Thereafter, the Department of Labor, following the EIAC's recommendation,
FIRST DIVISION issued a series of orders fine-tuning and implementing the new system. Prominent
[G.R. No. 120095. August 5, 1996]
JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL,
INC., petitioner, vs. HON. COURT OF APPEALS, HON. MA. NIEVES
CONFESSOR, then Secretary of the Department of the Labor and
Employment, HON. JOSE BRILLANTES, in his capacity as acting
Secretary of the Department of Labor and Employment and
HON. FELICISIMO JOSON, in his capacity as Administrator of the
Philippine Overseas Employment Administration, respondents.
DECISION
KAPUNAN, J.:
The limits of government regulation under the State's Police Power are once
again at the vortex of the instant controversy. Assailed is the government's power to
control deployment of female entertainers to Japan by requiring an Artist Record
Book (ARB) as a precondition to the processing by the POEA of any contract for
overseas employment. By contending that the right to overseas employment, is a
property right within the meaning of the Constitution, petitioners vigorously aver that
deprivation thereof allegedly through the onerous requirement of an ARB violates the
due process clause and constitutes an invalid exercise of the police power.
The factual antecedents are undisputed.
Following the much-publicized death of Maricris Sioson in 1991, former
President Corazon C. Aquino ordered a total ban against the deployment of
performing artists to Japan and other foreign destinations. The ban was, however,
rescinded after leaders of the overseas employment industry promised to extend full
support for a program aimed at removing kinks in the system of deployment. In its
place, the government, through the Secretary of Labor and Employment,
subsequently issued Department Order No. 28, creating the Entertainment Industry
Advisory Council (EIAC), which was tasked with issuing guidelines on the training,
testing certification and deployment of performing artists abroad.
Pursuant to the EIAC's recommendations,[1] the Secretary of Labor, on January
6, 1994, issued Department Order No. 3 establishing various procedures and
requirements for screening performing artists under a new system of training, testing,
certification and deployment of the former. Performing artists successfully hurdling the
test, training and certification requirement were to be issued an Artist's Record Book
(ARB), a necessary prerequisite to processing of any contract of employment by the
POEA. Upon request of the industry, implementation of the process, originally
scheduled for April 1, 1994, was moved to October 1, 1994.
among these orders were the following issuances:
1. Department Order No. 3-A, providing for additional guidelines on the training,
testing, certification and deployment of performing artists.
2. Department Order No. 3-B, pertaining to the Artist Record Book (ARB)
requirement, which could be processed only after the artist could show proof of
academic and skills training and has passed the required tests.
3. Department Order No. 3-E, providing the minimum salary a performing artist ought
to receive (not less than US$600.00 for those bound for Japan) and the authorized
deductions therefrom.
4. Department Order No. 3-F, providing for the guidelines on the issuance and use of
the ARB by returning performing artists who, unlike new artists, shall only undergo a
Special Orientation Program (shorter than the basic program) although they must
pass the academic test.
In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of
the Philippines (FETMOP), on January 27, 1995 filed a class suit assailing these
department orders, principally contending that said orders 1) violated the
constitutional right to travel; 2) abridged existing contracts for employment; and 3)
deprived individual artists of their licenses without due process of law. FETMOP,
likewise, averred that the issuance of the Artist Record Book (ARB) was
discriminatory and illegal and "in gross violation of the constitutional right... to life
liberty and property." Said Federation consequently prayed for the issuance of a writ
of preliminary injunction against the aforestated orders.
On February 2, 1992, JMM Promotion and Management, Inc. and Kary
International, Inc., herein petitioners, filed a Motion for Intervention in said civil case,
which was granted by the trial court in an Order dated 15 February, 1995.
However, on February 21, 1995, the trial court issued an Order denying
petitioners' prayer for a writ of preliminary injunction and dismissed the complaint.
On appeal from the trial court's Order, respondent court, in CA G.R. SP No.
36713 dismissed the same. Tracing the circumstances which led to the issuance of
the ARB requirement and the assailed Department Order, respondent court
concluded that the issuances constituted a valid exercise by the state of the police
power.
We agree.
The latin maxim salus populi est suprema lex embodies the character of the
entire spectrum of public laws aimed at promoting the general welfare of the people
under the State's police power. As an inherent attribute of sovereignty which virtually
"extends to all public needs,"[2] this "least limitable"[3] of governmental powers grants a
wide panoply of instruments through which the state, as parens patriae gives effect to
a host of its regulatory powers.
 Describing the nature and scope of the police power, Justice Malcolm, in the
early case of Rubi v. Provincial Board of Mindoro[4] wrote:
"The police power of the State," one court has said...'is a power coextensive with self-
protection, and is not inaptly termed 'the law of overruling necessity.' It may be said to
be that inherent and plenary power in the state which enables it to prohibit all things
hurtful to the comfort, safety and welfare of society.' Carried onward by the current of
legislature, the judiciary rarely attempts to dam the onrushing power of legislative
discretion, provided the purposes of the law do not go beyond the great principles that
mean security for the public welfare or do not arbitrarily interfere with the right of the
individual."[5]
Thus, police power concerns government enactments which precisely interfere
with personal liberty or property in order to promote the general welfare or the
common good. As the assailed Department Order enjoys a presumed validity, it
follows that the burden rests upon petitioners to demonstrate that the said order,
particularly, its ARB requirement, does not enhance the public welfare or was
exercised arbitrarily or unreasonably.
A thorough review of the facts and circumstances leading to the issuance of the
assailed orders compels us to rule that the Artist Record Book requirement and the
questioned Department Order related to its issuance were issued by the Secretary of
Labor pursuant to a valid exercise of the police power.
In 1984, the Philippines emerged as the largest labor sending country in Asia
dwarfing the labor export of countries with mammoth populations such as India and
China. According to the National Statistics Office, this diaspora was augmented
annually by over 450,000 documented and clandestine or illegal (undocumented)
workers who left the country for various destinations abroad, lured by higher salaries,
better work opportunities and sometimes better living conditions.
Of the hundreds of thousands of workers who left the country for greener
pastures in the last few years, women composed slightly close to half of those
deployed, constituting 47% between 1987-1991, exceeding this proportion (58%) by
the end of 1991,[6] the year former President Aquino instituted the ban on deployment
of performing artists to Japan and other countries as a result of the gruesome death
of Filipino entertainer Maricris Sioson.
It was during the same period that this Court took judicial notice not only of the
trend, but also of the fact that most of our women, a large number employed as
domestic helpers and entertainers, worked under exploitative conditions "marked by
physical and personal abuse."[7] Even then, we noted that "[t]he sordid tales of
maltreatment suffered by migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers" compelled "urgent government
action."[8]
Pursuant to the alarming number of reports that a significant number of Filipina
performing artists ended up as prostitutes abroad (many of whom were beaten,
drugged and forced into prostitution), and following the deaths of a number of these
women, the government began instituting measures aimed at deploying only those
individuals who met set standards which would qualify them as legitimate performing
artists. In spite of these measures, however, a number of our countrymen have
nonetheless fallen victim to unscrupulous recruiters, ending up as virtual slaves
controlled by foreign crime syndicates and forced into jobs other than those indicated
in their employment contracts. Worse, some of our women have been forced into
prostitution.
Thus, after a number of inadequate and failed accreditation schemes, the
Secretary of Labor issued on August 16, 1993, D.O. No. 28, establishing the
Entertainment Industry Advisory Council (EIAC), the policy advisory body of DOLE on
entertainment industry matters.[9] Acting on the recommendations of the said body,
the Secretary of Labor, on January 6, 1994, issued the assailed orders. These orders
embodied EIAC's Resolution No. 1, which called for guidelines on screening, testing
and accrediting performing overseas Filipino artists. Significantly, as the respondent
court noted, petitioners were duly represented in the EIAC, [10] which gave the
recommendations on which the ARB and other requirements were based.
Clearly, the welfare of Filipino performing artists, particularly the women was
paramount in the issuance of Department Order No. 3. Short of a total and absolute
ban against the deployment of performing artists to "high risk" destinations, a
measure which would only drive recruitment further underground, the new scheme at
the very least rationalizes the method of screening performing artists by requiring
reasonable educational and artistic skills from them and limits deployment to only
those individuals adequately prepared for the unpredictable demands of employment
as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for
exploitation by unscrupulous individuals and agencies.
Moreover, here or abroad, selection of performing artists is usually
accomplished by auditions, where those deemed unfit are usually weeded out
through a process which is inherently subjective and vulnerable to bias and
differences in taste. The ARB requirement goes one step further, however, attempting
to minimize the subjectivity of the process by defining the minimum skills required
from entertainers and performing artists. As the Solicitor General observed, this
should be easily met by experienced artists possessing merely basic skills. The tests
are aimed at segregating real artists or performers from those passing themselves off
as such, eager to accept any available job and therefore exposing themselves to
possible exploitation.
As to the other provisions of Department Order No. 3 questioned by petitioners,
we see nothing wrong with the requirement for document and booking confirmation
(D.O. 3-C), a minimum salary scale (D.O. 3-E), or the requirement for registration of
returning performers. The requirement for a venue certificate or other documents
evidencing the place and nature of work allows the government closer monitoring of
foreign employers and helps keep our entertainers away from prostitution fronts and
other worksites associated with unsavory, immoral, illegal or exploitative
practices. Parenthetically, none of these issuances appear to us, by any stretch of the
imagination, even remotely unreasonable or arbitrary. They address a felt need of
according greater protection for an oft-exploited segment of our OCW's. They
respond to the industry's demand for clearer and more practicable rules and
guidelines. Many of these provisions were fleshed out following recommendations by,
and after consultations with, the affected sectors and non-government
organizations. On the whole, they are aimed at enhancing the safety and security of
entertainers and artists bound for Japan and other destinations, without stifling the
industry's concerns for expansion and growth.
 In any event, apart from the State's police power, the Constitution itself
mandates government to extend the fullest protection to our overseas workers. The
basic constitutional statement on labor, embodied in Section 18 of Article II of the
Constitution provides:
Sec. 18. The State affirms labor as a primary social economic force. It shall protect
the rights of workers and promote their welfare.
More emphatically, the social justice provision on labor of the 1987 Constitution
in its first paragraph states:
The State shall afford full protection to labor, local and overseas, organized and
unorganized and promote full employment and equality of employment opportunities
for all.
Obviously, protection to labor does not indicate promotion of employment
alone. Under the welfare and social justice provisions of the Constitution, the
promotion of full employment, while desirable, cannot take a backseat to the
government's constitutional duty to provide mechanisms for the protection of our
workforce, local or overseas. As this Court explained in Philippine Association of
Service Exporters (PASEI) v. Drilon,[11] in reference to the recurring problems faced
by our overseas workers:
What concerns the Constitution more paramountly is that such an employment be
above all, decent, just, and humane. It is bad enough that the country has to send its
sons and daughters to strange lands because it cannot satisfy their employment
needs at home. Under these circumstances, the Government is duty-bound to insure
that our toiling expatriates have adequate protection, personally and economically,
while away from home.
We now go to petitioners' assertion that the police power cannot, nevertheless,
abridge the right of our performing workers to return to work abroad after having
earlier qualified under the old process, because, having previously been accredited,
their accreditation became a property right," protected by the due process clause. We
find this contention untenable.
A profession, trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work and the right to
make a living because these rights are property rights, the arbitrary and unwarranted
deprivation of which normally constitutes an actionable wrong. [12]
Nevertheless, no right is absolute, and the proper regulation of a profession,
calling, business or trade has always been upheld as a legitimate subject of a valid
exercise of the police power by the state particularly when their conduct affects either
the execution of legitimate governmental functions, the preservation of the State, the
public health and welfare and public morals. According to the maxim, sic utere tuo ut
alienum non laedas, it must of course be within the legitimate range of legislative
action to define the mode and manner in which every one may so use his own
property so as not to pose injury to himself or others.[13]
In any case, where the liberty curtailed affects at most the rights of property, the
permissible scope of regulatory measures is certainly much wider. [14] To pretend that
licensing or accreditation requirements violates the due process clause is to ignore
the settled practice, under the mantle of the police power, of regulating entry to the
practice of various trades or professions. Professionals leaving for abroad are
required to pass rigid written and practical exams before they are deemed fit to
practice their trade. Seamen are required to take tests determining their
seamanship. Locally, the Professional Regulation Commission has began to require
previously licensed doctors and other professionals to furnish documentary proof that
they had either re-trained or had undertaken continuing education courses as a
requirement for renewal of their licenses. It is not claimed that these requirements
pose an unwarranted deprivation of a property right under the due process clause. So
long as Professionals and other workers meet reasonable regulatory standards no
such deprivation exists.
Finally, it is a futile gesture on the part of petitioners to invoke the non-
impairment clause of the Constitution to support their argument that the government
cannot enact the assailed regulatory measures because they abridge the freedom to
contract. In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that
"[t]he non-impairment clause of the Constitution... must yield to the loftier purposes
targeted by the government."[15] Equally important, into every contract is read
provisions of existing law, and always, a reservation of the police power for so long as
the agreement deals with a subject impressed with the public welfare.
A last point. Petitioners suggest that the singling out of entertainers and
performing artists under the assailed department orders constitutes class legislation
which violates the equal protection clause of the Constitution. We do not agree.
The equal protection clause is directed principally against undue favor and
individual or class privilege. It is not intended to prohibit legislation which is limited to
the object to which it is directed or by the territory in which it is to operate. It does not
require absolute equality, but merely that all persons be treated alike under like
conditions both as to privileges conferred and liabilities imposed. [16] We have held,
time and again, that the equal protection clause of the Constitution does not forbid
classification for so long as such classification is based on real and substantial
differences having a reasonable relation to the subject of the particular
legislation.[17] If classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future conditions, the
classification does not violate the equal protection guarantee.
In the case at bar, the challenged Department Order clearly applies to all
performing artists and entertainers destined for jobs abroad. These orders, we
stressed hereinbefore, further the Constitutional mandate requiring Government to
protect our workforce, particularly those who may be prone to abuse and exploitation
as they are beyond the physical reach of government regulatory agencies. The tragic
incidents must somehow stop, but short of absolutely curtailing the right of these
performers and entertainers to work abroad, the assailed measures enable our
government to assume a measure of control.
WHEREFORE, finding no reversible error in the decision sought to be reviewed,
petition is hereby DENIED.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and
TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas
Employment Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a
firm "engaged principally in the recruitment of Filipino workers, male and female, for
overseas placement," 1 challenges the Constitutional validity of Department Order No.
1, Series of 1988, of the Department of Labor and Employment, in the character of
"GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT
OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for
certiorari and prohibition. Specifically, the measure is assailed for "discrimination
against males or females;" 2 that it "does not apply to all Filipino workers but only to
domestic helpers and females with similar skills;" 3 and that it is violative of the right to
travel. It is held likewise to be an invalid exercise of the lawmaking power, police
power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the
Constitution, providing for worker participation "in policy and decision-making
processes affecting their rights and benefits as may be provided by
law." 4 Department Order No. 1, it is contended, was passed in the absence of prior
consultations. It is claimed, finally, to be in violation of the Charter's non-impairment
clause, in addition to the "great and irreparable injury" that PASEI members face
should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of
Labor and Administrator of the Philippine Overseas Employment Administration, filed
a Comment informing the Court that on March 8, 1988, the respondent Labor
Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada,
Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In submitting the
validity of the challenged "guidelines," the Solicitor General invokes the police power
of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure.
The only question is whether or not it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined
as the "state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare." 5 As defined, it consists of (1) an
imposition of restraint upon liberty or property, (2) in order to foster the common good.
It is not capable of an exact definition but has been, purposely, veiled in general
terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the
future where it could be done, provides enough room for an efficient and flexible
response to conditions and circumstances thus assuring the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not owe its
origin to the Charter. Along with the taxing power and eminent domain, it is inborn in
the very fact of statehood and sovereignty. It is a fundamental attribute of government
that has enabled it to perform the most vital functions of governance. Marshall, to
whom the expression has been credited, 7 refers to it succinctly as the plenary power
of the State "to govern its citizens." 8
"The police power of the State ... is a power coextensive with self- protection, and it is
not inaptly termed the "law of overwhelming necessity." It may be said to be that
inherent and plenary power in the State which enables it to prohibit all things hurtful to
the comfort, safety, and welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is
"rooted in the conception that men in organizing the state and imposing upon its
government limitations to safeguard constitutional rights did not intend thereby to
enable an individual citizen or a group of citizens to obstruct unreasonably the
enactment of such salutary measures calculated to ensure communal peace, safety,
good order, and welfare." 10 Significantly, the Bill of Rights itself does not purport to
be an absolute guaranty of individual rights and liberties "Even liberty itself, the
greatest of all rights, is not unrestricted license to act according to one's will." 11 It is
subject to the far more overriding demands and requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations.
For all its awesome consequences, it may not be exercised arbitrarily or
unreasonably. Otherwise, and in that event, it defeats the purpose for which it is
exercised, that is, to advance the public good. Thus, when the power is used to
further private interests at the expense of the citizenry, there is a clear misuse of the
power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear
and convincing evidence to the contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should
be nullified. There is no question that Department Order No. 1 applies only to "female
contract workers," 14 but it does not thereby make an undue discrimination between
the sexes. It is well-settled that "equality before the law" under the Constitution 15does
not import a perfect Identity of rights among all men and women. It admits of
classifications, provided that (1) such classifications rest on substantial distinctions;
(2) they are germane to the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same class. 16
The Court is satisfied that the classification made-the preference for female workers
rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has
befallen our female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by, in not a few cases, physical and personal
abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even
rape and various forms of torture, confirmed by testimonies of returning workers, are
compelling motives for urgent Government action. As precisely the caretaker of
Constitutional rights, the Court is called upon to protect victims of exploitation. In
fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no
evidence that, except perhaps for isolated instances, our men abroad have been
afflicted with an Identical predicament. The petitioner has proffered no argument that
the Government should act similarly with respect to male workers. The Court, of
course, is not impressing some male chauvinistic notion that men are superior to
women. What the Court is saying is that it was largely a matter of evidence (that
women domestic workers are being ill-treated abroad in massive instances) and not
upon some fanciful or arbitrary yardstick that the Government acted in this case. It is
evidence capable indeed of unquestionable demonstration and evidence this Court
accepts. The Court cannot, however, say the same thing as far as men are
concerned. There is simply no evidence to justify such an inference. Suffice it to state,
then, that insofar as classifications are concerned, this Court is content that
distinctions are borne by the evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally final on the
Court. Under a republican regime, it is the executive branch that enforces policy. For
their part, the courts decide, in the proper cases, whether that policy, or the manner
by which it is implemented, agrees with the Constitution or the laws, but it is not for
them to question its wisdom. As a co-equal body, the judiciary has great respect for
determinations of the Chief Executive or his subalterns, especially when the
legislature itself has specifically given them enough room on how the law should be
effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court
will deal with this at greater length shortly, that Department Order No. 1 implements
the rule-making powers granted by the Labor Code. But what should be noted is the
fact that in spite of such a fiction of finality, the Court is on its own persuaded that
prevailing conditions indeed call for a deployment ban.
There is likewise no doubt that such a classification is germane to the purpose behind
the measure. Unquestionably, it is the avowed objective of Department Order No. 1 to
"enhance the protection for Filipino female overseas workers" 17 this Court has no
quarrel that in the midst of the terrible mistreatment Filipina workers have suffered
abroad, a ban on deployment will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to
apply indefinitely so long as those conditions exist. This is clear from the Order itself
("Pending review of the administrative and legal measures, in the Philippines and in
the host countries . . ."18), meaning to say that should the authorities arrive at a
means impressed with a greater degree of permanency, the ban shall be lifted. As a
stop-gap measure, it is possessed of a necessary malleability, depending on the
circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE)
may, upon recommendation of the Philippine Overseas Employment Administration
(POEA), lift the suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and
protection of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female
domestic overseas workers. That it does not apply to "all Filipina workers" 20 is not an
argument for unconstitutionality. Had the ban been given universal applicability, then
it would have been unreasonable and arbitrary. For obvious reasons, not all of them
are similarly circumstanced. What the Constitution prohibits is the singling out of a
select person or group of persons within an existing class, to the prejudice of such a
person or group or resulting in an unfair advantage to another person or group of
persons. To apply the ban, say exclusively to workers deployed by A, but not to those
recruited by B, would obviously clash with the equal protection clause of the Charter.
It would be a classic case of what Chase refers to as a law that "takes property from
A and gives it to B." 21 It would be an unlawful invasion of property rights and freedom
of contract and needless to state, an invalid act. 22 (Fernando says: "Where the
classification is based on such distinctions that make a real difference as infancy, sex,
and stage of civilization of minority groups, the better rule, it would seem, is to
recognize its validity only if the young, the women, and the cultural minorities are
singled out for favorable treatment. There would be an element of unreasonableness
if on the contrary their status that calls for the law ministering to their needs is made
the basis of discriminatory legislation against them. If such be the case, it would be
difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the
assailed Order clearly accords protection to certain women workers, and not the
contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas
deployment. From scattered provisions of the Order, it is evident that such a total ban
has hot been contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers
of similar skills defined herein to the following [sic] are authorized under these
guidelines and are exempted from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited international
organizations.
5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral
labor agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--
Vacationing domestic helpers and/or workers of similar skills shall be allowed to
process with the POEA and leave for worksite only if they are returning to the same
employer to finish an existing or partially served employment contract. Those workers
returning to worksite to serve a new employer shall be covered by the suspension
and the provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may,
upon recommendation of the Philippine Overseas Employment Administration
(POEA), lift the suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and
protection of Filipino workers. 24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the
right. The right to travel is subject, among other things, to the requirements of "public
safety," "as may be provided by law." 25 Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its basic policy to "afford protection to
labor," 26 pursuant to the respondent Department of Labor's rule-making authority
vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable
simply because of its impact on the right to travel, but as we have stated, the right
itself is not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an
invalid exercise of legislative power. It is true that police power is the domain of the
legislature, but it does not mean that such an authority may not be lawfully delegated.
As we have mentioned, the Labor Code itself vests the Department of Labor and
Employment with rulemaking powers in the enforcement whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker participation "in
policy and decision-making processes affecting their rights and benefits" 29 is not well-
taken. The right granted by this provision, again, must submit to the demands and
necessities of the State's power of regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What
concerns the Constitution more paramountly is that such an employment be above
all, decent, just, and humane. It is bad enough that the country has to send its sons
and daughters to strange lands because it cannot satisfy their employment needs at
home. Under these circumstances, the Government is duty-bound to insure that our
toiling expatriates have adequate protection, personally and economically, while away
from home. In this case, the Government has evidence, an evidence the petitioner
cannot seriously dispute, of the lack or inadequacy of such protection, and as part of
its duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately made use
of its authority. It is not contested that it has in fact removed the prohibition with
respect to certain countries as manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield
to the loftier purposes targetted by the Government. 31 Freedom of contract and
enterprise, like all other freedoms, is not free from restrictions, more so in this
jurisdiction, where laissez faire has never been fully accepted as a controlling
economic way of life.
This Court understands the grave implications the questioned Order has on the
business of recruitment. The concern of the Government, however, is not necessarily
to maintain profits of business firms. In the ordinary sequence of events, it is profits
that suffer as a result of Government regulation. The interest of the State is to provide
a decent living to its citizens. The Government has convinced the Court in this case
that this is its intent. We do not find the impugned Order to be tainted with a grave
abuse of discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 122917. July 12, 1999]
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P.
PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ,
JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G.
CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, CORAZON C.
DELOS REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA
CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E.
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY
V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ,
MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL
PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE
CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA,
ELIZABETH VENTURA, GRACE S. PARDO & RICO TIMOSA, petitioners vs.
NATIONAL LABOR RELATIONS COMMISSION & FAR EAST BANK AND TRUST
COMPANY, respondents.
DECISION
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be
granted the same terms and conditions of employment as qualified able-bodied
employees. Once they have attained the status of regular workers, they should be
accorded all the benefits granted by law, notwithstanding written or verbal contracts to
the contrary. This treatment is rooted not merely on charity or accommodation, but on
justice for all.
The Case
Challenged in the Petition for Certiorari[1] before us is the June 20, 1995 Decision[2] of
the National Labor Relations Commission (NLRC),[3] which affirmed the August, 22
1994 ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiters Decision
disposed as follows:[4]
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned
complaint for lack of merit.
Also assailed is the August 4, 1995 Resolution[5] of the NLRC, which denied the
Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise: [6]
Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on
various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement called
Employment Contract for Handicapped Workers. (pp. 68 & 69, Records) The full text
of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly
organized and existing under and by virtue of the laws of the Philippines, with
business address at FEBTC Building, Muralla, Intramuros, Manila, represented herein
by its Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred
to as the BANK);
- and -
________________, ________________ years old, of legal age, _____________,
and residing at __________________ (hereinafter referred to as the (EMPLOYEE).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a
need to provide disabled and handicapped persons gainful employment and
opportunities to realize their potentials, uplift their socio-economic well being and
welfare and make them productive, self-reliant and useful citizens to enable them to
fully integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by
disabled and handicapped persons, particularly deaf-mutes, and the BANK ha[s]
been approached by some civic-minded citizens and authorized government
agencies [regarding] the possibility of hiring handicapped workers for these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers who [were]
recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in
compliance with Article 80 of the Labor Code of the Philippines as amended, the
BANK and the EMPLOYEE have entered into this Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE
agrees to diligently and faithfully work with the BANK, as Money Sorter and Counter.
2. The EMPLOYEE shall perform among others, the following duties and
responsibilities:
i Sort out bills according to color;
ii. Count each denomination per hundred, either manually or with the aid of a counting
machine;
iii. Wrap and label bills per hundred;
iv. Put the wrapped bills into bundles; and
v. Submit bundled bills to the bank teller for verification.
3. The EMPLOYEE shall undergo a training period of one (1) month, after which the
BANK shall determine whether or not he/she should be allowed to finish the
remaining term of this Contract.
4. The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day,
subject to adjustment in the sole judgment of the BANK, payable every 15 th and end
of the month.
5. The regular work schedule of the EMPLOYEE shall be five (5) days per week, from
Mondays thru Fridays, at eight (8) hours a day. The EMPLOYEE may be required to
perform overtime work as circumstance may warrant, for which overtime work he/she
[shall] be paid an additional compensation of 125% of his daily rate if performed
during ordinary days and 130% if performed during Saturday or [a] rest day.
6. The EMPLOYEE shall likewise be entitled to the following benefits:
i. Proportionate 13th month pay based on his basic daily wage.
ii. Five (5) days incentive leave.
iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK
Rules and Regulations and Policies, and to conduct himself/herself in a manner
expected of all employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had been employed under a
special employment program of the BANK, for which reason the standard hiring
requirements of the BANK were not applied in his/her case. Consequently, the
EMPLOYEE acknowledges and accepts the fact that the terms and conditions of the
employment generally observed by the BANK with respect to the BANKs regular
employee are not applicable to the EMPLOYEE, and that therefore, the terms and
conditions of the EMPLOYEEs employment with the BANK shall be governed solely
and exclusively by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with the employment
of disabled and handicapped workers. More specifically, the EMPLOYEE hereby
acknowledges that the provisions of Book Six of the Labor Code of the Philippines as
amended, particularly on regulation of employment and separation pay are not
applicable to him/her.
9. The Employment Contract shall be for a period of six (6) months or from ____ to
____ unless earlier terminated by the BANK for any just or reasonable cause. Any
continuation or extension of this Contract shall be in writing and therefore this
Contract will automatically expire at the end of its terms unless renewed in writing by
the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this
____ day of _________________, ____________ at Intramuros, Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two
(2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one
(21). Their employment[s] were renewed every six months such that by the time this
case arose, there were fifty-six (56) deaf-mutes who were employed by respondent
under the said employment agreement. The last one was Thelma Malindoy who was
employed in 1992 and whose contract expired on July 1993.
xxxxxxxxx
Disclaiming that complainants were regular employees, respondent Far East Bank
and Trust Company maintained that complainants who are a special class of workers
the hearing impaired employees were hired temporarily under [a] special employment
arrangement which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were hired due to pakiusap
which must be considered in the light of the context of the respondent Banks
corporate philosophy as well as its career and working environment which is to
maintain and strengthen a corps of professionals trained and qualified officers and
regular employees who are baccalaureate degree holders from excellent schools
which is an unbending policy in the hiring of regular employees; that in addition to
this, training continues so that the regular employee grows in the corporate ladder;
that the idea of hiring handicapped workers was acceptable to them only on a special
arrangement basis; that it adopted the special program to help tide over a group of
handicapped workers such as deaf-mutes like the complainants who could do manual
work for the respondent Bank; that the task of counting and sorting of bills which was
being performed by tellers could be assigned to deaf-mutes; that the counting and
sorting of money are tellering works which were always logically and naturally part
and parcel of the tellers normal functions; that from the beginning there have been no
separate items in the respondent Bank plantilla for sorters or counters; that the tellers
themselves already did the sorting and counting chore as a regular feature and
integral part of their duties (p. 97, Records); that through the pakiusap of Arturo
Borjal, the tellers were relieved of this task of counting and sorting bills in favor of
deaf-mutes without creating new positions as there is no position either in the
respondent or in any other bank in the Philippines which deals with purely counting
and sorting of bills in banking operations.
Petitioners specified when each of them was hired and dismissed, viz: [7]
NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed
1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 93
2. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 94
3. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 93
4. DAVID P. PASCUAL Bel-Air 15 OCT 88 21 NOV 94
5. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 94
6. ALBERT HALLARE West 4 JAN 91 9 JAN 94
7. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 93
8. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 93
9. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 94
10. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 93
11. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 93
12. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 93
13. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 93
14. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 93
15. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 93
16. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 93
17. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 93
18. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 93
19. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 93
20. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 93
21. ROBERT MARCELO West 31 JUL 93[8] 1 AUG 93
22. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 93
23. JOSE E. SALES West 6 AUG 92 12 OCT 93
24. ISABEL MAMAUAG West 8 MAY 92 10 NOV 93
25. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 94
26. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 93
27. MELODY V. GRUELA West 28 OCT 91 3 NOV 93
28. BERNADETH D. AGERO West 19 DEC 90 27 DEC 93
29. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 93
30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93
31. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 94
32. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 93
33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93
34. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 93
35. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 94
36. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 93
37. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 93
38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93
39. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 93
40. PINKY BALOLOA West 3 JUN 91 2 DEC 93
41. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC]
42. GRACE S. PARDO West 4 APR 90 13 MAR 94
43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein
petitioners. Hence, this recourse to this Court.[9]
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed
regular employees under Article 280 of the Labor Code, as amended, Respondent
Commission ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the
conclusion that complainants were hired as an accommodation to [the]
recommendation of civic oriented personalities whose employment[s] were covered
by xxx Employment Contract[s] with special provisions on duration of contract as
specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms
of the contract shall be the law between the parties.[10]
The NLRC also declared that the Magna Carta for Disabled Persons was not
applicable, considering the prevailing circumstances/milieu of the case.
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding that the
petitioners - money sorters and counters working in a bank - were not regular
employees.
II. The Honorable Commission committed grave abuse of discretion in holding that
the employment contracts signed and renewed by the petitioners - which provide for a
period of six (6) months - were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying
the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on
proscription against discrimination against disabled persons.[11]
In the main, the Court will resolve whether petitioners have become regular
employees.
This Courts Ruling
The petition is meritorious. However, only the employees, who worked for more than
six months and whose contracts were renewed are deemed regular. Hence, their
dismissal from employment was illegal.
Preliminary Matter: Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of
facts of the NLRC is not allowed in a petition for certiorari. Specifically, it maintains
that the Court cannot pass upon the findings of public respondents that petitioners
were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents
in a certiorari proceeding. In resolving whether the petitioners have become regular
employees, we shall not change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of discretion in
applying the law to the established facts, as above-quoted from the assailed Decision.
Main Issue: Are Petitioners Regular Employees?
Petitioners maintain that they should be considered regular employees, because their
task as money sorters and counters was necessary and desirable to the business of
respondent bank. They further allege that their contracts served merely to preclude
the application of Article 280 and to bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as
special workers and should not in any way be considered as part of the regular
complement of the Bank.[12] Rather, they were special workers under Article 80 of the
Labor Code. Private respondent contends that it never solicited the services of
petitioners, whose employment was merely an accommodation in response to the
requests of government officials and civic-minded citizens. They were told from the
start, with the assistance of government representatives, that they could not become
regular employees because there were no plantilla positions for money sorters,
whose task used to be performed by tellers. Their contracts were renewed several
times, not because of need but merely for humanitarian reasons. Respondent submits
that as of the present, the special position that was created for the petitioners no
longer exist[s] in private respondent [bank], after the latter had decided not to renew
anymore their special employment contracts.
At the outset, let it be known that this Court appreciates the nobility of private
respondents effort to provide employment to physically impaired individuals and to
make them more productive members of society. However, we cannot allow it to
elude the legal consequences of that effort, simply because it now deems their
employment irrelevant. The facts, viewed in light of the Labor Code and the Magna
Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of
them, should be deemed regular employees. As such, they have acquired legal rights
that this Court is duty-bound to protect and uphold, not as a matter of compassion but
as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be
trained for a period of one month, after which the employer shall determine whether
or not they should be allowed to finish the 6-month term of the contract. Furthermore,
the employer may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract shall automatically
expire at the end of the term.
According to private respondent, the employment contracts were prepared in
accordance with Article 80 of the Labor Code, which provides:
ART. 80. Employment agreement. Any employer who employs handicapped workers
shall enter into an employment agreement with them, which agreement shall include:
(a) The names and addresses of the handicapped workers to be employed;
(b) The rate to be paid the handicapped workers which shall be not less than seventy
five (75%) per cent of the applicable legal minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor
or his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta
for Disabled Persons),[13]however, justify the application of Article 280 of the Labor
Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from
1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the
hiring of others lead to the conclusion that their tasks were beneficial and necessary
to the bank. More important, these facts show that they were qualified to perform the
responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as
a qualified able-bodied person. Section 5 of the Magna Carta provides:
Section 5. Equal Opportunity for Employment.No disabled person shall be denied
access to opportunities for suitable employment. A qualified disabled employee shall
be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords
them the rights of qualified able-bodied persons, they are thus covered by Article 280
of the Labor Code, which provides:
ART. 280. Regular and Casual Employment. -- The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered as regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
The test of whether an employee is regular was laid down in De Leon v. NLRC,[14] in
which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. Also if the employee has
been performing the job for at least one year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for
its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with
respect to such activity, and while such activity exists.
Without a doubt, the task of counting and sorting bills is necessary and desirable to
the business of respondent bank. With the exception of sixteen of them, petitioners
performed these tasks for more than six months. Thus, the following twenty-seven
petitioners should be deemed regular employees: Marites Bernardo, Elvira Go
Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare,
Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo,
Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V.
Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B.
Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes,
Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S.
Pardo.
As held by the Court, Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the
simple expedient of extending to them probationary appointments, ad
infinitum.[15] The contract signed by petitioners is akin to a probationary employment,
during which the bank determined the employees fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees.[16] No employer is allowed to
determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure;
that is, their services may be terminated only for a just or authorized cause. Because
respondent failed to show such cause,[17] these twenty-seven petitioners are deemed
illegally dismissed and therefore entitled to back wages and reinstatement without
loss of seniority rights and other privileges.[18] Considering the allegation of
respondent that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged,[19] petitioners are hereby
awarded separation pay in lieu of reinstatement.[20]
Because the other sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.
Applicability of the Brent Ruling
Respondent bank, citing Brent School v. Zamora[21] in which the Court upheld the
validity of an employment contract with a fixed term, argues that the parties entered
into the contract on equal footing. It adds that the petitioners had in fact an
advantage, because they were backed by then DSWD Secretary Mita Pardo de
Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that
the petitioners were disabled, and that the bank had to determine their fitness for the
position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted
earlier, petitioners proved themselves to be qualified disabled persons who, under the
Magna Carta for Disabled Persons, are entitled to terms and conditions of
employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not
apply because petitioners are qualified for their positions. The validation of the limit
imposed on their contracts, imposed by reason of their disability, was a glaring
instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with
public interest.[22] Provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with
each other.[23] Clearly, the agreement of the parties regarding the period of
employment cannot prevail over the provisions of the Magna Carta for Disabled
Persons, which mandate that petitioners must be treated as qualified able-bodied
employees.
Respondents reason for terminating the employment of petitioners is
instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the
bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m.,
respondent resorted to nighttime sorting and counting of money. Thus, it reasons that
this task could not be done by deaf mutes because of their physical limitations as it is
very risky for them to travel at night.[24] We find no basis for this argument. Travelling
at night involves risks to handicapped and able-bodied persons alike. This excuse
cannot justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely accommodated employees. This fact
does not change the nature of their employment. As earlier noted, an employee is
regular because of the nature of work and the length of service, not because of the
mode or even the reason for hiring them.
Equally unavailing are private respondents arguments that it did not go out of its way
to recruit petitioners, and that its plantilla did not contain their positions. In L. T.
Datu v. NLRC,[25] the Court held that the determination of whether employment is
casual or regular does not depend on the will or word of the employer, and the
procedure of hiring x x x but on the nature of the activities performed by the
employee, and to some extent, the length of performance and its continued existence.
Private respondent argues that the petitioners were informed from the start that they
could not become regular employees. In fact, the bank adds, they agreed with the
stipulation in the contract regarding this point. Still, we are not persuaded. The well-
settled rule is that the character of employment is determined not by stipulations in
the contract, but by the nature of the work performed.[26] Otherwise, no employee can
become regular by the simple expedient of incorporating this condition in the contract
of employment.
In this light, we iterate our ruling in Romares v. NLRC:[27]
Article 280 was emplaced in our statute books to prevent the circumvention of the
employees right to be secure in his tenure by indiscriminately and completely ruling
out all written and oral agreements inconsistent with the concept of regular
employment defined therein. Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of the
employer, such employee is deemed a regular employee and is entitled to security of
tenure notwithstanding the contrary provisions of his contract of employment.
xxxxxxxxx
At this juncture, the leading case of Brent School, Inc. v. Zamora proves
instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of
fixed-term employment. It ruled that the decisive determinant in term employment
should not be the activities that the employee is called upon to perform but the day
certain agreed upon the parties for the commencement and termination of their
employment relationship. But this Court went on to say that where from the
circumstances it is apparent that the periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in
favor of the working class, but also the concern of the State for the plight of the
disabled. The noble objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal treatment
of qualified persons, disabled or not. In the present case, the handicap of petitioners
(deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is
the repeated renewal of their employment contracts. Why then should they be
dismissed, simply because they are physically impaired? The Court believes, that,
after showing their fitness for the work assigned to them, they should be treated and
granted the same rights like any other regular employees.
In this light, we note the Office of the Solicitor Generals prayer joining the petitioners
cause.[28]
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20,
1995 Decision and the August 4, 1995 Resolution of the NLRC
are REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company is
hereby ORDERED to pay back wages and separation pay to each of the following
twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante,
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M.
Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E.
Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela,
Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil,
Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is
hereby directed to compute the exact amount due each of said employees, pursuant
to existing laws and regulations, within fifteen days from the finality of this
Decision. No costs.
SO ORDERED.
Romero, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
EN BANC
[G.R. No. 118295. May 2, 1997]
WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the
Philippine Senate and as taxpayers; GREGORIO ANDOLANA and JOKER
ARROYO as members of the House of Representatives and as taxpayers;
NICANOR P. PERLAS and HORACIO R. MORALES, both as taxpayers; CIVIL
LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM ASSOCIATION,
CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG
KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION
MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS,
INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various
taxpayers and as non-governmental organizations, petitioners, vs. EDGARDO
ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON
ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES,
ERNESTO HERRERA, JOSE LINA, GLORIA MACAPAGAL-ARROYO, ORLANDO
MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA RASUL, RAMON
REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their
respective capacities as members of the Philippine Senate who concurred in
the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his
capacity as Secretary of Budget and Management; CARIDAD VALDEHUESA, in
her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as
Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as
Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary
of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs;
and TEOFISTO T. GUINGONA, in his capacity as Executive
Secretary, respondents.
DECISION
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization, abetted by the
membership thereto of the vast majority of countries has revolutionized international
business and economic relations amongst states. It has irreversibly propelled the
world towards trade liberalization and economic globalization. Liberalization,
globalization, deregulation and privatization, the third-millennium buzz words, are
ushering in a new borderless world of business by sweeping away as mere historical
relics the heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax
exemptions and currency controls. Finding market niches and becoming the best in
specific industries in a market-driven and export-oriented global scenario are
replacing age-old beggar-thy-neighbor policies that unilaterally protect weak and
inefficient domestic producers of goods and services. In the words of Peter Drucker,
the well-known management guru, Increased participation in the world economy has
become the key to domestic economic growth and prosperity.
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the Second World
War, plans for the establishment of three multilateral institutions -- inspired by that
grand political body, the United Nations -- were discussed at Dumbarton Oaks and
Bretton Woods. The first was the World Bank (WB) which was to address the
rehabilitation and reconstruction of war-ravaged and later developing countries;
the second, the International Monetary Fund (IMF) which was to deal with currency
problems; and the third, the International Trade Organization (ITO), which was to
foster order and predictability in world trade and to minimize unilateral protectionist
policies that invite challenge, even retaliation, from other states. However, for a
variety of reasons, including its non-ratification by the United States, the ITO, unlike
the IMF and WB, never took off. What remained was only GATT -- the General
Agreement on Tariffs and Trade. GATT was a collection of treaties governing access
to the economies of treaty adherents with no institutionalized body administering the
agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the
Kennedy Round, the Tokyo Round and the Uruguay Round, the world finally gave
birth to that administering body -- the World Trade Organization -- with the signing of
the Final Act in Marrakesh, Morocco and the ratification of the WTO Agreement by its
members.[1]
Like many other developing countries, the Philippines joined WTO as a founding
member with the goal, as articulated by President Fidel V. Ramos in two letters to the
Senate (infra), of improving Philippine access to foreign markets, especially its major
trading partners, through the reduction of tariffs on its exports, particularly agricultural
and industrial products. The President also saw in the WTO the opening of new
opportunities for the services sector x x x, (the reduction of) costs and uncertainty
associated with exporting x x x, and (the attraction of) more investments into the
country. Although the Chief Executive did not expressly mention it in his letter, the
Philippines - - and this is of special interest to the legal profession - - will benefit from
the WTO system of dispute settlement by judicial adjudication through the
independent WTO settlement bodies called (1) Dispute Settlement Panels and (2)
Appellate Tribunal.Heretofore, trade disputes were settled mainly through
negotiations where solutions were arrived at frequently on the basis of relative
bargaining strengths, and where naturally, weak and underdeveloped countries were
at a disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines to place nationals and
products of member-countries on the same footing as Filipinos and local products and
(2) that the WTO intrudes, limits and/or impairs the constitutional powers of both
Congress and the Supreme Court, the instant petition before this Court assails the
WTO Agreement for violating the mandate of the 1987 Constitution to develop a self-
reliant and independent national economy effectively controlled by Filipinos x x x (to)
give preference to qualified Filipinos (and to) promote the preferential use of Filipino
labor, domestic materials and locally produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine participation in
worldwide trade liberalization and economic globalization? Does it prescribe
Philippine integration into a global economy that is liberalized, deregulated and
privatized? These are the main questions raised in this petition for certiorari,
prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the
nullification, on constitutional grounds, of the concurrence of the Philippine Senate in
the ratification by the President of the Philippines of the Agreement Establishing the
World Trade Organization (WTO Agreement, for brevity) and (2) for the prohibition of
its implementation and enforcement through the release and utilization of public
funds, the assignment of public officials and employees, as well as the use of
government properties and resources by respondent-heads of various executive
offices concerned therewith. This concurrence is embodied in Senate Resolution No.
97, dated December 14, 1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of
the Department of Trade and Industry (Secretary Navarro, for brevity), representing
the Government of the Republic of the Philippines, signed in Marrakesh, Morocco, the
Final Act Embodying the Results of the Uruguay Round of Multilateral Negotiations
(Final Act, for brevity).
By signing the Final Act,[2] Secretary Navarro on behalf of the Republic of the
Philippines, agreed:
(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities, with a view to seeking approval of the Agreement in
accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
On August 12, 1994, the members of the Philippine Senate received a letter dated
August 11, 1994 from the President of the Philippines,[3] stating among others that the
Uruguay Round Final Act is hereby submitted to the Senate for its concurrence
pursuant to Section 21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received another letter
from the President of the Philippines[4] likewise dated August 11, 1994, which stated
among others that the Uruguay Round Final Act, the Agreement Establishing the
World Trade Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services are hereby submitted to the
Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the necessity of the
immediate adoption of P.S. 1083, a resolution entitled Concurring in the Ratification of
the Agreement Establishing the World Trade Organization.[5]
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which
Resolved, as it is hereby resolved, that the Senate concur, as it hereby concurs, in
the ratification by the President of the Philippines of the Agreement Establishing the
World Trade Organization.[6] The text of the WTO Agreement is written on pages
137 et seq. of Volume I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations and includes various agreements and associated legal instruments
(identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively
referred to as Multilateral Trade Agreements, for brevity) as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994
Agreement on Implementation of Article VII of the General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating Measures
Agreement on Safeguards
Annex 1B: General Agreement on Trade in Services and Annexes
Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing the Settlement of Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed[7] the Instrument of
Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic
of the Philippines, after having seen and considered the aforementioned Agreement
Establishing the World Trade Organization and the agreements and associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do
hereby ratify and confirm the same and every Article and Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the Philippines is
composed of the Agreement Proper and the associated legal instruments included in
Annexes one (1), two (2) and three (3) of that Agreement which are integral parts
thereof.
On the other hand, the Final Act signed by Secretary Navarro embodies not only the
WTO Agreement (and its integral annexes aforementioned) but also (1) the Ministerial
Declarations and Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,[8] the Solicitor General describes
these two latter documents as follows:
The Ministerial Decisions and Declarations are twenty-five declarations and decisions
on a wide range of matters, such as measures in favor of least developed countries,
notification procedures, relationship of WTO with the International Monetary Fund
(IMF), and agreements on technical barriers to trade and on dispute settlement.
The Understanding on Commitments in Financial Services dwell on, among other
things, standstill or limitations and qualifications of commitments to existing non-
conforming measures, market access, national treatment, and definitions of non-
resident supplier of financial services, commercial presence and new financial
service.
On December 29, 1994, the present petition was filed. After careful deliberation on
respondents comment and petitioners reply thereto, the Court resolved on December
12, 1995, to give due course to the petition, and the parties thereafter filed their
respective memoranda. The Court also requested the Honorable Lilia R. Bautista, the
Philippine Ambassador to the United Nations stationed in Geneva, Switzerland, to
submit a paper, hereafter referred to as Bautista Paper,[9] for brevity, (1) providing a
historical background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
(a) the petitioners to submit the (1) Senate Committee Report on the matter in
controversy and (2) the transcript of proceedings/hearings in the Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine
treaties signed prior to the Philippine adherence to the WTO Agreement, which
derogate from Philippine sovereignty and (2) copies of the multi-volume WTO
Agreement and other documents mentioned in the Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would consider the case
submitted for resolution. In a Compliance dated September 16, 1996, the Solicitor
General submitted a printed copy of the 36-volume Uruguay Round of Multilateral
Trade Negotiations, and in another Compliance dated October 24, 1996, he listed the
various bilateral or multilateral treaties or international instruments involving
derogation of Philippine sovereignty. Petitioners, on the other hand, submitted their
Compliance dated January 28, 1997, on January 30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the issues as
follows:
A. Whether the petition presents a political question or is otherwise not justiciable.
B. Whether the petitioner members of the Senate who participated in the deliberations
and voting leading to the concurrence are estopped from impugning the validity of the
Agreement Establishing the World Trade Organization or of the validity of the
concurrence.
C. Whether the provisions of the Agreement Establishing the World Trade
Organization contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12,
Article XII, all of the 1987 Philippine Constitution.
D. Whether provisions of the Agreement Establishing the World Trade Organization
unduly limit, restrict and impair Philippine sovereignty specifically the legislative power
which, under Sec. 2, Article VI, 1987 Philippine Constitution is vested in the Congress
of the Philippines;
E. Whether provisions of the Agreement Establishing the World Trade Organization
interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they voted for concurrence in the
ratification of the constitutionally-infirm Agreement Establishing the World Trade
Organization.
G. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they concurred only in the ratification
of the Agreement Establishing the World Trade Organization, and not with the
Presidential submission which included the Final Act, Ministerial Declaration and
Decisions, and the Understanding on Commitments in Financial Services.
On the other hand, the Solicitor General as counsel for respondents synthesized the
several issues raised by petitioners into the following: [10]
1. Whether or not the provisions of the Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments included in
Annexes one (1), two (2) and three (3) of that agreement cited by petitioners directly
contravene or undermine the letter, spirit and intent of Section 19, Article II and
Sections 10 and 12, Article XII of the 1987 Constitution.
2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair
the exercise of legislative power by Congress.
3. Whether or not certain provisions of the Agreement impair the exercise of judicial
power by this Honorable Court in promulgating the rules of evidence.
4. Whether or not the concurrence of the Senate in the ratification by the President of
the Philippines of the Agreement establishing the World Trade Organization implied
rejection of the treaty embodied in the Final Act.
By raising and arguing only four issues against the seven presented by petitioners,
the Solicitor General has effectively ignored three, namely: (1) whether the petition
presents a political question or is otherwise not justiciable; (2) whether petitioner-
members of the Senate (Wigberto E. Taada and Anna Dominique Coseteng) are
estopped from joining this suit; and (3) whether the respondent-members of the
Senate acted in grave abuse of discretion when they voted for concurrence in the
ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved
to deal with these three issues thus:
(1) The political question issue -- being very fundamental and vital, and being a
matter that probes into the very jurisdiction of this Court to hear and decide this case -
- was deliberated upon by the Court and will thus be ruled upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense is waivable and
the respondents have effectively waived it by not pursuing it in any of their pleadings;
in any event, this issue, even if ruled in respondents favor, will not cause the petitions
dismissal as there are petitioners other than the two senators, who are not vulnerable
to the defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the respondent
senators will be taken up as an integral part of the disposition of the four issues raised
by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not
question the locus standi of petitioners. Hence, they are also deemed to have waived
the benefit of such issue. They probably realized that grave constitutional issues,
expenditures of public funds and serious international commitments of the nation are
involved here, and that transcendental public interest requires that the substantive
issues be met head on and decided on the merits, rather than skirted or deflected by
procedural matters.[11]
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE
CONTROVERSY? OTHERWISE STATED, DOES THE PETITION INVOLVE A
POLITICAL QUESTION OVER WHICH THIS COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES
CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF
THE PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT,
RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY
CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE
EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES
ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND
ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT
INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS, AND
THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes
the Constitution, the petition no doubt raises a justiciable controversy. Where an
action of the legislative branch is seriously alleged to have infringed the Constitution,
it becomes not only the right but in fact the duty of the judiciary to settle the
dispute. The question thus posed is judicial rather than political. The duty (to
adjudicate) remains to assure that the supremacy of the Constitution is
upheld.[12] Once a controversy as to the application or interpretation of a constitutional
provision is raised before this Court (as in the instant case), it becomes a legal issue
which the Court is bound by constitutional mandate to decide. [13]
The jurisdiction of this Court to adjudicate the matters [14] raised in the petition is
clearly set out in the 1987 Constitution,[15] as follows:
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government.
The foregoing text emphasizes the judicial departments duty and power to strike
down grave abuse of discretion on the part of any branch or instrumentality of
government including Congress. It is an innovation in our political law.[16] As explained
by former Chief Justice Roberto Concepcion,[17] the judiciary is the final arbiter on the
question of whether or not a branch of government or any of its officials has acted
without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an
abuse of discretion amounting to excess of jurisdiction. This is not only a judicial
power but a duty to pass judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many cases, [18] it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in
matters that involve grave abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain,
speedy or adequate remedy in the ordinary course of law, we have no hesitation at all
in holding that this petition should be given due course and the vital questions raised
therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition
and mandamus are appropriate remedies to raise constitutional issues and to review
and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this,
we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will
not review the wisdom of the decision of the President and the Senate in enlisting the
country into the WTO, or pass upon the merits of trade liberalization as a policy
espoused by said international body. Neither will it rule on the propriety of the
governments economic policy of reducing/removing tariffs, taxes, subsidies,
quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its
constitutional duty to determine whether or not there had been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the Senate in
ratifying the WTO Agreement and its three annexes.
Second Issue: The WTO Agreement and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the Constitution
mandating economic nationalism are violated by the so-called parity provisions and
national treatment clauses scattered in various parts not only of the WTO Agreement
and its annexes but also in the Ministerial Decisions and Declarations and in the
Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec. 19, Article II,
and Secs. 10 and 12, Article XII, of the Constitution, which are worded as follows:
Article II
DECLARATION OF PRINCIPLES AND STATE POLICIES
xx xx xx xx
Sec. 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.
xx xx xx xx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xx xx xx xx
Sec. 10. x x x. The Congress shall enact measures that will encourage the formation
and operation of enterprises whose capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.
xx xx xx xx
Sec. 12. The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make them
competitive.
Petitioners aver that these sacred constitutional principles are desecrated by the
following WTO provisions quoted in their memorandum: [19]
a) In the area of investment measures related to trade in goods (TRIMS, for
brevity):
Article 2
National Treatment and Quantitative Restrictions.
1. Without prejudice to other rights and obligations under GATT 1994. no Member
shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI
of GATT 1994.
2. An Illustrative list of TRIMS that are inconsistent with the obligations of general
elimination of quantitative restrictions provided for in paragraph I of Article XI of GATT
1994 is contained in the Annex to this Agreement. (Agreement on Trade-Related
Investment Measures, Vol. 27, Uruguay Round, Legal Instruments, p.22121,
emphasis supplied).
The Annex referred to reads as follows:
ANNEX
Illustrative List
1. TRIMS that are inconsistent with the obligation of national treatment
provided for in paragraph 4 of Article III of GATT 1994 include those which are
mandatory or enforceable under domestic law or under administrative rulings,
or compliance with which is necessary to obtain an advantage, and which
require:
(a) the purchase or use by an enterprise of products of domestic origin or from any
domestic source, whether specified in terms of particular products, in terms of volume
or value of products, or in terms of proportion of volume or value of its local
production; or
(b) that an enterprises purchases or use of imported products be limited to an amount
related to the volume or value of local products that it exports.
2. TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 include
those which are mandatory or enforceable under domestic laws or under
administrative rulings, or compliance with which is necessary to obtain an advantage,
and which restrict:
(a) the importation by an enterprise of products used in or related to the local
production that it exports;
(b) the importation by an enterprise of products used in or related to its local
production by restricting its access to foreign exchange inflows attributable to the
enterprise; or
(c) the exportation or sale for export specified in terms of particular products, in terms
of volume or value of products, or in terms of a preparation of volume or value of its
local production. (Annex to the Agreement on Trade-Related Investment Measures,
Vol. 27, Uruguay Round Legal Documents, p.22125, emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:
The products of the territory of any contracting party imported into the territory of any
other contracting party shall be accorded treatment no less favorable than that
accorded to like products of national origin in respect of laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. the provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based exclusively on the
economic operation of the means of transport and not on the nationality of the
product. (Article III, GATT 1947, as amended by the Protocol Modifying Part II, and
Article XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph
1(a) of the General Agreement on Tariffs and Trade 1994, Vol. 1, Uruguay Round,
Legal Instruments p.177, emphasis supplied).
b) In the area of trade related aspects of intellectual property rights (TRIPS, for
brevity):
Each Member shall accord to the nationals of other Members treatment no less
favourable than that it accords to its own nationals with regard to the protection of
intellectual property... (par. 1, Article 3, Agreement on Trade-Related Aspect of
Intellectual Property rights, Vol. 31, Uruguay Round, Legal Instruments, p.25432
(emphasis supplied)
(c) In the area of the General Agreement on Trade in Services:
National Treatment
1. In the sectors inscribed in its schedule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than it accords to its own like services
and service suppliers.
2. A Member may meet the requirement of paragraph I by according to services and
service suppliers of any other Member, either formally identical treatment or formally
different treatment to that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be considered to be less
favourable if it modifies the conditions of completion in favour of services or service
suppliers of the Member compared to like services or service suppliers of any other
Member. (Article XVII, General Agreement on Trade in Services, Vol. 28, Uruguay
Round Legal Instruments, p.22610 emphasis supplied).
It is petitioners position that the foregoing national treatment and parity provisions of
the WTO Agreement place nationals and products of member countries on the same
footing as Filipinos and local products, in contravention of the Filipino First policy of
the Constitution. They allegedly render meaningless the phrase effectively controlled
by Filipinos. The constitutional conflict becomes more manifest when viewed in the
context of the clear duty imposed on the Philippines as a WTO member to ensure the
conformity of its laws, regulations and administrative procedures with its obligations
as provided in the annexed agreements.[20] Petitioners further argue that these
provisions contravene constitutional limitations on the role exports play in national
development and negate the preferential treatment accorded to Filipino labor,
domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such
Charter provisions are not self-executing and merely set out general policies; (2) that
these nationalistic portions of the Constitution invoked by petitioners should not be
read in isolation but should be related to other relevant provisions of Art. XII,
particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do
not conflict with the Constitution; and (4) that the WTO Agreement contains sufficient
provisions to protect developing countries like the Philippines from the harshness of
sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles Not Self-Executing
By its very title, Article II of the Constitution is a declaration of principles and state
policies. The counterpart of this article in the 1935 Constitution[21] is called the basic
political creed of the nation by Dean Vicente Sinco.[22] These principles in Article II are
not intended to be self-executing principles ready for enforcement through the
courts.[23] They are used by the judiciary as aids or as guides in the exercise of its
power of judicial review, and by the legislature in its enactment of laws. As held in the
leading case of Kilosbayan, Incorporated vs. Morato,[24] the principles and state
policies enumerated in Article II and some sections of Article XII are not self-
executing provisions, the disregard of which can give rise to a cause of action in the
courts.They do not embody judicially enforceable constitutional rights but guidelines
for legislation.
In the same light, we held in Basco vs. Pagcor[25] that broad constitutional principles
need legislative enactments to implement them, thus:
On petitioners allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12
(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to
state also that these are merely statements of principles and policies. As such, they
are basically not self-executing, meaning a law should be passed by Congress to
clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be self-executing
principles ready for enforcement through the courts. They were rather directives
addressed to the executive and to the legislature. If the executive and the legislature
failed to heed the directives of the article, the available remedy was not judicial but
political. The electorate could express their displeasure with the failure of the
executive and the legislature through the language of the ballot. (Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement of broad
constitutional principles are sourced from basic considerations of due process and the
lack of judicial authority to wade into the uncharted ocean of social and economic
policy making. Mr. Justice Florentino P. Feliciano in his concurring opinion in Oposa
vs. Factoran, Jr.,[26] explained these reasons as follows:
My suggestion is simply that petitioners must, before the trial court, show a more
specific legal right -- a right cast in language of a significantly lower order of generality
than Article II (15) of the Constitution -- that is or may be violated by the actions, or
failures to act, imputed to the public respondent by petitioners so that the trial court
can validly render judgment granting all or part of the relief prayed for. To my mind,
the court should be understood as simply saying that such a more specific legal right
or rights may well exist in our corpus of law, considering the general policy principles
found in the Constitution and the existence of the Philippine Environment Code, and
that the trial court should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a
cause of action be a specific, operable legal right, rather than a constitutional or
statutory policy, for at least two (2) reasons.One is that unless the legal right claimed
to have been violated or disregarded is given specification in operational terms,
defendants may well be unable to defend themselves intelligently and effectively; in
other words, there are due process dimensions to this matter.
The second is a broader-gauge consideration -- where a specific violation of law or
applicable regulation is not alleged or proved, petitioners can be expected to fall back
on the expanded conception of judicial power in the second paragraph of Section 1 of
Article VIII of the Constitution which reads:
Section 1. x x x
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the
Government. (Emphases supplied)
When substantive standards as general as the right to a balanced and healthy
ecology and the right to health are combined with remedial standards as broad
ranging as a grave abuse of discretion amounting to lack or excess of jurisdiction, the
result will be, it is respectfully submitted, to propel courts into the uncharted ocean of
social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making
departments -- the legislative and executive departments -- must be given a real and
effective opportunity to fashion and promulgate those norms and standards, and to
implement them before the courts should intervene.
Economic Nationalism Should Be Read with Other Constitutional Mandates to
Attain Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down
general principles relating to the national economy and patrimony, should be read
and understood in relation to the other sections in said article, especially Secs. 1 and
13 thereof which read:
Section 1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged.
The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop. x x x
xxxxxxxxx
Sec. 13. The State shall pursue a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and
reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national
economic development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the nation
for the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all especially
the underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic
nationalism (1) by expressing preference in favor of qualified Filipinos in the grant of
rights, privileges and concessions covering the national economy and
patrimony[27] and in the use of Filipino labor, domestic materials and locally-produced
goods; (2) by mandating the State to adopt measures that help make them
competitive;[28] and (3) by requiring the State to develop a self-reliant and
independent national economy effectively controlled by Filipinos. [29] In similar
language, the Constitution takes into account the realities of the outside world as it
requires the pursuit of a trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity;[30] and
speaks of industries which are competitive in both domestic and foreign markets as
well as of the protection of Filipino enterprises against unfair foreign competition and
trade practices.
It is true that in the recent case of Manila Prince Hotel vs. Government Service
Insurance System, et al.,[31] this Court held that Sec. 10, second par., Art. XII of the
1987 Constitution is a mandatory, positive command which is complete in itself and
which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any legislation to put
it in operation. It is per se judicially enforceable. However, as the constitutional
provision itself states, it is enforceable only in regard to the grants of rights, privileges
and concessions covering national economy and patrimony and not to every aspect
of trade and commerce. It refers to exceptions rather than the rule. The issue here is
not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather, the
issue is whether, as a rule, there are enough balancing provisions in the Constitution
to allow the Senate to ratify the Philippine concurrence in the WTO Agreement. And
we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods,
services, labor and enterprises, at the same time, it recognizes the need for business
exchange with the rest of the world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign competition and trade practices
that are unfair.[32] In other words, the Constitution did not intend to pursue an
isolationist policy. It did not shut out foreign investments, goods and services in the
development of the Philippine economy. While the Constitution does not encourage
the unlimited entry of foreign goods, services and investments into the country, it
does not prohibit them either. In fact, it allows an exchange on the basis of equality
and reciprocity, frowning only on foreign competition that is unfair.
WTO Recognizes Need to Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some built-in
advantages to protect weak and developing economies, which comprise the vast
majority of its members. Unlike in the UN where major states have permanent seats
and veto powers in the Security Council, in the WTO, decisions are made on the
basis of sovereign equality, with each members vote equal in weight to that of any
other. There is no WTO equivalent of the UN Security Council.
WTO decides by consensus whenever possible, otherwise, decisions of the
Ministerial Conference and the General Council shall be taken by the majority of the
votes cast, except in cases of interpretation of the Agreement or waiver of the
obligation of a member which would require three fourths vote. Amendments would
require two thirds vote in general. Amendments to MFN provisions and the
Amendments provision will require assent of all members. Any member may withdraw
from the Agreement upon the expiration of six months from the date of notice of
withdrawals.[33]
Hence, poor countries can protect their common interests more effectively through
the WTO than through one-on-one negotiations with developed countries. Within the
WTO, developing countries can form powerful blocs to push their economic agenda
more decisively than outside the Organization. This is not merely a matter of practical
alliances but a negotiating strategy rooted in law. Thus, the basic principles
underlying the WTO Agreement recognize the need of developing countries like the
Philippines to share in the growth in international trade commensurate with the needs
of their economic development. These basic principles are found in the preamble[34] of
the WTO Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic endeavour should
be conducted with a view to raising standards of living, ensuring full employment and
a large and steadily growing volume of real income and effective demand, and
expanding the production of and trade in goods and services, while allowing for the
optimal use of the worlds resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the environment and to enhance
the means for doing so in a manner consistent with their respective needs and
concerns at different levels of economic development,
Recognizing further that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure
a share in the growth in international trade commensurate with the needs of their
economic development,
Being desirous of contributing to these objectives by entering into reciprocal and
mutually advantageous arrangements directed to the substantial reduction of tariffs
and other barriers to trade and to the elimination of discriminatory treatment in
international trade relations,
Resolved, therefore, to develop an integrated, more viable and durable multilateral
trading system encompassing the General Agreement on Tariffs and Trade, the
results of past trade liberalization efforts, and all of the results of the Uruguay Round
of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the objectives underlying
this multilateral trading system, x x x. (underscoring supplied.)
Specific WTO Provisos Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent with the
foregoing basic principles, the WTO Agreement grants developing countries a more
lenient treatment, giving their domestic industries some protection from the rush of
foreign competition. Thus, with respect to tariffs in general, preferential treatment is
given to developing countries in terms of the amount of tariff reduction and the period
within which the reduction is to be spread out. Specifically, GATT requires an average
tariff reduction rate of 36% for developed countries to be effected within a period of
six (6) years while developing countries -- including the Philippines -- are required to
effect an average tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce
domestic support to agricultural products by 20% over six (6) years, as compared
to only 13% for developing countries to be effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed
countries to reduce their budgetary outlays for export subsidy by 36% and export
volumes receiving export subsidy by 21% within a period of six (6) years. For
developing countries, however, the reduction rate is only two-thirds of that prescribed
for developed countries and a longer period of ten (10) years within which to effect
such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition
and trade practices including anti-dumping measures, countervailing measures and
safeguards against import surges. Where local businesses are jeopardized by unfair
foreign competition, the Philippines can avail of these measures. There is hardly
therefore any basis for the statement that under the WTO, local industries and
enterprises will all be wiped out and that Filipinos will be deprived of control of the
economy. Quite the contrary, the weaker situations of developing nations like the
Philippines have been taken into account; thus, there would be no basis to say that in
joining the WTO, the respondents have gravely abused their discretion.True, they
have made a bold decision to steer the ship of state into the yet uncharted sea of
economic liberalization. But such decision cannot be set aside on the ground of grave
abuse of discretion, simply because we disagree with it or simply because we believe
only in other economic policies. As earlier stated, the Court in taking jurisdiction of
this case will not pass upon the advantages and disadvantages of trade liberalization
as an economic policy. It will only perform its constitutional duty of determining
whether the Senate committed grave abuse of discretion.
Constitution Does Not Rule Out Foreign Competition
Furthermore, the constitutional policy of a self-reliant and independent national
economy[35] does not necessarily rule out the entry of foreign investments, goods and
services. It contemplates neither economic seclusion nor mendicancy in the
international community. As explained by Constitutional Commissioner Bernardo
Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly
aware of overdependence on external assistance for even its most basic needs. It
does not mean autarky or economic seclusion; rather, it means avoiding mendicancy
in the international community. Independence refers to the freedom from undue
foreign control of the national economy, especially in such strategic industries as in
the development of natural resources and public utilities.[36]
The WTO reliance on most favored nation, national treatment, and trade without
discrimination cannot be struck down as unconstitutional as in fact they are rules of
equality and reciprocity that apply to all WTO members. Aside from envisioning a
trade policy based on equality and reciprocity,[37] the fundamental law encourages
industries that are competitive in both domestic and foreign markets, thereby
demonstrating a clear policy against a sheltered domestic trade environment, but one
in favor of the gradual development of robust industries that can compete with the
best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have
shown capability and tenacity to compete internationally. And given a free trade
environment, Filipino entrepreneurs and managers in Hongkong have demonstrated
the Filipino capacity to grow and to prosper against the best offered under a policy
of laissez faire.
Constitution Favors Consumers, Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any business
or enterprise, nor does it contain any specific pronouncement that Filipino companies
should be pampered with a total
proscription of foreign competition. On the other hand, respondents claim that
WTO/GATT aims to make available to the Filipino consumer the best goods and
services obtainable anywhere in the world at the most reasonable
prices. Consequently, the question boils down to whether WTO/GATT will favor the
general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to
reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare because it will --
as promised by its promoters -- expand the countrys exports and generate more
employment?
Will it bring more prosperity, employment, purchasing power and quality products at
the most reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our policy makers, for
which they are answerable to our people during appropriate electoral exercises. Such
questions and the answers thereto are not subject to judicial pronouncements based
on grave abuse of discretion.
Constitution Designed to Meet Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution was
drafted and ratified in 1987. That does not mean however that the Charter is
necessarily flawed in the sense that its framers might not have anticipated the advent
of a borderless world of business. By the same token, the United Nations was not yet
in existence when the 1935 Constitution became effective. Did that necessarily mean
that the then Constitution might not have contemplated a diminution of the
absoluteness of sovereignty when the Philippines signed the UN Charter, thereby
effectively surrendering part of its control over its foreign relations to the decisions of
various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only
the vagaries of contemporary events. They should be interpreted to cover even future
and unknown circumstances. It is to the credit of its drafters that a Constitution can
withstand the assaults of bigots and infidels but at the same time bend with the
refreshing winds of change necessitated by unfolding events. As one eminent political
law writer and respected jurist[38] explains:
The Constitution must be quintessential rather than superficial, the root and not the
blossom, the base and framework only of the edifice that is yet to rise. It is but the
core of the dream that must take shape, not in a twinkling by mandate of our
delegates, but slowly in the crucible of Filipino minds and hearts, where it will in time
develop its sinews and gradually gather its strength and finally achieve its
substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention, nor can it conjure by mere fiat an
instant Utopia. It must grow with the society it seeks to re-structure and march apace
with the progress of the race, drawing from the vicissitudes of history the dynamism
and vitality that will keep it, far from becoming a petrified rule, a pulsing, living law
attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that (e)ach Member shall ensure the conformity of its
laws, regulations and administrative procedures with its obligations as provided in the
annexed Agreements.[39] Petitioners maintain that this undertaking unduly limits,
restricts and impairs Philippine sovereignty, specifically the legislative power which
under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress
of the Philippines. It is an assault on the sovereign powers of the Philippines because
this means that Congress could not pass legislation that will be good for our national
interest and general welfare if such legislation will not conform with the WTO
Agreement, which not only relates to the trade in goods x x x but also to the flow of
investments and money x x x as well as to a whole slew of agreements on socio-
cultural matters x x x.[40]
More specifically, petitioners claim that said WTO proviso derogates from the power
to tax, which is lodged in the Congress.[41] And while the Constitution allows Congress
to authorize the President to fix tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts, such authority is subject to specified
limits and x x x such limitations and restrictions as Congress may provide, [42] as in
fact it did under Sec. 401 of the Tariff and Customs Code.
Sovereignty Limited by International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners
stressed their arguments on this issue. However, while sovereignty has traditionally
been deemed absolute and all-encompassing on the domestic level, it is however
subject to restrictions and limitations voluntarily agreed to by the Philippines,
expressly or impliedly, as a member of the family of nations. Unquestionably, the
Constitution did not envision a hermit-type isolation of the country from the rest of the
world. In its Declaration of Principles and State Policies, the Constitution adopts the
generally accepted principles of international law as part of the law of the land, and
adheres to the policy of peace, equality, justice, freedom, cooperation and amity, with
all nations."[43] By the doctrine of incorporation, the country is bound by generally
accepted principles of international law, which are considered to be automatically part
of our own laws.[44] One of the oldest and most fundamental rules in international law
is pacta sunt servanda -- international agreements must be performed in good faith. A
treaty engagement is not a mere moral obligation but creates a legally binding
obligation on the parties x x x. A state which has contracted valid international
obligations is bound to make in its legislations such modifications as may be
necessary to ensure the fulfillment of the obligations undertaken. [45]
By their inherent nature, treaties really limit or restrict the absoluteness of
sovereignty. By their voluntary act, nations may surrender some aspects of their state
power in exchange for greater benefits granted by or derived from a convention or
pact. After all, states, like individuals, live with coequals, and in pursuit of mutually
covenanted objectives and benefits, they also commonly agree to limit the exercise of
their otherwise absolute rights. Thus, treaties have been used to record agreements
between States concerning such widely diverse matters as, for example, the lease of
naval bases, the sale or cession of territory, the termination of war, the regulation of
conduct of hostilities, the formation of alliances, the regulation of commercial
relations, the settling of claims, the laying down of rules governing conduct in peace
and the establishment of international organizations.[46] The sovereignty of a state
therefore cannot in fact and in reality be considered absolute. Certain restrictions
enter into the picture: (1) limitations imposed by the very nature of membership in the
family of nations and (2) limitations imposed by treaty stipulations. As aptly put by
John F. Kennedy, Today, no nation can build its destiny alone. The age of self-
sufficient nationalism is over. The age of interdependence is here.[47]
UN Charter and Other Treaties Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter
members, it consented to restrict its sovereign rights under the concept of sovereignty
as auto-limitation.47-A Under Article 2 of the UN Charter, (a)ll members shall give the
United Nations every assistance in any action it takes in accordance with the present
Charter, and shall refrain from giving assistance to any state against which the United
Nations is taking preventive or enforcement action. Such assistance includes
payment of its corresponding share not merely in administrative expenses but also in
expenditures for the peace-keeping operations of the organization. In its advisory
opinion of July 20, 1961, the International Court of Justice held that money used by
the United Nations Emergency Force in the Middle East and in the Congo were
expenses of the United Nations under Article 17, paragraph 2, of the UN
Charter. Hence, all its members must bear their corresponding share in such
expenses. In this sense, the Philippine Congress is restricted in its power to
appropriate. It is compelled to appropriate funds whether it agrees with such peace-
keeping expenses or not. So too, under Article 105 of the said Charter, the UN and its
representatives enjoy diplomatic privileges and immunities, thereby limiting again the
exercise of sovereignty of members within their own territory. Another example:
although sovereign equality and domestic jurisdiction of all members are set forth as
underlying principles in the UN Charter, such provisos are however subject to
enforcement measures decided by the Security Council for the maintenance of
international peace and security under Chapter VII of the Charter. A final example:
under Article 103, (i)n the event of a conflict between the obligations of the Members
of the United Nations under the present Charter and their obligations under any other
international agreement, their obligation under the present charter shall prevail, thus
unquestionably denying the Philippines -- as a member -- the sovereign power to
make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international
pacts -- both bilateral and multilateral -- that involve limitations on Philippine
sovereignty. These are enumerated by the Solicitor General in his Compliance dated
October 24, 1996, as follows:
(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the
Philippines by, among others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private Investment
Corporation of the United States. Likewise, in said convention, wages, salaries and
similar remunerations paid by the United States to its citizens for labor and personal
services performed by them as employees or officials of the United States are exempt
from income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.
(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double
taxation.
(d) Bilateral convention with the French Republic for the avoidance of double taxation.
(e) Bilateral air transport agreement with Korea where the Philippines agreed to
exempt from all customs duties, inspection fees and other duties or taxes aircrafts of
South Korea and the regular equipment, spare parts and supplies arriving with said
aircrafts.
(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt
from customs duties, excise taxes, inspection fees and other similar duties, taxes or
charges fuel, lubricating oils, spare parts, regular equipment, stores on board
Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the Philippines granted
Belgian air carriers the same privileges as those granted to Japanese and Korean air
carriers under separate air service agreements.
(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the
Philippines exempted Israeli nationals from the requirement of obtaining transit or
visitor visas for a sojourn in the Philippines not exceeding 59 days.
(I) Bilateral agreement with France exempting French nationals from the requirement
of obtaining transit and visitor visa for a sojourn not exceeding 59 days.
(j) Multilateral Convention on Special Missions, where the Philippines agreed that
premises of Special Missions in the Philippines are inviolable and its agents can not
enter said premises without consent of the Head of Mission concerned. Special
Missions are also exempted from customs duties, taxes and related charges.
(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines
agreed to be governed by the Vienna Convention on the Law of Treaties.
(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of
the International Court of Justice. The International Court of Justice has jurisdiction in
all legal disputes concerning the interpretation of a treaty, any question of
international law, the existence of any fact which, if established, would constitute a
breach of international obligation.
In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of
its sovereign powers of taxation, eminent domain and police power. The underlying
consideration in this partial surrender of sovereignty is the reciprocal commitment of
the other contracting states in granting the same privilege and immunities to the
Philippines, its officials and its citizens. The same reciprocity characterizes the
Philippine commitments under WTO-GATT.
International treaties, whether relating to nuclear disarmament, human rights, the
environment, the law of the sea, or trade, constrain domestic political sovereignty
through the assumption of external obligations. But unless anarchy in international
relations is preferred as an alternative, in most cases we accept that the benefits of
the reciprocal obligations involved outweigh the costs associated with any loss of
political sovereignty. (T)rade treaties that structure relations by reference to durable,
well-defined substantive norms and objective dispute resolution procedures reduce
the risks of larger countries exploiting raw economic power to bully smaller countries,
by subjecting power relations to some form of legal ordering. In addition, smaller
countries typically stand to gain disproportionately from trade liberalization. This is
due to the simple fact that liberalization will provide access to a larger set of potential
new trading relationship than in case of the larger country gaining enhanced success
to the smaller countrys market.[48]
The point is that, as shown by the foregoing treaties, a portion of sovereignty may be
waived without violating the Constitution, based on the rationale that the Philippines
adopts the generally accepted principles of international law as part of the law of the
land and adheres to the policy of x x x cooperation and amity with all nations.
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic
Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS)[49]intrudes on the power of the Supreme Court to promulgate rules
concerning pleading, practice and procedures.[50]
To understand the scope and meaning of Article 34, TRIPS,[51] it will be fruitful to
restate its full text as follows:
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the infringement of the rights of
the owner referred to in paragraph 1(b) of Article 28, if the subject matter of a patent
is a process for obtaining a product, the judicial authorities shall have the authority to
order the defendant to prove that the process to obtain an identical product is different
from the patented process. Therefore, Members shall provide, in at least one of the
following circumstances, that any identical product when produced without the
consent of the patent owner shall, in the absence of proof to the contrary, be deemed
to have been obtained by the patented process:
(a) if the product obtained by the patented process is new;
(b) if there is a substantial likelihood that the identical product was made by the
process and the owner of the patent has been unable through reasonable efforts to
determine the process actually used.
2. Any Member shall be free to provide that the burden of proof indicated in
paragraph 1 shall be on the alleged infringer only if the condition referred to in
subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is
fulfilled.
3. In the adduction of proof to the contrary, the legitimate interests of defendants in
protecting their manufacturing and business secrets shall be taken into account.
From the above, a WTO Member is required to provide a rule of disputable (note the
words in the absence of proof to the contrary) presumption that a product shown to be
identical to one produced with the use of a patented process shall be deemed to have
been obtained by the (illegal) use of the said patented process, (1) where such
product obtained by the patented product is new, or (2) where there is substantial
likelihood that the identical product was made with the use of the said patented
process but the owner of the patent could not determine the exact process used in
obtaining such identical product. Hence, the burden of proof contemplated by Article
34 should actually be understood as the duty of the alleged patent infringer to
overthrow such presumption. Such burden, properly understood, actually refers to the
burden of evidence (burden of going forward) placed on the producer of the identical
(or fake) product to show that his product was produced without the use of the
patented process.
The foregoing notwithstanding, the patent owner still has the burden of proof since,
regardless of the presumption provided under paragraph 1 of Article 34, such owner
still has to introduce evidence of the existence of the alleged identical product, the
fact that it is identical to the genuine one produced by the patented process and the
fact of newness of the genuine product or the fact of substantial likelihood that the
identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as
the present law on the subject, Republic Act No. 165, as amended, otherwise known
as the Patent Law, provides a similar presumption in cases of infringement of
patented design or utility model, thus:
SEC. 60. Infringement. - Infringement of a design patent or of a patent for utility
model shall consist in unauthorized copying of the patented design or utility model for
the purpose of trade or industry in the article or product and in the making, using or
selling of the article or product copying the patented design or utility model. Identity or
substantial identity with the patented design or utility model shall constitute evidence
of copying. (underscoring supplied)
Moreover, it should be noted that the requirement of Article 34 to provide a disputable
presumption applies only if (1) the product obtained by the patented process is NEW
or (2) there is a substantial likelihood that the identical product was made by the
process and the process owner has not been able through reasonable effort to
determine the process used. Where either of these two provisos does not obtain,
members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.
By and large, the arguments adduced in connection with our disposition of the third
issue -- derogation of legislative power - will apply to this fourth issue also. Suffice it
to say that the reciprocity clause more than justifies such intrusion, if any actually
exists. Besides, Article 34 does not contain an unreasonable burden, consistent as it
is with due process and the concept of adversarial dispute settlement inherent in our
judicial system.
So too, since the Philippine is a signatory to most international conventions on
patents, trademarks and copyrights, the adjustment in legislation and rules of
procedure will not be substantial.[52]
Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other
Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and its
annexes -- but not in the other documents referred to in the Final Act, namely the
Ministerial Declaration and Decisions and the Understanding on Commitments in
Financial Services -- is defective and insufficient and thus constitutes abuse of
discretion. They submit that such concurrence in the WTO Agreement alone is flawed
because it is in effect a rejection of the Final Act, which in turn was the document
signed by Secretary Navarro, in representation of the Republic upon authority of the
President. They contend that the second letter of the President to the Senate[53] which
enumerated what constitutes the Final Act should have been the subject of
concurrence of the Senate.
A final act, sometimes called protocol de clture, is an instrument which records the
winding up of the proceedings of a diplomatic conference and usually includes a
reproduction of the texts of treaties, conventions, recommendations and other acts
agreed upon and signed by the plenipotentiaries attending the conference.[54] It is not
the treaty itself. It is rather a summary of the proceedings of a protracted conference
which may have taken place over several years. The text of the Final Act Embodying
the Results of the Uruguay Round of Multilateral Trade Negotiations is contained in
just one page[55] in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations. By signing said Final Act, Secretary Navarro as representative of the
Republic of the Philippines undertook:
"(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions."
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the
Final Act required from its signatories, namely, concurrence of the Senate in the WTO
Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for
ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT
which provides that representatives of the members can meet to give effect to those
provisions of this Agreement which invoke joint action, and generally with a view to
facilitating the operation and furthering the objectives of this Agreement.[56]
The Understanding on Commitments in Financial Services also approved in
Marrakesh does not apply to the Philippines. It applies only to those 27 Members
which have indicated in their respective schedules of commitments on standstill,
elimination of monopoly, expansion of operation of existing financial service suppliers,
temporary entry of personnel, free transfer and processing of information, and
national treatment with respect to access to payment, clearing systems and
refinancing available in the normal course of business. [57]
On the other hand, the WTO Agreement itself expresses what multilateral
agreements are deemed included as its integral parts, [58] as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional framework for the conduct of trade
relations among its Members in matters to the agreements and associated legal
instruments included in the Annexes to this Agreement.
2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3
(hereinafter referred to as Multilateral Agreements) are integral parts of this
Agreement, binding on all Members.
3. The Agreements and associated legal instruments included in Annex 4 (hereinafter
referred to as Plurilateral Trade Agreements) are also part of this Agreement for those
Members that have accepted them, and are binding on those Members. The
Plurilateral Trade Agreements do not create either obligation or rights for Members
that have not accepted them.
4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A
(hereinafter referred to as GATT 1994) is legally distinct from the General Agreement
on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the
conclusion of the Second Session of the Preparatory Committee of the United
Nations Conference on Trade and Employment, as subsequently rectified, amended
or modified (hereinafter referred to as GATT 1947).
It should be added that the Senate was well-aware of what it was concurring in as
shown by the members deliberation on August 25, 1994. After reading the letter of
President Ramos dated August 11, 1994,[59] the senators of the Republic minutely
dissected what the Senate was concurring in, as follows: [60]
THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in
the first day hearing of this Committee yesterday. Was the observation made by
Senator Taada that what was submitted to the Senate was not the agreement on
establishing the World Trade Organization by the final act of the Uruguay Round
which is not the same as the agreement establishing the World Trade
Organization?And on that basis, Senator Tolentino raised a point of order which,
however, he agreed to withdraw upon understanding that his suggestion for an
alternative solution at that time was acceptable. That suggestion was to treat the
proceedings of the Committee as being in the nature of briefings for Senators until the
question of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting a new... is he making
a new submission which improves on the clarity of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no
misunderstanding, it was his intention to clarify all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and later on Senator Tolentino since
they were the ones that raised this question yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now clearly appear that what is
being submitted to the Senate for ratification is not the Final Act of the Uruguay
Round, but rather the Agreement on the World Trade Organization as well as the
Ministerial Declarations and Decisions, and the Understanding and Commitments in
Financial Services.
I am now satisfied with the wording of the new submission of President Ramos.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator
Tolentino? And after him Senator Neptali Gonzales and Senator Lina.
SEN TOLENTINO, Mr. Chairman, I have not seen the new submission actually
transmitted to us but I saw the draft of his earlier, and I think it now complies with the
provisions of the Constitution, and with the Final Act itself. The Constitution does not
require us to ratify the Final Act. It requires us to ratify the Agreement which is now
being submitted. The Final Act itself specifies what is going to be submitted to with
the governments of the participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a) to submit as
appropriate the WTO Agreement for the consideration of the respective competent
authorities with a view to seeking approval of the Agreement in accordance with their
procedures.
In other words, it is not the Final Act that was agreed to be submitted to the
governments for ratification or acceptance as whatever their constitutional procedures
may provide but it is the World Trade Organization Agreement. And if that is the one
that is being submitted now, I think it satisfies both the Constitution and the Final Act
itself.
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of
record. And they had been adequately reflected in the journal of yesterdays session
and I dont see any need for repeating the same.
Now, I would consider the new submission as an act ex abudante cautela.
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make
any comment on this?
SEN. LINA. Mr. President, I agree with the observation just made by Senator
Gonzales out of the abundance of question. Then the new submission is, I believe,
stating the obvious and therefore I have no further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO Agreement,
petitioners are invoking this Courts constitutionally imposed duty to determine
whether or not there has been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the Senate in giving its concurrence therein via Senate
Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of
discretion may be issued by the Court under Rule 65 of the Rules of Court when it is
amply shown that petitioners have no other plain, speedy and adequate remedy in the
ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction.[61] Mere abuse of discretion is not
enough. It must be grave abuse of discretion as when the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be
so patent and so gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of law.[62] Failure
on the part of the petitioner to show grave abuse of discretion will result in the
dismissal of the petition.[63]
In rendering this Decision, this Court never forgets that the Senate, whose act is
under review, is one of two sovereign houses of Congress and is thus entitled to great
respect in its actions. It is itself a constitutional body independent and coordinate, and
thus its actions are presumed regular and done in good faith. Unless convincing proof
and persuasive arguments are presented to overthrow such presumptions, this Court
will resolve every doubt in its favor. Using the foregoing well-accepted definition of
grave abuse of discretion and the presumption of regularity in the Senates processes,
this Court cannot find any cogent reason to impute grave abuse of discretion to the
Senates exercise of its power of concurrence in the WTO Agreement granted it by
Sec. 21 of Article VII of the Constitution.[64]
It is true, as alleged by petitioners, that broad constitutional principles require the
State to develop an independent national economy effectively controlled by Filipinos;
and to protect and/or prefer Filipino labor, products, domestic materials and locally
produced goods. But it is equally true that such principles -- while serving as judicial
and legislative guides -- are not in themselves sources of causes of action. Moreover,
there are other equally fundamental constitutional principles relied upon by the
Senate which mandate the pursuit of a trade policy that serves the general welfare
and utilizes all forms and arrangements of exchange on the basis of equality and
reciprocity and the promotion of industries which are competitive in both domestic and
foreign markets, thereby justifying its acceptance of said treaty. So too, the alleged
impairment of sovereignty in the exercise of legislative and judicial powers is
balanced by the adoption of the generally accepted principles of international law as
part of the law of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it a part of the law of the land is a
legitimate exercise of its sovereign duty and power. We find no patent and gross
arbitrariness or despotism by reason of passion or personal hostility in such
exercise. It is not impossible to surmise that this Court, or at least some of its
members, may even agree with petitioners that it is more advantageous to the
national interest to strike down Senate Resolution No. 97. But that is not a legal
reason to attribute grave abuse of discretion to the Senate and to nullify its
decision. To do so would constitute grave abuse in the exercise of our own judicial
power and duty.Ineludably, what the Senate did was a valid exercise of its
authority. As to whether such exercise was wise, beneficial or viable is outside the
realm of judicial inquiry and review. That is a matter between the elected policy
makers and the people. As to whether the nation should join the worldwide march
toward trade liberalization and economic globalization is a matter that our people
should determine in electing their policy makers. After all, the WTO Agreement allows
withdrawal of membership, should this be the political desire of a member.

The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an
Asian Renaissance[65] where the East will become the dominant region of the world
economically, politically and culturally in the next century. He refers to the free market
espoused by WTO as the catalyst in this coming Asian ascendancy. There are at
present about 31 countries including China, Russia and Saudi Arabia negotiating for
membership in the WTO. Notwithstanding objections against possible limitations on
national sovereignty, the WTO remains as the only viable structure for multilateral
trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly
enriched with original membership, keenly aware of the advantages and
disadvantages of globalization with its on-line experience, and endowed with a vision
of the future, the Philippines now straddles the crossroads of an international strategy
for economic prosperity and stability in the new millennium. Let the people, through
their duly authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan,
Mendoza, Francisco, Hermosisima, Jr., and Torres, Jr., JJ., concur.

Padilla, and Vitug, JJ., in the result.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 110526 February 10, 1998
ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner,
vs.
PHILIPPINE COCONUT AUTHORITY, respondent.
MENDOZA, J.:
At issue in this case is the validity of a resolution, dated March 24, 1993, of the
Philippine Coconut Authority in which it declares that it will no longer require those
wishing to engage in coconut processing to apply to it for a license or permit as a
condition for engaging in such business.
Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as
APCD) brought this suit for certiorari and mandamus against respondent Philippine
Coconut Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and
the certificates of registration issued under it on the ground that the resolution in
question is beyond the power of the PCA to adopt, and to compel said administrative
agency to comply instead with the mandatory provisions of statutes regulating the
desiccated coconut industry, in particular, and the coconut industry, in general.
As disclosed by the parties' pleadings, the facts are as follows:
On November 5, 1992, seven desiccated coconut processing companies belonging to
the APCD brought suit in the Regional Trial Court, National Capital Judicial Region in
Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for
the establishment of new desiccated coconut processing plants. Petitioner alleged
that the issuance of licenses to the applicants would violate PCA's Administrative
Order No. 02, series of 1991, as the applicants were seeking permits to operate in
areas considered "congested" under the administrative order.1
On November 6, 1992, the trial court issued a temporary restraining order and, on
November 25, 1992, a writ of preliminary injunction, enjoining the PCA from
processing and issuing licenses to Primex Products, Inc., Coco Manila, Superstar
(Candelaria) and Superstar (Davao) upon the posting of a bond in the amount of
P100,000.00.2
Subsequently and while the case was pending in the Regional Trial Court, the
Governing Board of the PCA issued on March 24, 1993 Resolution No. 018-93,
providing for the withdrawal of the Philippine Coconut Authority from all regulation of
the coconut product processing industry. While it continues the registration of coconut
product processors, the registration would be limited to the "monitoring" of their
volumes of production and administration of quality standards. The full text of the
resolution reads:
RESOLUTION NO. 018-93
POLICY DECLARATION DEREGULATING
THE ESTABLISHMENT OF NEW COCONUT
PROCESSING PLANTS
WHEREAS, it is the policy of the State to promote free enterprise unhampered by
protective regulations and unnecessary bureaucratic red tapes;
WHEREAS, the deregulation of certain sectors of the coconut industry, such as
marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of
export and commodity clearances under Executive Order No. 1016, and relaxation of
regulated capacity for the desiccated coconut sector pursuant to Presidential
Memorandum of February 11, 1988, has become a centerpiece of the present
dispensation;
WHEREAS, the issuance of permits or licenses prior to business operation is a form
of regulation which is not provided in the charter of nor included among the powers of
the PCA;
WHEREAS, the Governing Board of PCA has determined to follow and further
support the deregulation policy and effort of the government to promote free
enterprise;
NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that,
henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery,
coconut desiccator, coconut product processor/factory, coconut fiber plant or any
similar coconut processing plant to apply with PCA and the latter shall no longer issue
any form of license or permit as condition prior to establishment or operation of such
mills or plants;
RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the
aforementioned coconut product processors for the purpose of monitoring their
volumes of production, administration of quality standards with the corresponding
service fees/charges.
ADOPTED this 24th day of March 1993, at Quezon City.3
The PCA then proceeded to issue "certificates of registration" to those wishing to
operate desiccated coconut processing plants, prompting petitioner to appeal to the
Office of the President of the Philippines on April 26, 1993 not to approve the
resolution in question. Despite follow-up letters sent on May 25 and June 2, 1993,
petitioner received no reply from the Office of the President. The "certificates of
registration" issued in the meantime by the PCA has enabled a number of new
coconut mills to operate. Hence this petition.
Petitioner alleges:
I indiscriminately to new coconut millers, we hold that petitioner was justified in
RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID FOR
BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN
ADMINISTRATIVE BODY.
II
ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS
WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN
VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW.
III
IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED
THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION
PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826
AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991.
On the other hand, in addition to answering petitioner's arguments, respondent PCA
alleges that this petition should be denied on the ground that petitioner has a pending
appeal before the Office of the President. Respondent accuses petitioner of forum-
shopping in filing this petition and of failing to exhaust available administrative
remedies before coming to this Court. Respondent anchors its argument on the
general rule that one who brings an action under Rule 65 must show that one has no
appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.
I.
The rule of requiring exhaustion of administrative remedies before a party may seek
judicial review, so strenuously urged by the Solicitor General on behalf of respondent,
has obviously no application here. The resolution in question was issued by the PCA
in the exercise of its rule-making or legislative power. However, only judicial review of
decisions of administrative agencies made in the exercise of their quasi-
judicial function is subject to the exhaustion doctrine. The exhaustion doctrine stands
as a bar to an action which is not yet complete4 and it is clear, in the case at bar,
that after its promulgation the resolution of the PCA abandoning regulation of
the desiccated coconut industry became effective. To be sure, the PCA is under
the direct supervision of the President of the Philippines but there is nothing in
P.D. No. 232, P.D. No. 961, P.D. No. 1468 and P.D. No. 1644 defining the powers
and functions of the PCA which requires rules and regulations issued by it to
be approved by the President before they become effective.
In any event, although the APCD has appealed the resolution in question to the
Office of the President, considering the fact that two months after they had sent
their first letter on April 26, 1993 they still had to hear from the President's
office, meanwhile respondent PCA was issuing certificates of registration
filing this case on June 25, 1993.5 Indeed, after writing the Office of the
President on April 26, 19936 petitioner sent inquiries to that office not once, but
twice, on May 26, 19937 and on June 2, 1993,8 but petitioner did not receive any
reply.
II.
We now turn to the merit of the present petition. The Philippine Coconut
Authority was originally created by P.D. 232 on June 30, 1973, to take over the
powers and functions of the Coconut Coordinating Council, the Philippine
Coconut Administration and the Philippine Coconut Research Institute. On
June 11, 1978, by P.D. No. 1468, it was made "an independent public
corporation . . . directly reporting to, and supervised by, the President of the
Philippines,"9 and charged with carrying out the State's policy "to promote the
rapid integrated development and growth of the coconut and other palm oil
industry in all its aspects and to ensure that the coconut farmers become direct
participants in, and beneficiaries of, such development and growth."10 through
a regulatory scheme set up by law.11
Through this scheme, the government, on August 28, 1982, temporarily
prohibited the opening of new coconut processing plants and, four months
later, phased out some of the existing ones in view of overproduction in the
coconut industry which resulted in cut-throat competition, underselling and
smuggling of poor quality products and ultimately in the decline of the export
performance of coconut-based commodities. The establishment of new plants
could be authorized only upon determination by the PCA of the existence of
certain economic conditions and the approval of the President of the
Philippines. Thus, Executive Order No. 826, dated August 28, 1982, provided:
Sec. 1. Prohibition. Except as herein provided, no government agency or
instrumentality shall hereafter authorize, approve or grant any permit or license
for the establishment or operation of new desiccated coconut processing
plants, including the importation of machinery or equipment for the purpose. In
the event of a need to establish a new plant, or expand the capacity, relocate or
upgrade the efficiencies of any existing desiccated plant, the Philippine
Coconut Authority may, upon proper determination of such need and
evaluation of the condition relating to:
a. the existing market demand;
b. the production capacity prevailing in the country or locality;
c. the level and flow of raw materials; and
d. other circumstances which may affect the growth or viability of the industry
concerned,
authorize or grant the application for, the establishment or expansion of
capacity, relocation or upgrading of efficiencies of such desiccated coconut
processing plant, subject to the approval of the President.
On December 6, 1982, a phase-out of some of the existing plants was ordered
by the government after finding that "a mere freeze in the present capacity of
existing plants will not afford a viable solution to the problem considering that
the total available limited market is not adequate to support all the existing
processing plants, making it imperative to reduce the number of existing
processing plants."12 Accordingly, it was ordered:13
Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action
as may be necessary to reduce the number of existing desiccated coconut
processing plants to a level which will insure the survival of the remaining
plants. The Authority is hereby directed to determine which of the existing
processing plants should be phased out and to enter into appropriate contracts
with such plants for the above purpose.
It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87,
authorizing the establishment and operation of additional DCN plants, in view
of the increased demand for desiccated coconut products in the world's
markets, particularly in Germany, the Netherlands and Australia. Even then, the
opening of new plants was made subject to "such implementing guidelines to
be set forth by the Authority" and "subject to the final approval of the
President."
The guidelines promulgated by the PCA, as embodied in Administrative Order
No. 002, series of 1991, inter alia authorized the opening of new plants in "non-
congested areas only as declared by the PCA" and subject to compliance by
applicants with "all procedures and requirements for registration under
Administrative Order No. 003, series of 1981 and this Order." In addition, as the
opening of new plants was premised on the increased global demand for
desiccated coconut products, the new entrants were required to submit sworn
statements of the names and addresses of prospective foreign buyers.
This form of "deregulation" was approved by President Aquino in her
memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory
scheme, the President stated in her memorandum:
It appears that pursuant to Executive Order No. 826 providing measures for the
protection of the Desiccated Coconut Industry, the Philippine Coconut
Authority evaluated the conditions relating to: (a) the existing market demands;
(b) the production capacity prevailing in the country or locality; (c) the level and
flow of raw materials; and (d) other circumstances which may affect the growth
or viability of the industry concerned and that the result of such evaluation
favored the expansion of production and market of desiccated coconut
products.
In view hereof and the favorable recommendation of the Secretary of
Agriculture, the deregulation of the Desiccated Coconut Industry as
recommended in Resolution No. 058-87 adopted by the PCA Governing Board
on October 28, 1987 (sic) is hereby approved.14
These measures the restriction in 1982 on entry into the field, the reduction
the same year of the number of the existing coconut mills and then the lifting of
the restrictions in 1987 were adopted within the framework of regulation as
established by law "to promote the rapid integrated development and growth of
the coconut and other palm oil industry in all its aspects and to ensure that the
coconut farmers become direct participants in, and beneficiaries of, such
development and growth." 15 Contrary to the assertion in the dissent, the power
given to the Philippine Coconut Authority and before it to the Philippine
Coconut Administration "to formulate and adopt a general program of
development for the coconut and other palm oils industry" 16 is not a roving
commission to adopt any program deemed necessary to promote the
development of the coconut and other palm oils industry, but one to be
exercised in the context of this regulatory structure.
In plain disregard of this legislative purpose, the PCA adopted on March 24,
1993 the questioned resolution which allows not only the indiscriminate
opening of new coconut processing plants but the virtual dismantling of the
regulatory infrastructure whereby, forsaking controls theretofore placed in its
keeping, the PCA limits its function to the innocuous one of "monitoring"
compliance by coconut millers with quality standards and volumes of
production. In effect, the PCA would simply be compiling statistical data on
these matters, but in case of violations of standards there would be nothing
much it would do. The field would be left without an umpire who would retire to
the bleachers to become a mere spectator. As the PCA provided in its
Resolution No. 018-93:
NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that,
henceforth, PCA shall no longer require any coconut oil mill, coconut oil
refinery, coconut desiccator, coconut product processor/factory, coconut fiber
plant or any similar coconut processing plant to apply with PCA and the latter
shall no longer issue any form of license or permit as condition prior to
establishment or operation of such mills or plants;
RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering
the aforementioned coconut product processors for the purpose of monitoring
their volumes of production, administration of quality standards with the
corresponding service fees/charges.
The issue is not whether the PCA has the power to adopt this resolution to
carry out its mandate under the law "to promote the accelerated growth and
development of the coconut and other palm oil industry." 17 The issue rather is
whether it can renounce the power to regulate implicit in the law creating it for
that is what the resolution in question actually is.
Under Art. II, 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the
PCA is "To formulate and adopt a general program of development for the
coconut and other palm oil industry in all its aspects." By limiting the purpose
of registration to merely "monitoring volumes of production [and]
administration of quality standards" of coconut processing plants, the PCA in
effect abdicates its role and leaves it almost completely to market forces how
the coconut industry will develop.
Art. II, 3 of P.D. No. 1468 further requires the PCA:
(h) To regulate the marketing and the exportation of copra and its by-products
by establishing standards for domestic trade and export and, thereafter, to
conduct an inspection of all copra and its by-products proposed for export to
determine if they conform to the standards established;
Instead of determining the qualifications of market players and preventing the
entry into the field of those who are unfit, the PCA now relies entirely on
competition with all its wastefulness and inefficiency to do the weeding
out, in its naive belief in survival of the fittest. The result can very well be a
repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting
in cut-throat competition, underselling, the production of inferior products and
the like, which badly affected the foreign trade performance of the coconut
industry.
Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk
other statutory provisions, particularly those of P.D. No. 1644, to wit:
Sec. 1. The Philippine Coconut Authority shall have full power and authority to
regulate the marketing and export of copra, coconut oil and their by-products,
in furtherance of the steps being taken to rationalize the coconut oil milling
industry.
Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine
Coconut Authority may initiate and implement such measures as may be
necessary to attain the rationalization of the coconut oil milling industry,
including, but not limited to, the following measures:
(a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil
and their by-products;
(b) Prescription of quality standards;
(c) Establishment of maximum quantities for particular periods and particular
markets;
(d) Inspection and survey of export shipments through an independent
international superintendent or surveyor.
In the exercise of its powers hereunder, the Philippine Coconut Authority shall
consult with, and be guided by, the recommendation of the coconut farmers,
through corporations owned or controlled by them through the Coconut
Industry Investment Fund and the private corporation authorized to be
organized under Letter of Instructions No. 926.
and the Revised Coconut Code (P.D. No. 1468), Art. II, 3, to wit:
(m) Except in respect of entities owned or controlled by the Government or by
the coconut farmers under Sections 9 and 10, Article III hereof, the Authority
shall have full power and authority to regulate the production, distribution and
utilization of all subsidized coconut-based products, and to require the
submission of such reports or documents as may be deemed necessary by the
Authority to ascertain whether the levy payments and/or subsidy claims are
due and correct and whether the subsidized products are distributed among,
and utilized by, the consumers authorized by the Authority.
The dissent seems to be saying that in the same way that restrictions on entry
into the field were imposed in 1982 and then relaxed in 1987, they can be totally
lifted now without prejudice to reimposing them in the future should it become
necessary to do so. There is really no renunciation of the power to regulate, it
is claimed. Trimming down of PCA's function to registration is not an
abdication of the power to regulate but is regulation itself. But how can this be
done when, under Resolution No. 018-93, the PCA no longer requires a license
as condition for the establishment or operation of a plant? If a number of
processing firms go to areas which are already congested, the PCA cannot
stop them from doing so. If there is overproduction, the PCA cannot order a cut
back in their production. This is because the licensing system is the
mechanism for regulation. Without it the PCA will not be able to regulate
coconut plants or mills.
In the first "whereas" clause of the questioned resolution as set out above, the
PCA invokes a policy of free enterprise that is "unhampered by protective
regulations and unnecessary bureaucratic red tape" as justification for
abolishing the licensing system. There can be no quarrel with the elimination of
"unnecessary red tape." That is within the power of the PCA to do and indeed it
should eliminate red tape. Its success in doing so will be applauded. But free
enterprise does not call for removal of "protective regulations."
Our Constitutions, beginning with the 1935 document, have repudiated laissez-
faire as an economic principle.18 Although the present Constitution enshrines
free enterprise as a policy,19 it nonetheless reserves to the government the
power to intervene whenever necessary to promote the general welfare. This is
clear from the following provisions of Art. XII of the Constitution which, so far
as pertinent, state:
Sec. 6. . . . Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own,
establish, and operate economic enterprises, subject to the duty of the State to
promote distributive justice and to intervene when the common good so
demands.
regulation and left the field to untrammeled competition that is likely to
resurrect the evils of cut-throat competition, underselling and overproduction
which in 1982 required the temporary closing of the field to new players in
order to save the industry.
The PCA cannot rely on the memorandum of then President Aquino for
authority to adopt the resolution in question. As already stated, what President
Aquino approved in 1988 was the establishment and operation of new DCN
plants subject to the guidelines to be drawn by the PCA.20 In the first place, she
could not have intended to amend the several laws already mentioned, which
set up the regulatory system, by a mere memoranda to the PCA. In the second
place, even if that had been her intention, her act would be without effect
considering that, when she issued the memorandum in question on February
11, 1988, she was no longer vested with legislative authority.21
WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all
certificates of registration issued under it are hereby declared NULL and VOID
for having been issued in excess of the power of the Philippine Coconut
Authority to adopt or issue.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban
and Martinez, JJ., concur.

Sec. 19. The State shall regulate or prohibit monopolies when the public
interest so requires. No combinations in restraint of trade or unfair competition
shall be allowed. (Emphasis added).

At all events, any change in policy must be made by the legislative department
of the government. The regulatory system has been set up by law. It is beyond
the power of an administrative agency to dismantle it. Indeed, petitioner
charges the PCA of seeking to render moot a case filed by some of its members
questioning the grant of licenses to certain parties by adopting the resolution
in question. It is alleged that members of petitioner complained to the court that
the PCA had authorized the establishment and operation of new plants in areas
which were already crowded, in violation of its Administrative Order No. 002,
series of 1991. In response, the Regional Trial Court issued a writ of preliminary
injunction, enjoining the PCA from issuing licenses to the private respondent in
that case.

These allegations of petitioner have not been denied here. It would thus seem
that instead of defending its decision to allow new entrants into the field
against petitioner's claim that the PCA decision violated the guidelines in
Administrative Order No. 002, series of 1991, the PCA adopted the resolution in
question to render the case moot. In so doing, the PCA abdicated its function of
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. NO. 156041 February 21, 2007
PEST MANAGEMENT ASSOCIATION OF THE PHILIPPINES (PMAP), represented
by its President, MANUEL J. CHAVEZ, Petitioner,
vs.
FERTILIZER AND PESTICIDE AUTHORITY (FPA), SECRETARY OF THE
DEPARTMENT OF AGRICULTURE, FPA OFFICER- IN-CHARGE CESAR M.
DRILON, AND FPA DEPUTY DIRECTOR DARIO C. SALUBARSE,Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari seeking to set aside the
Decision1 of the Regional Trial Court of Quezon City, Branch 90 (RTC) dated
November 5, 2002.
The case commenced upon petitioners filing of a Petition For Declaratory Relief With
Prayer For Issuance Of A Writ Of Preliminary Injunction And/Or Temporary
Restraining Order with the RTC on January 4, 2002. Petitioner, a non-stock
corporation duly organized and existing under the laws of the Philippines, is an
association of pesticide handlers duly licensed by respondent Fertilizer and Pesticide
Authority (FPA). It questioned the validity of Section 3.12 of the 1987 Pesticide
Regulatory Policies and Implementing Guidelines, which provides thus:
3.12 Protection of Proprietary Data
Data submitted to support the first full or conditional registration of a pesticide
active ingredient in the Philippines will be granted proprietary protection for a
period of seven years from the date of such registration. During this period
subsequent registrants may rely on these data only with third party
authorization or otherwise must submit their own data. After this period, all data
may be freely cited in support of registration by any applicant, provided convincing
proof is submitted that the product being registered is identical or substantially similar
to any current registered pesticide, or differs only in ways that would not significantly
increase the risk of unreasonable adverse effects.
Pesticides granted provisional registration under P.D. 1144 will be considered first
registered in 1977, the date of the Decree.
Pesticide products in which data is still under protection shall be referred to as
proprietary pesticides, and all others as commodity pesticides. (Emphasis supplied)
Petitioner argued that the specific provision on the protection of the proprietary data in
FPAs Pesticide Regulatory Policies and Implementing Guidelines is unlawful for
going counter to the objectives of Presidential Decree No. 1144 (P.D. No. 1144); for
exceeding the limits of delegated authority; and for encroaching on the exclusive
jurisdiction of the Intellectual Property Office.
On November 5, 2002, the RTC dismissed the petition for declaratory relief for lack of
merit. The RTC held that "the FPA did not exceed the limits of its delegated authority
in issuing the aforecited Section 3.12 of the Guidelines granting protection to
proprietary data x x x because the issuance of the aforecited Section was a valid
exercise of its power to regulate, control and develop the pesticide industry under
P.D. 1144"2 and the assailed provision does "not encroach on one of the functions of
the Intellectual Properly Office (IPO)."3
Dissatisfied with the RTC Decision, petitioner resorted to filing this petition for review
on certiorari where the following issues are raised:
I
WHETHER OR NOT RESPONDENT FPA HAS ACTED BEYOND THE SCOPE OF
ITS DELEGATED POWER WHEN IT GRANTED A SEVEN-YEAR PROPRIETARY
PROTECTION TO DATA SUBMITTED TO SUPPORT THE FIRST FULL OR
CONDITIONAL REGISTRATION OF A PESTICIDE INGREDIENT IN THE
PHILIPPINES;
II
WHETHER OR NOT RESPONDENT FPA IS ENCROACHING ON THE EXCLUSIVE
JURISDICTION OF THE INTELLECTUAL PROPERTY OFFICE (IPO) WHEN IT
INCLUDED IN ITS PESTICIDE REGULATORY POLICIES AND IMPLEMENTING
GUIDELINES THE SUBJECT SEVEN-YEAR PROPRIETARY DATA PROTECTION;
III
WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION IS AN UNLAWFUL
RESTRAINT OF FREE TRADE;
IV
WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION RUNS COUNTER
TO THE OBJECTIVES OF P.D. NO. 1144;
V
WHETHER OR NOT THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
90, COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD THE VALIDITY OF
SECTION 3.12 OF THE PESTICIDE REGULATORY POLICIES AND
IMPLEMENTING GUIDELINES ISSUED BY RESPONDENT FPA.
Respondents, on the other hand, maintain that the provision on the protection of
proprietary data in the FPA's Pesticide Regulatory Policies and Implementing
Guidelines is valid and legal as it does not violate the objectives of P.D. No. 1144; the
proprietary data are a substantial asset which must be protected; the protection for a
limited number of years does not constitute unlawful restraint of free trade; and such
provision does not encroach upon the jurisdiction of the Intellectual Property Office.
Respondents expound that since under P.D. No. 1144, the FPA is mandated to
regulate, control and develop the pesticide industry, it was necessary to provide for
such protection of proprietary data, otherwise, pesticide handlers will proliferate to the
the detriment of the industry and the public since the inherent toxicity of pesticides are
hazardous and are potential environmental contaminants.
They also pointed out that the protection under the assailed Pesticide Regulatory
Policies and Implementing Guidelines is warranted, considering that the development
of proprietary data involves an investment of many years and large sums of money,
thus, the data generated by an applicant in support of his application for registration
are owned and proprietary to him. Moreover, since the protection accorded to the
proprietary data is limited in time, then such protection is reasonable and does not
constitute unlawful restraint of trade.
Lastly, respondents emphasize that the provision on protection of proprietary data
does not usurp the functions of the Intellectual Property Office (IPO) since a patent
and data protection are two different matters. A patent prohibits all unlicensed
making, using and selling of a particular product, while data protection accorded by
the FPA merely prevents copying or unauthorized use of an applicant's data, but any
other party may independently generate and use his own data. It is further argued
that under Republic Act No. 8293 (R.A. No. 8293), the grant of power to the IPO to
administer and implement State policies on intellectual property is not exclusionary as
the IPO is even allowed to coordinate with other government agencies to formulate
and implement plans and policies to strengthen the protection of intellectual property
rights.
The petition is devoid of merit.
The law being implemented by the assailed Pesticide Regulatory Policies and
Implementing Guidelines is P.D. No. 1144, entitled Creating the Fertilizer and
Pesticide Authority and Abolishing the Fertilizer Industry Authority. As stated in the
Preamble of said decree, "there is an urgent need to create a technically-oriented
government authority equipped with the required expertise to regulate, control and
develop both the fertilizer and the pesticide industries." (Underscoring supplied) The
decree further provided as follows:
Section 6. Powers and Functions. The FPA shall have jurisdiction, over all existing
handlers of pesticides, fertilizers and other agricultural chemical inputs. The FPA shall
have the following powers and functions:
I. Common to Fertilizers, Pesticides and other Agricultural Chemicals
xxx
4. To promulgate rules and regulations for the registration and licensing of handlers of
these products, collect fees pertaining thereto, as well as the renewal, suspension,
revocation, or cancellation of such registration or licenses and such other rules and
regulations as may be necessary to implement this Decree;
xxx
Section 7. Power to Issue Rules and Regulations to Implement Decree. The FPA is
hereby authorized to issue or promulgate rules and regulations to implement, and
carry out the purposes and provisions of this Decree.
Did the FPA go beyond its delegated power and undermine the objectives of P.D. No.
1144 by issuing regulations that provide for protection of proprietary data? The
answer is in the negative.
Under P.D. No. 1144, the FPA is given the broad power to issue rules and regulations
to implement and carry out the purposes and provisions of said decree, i.e., to
regulate, control and develop the pesticide industry. In furtherance of such ends, the
FPA sees the protection of proprietary data as one way of fulfilling its mandate.
In Republic v. Sandiganbayan,4 the Court emphasized that:
x x x [t]he interpretation of an administrative government agency, which is
tasked to implement a statute is generally accorded great respect and
ordinarily controls the construction of the courts. The reason behind this rule was
explained in Nestle Philippines, Inc. vs. Court of Appeals in this wise:
The rationale for this rule relates not only to the emergence of the multifarious needs
of a modern or modernizing society and the establishment of diverse administrative
agencies for addressing and satisfying those needs; it also relates to the
accumulation of experience and growth of specialized capabilities by the
administrative agency charged with implementing a particular statute. In Asturias
Sugar Central, Inc. vs. Commissioner of Customs, the Court stressed that executive
officials are presumed to have familiarized themselves with all the
considerations pertinent to the meaning and purpose of the law, and to have
formed an independent, conscientious and competent expert opinion thereon.
The courts give much weight to the government agency officials charged with
the implementation of the law, their competence, expertness, experience and
informed judgment, and the fact that they frequently are the drafters of the law
they interpret."
x x x.5 [Emphasis supplied]
Verily, in this case, the Court acknowledges the experience and expertise of FPA
officials who are best qualified to formulate ways and means of ensuring the quality
and quantity of pesticides and handlers thereof that should enter the Philippine
market, such as giving limited protection to proprietary data submitted by applicants
for registration. The Court ascribes great value and will not disturb the FPA's
determination that one way of attaining the purposes of its charter is by granting such
protection, specially where there is nothing on record which shows that said
administrative agency went beyond its delegated powers.
explained and proven by competent evidence just exactly how such protective
regulation would result in the restraint of trade.
In sum, the assailed provision in the 1987 Pesticide Regulatory Policies and
Implementing Guidelines granting protection to proprietary data is well within the
authority of the FPA to issue so as to carry out its purpose of controlling, regulating
and developing the pesticide industry.
WHEREFORE, the petition is DENIED. The Decision of the Regional Trial Court of
Quezon City, Branch 90, in SP. Civil Case No. Q-01-42790 is AFFIRMED.
SO ORDERED.

Moreover, petitioner has not succeeded in convincing the Court that the provision in
question has legal infirmities.1awphi1.net

There is no encroachment upon the powers of the IPO granted under R.A. No. 8293,
otherwise known as the Intellectual Property Code of the Philippines. Section 5
thereof enumerates the functions of the IPO. Nowhere in said provision does it state
nor can it be inferred that the law intended the IPO to have the exclusive authority to
protect or promote intellectual property rights in the Philippines. On the contrary,
paragraph (g) of said Section even provides that the IPO shall "[c]oordinate with other
government agencies and the private sector efforts to formulate and implement plans
and policies to strengthen the protection of intellectual property rights in the country."
Clearly, R.A. No. 8293 recognizes that efforts to fully protect intellectual property
rights cannot be undertaken by the IPO alone. Other agencies dealing with
intellectual property rights are, therefore, not precluded from issuing policies,
guidelines and regulations to give protection to such rights.

There is also no evidence whatsoever to support petitioner's allegation that the grant
of protection to proprietary data would result in restraining free trade. Petitioner did
not adduce any reliable data to prove its bare allegation that the protection of
proprietary data would unduly restrict trade on pesticides. Furthermore, as held
in Association of Philippine Coconut Desiccators v. Philippine Coconut
Authority,6 despite the fact that "our present Constitution enshrines free enterprise as
a policy, it nonetheless reserves to the government the power to intervene whenever
necessary to promote the general welfare." There can be no question that the
unregulated use or proliferation of pesticides would be hazardous to our environment.
Thus, in the aforecited case, the Court declared that "free enterprise does not call for
removal of protective regulations."7 More recently, in Coconut Oil Refiners
Association, Inc. v. Torres,8 the Court held that "[t]he mere fact that incentives and
privileges are granted to certain enterprises to the exclusion of others does not render
the issuance unconstitutional for espousing unfair competition." It must be clearly
EN BANC Respondents. Promulgated:

REPRESENTATIVES GERARDO S. G.R. No. 143855 September 21, 2010

ESPINA, ORLANDO FUA, JR., PROSPERO AMATONG, ROBERT ACE S. x --------------------------------------------------------------------------------------- x

BARBERS, RAUL M. GONZALES, PROSPERO PICHAY, JUAN MIGUEL ZUBIRI
and FRANKLIN BAUTISTA, DECISION

Petitioners, Present:

CORONA, C.J., ABAD, J.:

CARPIO,

CARPIO MORALES,

VELASCO, JR.,* This case calls upon the Court to exercise its power of judicial review and determine
the constitutionality of the Retail Trade Liberalization Act of 2000, which has been
NACHURA,* assailed as in breach of the constitutional mandate for the development of a self-
reliant and independent national economy effectively controlled by Filipinos.
LEONARDO-DE CASTRO,*

- versus - BRION,*
The Facts and the Case
PERALTA,
On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.)
BERSAMIN, 8762, also known as the Retail Trade Liberalization Act of 2000. It expressly repealed
R.A. 1180, which absolutely prohibited foreign nationals from engaging in the retail
DEL CASTILLO, trade business. R.A. 8762 now allows them to do so under four categories:

ABAD,

VILLARAMA, JR.,
Category A Less than Exclusively for Filipino
citizens and corporations
PEREZ,
US$2,500,000.00 wholly owned by Filipino
MENDOZA,* and citizens.

SERENO,** JJ. Category B US$2,500,000.00 up but For the first two years of
less than US$7,500,000.00 R.A. 8762s effectivity,
HON. RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR ROXAS foreign ownership is
(Secretary of Trade and Industry), HON. FELIPE MEDALLA (Secretary of allowed up to 60%. After
National Economic and Development Authority), GOV. RAFAEL the two-year period, 100%
BUENAVENTURA (Bangko Sentral ng Pilipinas) and HON. LILIA BAUTISTA foreign equity shall be
(Chairman, Securities and Exchange Commission), allowed.
 Category C US$7,500,000.00 or more May be wholly owned by
foreigners. Foreign
investments for
establishing a store in
Categories B and C shall
not be less than the
equivalent in Philippine
Pesos of US$830,000.00.
Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-
sari store vendors, destroy self-employment, and bring about more unemployment.
Fourth, the World Bank-International Monetary Fund had improperly imposed the
passage of R.A. 8762 on the government as a condition for the release of certain
loans.

Category D US$250,000.00 per store May be wholly owned by

of foreign enterprises
specializing in high-end or
luxury products
foreigners.
Fifth, there is a clear and present danger that the law would promote monopolies or
combinations in restraint of trade.

Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary
Mar Roxas, National Economic and Development Authority (NEDA) Secretary Felipe
Medalla, Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities and
R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and
Exchange Commission Chairman Lilia Bautista countered that:
now reside in the Philippines, to engage in the retail trade business with the same
rights as Filipino citizens.

On October 11, 2000 petitioners Magtanggol T. Gunigundo I, Michael T.
Defensor, Gerardo S. Espina, Benjamin S. Lim, Orlando Fua, Jr., Prospero Amatong,
Sergio Apostol,Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales, Jaime
Jacob, Apolinario Lozada, Jr., Leonardo Montemayor, Ma. Elena Palma-Gil, Prospero
Pichay, Juan Miguel Zubiri and Franklin Bautista, all members of the House of
Representatives, filed the present petition, assailing the constitutionality of R.A. 8762
on the following grounds:
First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution which
enjoins the State to place the national economy under the control of Filipinos to
achieve equal distribution of opportunities, promote industrialization and full
employment, and protect Filipino enterprise against unfair competition and trade
policies.
First, petitioners have no legal standing to file the petition. They cannot invoke the
fact that they are taxpayers since R.A. 8762 does not involve the disbursement of
public funds. Nor can they invoke the fact that they are members of Congress since
they made no claim that the law infringes on their right as legislators.
Second, the petition does not involve any justiciable controversy. Petitioners of
course claim that, as members of Congress, they represent the small retail vendors in
their respective districts but the petition does not allege that the subject law violates
the rights of those vendors.
Third, petitioners have failed to overcome the presumption of constitutionality of R.A.
8762. Indeed, they could not specify how the new law violates the constitutional
provisions they cite. Sections 9, 19, and 20 of Article II of the Constitution are not self-
executing provisions that are judicially demandable.

Second, the implementation of R.A. 8762 would lead to alien control of the retail
trade, which taken together with alien dominance of other areas of business, would Fourth, the Constitution mandates the regulation but not the prohibition of foreign
result in the loss of effective Filipino control of the economy. investments. It directs Congress to reserve to Filipino citizens certain areas of
investments upon the recommendation of the NEDA and when the national interest
so dictates. But the Constitution leaves to the discretion of the Congress whether or
not to make such reservation. It does not prohibit Congress from enacting laws
allowing the entry of foreigners into certain industries not reserved by the Constitution
to Filipino citizens.
The Issues Presented
Simplified, the case presents two issues:
1. Whether or not petitioner lawmakers have the legal standing to challenge the
constitutionality of R.A. 8762; and
2. Whether or not R.A. 8762 is unconstitutional.
The Courts Ruling
One. The long settled rule is that he who challenges the validity of a law must have a
standing to do so.[1] Legal standing or locus standi refers to the right of a party to
come to a court of justice and make such a challenge. More particularly, standing
refers to his personal and substantial interest in that he has suffered or will suffer
direct injury as a result of the passage of that law.[2] To put it another way, he must
show that he has been or is about to be denied some right or privilege to which he is
lawfully entitled or that he is about to be subjected to some burdens or penalties by
reason of the law he complains of.[3]
Here, there is no clear showing that the implementation of the Retail Trade
Liberalization Act prejudices petitioners or inflicts damages on them, either as
taxpayers[4] or as legislators.[5] Still the Court will resolve the question they raise since
the rule on standing can be relaxed for nontraditional plaintiffs like ordinary citizens,
taxpayers, and legislators when as in this case the public interest so requires or the
matter is of transcendental importance, of overarching significance to society, or of
paramount public interest.[6]
Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987
Constitution for the State to develop a self-reliant and independent national economy
effectively controlled by Filipinos. They invoke the provisions of the Declaration of
Principles and State Policies under Article II of the 1987 Constitution, which read as
follows:
Section 9. The State shall promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free the people from
poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.
xxxx
Section 19. The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos.
Section 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
Petitioners also invoke the provisions of the National Economy and Patrimony under
Article XII of the 1987 Constitution, which reads:
Section 10. The Congress shall, upon recommendation of the economic and
planning agency, when the national interest dictates, reserve to citizens of the
Philippines or to corporations or associations at least sixty per centum of
whose capital is owned by such citizens, or such higher percentage as
Congress may prescribe, certain areas of investments. The Congress shall
enact measures that will encourage the formation and operation of enterprises
whose capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national
economy and patrimony, the State shall give preference to qualified Filipinos.
The State shall regulate and exercise authority over foreign investments within
its national jurisdiction and in accordance with its national goals and priorities.
xxxx
Section 12. The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures that help
make them competitive.
Section 13. The State shall pursue a trade policy that serves the general welfare
and utilizes all forms and arrangements of exchange on the basis of equality
and reciprocity.
But, as the Court explained in Taada v. Angara,[7] the provisions of Article II of the
1987 Constitution, the declarations of principles and state policies, are not self-
executing.Legislative failure to pursue such policies cannot give rise to a cause of
action in the courts.
The Court further explained in Taada that Article XII of the 1987 Constitution lays
down the ideals of economic nationalism: (1) by expressing preference in favor of
qualified Filipinos in the grant of rights, privileges and concessions covering the
national economy and patrimony and in the use of Filipino labor, domestic materials
and locally-produced goods; (2) by mandating the State to adopt measures that help
make them competitive; and (3) by requiring the State to develop a self-reliant and
independent national economy effectively controlled by Filipinos. [8]
In other words, while Section 19, Article II of the 1987 Constitution requires the
development of a self-reliant and independent national economy effectively controlled
by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the
economic environment. The objective is simply to prohibit foreign powers or interests
from maneuvering our economic policies and ensure that Filipinos are given
preference in all areas of development.
Indeed, the 1987 Constitution takes into account the realities of the outside world as it
requires the pursuit of a trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity; and
speaks of industries which are competitive in both domestic and foreign markets as
well as of the protection of Filipino enterprises against unfair foreign competition and
trade practices. Thus, while the Constitution mandates a bias in favor of Filipino
goods, services, labor and enterprises, it also recognizes the need for business
exchange with the rest of the world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign competition and trade practices
that are unfair.[9]
In other words, the 1987 Constitution does not rule out the entry of foreign
investments, goods, and services. While it does not encourage their unlimited entry
into the country, it does not prohibit them either. In fact, it allows an exchange on the
basis of equality and reciprocity, frowning only on foreign competition that is
unfair.[10] The key, as in all economies in the world, is to strike a balance between
protecting local businesses and allowing the entry of foreign investments and
services.
More importantly, Section 10, Article XII of the 1987 Constitution gives Congress the
discretion to reserve to Filipinos certain areas of investments upon the
recommendation of the NEDA and when the national interest requires. Thus,
Congress can determine what policy to pass and when to pass it depending on the
economic exigencies. It can enact laws allowing the entry of foreigners into certain
industries not reserved by the Constitution to Filipino citizens. In this case, Congress
has decided to open certain areas of the retail trade business to foreign investments
instead of reserving them exclusively to Filipino citizens. The NEDA has not opposed
such policy.
The control and regulation of trade in the interest of the public welfare is of course an
exercise of the police power of the State. A persons right to property, whether he is a
Filipino citizen or foreign national, cannot be taken from him without due process of
law. In 1954, Congress enacted the Retail Trade Nationalization Act or R.A. 1180 that
restricts the retail business to Filipino citizens. In denying the petition assailing the
validity of such Act for violation of the foreigners right to substantive due process of
law, the Supreme Court held that the law constituted a valid exercise of police
power.[11] The State had an interest in preventing alien control of the retail trade and
R.A. 1180 was reasonably related to that purpose. That law is not arbitrary.

Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the
restraint on the foreigners right to property or to engage in an ordinarily lawful
business, it cannot be said that the law amounts to a denial of the Filipinos right to
property and to due process of law. Filipinos continue to have the right to engage in
the kinds of retail business to which the law in question has permitted the entry of
foreign investors.

Certainly, it is not within the province of the Court to inquire into the wisdom of R.A.
8762 save when it blatantly violates the Constitution. But as the Court has said, there
is no showing that the law has contravened any constitutional mandate. The Court is
not convinced that the implementation of R.A. 8762 would eventually lead to alien
control of the retail trade business. Petitioners have not mustered any concrete and
strong argument to support its thesis. The law itself has provided strict safeguards on
foreign participation in that business. Thus

First, aliens can only engage in retail trade business subject to the categories above-
enumerated; Second, only nationals from, or juridical entities formed or incorporated
in countries which allow the entry of Filipino retailers shall be allowed to engage in
retail trade business; and Third, qualified foreign retailers shall not be allowed to
engage in certain retailing activities outside their accredited stores through the use of
mobile or rolling stores or carts, the use of sales representatives, door-to-door selling,
restaurants and sari-sari stores and such other similar retailing activities.

In sum, petitioners have not shown how the retail trade liberalization has prejudiced
and can prejudice the local small and medium enterprises since its implementation
about a decade ago.

WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO
D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M.
ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I.
LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J. PRESTOSA,
EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS
JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS'
COMMITTEE, INC., Victorias Mill District, Victorias, Negros
Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE
OF THE PRESIDENT, and Messrs. SALVADOR TALENTO, JAIME ABOGADO,
CONRADO AVANCENA and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK
OF THE PHILIPPINES, respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor. The
two wrestled mightily and Hercules flung his adversary to the ground thinking him
dead, but Antaeus rose even stronger to resume their struggle. This happened
several times to Hercules' increasing amazement. Finally, as they continued
grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never
die as long as any part of his body was touching his Mother Earth. Thus forewarned,
Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil, and
crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch
even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus need the
sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a slogan.
Through the brooding centuries, it has become a battle-cry dramatizing the
increasingly urgent demand of the dispossessed among us for a plot of earth as their
place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice
to "insure the well-being and economic security of all the people," 1 especially the less
privileged. In 1973, the new Constitution affirmed this goal adding specifically that
"the State shall regulate the acquisition, ownership, use, enjoyment and disposition of
private property and equitably diffuse property ownership and profits." 2 Significantly,
there was also the specific injunction to "formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it
also adopted one whole and separate Article XIII on Social Justice and Human
Rights, containing grandiose but undoubtedly sincere provisions for the uplift of the
common people. These include a call in the following words for the adoption by the
State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform
Code, had already been enacted by the Congress of the Philippines on August 8,
1963, in line with the above-stated principles. This was substantially superseded
almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972,
along with martial law, to provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum retention limits for
landowners.
The people power revolution of 1986 did not change and indeed even energized the
thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino
issued E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D.
No. 27 and providing for the valuation of still unvalued lands covered by the decree as
well as the manner of their payment. This was followed on July 22, 1987 by
Presidential Proclamation No. 131, instituting a comprehensive agrarian reform
program (CARP), and E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines
took over legislative power from the President and started its own deliberations,
including extensive public hearings, on the improvement of the interests of farmers.
The result, after almost a year of spirited debate, was the enactment of R.A. No.
6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, which
President Aquino signed on June 10, 1988. This law, while considerably changing the
earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
they are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common
legal questions, including serious challenges to the constitutionality of the several
measures mentioned above. They will be the subject of one common discussion and
resolution, The different antecedents of each case will require separate treatment,
however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228
and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and
owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by
four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were
declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D.
No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds
inter alia of separation of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power when she promulgated
E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section 4,
of the Constitution, for failure to provide for retention limits for small landowners.
Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.
In connection with the determination of just compensation, the petitioners argue that
the same may be made only by a court of justice and not by the President of the
Philippines. They invoke the recent cases of EPZA v. Dulay 5 andManotok v. National
Food Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights
is payable in money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also
deprives the petitioners of their property rights as protected by due process. The
equal protection clause is also violated because the order places the burden of
solving the agrarian problems on the owners only of agricultural lands. No similar
obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to
be the owners of the lands occupied by them, E.O. No. 228 ignored judicial
prerogatives and so violated due process. Worse, the measure would not solve the
agrarian problem because even the small farmers are deprived of their lands and the
retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been
upheld in the earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and
Association of Rice and Corn Producers of the Philippines, Inc. v. The National Land
Reform Council. 9 The determination of just compensation by the executive
authorities conformably to the formula prescribed under the questioned order is at
best initial or preliminary only. It does not foreclose judicial intervention whenever
sought or warranted. At any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the Department of Agrarian
Reform. The petitioners are also not proper parties because the lands owned by them
do not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not
provide for retention limits on tenanted lands and that in any event their petition is a
class suit brought in behalf of landowners with landholdings below 24 hectares. They
maintain that the determination of just compensation by the administrative authorities
is a final ascertainment. As for the cases invoked by the public respondent, the
constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was
decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27,
E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly repealed by
R.A. No. 6657. Nevertheless, this statute should itself also be declared
unconstitutional because it suffers from substantially the same infirmities as the
earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente
Cruz, owner of a 1. 83- hectare land, who complained that the DAR was insisting on
the implementation of P.D. No. 27 and E.O. No. 228 despite a compromise
agreement he had reached with his tenant on the payment of rentals. In a subsequent
motion dated April 10, 1989, he adopted the allegations in the basic amended petition
that the above- mentioned enactments have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an
organization composed of 1,400 planter-members. This petition seeks to prohibit the
implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform
Program as decreed by the Constitution belongs to Congress and not the President.
Although they agree that the President could exercise legislative power until the
Congress was convened, she could do so only to enact emergency measures during
the transition period. At that, even assuming that the interim legislative power of the
President was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to
be annulled for violating the constitutional provisions on just compensation, due
process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the
Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian
Reform Program from 1987 to 1992 which shall be sourced from the receipts of the
sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such
other sources as government may deem appropriate. The amounts collected and
accruing to this special fund shall be considered automatically appropriated for the
purpose authorized in this Proclamation the amount appropriated is in futuro, not in
esse. The money needed to cover the cost of the contemplated expropriation has yet
to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just
compensation as it is traditionally understood, i.e., with money and in full, but no such
payment is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6,
thereof provides that the Land Bank of the Philippines "shall compensate the
landowner in an amount to be established by the government, which shall be based
on the owner's declaration of current fair market value as provided in Section 4
hereof, but subject to certain controls to be defined and promulgated by the
Presidential Agrarian Reform Council." This compensation may not be paid fully in
money but in any of several modes that may consist of part cash and part bond, with
interest, maturing periodically, or direct payment in cash or bond as may be mutually
agreed upon by the beneficiary and the landowner or as may be prescribed or
approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was
made to make a careful study of the sugar planters' situation. There is no tenancy
problem in the sugar areas that can justify the application of the CARP to them. To
the extent that the sugar planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems exclusively their own, their
right to equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of
Sugarcane Planters (NASP) which claims a membership of at least 20,000 individual
sugar planters all over the country. On September 10, 1987, another motion for
intervention was filed, this time by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform
Program and that, in any event, the appropriation is invalid because of uncertainty in
the amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O.
No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount. This is not allowed.
Furthermore, the stated initial amount has not been certified to by the National
Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by
clear and convincing evidence the necessity for the exercise of the powers of eminent
domain, and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the
expropriation of the said land for an amount equal to the government assessor's
valuation of the land for tax purposes. On the other hand, if the landowner declares
his own valuation he is unjustly required to immediately pay the corresponding taxes
on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the
necessity for the expropriation as explained in the "whereas" clauses of the
Proclamation and submits that, contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on the people's opinion
thereon are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed
to show that they belong to a different class and should be differently treated. The
Comment also suggests the possibility of Congress first distributing public agricultural
lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the
payment of public money without the corresponding appropriation. There is no rule
that only money already in existence can be the subject of an appropriation law.
Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although
denominated as an initial amount, is actually the maximum sum appropriated. The
word "initial" simply means that additional amounts may be appropriated later when
necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own
behalf, assailing the constitutionality of E.O. No. 229. In addition to the arguments
already raised, Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in
violation of due process and the requirement for just compensation, placed his
landholding under the coverage of Operation Land Transfer. Certificates of Land
Transfer were subsequently issued to the private respondents, who then refused
payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small
landholding under Operation Land transfer and asked for the recall and cancellation
of the Certificates of Land Transfer in the name of the private respondents. He claims
that on December 24, 1986, his petition was denied without hearing. On February 17,
1987, he filed a motion for reconsideration, which had not been acted upon when
E.O. Nos. 228 and 229 were issued. These orders rendered his motion moot and
academic because they directly effected the transfer of his land to the private
respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before
Congress convened is anomalous and arbitrary, besides violating the doctrine of
separation of powers. The legislative power granted to the President under the
Transitory Provisions refers only to emergency measures that may be promulgated in
the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due
process of law and to the retention of his small parcels of riceholding as guaranteed
under Article XIII, Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of E.O. No. 228 declaring
that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972
shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the
inclusion of even small landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because
the motion for reconsideration filed with the Minister of Agrarian Reform is still
unresolved. As for the validity of the issuance of E.O. Nos. 228 and 229, he argues
that they were enacted pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first
Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was deemed
the owner of the land he was tilling. The leasehold rentals paid after that date should
therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed
was resolved on December 14, 1987. An appeal to the Office of the President would
be useless with the promulgation of E.O. Nos. 228 and 229, which in effect
sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to
owners of rice and corn lands not exceeding seven hectares as long as they are
cultivating or intend to cultivate the same. Their respective lands do not exceed the
statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be
ejected or removed from his farmholding until such time as the respective rights of the
tenant- farmers and the landowner shall have been determined in accordance with
the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their
right of retention because the Department of Agrarian Reform has so far not issued
the implementing rules required under the above-quoted decree. They therefore ask
the Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended
by LOI 474 removing any right of retention from persons who own other agricultural
lands of more than 7 hectares in aggregate area or lands used for residential,
commercial, industrial or other purposes from which they derive adequate income for
their family. And even assuming that the petitioners do not fall under its terms, the
regulations implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small
Landowners, with an accompanying Retention Guide Table), Memorandum Circular
No. 11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474),
Memorandum Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines
on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to
file the corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated
this case notwithstanding the pendency of their appeal to the President of the
Philippines. Moreover, the issuance of the implementing rules, assuming this has not
yet been done, involves the exercise of discretion which cannot be controlled through
the writ of mandamus. This is especially true if this function is entrusted, as in this
case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable
to them because they do not own more than seven hectares of agricultural land.
Moreover, assuming arguendo that the rules were intended to cover them also, the
said measures are nevertheless not in force because they have not been published
as required by law and the ruling of this Court in Tanada v. Tuvera.10 As for LOI 474,
the same is ineffective for the additional reason that a mere letter of instruction could
not have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the
three departments of the government, the judiciary is nonetheless vested with the
power to annul the acts of either the legislative or the executive or of both when not
conformable to the fundamental law. This is the reason for what some quarters call
the doctrine of judicial supremacy. Even so, this power is not lightly assumed or
readily exercised. The doctrine of separation of powers imposes upon the courts a
proper restraint, born of the nature of their functions and of their respect for the other
departments, in striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to
sustain. The theory is that before the act was done or the law was enacted, earnest
studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of
the Supreme Court who took part in the deliberations and voted on the issue during
their session en banc.11 And as established by judge made doctrine, the Court will
assume jurisdiction over a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first satisfied. Thus, there must
be an actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases
before us, we hold that the same is satisfied by the petitioners and intervenors
because each of them has sustained or is in danger of sustaining an immediate injury
as a result of the acts or measures complained of. 13 And even if, strictly speaking,
they are not covered by the definition, it is still within the wide discretion of the Court
to waive the requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed
to question the constitutionality of several executive orders issued by President
Quirino although they were invoking only an indirect and general interest shared in
common with the public. The Court dismissed the objection that they were not proper
parties and ruled that "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure." We have since then applied this exception in many other
cases. 15
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not hesitate to
declare a law or act invalid when it is convinced that this must be done. In arriving at
this conclusion, its only criterion will be the Constitution as God and its conscience
give it the light to probe its meaning and discover its purpose. Personal motives and
political considerations are irrelevancies that cannot influence its decision.
Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not
hesitate to "make the hammer fall, and heavily," to use Justice Laurel's pithy
language, where the acts of these departments, or of any public official, betray the
people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
... when the judiciary mediates to allocate constitutional boundaries, it does not assert
any superiority over the other departments; it does not in reality nullify or invalidate an
act of the Legislature, but only asserts the solemn and sacred obligation assigned to it
by the Constitution to determine conflicting claims of authority under the Constitution
and to establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is involved in what
is termed "judicial supremacy" which properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the
more serious challenges to the constitutionality of the several measures involved in
these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers
under martial law has already been sustained in Gonzales v. Estrella and we find no
reason to modify or reverse it on that issue. As for the power of President Aquino to
promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power
from her. They are not "midnight" enactments intended to pre-empt the legislature
because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e.,
Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it
correct to say that these measures ceased to be valid when she lost her legislative
power for, like any statute, they continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute does not ipso
facto become inoperative simply because of the dissolution of the legislature that
enacted it. By the same token, President Aquino's loss of legislative power did not
have the effect of invalidating all the measures enacted by her when and as long as
she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that
they shall be suppletory to R.A. No. 6657 whenever not inconsistent with its
provisions. 17 Indeed, some portions of the said measures, like the creation of the P50
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229,
have been incorporated by reference in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not
conform to the requirements of a valid appropriation as specified in the Constitution.
Clearly, however, Proc. No. 131 is not an appropriation measure even if it does
provide for the creation of said fund, for that is not its principal purpose. An
appropriation law is one the primary and specific purpose of which is to authorize the
release of public funds from the treasury. 19 The creation of the fund is only incidental
to the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24
and Section 25(4) of Article VI, are not applicable. With particular reference to Section
24, this obviously could not have been complied with for the simple reason that the
House of Representatives, which now has the exclusive power to initiate
appropriation measures, had not yet been convened when the proclamation was
issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should
be invalidated because they do not provide for retention limits as required by Article
XIII, Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for
such limits now in Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1) that
he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall
have only one subject, to be expressed in its title, deserves only short attention. It is
settled that the title of the bill does not have to be a catalogue of its contents and will
suffice if the matters embodied in the text are relevant to each other and may be
inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law because it
came from President Marcos. Such are the ways of despots. Hence, it is futile to
argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed
P.D. No. 27 because the former was only a letter of instruction. The important thing is
that it was issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had
to comply with the requirement for publication as this Court held in Tanada v.
Tuvera. 21 Hence, unless published in the Official Gazette in accordance with Article 2
of the Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was published, though, in
the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ
of mandamus cannot issue to compel the performance of a discretionary act,
especially by a specific department of the government. That is true as a general
proposition but is subject to one important qualification. Correctly and categorically
stated, the rule is that mandamus will lie to compel the discharge of the discretionary
duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
by law, the courts will intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will require specific action. If
the duty is purely discretionary, the courts by mandamus will require action only. For
example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the first case to require a decision,
and in the second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a
plain, speedy and adequate remedy available from the administrative authorities,
resort to the courts may still be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent
domain that logically preclude the application of both powers at the same time on the
same subject. In the case of City of Baguio v. NAWASA, 24for example, where a law
required the transfer of all municipal waterworks systems to the NAWASA in
exchange for its assets of equivalent value, the Court held that the power being
exercised was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the verge of collapse, which
should be demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property is not
compensable, unlike the taking of property under the power of expropriation, which
requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits
of the police power in a famous aphorism: "The general rule at least is that while
property may be regulated to a certain extent, if regulation goes too far it will be
recognized as a taking." The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures for human habitation
constructed on the land surface. This was resisted by a coal company which had
earlier granted a deed to the land over its mine but reserved all mining rights
thereunder, with the grantee assuming all risks and waiving any damage claim. The
Court held the law could not be sustained without compensating the grantor. Justice
Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said:
Every restriction upon the use of property imposed in the exercise of the police power
deprives the owner of some right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely the prohibition of
a noxious use. The property so restricted remains in the possession of its owner. The
state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as it may because of further
changes in local or social conditions the restriction will have to be removed and the
owner will again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police
power and the power of eminent domain, with the latter being used as an implement
of the former like the power of taxation. The employment of the taxing power to
achieve a police purpose has long been accepted. 26 As for the power of
expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which
sustained a zoning law under the police power) makes the following significant
remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent
domain powers on different planets. Generally speaking, they viewed eminent domain
as encompassing public acquisition of private property for improvements that would
be available for public use," literally construed. To the police power, on the other
hand, they assigned the less intrusive task of preventing harmful externalities a point
reflected in the Euclid opinion's reliance on an analogy to nuisance law to bolster its
support of zoning. So long as suppression of a privately authored harm bore a
plausible relation to some legitimate "public purpose," the pertinent measure need
have afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two powers has
contracted considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker, which
broadened the reach of eminent domain's "public use" test to match that of the police
power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of
blighted areas in the District of Columbia as a proper exercise of the police power. On
the role of eminent domain in the attainment of this purpose, Justice Douglas
declared:
If those who govern the District of Columbia decide that the Nation's Capital should
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in
the way.
Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear.
28
For the power of eminent domain is merely the means to the end.
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in
1978, the U.S Supreme Court sustained the respondent's Landmarks Preservation
Law under which the owners of the Grand Central Terminal had not been allowed to
construct a multi-story office building over the Terminal, which had been designated a
historic landmark. Preservation of the landmark was held to be a valid objective of the
police power. The problem, however, was that the owners of the Terminal would be
deprived of the right to use the airspace above it although other landowners in the
area could do so over their respective properties. While insisting that there was here
no taking, the Court nonetheless recognized certain compensatory rights accruing to
Grand Central Terminal which it said would "undoubtedly mitigate" the loss caused by
the regulation. This "fair compensation," as he called it, was explained by Prof.
Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central
was authorized to transfer to neighboring properties the authorized but unused rights
accruing to the site prior to the Terminal's designation as a landmark the rights
which would have been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were
proportionately relaxed, theoretically enabling Penn Central to recoup its losses at the
Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under challenge
merely prescribe retention limits for landowners, there is an exercise of the police
power for the regulation of private property in accordance with the Constitution. But
where, to carry out such regulation, it becomes necessary to deprive such owners of
whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the
use of the land. What is required is the surrender of the title to and the physical
possession of the said excess and all beneficial rights accruing to the owner in favor
of the farmer-beneficiary. This is definitely an exercise not of the police power but of
the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the
several measures before us are challenged as violative of the due process and equal
protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no
retention limits are prescribed has already been discussed and dismissed. It is noted
that although they excited many bitter exchanges during the deliberation of the CARP
Law in Congress, the retention limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not discuss them here. The
Court will come to the other claimed violations of due process in connection with our
examination of the adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied equal protection
because of the absence of retention limits has also become academic under Section
6 of R.A. No. 6657. Significantly, they too have not questioned the area of such limits.
There is also the complaint that they should not be made to share the burden of
agrarian reform, an objection also made by the sugar planters on the ground that they
belong to a particular class with particular interests of their own. However, no
evidence has been submitted to the Court that the requisites of a valid classification
have been violated.
Classification has been defined as the grouping of persons or things similar to each
other in certain particulars and different from each other in these same
particulars. 31 To be valid, it must conform to the following requirements: (1) it must be
based on substantial distinctions; (2) it must be germane to the purposes of the law;
(3) it must not be limited to existing conditions only; and (4) it must apply equally to all
the members of the class. 32 The Court finds that all these requisites have been met
by the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be
treated alike both as to the rights conferred and the liabilities imposed. 33 The
petitioners have not shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that
is clearly visible except to those who will not see. There is no need to elaborate on
this matter. In any event, the Congress is allowed a wide leeway in providing for a
valid classification. Its decision is accorded recognition and respect by the courts of
justice except only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police
power only if there is a concurrence of the lawful subject and the lawful method. Put
otherwise, the interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less important, the
means employed are reasonably necessary for the attainment of the purpose sought
to be achieved and not unduly oppressive upon individuals. 34 As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may
say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the
individual are concerned, the end does not justify the means. It is not enough that
there be a valid objective; it is also necessary that the means employed to pursue it
be in keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the
most urgent public need, subject only to a few notable exceptions, will excuse the
bypassing of an individual's rights. It is no exaggeration to say that a, person invoking
a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of
Article III of the Constitution. With regard to his property, the owner enjoys the added
protection of Section 9, which reaffirms the familiar rule that private property shall not
be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
under terms also acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is unwilling to sell, or
cannot accept the price or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount authority of the State
over the interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored justification, as in the
case of the police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means
absolute (as indeed no power is absolute). The limitation is found in the constitutional
injunction that "private property shall not be taken for public use without just
compensation" and in the abundant jurisprudence that has evolved from the
interpretation of this principle. Basically, the requirements for a proper exercise of the
power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that
the State should first distribute public agricultural lands in the pursuit of agrarian
reform instead of immediately disturbing property rights by forcibly acquiring private
agricultural lands. Parenthetically, it is not correct to say that only public agricultural
lands may be covered by the CARP as the Constitution calls for "the just distribution
of all agricultural lands." In any event, the decision to redistribute private agricultural
lands in the manner prescribed by the CARP was made by the legislative and
executive departments in the exercise of their discretion. We are not justified in
reviewing that discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As explained
by Chief Justice Concepcion in the case of Taada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance, namely, a
question of policy. It refers to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the wisdom, not legality,
of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "to
determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as a license for us to reverse
the other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the
CARP the redistribution of private landholdings (even as the distribution of public
agricultural lands is first provided for, while also continuing apace under the Public
Land Act and other cognate laws). The Court sees no justification to interpose its
authority, which we may assert only if we believe that the political decision is not
unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
Congress having determined, as it did by the Act of March 3,1909 that the entire St.
Mary's river between the American bank and the international line, as well as all of the
upland north of the present ship canal, throughout its entire length, was "necessary
for the purpose of navigation of said waters, and the waters connected therewith,"
that determination is conclusive in condemnation proceedings instituted by the United
States under that Act, and there is no room for judicial review of the judgment of
Congress ... .
As earlier observed, the requirement for public use has already been settled for us by
the Constitution itself No less than the 1987 Charter calls for agrarian reform, which is
the reason why private agricultural lands are to be taken from their owners, subject to
the prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc.
No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that
the State adopt the necessary measures "to encourage and undertake the just
distribution of all agricultural lands to enable farmers who are landless to own directly
or collectively the lands they till." That public use, as pronounced by the fundamental
law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and
more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. 39 It has been repeatedly stressed by this Court that the
measure is not the taker's gain but the owner's loss. 40 The word "just" is used to
intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full,
ample. 41
It bears repeating that the measures challenged in these petitions contemplate more
than a mere regulation of the use of private lands under the police power. We deal
here with an actual taking of private agricultural lands that has dispossessed the
owners of their property and deprived them of all its beneficial use and enjoyment, to
entitle them to the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking
when the following conditions concur: (1) the expropriator must enter a private
property; (2) the entry must be for more than a momentary period; (3) the entry must
be under warrant or color of legal authority; (4) the property must be devoted to public
use or otherwise informally appropriated or injuriously affected; and (5) the utilization
of the property for public use must be in such a way as to oust the owner and deprive
him of beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit
upon its taking possession of the condemned property, as "the compensation is a
public charge, the good faith of the public is pledged for its payment, and all the
resources of taxation may be employed in raising the amount." 43 Nevertheless,
Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of rejection
or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in LBP bonds in accordance
with this Act, the DAR shall take immediate possession of the land and shall request
the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name
of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in case
of the rejection or disregard by the owner of the offer of the government to buy his
land-
... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land, within fifteen (15)
days from the receipt of the notice. After the expiration of the above period, the matter
is deemed submitted for decision. The DAR shall decide the case within thirty (30)
days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the
government. EPZA v. Dulay 44 resolved a challenge to several decrees promulgated
by President Marcos providing that the just compensation for property under
expropriation should be either the assessment of the property by the government or
the sworn valuation thereof by the owner, whichever was lower. In declaring these
decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court technically would still have
the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value of the
property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict application of the
decrees during the proceedings would be nothing short of a mere formality or charade
as the court has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court cannot
exercise its discretion or independence in determining what is just or fair. Even a
grade school pupil could substitute for the judge insofar as the determination of
constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a
fair and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from
the arbitrariness that rendered the challenged decrees constitutionally objectionable.
Although the proceedings are described as summary, the landowner and other
interested parties are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, the determination of the just
compensation by the DAR is not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with
finality the said determination in the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not
as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the
landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned
Twenty-five percent (25%) cash, the balance to be paid in government financial
instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares Thirty
percent (30%) cash, the balance to be paid in government financial instruments
negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five percent (35%) cash,
the balance to be paid in government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred
shares, physical assets or other qualified investments in accordance with guidelines
set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of
the face value of the bonds shall mature every year from the date of issuance until the
tenth (10th) year: Provided, That should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner,
his successors-in- interest or his assigns, up to the amount of their face value, for any
of the following:
(i) Acquisition of land or other real properties of the government, including assets
under the Asset Privatization Program and other assets foreclosed by government
financial institutions in the same province or region where the lands for which the
bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled corporations or
shares of stock owned by the government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused
persons, or for performance bonds;
(iv) Security for loans with any government financial institution, provided the proceeds
of the loans shall be invested in an economic enterprise, preferably in a small and
medium- scale industry, in the same province or region as the land for which the
bonds are paid;
(v) Payment for various taxes and fees to government: Provided, That the use of
these bonds for these purposes will be limited to a certain percentage of the
outstanding balance of the financial instruments; Provided, further, That the PARC
shall determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in
government universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in
government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is
unconstitutional insofar as it requires the owners of the expropriated properties to
accept just compensation therefor in less than money, which is the only medium of
payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor
less, whenever it is possible to make the assessment, than the money equivalent of
said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation . 45 (Emphasis supplied.)
46
In J.M. Tuazon Co. v. Land Tenure Administration, this Court held:
It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything short of
that is less, than just compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever gain would accrue to
the expropriating entity. The market value of the land taken is the just compensation
to which the owner of condemned property is entitled, the market value being that
sum of money which a person desirous, but not compelled to buy, and an owner,
willing, but not compelled to sell, would agree on as a price to be given and received
for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for property
expropriated is payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The condemnor
cannot compel the owner to accept anything but money, nor can the owner compel or
require the condemnor to pay him on any other basis than the value of the property in
money at the time and in the manner prescribed by the Constitution and the statutes.
When the power of eminent domain is resorted to, there must be a standard medium
of payment, binding upon both parties, and the law has fixed that standard as money
in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair equivalent in
money, which must be paid at least within a reasonable time after the taking, and it is
not within the power of the Legislature to substitute for such payment future
obligations, bonds, or other valuable advantage. 49(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of
just compensation is money and no other. And so, conformably, has just
compensation been paid in the past solely in that medium. However, we do not deal
here with the traditional excercise of the power of eminent domain. This is not an
ordinary expropriation where only a specific property of relatively limited area is
sought to be taken by the State from its owner for a specific and perhaps local
purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and
of whatever kind as long as they are in excess of the maximum retention limits
allowed their owners. This kind of expropriation is intended for the benefit not only of
a particular community or of a small segment of the population but of the entire
Filipino nation, from all levels of our society, from the impoverished farmer to the land-
glutted owner. Its purpose does not cover only the whole territory of this country but
goes beyond in time to the foreseeable future, which it hopes to secure and edify with
the vision and the sacrifice of the present generation of Filipinos. Generations yet to
come are as involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them tomorrow
through our thoughtfulness today. And, finally, let it not be forgotten that it is no less
than the Constitution itself that has ordained this revolution in the farms, calling for "a
just distribution" among the farmers of lands that have heretofore been the prison of
their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us,
we estimate that hundreds of billions of pesos will be needed, far more indeed than
the amount of P50 billion initially appropriated, which is already staggering as it is by
our present standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when
they called for agrarian reform as a top priority project of the government. It is a part
of this assumption that when they envisioned the expropriation that would be needed,
they also intended that the just compensation would have to be paid not in the
orthodox way but a less conventional if more practical method. There can be no doubt
that they were aware of the financial limitations of the government and had no
illusions that there would be enough money to pay in cash and in full for the lands
they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP
Law, particularly the payment of the balance (if the owner cannot be paid fully with
money), or indeed of the entire amount of the just compensation, with other things of
value. We may also suppose that what they had in mind was a similar scheme of
payment as that prescribed in P.D. No. 27, which was the law in force at the time they
deliberated on the new Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be given the
concept of just compensation as applied to the comprehensive agrarian reform
program being contemplated. There was the suggestion to "fine tune" the requirement
to suit the demands of the project even as it was also felt that they should "leave it to
Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as
"progressive compensation" and "State-subsidized compensation" were also
proposed. In the end, however, no special definition of the just compensation for the
lands to be expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against the
assumptions we are making of the general sentiments and intention of the members
on the content and manner of the payment to be made to the landowner in the light of
the magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of
the just compensation provided for in the afore- quoted Section 18 of the CARP Law
is not violative of the Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all this Court is not a
cloistered institution removed from the realities and demands of society or oblivious to
the need for its enhancement. The Court is as acutely anxious as the rest of our
people to see the goal of agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing decades. We are
aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and
resurrecting the spectre of discontent and dissent in the restless countryside. That is
not in our view the intention of the Constitution, and that is not what we shall decree
today.
Accepting the theory that payment of the just compensation is not always required to
be made fully in money, we find further that the proportion of cash payment to the
other things of value constituting the total payment, as determined on the basis of the
areas of the lands expropriated, is not unduly oppressive upon the landowner. It is
noted that the smaller the land, the bigger the payment in money, primarily because
the small landowner will be needing it more than the big landowners, who can afford a
bigger balance in bonds and other things of value. No less importantly, the
government financial instruments making up the balance of the payment are
"negotiable at any time." The other modes, which are likewise available to the
landowner at his option, are also not unreasonable because payment is made in
shares of stock, LBP bonds, other properties or assets, tax credits, and other things
of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big
and small, not a little inconvenience. As already remarked, this cannot be avoided.
Nevertheless, it is devoutly hoped that these countrymen of ours, conscious as we
know they are of the need for their forebearance and even sacrifice, will not begrudge
us their indispensable share in the attainment of the ideal of agrarian reform.
Otherwise, our pursuit of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229
does not seem to be viable any more as it appears that Section 4 of the said Order
has been superseded by Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not provide, as the latter did,
that in case of failure or refusal to register the land, the valuation thereof shall be that
given by the provincial or city assessor for tax purposes. On the contrary, the CARP
Law says that the just compensation shall be ascertained on the basis of the factors
mentioned in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property
even before actual payment to him in full of just compensation, in contravention of a
well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from
the owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the petition under the Eminent
Domain Act, or the commissioner's report under the Local Improvement Act, is
filed. 51
... although the right to appropriate and use land taken for a canal is complete at the
time of entry, title to the property taken remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniformly to this effect. As early as
1838, in Rubottom v. McLure, 54 it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to the
property in the State" albeit "not to the appropriation of it to public use." In Rexford v.
Knight, 55 the Court of Appeals of New York said that the construction upon the
statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that "both on principle and
authority the rule is ... that the right to enter on and use the property is complete, as
soon as the property is actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted in
this jurisdiction is such as to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until compensation is paid ...
. (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as
October 21, 1972 and declared that he shall "be deemed the owner" of a portion of
land consisting of a family-sized farm except that "no title to the land owned by him
was to be actually issued to him unless and until he had become a full-fledged
member of a duly recognized farmers' cooperative." It was understood, however, that
full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972
of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis
supplied.)
it was obviously referring to lands already validly acquired under the said decree,
after proof of full-fledged membership in the farmers' cooperatives and full payment of
just compensation. Hence, it was also perfectly proper for the Order to also provide in
its Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full payment of just
compensation), shall be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of
the land to the government on receipt by the landowner of the corresponding payment
or the deposit by the DAR of the compensation in cash or LBP bonds with an
accessible bank. Until then, title also remains with the landowner. 57 No outright
change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under
P.D. No. 27, as recognized under E.O. No. 228, are retained by him even now under
R.A. No. 6657. This should counter-balance the express provision in Section 6 of the
said law that "the landowners whose lands have been covered by Presidential Decree
No. 27 shall be allowed to keep the area originally retained by them thereunder,
further, That original homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain the same areas 1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
as long as they continue to cultivate said homestead." SUSTAINED against all the constitutional objections raised in the herein petitions.

In connection with these retained rights, it does not appear in G.R. No. 78742 that the
appeal filed by the petitioners with the Office of the President has already been
resolved. Although we have said that the doctrine of exhaustion of administrative
remedies need not preclude immediate resort to judicial action, there are factual
issues that have yet to be examined on the administrative level, especially the claim
that the petitioners are not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the
petitioners have not yet exercised their retention rights, if any, under P.D. No. 27, the
Court holds that they are entitled to the new retention rights provided for by R.A. No.
6657, which in fact are on the whole more liberal than those granted by the decree.
2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained
and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.

V SO ORDERED.

The CARP Law and the other enactments also involved in these cases have been the Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,
subject of bitter attack from those who point to the shortcomings of these measures Gancayco, Padilla, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado,
and ask that they be scrapped entirely. To be sure, these enactments are less than JJ., concur.
perfect; indeed, they should be continuously re-examined and rehoned, that they may
be sharper instruments for the better protection of the farmer's rights. But we have to
start somewhere. In the pursuit of agrarian reform, we do not tread on familiar ground
but grope on terrain fraught with pitfalls and expected difficulties. This is inevitable.
The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as
we venture forward, and, if necessary, by our own mistakes. We cannot expect
perfection although we should strive for it by all means. Meantime, we struggle as
best we can in freeing the farmer from the iron shackles that have unconscionably,
and for so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the comprehensive
agrarian reform program are removed, to clear the way for the true freedom of the
farmer. We may now glimpse the day he will be released not only from want but also
from the exploitation and disdain of the past and from his own feelings of inadequacy
and helplessness. At last his servitude will be ended forever. At last the farm on which
he toils will be his farm. It will be his portion of the Mother Earth that will give him not
only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now
at last can he banish from his small plot of earth his insecurities and dark resentments
and "rebuild in it the music and the dream."

WHEREFORE, the Court holds as follows:

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 175368 April 11, 2013
LEAGUE OF PROVINCES OF THE PHILIPPINES, Petitioner,
vs.
DEPARTMENT OF ENVIRONMENT and NATURAL RESOURCES and HON.
ANGELO T. REYES, in his capacity as Secretary of DENR, Respondents.
DECISION
PERALTA, J.:
This is a petition for certiorari, prohibition and mandamus, 1 praying that this Court
order the following: ( 1) declare as unconstitutional Section 17(b)(3)(iii) of Republic
Act (R.A.) No. 7160, otherwise known as The Local Government Code of 1991 and
Section 24 of Republic Act (R.A.) No. 7076, otherwise known as the People's Small-
Scale Mining Act of 1991; (2) prohibit and bar respondents from exercising control
over provinces; and (3) declare as illegal the respondent Secretary of the Department
of Energy and Natural Resources' (DENR) nullification, voiding and cancellation of the
Small-Scale Mining permits issued by the Provincial Governor of Bulacan.
The Facts are as follows:
On March 28, 1996, Golden Falcon Mineral Exploration Corporation (Golden Falcon)
filed with the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-
III) an Application for Financial and Technical Assistance Agreement (FTAA) covering
an area of 61,136 hectares situated in the Municipalities of San Miguel, San
Ildefonso, Norzagaray and San Jose del Monte, Bulacan. 2
On April 29, 1998, the MGB R-III issued an Order denying Golden Falcon's
Application for Financial and Technical Assistance Agreement for failure to secure
area clearances from the Forest Management Sector and Lands Management Sector
of the DENR Regional Office No. III.3
On November 11, 1998, Golden Falcon filed an appeal with the DENR Mines and
Geosciences Bureau Central Office (MGB-Central Office), and sought reconsideration
of the Order dated April 29, 1998.4
On February 10, 2004, while Golden Falcon's appeal was pending, Eduardo D.
Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the
Provincial Environment and Natural Resources Office (PENRO) of Bulacan their
respective Applications for Quarry Permit (AQP), which covered the same area
subject of Golden Falcon's Application for Financial and Technical Assistance
Agreement.5
On July 16, 2004, the MGB-Central Office issued an Order denying Golden Falcon's
appeal and affirming the MGB R-III's Order dated April 29, 1998.
On September 13, 2004, Atlantic Mines and Trading Corporation (AMTC) filed with
the PENRO of Bulacan an Application for Exploration Permit (AEP) covering 5,281
hectares of the area covered by Golden Falcon's Application for Financial and
Technical Assistance Agreement.6
On October 19, 2004, DENR-MGB Director Horacio C. Ramos, in response to MGB
R-III Director Arnulfo V. Cabantog's memorandum query dated September 8, 2004,
categorically stated that the MGB-Central Office's Order dated July 16, 2004 became
final on August 11, 2004, fifteen (15) days after Golden Falcon received the said
Order, per the Certification dated October 8, 2004 issued by the Postmaster II of the
Philippine Postal Corporation of Cainta, Rizal.7
Through letters dated May 5 and May 10, 2005, AMTC notified the PENRO of
Bulacan and the MGB R-III Director, respectively, that the subject Applications for
Quarry Permit fell within its (AMTC's) existing valid and prior Application for
Exploration Permit, and the the former area of Golden Falcon was open to mining
location only on August 11, 2004 per the Memorandum dated October 19, 2004 of the
MGB Director, Central Office.8
On June 24, 2005, Ricardo Medina, Jr., PENRO of Bulacan, indorsed AMTC's letter
to the Provincial Legal Officer, Atty. Eugenio F. Resurreccion, for his legal opinion on
which date of denial of Golden Falcon's application/appeal April 29, 1998 or July 16,
2004 is to be considered in the deliberation of the Provincial Mining Regulatory
Board (PMRB) for the purpose of determining when the land subject of the
Applications for Quarry Permit could be considered open for application.
On June 28, 2005, Provincial Legal Officer Eugenio Resurreccion issued a legal
opinion stating that the Order dated July 16, 2004 of the MGB-Central Office was a
mere reaffirmation of the Order dated April 29, 1998 of the MGB R-III; hence, the
Order dated April 29, 1998 should be the reckoning period of the denial of the
application of Golden Falcon.
On July 22, 2005, AMTC filed with the PMRB of Bulacan a formal protest against the
aforesaid Applications for Quarry Permit on the ground that the subject area was
already covered by its Application for Exploration Permit. 9
On August 8, 2005, MGB R-III Director Cabantog, who was the concurrent Chairman
of the PMRB, endorsed to the Provincial Governor of Bulacan, Governor Josefina M.
dela Cruz, the aforesaid Applications for Quarry Permit that had apparently been
converted to Applications for Small-Scale Mining Permit of Eduardo D. Mercado,
Benedicto S. Cruz, Gerardo R. Cruz and Lucila S. Valdez (formerly Liberato
Sembrano).10
On August 9, 2005, the PENRO of Bulacan issued four memoranda recommending to
Governor Dela Cruz the approval of the aforesaid Applications for Small-Scale Mining
Permit.11
On August 10, 2005, Governor Dela Cruz issued the corresponding Small-Scale
Mining Permits in favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz
and Lucila S. Valdez.12
Subsequently, AMTC appealed to respondent DENR Secretary the grant of the
aforesaid Small-Scale Mining Permits, arguing that: (1) The PMRB of Bulacan erred
in giving due course to the Applications for Small-Scale Mining Permit without first
resolving its formal protest; (2) The areas covered by the Small-Scale Mining Permits
fall within the area covered by AMTC's valid prior Application for Exploration Permit;
(3) The Applications for Quarry Permit were illegally converted to Applications for
Small-Scale Mining Permit; (4) DENR-MGB Director Horacio C. Ramos' ruling that the
subject areas became open for mining location only on August 11, 2004 was
controlling; (5) The Small-Scale Mining Permits were null and void because they
covered areas that were never declared People's Small-Scale Mining Program sites
as mandated by Section 4 of the People's Small-Scale Mining Act of 1991; and (6)
Iron ore is not considered as one of the quarry resources, as defined by Section 43 of
the Philippine Mining Act of 1995, which could be subjects of an Application for
Quarry Permit.13
On August 8, 2006, respondent DENR Secretary rendered a Decision14 in favor of
AMTC. The DENR Secretary agreed with MGB Director Horacio C. Ramos that the
area was open to mining location only on August 11, 2004, fifteen (15) days after the
receipt by Golden Falcon on July 27, 2004 of a copy of the MGB-Central Office's
Order dated July 16, 2004, which Order denied Golden Falcon's appeal. According to
the DENR Secretary, the filing by Golden Falcon of the letter-appeal suspended the
finality of the Order of denial issued on April 29, 1998 by the Regional Director until
the resolution of the appeal on July 16, 2004 by the MGB-Central Office. He stated
that the Applications for Quarry Permit were filed on February 10, 2004 when the area
was still closed to mining location; hence, the Small-Scale Mining Permits granted by
the PMRB and the Governor were null and void. On the other hand, the DENR
Secretary declared that AMTC filed its Application for Exploration Permit when the
area was already open to other mining applicants; thus, AMTCs Application for
Exploration Permit was valid. Moreover, the DENR Secretary held that the questioned
Small-Scale Mining Permits were issued in violation of Section 4 of R.A. No. 7076
and beyond the authority of the Provincial Governor pursuant to Section 43 of R.A.
No. 7942, because the area was never proclaimed to be under the People's Small-
Scale Mining Program. Further, the DENR Secretary stated that iron ore mineral is
not considered among the quarry resources.
The dispositive portion of the DENR Secretarys Decision reads:
WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines
and Trading Corp. is declared valid and may now be given due course. The Small-
Scale Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo
D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S.
Valdez are declared NULL AND VOID. Consequently, the said permits are hereby
CANCELLED.15
Hence, petitioner League of Provinces filed this petition.
Petitioner is a duly organized league of local governments incorporated under R.A.
No. 7160. Petitioner declares that it is composed of 81 provincial governments,
including the Province of Bulacan. It states that this is not an action of one province
alone, but the collective action of all provinces through the League, as a favorable
ruling will not only benefit one province, but all provinces and all local governments.
Petitioner raises these issues:
I
WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991 LOCAL GOVERNMENT
CODE AND SECTION 24 OF THE PEOPLE'S SMALL-SCALE MINING ACT OF 1991
ARE UNCONSTITUTIONAL FOR PROVIDING FOR EXECUTIVE CONTROL AND
INFRINGING UPON THE LOCAL AUTONOMY OF PROVINCES.
II
WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN NULLIFYING,
VOIDING AND CANCELLING THE SMALL-SCALE MINING PERMITS AMOUNTS
TO EXECUTIVE CONTROL, NOT MERELY SUPERVISION AND USURPS THE
DEVOLVED POWERS OF ALL PROVINCES.16
To start, the Court finds that petitioner has legal standing to file this petition because it
is tasked under Section 504 of the Local Government Code of 1991 to promote local
autonomy at the provincial level;17 adopt measures for the promotion of the welfare of
all provinces and its officials and employees;18 and exercise such other powers and
perform such other duties and functions as the league may prescribe for the welfare
of the provinces.19
Before this Court determines the validity of an act of a co-equal and coordinate
branch of the Government, it bears emphasis that ingrained in our jurisprudence is
the time-honored principle that a statute is presumed to be valid.20This presumption is
rooted in the doctrine of separation of powers which enjoins upon the three
coordinate departments of the Government a becoming courtesy for each other's
acts.21 This Court, however, may declare a law, or portions thereof, unconstitutional
where a petitioner has shown a clear and unequivocal breach of the
Constitution,22 leaving no doubt or hesitation in the mind of the Court.23
In this case, petitioner admits that respondent DENR Secretary had the authority to
nullify the Small-Scale Mining Permits issued by the Provincial Governor of Bulacan,
as the DENR Secretary has control over the PMRB, and the implementation of the
Small-Scale Mining Program is subject to control by respondent DENR.
Control of the DENR/DENR Secretary over small-scale mining in the provinces is
granted by three statutes: (1) R.A. No. 7061 or The Local Government Code of 1991;
(2) R.A. No. 7076 or the People's Small Scale Mining Act of 1991; and (3) R.A. No.
7942, otherwise known as the Philippine Mining Act of 1995. 24 The pertinent
provisions of law sought to be declared as unconstitutional by petitioner are as
follows:
R.A. No. 7061 (The Local Government Code of 1991)
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to
be self-reliant and shall continue exercising the powers and discharging the duties
and functions currently vested upon them. They shall also discharge the functions
and responsibilities of national agencies and offices devolved to them pursuant to this
Code. Local government units shall likewise exercise such other powers and
discharge such other functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic services and facilities
enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local purposes; x x x25
R.A. No. 7076 (People's Small-Scale Mining Act of 1991)
Sec. 24. Provincial/City Mining Regulatory Board. - There is hereby created under the
direct supervision and control of the Secretary a provincial/city mining regulatory
board, herein called the Board, which shall be the implementing agency of the
Department, and shall exercise the following powers and functions, subject to review
by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims within a peoples
small-scale mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.26
Petitioner contends that the aforecited laws and DENR Administrative Order No. 9640
(the Implementing Rules and Regulations of the Philippine Mining Act of 1995) did not
explicitly confer upon respondents DENR and the DENR Secretary the power to
reverse, abrogate, nullify, void, or cancel the permits issued by the Provincial
Governor or small-scale mining contracts entered into by the PMRB. The statutes are
also silent as to the power of respondent DENR Secretary to substitute his own
judgment over that of the Provincial Governor and the PMRB.
Moreover, petitioner contends that Section 17 (b)(3)(iii) of the Local Government
Code of 1991 and Section 24 of R.A. No. 7076, which confer upon respondents
DENR and the DENR Secretary the power of control are unconstitutional, as the
Constitution states that the President (and Executive Departments and her alter-egos)
has the power of supervision only, not control, over acts of the local government
units, and grants the local government units autonomy, thus:
The 1987 Constitution:
Article X, Section 4. The President of the Philippines shall exercise general
supervision over local governments. Provinces with respect to component cities and
municipalities, and cities and municipalities with respect to component barangays,
shall ensure that the acts of their component units are within the scope of their
prescribed powers and functions.27
Petitioner contends that the policy in the above-cited constitutional provision is
mirrored in the Local Government Code, which states:
SEC. 25. National Supervision over Local Government Units. - (a) Consistent with the
basic policy on local autonomy, the President shall exercise general supervision over
local government units to ensure that their acts are within the scope of their
prescribed powers and functions.
The President shall exercise supervisory authority directly over provinces, highly
urbanized cities, and independent component cities; through the province with
respect to component cities and municipalities; and through the city and municipality
with respect to barangays.28
Petitioner contends that the foregoing provisions of the Constitution and the Local
Government Code of 1991 show that the relationship between the President and the
Provinces or respondent DENR, as the alter ego of the President, and the Province of
Bulacan is one of executive supervision, not one of executive control. The term
"control" has been defined as the power of an officer to alter or modify or set aside
what a subordinate officer had done in the performance of his/her duties and to
substitute the judgment of the former for the latter, while the term "supervision" is the
power of a superior officer to see to it that lower officers perform their function in
accordance with law.29
Petitioner argues that respondent DENR Secretary went beyond mere executive
supervision and exercised control when he nullified the small-scale mining permits
granted by the Provincial Governor of Bulacan, as the former substituted the
judgment of the latter.
Petitioner asserts that what is involved here is a devolved power.
Under the Local Government Code of 1991, the power to regulate small-scale mining
has been devolved to all provinces. In the exercise of devolved powers, departmental
approval is not necessary.30
Petitioner contends that if the provisions in Section 24 of R.A. No. 7076 and Section
17 (b)(3)(iii) of the Local Government Code of 1991 granting the power of control to
the DENR/DENR Secretary are not nullified, nothing would stop the DENR Secretary
from nullifying, voiding and canceling the small-scale mining permits that have been
issued by a Provincial Governor.
Petitioner submits that the statutory grant of power of control to respondents is
unconstitutional, as the Constitution only allows supervision over local governments
and proscribes control by the executive departments.
In its Comment, respondents, represented by the Office of the Solicitor General,
stated that contrary to the assertion of petitioner, the power to implement the small-
scale mining law is expressly limited in Section 17 (b)(3)(iii) of the Local Government
Code, which provides that it must be carried out "pursuant to national policies and
subject to supervision, control and review of the DENR." Moreover, the fact that the
power to implement the small-scale mining law has not been fully devolved to
provinces is further amplified by Section 4 of the People's Small-Scale Mining Act of
1991, which provides, among others, that the People's Small-Scale Mining Program
shall be implemented by the DENR Secretary.
The petition lacks merit.
Paragraph 1 of Section 2, Article XII (National Economy and Patrimony) of the
Constitution31 provides that "the exploration, development and utilization of natural
resources shall be under the full control and supervision of the State."
Moreover, paragraph 3 of Section 2, Article XII of the Constitution provides that "the
Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens x x x."
Pursuant to Section 2, Article XII of the Constitution, R.A. No. 7076 or the People's
Small-Scale Mining Act of 1991, was enacted, establishing under Section 4 thereof a
People's Small-Scale Mining Program to be implemented by the DENR Secretary in
coordination with other concerned government agencies.
The People's Small-Scale Mining Act of 1991 defines "small-scale mining" as
"refer[ring] to mining activities, which rely heavily on manual labor using simple
implement and methods and do not use explosives or heavy mining equipment." 32
It should be pointed out that the Administrative Code of 198733 provides that the
DENR is, subject to law and higher authority, in charge of carrying out the State's
constitutional mandate, under Section 2, Article XII of the Constitution, to control and
supervise the exploration, development, utilization and conservation of the country's
natural resources. Hence, the enforcement of small-scale mining law in the provinces
is made subject to the supervision, control and review of the DENR under the Local
Government Code of 1991, while the Peoples Small-Scale Mining Act of 1991
provides that the Peoples Small-Scale Mining Program is to be implemented by the
DENR Secretary in coordination with other concerned local government agencies.
Indeed, Section 4, Article X (Local Government) of the Constitution states that "[t]he
President of the Philippines shall exercise general supervision over local
governments," and Section 25 of the Local Government Code reiterates the same.
General supervision by the President means no more than seeing to it that laws are
faithfully executed or that subordinate officers act within the law. 34
The Court has clarified that the constitutional guarantee of local autonomy in the
Constitution Art. X, Sec. 2 refers to the administrative autonomy of local government
units or, cast in more technical language, the decentralization of government
authority.35 It does not make local governments sovereign within the
State.36 Administrative autonomy may involve devolution of powers, but subject to
limitations like following national policies or standards, 37 and those provided by the
Local Government Code, as the structuring of local governments and the allocation of
powers, responsibilities, and resources among the different local government units
and local officials have been placed by the Constitution in the hands of
Congress38 under Section 3, Article X of the Constitution.
Section 3, Article X of the Constitution mandated Congress to "enact a local
government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the different local
government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and
functions and duties of local officials, and all other matters relating to the organization
and operation of the local units."
In connection with the enforcement of the small-scale mining law in the province,
Section 17 of the Local Government Code provides:
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to
be self-reliant and shall continue exercising the powers and discharging the duties
and functions currently vested upon them. They shall also discharge the functions
and responsibilities of national agencies and offices devolved to them pursuant to this
Code. Local government units shall likewise exercise such other powers and
discharge such other functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic services and facilities
enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the following:
xxxx
(3) For a Province:c
xxxx
(iii) Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local purposes;39
Clearly, the Local Government Code did not fully devolve the enforcement of the
small-scale mining law to the provincial government, as its enforcement is subject to
the supervision, control and review of the DENR, which is in charge, subject to law
and higher authority, of carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization of the country's natural
resources.40
Section 17 (b)(3)(iii) of the Local Government Code of 1991 is in harmony with R.A.
No. 7076 or the People's Small-Scale Mining Act of 1991,41 which established a
People's Small-Scale Mining Program to be implemented by the Secretary of the
DENR, thus:
Sec. 2. Declaration of Policy. It is hereby declared of the State to promote, develop,
protect and rationalize viable small-scale mining activities in order to generate more
employment opportunities and provide an equitable sharing of the nation's wealth and
natural resources, giving due regard to existing rights as herein provided.
xxxx
Sec. 4. People's Small-Scale Mining Program. - For the purpose of carrying out the
declared policy provided in Section 2 hereof, there is hereby established a People's
Small-Scale Mining Program to be implemented by the Secretary of the Department
of Environment and Natural Resources, hereinafter called the Department, in
coordination with other concerned government agencies, designed to achieve an
orderly, systematic and rational scheme for the small-scale development and
utilization of mineral resources in certain mineral areas in order to address the social,
economic, technical, and environmental problems connected with small-scale mining
activities.
xxxx
Sec. 24. Provincial/City Mining Regulatory Board. There is hereby created under
the direct supervision and control of the Secretary a provincial/city mining regulatory
board, herein called the Board, which shall be the implementing agency of the
Department, and shall exercise the following powers and functions, subject to review
by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims within a peoples
small-scale mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.42
DENR Administrative Order No. 34, series of 1992, containing the Rules and
Regulations to implement R.A. No. 7076, provides:
SEC. 21. Administrative Supervision over the People's Small-Scale Mining Program.
The following DENR officials shall exercise the following supervisory functions in
the implementation of the Program:
21.1 DENR Secretrary direct supervision and control over the program and
activities of the small-scale miners within the people's small-scale mining area;
21.2 Director the Director shall:
a. Recommend the depth or length of the tunnel or adit taking into account the: (1)
size of membership and capitalization of the cooperative; (2) size of mineralized
areas; (3) quantity of mineral deposits; (4) safety of miners; and (5) environmental
impact and other considerations;
b. Determine the right of small-scale miners to existing facilities in consultation with
the operator, claimowner, landowner or lessor of an affected area upon declaration of
a small-scale mining area;
c. Recommend to the Secretary the withdrawal of the status of the people's small-
scale mining area when it can no longer be feasibly operated on a small-scale basis;
and
d. See to it that the small-scale mining contractors abide by small-scale mines safety
rules and regulations.
xxxx
SEC. 22. Provincial/City Mining Regulatory Board. The Provincial/City Mining
Regulatory Board created under R.A. 7076 shall exercise the following powers and
functions, subject to review by the Secretary:
22.1 Declares and segregates existing gold rush area for small-scale mining;
22.2 Reserves for the future, mineralized areas/mineral lands for people's small-scale
mining;
22.3 Awards contracts to small-scale miners cooperative;
22.4 Formulates and implements rules and regulations related to R.A. 7076;
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90)
days upon filing of protests or complaints; Provided, That any aggrieved party may
appeal within five (5) days from the Board's decision to the Secretary for final
resolution otherwise the same is considered final and executory; and
22.6 Performs such other functions as may be necessary to achieve the goals and
objectives of R.A. 7076.
SEC. 6. Declaration of People's Small-Scale Mining Areas. The Board created
under R.A. 7076 shall have the authority to declare and set aside People's Small-
Scale Mining Areas in sites onshore suitable for small-scale mining operations subject
to review by the DENR Secretary thru the Director.43
DENR Administrative Order No. 23, otherwise known as the Implementing Rules and
Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995,
adopted on August 15, 1995, provides under Section 123 44thereof that small-scale
mining applications should be filed with the PMRB45 and the corresponding permits
shall be issued by the Provincial Governor, except small-scale mining applications
within the mineral reservations.
Thereafter, DENR Administrative Order No. 96-40, otherwise known as the Revised
Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the
Philippine Mining Act of 1995, adopted on December 19, 1996, provides that
applications for Small-Scale Mining Permits shall be filed with the Provincial
Governor/City Mayor through the concerned Provincial/City Mining Regulatory Board
for areas outside the Mineral Reservations and with the Director though the Bureau
for areas within the Mineral Reservations.46 Moreover, it provides that Local
Government Units shall, in coordination with the Bureau/ Regional Offices and subject
to valid and existing mining rights, "approve applications for small-scale mining, sand
and gravel, quarry x x x and gravel permits not exceeding five (5) hectares." 47
Petitioner contends that the Local Government Code of 1991, R.A. No. 7076, DENR
Administrative Orders Nos. 95-23 and 96-40 granted the DENR Secretary the broad
statutory power of control, but did not confer upon the respondents DENR and DENR
Secretary the power to reverse, abrogate, nullify, void, cancel the permits issued by
the Provincial Governor or small-scale mining contracts entered into by the Board.
The contention does not persuade.
The settlement of disputes over conflicting claims in small-scale mining is provided for
in Section 24 of R.A. No. 7076, thus:
Sec. 24. Provincial/City Mining Regulatory Board. There is hereby created under
the direct supervision and control of the Secretary a provincial/city mining regulatory
board, herein called the Board, which shall be the implementing agency of the
Department, and shall exercise the following powers and functions, subject to review
by the Secretary:
xxxx
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's
small-scale mining area, an area that is declared a small mining area; x x x
Section 24, paragraph (e) of R.A. No. 7076 cited above is reflected in Section 22,
paragraph 22.5 of the Implementing Rules and Regulations of R.A. No. 7076, to wit:
SEC. 22. Provincial/City Mining Regulatory Board. The Provincial/City Mining
Regulatory Board created under R.A. No. 7076 shall exercise the following powers
and functions, subject to review by the Secretary:
xxxx
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90)
days upon filing of protests or complaints; Provided, That any aggrieved party may
appeal within five (5) days from the Board's decision to the Secretary for final
resolution otherwise the same is considered final and executory; x x x
In this case, in accordance with Section 22, paragraph 22.5 of the Implementing
Rules and Regulations of R.A. No. 7076, the AMTC filed on July 22, 2005 with the
PMRB of Bulacan a formal protest against the Applications for Quarry Permits of
Eduardo Mercado, Benedicto Cruz, Liberato Sembrano (replaced by Lucila Valdez)
and Gerardo Cruz on the ground that the subject area was already covered by its
Application for Exploration Permit.48 However, on August 8, 2005, the PMRB issued
Resolution Nos. 05-8, 05-9, 05-10 and 05-11, resolving to submit to the Provincial
Governor of Bulacan the Applications for Small-Scale Mining Permits of Eduardo
Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the granting/issuance
of the said permits.49 On August 10, 2005, the Provincial Governor of Bulacan issued
the Small-Scale Mining Permits to Eduardo Mercado, Benedicto Cruz, Lucila Valdez
and Gerardo Cruz based on the legal opinion of the Provincial Legal Officer and the
Resolutions of the PMRB of Bulacan.
Hence, AMTC filed an appeal with respondent DENR Secretary, appealing from
Letter-Resolution No. 05-1317 and Resolution Nos. 05-08, 05-09, 05-10 and 05-11,
all dated August 8, 2005, of the PMRB of Bulacan, which resolutions gave due course
and granted, on August 10, 2005, Small-Scale Mining Permits to Eduardo D.
Mercado, Benedicto S. Cruz, Lucila Valdez and Gerardo Cruz involving parcels of
mineral land situated at Camachin, Doa Remedios Trinidad, Bulacan.
The PMRB of Bulacan filed its Answer, stating that it is an administrative body,
created under R.A. No. 7076, which cannot be equated with the court wherein a full-
blown hearing could be conducted, but it is enough that the parties were given the
opportunity to present evidence. It asserted that the questioned resolutions it issued
were in accordance with the mining laws and that the Small-Scale Mining Permits
granted were registered ahead of AMTC's Application for Exploration Permit. Further,
the Board stated that the Governor of Bulacan had the power to approve the Small-
Scale Mining Permits under R.A. No. 7160.
The DENR Secretary found the appeal meritorious, and resolved these pivotal issues:
(1) when is the subject mining area open for mining location by other applicants; and
(2) who among the applicants have valid applications.1wphi1 The pertinent portion
of the decision of the DENR Secretary reads:
We agree with the ruling of the MGB Director that the area is open only to mining
location on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon on
July 27, 2004 of a copy of the subject Order of July 16, 2004.1wphi1The filing by
Golden Falcon of the letter-appeal suspended the finality of the Order of Denial
issued on April 29, 1998 by the Regional Director until the Resolution thereof on July
16, 2004.
Although the subject AQPs/SSMPs were processed in accordance with the
procedures of the PMRB, however, the AQPs were filed on February 10, 2004 when
the area is still closed to mining location. Consequently, the SSMPs granted by the
PMRB and the Governor are null and void making thereby AEP No. III-02-04 of the
AMTC valid, it having been filed when the area is already open to other mining
applicants.
Records also show that the AQPs were converted into SSMPs. These are two (2)
different applications. The questioned SSMPs were issued in violation of Section 4 of
RA 7076 and beyond the authority of the Provincial Governor pursuant to Section 43
of RA 7942 because the area was never proclaimed as "People's Small-Scale Mining
Program." Moreover, iron ore mineral is not considered among the quarry resources.
xxxx
WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines
and Trading Corp. is declared valid and may now be given due course. The Small-
Scale Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo
D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S.
Valdez are declared NULL AND VOID. Consequently, the said permits are hereby
CANCELLED.50
The Court finds that the decision of the DENR Secretary was rendered in accordance
with the power of review granted to the DENR Secretary in the resolution of disputes,
which is provided for in Section 24 of R.A. No. 707651 and Section 22 of its
Implementing Rules and Regulations.52 It is noted that although AMTC filed a protest
with the PMRB regarding its superior and prior Application for Exploration Permit over
the Applications for Quarry Permit, which were converted to Small-Scale Mining
Permits, the PMRB did not resolve the same, but issued Resolution Nos. 05-08 to 05-
11 on August 8, 2005, resolving to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz,
Lucila Valdez and Gerardo Cruz for the granting of the said permits. After the
Provincial Governor of Bulacan issued the Small-Scale Mining Permits on August 10,
2005, AMTC appealed the Resolutions of the PMRB giving due course to the granting
of the Small-Scale Mining Permits by the Provincial Governor.
Hence, the decision of the DENR Secretary, declaring that the Application for
Exploration Permit of AMTC was valid and may be given due course, and canceling
the Small-Scale Mining Permits issued by the Provincial Governor, emanated from
the power of review granted to the DENR Secretary under R.A. No. 7076 and its
Implementing Rules and Regulations. The DENR Secretary's power to review and,
therefore, decide, in this case, the issue on the validity of the issuance of the Small-
Scale Mining Permits by the Provincial Governor as recommended by the PMRB, is a
quasi-judicial function, which involves the determination of what the law is, and what
the legal rights of the contending parties are, with respect to the matter in controversy
and, on the basis thereof and the facts obtaining, the adjudication of their respective
rights.53 The DENR Secretary exercises quasi-judicial function under R.A. No. 7076
and its Implementing Rules and Regulations to the extent necessary in settling
disputes, conflicts or litigations over conflicting claims. This quasi-judicial function of
the DENR Secretary can neither be equated with "substitution of judgment" of the
Provincial Governor in issuing Small-Scale Mining Permits nor "control" over the said
act of the Provincial Governor as it is a determination of the rights of AMTC over
conflicting claims based on the law.

In determining whether Section 17 (b)(3)(iii) of the Local Government Code of 1991

and Section 24 of R.A. No. 7076 are unconstitutional, the Court has been guided by
Beltran v. The Secretary of Health, 54 which held:

The fundamental criterion is that all reasonable doubts should be resolved in favor of
the constitutionality of a statute. Every law has in its favor the presumption of
constitutionality. For a law to be nullified, it must be shown that there is a clear and
unequivocal breach of the Constitution. The ground for nullity must be clear and
beyond reasonable doubt. Those who petition this Court to declare a law, or parts
thereof, unconstitutional must clearly establish the basis therefor. Otherwise, the
petition must fail. 55

In this case, the Court finds that the grounds raised by petitioner to challenge the
constitutionality of Section 17 (b )(3)(iii) of the Local Government Code of 1991 and
Section 24 'of R.A. No.7076 failed to overcome the constitutionality of the said
provisions of law.

WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 91649 May 14, 1991
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN
AND LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION
(PAGCOR), respondent.
H.B. Basco & Associates for petitioners.
Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.
PARAS, J.:
A TV ad proudly announces:
"The new PAGCOR responding through responsible gaming."
But the petitioners think otherwise, that is why, they filed the instant petition seeking
to annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter
PD 1869, because it is allegedly contrary to morals, public policy and order, and
because
A. It constitutes a waiver of a right prejudicial to a third person with a right recognized
by law. It waived the Manila City government's right to impose taxes and license fees,
which is recognized by law;
B. For the same reason stated in the immediately preceding paragraph, the law has
intruded into the local government's right to impose local taxes and license fees. This,
in contravention of the constitutionally enshrined principle of local autonomy;
C. It violates the equal protection clause of the constitution in that it legalizes
PAGCOR conducted gambling, while most other forms of gambling are outlawed,
together with prostitution, drug trafficking and other vices;
D. It violates the avowed trend of the Cory government away from monopolistic and
crony economy, and toward free enterprise and privatization. (p. 2, Amended Petition;
p. 7, Rollo)
In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to
the declared national policy of the "new restored democracy" and the people's will as
expressed in the 1987 Constitution. The decree is said to have a "gambling objective"
and therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII
and Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended
Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and practicing lawyers
(petitioner Basco being also the Chairman of the Committee on Laws of the City
Council of Manila), can question and seek the annulment of PD 1869 on the alleged
grounds mentioned above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was created by
virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D.
1067-B also dated January 1, 1977 "to establish, operate and maintain gambling
casinos on land or water within the territorial jurisdiction of the Philippines." Its
operation was originally conducted in the well known floating casino "Philippine
Tourist." The operation was considered a success for it proved to be a potential
source of revenue to fund infrastructure and socio-economic projects, thus, P.D. 1399
was passed on June 2, 1978 for PAGCOR to fully attain this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable
the Government to regulate and centralize all games of chance authorized by existing
franchise or permitted by law, under the following declared policy
Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to
centralize and integrate all games of chance not heretofore authorized by existing
franchises or permitted by law in order to attain the following objectives:
(a) To centralize and integrate the right and authority to operate and conduct games
of chance into one corporate entity to be controlled, administered and supervised by
the Government.
(b) To establish and operate clubs and casinos, for amusement and recreation,
including sports gaming pools, (basketball, football, lotteries, etc.) and such other
forms of amusement and recreation including games of chance, which may be
allowed by law within the territorial jurisdiction of the Philippines and which will: (1)
generate sources of additional revenue to fund infrastructure and socio-civic projects,
such as flood control programs, beautification, sewerage and sewage projects,
Tulungan ng Bayan Centers, Nutritional Programs, Population Control and such other
essential public services; (2) create recreation and integrated facilities which will
expand and improve the country's existing tourist attractions; and (3) minimize, if not
totally eradicate, all the evils, malpractices and corruptions that are normally prevalent
on the conduct and operation of gambling clubs and casinos without direct
government involvement. (Section 1, P.D. 1869)
To attain these objectives PAGCOR is given territorial jurisdiction all over the
Philippines. Under its Charter's repealing clause, all laws, decrees, executive orders,
rules and regulations, inconsistent therewith, are accordingly repealed, amended or
modified.
It is reported that PAGCOR is the third largest source of government revenue, next to
the Bureau of Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR
earned P3.43 Billion, and directly remitted to the National Government a total of P2.5
Billion in form of franchise tax, government's income share, the President's Social
Fund and Host Cities' share. In addition, PAGCOR sponsored other socio-cultural and
charitable projects on its own or in cooperation with various governmental agencies,
and other private associations and organizations. In its 3 1/2 years of operation under
the present administration, PAGCOR remitted to the government a total of P6.2
Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its
nine (9) casinos nationwide, directly supporting the livelihood of Four Thousand Four
Hundred Ninety-Four (4,494) families.
But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the
same is "null and void" for being "contrary to morals, public policy and public order,"
monopolistic and tends toward "crony economy", and is violative of the equal
protection clause and local autonomy as well as for running counter to the state
policies enunciated in Sections 11 (Personal Dignity and Human Rights), 12 (Family)
and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and
Section 2 (Educational Values) of Article XIV of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the
most deliberate consideration by the Court, involving as it does the exercise of what
has been described as "the highest and most delicate function which belongs to the
judicial department of the government." (State v. Manuel, 20 N.C. 144; Lozano v.
Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a co-equal and
coordinate branch of the government We need not be reminded of the time-honored
principle, deeply ingrained in our jurisprudence, that a statute is presumed to be valid.
Every presumption must be indulged in favor of its constitutionality. This is not to say
that We approach Our task with diffidence or timidity. Where it is clear that the
legislature or the executive for that matter, has over-stepped the limits of its authority
under the constitution, We should not hesitate to wield the axe and let it fall heavily,
as fall it must, on the offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr.
Justice Zaldivar underscored the
. . . thoroughly established principle which must be followed in all cases where
questions of constitutionality as obtain in the instant cases are involved. All
presumptions are indulged in favor of constitutionality; one who attacks a statute
alleging unconstitutionality must prove its invalidity beyond a reasonable doubt; that a
law may work hardship does not render it unconstitutional; that if any reasonable
basis may be conceived which supports the statute, it will be upheld and the
challenger must negate all possible basis; that the courts are not concerned with the
wisdom, justice, policy or expediency of a statute and that a liberal interpretation of
the constitution in favor of the constitutionality of legislation should be adopted.
(Danner v. Hass, 194 N.W. 2nd534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660,
663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta
v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes,
125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are questioning the
legal personality of petitioners to file the instant petition.
Considering however the importance to the public of the case at bar, and in keeping
with the Court's duty, under the 1987 Constitution, to determine whether or not the
other branches of government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the discretion given to them,
the Court has brushed aside technicalities of procedure and has taken cognizance of
this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan,
163 SCRA 371)
With particular regard to the requirement of proper party as applied in the cases
before us, We hold that the same is satisfied by the petitioners and intervenors
because each of them has sustained or is in danger of sustaining an immediate injury
as a result of the acts or measures complained of. And even if, strictly speaking they
are not covered by the definition, it is still within the wide discretion of the Court to
waive the requirement and so remove the impediment to its addressing and resolving
the serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed
to question the constitutionality of several executive orders issued by President
Quirino although they were involving only an indirect and general interest shared in
common with the public. The Court dismissed the objection that they were not proper
parties and ruled that "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must
technicalities of procedure." We have since then applied the exception in many other
cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian
Reform, 175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the substantive issues
raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the
prohibition of gambling does not mean that the Government cannot regulate it in the
exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has been defined
as the "state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare." (Edu v. Ericta, 35 SCRA 481, 487)
As defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in
order to foster the common good. It is not capable of an exact definition but has been,
purposely, veiled in general terms to underscore its all-comprehensive embrace.
(Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the
future where it could be done, provides enough room for an efficient and flexible
response to conditions and circumstances thus assuming the greatest benefits. (Edu
v. Ericta, supra)
It finds no specific Constitutional grant for the plain reason that it does not owe its
origin to the charter. Along with the taxing power and eminent domain, it is inborn in
the very fact of statehood and sovereignty. It is a fundamental attribute of government
that has enabled it to perform the most vital functions of governance. Marshall, to
whom the expression has been credited, refers to it succinctly as the plenary power of
the state "to govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The
police power of the State is a power co-extensive with self-protection and is most
aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of
Mindoro, 39 Phil. 660, 708) It is "the most essential, insistent, and illimitable of
powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a dynamic force that enables
the state to meet the agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to "regulate and
centralize thru an appropriate institution all games of chance authorized by existing
franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently
proved, regulating and centralizing gambling operations in one corporate entity the
PAGCOR, was beneficial not just to the Government but to society in general. It is a
reliable source of much needed revenue for the cash strapped Government. It
provided funds for social impact projects and subjected gambling to "close scrutiny,
regulation, supervision and control of the Government" (4th Whereas Clause, PD
1869). With the creation of PAGCOR and the direct intervention of the Government,
the evil practices and corruptions that go with gambling will be minimized if not totally
eradicated. Public welfare, then, lies at the bottom of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of
Manila to impose taxes and legal fees; that the exemption clause in P.D. 1869 is
violative of the principle of local autonomy. They must be referring to Section 13 par.
(2) of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying any
"tax of any kind or form, income or otherwise, as well as fees, charges or levies of
whatever nature, whether National or Local."
(2) Income and other taxes. a) Franchise Holder: No tax of any kind or form,
income or otherwise as well as fees, charges or levies of whatever nature, whether
National or Local, shall be assessed and collected under this franchise from the
Corporation; nor shall any form or tax or charge attach in any way to the earnings of
the Corporation, except a franchise tax of five (5%) percent of the gross revenues or
earnings derived by the Corporation from its operations under this franchise. Such tax
shall be due and payable quarterly to the National Government and shall be in lieu of
all kinds of taxes, levies, fees or assessments of any kind, nature or description,
levied, established or collected by any municipal, provincial or national government
authority (Section 13 [2]).
Their contention stated hereinabove is without merit for the following reasons:
(a) The City of Manila, being a mere Municipal corporation has no inherent right to
impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105
Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or
statute must plainly show an intent to confer that power or the municipality cannot
assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must
always yield to a legislative act which is superior having been passed upon by the
state itself which has the "inherent power to tax" (Bernas, the Revised [1973]
Philippine Constitution, Vol. 1, 1983 ed. p. 445).
(b) The Charter of the City of Manila is subject to control by Congress. It should be
stressed that "municipal corporations are mere creatures of Congress" (Unson v.
Lacson, G.R. No. 7909, January 18, 1957) which has the power to "create and
abolish municipal corporations" due to its "general legislative powers" (Asuncion v.
Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has
the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July
2, 1950). And if Congress can grant the City of Manila the power to tax certain
matters, it can also provide for exemptions or even take back the power.
(c) The City of Manila's power to impose license fees on gambling, has long been
revoked. As early as 1975, the power of local governments to regulate gambling thru
the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and was
vested exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered
cities and other local governments to issue license, permit or other form of franchise
to operate, maintain and establish horse and dog race tracks, jai-alai and other forms
of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse
and dog race tracks, jai-alai and other forms of gambling shall be issued by the
national government upon proper application and verification of the qualification of the
applicant . . .
Therefore, only the National Government has the power to issue "licenses or permits"
for the operation of gambling. Necessarily, the power to demand or collect license
fees which is a consequence of the issuance of "licenses or permits" is no longer
vested in the City of Manila.
(d) Local governments have no power to tax instrumentalities of the National
Government. PAGCOR is a government owned or controlled corporation with an
original charter, PD 1869. All of its shares of stocks are owned by the National
Government. In addition to its corporate powers (Sec. 3, Title II, PD 1869) it also
exercises regulatory powers thus:
Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the
affiliated entities, and shall exercise all the powers, authority and the responsibilities
vested in the Securities and Exchange Commission over such affiliating entities
mentioned under the preceding section, including, but not limited to amendments of
Articles of Incorporation and By-Laws, changes in corporate term, structure,
capitalization and other matters concerning the operation of the affiliated entities, the
provisions of the Corporation Code of the Philippines to the contrary notwithstanding,
except only with respect to original incorporation.
PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role
is governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might be burdened,
impeded or subjected to control by a mere Local government.
The states have no power by taxation or otherwise, to retard, impede, burden or in
any manner control the operation of constitutional laws enacted by Congress to carry
into execution the powers vested in the federal government. (MC Culloch v. Marland,
4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local
governments.
Justice Holmes, speaking for the Supreme Court, made reference to the entire
absence of power on the part of the States to touch, in that way (taxation) at least, the
instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be
agreed that no state or political subdivision can regulate a federal instrumentality in
such a way as to prevent it from consummating its federal responsibilities, or even to
seriously burden it in the accomplishment of them. (Antieau, Modern Constitutional
Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination
of what local authorities may perceive to be undesirable activities or enterprise using
the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc
Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation
of the very entity which has the inherent power to wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be
violated by P.D. 1869. This is a pointless argument. Article X of the 1987 Constitution
(on Local Autonomy) provides:
Sec. 5. Each local government unit shall have the power to create its own source of
revenue and to levy taxes, fees, and other charges subject to such guidelines and
limitation as the congress may provide, consistent with the basic policy on local
autonomy. Such taxes, fees and charges shall accrue exclusively to the local
government. (emphasis supplied)
The power of local government to "impose taxes and fees" is always subject to
"limitations" which Congress may provide by law. Since PD 1869 remains an
"operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987
Constitution), its "exemption clause" remains as an exception to the exercise of the
power of local governments to impose taxes and fees. It cannot therefore be violative
but rather is consistent with the principle of local autonomy.
Besides, the principle of local autonomy under the 1987 Constitution simply means
"decentralization" (III Records of the 1987 Constitutional Commission, pp. 435-436,
as cited in Bernas, The Constitution of the Republic of the Philippines, Vol. II, First
Ed., 1988, p. 374). It does not make local governments sovereign within the state or
an "imperium in imperio."
Local Government has been described as a political subdivision of a nation or state
which is constituted by law and has substantial control of local affairs. In a unitary
system of government, such as the government under the Philippine Constitution,
local governments can only be an intra sovereign subdivision of one sovereign nation,
it cannot be an imperium in imperio. Local government in such a system can only
mean a measure of decentralization of the function of government. (emphasis
supplied)
As to what state powers should be "decentralized" and what may be delegated to
local government units remains a matter of policy, which concerns wisdom. It is
therefore a political question. (Citizens Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing with
gambling is a State concern and hence, it is the sole prerogative of the State to retain
it or delegate it to local governments.
As gambling is usually an offense against the State, legislative grant or express
charter power is generally necessary to empower the local corporation to deal with
the subject. . . . In the absence of express grant of power to enact, ordinance
provisions on this subject which are inconsistent with the state laws are void. (Ligan v.
Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757
following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480, as
cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause of the
Constitution, because "it legalized PAGCOR conducted gambling, while most
gambling are outlawed together with prostitution, drug trafficking and other vices" (p.
82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners' posture
ignores the well-accepted meaning of the clause "equal protection of the laws." The
clause does not preclude classification of individuals who may be accorded different
treatment under the law as long as the classification is not unreasonable or arbitrary
(Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force
on all persons or things to be conformable to Article III, Section 1 of the Constitution
(DECS v. San Diego, G.R. No. 89572, December 21, 1989).
The "equal protection clause" does not prohibit the Legislature from establishing
classes of individuals or objects upon which different rules shall operate (Laurel v.
Misa, 43 O.G. 2847). The Constitution does not require situations which are different
in fact or opinion to be treated in law as though they were the same (Gomez v.
Palomar, 25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the
equal protection is not clearly explained in the petition. The mere fact that some
gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by
RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are
legalized under certain conditions, while others are prohibited, does not render the
applicable laws, P.D. 1869 for one, unconstitutional.
If the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied. (Gomez v.
Palomar, 25 SCRA 827)
The equal protection clause of the 14th Amendment does not mean that all
occupations called by the same name must be treated the same way; the state may
do what it can to prevent which is deemed as evil and stop short of those cases in
which harm to the few concerned is not less than the harm to the public that would
insure if the rule laid down were made mathematically exact. (Dominican Hotel v.
Arizona, 249 US 2651).
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory
Government away from monopolies and crony economy and toward free enterprise
and privatization" suffice it to state that this is not a ground for this Court to nullify P.D.
1869. If, indeed, PD 1869 runs counter to the government's policies then it is for the
Executive Department to recommend to Congress its repeal or amendment.
The judiciary does not settle policy issues. The Court can only declare what the law is
and not what the law should be.1wphi1 Under our system of government, policy
issues are within the domain of the political branches of government and of the
people themselves as the repository of all state power. (Valmonte v. Belmonte, Jr.,
170 SCRA 256).
On the issue of "monopoly," however, the Constitution provides that:
Sec. 19. The State shall regulate or prohibit monopolies when public interest so
requires. No combinations in restraint of trade or unfair competition shall be allowed.
(Art. XII, National Economy and Patrimony)
It should be noted that, as the provision is worded, monopolies are not necessarily
prohibited by the Constitution. The state must still decide whether public interest
demands that monopolies be regulated or prohibited. Again, this is a matter of policy
for the Legislature to decide.
On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12
(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to
state also that these are merely statements of principles and, policies. As such, they
are basically not self-executing, meaning a law should be passed by Congress to
clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be self-executing
principles ready for enforcement through the courts. They were rather directives
addressed to the executive and the legislature. If the executive and the legislature
failed to heed the directives of the articles the available remedy was not judicial or
political. The electorate could express their displeasure with the failure of the
executive and the legislature through the language of the ballot. (Bernas, Vol. II, p. 2)
Every law has in its favor the presumption of constitutionality (Yu Cong Eng v.
Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82
SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified,
it must be shown that there is a clear and unequivocal breach of the Constitution, not
merely a doubtful and equivocal one. In other words, the grounds for nullity must be
clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition
this Court to declare a law, or parts thereof, unconstitutional must clearly establish the
basis for such a declaration. Otherwise, their petition must fail. Based on the grounds
raised by petitioners to challenge the constitutionality of P.D. 1869, the Court finds
that petitioners have failed to overcome the presumption. The dismissal of this
petition is therefore, inevitable. But as to whether P.D. 1869 remains a wise
legislation considering the issues of "morality, monopoly, trend to free enterprise,
privatization as well as the state principles on social justice, role of youth and
educational values" being raised, is up for Congress to determine.

As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 521

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any
case, in its favor the presumption of validity and constitutionality which petitioners
Valmonte and the KMU have not overturned. Petitioners have not undertaken to
identify the provisions in the Constitution which they claim to have been violated by
that statute. This Court, however, is not compelled to speculate and to imagine how
the assailed legislation may possibly offend some provision of the Constitution. The
Court notes, further, in this respect that petitioners have in the main put in question
the wisdom, justice and expediency of the establishment of the OPSF, issues which
are not properly addressed to this Court and which this Court may not constitutionally
pass upon. Those issues should be addressed rather to the political departments of
government: the President and the Congress.

Parenthetically, We wish to state that gambling is generally immoral, and this is

precisely so when the gambling resorted to is excessive. This excessiveness
necessarily depends not only on the financial resources of the gambler and his family
but also on his mental, social, and spiritual outlook on life. However, the mere fact
that some persons may have lost their material fortunes, mental control, physical
health, or even their lives does not necessarily mean that the same are directly
attributable to gambling. Gambling may have been the antecedent, but certainly not
necessarily the cause. For the same consequences could have been preceded by an
overdose of food, drink, exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento,
Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 80391 February 28, 1989
SULTAN ALIMBUSAR P. LIMBONA, petitioner,
vs.
CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING,
ACMAD TOMAWIS, GERRY TOMAWIS, JESUS ORTIZ, ANTONIO DELA FUENTE,
DIEGO PALOMARES, JR., RAUL DAGALANGIT, and BIMBO
SINSUAT, respondents.
Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner petitioner.
Makabangkit B. Lanto for respondents.
SARMIENTO, J.:
The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The
antecedent facts are as follows:
1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a
member of the Sangguniang Pampook, Regional Autonomous Government, Region
XII, representing Lanao del Sur.
2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central Mindanao (Assembly for brevity).
3. Said Assembly is composed of eighteen (18) members. Two of said members,
respondents Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the
Commission on Elections their respective certificates of candidacy in the May 11,
1987 congressional elections for the district of Lanao del Sur but they later withdrew
from the aforesaid election and thereafter resumed again their positions as members
of the Assembly.
4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the
Committee on Muslim Affairs of the House of Representatives, invited Mr. Xavier
Razul, Pampook Speaker of Region XI, Zamboanga City and the petitioner in his
capacity as Speaker of the Assembly, Region XII, in a letter which reads:
The Committee on Muslim Affairs well undertake consultations and dialogues with
local government officials, civic, religious organizations and traditional leaders on the
recent and present political developments and other issues affecting Regions IX and
XII.
The result of the conference, consultations and dialogues would hopefully chart the
autonomous governments of the two regions as envisioned and may prod the
President to constitute immediately the Regional Consultative Commission as
mandated by the Commission.
You are requested to invite some members of the Pampook Assembly of your
respective assembly on November 1 to 15, 1987, with venue at the Congress of the
Philippines. Your presence, unstinted support and cooperation is (sic) indispensable.
5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary
Johnny Alimbuyao of the Assembly to wire all Assemblymen that there shall be no
session in November as "our presence in the house committee hearing of Congress
take (sic) precedence over any pending business in batasang pampook ... ."
6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary
Alimbuyao sent to the members of the Assembly the following telegram:
TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM
RECEIVED FROM SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY
MATALAM CHAIRMAN OF THE HOUSE COMMITTEE ON MUSLIM AFFAIRS
REQUESTED ME TO ASSIST SAID COMMITTEE IN THE DISCUSSION OF THE
PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WERE ALL
ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR
PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE
PRECEDENCE OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF
MATALAM FOLLOWS UNQUOTE REGARDS.
7. On November 2, 1987, the Assembly held session in defiance of petitioner's
advice, with the following assemblymen present:
1. Sali, Salic
2. Conding, Pilipinas (sic)
3. Dagalangit, Rakil
4. Dela Fuente, Antonio
5. Mangelen, Conte
6. Ortiz, Jesus
7. Palomares, Diego
8. Sinsuat, Bimbo Johnny Evangelists as Acting Secretary in the session last November 2, 1987 be
reconfirmed in today's session.
9. Tomawis, Acmad
HON. SALIC ALI: I second the motions.
10. Tomawis, Jerry
PRESIDING OFFICER: Any comment or objections on the two motions presented?
After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized Me chair hears none and the said motions are approved. ...
to preside in the session. On Motion to declare the seat of the Speaker vacant, all
Assemblymen in attendance voted in the affirmative, hence, the chair declared said Twelve (12) members voted in favor of the motion to declare the seat of the Speaker
seat of the Speaker vacant. 8. On November 5, 1987, the session of the Assembly vacant; one abstained and none voted against. 1
resumed with the following Assemblymen present:
Accordingly, the petitioner prays for judgment as follows:
1. Mangelen Conte-Presiding Officer
WHEREFORE, petitioner respectfully prays that-
2. Ali Salic
(a) This Petition be given due course;
3. Ali Salindatu
(b) Pending hearing, a restraining order or writ of preliminary injunction be issued
4. Aratuc, Malik enjoining respondents from proceeding with their session to be held on November 5,
1987, and on any day thereafter;
5. Cajelo, Rene
(c) After hearing, judgment be rendered declaring the proceedings held by
6. Conding, Pilipinas (sic) respondents of their session on November 2, 1987 as null and void;

7. Dagalangit, Rakil (d) Holding the election of petitioner as Speaker of said Legislative Assembly or
Batasan Pampook, Region XII held on March 12, 1987 valid and subsisting, and
8. Dela Fuente, Antonio
(e) Making the injunction permanent.
9. Ortiz, Jesus
2
Petitioner likewise prays for such other relief as may be just and equitable.
10 Palomares, Diego
Pending further proceedings, this Court, on January 19, 1988, received a resolution
11. Quijano, Jesus filed by the Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM
MEMBERSHIP OF THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION
12. Sinsuat, Bimbo
XII," 3 on the grounds, among other things, that the petitioner "had caused to be
13. Tomawis, Acmad prepared and signed by him paying [sic] the salaries and emoluments of Odin Abdula,
who was considered resigned after filing his Certificate of Candidacy for
14. Tomawis, Jerry Congressmen for the First District of Maguindanao in the last May 11, elections. . .
and nothing in the record of the Assembly will show that any request for reinstatement
An excerpt from the debates and proceeding of said session reads: by Abdula was ever made . . ." 4 and that "such action of Mr. Lim bona in paying
Abdula his salaries and emoluments without authority from the Assembly . . .
HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the constituted a usurpation of the power of the Assembly," 5 that the petitioner "had
presence of our colleagues who have come to attend the session today, I move to call recently caused withdrawal of so much amount of cash from the Assembly resulting
the names of the new comers in order for them to cast their votes on the previous to the non-payment of the salaries and emoluments of some Assembly [sic]," 6 and
motion to declare the position of the Speaker vacant. But before doing so, I move also that he had "filed a case before the Supreme Court against some members of the
that the designation of the Speaker Pro Tempore as the Presiding Officer and Mr. Assembly on question which should have been resolved within the confines of the
Assembly," 7 for which the respondents now submit that the petition had become
"moot and academic". 8
The first question, evidently, is whether or not the expulsion of the petitioner (pending
litigation) has made the case moot and academic.
We do not agree that the case has been rendered moot and academic by reason
simply of the expulsion resolution so issued. For, if the petitioner's expulsion was
done purposely to make this petition moot and academic, and to preempt the Court, it
will not make it academic.
On the ground of the immutable principle of due process alone, we hold that the
expulsion in question is of no force and effect. In the first place, there is no showing
that the Sanggunian had conducted an investigation, and whether or not the petitioner
had been heard in his defense, assuming that there was an investigation, or
otherwise given the opportunity to do so. On the other hand, what appears in the
records is an admission by the Assembly (at least, the respondents) that "since
November, 1987 up to this writing, the petitioner has not set foot at the Sangguniang
Pampook." 9 "To be sure, the private respondents aver that "[t]he Assemblymen, in a
conciliatory gesture, wanted him to come to Cotabato City," 10 but that was "so that
their differences could be threshed out and settled." 11Certainly, that avowed wanting
or desire to thresh out and settle, no matter how conciliatory it may be cannot be a
substitute for the notice and hearing contemplated by law.
While we have held that due process, as the term is known in administrative law,
does not absolutely require notice and that a party need only be given the opportunity
to be heard, 12 it does not appear herein that the petitioner had, to begin with, been
made aware that he had in fact stood charged of graft and corruption before his
collegues. It cannot be said therefore that he was accorded any opportunity to rebut
their accusations. As it stands, then, the charges now levelled amount to mere
accusations that cannot warrant expulsion.
In the second place, (the resolution) appears strongly to be a bare act of vendetta by
the other Assemblymen against the petitioner arising from what the former perceive to
be abduracy on the part of the latter. Indeed, it (the resolution) speaks of "a case
[having been filed] [by the petitioner] before the Supreme Court . . . on question which
should have been resolved within the confines of the Assemblyman act which some
members claimed unnecessarily and unduly assails their integrity and character as
representative of the people" 13 an act that cannot possibly justify expulsion. Access
to judicial remedies is guaranteed by the Constitution, 14 and, unless the recourse
amounts to malicious prosecution, no one may be punished for seeking redress in the
courts.
We therefore order reinstatement, with the caution that should the past acts of the
petitioner indeed warrant his removal, the Assembly is enjoined, should it still be so
minded, to commence proper proceedings therefor in line with the most elementary
requirements of due process. And while it is within the discretion of the members of
the Sanggunian to punish their erring colleagues, their acts are nonetheless subject
to the moderating band of this Court in the event that such discretion is exercised with
grave abuse.
It is, to be sure, said that precisely because the Sangguniang Pampook(s) are
"autonomous," the courts may not rightfully intervene in their affairs, much less strike
down their acts. We come, therefore, to the second issue: Are the so-called
autonomous governments of Mindanao, as they are now constituted, subject to the
jurisdiction of the national courts? In other words, what is the extent of self-
government given to the two autonomous governments of Region IX and XII?
The autonomous governments of Mindanao were organized in Regions IX and XII by
Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other things,
the Decree established "internal autonomy" 16 in the two regions "[w]ithin the
framework of the national sovereignty and territorial integrity of the Republic of the
Philippines and its Constitution," 17 with legislative and executive machinery to
exercise the powers and responsibilities 18specified therein.
It requires the autonomous regional governments to "undertake all internal
administrative matters for the respective regions," 19 except to "act on matters which
are within the jurisdiction and competence of the National Government," 20 "which
include, but are not limited to, the following:
(1) National defense and security;
(2) Foreign relations;
(3) Foreign trade;
(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and
external borrowing,
(5) Disposition, exploration, development, exploitation or utilization of all natural
resources;
(6) Air and sea transport
(7) Postal matters and telecommunications;
(8) Customs and quarantine;
(9) Immigration and deportation;
(10) Citizenship and naturalization;
(11) National economic, social and educational planning; and
(12) General auditing. 21
In relation to the central government, it provides that "[t]he President shall have the
power of general supervision and control over the Autonomous Regions ..." 22
Now, autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the base
of government power and in the process to make local governments "more
responsive and accountable," 23 "and ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress." 24 At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on
national concerns. The President exercises "general supervision" 25 over them, but
only to "ensure that local affairs are administered according to law." 26 He has no
control over their acts in the sense that he can substitute their judgments with his
own. 27
Decentralization of power, on the other hand, involves an abdication of political power
in the favor of local governments units declare to be autonomous . In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to "self-immolation," since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency. 28
But the question of whether or not the grant of autonomy Muslim Mindanao under the
1987 Constitution involves, truly, an effort to decentralize power rather than mere
administration is a question foreign to this petition, since what is involved herein is a
local government unit constituted prior to the ratification of the present Constitution.
Hence, the Court will not resolve that controversy now, in this case, since no
controversy in fact exists. We will resolve it at the proper time and in the proper case.
Under the 1987 Constitution, local government units enjoy autonomy in these two
senses, thus:
Section 1. The territorial and political subdivisions of the Republic of the Philippines
are the provinces, cities, municipalities, and barangays. Here shall be autonomous
regions in Muslim Mindanao ,and the Cordilleras as hereinafter provided. 29
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30
xxx xxx xxx
See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the
Cordilleras consisting of provinces, cities, municipalities, and geographical areas
sharing common and distinctive historical and cultural heritage, economic and social
structures, and other relevant characteristics within the framework of this Constitution
and the national sovereignty as well as territorial integrity of the Republic of the
Philippines. 31
An autonomous government that enjoys autonomy of the latter category [CONST.
(1987), art. X, sec. 15.] is subject alone to the decree of the organic act creating it and
accepted principles on the effects and limits of "autonomy." On the other hand, an
autonomous government of the former class is, as we noted, under the supervision of
the national government acting through the President (and the Department of Local
Government). 32 If the Sangguniang Pampook (of Region XII), then, is autonomous in
the latter sense, its acts are, debatably beyond the domain of this Court in perhaps
the same way that the internal acts, say, of the Congress of the Philippines are
beyond our jurisdiction. But if it is autonomous in the former category only, it comes
unarguably under our jurisdiction. An examination of the very Presidential Decree
creating the autonomous governments of Mindanao persuades us that they were
never meant to exercise autonomy in the second sense, that is, in which the central
government commits an act of self-immolation. Presidential Decree No. 1618, in the
first place, mandates that "[t]he President shall have the power of general supervision
and control over Autonomous Regions."33 In the second place, the Sangguniang
Pampook, their legislative arm, is made to discharge chiefly administrative services,
thus:
SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall
exercise local legislative powers over regional affairs within the framework of national
development plans, policies and goals, in the following areas:
(1) Organization of regional administrative system;
(2) Economic, social and cultural development of the Autonomous Region;
(3) Agricultural, commercial and industrial programs for the Autonomous Region;
(4) Infrastructure development for the Autonomous Region;
(5) Urban and rural planning for the Autonomous Region;
(6) Taxation and other revenue-raising measures as provided for in this Decree;
(7) Maintenance, operation and administration of schools established by the
Autonomous Region;
(8) Establishment, operation and maintenance of health, welfare and other social
services, programs and facilities;
(9) Preservation and development of customs, traditions, languages and culture
indigenous to the Autonomous Region; and
(10) Such other matters as may be authorized by law,including the enactment of such
measures as may be necessary for the promotion of the general welfare of the people
in the Autonomous Region.
The President shall exercise such powers as may be necessary to assure that
enactment and acts of the Sangguniang Pampook and the Lupong Tagapagpaganap
ng Pook are in compliance with this Decree, national legislation, policies, plans and
programs.
34
The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa.
It does not appear to us, moreover, that the petitioner had resorted to the aforesaid
"recess" in order to forestall the Assembly from bringing about his ouster. This is not
apparent from the pleadings before us. We are convinced that the invitation was what
precipitated it.
In holding that the "recess" in question is valid, we are not to be taken as establishing
a precedent, since, as we said, a recess can not be validly declared without a session
having been first opened. In upholding the petitioner herein, we are not giving him
a carte blanche to order recesses in the future in violation of the Rules, or otherwise
to prevent the lawful meetings thereof.

Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the Neither are we, by this disposition, discouraging the Sanggunian from reorganizing
expulsion in question, with more reason can we review the petitioner's removal as itself pursuant to its lawful prerogatives. Certainly, it can do so at the proper time. In
Speaker. the event that be petitioner should initiate obstructive moves, the Court is certain that
it is armed with enough coercive remedies to thwart them. 39
Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that:
(1) the Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of In view hereof, we find no need in dwelling on the issue of quorum.
declaring the office of the Speaker vacant), did so in violation of the Rules of the
Sangguniang Pampook since the Assembly was then on recess; and (2) assuming WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang
that it was valid, his ouster was ineffective nevertheless for lack of quorum. Pampook, Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member,
Sangguniang Pampook, Region XII; and (2) REINSTATE him as Speaker thereof. No
Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were costs.
invalid. It is true that under Section 31 of the Region XII Sanggunian Rules,
"[s]essions shall not be suspended or adjourned except by direction of the SO ORDERED.
Sangguniang Pampook," 35 but it provides likewise that "the Speaker may, on [sic] his
discretion, declare a recess of "short intervals." 36 Of course, there is disagreement Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano,
between the protagonists as to whether or not the recess called by the petitioner Gancayco, Bidin, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.
effective November 1 through 15, 1987 is the "recess of short intervals" referred to;
the petitioner says that it is while the respondents insist that, to all intents and Padilla, J., took no part.
purposes, it was an adjournment and that "recess" as used by their Rules only refers
to "a recess when arguments get heated up so that protagonists in a debate can talk
things out informally and obviate dissenssion [sic] and disunity. 37 The Court agrees
with the respondents on this regard, since clearly, the Rules speak of "short
intervals." Secondly, the Court likewise agrees that the Speaker could not have validly
called a recess since the Assembly had yet to convene on November 1, the date
session opens under the same Rules. 38 Hence, there can be no recess to speak of
that could possibly interrupt any session. But while this opinion is in accord with the
respondents' own, we still invalidate the twin sessions in question, since at the time
the petitioner called the "recess," it was not a settled matter whether or not he could.
do so. In the second place, the invitation tendered by the Committee on Muslim
Affairs of the House of Representatives provided a plausible reason for the
intermission sought. Thirdly, assuming that a valid recess could not be called, it does
not appear that the respondents called his attention to this mistake. What appears is
that instead, they opened the sessions themselves behind his back in an apparent act
of mutiny. Under the circumstances, we find equity on his side. For this reason, we
uphold the "recess" called on the ground of good faith.
SECOND DIVISION
[G.R. No. 129093. August 30, 2001]
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and
HON. CALIXTO CATAQUIZ, petitioners, vs. HON. FRANCISCO DIZON PAO and
TONY CALVENTO, respondents.
DECISION
QUISUMBING, J.:
For our resolution is a petition for review on certiorari seeking the reversal of the
decision[1] dated February 10, 1997 of the Regional Trial Court of San Pedro, Laguna,
Branch 93, enjoining petitioners from implementing or enforcing Kapasiyahan Bilang
508, Taon 1995, of the Sangguniang Panlalawigan of Laguna and its subsequent
Order[2] dated April 21, 1997 denying petitioners motion for reconsideration.
On December 29, 1995, respondent Tony Calvento was appointed agent by the
Philippine Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the
operation of lotto. He asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for
a mayors permit to open the lotto outlet. This was denied by Mayor Cataquiz in a
letter dated February 19, 1996. The ground for said denial was an ordinance passed
by the Sangguniang Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, T.
1995 which was issued on September 18, 1995. The ordinance reads:
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA ILLEGAL GAMBLING LALO NA
ANG LOTTO SA LALAWIGAN NG LAGUNA
SAPAGKAT, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SAPAGKAT, ang sugal ay nagdudulot ng masasamang impluwensiya lalot higit sa
mga kabataan;
KUNG KAYAT DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg.
Kgd. Gat-Ala A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong
pagkakaisang sinangayunan ng lahat ng dumalo sa pulong;
IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri
ng sugal dito sa lalawigan ng Laguna lalot higit ang Lotto;
IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng
Philippine National Police (PNP) Col. [illegible] na mahigpit na pag-ibayuhin ang
pagsugpo sa lahat ng uri ng illegal na sugal sa buong lalawigan ng Laguna lalo na
ang Jueteng.[3]
As a result of this resolution of denial, respondent Calvento filed a complaint for
declaratory relief with prayer for preliminary injunction and temporary restraining
order. In the said complaint, respondent Calvento asked the Regional Trial Court of
San Pedro Laguna, Branch 93, for the following reliefs: (1) a preliminary injunction or
temporary restraining order, ordering the defendants to refrain from implementing or
enforcing Kapasiyahan Blg. 508, T. 1995; (2) an order requiring Hon. Municipal Mayor
Calixto R. Cataquiz to issue a business permit for the operation of a lotto outlet; and
(3) an order annulling or declaring as invalid Kapasiyahan Blg. 508, T. 1995.
On February 10, 1997, the respondent judge, Francisco Dizon Pao, promulgated his
decision enjoining the petitioners from implementing or enforcing resolution
or Kapasiyahan Blg. 508, T. 1995. The dispositive portion of said decision reads:
WHEREFORE, premises considered, defendants, their agents and representatives
are hereby enjoined from implementing or enforcing resolution or kapasiyahan blg.
508, T. 1995 of the Sangguniang Panlalawigan ng Laguna prohibiting the operation of
the lotto in the province of Laguna.
SO ORDERED.[4]
Petitioners filed a motion for reconsideration which was subsequently denied in an
Order dated April 21, 1997, which reads:
Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and the
Sangguniang Panlalawigan of Laguna, thru counsel, with the opposition filed by
plaintiffs counsel and the comment thereto filed by counsel for the defendants which
were duly noted, the Court hereby denies the motion for lack of merit.
SO ORDERED.[5]
On May 23, 1997, petitioners filed this petition alleging that the following errors were
committed by the respondent trial court:
I
THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM
IMPLEMENTING KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG
PANLALAWIGAN OF LAGUNA PROHIBITING THE OPERATION OF THE LOTTO
IN THE PROVINCE OF LAGUNA.
II
THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE
PETITIONERS THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM
MAY BE IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR
CONSULTATION AND APPROVAL BY THE LOCAL GOVERNMENT UNITS
CONCERNED AND OTHER CONCERNED SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy declaration of the
Provincial Government of Laguna of its vehement objection to the operation of lotto
and all forms of gambling. It is likewise a valid exercise of the provincial governments
police power under the General Welfare Clause of Republic Act 7160, otherwise
known as the Local Government Code of 1991.[6] They also maintain that
respondents lotto operation is illegal because no prior consultations and approval by
the local government were sought before it was implemented contrary to the express
provisions of Sections 2 (c) and 27 of R.A. 7160.[7]
For his part, respondent Calvento argues that the questioned resolution is, in effect, a
curtailment of the power of the state since in this case the national legislature itself
had already declared lotto as legal and permitted its operations around the
country.[8] As for the allegation that no prior consultations and approval were sought
from the sangguniang panlalawigan of Laguna, respondent Calvento contends this is
not mandatory since such a requirement is merely stated as a declaration of policy
and not a self-executing provision of the Local Government Code of 1991.[9] He also
states that his operation of the lotto system is legal because of the authority given to
him by the PCSO, which in turn had been granted a franchise to operate the lotto by
Congress.[10]
The Office of the Solicitor General (OSG), for the State, contends that the Provincial
Government of Laguna has no power to prohibit a form of gambling which has been
authorized by the national government.[11] He argues that this is based on the
principle that ordinances should not contravene statutes as municipal governments
are merely agents of the national government. The local councils exercise only
delegated legislative powers which have been conferred on them by Congress. This
being the case, these councils, as delegates, cannot be superior to the principal or
exercise powers higher than those of the latter. The OSG also adds that the question
of whether gambling should be permitted is for Congress to determine, taking into
account national and local interests. Since Congress has allowed the PCSO to
operate lotteries which PCSO seeks to conduct in Laguna, pursuant to its legislative
grant of authority, the provinces Sangguniang Panlalawigan cannot nullify the
exercise of said authority by preventing something already allowed by Congress.
The issues to be resolved now are the following: (1) whether Kapasiyahan Blg. 508,
T. 1995 of the Sangguniang Panlalawigan of Laguna and the denial of a mayors
permit based thereon are valid; and (2) whether prior consultations and approval by
the concerned Sanggunian are needed before a lotto system can be operated in a
given local government unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz to issue a
mayors permit for the operation of a lotto outlet in favor of private
respondent. According to the mayor, he based his decision on an existing ordinance
prohibiting the operation of lotto in the province of Laguna. The ordinance, however,
merely states the objection of the council to the said game. It is but a mere policy
statement on the part of the local council, which is not self-executing. Nor could it
serve as a valid ground to prohibit the operation of the lotto system in the province of
Laguna. Even petitioners admit as much when they stated in their petition that:
5.7. The terms of the Resolution and the validity thereof are express and clear. The
Resolution is a policy declaration of the Provincial Government of Laguna of its
vehement opposition and/or objection to the operation of and/or all forms of gambling
including the Lotto operation in the Province of Laguna.[12]
As a policy statement expressing the local governments objection to the lotto, such
resolution is valid. This is part of the local governments autonomy to air its views
which may be contrary to that of the national governments. However, this freedom to
exercise contrary views does not mean that local governments may actually enact
ordinances that go against laws duly enacted by Congress. Given this premise, the
assailed resolution in this case could not and should not be interpreted as a measure
or ordinance prohibiting the operation of lotto.
The game of lotto is a game of chance duly authorized by the national government
through an Act of Congress. Republic Act 1169, as amended by Batas Pambansa
Blg. 42, is the law which grants a franchise to the PCSO and allows it to operate the
lotteries. The pertinent provision reads:
Section 1. The Philippine Charity Sweepstakes Office.- The Philippine Charity
Sweepstakes Office, hereinafter designated the Office, shall be the principal
government agency for raising and providing for funds for health programs, medical
assistance and services and charities of national character, and as such shall have
the general powers conferred in section thirteen of Act Numbered One thousand four
hundred fifty-nine, as amended, and shall have the authority:
A. To hold and conduct charity sweepstakes races, lotteries, and other similar
activities, in such frequency and manner, as shall be determined, and subject to such
rules and regulations as shall be promulgated by the Board of Directors.
This statute remains valid today. While lotto is clearly a game of chance, the national
government deems it wise and proper to permit it. Hence, the Sangguniang
Panlalawigan of Laguna, a local government unit, cannot issue a resolution or an
ordinance that would seek to prohibit permits. Stated otherwise, what the national
legislature expressly allows by law, such as lotto, a provincial board may not disallow
by ordinance or resolution.
In our system of government, the power of local government units to legislate and
enact ordinances and resolutions is merely a delegated power coming from
Congress. As held in Tatel vs. Virac,[13]ordinances should not contravene an existing
statute enacted by Congress. The reasons for this is obvious, as elucidated
in Magtajas v. Pryce Properties Corp.[14]
Municipal governments are only agents of the national government. Local councils
exercise only delegated legislative powers conferred upon them by Congress as the
national lawmaking body. The delegate cannot be superior to the principal or exercise
powers higher than those of the latter. It is a heresy to suggest that the local
government units can undo the acts of Congress, from which they have derived their
power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly
from the legislature. It breathes into them the breath of life, without which they cannot
exist. As it creates, so it may destroy. As it may destroy, it may abridge and
control. Unless there is some constitutional limitation on the right, the legislature
might, by a single act, and if we can suppose it capable of so great a folly and so
great a wrong, sweep from existence all of the municipal corporations in the state,
and the corporation could not prevent it. We know of no limitation on the right so far
as the corporation themselves are concerned. They are, so to phrase it, the mere
tenants at will of the legislature (citing Clinton vs. Ceder Rapids, etc. Railroad Co., 24
Iowa 455).
Nothing in the present constitutional provision enhancing local autonomy dictates a
different conclusion.
The basic relationship between the national legislature and the local government units
has not been enfeebled by the new provisions in the Constitution strengthening the
policy of local autonomy. Without meaning to detract from that policy, we here confirm
that Congress retains control of the local government units although in significantly
reduced degree now than under our previous Constitutions. The power to create still
includes the power to destroy. The power to grant still includes the power to withhold
or recall. True, there are certain notable innovations in the Constitution, like the direct
conferment on the local government units of the power to tax (citing Art. X, Sec. 5,
Constitution), which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units,
which cannot defy its will or modify or violate it.[15]
Ours is still a unitary form of government, not a federal state. Being so, any form of
autonomy granted to local governments will necessarily be limited and confined within
the extent allowed by the central authority. Besides, the principle of local autonomy
under the 1987 Constitution simply means decentralization. It does not make local
governments sovereign within the state or an imperium in imperio.[16]
To conclude our resolution of the first issue, respondent mayor of San Pedro, cannot
avail of Kapasiyahan Bilang 508, Taon 1995, of the Provincial Board of Laguna as
justification to prohibit lotto in his municipality. For said resolution is nothing but an
expression of the local legislative unit concerned. The Boards enactment, like spring
water, could not rise above its source of power, the national legislature.
As for the second issue, we hold that petitioners erred in declaring that Sections 2 (c)
and 27 of Republic Act 7160, otherwise known as the Local Government Code of
1991, apply mandatorily in the setting up of lotto outlets around the country. These
provisions state:
Section 2. Declaration of Policy. x x x
(c) It is likewise the policy of the State to require all national agencies and offices to
conduct periodic consultations with appropriate local government units, non-
governmental and peoples organizations, and other concerned sectors of the
community before any project or program is implemented in their respective
jurisdictions.
Section 27. Prior Consultations Required. No project or program shall be
implemented by government authorities unless the consultations mentioned in
Section 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian
concerned is obtained; Provided, that occupants in areas where such projects are to
be implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.
From a careful reading of said provisions, we find that these apply only to national
programs and/or projects which are to be implemented in a particular local
community. Lotto is neither a program nor a project of the national government, but of
a charitable institution, the PCSO. Though sanctioned by the national government, it
is far fetched to say that lotto falls within the contemplation of Sections 2 (c) and 27 of
the Local Government Code.
Section 27 of the Code should be read in conjunction with Section 26
thereof.[17] Section 26 reads:
Section 26. Duty of National Government Agencies in the Maintenance of Ecological
Balance. It shall be the duty of every national agency or government-owned or
controlled corporation authorizing or involved in the planning and implementation of
any project or program that may cause pollution, climatic change, depletion of non-
renewable resources, loss of crop land, range-land, or forest cover, and extinction of
animal or plant species, to consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals and objectives of
the project or program, its impact upon the people and the community in terms of
environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.
Thus, the projects and programs mentioned in Section 27 should be interpreted to
mean projects and programs whose effects are among those enumerated in Section
26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic
change; (3) may cause the depletion of non-renewable resources; (4) may result in
loss of crop land, range-land, or forest cover; (5) may eradicate certain animal or
plant species from the face of the planet; and (6) other projects or programs that may
call for the eviction of a particular group of people residing in the locality where these
will be implemented. Obviously, none of these effects will be produced by the
introduction of lotto in the province of Laguna.

Moreover, the argument regarding lack of consultation raised by petitioners is clearly

an afterthought on their part. There is no indication in the letter of Mayor Cataquiz that
this was one of the reasons for his refusal to issue a permit. That refusal was
predicated solely but erroneously on the provisions of Kapasiyahan Blg. 508, Taon
1995, of the Sangguniang Panlalawigan of Laguna.

In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from
enforcing or implementing the Kapasiyahan Blg. 508, T. 1995, of the Sangguniang
Panlalawigan of Laguna. That resolution expresses merely a policy statement of the
Laguna provincial board. It possesses no binding legal force nor requires any act of
implementation. It provides no sufficient legal basis for respondent mayors refusal to
issue the permit sought by private respondent in connection with a legitimate
business activity authorized by a law passed by Congress.

WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regional
Trial Court of San Pedro, Laguna enjoining the petitioners from implementing or
enforcing Resolution or Kapasiyahan Blg. 508, T. 1995, of the Provincial Board of
Laguna is hereby AFFIRMED. No costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

EN BANC
[G.R. No. 125350. December 3, 2002]
HON. RTC JUDGES MERCEDES G. DADOLE (Executive Judge, Branch 28),
ULRIC R. CAETE (Presiding Judge, Branch 25), AGUSTINE R. VESTIL
(Presiding Judge, Branch 56), HON. MTC JUDGES TEMISTOCLES M. BOHOLST
(Presiding Judge, Branch 1), VICENTE C. FANILAG (Judge Designate, Branch
2), and WILFREDO A. DAGATAN (Presiding Judge, Branch 3), all of Mandaue
City, petitioners, vs. COMMISSION ON AUDIT, respondent.
DECISION
CORONA, J.:
Before us is a petition for certiorari under Rule 64 to annul the decision[1] and
resolution[2], dated September 21, 1995 and May 28, 1996, respectively, of the
respondent Commission on Audit (COA) affirming the notices of the Mandaue City
Auditor which diminished the monthly additional allowances received by the petitioner
judges of the Regional Trial Court (RTC) and Municipal Trial Court (MTC) stationed in
Mandaue City.
The undisputed facts are as follows:
In 1986, the RTC and MTC judges of Mandaue City started receiving monthly
allowances of P1,260 each through the yearly appropriation ordinance enacted by the
Sangguniang Panlungsod of the said city. In 1991, Mandaue City increased the
amount to P1,500 for each judge.
On March 15, 1994, the Department of Budget and Management (DBM) issued the
disputed Local Budget Circular No. 55 (LBC 55) which provided that:
xxx xxx xxx
2.3.2. In the light of the authority granted to the local government units under the
Local Government Code to provide for additional allowances and other benefits to
national government officials and employees assigned in their locality, such additional
allowances in the form of honorarium at rates not exceeding P1,000.00 in provinces
and cities and P700.00 in municipalities may be granted subject to the following
conditions:
a) That the grant is not mandatory on the part of the LGUs;
b) That all contractual and statutory obligations of the LGU including the
implementation of R.A. 6758 shall have been fully provided in the budget;
c) That the budgetary requirements/limitations under Section 324 and 325 of R.A.
7160 should be satisfied and/or complied with; and
d) That the LGU has fully implemented the devolution of functions/personnel in
accordance with R.A. 7160.[3] (italics supplied)
xxx xxx xxx
The said circular likewise provided for its immediate effectivity without need of
publication:
5.0 EFFECTIVITY
This Circular shall take effect immediately.
Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance
to herein petitioners, namely, Honorable RTC Judges Mercedes G. Dadole, Ulric R.
Caete, Agustin R. Vestil, Honorable MTC Judges Temistocles M. Boholst, Vicente C.
Fanilag and Wilfredo A. Dagatan, in excess of the amount authorized by LBC 55.
Beginning October, 1994, the additional monthly allowances of the petitioner judges
were reduced to P1,000 each. They were also asked to reimburse the amount they
received in excess of P1,000 from April to September, 1994.
The petitioner judges filed with the Office of the City Auditor a protest against the
notices of disallowance. But the City Auditor treated the protest as a motion for
reconsideration and indorsed the same to the COA Regional Office No. 7. In turn, the
COA Regional Office referred the motion to the head office with a recommendation
that the same be denied.
On September 21, 1995, respondent COA rendered a decision denying petitioners
motion for reconsideration. The COA held that:
The issue to be resolved in the instant appeal is whether or not the City Ordinance of
Mandaue which provides a higher rate of allowances to the appellant judges may
prevail over that fixed by the DBM under Local Budget Circular No. 55 dated March
15, 1994.
xxx xxx xxx
Applying the foregoing doctrine, appropriation ordinance of local government units is
subject to the organizational, budgetary and compensation policies of budgetary
authorities (COA 5th Ind., dated March 17, 1994 re: Province of Antique; COA letter
dated May 17, 1994 re: Request of Hon. Renato Leviste, Cong. 1 st Dist. Oriental
Mindoro). In this regard, attention is invited to Administrative Order No. 42 issued on
March 3, 1993 by the President of the Philippines clarifying the role of DBM in the
compensation and classification of local government positions under RA No. 7160
vis-avis the provisions of RA No. 6758 in view of the abolition of the JCLGPA. Section
1 of said Administrative Order provides that:
Section 1. The Department of Budget and Management as the lead administrator of
RA No. 6758 shall, through its Compensation and Position Classification Bureau,
continue to have the following responsibilities in connection with the implementation
of the Local Government Code of 1991:
a) Provide guidelines on the classification of local government positions and on the
specific rates of pay therefore;
b) Provide criteria and guidelines for the grant of all allowances and additional forms
of compensation to local government employees; xxx. (underscoring supplied)
To operationalize the aforecited presidential directive, DBM issued LBC No. 55, dated
March 15, 1994, whose effectivity clause provides that:
xxx xxx xxx
5.0 EFFECTIVITY
This Circular shall take effect immediately.
It is a well-settled rule that implementing rules and regulations promulgated by
administrative or executive officer in accordance with, and as authorized by law, has
the force and effect of law or partake the nature of a statute (Victorias Milling Co.,
Inc., vs. Social Security Commission, 114 Phil. 555, cited in Agpalos Statutory
Construction, 2nd Ed. P. 16; Justice Cruzs Phil. Political Law, 1984 Ed., p. 103;
Espanol vs. Phil Veterans Administration, 137 SCRA 314; Antique Sawmills Inc. vs.
Tayco, 17 SCRA 316).
xxx xxx xxx
There being no statutory basis to grant additional allowance to judges in excess of
P1,000.00 chargeable against the local government units where they are stationed,
this Commission finds no substantial grounds or cogent reason to disturb the decision
of the City Auditor, Mandaue City, disallowing in audit the allowances in question.
Accordingly, the above-captioned appeal of the MTC and RTC Judges of Mandaue
City, insofar as the same is not covered by Circular Letter No. 91-7, is hereby
dismissed for lack of merit.
xxx xxx xxx[4]
On November 27, 1995, Executive Judge Mercedes Gozo-Dadole, for and in behalf of
the petitioner judges, filed a motion for reconsideration of the decision of the COA. In
a resolution dated May 28, 1996, the COA denied the motion.
Hence, this petition for certiorari by the petitioner judges, submitting the following
questions for resolution:
I
HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO
PROVIDE ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO JUDGES
STATIONED IN AND ASSIGNED TO THE CITY?
II
CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL
BUDGET CIRCULAR NO. 55 RENDER INOPERATIVE THE POWER OF THE
LEGISLATIVE BODY OF A CITY BY SETTING A LIMIT TO THE EXTENT OF THE
EXERCISE OF SUCH POWER?
III
HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL
BUDGET CIRCULAR NO. 55 TO INCLUDE MEMBERS OF THE JUDICIARY IN
FIXING THE CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE
PROVIDED TO JUDGES STATIONED IN AND ASSIGNED TO MANDAUE CITY BY
THE CITY GOVERNMENT AT P1,000.00 PER MONTH NOTWITHSTANDING THAT
THEY HAVE BEEN RECEIVING ALLOWANCES OF P1,500.00 MONTHLY FOR
THE PAST FIVE YEARS?
IV
IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE
DEPARTMENT OF BUDGET AND MANAGEMENT VALID AND ENFORCEABLE
CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE WITH
LAW?[5]
Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of
Mandaue City by dictating a uniform amount that a local government unit can
disburse as additional allowances to judges stationed therein. They maintain that said
circular is not supported by any law and therefore goes beyond the supervisory
powers of the President. They further allege that said circular is void for lack of
publication.
On the other hand, the yearly appropriation ordinance providing for additional
allowances to judges is allowed by Section 458, par. (a)(1)[xi], of RA 7160, otherwise
known as the Local Government Code of 1991, which provides that:
Sec. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of the corporate
powers of the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective
city government, and in this connection, shall:
xxx xxx xxx
(xi) When the finances of the city government allow, provide for additional allowances
and other benefits to judges, prosecutors, public elementary and high school
teachers, and other national government officials stationed in or assigned to the
city; (italics supplied)
Instead of filing a comment on behalf of respondent COA, the Solicitor General filed a
manifestation supporting the position of the petitioner judges. The Solicitor General
argues that (1) DBM only enjoys the power to review and determine whether the
disbursements of funds were made in accordance with the ordinance passed by a
local government unit while (2) the COA has no more than auditorial visitation powers
over local government units pursuant to Section 348 of RA 7160 which provides for
the power to inspect at any time the financial accounts of local government units.
Moreover, the Solicitor General opines that the DBM and the respondent are only
authorized under RA 7160 to promulgate a Budget Operations Manual for local
government units, to improve and systematize methods, techniques and procedures
employed in budget preparation, authorization, execution and accountability pursuant
to Section 354 of RA 7160. The Solicitor General points out that LBC 55 was not
exercised under any of the aforementioned provisions.
Respondent COA, on the other hand, insists that the constitutional and statutory
authority of a city government to provide allowances to judges stationed therein is not
absolute. Congress may set limitations on the exercise of autonomy. It is for the
President, through the DBM, to check whether these legislative limitations are being
followed by the local government units.
One such law imposing a limitation on a local government units autonomy is Section
458, par. (a) (1) [xi], of RA 7160, which authorizes the disbursement of additional
allowances and other benefits to judges subject to the condition that the finances of
the city government should allow the same. Thus, DBM is merely enforcing the
condition of the law when it sets a uniform maximum amount for the additional
allowances that a city government can release to judges stationed therein.
Assuming arguendo that LBC 55 is void, respondent COA maintains that the
provisions of the yearly approved ordinance granting additional allowances to judges
are still prohibited by the appropriation laws passed by Congress every year. COA
argues that Mandaue City gets the funds for the said additional allowances of judges
from the Internal Revenue Allotment (IRA). But the General Appropriations Acts of
1994 and 1995 do not mention the disbursement of additional allowances to judges
as one of the allowable uses of the IRA. Hence, the provisions of said ordinance
granting additional allowances, taken from the IRA, to herein petitioner judges are
void for being contrary to law.
To resolve the instant petition, there are two issues that we must address: (1) whether
LBC 55 of the DBM is void for going beyond the supervisory powers of the President
and for not having been published and (2) whether the yearly appropriation ordinance
enacted by the City of Mandaue that provides for additional allowances to judges
contravenes the annual appropriation laws enacted by Congress.
We rule in favor of the petitioner judges.
On the first issue, we declare LBC 55 to be null and void.
We recognize that, although our Constitution[6] guarantees autonomy to local
government units, the exercise of local autonomy remains subject to the power of
control by Congress and the power of supervision by the President. Section 4 of
Article X of the 1987 Philippine Constitution provides that:
Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. x x x
In Pimentel vs. Aguirre[7], we defined the supervisory power of the President and
distinguished it from the power of control exercised by Congress. Thus:
This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been
interpreted to exclude the power of control. In Mondano v. Silvosa,[i][5] the Court
contrasted the President's power of supervision over local government officials with
that of his power of control over executive officials of the national government. It was
emphasized that the two terms -- supervision and control -- differed in meaning and
extent. The Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority
of an officer to see that subordinate officers perform their duties. If the latter fail or
neglect to fulfill them, the former may take such action or step as prescribed by law to
make them perform their duties. Control, on the other hand, means the power of an
officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in
the performance of his duties and to substitute the judgment of the former for that of
the latter."[ii][6]
In Taule v. Santos,[iii][7] we further stated that the Chief Executive wielded no more
authority than that of checking whether local governments or their officials were
performing their duties as provided by the fundamental law and by statutes. He
cannot interfere with local governments, so long as they act within the scope of their
authority. "Supervisory power, when contrasted with control, is the power of mere
oversight over an inferior body; it does not include any restraining authority over such
body,"[iv][8] we said.
In a more recent case, Drilon v. Lim,[v][9] the difference between control and
supervision was further delineated. Officers in control lay down the rules in the
performance or accomplishment of an act. If these rules are not followed, they may, in
their discretion, order the act undone or redone by their subordinates or even decide
to do it themselves. On the other hand, supervision does not cover such
authority.Supervising officials merely see to it that the rules are followed, but they
themselves do not lay down such rules, nor do they have the discretion to modify or
replace them. If the rules are not observed, they may order the work done or redone,
but only to conform to such rules. They may not prescribe their own manner of
execution of the act. They have no discretion on this matter except to see to it that the
rules are followed.
Under our present system of government, executive power is vested in the
President.[vi][10] The members of the Cabinet and other executive officials are merely
alter egos. As such, they are subject to the power of control of the President, at
whose will and behest they can be removed from office; or their actions and decisions
changed, suspended or reversed.[vii][11] In contrast, the heads of political subdivisions
are elected by the people. Their sovereign powers emanate from the electorate, to
whom they are directly accountable. By constitutional fiat, they are subject to the
Presidents supervision only, not control, so long as their acts are exercised within the
sphere of their legitimate powers. By the same token, the President may not withhold
or alter any authority or power given them by the Constitution and the law.
Clearly then, the President can only interfere in the affairs and activities of a local
government unit if he or she finds that the latter has acted contrary to law. This is the
scope of the Presidents supervisory powers over local government units. Hence, the
President or any of his or her alter egos cannot interfere in local affairs as long as the
concerned local government unit acts within the parameters of the law and the
Constitution. Any directive therefore by the President or any of his or her alter
egos seeking to alter the wisdom of a law-conforming judgment on local affairs of a
local government unit is a patent nullity because it violates the principle of local
autonomy and separation of powers of the executive and legislative departments in
governing municipal corporations.
Does LBC 55 go beyond the law it seeks to implement? Yes.
LBC 55 provides that the additional monthly allowances to be given by a local
government unit should not exceed P1,000 in provinces and cities and P700 in
municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that supposedly
serves as the legal basis of LBC 55, allows the grant of additional allowances to
judges when the finances of the city government allow. The said provision does not
authorize setting a definite maximum limit to the additional allowances granted to
judges. Thus, we need not belabor the point that the finances of a city government
may allow the grant of additional allowances higher than P1,000 if the revenues of the
said city government exceed its annual expenditures. Thus, to illustrate, a city
government with locally generated annual revenues of P40 million and expenditures
of P35 million can afford to grant additional allowances of more than P1,000 each to,
say, ten judges inasmuch as the finances of the city can afford it.
Setting a uniform amount for the grant of additional allowances is an inappropriate
way of enforcing the criterion found in Section 458, par. (a)(1)(xi), of RA 7160. The
DBM over-stepped its power of supervision over local government units by imposing
a prohibition that did not correspond with the law it sought to implement. In other
words, the prohibitory nature of the circular had no legal basis.
Furthermore, LBC 55 is void on account of its lack of publication, in violation of our
ruling in Taada vs. Tuvera[8] where we held that:
xxx. Administrative rules and regulations must also be published if their purpose is to
enforce or implement existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only
the personnel of an administrative agency and the public, need not be published.
Neither is publication required of the so-called letters of instruction issued by
administrative superiors concerning the rules or guidelines to be followed by their
subordinates in the performance of their duties.
Respondent COA claims that publication is not required for LBC 55 inasmuch as it is
merely an interpretative regulation applicable to the personnel of an LGU. We
disagree. In De Jesus vs. Commission on Audit[9] where we dealt with the same
issue, this Court declared void, for lack of publication, a DBM circular that disallowed
payment of allowances and other additional compensation to government officials and
employees. In refuting respondent COAs argument that said circular was merely an
internal regulation, we ruled that:
On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative.
Following the doctrine enunciated in Taada v. Tuvera, publication in the Official
Gazette or in a newspaper of general circulation in the Philippines is required
since DBM-CCC No. 10 is in the nature of an administrative circular the purpose
of which is to enforce or implement an existing law. Stated differently, to be
effective and enforceable, DBM-CCC No. 10 must go through the requisite publication
in the Official Gazette or in a newspaper of general circulation in the Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which
completely disallows payment of allowances and other additional compensation to
government officials and employees, starting November 1, 1989, is not a mere
interpretative or internal regulation. It is something more than that. And why not, when
it tends to deprive government workers of their allowance and additional
compensation sorely needed to keep body and soul together. At the very least,
before the said circular under attack may be permitted to substantially reduce
their income, the government officials and employees concerned should be
apprised and alerted by the publication of subject circular in the Official
Gazette or in a newspaper of general circulation in the Philippines to the end
that they be given amplest opportunity to voice out whatever opposition they
may have, and to ventilate their stance on the matter. This approach is more in
keeping with democratic precepts and rudiments of fairness and
transparency. (emphasis supplied)
In Philippine International Trading Corporation vs. Commission on Audit [10], we again
declared the same circular as void, for lack of publication, despite the fact that it was
re-issued and then submitted for publication. Emphasizing the importance of
publication to the effectivity of a regulation, we therein held that:
It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety
and submitted for publication in the Official Gazette per letter to the National Printing
Office dated March 9, 1999. Would the subsequent publication thereof cure the defect
and retroact to the time that the above-mentioned items were disallowed in audit?
The answer is in the negative, precisely for the reason that publication is required as
a condition precedent to the effectivity of a law to inform the public of the contents of
the law or rules and regulations before their rights and interests are affected by the
same. From the time the COA disallowed the expenses in audit up to the filing of
herein petition the subject circular remained in legal limbo due to its non-publication.
As was stated in Taada v. Tuvera, prior publication of laws before they become
effective cannot be dispensed with, for the reason that it would deny the public
knowledge of the laws that are supposed to govern it.[11]
We now resolve the second issue of whether the yearly appropriation ordinance
enacted by Mandaue City providing for fixed allowances for judges contravenes any
law and should therefore be struck down as null and void.
According to respondent COA, even if LBC 55 were void, the ordinances enacted by
Mandaue City granting additional allowances to the petitioner judges would still (be)
bereft of legal basis for want of a lawful source of funds considering that the
IRA cannot be used for such purposes. Respondent COA showed that Mandaue
Citys funds consisted of locally generated revenues and the IRA. From 1989 to 1995,
Mandaue Citys yearly expenditures exceeded its locally generated revenues, thus
resulting in a deficit. During all those years, it was the IRA that enabled Mandaue City
to incur a surplus. Respondent avers that Mandaue City used its IRA to pay for said
additional allowances and this violated paragraph 2 of the Special Provisions, page
1060, of RA 7845 (The General Appropriations Act of 1995) [12] and paragraph 3 of the
Special Provision, page 1225, of RA 7663 (The General Appropriations Act of
1994)[13] which specifically identified the objects of expenditure of the IRA. Nowhere in
said provisions of the two budgetary laws does it say that the IRA can be used for
additional allowances of judges. Respondent COA thus argues that the provisions in
the ordinance providing for such disbursement are against the law, considering that
the grant of the subject allowances is not within the specified use allowed by the
aforesaid yearly appropriations acts.
We disagree.
Respondent COA failed to prove that Mandaue City used the IRA to spend for the
additional allowances of the judges. There was no evidence submitted by COA
showing the breakdown of the expenses of the city government and the funds used
for said expenses. All the COA presented were the amounts expended, the locally
generated revenues, the deficit, the surplus and the IRA received each year. Aside
from these items, no data or figures were presented to show that Mandaue City
deducted the subject allowances from the IRA. In other words, just because Mandaue
Citys locally generated revenues were not enough to cover its expenditures, this did
not mean that the additional allowances of petitioner judges were taken from the IRA
and not from the citys own revenues.
Moreover, the DBM neither conducted a formal review nor ordered a disapproval of
Mandaue Citys appropriation ordinances, in accordance with the procedure outlined
by Sections 326 and 327 of RA 7160 which provide that:
Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized
Cities, Independent Component Cities, and Municipalities within the Metropolitan
Manila Area. The Department of Budget and Management shall review ordinances
authorizing the annual or supplemental appropriations of provinces, highly-urbanized
cities, independent component cities, and municipalities within the Metropolitan
Manila Area in accordance with the immediately succeeding Section.
Section 327. Review of Appropriation Ordinances of Component Cities and
Municipalities.- The sangguninang panlalawigan shall review the ordinance
authorizing annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period prescribed for the
review of other ordinances.
If within ninety (90) days from receipt of copies of such ordinance, the
sangguniang panlalawigan takes no action thereon, the same shall be deemed
to have been reviewed in accordance with law and shall continue to be in full
force and effect. (emphasis supplied)
Within 90 days from receipt of the copies of the appropriation ordinance, the DBM
should have taken positive action. Otherwise, such ordinance was deemed to have
been properly reviewed and deemed to have taken effect. Inasmuch as, in the instant
case, the DBM did not follow the appropriate procedure for reviewing the subject
ordinance of Mandaue City and allowed the 90-day period to lapse, it can no longer
question the legality of the provisions in the said ordinance granting additional
allowances to judges stationed in the said city.
WHEREFORE, the petition is hereby GRANTED, and the assailed decision and
resolution, dated September 21, 1995 and May 28, 1996, respectively, of the
Commission on Audit are hereby set aside.

No costs.

SO ORDERED.
EN BANC
G.R. No. 161872 April 13, 2004
REV. ELLY CHAVEZ PAMATONG, ESQUIRE, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
TINGA, J.:
Petitioner Rev. Elly Velez Pamatong filed his Certificate of Candidacy for President on
December 17, 2003. Respondent Commission on Elections (COMELEC) refused to
give due course to petitioners Certificate of Candidacy in its Resolution No.
6558 dated January 17, 2004. The decision, however, was not unanimous since
Commissioners Luzviminda G. Tancangco and Mehol K. Sadain voted to include
petitioner as they believed he had parties or movements to back up his candidacy.
On January 15, 2004, petitioner moved for reconsideration of Resolution No.
6558. Petitioners Motion for Reconsideration was docketed as SPP (MP) No. 04-001.
The COMELEC, acting on petitioners Motion for Reconsideration and on similar
motions filed by other aspirants for national elective positions, denied the same under
the aegis of Omnibus Resolution No. 6604 dated February 11, 2004. The COMELEC
declared petitioner and thirty-five (35) others nuisance candidates who could not
wage a nationwide campaign and/or are not nominated by a political party or are not
supported by a registered political party with a national constituency. Commissioner
Sadain maintained his vote for petitioner. By then, Commissioner Tancangco had
retired.
In this Petition For Writ of Certiorari, petitioner seeks to reverse the resolutions which
were allegedly rendered in violation of his right to "equal access to opportunities for
public service" under Section 26, Article II of the 1987
Constitution,1 by limiting the number of qualified candidates only to those who can
afford to wage a nationwide campaign and/or are nominated by political parties. In so
doing, petitioner argues that the COMELEC indirectly amended the constitutional
provisions on the electoral process and limited the power of the sovereign people to
choose their leaders. The COMELEC supposedly erred in disqualifying him since he
is the most qualified among all the presidential candidates, i.e., he possesses all the
constitutional and legal qualifications for the office of the president, he is capable of
waging a national campaign since he has numerous national organizations under his
leadership, he also has the capacity to wage an international campaign since he has
practiced law in other countries, and he has a platform of government. Petitioner
likewise attacks the validity of the form for the Certificate of Candidacy prepared by
the COMELEC. Petitioner claims that the form does not provide clear and reasonable
guidelines for determining the qualifications of candidates since it does not ask for the
candidates bio-data and his program of government.
First, the constitutional and legal dimensions involved.
Implicit in the petitioners invocation of the constitutional provision ensuring "equal
access to opportunities for public office" is the claim that there is a constitutional right
to run for or hold public office and, particularly in his case, to seek the presidency.
There is none. What is recognized is merely a privilege subject to limitations imposed
by law. Section 26, Article II of the Constitution neither bestows such a right nor
elevates the privilege to the level of an enforceable right. There is nothing in the plain
language of the provision which suggests such a thrust or justifies an interpretation of
the sort.
The "equal access" provision is a subsumed part of Article II of the Constitution,
entitled "Declaration of Principles and State Policies." The provisions under the Article
are generally considered not self-executing,2 and there is no plausible reason for
according a different treatment to the "equal access" provision. Like the rest of the
policies enumerated in Article II, the provision does not contain any judicially
enforceable constitutional right but merely specifies a guideline for legislative or
executive action.3 The disregard of the provision does not give rise to any cause of
action before the courts.4
An inquiry into the intent of the framers5 produces the same determination that the
provision is not self-executory. The original wording of the present Section 26, Article
II had read, "The State shall broaden opportunities to public office and prohibit public
dynasties."6 Commissioner (now Chief Justice) Hilario Davide, Jr. successfully
brought forth an amendment that changed the word "broaden" to the phrase "ensure
equal access," and the substitution of the word "office" to "service." He explained his
proposal in this wise:
I changed the word "broaden" to "ENSURE EQUAL ACCESS TO" because what is
important would be equal access to the opportunity. If you broaden, it would
necessarily mean that the government would be mandated to create as many
offices as are possible to accommodate as many people as are also possible.
That is the meaning of broadening opportunities to public service. So, in order that
we should not mandate the State to make the government the number one
employer and to limit offices only to what may be necessary and expedient yet
offering equal opportunities to access to it, I change the word
"broaden."7 (emphasis supplied)
Obviously, the provision is not intended to compel the State to enact positive
measures that would accommodate as many people as possible into public office.
The approval of the "Davide amendment" indicates the design of the framers to cast
the provision as simply enunciatory of a desired policy objective and not reflective of
the imposition of a clear State burden.
Moreover, the provision as written leaves much to be desired if it is to be regarded as
the source of positive rights. It is difficult to interpret the clause as operative in the
absence of legislation since its effective means and reach are not properly defined.
Broadly written, the myriad of claims that can be subsumed under this rubric appear
to be entirely open-ended.8 Words and phrases such as "equal access,"
"opportunities," and "public service" are susceptible to countless interpretations owing
to their inherent impreciseness. Certainly, it was not the intention of the framers to
inflict on the people an operative but amorphous foundation from which innately
unenforceable rights may be sourced.
As earlier noted, the privilege of equal access to opportunities to public office may be
subjected to limitations. Some valid limitations specifically on the privilege to seek
elective office are found in the provisions9 of the Omnibus Election Code on
"Nuisance Candidates" and COMELEC Resolution No. 645210 dated December 10,
2002 outlining the instances wherein the COMELEC may motu proprio refuse to give
due course to or cancel a Certificate of Candidacy.
As long as the limitations apply to everybody equally without discrimination, however,
the equal access clause is not violated. Equality is not sacrificed as long as the
burdens engendered by the limitations are meant to be borne by any one who is
minded to file a certificate of candidacy. In the case at bar, there is no showing that
any person is exempt from the limitations or the burdens which they create.
Significantly, petitioner does not challenge the constitutionality or validity of Section
69 of the Omnibus Election Code and COMELEC Resolution No. 6452 dated 10
December 2003. Thus, their presumed validity stands and has to be accorded due
weight.
Clearly, therefore, petitioners reliance on the equal access clause in Section 26,
Article II of the Constitution is misplaced.
The rationale behind the prohibition against nuisance candidates and the
disqualification of candidates who have not evinced a bona fide intention to run for
office is easy to divine. The State has a compelling interest to ensure that its electoral
exercises are rational, objective, and orderly. Towards this end, the State takes into
account the practical considerations in conducting elections. Inevitably, the greater
the number of candidates, the greater the opportunities for logistical confusion, not to
mention the increased allocation of time and resources in preparation for the election.
These practical difficulties should, of course, never exempt the State from the conduct
of a mandated electoral exercise. At the same time, remedial actions should be
available to alleviate these logistical hardships, whenever necessary and proper.
Ultimately, a disorderly election is not merely a textbook example of inefficiency, but a
rot that erodes faith in our democratic institutions. As the United States Supreme
Court held:
[T]here is surely an important state interest in requiring some preliminary showing of a
significant modicum of support before printing the name of a political organization and
its candidates on the ballot the interest, if no other, in avoiding confusion, deception
and even frustration of the democratic [process].11
The COMELEC itself recognized these practical considerations when it
promulgated Resolution No. 6558 on 17 January 2004, adopting the study
Memorandum of its Law Department dated 11 January 2004. As observed in the
COMELECs Comment:
There is a need to limit the number of candidates especially in the case of candidates
for national positions because the election process becomes a mockery even if those
who cannot clearly wage a national campaign are allowed to run. Their names would
have to be printed in the Certified List of Candidates, Voters Information Sheet and
the Official Ballots. These would entail additional costs to the government. For the
official ballots in automated counting and canvassing of votes, an additional page
would amount to more or less FOUR HUNDRED FIFTY MILLION PESOS
(450,000,000.00).
xxx[I]t serves no practical purpose to allow those candidates to continue if they
cannot wage a decent campaign enough to project the prospect of winning, no matter
how slim.12
The preparation of ballots is but one aspect that would be affected by allowance of
"nuisance candidates" to run in the elections. Our election laws provide various
entitlements for candidates for public office, such as watchers in every polling
place,13 watchers in the board of canvassers,14 or even the receipt of electoral
contributions.15Moreover, there are election rules and regulations the formulations of
which are dependent on the number of candidates in a given election.
Given these considerations, the ignominious nature of a nuisance candidacy
becomes even more galling. The organization of an election with bona
fide candidates standing is onerous enough. To add into the mix candidates with no
serious intentions or capabilities to run a viable campaign would actually impair the
electoral process. This is not to mention the candidacies which are palpably ridiculous
so as to constitute a one-note joke. The poll body would be bogged by irrelevant
minutiae covering every step of the electoral process, most probably posed at the
instance of these nuisance candidates. It would be a senseless sacrifice on the part
of the State.
Owing to the superior interest in ensuring a credible and orderly election, the State
could exclude nuisance candidates and need not indulge in, as the song goes, "their
trips to the moon on gossamer wings."
The Omnibus Election Code and COMELEC Resolution No. 6452 are cognizant of
the compelling State interest to ensure orderly and credible elections by excising
impediments thereto, such as nuisance candidacies that distract and detract from the The COMELEC is directed to hold and complete the reception of evidence and report
larger purpose. The COMELEC is mandated by the Constitution with the its findings to this Court with deliberate dispatch.
administration of elections16 and endowed with considerable latitude in adopting
means and methods that will ensure the promotion of free, orderly and honest SO ORDERED.
elections.17 Moreover, the Constitution guarantees that only bona fide candidates for
public office shall be free from any form of harassment and discrimination.18 The
determination of bona fidecandidates is governed by the statutes, and the concept, to
our mind is, satisfactorily defined in the Omnibus Election Code.

Now, the needed factual premises.

However valid the law and the COMELEC issuance involved are, their proper
application in the case of the petitioner cannot be tested and reviewed by this Court
on the basis of what is now before it. The assailed resolutions of the COMELEC do
not direct the Court to the evidence which it considered in determining that petitioner
was a nuisance candidate. This precludes the Court from reviewing at this instance
whether the COMELEC committed grave abuse of discretion in disqualifying
petitioner, since such a review would necessarily take into account the matters which
the COMELEC considered in arriving at its decisions.

Petitioner has submitted to this Court mere photocopies of various documents

purportedly evincing his credentials as an eligible candidate for the presidency. Yet
this Court, not being a trier of facts, can not properly pass upon the reproductions as
evidence at this level. Neither the COMELEC nor the Solicitor General appended any
document to their respective Comments.

The question of whether a candidate is a nuisance candidate or not is both legal and
factual. The basis of the factual determination is not before this Court. Thus, the
remand of this case for the reception of further evidence is in order.

A word of caution is in order. What is at stake is petitioners aspiration and offer to

serve in the government. It deserves not a cursory treatment but a hearing which
conforms to the requirements of due process.

As to petitioners attacks on the validity of the form for the certificate of candidacy,
suffice it to say that the form strictly complies with Section 74 of the Omnibus Election
Code. This provision specifically enumerates what a certificate of candidacy should
contain, with the required information tending to show that the candidate possesses
the minimum qualifications for the position aspired for as established by the
Constitution and other election laws.

IN VIEW OF THE FOREGOING, COMELEC Case No. SPP (MP) No. 04-001 is
hereby remanded to the COMELEC for the reception of further evidence, to
determine the question on whether petitioner Elly Velez Lao Pamatong is a nuisance
candidate as contemplated in Section 69 of the Omnibus Election Code.
Republic of the Philippines bonding company of good reputation, acceptable to the Commission, in the sums of
SUPREME COURT P60,000.00 and P40,000.00, for President and Vice-President, respectively, and
Manila P32,000.00 for Senator and Member of the House of Representatives;

EN BANC 3. That, in consequence of said Republic Act No. 4421 and the aforementioned action
of the Commission on Elections, every candidate has to pay the premium charged by
G.R. No. L-24761 September 7, 1965 bonding companies, and, to offer thereto, either his own properties, worth, at least,
the amount of the surety bond, or properties of the same worth, belonging to other
LEON G. MAQUERA, petitioner, persons willing to accommodate him, by way of counter-bond in favor of said bonding
vs. companies;
JUAN BORRA, CESAR MIRAFLOR, and GREGORIO SANTAYANA, in their
respective capacities as Chairman and Members of the Commission on 4. That the effect of said Republic Act No. 4421 is, therefore, to prevent or disqualify
Elections, and the COMMISSION ON ELECTIONS, respondents. from running for President, Vice-President, Senator or Member of the House of
Representatives those persons who, although having the qualifications prescribed by
--------------------------- the Constitution therefore, cannot file the surety bond aforementioned, owing to
failure to pay the premium charged by the bonding company and/or lack of the
G.R. No. L-24828 September 7, 1965
property necessary for said counter-bond;
FELIPE N. AUREA and MELECIO MALABANAN, petitioners,
5. That said Republic Act No. 4421 has, likewise, the effect of disqualifying for
vs.
provincial, city or municipal elective offices, persons who, although possessing the
COMMISSION ON ELECTIONS, respondent.
qualifications prescribed by law therefor, cannot pay said premium and/or do not have
Leon G. Maquera in his own behalf as petitioner. the property essential for the aforementioned counter-bond;
Ramon Barrios for respondents.
6. That said Republic Act No. 4421 has, accordingly, the effect of imposing property
RESOLUTION qualifications in order that a person could run for a public office and that the people
could validly vote for him;

PER CURIAM:
Upon consideration of case G.R. No. L-24761, "Leon G. Maquera vs. Juan Borra, et
al.," and case G.R. No. L-24828, "Felipe N. Aurea and Melecio Malabanan vs.
Commission on Elections," and it appearing:
1. That Republic Act No. 4421 requires "all candidates for national, provincial, city and
municipal offices" to post a surety bond equivalent to the one-year salary or
emoluments of the position to which he is a candidate, which bond shall be forfeited
in favor of the national, provincial, city or municipal government concerned if the
candidate, except when declared winner, fails to obtain at least 10% of the votes cast
for the office to which he has filed his certificate of candidacy, there being not more
than four (4) candidates for the same office;"
2. That, in compliance with said Republic Act No. 4421, the Commission on Elections
had, on July 20, 1965, decided to require all candidates for President, Vice-President,
Senator and Member of the House of Representatives to file a surety bond, by a
7. That said property qualifications are inconsistent with the nature and essence of
the Republican system ordained in our Constitution and the principle of social justice
underlying the same, for said political system is premised upon the tenet that
sovereignty resides in the people and all government authority emanates from them,
and this, in turn, implies necessarily that the right to vote and to be voted for shall not
be dependent upon the wealth of the individual concerned, whereas social justice
presupposes equal opportunity for all, rich and poor alike, and that, accordingly, no
person shall, by reason of poverty, be denied the chance to be elected to public
office; and
8. That the bond required in Republic Act No. 4421 and the confiscation of said bond
are not predicated upon the necessity of defraying certain expenses or of
compensating services given in connection with elections, and is, therefore, arbitrary
and oppressive.
The Court RESOLVED, without prejudice to rendering an extended decision, to
declare that said Republic Act No. 4421 is unconstitutional and hence null and void,
and, hence, to enjoin respondents herein, as well as their representatives and agents,
from enforcing and/or implementing said constitutional enactment.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-72119 May 29, 1987
VALENTIN L. LEGASPI, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
CORTES, J.:
The fundamental right of the people to information on matters of public concern is
invoked in this special civil action for mandamus instituted by petitioner Valentin L.
Legaspi against the Civil Service Commission. The respondent had earlier denied
Legaspi's request for information on the civil service eligibilities of certain persons
employed as sanitarians in the Health Department of Cebu City. These government
employees, Julian Sibonghanoy and Mariano Agas, had allegedly represented
themselves as civil service eligibles who passed the civil service examinations for
sanitarians.
Claiming that his right to be informed of the eligibilities of Julian Sibonghanoy and
Mariano Agas, is guaranteed by the Constitution, and that he has no other plain,
speedy and adequate remedy to acquire the information, petitioner prays for the
issuance of the extraordinary writ of mandamus to compel the respondent
Commission to disclose said information.
This is not the first tune that the writ of mandamus is sought to enforce the
fundamental right to information. The same remedy was resorted to in the case
of Tanada et. al. vs. Tuvera et. al., (G.R. No. L-63915, April 24,1985,136 SCRA 27)
wherein the people's right to be informed under the 1973 Constitution (Article IV,
Section 6) was invoked in order to compel the publication in the Official Gazette of
various presidential decrees, letters of instructions and other presidential issuances.
Prior to the recognition of the right in said Constitution the statutory right to
information provided for in the Land Registration Act (Section 56, Act 496, as
amended) was claimed by a newspaper editor in another mandamus proceeding, this
time to demand access to the records of the Register of Deeds for the purpose of
gathering data on real estate transactions involving aliens (Subido vs. Ozaeta, 80
Phil. 383 [1948]).
The constitutional right to information on matters of public concern first gained
recognition in the Bill of Rights, Article IV, of the 1973 Constitution, which states:
Sec. 6. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to
official acts, transactions, or decisions, shall be afforded the citizen subject to such
limitations as may be provided by law.
The foregoing provision has been retained and the right therein provided amplified in
Article III, Sec. 7 of the 1987 Constitution with the addition of the phrase, "as well as
to government research data used as basis for policy development." The new
provision reads:
The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used
as basis. for policy development, shall be afforded the citizen, subject to such stations
as may be provided by law.
These constitutional provisions are self-executing. They supply the rules by means of
which the right to information may be enjoyed (Cooley, A Treatise on the
Constitutional Limitations 167 [1927]) by guaranteeing the right and mandating the
duty to afford access to sources of information. Hence, the fundamental right therein
recognized may be asserted by the people upon the ratification of the constitution
without need for any ancillary act of the Legislature. (Id. at, p. 165) What may be
provided for by the Legislature are reasonable conditions and limitations upon the
access to be afforded which must, of necessity, be consistent with the declared State
policy of full public disclosure of all transactions involving public interest (Constitution,
Art. 11, Sec. 28). However, it cannot be overemphasized that whatever limitation may
be prescribed by the Legislature, the right and the duty under Art. III Sec. 7 have
become operative and enforceable by virtue of the adoption of the New Charter.
Therefore, the right may be properly invoked in a mandamus proceeding such as this
one.
The Solicitor General interposes procedural objections to Our giving due course to
this Petition. He challenges the petitioner's standing to sue upon the ground that the
latter does not possess any clear legal right to be informed of the civil service
eligibilities of the government employees concerned. He calls attention to the alleged
failure of the petitioner to show his actual interest in securing this particular
information. He further argues that there is no ministerial duty on the part of the
Commission to furnish the petitioner with the information he seeks.
1. To be given due course, a Petition for mandamus must have been instituted by a
party aggrieved by the alleged inaction of any tribunal, corporation, board or person
which unlawfully excludes said party from the enjoyment of a legal right. (Ant;-
Chinese League of the Philippines vs. Felix, 77 Phil. 1012 [1947]). The petitioner in
every case must therefore be an "aggrieved party" in the sense that he possesses a
clear legal right to be enforced and a direct interest in the duty or act to be performed.
In the case before Us, the respondent takes issue on the personality of the petitioner
to bring this suit. It is asserted that, the instant Petition is bereft of any allegation of
Legaspi's actual interest in the civil service eligibilities of Julian Sibonghanoy and
Mariano Agas, At most there is a vague reference to an unnamed client in whose
behalf he had allegedly acted when he made inquiries on the subject (Petition, Rollo,
p. 3).
But what is clear upon the face of the Petition is that the petitioner has firmly
anchored his case upon the right of the people to information on matters of public
concern, which, by its very nature, is a public right. It has been held that:
* * * when the question is one of public right and the object of the mandamus is to
procure the enforcement of a public duty, the people are regarded as the real party in
interest and the relator at whose instigation the proceedings are instituted need not
show that he has any legal or special interest in the result, it being sufficient to show
that he is a citizen and as such interested in the execution of the laws * * * (Tanada
et. al. vs. Tuvera, et. al., G.R. No. L- 63915, April 24, 1985, 136 SCRA 27, 36).
From the foregoing, it becomes apparent that when a mandamus proceeding involves
the assertion of a public right, the requirement of personal interest is satisfied by the
mere fact that the petitioner is a citizen, and therefore, part of the general "public"
which possesses the right.
The Court had opportunity to define the word "public" in the Subido case, supra, when
it held that even those who have no direct or tangible interest in any real estate
transaction are part of the "public" to whom "(a)ll records relating to registered lands
in the Office of the Register of Deeds shall be open * * *" (Sec. 56, Act No. 496, as
amended). In the words of the Court:
* * * "Public" is a comprehensive, all-inclusive term. Properly construed, it embraces
every person. To say that only those who have a present and existing interest of a
pecuniary character in the particular information sought are given the right of
inspection is to make an unwarranted distinction. *** (Subido vs. Ozaeta, supra at p.
387).
The petitioner, being a citizen who, as such is clothed with personality to seek redress
for the alleged obstruction of the exercise of the public right. We find no cogent
reason to deny his standing to bring the present suit.
2. For every right of the people recognized as fundamental, there lies a corresponding
duty on the part of those who govern, to respect and protect that right. That is the
very essence of the Bill of Rights in a constitutional regime. Only governments
operating under fundamental rules defining the limits of their power so as to shield
individual rights against its arbitrary exercise can properly claim to be constitutional
(Cooley, supra, at p. 5). Without a government's acceptance of the limitations
imposed upon it by the Constitution in order to uphold individual liberties, without an
acknowledgment on its part of those duties exacted by the rights pertaining to the
citizens, the Bill of Rights becomes a sophistry, and liberty, the ultimate illusion.
In recognizing the people's right to be informed, both the 1973 Constitution and the
New Charter expressly mandate the duty of the State and its agents to afford access
to official records, documents, papers and in addition, government research data
used as basis for policy development, subject to such limitations as may be provided
by law. The guarantee has been further enhanced in the New Constitution with the
adoption of a policy of full public disclosure, this time "subject to reasonable
conditions prescribed by law," in Article 11, Section 28 thereof, to wit:
Subject to reasonable conditions prescribed by law, the State adopts and implements
a policy of full public disclosure of all its transactions involving public interest. (Art. 11,
Sec. 28).
In the Tanada case, supra, the constitutional guarantee was bolstered by what this
Court declared as an imperative duty of the government officials concerned to publish
all important legislative acts and resolutions of a public nature as well as all executive
orders and proclamations of general applicability. We granted mandamus in said
case, and in the process, We found occasion to expound briefly on the nature of said
duty:
* * * That duty must be enforced if the Constitutional right of the people to be informed
on matters of public concern is to be given substance and reality. The law itself
makes a list of what should be published in the Official Gazette. Such listing, to our
mind, leaves respondents with no discretion whatsoever as to what must be in
included or excluded from such publication. (Tanada v. Tuvera, supra, at 39).
(Emphasis supplied).
The absence of discretion on the part of government agencia es in allowing the
examination of public records, specifically, the records in the Office of the Register of
Deeds, is emphasized in Subido vs. Ozaeta, supra:
Except, perhaps when it is clear that the purpose of the examination is unlawful, or
sheer, idle curiosity, we do not believe it is the duty under the law of registration
officers to concern themselves with the motives, reasons, and objects of the person
seeking access to the records. It is not their prerogative to see that the information
which the records contain is not flaunted before public gaze, or that scandal is not
made of it. If it be wrong to publish the contents of the records, it is the legislature and
not the officials having custody thereof which is called upon to devise a remedy. ***
(Subido v. Ozaeta, supra at 388). (Emphasis supplied).
It is clear from the foregoing pronouncements of this Court that government agencies
are without discretion in refusing disclosure of, or access to, information of public
concern. This is not to lose sight of the reasonable regulations which may be imposed
by said agencies in custody of public records on the manner in which the right to
information may be exercised by the public. In the Subido case, We recognized the
authority of the Register of Deeds to regulate the manner in which persons desiring to
do so, may inspect, examine or copy records relating to registered lands. However,
the regulations which the Register of Deeds may promulgate are confined to:
* * * prescribing the manner and hours of examination to the end that damage to or
loss of, the records may be avoided, that undue interference with the duties of the
custodian of the books and documents and other employees may be prevented, that
the right of other persons entitled to make inspection may be insured * * * (Subido vs.
Ozaeta, 80 Phil. 383, 387)
Applying the Subido ruling by analogy, We recognized a similar authority in a
municipal judge, to regulate the manner of inspection by the public of criminal docket
records in the case of Baldoza vs. Dimaano (Adm. Matter No. 1120-MJ, May 5, 1976,
71 SCRA 14). Said administrative case was filed against the respondent judge for his
alleged refusal to allow examination of the criminal docket records in his sala. Upon a
finding by the Investigating Judge that the respondent had allowed the complainant to
open and view the subject records, We absolved the respondent. In effect, We have
also held that the rules and conditions imposed by him upon the manner of examining
the public records were reasonable.
In both the Subido and the Baldoza cases, We were emphatic in Our statement that
the authority to regulate the manner of examining public records does not carry with it
the power to prohibit. A distinction has to be made between the discretion to refuse
outright the disclosure of or access to a particular information and the authority to
regulate the manner in which the access is to be afforded. The first is a limitation
upon the availability of access to the information sought, which only the Legislature
may impose (Art. III, Sec. 6, 1987 Constitution). The second pertains to the
government agency charged with the custody of public records. Its authority to
regulate access is to be exercised solely to the end that damage to, or loss of, public
records may be avoided, undue interference with the duties of said agencies may be
prevented, and more importantly, that the exercise of the same constitutional right by
other persons shall be assured (Subido vs. Ozaetal supra).
Thus, while the manner of examining public records may be subject to reasonable
regulation by the government agency in custody thereof, the duty to disclose the
information of public concern, and to afford access to public records cannot be
discretionary on the part of said agencies. Certainly, its performance cannot be made
contingent upon the discretion of such agencies. Otherwise, the enjoyment of the
constitutional right may be rendered nugatory by any whimsical exercise of agency
discretion. The constitutional duty, not being discretionary, its performance may be
compelled by a writ of mandamus in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us, the public
right to be enforced and the concomitant duty of the State are unequivocably set forth
in the Constitution. The decisive question on the propriety of the issuance of the writ
of mandamus in this case is, whether the information sought by the petitioner is within
the ambit of the constitutional guarantee.
3. The incorporation in the Constitution of a guarantee of access to information of
public concern is a recognition of the essentiality of the free flow of ideas and
information in a democracy (Baldoza v. Dimaano, Adm. Matter No. 1120-MJ, May 5,
1976, 17 SCRA 14). In the same way that free discussion enables members of
society to cope with the exigencies of their time (Thornhill vs. Alabama, 310 U.S.
88,102 [1939]), access to information of general interest aids the people in
democratic decision-making (87 Harvard Law Review 1505 [1974]) by giving them a
better perspective of the vital issues confronting the nation.
But the constitutional guarantee to information on matters of public concern is not
absolute. It does not open every door to any and all information. Under the
Constitution, access to official records, papers, etc., are "subject to limitations as may
be provided by law" (Art. III, Sec. 7, second sentence). The law may therefore exempt
certain types of information from public scrutiny, such as those affecting national
security (Journal No. 90, September 23, 1986, p. 10; and Journal No. 91, September
24, 1986, p. 32, 1986 Constitutional Commission). It follows that, in every case, the
availability of access to a particular public record must be circumscribed by the nature
of the information sought, i.e., (a) being of public concern or one that involves public
interest, and, (b) not being exempted by law from the operation of the constitutional
guarantee. The threshold question is, therefore, whether or not the information sought
is of public interest or public concern.
a. This question is first addressed to the government agency having custody of the
desired information. However, as already discussed, this does not give the agency
concerned any discretion to grant or deny access. In case of denial of access, the
government agency has the burden of showing that the information requested is not
of public concern, or, if it is of public concern, that the same has been exempted by
law from the operation of the guarantee. To hold otherwise will serve to dilute the
constitutional right. As aptly observed, ". . . the government is in an advantageous
position to marshall and interpret arguments against release . . ." (87 Harvard Law
Review 1511 [1974]). To safeguard the constitutional right, every denial of access by
the government agency concerned is subject to review by the courts, and in the
proper case, access may be compelled by a writ of Mandamus.
In determining whether or not a particular information is of public concern there is no
rigid test which can be applied. "Public concern" like "public interest" is a term that
eludes exact definition. Both terms embrace a broad spectrum of subjects which the
public may want to know, either because these directly affect their lives, or simply
because such matters naturally arouse the interest of an ordinary citizen. In the final
analysis, it is for the courts to determine in a case by case basis whether the matter at
issue is of interest or importance, as it relates to or affects the public.
The public concern invoked in the case of Tanada v. Tuvera, supra, was the need for
adequate notice to the public of the various laws which are to regulate the actions and
conduct of citizens. In Subido vs. Ozaeta, supra, the public concern deemed covered
by the statutory right was the knowledge of those real estate transactions which some
believed to have been registered in violation of the Constitution.
Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz,
Paras, Gancayco, Padilla, Bidin and Sarmiento, JJ., concur.
Feliciano, J., is on leave.

The information sought by the petitioner in this case is the truth of the claim of certain
government employees that they are civil service eligibles for the positions to which
they were appointed. The Constitution expressly declares as a State policy that:

Appointments in the civil service shall be made only according to merit and fitness to
be determined, as far as practicable, and except as to positions which are policy
determining, primarily confidential or highly technical, by competitive examination.
(Art. IX, B, Sec. 2.[2]).

Public office being a public trust, [Const. Art. XI, Sec. 1] it is the legitimate concern of
citizens to ensure that government positions requiring civil service eligibility are
occupied only by persons who are eligibles. Public officers are at all times
accountable to the people even as to their eligibilities for their respective positions.

b. But then, it is not enough that the information sought is of public interest. For
mandamus to lie in a given case, the information must not be among the species
exempted by law from the operation of the constitutional guarantee.

In the instant, case while refusing to confirm or deny the claims of eligibility, the
respondent has failed to cite any provision in the Civil Service Law which would limit
the petitioner's right to know who are, and who are not, civil service eligibles. We take
judicial notice of the fact that the names of those who pass the civil service
examinations, as in bar examinations and licensure examinations for various
professions, are released to the public. Hence, there is nothing secret about one's
civil service eligibility, if actually possessed. Petitioner's request is, therefore, neither
unusual nor unreasonable. And when, as in this case, the government employees
concerned claim to be civil service eligibles, the public, through any citizen, has a
right to verify their professed eligibilities from the Civil Service Commission.

The civil service eligibility of a sanitarian being of public concern, and in the absence
of express limitations under the law upon access to the register of civil service
eligibles for said position, the duty of the respondent Commission to confirm or deny
the civil service eligibility of any person occupying the position becomes imperative.
Mandamus, therefore lies.

WHEREFORE, the Civil Service Commission is ordered to open its register of

eligibles for the position of sanitarian, and to confirm or deny, the civil service
eligibility of Julian Sibonghanoy and Mariano Agas, for said position in the Health
Department of Cebu City, as requested by the petitioner Valentin L. Legaspi.
Republic of the Philippines Sir:
SUPREME COURT
Manila As a lawyer, member of the media and plain citizen of our Republic, I am requesting
that I be furnished with the list of names of the opposition members of (the) Batasang
EN BANC Pambansa who were able to secure a clean loan of P2 million each on guarranty (sic)
of Mrs. Imelda Marcos. We understand that OIC Mel Lopez of Manila was one of
G.R. No. 74930 February 13, 1989 those aforesaid MPs. Likewise, may we be furnished with the certified true copies of
the documents evidencing their loan. Expenses in connection herewith shall be borne
RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO, by us.
ROLANDO BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO
BAGATSING, JUN "NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and If we could not secure the above documents could we have access to them?
ROLANDO FADUL, petitioners,
vs. We are premising the above request on the following provision of the Freedom
FELICIANO BELMONTE, JR., respondent. Constitution of the present regime.

Ricardo C. Valmonte for and in his own behalf and his co-petitioners. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to
The Solicitor General for respondent. official acts, transactions or decisions, shall be afforded the citizen subject to such
limitation as may be provided by law. (Art. IV, Sec. 6).

We trust that within five (5) days from receipt hereof we will receive your favorable
CORTES, J.: response on the matter.

Petitioners in this special civil action for mandamus with preliminary injunction invoke Very truly yours,
their right to information and pray that respondent be directed:
(Sgd.) RICARDO C. VALMONTE

[Rollo, p. 7.]
(a) to furnish petitioners the list of the names of the Batasang Pambansa members
belonging to the UNIDO and PDP-Laban who were able to secure clean loans To the aforesaid letter, the Deputy General Counsel of the GSIS replied:
immediately before the February 7 election thru the intercession/marginal note of the
then First Lady Imelda Marcos; and/or June 17, 1986

(b) to furnish petitioners with certified true copies of the documents evidencing their Atty. Ricardo C. Valmonte
respective loans; and/or 108 E. Benin Street
Caloocan City
(c) to allow petitioners access to the public records for the subject information.
(Petition, pp. 4-5; paragraphing supplied.] Dear Compaero:

The controversy arose when petitioner Valmonte wrote respondent Belmonte the Possibly because he must have thought that it contained serious legal implications,
following letter: President & General Manager Feliciano Belmonte, Jr. referred to me for study and
reply your letter to him of June 4, 1986 requesting a list of the opposition members of
June 4, 1986 Batasang Pambansa who were able to secure a clean loan of P2 million each on
guaranty of Mrs. Imelda Marcos.
Hon. Feliciano Belmonte
GSIS General Manager My opinion in this regard is that a confidential relationship exists between the GSIS
Arroceros, Manila and all those who borrow from it, whoever they may be; that the GSIS has a duty to
its customers to preserve this confidentiality; and that it would not be proper for the
GSIS to breach this confidentiality unless so ordered by the courts.
As a violation of this confidentiality may mar the image of the GSIS as a reputable
financial institution, I regret very much that at this time we cannot respond positively
to your request.
Very truly yours,
(Sgd.) MEYNARDO A. TIRO
Deputy General Counsel
[Rollo, p. 40.]
On June 20, 1986, apparently not having yet received the reply of the Government
Service and Insurance System (GSIS) Deputy General Counsel, petitioner Valmonte
wrote respondent another letter, saying that for failure to receive a reply, "(W)e are
now considering ourselves free to do whatever action necessary within the premises
to pursue our desired objective in pursuance of public interest." [Rollo, p. 8.]
On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant suit.
On July 19, 1986, the Daily Express carried a news item reporting that 137 former
members of the defunct interim and regular Batasang Pambansa, including ten (10)
opposition members, were granted housing loans by the GSIS [Rollo, p. 41.]
Separate comments were filed by respondent Belmonte and the Solicitor General.
After petitioners filed a consolidated reply, the petition was given due course and the
parties were required to file their memoranda. The parties having complied, the case
was deemed submitted for decision.
In his comment respondent raises procedural objections to the issuance of a writ of
mandamus, among which is that petitioners have failed to exhaust administrative
remedies.
Respondent claims that actions of the GSIS General Manager are reviewable by the
Board of Trustees of the GSIS. Petitioners, however, did not seek relief from the
GSIS Board of Trustees. It is therefore asserted that since administrative remedies
were not exhausted, then petitioners have no cause of action.
To this objection, petitioners claim that they have raised a purely legal
issue, viz., whether or not they are entitled to the documents sought, by virtue of their
constitutional right to information. Hence, it is argued that this case falls under one of
the exceptions to the principle of exhaustion of administrative remedies.
Among the settled principles in administrative law is that before a party can be
allowed to resort to the courts, he is expected to have exhausted all means of
administrative redress available under the law. The courts for reasons of law, comity
and convenience will not entertain a case unless the available administrative
remedies have been resorted to and the appropriate authorities have been given
opportunity to act and correct the errors committed in the administrative forum.
However, the principle of exhaustion of administrative remedies is subject to settled
exceptions, among which is when only a question of law is involved [Pascual v.
Provincial Board, 106 Phil. 466 (1959); Aguilar v. Valencia, et al., G.R. No. L-30396,
July 30, 1971, 40 SCRA 210; Malabanan v. Ramento, G.R. No. L-2270, May 21,
1984, 129 SCRA 359.] The issue raised by petitioners, which requires the
interpretation of the scope of the constitutional right to information, is one which can
be passed upon by the regular courts more competently than the GSIS or its Board of
Trustees, involving as it does a purely legal question. Thus, the exception of this case
from the application of the general rule on exhaustion of administrative remedies is
warranted. Having disposed of this procedural issue, We now address ourselves to
the issue of whether or not mandamus hes to compel respondent to perform the acts
sought by petitioners to be done, in pursuance of their right to information.
We shall deal first with the second and third alternative acts sought to be done, both
of which involve the issue of whether or not petitioners are entitled to access to the
documents evidencing loans granted by the GSIS.
This is not the first time that the Court is confronted with a controversy directly
involving the constitutional right to information. In Taada v. Tuvera, G.R. No. 63915,
April 24,1985, 136 SCRA 27 and in the recent case of Legaspi v. Civil Service
Commission, G.R. No. 72119, May 29, 1987,150 SCRA 530, the Court upheld the
people's constitutional right to be informed of matters of public interest and ordered
the government agencies concerned to act as prayed for by the petitioners.
The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which states:
The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used
as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.
The right of access to information was also recognized in the 1973 Constitution, Art.
IV Sec. 6 of which provided:
The right of the people to information on 'matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to
official acts, transactions, or decisions, shall be afforded the citizen subject to such
limitations as may be provided by law.
An informed citizenry with access to the diverse currents in political, moral and artistic
thought and data relative to them, and the free exchange of ideas and discussion of
issues thereon, is vital to the democratic government envisioned under our
Constitution. The cornerstone of this republican system of government is delegation
of power by the people to the State. In this system, governmental agencies and
institutions operate within the limits of the authority conferred by the people. Denied
access to information on the inner workings of government, the citizenry can become
prey to the whims and caprices of those to whom the power had been delegated. The
postulate of public office as a public trust, institutionalized in the Constitution (in Art.
XI, Sec. 1) to protect the people from abuse of governmental power, would certainly
be were empty words if access to such information of public concern is denied,
except under limitations prescribed by implementing legislation adopted pursuant to
the Constitution.
Petitioners are practitioners in media. As such, they have both the right to gather and
the obligation to check the accuracy of information the disseminate. For them, the
freedom of the press and of speech is not only critical, but vital to the exercise of their
professions. The right of access to information ensures that these freedoms are not
rendered nugatory by the government's monopolizing pertinent information. For an
essential element of these freedoms is to keep open a continuing dialogue or process
of communication between the government and the people. It is in the interest of the
State that the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the people's will. Yet, this open
dialogue can be effective only to the extent that the citizenry is informed and thus able
to formulate its will intelligently. Only when the participants in the discussion are
aware of the issues and have access to information relating thereto can such bear
fruit.
The right to information is an essential premise of a meaningful right to speech and
expression. But this is not to say that the right to information is merely an adjunct of
and therefore restricted in application by the exercise of the freedoms of speech and
of the press. Far from it. The right to information goes hand-in-hand with the
constitutional policies of full public disclosure * and honesty in the public service. ** It
is meant to enhance the widening role of the citizenry in governmental decision-
making as well as in checking abuse in government.
Yet, like all the constitutional guarantees, the right to information is not absolute. As
stated in Legaspi, the people's right to information is limited to "matters of public
concern," and is further "subject to such limitations as may be provided by law."
Similarly, the State's policy of full disclosure is limited to "transactions involving public
interest," and is "subject to reasonable conditions prescribed by law."
Hence, before mandamus may issue, it must be clear that the information sought is of
"public interest" or "public concern," and is not exempted by law from the operation of
the constitutional guarantee [Legazpi v. Civil Service Commission, supra, at p. 542.]
The Court has always grappled with the meanings of the terms "public interest" and
"public concern". As observed in Legazpi:
In determining whether or not a particular information is of public concern there is no
rigid test which can be applied. "Public concern" like "public interest" is a term that
eludes exact definition. Both terms embrace a broad spectrum of subjects which the
public may want to know, either because these directly affect their lives, or simply
because such matters naturally arouse the interest of an ordinary citezen. In the final
analysis, it is for the courts to determine on a case by case basis whether the matter
at issue is of interest or importance, as it relates to or affects the public. [Ibid. at p.
541]
In the Taada case the public concern deemed covered by the constitutional right to
information was the need for adequate notice to the public of the various laws which
are to regulate the actions and conduct of citezens. In Legaspi, it was the "legitimate
concern of citezensof ensure that government positions requiring civil service
eligibility are occupied only by persons who are eligibles" [Supra at p. 539.]
The information sought by petitioners in this case is the truth of reports that certain
Members of the Batasang Pambansa belonging to the opposition were able to secure
"clean" loans from the GSIS immediately before the February 7, 1986 election
through the intercession of th eformer First Lady, Mrs. Imelda Marcos.
The GSIS is a trustee of contributions from the government and its employees and
the administrator of various insurance programs for the benefit of the latter.
Undeniably, its funds assume a public character. More particularly, Secs. 5(b) and 46
of P.D. 1146, as amended (the Revised Government Service Insurance Act of 1977),
provide for annual appropriations to pay the contributions, premiums, interest and
other amounts payable to GSIS by the government, as employer, as well as the
obligations which the Republic of the Philippines assumes or guarantees to pay.
Considering the nature of its funds, the GSIS is expected to manage its resources
with utmost prudence and in strict compliance with the pertinent laws or rules and
regulations. Thus, one of the reasons that prompted the revision of the old GSIS law
(C.A. No. 186, as amended) was the necessity "to preserve at all times the actuarial
solvency of the funds administered by the System" [Second Whereas Clause, P.D.
No. 1146.] Consequently, as respondent himself admits, the GSIS "is not supposed to
grant 'clean loans.'" [Comment, p. 8.] It is therefore the legitimate concern of the
public to ensure that these funds are managed properly with the end in view of
maximizing the benefits that accrue to the insured government employees. Moreover,
the supposed borrowers were Members of the defunct Batasang Pambansa who
themselves appropriated funds for the GSIS and were therefore expected to be the
first to see to it that the GSIS performed its tasks with the greatest degree of fidelity
and that an its transactions were above board.
In sum, the public nature of the loanable funds of the GSIS and the public office held
by the alleged borrowers make the information sought clearly a matter of public
interest and concern.
A second requisite must be met before the right to information may be enforced
through mandamus proceedings, viz., that the information sought must not be among
those excluded by law.
Respondent maintains that a confidential relationship exists between the GSIS and its
borrowers. It is argued that a policy of confidentiality restricts the indiscriminate
dissemination of information.
Yet, respondent has failed to cite any law granting the GSIS the privilege of
confidentiality as regards the documents subject of this petition. His position is
apparently based merely on considerations of policy. The judiciary does not settle
policy issues. The Court can only declare what the law is, and not what the law
should be. Under our system of government, policy issues are within the domain of
the political branches of the government, and of the people themselves as the
repository of all State power.
Respondent however contends that in view of the right to privacy which is equally
protected by the Constitution and by existing laws, the documents evidencing loan
transactions of the GSIS must be deemed outside the ambit of the right to
information.
There can be no doubt that right to privacy is constitutionally protected. In the
landmark case of Morfe v. Mutuc [130 Phil. 415 (1968), 22 SCRA 424], this Court,
speaking through then Mr. Justice Fernando, stated:
... The right to privacy as such is accorded recognition independently of its
identification with liberty; in itself, it is fully deserving of constitutional protection. The
language of Prof. Emerson is particularly apt: "The concept of limited government has
always included the idea that governmental powers stop short of certain intrusions
into the personal life of the citizen. This is indeed one of the basic distinctions
between absolute and limited government. UItimate and pervasive control of the
individual, in all aspects of his life, is the hallmark of the absolute. state, In contrast, a
system of limited government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the state can control.
Protection of this private sector protection, in other words, of the dignity and
integrity of the individual has become increasingly important as modem society has
developed. All the forces of technological age industrialization, urbanization, and
organization operate to narrow the area of privacy and facilitate intrusion into it. In
modern terms, the capacity to maintain and support this enclave of private life marks
the difference between a democratic and a totalitarian society." [at pp. 444-445.]
When the information requested from the government intrudes into the privacy of a
citizen, a potential conflict between the rights to information and to privacy may arise.
However, the competing interests of these rights need not be resolved in this case.
Apparent from the above-quoted statement of the Court in Morfe is that the right to
privacy belongs to the individual in his private capacity, and not to public and
governmental agencies like the GSIS. Moreover, the right cannot be invoked by
juridical entities like the GSIS. As held in the case of Vassar College v. Loose Wills
Biscuit Co. [197 F. 982 (1912)], a corporation has no right of privacy in its name since
the entire basis of the right to privacy is an injury to the feelings and sensibilities of
the party and a corporation would have no such ground for relief.
Neither can the GSIS through its General Manager, the respondent, invoke the right
to privacy of its borrowers. The right is purely personal in nature [Cf. Atkinson v. John
Doherty & Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219 (1899); Schuyler v. Curtis,
147 N.Y. 434, 42 N.E. 22, 31 L.R.A. 286 (1895)), and hence may be invoked only by
the person whose privacy is claimed to be violated.
It may be observed, however, that in the instant case, the concerned borrowers
themselves may not succeed if they choose to invoke their right to privacy,
considering the public offices they were holding at the time the loans were alleged to
have been granted. It cannot be denied that because of the interest they generate
and their newsworthiness, public figures, most especially those holding responsible
positions in government, enjoy a more limited right to privacy as compared to ordinary
individuals, their actions being subject to closer public scrutiny [Cf.Ayer Productions
Pty. Ltd. v. Capulong, G.R. Nos. 82380 and 82398, April 29, 1988; See also Cohen v.
Marx, 211 P. 2d 321 (1949).]
Respondent next asserts that the documents evidencing the loan transactions of the
GSIS are private in nature and hence, are not covered by the Constitutional right to
information on matters of public concern which guarantees "(a)ccess
to official records, and to documents, and papers pertaining to official acts,
transactions, or decisions" only.
It is argued that the records of the GSIS, a government corporation performing
proprietary functions, are outside the coverage of the people's right of access
to official records.
It is further contended that since the loan function of the GSIS is merely incidental to
its insurance function, then its loan transactions are not covered by the constitutional
policy of full public disclosure and the right to information which is applicable only to
"official" transactions.
First of all, the "constituent ministrant" dichotomy characterizing government
function has long been repudiated. In ACCFA v. Confederation of Unions and
Government Corporations and Offices (G.R. Nos. L-21484 and L-23605, November
29, 1969, 30 SCRA 6441, the Court said that the government, whether carrying out its
sovereign attributes or running some business, discharges the same function of
service to the people.
Consequently, that the GSIS, in granting the loans, was exercising a proprietary
function would not justify the exclusion of the transactions from the coverage and
scope of the right to information.
Moreover, the intent of the members of the Constitutional Commission of 1986, to
include government-owned and controlled corporations and transactions entered into
by them within the coverage of the State policy of fun public disclosure is manifest
from the records of the proceedings:
xxx xxx xxx
THE PRESIDING OFFICER (Mr. Colayco).
Commissioner Suarez is recognized.
MR. SUAREZ. Thank you. May I ask the Gentleman a few question?
MR. OPLE. Very gladly.
MR. SUAREZ. Thank you.
When we declare a "policy of full public disclosure of all its transactions" referring
to the transactions of the State and when we say the "State" which I suppose
would include all of the various agencies, departments, ministries and
instrumentalities of the government....
MR. OPLE. Yes, and individual public officers, Mr. Presiding Officer.
MR. SUAREZ. Including government-owned and controlled corporations.
MR. OPLE. That is correct, Mr. Presiding Officer.
MR. SUAREZ. And when we say "transactions" which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps
leading to the consummation of the contract, or does he refer to the contract itself?
MR. OPLE. The "transactions" used here I suppose is generic and, therefore, it can
cover both steps leading to a contract, and already a consummated contract, Mr.
Presiding Officer.
MR. SUAREZ. This contemplates inclusion of negotiations leading to the
consummation of the transaction.
MR. OPLE. Yes, subject only to reasonable safeguards on the national interest.
MR. SUAREZ. Thank you. [V Record of the Constitutional Commission 24-25.]
(Emphasis supplied.)
Considering the intent of the framers of the Constitution which, though not binding
upon the Court, are nevertheless persuasive, and considering further that
government-owned and controlled corporations, whether performing proprietary or
governmental functions are accountable to the people, the Court is convinced that
transactions entered into by the GSIS, a government-controlled corporation created
by special legislation are within the ambit of the people's right to be informed pursuant
to the constitutional policy of transparency in government dealings.
In fine, petitioners are entitled to access to the documents evidencing loans granted
by the GSIS, subject to reasonable regulations that the latter may promulgate relating
to the manner and hours of examination, to the end that damage to or loss of the
records may be avoided, that undue interference with the duties of the custodian of
the records may be prevented and that the right of other persons entitled to inspect
the records may be insured [Legaspi v. Civil Service Commission, supra at p. 538,
quoting Subido v. Ozaeta, 80 Phil. 383, 387.] The petition, as to the second and third
alternative acts sought to be done by petitioners, is meritorious.
However, the same cannot be said with regard to the first act sought by petitioners,
i.e., "to furnish petitioners the list of the names of the Batasang Pambansa members
belonging to the UNIDO and PDP-Laban who were able to secure clean loans
immediately before the February 7 election thru the intercession/marginal note of the
then First Lady Imelda Marcos."
Although citizens are afforded the right to information and, pursuant thereto, are
entitled to "access to official records," the Constitution does not accord them a right to
compel custodians of official records to prepare lists, abstracts, summaries and the
like in their desire to acquire information on matters of public concern.
It must be stressed that it is essential for a writ of mandamus to issue that the
applicant has a well-defined, clear and certain legal right to the thing demanded and
that it is the imperative duty of defendant to perform the act required. The
corresponding duty of the respondent to perform the required act must be clear and
specific [Lemi v. Valencia, G.R. No. L-20768, November 29,1968,126 SCRA 203;
Ocampo v. Subido, G.R. No. L-28344, August 27, 1976, 72 SCRA 443.] The request
of the petitioners fails to meet this standard, there being no duty on the part of
respondent to prepare the list requested.
WHEREFORE, the instant petition is hereby granted and respondent General
Manager of the Government Service Insurance System is ORDERED to allow
petitioners access to documents and records evidencing loans granted to Members of
the former Batasang Pambansa, as petitioners may specify, subject to reasonable
regulations as to the time and manner of inspection, not incompatible with this
decision, as the GSIS may deem necessary.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 92024 November 9, 1990
CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), petitioner,
vs.
THE BOARD OF INVESTMENTS, THE DEPARTMENT OF TRADE AND
INDUSTRY, LUZON PETROCHEMICAL CORPORATION, and PILIPINAS SHELL
CORPORATION, respondents.
Abraham C. La Vina for petitioner.
Sycip, Salazar, Hernandez & Gatmaitan for Luzon Petrochemical Corporation.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for Pilipinas Shell
Petroleum Corporation.
GUTIERREZ, JR., J.:
This is a petition to annul and set aside the decision of the Board of Investments
(BOI)/Department of Trade and Industry (DTI) approving the transfer of the site of the
proposed petrochemical plant from Bataan to Batangas and the shift of feedstock for
that plant from naphtha only to naphtha and/or liquefied petroleum gas (LPG).
This petition is a sequel to the petition in G.R. No. 88637 entitled "Congressman
Enrique T. Garcia v. the Board of Investments", September 7, 1989, where this Court
issued a decision, ordering the BOI as follows:
WHEREFORE, the petition for certiorari is granted. The Board of Investments is
ordered: (1) to publish the amended application for registration of the Bataan
Petrochemical Corporation, (2) to allow the petitioner to have access to its records on
the original and amended applications for registration, as a petrochemical
manufacturer, of the respondent Bataan Petrochemical Corporation, excluding,
however, privileged papers containing its trade secrets and other business and
financial information, and (3) to set for hearing the petitioner's opposition to the
amended application in order that he may present at such hearing all the evidence in
his possession in support of his opposition to the transfer of the site of the BPC
petrochemical plant to Batangas province. The hearing shall not exceed a period of
ten (10) days from the date fixed by the BOI, notice of which should be served by
personal service to the petitioner through counsel, at least three (3) days in advance.
The hearings may be held from day to day for a period of ten (10) days without
postponements. The petition for a writ of prohibition or preliminary injunction is
denied. No costs. (Rollo, pages 450-451)
However, acting on the petitioner's motion for partial reconsideration asking that we
rule on the import of P.D. Nos. 949 and 1803 and on the foreign investor's claim of
right of final choice of plant site, in the light of the provisions of the Constitution and
the Omnibus Investments Code of 1987, this Court on October 24, 1989, made the
observation that P.D. Nos. 949 and 1803 "do not provide that the Limay site should
be the only petrochemical zone in the country, nor prohibit the establishment of a
petrochemical plant elsewhere in the country, that the establishment of a
petrochemical plant in Batangas does not violate P.D. No. 949 and P.D. No. 1803.
Our resolution skirted the issue of whether the investor given the initial inducements
and other circumstances surrounding its first choice of plant site may change it simply
because it has the final choice on the matter. The Court merely ruled that the
petitioner appears to have lost interest in the case by his failure to appear at the
hearing that was set by the BOI after receipt of the decision, so he may be deemed to
have waived the fruit of the judgment. On this ground, the motion for partial
reconsideration was denied.
A motion for reconsideration of said resolution was filed by the petitioner asking that
we resolve the basic issue of whether or not the foreign investor has the right of final
choice of plant site; that the non-attendance of the petitioner at the hearing was
because the decision was not yet final and executory; and that the petitioner had not
therefor waived the right to a hearing before the BOI.
In the Court's resolution dated January 17, 1990, we stated:
Does the investor have a "right of final choice" of plant site? Neither under the 1987
Constitution nor in the Omnibus Investments Code is there such a 'right
of final choice.' In the first place, the investor's choice is subject to processing and
approval or disapproval by the BOI (Art. 7, Chapter II, Omnibus Investments Code).
By submitting its application and amended application to the BOI for approval, the
investor recognizes the sovereign prerogative of our Government, through the BOI, to
approve or disapprove the same after determining whether its proposed project will
be feasible, desirable and beneficial to our country. By asking that his opposition to
the LPC's amended application be heard by the BOI, the petitioner likewise
acknowledges that the BOI, not the investor, has the last word or the "final choice" on
the matter.
Secondly, as this case has shown, even a choice that had been approved by the BOI
may not be 'final', for supervening circumstances and changes in the conditions of a
place may dictate a corresponding change in the choice of plant site in order that the
project will not fail. After all, our country will benefit only when a project succeeds, not
when it fails. (Rollo, pp. 538-539)
Nevertheless, the motion for reconsideration of the petitioner was denied.
A minority composed of Justices Melencio-Herrera, Gancayco, Sarmiento and
this ponente voted to grant the motion for reconsideration stating that the hearing set
by the BOI was premature as the decision of the Court was not yet final and
executory; that as contended by the petitioner the Court must first rule on whether or
not the investor has the right of final choice of plant site for if the ruling is in the
affirmative, the hearing would be a useless exercise; that in the October 19, 1989
resolution, the Court while upholding validity of the transfer of the plant site did not
rule on the issue of who has the final choice; that they agree with the observation of
the majority that "the investor has no final choice either under the 1987 Constitution or
in the Omnibus Investments Code and that it is the BOI who decides for the
government" and that the plea of the petitioner should be granted to give him the
chance to show the justness of his claim and to enable the BOI to give a second hard
look at the matter.
Thus, the herein petition which relies on the ruling of the Court in the resolution of
January 17, 1990 in G.R. No. 88637 that the investor has no right of final choice
under the 1987 Constitution and the Omnibus Investments Code.
Under P.D. No. 1803 dated January 16, 1981, 576 hectares of the public domain
located in Lamao, Limay, Bataan were reserved for the Petrochemical Industrial Zone
under the administration, management, and ownership of the Philippine National Oil
Company (PNOC).
The Bataan Refining Corporation (BRC) is a wholly government owned corporation,
located at Bataan. It produces 60% of the national output of naphtha.
Taiwanese investors in a petrochemical project formed the Bataan Petrochemical
Corporation (BPC) and applied with BOI for registration as a new domestic producer
of petrochemicals. Its application specified Bataan as the plant site. One of the terms
and conditions for registration of the project was the use of "naphtha cracker" and
"naphtha" as feedstock or fuel for its petrochemical plant. The petrochemical plant
was to be a joint venture with PNOC. BPC was issued a certificate of registration on
February 24, 1988 by BOI.
BPC was given pioneer status and accorded fiscal and other incentives by BOI, like:
(1) exemption from taxes on raw materials, (2) repatriation of the entire proceeds of
liquidation investments in currency originally made and at the exchange rate obtaining
at the time of repatriation; and (3) remittance of earnings on investments. As
additional incentive, the House of Representatives approved a bill introduced by the
petitioner eliminating the 48% ad valoremtax on naphtha if and when it is used as raw
materials in the petrochemical plant. (G.R. No. 88637, September 7, 1989, pp. 2-3.
Rollo, pp. 441-442)
However, in February, 1989, A.T. Chong, chairman of USI Far East Corporation, the
major investor in BPC, personally delivered to Trade Secretary Jose Concepcion a
letter dated January 25, 1989 advising him of BPC's desire to amend the original
registration certification of its project by changing the job site from Limay, Bataan, to
Batangas. The reason adduced for the transfer was the insurgency and unstable
labor situation, and the presence in Batangas of a huge liquefied petroleum gas
(LPG) depot owned by the Philippine Shell Corporation.
The petitioner vigorously opposed the proposal and no less than President Aquino
expressed her preference that the plant be established in Bataan in a conference with
the Taiwanese investors, the Secretary of National Defense and The Chief of Staff of
the Armed Forces.
Despite speeches in the Senate and House opposing the Transfer of the project to
Batangas, BPC filed on April 11, 1989 its request for approval of the amendments. Its
application is as follows: "(l) increasing the investment amount from US $220 million
to US $320 million; (2) increasing the production capacity of its naphtha cracker,
polythylene plant and polypropylene plant; (3) changing the feedstock from naphtha
only to "naphtha and/or liquefied petroleum gas;" and (4) transferring the job site from
Limay, Bataan, to Batangas. (Annex B to Petition; Rollo, p. 25)
Notwithstanding opposition from any quarters and the request of the petitioner
addressed to Secretary Concepcion to be furnished a copy of the proposed
amendment with its attachments which was denied by the BOI on May 25, 1989, BOI
approved the revision of the registration of BPC's petrochemical project. (Petition,
Annex F; Rollo, p. 32; See pp. 4 to 6, Decision in G.R. No. 88637; supra.)
BOI Vice-Chairman Tomas I. Alcantara testifying before the Committee on Ways and
Means of the Senate asserted that:
The BOI has taken a public position preferring Bataan over Batangas as the site of
the petrochemical complex, as this would provide a better distribution of industries
around the Metro Manila area. ... In advocating the choice of Bataan as the project
site for the petrochemical complex, the BOI, however, made it clear, and I would like
to repeat this that the BOI made it clear in its view that the BOI or the government for
that matter could only recomend as to where the project should be located. The BOI
recognizes and respect the principle that the final chouce is still with the proponent
who would in the final analysis provide the funding or risk capital for the
project. (Petition, P. 13; Annex D to the petition)
This position has not been denied by BOI in its pleadings in G.R. No. 88637 and in
the present petition.
Section 1, Article VIII of the 1987 Constitution provides:
SECTION 1. The judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
There is before us an actual controversy whether the petrochemical plant should
remain in Bataan or should be transferred to Batangas, and whether its feedstock
originally of naphtha only should be changed to naphtha and/or liquefied petroleum
gas as the approved amended application of the BPC, now Luzon Petrochemical
Corporation (LPC), shows. And in the light of the categorical admission of the BOI
that it is the investor who has the final choice of the site and the decision on the
feedstock, whether or not it constitutes a grave abuse of discretion for the BOI to yield
to the wishes of the investor, national interest notwithstanding.
We rule that the Court has a constitutional duty to step into this controversy and
determine the paramount issue. We grant the petition.
First, Bataan was the original choice as the plant site of the BOI to which the BPC
agreed. That is why it organized itself into a corporation bearing the name Bataan.
There is available 576 hectares of public land precisely reserved as the petrochemical
zone in Limay, Bataan under P.D. No. 1803. There is no need to buy expensive real
estate for the site unlike in the proposed transfer to Batangas. The site is the result of
careful study long before any covetous interests intruded into the choice. The site is
ideal. It is not unduly constricted and allows for expansion. The respondents have not
shown nor reiterated that the alleged peace and order situation in Bataan or unstable
labor situation warrant a transfer of the plant site to Batangas. Certainly, these were
taken into account when the firm named itself Bataan Petrochemical Corporation.
Moreover, the evidence proves the contrary.
Second, the BRC, a government owned Filipino corporation, located in Bataan
produces 60% of the national output of naphtha which can be used as feedstock for
the plant in Bataan. It can provide the feedstock requirement of the plant. On the
other hand, the country is short of LPG and there is need to import the same for use
of the plant in Batangas. The local production thereof by Shell can hardly supply the
needs of the consumers for cooking purposes. Scarce dollars will be diverted,
unnecessarily, from vitally essential projects in order to feed the furnaces of the
transferred petrochemical plant.
Third, naphtha as feedstock has been exempted by law from the ad valorem tax by
the approval of Republic Act No. 6767 by President Aquino but excluding LPG from
exemption from ad valorem tax. The law was enacted specifically for the
petrochemical industry. The policy determination by both Congress and the President
is clear. Neither BOI nor a foreign investor should disregard or contravene expressed
policy by shifting the feedstock from naphtha to LPG.
Fourth, under Section 10, Article XII of the 1987 Constitution, it is the duty of the State
to "regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national goals and priorities." The development
of a self-reliant and independent national economy effectively controlled by Filipinos
is mandated in Section 19, Article II of the Constitution.
In Article 2 of the Omnibus Investments Code of 1987 "the sound development of the
national economy in consonance with the principles and objectives of economic
nationalism" is the set goal of government.
Fifth, with the admitted fact that the investor is raising the greater portion of the capital
for the project from local sources by way of loan which led to the so-called "petroscam
scandal", the capital requirements would be greatly minimized if LPC does not have
to buy the land for the project and its feedstock shall be limited to naphtha which is
certainly more economical, more readily available than LPG, and does not have to be
imported.
Sixth, if the plant site is maintained in Bataan, the PNOC shall be a partner in the
venture to the great benefit and advantage of the government which shall have a
participation in the management of the project instead of a firm which is a huge
multinational corporation.
In the light of all the clear advantages manifest in the plant's remaining in Bataan,
practically nothing is shown to justify the transfer to Batangas except a near-absolute
discretion given by BOI to investors not only to freely choose the site but to transfer it
from their own first choice for reasons which remain murky to say the least.
And this brings us to a prime consideration which the Court cannot rightly ignore.
Section 1, Article XII of the Constitution provides that:
xxx xxx xxx
The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.
xxx xxx xxx
Every provision of the Constitution on the national economy and patrimony is infused
with the spirit of national interest. The non-alienation of natural resources, the State's
full control over the development and utilization of our scarce resources, agreements
with foreigners being based on real contributions to the economic growth and general
welfare of the country and the regulation of foreign investments in accordance with
national goals and priorities are too explicit not to be noticed and understood.
A petrochemical industry is not an ordinary investment opportunity. It should not be
treated like a garment or embroidery firm, a shoe-making venture, or even an
assembler of cars or manufacturer of computer chips, where the BOI reasoning may
be accorded fuller faith and credit. The petrochemical industry is essential to the
national interest. In other ASEAN countries like Indonesia and Malaysia, the
government superintends the industry by controlling the upstream or cracker facility.
In this particular BPC venture, not only has the Government given unprecedented
favors, among them:
foreign dictation. In this case, it is not even a foreign government but an ordinary
investor whom the BOI allows to dictate what we shall do with our heritage.
WHEREFORE, the petition is hereby granted. The decision of the respondent Board
of Investments approving the amendment of the certificate of registration of the Luzon
Petrochemical Corporation on May 23, 1989 under its Resolution No. 193, Series of
1989, (Annex F to the Petition) is SET ASIDE as NULL and VOID. The original
certificate of registration of BPC' (now LPC) of February 24, 1988 with Bataan as the
plant site and naphtha as the feedstock is, therefore, ordered maintained.
SO ORDERED.
Cruz, Gancayco, Padilla, Bidin, Sarmiento and Medialdea, JJ., concur.

(1) For an initial authorized capital of only P20 million, the Central Bank gave an Fernan, C.J., Paras, JJ., took no part.
eligible relending credit or relending facility worth US $50 million and a debt to swap
arrangement for US $30 million or a total accommodation of US $80 million which at Feliciano, J., is on leave.
current exchange rates is around P2080 million.

(2) A major part of the company's capitalization shall not come from foreign sources
but from loans, initially a Pl Billion syndicated loan, to be given by both government
banks and a consortium of Philippine private banks or in common parlance, a case of
'guiniguisa sa sariling manteca.'

(3) Tax exemptions and privileges were given as part of its 'preferred pioneer status.'

(4) Loan applications of other Philippine firms will be crowded out of the Asian
Development Bank portfolio because of the petrochemical firm's massive loan
request. (Taken from the proceedings before the Senate Blue Ribbon Committee).

but through its regulatory agency, the BOI, it surrenders even the power to make a
company abide by its initial choice, a choice free from any suspicion of unscrupulous
machinations and a choice which is undoubtedly in the best interests of the Filipino
people.

The Court, therefore, holds and finds that the BOI committed a grave abuse of
discretion in approving the transfer of the petrochemical plant from Bataan to
Batangas and authorizing the change of feedstock from naphtha only to naphtha
and/or LPG for the main reason that the final say is in the investor all other
circumstances to the contrary notwithstanding. No cogent advantage to the
government has been shown by this transfer. This is a repudiation of the independent
policy of the government expressed in numerous laws and the Constitution to run its
own affairs the way it deems best for the national interest.

One can but remember the words of a great Filipino leader who in part said he would
not mind having a government run like hell by Filipinos than one subservient to
Republic of the Philippines
SUPREME COURT
Manila
G.R. No. 92541 November 13, 1991
MA. CARMEN G. AQUINO-SARMIENTO, petitioner,
vs.
MANUEL L. MORATO (in his capacity as Chairman of the MTRCB) and the
MOVIE & TELEVISION REVIEW AND CLASSIFICATION BOARD, respondents.
Araullo, Zambrano, Gruba, Chua Law Firm for petitioner.
Francisco Ma. Chanco for respondents.
BIDIN, J.:
At issue in this petition is the citizen's right of access to official records as guaranteed
by the constitution.
In February 1989, petitioner, herself a member of respondent Movie and Television
Review and Classification Board (MTRCB), wrote its records officer requesting that
she be allowed to examine the board's records pertaining to the voting slips
accomplished by the individual board members after a review of the movies and
television productions. It is on the basis of said slips that films are either banned, cut
or classified accordingly.
Acting on the said request, the records officer informed petitioner that she has to
secure prior clearance from respondent Manuel Morato, as chairman of MTRCB, to
gain access to the records sought to be examined.
Petitioner's request was eventually denied by respondent Morato on the ground that
whenever the members of the board sit in judgment over a film, their decisions as
reflected in the individual voting slips partake the nature of conscience votes and as
such, are purely and completely private and personal. It is the submission of
respondents that the individual voting slips is the exclusive property of the member
concerned and anybody who wants access thereto must first secure his (the
member's) consent, otherwise, a request therefor may be legally denied.
Petitioner argues, on the other hand, that the records she wishes to examine are
public in character and other than providing for reasonable conditions regulating the
manner and hours of examination, respondents Morato and the classification board
have no authority to deny any citizen seeking examination of the board's records.
On February 27, 1989, respondent Morato called an executive meeting of the MTRCB
to discuss, among others, the issue raised by petitioner. In said meeting, seventeen
(17) members of the board voted to declare their individual voting records as
classified documents which rendered the same inaccessible to the public without
clearance from the chairman. Thereafter, respondent Morato denied petitioner's
request to examine the voting slips. However, it was only much later, i.e., on July 27,
1989, that respondent Board issued Resolution No. 10-89 which declared as
confidential, private and personal, the decision of the reviewing committee and the
voting slips of the members.
Petitioner brought the matter to the attention of the Executive Secretary, which in turn,
referred the same to respondent Morato for appropriate comment.
Another incident which gave rise to this petition occurred in a board meeting held on
June 22, 1989. In that meeting, respondent Morato told the board that he has ordered
some deletions on the movie "Mahirap ang Magmahal" notwithstanding the fact that
said movie was earlier approved for screening by the Board with classification "R-18
without cuts". He explained that his power to unilaterally change the decision of the
Review Committee is authorized by virtue of MTRCB Resolution No. 88-1-25 (dated
June 22,1988) which allows the chairman of the board "to downgrade a film (already)
reviewed especially those which are controversial."
Petitioner informed the Board, however, that respondent Morato possesses no
authority to unilaterally reverse a decision of the review committee under PD 1986
(Creating the Movie and Television Review and Classification Board).
After the matter was referred by the Deputy Executive Secretary to the Justice
Secretary, the latter opined that PD 1896 does not vest respondent Morato any
authority to unilaterally reverse the decision of the review committee but declined to
comment on the constitutionality of Res. No. 10-89 on the ground that the resolution
thereof is a judicial prerogative (Rollo, pp. 38-42).
The Justice Secretary's opinion to the contrary notwithstanding, respondent Morato
opted to ignore it.
Hence, this petition anchored on the following:
A. MORATO AND THE MTRCB BY APPROVING AND ENFORCING RESOLUTION
NO. 10-89 ACTED WITH GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
LACK OF JURISDICTION BECAUSE THE SAME VIOLATES ARTICLE III SECTION
7 OF THE 1987 CONSTITUTION.
B. MTRCB RESOLUTION NO. 88-1-25 HAS NO LEGAL BASIS AND CONSTITUTES
AN UNLAWFUL DELEGATION OF DISCRETIONARY POWERS.
C. MORATO AND THE MTRCB BY REFUSING TO ABIDE BY OPINION NO. 1
SERIES OF 1990 OF THE SECRETARY OF JUSTICE AND BY INSISTING ON THE
VALIDITY OF RESOLUTION NO. 88-1-25 ACTED CAPRICIOUSLY, ARBITRARILY,
IN BAD FAITH, IN EXCESS OF THEIR JURISDICTION, AND WITH GRAVE ABUSE
OF DISCRETION.
Petitioner therefore seeks the nullification of 1) MTRCB Resolution No. 88-1-25 which
allows the Chairman of the Board to unilaterally downgrade a film (already) reviewed
especially those which are controversial and 2) MTRCB RESOLUTION No. 10-89
(dated July 27, 1989) declaring as strictly confidential, private and personal a) the
decision of a reviewing committee which previously reviewed a certain film and b) the
individual voting slips of the members of the committee that reviewed the film.
Respondents argue at the outset that the instant petition should be dismissed outright
for having failed to comply with the doctrine of exhaustion of administrative remedies.
We disagree. The doctrine of exhaustion of administrate remedies simply provides
that before a party litigant is allowed resort to the courts, he is required to comply with
all administrative remedies available under the law (Rosales v. Court of Appeals, 165
SCRA 344 [1988]). The rationale behind this salutory principle is that for reasons of
practical considerations, comity and convenience, the courts of law will not entertain a
case until all the available administrative remedies provided by law have been
resorted to and the appropriate authorities have been given ample opportunity to act
and to correct the errors committed in the administrative level. If the error is rectified,
judicial intervention would then be unnecessary.
Nonetheless, the doctrine of exhaustion of administrative remedies is not absolute.
The applicability of the principle admits of certain exceptions, such as: 1) when no
administrative review is provided by law; 2) when the only question involved is one of
law (Valmonte v. Valmonte, 170 SCRA 256 [1989], citing Aguilar v. Valencia, 40
SCRA 210 [1971]; Malabanan v. Ramento, 129 SCRA 359 [1984]; Bagatsing v.
Ramirez, 74 SCRA 306; Del Mar v. Philippine Veterans Administration, 51 SCRA 340
[1973]; Pascual v. Provincial Board, 106 Phil. 466 [1959]; 3) where the party invoking
the doctrine is guilty of estoppel (Vda. de Tan v. Veterans' Backpay Commission
[1969]; 4) where the challenged administrative action is patently illegal, arbitrary and
oppressive (Azur v. Provincial Board, 27 SCRA 50 [1969]; National Development Co.
v. Collector of Customs of Manila, 9 SCRA 429 [1963]; 5) where there is
unreasonable delay or official inaction that would greatly prejudice the complainant
(Gravador v. Mamigo, 20 SCRA 742 [1967]; Azuelo v. Arnaldo, 108 Phil. 293 [1960];
6) where to exhaust administrative review is impractical and unreasonable (Cipriano
v. Marcelino, 43 SCRA 291); and 7) where the rule of qualified political agency
applies (Demaisip v. Court of Appeals, 106 Phil. 237 [1906]).
The issue raised in the instant petition is one of law, hence the doctrine of non-
exhaustion of administrative remedy relied upon by respondents is inapplicable and
cannot be given any effect. At any rate, records are replete with events pointing to the
fact that petitioner adhered to the administrative processes in the disposition of the
assailed resolutions of public respondents prior to filing the instant petition by, among
others, writing the Executive Secretary and bringing the matter to the attention of the
Office of the President (Rollo, pp. 145-147). Respondents' claim that petitioner failed
to exhaust administrative remedies must therefore fail.
Having disposed of the procedural objection raised by respondents, We now proceed
to resolve the issues raised by petitioner. In this regard, We find respondents' refusal
to allow petitioner to examine the records of respondent MTRCB, pertaining to the
decisions of the review committee as well as the individual voting slips of its
members, as violative of petitioner's constitutional right of access to public records.
More specifically, Sec. 7, Art. III of the Constitution provides that:
The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used
as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law. (emphasis supplied)
As We held in Legaspi v. Civil Service Commission (150 SCRA 530 [1987]), this
constitutional provision is self-executory and supplies "the rules by means of which
the right to information may be enjoyed (Cooley, A Treatise on Constitutional
Limitations 167 [1927]) by guaranteeing the right and mandating the duty to afford
access to sources of information. Hence, the fundamental right therein recognized
may be asserted by the people upon the ratification of the constitution without need
for any ancillary act of the Legislature (Id. at 165). What may be provided for by the
Legislature are reasonable conditions and limitations upon the access to be afforded
which must, of necessity, be consistent with the declared State Policy of full public
disclosure of all transactions involving public interest (Constitution, Art. II, Sec. 28)."
(See also Taada v. Tuvera, 136 SCRA 27 [1985]; Valmonte v. Belmonte, Jr., 170
SCRA 256 [1989]).
Respondents contend, however, that what is rendered by the members of the board
in reviewing films and reflected in their individual voting slip is their individual vote of
conscience on the motion picture or television program and as such, makes the
individual voting slip purely private and personal; an exclusive property of the member
concerned.
The term private has been defined as "belonging to or concerning, an individual
person, company, or interest"; whereas, public means "pertaining to, or belonging to,
or affecting a nation, state, or community at large" (People v. Powell, 274 NW 372
[1937]). May the decisions of respondent Board and the individual members
concerned, arrived at in an official capacity, be considered private? Certainly not. As
may be gleaned from the decree (PD 1986) creating the respondent classification
board, there is no doubt that its very existence is public is character; it is an office
created to serve public interest. It being the case, respondents can lay no valid claim
to privacy. The right to privacy belongs to the individual acting in his private capacity
and not to a governmental agency or officers tasked with, and acting in, the discharge
of public duties (See Valmonte v. Belmonte, Jr., supra.) There can be no invasion of
privacy in the case at bar since what is sought to be divulged is a product of action
undertaken in the course of performing official functions. To declare otherwise would
be to clothe every public official with an impregnable mantle of protection against
public scrutiny for their official acts.
Further, the decisions of the Board and the individual voting slips accomplished by
the members concerned are acts made pursuant to their official functions, and as
such, are neither personal nor private in nature but rather public in character. They
are, therefore, public records access to which is guaranteed to the citizenry by no less
than the fundamental law of the land. Being a public right, the exercise thereof cannot
be made contingent on the discretion, nay, whim and caprice, of the agency charged
with the custody of the official records sought to be examined. The constitutional
recognition of the citizen's right of access to official records cannot be made
dependent upon the consent of the members of the board concerned, otherwise, the
said right would be rendered nugatory. As stated by this Court in Subido v.
Ozaeta (80 Phil. 383 [1948]):
Except, perhaps when it is clear that the purpose of the examinations is unlawful, or
sheer, idle curiosity, we do not believe it is the duty under the law of registration
officers to concern themselves with the motives, reasons, and objects of the person
seeking access to the records. It is not their prerogative to see that the information
which the records contain is not flaunted before public gaze, or that scandal is not
made of it. If it be wrong to publish the contents of the records, it is the legislature and
not the officials having custody thereof which is called upon to devise a
remedy. (emphasis supplied)
It is significant to point out that this Court in the 1948 case of Subido v. Ozaeta,
supra, upheld the right to information based on the statutory right then provided in
Sec. 56 of the Land Registration Act (Act 496, as amended). Consequently, We see
no cogent reason why said right, now constitutionalized, should be given less efficacy
and primacy than what the fundament law mandates.
The Court is not unaware of RA 6713 (Code of Conduct and Ethical Standards for
Public Officials and Employees) which provides, among others, certain exceptions as
regards the availability of official records or documents to the requesting public, e.g.,
closed door Cabinet sessions and deliberations of this Court. Suffice it to state,
however, that the exceptions therein enumerated find no application in the case at
bar. Petitioner request is not concerned with the deliberations of respondent Board
but with its documents or records made after a decision or order has been rendered.
Neither will the examination involve disclosure of trade secrets or matters pertaining
to national security which would otherwise limit the right of access to official records
(See Legaspi v. Civil Service Commission, supra).
We are likewise not impressed with the proposition advanced by respondents that
respondent Morato is empowered by PD 1986 to unilaterally downgrade or upgrade a
film reviewed especially those which are controversial. The pertinent provisions of
said decree provides:
Sec 4. Decision. The decision of the BOARD either approving or disapproving for
exhibition in the Philippines a motion picture, television program, still and other
pictorial advertisement submitted to it for examination and preview must be rendered
within a period of ten (10) days which shall be counted from the date of receipt by the
BOARD of an application for the purpose . . .
For each review session, the Chairman of the Board shall designate a sub-committee
composed of at least three BOARD members to undertake the work of review. Any
disapproval or deletion must be approved by a majority of the sub-committee
members so designated. After receipt of the written decision of the sub-committee, a
motion for reconsideration in writing may be made, upon which the Chairman of the
Board shall designate a sub-committee of five BOARD members to undertake a
second review session, whose decision on behalf of the Board shall be rendered
through a majority of the sub-committee members so designated and present at the
second review session. This second review session shall be presided over by the
Chairman, or the Vice-Chairman. The decision of the BOARD in the second review
session shall be rendered within five (5) days from the date of receipt of the motion
for reconsideration.
Every decision of the BOARD disapproving a motion picture, television program or
publicity material for exhibition in the Philippines must be in writing, and shall state the
reasons or grounds for such disapproval. No film or motion picture intended for
exhibition at the moviehouses or theaters or on television shall be disapproved by
reason of its topic, theme or subject matter, but upon the merits of each picture or
program considered in its entirety.
The second decision of the BOARD shall be final, with the exception of a decision
disapproving or prohibiting a motion picture or television program in its entirety which
shall be appealable to the President of the Philippines, who may himself decide the
appeal, or be assisted either by an ad hoe committee he may create or by the
Appeals Committee herein created.
An Appeals Committee in the Office of the President of the Philippines is hereby
created composed of a Chairman and four (4) members to be appointed by the
President of the Philippines, which shall submit its recommendation to the President.
The Office of the Presidential Assistant for Legal Affairs shall serve as the Secretariat
of the Appeals Committee.
The decision of the President of the Philippines on any appealed matter shall be final.
Implementing Rules and Regulations
Sec 11. Review by Sub-Committee of Three. a) A proper application having been
filed, the Chairman of the Board shall, as the exigencies of the service may permit,
designate a Sub-Committee of at least three Board Members who shall meet, with
notice to the applicant, within ten days from receipt of the completed application. The
Sub-Committee shall then preview the motion picture subject of the application.
b) Immediately after the preview, the applicant or his representative shall withdraw to
await the results of the deliberation of the Sub-Committee. After reaching a decision,
the Sub-Committee shall summon the applicant or his representative and inform him
of its decision giving him an opportunity either to request reconsideration or to offer
certain cuts or deletions in exchange for a better classification. The decision shall be
in writing, stating, in case of disapproval of the film or denial of the classification rating
desired or both, the reason or reasons for such disapproval or denial and the
classification considered by the Sub-Committee member dissenting from the majority
opinion may express his dissent in writing.
c) The decision including the dissenting opinion, if any, shall immediately be
submitted to the Chairman of the Board for transmission to the applicant.
Sec 12. Review by Sub-Committee of Five. Within five days from receipt of a copy
of the decision of the Sub-Committee referred to in the preceding section, the
applicant may file a motion for reconsideration in writing of that decision. On receipt of
the motion, the Chairman of the Board shall designate a Sub-Committee of Five
Board Members which shall consider the motion and, within five days of receipt of
such motion, conduct a second preview of the film. The review shall, to the extent
applicable, follow the same procedure provided in the preceding section.
Sec 13. Reclassification. An applicant desiring a change in the classification rating
given his film by either the Sub-Committee of Three? or Committee of Five mentioned
in the immediately preceeding two sections may re-edit such film and apply anew with
the Board for its review and reclassification.
Sec 14. Appeal. The decision of the Committee of Five Board Members in the
second review shall be final, with the exception of a decision disapproving or
prohibiting a motion picture in its entirety which shall be appealable to the President
of the Philippines who may himself decide the appeal or refer it to the Appeals
Committee in the Office of the President for adjudication.
On the other hand, the powers and functions of the MTRCB Chairman are found in
Section 5 of the same decree as follows:
Sec. 5. Executive Officer. The Chairman of the BOARD shall be the Chief
Executive Officer of the BOARD. He shall exercise the following functions, powers
and duties:
(a) Execute, implement and enforce the decisions, orders, awards, rules and
regulations issued by the BOARD;
(b) Direct and supervise the operations and the internal affairs of the BOARD;
(c) Establish the internal organization and administrative procedures of the BOARD,
and recommend to the BOARD the appointment of the necessary administrative and
subordinate personnel; and
(d) Exercise such other powers and functions and perform such duties as are not
specifically lodged in the BOARD.
It is at once apparent from a reading of the above provisions of PD 1986 that
respondent Morato, as Chairman of the MTRCB, is not vested with any authority to
reverse or overrule by himself alone a decision rendered by a committee which
conducted a review of motion pictures or television programs.
The power to classify motion pictures into categories such as "General Patronage" or
"For Adults Only" is vested with the respondent Board itself and not with the
Chairman thereof (Sec. 3 [e], PD 1986). As Chief Executive Officer, respondent
Morato's function as Chairman of the Board calls for the implementation and
execution, not modification or reversal, of the decisions or orders of the latter (Sec. 5
[a], Ibid.). The power of classification having been reposed by law exclusively with the
respondent Board, it has no choice but to exercise the same as mandated by law, i.e.,
as a collegial body, and not transfer it elsewhere or discharge said power through the
intervening mind of another. Delegata potestas non potest delegari a delegated
power cannot be delegated. And since the act of classification involves an exercise of
the Board's discretionary power with more reason the Board cannot, by way of the
assailed resolution, delegate said power for it is an established rule in administrative
law that discretionary authority cannot be a subject of delegation.
WHEREFORE, the instant petition is GRANTED. Resolution Nos. 10-89 and 88-1-25
issued by the respondent Board are hereby declared null and void.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano,
Padilla, Medialdea, Regalado and Davide, Jr., JJ., concur.
Grio-Aquino and Romero, JJ., took no part.
EN BANC
[G.R. No. 133250. July 9, 2002]
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and
AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary
injunction and a temporary restraining order. The petition seeks to compel the Public
Estates Authority (PEA for brevity) to disclose all facts on PEAs then on-going
renegotiations with Amari Coastal Bay and Development Corporation (AMARI for
brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA
from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public
Highways, signed a contract with the Construction and Development Corporation of
the Philippines (CDCP for brevity) to reclaim certain foreshore and offshore areas of
Manila Bay. The contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree
No. 1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including foreshore
and submerged areas, and to develop, improve, acquire, x x x lease and sell any and
all kinds of lands.[1] On the same date, then President Marcos issued Presidential
Decree No. 1085 transferring to PEA the lands reclaimed in the foreshore and
offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA
to amend its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall be
funded and owned by PEA. Accordingly, PEA and CDCP executed a Memorandum of
Agreement dated December 29, 1981, which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of
works on a unit price/lump sum basis for items of work to be agreed upon, subject to
price escalation, retention and other terms and conditions provided for in Presidential
Decree No. 1594. All the financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede
and transfer in favor of PEA, all of the rights, title, interest and participation of CDCP
in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December
30, 1981 which have not yet been sold, transferred or otherwise disposed of by
CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand
Four Hundred Seventy Three (99,473) square meters in the Financial Center Area
covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty
Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed
areas at varying elevations above Mean Low Water Level located outside the
Financial Center Area and the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No.
3517, granting and transferring to PEA the parcels of land so reclaimed under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters. Subsequently, on April 9, 1988, the Register of Deeds of
the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311,
and 7312, in the name of PEA, covering the three reclaimed islands known as the
Freedom Islands located at the southern portion of the Manila-Cavite Coastal Road,
Paraaque City. The Freedom Islands have a total land area of One Million Five
Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with
AMARI, a private corporation, to develop the Freedom Islands. The JVA also required
the reclamation of an additional 250 hectares of submerged areas surrounding these
islands to complete the configuration in the Master Development Plan of the Southern
Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through
negotiation without public bidding.[4] On April 28, 1995, the Board of Directors of PEA,
in its Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995, then President
Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the
JVA.[6]
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege
speech in the Senate and denounced the JVA as the grandmother of all scams. As a
result, the Senate Committee on Government Corporations and Public Enterprises,
and the Committee on Accountability of Public Officers and Investigations, conducted
a joint investigation. The Senate Committees reported the results of their investigation
in Senate Committee Report No. 560 dated September 16, 1997.[7] Among the
conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to
AMARI under the JVA are lands of the public domain which the government has not
classified as alienable lands and therefore PEA cannot alienate these lands; (2) the
certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself
is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a study on the
legality of the JVA in view of Senate Committee Report No. 560. The members of the
Legal Task Force were the Secretary of Justice,[8] the Chief Presidential Legal
Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force upheld
the legality of the JVA, contrary to the conclusions reached by the Senate
Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that
there were on-going renegotiations between PEA and AMARI under an order issued
by then President Fidel V. Ramos. According to these reports, PEA Director Nestor
Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed
the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition
with Application for the Issuance of a Temporary Restraining Order and Preliminary
Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court
dismissed the petition for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer,
filed the instant Petition for Mandamus with Prayer for the Issuance of a Writ of
Preliminary Injunction and Temporary Restraining Order. Petitioner contends the
government stands to lose billions of pesos in the sale by PEA of the reclaimed lands
to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation
of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987
Constitution on the right of the people to information on matters of public
concern. Petitioner assails the sale to AMARI of lands of the public domain as a
blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations. Finally, petitioner asserts
that he seeks to enjoin the loss of billions of pesos in properties of the State that are
of public dominion.
After several motions for extension of time,[13] PEA and AMARI filed their Comments
on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28,
1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of
the renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining
order; and (c) to set the case for hearing on oral argument. Petitioner filed a
Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court
denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and
required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement
(Amended JVA, for brevity). On May 28, 1999, the Office of the President under the
administration of then President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner
now prays that on constitutional and statutory grounds the renegotiated contract be
declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE
MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE
THE PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES
OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL
AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE
OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and
academic because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of the on-going
negotiations for a new agreement. The petition also prays that the Court enjoin PEA
from privately entering into, perfecting and/or executing any new agreement with
AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI
furnished petitioner on June 21, 1999 a copy of the signed Amended JVA containing
the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied
petitioners prayer for a public disclosure of the renegotiations. Likewise, petitioners
prayer to enjoin the signing of the Amended JVA is now moot because PEA and
AMARI have already signed the Amended JVA on March 30, 1999. Moreover, the
Office of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by
simply fast-tracking the signing and approval of the Amended JVA before the Court
could act on the issue. Presidential approval does not resolve the constitutional issue
or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by
the President cannot operate to moot the petition and divest the Court of its
jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to
enjoin the signing of the Amended JVA on constitutional grounds necessarily includes
preventing its implementation if in the meantime PEA and AMARI have signed one in
violation of the Constitution. Petitioners principal basis in assailing the renegotiation of
the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private corporations. If the
Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin its
implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and
submerged areas of Manila Bay to a single private corporation. It now becomes
more compelling for the Court to resolve the issue to insure the government itself
does not violate a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of the Constitution. In the
instant case, if the Amended JVA runs counter to the Constitution, the Court can still
prevent the transfer of title and ownership of alienable lands of the public domain in
the name of AMARI. Even in cases where supervening events had made the cases
moot, the Court did not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and the public. [17]
Also, the instant petition is a case of first impression. All previous decisions of the
Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart
provision in the 1973 Constitution,[18] covered agricultural lands sold to private
corporations which acquired the lands from private parties. The transferors of the
private corporations claimed or could claim the right to judicial confirmation of their
imperfect titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the
purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles
because the lands covered by the Amended JVA are newly reclaimed or still to be
reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive
and notorious occupation of agricultural lands of the public domain for at least thirty
years since June 12, 1945 or earlier. Besides, the deadline for filing applications for
judicial confirmation of imperfect title expired on December 31, 1987. [20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title and
ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is
obligated to transfer to AMARI the latters seventy percent proportionate share in the
reclaimed areas as the reclamation progresses. The Amended JVA even allows
AMARI to mortgage at any time the entire reclaimed area to raise financing for the
reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to cases
involving factual questions. As it is not a trier of facts, the Court cannot entertain
cases involving factual issues. The instant case, however, raises constitutional issues
of transcendental importance to the public.[22] The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition
for mandamus which falls under the originaljurisdiction of the Court under Section 5,
Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the
instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose
publicly certain information without first asking PEA the needed information. PEA
claims petitioners direct resort to the Court violates the principle of exhaustion of
administrative remedies. It also violates the rule that mandamus may issue only if
there is no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted
the petition for mandamus even if the petitioners there did not initially demand from
the Office of the President the publication of the presidential decrees. PEA points out
that in Taada, the Executive Department had an affirmative statutory duty under
Article 2 of the Civil Code[24] and Section 1 of Commonwealth Act No. 638[25] to
publish the presidential decrees. There was, therefore, no need for the petitioners
in Taada to make an initial demand from the Office of the President. In the instant
case, PEA claims it has no affirmative statutory duty to disclose publicly information
about its renegotiation of the JVA. Thus, PEA asserts that the Court must apply the
principle of exhaustion of administrative remedies to the instant case in view of the
failure of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a
government corporation. Under Section 79 of the Government Auditing Code,[26]2 the
disposition of government lands to private parties requires public bidding. PEA was
under a positive legal duty to disclose to the public the terms and conditions
for the sale of its lands. The law obligated PEA to make this public disclosure even
without demand from petitioner or from anyone. PEA failed to make this public
disclosure because the original JVA, like the Amended JVA, was the result of
a negotiated contract, not of a public bidding. Considering that PEA had an
affirmative statutory duty to make the public disclosure, and was even in breach of
this legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or
constitutional question.[27] The principal issue in the instant case is the capacity of
AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the
alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to
enforce his constitutional right to information without a showing that PEA refused to
perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that
petitioner has not shown that he will suffer any concrete injury because of the signing
or implementation of the Amended JVA. Thus, there is no actual controversy requiring
the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the petition seeks to
compel PEA to comply with its constitutional duties. There are two constitutional
issues involved here. First is the right of citizens to information on matters of public
concern. Second is the application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among Filipino
citizens. The thrust of the first issue is to compel PEA to disclose publicly information
on the sale of government lands worth billions of pesos, information which the
Constitution and statutory law mandate PEA to disclose. The thrust of the second
issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the
public domain in violation of the Constitution, compelling PEA to comply with a
constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the
public. In Chavez v. PCGG,[28] the Court upheld the right of a citizen to bring a
taxpayers suit on matters of transcendental importance to the public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of transcendental importance to the public. He asserts that
ordinary taxpayers have a right to initiate and prosecute actions questioning the
validity of acts or orders of government agencies or instrumentalities, if the issues
raised are of paramount public interest, and if they immediately affect the social,
economic and moral well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal
interest, when the proceeding involves the assertion of a public right, such as in this
case. He invokes several decisions of this Court which have set aside the procedural
matter of locus standi, when the subject of the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right
and the object of mandamus is to obtain the enforcement of a public duty, the people
are regarded as the real parties in interest; and because it is sufficient that petitioner
is a citizen and as such is interested in the execution of the laws, he need not show
that he has any legal or special interest in the result of the action. In the aforesaid
case, the petitioners sought to enforce their right to be informed on matters of public
concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in
connection with the rule that laws in order to be valid and enforceable must be
published in the Official Gazette or otherwise effectively promulgated. In ruling for the
petitioners' legal standing, the Court declared that the right they sought to be enforced
is a public right recognized by no less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that
when a mandamus proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere fact that petitioner is a citizen
and, therefore, part of the general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not
have been involved under the questioned contract for the development, management
and operation of the Manila International Container Terminal, public interest [was]
definitely involved considering the important role [of the subject contract] . . . in the
economic development of the country and the magnitude of the financial
consideration involved. We concluded that, as a consequence, the disclosure
provision in the Constitution would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and
access to official records, documents and papers a right guaranteed under Section 7,
Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino
citizen. Because of the satisfaction of the two basic requisites laid down by decisional
law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2)
espoused by a Filipino citizen, we rule that the petition at bar should be allowed.
We rule that since the instant petition, brought by a citizen, involves the enforcement
of constitutional rights - to information and to the equitable diffusion of natural
resources - matters of transcendental public importance, the petitioner has the
requisite locus standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to information on
matters of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining
to official acts, transactions, or decisions, as well as to government research data
used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest
reinforces the peoples right to information on matters of public concern. This State
policy is expressed in Section 28, Article II of the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving
public interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-
making and in the operations of the government, as well as provide the people
sufficient information to exercise effectively other constitutional rights. These twin
provisions are essential to the exercise of freedom of expression. If the government
does not disclose its official acts, transactions and decisions to citizens, whatever
citizens say, even if expressed without any restraint, will be speculative and amount
to nothing. These twin provisions are also essential to hold public officials at all times
x x x accountable to the people,[29] for unless citizens have the proper information,
they cannot hold public officials accountable for anything. Armed with the right
information, citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any democracy. As explained by
the Court in Valmonte v. Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or
process of communication between the government and the people. It is in the
interest of the State that the channels for free political discussion be maintained to the
end that the government may perceive and be responsive to the peoples will. Yet, this
open dialogue can be effective only to the extent that the citizenry is informed and
thus able to formulate its will intelligently. Only when the participants in the discussion
are aware of the issues and have access to information relating thereto can such bear
fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations the
right to information is limited to definite propositions of the government. PEA
maintains the right does not include access to intra-agency or inter-agency
recommendations or communications during the stage when common assertions are
still in the process of being formulated or are in the exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional
stage or before the closing of the transaction. To support its contention, AMARI cites
the following discussion in the 1986 Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps
leading to the consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it can
cover both steps leading to a contract and already a consummated contract,
Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can
invoke the right. Requiring government officials to reveal their deliberations at the pre-
decisional stage will degrade the quality of decision-making in government
agencies. Government officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting
them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA
to disclose publicly, and information the constitutional right to information requires
PEA to release to the public. Before the consummation of the contract, PEA must, on
its own and without demand from anyone, disclose to the public matters relating to
the disposition of its property.These include the size, location, technical description
and nature of the property being disposed of, the terms and conditions of the
disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the public at the
start of the disposition process, long before the consummation of the contract,
because the Government Auditing Code requires public bidding. If PEA fails to
make this disclosure, any citizen can demand from PEA this information at any time
during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being
undertaken by the bidding or review committee is not immediately accessible under
the right to information. While the evaluation or review is still on-going, there are no
official acts, transactions, or decisions on the bids or proposals. However, once the
committee makes its official recommendation, there arises a definite
proposition on the part of the government. From this moment, the publics right to
information attaches, and any citizen can access all the non-proprietary information
leading to such definite proposition. In Chavez v. PCGG,[33] the Court ruled as
follows:
Considering the intent of the framers of the Constitution, we believe that it is
incumbent upon the PCGG and its officers, as well as other government
representatives, to disclose sufficient public information on any proposed settlement
they have decided to take up with the ostensible owners and holders of ill-gotten
wealth. Such information, though, must pertain to definite propositions of the
government, not necessarily to intra-agency or inter-agency recommendations or
communications during the stage when common assertions are still in the process of
being formulated or are in the exploratory stage. There is need, of course, to observe
the same restrictions on disclosure of information in general, as discussed earlier
such as on matters involving national security, diplomatic or foreign relations,
intelligence and other classified information. (Emphasis supplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information contemplates inclusion of
negotiations leading to the consummation of the transaction. Certainly, a
consummated contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if no contract is
consummated, and if one is consummated, it may be too late for the public to expose
its defects.
Requiring a consummated contract will keep the public in the dark until the contract,
which may be grossly disadvantageous to the government or even illegal, becomes
a fait accompli.This negates the State policy of full transparency on matters of public
concern, a situation which the framers of the Constitution could not have
intended. Such a requirement will prevent the citizenry from participating in the public
discussion of any proposed contract, effectively truncating a basic right enshrined in
the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a
retreat by the State of its avowed policy of full disclosure of all its transactions
involving public interest.
The right covers three categories of information which are matters of public concern,
namely: (1) official records; (2) documents and papers pertaining to official acts,
transactions and decisions; and (3) government research data used in formulating
policies. The first category refers to any document that is part of the public records in
the custody of government agencies or officials. The second category refers to
documents and papers recording, evidencing, establishing, confirming, supporting,
justifying or explaining official acts, transactions or decisions of government agencies
or officials. The third category refers to research data, whether raw, collated or
processed, owned by the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes
evaluation reports, recommendations, legal and expert opinions, minutes of meetings,
terms of reference and other documents attached to such reports or minutes, all
relating to the JVA. However, the right to information does not compel PEA to prepare
lists, abstracts, summaries and the like relating to the renegotiation of the JVA.[34] The
right only affords access to records, documents and papers, which means the
opportunity to inspect and copy them. One who exercises the right must copy the
records, documents and papers at his expense. The exercise of the right is also
subject to reasonable regulations to protect the integrity of the public records and to
minimize disruption to government operations, like rules specifying when and how to
conduct the inspection and copying.[35]
The right to information, however, does not extend to matters recognized as
privileged information under the separation of powers.[36] The right does not also
apply to information on military and diplomatic secrets, information affecting national
security, and information on investigations of crimes by law enforcement agencies
before the prosecution of the accused, which courts have long recognized as
confidential.[37] The right may also be subject to other limitations that Congress may
impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover
Presidential conversations, correspondences, or discussions during closed-door
Cabinet meetings which, like internal deliberations of the Supreme Court and other
collegiate courts, or executive sessions of either house of Congress, [38] are
recognized as confidential. This kind of information cannot be pried open by a co-
equal branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested parties, is
essential to protect the independence of decision-making of those tasked to exercise
Presidential, Legislative and Judicial power.[39] This is not the situation in the instant
case.
We rule, therefore, that the constitutional right to information includes official
information on on-going negotiations before a final contract. The information,
however, must constitute definite propositions by the government and should not
cover recognized exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public order.[40] Congress
has also prescribed other limitations on the right to information in several
legislations.[41]
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI
of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in
the Regalian doctrine which holds that the State owns all lands and waters of the
public domain.Upon the Spanish conquest of the Philippines, ownership of all lands,
territories and possessions in the Philippines passed to the Spanish Crown.[42] The
King, as the sovereign ruler and representative of the people, acquired and owned all
lands and territories in the Philippines except those he disposed of by grant or sale to
private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting,
however, the State, in lieu of the King, as the owner of all lands and waters of the
public domain.The Regalian doctrine is the foundation of the time-honored principle of
land ownership that all lands that were not acquired from the Government, either by
purchase or by grant, belong to the public domain. [43] Article 339 of the Civil Code of
1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian
doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the
ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907, the
Philippine Commission enacted Act No. 1654 which provided for the lease, but not
the sale, of reclaimed lands of the government to corporations and individuals.
Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the
Public Land Act, which authorized the lease, but not the sale, of reclaimed lands
of the government to corporations and individuals. On November 7, 1936, the
National Assembly passed Commonwealth Act No. 141, also known as the Public
Land Act, which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this day as
the general law governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all
waters within the maritime zone of the Spanish territory belonged to the public domain
for public use.[44] The Spanish Law of Waters of 1866 allowed the reclamation of the
sea under Article 5, which provided as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided
by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party
undertaking the reclamation, provided the government issued the necessary permit
and did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar
character;
2. That belonging exclusively to the State which, without being of general public use,
is employed in some public service, or in the development of the national wealth,
such as walls, fortresses, and other works for the defense of the territory, and mines,
until granted to private individuals.
Property devoted to public use referred to property open for use by the public. In
contrast, property devoted to public service referred to property used for some
specific public service and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but
also to property not so used but employed to develop the national wealth. This
class of property constituted property of public dominion although employed for some
economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of
public dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State.
This provision, however, was not self-executing. The legislature, or the executive
department pursuant to law, must declare the property no longer needed for public
use or territorial defense before the government could lease or alienate the property
to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated
the lease of reclaimed and foreshore lands. The salient provisions of this law were as
follows:
Section 1. The control and disposition of the foreshore as defined in existing law,
and the title to all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise throughout the Philippine
Islands, shall be retained by the Government without prejudice to vested rights and
without prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands
made or reclaimed by the Government by dredging or filling or otherwise to be divided
into lots or blocks, with the necessary streets and alleyways located thereon, and
shall cause plats and plans of such surveys to be prepared and filed with the Bureau
of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give
notice to the public that such parts of the lands so made or reclaimed as are
not needed for public purposes will be leased for commercial and business
purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-
General may by executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government control and
disposition of foreshore lands. Private parties could lease lands reclaimed by the
government only if these lands were no longer needed for public purpose. Act No.
1654 mandated public bidding in the lease of government reclaimed lands. Act No.
1654 made government reclaimed lands sui generis in that unlike other public lands
which the government could sell to private parties, these reclaimed lands were
available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of
1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea
under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by
private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public
Land Act.[46] The salient provisions of Act No. 2874, on reclaimed lands, were as
follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of
the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable
public lands, the Governor-General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall from time to time declare what lands
are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral
land, shall be classified as suitable for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural purposes, and
shall be open to disposition or concession, shall be disposed of under the provisions
of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall
be disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in
class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the
public domain into x x x alienable or disposable [47] lands. Section 7 of the Act
empowered the Governor-General to declare what lands are open to disposition or
concession. Section 8 of the Act limited alienable or disposable lands only to those
lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title [48] shall be
classified as government reclaimed, foreshore and marshy lands, as well as other
lands. All these lands, however, must be suitable for residential, commercial,
industrial or other productive non-agricultural purposes. These provisions vested
upon the Governor-General the power to classify inalienable lands of the public
domain into disposable lands of the public domain. These provisions also empowered
the Governor-General to classify further such disposable lands of the public domain
into government reclaimed, foreshore or marshy lands of the public domain, as well
as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public
domain classified as government reclaimed, foreshore and marshy lands shall be
disposed of to private parties by lease only and not otherwise. The Governor-
General, before allowing the lease of these lands to private parties, must formally
declare that the lands were not necessary for the public service. Act No. 2874
reiterated the State policy to lease and not to sell government reclaimed, foreshore
and marshy lands of the public domain, a policy first enunciated in 1907 in Act No.
1654. Government reclaimed, foreshore and marshy lands remained sui generis, as
the only alienable or disposable lands of the public domain that the government could
not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore
and marshy public lands for non-agricultural purposes retain their inherent potential
as areas for public service. This is the reason the government prohibited the sale, and
only allowed the lease, of these lands to private parties. The State always reserved
these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed,
foreshore and marshy lands into other non-agricultural lands under Section 56
(d). Lands falling under Section 56 (d) were the only lands for non-agricultural
purposes the government could sell to private parties. Thus, under Act No. 2874, the
government could not sell government reclaimed, foreshore and marshy lands to
private parties, unless the legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant
to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by
private parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino
people. The 1935 Constitution, in adopting the Regalian doctrine, declared in Section
1, Article XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines or
to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, subject to any existing right, grant, lease, or concession at
the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural land,
shall not be alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for another twenty-five years, except
as to water rights for irrigation, water supply, fisheries, or industrial uses other than
the development of water power, in which cases beneficial use may be the measure
and limit of the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public
agricultural lands, which were the only natural resources the State could
alienate. Thus, foreshore lands, considered part of the States natural resources,
became inalienable by constitutional fiat, available only for lease for 25 years,
renewable for another 25 years. The government could alienate foreshore lands only
after these lands were reclaimed and classified as alienable agricultural lands of the
public domain. Government reclaimed and marshy lands of the public domain, being
neither timber nor mineral lands, fell under the classification of public agricultural
lands.[50] However, government reclaimed and marshy lands, although subject to
classification as disposable public agricultural lands, could only be leased and not
sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed
and marshy lands of the public domain was only a statutory prohibition and the
legislature could therefore remove such prohibition. The 1935 Constitution did not
prohibit individuals and corporations from acquiring government reclaimed and
marshy lands of the public domain that were classified as agricultural lands under
existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as
follows:
Section 2. No private corporation or association may acquire, lease, or hold
public agricultural lands in excess of one thousand and twenty four hectares,
nor may any individual acquire such lands by purchase in excess of one
hundred and forty hectares, or by lease in excess of one thousand and twenty-four
hectares, or by homestead in excess of twenty-four hectares. Lands adapted to
grazing, not exceeding two thousand hectares, may be leased to an individual, private
corporation, or association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section
58 of Act No. 2874 to open for sale to private parties government reclaimed and
marshy lands of the public domain. On the contrary, the legislature continued the long
established State policy of retaining for the government title and ownership of
government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141,
also known as the Public Land Act, which compiled the then existing laws on lands of
the public domain. CA No. 141, as amended, remains to this day the existing
general law governing the classification and disposition of lands of the public domain
other than timber and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public
domain into alienable or disposable[52] lands of the public domain, which prior to such
classification are inalienable and outside the commerce of man. Section 7 of CA No.
141 authorizes the President to declare what lands are open to disposition or
concession. Section 8 of CA No. 141 states that the government can declare open for
disposition or concession only lands that are officially delimited and classified.
Sections 6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture
and Commerce, shall from time to time classify the lands of the public domain
into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to
another,[53] for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or
disposable public lands, the President, upon recommendation by the Secretary of
Agriculture and Commerce, shall from time to time declare what lands are open
to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited and classified and, when practicable,
surveyed, and which have not been reserved for public or quasi-public uses, nor
appropriated by the Government, nor in any manner become private property, nor
those on which a private right authorized and recognized by this Act or any other valid
law may be claimed, or which, having been reserved or appropriated, have ceased to
be so. x x x.
Thus, before the government could alienate or dispose of lands of the public domain,
the President must first officially classify these lands as alienable or disposable, and
then declare them open to disposition or concession. There must be no law reserving
these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and
marshy lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this
chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the
case may be, to any person, corporation, or association authorized to purchase or
lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine
shall be disposed of to private parties by lease only and not otherwise, as soon
as the President, upon recommendation by the Secretary of Agriculture, shall
declare that the same are not necessary for the public service and are open to
disposition under this chapter. The lands included in class (d) may be disposed of
by sale or lease under the provisions of this Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution,
Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore
and marshy disposable lands of the public domain. All these lands are intended for
residential, commercial, industrial or other non-agricultural purposes. As before,
Section 61 allowed only the lease of such lands to private parties. The government
could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or
those lands for non-agricultural purposes not classified as government reclaimed,
foreshore and marshy disposable lands of the public domain. Foreshore lands,
however, became inalienable under the 1935 Constitution which only allowed the
lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain
intended for residential, commercial, industrial or other productive purposes other
than agricultural shall be disposed of under the provisions of this chapter and
not otherwise. Under Section 10 of CA No. 141, the term disposition includes lease
of the land. Any disposition of government reclaimed, foreshore and marshy
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III
of CA No. 141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation
v. Court of Appeals,[55] Justice Reynato S. Puno summarized succinctly the law on
this matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So too are
lands reclaimed by the government by dredging, filling, or other means. Act 1654
mandated that the control and disposition of the foreshore and lands under water
remained in the national government. Said law allowed only the leasing of reclaimed
land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and
lands reclaimed by the government were to be disposed of to private parties by lease
only and not otherwise. Before leasing, however, the Governor-General, upon
recommendation of the Secretary of Agriculture and Natural Resources, had first to
determine that the land reclaimed was not necessary for the public service. This
requisite must have been met before the land could be disposed of. But even then,
the foreshore and lands under water were not to be alienated and sold to
private parties. The disposition of the reclaimed land was only by lease. The
land remained property of the State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141
has remained in effect at present.
The State policy prohibiting the sale to private parties of government reclaimed,
foreshore and marshy alienable lands of the public domain, first implemented in 1907
was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The
prohibition on the sale of foreshore lands, however, became a constitutional edict
under the 1935 Constitution. Foreshore lands became inalienable as natural
resources of the State, unless reclaimed by the government and classified as
agricultural lands of the public domain, in which case they would fall under the
classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy
disposable lands of the public domain continued to be only leased and not sold to
private parties.[56]These lands remained sui generis, as the only alienable or
disposable lands of the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for the
legislature to pass a law authorizing such sale. CA No. 141 does not authorize the
President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the
only alienable or disposable lands for non-agricultural purposes that the government
could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority
before lands under Section 59 that the government previously transferred to
government units or entities could be sold to private parties. Section 60 of CA No. 141
declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of
the Secretary of Agriculture and Natural Resources, be reasonably necessary for the
purposes for which such sale or lease is requested, and shall not exceed one
hundred and forty-four hectares: Provided, however, That this limitation shall not
apply to grants, donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said entities conducive to
the public interest; but the land so granted, donated, or transferred to a province,
municipality or branch or subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except
when authorized by Congress: x x x. (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the
legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public lands that
could be acquired from the State. These government units and entities should not just
turn around and sell these lands to private parties in violation of constitutional or
statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to
government units and entities could be used to circumvent constitutional limitations
on ownership of alienable or disposable lands of the public domain. In the same
manner, such transfers could also be used to evade the statutory prohibition in CA
No. 141 on the sale of government reclaimed and marshy lands of the public domain
to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on
these lands.[57]
In case of sale or lease of disposable lands of the public domain falling under
Section 59 of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63
and 67 of CA No. 141 provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for
public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce (now the Secretary of Natural Resources) for authority to dispose of the
same. Upon receipt of such authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or sales of agricultural
public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall
be made to the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or
sales of alienable or disposable lands of the public domain. [58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of
the Spanish Law of Waters of 1866. Private parties could still reclaim portions of the
sea with government permission. However, the reclaimed land could become
private land only if classified as alienable agricultural land of the public
domain open to disposition under CA No. 141. The 1935 Constitution prohibited the
alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public
dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of
1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.
Again, the government must formally declare that the property of public dominion is
no longer needed for public use or public service, before the same could be classified
as patrimonial property of the State.[59] In the case of government reclaimed and
marshy lands of the public domain, the declaration of their being disposable, as well
as the manner of their disposition, is governed by the applicable provisions of CA No.
141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public
dominion those properties of the State which, without being for public use, are
intended for public service or the development of the national wealth. Thus,
government reclaimed and marshy lands of the State, even if not employed for public
use or public service, if developed to enhance the national wealth, are classified as
property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the
Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, wildlife, and other natural
resources of the Philippines belong to the State. With the exception of agricultural,
industrial or commercial, residential, and resettlement lands of the public
domain, natural resources shall not be alienated, and no license, concession, or
lease for the exploration, development, exploitation, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-five years, renewable for
not more than twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which
cases, beneficial use may be the measure and the limit of the grant. (Emphasis
supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of agricultural, industrial or commercial, residential, and resettlement lands
of the public domain. In contrast, the 1935 Constitution barred the alienation of all
natural resources except public agricultural lands. However, the term public
agricultural lands in the 1935 Constitution encompassed industrial, commercial,
residential and resettlement lands of the public domain. [60] If the land of public domain
were neither timber nor mineral land, it would fall under the classification of
agricultural land of the public domain. Both the 1935 and 1973 Constitutions,
therefore, prohibited the alienation of all natural resources except agricultural
lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to
individuals who were citizens of the Philippines. Private corporations, even if wholly
owned by Philippine citizens, were no longer allowed to acquire alienable lands of the
public domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973
Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of
land of the public domain which may be developed, held or acquired by, or leased to,
any qualified individual, corporation, or association, and the conditions therefor. No
private corporation or association may hold alienable lands of the public
domain except by lease not to exceed one thousand hectares in area nor may any
citizen hold such lands by lease in excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twenty-four hectares. No private
corporation or association may hold by lease, concession, license or permit, timber or
forest lands and other timber or forest resources in excess of one hundred thousand
hectares. However, such area may be increased by the Batasang Pambansa upon
recommendation of the National Economic and Development Authority. (Emphasis
supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of
the public domain only through lease. Only individuals could now acquire alienable
lands of the public domain, and private corporations became absolutely barred
from acquiring any kind of alienable land of the public domain. The constitutional
ban extended to all kinds of alienable lands of the public domain, while the statutory
ban under CA No. 141 applied only to government reclaimed, foreshore and marshy
alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree
No. 1084 creating PEA, a wholly government owned and controlled corporation with a
special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following
purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging,
filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and
sell any and all kinds of lands, buildings, estates and other forms of real property,
owned, managed, controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the
efficient, economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified. (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the
public domain. Foreshore areas are those covered and uncovered by the ebb and
flow of the tide.[61] Submerged areas are those permanently under water regardless of
the ebb and flow of the tide.[62] Foreshore and submerged areas indisputably belong
to the public domain[63] and are inalienable unless reclaimed, classified as alienable
lands open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable
lands of the public domain did not apply to PEA since it was then, and until today, a
fully owned government corporation. The constitutional ban applied then, as it still
applies now, only to private corporations and associations. PD No. 1084 expressly
empowers PEA to hold lands of the public domain even in excess of the area
permitted to private corporations by statute. Thus, PEA can hold title to private
lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the
public domain, there must be legislative authority empowering PEA to sell these
lands. This legislative authority is necessary in view of Section 60 of CA No.141,
which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when
authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed
foreshore and submerged alienable lands of the public domain. Nevertheless, any
legislative authority granted to PEA to sell its reclaimed alienable lands of the public
domain would be subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. Hence, such legislative authority could
only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted
the Regalian doctrine. The 1987 Constitution declares that all natural resources
are owned by the State, and except for alienable agricultural lands of the public
domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the
1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber,
mineral lands, and national parks. Agricultural lands of the public domain may be
further classified by law according to the uses which they may be devoted. Alienable
lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and not to exceed one thousand
hectares in area. Citizens of the Philippines may lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof by purchase, homestead,
or grant.
Taking into account the requirements of conservation, ecology, and development, and
subject to the requirements of agrarian reform, the Congress shall determine, by law,
the size of lands of the public domain which may be acquired, developed, held, or
leased and the conditions therefor. (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public
domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations
to hold alienable lands of the public domain only through lease. As in the 1935 and
1973 Constitutions, the general law governing the lease to private corporations of
reclaimed, foreshore and marshy alienable lands of the public domain is still CA No.
141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except
through lease, alienable lands of the public domain is not well understood. During the
deliberations of the 1986 Constitutional Commission, the commissioners probed the
rationale behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5
which says:
`No private corporation or association may hold alienable lands of the public domain
except by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this was
introduced in the 1973 Constitution. In effect, it prohibits private corporations from
acquiring alienable public lands. But it has not been very clear in jurisprudence
what the reason for this is. In some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent large landholdings. Is that the
intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were
instances where the Iglesia ni Cristo was not allowed to acquire a mere 313-square
meter land where a chapel stood because the Supreme Court said it would be in
violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban in
this way:
Indeed, one purpose of the constitutional prohibition against purchases of public
agricultural lands by private corporations is to equitably diffuse land ownership or to
encourage owner-cultivatorship and the economic family-size farm and to prevent a
recurrence of cases like the instant case. Huge landholdings by corporations or
private persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution
could have simply limited the size of alienable lands of the public domain that
corporations could acquire. The Constitution could have followed the limitations on
individuals, who could acquire not more than 24 hectares of alienable lands of the
public domain under the 1973 Constitution, and not more than 12 hectares under the
1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the
land in the name of a corporation would be more effective in preventing the break-up
of farmlands. If the farmland is registered in the name of a corporation, upon the
death of the owner, his heirs would inherit shares in the corporation instead of
subdivided parcels of the farmland. This would prevent the continuing break-up of
farmlands into smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on
individuals from acquiring more than the allowed area of alienable lands of the public
domain.Without the constitutional ban, individuals who already acquired the maximum
area of alienable lands of the public domain could easily set up corporations to
acquire more alienable public lands. An individual could own as many corporations as
his means would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation. The
corporation is a convenient vehicle to circumvent the constitutional limitation on
acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer
ownership of only a limited area of alienable land of the public domain to a qualified
individual. This constitutional intent is safeguarded by the provision prohibiting
corporations from acquiring alienable lands of the public domain, since the vehicle to
circumvent the constitutional intent is removed. The available alienable public lands
are gradually decreasing in the face of an ever-growing population. The most
effective way to insure faithful adherence to this constitutional intent is to grant or sell
alienable lands of the public domain only to individuals. This, it would seem, is the
practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause,
consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less
to regularize the configuration of the reclaimed area. [65]
PEA confirms that the Amended JVA involves the development of the Freedom
Islands and further reclamation of about 250 hectares x x x, plus an option granted to
AMARI to subsequently reclaim another 350 hectares x x x. [66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84
hectares of the 750-hectare reclamation project have been reclaimed, and the
rest of the 592.15 hectares are still submerged areas forming part of Manila
Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00
for PEAs actual cost in partially reclaiming the Freedom Islands. AMARI will also
complete, at its own expense, the reclamation of the Freedom Islands. AMARI will
further shoulder all the reclamation costs of all the other areas, totaling 592.15
hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70
percent and 30 percent, respectively, the total net usable area which is defined in the
Amended JVA as the total reclaimed area less 30 percent earmarked for common
areas. Title to AMARIs share in the net usable area, totaling 367.5 hectares, will be
issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of
transfer or conveyance of the title pertaining to AMARIs Land share based on the
Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause
the issuance and delivery of the proper certificates of title covering AMARIs
Land Share in the name of AMARI, x x x; provided, that if more than seventy
percent (70%) of the titled area at any given time pertains to AMARI, PEA shall
deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until
such time when a corresponding proportionate area of additional land pertaining to
PEA has been titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum
of 367.5 hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI
joint venture PEAs statutory authority, rights and privileges to reclaim foreshore and
submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to perform
Rawland Reclamation and Horizontal Development as well as own the Reclamation
Area, thereby granting the Joint Venture the full and exclusive right, authority and
privilege to undertake the Project in accordance with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated April 25,
1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own
under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged
areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution
which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands
of the public domain except by lease, x x x.(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of
Manila Bay are alienable or disposable lands of the public domain. In its
Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified
as alienable and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative Order
No. 365 admitted in its Report and Recommendation to then President Fidel V.
Ramos, [R]eclaimed lands are classified as alienable and disposable lands of
the public domain.[69] The Legal Task Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the
rights of ownership and disposition over reclaimed lands have been transferred to
PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified
person without violating the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land,
except by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to reclaimed
lands whose ownership has passed on to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged
areas of Manila Bay are part of the lands of the public domain, waters x x x and other
natural resources and consequently owned by the State. As such, foreshore and
submerged areas shall not be alienated, unless they are classified as agricultural
lands of the public domain. The mere reclamation of these areas by PEA does not
convert these inalienable natural resources of the State into alienable or disposable
lands of the public domain. There must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition
or concession. Moreover, these reclaimed lands cannot be classified as alienable or
disposable if the law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to
disposition or concession which have been officially delimited and
classified.[72] The President has the authority to classify inalienable lands of the
public domain into alienable or disposable lands of the public domain, pursuant to
Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the Executive Department
attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the
Philippine Government for use as the Chancery of the Philippine Embassy.Although
the Chancery had transferred to another location thirteen years earlier, the Court still
ruled that, under Article 422[74] of the Civil Code, a property of public dominion retains
such character until formally declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be part of
the public domain, not available for private appropriation or ownership until
there is a formal declaration on the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land
patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila
Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent
No. 3517 in the name of PEA for the 157.84 hectares comprising the partially
reclaimed Freedom Islands.Subsequently, on April 9, 1999 the Register of Deeds of
the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of
PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates
of title corresponding to land patents. To this day, these certificates of title are still in
the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the
Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085
and President Aquinos issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service. The Freedom Islands are
thus alienable or disposable lands of the public domain, open to disposition or
concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already
reclaimed the Freedom Islands although subsequently there were partial erosions on
some areas. The government had also completed the necessary surveys on these
islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the
land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public
domain into agricultural, forest or timber, mineral lands, and national parks. Being
neither timber, mineral, nor national park lands, the reclaimed Freedom Islands
necessarily fall under the classification of agricultural lands of the public
domain. Under the 1987 Constitution, agricultural lands of the public domain are the
only natural resources that the State may alienate to qualified private parties. All other
natural resources, such as the seas or bays, are waters x x x owned by the State
forming part of the public domain, and are inalienable pursuant to Section 2, Article
XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a
private corporation, reclaimed the islands under a contract dated November 20, 1973
with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish
Law of Waters of 1866, argues that if the ownership of reclaimed lands may be given
to the party constructing the works, then it cannot be said that reclaimed lands are
lands of the public domain which the State may not alienate. [75] Article 5 of the
Spanish Law of Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise
provided by the terms of the grant of authority. (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim
from the sea only with proper permission from the State. Private parties could own the
reclaimed land only if not otherwise provided by the terms of the grant of authority.
This clearly meant that no one could reclaim from the sea without permission from the
State because the sea is property of public dominion. It also meant that the State
could grant or withhold ownership of the reclaimed land because any reclaimed land,
like the sea from which it emerged, belonged to the State. Thus, a private person
reclaiming from the sea without permission from the State could not acquire
ownership of the reclaimed land which would remain property of public dominion like
the sea it replaced.[76] Article 5 of the Spanish Law of Waters of 1866 adopted the
time-honored principle of land ownership that all lands that were not acquired from
the government, either by purchase or by grant, belong to the public domain. [77]
Article 5 of the Spanish Law of Waters must be read together with laws subsequently
enacted on the disposition of public lands. In particular, CA No. 141 requires that
lands of the public domain must first be classified as alienable or disposable before
the government can alienate them. These lands must not be reserved for public or
quasi-public purposes.[78]Moreover, the contract between CDCP and the government
was executed after the effectivity of the 1973 Constitution which barred private
corporations from acquiring any kind of alienable land of the public domain. This
contract could not have converted the Freedom Islands into private lands of a private
corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in the National
Government the power to reclaim lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of
areas under water, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under a proper contract. (Emphasis
supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the National
Government or by a person contracted by the National Government. Private parties
may reclaim from the sea only under a contract with the National Government, and no
longer by grant or permission as provided in Section 5 of the Spanish Law of Waters
of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the
National Governments implementing arm to undertake all reclamation projects of the
government, which shall be undertaken by the PEA or through a proper contract
executed by it with any person or entity. Under such contract, a private party
receives compensation for reclamation services rendered to PEA. Payment to the
contractor may be in cash, or in kind consisting of portions of the reclaimed land,
subject to the constitutional ban on private corporations from acquiring alienable
lands of the public domain. The reclaimed land can be used as payment in kind only if
the reclaimed land is first classified as alienable or disposable land open to
disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional
592.15 hectares which are still submerged and forming part of Manila Bay. There is
no legislative or Presidential act classifying these submerged areas as
alienable or disposable lands of the public domain open to disposition. These
submerged areas are not covered by any patent or certificate of title. There can be no
dispute that these submerged areas form part of the public domain, and in their
present state are inalienable and outside the commerce of man. Until reclaimed
from the sea, these submerged areas are, under the Constitution, waters x x x owned
by the State, forming part of the public domain and consequently inalienable.Only
when actually reclaimed from the sea can these submerged areas be classified as
public agricultural lands, which under the Constitution are the only natural resources
that the State may alienate. Once reclaimed and transformed into public agricultural
lands, the government may then officially classify these lands as alienable or
disposable lands open to disposition.Thereafter, the government may declare these
lands no longer needed for public service. Only then can these reclaimed lands be
considered alienable or disposable lands of the public domain and within the
commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its
charter to undertake public services that require the use of lands of the public
domain. Under Section 5 of PD No. 1084, the functions of PEA include the following:
[T]o own or operate railroads, tramways and other kinds of land transportation, x x x;
[T]o construct, maintain and operate such systems of sanitary sewers as may be
necessary; [T]o construct, maintain and operate such storm drains as may be
necessary. PEA is empowered to issue rules and regulations as may be necessary
for the proper use by private parties of any or all of the highways, roads, utilities,
buildings and/or any of its properties and to impose or collect fees or tolls for their
use. Thus, part of the reclaimed foreshore and submerged lands held by the PEA
would actually be needed for public use or service since many of the functions
imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and
on behalf of the National Government. The same section also states that [A]ll
reclamation projects shall be approved by the President upon recommendation of the
PEA, and shall be undertaken by the PEA or through a proper contract executed by it
with any person or entity; x x x. Thus, under EO No. 525, in relation to PD No. 3-A
and PD No.1084, PEA became the primary implementing agency of the National
Government to reclaim foreshore and submerged lands of the public domain. EO No.
525 recognized PEA as the government entity to undertake the reclamation of lands
and ensure their maximum utilization in promoting public welfare and
interests.[79] Since large portions of these reclaimed lands would obviously be
needed for public service, there must be a formal declaration segregating reclaimed
lands no longer needed for public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to
or be owned by the PEA, could not automatically operate to classify inalienable lands
into alienable or disposable lands of the public domain. Otherwise, reclaimed
foreshore and submerged lands of the public domain would automatically become
alienable once reclaimed by PEA, whether or not classified as alienable or
disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO
No. 525, vests in the Department of Environment and Natural Resources (DENR for
brevity) the following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources and, in the process of exercising such control,
impose appropriate taxes, fees, charges, rentals and any such form of levy and
collect such revenues for the exploration, development, utilization or gathering of
such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses,
permits, concessions, lease agreements and such other privileges concerning
the development, exploration and utilization of the countrys marine, freshwater,
and brackish water and over all aquatic resources of the country and shall
continue to oversee, supervise and police our natural resources; cancel or
cause to cancel such privileges upon failure, non-compliance or violations of any
regulation, order, and for all other causes which are in furtherance of the conservation
of natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all
lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation with
appropriate agencies.[80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR
exercises supervision and control over alienable and disposable public lands. DENR
also exercises exclusive jurisdiction on the management and disposition of all lands
of the public domain. Thus, DENR decides whether areas under water, like foreshore
or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA
needs authorization from DENR before PEA can undertake reclamation projects in
Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the
public domain. Hence, DENR decides whether reclaimed lands of PEA should be
classified as alienable under Sections 6[81] and 7[82] of CA No. 141. Once DENR
decides that the reclaimed lands should be so classified, it then recommends to the
President the issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note that then DENR
Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No.
141.
In short, DENR is vested with the power to authorize the reclamation of areas under
water, while PEA is vested with the power to undertake the physical reclamation of
areas under water, whether directly or through private contractors. DENR is also
empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop,
sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged
areas does not make the reclaimed lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of
PEA.
Absent two official acts a classification that these lands are alienable or disposable
and open to disposition and a declaration that these lands are not needed for public
service, lands reclaimed by PEA remain inalienable lands of the public domain. Only
such an official classification and formal declaration can convert reclaimed lands into
alienable or disposable lands of the public domain, open to disposition under the
Constitution, Title I and Title III[83] of CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the
public domain, the reclaimed lands shall be disposed of in accordance with CA No.
141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed
lands transferred to a branch or subdivision of the government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative
Code of 1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x.
Thus, the Court concluded that a law is needed to convey any real property belonging
to the Government. The Court declared that -
It is not for the President to convey real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and legislative
concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority
allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977,
provides that
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to
the contract for the reclamation and construction of the Manila-Cavite Coastal Road
Project between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines dated November 20, 1973 and/or any
other contract or reclamation covering the same area is hereby transferred,
conveyed and assigned to the ownership and administration of the Public
Estates Authority established pursuant to PD No. 1084; Provided, however, That the
rights and interests of the Construction and Development Corporation of the
Philippines pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the
obligations of the Republic of the Philippines (Department of Public Highways) arising
from, or incident to, the aforesaid contract between the Republic of the Philippines
and the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates
Authority shall issue in favor of the Republic of the Philippines the corresponding
shares of stock in said entity with an issued value of said shares of stock (which) shall
be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates
Authority shall execute such contracts or agreements, including appropriate
agreements with the Construction and Development Corporation of the Philippines,
as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural
Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or
portions of the land reclaimed or to be reclaimed as provided for in the above-
mentioned contract. On the basis of such patents, the Land Registration
Commission shall issue the corresponding certificate of title. (Emphasis
supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides
that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the
PEA which shall be responsible for its administration, development, utilization or
disposition in accordance with the provisions of Presidential Decree No. 1084. Any
and all income that the PEA may derive from the sale, lease or use of reclaimed lands
shall be used in accordance with the provisions of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell
its reclaimed lands. PD No. 1085 merely transferred ownership and administration of
lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands
reclaimed by PEA shall belong to or be owned by PEA. EO No. 525 expressly states
that PEA should dispose of its reclaimed lands in accordance with the provisions of
Presidential Decree No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands x x
x owned, managed, controlled and/or operated by the government.[87] (Emphasis
supplied) There is, therefore, legislative authority granted to PEA to sell its
lands, whether patrimonial or alienable lands of the public domain. PEA may sell
to private parties its patrimonial properties in accordance with the PEA charter free
from constitutional limitations. The constitutional ban on private corporations from
acquiring alienable lands of the public domain does not apply to the sale of PEAs
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to
private individuals since, with the legislative authority, there is no longer any statutory
prohibition against such sales and the constitutional ban does not apply to
individuals. PEA, however, cannot sell any of its alienable or disposable lands of the
public domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority benefits only
individuals. Private corporations remain barred from acquiring any kind of alienable
land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be
transferred by PEA to the contractor or his assignees (Emphasis supplied) would not
apply to private corporations but only to individuals because of the constitutional
ban. Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands
open to disposition, and further declared no longer needed for public service, PEA
would have to conduct a public bidding in selling or leasing these lands. PEA must
observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction,
in the absence of a law exempting PEA from holding a public auction.[88] Special
Patent No. 3517 expressly states that the patent is issued by authority of the
Constitution and PD No. 1084, supplemented by Commonwealth Act No. 141, as
amended. This is an acknowledgment that the provisions of CA No. 141 apply to the
disposition of reclaimed alienable lands of the public domain unless otherwise
provided by law. Executive Order No. 654,[89] which authorizes PEA to determine the
kind and manner of payment for the transfer of its assets and properties, does not
exempt PEA from the requirement of public auction. EO No. 654 merely authorizes
PEA to decide the mode of payment, whether in kind and in installment, but does not
authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property
through public bidding. Section 79 of PD No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause,
or is no longer needed, it shall, upon application of the officer accountable therefor,
be inspected by the head of the agency or his duly authorized representative in the
presence of the auditor concerned and, if found to be valueless or unsaleable, it may
be destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in the
Official Gazette, or for not less than three consecutive days in any newspaper
of general circulation, or where the value of the property does not warrant the
expense of publication, by notices posted for a like period in at least three public
places in the locality where the property is to be sold. In the event that the public
auction fails, the property may be sold at a private sale at such price as may be
fixed by the same committee or body concerned and approved by the
Commission.
It is only when the public auction fails that a negotiated sale is allowed, in which case
the Commission on Audit must approve the selling price. [90] The Commission on Audit
implements Section 79 of the Government Auditing Code through Circular No. 89-
296[91] dated January 27, 1989. This circular emphasizes that government assets
must be disposed of only through public auction, and a negotiated sale can be
resorted to only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs
reclaimed foreshore and submerged alienable lands of the public domain. Private
corporations are barred from bidding at the auction sale of any kind of alienable land
of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10,
1991. PEA imposed a condition that the winning bidder should reclaim another 250
hectares of submerged areas to regularize the shape of the Freedom Islands, under a
60-40 sharing of the additional reclaimed areas in favor of the winning bidder. [92] No
one, however, submitted a bid. On December 23, 1994, the Government Corporate
Counsel advised PEA it could sell the Freedom Islands through negotiation, without
need of another public bidding, because of the failure of the public bidding on
December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands
and the additional 250 hectares still to be reclaimed, it also granted an option to
AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract,
enlarged the reclamation area to 750 hectares.[94] The failure of public bidding on
December 10, 1991, involving only 407.84 hectares,[95] is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides,
the failure of public bidding happened on December 10, 1991, more than three years
before the signing of the original JVA on April 25, 1995. The economic situation in the
country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is
absolute and clear: Private corporations or associations may not hold such alienable
lands of the public domain except by lease, x x x. Even Republic Act No. 6957 (BOT
Law, for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed
lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957
states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure projects undertaken through the build-operate-and-
transfer arrangement or any of its variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a
portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x. (Emphasis
supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the public
domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI,
authorizes local governments in land reclamation projects to pay the contractor or
developer in kind consisting of a percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan
may consist of the grant of a portion or percentage of the reclaimed land or the
industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a proviso
similar to that of the BOT Law, the constitutional restrictions on land ownership
automatically apply even though not expressly mentioned in the Local Government
Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or
developer, if a corporate entity, can only be paid with leaseholds on portions of the
reclaimed land. If the contractor or developer is an individual, portions of the
reclaimed land, not exceeding 12 hectares[96] of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law and the Local
Government Code can avoid a direct collision with Section 3, Article XII of the 1987
Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands
to public respondent PEA transformed such lands of the public domain to private
lands. This theory is echoed by AMARI which maintains that the issuance of the
special patent leading to the eventual issuance of title takes the subject land away
from the land of public domain and converts the property into patrimonial or private
property. In short, PEA and AMARI contend that with the issuance of Special Patent
No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising
the Freedom Islands have become private lands of PEA. In support of their theory,
PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was issued, the
land ceased to be part of the public domain and became private property over which
the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate of title
based on a public land patent, the land covered thereby automatically comes under
the operation of Republic Act 496 subject to all the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
While the Director of Lands has the power to review homestead patents, he may do
so only so long as the land remains part of the public domain and continues to be
under his exclusive control; but once the patent is registered and a certificate of title is
issued, the land ceases to be part of the public domain and becomes private property
over which the Director of Lands has neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and free
patents were issued covering the same in favor of the private respondents, the said
lots ceased to be part of the public domain and, therefore, the Director of Lands lost
jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally
effected a land grant to the Mindanao Medical Center, Bureau of Medical Services,
Department of Health, of the whole lot, validly sufficient for initial registration under
the Land Registration Act. Such land grant is constitutive of a fee simple title or
absolute title in favor of petitioner Mindanao Medical Center.Thus, Section 122 of the
Act, which governs the registration of grants or patents involving public lands,
provides that Whenever public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of the Philippines are
alienated, granted or conveyed to persons or to public or private corporations, the
same shall be brought forthwith under the operation of this Act (Land Registration Act,
Act 496) and shall become registered lands.
The first four cases cited involve petitions to cancel the land patents and the
corresponding certificates of titles issued to private parties. These four cases
uniformly hold that the Director of Lands has no jurisdiction over private lands or that
upon issuance of the certificate of title the land automatically comes under the
Torrens System. The fifth case cited involves the registration under the Torrens
System of a 12.8-hectare public land granted by the National Government to
Mindanao Medical Center, a government unit under the Department of Health. The
National Government transferred the 12.8-hectare public land to serve as the site for
the hospital buildings and other facilities of Mindanao Medical Center, which
performed a public service. The Court affirmed the registration of the 12.8-hectare
public land in the name of Mindanao Medical Center under Section 122 of Act No.
496. This fifth case is an example of a public land being registered under Act No. 496
without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the
name of PEA, a wholly government owned corporation performing public as well as
proprietary functions. No patent or certificate of title has been issued to any private
party. No one is asking the Director of Lands to cancel PEAs patent or certificates of
title. In fact, the thrust of the instant petition is that PEAs certificates of title should
remain with PEA, and the land covered by these certificates, being alienable lands of
the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant
private or public ownership of the land. Registration is not a mode of acquiring
ownership but is merely evidence of ownership previously conferred by any of the
recognized modes of acquiring ownership. Registration does not give the registrant a
better right than what the registrant had prior to the registration. [102] The registration of
lands of the public domain under the Torrens system, by itself, cannot convert public
lands into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate
of title the alienable land of the public domain automatically becomes private land
cannot apply to government units and entities like PEA. The transfer of the Freedom
Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated
in Special Patent No. 3517 issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
Philippines and in conformity with the provisions of Presidential Decree No.
1084, supplemented by Commonwealth Act No. 141, as amended, there are
hereby granted and conveyed unto the Public Estates Authority the aforesaid tracts of
land containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters; the technical description of which are
hereto attached and made an integral part hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not
covered by PD No. 1084. Section 60 of CA No. 141 prohibits, except when authorized
by Congress, the sale of alienable lands of the public domain that are transferred to
government units or entities. Section 60 of CA No. 141 constitutes, under Section 44
of PD No. 1529, a statutory lien affecting title of the registered land even if not
annotated on the certificate of title.[104] Alienable lands of the public domain held by
government entities under Section 60 of CA No. 141 remain public lands because
they cannot be alienated or encumbered unless Congress passes a law authorizing
their disposition. Congress, however, cannot authorize the sale to private
corporations of reclaimed alienable lands of the public domain because of the
constitutional ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of
CA No. 141 does not automatically convert alienable lands of the public domain into
private or patrimonial lands. The alienable lands of the public domain must be
transferred to qualified private parties, or to government entities not tasked to dispose
of public lands, before these lands can become private or patrimonial
lands. Otherwise, the constitutional ban will become illusory if Congress can declare
lands of the public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This will allow private
corporations to acquire directly from government agencies limitless areas of lands
which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus,
EO No. 525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being
proposed to be undertaken in various parts of the country which need to be evaluated
for consistency with national programs;
Whereas, there is a need to give further institutional support to the Governments
declared policy to provide for a coordinated, economical and efficient reclamation of
lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be
limited to the National Government or any person authorized by it under proper
contract;
Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in the
reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as
a government corporation to undertake reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing
authority to reorganize the national government including the transfer, abolition, or
merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by
virtue of the powers vested in me by the Constitution and pursuant to Presidential
Decree No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on
behalf of the National Government. All reclamation projects shall be approved by
the President upon recommendation of the PEA, and shall be undertaken by the PEA
or through a proper contract executed by it with any person or entity; Provided, that,
reclamation projects of any national government agency or entity authorized under its
charter shall be undertaken in consultation with the PEA upon approval of the
President.
xxx.
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the
government agency charged with leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold by PEA are not private lands, in
the same manner that DENR, when it disposes of other alienable lands, does not
dispose of private lands but alienable lands of the public domain. Only when qualified
private parties acquire these lands will the lands become private lands. In the hands
of the government agency tasked and authorized to dispose of alienable of
disposable lands of the public domain, these lands are still public, not private
lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the public
domain as well as any and all kinds of lands. PEA can hold both lands of the public
domain and private lands. Thus, the mere fact that alienable lands of the public
domain like the Freedom Islands are transferred to PEA and issued land patents or
certificates of title in PEAs name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA
as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA will
simply turn around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be reclaimed lands to a
single private corporation in only one transaction. This scheme will effectively nullify
the constitutional ban in Section 3, Article XII of the 1987 Constitution which was
intended to diffuse equitably the ownership of alienable lands of the public domain
among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the
public domain since PEA can acquire x x x any and all kinds of lands. This will open
the floodgates to corporations and even individuals acquiring hundreds of hectares of
alienable lands of the public domain under the guise that in the hands of PEA these
lands are private lands. This will result in corporations amassing huge landholdings
never before seen in this country - creating the very evil that the constitutional ban
was designed to prevent. This will completely reverse the clear direction of
constitutional development in this country. The 1935 Constitution allowed private
corporations to acquire not more than 1,024 hectares of public lands. [105] The 1973
Constitution prohibited private corporations from acquiring any kind of public land,
and the 1987 Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No.
496 or PD No. 1529, automatically become private lands is contrary to existing
laws. Several laws authorize lands of the public domain to be registered under the
Torrens System or Act No. 496, now PD No. 1529, without losing their character as
public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529,
respectively, provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x
Government of the Philippine Islands are alienated, granted, or conveyed to persons
or the public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith
under the operation of this Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of
PD No. 1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a province,
municipality, or branch or subdivision of the Government, as provided in Section 60 of
CA No. 141, may be registered under the Torrens System pursuant to Section 103 of
PD No. 1529. Such registration, however, is expressly subject to the condition in
Section 60 of CA No. 141 that the land shall not be alienated, encumbered or
otherwise disposed of in a manner affecting its title, except when authorized by
Congress. This provision refers to government reclaimed, foreshore and marshy
lands of the public domain that have been titled but still cannot be alienated or
encumbered unless expressly authorized by Congress. The need for legislative
authority prevents the registered land of the public domain from becoming private
land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public
domain may be registered under the Torrens System. Section 48, Chapter 12, Book I
of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the
name of any political subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a
public wharf may be titled in the name of a government corporation regulating port
operations in the country. Private property purchased by the National Government for
expansion of an airport may also be titled in the name of the government agency
tasked to administer the airport.Private property donated to a municipality for use as a
town plaza or public school site may likewise be titled in the name of the
municipality.[106] All these properties become properties of the public domain, and if
already registered under Act No. 496 or PD No. 1529, remain registered land. There
is no requirement or provision in any existing law for the de-registration of land from
the Torrens System.
Private lands taken by the Government for public use under its power of eminent
domain become unquestionably part of the public domain. Nevertheless, Section 85
of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National
Government new certificates of title covering such expropriated lands. Section 85 of
PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest
therein, is expropriated or taken by eminent domain, the National Government,
province, city or municipality, or any other agency or instrumentality exercising such
right shall file for registration in the proper Registry a certified copy of the judgment
which shall state definitely by an adequate description, the particular property or
interest expropriated, the number of the certificate of title, and the nature of the public
use. A memorandum of the right or interest taken shall be made on each certificate of
title by the Register of Deeds, and where the fee simple is taken, a new certificate
shall be issued in favor of the National Government, province, city,
municipality, or any other agency or instrumentality exercising such right for the land
so taken. The legal expenses incident to the memorandum of registration or issuance
of a new certificate of title shall be for the account of the authority taking the land or
interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively
private or patrimonial lands. Lands of the public domain may also be registered
pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the
Freedom Islands or of the lands to be reclaimed from submerged areas of Manila
Bay. In the words of AMARI, the Amended JVA is not a sale but a joint venture with a
stipulation for reimbursement of the original cost incurred by PEA for the earlier
reclamation and construction works performed by the CDCP under its 1973 contract
with the Republic. Whether the Amended JVA is a sale or a joint venture, the fact
remains that the Amended JVA requires PEA to cause the issuance and delivery of
the certificates of title conveying AMARIs Land Share in the name of AMARI. [107]
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which
provides that private corporations shall not hold such alienable lands of the public
domain except by lease. The transfer of title and ownership to AMARI clearly means
that AMARI will hold the reclaimed lands other than by lease. The transfer of title and
ownership is a disposition of the reclaimed lands, a transaction considered a sale or
alienation under CA No. 141,[108] the Government Auditing Code,[109] and Section 3,
Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and
submerged areas form part of the public domain and are inalienable. Lands reclaimed
from foreshore and submerged areas also form part of the public domain and are also
inalienable, unless converted pursuant to law into alienable or disposable lands of the
public domain. Historically, lands reclaimed by the government are sui generis, not
available for sale to private parties unlike other alienable public lands. Reclaimed
lands retain their inherent potential as areas for public use or public service. Alienable
lands of the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such equitable
distribution, the 1973 and 1987 Constitutions have barred private corporations from
acquiring any kind of alienable land of the public domain. Those who attempt to
dispose of inalienable natural resources of the State, or seek to circumvent the
constitutional ban on alienation of lands of the public domain to private corporations,
do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private corporations but may not sell or
transfer ownership of these lands to private corporations. PEA may only sell these
lands to Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open
to disposition and declared no longer needed for public service. The government can
make such classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural lands of the public
domain, which are the only natural resources the government can alienate. In their
present state, the 592.15 hectares of submerged areas are inalienable and outside
the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation,
ownership of 77.34 hectares[110] of the Freedom Islands, such transfer is void for
being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares[111] of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation
of natural resources other than agricultural lands of the public domain. PEA may
reclaim these submerged areas. Thereafter, the government can classify the
reclaimed lands as alienable or disposable, and further declare them no longer
needed for public service. Still, the transfer of such reclaimed alienable lands of the
public domain to AMARI will be void in view of Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409[112] of the Civil Code, contracts whose object or
purpose is contrary to law, or whose object is outside the commerce of men, are
inexistent and void from the beginning. The Court must perform its duty to defend and
uphold the Constitution, and therefore declares the Amended JVA null and void ab
initio.

Seventh issue: whether the Court is the proper forum to raise the issue of
whether the Amended JVA is grossly disadvantageous to the government.

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

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari
Coastal Bay Development Corporation are PERMANENTLY ENJOINED from
implementing the Amended Joint Venture Agreement which is hereby declared NULL
and VOID ab initio.

SO ORDERED.