Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6791 March 29, 1954
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
QUE PO LAY, defendant-appellant.
MONTEMAYOR, J.:
Que Po Lay is appealing from the decision of the Court of First Instance of Manila,
finding him guilty of violating Central Bank Circular No. 20 in connection with section
34 of Republic Act No. 265, and sentencing him to suffer six months imprisonment,
to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to
pay the costs.
The charge was that the appellant who was in possession of foreign exchange
consisting of U.S. dollars, U.S. checks and U.S. money orders amounting to about
$7,000 failed to sell the same to the Central Bank through its agents within one day
following the receipt of such foreign exchange as required by Circular No. 20. the
appeal is based on the claim that said circular No. 20 was not published in the Official
Gazette prior to the act or omission imputed to the appellant, and that consequently,
said circular had no force and effect. It is contended that Commonwealth Act. No.,
638 and Act 2930 both require said circular to be published in the Official Gazette,
it being an order or notice of general applicability. The Solicitor General answering
this contention says that Commonwealth Act. No. 638 and 2930 do not require the
publication in the Official Gazette of said circular issued for the implementation of a
law in order to have force and effect.
We agree with the Solicitor General that the laws in question do not require the
publication of the circulars, regulations and notices therein mentioned in order to
become binding and effective. All that said two laws provide is that laws, resolutions,
decisions of the Supreme Court and Court of Appeals, notices and documents
required by law to be of no force and effect. In other words, said two Acts merely
enumerate and make a list of what should be published in the Official Gazette,
presumably, for the guidance of the different branches of the Government issuing
same, and of the Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that statutes
passed by Congress shall, in the absence of special provision, take effect at the
beginning of the fifteenth day after the completion of the publication of the statute
PUP COL 2015
in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally
provides that laws shall take effect after fifteen days following the completion of
their publication in the Official Gazette, unless it is otherwise provided. It is true that
Circular No. 20 of the Central Bank is not a statute or law but being issued for the
implementation of the law authorizing its issuance, it has the force and effect of law
according to settled jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and
authorities cited therein.) Moreover, as a rule, circulars and regulations especially
like the Circular No. 20 of the Central Bank in question which prescribes a penalty
for its violation should be published before becoming effective, this, on the general
principle and theory that before the public is bound by its contents, especially its
penal provisions, a law, regulation or circular must first be published and the people
officially and specifically informed of said contents and its penalties.
Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the
effectivity of laws, (Article 1 thereof), namely, that laws shall be binding twenty days
after their promulgation, and that their promulgation shall be understood as made
on the day of the termination of the publication of the laws in the Gazette. Manresa,
commenting on this article is of the opinion that the word "laws" include regulations
and circulars issued in accordance with the same. He says:
El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en
Sentencia de 22 de Junio de 1910, en el sentido de que bajo la
denominacion generica de leyes, se comprenden tambien los Reglamentos,
Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de
conformidad con las mismas por el Gobierno en uso de su potestad.
Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba
el hecho de que muchas de sus disposiciones contienen la advertencia de
que empiezan a regir el mismo dia de su publicacion en la Gaceta,
advertencia que seria perfectamente inutil si no fuera de aplicacion al caso
el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p.
52).
In the present case, although circular No. 20 of the Central Bank was issued in the
year 1949, it was not published until November 1951, that is, about 3 months after
appellant's conviction of its violation. It is clear that said circular, particularly its
penal provision, did not have any legal effect and bound no one until its publication
in the Official Gazzette or after November 1951. In other words, appellant could not
be held liable for its violation, for it was not binding at the time he was found to
have failed to sell the foreign exchange in his possession thereof.
1|Page
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

But the Solicitor General also contends that this question of non-publication of the Republic of the Philippines
Circular is being raised for the first time on appeal in this Court, which cannot be SUPREME COURT
done by appellant. Ordinarily, one may raise on appeal any question of law or fact Manila
that has been raised in the court below and which is within the issues made by the EN BANC
parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But the G.R. No. L-63915 April 24, 1985
question of non-publication is fundamental and decisive. If as a matter of fact LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF
Circular No. 20 had not been published as required by law before its violation, then ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
in the eyes of the law there was no such circular to be violated and consequently [MABINI], petitioners,
appellant committed no violation of the circular or committed any offense, and the vs.
trial court may be said to have had no jurisdiction. This question may be raised at HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the
any stage of the proceeding whether or not raised in the court below. President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive
In view of the foregoing, we reverse the decision appealed from and acquit the Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity
appellant, with costs de oficio. as Director, Malacaang Records Office, and FLORENDO S. PABLO, in his
Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and capacity as Director, Bureau of Printing, respondents.
Diokno, JJ., concur.
ESCOLIN, J.:

Invoking the people's right to be informed on matters of public concern, a right

recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as
the principle that laws to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus
to compel respondent public officials to publish, and/or cause the publication in the
Official Gazette of various presidential decrees, letters of instructions, general
orders, proclamations, executive orders, letter of implementation and administrative
orders.

Specifically, the publication of the following presidential issuances is sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179,
184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337,
355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447,
473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599,
644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935,
961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166,
1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810,
1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130,
136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199,
202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-
245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289,

2|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346,
349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-
440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587,
594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702,
712-713, 726, 837-839, 878-879, 881, 882, 939-940,
964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281,
1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558,
1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628,
1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734,
1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787,
1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814,
1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840,
1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868,
1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963,
1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145,
2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471,
474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538,
543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594,
598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786,
788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39,
50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-
433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed
outright on the ground that petitioners have no legal personality or standing to bring
the instant petition. The view is submitted that in the absence of any showing that
petitioners are personally and directly affected or prejudiced by the alleged non-
publication of the presidential issuances in question 2 said petitioners are without
the requisite legal personality to institute this mandamus proceeding, they are not
being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of
Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation,
board or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an
PUP COL 2015
office, trust, or station, or unlawfully excludes another from the
use a rd enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate remedy
in the ordinary course of law, the person aggrieved thereby may
file a verified petition in the proper court alleging the facts with
certainty and praying that judgment be rendered commanding the
defendant, immediately or at some other specified time, to do the
act required to be done to Protect the rights of the petitioner, and
to pay the damages sustained by the petitioner by reason of the
wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition
concerns a public right and its object is to compel the performance of a public duty,
they need not show any specific interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino
vs. Governor General, 3 this Court held that while the general rule is that "a writ of
mandamus would be granted to a private individual only in those cases where he
has some private or particular interest to be subserved, or some particular right to
be protected, independent of that which he holds with the public at large," and "it
is for the public officers exclusively to apply for the writ when public rights are to be
subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "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 [High,
Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private
individual, as a proper party to the mandamus proceedings brought to compel the
Governor General to call a special election for the position of municipal president in
the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T.
Trent said:
We are therefore of the opinion that the weight of authority
supports the proposition that the relator is a proper party to
proceedings of this character when a public right is sought to be
enforced. If the general rule in America were otherwise, we think
that it would not be applicable to the case at bar for the reason
'that it is always dangerous to apply a general rule to a particular
case without keeping in mind the reason for the rule, because, if
3|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
under the particular circumstances the reason for the rule does
not exist, the rule itself is not applicable and reliance upon the
rule may well lead to error'
No reason exists in the case at bar for applying the general rule
insisted upon by counsel for the respondent. The circumstances
which surround this case are different from those in the United
States, inasmuch as if the relator is not a proper party to these
proceedings no other person could be, as we have seen that it is
not the duty of the law officer of the Government to appear and
represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in
the aforementioned case apply squarely to the present petition. Clearly, the right
sought to be enforced by petitioners herein is a public right recognized by no less
than the fundamental law of the land. If petitioners were not allowed to institute
this proceeding, it would indeed be difficult to conceive of any other person to initiate
the same, considering that the Solicitor General, the government officer generally
empowered to represent the people, has entered his appearance for respondents in
this case.
Respondents further contend that publication in the Official Gazette is not a sine qua
non requirement for the effectivity of laws where the laws themselves provide for
their own effectivity dates. It is thus submitted that since the presidential issuances
in question contain special provisions as to the date they are to take effect,
publication in the Official Gazette is not indispensable for their effectivity. The point
stressed is anchored on Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is
otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of
said article. In a long line of decisions,4 this Court has ruled that publication in the
Official Gazette is necessary in those cases where the legislation itself does not
provide for its effectivity date-for then the date of publication is material for
determining its date of effectivity, which is the fifteenth day following its publication-
but not when the law itself provides for the date when it goes into effect.
PUP COL 2015
Respondents' argument, however, is logically correct only insofar as it equates the
effectivity of laws with the fact of publication. Considered in the light of other
statutes applicable to the issue at hand, the conclusion is easily reached that said
Article 2 does not preclude the requirement of publication in the Official Gazette,
even if the law itself provides for the date of its effectivity. Thus, Section 1 of
Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all
important legisiative acts and resolutions of a public nature of the,
Congress of the Philippines; [2] all executive and administrative
orders and proclamations, except such as have no general
applicability; [3] decisions or abstracts of decisions of the
Supreme Court and the Court of Appeals as may be deemed by
said courts of sufficient importance to be so published; [4] such
documents or classes of documents as may be required so to be
published by law; and [5] such documents or classes of
documents as the President of the Philippines shall determine
from time to time to have general applicability and legal effect, or
which he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate
notice of the various laws which are to regulate their actions and conduct as citizens.
Without such notice and publication, there would be no basis for the application of
the maxim "ignorantia legis non excusat." It would be the height of injustice to
punish or otherwise burden a citizen for the transgression of a law of which he had
no notice whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the
publication of laws taken so vital significance that at this time when the people have
bestowed upon the President a power heretofore enjoyed solely by the legislature.
While the people are kept abreast by the mass media of the debates and
deliberations in the Batasan Pambansaand for the diligent ones, ready access to
the legislative recordsno such publicity accompanies the law-making process of
the President. Thus, without publication, the people have no means of knowing what
presidential decrees have actually been promulgated, much less a definite way of
informing themselves of the specific contents and texts of such decrees. As the
Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se
comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y
Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de
su potestad.5
4|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be
published in the Official Gazette ... ." The word "shall" used therein imposes upon
respondent officials an imperative 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 included or excluded from such
publication.
The publication of all presidential issuances "of a public nature" or "of general
applicability" is mandated by law. Obviously, presidential decrees that provide for
fines, forfeitures or penalties for their violation or otherwise impose a burden or. the
people, such as tax and revenue measures, fall within this category. Other
presidential issuances which apply only to particular persons or class of persons such
as administrative and executive orders need not be published on the assumption
that they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature"
or "of general applicability" is a requirement of due process. It is a rule of law that
before a person may be bound by law, he must first be officially and specifically
informed of its contents. As Justice Claudio Teehankee said in Peralta vs.
COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions
which all form part of the law of the land, the requirement of due
process and the Rule of Law demand that the Official Gazette as
the official government repository promulgate and publish the
texts of all such decrees, orders and instructions so that the
people may know where to obtain their official and specific
contents.
The Court therefore declares that presidential issuances of general application,
which have not been published, shall have no force and effect. Some members of
the Court, quite apprehensive about the possible unsettling effect this decision might
have on acts done in reliance of the validity of those presidential decrees which were
published only during the pendency of this petition, have put the question as to
whether the Court's declaration of invalidity apply to P.D.s which had been enforced
or implemented prior to their publication. The answer is all too familiar. In similar
situations in the past this Court had taken the pragmatic and realistic course set
forth in Chicot County Drainage District vs. Baxter Bank 8 to wit:
PUP COL 2015
The courts below have proceeded on the theory that the Act of
Congress, having been found to be unconstitutional, was not a
law; that it was inoperative, conferring no rights and imposing no
duties, and hence affording no basis for the challenged decree.
Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry.
Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that
such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects-with respect to
particular conduct, private and official. Questions of rights claimed
to have become vested, of status, of prior determinations deemed
to have finality and acted upon accordingly, of public policy in the
light of the nature both of the statute and of its previous
application, demand examination. These questions are among the
most difficult of those which have engaged the attention of courts,
state and federal and it is manifest from numerous decisions that
an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained
the right of a party under the Moratorium Law, albeit said right had accrued in his
favor before said law was declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is "an operative fact which may have consequences
which cannot be justly ignored. The past cannot always be erased by a new judicial
declaration ... that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the
presidential decrees sought by petitioners to be published in the Official Gazette,
only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939,
inclusive, have not been so published. 10 Neither the subject matters nor the texts
of these PDs can be ascertained since no copies thereof are available. But whatever
their subject matter may be, it is undisputed that none of these unpublished PDs
has ever been implemented or enforced by the government. In Pesigan vs.
5|Page
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is
necessary to apprise the public of the contents of [penal] regulations and make the
said penalties binding on the persons affected thereby. " The cogency of this holding
is apparently recognized by respondent officials considering the manifestation in
their comment that "the government, as a matter of policy, refrains from prosecuting
violations of criminal laws until the same shall have been published in the Official
Gazette or in some other publication, even though some criminal laws provide that
they shall take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette
all unpublished presidential issuances which are of general application, and unless EN BANC
so published, they shall have no binding force and effect. G.R. No. 127882 January 27, 2004
SO ORDERED. LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its
Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAADA,
PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR.,
F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE,
SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO
L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P.
TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO
D. BUGOY, ROGER M. DADING, represented by his father ANTONIO L.
DADING, ROMY M. LAGARO, represented by his father TOTING A.
LAGARO, MIKENY JONG B. LUMAYONG, represented by his father
MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by his mother
EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his father DANNY
M. SAL, DAISY RECARSE, represented by her mother LYDIA S. SANTOS,
EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDEN S.
TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN,
JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR.,
represented by their father VIRGILIO CULAR, PAUL ANTONIO P.
VILLAMOR, represented by his parents JOSE VILLAMOR and ELIZABETH
PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father
MARIO JOSE B. TALJA, SHARMAINE R. CUNANAN, represented by her
father ALFREDO M. CUNANAN, ANTONIO JOSE A. VITUG III, represented
by his mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, represented by
his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING,
represented by her father RIO OLIMPIO A. LINGATING, MARIO JOSE B.
TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN
O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE L.
NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO
AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father
ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM

6|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
WESTERN VISAYAS, (GF-WV), ENVIRONMETAL LEGAL ASSISTANCE
CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG
KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN
TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN
(KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURAL
DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP
FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS,
INC. (PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER FOR
ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND
DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC.,
SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL
RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES
AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE
SECRETARY, and WMC (PHILIPPINES), INC.4 respondents.
DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality of
Republic Act No. 7942,5 otherwise known as the PHILIPPINE MINING ACT OF 1995,
along with the Implementing Rules and Regulations issued pursuant thereto,
Department of Environment and Natural Resources (DENR) Administrative Order 96-
40, and of the Financial and Technical Assistance Agreement (FTAA) entered into
on March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc.
(WMCP), a corporation organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.)
No. 2796 authorizing the DENR Secretary to accept, consider and evaluate proposals
from foreign-owned corporations or foreign investors for contracts or agreements
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, which, upon appropriate recommendation
of the Secretary, the President may execute with the foreign proponent. In entering
into such proposals, the President shall consider the real contributions to the
economic growth and general welfare of the country that will be realized, as well as
the development and use of local scientific and technical resources that will be
promoted by the proposed contract or agreement. Until Congress shall determine
PUP COL 2015
otherwise, large-scale mining, for purpose of this Section, shall mean those
proposals for contracts or agreements for mineral resources exploration,
development, and utilization involving a committed capital investment in a single
mining unit project of at least Fifty Million Dollars in United States Currency (US
$50,000,000.00).7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern
the exploration, development, utilization and processing of all mineral
resources."8 R.A. No. 7942 defines the modes of mineral agreements for mining
operations,9 outlines the procedure for their filing and
approval,10 assignment/transfer11 and withdrawal,12and fixes their terms.13 Similar
provisions govern financial or technical assistance agreements.14
The law prescribes the qualifications of contractors15 and grants them certain rights,
including timber,16 water17 and easement18 rights, and the right to possess
explosives.19 Surface owners, occupants, or concessionaires are forbidden from
preventing holders of mining rights from entering private lands and concession
areas.20 A procedure for the settlement of conflicts is likewise provided for.21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It
regulates the transport, sale and processing of minerals,25 and promotes the
development of mining communities, science and mining technology,26and safety
and environmental protection.27
The government's share in the agreements is spelled out and allocated,28 taxes and
fees are imposed,29 incentives granted.30 Aside from penalizing certain acts,31 the
law likewise specifies grounds for the cancellation, revocation and termination of
agreements and permits.32
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and
Manila Times, two newspapers of general circulation, R.A. No. 7942 took
effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March 30,
1995, the President entered into an FTAA with WMCP covering 99,387 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato.34
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by
DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
7|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary
demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No.
96-40,35 giving the DENR fifteen days from receipt36 to act thereon. The DENR,
however, has yet to respond or act on petitioners' letter.37
Petitioners thus filed the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They allege that at the time of the filing of
the petition, 100 FTAA applications had already been filed, covering an area of 8.4
million hectares,38 64 of which applications are by fully foreign-owned corporations
covering a total of 5.8 million hectares, and at least one by a fully foreign-owned
mining company over offshore areas.39
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I (a) Permanently enjoining respondents from acting on any application for
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows fully foreign owned corporations to explore, develop, utilize and exploit
mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the
Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the taking of private property without the determination of public use and for
just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows enjoyment by foreign citizens as well as fully foreign owned corporations of
the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the
Constitution;
V for judicial inquiry have not been met and that the petition does not comply with
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows priority to foreign and fully foreign owned corporations in the exploration,
development and utilization of mineral resources contrary to Article XII of the
Constitution;
PUP COL 2015
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1,
and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical
Assistance Agreement between the President of the Republic of the Philippines and
Western Mining Corporation Philippines Inc. because the same is illegal and
unconstitutional.40
They pray that the Court issue an order:
Financial or Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as
unconstitutional and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine
Mining Act contained in DENR Administrative Order No. 96-40 and all other
similar administrative issuances as unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to
Western Mining Philippines, Inc. as unconstitutional, illegal and null and
void.41
Impleaded as public respondents are Ruben Torres, the then Executive Secretary,
Victor O. Ramos, the then DENR Secretary, and Horacio Ramos, Director of the
Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent
WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP
is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned
subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major
Australian mining and exploration company."42 By WMCP's information, "it is a 100%
owned subsidiary of WMC LIMITED."43
Respondents, aside from meeting petitioners' contentions, argue that the requisites
the criteria for prohibition and mandamus. Additionally, respondent WMCP argues
that there has been a violation of the rule on hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the petition. The
parties have since filed their respective memoranda.
8|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that
on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc.
(Sagittarius), a corporation organized under Philippine laws.44WMCP was
subsequently renamed "Tampakan Mineral Resources Corporation."45 WMCP claims
that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-
owned corporations while about 40% is owned by Indophil Resources NL, an
Australian company.46 It further claims that by such sale and transfer of shares,
"WMCP has ceased to be connected in any way with WMC."47
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18,
2001,48 approved the transfer and registration of the subject FTAA from WMCP to
Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining Co.
(Lepanto) to the Office of the President which upheld it by Decision of July 23,
2002.49 Its motion for reconsideration having been denied by the Office of the
President by Resolution of November 12, 2002,50 Lepanto filed a petition for
review51 before the Court of Appeals. Incidentally, two other petitions for review
related to the approval of the transfer and registration of the FTAA to Sagittarius
were recently resolved by this Court.52
It bears stressing that this case has not been rendered moot either by the transfer
and registration of the FTAA to a Filipino-owned corporation or by the non-issuance
of a temporary restraining order or a preliminary injunction to stay the above-said
July 23, 2002 decision of the Office of the President. 53 The validity of the transfer
remains in dispute and awaits final judicial determination. This assumes, of course,
that such transfer cures the FTAA's alleged unconstitutionality, on which question
judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas
included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and
Southcot Mining Corporation, are all Filipino-owned corporations,54 each of which
was a holder of an approved Mineral Production Sharing Agreement awarded in
1994, albeit their respective mineral claims were subsumed in the WMCP
FTAA;55 and that these three companies are the same companies that consolidated
their interests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP
concludes that in the event that the FTAA is invalidated, the MPSAs of the three
corporations would be revived and the mineral claims would revert to their original
claimants.57
PUP COL 2015
These circumstances, while informative, are hardly significant in the resolution of
this case, it involving the validity of the FTAA, not the possible consequences of its
invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown later,
only the first and the last need be delved into; in the latter, the discussion shall dwell
only insofar as it questions the effectivity of E. O. No. 279 by virtue of which order
the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by
respondents shall first be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of
judicial review only if the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional
question;
(3) The exercise of judicial review is pleaded at the earliest opportunity;
and
(4) The constitutional question is the lis mota of the case. 58
Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that "(j)udicial power includes the
duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable." The power of judicial review, therefore, is
limited to the determination of actual cases and controversies.59
An actual case or controversy means an existing case or controversy that is
appropriate or ripe for determination, not conjectural or anticipatory, 60 lest the
decision of the court would amount to an advisory opinion.61 The power does not
extend to hypothetical questions62 since any attempt at abstraction could only lead
to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.63
9|Page
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
"Legal standing" or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury as
a result of the governmental act that is being challenged, 64alleging more than a
generalized grievance.65 The gist of the question of standing is whether a party
alleges "such personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the
court depends for illumination of difficult constitutional questions."66 Unless a person
is injuriously affected in any of his constitutional rights by the operation of statute
or ordinance, he has no standing.67
Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal
Association, Inc., a farmers and indigenous people's cooperative organized under
Philippine laws representing a community actually affected by the mining activities
of WMCP, members of said cooperative,68 as well as other residents of areas also
affected by the mining activities of WMCP.69 These petitioners have standing to raise
the constitutionality of the questioned FTAA as they allege a personal and substantial
injury. They claim that they would suffer "irremediable displacement" 70 as a result
of the implementation of the FTAA allowing WMCP to conduct mining activities in
their area of residence. They thus meet the appropriate case requirement as they
assert an interest adverse to that of respondents who, on the other hand, insist on
the FTAA's validity.
In view of the alleged impending injury, petitioners also have standing to assail the
validity of E.O. No. 279, by authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot
sue either or both contracting parties to annul it.71 In other words, they contend
that petitioners are not real parties in interest in an action for the annulment of
contract.
Public respondents' contention fails. The present action is not merely one for
annulment of contract but for prohibition and mandamus. Petitioners allege that
public respondents acted without or in excess of jurisdiction in implementing the
FTAA, which they submit is unconstitutional. As the case involves constitutional
questions, this Court is not concerned with whether petitioners are real parties in
interest, but with whether they have legal standing. As held in Kilosbayan v.
Morato:72
x x x. "It is important to note . . . that standing because of its constitutional and
public policy underpinnings, is very different from questions relating to whether a
PUP COL 2015
particular plaintiff is the real party in interest or has capacity to sue. Although all
three requirements are directed towards ensuring that only certain parties can
maintain an action, standing restrictions require a partial consideration of the merits,
as well as broader policy concerns relating to the proper role of the judiciary in
certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328
[1985])
Standing is a special concern in constitutional law because in some cases suits are
brought not by parties who have been personally injured by the operation of a law
or by official action taken, but by concerned citizens, taxpayers or voters who
actually sue in the public interest. Hence, the question in standing is whether such
parties have "alleged such a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional
questions." (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)
As earlier stated, petitioners meet this requirement.
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40
likewise fulfills the requisites of justiciability. Although these laws were not in force
when the subject FTAA was entered into, the question as to their validity is ripe for
adjudication.
The WMCP FTAA provides:
14.3 Future Legislation
Any term and condition more favourable to Financial &Technical Assistance
Agreement contractors resulting from repeal or amendment of any existing law or
regulation or from the enactment of a law, regulation or administrative order shall
be considered a part of this Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are
more favorable to WMCP, hence, these laws, to the extent that they are favorable
to WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing
agreements.
10 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the
provisions of Chapter XIV on government share in mineral production-sharing
agreement and of Chapter XVI on incentives of this Act shall immediately govern
and apply to a mining lessee or contractor unless the mining lessee or contractor
indicates his intention to the secretary, in writing, not to avail of said provisions x x
x Provided, finally, That such leases, production-sharing agreements, financial or
technical assistance agreements shall comply with the applicable provisions of this
Act and its implementing rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of the
provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that they
apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review that the
exercise of the review is pleaded at the earliest opportunity WMCP points out that
the petition was filed only almost two years after the execution of the FTAA, hence,
not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of constitutionality
must be raised immediately after the execution of the state action complained of.
That the question of constitutionality has not been raised before is not a valid reason
for refusing to allow it to be raised later.73 A contrary rule would mean that a law,
otherwise unconstitutional, would lapse into constitutionality by the mere failure of
the proper party to promptly file a case to challenge the same.
PROPRIETY OF PROHIBITION AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2
of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation,
board, or person, whether exercising functions judicial or ministerial, are without or
in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court
alleging the facts with certainty and praying that judgment be rendered commanding
the defendant to desist from further proceeding in the action or matter specified
therein.
PUP COL 2015
Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to
desist from continuing with the commission of an act perceived to be illegal.75
The petition for prohibition at bar is thus an appropriate remedy. While the execution
of the contract itself may be fait accompli, its implementation is not. Public
respondents, in behalf of the Government, have obligations to fulfill under said
contract. Petitioners seek to prevent them from fulfilling such obligations on the
theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety
of the mandamus aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts
does not likewise lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that
should initially pass upon the issues of a case. That way, as a particular case goes
through the hierarchy of courts, it is shorn of all but the important legal issues or
those of first impression, which are the proper subject of attention of the appellate
court. This is a procedural rule borne of experience and adopted to improve the
administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts.
Although this Court has concurrent jurisdiction with the Regional Trial Courts and
the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence does not give a party
unrestricted freedom of choice of court forum. The resort to this Court's primary
jurisdiction to issue said writs shall be allowed only where the redress desired cannot
be obtained in the appropriate courts or where exceptional and compelling
circumstances justify such invocation. We held in People v. Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of
Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue
these writs should be allowed only where there are special and important reasons
therefor, clearly and specifically set out in the petition. This is established policy. It
is a policy necessary to prevent inordinate demands upon the Court's time and
11 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
attention which are better devoted to those matters within its exclusive jurisdiction,
and to prevent further over-crowding of the Court's docket x x x.76 [Emphasis
supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if not
the national economy, as well as the novelty thereof, constitute exceptional and
compelling circumstances to justify resort to this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which does
not satisfy the requirements of an actual case or legal standing when paramount
public interest is involved.77 When the issues raised are of paramount importance to
the public, this Court may brush aside technicalities of procedure.78
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed date
of effectivity came after President Aquino had already lost her legislative powers
under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to
E.O. No. 279, violates Section 2, Article XII of the Constitution because, among other
reasons:
(1) It allows foreign-owned companies to extend more than mere financial
or technical assistance to the State in the exploitation, development, and
utilization of minerals, petroleum, and other mineral oils, and even permits
foreign owned companies to "operate and manage mining activities."
(2) It allows foreign-owned companies to extend both technical and
financial assistance, instead of "either technical or financial assistance."
To appreciate the import of these issues, a visit to the history of the pertinent
constitutional provision, the concepts contained therein, and the laws enacted
pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full
PUP COL 2015
control and supervision of the State. The State may directly undertake such activities
or it may enter into co-production, joint venture, or production-sharing agreements
with Filipino citizens, or corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. In cases of water rights
for irrigation, water supply, fisheries, or industrial uses other than the development
of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.
THE SPANISH REGIME AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura regalia.
Introduced by Spain into these Islands, this feudal concept is based on the State's
power of dominium, which is the capacity of the State to own or acquire property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights which
the King has by virtue of his prerogatives. In Spanish law, it refers to a right which
the sovereign has over anything in which a subject has a right of property or
propriedad. These were rights enjoyed during feudal times by the king as the
sovereign.
The theory of the feudal system was that title to all lands was originally held by the
King, and while the use of lands was granted out to others who were permitted to
12 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
hold them under certain conditions, the King theoretically retained the title. By fiction
of law, the King was regarded as the original proprietor of all lands, and the true
and only source of title, and from him all lands were held. The theory of jura regalia
was therefore nothing more than a natural fruit of conquest.80
The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier
Spanish decrees declared that "all lands were held from the Crown."82
The Regalian doctrine extends not only to land but also to "all natural wealth that
may be found in the bowels of the earth."83 Spain, in particular, recognized the
unique value of natural resources, viewing them, especially minerals, as an abundant
source of revenue to finance its wars against other nations.84 Mining laws during the
Spanish regime reflected this perspective.85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known
as the Philippine Islands" to the United States. The Philippines was hence governed
by means of organic acts that were in the nature of charters serving as a Constitution
of the occupied territory from 1900 to 1935.86 Among the principal organic acts of
the Philippines was the Act of Congress of July 1, 1902, more commonly known as
the Philippine Bill of 1902, through which the United States Congress assumed the
administration of the Philippine Islands.87 Section 20 of said Bill reserved the
disposition of mineral lands of the public domain from sale. Section 21 thereof
allowed the free and open exploration, occupation and purchase of mineral deposits
not only to citizens of the Philippine Islands but to those of the United States as
well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands,
both surveyed and unsurveyed, are hereby declared to be free and open to
exploration, occupation and purchase, and the land in which they are found, to
occupation and purchase, by citizens of the United States or of said Islands:
Provided, That when on any lands in said Islands entered and occupied as
agricultural lands under the provisions of this Act, but not patented, mineral deposits
have been found, the working of such mineral deposits is forbidden until the person,
association, or corporation who or which has entered and is occupying such lands
shall have paid to the Government of said Islands such additional sum or sums as
will make the total amount paid for the mineral claim or claims in which said deposits
are located equal to the amount charged by the Government for the same as mineral
claims.
PUP COL 2015
Unlike Spain, the United States considered natural resources as a source of wealth
for its nationals and saw fit to allow both Filipino and American citizens to explore
and exploit minerals in public lands, and to grant patents to private mineral
lands.88 A person who acquired ownership over a parcel of private mineral land
pursuant to the laws then prevailing could exclude other persons, even the State,
from exploiting minerals within his property.89 Thus, earlier jurisprudence90 held
that:
A valid and subsisting location of mineral land, made and kept up in accordance with
the provisions of the statutes of the United States, has the effect of a grant by the
United States of the present and exclusive possession of the lands located, and this
exclusive right of possession and enjoyment continues during the entire life of the
location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location
perfects his claim and his location not only against third persons, but also against
the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential
respect. Under the Regalian theory, mineral rights are not included in a grant of land
by the state; under the American doctrine, mineral rights are included in a grant of
land by the government.91
Section 21 also made possible the concession (frequently styled "permit", license"
or "lease")92 system.93 This was the traditional regime imposed by the colonial
administrators for the exploitation of natural resources in the extractive sector
(petroleum, hard minerals, timber, etc.).94
Under the concession system, the concessionaire makes a direct equity investment
for the purpose of exploiting a particular natural resource within a given
area.95 Thus, the concession amounts to complete control by the concessionaire
over the country's natural resource, for it is given exclusive and plenary rights to
exploit a particular resource at the point of extraction.96 In consideration for the
right to exploit a natural resource, the concessionaire either pays rent or royalty,
which is a fixed percentage of the gross proceeds.97
Later statutory enactments by the legislative bodies set up in the Philippines adopted
the contractual framework of the concession.98 For instance, Act No.
2932,99 approved on August 31, 1920, which provided for the exploration, location,
13 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
and lease of lands containing petroleum and other mineral oils and gas in the
Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the
leasing and development of coal lands in the Philippines, both utilized the concession
system.101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL
RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the
Tydings-McDuffie Law, the People of the Philippine Islands were authorized to adopt
a constitution.102 On July 30, 1934, the Constitutional Convention met for the
purpose of drafting a constitution, and the Constitution subsequently drafted was
approved by the Convention on February 8, 1935.103 The Constitution was submitted
to the President of the United States on March 18, 1935.104 On March 23, 1935, the
President of the United States certified that the Constitution conformed substantially
with the provisions of the Act of Congress approved on March 24, 1934. 105 On May
14, 1935, the Constitution was ratified by the Filipino people. 106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources
of the Philippines, including mineral lands and minerals, to be property belonging to
the State.107 As adopted in a republican system, the medieval concept of jura regalia
is stripped of royal overtones and ownership of the land is vested in the State.108
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the
1935 Constitution provided:
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, 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.
PUP COL 2015
The nationalization and conservation of the natural resources of the country was
one of the fixed and dominating objectives of the 1935 Constitutional
Convention.109 One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of
state ownership of natural resources and the adoption of the Regalian doctrine.
State ownership of natural resources was seen as a necessary starting point to
secure recognition of the state's power to control their disposition, exploitation,
development, or utilization. The delegates of the Constitutional Convention very well
knew that the concept of State ownership of land and natural resources was
introduced by the Spaniards, however, they were not certain whether it was
continued and applied by the Americans. To remove all doubts, the Convention
approved the provision in the Constitution affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the
Regalian doctrine was considered to be a necessary starting point for the plan of
nationalizing and conserving the natural resources of the country. For with the
establishment of the principle of state ownership of the natural resources, it would
not be hard to secure the recognition of the power of the State to control their
disposition, exploitation, development or utilization.110
The nationalization of the natural resources was intended (1) to insure their
conservation for Filipino posterity; (2) to serve as an instrument of national defense,
helping prevent the extension to the country of foreign control through peaceful
economic penetration; and (3) to avoid making the Philippines a source of
international conflicts with the consequent danger to its internal security and
independence.111
The same Section 1, Article XIII also adopted the concession system, expressly
permitting the State to grant licenses, concessions, or leases for the exploitation,
development, or utilization of any of the natural resources. Grants, however, were
limited to Filipinos or entities at least 60% of the capital of which is owned by
Filipinos.
The swell of nationalism that suffused the 1935 Constitution was radically diluted
when on November 1946, the Parity Amendment, which came in the form of an
"Ordinance Appended to the Constitution," was ratified in a plebiscite.112 The
Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and
exploit our natural resources to citizens of the United States and business enterprises
owned or controlled, directly or indirectly, by citizens of the United States:113
14 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Notwithstanding the provision of section one, Article Thirteen, and section eight,
Article Fourteen, of the foregoing Constitution, during the effectivity of the Executive
Agreement entered into by the President of the Philippines with the President of the
United States on the fourth of July, nineteen hundred and forty-six, pursuant to the
provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in
no case to extend beyond the third of July, nineteen hundred and seventy-four, the
disposition, exploitation, development, and utilization of all agricultural, timber, and
mineral lands of the public domain, waters, minerals, coals, petroleum, and other
mineral oils, all forces and sources of potential energy, and other natural resources
of the Philippines, and the operation of public utilities, shall, if open to any person,
be open to citizens of the United States and to all forms of business enterprise owned
or controlled, directly or indirectly, by citizens of the United States in the same
manner as to, and under the same conditions imposed upon, citizens of the
Philippines or corporations or associations owned or controlled by citizens of the
Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade
Agreement, also known as the Laurel-Langley Agreement, embodied in Republic Act
No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949,
was approved on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of
the nation's petroleum resources. Among the kinds of concessions it sanctioned were
exploration and exploitation concessions, which respectively granted to the
concessionaire the exclusive right to explore for116 or develop117 petroleum within
specified areas.
Concessions may be granted only to duly qualified persons 118 who have sufficient
finances, organization, resources, technical competence, and skills necessary to
conduct the operations to be undertaken.119
Nevertheless, the Government reserved the right to undertake such work
itself.120 This proceeded from the theory that all natural deposits or occurrences of
petroleum or natural gas in public and/or private lands in the Philippines belong to
the State.121 Exploration and exploitation concessions did not confer upon the
concessionaire ownership over the petroleum lands and petroleum
PUP COL 2015
deposits.122 However, they did grant concessionaires the right to explore, develop,
exploit, and utilize them for the period and under the conditions determined by the
law.123
Concessions were granted at the complete risk of the concessionaire; the
Government did not guarantee the existence of petroleum or undertake, in any case,
title warranty.124
Concessionaires were required to submit information as maybe required by the
Secretary of Agriculture and Natural Resources, including reports of geological and
geophysical examinations, as well as production reports.125Exploration126 and
exploitation127 concessionaires were also required to submit work programs.
Exploitation concessionaires, in particular, were obliged to pay an annual
exploitation tax,128 the object of which is to induce the concessionaire to actually
produce petroleum, and not simply to sit on the concession without developing or
exploiting it.129 These concessionaires were also bound to pay the Government
royalty, which was not less than 12% of the petroleum produced and saved, less
that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No.
387, the exploitation tax may be credited against the royalties so that if the
concessionaire shall be actually producing enough oil, it would not actually be paying
the exploitation tax.131
Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty
due to the Government within one year from the date it becomes due,133 constituted
grounds for the cancellation of the concession. In case of delay in the payment of
the taxes or royalty imposed by the law or by the concession, a surcharge of 1%
per month is exacted until the same are paid.134
As a rule, title rights to all equipment and structures that the concessionaire placed
on the land belong to the exploration or exploitation concessionaire.135 Upon
termination of such concession, the concessionaire had a right to remove the
same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying out the
provisions of the law, through the Director of Mines, who acted under the Secretary's
immediate supervision and control.137 The Act granted the Secretary the authority
to inspect any operation of the concessionaire and to examine all the books and
accounts pertaining to operations or conditions related to payment of taxes and
royalties.138
15 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
The same law authorized the Secretary to create an Administration Unit and a
Technical Board.139 The Administration Unit was charged, inter alia, with the
enforcement of the provisions of the law.140 The Technical Board had, among other
functions, the duty to check on the performance of concessionaires and to determine
whether the obligations imposed by the Act and its implementing regulations were
being complied with.141
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy
Development, analyzed the benefits and drawbacks of the concession system insofar
as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most
positive aspect of the concession system is that the State's financial involvement is
virtually risk free and administration is simple and comparatively low in cost.
Furthermore, if there is a competitive allocation of the resource leading to substantial
bonuses and/or greater royalty coupled with a relatively high level of taxation,
revenue accruing to the State under the concession system may compare favorably
with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this
system. Because the Government's role in the traditional concession is passive, it is
at a distinct disadvantage in managing and developing policy for the nation's
petroleum resource. This is true for several reasons. First, even though most
concession agreements contain covenants requiring diligence in operations and
production, this establishes only an indirect and passive control of the host country
in resource development. Second, and more importantly, the fact that the host
country does not directly participate in resource management decisions inhibits its
ability to train and employ its nationals in petroleum development. This factor could
delay or prevent the country from effectively engaging in the development of its
resources. Lastly, a direct role in management is usually necessary in order to obtain
a knowledge of the international petroleum industry which is important to an
appreciation of the host country's resources in relation to those of other countries.142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic
power arising from its exclusive equity holding. This includes, first, appropriation of
the returns of the undertaking, subject to a modest royalty; second, exclusive
management of the project; third, control of production of the natural resource,
such as volume of production, expansion, research and development; and fourth,
exclusive responsibility for downstream operations, like processing, marketing, and
PUP COL 2015
distribution. In short, even if nominally, the state is the sovereign and owner of the
natural resource being exploited, it has been shorn of all elements of control over
such natural resource because of the exclusive nature of the contractual regime of
the concession. The concession system, investing as it does ownership of natural
resources, constitutes a consistent inconsistency with the principle embodied in our
Constitution that natural resources belong to the state and shall not be alienated,
not to mention the fact that the concession was the bedrock of the colonial system
in the exploitation of natural resources.143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession
system could not have properly spurred sustained oil exploration activities in the
country, since it assumed that such a capital-intensive, high risk venture could be
successfully undertaken by a single individual or a small company. In effect,
concessionaires' funds were easily exhausted. Moreover, since the concession
system practically closed its doors to interested foreign investors, local capital was
stretched to the limits. The old system also failed to consider the highly sophisticated
technology and expertise required, which would be available only to multinational
companies.144
A shift to a new regime for the development of natural resources thus seemed
imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE
SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87,145 otherwise
known as The Oil Exploration and Development Act of 1972 signaled such a
transformation. P.D. No. 87 permitted the government to explore for and produce
indigenous petroleum through "service contracts."146
"Service contracts" is a term that assumes varying meanings to different people, and
it has carried many names in different countries, like "work contracts" in Indonesia,
"concession agreements" in Africa, "production-sharing agreements" in the Middle
East, and "participation agreements" in Latin America.147 A functional definition of
"service contracts" in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and
development of petroleum, mineral, energy, land and other natural resources by
16 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
which a government or its agency, or a private person granted a right or privilege
by the government authorizes the other party (service contractor) to engage or
participate in the exercise of such right or the enjoyment of the privilege, in that the
latter provides financial or technical resources, undertakes the exploitation or
production of a given resource, or directly manages the productive enterprise,
operations of the exploration and exploitation of the resources or the disposition of
marketing or resources.148
In a service contract under P.D. No. 87, service and technology are furnished by the
service contractor for which it shall be entitled to the stipulated service fee. 149 The
contractor must be technically competent and financially capable to undertake the
operations required in the contract.150
Financing is supposed to be provided by the Government to which all petroleum
produced belongs.151 In case the Government is unable to finance petroleum
exploration operations, the contractor may furnish services, technology and
financing, and the proceeds of sale of the petroleum produced under the contract
shall be the source of funds for payment of the service fee and the operating
expenses due the contractor.152 The contractor shall undertake, manage and
execute petroleum operations, subject to the government overseeing the
management of the operations.153 The contractor provides all necessary services
and technology and the requisite financing, performs the exploration work
obligations, and assumes all exploration risks such that if no petroleum is produced,
it will not be entitled to reimbursement.154 Once petroleum in commercial quantity
is discovered, the contractor shall operate the field on behalf of the government.155
P.D. No. 87 prescribed minimum terms and conditions for every service
contract.156 It also granted the contractor certain privileges, including exemption
from taxes and payment of tariff duties,157 and permitted the repatriation of capital
and retention of profits abroad.158
Ostensibly, the service contract system had certain advantages over the concession
regime.159 It has been opined, though, that, in the Philippines, our concept of a
service contract, at least in the petroleum industry, was basically a concession
regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification
of a new Constitution.161Article XIV on the National Economy and Patrimony
contained provisions similar to the 1935 Constitution with regard to Filipino
participation in the nation's natural resources. Section 8, Article XIV thereof
provides:
PUP COL 2015
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.
While Section 9 of the same Article maintained the Filipino-only policy in the
enjoyment of natural resources, it also allowed Filipinos, upon authority of the
Batasang Pambansa, to enter into service contracts with any person or entity for the
exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of any
of the natural resources of the Philippines shall be limited to citizens, or to
corporations or associations at least sixty per centum of which is owned by such
citizens. The Batasang Pambansa, in the national interest, may allow such citizens,
corporations or associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any person or entity for the
exploration, or utilization of any of the natural resources. Existing valid and binding
service contracts for financial, technical, management, or other forms of assistance
are hereby recognized as such. [Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the
methods followed by India, Pakistan and especially Indonesia in the exploration of
petroleum and mineral oils.162 The provision allowing such contracts, according to
another, was intended to "enhance the proper development of our natural resources
since Filipino citizens lack the needed capital and technical know-how which are
essential in the proper exploration, development and exploitation of the natural
resources of the country."163
The original idea was to authorize the government, not private entities, to enter into
service contracts with foreign entities.164 As finally approved, however, a citizen or
private entity could be allowed by the National Assembly to enter into such service
contract.165 The prior approval of the National Assembly was deemed sufficient to
protect the national interest.166 Notably, none of the laws allowing service contracts
17 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
were passed by the Batasang Pambansa. Indeed, all of them were enacted by
presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the
President promulgated Presidential Decree No. 151.167 The law allowed Filipino
citizens or entities which have acquired lands of the public domain or which own,
hold or control such lands to enter into service contracts for financial, technical,
management or other forms of assistance with any foreign persons or entity for the
exploration, development, exploitation or utilization of said lands.168
Presidential Decree No. 463,169 also known as The Mineral Resources Development
Decree of 1974, was enacted on May 17, 1974. Section 44 of the decree, as
amended, provided that a lessee of a mining claim may enter into a service contract
with a qualified domestic or foreign contractor for the exploration, development and
exploitation of his claims and the processing and marketing of the product thereof.
Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16,
1975, allowed Filipinos engaged in commercial fishing to enter into contracts for
financial, technical or other forms of assistance with any foreign person, corporation
or entity for the production, storage, marketing and processing of fish and
fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines),
approved on May 19, 1975, allowed "forest products licensees, lessees, or permitees
to enter into service contracts for financial, technical, management, or other forms
of assistance . . . with any foreign person or entity for the exploration, development,
exploitation or utilization of the forest resources."173
Yet another law allowing service contracts, this time for geothermal resources, was
Presidential Decree No. 1442,174 which was signed into law on June 11, 1978.
Section 1 thereof authorized the Government to enter into service contracts for the
exploration, exploitation and development of geothermal resources with a foreign
contractor who must be technically and financially capable of undertaking the
operations required in the service contract.
Thus, virtually the entire range of the country's natural resources from petroleum
and minerals to geothermal energy, from public lands and forest resources to fishery
products was well covered by apparent legal authority to engage in the direct
participation or involvement of foreign persons or corporations (otherwise
disqualified) in the exploration and utilization of natural resources through service
contracts.175
PUP COL 2015
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE
AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power
under a revolutionary government. On March 25, 1986, President Aquino issued
Proclamation No. 3,176 promulgating the Provisional Constitution, more popularly
referred to as the Freedom Constitution. By authority of the same Proclamation, the
President created a Constitutional Commission (CONCOM) to draft a new
constitution, which took effect on the date of its ratification on February 2, 1987.177
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section
2, Article XII states: "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."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second
sentence of the same provision, prohibits the alienation of natural resources, except
agricultural lands.
The third sentence of the same paragraph is new: "The exploration, development
and utilization of natural resources shall be under the full control and supervision of
the State." The constitutional policy of the State's "full control and supervision" over
natural resources proceeds from the concept of jura regalia, as well as the
recognition of the importance of the country's natural resources, not only for national
economic development, but also for its security and national defense. 178 Under this
provision, the State assumes "a more dynamic role" in the exploration, development
and utilization of natural resources.179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions
authorizing the State to grant licenses, concessions, or leases for the exploration,
exploitation, development, or utilization of natural resources. By such omission, the
utilization of inalienable lands of public domain through "license, concession or
lease" is no longer allowed under the 1987 Constitution.180
Having omitted the provision on the concession system, Section 2 proceeded to
introduce "unfamiliar language":181
The State may directly undertake such activities or it may enter into co-production,
joint venture, or production-sharing agreements with Filipino citizens, or
18 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
corporations or associations at least sixty per centum of whose capital is owned by
such citizens.
Consonant with the State's "full supervision and control" over natural resources,
Section 2 offers the State two "options."182 One, the State may directly undertake
these activities itself; or two, it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or entities at least 60% of
whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the case
of the former, to corporations or associations at least 60% of the capital of which is
owned by Filipinos, a fourth allows the participation of foreign-owned corporations.
The fourth and fifth paragraphs of Section 2 provide:
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in the
exploration, development, and utilization of natural resources, it imposes certain
limitations or conditions to agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may
enter into these agreements, and only with corporations. By contrast,
under the 1973 Constitution, a Filipino citizen, corporation or association
may enter into a service contract with a "foreign person or entity."
PUP COL 2015
Second, the size of the activities: only large-scale exploration,
development, and utilization is allowed. The term "large-scale usually refers
to very capital-intensive activities."183
Third, the natural resources subject of the activities is restricted to
minerals, petroleum and other mineral oils, the intent being to limit service
contracts to those areas where Filipino capital may not be sufficient.184
Fourth, consistency with the provisions of statute. The agreements must
be in accordance with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such
agreements. The agreements must be based on real contributions to
economic growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for the
promotion of the development and use of local scientific and technical
resources.
Seventh, the notification requirement. The President shall notify Congress
of every financial or technical assistance agreement entered into within
thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred
to "service contracts for financial, technical, management, or other forms
of assistance" the 1987 Constitution provides for "agreements. . . involving
either financial or technical assistance." It bears noting that the phrases
"service contracts" and "management or other forms of assistance" in the
earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution, 185 President
Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the interim
procedures in the processing and approval of applications for the exploration,
development and utilization of minerals. The omission in the 1987 Constitution of
the term "service contracts" notwithstanding, the said E.O. still referred to them in
Section 2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral
resources, including renewal applications and applications for approval of operating
19 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
agreements and mining service contracts, shall be accepted and processed and may
be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the "processing, evaluation and approval
of all mining applications . . . operating agreements and service contracts . . . shall
be governed by Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279
by authority of which the subject WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15
thereof declares that the Act "shall govern the exploration, development, utilization,
and processing of all mineral resources." Such declaration notwithstanding, R.A. No.
7942 does not actually cover all the modes through which the State may undertake
the exploration, development, and utilization of natural resources.
The State, being the owner of the natural resources, is accorded the primary power
and responsibility in the exploration, development and utilization thereof. As such,
it may undertake these activities through four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-
sharing agreements with Filipino citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources
by Filipino citizens.
(4) For the large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils, the President may enter into agreements
with foreign-owned corporations involving technical or financial
assistance.186
Except to charge the Mines and Geosciences Bureau of the DENR with performing
researches and surveys,187 and a passing mention of government-owned or
controlled corporations,188 R.A. No. 7942 does not specify how the State should go
about the first mode. The third mode, on the other hand, is governed by Republic
Act No. 7076189(the People's Small-Scale Mining Act of 1991) and other pertinent
laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes.
PUP COL 2015
Mineral production sharing, co-production and joint venture agreements are
collectively classified by R.A. No. 7942 as "mineral agreements."191 The Government
participates the least in a mineral production sharing agreement (MPSA). In an
MPSA, the Government grants the contractor192 the exclusive right to conduct mining
operations within a contract area193 and shares in the gross output.194 The MPSA
contractor provides the financing, technology, management and personnel
necessary for the agreement's implementation.195 The total government share in an
MPSA is the excise tax on mineral products under Republic Act No.
7729,196 amending Section 151(a) of the National Internal Revenue Code, as
amended.197
In a co-production agreement (CA),198 the Government provides inputs to the mining
operations other than the mineral resource,199 while in a joint venture agreement
(JVA), where the Government enjoys the greatest participation, the Government and
the JVA contractor organize a company with both parties having equity
shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to
a share in the gross output.201The Government may enter into a CA202 or JVA203 with
one or more contractors. The Government's share in a CA or JVA is set out in Section
81 of the law:
The share of the Government in co-production and joint venture agreements shall
be negotiated by the Government and the contractor taking into consideration the:
(a) capital investment of the project, (b) the risks involved, (c) contribution of the
project to the economy, and (d) other factors that will provide for a fair and equitable
sharing between the Government and the contractor. The Government shall also be
entitled to compensations for its other contributions which shall be agreed upon by
the parties, and shall consist, among other things, the contractor's income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign
stockholders arising from dividend or interest payments to the said foreign
stockholders, in case of a foreign national and all such other taxes, duties and fees
as provided for under existing laws.
All mineral agreements grant the respective contractors the exclusive right to
conduct mining operations and to extract all mineral resources found in the contract
area.204 A "qualified person" may enter into any of the mineral agreements with the
Government.205 A "qualified person" is any citizen of the Philippines with capacity to
contract, or a corporation, partnership, association, or cooperative organized or
authorized for the purpose of engaging in mining, with technical and financial
capability to undertake mineral resources development and duly registered in
20 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
accordance with law at least sixty per centum (60%) of the capital of which is owned
by citizens of the Philippines x x x.206
The fourth mode involves "financial or technical assistance agreements." An FTAA is
defined as "a contract involving financial or technical assistance for large-scale
exploration, development, and utilization of natural resources."207 Any qualified
person with technical and financial capability to undertake large-scale exploration,
development, and utilization of natural resources in the Philippines may enter into
such agreement directly with the Government through the DENR.208 For the purpose
of granting an FTAA, a legally organized foreign-owned corporation (any
corporation, partnership, association, or cooperative duly registered in accordance
with law in which less than 50% of the capital is owned by Filipino citizens) 209 is
deemed a "qualified person."210
Other than the difference in contractors' qualifications, the principal distinction
between mineral agreements and FTAAs is the maximum contract area to which a
qualified person may hold or be granted.211 "Large-scale" under R.A. No. 7942 is
determined by the size of the contract area, as opposed to the amount invested (US
$50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation. 212 The Government's
contributions, in the form of taxes, in an FTAA is identical to its contributions in the
two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement
shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development
expenditures, inclusive.213
III
Having examined the history of the constitutional provision and statutes enacted
pursuant thereto, a consideration of the substantive issues presented by the petition
is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was
executed, did not come into effect.
PUP COL 2015
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two
days before the opening of Congress on July 27, 1987.214 Section 8 of the E.O. states
that the same "shall take effect immediately." This provision, according to
petitioners, runs counter to Section 1 of E.O. No. 200,215 which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their
publication either in the Official Gazette or in a newspaper of general circulation in
the Philippines, unless it is otherwise provided.216 [Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect
fifteen days after its publication at which time Congress had already convened and
the President's power to legislate had ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled
in Miners Association of the Philippines v. Factoran, supra. This is of course incorrect
for the issue in Miners Association was not the validity of E.O. No. 279 but that of
DAO Nos. 57 and 82 which were issued pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking
effect on a date other than even before the 15-day period after its publication.
Where a law provides for its own date of effectivity, such date prevails over that
prescribed by E.O. No. 200. Indeed, this is the very essence of the phrase "unless it
is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore,
applies only when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this Court
held in Taada v. Tuvera,217is the publication of the law for without such notice and
publication, there would be no basis for the application of the maxim "ignorantia
legis n[eminem] excusat." It would be the height of injustice to punish or otherwise
burden a citizen for the transgression of a law of which he had no notice whatsoever,
not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not
a ground for its invalidation since the Constitution, being "the fundamental,
paramount and supreme law of the nation," is deemed written in the law.218 Hence,
the due process clause,219 which, so Taada held, mandates the publication of
statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No.
200 which provides for publication "either in the Official Gazette or in a newspaper
21 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
of general circulation in the Philippines," finds suppletory application. It is significant
to note that E.O. No. 279 was actually published in the Official Gazette220 on August
3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and
Taada v. Tuvera, this Court holds that E.O. No. 279 became effective immediately
upon its publication in the Official Gazette on August 3, 1987.
That such effectivity took place after the convening of the first Congress is irrelevant.
At the time President Aquino issued E.O. No. 279 on July 25, 1987, she was still
validly exercising legislative powers under the Provisional Constitution. 221 Article
XVIII (Transitory Provisions) of the 1987 Constitution explicitly states:
Sec. 6. The incumbent President shall continue to exercise legislative powers until
the first Congress is convened.
The convening of the first Congress merely precluded the exercise of legislative
powers by President Aquino; it did not prevent the effectivity of laws she had
previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly
enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the
Constitution, FTAAs should be limited to "technical or financial assistance" only. They
observe, however, that, contrary to the language of the Constitution, the WMCP
FTAA allows WMCP, a fully foreign-owned mining corporation, to extend more than
mere financial or technical assistance to the State, for it permits WMCP to manage
and operate every aspect of the mining activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of
constitutions that the instrument must be so construed as to give effect to the
intention of the people who adopted it.223 This intention is to be sought in the
constitution itself, and the apparent meaning of the words is to be taken as
expressing it, except in cases where that assumption would lead to absurdity,
ambiguity, or contradiction.224 What the Constitution says according to the text of
the provision, therefore, compels acceptance and negates the power of the courts
to alter it, based on the postulate that the framers and the people mean what they
PUP COL 2015
say.225 Accordingly, following the literal text of the Constitution, assistance accorded
by foreign-owned corporations in the large-scale exploration, development, and
utilization of petroleum, minerals and mineral oils should be limited to "technical" or
"financial" assistance only.
WMCP nevertheless submits that the word "technical" in the fourth paragraph of
Section 2 of E.O. No. 279 encompasses a "broad number of possible services,"
perhaps, "scientific and/or technological in basis."226 It thus posits that it may also
well include "the area of management or operations . . . so long as such assistance
requires specialized knowledge or skills, and are related to the exploration,
development and utilization of mineral resources."227
This Court is not persuaded. As priorly pointed out, the phrase "management or
other forms of assistance" in the 1973 Constitution was deleted in the 1987
Constitution, which allows only "technical or financial assistance." Casus omisus pro
omisso habendus est. A person, object or thing omitted from an enumeration must
be held to have been omitted intentionally.228 As will be shown later, the
management or operation of mining activities by foreign contractors, which is the
primary feature of service contracts, was precisely the evil that the drafters of the
1987 Constitution sought to eradicate.
Respondents insist that "agreements involving technical or financial assistance" is
just another term for service contracts. They contend that the proceedings of the
CONCOM indicate "that although the terminology 'service contract' was avoided [by
the Constitution], the concept it represented was not." They add that "[t]he concept
is embodied in the phrase 'agreements involving financial or technical
assistance.'"229 And point out how members of the CONCOM referred to these
agreements as "service contracts." For instance:
SR. TAN. Am I correct in thinking that the only difference between these
future service contracts and the past service contracts under Mr. Marcos is
the general law to be enacted by the legislature and the notification of
Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts
before.
SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]
22 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
WMCP also cites the following statements of Commissioners Gascon,
Garcia, Nolledo and Tadeo who alluded to service contracts as they
explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two
reasons: One, the provision on service contracts. I felt that if we would
constitutionalize any provision on service contracts, this should always be
with the concurrence of Congress and not guided only by a general law to
be promulgated by Congress. x x x.231 [Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even
when they have been proven to be inimical to the interests of the nation,
providing as they do the legal loophole for the exploitation of our natural
resources for the benefit of foreign interests. They constitute a serious
negation of Filipino control on the use and disposition of the nation's natural
resources, especially with regard to those which are
nonrenewable.232[Emphasis supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on
National Economy and Patrimony, going over said provisions meticulously,
setting aside prejudice and personalities will reveal that the article contains
a balanced set of provisions. I hope the forthcoming Congress will
implement such provisions taking into account that Filipinos should have
real control over our economy and patrimony, and if foreign equity is
permitted, the same must be subordinated to the imperative demands of
the national interest.
x x x.
It is also my understanding that service contracts involving foreign
corporations or entities are resorted to only when no Filipino enterprise or
Filipino-controlled enterprise could possibly undertake the exploration or
exploitation of our natural resources and that compensation under such
contracts cannot and should not equal what should pertain to ownership of
capital. In other words, the service contract should not be an instrument
to circumvent the basic provision, that the exploration and exploitation of
natural resources should be truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
PUP COL 2015
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin,
pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang
sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista at
ang salitang "imperyalismo" ay buhay na buhay sa National Economy and
Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on,"
naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas
ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa,
naroroon pa rin ang parity rights, ang service contract, ang 60-40 equity
sa natural resources. Habang naghihirap ang sambayanang Pilipino,
ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man
ang Article on National Economy and Patrimony ay hindi nagpaalis sa
pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon
sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na
reporma sa lupa at ang national industrialization. Ito ang tinatawag naming
pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big
businessmen at ang mga komprador ay nagsasabi na ang free trade na ito,
ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw
ay sisikat sa Kanluran. Kailan man hindi puwedeng sumikat ang araw sa
Kanluran. I vote no.234 [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase "service contracts" has been deleted in the 1987
Constitution's Article on National Economy and Patrimony. If the CONCOM intended
to retain the concept of service contracts under the 1973 Constitution, it could have
simply adopted the old terminology ("service contracts") instead of employing new
and unfamiliar terms ("agreements . . . involving either technical or financial
assistance"). Such a difference between the language of a provision in a revised
constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose.235 If, as respondents suggest, the concept of
"technical or financial assistance" agreements is identical to that of "service
contracts," the CONCOM would not have bothered to fit the same dog with a new
collar. To uphold respondents' theory would reduce the first to a mere euphemism
for the second and render the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or financial
assistance agreements are not synonymous to service contracts.
23 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
[T]he Court in construing a Constitution should bear in mind the object sought to
be accomplished by its adoption, and the evils, if any, sought to be prevented or
remedied. A doubtful provision will be examined in light of the history of the times,
and the condition and circumstances under which the Constitution was framed. The
object is to ascertain the reason which induced the framers of the Constitution to
enact the particular provision and the purpose sought to be accomplished thereby,
in order to construe the whole as to make the words consonant to that reason and
calculated to effect that purpose.236
As the following question of Commissioner Quesada and Commissioner Villegas'
answer shows the drafters intended to do away with service contracts which were
used to circumvent the capitalization (60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service contracts."
In this particular Section 3, is there a safeguard against the possible control
of foreign interests if the Filipinos go into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts"
was our first attempt to avoid some of the abuses in the past regime in the
use of service contracts to go around the 60-40 arrangement. The
safeguard that has been introduced and this, of course can be refined
is found in Section 3, lines 25 to 30, where Congress will have to concur
with the President on any agreement entered into between a foreign-
owned corporation and the government involving technical or financial
assistance for large-scale exploration, development and utilization of
natural resources.237 [Emphasis supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of
Commissioner Quesada regarding the participation of foreign interests in
Philippine natural resources, which was supposed to be restricted to
Filipinos.
MS. QUESADA. Another point of clarification is the phrase "and utilization
of natural resources shall be under the full control and supervision of the
State." In the 1973 Constitution, this was limited to citizens of the
Philippines; but it was removed and substituted by "shall be under the full
control and supervision of the State." Was the concept changed so that
these particular resources would be limited to citizens of the Philippines?
Or would these resources only be under the full control and supervision of
PUP COL 2015
the State; meaning, noncitizens would have access to these natural
resources? Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next
sentence, it states:
Such activities may be directly undertaken by the State, or it may enter into co-
production, joint venture, production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources may be directly
undertaken by the State, or it may enter into co-production, joint venture or
production-sharing agreement with . . . corporations or associations at least sixty
per cent of whose voting stock or controlling interest is owned by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration,
development and utilization of natural resources, the President with the concurrence
of Congress may enter into agreements with foreign-owned corporations even for
technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point
for fear that foreign investors will use their enormous capital resources to facilitate
the actual exploitation or exploration, development and effective disposition of our
natural resources to the detriment of Filipino investors. I am not saying that we
should not consider borrowing money from foreign sources. What I refer to is that
foreign interest should be allowed to participate only to the extent that they lend us
money and give us technical assistance with the appropriate government permit. In
this way, we can insure the enjoyment of our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not permit
foreign investors to participate. It is only technical or financial assistance they do
not own anything but on conditions that have to be determined by law with the
concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts
which we said yesterday were avenues used in the previous regime to go around
the 60-40 requirement.238 [Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this
limitation in scope in proposing an amendment to the 60-40 requirement:
24 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

MR. DAVIDE. May I be allowed to explain the proposal?
MR. MAAMBONG. Subject to the three-minute rule, Madam President.
MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly stated
that the Filipino people are sovereign and that one of the objectives for the creation
or establishment of a government is to conserve and develop the national patrimony.
The implication is that the national patrimony or our natural resources are
exclusively reserved for the Filipino people. No alien must be allowed to enjoy,
exploit and develop our natural resources. As a matter of fact, that principle
proceeds from the fact that our natural resources are gifts from God to the Filipino
people and it would be a breach of that special blessing from God if we will allow
aliens to exploit our natural resources.
This provision balances the need for foreign capital and technology with the need to
maintain the national sovereignty. It recognizes the fact that as long as Filipinos can
formulate their own terms in their own territory, there is no danger of relinquishing
sovereignty to foreign interests.
Are service contracts allowed under the new Constitution? No. Under the new
Constitution, foreign investors (fully alien-owned) can NOT participate in Filipino
enterprises except to provide: (1) Technical Assistance for highly technical
enterprises; and (2) Financial Assistance for large-scale enterprises.
The intent of this provision, as well as other provisions on foreign investments, is to
prevent the practice (prevalent in the Marcos government) of skirting the 60/40
equation using the cover of service contracts.241 [Emphasis supplied.]

I voted in favor of the Jamir proposal because it is not really exploitation that we Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft
granted to the alien corporations but only for them to render financial or technical Article on National Economy and Patrimony, adopted the concept of "agreements .
assistance. It is not for them to enjoy our natural resources. Madam President, our . . involving either technical or financial assistance" contained in the "Draft of the
natural resources are depleting; our population is increasing by leaps and bounds. 1986 U.P. Law Constitution Project" (U.P. Law draft) which was taken into
Fifty years from now, if we will allow these aliens to exploit our natural resources, consideration during the deliberation of the CONCOM.243 The former, as well as
there will be no more natural resources for the next generations of Filipinos. It may Article XII, as adopted, employed the same terminology, as the comparative table
last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to below shows:
a certain extent the exploitation of our natural resources, and we became victims of
foreign dominance and control. The aliens are interested in coming to the Philippines DRAFT OF THE UP PROPOSED ARTICLE XII OF THE
because they would like to enjoy the bounty of nature exclusively intended for LAW RESOLUTION NO. 1987
Filipinos by God. CONSTITUTION 496 OF THE CONSTITUTION
PROJECT CONSTITUTIONAL
And so I appeal to all, for the sake of the future generations, that if we have to pray COMMISSION
in the Preamble "to preserve and develop the national patrimony for the sovereign
Filipino people and for the generations to come," we must at this time decide once
and for all that our natural resources must be reserved only to Filipino citizens.
Thank you.239 [Emphasis supplied.] Sec. 1. All lands of Sec. 3. All lands of Sec. 2. All lands of
the public domain, the public domain, the public domain,
The opinion of another member of the CONCOM is persuasive240 and leaves no doubt waters, minerals, waters, minerals, waters, minerals,
as to the intention of the framers to eliminate service contracts altogether. He writes: coal, petroleum and coal, petroleum and coal, petroleum,
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological other mineral oils, other mineral oils, and other mineral
undertakings for which the President may enter into contracts with foreign-owned all forces of all forces of oils, all forces of
corporations, and enunciates strict conditions that should govern such contracts. x potential energy, potential energy, potential energy,
x x. fisheries, flora and fisheries, forests, fisheries, forests or
fauna and other flora and fauna, and timber, wildlife,

25 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

natural resources of other natural flora and fauna, and be provided by law. under such term five years, and
the Philippines are resources are other natural In case as to water and conditions as under such terms
owned by the State. owned by the State. resources are rights for irrigation, may be provided by and conditions as
With the exception With the exception owned by the State. water supply, law. In cases of may be provided by
of agricultural lands, of agricultural lands, With the exception fisheries, or water rights for law. In case of
all other natural all other natural of agricultural lands, industrial uses other irrigation, water water rights for
resources shall not resources shall not all other natural than the supply, fisheries or irrigation, water
be alienated. The be alienated. The resources shall not development of industrial uses other supply, fisheries, or
exploration, exploration, be alienated. The water power, than the industrial uses other
development and development, and exploration, beneficial use may development for than the
utilization of natural utilization of natural development, and be the measure and water power, development of
resources shall be resources shall be utilization of natural limit of the grant. beneficial use may water power,
under the full under the full resources shall be The National be the measure and beneficial use may
control and control and under the full Assembly may by limit of the grant. be the measure and
supervision of the supervision of the control and law allow small scale The Congress may limit of the grant.
State. Such State. Such supervision of the utilization of natural by law allow small- The State shall
activities may be activities may be State. The State resources by Filipino scale utilization of protect the nation's
directly undertaken directly undertaken may directly citizens. natural resources by marine wealth in its
by the state, or it by the State, or it undertake such The National Filipino citizens, as archipelagic waters,
may enter into co- may enter into co- activities or it may Assembly, may, by well as cooperative territorial sea, and
production, joint production, joint enter into co- two-thirds vote of all fish farming in exclusive economic
venture, production venture, production, joint its members by rivers, lakes, bays, zone, and reserve
sharing agreements production-sharing venture, or special law provide and lagoons. its use and
with Filipino citizens agreements with production-sharing the terms and The President with enjoyment
or corporations or Filipino citizens or agreements with conditions under the concurrence of exclusively to
associations sixty corporations or Filipino citizens, or which a foreign- Congress, by special Filipino citizens.
per cent of whose associations at least corporations or owned corporation law, shall provide The Congress may,
voting stock or sixty per cent of associations at least may enter into the terms and by law, allow small-
controlling interest whose voting stock sixty per centum of agreements with conditions under scale utilization of
is owned by such or controlling whose capital is the government which a foreign- natural resources by
citizens for a period interest is owned by owned by such involving either owned corporation Filipino citizens, as
of not more than such citizens. Such citizens. Such technical or may enter into well as cooperative
twenty-five years, agreements shall be agreements may be financial agreements with fish farming, with
renewable for not for a period of for a period not assistance for the government priority to
more than twenty- twenty-five years, exceeding twenty- large-scale involving either subsistence
five years and under renewable for not five years, exploration, technical or fishermen and fish-
such terms and more than twenty- renewable for not development, or financial workers in rivers,
conditions as may five years, and more than twenty- utilization of natural assistance for

26 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

resources. large-scale lakes, bays, and entered into in

[Emphasis exploration, lagoons. accordance with this
supplied.] development, and The President may provision, within
utilization of natural enter into thirty days from its
resources. agreements with execution.
[Emphasis foreign-owned
supplied.] corporations The insights of the proponents of the U.P. Law draft are, therefore, instructive in
involving either interpreting the phrase "technical or financial assistance."
technical or
financial In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor
assistance for Pacifico A. Agabin, who was a member of the working group that prepared the U.P.
large-scale Law draft, criticized service contracts for they "lodge exclusive management and
exploration, control of the enterprise to the service contractor, which is reminiscent of the old
development, and concession regime. Thus, notwithstanding the provision of the Constitution that
utilization of natural resources belong to the State, and that these shall not be alienated, the
minerals, service contract system renders nugatory the constitutional provisions cited." 244 He
petroleum, and elaborates:
other mineral oils
according to the Looking at the Philippine model, we can discern the following vestiges of the
general terms and concession regime, thus:
conditions provided 1. Bidding of a selected area, or leasing the choice of the area to the
by law, based on interested party and then negotiating the terms and conditions of the
real contributions to contract; (Sec. 5, P.D. 87)
the economic 2. Management of the enterprise vested on the contractor, including
growth and general operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)
welfare of the 3. Control of production and other matters such as expansion and
country. In such development; (Sec. 8)
agreements, the 4. Responsibility for downstream operations marketing, distribution, and
State shall promote processing may be with the contractor (Sec. 8);
the development 5. Ownership of equipment, machinery, fixed assets, and other properties
and use of local remain with contractor (Sec. 12, P.D. 87);
scientific and 6. Repatriation of capital and retention of profits abroad guaranteed to the
technical resources. contractor (Sec. 13, P.D. 87); and
[Emphasis 7. While title to the petroleum discovered may nominally be in the name of
supplied.] the government, the contractor has almost unfettered control over its
The President shall disposition and sale, and even the domestic requirements of the country is
notify the Congress relegated to a pro rata basis (Sec. 8).
of every contract

27 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
In short, our version of the service contract is just a rehash of the old concession
regime x x x. Some people have pulled an old rabbit out of a magician's hat, and
foisted it upon us as a new and different animal.
The service contract as we know it here is antithetical to the principle of sovereignty
over our natural resources restated in the same article of the [1973] Constitution
containing the provision for service contracts. If the service contractor happens to
be a foreign corporation, the contract would also run counter to the constitutional
provision on nationalization or Filipinization, of the exploitation of our natural
resources.245 [Emphasis supplied. Underscoring in the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in
his reproach of the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the
[1973] Charter, but the essence of nationalism was reduced to hollow rhetoric. The
1973 Charter still provided that the exploitation or development of the country's
natural resources be limited to Filipino citizens or corporations owned or controlled
by them. However, the martial-law Constitution allowed them, once these resources
are in their name, to enter into service contracts with foreign investors for financial,
technical, management, or other forms of assistance. Since foreign investors have
the capital resources, the actual exploitation and development, as well as the
effective disposition, of the country's natural resources, would be under their
direction, and control, relegating the Filipino investors to the role of second-rate
partners in joint ventures.
Through the instrumentality of the service contract, the 1973 Constitution had
legitimized at the highest level of state policy that which was prohibited under the
1973 Constitution, namely: the exploitation of the country's natural resources by
foreign nationals. The drastic impact of [this] constitutional change becomes more
pronounced when it is considered that the active party to any service contract may
be a corporation wholly owned by foreign interests. In such a case, the citizenship
requirement is completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the country's natural
resources.246 [Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
PUP COL 2015
Recognizing the service contract for what it is, we have to expunge it from the
Constitution and reaffirm ownership over our natural resources. That is the only way
we can exercise effective control over our natural resources.
This should not mean complete isolation of the country's natural resources from
foreign investment. Other contract forms which are less derogatory to our
sovereignty and control over natural resources like technical assistance
agreements, financial assistance [agreements], co-production agreements, joint
ventures, production-sharing could still be utilized and adopted without violating
constitutional provisions. In other words, we can adopt contract forms which
recognize and assert our sovereignty and ownership over natural resources, and
where the foreign entity is just a pure contractor instead of the beneficial owner of
our economic resources.247 [Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed
that:
2. Service contracts as practiced under the 1973 Constitution should be discouraged,
instead the government may be allowed, subject to authorization by special law
passed by an extraordinary majority to enter into either technical or financial
assistance. This is justified by the fact that as presently worded in the 1973
Constitution, a service contract gives full control over the contract area to the service
contractor, for him to work, manage and dispose of the proceeds or production. It
was a subterfuge to get around the nationality requirement of the
constitution.248[Emphasis supplied.]
In the annotations on the proposed Article on National Economy and Patrimony, the
U.P. Law draft summarized the rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found in
Section 9, Article XIV of the 1973 Constitution as amended. This 1973 provision
shattered the framework of nationalism in our fundamental law (see Magallona,
"Nationalism and its Subversion in the Constitution"). Through the service contract,
the 1973 Constitution had legitimized that which was prohibited under the 1935
constitutionthe exploitation of the country's natural resources by foreign nationals.
Through the service contract, acts prohibited by the Anti-Dummy Law were
recognized as legitimate arrangements. Service contracts lodge exclusive
management and control of the enterprise to the service contractor, not unlike the
old concession regime where the concessionaire had complete control over the
country's natural resources, having been given exclusive and plenary rights to exploit
28 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
a particular resource and, in effect, having been assured of ownership of that
resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New
Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty
over our natural resources, as well as the constitutional provision on nationalization
or Filipinization of the exploitation of our natural resources.
Under the proposed provision, only technical assistance or financial assistance
agreements may be entered into, and only for large-scale activities. These are
contract forms which recognize and assert our sovereignty and ownership over
natural resources since the foreign entity is just a pure contractor and not a
beneficial owner of our economic resources. The proposal recognizes the need for
capital and technology to develop our natural resources without sacrificing our
sovereignty and control over such resources by the safeguard of a special law which
requires two-thirds vote of all the members of the Legislature. This will ensure that
such agreements will be debated upon exhaustively and thoroughly in the National
Assembly to avert prejudice to the nation.249 [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution
as grants of beneficial ownership of the country's natural resources to foreign owned
corporations. While, in theory, the State owns these natural resources and Filipino
citizens, their beneficiaries service contracts actually vested foreigners with the
right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not
Filipinos, became the beneficiaries of Philippine natural resources. This arrangement
is clearly incompatible with the constitutional ideal of nationalization of natural
resources, with the Regalian doctrine, and on a broader perspective, with Philippine
sovereignty.
The proponents nevertheless acknowledged the need for capital and technical know-
how in the large-scale exploitation, development and utilization of natural resources
the second paragraph of the proposed draft itself being an admission of such
scarcity. Hence, they recommended a compromise to reconcile the nationalistic
provisions dating back to the 1935 Constitution, which reserved all natural resources
exclusively to Filipinos, and the more liberal 1973 Constitution, which allowed
foreigners to participate in these resources through service contracts. Such a
compromise called for the adoption of a new system in the exploration,
development, and utilization of natural resources in the form of technical
agreements or financial agreements which, necessarily, are distinct concepts from
service contracts.
PUP COL 2015
The replacement of "service contracts" with "agreements involving either technical
or financial assistance," as well as the deletion of the phrase "management or other
forms of assistance," assumes greater significance when note is taken that the U.P.
Law draft proposed other equally crucial changes that were obviously heeded by the
CONCOM. These include the abrogation of the concession system and the adoption
of new "options" for the State in the exploration, development, and utilization of
natural resources. The proponents deemed these changes to be more consistent
with the State's ownership of, and its "full control and supervision" (a phrase also
employed by the framers) over, such resources. The Project explained:
3. In line with the State ownership of natural resources, the State should take a
more active role in the exploration, development, and utilization of natural
resources, than the present practice of granting licenses, concessions, or leases
hence the provision that said activities shall be under the full control and supervision
of the State. There are three major schemes by which the State could undertake
these activities: first, directly by itself; second, by virtue of co-production, joint
venture, production sharing agreements with Filipino citizens or corporations or
associations sixty per cent (60%) of the voting stock or controlling interests of which
are owned by such citizens; or third, with a foreign-owned corporation, in cases of
large-scale exploration, development, or utilization of natural resources through
agreements involving either technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government
benefits from such benefits only through fees, charges, ad valorem taxes and income
taxes of the exploiters of our natural resources. Such benefits are very minimal
compared with the enormous profits reaped by theses licensees, grantees,
concessionaires. Moreover, some of them disregard the conservation of natural
resources and do not protect the environment from degradation. The proposed role
of the State will enable it to a greater share in the profits it can also actively
husband its natural resources and engage in developmental programs that will be
beneficial to them.
4. Aside from the three major schemes for the exploration, development, and
utilization of our natural resources, the State may, by law, allow Filipino citizens to
explore, develop, utilize natural resources in small-scale. This is in recognition of the
plight of marginal fishermen, forest dwellers, gold panners, and others similarly
situated who exploit our natural resources for their daily sustenance and survival.250
Professor Agabin, in particular, after taking pains to illustrate the similarities between
the two systems, concluded that the service contract regime was but a "rehash" of
the concession system. "Old wine in new bottles," as he put it. The rejection of the
29 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
service contract regime, therefore, is in consonance with the abolition of the
concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and the
adoption of other proposed changes, there is no doubt that the framers considered
and shared the intent of the U.P. Law proponents in employing the phrase
"agreements . . . involving either technical or financial assistance."
While certain commissioners may have mentioned the term "service contracts"
during the CONCOM deliberations, they may not have been necessarily referring to
the concept of service contracts under the 1973 Constitution. As noted earlier,
"service contracts" is a term that assumes different meanings to different
people.251 The commissioners may have been using the term loosely, and not in its
technical and legal sense, to refer, in general, to agreements concerning natural
resources entered into by the Government with foreign corporations. These loose
statements do not necessarily translate to the adoption of the 1973 Constitution
provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in
CONCOM, in response to Sr. Tan's question, Commissioner Villegas commented that,
other than congressional notification, the only difference between "future" and
"past" "service contracts" is the requirement of a general law as there were no laws
previously authorizing the same.252 However, such remark is far outweighed by his
more categorical statement in his exchange with Commissioner Quesada that the
draft article "does not permit foreign investors to participate" in the nation's natural
resources which was exactly what service contracts did except to provide
"technical or financial assistance."253
In the case of the other commissioners, Commissioner Nolledo himself clarified in
his work that the present charter prohibits service contracts.254 Commissioner
Gascon was not totally averse to foreign participation, but favored stricter
restrictions in the form of majority congressional concurrence.255 On the other hand,
Commissioners Garcia and Tadeo may have veered to the extreme side of the
spectrum and their objections may be interpreted as votes against any foreign
participation in our natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the
Secretary of Justice, expressing the view that a financial or technical assistance
agreement "is no different in concept" from the service contract allowed under the
1973 Constitution. This Court is not, however, bound by this interpretation. When
PUP COL 2015
an administrative or executive agency renders an opinion or issues a statement of
policy, it merely interprets a pre-existing law; and the administrative interpretation
of the law is at best advisory, for it is the courts that finally determine what the law
means.258
In any case, the constitutional provision allowing the President to enter into FTAAs
with foreign-owned corporations is an exception to the rule that participation in the
nation's natural resources is reserved exclusively to Filipinos. Accordingly, such
provision must be construed strictly against their enjoyment by non-Filipinos. As
Commissioner Villegas emphasized, the provision is "very
restrictive."259 Commissioner Nolledo also remarked that "entering into service
contracts is an exception to the rule on protection of natural resources for the
interest of the nation and, therefore, being an exception, it should be subject,
whenever possible, to stringent rules."260 Indeed, exceptions should be strictly but
reasonably construed; they extend only so far as their language fairly warrants and
all doubts should be resolved in favor of the general provision rather than the
exception.261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid
insofar as said Act authorizes service contracts. Although the statute employs the
phrase "financial and technical agreements" in accordance with the 1987
Constitution, it actually treats these agreements as service contracts that grant
beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance
Agreement) of R.A. No. 7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of mineral resources
in the Philippines may enter into a financial or technical assistance agreement
directly with the Government through the Department. [Emphasis supplied.]
"Exploration," as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological,
geochemical or geophysical surveys, remote sensing, test pitting, trending, drilling,
shaft sinking, tunneling or any other means for the purpose of determining the
existence, extent, quantity and quality thereof and the feasibility of mining them for
profit.262
30 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
A legally organized foreign-owned corporation may be granted an exploration
permit,263 which vests it with the right to conduct exploration for all minerals in
specified areas,264 i.e., to enter, occupy and explore the same.265Eventually, the
foreign-owned corporation, as such permittee, may apply for a financial and
technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a
mineral deposit for mining, including the construction of necessary infrastructure
and related facilities.267
"Utilization" "means the extraction or disposition of minerals."268 A stipulation that
the proponent shall dispose of the minerals and byproducts produced at the highest
price and more advantageous terms and conditions as provided for under the
implementing rules and regulations is required to be incorporated in every FTAA.269
A foreign-owned/-controlled corporation may likewise be granted a mineral
processing permit.270 "Mineral processing" is the milling, beneficiation or upgrading
of ores or minerals and rocks or by similar means to convert the same into
marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be conducted
in accordance with the provisions of R.A. No. 7942 and its implementing rules272 and
for work programs and minimum expenditures and commitments.273 And it obliges
itself to furnish the Government records of geologic, accounting, and other relevant
data for its mining operation.274
"Mining operation," as the law defines it, means mining activities involving
exploration, feasibility, development, utilization, and processing.275
The underlying assumption in all these provisions is that the foreign contractor
manages the mineral resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same
auxiliary mining rights that it grants contractors in mineral agreements (MPSA, CA
and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor," without
distinguishing between FTAA and mineral agreement contractors. And so does
"holders of mining rights" in Section 76. A foreign contractor may even convert its
FTAA into a mineral agreement if the economic viability of the contract area is found
to be inadequate to justify large-scale mining operations,277 provided that it reduces
its equity in the corporation, partnership, association or cooperative to forty percent
(40%).278
PUP COL 2015
Finally, under the Act, an FTAA contractor warrants that it "has or has access to all
the financing, managerial, and technical expertise. . . ."279 This suggests that an
FTAA contractor is bound to provide some management assistance a form of
assistance that has been eliminated and, therefore, proscribed by the present
Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining
operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed
beneficial ownership over the nation's mineral resources to these contractors,
leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a
circumvention of the constitutionally ordained 60%-40% capitalization requirement
for corporations or associations engaged in the exploitation, development and
utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of
Section 2, Article XII of the Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be
deemed a qualified person for purposes of granting an exploration permit,
financial or technical assistance agreement or mineral processing permit.
(2) Section 23,280 which specifies the rights and obligations of an
exploration permittee, insofar as said section applies to a financial or
technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial
or technical assistance agreement;
(4) Section 35,281 which enumerates the terms and conditions for every
financial or technical assistance agreement;
(5) Section 39,282 which allows the contractor in a financial and technical
assistance agreement to convert the same into a mineral production-
sharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral processing
permit to a contractor in a financial and technical assistance agreement;
31 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
The following provisions of the same Act are likewise void as they are dependent on
the foregoing provisions and cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it
applies to a financial or technical assistance agreement.
Section 34,285 which prescribes the maximum contract area in a financial
or technical assistance agreements;
Section 36,286 which allows negotiations for financial or technical assistance
agreements;
Section 37,287 which prescribes the procedure for filing and evaluation of
financial or technical assistance agreement proposals;
Section 38,288 which limits the term of financial or technical assistance
agreements;
Section 40,289 which allows the assignment or transfer of financial or
technical assistance agreements;
Section 41,290 which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81,291 which provide for the
Government's share in a financial and technical assistance agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs insofar
as it applies to said contractors;
When the parts of the statute are so mutually dependent and connected as
conditions, considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, and that if all could
not be carried into effect, the legislature would not pass the residue independently,
then, if some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them.293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit,
utilise[,] process and dispose of all Minerals products and by-products thereof that
may be produced from the Contract Area."294 The FTAA also imbues WMCP with the
following rights:
(b) to extract and carry away any Mineral samples from the Contract area
for the purpose of conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during
the Development/Operating Period and the project facilities to be
constructed during the Development and Construction Period;
PUP COL 2015
(d) have the right of possession of the Contract Area, with full right of
ingress and egress and the right to occupy the same, subject to the
provisions of Presidential Decree No. 512 (if applicable) and not be
prevented from entry into private ands by surface owners and/or occupants
thereof when prospecting, exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and
transmission facilities and all other types of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery
and other equipment relating to the Mining Operations and to use, sell or
otherwise dispose of, modify, remove or diminish any and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of
third Parties, easement rights and the use of timber, sand, clay, stone,
water and other natural resources in the Contract Area without cost for the
purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its interest
and obligations under this Agreement, the plant, equipment and
infrastructure and the Minerals produced from the Mining Operations;
x x x. 295
All materials, equipment, plant and other installations erected or placed on the
Contract Area remain the property of WMCP, which has the right to deal with and
remove such items within twelve months from the termination of the FTAA.296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology,
management and personnel necessary for the Mining Operations." The mining
company binds itself to "perform all Mining Operations . . . providing all necessary
services, technology and financing in connection therewith,"297 and to "furnish all
materials, labour, equipment and other installations that may be required for
carrying on all Mining Operations."298> WMCP may make expansions, improvements
and replacements of the mining facilities and may add such new facilities as it
considers necessary for the mining operations.299
These contractual stipulations, taken together, grant WMCP beneficial ownership
over natural resources that properly belong to the State and are intended for the
benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution.
They are precisely the vices that the fundamental law seeks to avoid, the evils that
32 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
it aims to suppress. Consequently, the contract from which they spring must be
struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the
Promotion and Protection of Investments between the Philippine and Australian
Governments, which was signed in Manila on January 25, 1995 and which entered
into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made
and thus the fact that [WMCP's] FTAA was entered into prior to the entry into force
of the treaty does not preclude the Philippine Government from protecting [WMCP's]
investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides that "Each
Party shall encourage and promote investments in its area by investors of the other
Party and shall [admit] such investments in accordance with its Constitution, Laws,
regulations and investment policies" and in Article 3 (2), it states that "Each Party
shall ensure that investments are accorded fair and equitable treatment." The latter
stipulation indicates that it was intended to impose an obligation upon a Party to
afford fair and equitable treatment to the investments of the other Party and that a
failure to provide such treatment by or under the laws of the Party may constitute a
breach of the treaty. Simply stated, the Philippines could not, under said treaty, rely
upon the inadequacies of its own laws to deprive an Australian investor (like
[WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without
likewise nullifying the service contracts entered into before the enactment of RA
7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was
executed not by a mere Filipino citizen, but by the Philippine Government itself,
through its President no less, which, in entering into said treaty is assumed to be
aware of the existing Philippine laws on service contracts over the exploration,
development and utilization of natural resources. The execution of the FTAA by the
Philippine Government assures the Australian Government that the FTAA is in
accordance with existing Philippine laws.300 [Emphasis and italics by private
respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of said
treaty which, in turn, would amount to a violation of Section 3, Article II of the
Constitution adopting the generally accepted principles of international law as part
of the law of the land. One of these generally accepted principles is pacta sunt
servanda, which requires the performance in good faith of treaty obligations.
PUP COL 2015
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and
its assertion that "the Philippines could not . . . deprive an Australian investor (like
[WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without
likewise nullifying the service contracts entered into before the enactment of RA
7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty
invoked. For this decision herein invalidating the subject FTAA forms part of the legal
system of the Philippines.301 The equal protection clause302 guarantees that such
decision shall apply to all contracts belonging to the same class, hence, upholding
rather than violating, the "fair and equitable treatment" stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with the
provisions of Section 2, Article XII of the Constitution, the President may enter into
agreements involving "either technical or financial assistance" only. The agreement
in question, however, is a technical and financial assistance agreement.
Petitioners' contention does not lie. To adhere to the literal language of the
Constitution would lead to absurd consequences.303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the
President) to enter into contract with two (2) foreign-owned corporations, one for
financial assistance agreement and with the other, for technical assistance over one
and the same mining area or land; or to execute two (2) contracts with
only one foreign-owned corporation which has the capability to provide both
financial and technical assistance, one for financial assistance and another for
technical assistance, over the same mining area. Such an absurd result is definitely
not sanctioned under the canons of constitutional construction. 304 [Underscoring in
the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result
from their use of "either/or." A constitution is not to be interpreted as demanding
the impossible or the impracticable; and unreasonable or absurd consequences, if
possible, should be avoided.305 Courts are not to give words a meaning that would
lead to absurd or unreasonable consequences and a literal interpretation is to be
rejected if it would be unjust or lead to absurd results.306 That is a strong argument
against its adoption.307 Accordingly, petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other
issues raised by the petition.
33 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional Republic of the Philippines
and void: SUPREME COURT
(1) The following provisions of Republic Act No. 7942: Manila
(a) The proviso in Section 3 (aq), EN BANC
(b) Section 23,
(c) Section 33 to 41, G.R. No. 104037 May 29, 1992
(d) Section 56, REYNALDO V. UMALI, petitioner,
(e) The second and third paragraphs of Section 81, and vs.
(f) Section 90. HON. JESUS P. ESTANISLAO, Secretary of Finance, and HON. JOSE U.
(2) All provisions of Department of Environment and Natural Resources ONG, Commissioner of Internal Revenue, respondents.
Administrative Order 96-40, s. 1996 which are not in conformity with this G.R. No. 104069 May 29, 1992
Decision, and RENE B. GOROSPE, LEIGHTON R. SIAZON, MANUEL M. SUNGA, PAUL D.
(3) The Financial and Technical Assistance Agreement between the UNGOS, BIENVENIDO T. JAMORALIN, JR., JOSE D. FLORES, JR., EVELYN
Government of the Republic of the Philippines and WMC Philippines, Inc. G. VILLEGAS, DOMINGO T. LIGOT, HENRY E. LARON, PASTOR M.
DALMACION, JR., and, JULIUS NORMAN C. CERRADA, petitioners,
SO ORDERED. vs
COMMISSIONER OF INTERNAL REVENUE, respondent.

PADILLA, J.:

These consolidated cases are petitions for mandamus and prohibition, premised
upon the following undisputed facts:

Congress enacted Rep. Act 7167, entitled "AN ACT ADJUSTING THE BASIC
PERSONAL AND ADDITIONAL EXEMPTIONS ALLOWABLE TO INDIVIDUALS FOR
INCOME TAX PURPOSES TO THE POVERTY THRESHOLD LEVEL, AMENDING FOR
THE PURPOSE SECTION 29, PARAGRAPH (L), ITEMS (1) AND (2) (A) OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES." It provides as follows:

Sec. (1). The first paragraph of item (1), paragraph (1) of Section
29 of the National Internal Revenue Code, as amended, is hereby
further amended to read as follows:
(1) Personal Exemptions allowable to individuals (1) Basic
personal exemption as follows:

For single individual or married individual

judicially decreed as legally separated with no
qualified dependents P9,000

34 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
For head of a family P12,000
For married individual P18,000
Provided, That husband and wife electing to compute their income
tax separately shall be entitled to a personal exemption of P9,000
each.
Sec. 2. The first paragraph of item (2) (A), paragraph (1) of
Section 29 of the same Code, as amended, is hereby further
amended to read as follows:
(2) Additional exemption.
(a) Taxpayers with dependents. A married individual or a head
of family shall be allowed an additional exemption of Five
Thousand Pesos (P5,000) for each dependent: Provided, That the
total number of dependents for which additional exemptions may
be claimed shall not exceed four dependents: Provided, further,
That an additional exemption of One Thousand Pesos (1,000)
shall be allowed for each child who otherwise qualified as
dependent prior to January 1, 1980: Provided, finally, That the
additional exemption for dependents shall be claimed by only one
of the spouses in case of married individuals electing to compute
their income tax liabilities separately.
Sec. 3. This act shall take effect upon its approval.
Approved. 1
The said act was signed and approved by the President on 19 December 1991 and
published on 14 January 1992 in "Malaya" a newspaper of general circulation.
On 26 December 1991, respondents promulgated Revenue Regulations No. 1-92,
the pertinent portions of which read as follows:
Sec. 1. SCOPE Pursuant to Sections 245 and 72 of the National
Internal Revenue Code in relation to Republic Act No. 7167, these
Regulations are hereby promulgated prescribing the collection at
source of income tax on compensation income paid on or after
January 1, 1992 under the Revised Withholding Tax Tables
(ANNEX "A") which take into account the increase of personal and
additional exemptions.
xxx xxx xxx
PUP COL 2015
Sec. 3. Section 8 of Revenue Regulations No. 6-82 is amended by
Revenue Regulations No. 1-86 is hereby further amended to read
as follows:
Section 8. Right to claim the following
exemptions. . . .
Each employee shall be allowed to claim the
following amount of exemption with respect to
compensation paid on or after January 1, 1992.
xxx xxx xxx
Sec. 5. EFFECTIVITY. These regulations shall take effect on
compensation income from January 1, 1992.
On 27 February 1992, the petitioner in G.R. No. 104037, a taxpayer and a resident
of Gitnang Bayan Bongabong, Oriental Mindoro, filed a petition for mandamus for
himself and in behalf all individual Filipino taxpayers, to COMPEL the respondents to
implement Rep. Act 7167 with respect to taxable income of individual taxpayers
earned or received on or after 1 January 1991 or as of taxable year ending 31
December 1991.
On 28 February 1992, the petitioners in G.R. No. 104069 likewise filed a petition
for mandamus and prohibition on their behalf as well as for those other individual
taxpayers who might be similarly situated, to compel the Commissioner of Internal
Revenue to implement the mandate of Rep. Act 7167 adjusting the personal and
additional exemptions allowable to individuals for income tax purposes in regard to
income earned or received in 1991, and to enjoin the respondents from
implementing Revenue Regulations No. 1-92.
In the Court's resolution of 10 March 1992, these two (2) cases were consolidated.
Respondents were required to comment on the petitions, which they did within the
prescribed period.
The principal issues to be resolved in these cases are: (1) whether or not Rep. Act
7167 took effect upon its approval by the President on 19 December 1991, or on 30
January 1992, i.e., after fifteen (15) days following its publication on 14 January
1992 in the "Malaya" a newspaper of general circulation; and (2) assuming that Rep.
Act 7167 took effect on 30 January 1992, whether or not the said law nonetheless
covers or applies to compensation income earned or received during calendar year
1991.
35 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
In resolving the first issue, it will be recalled that the Court in its resolution in Caltex
(Phils.), Inc. vs. The Commissioner of Internal Revenue, G.R. No. 97282, 26 June
1991 which is on all fours with this case as to the first issue held:
The central issue presented in the instant petition is the effectivity
of R.A. 6965 entitled "An Act Revising The Form of Taxation on
Petroleum Products from Ad Valorem to Specific, Amending For
the Purpose Section 145 of the National Internal Revenue Code,
As amended by Republic Act Numbered Sixty Seven Hundred Sixty
Seven."
Sec. 3 of R.A. 6965 contains the effectivity clause which provides.
"This Act shall take effect upon its approval"
R.A. 6965 was approved on September 19, 1990. It was published
in the Philippine Journal, a newspaper of general circulation in the
Philippines, on September 20, 1990. Pursuant to the Act, an
implementing regulation was issued by the Commissioner of
Internal Revenue, Revenue Memorandum Circular 85-90, stating
that R.A. 6965 took effect on October 5, 1990. Petitioner took
exception thereof and argued that the law took effect on
September 20, 1990 instead.
Pertinent is Article 2 of the Civil Code (as amended by Executive
Order No. 200) which provides:
Art. 2. Laws shall take effect after fifteen days
following the completion of their publication
either in the official Gazette or in a newspaper
of general circulation in the Philippines, unless
it is otherwise provided. . . .
In the case of Tanada vs. Tuvera (L-63915, December 29, 1986,
146 SCRA 446, 452) we construed Article 2 of the Civil Code and
laid down the rule:
. . .: the) clause "unless it is otherwise
provided" refers to the date of effectivity and
not to the requirement of publication itself,
which cannot in any event be omitted. This
clause does not mean that the legislator may
PUP COL 2015
make the law effective immediately upon
approval, or on any other date without its
previous publication.
Publication is indispensable in every case, but
the legislature may in its discretion provide that
the usual fifteen-day period shall be shortened
or extended. . . .
Inasmuch as R.A. 6965 has no specific date for its effectivity and
neither can it become effective upon its approval notwithstanding
its express statement, following Article 2 of the Civil Code and the
doctrine enunciated in Tanada, supra, R.A. 6965 took effect
fifteen days after September 20, 1990, or specifically, on October
5, 1990.
Accordingly, the Court rules that Rep. Act 7167 took effect on 30 January 1992,
which is after fifteen (15) days following its publication on 14 January 1992 in the
"Malaya."
Coming now to the second issue, the Court is of the considered view that Rep. Act
7167 should cover or extend to compensation income earned or received during
calendar year 1991.
Sec. 29, par. (L), Item No. 4 of the National Internal Revenue Code, as amended,
provides:
Upon the recommendation of the Secretary of Finance, the
President shall automatically adjust not more often than once
every three years, the personal and additional exemptions taking
into account, among others, the movement in consumer price
indices, levels of minimum wages, and bare subsistence levels.
As the personal and additional exemptions of individual taxpayers were last
adjusted in 1986, the President, upon the recommendation of the Secretary of
Finance, could have adjusted the personal and additional exemptions in 1989 by
increasing the same even without any legislation providing for such adjustment. But
the President did not.
However, House Bill 28970, which was subsequently enacted by Congress as Rep.
Act 7167, was introduced in the House of Representatives in 1989 although its
passage was delayed and it did not become effective law until 30 January 1992. A
perusal, however, of the sponsorship remarks of Congressman Hernando B. Perez,
36 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Chairman of the House Committee on Ways and Means, on House Bill 28970,
provides an indication of the intent of Congress in enacting Rep. Act 7167. The
pertinent legislative journal contains the following:
At the outset, Mr. Perez explained that the Bill Provides for
increased personal additional exemptions to individuals in view of
the higher standard of living.
The Bill, he stated, limits the amount of income of individuals
subject to income tax to enable them to spend for basic
necessities and have more disposable income.
xxx xxx xxx
Mr. Perez added that inflation has raised the basic necessities and
that it had been three years since the last exemption adjustment
in 1986.
xxx xxx xxx
Subsequently, Mr. Perez stressed the necessity of passing the
measure to mitigate the effects of the current inflation and of the
implementation of the salary standardization law. Stating that it is
imperative for the government to take measures to ease the
burden of the individual income tax filers, Mr. Perez then cited
specific examples of how the measure can help assuage the
burden to the taxpayers.
He then reiterated that the increase in the prices of commodities
has eroded the purchasing power of the peso despite the recent
salary increases and emphasized that the Bill will serve to
compensate the adverse effects of inflation on the taxpayers. . . .
(Journal of the House of Representatives, May 23, 1990, pp. 32-
33).
It will also be observed that Rep. Act 7167 speaks of the adjustments that it provides
for, as adjustments "to the poverty threshold level." Certainly, "the poverty threshold
level" is the poverty threshold level at the time Rep. Act 7167 was enacted by
Congress, not poverty threshold levels in futuro, at which time there may be need
of further adjustments in personal exemptions. Moreover, the Court can not lose
sight of the fact that these personal and additional exemptions are fixed amounts to
which an individual taxpayer is entitled, as a means to cushion the devastating
PUP COL 2015
effects of high prices and a depreciated purchasing power of the currency. In the
end, it is the lower-income and the middle-income groups of taxpayers (not the
high-income taxpayers) who stand to benefit most from the increase of personal
and additional exemptions provided for by Rep. Act 7167. To that extent, the act is
a social legislation intended to alleviate in part the present economic plight of the
lower income taxpayers. It is intended to remedy the inadequacy of the heretofore
existing personal and additional exemptions for individual taxpayers.
And then, Rep. Act 7167 says that the increased personal exemptions that it provides
for shall be available thenceforth, that is, after Rep. Act 7167 shall have become
effective. In other words, these exemptions are available upon the filing of personal
income tax returns which is, under the National Internal Revenue Code, done not
later than the 15th day of April after the end of a calendar year. Thus, under Rep.
Act 7167, which became effective, as aforestated, on 30 January 1992, the increased
exemptions are literally available on or before 15 April 1992 (though not before 30
January 1992). But these increased exemptions can be available on 15 April
1992 only in respect of compensation income earned or received during the calendar
year 1991.
The personal exemptions as increased by Rep. Act 7167 cannot be regarded as
available in respect of compensation income received during the 1990 calendar
year; the tax due in respect of said income had already accrued, and been
presumably paid, by 15 April 1991 and by 15 July 1991, at which time Rep. Act 7167
had not been enacted. To make Rep. Act 7167 refer back to income received during
1990 would require language explicitly retroactive in purport and effect, language
that would have to authorize the payment of refunds of taxes paid on 15 April 1991
and 15 July 1991: such language is simply not found in Rep. Act 7167.
The personal exemptions as increased by Rep. Act 7167 cannot be regarded as
available only in respect of compensation income received during 1992, as the
implementing Revenue Regulations No. 1-92 purport to provide. Revenue
Regulations No. 1-92 would in effect postpone the availability of the increased
exemptions to 1 January-15 April 1993, and thus literally defer the effectivity of Rep.
Act 7167 to 1 January 1993. Thus, the implementing regulations collide frontally
with Section 3 of Rep. Act 7167 which states that the statute "shall take effect upon
its approval." The objective of the Secretary of Finance and the Commissioner of
Internal Revenue in postponing through Revenue Regulations No. 1-92 the legal
effectivity of Rep. Act 7167 is, of course, entirely understandable to defer to
1993 the reduction of governmental tax revenues which irresistibly follows from the
application of Rep. Act 7167. But the law-making authority has spoken and the Court
37 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

can not refuse to apply the law-maker's words. Whether or not the government can Republic of the Philippines
afford the drop in tax revenues resulting from such increased exemptions was for SUPREME COURT
Congress (not this Court) to decide. Manila
FIRST DIVISION
WHEREFORE, Sections 1, 3 and 5 of Revenue Regulations No. 1-92 which provide
that the regulations shall take effect on compensation income earned or received G.R. No. 115068 November 28, 1996
from 1 January 1992 are hereby SET ASIDE. They should take effect on FORTUNE MOTORS (PHILS.) INC. petitioner,
compensation income earned or received from 1 January 1991. vs.
METROPOLITAN BANK AND TRUST COMPANY, and THE COURT OF
Since this decision is promulgated after 15 April 1992, the individual taxpayers APPEALS, respondents.
entitled to the increased exemptions on compensation income earned during
calendar year 1991 who may have filed their income tax returns on or before 15 HERMOSISIMA, JR., J.:
April 1992 (later extended to 24 April 1992) without the benefit of such increased
exemptions, are entitled to the corresponding tax refunds and/or credits, and Before us is a petition for review of the decision of the Court of Appeals in
respondents are ordered to effect such refunds and/or credits. No costs. CA G.R CV No. 38340 entitled "Fortune Motors (Phils.) Inc., v.
Metropolitan Bank and Trust Company et al.1 The appellate court's decision
SO ORDERED. reversed the decision in Civil Case No. 89-5637 of Branch 150 of the
Regional Trial Court of Makati City.

It appears that Fortune Motors (Phils.) Inc. obtained the following loans
from the Metropolitan Bank and Trust Company: (1) P20 Million, on March
31, 1982; (2) P8 Million, on April 30, 1983; (3) P2,500,000.00, on June 8,
1983 and; (4) P3 Million, on August 16, 1983.

On January 6, 1984, respondent bank consolidated the loans of P8 Million

and P3 Million into one promissory note, which amounted to
P12,650,000.00. This included the interest that had accrued thereon in the
amount of P1,650,000.00.

To secure the obligation in the total amount of P34,150,000.00, petitioner

mortgaged certain real estate in favor of respondent bank.

Due to financial constraints, petitioner failed to pay the loan upon maturity.
Consequently on May 25, 1984, respondent bank initiated extrajudicial
foreclosure proceedings and in effect, foreclosed the real estate mortgage.
The extrajudicial foreclosure was actually conducted by Senior Deputy
Sheriff Pablo Y. Sy who had sent copies of the Notice of Extrajudicial Sale
to the opposing parties by registered mail. In accordance with law, he
posted copies of the Notice of Sheriff's Sale at three conspicuous public
places in Makati the office of the Sheriff, the Assessor's Office and the

38 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Register of Deeds in Makati. He thereafter executed the Certificates of
Posting on May 20, 1984. The said notice was in fact published on June 2,
9 and 16, 1984 in three issues of "The New Record." An affidavit of
publication, dated June 19, 1984,2 was executed by Teddy F. Borres,
publisher of the said newspaper.
Subsequently, the mortgaged property was sold at public auction for
P47,899,264.91 to the mortgagee bank, the highest bidder.
Petitioner failed to redeem the mortgaged property within the one-year
redemption period and so, the titles thereto were consolidated in the name
of respondent bank by which token the latter was entitled to the possession
of the property mortgaged and, in fact possessed the same.
Petitioner then filed a complaint for the annulment of the extrajudicial
foreclosure, which covered TCT Nos. 461087, 432685, 457590, 432684, S-
54185, S-54186, S-54187, and S-54188.
On December 27, 1991, the trial court rendered judgment annulling the
extrajudicial foreclosure of the mortgage.
On May 14, 1992, an appeal was interposed by the respondent to the Court
of Appeals. Acting thereon, the Court of Appeals reversed the decision
rendered by the lower court. Subsequently, the Motion for Reconsideration
filed by petitioner was denied on April 26, 1994.
Aggrieved by the decision rendered by the Court of Appeals, petitioner
appealed before this Court. On May 30, 1994, however, we issued a
Resolution denying said petition. Hence, this motion for reconsideration.
Petitioner raises the following issues before us, to wit:
I publication. (Sadang v. GSIS, 18 SCRA 491).
THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PUBLICATION OF THE NOTICE OF EXTRAJUDICIAL
FORECLOSURE WAS VALID.3
II
THAT THE RESPONDENT COURT OF APPEALS ERRED IN
DECLARING THAT THE NOTICES OF EXTRAJUDICIAL
FORECLOSURE, AND SALE WERE DULY RECEIVED BY THE
PETITIONER.4
III
PUP COL 2015
THAT THE COURT OF APPEALS ERRED IN FAILING TO ADJUDGE
THE IRREGULARITIES IN THE BIDDING, POSTING,
PUBLICATION, AND THE SALE OF FORTUNE BUILDING.5
IV
THAT THE RESPONDENT COURT OF APPEALS ERRED IN
RENDERING A JUDGMENT BASED ON PRESUMPTION.6
Petitioner contends that the newspaper "Daily Record" 7 where the notice
of extrajudicial foreclosure was published does not qualify as a newspaper
of general circulation.
It further contends that the population that can be reached by the "Daily
Record" is only .004% as its circulation in Makati in 1984, was 1000 to 1500
per week. Hence, it concludes that only 1648 out of a population of 412,069
were probable readers of the "Daily Record," and that this is not the
standard contemplated by law when it refers to a newspaper of general
circulation.
In the case of Bonnevie v. Court of Appeals,8 we had already made a ruling
on this point:
The argument that the publication of the notice in the "Luzon
Weekly Courier" was not in accordance with law as said
newspaper is not of general circulation must likewise be
disregarded. The affidavit of publication, executed by the
publisher, business/advertising manager of the Luzon Weekly
Courier, states that it is "a newspaper of general circulation in . .
. Rizal; and that the Notice of Sheriffs sale was published in said
paper on June 30, July 7 and July 14, 1968." This
constitutes prima facie evidence of compliance with the requisite
To be a newspaper of general circulation, it is enough that "it is
published for the dissemination of local news and general
information; that it has a bona fide subscription list of paying
subscribers; that it is published at regular intervals." (Basa v.
Mercado, 61 Phil. 632). The newspaper need not have the largest
circulation so long as it is of general circulation. (Banta v. Pacheco,
74 Phil. 67).
39 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
In the case at bench, there was sufficient compliance with the requirements
of the law regarding publication of the notice in a newspaper of general
circulation. This is evidenced by the affidavit of publication executed by the
New Record's publisher, Teddy F. Borres, which stated that it is a
newspaper edited in Manila and Quezon City and of general circulation in
the cities of Manila, Quezon City et. al., and in the Provinces of Rizal . . . ,
published every Saturday by the Daily Record, Inc. This was affirmed by
Pedro Deyto, who was the executive editor of the said newspaper and who
was a witness for petitioner. Deyto testified: a) that the New Record
contains news; b) that it has subscribers from Metro Manila and from all
over the Philippines; c) that it is published once a week or four times a
month; and d) that he had been connected with the said paper since 1958,
an indication that the said newspaper had been in existence even before
that year.9
Another contention posited by petitioner is that the New Record is
published and edited in Quezon City and not in Makati where the foreclosed
property is situated, and that, when New Record's publisher enumerated
the places where said newspaper is being circulated, Makati was not
mentioned.
This contention of petitioner is untenable. In 1984, when the publisher's
affidavit relied upon by petitioner was executed, Makati, Mandaluyong, San
Juan, Paraaque et. al., were still part of the province of Rizal. Apparently,
this is the reason why in the New Record's affidavit of publication executed
by its publisher, the enumeration of the places where it was being
circulated, only the cities of Manila, Quezon, Caloocan, Pasay, Tagaytay et.
al., were named. Furthermore, as aptly ratiocinated by the Court of
Appeals:
The application given by the trial court to the provisions of P.D.
No. 1079 is, to our mind, too narrow and restricted and could not
have been the intention of the said law. Were the interpretation
of the trial court (sic) to be followed, even the leading dailies in
the country like the "Manila Bulletin," the "Philippine Daily
Inquirer," or "The Philippine Star" which all enjoy a wide
circulation throughout the country, cannot publish legal notices
that would be honored outside the place of their publication. But
this is not the interpretation given by the courts. For what is
important is that a paper should be in general circulation in the
PUP COL 2015
place where the properties to be foreclosed are located in order
that publication may serve the purpose for which it was
intended.10
Petitioner also claims that the New Record is not a daily newspaper because
it is published only once a week.
A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that
the said laws do not require that the newspaper which publishes judicial
notices should be a daily newspaper. Under P.D. 1079, for a newspaper to
qualify, it is enough that it be a "newspaper or periodical which is
authorized by law to publish and which is regularly published for at least
one (1) year before the date of publication" which requirement was
satisfied by New Record. Nor is there a requirement, as stated in the said
law, that the newspaper should have the largest circulation in the place of
publication.
Petitioner claims that, when its representative went to a newspaper stand
to look for a copy of the new Record, he could not find any. This allegation
can not be made a basis to conclude that the newspaper "New Record" is
not of general circulation. By its own admission, petitioner's representative
was looking for a newspaper named "Daily Record." Naturally, he could not
find a newspaper by that name as the newspaper's name is "New Record"
and not "Daily Record." Although it is the Daily Record Inc. which publishes
the New Record, it does not mean that the name of the newspaper is Daily
Record.
Petitioner contends that, since it was the Executive Judge who caused the
publication of the notice of the sale and not the Sheriff, the extrajudicial
foreclosure of the mortgage should be deemed annulled.
Petitioner's contention in this regard is bereft of merit, because Sec. 2 of
P.D. No. 1079 clearly provides that:
The executive judge of the court of first instance shall designate
a regular working day and a definite time each week during which
the said judicial notices or advertisements shall be distributed
personally by him 11 for publication to qualified newspapers or
periodicals . . . , which distribution shall be done by raffle.
The said provision of the law is clear as to who should personally distribute
the judicial notices or advertisements to qualified newspapers for
40 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
publication. There was substantial compliance with the requirements when
it was the Executive Judge of the Regional Trial Court of Makati who caused
the publication of the said notice by the newspaper selected by means of
raffle.
With regard to the second assigned error wherein petitioner claims that it
did not personally receive the notices of extrajudicial foreclosure and sale
supposedly sent to it by Metrobank, we find the same unmeritorious.
Settled is the rule that personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary. Section 3 of Act No. 3135
governing extrajudicial foreclosure of real estate mortgages, as amended
by Act No. 4118, requires only the posting of the notice of sale in three
public places and the publication of that notice in a newspaper of general
circulation. It is pristine clear from the above provision that the lack of
personal notice to the mortgagor, herein petitioner, is not a ground to set
aside the foreclosure sale.12
Petitioner's expostulation that it did not receive the mailed notice to it of
the sale of the mortgaged property should be brushed aside. The fact that
respondent was able to receive the registry return card from the mail in
regular course shows that the postal item represented by the return card
had been received by the addressee. Otherwise, as correctly contended by
respondent, the mailed item should have been stamped "Returned to
Sender," still sealed with all the postal markings, and the return card still
attached to it.
As to the contention that the signature appearing on the registry return
card receipt appears to be only a dot and that the photostat copy does not
contain a signature at all we find, after a close scrutiny of the registry return
card, that there are strokes before and after the dot. These strokes appear
to be a signature which signifies: a) that the registry claim card was
received at the given address; b) that the addressee had authorized a
person to present the claim card at the post office and receive the
registered mail matter; and c) that the authorized person signed the return
card to acknowledge his receipt of the mail matter. Even the trial court in
its decision ruled that:
. . . the Court finds no cogent reason to overcome the presumption
that Sheriff Pablo Sy performed his task regularly and in
PUP COL 2015
accordance with the rules. A closer look at the assailed xerox copy
of the registry receipt and the original form which said xerox was
admittedly copied would indeed show that the xerox is not a
faithful reproduction of the original since it does not bear the
complete signature of the addressee as appearing on the original.
It does not, however, follow that the xerox is a forgery. The same
bears slight traces of the signature appearing on the original but,
there is no indication that the one was altered to conform to the
other. Rather, there must have been only a misprint of the xerox
but not amounting to any attempt to falsify the same.13
Petitioner also claims that it had transferred to a different location but the
notice was sent to its old address. Petitioner failed to notify respondent of
its supposed change of address. Needless to say, it can be surmised that
respondent had sent the notice to petitioner's official address.
Anent its third assigned error, petitioner assails the posting of the notices
of sale by the Sheriff in the Office of the Sheriff, Office of the Assessor and
the Register of Deeds as these are not the conspicuous public places
required by law. Furthermore, it also questions the non-posting of the
notice of sale on the property itself which was to be sold.
Apparently, this assigned error of petitioner is tantamount to a last ditch
effort to extricate itself from the quagmire it is in. Act 3135 does not require
posting of the notice of sale on the mortgaged property. Section 3 of the
said law merely requires that the notice of the sale be posted for not less
than twenty days in at least three public places of the municipality or city
where the property is situated. The aforementioned places, to wit: the
Sheriff's Office, the Assessor's Office and the Register of Deeds are
certainly the public places contemplated by law, as these are places where
people interested in purchasing real estate congregate.
With regard to the fourth assigned error of petitioner, we do not subscribe
to the latter's view that the decision of the Court of Appeals was mainly
based on the presumption of the regularity of the performance of official
function of the officers involved. A perusal of the records indubitably shows
that the requirement of Act No. 3135 on the extrajudicial foreclosure of real
estate mortgage had been duly complied with by Senior Deputy Sheriff Sy.
WHEREFORE, the petition is DENIED and the decision rendered in CA-G.R
CV No. 38340 is hereby AFFIRMED. SO ORDERED.
41 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 100776 October 28, 1993
ALBINO S. CO, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
NARVASA, C.J.:
In connection with an agreement to salvage and refloat asunken vessel and in
payment of his share of the expenses of the salvage operations therein stipulated
petitioner Albino Co delivered to the salvaging firm on September 1, 1983 a check
drawn against the Associated Citizens' Bank, postdated November 30, 1983 in the
sum of P361,528.00.1 The check was deposited on January 3, 1984. It was
dishonored two days later, the tersely-stated reason given by the bank being:
"CLOSED ACCOUNT."
A criminal complaint for violation of Batas Pambansa Bilang 222 was filed by the
salvage company against Albino Co with the Regional Trial Court of Pasay City. The
case eventuated in Co's conviction of the crime charged, and his being sentenced to
suffer a term of imprisonment of sixty (60) days and to indemnify the salvage
company in the sum of P361,528.00.
Co appealed to the Court of Appeals. There he sought exoneration upon the theory
that it was reversible error for the Regional Trial Court to have relied, as basis for
its verdict of conviction, on the ruling rendered on September 21, 1987 by this Court
in Que v. People, 154 SCRA 160 (1987)3 i.e., that a check issued merely to
guarantee the performance of an obligation is nevertheless covered by B.P. Blg. 22.
This was because at the time of the issuance of the check on September 1, 1983,
some four (4) years prior to the promulgation of the judgment in Que v. Peopleon
September 21, 1987, the delivery of a "rubber" or "bouncing" check as guarantee
for an obligation was not considered a punishable offense, an official pronouncement
made in a Circular of the Ministry of Justice. That Circular (No. 4), dated December
15, 1981, pertinently provided as follows:
2.3.4. Where issuance of bouncing check is neither estafa nor
violation of B.P. Blg. 22.
PUP COL 2015
Where the check is issued as part of an arrangement to guarantee
or secure the payment of an obligation, whether pre-existing or
not, the drawer is not criminally liable for either estafa or violation
of B.P. Blg. 22 (Res. No. 438, s. 1981, Virginia Montano vs.
Josefino Galvez, June 19, 1981; Res. No. 707, s. 1989; Alice
Quizon vs. Lydia Calingo, October 23, 1981, Res. No. 769, s. 1981,
Alfredo Guido vs. Miguel A. Mateo, et. al., November 17, 1981;
Res. No. 589, s. 1981, Zenaida Lazaro vs. Maria Aquino, August
7, 1981).
This administrative circular was subsequently reversed by another issued on August
8, 1984 (Ministry Circular No. 12) almost one (1) year after Albino Co had
delivered the "bouncing" check to the complainant on September 1, 1983. Said
Circular No. 12, after observing inter alia that Circular No. 4 of December 15, 1981
appeared to have been based on "a misapplication of the deliberation in the
Batasang Pambansa, . . . (or) the explanatory note on the original bill, i.e. that the
intention was not to penalize the issuance of a check to secure or guarantee the
payment of an obligation," as follows:4
Henceforth, conforming with the rule that an administrative
agency having interpreting authority may reverse its
administration interpretation of a statute, but that its review
interpretation applies only prospectively (Waterbury Savings Bank
vs. Danaher, 128 Conn., 476; 20 a2d 455 (1941), in all cases
involving violation of Batas Pambansa Blg. 22 where the check in
question is issued after this date, the claim that the check is issued
as a guarantee or part of an arrangement to secure an obligation
collection will no longer be considered a valid defense.
Co's theory was rejected by the Court of Appeals which affirmed his conviction.
Citing Senarillos v. Hermosisima, 101 Phil. 561, the Appellate Court opined that
the Que doctrine did not amount to the passage of new law but was merely a
construction or interpretation of a pre-existing one, i.e., BP 22, enacted on April 3,
1979.
From this adverse judgment of the Court of Appeals, Albino Co appealed to this
Court on certiorari under Rule 45 of the Rules of Court. By Resolution dated
September 9, 1991, the Court dismissed his appeal. Co moved for reconsideration
under date of October 2, 1991. The Court required comment thereon by the Office
of the Solicitor General. The latter complied and, in its comment dated December
42 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
13, 1991, extensively argued against the merits of Albino Co's theory on appeal,
which was substantially that proffered by him in the Court of Appeals. To this
comment, Albino Co filed a reply dated February 14, 1992. After deliberating on the
parties' arguments and contentions, the Court resolved, in the interests of justice,
to reinstate Albino Co's appeal and adjudicate the same on its merits.
Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system of the
Philippines," according to Article 8 of the Civil Code. "Laws shall
have no retroactive effect, unless the contrary is provided,"
declares Article 4 of the same Code, a declaration that is echoed
by Article 22 of the Revised Penal Code: "Penal laws shall have, a
retroactive effect insofar as they favor the person guilty of a
felony, who is not a habitual criminal . . .5
The principle of prospectivity of statutes, original or amendatory, has been applied
in many cases. These include: Buyco v. PNB, 961 2 SCRA 682 (June 30, 1961),
holding that Republic Act No. 1576 which divested the Philippine National Bank of
authority to accept back pay certificates in payment of loans, does not apply to an
offer of payment made before effectivity of the act; Largado v. Masaganda, et al., 5
SCRA 522 (June 30, 1962), ruling that RA 2613, s amended by RA 3090 on June,
1961, granting to inferior courts jurisdiction over guardianship cases, could not be
given retroactive effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64
SCRA 18, to the effect that Sections 9 and 10 of Executive Order No. 90, amending
Section 4 of PD 1752, could have no retroactive application; People v. Que Po Lay,
94 Phil. 640, holding that a person cannot be convicted of violating Circular No. 20
of the Central, when the alleged violation occurred before publication of the Circular
in the Official Gazette; Baltazar v. C.A., 104 SCRA 619, denying retroactive
application to P.D. No. 27 decreeing the emancipation of tenants from the bondage
of the soil, and P.D. No. 316 prohibiting ejectment of tenants from rice and corn
farmholdings, pending the promulgation of rules and regulations implementing P.D.
No. 27; Nilo v. Court of Appeals, 128 SCRA 519, adjudging that RA 6389
whichremoved "personal cultivation" as a ground for the ejectment of a tenant
cannot be given retroactive effect in the absence of a statutory statement for
retroactivity; Tac-An v. CA, 129 SCRA 319, ruling that the repeal of the old
Administrative Code by RA 4252 could not be accorded retroactive effect; Ballardo
v. Borromeo, 161 SCRA 500, holding that RA 6389 should have only prospective
application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA, 205
SCRA 419).
PUP COL 2015
The prospectivity principle has also been made to apply to administrative rulings and
circulars, to wit: ABS-CBN Broadcasting Corporation v. CTA, Oct. 12, 1981, 108
SCRA 142, holding that a circular or ruling of the Commissioner of Internal Revenue
may not be given retroactive effect adversely to a taxpayer: Sanchez v.COMELEC,
193 SCRA 317, ruling that Resolution No. 90-0590 of the Commission on Elections,
which directed the holding of recall proceedings, had no retroactive
application; Romualdez v. CSC, 197 SCRA 168, where it was ruled that CSC
Memorandum Circular No. 29, s. 1989 cannot be given retrospective effect so as to
entitle to permanent appointment an employee whose temporary appointment had
expired before the Circular was issued.
The principle of prospectivity has also been applied to judicial decisions which,
"although in themselves not laws, are nevertheless evidence of what the laws mean,
. . . (this being) the reason whyunder Article 8 of the New Civil Code, 'Judicial
decisions applying or interpreting the laws or the Constitution shall form a part of
the legal system . . .'"
So did this Court hold, for example, in Peo. v. Jabinal, 55 SCRA 607, 611:
It will be noted that when appellant was appointed Secret Agent
by the Provincial Government in 1962, and Confidential Agent by
the Provincial commander in 1964, the prevailing doctrine on the
matter was that laid down by Us in People v. Macarandang (1959)
and People v. Lucero (1958).6 Our decision in People
v. Mapa, reversing the aforesaid doctrine, came only in 1967.
7
The sole question in this appeal is: should appellant be acquitted
on the basis of Our rulings in Macarandang and Lucero, or should
his conviction stand in view of the complete reverse of the
Macarandang and Lucero doctrine in Mapa? . . .
Decisions of this Court, although in themselves not laws, are
nevertheless evidence of what the laws mean, and this is the
reason why under Article 8 of the New Civil Code, "Judicial
decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system . . ."The interpretation upon a law
by this Court constitutes, in a way, a part of the law as of the date
that law was originally passed, since this Court's construction
merely establishes the contemporaneous legislative intent that the
law thus construed intends to effectuate. The settled rule
supported by numerous authorities is a restatement of the legal
43 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
maxim "legis interpretation legis vim obtinet" the interpretation
placed upon the written law by a competent court has the force
of law. The doctrine laid down in Lucero and Macarandang was
part of the jurisprudence, hence, of the law, of the land, at the
time appellant was found in possession of the firearm in question
and where he was arraigned by the trial court. It is true that the
doctrine was overruled in the Mapa case in 1967, but when a
doctrine of this Court is overruled and a different view is adopted,
the new doctrine should be applied prospectively, and should not
apply to parties who had relied on, the old doctrine and acted on
the faith thereof. This is especially true in the construction and
application of criminal laws, where it is necessary that the
punishment of an act be reasonably foreseen for the guidance of
society.
So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v. Court of
Appeals, et al. (G.R. No. 97973) and Development Bank of the Philippines v. Court
of Appeals, et al (G.R. No 97998), Jan. 27, 1992, 205 SCRA 515, 527-528:8
We sustain the petitioners' position, It is undisputed that the
subject lot was mortgaged to DBP on February 24, 1970. It was
acquired by DBP as the highest bidder at a foreclosure sale on
June 18, 1977, and then sold to the petitioners on September 29,
1979.
At that time, the prevailing jurisprudence interpreting section 119
of R.A. 141 as amended was that enunciated
in Monge and Tupas cited above. The petitioners Benzonan and
respondent Pe and the DBP are bound by these decisions for
pursuant to Article 8 of the Civil Code "judicial decisions applying
or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines." But while our decisions form part
of the law of the land, they are also subject to Article 4 of the Civil
Code which provides that "laws shall have no retroactive effect
unless the contrary is provided." This is expressed in the familiar
legal maxim lex prospicit, non respicit, the law looks forward not
backward. The rationale against retroactivity is easy to perceive.
The retroactive application of a law usually divests rights that have
already become vested or impairs the obligations of contract and
PUP COL 2015
hence, is unconstitutional (Francisco vs. Certeza, 3 SCRA 565
[1061]).
The same consideration underlies our rulings giving only
prospective effect to decisions enunciating new doctrines. Thus,
we emphasized in People v. Jabinal, 55 SCRA 607 [1974]" . . .
when a doctrine of this Court is overruled and a different view is
adopted, the new doctrine should be applied prospectively and
should not apply to parties who had relied on the old doctrine and
acted on the faith thereof.
A compelling rationalization of the prospectivity principle of judicial decisions is well
set forth in the oft-cited case of Chicot County Drainage Dist. v. Baxter States Bank,
308 US 371, 374 [1940]. The Chicot doctrine advocates the imperative necessity to
take account of the actual existence of a statute prior to its nullification, as an
operative fact negating acceptance of "a principle of absolute retroactive invalidity.
Thus, in this Court's decision in Taada v. Tuvera,9 promulgated on April 24, 1985
which declared "that presidential issuances of general application, which have not
been published,shall have no force and effect," and as regards which declaration
some members of the Court appeared "quite apprehensive about the possible
unsettling effect . . . (the) decision might have on acts done in reliance on the validity
of these presidential decrees . . ." the Court said:
. . . . The answer is all too familiar. In similar situation is in the
past this Court, had taken the pragmatic and realistic course set
forth in Chicot County Drainage District vs. Baxter Bank (308 U.S.
371, 374) to wit:
The courts below have proceeded on the theory that the Act of
Congress, having found to be unconstitutional, was not a law; that
it was inoperative, conferring no rights and imposing no duties,
and hence affording no basis for the challenged decree. Norton
vs. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v.
Hackett, 228 U. S. 559, 566. It is quite clear, however, that such
broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to invalidity
44 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
may have to be considered in various aspects with respect to
particular conduct, private and official. Questions of rights claimed
to have become vested, of status, of prior determinations deemed
to have finality and acted upon accordingly, of public policy in the
light of the nature both of the statute and of its previous
application, demand examination. These questions are among the
most difficult of those who have engaged the attention of courts,
state and federal, and it is manifest from numerous decisions that
an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified.
Much earlier, in De Agbayani v. PNB, 38 SCRA 429 concerning the effects of the
invalidation of "Republic Act No. 342, the moratorium legislation, which continued
Executive Order No. 32, issued by the then President Osmea, suspending the
enforcement of payment of all debts and other monetary obligations payable by war
sufferers," and which had been "explicitly held in Rutter v. Esteban (93 Phil. 68
[1953] 10 . . . (to be) in 1953 'unreasonable and oppressive, and should not be
prolonged a minute longer . . ." the Court made substantially the same
observations, to wit:11
. . . . The decision now on appeal reflects the orthodox view that
an unconstitutional act, for that matter an executive order or a
municipal ordinance likewise suffering from that infirmity, cannot
be the source of any legal rights or duties. Nor can it justify any
official act taken under it. Its repugnancy to the fundamental law
once judicially declared results in its being to all intents and
purposes amere scrap of paper. . . . It is understandable why it
should be so, the Constitution being supreme and paramount. Any
legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of
simplicity. lt may not however be sufficiently realistic. It does not
admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force
and had to be compiled with. This is so as until after the judiciary,
in an appropriate case, declares its invalidity,, it is entitled to
obedience and respect. Parties may have acted under it and may
have changed theirpositions, what could be more fitting than that
in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a
PUP COL 2015
doctrine that prior to its being nullified, its existence is a fact must
be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the governmental organ which
has the final say on whether or not a legislative or executive
measure is valid, a, period of time may have elapsed before it can
exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality
of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: 'The
actual existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in
various aspects, with respect to particular relations, individual
and corporate, and particular conduct, private and official (Chicot
County Drainage Dist. v. Baxter States Bank, 308 US 371, 374
[1940]). This language has been quoted with approval in a
resolution in Araneta v. Hill (93 Phil. 1002 [1953]) and the decision
in Manila Motor Co. Inc. v. Flores (99 Phil. 738 [1956]). An even
more recent instance is the opinion of Justice Zaldivar speaking
for the Court in Fernandez v. Cuerva and Co. (L-21114, Nov. 28,
1967, 21 SCRA 1095).
Again, treating of the effect that should be given to its decision in Olaguer v. Military
Commission No 34, 12 declaring invalid criminal proceedings conducted during the
martial law regime against civilians, which had resulted in the conviction and
incarceration of numerous persons this Court, in Tan vs. Barrios, 190 SCRA 686,
at p. 700, ruled as follows:
In the interest of justice and consistently, we hold that Olaguer
should, in principle, be applied prospectively only to future cases
and cases still ongoing or not yet final when that decision was
promulgated. Hence, there should be no retroactive nullification
of final judgments, whether of conviction or acquittal, rendered
by military courts against civilians before the promulgation of the
Olaguer decision. Such final sentences should not be disturbed by
the State. Only in particular cases where the convicted person or
45 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

the State shows that there was serious denial of constitutional
rights of the accused, should the nullity of the sentence be
declared and a retrial be ordered based on the violation of the
constitutional rights of the accused and not on the Olaguer
doctrine. If a retrial is no longer possible, the accused should be
released since judgment against him is null on account of the
violation of his constitutional rights and denial of due process.
xxx xxx xxx
The trial of thousands of civilians for common crimes before the
military tribunals and commissions during the ten-year period of
martial rule (1971-1981) which were created under general orders
issued by President Marcos in the exercise of his legislative powers
is an operative fact that may not just be ignored. The belated
declaration in 1987 of the unconstitutionality and invalidity of
those proceedings did not erase the reality of their consequences
which occurred long before our decision in Olaguer was
promulgated and which now prevent us from carrying Olaguer to
the limit of its logic. Thus did this Court rule in Municipality
of Malabang v. Benito, 27 SCRA 533, where the question arose as
to whether the nullity of creation of a municipality by executive
order wiped out all the acts of the local government abolished. 13
opinion of a private lawyer but upon an official pronouncement of no less than the
attorney of the Government, the Secretary of Justice, whose opinions, though not
law, are entitled to great weight and on which reliance may be placed by private
individuals is reflective of the correct interpretation of a constitutional or statutory
provision; this, particularly in the case of penal statutes, by the very nature and
scope of the authority that resides in as regards prosecutions for their
violation.17 Senarillos vs.Hermosisima, supra, relied upon by the respondent Court
of Appeals, is crucially different in that in said case, as in U.S. v. Go Chico, supra,
no administrative interpretation antedated the contrary construction placed by the
Court on the law invoked.
This is after all a criminal action all doubts in which, pursuant to familiar,
fundamental doctrine, must be resolved in favor of the accused. Everything
considered, the Court sees no compelling reason why the doctrine of mala
prohibita should override the principle of prospectivity, and its clear implications as
herein above set out and discussed, negating criminal liability.
WHEREFORE, the assailed decisions of the Court of Appeals and of the Regional
Trial Court are reversed and set aside, and the criminal prosecution against the
accused-petitioner is DISMISSED, with costs de oficio.
SO ORDERED.

It would seem then, that the weight of authority is decidedly in favor of the
proposition that the Court's decision of September 21, 1987 in Que v. People, 154
SCRA 160 (1987) 14 that a check issued merely to guarantee the performance of an
obligation is nevertheless covered by B.P. Blg. 22 should not be given
retrospective effect to the prejudice of the petitioner and other persons situated,
who relied on the official opinion of the Minister of Justice that such a check did not
fall within the scope of B.P. Blg. 22.

Inveighing against this proposition, the Solicitor General invokes U.S. v. Go Chico,
14 Phil. 128, applying the familiar doctrine that in crimes mala prohibita, the intent
or motive of the offender is inconsequential, the only relevant inquiry being, "has
the law been violated?" The facts in Go Chico are substantially different from those
in the case at bar. In the former, there was no official issuance by the Secretary of
Justice or other government officer construing the special law violated; 15 and it was
there observed, among others, that "the defense . . . (of) an honest misconstruction
of the law under legal advice" 16 could not be appreciated as a valid defense. In the
present case on the other hand, the defense is that reliance was placed, not on the

46 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 192074 June 10, 2014
LIGHT RAIL TRANSIT AUTHORITY, represented by its Administrator
MELQUIADES A. ROBLES, Petitioner,
vs.
AURORA A. SALVAA, Respondent.
DECISION
LEONEN, J.:
An administrative agency has standing to appeal the Civil Service Commission's
repeal or modification of its original decision. In such instances, it is included in the
concept of a "party adversely affected" by a decision of the Civil Service Commission
granted the statutory right to appeal:
We are asked in this petition for review1 filed by the Light Rail Transit Authority
(LRTA), a government-owned and -controlled corporation, to modify the Civil Service
Commissions finding that respondent was guilty only of simple dishonesty.
This case developed as follows:
On May 12, 2006, then Administrator of the Light Rail Transit Authority, Melquiades
Robles, issued Office Order No. 119, series of 2006.2 The order revoked Atty. Aurora
A. Salvaas designation as Officer-in-Charge (OIC) of the LRTA Administrative
Department. It "direct[ed] her instead to handle special projects and perform such
other duties and functions as may be assigned to her"3 by the Administrator.
Atty. Salvaa was directed to comply with this office order through a memorandum
issued on May 22, 2006 by Atty. Elmo Stephen P. Triste, the newly designated OIC
of the administrative department. Instead of complying, Salvaa questioned the
order with the Office of the President.4
In the interim, Salvaa applied for sick leave of absence on May 12, 2006 and from
May 15 to May 31, 2006.5 In support of her application, she submitted a medical
certificate6 issued by Dr. Grace Marie Blanco of the Veterans Memorial Medical
Center (VMMC).
PUP COL 2015
LRTA discovered that Dr. Blanco did not issue this medical certificate. Dr. Blanco
also denied having seen or treated Salvaa on May 15, 2006, the date stated on her
medical certificate.7 On June 23, 2006, Administrator Robles issued a notice of
preliminary investigation. The notice directed Salvaa to explain in writing within 72
hours from her receipt of the notice "why no disciplinary action should be taken
against [her]"8 for not complying with Office Order No. 119 and for submitting a
falsified medical certificate.9
Salvaa filed her explanation on June 30, 2006.10 She alleged that as a member of
the Bids and Awards Committee, she "refused to sign a resolution"11 favoring a
particular bidder. She alleged that Office Order No. 119 was issued by Administrator
Robles to express his "ire and vindictiveness"12 over her refusal to sign.
The LRTAs Fact-finding Committee found her explanation unsatisfactory. On July
26, 2006, it issued a formal charge against her for Dishonesty, Falsification of Official
Document, Grave Misconduct, Gross Insubordination, and Conduct Prejudicial to the
Best Interest of the Service.13
On August 5, 2006, "Salvaa tendered her irrevocable resignation."14 None of the
pleadings alleged that this irrevocable resignation was accepted, although the
resolution of the Fact-finding Committee alluded to Administrator Robles acceptance
of the resignation letter.
In the meantime, the investigation against Salvaa continued, and the prosecution
presented its witnesses.15Salvaa "submitted a manifestation dated September 6,
2006, stating that the Committee was biased and that [Administrator] Robles was
both the accuser and the hearing officer."16
On October 31, 2006, the Fact-finding Committee issued a resolution "finding
Salvaa guilty of all the charges against her and imposed [on] her the penalty of
dismissal from . . . service with all the accessory penalties."17 The LRTA Board of
Directors approved the findings of the Fact-finding Committee18
Salvaa appealed with the Civil Service Commission. "In her appeal, [she] claimed
that she was denied due process and that there [was] no substantial evidence to
support the charges against her."19
On July 18, 2007, the Civil Service Commission modified the decision and issued
Resolution No. 071364.The Civil Service Commission found that Salvaa was guilty
47 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
only of simple dishonesty. She was meted a penalty of suspension for three
months.20
LRTA moved for reconsideration21 of the resolution. This was denied in a resolution
dated May 26, 2008.22 LRTA then filed a petition for review with the Court of
Appeals.23
On November 11, 2009, the Court of Appeals24 dismissed the petition and affirmed
the Civil Service Commissions finding that Salvaa was only guilty of simple
dishonesty. The appellate court also ruled that Administrator Robles had no standing
to file a motion for reconsideration before the Civil Service Commission because that
right only belonged to respondent in an administrative case.25 LRTA moved for
reconsideration26 of this decision but was denied.27
Hence, LRTA filed this present petition.
Petitioner argues that it has the legal personality to appeal the decision of the Civil
Service Commission before the Court of Appeals.28 It cites Philippine National Bank
v. Garcia29 as basis for its argument that it can be considered a "person adversely
affected" under the pertinent rules and regulations on the appeal of administrative
cases.30 It also argues that respondents falsification of the medical certificate
accompanying her application for sick leave was not merely simple but serious
dishonesty.31
Respondent agrees with the ruling of the Court of Appeals that petitioner had no
legal personality to file the appeal since it was not the "person adversely affected"
by the decision. She counters that Administrator Robles had no authority to file the
appeal since he was unable to present a resolution from the Board of Directors
authorizing him to do so.32 She also agrees with the Civil Service Commissions
finding that she was merely guilty of simple dishonesty.33
In its reply,34 petitioner points out that it presented a secretarys certificate35 dated
July 17, 2008 and which it attached to the petitions before the Civil Service
Commission, Court of Appeals, and this court. It argues that the certificate
authorizes the LRTA and its Administrator to file the necessary motion for
reconsideration or appeal regarding this case, and this authorization has yet to be
revoked.36
Both parties filed their respective memoranda before this court on May 23,
201237 and December 6, 2012.38
PUP COL 2015
The legal issues that will determine the results of this case are:
1. Whether the LRTA, as represented by its Administrator, has the standing
to appeal the modification by the Civil Service Commission of its decision
2. Whether Salvaa was correctly found guilty of simple dishonesty only
We grant the petition.
The parties may appeal in administrative cases involving members of the civil service
It is settled that "[t]he right to appeal is not a natural right [or] a part of due process;
it is merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of the law."39 If it is not granted by the Constitution,
it can only be availed of when a statute provides for it.40 When made available by
law or regulation, however, a person cannot be deprived of that right to appeal.
Otherwise, there will be a violation of the constitutional requirement of due process
of law.
Article IX (B), Section 3 of the Constitution mandates that the Civil Service
Commission shall be "the central personnel agency of the Government."41 In line
with the constitutionally enshrined policy that a public office is a public trust, the
Commission was tasked with the duty "to set standards and to enforce the laws and
rules governing the selection, utilization, training, and discipline of civil servants."42
Civil servants enjoy security of tenure, and "[n]o officer or employee in the Civil
Service shall be suspended or dismissed except for cause as provided by law and
after due process."43 Under Section 12, Chapter 3, Book V of the Administrative
Code, it is the Civil Service Commission that has the power to "[h]ear and decide
administrative cases instituted by or brought before it directly or on appeal."
The grant of the right to appeal in administrative cases is not new. In Republic Act
No. 2260 or the Civil Service Law of 1959, appeals "by the respondent" 44 were
allowed on "[t]he decision of the Commissioner of Civil Service rendered in an
administrative case involving discipline of subordinate officers and employees."45
Presidential Decree No. 807, while retaining the right to appeal in administrative
cases, amended the phrasing of the party allowed to appeal. Section 37, paragraph
(a), and Section 39, paragraph (a),of Presidential Decree No. 807 provide:
Sec. 37. Disciplinary Jurisdiction. - (a) The Commission shall decide upon appeal all
administrative cases involving the imposition of a penalty of suspension for more
than thirty days, or fine in an amount exceeding thirty days' salary, demotion in rank
or salary or transfer, removal or dismissal from office.
48 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Sec. 39. Appeals. - (a) Appeals, where allowable, shall be made by the party
adversely affected by the decision within fifteen days from receipt of the decision
unless a petition shall be decided within fifteen days. (Emphasis supplied)
Additionally, Section 47, paragraph (1), and Section 49, paragraph (1), of the
Administrative Code provide:
SECTION 47. Disciplinary Jurisdiction.(1) The Commission shall decide upon
appeal all administrative disciplinary cases involving the imposition of a penalty of
suspension for more than thirty days, or fine in an amount exceeding thirty days
salary, demotion in rank or salary or transfer, removal or dismissal from office.
SECTION 49. Appeals.(1) Appeals, where allowable, shall be made by the party
adversely affected by the decision within fifteen days from receipt of the decision
unless a petition for reconsideration is seasonably filed, which petition shall be
decided within fifteen days.(Emphasis supplied)
The phrase, "person adversely affected," was not defined in either Presidential
Decree No. 807 or the Administrative Code. This prompted a series of
cases46 providing the interpretation of this phrase.
The first of these cases, Paredes v. Civil Service Commission,47 declared:
Based on [Sections 37 (a) and 39 (a) of Presidential Decree No. 807], appeal to the
Civil Service Commission in an administrative case is extended to the party adversely
affected by the decision, that is, the person or the respondent employee who has
been meted out the penalty of suspension for more than thirty days; or fine in an
amount exceeding thirty days salary demotion in rank or salary or transfer, removal
or dismissal from office. The decision of the disciplining authority is even final and
not appealable to the Civil Service Commission in cases where the penalty imposed
is suspension for not more than thirty days or fine in an amount not exceeding thirty
days salary.48(Emphasis supplied)
This ruling was repeated in Mendez v. Civil Service Commission 49 where this court
stated that:
A cursory reading of P.D. 807, otherwise known as "The Philippine Civil Service Law"
shows that said law does not contemplate a review of decisions exonerating officers
or employees from administrative charges.
....
PUP COL 2015
By inference or implication, the remedy of appeal may be availed of only in a case
where the respondent is found guilty of the charges filed against him. But when the
respondent is exonerated of said charges, as in this case, there is no occasion for
appeal.50 (Emphasis supplied)
The same ratio would be reiterated and become the prevailing doctrine on the
matter in Magpale, Jr. v. Civil Service Commission,51 Navarro v. Civil Service
Commission and Export Processing Zone,52 University of the Philippines v. Civil
Service Commission,53 and Del Castillo v. Civil Service Commission.54
In these cases, this court explained that the right to appeal being merely a statutory
privilege can only be availed of by the party specified in the law. Since the law
presumes that appeals will only be made in decisions prescribing a penalty, this
court concluded that the only parties that will be adversely affected are the
respondents that are charged with administrative offenses. Since the right to appeal
is a remedial right that may only be granted by statute, a government party cannot
by implication assert that right as incidental to its power, since the right to appeal
does not form part of due process.55
In effect, this court equated exonerations in administrative cases to acquittals in
criminal cases wherein the State or the complainant would have no right to
appeal.56 When the Civil Service Commission enacted the Uniform Rules on
Administrative Cases in the Civil Service, or the URACCS, on September 27, 1999, it
applied this courts definition. Thus, Section 2, paragraph (l),Rule I, and Section
38,Rule III of the URACCS defined "party adversely affected" as follows:
Section 2. Coverage and Definition of Terms.
....
(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision
in a disciplinary case has been rendered.
For some time, government parties were, thus, barred from appealing exonerations
of civil servants they had previously sanctioned. It was not until the promulgation
by this court of Civil Service Commission v. Dacoycoy57 on April 29, 1999 that the
issue would be revisited.
Civil Service Commission v. Dacoycoyand Philippine National Bank v. Garcia
In Civil Service Commission v. Dacoycoy,58 an administrative complaint for habitual
drunkenness, misconduct, and nepotism was filed against the Vocational School
Administrator of Balicuatro College of Arts and Trade in Allen, Northern Samar. The
49 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Civil Service Commission found Dacoycoy guilty, but the Court of Appeals overturned
this finding and exonerated Dacoycoy of all charges. The Civil Service Commission
then appealed the ruling of the appellate court. This court, in addressing the issue
of the Commissions standing, stated that:
Subsequently, the Court of Appeals reversed the decision of the Civil Service
Commission and held respondent not guilty of nepotism. Who now may appeal the
decision of the Court of Appeals to the Supreme Court? Certainly not the respondent,
who was declared not guilty of the charge. Nor the complainant George P. Suan,
who was merely a witness for the government. Consequently, the Civil Service
Commission has become the party adversely affected by such ruling, which seriously
prejudices the civil service system. Hence, as an aggrieved party, it may appeal the
decision of the Court of Appeals to the Supreme Court. By this ruling, we now
expressly abandon and overrule extant jurisprudence that "the phrase party
adversely affected by the decision refers to the government employee against whom
the administrative case is filed for the purpose of disciplinary action which may take
the form of suspension, demotion in rank or salary, transfer, removal or dismissal
from office" and not included are "cases where the penalty imposed is suspension
for not more than thirty (30) days or fine in an amount not exceeding thirty days
salary" or "when the respondent is exonerated of the charges, there is no occasion
for appeal." In other words, we overrule prior decisions holding that the Civil Service
Law "does not contemplate a review of decisions exonerating officers or employees
from administrative charges" enunciated in Paredes v. Civil Service Commission;
Mendez v. Civil Service Commission; Magpale v. Civil Service Commission; Navarro
v. Civil Service Commission and Export Processing Zone Authority and more recently
Del Castillo v. Civil Service Commission.59 (Emphasis supplied; citations omitted)
In his concurring opinion, then Chief Justice Puno summed up the rationale for
allowing government parties to appeal, thus:
In truth, the doctrine barring appeal is not categorically sanctioned by the Civil
Service Law. For what the law declares as "final" are decisions of heads of agencies
involving suspension for not more than thirty (30) days or fine in an amount not
exceeding thirty (30) days salary.
But there is a clear policy reason for declaring these decisions final. These decisions
involve minor offenses. They are numerous for they are the usual offenses
committed by government officials and employees. To allow their multiple level
appeal will doubtless overburden the quasi-judicial machinery of our administrative
system and defeat the expectation of fast and efficient action from these
administrative agencies. Nepotism, however, is not a petty offense. Its deleterious
PUP COL 2015
effect on government cannot be over-emphasized. And it is a stubborn evil. The
objective should be to eliminate nepotic acts, hence, erroneous decisions allowing
nepotism cannot be given immunity from review, especially judicial review. It is thus
non sequitur to contend that since some decisions exonerating public officials from
minor offenses cannot be appealed, ergo, even a decision acquitting a government
official from a major offense like nepotism cannot also be appealed. 60 (Emphasis
supplied)
The decision in Dacoycoy would be reiterated in 2002 when this court promulgated
Philippine National Bank v. Garcia.61 Philippine National Bank categorically allowed
the disciplining authority to appeal the decision exonerating the disciplined
employee.
In that case, the bank charged Ricardo V. Garcia, Jr., one of its check processors
and cash representatives, with gross neglect of duty when he lost 7 million in
connection with his duties. Both the Civil Service Commission and the Court of
Appeals reversed the bank and exonerated Garcia from all liability.
This court, however, upheld Philippine National Banks right to appeal the case.
Citing Dacoycoy, this court ruled:
Indeed, the battles against corruption, malfeasance and misfeasance will be
seriously undermined if we bar appeals of exoneration. After all, administrative cases
do not partake of the nature of criminal actions, in which acquittals are final and
unappealable based on the constitutional proscription of double jeopardy.
Furthermore, our new Constitution expressly expanded the range and scope of
judicial review. Thus, to prevent appeals of administrative decisions except those
initiated by employees will effectively and pervertedly erode this constitutional grant.
Finally, the Court in Dacoycoy ruled that the CSC had acted well within its rights in
appealing the CAs exoneration of the respondent public official therein, because it
has been mandated by the Constitution to preserve and safeguard the integrity of
our civil service system. In the same light, herein Petitioner PNB has the standing to
appeal to the CA the exoneration of Respondent Garcia. After all, it is the aggrieved
party which has complained of his acts of dishonesty. Besides, this Court has not
lost sight of the fact that PNB was already privatized on May 27, 1996. Should
respondent be finally exonerated indeed, it might then be incumbent upon petitioner
to take him back into its fold. It should therefore be allowed to appeal a decision
that in its view hampers its right to select honest and trustworthy employees, so
that it can protect and preserve its name as a premier banking institution in our
50 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
country.62(Emphasis supplied) Thus, the Civil Service Commission issued Resolution
No. 021600 published on December 29, 2002, which amended the URACCS, to allow
the disciplining authority to appeal the decision exonerating the employee:
Section 2. Coverage and Definition of Terms.
....
(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision
in a disciplinary case has been rendered or to the disciplining authority in an appeal
from a decision exonerating the said employee.
Subsequent decisions continued to reiterate the rulings in Dacoycoy and Philippine
National Bank.
In Constantino-David v. Pangandaman-Gania,63 this court explained the rationale of
allowing the Civil Service Commission to appeal decisions of exonerations as follows:
That the CSC may appeal from an adverse decision of the Court of Appeals reversing
or modifying its resolutions which may seriously prejudice the civil service system is
beyond doubt. In Civil Service Commission v. Dacoycoy[,] this Court held that the
CSC may become the party adversely affected by such ruling and the aggrieved
party who may appeal the decision to this Court.
The situation where the CSCs participation is beneficial and indispensable often
involves complaints for administrative offenses, such as neglect of duty, being
notoriously undesirable, inefficiency and incompetence in the performance of official
duties, and the like, where the complainant is more often than not acting merely as
a witness for the government which is the real party injured by the illicit act. In
cases of this nature, a ruling of the Court of Appeals favorable to the respondent
employee is understandably adverse to the government, and unavoidably the CSC
as representative of the government may appeal the decision to this Court to protect
the integrity of the civil service system.
The CSC may also seek a review of the decisions of the Court of Appeals that are
detrimental to its constitutional mandate as the central personnel agency of the
government tasked to establish a career service, adopt measures to promote morale,
efficiency, integrity, responsiveness, progressiveness and courtesy in the civil
service, strengthen the merit and rewards system, integrate all human resources
development programs for all levels and ranks, and institutionalize a management
climate conducive to public accountability. Nonetheless, the right of the CSC to
appeal the adverse decision does not preclude the private complainant in
appropriate cases from similarly elevating the decision for review.64
PUP COL 2015
Then in Civil Service Commission v. Gentallan,65 this court declared:
At the outset, it should be noted that the Civil Service Commission, under the
Constitution, is the central personnel agency of the government charged with the
duty of determining questions of qualifications of merit and fitness of those
appointed to the civil service. Thus, the CSC, as an institution whose primary concern
is the effectiveness of the civil service system, has the standing to appeal a decision
which adversely affects the civil service. We hold, at this juncture, that CSC has the
standing to appeal and/or to file its motion for reconsideration.66
The right to appeal by government parties was not limited to the Civil Service
Commission.
In Pastor v. City of Pasig,67 this court ruled that the City of Pasig had standing to
appeal the decision of the Civil Service Commission reinstating a city employee to
her former position, despite the city government having reassigned her to another
unit.
In Geronga v. Varela,68 this court ruled that the Mayor of Cadiz City had the right to
file a motion for reconsideration of a decision by the Civil Service Commission
exonerating a city employee on the ground that "as the appointing and disciplining
authority, [he] is a real party in interest."69
In Department of Education v. Cuanan,70 this court ruled that the Department of
Education "qualifie[d] as a party adversely affected by the judgment, who can file
an appeal of a judgment of exoneration in an administrative case."71
There are, however, cases, which sought to qualify this right to appeal.
In National Appellate Board v. Mamauag,72 an administrative complaint for grave
misconduct was filed by Quezon City Judge Adoracion G. Angeles against several
members of the Philippine National Police (PNP). The Central Police District
Command (CPDC) of Quezon City, upon investigation, dismissed the complaint.
Dissatisfied, Judge Angeles moved for a reinvestigation by then PNP Chief Recaredo
Sarmiento II.
PNP Chief Sarmiento issued a decision finding the accused police officers guilty of
the offenses charged. Some were meted the penalty of suspension while others
were dismissed from service. Upon motion for reconsideration by Judge Angeles,
51 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Chief Sarmiento modified his ruling and ordered the dismissal of the suspended
police officers.
One of the officers, Police Inspector John Mamauag, appealed the decision with the
National Appellate Board of the National Police Commission. The National Appellate
Board, however, denied the appeal. Mamauag appealed the denial with the Court of
Appeals. The Court of Appeals reversed the decision of the National Appellate Board
and ruled that it was the Philippine National Police, not Judge Angeles, which had
the right to appeal the decision of PNP Chief Sarmiento, as it was the party adversely
affected. The National Appellate Board then appealed this decision with this court.
This court, while citing Dacoycoy, declared that Judge Angeles, as complainant, had
no right to appeal the dismissal by CPDC of the complaint against Mamauag. It
qualified the right of government agencies to appeal by specifying the circumstances
by which the right may be given, thus:
However, the government party that can appeal is not the disciplining authority or
tribunal which previously heard the case and imposed the penalty of demotion or
dismissal from the service. The government party appealing must be one that is
prosecuting the administrative case against the respondent. Otherwise, an
anomalous situation will result where the disciplining authority or tribunal hearing
the case, instead of being impartial and detached, becomes an active participant in
prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after
Dacoycoy, the Court declared:
To be sure, when the resolutions of the Civil Service Commission were brought
before the Court of Appeals, the Civil Service Commission was included only as a
nominal party. As a quasi-judicial body, the Civil Service Commission can be likened
to a judge who should "detach himself from cases where his decision is appealed to
a higher court for review."
In instituting G.R. No. 126354, the Civil Service Commission dangerously departed
from its role as adjudicator and became an advocate. Its mandated function is to
"hear and decide administrative cases instituted by or brought before it directly or
on appeal, including contested appointments and to review decisions and actions of
its offices and agencies," not to litigate.73 (Emphasis supplied)
The ruling in National Appellate Boardwas applied in Montoya v. Varilla, 74 Pleyto v.
PNP-CIDG,75 and Ombudsman v. Liggayu.76
PUP COL 2015
The present rule is that a government party is a "party adversely affected" for
purposes of appeal provided that the government party that has a right to appeal
must be the office or agency prosecuting the case.
Despite the limitation on the government partys right to appeal, this court has
consistently upheld that right in Dacoycoy. In Civil Service Commission v.
Almojuela,77 we stated that:
More than ten years have passed since the Court first recognized in Dacoycoy the
CSCs standing to appeal the CAs decisions reversing or modifying its resolutions
seriously prejudicial to the civil service system. Since then, the ruling in Dacoycoy
has been subjected to clarifications and qualifications but the doctrine has remained
the same: the CSC has standing as a real party in interest and can appeal the CAs
decisions modifying or reversing the CSCs rulings, when the CA action would have
an adverse impact on the integrity of the civil service. As the governments central
personnel agency, the CSC is tasked to establish a career service and promote
morale, efficiency, integrity, responsiveness, progressiveness, and courtesy in the
civil service; it has a stake in ensuring that the proper disciplinary action is imposed
on an erring public employee, and this stake would be adversely affected by a ruling
absolving or lightening the CSC-imposed penalty. Further, a decision that declares a
public employee not guilty of the charge against him would have no other appellant
than the CSC. To be sure, it would not be appealed by the public employee who has
been absolved of the charge against him; neither would the complainant appeal the
decision, as he acted merely as a witness for the government. We thus find no
reason to disturb the settled Dacoycoy doctrine.78 (Citations omitted)
Indeed, recent decisions showed that this court has allowed appeals by government
parties. Notably, the government parties right to appeal in these cases was not
brought up as an issue by either of the parties.
In Civil Service Commission v. Yu,79 this court allowed the Civil Service Commission
to appeal the Court of Appeals decision granting the reinstatement of a government
employee whose appointment had been revoked by the Commission.
In National Power Corporation v. Civil Service Commission and Tanfelix, 80 the
National Power Corporation had previously filed an administrative complaint against
one of its employees, Rodrigo Tanfelix, resulting in his dismissal from service. When
the Civil Service Commission exonerated Tanfelix and the Court of Appeals affirmed
the exoneration, the National Power Corporation was allowed to appeal.
52 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
These cases, however, allowed the disciplining authority to appeal only from a
decision exonerating the said employee. In this case, respondent was not
exonerated; she was found guilty, but the finding was modified. This court previously
stated that:
If the administrative offense found to have been actually committed is of lesser
gravity than the offense charged, the employee cannot be considered exonerated if
the factual premise for the imposition of the lesser penalty remains the same.81
Dacoycoy, Philippine National Bank, and the URACCS failed to contemplate a
situation where the Civil Service Commission modified the penalty from dismissal to
suspension. The erring civil servant was not exonerated, and the finding of guilt still
stood. In these situations, the disciplinary authority should be allowed to appeal the
modification of the decision.
The LRTA had standing to appeal the modification by the Civil Service Commission
of its decision
The employer has the right "to select honest and trustworthy employees."82 When
the government office disciplines an employee based on causes and procedures
allowed by law, it exercises its discretion. This discretion is inherent in the
constitutional principle that "[p]ublic officers and employees must, at all times, be
accountable to the people, serve them with utmost responsibility, integrity, loyalty,
and efficiency; act with patriotism and justice, and lead modest lives." 83 This is a
principle that can be invoked by the public as well as the government office
employing the public officer.
Here, petitioner already decided to dismiss respondent for dishonesty. Dishonesty is
a serious offense that challenges the integrity of the public servant charged. To bar
a government office from appealing a decision that lowers the penalty of the
disciplined employee prevents it from ensuring its mandate that the civil service
employs only those with the utmost sense of responsibility, integrity, loyalty, and
efficiency.
Honesty and integrity are important traits required of those in public service. If all
decisions by quasi-judicial bodies modifying the penalty of dismissal were allowed
to become final and unappealable, it would, in effect, show tolerance to conduct
unbecoming of a public servant. The quality of civil service would erode, and the
citizens would end up suffering for it.
PUP COL 2015
During the pendency of this decision, or on November 18, 2011, the Revised Rules
on Administrative Cases in the Civil Service or RACCS was promulgated. The Civil
Service Commission modified the definition of a "party adversely affected" for
purposes of appeal.
Section 4. Definition of Terms.
....
k. PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision
in an administrative case has been rendered or to the disciplining authority in an
appeal from a decision reversing or modifying the original decision. (Emphasis
supplied)
Procedural laws have retroactive application. In Zulueta v. Asia Brewery:84
As a general rule, laws have no retroactive effect. But there are certain recognized
exceptions, such as when they are remedial or procedural in nature. This Court
explained this exception in the following language:
It is true that under the Civil Code of the Philippines, "(l)aws shall have no retroactive
effect, unless the contrary is provided. But there are settled exceptions to this
general rule, such as when the statute is CURATIVE or REMEDIAL in nature or when
it CREATES NEW RIGHTS.
....
On the other hand, remedial or procedural laws, i.e., those statutes relating to
remedies or modes of procedure, which do not create new or take away vested
rights, but only operate in furtherance of the remedy or confirmation of such rights,
ordinarily do not come within the legal meaning of a retrospective law, nor within
the general rule against the retrospective operation of statutes.
Thus, procedural laws may operate retroactively as to pending proceedings even
without express provision to that effect. Accordingly, rules of procedure can apply
to cases pending at the time of their enactment. In fact, statutes regulating the
procedure of the courts will be applied on actions undetermined at the time of their
effectivity. Procedural laws are retrospective in that sense and to that
extent.85 (Emphasis supplied)
Remedial rights are those rights granted by remedial or procedural laws. These are
rights that only operate to further the rules of procedure or to confirm vested rights.
As such, the retroactive application of remedial rights will not adversely affect the
53 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
vested rights of any person. Considering that the right to appeal is a right remedial
in nature, we find that Section 4, paragraph (k), Rule I of the RACCS applies in this
case. Petitioner, therefore, had the right to appeal the decision of the Civil Service
Commission that modified its original decision of dismissal.
Recent decisions implied the retroactive application of this rule. While the right of
government parties to appeal was not an issue, this court gave due course to the
appeals filed by government agencies before the promulgation of the Revised Rules
on Administrative Cases in the Civil Service.
In Civil Service Commission v. Clave,86 the Government Service and Insurance
System (GSIS) found one of its employees, Aurora M. Clave, guilty of simple neglect
of duty. The Civil Service Commission affirmed the GSISs findings. The Court of
Appeals, however, while affirming the Civil Service Commission, reduced the penalty.
Both the GSIS and the Civil Service Commission were given standing to appeal the
decision of the Court of Appeals.
In GSIS v. Chua,87 the GSIS dismissed Heidi R. Chua for grave misconduct,
dishonesty, and conduct prejudicial to the best interest of service. The Civil Service
Commission affirmed the GSIS, but the Court of Appeals, while affirming the findings
of the Commission, modified the penalty to simple misconduct. The GSIS was then
allowed to bring an appeal of the modification of the penalty with this court.
Thus, we now hold that the parties adversely affected by a decision in an
administrative case who may appeal shall include the disciplining authority whose
decision dismissing the employee was either overturned or modified by the Civil
Service Commission.
The offense committed was less serious dishonesty, not simple dishonesty
Dishonesty has been defined "as the disposition to lie, cheat, deceive, or defraud;
untrustworthiness, lack of integrity . . . ."88 Since the utmost integrity is expected
of public servants, its absence is not only frowned upon but punished severely.
Section 52, Rule IV of the URACCS provides:
Section 52. Classification of Offenses. Administrative offenses with corresponding
penalties are classified into grave, less grave or light, depending on their gravity or
depravity and effects on the government service.
A. The following are grave offenses with their corresponding penalties:
PUP COL 2015
1. Dishonesty - 1st Offense Dismissal
....
In Remolona v. Civil Service Commission,89 this court explained the rationale for the
severity of the penalty:
It cannot be denied that dishonesty is considered a grave offense punishable by
dismissal for the first offense under Section 23, Rule XIV of the Rules Implementing
Book V of Executive Order No. 292. And the rule is that dishonesty, in order to
warrant dismissal, need not be committed in the course of the performance of duty
by the person charged. The rationale for the rule is that if a government officer or
employee is dishonest or is guilty of oppression or grave misconduct, even if said
defects of character are not connected with his office, they affect his right to
continue in office. The Government cannot tolerate in its service a dishonest official,
even if he performs his duties correctly and well, because by reason of his
government position, he is given more and ample opportunity to commit acts of
dishonesty against his fellow men, even against offices and entities of the
government other than the office where he is employed; and by reason of his office,
he enjoys and possesses a certain influence and power which renders the victims of
his grave misconduct, oppression and dishonesty less disposed and prepared to
resist and to counteract his evil acts and actuations. The private life of an employee
cannot be segregated from his public life. Dishonesty inevitably reflects on the
fitness of the officer or employee to continue in office and the discipline and morale
of the service.90 (Emphasis supplied)
However, on April 4, 2006, the Civil Service Commission issued Resolution No. 06-
0538 or the Rules on the Administrative Offense of Dishonesty.
Resolution No. 06-0538 recognizes that dishonesty is a grave offense punishable by
dismissal from service.91 It, however, also recognizes that "some acts of Dishonesty
are not constitutive of an offense so grave as to warrant the imposition of the penalty
of dismissal from the service."92
Recognizing the attendant circumstances in the offense of dishonesty, the Civil
Service Commission issued parameters "in order to guide the disciplining authority
in charging the proper offense"93 and to impose the proper penalty.
The resolution classifies dishonesty in three gradations: (1) serious; (2) less serious;
and (3) simple. Serious dishonesty is punishable by dismissal.94 Less serious
dishonesty is punishable by suspension for six months and one day to one year for
the first offense and dismissal for the second offense. 95 Simple dishonesty is
54 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
punishable by suspension of one month and one day to six months for the first
offense, six months and one day to one year for the second offense, and dismissal
for the third offense.96
The medical certificate respondent submitted to support her application for sick
leave was falsified. The question remains as to whether this act could be considered
serious dishonesty, less serious dishonesty, or simple dishonesty.
According to the Civil Service Commissions finding in its resolution:
In the instant case, the prosecution was able to establish that the medical certificate
submitted by Salvaa was spurious or not genuine as the physician-signatory
therein, Dr. Blanco[,] testified that she did not examine/treat the appellant nor did
she issue a medical certificate on May 15, 2006 since she was on sick leave of
absence on that particular day. Worthy [of] mention is that the appellant never
bothered to submit any evidence, documentary or otherwise, to rebut the testimony
of Blanco.
Thus, the Commission rules and so holds that the appellant is liable for Dishonesty
but applying the aforementioned CSC Resolution No. 06-0538, her dishonest act
would be classified only as Simple Dishonesty as the same did not cause damage or
prejudice to the government and had no direct relation to or did not involve the
duties and responsibilities of the appellant. The same is true with the falsification
she committed, where the information falsified was not related to her
employment.97 (Emphasis supplied)
In Cuerdo v. Commission on Audit,98 this court previously ruled that "it is the general
policy of this Court to sustain the decisions of administrative authorities not only on
the basis of the doctrine of separation of powers but also for their presumed
knowledge ability and even expertise in the laws they are entrusted to
enforce."99 The same case also stated that:
. . . . we reaffirmed the oft-repeated rule that findings of administrative agencies
are generally accorded not only respect but also finality when the decision and order
. . . are not tainted with unfairness or arbitrariness that would amount to abuse of
discretion or lack of jurisdiction. The findings off acts must be respected, so long as
they are supported by substantial evidence even if not overwhelming or
preponderant.100
PUP COL 2015
Petitioner insists that respondent committed serious dishonesty when she submitted
the falsified medical certificate. Under Section 3 of Resolution No. 06-0538, serious
dishonesty comprises the following acts:
Section 3. Serious Dishonesty. The presence of any one of the following attendant
circumstances in the commission of the dishonest act would constitute the offense
of Serious Dishonesty:
a. The dishonest act causes serious damage and grave prejudice to the
government.
b. The respondent gravely abused his authority in order to commit the
dishonest act.
c. Where the respondent is an accountable officer, the dishonest act
directly involves property, accountable forms or money for which he is
directly accountable and the respondent shows an intent to commit
material gain, graft and corruption.
d. The dishonest act exhibits moral depravity on the part of the respondent.
e. The respondent employed fraud and/or falsification of official documents
in the commission of the dishonest act related to his/her employment.
f. The dishonest act was committed several times or in various occasions.
g. The dishonest act involves a Civil Service examination, irregularity or
fake Civil Service eligibility such as, but not limited to, impersonation,
cheating and use of crib sheets.
h. Other analogous circumstances. (Emphasis supplied)
Simple dishonesty, on the other hand, comprises the following offenses:
Section 5. The presence of any of the following attendant circumstances in the
commission of the dishonest act would constitute the offense of Simple Dishonesty:
a. The dishonest act did not cause damage or prejudice to the government.
b. The dishonest act had no direct relation to or does not involve the duties
and responsibilities of the respondent.
c. In falsification of any official document, where the information falsified
is not related to his/her employment.
d. That the dishonest act did not result in any gain or benefit to the
offender.
e. Other analogous circumstances. (Emphasis supplied)
This court previously ruled that "[f]alsification of an official document, as an
administrative offense, is knowingly making false statements in official or public
55 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
documents."101 Respondent, in her defense, states that she merely relied on her
Health Maintenance Organizations (HMO) advice that it was going to issue her a
medical certificate after she had gone to the hospital complaining of
hypertension.102 She maintains that she did not know that her medical certificate
was falsified. We do not find this defense credible.
Respondent knew that she was not examined by Dr. Blanco, the medical certificates
signatory. She knew that she would not be able to fully attest to the truthfulness of
the information in the certificate. Despite this, she still submitted the certificate in
support of her application for leave.
The Civil Service Commission, however, found that the medical certificate was
falsified. Dr. Blanco repudiated the certificate. Respondent did not present any
evidence to defend its validity. Her application for sick leave, therefore, should not
have been granted since it was unaccompanied by the proper documents. The
Commission correctly found respondent guilty of dishonesty.
However, it would be wrong to classify this offense as simple dishonesty.
By law, all employees in the civil service are entitled to leave of absence for a certain
number of days, with or without pay.103 Under Section 1, Rule XVI of the Omnibus
Rules Implementing Book V of the Administrative Code, government employees are
entitled to 15 days of sick leave annually with full pay.
The grant of sick leave with pay is an exception to the principle of "no work, no
pay," i.e., entitlement to compensation only upon actual service rendered. As such,
applications for leave must be properly filled out and filed accordingly. Section 16,
Rule XVI of the Omnibus Rules Implementing Book V of the Administrative Code
provides the rules for an application for sick leave:
SECTION 16. All applications for sick leaves of absence for one full day or more shall
be on the prescribed form and shall be filed immediately upon the employee's return
from such leave. Notice of absence, however, should be sent to the immediate
supervisor and/or to the office head. Application for sick leave in excess of five days
shall be accompanied by a proper medical certificate.
Respondents application for sick leave, if approved, would allow her to be absent
from work without any deductions from her salary. Being a government employee,
respondent would have received her salaries coming from government funds.
PUP COL 2015
Since her application for sick leave was supported by a false medical certificate, it
would have been improperly filed, which made all of her absences during this period
unauthorized. The receipt, therefore, of her salaries during this period would be
tantamount to causing damage or prejudice to the government since she would have
received compensation she was not entitled to receive.
This act of causing damage or prejudice, however, cannot be classified as serious
since the information falsified had no direct relation to her employment. Whether or
not she was suffering from hypertension is a matter that has no relation to the
functions of her office.
Given these circumstances, the offense committed can be properly identified as less
serious dishonesty. Under Section 4 of Resolution No. 06-0538, less serious
dishonesty is classified by the following acts:
Section 4. The presence of any one of the following attendant circumstances in the
commission of the dishonest act would constitute the offense of Less Serious
Dishonesty:
a. The dishonest act caused damage and prejudice to the government
which is not so serious as to qualify under the immediately preceding
classification.
b. The respondent did not take advantage of his/her position in committing
the dishonest act.
c. Other analogous circumstances. (Emphasis supplied)
We hold, therefore, that respondent Atty. Aurora A. Salvaa is guilty of less serious
dishonesty.
A final note
The records showed that respondent tendered her irrevocable resignation on August
5, 2006. Petitioners acceptance of respondents resignation was not mentioned in
any of the pleadings. However, the resolution by the Fact-finding Committee stated
that "[o]n 16 August 2006, the Office of the Administrator received the
resignation."104On the issue of whether respondents resignation mooted its
proceedings, it concluded that:
[I]n the response of the Administrator to the letter of resignation filed by Respondent
there was no unconditional acceptance of the same. In fact it was specified therein
56 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
that her resignation is "without prejudice to any appropriate action on any
malfeasance or misfeasance committed during her tenure[."]There can [sic] be no
other conclusion from the above that her resignation does not prevent the
administration from proceeding with any charge/s appropriate under the
circumstances.105 (Emphasis in the original)
Resignation from public office, to be effective, requires the acceptance of the proper
government authority. In Republic v. Singun,106 this court stated:
Resignation implies an expression of the incumbent in some form, express or
implied, of the intention to surrender, renounce, and relinquish the office and the
acceptance by competent and lawful authority. To constitute a complete and
operative resignation from public office, there must be: (a) an intention to relinquish
a part of the term; (b) an act of relinquishment; and (c) an acceptance by the proper
authority.
....
In our jurisdiction, acceptance is necessary for resignation of a public officer to be
operative and effective. Without acceptance, resignation is nothing and the officer
remains in office. Resignation to be effective must be accepted by competent
authority, either in terms or by something tantamount to an acceptance, such as
the appointment of the successor. A public officer cannot abandon his office before
his resignation is accepted, otherwise the officer is subject to the penal provisions
of Article 238 of the Revised Penal Code. The final or conclusive act of a resignations
acceptance is the notice of acceptance. The incumbent official would not be in a
position to determine the acceptance of his resignation unless he had been duly
notified therefor.107 (Emphasis supplied)
If there was evidence to show that petitioner did not, in fact, accept respondents
resignation, her resignation would have been ineffective. Respondents continued
absence from her post would have been deemed abandonment from her office, of
which she could be criminally charged.
Although the response of Administrator Robles was not attached to the record, it
can be concluded from the resolution of the Fact-finding Committee that he accepted
the resignation, albeit with the qualification that it be "without prejudice to any
appropriate action on any malfeasance or misfeasance committed during her
tenure."108
The qualified acceptance of Administrator Robles, however, did not affect the validity
of respondents resignation.1wphi1Section 1, Rule XII of the Civil Service
PUP COL 2015
Commission Memorandum Circular No. 40, series of 1998, as amended by Civil
Service Commission Memorandum Circular No. 15, series of 1999, requires:
Sec. 1. Resignation. The following documents shall be submitted to the Commission
for record purposes:
a. The voluntary written notice of the employee informing the appointing
authority that he is relinquishing his position and the efffectivity date of
said resignation; and,
b. The acceptance of resignation in writing by the agency head or
appointing authority which shall indicate the date of effectivity of the
resignation.
An officer or employee under investigation may be allowed to resign pending
decision of his case without prejudice to the continuation of the proceedings until
finally terminated.
The qualification placed by Administrator Robles on his acceptance does not make
respondents resignation any less valid. The rules and regulations allow the
acceptance of resignations while the administrative case is pending provided that
the proceedings will still continue.
We also note that the unauthorized absences were incurred after the issuance of
Office Order No. 119. Atrespondents refusal to comply, she was administratively
charged, which prompted her resignation from office. If there were irregularities in
the issuance of Office Order No. 119, what respondent should have done would be
to occupy the new position and then file the proper remedies. She should not have
defied the orders of her superiors.
Because of her resignation on August 5, 2006, any modification as to the service of
her suspension became moot. Her permanent employment record, however, must
reflect the modified penalty. Considering that she is also a member of the Bar, this
court furnishes the Office of the Bar Confidant with a copy of this decision to initiate
the proper disciplinary action against respondent.
WHEREFORE, the petition is GRANTED. The decision dated November 11, 2009 of
the Court of Appeals in CA-G.R. SP. No. 104225 and Resolution No. 071364 dated
July 18, 2007 of the Civil Service Commission is AFFIRMED with the MODIFICATION
that respondent, Atty. Aurora A. Salvaa, is found guilty of Less Serious Dishonesty.
57 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

The Civil Service Commission is DIRECTED to attach a copy of this decision to Republic of the Philippines
respondent's permanent employment record. SUPREME COURT
Manila
Let a copy of this decision be given to the Office of the Bar Confidant to initiate the EN BANC
proper disciplinary action against respondent Atty. Aurora A. Salvaa. G.R. No. L-15127 May 30, 1961
SO ORDERED. EMETERIO CUI, plaintiff-appellant,
vs.
ARELLANO UNIVERSITY, defendant-appellee.

CONCEPCION, J.:

Appeal by plaintiff Emeterio Cui from a decision of the Court of First Instance of
Manila, absolving defendant Arellano University from plaintiff's complaint, with costs
against the plaintiff, and dismissing defendant's counter claim, for insufficiency of
proof thereon.

In the language of the decision appealed from:

The essential facts of this case are short and undisputed. As established by
the agreement of facts Exhibits X and by the respective oral and
documentary evidence introduced by the parties, it appears conclusive that
plaintiff, before the school year 1948-1949 took up preparatory law course
in the defendant University. After finishing his preparatory law course
plaintiff enrolled in the College of Law of the defendant from the school
year 1948-1949. Plaintiff finished his law studies in the defendant university
up to and including the first semester of the fourth year. During all the
school years in which plaintiff was studying law in defendant law college,
Francisco R. Capistrano, brother of the mother of plaintiff, was the dean of
the College of Law and legal counsel of the defendant university. Plaintiff
enrolled for the last semester of his law studies in the defendant university
but failed to pay his tuition fees because his uncle Dean Francisco R.
Capistrano having severed his connection with defendant and having
accepted the deanship and chancellorship of the College of Law of Abad
Santos University, plaintiff left the defendant's law college and enrolled for
the last semester of his fourth year law in the college of law of the Abad
Santos University graduating from the college of law of the latter university.
Plaintiff, during all the time he was studying law in defendant university
was awarded scholarship grants, for scholastic merit, so that his semestral
tuition fees were returned to him after the ends of semester and when his
scholarship grants were awarded to him. The whole amount of tuition fees

58 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
paid by plaintiff to defendant and refunded to him by the latter from the
first semester up to and including the first semester of his last year in the
college of law or the fourth year, is in total P1,033.87. After graduating in
law from Abad Santos University he applied to take the bar examination.
To secure permission to take the bar he needed the transcripts of his
records in defendant Arellano University. Plaintiff petitioned the latter to
issue to him the needed transcripts. The defendant refused until after he
had paid back the P1,033 87 which defendant refunded to him as above
stated. As he could not take the bar examination without those transcripts,
plaintiff paid to defendant the said sum under protest. This is the sum
which plaintiff seeks to recover from defendant in this case.
Before defendant awarded to plaintiff the scholarship grants as above
stated, he was made to sign the following contract covenant and
agreement:
"In consideration of the scholarship granted to me by the University, I
hereby waive my right to transfer to another school without having
refunded to the University (defendant) the equivalent of my scholarship
cash.
(Sgd.) Emeterio Cui".
It is admitted that, on August 16, 1949, the Director of Private Schools issued
Memorandum No. 38, series of 1949, on the subject of "Scholarship," addressed to
"All heads of private schools, colleges and universities," reading:
1. School catalogs and prospectuses submitted to this, Bureau show that
some schools offer full or partial scholarships to deserving students for
excellence in scholarship or for leadership in extra-curricular activities. Such
inducements to poor but gifted students should be encouraged. But to
stipulate the condition that such scholarships are good only if the students
concerned continue in the same school nullifies the principle of merit in the
award of these scholarships.
2. When students are given full or partial scholarships, it is understood that
such scholarships are merited and earned. The amount in tuition and other
fees corresponding to these scholarships should not be subsequently
charged to the recipient students when they decide to quit school or to
transfer to another institution. Scholarships should not be offered merely
to attract and keep students in a school.
PUP COL 2015
3. Several complaints have actually been received from students who have
enjoyed scholarships, full or partial, to the effect that they could not
transfer to other schools since their credentials would not be released
unless they would pay the fees corresponding to the period of the
scholarships. Where the Bureau believes that the right of the student to
transfer is being denied on this ground, it reserves the right to authorize
such transfer.
that defendant herein received a copy of this memorandum; that plaintiff asked the
Bureau of Private Schools to pass upon the issue on his right to secure the transcript
of his record in defendant University, without being required to refund the sum of
P1,033.87; that the Bureau of Private Schools upheld the position taken by the
plaintiff and so advised the defendant; and that, this notwithstanding, the latter
refused to issue said transcript of records, unless said refund were made, and even
recommended to said Bureau that it issue a written order directing the defendant to
release said transcript of record, "so that the case may be presented to the court
for judicial action." As above stated, plaintiff was, accordingly, constrained to pay,
and did pay under protest, said sum of P1,033.87, in order that he could take the
bar examination in 1953. Subsequently, he brought this action for the recovery of
said amount, aside from P2,000 as moral damages, P500 as exemplary damages,
P2,000 as attorney's fees, and P500 as expenses of litigation.
In its answer, defendant reiterated the stand it took, vis-a-vis the Bureau of Private
Schools, namely, that the provisions of its contract with plaintiff are valid and binding
and that the memorandum above-referred to is null and void. It, likewise, set up a
counterclaim for P10,000.00 as damages, and P3,000 as attorney's fees.
The issue in this case is whether the above quoted provision of the contract between
plaintiff and the defendant, whereby the former waived his right to transfer to
another school without refunding to the latter the equivalent of his scholarships in
cash, is valid or not. The lower court resolved this question in the affirmative, upon
the ground that the aforementioned memorandum of the Director of Private Schools
is not a law; that the provisions thereof are advisory, not mandatory in nature; and
that, although the contractual provision "may be unethical, yet it was more unethical
for plaintiff to quit studying with the defendant without good reasons and simply
because he wanted to follow the example of his uncle." Moreover, defendant
maintains in its brief that the aforementioned memorandum of the Director of Private
Schools is null and void because said officer had no authority to issue it, and because
it had been neither approved by the corresponding department head nor published
in the official gazette.
59 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
We do not deem it necessary or advisable to consider as the lower court did, the
question whether plaintiff had sufficient reasons or not to transfer from defendant
University to the Abad Santos University. The nature of the issue before us, and its
far reaching effects, transcend personal equations and demand a determination of
the case from a high impersonal plane. Neither do we deem it essential to pass upon
the validity of said Memorandum No. 38, for, regardless of the same, we are of the
opinion that the stipulation in question is contrary to public policy and, hence, null
and void. The aforesaid memorandum merely incorporates a sound principle of
public policy. As the Director of Private Schools correctly pointed, out in his letter,
Exhibit B, to the defendant,
There is one more point that merits refutation and that is whether or not
the contract entered into between Cui and Arellano University on
September 10, 1951 was void as against public policy. In the case of Zeigel
vs. Illinois Trust and Savings Bank, 245 Ill. 180, 19 Ann. Case 127, the
court said: 'In determining a public policy of the state, courts are limited to
a consideration of the Constitution, the judicial decisions, the statutes,
and the practice of government officers.' It might take more than a
government bureau or office to lay down or establish a public policy, as
alleged in your communication, but courts consider the practices of
government officials as one of the four factors in determining a public policy
of the state. It has been consistently held in America that under the
principles relating to the doctrine of public policy, as applied to the law of
contracts, courts of justice will not recognize or uphold a transaction which
its object, operation, or tendency is calculated to be prejudicial to the public
welfare, to sound morality or to civic honesty (Ritter vs. Mutual Life Ins.
Co., 169 U.S. 139; Heding vs. Gallaghere 64 L.R.A. 811; Veazy vs. Allen,
173 N.Y. 359). If Arellano University understood clearly the real essence of
scholarships and the motives which prompted this office to issue
Memorandum No. 38, s. 1949, it should have not entered into a contract
of waiver with Cui on September 10, 1951, which is a direct violation of our
Memorandum and an open challenge to the authority of the Director of
Private Schools because the contract was repugnant to sound morality and
civic honesty. And finally, in Gabriel vs. Monte de Piedad, Off. Gazette Supp.
Dec. 6, 1941, p. 67 we read: 'In order to declare a contract void as against
public policy, a court must find that the contract as to consideration or the
thing to be done, contravenes some established interest of society, or
is inconsistent with sound policy and good moralsor tends clearly to
undermine the security of individual rights. The policy enunciated in
Memorandum No. 38, s. 1949 is sound policy. Scholarship are awarded in
PUP COL 2015
recognition of merit not to keep outstanding students in school to bolster
its prestige. In the understanding of that university scholarships award is a
business scheme designed to increase the business potential of an
education institution. Thus conceived it is not only inconsistent with sound
policy but also good morals. But what is morals? Manresa has this
definition. It is good customs; those generally accepted principles of
morality which have received some kind of social and practical
confirmation. The practice of awarding scholarships to attract students and
keep them in school is not good customs nor has it received some kind of
social and practical confirmation except in some private institutions as in
Arellano University. The University of the Philippines which implements
Section 5 of Article XIV of the Constitution with reference to the giving of
free scholarships to gifted children, does not require scholars to reimburse
the corresponding value of the scholarships if they transfer to other
schools. So also with the leading colleges and universities of the United
States after which our educational practices or policies are patterned. In
these institutions scholarships are granted not to attract and to keep
brilliant students in school for their propaganda mine but to reward merit
or help gifted students in whom society has an established interest or a
first lien. (Emphasis supplied.)
WHEREFORE, the decision appealed from is hereby reversed and another one shall
be entered sentencing the defendant to pay to the plaintiff the sum of P1,033.87,
with interest thereon at the legal rate from September 1, 1954, date of the institution
of this case, as well as the costs, and dismissing defendant's counterclaim. It is so
ordered.
60 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 79269 June 5, 1991
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. PROCORO J. DONATO, in his official capacity as Presiding Judge,
Regional Trial Court, Branch XII, Manila; RODOLFO C. SALAS, alias
Commander Bilog, respondents.
DAVIDE, JR., J.:
The People of the Philippines, through the Chief State Prosecutor of the Department
of Justice, the City Fiscal of Manila and the Judge Advocate General, filed the instant
petition for certiorari and prohibition, with a prayer for restraining order/preliminary
injunction, to set aside the order of respondent Judge dated July 7, 1987 granting
bail to the accused Rodolfo Salas alias "Commander Bilog" in Criminal Case No. 86-
48926 for Rebellion,1 and the subsequent Order dated July 30, 1987 granting the
motion for reconsideration of 16 July 1987 by increasing the bail bond from
P30,000.00 to P50,000.00 but denying petitioner's supplemental motion for
reconsideration of July 17, 1987 which asked the court to allow petitioner to present
evidence in support of its prayer for a reconsideration of the order of 7 July 1987.
The pivotal issues presented before Us are whether the right to bail may, under
certain circumstances, be denied to a person who is charged with an otherwise
bailable offense, and whether such right may be waived.
The following are the antecedents of this petition:
In the original Information2 filed on 2 October 1986 in Criminal Case No. 86-48926
of the Regional Trial Court of Manila, later amended in an Amended
Information3 which was filed on 24 October 1986, private respondent Rodolfo
Salas, alias "Commander Bilog", and his co-accused were charged for the crime of
rebellion under Article 134, in relation to Article 135, of the Revised Penal Code
allegedly committed as follows:
That in or about 1968 and for some time before said year and continuously
thereafter until the present time, in the City of Manila and elsewhere in the
Philippines, the Communist Party of the Philippines, its military arm, the
PUP COL 2015
New People's Army, its mass infiltration network, the National Democratic
Front with its other subordinate organizations and fronts, have, under the
direction and control of said organizations' leaders, among whom are the
aforenamed accused, and with the aid, participation or support of members
and followers whose whereabouts and identities are still unknown, risen
publicly and taken arms throughout the country against the Government of
the Republic of the Philippines for the purpose of overthrowing the present
Government, the seat of which is in the City of Manila, or of removing from
the allegiance to that government and its laws, the country's territory or
part of it;
That from 1970 to the present, the above-named accused in their capacities
as leaders of the aforenamed organizations, in conspiracy with, and in
support of the cause of, the organizations aforementioned, engaged
themselves in war against the forces of the government, destroying
property or committing serious violence, and other acts in the pursuit of
their unlawful purpose, such as . . .
(then follows the enumeration of specific acts committed before and after
February 1986).
At the time the Information was filed the private respondent and his co-accused
were in military custody following their arrest on 29 September 1986 at the Philippine
General Hospital, Taft Ave., Manila; he had earlier escaped from military detention
and a cash reward of P250,000.00 was offered for his
capture.4
A day after the filing of the original information, or on 3 October 1986, a petition
for habeas corpus for private respondent and his co-accused was filed with this
Court5 which, as shall hereafter be discussed in detail, was dismissed in Our
resolution of 16 October 1986 on the basis of the agreement of the parties under
which herein private respondent "will remain in legal custody and will face trial
before the court having custody over his person" and the warrants for the arrest of
his co-accused are deemed recalled and they shall be immediately released but shall
submit themselves to the court having jurisdiction over their person.
On November 7, 1986 , private respondent filed with the court below a Motion to
Quash the Information alleging that: (a) the facts alleged do not constitute an
offense; (b) the Court has no jurisdiction over the offense charged; (c) the Court
has no jurisdiction over the persons of the defendants; and (d) the criminal action
61 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
or liability has been extinguished,6 to which petitioner filed an Opposition7 citing,
among other grounds, the fact that in the Joint Manifestation and Motion dated
October 14, 1986, in G.R. No. 76009, private respondent categorically conceded
that:
xxx xxx xxx
Par. 2 (B) Petitioner Rodolfo Salas will remain in legal custody and face
trial before the court having custody over his person.
In his Order of March 6, 1987,8 respondent Judge denied the motion to quash.
Instead of asking for a reconsideration of said Order, private respondent filed on 9
May 1987 a petition for bail,9which herein petitioner opposed in an Opposition filed
on 27 May 198710 on the ground that since rebellion became a capital offense under
the provisions of P.D. Nos. 1996, 942 and 1834, which amended Article 135 of the
Revised Penal Code, by imposing the penalty of reclusion perpetua to death on those
who promote, maintain, or head a rebellion the accused is no longer entitled to bail
as evidence of his guilt is strong.
On 5 June 1987 the President issued Executive Order No. 187 repealing, among
others, P.D. Nos. 1996, 942 and 1834 and restoring to full force and effect Article
135 of the Revised Penal Code as it existed before the amendatory decrees. Thus,
the original penalty for rebellion, prision mayor and a fine not to exceed P20,000.00,
was restored.
Executive Order No. 187 was published in the Official Gazette in its June 15, 1987
issue (Vol. 83, No. 24) which was officially released for circulation on June 26, 1987.
In his Order of 7 July 198711 respondent Judge, taking into consideration Executive
Order No. 187, granted private respondent's petition for bail, fixed the bail bond at
P30,000.00 and imposed upon private respondent the additional condition that he
shall report to the court once every two (2) months within the first ten (10) days of
every period thereof. In granting the petition respondent Judge stated:
. . . There is no more debate that with the effectivity of Executive Order
No. 187, the offense of rebellion, for which accused Rodolfo Salas is herein
charged, is now punishable with the penalty of prision mayor and a fine
not exceeding P20,000.00, which makes it now bailable pursuant to Section
13, Article III, 1986 Constitution and Section 3, Rule 114, 1985 Rules of
Criminal Procedure. Unlike the old rule, bail is now a matter of right in non-
capital offenses before final judgment. This is very evident upon a reading
of Section 3, Rule 114, aforementioned, in relation to Section 21, same
rule. In view, therefore, of the present circumstances in this case, said
PUP COL 2015
accused-applicant is now entitled to bail as a matter of right inasmuch as
the crime of rebellion ceased to be a capital offense.
As to the contention of herein petitioner that it would be dangerous to grant bail to
private respondent considering his stature in the CPP-NPA hierarchy, whose ultimate
and overriding goal is to wipe out all vestiges of our democracy and to replace it
with their ideology, and that his release would allow his return to his organization to
direct its armed struggle to topple the government before whose courts he invokes
his constitutional right to bail, respondent Judge replied:
True, there now appears a clash between the accused's constitutional right
to bail in a non-capital offense, which right is guaranteed in the Bill of
Rights and, to quote again the prosecution, "the existence of the
government that bestows the right, the paramount interest of the state."
Suffice to state that the Bill of Rights, one of which is the right to bail, is a
"declaration of the rights of the individual, civil, political and social and
economic, guaranteed by the Constitution against impairment or intrusion
by any form of governmental action. Emphasis is placed on the dignity of
man and the worth of individual. There is recognition of certain inherent
and inalienable rights of the individual, which the government is prohibited
from violating" (Quisumbing-Fernando, Philippine Constitutional Law, 1984
Edition, p. 77). To this Court, in case of such conflict as now pictured by
the prosecution, the same should be resolved in favor of the individual who,
in the eyes of the law, is alone in the assertion of his rights under the Bill
of Rights as against the State. Anyway, the government is that powerful
and strong, having the resources, manpower and the wherewithals to fight
those "who oppose, threathen (sic) and destroy a just and orderly society
and its existing civil and political institutions." The prosecution's fear may
or may not be founded that the accused may later on jump bail and rejoin
his comrades in the field to sow further disorders and anarchy against the
duly constituted authorities. But, then, such a fear can not be a reason to
deny him bail. For the law is very explicit that when it comes to bailable
offenses an accused is entitled as a matter of light to bail. Dura est lex sed
lex.
In a motion to reconsider12 the above order filed on 16 July 1987, petitioner asked
the court to increase the bail from P30,000.00 to P100,000.00 alleging therein that
per Department of Justice Circular No. 10 dated 3 July 1987, the bail for the,
provisional release of an accused should be in an amount computed at P10,000.00
per year of imprisonment based on the medium penalty imposable for the offense
62 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
and explaining that it is recommending P100,000.00 because the private respondent
"had in the past escaped from the custody of the military authorities and the offense
for which he is charged is not an ordinary crime, like murder, homicide or robbery,
where after the commission, the perpetrator has achieved his end" and that "the
rebellious acts are not consummated until the well-organized plan to overthrow the
government through armed struggle and replace it with an alien system based on a
foreign ideology is attained."
On 17 July 1987, petitioner filed a supplemental motion for
reconsideration13 indirectly asking the court to deny bail to the private respondent
and to allow it to present evidence in support thereof considering the "inevitable
probability that the accused will not comply with this main condition of his bail to
appear in court for trial," a conclusion it claims to be buttressed "by the following
facts which are widely known by the People of the Philippines and which this
Honorable Court may have judicial notice of:
1. The accused has evaded the authorities for thirteen years and was an
escapee from detention when arrested;
2. He was not arrested at his residence as he had no known address;
3. He was using the false name "Manuel Mercado Castro" at the time of his
arrest and presented a Driver's License to substantiate his false identity;
4. The address he gave "Panamitan, Kawit, Cavite," turned out to be also
a false address;
5. He and his companions were on board a private vehicle with a declared
owner whose identity and address were also found to be false;
6. Pursuant to Ministry Order No. 1-A dated 11 January 1982 , a reward of
P250,000.00 was offered and paid for his arrest,
which "clearly indicate that the accused does not entertain the slightest intention to
appear in court for trial, if released." Petitioner further argues that the accused, who
is the Chairman of the Communist Party of the Philippines and head of its military
arm, the NPA, together with his followers, are now engaged in an open warfare and
rebellion against this government and threatens the existence of this very Court
from which he now seeks provisional release," and that while he is entitled to bail
as a matter of right in view of Executive Order No. 187 which restored the original
penalty for rebellion under Article 135 of the Revised Penal Code, yet, when the
interest of the State conflicts with that of an individual, that of the former prevails
for "the right of the State of self-preservation is paramount to any of the rights of
an individual enshrined in the Bill of Rights of the Constitution." Petitioner further
invokes precedents in the United States of America holding "that there is no absolute
PUP COL 2015
constitutional barrier to detention of potentially dangerous resident aliens pending
deportation proceedings,14 and that an arrestee may be incarcerated until trial as he
presents a risk of flight;15 and sustaining a detention prior to trial of arrestee charged
with serious felonies who are found after an adversary hearing to pose threat to the
safety of individuals and to the community which no condition of release can dispel.16
On 30 July 1987 respondent Judge handed down the Order17 adverted to in the
introductory portion of this decision the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing considerations, the Court finds
the "supplemental" motion for reconsideration to be without merit and
hereby denies it but finds the first motion for reconsideration to be
meritorious only insofar as the amount of bail is concerned and hereby
reconsiders its Order of July 7, 1987 only to increase the amount of bail
from P30,000.00 to P50,000.00, subject to the approval of this Court, and
with the additional condition that accused Rodolfo Salas shall report to the
court once every two (2) months within the first ten (10) days of every
period thereof (Almendras vs. Villaluz, et al., L-31665, August 6, 1975, 66
SCRA 58).
In denying the supplemental motion for reconsideration the respondent Judge took
into account the "sudden turn-about" on the part of the petitioner in that a day
earlier it filed a motion for reconsideration wherein it conceded the right of the
private respondent to bail but merely asked to increase the amount of bail; observed
that it is only a reiteration of arguments in its opposition to the petition for bail of
25 May 1987; asserted that the American precedents are not applicable since the
cases involved deportation of aliens and, moreover, the U.S. Federal Constitution
does not contain a proviso on the right of an accused to bail in bailable offenses,
but only an injunction against excessive bail; and quoted the concurring opinion of
the late Justice Pedro Tuason in the cases of Nava, et al. vs. Gatmaitan, L-4853,
Hernandez vs. Montesa, L-4964 and Angeles vs. Abaya, L-5108, October 11, 1951,
90 Phil, 172.
Unable to agree with said Order, petitioner commenced this petition submitting
therein the following issues:
THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED
WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS
JURISDICTION, AND IN TOTAL DISREGARD OF THE PREVAILING
REALITIES, WHEN HE DENIED PETITIONER'S SUPPLEMENTAL MOTION
FOR RECONSIDERATION WITH PRAYER TO BE GIVEN THE OPPORTUNITY
63 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
TO ADDUCE EVIDENCE IN SUPPORT OF ITS OPPOSITION TO THE GRANT
OF BAIL TO THE RESPONDENT RODOLFO SALAS.
THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED
WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS
JURISDICTION WHEN HE GRANTED BAIL TO THE RESPONDENT RODOLFO
SALAS.
in support of which petitioner argues that private respondent is estopped from
invoking his right to bail, having expressly waived it in G.R. No. 76009 when he
agreed to "remain in legal custody and face trial before the court having custody of
his person" in consideration of the recall of the warrant of arrest for his co-petitioners
Josefina Cruz and Jose Concepcion; and the right to bail, even in non-capital
offenses, is not absolute when there is prima facie evidence that the accused is a
serious threat to the very existence of the State, in which case the prosecution must
be allowed to present evidence for the denial of bail. Consequently, respondent
Judge acted with grave abuse of discretion when he did not allow petitioner to
present all the evidence it may desire to support its prayer for the denial of bail and
when he declared that the State has forfeited its right to do so since during all the
time that the petition for bail was pending, it never manifested, much less hinted,
its intention to adduce such evidence. And that even if release on bail may be
allowed, respondent judge, in fixing the amount of bail at P50,000.00 (originally
P30,000.00 only), failed to take into account the lengthy record of private
respondents' criminal background, the gravity of the pending charge, and the
likelihood of flight.18
In Our resolution of 11 August 198719 We required the respondents to comment on
the petition and issued a Temporary Restraining Order ordering respondent Judge
to cease and desist from implementing his order of 30 July 1987 granting bail to
private respondent in the amount of P50,000.00.
In his Comment filed on 27 August 1987,20 private respondent asks for the outright
dismissal of the petition and immediate lifting of the temporary restraining order on
the following grounds:
I light to bail in view of the agreement in G.R. No. 76009; that granting bail to him is
RESPONDENT SALAS NEVER WAIVED HIS RIGHT TO BAIL; NEITHER IS HE
ESTOPPED FROM ASSERTING SAID RIGHT. ON THE CONTRARY IT IS
PETITIONER WHO IS ESTOPPED FROM RAISING THE SAID ISSUE FOR
THE FIRST TIME ON APPEAL.
II
PUP COL 2015
RESPONDENT SALAS ENJOYS NOT ONLY THE CONSTITUTIONAL RIGHT
TO BE PRESUMED INNOCENT BUT ALSO THE RIGHT TO BAIL.
III
RESPONDENT SALAS IS NOT CHARGED WITH A CAPITAL OFFENSE
(RECLUSION PERPETUA), HENCE HE HAS THE RIGHT TO BAIL AS
MANDATED BY THE CONSTITUTION.
IV
THE ORDER OF JULY 30, 1987 DENYING PETITIONER OPPORTUNITY TO
PRESENT EVIDENCE IS CORRECT. PETITIONER'S ALLEGED RIGHT TO
PRESENT EVIDENCE IS NON-EXISTENT AND/OR HAD BEEN WAIVED.
V
THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER IN THIS CASE
VIOLATES NOT ONLY RESPONDENT SALAS' RIGHT TO BAIL BUT ALSO HIS
OTHER CONSTITUTIONAL RIGHT TO DUE PROCESS.
We required the petitioner to reply to the comment of private respondent.21 The
reply was filed on 18 September 1987.22
In Our resolution of 15 October 198723 We gave due course to the petition and
required the parties to file simultaneously their memoranda within twenty days from
notice.
In their respective manifestations and motions dated 5 November24 and 23
November 198725 petitioner and private respondents asked to be excused from filing
their Memoranda and that the petition and reply be considered as the Memorandum
for petitioner and the Comment as the Memorandum for private respondent, which
We granted in Our resolution of 19 November 198726 and 1 December
1987,27 respectively.
In Our resolution of 14 September 1989 We required the Solicitor General to express
his stand on the issues raised in this petitions,28 which he complied with by filing his
Manifestation on 30 May 199029 wherein he manifests that he supports the petition
and submits that the Order of respondent Judge of July 7, July 17 and July 30, 1987
should be annulled and set aside asserting that private respondent had waived the
accepting wide-eyed his undertaking which he is sure to break; in determining bail,
the primary consideration is to insure the attendance of the accused at the trial of
the case against him which would be frustrated by the "almost certainty that
respondent Salas will lump bail of whatever amount"; and application of the
guidelines provided for in Section 10 of Rule 114, 1985 Rules on Criminal Procedure
64 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
on the amount of bail dictates denial of bail to private respondent. The Solicitor
General likewise maintains that the right of the petitioner to hearing on the
application of private respondent for bail cannot be denied by respondent Judge.
And now on the issues presented in this case.
I.
Unquestionably, at the time the original and the amended Informations for rebellion
and the application for bail were filed before the court below the penalty imposable
for the offense for which the private respondent was charged was reclusion perpetua
to death. During the pendency of the application for bail Executive Order No. 187
was issued by the President, by virtue of which the penalty for rebellion as originally
provided for in Article 135 of the Revised Penal Code was restored. The restored law
was the governing law at the time the respondent court resolved the petition for
bail.
We agree with the respondent court that bail cannot be denied to the private
respondent for he is charged with the crime of rebellion as defined in Article 134 of
the Revised Penal Code to which is attached the penalty of prision mayor and a fine
not exceeding P20,000.00.30 It is, therefore, a bailable offense under Section 13 of
Article III of the 1987 Constitution which provides thus:
Sec. 13. All persons, except those charged with offenses punishable
by reclusion perpetua when evidence of guilt is strong, shall, before
conviction, be bailable by sufficient sureties, or be released on
recognizance as may be prescribed by law. The right to bail shall not be
impaired even when the privilege of the writ of habeas corpus is
suspended. Excessive bail shall not be required.
Section 3, Rule 114 of the Rules of Court, as amended, also provides:
Bail, a matter of right: exception. All persons in custody shall, before
final conviction, be entitled to bail as a matter of right, except those
charged with a capital offense or an offense which, under the law at the
time of its commission and at the time of the application for bail, is
punishable by reclusion perpetua, when evidence of guilt is strong.
Therefore, before conviction bail is either a matter of right or of discretion. It is a
matter of right when the offense charged is punishable by any penalty lower
than reclusion perpetua.31 To that extent the right is absolute.32
PUP COL 2015
And so, in a similar case for rebellion, People vs. Hernandez, et al., 99 Phil. 515,
despite the fact that the accused was already convicted, although erroneously, by
the trial court for the complex crime of rebellion with multiple murders, arsons and
robberies, and sentenced to life imprisonment, We granted bail in the amount of
P30,000.00 during the pendency of his appeal from such conviction. To the vigorous
stand of the People that We must deny bail to the accused because the security of
the State so requires, and because the judgment of conviction appealed from
indicates that the evidence of guilt of Hernandez is strong, We held:
. . . Furthermore, individual freedom is too basic, too transcendental and
vital in a republican state, like ours, to be derived upon mere general
principles and abstract consideration of public safety. Indeed, the
preservation of liberty is such a major preoccupation of our political system
that, not satisfied with guaranteeing its enjoyment in the very first
paragraph of section (1) of the Bill of Rights, the framers of our Constitution
devoted paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15),
(16), (17), (18), and (21) of said section (1) to the protection of several
aspects of freedom.
The 1987 Constitution strengthens further the right to bail by explicitly providing
that it shall not be impaired even when the privilege of the writ of habeas corpus is
suspended. This overturns the Court's ruling in Garcia-Padilla vs. Enrile, et
al., supra., to wit:
The suspension of the privilege of the writ of habeas corpus must, indeed,
carry with it the suspension of the right to bail, if the government's
campaign to suppress the rebellion is to be enhanced and rendered
effective. If the right to bail may be demanded during the continuance of
the rebellion, and those arrested, captured and detained in the course
thereof will be released, they would, without the least doubt, rejoin their
comrades in the field thereby jeopardizing the success of government
efforts to bring to an end the invasion, rebellion or insurrection.
Upon the other hand, if the offense charged is punishable by reclusion perpetua bail
becomes a matter of discretion. It shall be denied if the evidence of guilt is strong.
The court's discretion is limited to determining whether or not evidence of guilt is
strong.33 But once it is determined that the evidence of guilt is not strong, bail also
becomes a matter of right. In Teehankee vs. Director of Prisons, supra., We held:
65 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
The provision on bail in our Constitution is patterned after similar provisions
contained in the Constitution of the United States and that of many states
of the Union. And it is said that:
The Constitution of the United States and the constitution of the
many states provide that all persons shall be bailable by sufficient
sureties, except for capital offenses, where the proof is evident or
the presumption of guilt is great, and, under such provisions, bail
is a matter of right which no court or judge can properly refuse,
in all cases not embraced in the exceptions. Under such
provisions bail is a matter of right even in cases of capital
offenses, unless the proof of guilt is evident or the presumption
thereof is great!34
Accordingly, the prosecution does not have the right to present evidence
for the denial of bail in the instances where bail is a matter of right.
However, in the cases where the grant of bail is discretionary, due process
requires that the prosecution must be given an opportunity to present,
within a reasonable time, all the evidence that it may desire to introduce
before the court should resolve the motion for bail.35
We agree, however, with petitioner that it was error for the respondent
court to fix the bond at P30,000.00, then later at P50,000.00 without
hearing the prosecution. The guidelines for the fixing of the amount of bail
provided for in Section 10 of Rule 114 of the Rules of Court are not matters
left entirely to the discretion of the court. As We stated in People vs.
Dacudao, et al., 170 SCRA, 489, 495:
Certain guidelines in the fixing of a bailbond call for the
presentation of evidence and reasonable opportunity for the
prosecution to refute it. Among them are the nature and
circumstances of the crime, character and reputation of the
accused, the weight of the evidence against him, the probability
of the accused appearing at the trial, whether or not the accused
is a fugitive from justice, and whether or not the accused is under
bond in other case. . . .
In the instant case petitioner has sufficiently made out allegations which
necessitate a grant of an opportunity to be heard for the purpose of
PUP COL 2015
determining the amount of bail, but not for the denial thereof because
aforesaid Section 10 of Rule 114 does not authorize any court to deny bail.
II.
It must, however, be stressed that under the present state of the law,
rebellion is no longer punishable byprision mayor and fine not exceeding
P20,000.00. Republic Act No. 6968 approved on 24 October 1990 and
which took effect after publication in at least two newspapers of general
circulation, amended, among others, Article 135 of the Revised Penal Code
by increasing the penalty for rebellion such that, as amended, it now reads:
Article 135. Penalty for rebellion, insurrection or coup d'etat .
Any person who promotes, maintains, or heads a rebellion or
insurrection shall suffer the penalty of reclusion perpetua.
Any person merely participating or executing the commands of
others in a rebellion or insurrection shall suffer the penalty
of reclusion perpetua.
xxx xxx xxx
This amendatory law cannot apply to the private respondent for acts
allegedly committed prior to its effectivity. It is not favorable to him. "Penal
laws shall have a retroactive effect insofar as they favor the person guilty
of a felony, who is not a habitual criminal, as this term is defined in Rule 5
of Article 62 of this Code, although at the time of the publication of such
laws a final sentence has been pronounced and the convict is serving the
same.36
III.
We agree with Petitioner that private respondent has, however, waived his
right to bail in G.R. No. 76009.
On 3 October 1986, or the day following the filing of the original information
in Criminal Case No. 86-48926 with the trial court, a petition for habeas
corpus for herein private respondent, and his co-accused Josefina Cruz and
Jose Concepcion, was filed with this Court by Lucia Cruz, Aida Concepcion
Paniza and Beatriz Salas against Juan Ponce Enrile, Gen. Fidel Ramos, Brig.
Gen. Renato de Villa, Brig. Gen. Ramon Montao, and Col. Saldajeno
praying, among others, that the petition be given due course and a writ
of habeas corpusbe issued requiring respondents to produce the bodies of
66 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
herein private respondent and his co-accused before the Court and explain
by what authority they arrested and detained them. The following
proceedings took place thereafter in said case:
1. In a resolution of 7 October 1986 We issued a writ of habeas corpus,
required respondents to make a return of the writ on or before the close
of office hours on 13 October and set the petition for hearing on 14 October
1986 at 10:00 o'clock in the morning.
2. On 13 October 1986 respondents, through the Office of the Solicitor
General, filed a Return To The Writ of Habeas Corpus alleging therein that
private respondent and Josefina Cruz alias "Mrs. Mercado", and Jose Milo
Concepcion alias "Eugene Zamora" were apprehended by the military on
September 29, 1986 in the evening at the Philippine General Hospital
Compound at Taft Ave., Mangga being leaders or members of the
Communist Party of the Philippines, New People's Army and National
Democratic Front, organizations dedicated to the overthrow of the
Government through violent means, and having actually committed acts of
rebellion under Article 134 of the Revised Penal Code, as amended. After
their arrest they were forthwith charged with rebellion before Branch XII
of the Regional Trial Court, National Capital Region in Criminal Case No.
86-48926 and on 3 October warrants for their arrest were issued and
respondents continue to detain them because of the warrants of arrest and
the pendency of the criminal cases against them. Respondents further
allege that, contrary to the allegation in the petition, herein private
respondent was not a member of the NDF panel involved in peace
negotiations with the Government; neither is he and his companions Cruz
and Concepcion covered by any, safe conduct pass issued by competent
authorities.
3. At the hearing on 14 October 1986 the parties informed the Court of
certain agreements reached between them. We issued a resolution reading
as follows:
When this case was called for hearing this morning, Attorneys
Romeo Capulong, Arno V. Sanidad, Efren H. Mercado, Edgardo
Pamin-tuan, Casiano Sabile, Ramon Cura, and William Chua
appeared for the petitioners with Atty. Capulong arguing for the
petitioners. Solicitor General Sedfrey Ordonez, Assistant Solicitor
General Romeo C. de la Cruz and Trial Attorney Josue E.
Villanueva appeared for the respondents, with Solicitor General
Ordoez arguing for the respondents.
PUP COL 2015
Petitioners' counsel, Atty. Romeo Capulong, manifested in open
Court that in conformity with the agreement reached with the
government, the petition for habeas corpus will be withdrawn
with detainee Rodolfo Salas to remain under custody, whereas his
co-detainees Josefina Cruz and Jose Milo Concepcion will be
released immediately.
Solicitor General Sedfrey Ordoez, also in open Court, confirmed
the foregoing statement made by petitioners' counsel regarding
the withdrawal of the petition for habeas corpus, declaring that
no objection will be interposed to the immediate release of
detainees Josefina Cruz and Jose Milo Concepcion, and that no
bond will be required of them, but they will continue to face trial
with their co-accused, Rodolfo Salas; further, that they will not be
rearrested on the basis of the warrants issued by the trial court
provided that they manifest in open Court their willingness to
subject themselves to the jurisdiction of the Court and to appear
in court when their presence is required.
In addition, he stated that he is willing to confer with petitioners'
counsel today relative to the compromise agreement that they
have previously undertaken to submit.
Upon manifestation of petitioners' counsel, Atty. Romeo
Capulong, that on his oath as member of the Bar, the detainees
Josefina Cruz and Jose Milo Concepcion have agreed to subject
themselves to the jurisdiction of the trial court, the Court ordered
their immediate release.
Thereafter, the Court approved the foregoing manifestations and
statements and required both parties to SUBMIT to the Court their
compromise agreement by 4:00 o'clock this afternoon.
Teehankee, C.J., is on official leave.
4. At 3:49 o'clock in the afternoon of 14 October 1986 the parties submitted
a Joint Manifestation and Motion duly signed by Atty. Romeo Capulong,
counsel for petitioners, and Solicitor General Sedfrey Ordoez, Assistant
Solicitor General Romeo C. de la Cruz and Trial Attorney Josue S.
Villanueva, counsel for respondents, which reads as follows:
67 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
COME NOW petitioners and the respondents, assisted by their
respective counsel, and to this Honorable Tribunal respectfully
manifest:
1. That in the discussion between Romeo Capulong, petitioners'
counsel, and Solicitor General Sedfrey A. Ordoez on October 13,
1986 exploratory talks were conducted to find out how the
majesty of the law may be preserved and human considerations
may be called into play.
2. That in the conference both counsel agreed to the following
terms of agreement:
a. The petition for habeas corpus will be withdrawn by
petitioners and Josefina Cruz and Jose Milo Concepcion
will be immediately released but shall appear at the trial
of the criminal case for rebellion (People v. Rodolfo
Salas, et al., Criminal Case No. 4886 [should be 86-
48926], Regional Trial Court, National Capital Judicial
Region) filed against them under their personal
recognizance.
b. Petitioner Rodolfo Salas will remain in legal custody
and face trial before the court having custody over his
person.
c. The warrant of arrest for the persons of Josefina Cruz
and Jose Milo Concepcion is hereby deemed recalled in
view of formal manifestation before the Supreme Court
that they will submit themselves to the court having
jurisdiction over their person.
3. That on October 14, the Solicitor General was able to obtain
the conformity of the Government to the foregoing terms which
were likewise accepted by petitioner (sic) and their counsel of
record.
4. That the two counsel submitted their oral manifestation during
the hearing on October 14 and the present manifestation in
compliance with the resolution announced in court this morning.
WHEREFORE, it is prayed that the petition for habeas corpus be
dismissed.
5. On 16 October 1986 We issued the following resolution:
PUP COL 2015
G.R. No. 76009 [In the Matter of the Petition for Habeas Corpus of
Rodolfo Salas, Josefina Cruz and Jose Milo Concepcion, et al. v.
Hon. Juan Ponce Enrile, Gen. Fidel V. Ramos, Brig. Gen. Renato
de Villa, Brig. Gen. Ramon Montao and Col. Virgilio Saldajeno]
considering the Joint Manifestation and Motion dated October 14,
1986 filed by Attorneys Romeo Capulong, Arno V. Sanidad, Efren
H. Mercado and Ricardo Fernandez, Jr. as counsel for petitioners
and Solicitor General Sedfrey A. Ordonez and Assistant Solicitor
General Romeo C. de la Cruz and Trial Attorney Josue S.
Villanueva as counsel for respondents which states that they have
entered into an agreement whereby: [a] the petition for habeas
corpus will be withdrawn by petitioners, and Josefina Cruz and
Jose Milo Concepcion will be immediately released but shall
appear at the trial of the criminal case for rebellion [People vs.
Rodolfo Salas, et al., Criminal Case No. 4886, Regional Trial Court,
National Capital Judicial Region, Branch XII, Manila], filed against
them, on their personal recognizance; [b] petitioner Rodolfo Salas
will remain in legal custody and face trial before the court having
custody over his person; and [c] the warrant of arrest for the
person of Josefina Cruz and Jose Milo Concepcion is hereby
deemed recalled in view of the formal manifestation before this
Court that they will submit themselves to the court having
jurisdiction over their person and in view of the said agreement,
the petition for habeas corpus be dismissed, the Court Resolved
to DISMISS the petition for habeas corpusbut subject to the
condition that petitioners' lead counsel, Atty. Capulong, upon his
oath as member of the Bar, shall abide by his commitment to
ensure the appearance of Josefina Cruz and Jose Milo Concepcion
at the trial of the criminal case for rebellion filed against them.
Teehankee, C.J., is on official leave.
It is the stand of the petitioner that private respondent, "in agreeing to remain in
legal custody even during the pendency of the trial of his criminal case, [he] has
expressly waived his right to bail."37 Upon the other hand, private respondent asserts
that this claim is totally devoid of factual and legal basis, for in their petition
for habeas corpusthey precisely questioned the legality of the arrest and the
continued detention of Rodolfo Salas, Josefina Cruz and Jose Milo Concepcion, which
was not resolved by this Court or by the compromise agreement of the parties but
left open for further determination in another proceeding. Moreover, the matter of
the right to bail was neither raised by either party nor resolved by this Court, and
68 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
the legal steps promptly taken by private respondent after the agreement was
reached, like the filing of the motion to quash on 7 November 1986 and the petition
for bail on 14 May 1987, were clear and positive assertions of his statutory and
constitutional rights to be granted not only provisional but final and permanent
liberty. Finally, private respondent maintains that the term "legal custody" as used
in the Joint Manifestation and Motion simply means that private respondent agreed
to continue to be in the custody of the law or in custodia legis and nothing else; it
is not to be interpreted as waiver.
Interestingly, private respondent admits that:
"Custody" has been held to mean nothing less than actual imprisonment.
It is also defined as the detainer of a person by virtue of a lawful authority,
or the "care and possession of a thing or person." (Bouviers Law Dictionary,
Third Ed, Vol. I, pp. 741-742 citing Smith v. Com. 59 Pa. 320 and Rolland
v. Com. 82 Pa. 306)
He further admits that, in the light of Section 1 of Rule 114 of the Rules of Court
and settled jurisprudence, the "constitutional right to bail is subject to the limitation
that the person applying for admission to bail should be in the custody of the law or
otherwise deprived of his liberty."38
When the parties in G.R. No. 76009 stipulated that:
b. Petitioner Rodolfo Salas will remain in legal custody and face trial before
the court having custody over his person.
they simply meant that Rodolfo Salas, herein respondent, will remain in actual
physical custody of the court, or in actual confinement or detention, as distinguished
from the stipulation concerning his co-petitioners, who were to be released in view
of the recall of the warrants of arrest against them; they agreed, however, "to
submit themselves to the court having jurisdiction over their persons." Note should
be made of the deliberate care of the parties in making a fine distinction
between legal custody and court having custody over the person in respect to
Rodolfo Salas and court having jurisdiction over the persons of his co-accused. Such
a fine distinction was precisely intended to emphasize the agreement that Rodolfo
Salas will not be released, but should remain in custody. Had the parties intended
otherwise, or had this been unclear to private respondent and his counsel, they
should have insisted on the use of a clearer language. It must be remembered that
at the time the parties orally manifested before this Court on 14 October 1986 the
PUP COL 2015
terms and conditions of their agreement and prepared and signed the Joint
Manifestation and Motion, a warrant of arrest had already been issued by the trial
court against private respondent and his co-accused. The stipulation that only the
warrants of arrest for Josefina Cruz and Jose Milo Concepcion shall be recalled and
that only they shall be released, further confirmed the agreement that herein
petitioner shall remain in custody of the law, or detention or confinement.
In defining bail as:
. . . the security given for the release of a person in custody of the law, . .
.
Section 1 of Rule 114 of the Revised Rules of Court admits no other meaning or
interpretation for the term "in custody of the law" than that as above indicated. The
purpose of bail is to relieve an accused from imprisonment until his conviction and
yet secure his appearance at the trial.39 It presupposes that the person applying for
it should be in the custody of the law or otherwise deprived of liberty.40
Consequently, having agreed in G.R. No. 76009 to remain in legal custody, private
respondent had unequivocably waived his right to bail.
But, is such waiver valid?
Article 6 of the Civil Code expressly provides:
Art. 6. Rights may be waived, unless the waiver is contrary to law, public
order, public policy, morals, or good customs, or prejudicial to a third
person with a right recognized by law.
Waiver is defined as "a voluntary and intentional relinquishment or abandonment of
a known existing legal right, advantage, benefit, claim or privilege, which except for
such waiver the party would have enjoyed; the voluntary abandonment or
surrender, by a capable person, of a right known by him to exist, with the intent
that such right shall be surrendered and such person forever deprived of its benefit;
or such conduct as warrants an inference of the relinquishment of such right; or the
intentional doing of an act inconsistent with claiming it."41
As to what rights and privileges may be waived, the authority is settled:
. . . the doctrine of waiver extends to rights and privileges of any character,
and, since the word "waiver" covers every conceivable right, it is the
69 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

general rule that a person may waive any matter which affects his property,
and any alienable right or privilege of which he is the owner or which
belongs to him or to which he is legally entitled, whether secured by
contract, conferred with statute, or guaranteed by constitution, provided
such rights and privileges rest in the individual, are intended for his sole
benefit, do not infringe on the rights of others, and further provided the
waiver of the right or privilege is not forbidden by law, and does not
contravene public policy; and the principle is recognized that everyone has
a right to waive, and agree to waive, the advantage of a law or rule made
solely for the benefit and protection of the individual in his private capacity,
if it can be dispensed with and relinquished without infringing on any public
right, and without detriment to the community at large. . . .
Although the general rule is that any right or privilege conferred by statute
or guaranteed by constitution may be waived, a waiver in derogation of a
statutory right is not favored, and a waiver will be inoperative and void if it
infringes on the rights of others, or would be against public policy or morals
and the public interest may be waived.
While it has been stated generally that all personal rights conferred by
statute and guaranteed by constitutionmay be waived, it has also been said
that constitutional provisions intended to protect property may be waived,
and even some of the constitutional rights created to secure personal
liberty are subjects of waiver.42
In Commonwealth vs. Petrillo,43 it was held:
Even the 1987 Constitution expressly recognizes a waiver of rights guaranteed by
its Bill of Rights.1wphi1 Section 12(l) of Article III thereof on the right to remain
silent and to have a competent and independent counsel, preferably of his own
choice states:
. . . These rights cannot be waived except in writing and in the presence
of counsel.
This provision merely particularizes the form and manner of the waiver; it,
nevertheless, clearly suggests that the other rights may be waived in some other
form or manner provided such waiver will not offend Article 6 of the Civil Code.
We hereby rule that the right to bail is another of the constitutional rights which can
be waived. It is a right which is personal to the accused and whose waiver would
not be contrary to law, public order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by law.
The respondent Judge then clearly acted with grave abuse of discretion in granting
bail to the private respondent.
WHEREFORE, the Orders of respondent Judge of July 7, 1987 and July 30, 1987 in
Criminal Case No. 86-48926 entitled People of the Philippines vs. Rodolfo C.
Salas alias Commander Bilog/Henry, Josefina Cruz alias Mrs. Mercado, and Jose Milo
Concepcion alias Eugene Zamora, for Rebellion, are hereby NULLIFIED and SET
ASIDE.
SO ORDERED.

Rights guaranteed to one accused of a crime fall naturally into two classes:
(a) those in which the state, as well as the accused, is interested; and (b)
those which are personal to the accused, which are in the nature of
personal privileges. Those of the first class cannot be waived; those of the
second may be.

It is "competent for a person to waive a right guaranteed by the Constitution, and

to consent to action which would be invalid if taken against his will."44

This Court has recognized waivers of constitutional rights such as, for example, the
right against unreasonable searches and seizures;45 the right to counsel and to
remain silent;46 and the right to be heard.47

70 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24022 March 3, 1965
ILOILO PALAY AND CORN PLANTERS ASSOCIATION, INC., ET
AL., petitioners,
vs.
HON. JOSE, Y. FELICIANO, ET AL., respondents.
BAUTISTA ANGELO, J.:
On December 26, 1964, Jose Y. Feliciano, Chairman and General Manager of the
Rice and Corn Administration, wrote the President of the Philippines urging the
immediate importation of 595,400 metric tons of rice, thru a government agency
which the President may designate, pursuant to the recommendation of the National
Economic Council as embodied in its Resolution No. 70, series of 1964.
On December 27, 1964, the President submitted said letter to his cabinet for
consideration and on December 28, 1964, the cabinet approved the needed
importation. On January 4, 1965, the President designated the Rice and Corn
Administration as the government agency authorized to undertake the importation
pursuant to which Chairman Jose Y. Feliciano announced an invitation to bid for said
importation and set the bidding for February 1, 1965.
Considering that said importation is contrary to Republic Act 3452 which prohibits
the government from importing rice and that there is no law appropriating funds to
finance the same, the Iloilo Palay and Corn Planters Association, Inc., together with
Ramon A. Gonzales, in his capacity as taxpayer, filed the instant petition before this
Court seeking to restrain Jose Y. Feliciano, in his capacity as Chairman and General
Manager of the Rice and Corn Administration, from conducting the bid scheduled on
the date abovementioned, and from doing any other act that may result in the
contemplated importation until further orders of this Court. For reasons that do not
clearly appear, the Secretary of Foreign Affairs and the Auditor General were made
co-respondents.
Pending decision on the merits, petitioners prayed for the issuance of a writ of
preliminary injunction, which, in due course, this Court granted upon petitioners'
filing a bond in the amount of P50,000.00. This bond having been filed, the writ was
issued on February 10, 1965.
PUP COL 2015
Respondents, in their answer do not dispute the essential allegations of the petition
though they adduced reasons which justify the importation sought to be made. They
anchor the validity of the importation on the provisions of Republic Act 2207 which,
in their opinion, still stand.
It is petitioners' contention that the importation in question being undertaken by the
government even if there is a certification by the National Economic Council that
there is a shortage in the local supply of rice of such gravity as to constitute a
national emergency, is illegal because the same is prohibited by Republic Act 3452
which, in its Section 10, provides that the importation of rice and corn is only left to
private parties upon payment of the corresponding taxes. They claim that the Rice
and Corn Administration, or any other government agency, is prohibited from doing
so.
It is true that the section above adverted to leaves the importation of rice and corn
exclusively to private parties thereby prohibiting from doing so the Rice and Corn
Administration or any other government agency, but from this it does not follow that
at present there is no law which permits the government to undertake the
importation of rice into the Philippines. And this we say because, in our opinion, the
provision of Republic Act 2207 on the matter still stands. We refer to Section 2 of
said Act wherein, among other things, it provides that should there be an existing
or imminent shortage in the local supply of rice of such gravity as to constitute a
national emergency, and this is certified by the National Economic Council, the
President of the Philippines may authorize such importation thru any government
agency that he may designate. Here there is no dispute that the National Economic
Council has certified that there is such shortage present which, because of its
gravity, constitutes a national emergency, and acting in pursuance thereof the
President lost no time in authorizing, after consulting his cabinet, the General
Manager of the Rice and Corn Administration to immediately undertake the needed
importation in order to stave off the impending emergency. We find, therefore, no
plausible reason why the disputed importation should be prevented as petitioners
now desire.
The contention that Republic Act 2207 has already been repealed by Republic Act
3452 is untenable in the light of the divergent provisions obtaining in said two laws.
Admittedly, Section 16 of Republic Act 3452 contains a repealing clause which
provides: "All laws or parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly." The question may now be asked: what is
the nature of this repealing clause ? It is certainly not an express repealing clause
because it fails to identify or designate the Act or Acts that are intended to be
71 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
repealed [ Sutherland, Statutory Construction, (1943) Vol. 1, p. 467]. Rather, it is a
clause which predicates the intended repeal upon the condition that a substantial
conflict must be found in existing and prior Acts. Such being the case, the
presumption against implied repeals and the rule against strict construction
regarding implied repeals apply ex proprio vigore. Indeed, the legislature is
presumed to know the existing laws so that, if a repeal is intended, the proper step
is to so express it [Continental Insurance Co. v. Simpson, 8 F (2d) 439; Weber v.
Bailey, 151 Ore. 2188, 51 P (2d) 832; State v. Jackson, 120 W. Va. 521, 199 S.E.
876]. The failure to add a specific repealing clause indicates that the intent was not
to repeal any existing law (Crawford, Construction of Statute, 1940 ed., p. 631),
unless an irreconcilable inconsistency and repugnancy exist in the terms of the new
and old laws. Here there is no such inconsistency.
To begin with, the two laws, although with a common objective, refer to different
methods applicable to different circumstances. Thus, the total banning of
importation under normal conditions as provided for in Republic Act 2207 is one step
to achieve the rice and corn sufficiency program of the Administration. The
philosophy behind the banning is that any importation of rice during a period of
sufficiency or even of a minor shortage will unduly compete with the local producers
and depress the local price which may discourage them from raising said crop. On
the other hand, a price support program and a partial ban of rice importation as
embodied in Republic Act 3452 is another step adopted to attend the sufficiency
program. While the two laws are geared towards the same ultimate objective, their
methods of approach are different; one is by a total ban of rice importation and the
other by a partial ban, the same being applicable only to the government during
normal period.
There is another area where the two laws find a common point of reconciliation: the
normalcy of the time underlying both laws. Thus, with respect to the matter of
importation Republic Act 2207 covers three different situations: (1) when the local
produce of rice is sufficient to supply local consumption; (2) when the local produce
falls short of the supply but the shortage is not enough to constitute a national
emergency; and (3) when the shortage, on the local supply of rice is of such gravity
as to constitute a national emergency. Under the first two situations, no importation
is allowed whether by the government or by the private sector. However, in the case
of the third situation, the law authorizes importation, by the government.
Republic Act 3452, on the other hand, deals only with situations 1 and 2, but not
with. Nowhere in said law can we discern that it covers importation where the
shortage in the local supply is of such gravity as to constitute a national emergency.
PUP COL 2015
In short, Republic Act 3452 only authorizes importation during normal times, but
when there is a shortage in the local supply of such gravity as to constitute a national
emergency, we have to turn to Republic Act 2207. These two laws therefore, are
not inconsistent and so implied repeal does not ensue.
Our view that Republic Act 3452 merely contemplates importation during normal
times is bolstered by a consideration of the discussion that took place in Congress
of House Bill No. 11511 which was presented in answer to the request of the Chief
Executive that he be given a standby power to import rice in the Philippines. On this
matter, we quote the following views of Senators Padilla and Almendras:
SENATOR PADILLA: But under Republic Act No. 3452 them is a proviso in
Sec. 10 thereof "that the Rice and Corn Administration or any government
agency is hereby prohibited from importing rice and corn."
SENATOR ALMENDRAS: That is under normal conditions.
SENATOR PADILLA: "Provided further", it says, "that the importation of
rice, and corn is left to private parties upon payment of the corresponding
tax." So therefore, the position of the Committee as expressed by the
distinguished sponsor, is that Sec. 10 of Republic Act No. 3452 is applicable
under normal conditions.
SENATOR ALMENDRAS: "Yes". (Senate Debate, June 16, 1964).
Much stress is laid on the content of Section 12 of Republic Act 3452 which gives to
the President authority to declare a rice and corn emergency any time he deems
necessary in the public interest and, during the emergency, to conduct raids, seizure
and confiscation of rice and corn hoarded in any private warehouse or bodega
subject to constitutional limitations, to support the claim that said Act also bans
importation on the part of the government even in case of an emergency. The
contention is predicated on a misinterpretation of the import and meaning of said
provision. Note that the section refers to an emergency where there is an artificial
shortage because of the apparent hoarding undertaken by certain unscrupulous
dealers or businessmen, and not to an actual serious shortage of the commodity
because, if the latter exists, there is really nothing to raid, seize or confiscate,
because the situation creates a real national emergency. Congress by no means
could have intended under such a situation to deprive the government of its right to
import to stave off hunger and starvation. Congress knows that such remedy is
worthless as there is no rice to be found in the Philippines. Seizure of rice is only of
72 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
value in fighting hoarding and profiteering, but such remedy cannot produce the rice
needed to solve the emergency. If there is really insufficient rice stocked in the
private warehouses and bodegas such confiscatory step cannot remedy an actual
emergency, in which case we have to turn to Republic Act 2207.
The two laws can therefore be construed as harmonious parts of the legislative
expression of its policy to promote a rice and corn program. And if this can be done,
as we have shown, it is the duty of this Court to adopt such interpretation that would
give effect to both laws. Conversely, in order to effect a repeal by implication, the
litter statute must be irreconcilably inconsistent and repugnant to the prior existing
law [United States v. Greathouse,. 166 U.S. 601, 41 L. Ed., 1130; In re Phoenix
Hotel Co., 13 F. Supp. 229; Hammond v. McDonald, 32 Cal. App. 187, 89 P (2d)
407; Sutherland, Statutory Construction, supra, p. 462]. The old and the new laws
must be absolutely incompatible (Compaia General de Tabacos v. Collector of
Customs, 46 Phil. 8). A mere difference in the terms and provisions of the statutes
is not sufficient to create a repugnancy between them. There must be such a positive
repugnancy between the provisions of the old and the new statutes that they cannot
be made to reconcile and stand together (Crawford, Construction of Statute, supra,
p. 631). The clearest case possible must first be made before the inference of implied
repeal may be drawn [Nagano v. McGrath, 187 F (2d) 759]. Inconsistency is never
presumed.
Republic Act 3848 entitled "An Act Providing for the Importation of Rice During the
Calendar Year Nineteen Hundred Sixty-Four in the Event of Shortage in Local Supply"
cannot be given any nullifying value, as it is pretended, simply because Section 6
thereof provides that "except as provided in this Act, no other agency or
instrumentality of the Government shall be allowed to purchase rice from abroad."
The reason is that it is a mere temporary law effective only for a specific year. As its
title reads, it is merely an authority to import rice during the year 1964. The same,
therefore, is now functus officio at least on the matter of importation.
Neither can petitioners successfully pretend that as Section 4 thereof provides that
pending prosecutions for any violation of Republic Acts 2207 and 3452 shall in no
way be affected by said Act 3848 the implication is that the aforesaid Acts have
already been repealed. That provision is merely a safeguard placed therein in order
that the prosecutions already undertaken may not be defeated with the enactment
of Republic Act 3848 because the latter provides for penal provisions which call for
lesser penalty. The intention is to except them from the rule that penal statutes can
be given retroactive effect if favorable to the accused.
PUP COL 2015
To further bolster our view that Republic Act 2207 has not been impliedly repealed
by Republic Act 3452, we wish to briefly quote hereunder the views expressed by
some senators during the discussion of House Bill 11511 already mentioned above.
It should be here repeated that said bill was presented to accede to the request of
the President for a stand-by power to import in case of emergency in view of
the uncertainty of the law, but that during the discussion thereof it was strongly
asserted and apparently upheld that such request for authority was not necessary
because Republic Act 2207 was still in force. It is probably for this reason that said
bill, after having been approved by the Senate, was killed in the conference
committee that considered it. These views, while not binding, are of persuasive
authority and throw light on the issue relative to the effectivity of Republic Act 2207.
SENATOR LIWAG: ... Now Mr. Chairman, is it the sense of the Committee
that in the case of emergency, in case of an impending shortage, we can
import rice under the provisions of R.A. No. 2207?
SENATOR ALMENDRAS: Yes, that is what we mean, your Honor, in this
paragraph (c), Section 2, page 2, that when we say "under the provisions
of existing law," we are referring to R.A. No. 2207.
xxx xxx xxx
SENATOR PADILLA: I notice, Mr. Senator, that Section 2 paragraph (c) of
the amendment by substitution reads:
Importation of rice and/or corn should be resorted to only in cases of
extreme and under the provisions of existing law.
I suppose that the existing laws referred to are Republic Act No. 2207 and
Republic Act No. 3452. Does this section in the proposed bill by substitution
recognize the continued existence of the pertinent provisions of Republic
Act No. 2207 and Republic Act No. 3452 on rice importation ?
SENATOR ALMENDRAS: Yes, that is the reason, Your Honor, why we struck
out the stand-by power on the part of the President to import rice.
xxx xxx xxx
SENATOR ALMENDRAS: The position of your Committee, Your Honor,
because of the existing law that is, Republic Act No. 3452 and Republic
Act No. 2207 that is the reason your Committee eliminated that stand-
by power of the President to import rice. Because you know, Your Honor,
73 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

what is the use of that stand-by power, inasmuch as under Republic Act nothing in the proviso contained in Republic Act No. 3452 which would be
No. 3452 and Republic Act No. 2207 the President can designate any inconsistent with importation during a shortage amounting to a national
government agency to import rice? emergency.

SENATOR PADILLA: Well, it is good to make that clear because in the
decision of the Supreme Court, as I said, there was no clear-cut holding as
to the possible co-existence or implied repeal between these two Acts.
SENATOR ALMENDRAS: Yes, Your Honor, but the gentleman from Nueva
Ecija, Senator Liwag, informed me that Republic Act No. 2207 has never
been repealed.
SENATOR PADILLA: Well, I also concur with that view, but we want to
make that clear ... .
SENATOR PADILLA: "Provided, further," it says, "That the importation of
rice and corn is left to private parties upon payment of the corresponding
taxes." So, therefore, the position of the Committee, as expressed by the
distinguished sponsor is that Sec. 10 of Republic Act No. 3452 is applicable
under normal conditions.
Another circumstance that strengthens our view is that when said House Bill No.
11511 was finally approved by the Senate, it carried a clause which expressly
repeals, among others, Republic Act No. 2207 (Section 14), but which bill, as already
said, was later killed in the conference committee. This attitude clearly reveals that
Congress preferred to fall back on Republic Act 2207 with regard to future
importations.
Anent the point raised relative to the lack of necessary appropriation to finance the
importation in question, suffice it to state that under Republic Act 663 the National
Rice and Corn Corporation is authorized to borrow, raise and secure the money that
may be necessary to carry out its objectives. We refer to Section 3 (e) of said Act
which empowers said corporation to secure money and to encumber any property
it has as a guaranty, and Republic Act No. 3452, which creates the Rice and Corn
Administration, transferred its functions and powers to the latter, including the
power to borrow money under Section 3(e). This provision gives the RCA enough
power with which to finance the importation in question.

SENATOR ALMENDRAS: Yes. WHEREFORE, petition is dismissed. The writ of preliminary injunction issued by this
SENATOR PADILLA: So, both provisions of law are in existence. Court is hereby dissolved. Costs against petitioners.
SENATOR ALMENDRAS: Yes.
SENATOR PADILLA: One is not repealed by the other.
xxx xxx xxx

SENATOR TOLENTINO: Mr. President, there are two views already

expressed on whether Republic Act No. 2207 has been repealed by
Republic Act No. 3452. One view sustains the theory that there has been a
repeal of Republic Act No. 2207 by Republic Act No. 3452 insofar as rice
importation is concerned. The other view is that there is no repeal. The
Supreme Court does not state clearly which side prevails. I take the view
that the two laws can be reconciled ... .

Now, Mr. President, reading those two provisions together, I maintain that
they are not totally repugnant to each other, that it is possible for them to
stand together except on certain points: First, is importation in case of a
national emergency certified by the National Economic Council permissible?
By reading the two provisos together I would say yes because there is

74 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 166562 March 31, 2009
BENJAMIN G. TING, Petitioner,
vs.
CARMEN M. VELEZ-TING, Respondent.
DECISION
NACHURA, J.:
Before us is a petition for review on certiorari seeking to set aside the November 17,
2003 Amended Decision1 of the Court of Appeals (CA), and its December 13, 2004
Resolution2 in CA-G.R. CV No. 59903. The appellate court, in its assailed decision
and resolution, affirmed the January 9, 1998 Decision3 of the Regional Trial Court
(RTC), Branch 23, Cebu City, declaring the marriage between petitioner and
respondent null and void ab initio pursuant to Article 36 of the Family Code.4
The facts follow.
Petitioner Benjamin Ting (Benjamin) and respondent Carmen Velez-Ting (Carmen)
first met in 1972 while they were classmates in medical school.5 They fell in love,
and they were wed on July 26, 1975 in Cebu City when respondent was already
pregnant with their first child.
At first, they resided at Benjamins family home in Maguikay, Mandaue City. 6 When
their second child was born, the couple decided to move to Carmens family home
in Cebu City.7 In September 1975, Benjamin passed the medical board
examinations8 and thereafter proceeded to take a residency program to become a
surgeon but shifted to anesthesiology after two years. By 1979, Benjamin completed
the preceptorship program for the said field9 and, in 1980, he began working for
Velez Hospital, owned by Carmens family, as member of its active staff,10 while
Carmen worked as the hospitals Treasurer.11
The couple begot six (6) children, namely Dennis, born on December 9, 1975; James
Louis, born on August 25, 1977; Agnes Irene, born on April 5, 1981; Charles
Laurence, born on July 21, 1986; Myles Vincent, born on July 19, 1988; and Marie
Corinne, born on June 16, 1991.12
PUP COL 2015
On October 21, 1993, after being married for more than 18 years to petitioner and
while their youngest child was only two years old, Carmen filed a verified petition
before the RTC of Cebu City praying for the declaration of nullity of their marriage
based on Article 36 of the Family Code. She claimed that Benjamin suffered from
psychological incapacity even at the time of the celebration of their marriage, which,
however, only became manifest thereafter. 13
In her complaint, Carmen stated that prior to their marriage, she was already aware
that Benjamin used to drink and gamble occasionally with his friends. 14 But after
they were married, petitioner continued to drink regularly and would go home at
about midnight or sometimes in the wee hours of the morning drunk and violent.
He would confront and insult respondent, physically assault her and force her to
have sex with him. There were also instances when Benjamin used his gun and shot
the gate of their house.15 Because of his drinking habit, Benjamins job as
anesthesiologist was affected to the point that he often had to refuse to answer the
call of his fellow doctors and to pass the task to other anesthesiologists. Some
surgeons even stopped calling him for his services because they perceived petitioner
to be unreliable. Respondent tried to talk to her husband about the latters drinking
problem, but Benjamin refused to acknowledge the same.16
Carmen also complained that petitioner deliberately refused to give financial support
to their family and would even get angry at her whenever she asked for money for
their children. Instead of providing support, Benjamin would spend his money on
drinking and gambling and would even buy expensive equipment for his hobby.17 He
rarely stayed home18 and even neglected his obligation to his children.19
Aside from this, Benjamin also engaged in compulsive gambling.20 He would gamble
two or three times a week and would borrow from his friends, brothers, or from loan
sharks whenever he had no money. Sometimes, Benjamin would pawn his wifes
own jewelry to finance his gambling.21 There was also an instance when the spouses
had to sell their family car and even a portion of the lot Benjamin inherited from his
father just to be able to pay off his gambling debts.22 Benjamin only stopped going
to the casinos in 1986 after he was banned therefrom for having caused trouble, an
act which he said he purposely committed so that he would be banned from the
gambling establishments.23
In sum, Carmens allegations of Benjamins psychological incapacity consisted of the
following manifestations:
75 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
1. Benjamins alcoholism, which adversely affected his family relationship
and his profession;
2. Benjamins violent nature brought about by his excessive and regular
drinking;
3. His compulsive gambling habit, as a result of which Benjamin found it
necessary to sell the family car twice and the property he inherited from
his father in order to pay off his debts, because he no longer had money
to pay the same; and
4. Benjamins irresponsibility and immaturity as shown by his failure and
refusal to give regular financial support to his family.24
In his answer, Benjamin denied being psychologically incapacitated. He maintained
that he is a respectable person, as his peers would confirm. He said that he is an
active member of social and athletic clubs and would drink and gamble only for
social reasons and for leisure. He also denied being a violent person, except when
provoked by circumstances.25 As for his alleged failure to support his family
financially, Benjamin claimed that it was Carmen herself who would collect his
professional fees from Velez Hospital when he was still serving there as practicing
anesthesiologist.26 In his testimony, Benjamin also insisted that he gave his family
financial support within his means whenever he could and would only get angry at
respondent for lavishly spending his hard-earned money on unnecessary
things.27 He also pointed out that it was he who often comforted and took care of
their children, while Carmen played mahjong with her friends twice a week.28
During the trial, Carmens testimony regarding Benjamins drinking and gambling
habits and violent behavior was corroborated by Susana Wasawas, who served as
nanny to the spouses children from 1987 to 1992. 29 Wasawas stated that she
personally witnessed instances when Benjamin maltreated Carmen even in front of
their children.30
Carmen also presented as witness Dr. Pureza Trinidad-Oate, a
psychiatrist.31 Instead of the usual personal interview, however, Dr. Oates
evaluation of Benjamin was limited to the transcript of stenographic notes taken
during Benjamins deposition because the latter had already gone to work as an
anesthesiologist in a hospital in South Africa. After reading the transcript of
stenographic notes, Dr. Oate concluded that Benjamins compulsive drinking,
compulsive gambling and physical abuse of respondent are clear indications that
petitioner suffers from a personality disorder.32
PUP COL 2015
To refute Dr. Oates opinion, petitioner presented Dr. Renato D. Obra, a psychiatrist
and a consultant at the Department of Psychiatry in Don Vicente Sotto Memorial
Medical Center, as his expert witness.33 Dr. Obra evaluated Benjamins psychological
behavior based on the transcript of stenographic notes, as well as the psychiatric
evaluation report prepared by Dr. A.J.L. Pentz, a psychiatrist from the University of
Pretoria in South Africa, and his (Dr. Obras) interview with Benjamins
brothers.34 Contrary to Dr. Oates findings, Dr. Obra observed that there is nothing
wrong with petitioners personality, considering the latters good relationship with
his fellow doctors and his good track record as anesthesiologist.35
On January 9, 1998, the lower court rendered its Decision36 declaring the marriage
between petitioner and respondent null and void. The RTC gave credence to Dr.
Oates findings and the admissions made by Benjamin in the course of his
deposition, and found him to be psychologically incapacitated to comply with the
essential obligations of marriage. Specifically, the trial court found Benjamin an
excessive drinker, a compulsive gambler, someone who prefers his extra-curricular
activities to his family, and a person with violent tendencies, which character traits
find root in a personality defect existing even before his marriage to Carmen. The
decretal portion of the decision reads:
WHEREFORE, all the foregoing considered, judgment is hereby rendered declaring
the marriage between plaintiff and defendant null and void ab initio pursuant to Art.
36 of the Family Code. x x x
xxxx
SO ORDERED.37
Aggrieved, petitioner appealed to the CA. On October 19, 2000, the CA rendered a
Decision38 reversing the trial courts ruling. It faulted the trial courts finding, stating
that no proof was adduced to support the conclusion that Benjamin was
psychologically incapacitated at the time he married Carmen since Dr. Oates
conclusion was based only on theories and not on established fact,39 contrary to the
guidelines set forth in Santos v. Court of Appeals40and in Rep. of the Phils. v. Court
of Appeals and Molina.41
Because of this, Carmen filed a motion for reconsideration, arguing that the Molina
guidelines should not be applied to this case since the Molina decision was
promulgated only on February 13, 1997, or more than five years after she had filed
her petition with the RTC.42 She claimed that the Molina ruling could not be made
76 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
to apply retroactively, as it would run counter to the principle of stare decisis.
Initially, the CA denied the motion for reconsideration for having been filed beyond
the prescribed period. Respondent thereafter filed a manifestation explaining
compliance with the prescriptive period but the same was likewise denied for lack
of merit. Undaunted, respondent filed a petition for certiorari43 with this Court. In a
Resolution44 dated March 5, 2003, this Court granted the petition and directed the
CA to resolve Carmens motion for reconsideration.45 On review, the CA decided to
reconsider its previous ruling. Thus, on November 17, 2003, it issued an Amended
Decision46 reversing its first ruling and sustaining the trial courts decision.47
A motion for reconsideration was filed, this time by Benjamin, but the same was
denied by the CA in its December 13, 2004 Resolution.48
Hence, this petition.
For our resolution are the following issues:
I. Whether the CA violated the rule on stare decisis when it refused to
follow the guidelines set forth under the Santos and Molina cases;
II. Whether the CA correctly ruled that the requirement of proof of
psychological incapacity for the declaration of absolute nullity of marriage
based on Article 36 of the Family Code has been liberalized; and
III. Whether the CAs decision declaring the marriage between petitioner
and respondent null and void [is] in accordance with law and jurisprudence.
We find merit in the petition.
I. On the issue of stare decisis.
The principle of stare decisis enjoins adherence by lower courts to doctrinal rules
established by this Court in its final decisions. It is based on the principle that once
a question of law has been examined and decided, it should be deemed settled and
closed to further argument.49 Basically, it is a bar to any attempt to relitigate the
same issues,50necessary for two simple reasons: economy and stability. In our
jurisdiction, the principle is entrenched in Article 8 of the Civil Code.51
This doctrine of adherence to precedents or stare decisis was applied by the English
courts and was later adopted by the United States. Associate Justice (now Chief
Justice) Reynato S. Punos discussion on the historical development of this legal
PUP COL 2015
principle in his dissenting opinion in Lambino v. Commission on Elections52 is
enlightening:
The latin phrase stare decisis et non quieta movere means "stand by the thing and
do not disturb the calm." The doctrine started with the English Courts. Blackstone
observed that at the beginning of the 18th century, "it is an established rule to abide
by former precedents where the same points come again in litigation." As the rule
evolved, early limits to its application were recognized: (1) it would not be followed
if it were "plainly unreasonable"; (2) where courts of equal authority developed
conflicting decisions; and, (3) the binding force of the decision was the "actual
principle or principles necessary for the decision; not the words or reasoning used
to reach the decision."
The doctrine migrated to the United States. It was recognized by the framers of the
U.S. Constitution. According to Hamilton, "strict rules and precedents" are necessary
to prevent "arbitrary discretion in the courts." Madison agreed but stressed that "x
x x once the precedent ventures into the realm of altering or repealing the law, it
should be rejected." Prof. Consovoy well noted that Hamilton and Madison "disagree
about the countervailing policy considerations that would allow a judge to abandon
a precedent." He added that their ideas "reveal a deep internal conflict between the
concreteness required by the rule of law and the flexibility demanded in error
correction. It is this internal conflict that the Supreme Court has attempted to deal
with for over two centuries."
Indeed, two centuries of American case law will confirm Prof. Consovoy's
observation although stare decisis developed its own life in the United States. Two
strains of stare decisis have been isolated by legal scholars. The first, known as
vertical stare decisis deals with the duty of lower courts to apply the decisions of the
higher courts to cases involving the same facts. The second, known as horizontal
stare decisis requires that high courts must follow its own precedents. Prof.
Consovoy correctly observes that vertical stare decisis has been viewed as an
obligation, while horizontal stare decisis, has been viewed as a policy, imposing
choice but not a command. Indeed, stare decisis is not one of the precepts set in
stone in our Constitution.
It is also instructive to distinguish the two kinds of horizontal stare decisis
constitutional stare decisis and statutory stare decisis. Constitutional stare decisis
involves judicial interpretations of the Constitution while statutory stare decisis
involves interpretations of statutes. The distinction is important for courts enjoy
more flexibility in refusing to apply stare decisis in constitutional litigations. Justice
77 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
Brandeis' view on the binding effect of the doctrine in constitutional litigations still
holds sway today. In soothing prose, Brandeis stated: "Stare decisis is not . . . a
universal and inexorable command. The rule of stare decisis is not inflexible.
Whether it shall be followed or departed from, is a question entirely within the
discretion of the court, which is again called upon to consider a question once
decided." In the same vein, the venerable Justice Frankfurter opined: "the ultimate
touchstone of constitutionality is the Constitution itself and not what we have said
about it." In contrast, the application of stare decisis on judicial interpretation of
statutes is more inflexible. As Justice Stevens explains: "after a statute has been
construed, either by this Court or by a consistent course of decision by other federal
judges and agencies, it acquires a meaning that should be as clear as if the judicial
gloss had been drafted by the Congress itself." This stance reflects both respect for
Congress' role and the need to preserve the courts' limited resources.
In general, courts follow the stare decisis rule for an ensemble of reasons, viz.: (1)
it legitimizes judicial institutions; (2) it promotes judicial economy; and, (3) it allows
for predictability. Contrariwise, courts refuse to be bound by the stare decisis rule
where (1) its application perpetuates illegitimate and unconstitutional holdings; (2)
it cannot accommodate changing social and political understandings; (3) it leaves
the power to overturn bad constitutional law solely in the hands of Congress; and,
(4) activist judges can dictate the policy for future courts while judges that respect
stare decisis are stuck agreeing with them.
In its 200-year history, the U.S. Supreme Court has refused to follow the stare decisis
rule and reversed its decisions in 192 cases. The most famous of these reversals is
Brown v. Board of Education which junked Plessy v. Ferguson's "separate but equal
doctrine." Plessy upheld as constitutional a state law requirement that races be
segregated on public transportation. In Brown, the U.S. Supreme Court,
unanimously held that "separate . . . is inherently unequal." Thus, by freeing itself
from the shackles of stare decisis, the U.S. Supreme Court freed the colored
Americans from the chains of inequality. In the Philippine setting, this Court has
likewise refused to be straitjacketed by the stare decisis rule in order to promote
public welfare. In La Bugal-B'laan Tribal Association, Inc. v. Ramos, we reversed our
original ruling that certain provisions of the Mining Law are unconstitutional.
Similarly, in Secretary of Justice v. Lantion, we overturned our first ruling and held,
on motion for reconsideration, that a private respondent is bereft of the right to
notice and hearing during the evaluation stage of the extradition process.
An examination of decisions on stare decisis in major countries will show that courts
are agreed on the factors that should be considered before overturning prior rulings.
PUP COL 2015
These are workability, reliance, intervening developments in the law and changes in
fact. In addition, courts put in the balance the following determinants: closeness of
the voting, age of the prior decision and its merits.
The leading case in deciding whether a court should follow the stare decisis rule in
constitutional litigations is Planned Parenthood v. Casey. It established a 4-pronged
test. The court should (1) determine whether the rule has proved to be intolerable
simply in defying practical workability; (2) consider whether the rule is subject to a
kind of reliance that would lend a special hardship to the consequences of overruling
and add inequity to the cost of repudiation; (3) determine whether related principles
of law have so far developed as to have the old rule no more than a remnant of an
abandoned doctrine; and, (4) find out whether facts have so changed or come to
be seen differently, as to have robbed the old rule of significant application or
justification.53
To be forthright, respondents argument that the doctrinal guidelines prescribed in
Santos and Molina should not be applied retroactively for being contrary to the
principle of stare decisis is no longer new. The same argument was also raised but
was struck down in Pesca v. Pesca,54 and again in Antonio v. Reyes.55 In these cases,
we explained that the interpretation or construction of a law by courts constitutes a
part of the law as of the date the statute is enacted. It is only when a prior ruling of
this Court is overruled, and a different view is adopted, that the new doctrine may
have to be applied prospectively in favor of parties who have relied on the old
doctrine and have acted in good faith, in accordance therewith under the familiar
rule of "lex prospicit, non respicit."
II. On liberalizing the required proof for the declaration of nullity of marriage under
Article 36.
Now, petitioner wants to know if we have abandoned the Molina doctrine.
We have not.
In Edward Kenneth Ngo Te v. Rowena Ong Gutierrez Yu-Te,56 we declared that, in
hindsight, it may have been inappropriate for the Court to impose a rigid set of rules,
as the one in Molina, in resolving all cases of psychological incapacity. We said that
instead of serving as a guideline, Molina unintentionally became a straightjacket,
forcing all cases involving psychological incapacity to fit into and be bound by it,
which is not only contrary to the intention of the law but unrealistic as well because,
with respect to psychological incapacity, no case can be considered as on "all fours"
with another.57
78 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
By the very nature of cases involving the application of Article 36, it is logical and
understandable to give weight to the expert opinions furnished by psychologists
regarding the psychological temperament of parties in order to determine the root
cause, juridical antecedence, gravity and incurability of the psychological incapacity.
However, such opinions, while highly advisable, are not conditions sine qua non in
granting petitions for declaration of nullity of marriage. 58 At best, courts must treat
such opinions as decisive but not indispensable evidence in determining the merits
of a given case. In fact, if the totality of evidence presented is enough to sustain a
finding of psychological incapacity, then actual medical or psychological examination
of the person concerned need not be resorted to.59The trial court, as in any other
given case presented before it, must always base its decision not solely on the expert
opinions furnished by the parties but also on the totality of evidence adduced in the
course of the proceedings.
It was for this reason that we found it necessary to emphasize in Ngo Te that each
case involving the application of Article 36 must be treated distinctly and judged not
on the basis of a priori assumptions, predilections or generalizations but according
to its own attendant facts. Courts should interpret the provision on a case-to-case
basis, guided by experience, the findings of experts and researchers in psychological
disciplines, and by decisions of church tribunals.
Far from abandoning Molina, we simply suggested the relaxation of the stringent
requirements set forth therein, cognizant of the explanation given by the Committee
on the Revision of the Rules on the rationale of the Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-
SC), viz.:
To require the petitioner to allege in the petition the particular root cause of the
psychological incapacity and to attach thereto the verified written report of an
accredited psychologist or psychiatrist have proved to be too expensive for the
parties. They adversely affect access to justice o poor litigants. It is also a fact that
there are provinces where these experts are not available. Thus, the Committee
deemed it necessary to relax this stringent requirement enunciated in the Molina
Case. The need for the examination of a party or parties by a psychiatrist or clinical
psychologist and the presentation of psychiatric experts shall now be determined by
the court during the pre-trial conference.60
But where, as in this case, the parties had the full opportunity to present professional
and expert opinions of psychiatrists tracing the root cause, gravity and incurability
of a partys alleged psychological incapacity, then such expert opinion should be
PUP COL 2015
presented and, accordingly, be weighed by the court in deciding whether to grant a
petition for nullity of marriage.
III. On petitioners psychological incapacity.
Coming now to the main issue, we find the totality of evidence adduced by
respondent insufficient to prove that petitioner is psychologically unfit to discharge
the duties expected of him as a husband, and more particularly, that he suffered
from such psychological incapacity as of the date of the marriage eighteen (18)
years ago. Accordingly, we reverse the trial courts and the appellate courts rulings
declaring the marriage between petitioner and respondent null and void ab initio.
The intendment of the law has been to confine the application of Article 36 to the
most serious cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the marriage.61 The
psychological illness that must have afflicted a party at the inception of the marriage
should be a malady so grave and permanent as to deprive one of awareness of the
duties and responsibilities of the matrimonial bond he or she is about to assume.
In this case, respondent failed to prove that petitioners "defects" were present at
the time of the celebration of their marriage. She merely cited that prior to their
marriage, she already knew that petitioner would occasionally drink and gamble with
his friends; but such statement, by itself, is insufficient to prove any pre-existing
psychological defect on the part of her husband. Neither did the evidence adduced
prove such "defects" to be incurable.
The evaluation of the two psychiatrists should have been the decisive evidence in
determining whether to declare the marriage between the parties null and void.
Sadly, however, we are not convinced that the opinions provided by these experts
strengthened respondents allegation of psychological incapacity. The two experts
provided diametrically contradicting psychological evaluations: Dr. Oate testified
that petitioners behavior is a positive indication of a personality disorder,63 while Dr.
Obra maintained that there is nothing wrong with petitioners personality. Moreover,
there appears to be greater weight in Dr. Obras opinion because, aside from
analyzing the transcript of Benjamins deposition similar to what Dr. Oate did, Dr.
Obra also took into consideration the psychological evaluation report furnished by
another psychiatrist in South Africa who personally examined Benjamin, as well as
his (Dr. Obras) personal interview with Benjamins brothers.64 Logically, therefore,
the balance tilts in favor of Dr. Obras findings.
79 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

Lest it be misunderstood, we are not condoning petitioners drinking and gambling

problems, or his violent outbursts against his wife. There is no valid excuse to justify
such a behavior. Petitioner must remember that he owes love, respect, and fidelity
to his spouse as much as the latter owes the same to him. Unfortunately, this court
finds respondents testimony, as well as the totality of evidence presented by the
respondent, to be too inadequate to declare him psychologically unfit pursuant to
Article 36.

It should be remembered that the presumption is always in favor of the validity of

marriage. Semper praesumitur pro matrimonio.65 In this case, the presumption has
not been amply rebutted and must, perforce, prevail.
THIRD DIVISION
G.R. No. 136921 April 17, 2001
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED.
LORNA GUILLEN PESCA, petitioner
The November 17, 2003 Amended Decision and the December 13, 2004 Resolution
vs.
of the Court of Appeals in CA-G.R. CV No. 59903 are accordingly REVERSED and
ZOSIMO A PESCA, respondent.
SET ASIDE.
VITUG, J.:
SO ORDERED.
Submitted for review is the decision of the Court of Appeals, promulgated on 27 May
1998, in C.A. G.R. CV. No. 52374, reversing the decision of the Regional Trial Court
("RTC") of Caloocan City, Branch 130, which has declared the marriage between
petitioner and respondent to be null and void ab initio on the ground of psychological
incapacity on the part of respondent.

Petitioner Lorna G. Pesca and respondent Zosimo A. Pesca first met sometime in
1975 while on board an inter-island vessel bound for Bacolod City. After a whirlwind
courtship, they got married on 03 March 1975. Initially, the young couple did not
live together as petitioner was still a student in college and respondent, a seaman,
had to leave the country on board an ocean-going vessel barely a month after the
marriage. Six months later, the young couple established their residence in Quezon
City until they were able to build their own house in Caloocan City where they finally
resided. It was blissful marriage for the couple during the two months of the year
that they could stay together - when respondent was on vacation. The union begot
four children, 19-year old Ruhem, 17-year old Rez, 11-year old Ryan, and 9-year old
Richie.

It started in 1988, petitioner said, when she noticed that respondent surprisingly
showed signs of "psychological incapacity" to perform his marital covenant. His "true
color" of being an emotionally immature and irresponsible husband became
apparent. He was cruel and violent. He was a habitual drinker, staying with friends
daily from 4:00 o'clock in the afternoon until 1:00 o'clock in the morning. When

80 | P a g e
Persons and Family Relations Cases
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal
cautioned to stop or, to at least, minimize his drinking, respondent would beat, slap
and kick her. At one time, he chased petitioner with a loaded shotgun and
threatened to kill her in the presence of the children. The children themselves were
not spared from physical violence.
Finally, on 19 November 1992, petitioner and her children left the conjugal abode
to live in the house of her sister in Quezon City as they could no longer bear his
violent ways. Two months later, petitioner decided to forgive respondent, and she
returned home to give him a chance to change. But, to her dismay, things did not
so turn out as expected. Indeed, matters became worse.
On the morning of 22 March 1994, about eight o'clock, respondent assaulted
petitioner for about half an hour in the presence of the children. She was battered
black and blue. She submitted herself to medical examination at the Quezon City
General Hospital, which diagnosed her injuries as contusions and abrasions.
Petitioner filed a complaint with the barangay authorities, and a case was filed
against respondent for slight physical injuries. He was convicted by the Metropolitan
Trial Court of Caloocan City and sentenced to eleven days of imprisonment.
This time, petitioner and her children left the conjugal home for good and stayed
with her sister. Eventually, they decided to rent an apartment. Petitioner sued
respondent before the Regional Trial Court for the declaration of nullity of their
marriage invoking psychological incapacity. Petitioner likewise sought the custody of
her minor children and prayed for support pendente lite .
Summons, together with a copy of the complaint, was served on respondent on 25
April 1994 by personal service by the sheriff. As respondent failed to file an answer
or to enter his appearance within the reglementary period, the trial court ordered
the city prosecutor to look into a possible collusion between the parties. Prosecutor
Rosa C. Reyes, on 03 August 1994, submitted her report to the effect that she found
no evidence to establish that there was collusion between the parties. 1wphi1.nt
On 11 January 1995, respondent belatedly filed, without leave of court, an answer,
and the same, although filed late, was admitted by the court. In his answer,
respondent admitted the fact of his marriage with petitioner and the birth of their
children. He also confirmed the veracity of Annex "A" of the complaint which listed
the conjugal property. Respondent vehemently denied, however, the allegation that
he was psychologically incapacitated.
On 15 November 1995, following hearings conducted by it, the trial court rendered
its decision declaring the marriage between petitioner and respondent to be null and
PUP COL 2015
void ab initio on the basis of psychological incapacity on the part of respondent and
ordered the liquidation of the conjugal partnership.
Respondent appealed the above decision to the Court of Appeals, contending that
the trial court erred, particularly, in holding that there was legal basis to declare the
marriage null and void and in denying his motion to reopen the case.
The Court of Appeals reversed the decision of the trial court and declared the
marriage between petitioner and respondent valid and subsisting. The appellate
court said:
"Definitely the appellee has not established the following: That the
appellant showed signs of mental incapacity as would cause him to be truly
incognitive of the basic marital covenant, as so provided for in Article 68 of
the Family Code; that the incapacity is grave, has preceded the marriage
and is incurable; that his incapacity to meet his marital responsibility is
because of a psychological, not physical illness; that the root cause of the
incapacity has been identified medically or clinically, and has been proven
by an expert; and that the incapacity is permanent and incurable in nature.
"The burden of proof to show the nullity of marriage lies in the plaintiff and
any doubt should be resolved in favor of the existence and continuation of
the marriage and against its dissolution and nullity."1
Petitioner, in her plea to this Court, would have the decision of the Court of Appeals
reversed on the thesis that the doctrine enunciated in Santos vs. Court of
Appeals,2 promulgated on 14 January 1995, as well as the guidelines set out in
Republic vs. Court of Appeals and Molina,3 promulgated on 13 February 1997, should
have no retroactive application and, on the assumption that the Molina ruling could
be applied retroactively, the guidelines therein outlined should be taken to be merely
advisory and not mandatory in nature. In any case, petitioner argues, the application
of the Santos and Molina dicta should warrant only a remand of the case to the
trial court for further proceedings and not its dismissal.
Be that as it may, respondent submits, the appellate court did not err in its assailed
decision for there is absolutely no evidence that has been shown to prove
psychological incapacity on his part as the term has been so defined in Santos.
Indeed, there is no merit in the petition.
81 | P a g e
Persons and Family Relations Cases PUP COL 2015
1st Set of Cases. Articles 1-8
Atty. Judy A. Lardizabal

The term "psychological incapacity," as a ground for the declaration of nullity of a
marriage under Article 36 of the Family Code, has been explained by the Court,
in Santos and reiterated in Molina. The Court, in Santos, concluded:
"It should be obvious, looking at all the foregoing disquisitions, including,
and most importantly, the deliberations of the Family Code Revision
Committee itself, that the use of the phrase 'psychological incapacity' under
Article 36 of the Code has not been meant to comprehend all such possible
cases of psychoses as, likewise mentioned by some ecclesiastical
authorities, extremely low intelligence, immaturity, and like circumstances
(cited in Fr. Artemio Balumad's 'Void and Voidable Marriages in the Family
Code and their Parallels in Canon Law,' quoting form the Diagnostic
Statistical Manuel of Mental Disorder by the American Psychiatric
Association; Edward Hudson's 'Handbook II for Marriage Nullity Cases').
Article 36 of the Family. Code cannot be taken and construed independently
of, but must stand in conjunction with, existing precepts in our law on
marriage. Thus correlated, 'psychological incapacity' should refer to no less
than a mental (not physical) incapacity that causes a party to be truly
incognitive of the basic marital covenants that concomitantly must be
assumed and discharged by the parties to the marriage which, as so
expressed by Article 68 of the Family Code, include their mutual obligations
to live together, observe love, respect and fidelity and render help and
support. There is hardly any doubt that the intendment of the law has been
to confine the meaning of 'psychological incapacity' to the most serious
cases of personality disorders clearly demonstrative of an utter insensitivity
or inability to give meaning and significance to the marriage. This
psychologic condition must exist at the time the marriage is celebrated."
The phrase "psychological incapacity ," borrowed from Canon law, is an entirely
novel provision in our statute books, and, until the relatively recent enactment of
the Family Code, the concept has escaped jurisprudential attention. It is
in Santos when, for the first time, the Court has given life to the term. Molina,
that followed, has additionally provided procedural guidelines to assist the courts
and the parties in trying cases for annulment of marriages grounded on
psychological incapacity. Molina has strengthened, not overturned, Santos.
At all events, petitioner has utterly failed, both in her allegations in the complaint
and in her evidence, to make out a case of psychological incapacity on the part of
respondent, let alone at the time of solemnization of the contract, so as to warrant
a declaration of nullity of the marriage. Emotional immaturity and irresponsibility,
invoked by her, cannot be equated with psychological incapacity.
The Court reiterates its reminder that marriage is an inviolable social institution and
the foundation of the family6 that the State cherishes and protects. While the Court
commisserates with petitioner in her unhappy marital relationship with respondent,
totally terminating that relationship, however, may not necessarily be the fitting
denouement to it. In these cases, the law has not quite given up, neither should we.
WHEREFORE, the herein petition is DENIED. No costs.
SO ORDERED.

The- "doctrine of stare decisis," ordained in Article 8 of the Civil Code, expresses
that judicial decisions applying or interpreting the law shall form part of the legal
system of the Philippines. The rule follows the settled legal maxim - "legis
interpretado legis vim obtinet" - that the interpretation placed upon the written law
by a competent court has the force of law.3 The interpretation or construction placed
by the courts establishes the contemporaneous legislative intent of the law. The
latter as so interpreted and construed would thus constitute a part of that law as of
the date the statute is enacted. It is only when a prior ruling of this Court finds itself
later overruled, and a different view is adopted, that the new doctrine may have to
be applied prospectively in favor of parties who have relied on the old doctrine and
have acted in good faith in accordance therewith5 under the familiar rule of "lex
prospicit, non respicit."

82 | P a g e