1. CITY OF MANILA vs. GRECIA-CUERDO G.R. No.
175723 February 4, 2014 Writ of xxx
Certiorari in Tax Cases, CTA Jurisdiction, Local Tax, Tax Remedies
FACTS:
 Petitioner City of Manila, through its treasurer, assessed taxes against private
respondents SM Mart, Inc., SM Prime Holdings, Inc., Star Appliances Center,
Supervalue, Inc., Ace Hardware Philippines, Inc., Watsons Personal Care Stores
Phils., Inc., Jollimart Philippines Corp., Surplus Marketing Corp. and Signature Lines.
 In addition to the taxes purportedly due from private respondents pursuant to
Section 14, 15, 16, 17 of the Revised Revenue Code of Manila (RRCM), said
assessment covered the local business taxes petitioners were authorized to collect
under Section 21 of the same Code.
 Because payment of the taxes assessed was a precondition for the issuance of their
business permits, private respondents were constrained to pay the ₱19,316,458.77
assessment under protest.
 Private respondents filed a complaint for “Refund or Recovery of Illegally and/or
Erroneously-Collected Local Business Tax, Prohibition with Prayer to Issue TRO and
Writ of Preliminary Injunction” alleging inter alia that, in relation to Section 21
thereof, Sections 14, 15, 16, 17, 18, 19 and 20 of the RRCM were violative of the
limitations and guidelines under Section 143 (h) of Republic Act. No. 7160 [Local
Government Code] on double taxation.
 RTC granted private respondents’ application for a writ of preliminary injunction.
 Petitioners then filed a special civil action for certiorari with the CA.
 CA dismissed the petition holding that it has no jurisdiction over the said petition
since the appellate jurisdiction over private respondents’ complaint for tax refund,
which was filed with the RTC, is vested in the Court of Tax Appeals (CTA).
ISSUE: Whether CTA has jurisdiction over a special civil action for certiorari assailing an
interlocutory order issued by the RTC in a local tax case.
RULING: YES.
RA 1125 is the law creating the CTA and giving to the said court jurisdiction over tax
cases. Later, Republic Act No. 9282 amended RA 1125 by expanding the jurisdiction of
the CTA, enlarging its membership and elevating its rank to the level of a collegiate
court with special jurisdiction. Section 7 of which provides:
Sec. 7. Jurisdiction. – The CTA shall exercise:
Exclusive appellate jurisdiction to review by appeal, as herein provided:
xxx
Over appeals from the judgments, resolutions or orders of the Regional Trial
Courts in tax cases originally decided by them, in their respected territorial
jurisdiction.
Over petitions for review of the judgments, resolutions or orders of the Regional
Trial Courts in the exercise of their appellate jurisdiction over tax cases originally
decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in their respective jurisdiction.
xxx
Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provides, however, that
collection cases where the principal amount of taxes and fees, exclusive of
charges and penalties, claimed is less than One million pesos (₱1,000,000.00) shall
be tried by the proper Municipal Trial Court, Metropolitan Trial Court and
Regional Trial Court.
Over appeals from the judgments, resolutions or orders of the Regional Trial
Courts in tax collection cases originally decided by them, in their respective
territorial jurisdiction.
Over petitions for review of the judgments, resolutions or orders of the Regional
Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases
originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts, in their respective jurisdiction.
The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise
of original jurisdiction which must be expressly conferred by the Constitution or by law
and cannot be implied from the mere existence of appellate jurisdiction.
With respect to the CTA, Section 1, Article VIII of the 1987 Constitution provides,
nonetheless, that judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law and that judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
On the strength of the above constitutional provisions, it can be fairly interpreted that
the power of the CTA includes that of determining whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in
issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of
the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with
jurisdiction to issue writs of certiorari in these cases.
It is more in consonance with logic and legal soundness to conclude that the grant of
appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries
with it the power to issue a writ of certiorari when necessary in aid of such appellate
jurisdiction. The supervisory power or jurisdiction of the CTA to issue a writ of certiorari in
aid of its appellate jurisdiction should co-exist with, and be a complement to, its
appellate jurisdiction to review, by appeal, the final orders and decisions of the RTC.
Based on the foregoing disquisitions, it can be reasonably concluded that the authority
of the CTA to take cognizance of petitions for certiorari questioning interlocutory orders
issued by the RTC in a local tax case is included in the powers granted by the
Constitution as well as inherent in the exercise of its appellate jurisdiction.
WHEREFORE, the petition is DENIED.
 2. ATTY. OLIVER O. LOZANO and ATTY. EVANGELINE J. LOZANO-ENDRIANO vs.
SPEAKER PROSPERO C. NOGRALES, Representative, Majority, House of
Representatives, G.R. No. 187883 June 16, 2009
Facts:
 The two petitions, filed by their respective petitioners in their capacities as
concerned citizens and taxpayers, prayed for the nullification of House Resolution
No. 1109 entitled “A Resolution Calling upon the Members of Congress to Convene
for the Purpose of Considering Proposals to Amend or Revise the Constitution, Upon
a Three-fourths Vote of All the Members of Congress,” convening the Congress into
a Constituent Assembly to amend the 1987 Constitution.
 In essence, both petitions seek to trigger a justiciable controversy that would
warrant a definitive interpretation by this Court of Section 1, Article XVII, which
provides for the procedure for amending or revising the Constitution.
 The petitioners contend that the House Resolution contradicts the procedures set
forth by the 1987 Constitution regarding the amendment or revision of the same as
the separate voting of the members of each House (the Senate and the House of
Representatives) is deleted and substituted with a vote of three-fourths of all the
Members of Congress (i.e., ¾ of the “members of Congress” without distinction as
to which institution of Congress they belong to).
Issue: Whether the court has the power to review the case of the validity of House
Resolution No. 1109.
Held: No.
The Supreme Court cannot indulge petitioners’ supplications. While some may interpret
petitioners’ moves as vigilance in preserving the rule of law, a careful perusal of their
petitions would reveal that they cannot hurdle the bar of justiciability set by the Court
before it will assume jurisdiction over cases involving constitutional disputes.
The Court’s power of review may be awesome, but it is limited to actual cases and
controversies dealing with parties having adversely legal claims, to be exercised after
full opportunity of argument by the parties, and limited further to the constitutional
question raised or the very lis mota presented. The “case-or-controversy” requirement
bans this court from deciding “abstract, hypothetical or contingent questions,” lest the
court give opinions in the nature of advice concerning legislative or executive action
An aspect of the “case-or-controversy” requirement is the requisite of “ripeness.” In the
United States, courts are centrally concerned with whether a case involves uncertain
contingent future events that may not occur as anticipated, or indeed may not occur
at all. Another approach is the evaluation of the twofold aspect of ripeness: first, the
fitness of the issues for judicial decision; and second, the hardship to the parties entailed
by withholding court consideration. In our jurisdiction, the issue of ripeness is generally
treated in terms of actual injury to the plaintiff. Hence, a question is ripe for adjudication
when the act being challenged has had a direct adverse effect on the individual
challenging it. An alternative road to review similarly taken would be to determine
whether an action has already been accomplished or performed by a branch of
government before the courts may step in.
In the present case, the fitness of petitioners’ case for the exercise of judicial review is
grossly lacking. In the first place, petitioners have not sufficiently proven any adverse
injury or hardship from the act complained of. In the second place, House Resolution
No. 1109 only resolved that the House of Representatives shall convene at a future time
for the purpose of proposing amendments or revisions to the Constitution. No actual
convention has yet transpired and no rules of procedure have yet been adopted. More
importantly, no proposal has yet been made, and hence, no usurpation of power or
gross abuse of discretion has yet taken place. In short, House Resolution No. 1109
involves a quintessential example of an uncertain contingent future event that may not
occur as anticipated, or indeed may not occur at all. The House has not yet performed
a positive act that would warrant an intervention from this Court.
As in the case of Tan v. Macapagal, as long as any proposed amendment is still
unacted on by it, there is no room for the interposition of judicial oversight. Only after it
has made concrete what it intends to submit for ratification may the appropriate case
be instituted. Until then, the courts are devoid of jurisdiction
A party will be allowed to litigate only when he can demonstrate that
(1) he has personally suffered some actual or threatened injury because of the allegedly
illegal conduct of the government;
(2) the injury is fairly traceable to the challenged action; and
(3) the injury is likely to be redressed by the remedy being sought.
In the cases at bar, petitioners have not shown the elemental injury in fact that would
endow them with the standing to sue. Locus standi requires a personal stake in the
outcome of a controversy for significant reasons. It assures adverseness and sharpens
the presentation of issues for the illumination of the Court in resolving difficult
constitutional questions. The lack of petitioners’ personal stake in this case is no more
evident than in Lozano’s three-page petition that is devoid of any legal or jurisprudential
basis.
Neither can the lack of locus standi be cured by the claim of petitioners that they are
instituting the cases at bar as taxpayers and concerned citizens. A taxpayer’s suit
requires that the act complained of directly involves the illegal disbursement of public
funds derived from taxation. It is undisputed that there has been no allocation or
disbursement of public funds in this case as of yet.
The possible consequence of House Resolution No. 1109 is yet unrealized and does not
infuse petitioners with locus standi
The rule on locus standi is not a plain procedural rule but a constitutional requirement
derived from Section 1, Article VIII of the Constitution, which mandates courts of justice
to settle only “actual controversies involving rights which are legally demandable and
enforceable.”
Moreover, while the Court has taken an increasingly liberal approach to the rule of
locus standi, evolving from the stringent requirements of “personal injury” to the broader
“transcendental importance” doctrine, such liberality is not to be abused. It is not an
open invitation for the ignorant and the ignoble to file petitions that prove nothing but
their cerebral deficit.
IN VIEW WHEREOF, the petitions are dismissed.
 3. JELBERT B. GALICTO v. H.E. PRESIDENT BENIGNO SIMEON C. AQUINO III, in his incorrect remedy; instead a petition for declaratory relief under Rule 63 of the Rules of
capacity as President of the Republic of the Philippines; ATTY. PAQUITO N. Court, filed with the Regional Trial Court (RTC), is the proper recourse to assail the validity
OCHOA, JR., in his capacity as Executive Secretary; and FLORENCIO B. ABAD, of EO 7.
in his capacity as Secretary of the Department of Budget and Management,
G.R. No. 193978 : February 28, 2012 CONSTITUTIONAL LAW: locus standi

FACTS: Locus standi or legal standing has been defined as a personal and substantial interest in
 Pres. Aquino made public in his first State of the Nation Address the alleged a case such that the party has sustained or will sustain direct injury as a result of the
excessive allowances, bonuses and other benefits of Officers and Members of the governmental act that is being challenged. The gist of the question on standing is
Board of Directors of the Manila Waterworks and Sewerage System a government whether a party alleges such personal stake in the outcome of the controversy as to
owned and controlled corporation (GOCC) which has been unable to meet its assure that concrete adverseness which sharpens the presentation of issues upon which
standing obligations. the court depends for illumination of difficult constitutional questions.
 Subsequently, the Senate conducted an inquiry in aid of legislation on the reported
excessive salaries, allowances, and other benefits of GOCCs and government In the present case, the petitioner has not demonstrated that he has a personal stake or
financial institutions (GFIs). material interest in the outcome of the case because his interest, if any, is speculative
 Based on its findings, officials and governing boards of various GOCCs and GFIs and based on a mere expectancy. In this case, the curtailment of future increases in his
have been granting themselves unwarranted allowances, bonuses, incentives, salaries and other benefits cannot but be characterized as contingent events or
stock options, and other benefits as well as other irregular and abusive practices expectancies. To be sure, he has no vested rights to salary increases and, therefore, the
 Senate issued Senate Resolution No. 17 urging the President to order the immediate absence of such right deprives the petitioner of legal standing to assail EO 7.
suspension of the unusually large and apparently excessive allowances, bonuses,
incentives and other perks of members of the governing boards of GOCCs and The petition has been mooted by supervening events.
GFIs. Because of the transitory nature of EO 7, it has been pointed out that the present case
 Heeding the call of Congress, Pres. Aquino, on September 8, 2010, issued EO 7, has already been rendered moot by the enactment of R.A. No. 10149 amending the
entitled Directing the Rationalization of the Compensation and Position provisions in the charters of GOCCs and GFIs empowering their board of
Classification System in the GOCCs and GFIs, and for Other Purposes. directors/trustees to determine their own compensation system, in favor of the grant of
 EO 7 provided for the guiding principles and framework to establish a fixed authority to the President to perform this act. With the enactment of the GOCC
compensation and position classification system for GOCCs and GFIs. Governance Act of 2011, the President is now authorized to fix the compensation
 EO 7 was published and precluded the Board of Directors, Trustees and/or Officers framework of GOCCs and GFIs.
of GOCCs from granting and releasing bonuses and allowances to members of the
board of directors, and from increasing salary rates of and granting new or DISMISSED.
additional benefits and allowances to their employees.
 Petitioner Jelbert Galicto allegedly questions the constitutionality of E.O 7 in his
capacity as a lawyer and as an employee of PhilHealth Regional Office.
 As he allegedly stands to be prejudiced by E.O 7 because it suspends or imposes a
moratorium on the grant of salary increase and other benefits granted to the
GOCC and GFI officials.
 Moreover, he claims interest in making sure that laws and orders by government
officials are legally issued and implemented.
 The respondents pointed out the following procedural defects as grounds for the
petition's dismissal: (1) the petitioner lacks locus standi; and (2) certiorari is not
applicable to this case.
 Meanwhile, on June 6, 2011, Congress enacted Republic Act (R.A.) No. 10149,
otherwise known as the GOCC Governance Act of 2011. Section 11 of RA 10149
expressly authorizes the President to fix the compensation framework of GOCCs
and GFIs.

ISSUE: Whether or not certiorari is the proper remedy.

HELD: NO. Petition is dismissed.

REMEDIAL LAW: formal and procedural infirmities

Under the Rules of Court, petitions for Certiorari and Prohibition are availed of to
question judicial, quasi-judicial and mandatory acts. Since the issuance of an EO is not
judicial, quasi-judicial or a mandatory act, a petition for certiorari and prohibition is an
 4. MOLDEX REALTY INC. v. HLURB
FACTS:
 This is a petition for prohibition and certiorari with respect to the HLURB’s resolution
against the Petitioner.
 Petitioner Moldex Realty, Inc. is a domestic corporation engaged in real estate
development.
o It is the owner-developer of Metrogate Complex Phase I, a subdivision situated
in Mey-cauayan, Marilao, Bulacan.
 The HLURB issued petitioner a License to Sell parcels of land within the subdivision.
 A sufficient number of lot buyers and homeowners in the subdivision formally
organized to become the Metrogate Complex Village Homeowners’ Association.
 Petitioner claims that since the completion of the subdivision, it had been
subsidizing and advancing the payment for the delivery and maintenance of
common facilities including the operation of streetlights and the payment of the
corresponding electric bills.
 Eventually, the petitioner decided to stop paying the electric bills for the streetlights
and advised respondent association to assume this obligation.
 Respondent association objected to petitioner’s resolution and refused to pay the
electric bills.
 Consequently, Meralco discontinued its service, prompting respondent association
to apply for a preliminary injunction and preliminary mandatory injunction with the
HLURB against petitioner.
 HUDCC’s regulation as the basis of its decsion against the petitioner stems from
Resolution No. R-562, series of 1994, which particularly provides that “subdivision
owners/developers shall continue to maintain street lights facilities and, unless
otherwise stipulated in the contract, pay the bills for electric consumption of the
subdivision street lights until the facilities in the project are turned over to the local
government until after completion of development in accordance with PD 957, PD
1216 and their implementing rules and regulations.”, rendering the petition moot
and academic.
 Petitioner elevated the matter to the Court of Appeals by filing a Petition for
Prohibition and Certiorari, praying not only for the reversal of the writ of preliminary
mandatory injunction, as well as the Resolution dated 5 April 2001 and the Order
dated 28 May 2001, but also for the nullification of HUDCC Resolution No. R-562,
series of 1994, on the ground that it is unconstitutional.
 During the pendency of the petition before the Court of Appeals, the HUDCC
approved Board Resolution No. R-699, series of 2001, entitled “Amending the Rules
and Regulations Implementing the Subdivision and Condominium Buyer’s
Protective Decree and Other Related Laws.”
 The Court of Appeals dismissed the petition on the ground that petitioner should
have raised the constitutionality of HUDCC Resolution No. R-562, series of 1994,
directly to the Supreme Court.
series of 1994, directing subdivision developers to shoulder the electricity cost of
streetlights. At the time of the filing of the instant petition, the new provision was already
in effect. That being the situation, the instant petition has become moot and
academic.
It is a well-established rule that a court should not pass upon a constitutional question
and decide a law, or an administrative regulation as in the instant case, to be
unconstitutional or invalid, unless such question is raised by the parties and that when it
is raised, if the record also presents some other ground upon which the court may raise
its judgment, that course will be adopted and the constitutional question will be left for
consideration until such question will be unavoidable. In other words, the Court will not
touch the issue of unconstitutionality unless it is the very lis mota of the case.
When an administrative regulation is attacked for being unconstitutional or invalid, a
party may raise its unconstitu-tionality or invalidity on every occasion that the regulation
is being enforced. For the Court to exercise its power of judicial review, the party
assailing the regulation must show that the question of constitutionality has been raised
at the earliest opportunity.9 This 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. 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.
MAIN POINT: Given the presumed validity of an executive act, the petitioner who claims
otherwise has the burden of showing first that the case cannot be resolved unless the
constitutional question he raised is determined by the Court. It is a well-established rule
that a court should not pass upon a constitutional question and decide a law, or an
administrative regulation as in the instant case, to be unconstitutional or invalid, unless
such question is raised by the parties and that when it is raised, if the record also
presents some other ground upon which the court may raise its judgment, that course
will be adopted and the constitutional question will be left for consideration until such
question will be unavoidable. In other words, the Court will not touch the issue of
unconstitutionality unless it is the very lis mota of the case.

ISSUE: Whether or not the petition for certiorari and prohibition assailing HLURB decision
presents a justiciable controversy.

HELD: NO.

Resolution No. 699, series of 2001, entitled Amending the Rules and Regulations
Implementing the Subdivision and Condominium Buyer’s Protective Decree and Other
Related Laws, was passed by the HUDCC. The regulation amended certain design
standards for subdivision projects, among which is the proportionate obligation of
subdivision homeowners in the payment of the electricity cost of streetlights. The
amendatory provision has superseded the provision in HUDCC Resolution No. R-562,
 5. ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW
NAVIGATION CO., INC. GR No. 167614 – March 24, 2009
FACTS:
 Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc.
and Marlow Navigation Co., Inc., under a POEA-approved contract of
employment for 12 months, as Chief Officer, with the basic monthly salary of
US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per
month.
 On March 19, 1998, the date of his departure, Serrano was constrained to accept a
downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000 upon the assurance and representation of respondents
that he would be Chief Officer by the end of April 1998.
 Respondents did not deliver on their promise to make Serrano Chief Officer.
 Serrano refused to stay on as second Officer and was repatriated to the Philippines
on May 26, 1998, serving only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-three (23) days.
 Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for
constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73 (based on the computation of $2590/month from June 1998 to
February 199, $413.90 for March 1998, and $1640 for March 1999) as well as moral
and exemplary damages.
 The LA declared the petitioner’s dismissal illegal and awarded him US$8,770,
representing his salaray for three (3) months of the unexpired portion of the
aforesaid contract of employment, plus $45 for salary differential and for attorney’s
fees equivalent to 10% of the total amount; however, no compensation for
damages as prayed was awarded.
 On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50,
representing three (3) months salary at $1400/month, plus 445 salary differential and
10% for attorney’s fees. This decision was based on the provision of RA 8042, which
was made into law on July 15, 1995.
 Serrano filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042,
which reads:
o Sec. 10. Money Claims. – x x x In case of termination of overseas
employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term, whichever is less.
 The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the
Court of Appeals (CA), reiterating the constitutional challenge against the subject
clause. The CA affirmed the NLRC ruling on the reduction of the applicable salary
rate, but skirted the constitutional issue raised by herein petitioner Serrano.
ISSUES:
1. Whether or not the subject clause violates Section 10, Article III of the Constitution on
non-impairment of contracts; -- NO
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and
Section 18, Article II and Section 3, Article XIII on labor as a protected sector. -- YES
HELD:
1. NO.
Petitioner’s claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will receive is
not tenable.
Section 10, Article III of the Constitution provides: No law impairing the obligation of
contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only
a prospective operation, and cannot affect acts or contracts already perfected;
however, as to laws already in existence, their provisions are read into contracts and
deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II is
limited in application to laws about to be enacted that would in any way derogate
from existing acts or contracts by enlarging, abridging or in any manner changing the
intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired
the employment contract of the parties. Rather, when the parties executed their 1998
employment contract, they were deemed to have incorporated into it all the provisions
of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause, for
the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed. Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare
of the people are generally applicable not only to future contracts but even to those
already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.
2. YES.
Section 1, Article III of the Constitution guarantees: No person shall be deprived of life,
liberty, or property without due process of law nor shall any person be denied the equal
protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne
by them in equal degree; none should be denied the protection of the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances.
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to be
valid, the classification must comply with these requirements: 1) it is based on substantial
distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing
conditions only; and 4) it applies equally to all members of the class.
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a
legitimate state interest; b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that interest;
and c) strict judicial scrutiny in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right or operates to the peculiar
disadvantage of a suspect class is presumed unconstitutional, and the burden is upon
the government to prove that the classification is necessary to achieve a compelling
state interest and that it is the least restrictive means to protect such interest.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their money
claims: they were uniformly entitled to their salaries for the entire unexpired portions of
their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the
subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in
their employment contract have since been differently treated in that their money
claims are subject to a 3-month cap, whereas no such limitation is imposed on local
workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that, in
the computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion
of one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history. It is akin to the paramount interest
of the state for which some individual liberties must give way, such as the public interest
in safeguarding health or maintaining medical standards, or in maintaining access to
information on matters of public concern.
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
the employment of OFWs by mitigating the solidary liability of placement agencies, such
callous and cavalier rationale will have to be rejected. There can never be a
justification for any form of government action that alleviates the burden of one sector,
but imposes the same burden on another sector, especially when the favored sector is
composed of private businesses such as placement agencies, while the disadvantaged
sector is composed of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level of a compelling
state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in
place that can be employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-
Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary
measures on erring foreign employers who default on their contractual obligations to
migrant workers and/or their Philippine agents. These disciplinary measures range from
temporary disqualification to preventive suspension. The POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains
similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of
the right of petitioner and other OFWs to equal protection.
The subject clause “or for three months for every year of the unexpired term, whichever
is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED
UNCONSTITUTIONAL.
 6. SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, vs. JOY C. CABILES, Thus, when a law or a provision of law is null because it is inconsistent with the
Respondent. G.R. No. 170139 August 5, 2014 Constitution, the nullity cannot be cured by reincorporation or reenactment of the same
or a similar law or provision. A law or provision of law that was already declared
TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022 unconstitutional remains as such unless circumstances have so changed as to warrant a
reverse conclusion.
FACTS:
 Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and The Court observed that the reinstated clause, this time as provided in Republic Act. No.
placement agency. 10022, violates the constitutional rights to equal protection and due process.96
 Respondent Joy Cabiles was hired thus signed a one-year employment contract for Petitioner as well as the Solicitor General have failed to show any compelling change in
a monthly salary of NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, the circumstances that would warrant us to revisit the precedent.
Co. Ltd. (Wacoal) on June 26, 1997.
 She alleged that in her employment contract, she agreedto work as quality control The Court declared, once again, the clause, “or for three (3) months for every year of
for one year. In Taiwan, she was asked to work as a cutter. the unexpired term, whichever is less” in Section 7 of Republic Act No. 10022 amending
 Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Section 10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null and
Joy, without prior notice, that she was terminated and that “she should void.
immediately report to their office to get her salary and passport.”
 She was asked to “prepare for immediate repatriation.”
 Joy claims that she was told that from June 26 to July 14, 1997, she only earned a
total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her
plane ticket to Manila.
 On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC
against petitioner and Wacoal. LA dismissed the complaint.
 NLRC reversed LA’s decision.
 CA affirmed the ruling of the National Labor Relations Commission finding
respondent illegally dismissed and awarding her three months’ worth of salary, the
reimbursement of the cost of her repatriation, and attorney’s fees

ISSUE: Whether Cabiles was entitled to the unexpired portion of her salary due to illegal
dismissal.

HELD: YES. The Court held that the award of the three-month equivalent of respondent’s
salary should be increased to the amount equivalent to the unexpired term of the
employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court
ruled that the clause “or for three (3) months for every year of the unexpired term,
whichever is less” is unconstitutional for violating the equal protection clause and
substantive due process.

A statute or provision which was declared unconstitutional is not a law. It “confers no

rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative
as if it has not been passed at all.”

The Court said that they are aware that the clause “or for three (3) months for every
year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010.

Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the

government may exercise its powers in any manner inconsistent with the Constitution,
regardless of the existence of any law that supports such exercise. The Constitution
cannot be trumped by any other law. All laws must be read in light of the Constitution.
Any law that is inconsistent with it is a nullity.
 7. LEAGUE OF CITIES OF THE PHILIPPINES v. COMELEC
Facts:
 During the 12th Congress, Congress enacted into law RA 9009 amending Section
450 of the Local Government Code by increasing the annual income requirement
for conversion of a municipality into a city from P20 million to P100 million to restrain
the “mad rush” of municipalities to convert into cities solely to secure a larger share
in the Internal Revenue Allotment despite the fact that they are incapable of fiscal
independence.
 Prior to its enactment, a total of 57 municipalities had cityhood bills pending in
Congress. Congress did not act on 24 cityhood bills during the 11th Congress.
 During the 12th Congress, the House of Representatives adopted Joint Resolution
No. 29. This Resolution reached the Senate.
 However, the 12th Congress adjourned without the Senate approving Joint
Resolution No. 29.
 During the 13th Congress, 16 of the 24 municipalities mentioned in the unapproved
Joint Resolution No. 29 filed between November and December of 2006, through
their respective sponsors in Congress, individual cityhood bills containing a
common provision, as follows:
o Exemption from Republic Act No. 9009. - The City of x x x shall be
exempted from the income requirement prescribed under Republic Act
No. 9009.
 These cityhood bills lapsed into law on various dates from March to July 2007 after
President Gloria Macapagal-Arroyo failed to sign them.
 Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional
for violation of Section 10, Article X of the Constitution, as well as for violation of the
equal protection clause.
 Petitioners also lament that the wholesale conversion of municipalities into cities will
reduce the share of existing cities in the Internal Revenue Allotment because more
cities will share the same amount of internal revenue set aside for all cities under
Section 285 of the Local Government Code.
Issue: Whether or not the Cityhood Laws violate Section 10, Article X of the Constitution
and the equal protection clause
Held: Yes, the Cityhood Laws violate both the Constitution and the equal protection
clause
Section 10, Article X of the 1987 Constitution provides:
No province, city, municipality, or barangay shall be created, divided,
merged, abolished or its boundary substantially altered, except in accordance
with the criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the political units
directly affected. (Emphasis supplied)
The Constitution is clear. The creation of local government units must follow the criteria
established in the Local Government Code and not in any other law. There is only one
Local Government Code. The Constitution requires Congress to stipulate in the Local
Government Code all the criteria necessary for the creation of a city, including the
conversion of a municipality into a city. Congress cannot write such criteria in any other
law, like the Cityhood Laws.
Section 450 of the Local Government Code provides:
Section 450. Requisites for Creation. – (a) A municipality or a cluster of
barangays may be converted into a component city if it has a
locallygenerated average annual income, as certified by the Department of
Finance, of at least One hundred million pesos (P100,000,000.00) for the last
two (2) consecutive years based on 2000 constant prices, and if it has either of
the following requisites:
(i) a contiguous territory of at least one hundred (100) square
kilometers, as certified by the Land Management Bureau; or
(ii) a population of not less than one hundred fifty thousand (150,000)
inhabitants, as certified by the National Statistics Office.
The creation thereof shall not reduce the land area, population and income of
the original unit or units at the time of said creation to less than the minimum
requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created city shall be properly identified
by metes and bounds. The requirement on land area shall not apply where the
city proposed to be created is composed of one (1) or more islands. The
territory need not be contiguous if it comprises two (2) or more islands.
(c) The average annual income shall include the income accruing to the
general fund, exclusive of special funds, transfers, and non-recurring income.
Thus, RA 9009 increased the income requirement for conversion of a municipality into a
city from P20 million toP100 million. Section 450 of the Local Government Code, as
amended by RA 9009, does not provide any exemption from the increased income
requirement.
The equal protection clause of the 1987 Constitution permits a valid classification under
the following conditions:
1. The classification must rest on substantial distinctions;
2. The classification must be germane to the purpose of the law;
3. The classification must not be limited to existing conditions only; and
4. The classification must apply equally to all members of the same class.
Limiting the exemption only to the 16 municipalities violates the requirement that the
classification must apply to all similarly situated. Municipalities with the same income as
the 16 respondent municipalities cannot convert into cities, while the 16 respondent
municipalities can. Clearly,as worded the exemption provision found in the Cityhood
Laws, even if it were written in Section 450 of the Local Government Code, would still be
unconstitutional for violation of the equal protection clause.
 8. RE: COA OPINION ON THE COMPUTATION OF THE APPRAISED VALUE OF THE
PROPERTIES PURCHASED BY THE RETIRED CHIEF/ASSOCIATE JUSTICES OF THE
SUPREME COURT A.M. NO. 11-7-10-SC JULY 31, 2012
DOCTRINE: Any kind of interference on how these retirement privileges and benefits are
exercised and availed of, not only violates the fiscal autonomy and independence of
the Judiciary, but also encroaches upon the constitutional duty and privilege of the
Chief Justice and the Supreme Court En Banc to manage the Judiciary’s own affairs.
FACTS:
 Office of the General Counsel of the Commission on Audit (COA) found that an
underpayment amounting to P221,021.50 resulted when five retired Supreme Court
justices purchased from the Supreme Court the personal properties assigned to
them during their incumbency in the Court.
 The COA attributed this underpayment to the use by the Property Division of the
Supreme Court of the wrong formula in computing the appraisal value of the
purchased vehicles. According to the COA, the Property Division erroneously
appraised the subject motor vehicles by applying Constitutional Fiscal Autonomy
Group (CFAG) Joint Resolution No. 35 and its guidelines, in compliance with the
Resolution of the Court En Banc in A.M. No. 03- 12-01, when it should have applied
the formula found in COA Memorandum No. 98-569-A4.
 Atty. Candelaria, Deputy Clerk of Court and Chief Administrative Officer,
recommended that the Court advise the COA to respect the in-house
computation based on the CFAG formula, noting that this was the first time that the
COA questioned the authority of the Court in using CFAG Joint Resolution No. 35
and its guidelines in the appraisal and disposal of government property since these
were issued in 1997.
 As a matter of fact, in two previous instances involving two retired Court of Appeals
Associate Justices, the COA upheld the in-house appraisal of government property
using the formula found in the CFAG guidelines.
 More importantly, the Constitution itself grants the Judiciary fiscal autonomy in the
handling of its budget and resources.
ISSUE: WON COA’s interference, in this case, violates the judiciary’s autonomy.
HELD: Yes.
The COA’s authority to conduct post-audit examinations on constitutional bodies
granted fiscal autonomy is provided under Section 2(1), Article IX-D of the 1987
Constitution. This authority, however, must be read not only in light of the Court’s fiscal
autonomy, but also in relation with the constitutional provisions on judicial
independence and the existing jurisprudence and Court rulings on these matters. The
concept of the independence of the three branches of government extends from the
notion that the powers of government must be divided to avoid concentration of these
powers in any one branch; the division, it is hoped, would avoid any single branch from
lording its power over the other branches or the citizenry. To achieve this purpose, the
divided power must be wielded by co-equal branches of government that are equally
capable of independent action in exercising their respective mandates; lack of
independence would result in the inability of one branch of government to check the
arbitrary or self-interest assertions of another or others.
Thus, judicial independence can be “broken down into two distinct concepts:
decisional independence and institutional independence.” Decisional independence
“refers to a judge’s ability to render decisions free from political or popular influence
based solely on the individual facts and applicable law.”On the other hand, institutional
independence “describes the separation of the judicial branch from the executive and
legislative branches of government.”
While, as a general proposition, the authority of legislatures to control the purse in the
first instance is unquestioned, any form of interference by the Legislative or the
Executive on the Judiciary’s fiscal autonomy amounts to an improper check on a co-
equal branch of government. If the judicial branch is to perform its primary function of
adjudication, it must be able to command adequate resources for that purpose. This
authority to exercise (or to compel the exercise of) legislative power over the national
purse (which at first blush appears to be a violation of concepts of separateness and an
invasion of legislative autonomy) is necessary to maintain judicial independence and is
expressly provided for by the Constitution through the grant of fiscal autonomy under
Section 3, Article VIII.
The Judiciary’s fiscal autonomy is realized through the actions of the Chief Justice, as its
head, and of the Supreme Court En Banc, in the exercise of administrative control and
supervision of the courts and its personnel. As the Court En Banc’s Resolution reflects, the
fiscal autonomy of the Judiciary serves as the basis in allowing the sale of the Judiciary’s
properties to retiring Justices of the Supreme Court and the appellate courts. The
Judiciary has full flexibility to allocate and utilize (its) resources with the wisdom and
dispatch that (its) needs require.
By way of a long standing tradition, partly based on the intention to reward long and
faithful service, the sale to the retired Justices of specifically designated properties that
they used during their incumbency has been recognized both as a privilege and a
benefit. This has become an established practice within the Judiciary that even the
COA has previously recognized. The En Banc Resolution also deems the grant of the
privilege as a form of additional retirement benefit that the Court can grant its officials
and employees in the exercise of its power of administrative supervision. Under this
administrative authority, the Court has the power to administer the Judiciary’s internal
affairs, and this includes the authority to handle and manage the retirement
applications and entitlements of its personnel as provided by law and by its own grants.
In the context of the grant now in issue, the use of the formula provided in CFAG Joint
Resolution No. 35 is a part of the Court’s exercise of its discretionary authority to
determine the manner the granted retirement privileges and benefits can be availed of.
Any kind of interference on how these retirement privileges and benefits are exercised
and availed of, not only violates the fiscal autonomy and independence of the
Judiciary, but also encroaches upon the constitutional duty and privilege of the Chief
Justice and the Supreme Court En Banc to manage the Judiciary’s own affairs.
 9. RE: REQUEST FOR GUIDANCE/CLARIFICATION ON SEC. 7, RULE 111 OF RA NO.
10154 REQUIRING RETIRING GOVERNMENT EMPLOYEES TO SECURE A CLEARANCE By virtue of its power of administrative supervision over all courts and the personnel
OF PENDENCY/NON-PENDENCY OF CASE IS FROM THE CIVIL SERVICE
thereof, it is only the Supreme Court that can oversee the judges’ and court personnel’s
COMMISSION administrative compliance with all laws, rules and regulations — no other branch of
government may intrude into this power, without running afoul of the doctrine of
FACTS: separation of powers; In case of violation of the Civil Service Law by a court personnel,
the standard procedure is for the Civil Service Commission (CSC) to bring its complaint
 Atty. Eden T. Candelaria, Deputy Clerk of Court requested guidance/clarification against a judicial employee before the Office of the Court Administrator of the Supreme
on the applicability to the Judiciary of Section 7, Rule III of the Implementing Rules Court.
and Regulations of Republic Act No. (RA) 101541 which states:
o Section 7. Notice of Pendency of Case.—The retiring employee shall seek
Clearance of Pendency/Non-Pendency of Administrative Case from his/her
employer agency, Civil Service Commission (CSC), Office of the Ombudsman,
or in case of presidential appointees, from the Office of the President.
 Section 6,2 Article VIII of the 1987 Philippine Constitution (Constitution) exclusively
vests in the Court administrative supervision over all courts and court personnel. As
such, it oversees the court personnel’s compliance with all laws and takes the
proper administrative action against them for any violation thereof. As an adjunct
thereto, it keeps in its custody records pertaining to the administrative cases of
retiring court personnel.

ISSUE: Whether such provision will apply to Judiciary personnel

HELD: NO.

In view of the foregoing, the Court rules that the subject provision — which requires
retiring government employees to secure a prior clearance of pendency/non-
pendency of administrative case/s from, among others, the CSC — should not be made
to apply to employees of the Judiciary.

To deem it otherwise would disregard the Court’s constitutionally-enshrined power of

administrative supervision over its personnel. Besides, retiring court personnel are already
required to secure a prior clearance of the pendency/non-pendency of administrative
case/s from the Court which makes the CSC clearance a superfluous and non-
expeditious requirement contrary to the declared state policy of RA 10154.

To further clarify the matter, the same principles dictate that a prior clearance of
pendency/non-pendency of administrative case/s from the Office of the President
(albeit some court personnel are presidential appointees, e.g., Supreme Court Justices)
or the Office of the Ombudsman should not equally apply to retiring court personnel.
Verily, the administrative supervision of court personnel and all affairs related thereto fall
within the exclusive province of the Judiciary.

It must, however, be noted that since the Constitution only accords the Judiciary
administrative supervision over its personnel, a different treatment of the clearance
requirement obtains with respect to criminal cases. As such, a clearance requirement
which pertains to criminal cases may be imposed by the appropriate government
agency, i.e., the Office of the Ombudsman,6 on retiring court personnel as it is a matter
beyond the ambit of the Judiciary’s power of administrative supervision.

WHEREFORE, the requirement of seeking a Clearance of Pendency/Non-Pendency of

Administrative Case from the Civil Service Commission embodied in Section 7, Rule III of
the Implementing Rules and Regulations of Republic Act No. 10154 is declared
INAPPLICABLE to retiring employees of the Judiciary. SO ORDERED.
 10. JARDELEZA v. SERENO G.R. No. 213181 August 19, 2014
Article VIII, Section 1 provides that the judicial power is vested in one Supreme Court
FACTS: Associate Justice Roberto Abad was about to retire and the Judicial and Bar and in such lower courts as may be established by law. Judicial power includes the duty
Council (JBC) announce an opening for application and recommendation for the said of the courts of justice to settle actual controversies involving rights which are legally
vacancy. Francis H. Jardeleza (Jardeleza), incumbent Solicitor General of the Republic demandable and enforceable, and to determine whether or not there has been a
was included in the list of candidates. Hence, he was interviewed. grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
However, he received calls from some Justices that the Chief Justice herself – CJ
Sereno, will be invoking unanimity rule against him. It is invoked because Jardeleza’s In this case, Jardeleza cries that although he earned a qualifying number of votes in the
integrity is in question. JBC, it was negated by the invocation of the “unanimity rule” on integrity in violation of
his right to due process guaranteed not only by the Constitution but by the Council’s
During the meeting, Justice Carpio disclosed a confidential information which own rules. For said reason, the Court is of the position that it can exercise the expanded
characterized Jardeleza’s integrity as dubious. Jardeleza answered that he would judicial power of review vested upon it by the 1987 Constitution.
defend himself provided that due process would be observed. His request was denied
and he was not included in the shortlist. It has been judicially settled that a petition for certiorari is a proper remedy to question
the act of any branch or instrumentality of the government on the ground of grave
Hence, Jardeleza filed for certiorari and mandamus with prayer for TRO to compel the abuse of discretion amounting to lack or excess of jurisdiction by any branch or
JBC to include him in the list on the grounds that the JBC and CJ Sereno acted with instrumentality of the government, even if the latter does not exercise judicial, quasi-
grave abuse of discretion in excluding him, despite having garnered a sufficient number judicial or ministerial functions.
of votes to qualify for the position.
In a case like this, where constitutional bearings are too blatant to ignore, the Court
ISSUE: Whether or not the right to due process is available in the course of JBC does not find passivity as an alternative. The impasse must be overcome.
proceedings in cases where an objection or opposition to an application is raised.
Mandamus, on the other hand, lies to compel the performance, when refused, of a
RULING: Yes. While it is true that the JBC proceedings are sui generis, it does not ministerial duty, but not to compel the performance of a discretionary duty. Mandamus
automatically denigrate an applicant’s entitlement to due process. will not issue to control or review the exercise of discretion of a public officer where the
law imposes upon said public officer the right and duty to exercise his judgment in
The Court does not brush aside the unique and special nature of JBC proceedings. reference to any matter in which he is required to act. It is his judgment that is to be
Notwithstanding being “a class of its own,” the right to be heard and to explain one’s exercised and not that of the court. There is no question that the JBC’s duty to nominate
self is availing. is discretionary and it may not be compelled to do something.
In cases where an objection to an applicant’s qualifications is raised, the observance of
due process neither contradicts the fulfillment of the JBC’s duty to recommend. This
holding is not an encroachment on its discretion in the nomination process. Actually, its
adherence to the precepts of due process supports and enriches the exercise of its
discretion. When an applicant, who vehemently denies the truth of the objections, is
afforded the chance to protest, the JBC is presented with a clearer understanding of
the situation it faces, thereby guarding the body from making an unsound and
capricious assessment of information brought before it. The JBC is not expected to
strictly apply the rules of evidence in its assessment of an objection against an
applicant. Just the same, to hear the side of the person challenged complies with the
dictates of fairness because the only test that an exercise of discretion must surmount is
that of soundness.

Consequently, the Court is compelled to rule that Jardeleza should have been included
in the shortlist submitted to the President for the vacated position of Associate Justice
Abad. This consequence arose from the violation by the JBC of its own rules of
procedure and the basic tenets of due process.

True, Jardeleza has no vested right to a nomination, but this does not prescind from the
fact that the JBC failed to observe the minimum requirements of due process.

ISSUE: Does the Supreme Court’s power of supervision over the JBC include the
remedies of certiorari and mandamus?

HELD: YES, on the availability of certiorari. NO, on the availability of mandamus.

 11. CHAVEZ v. JBC G.R. No. 202242 July 17, 2012
Facts:
 A body representative of all the stakeholders in the judicial appointment process
was conceived and called the Judicial and Bar Council (JBC) and its composition,
term and functions are provided under Section 8, Article VIII of the 1987
Constitution which also indicates that the JBC shall be composed of seven (7)
members.
 In 1994, instead of having only seven members, an eighth member was added to
the JBC as two representatives from Congress began sitting in the JBC – one from
the House of Representatives and one from the Senate, with each having one-half
(1/2) of a vote.
 In separate meetings held in 2000 and 2001, the JBC En Banc decided to allow the
representatives from the Senate and the House of Representatives one full vote
each.
 At present, Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr.
(respondents) simultaneously sit in the JBC as representatives of the legislature.
Francisco I. Chavez, (petitioner) questioned this practice in this petition.
 Respondents argued that the crux of the controversy is the phrase “a
representative of Congress.” It is their theory that the two houses, the Senate and
the House of Representatives, are permanent and mandatory components of
“Congress,” such that the absence of either divests the term of its substantive
meaning as expressed under the Constitution. Bicameralism, as the system of
choice by the Framers, requires that both houses exercise their respective powers in
the performance of its mandated duty which is to legislate. Thus, when Section 8(1),
Article VIII of the Constitution speaks of “a representative from Congress,” it should
mean one representative each from both Houses which comprise the entire
Congress.
 The Supreme Court granted the petition.
Issues:
(1) Whether or not the conditions sine qua non for the exercise of the power of judicial
review have been met in this case; and -- YES
(2) Whether or not the current practice of the JBC to perform its functions with eight (8)
members, two (2) of whom are members of Congress, runs counter to the letter and
spirit of the 1987 Constitution. -- YES
(3) What is the effect of the Court’s finding that the current composition of the JBC is
unconstitutional? --
Held:
(1) Yes.
The Courts’ power of judicial review is subject to several limitations, namely: (a) there
must be an actual case or controversy calling for the exercise of judicial power; (b) the
person challenging the act must have “standing” to challenge; he must have a
personal and substantial interest in the case, such that he has sustained or will sustain,
direct injury as a result of its enforcement; (c) the question of constitutionality must be
raised at the earliest possible opportunity; and (d) the issue of constitutionality must be
the very lis mota of the case.
The Court disagrees with the respondents’ argument that petitioner lost his standing to
sue because he is not an official nominee for the post of Chief Justice. To question the
JBC composition for being unconstitutional is not limited to official nominees for the post
of Chief Justice.
The court recognizes the petitioner’s right to sue in this case and that he has the legal
standing to bring the present action because he has a personal stake in the outcome of
the controversy. According to petitioner, “since the JBC derives financial support for its
functions, operation and proceedings from taxes paid, petitioner possesses as taxpayer
both right and legal standing to demand that the JBC’s proceedings are not tainted
with illegality and that its composition and actions do not violate the Constitution”.
The legality of the very process of the nominations to the positions in the judiciary is the
nucleus of the controversy which is considered by the court as a constitutional issue that
must be passed upon and that the allegations are substantiated by facts and,
therefore, deserve an evaluation from the court.
The JBC likewise screens and nominates other members of the Judiciary. Albeit heavily
publicized in this regard, the JBC’s duty is not at all limited to the nominations for the
highest magistrate in the land. A vast number of aspirants to judicial posts all over the
country may be affected by the Court’s ruling. More importantly, the legality of the very
process of nominations to the positions in the Judiciary is the nucleus of the controversy.
The claim that the composition of the JBC is illegal and unconstitutional is an object of
concern, not just for a nominee to a judicial post, but for all citizens who have the right
to seek judicial intervention for rectification of legal blunders.
(2) Yes.
The word “Congress” used in Article VIII, Section 8(1) of the Constitution is used in its
basic sense, and not pertaining to either House of Representatives or Senate is referred
to, but that, can only have one representative. The practical purpose of the seven-
member composition of the JBC is solution to stalemate voting.
Section 8. (1) A Judicial and Bar Council is hereby created under the supervision of
the Supreme Court composed of the Chief Justice as ex officio Chairman, the
Secretary of Justice, and a representative of the Congress as ex officio Members, a
representative of the Integrated Bar, a professor of law, a retired Member of the
Supreme Court, and a representative of the private sector.
Bicameralism of “Congress” refers to its legislative function in the government. The
Constitution is clear in the distinction of the role of each house in the process of
lawmaking. In the JBC, since there is no need for a liaison between the Senate and
House of Representatives when nominating judicial officers. “Congress” must therefore
refer to the entire Legislative department. It is clear that the Constitution orders that the
JBC be composed of seven (7) members only.
The first paragraph calls for the creation of a JBC and places the same under the
supervision of the Court. Then it goes to its composition where the regular members are
enumerated: a representative of the Integrated Bar, a professor of law, a retired
member of the Court and a representative from the private sector. On the second part
lies the crux of the present controversy. It enumerates the ex officio or special members
of the JBC composed of the Chief Justice, who shall be its Chairman, the Secretary of
Justice and “a representative of Congress.”
The use of the singular letter “a” preceding “representative of Congress” is unequivocal
and leaves no room for any other construction. It is indicative of what the members of
the Constitutional Commission had in mind, that is, Congress may designate only one (1)
representative to the JBC. Had it been the intention that more than one (1)
representative from the legislature would sit in the JBC, the Framers could have, in no
uncertain terms, so provided.

Even though finding the current composition of the JBC as unconstitutional, all its prior
official actions are valid. Actions previous to the declaration of unconstitutionality are
legally recognized under the doctrine of operative facts. These official actions are not
nullified.

(3) As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes
no duties; it affords no protection; it creates no office; it is inoperative as if it has not
been passed at all. This rule, however, is not absolute. Under the doctrine of operative
facts, actions previous to the declaration of unconstitutionality are legally recognized.

They are not nullified. This is essential in the interest of fair play.

The doctrine of operative fact, as an exception to the general rule, only applies as a
matter of equity and fair play. It nullifies the effects of an unconstitutional law by
recognizing that the existence of a statute prior to a determination of unconstitutionality
is an operative fact and may have consequences which cannot always be ignored.
The past cannot always be erased by a new judicial declaration. The doctrine is
applicable when a declaration of unconstitutionality will impose an undue burden on
those who have relied on the invalid law. Thus, it was applied to a criminal case when a
declaration of unconstitutionality would put the accused in double jeopardy or would
put in limbo the acts done by a municipality in reliance upon a law creating it.3

Under the circumstances, the Court finds the exception applicable in this case and
holds that notwithstanding its finding of unconstitutionality in the current composition of
the JBC, all its prior official actions are nonetheless valid.
 12. G.R. No. 228628 REP. REYNALDO V. UMALI, in his capacity as Chairman of the omitted is to be held as intentionally omitted and the Judiciary cannot supply the
House of Representatives Committee on Justice and Ex Officio Member of the omission as that would be tantamount to judicial legislation.
JBC, Petitioner vs. THE JUDICIAL AND BAR COUNCIL, chaired by THE HON.
MARIA LOURDES P.A. SERENO, Chief Justice and Ex Officio Chairperson, LAWS/PROVISIONS:
Respondent
Section 8, Article VIII, 1987 Constitution: A Judicial and Bar Council is hereby
FACTS: created under the supervision of the Supreme Court composed of the Chief
 In Section 8, Article VIII of the 1987 Constitution of the Philippines, the members Justice as ex officio Chairman, the Secretary of Justice, and a
of the Judicial and Bar Council of the Philippines was stipulated. representative of the Congress as ex officio Members, a representative of
 These are the Chief Justice, the Secretary of Justice, a representative of the the Integrated Bar, a professor of law, a retired Member of the Supreme
Congress, a representative of the Integrated Bar, a professor of law, a retired Court, and a representative of the private sector.
member of the Supreme Court, and a representative from the Private Sector.
 On the 12th of July in 2012, the Supreme Court ruled in the Chavez V. JBC case Article 8, Civil Code: Judicial decisions applying or interpreting the laws or the
that having two (2) members of Congress as representatives is unconstitutional Constitution shall form a part of the legal system of the Philippines
as the framers intended for a single member of Congress to represent the
department in the JBC.
 As a result, the Congress agreed upon a 6-month rotational representation in
the JBC wherein the House of Representatives would represent the
department from January to June and the Senate would represent the
department from July to December.
 On the 2nd and 9th of December in 2016, petitioner Reynaldo Umali, the
Chairman of the House of Representatives, cast his votes for the selection of
Supreme Court Justices. With him being from the HOR, his votes were not
counted by the JBC.

ISSUE: Whether the present practice of the JBC in allowing only one (1) member of
Congress to represent the department during deliberations is unconstitutional.

RULING: No.

The JBC is merely following the provisions stipulated in Section 8 of Article VIII of the 1987
Constitution and the Supreme Court’s ruling in the Chavez case.

The Court further ruled that the JBC’s action was ministerial in nature, given that the JBC
did not act with any decision and was merely performing in a prescribed manner.
Otherwise, that would be a discretionary act.

Furthermore, petitioner’s petition is rendered moot as the two recently vacated

Associate Justice positions have already been occupied.

The doctrine of Stare Decesis is used the court’s decision given the fact that they had
already ruled a similar case with similar facts in Chavez V. JBC wherein the latter also
discussed the constitutionality of the JBC’s adoption of a 6-month rotational
representation in the JBC. This doctrine is further bolstered by Article 8 of the Civil Code
of the Philippines, which allows for judicial decisions to be a part of the legal system in
the Philippines.

With regards to Section 8, Article VIII of the 1987 Constitution, the Court ruled in Chavez
and in the present case at bar that the framers intended for the equal representation of
all three government branches namely, the Legislative, the Executive, and the Judiciary.
To have more than one member representing each department would be unfair.

The court further ruled that when the framers stipulated “a representative of the
Congress,” they had not anticipated that the government would shift from a
unicameral Congress to a bicameral one. Following the rule of Casus Omissus, a case
 13. FERDINAND R. VILLANUEVA, PRESIDING JUDGE, MCTC, COMPOSTELA-NEW
BATAAN, COMPOSTELA VALLEY PROVINCE, Petitioner, v. JUDICIAL AND BAR
COUNCIL, Respondent.
RECIT READY
 Petitioner applied for a position as a judge in a second level court but JBC did
not include his name in the list of applicants since he failed to qualify.
 This is because the JBC put priority to incumbent judges who served their
position for at least five years and petitioner here only served as judged for
more than a year.
 The petitioner assailed, inter alia, the authority of the JBC to add another
qualification (5-year-qualitification) because the said qualification was already
prescribed
 The Supreme Court ruled that the internal process of choosing people who
would qualify done by the JBC was valid since under Sect. 8 (5), Art. VIII of the
Constitution gave the JBC principal function of recommending appointees to
the judiciary
FACTS:
 Herein petitioner, Judge Ferdinand R. Villanueva was a presiding judge of the
Municipal Circuit Trial Court of Compostela-New Bataas, Poblacion, Compostela
Valley Province, Region XI, which is a first-level court.
o He applied on second-level courts such as Branch 31, Tagum City; Branch 13,
Davao City; and Branch 6, Prosperidad, Adusan Del Sur.
 The Judicial and Bar Council’s (JBC) Office of Recruitment, Selection and
Nomination, informed the petitioner through a letter that we failed to qualify for the
said position he applied on.
 On the same day, petitioner sent a letter (electronic mail).
o He seeks reconsideration of his non-inclusion in the list of the considered
applicants.
o He also protested the inclusion of applicants who failed the prejudicature
examination
 Through a letter, the JBC Executive officer informed him that his protest and
reconsideration was duly noted by the JBC en banc.
 Still the non-inclusion of his name in the list of applicants was upheld.
o The reason was, the JBS’s long standing policy of giving priority to incumbent
judges that served their current position for at least five years.
o Since the petitioner only served as a judged for more than a year only, his
name was not included in the list.
 Petitioner argues that:
o Qualifications was already prescribed so the JBC could add no more
o The five-year-requirement violates the equal protection and due process
clauses of the constitution
o The same requirement violates the constitutional provision on Social Justice
and Human Rights for Equal Opportunity of employment, and
o The requirement of passing the prejudicature exam should be mandatory.
 Respondents argue that
o The writ of certiorari and prohibition cannot issue to prevent the JBC from
performing its principal function under the constitution to recommend
appointees to the judiciary because the JBC is not a tribunal exercising judicial
or quasi-judicial function,
o Remedy of mandamus and declaratory relief will not lie because petitioner
does not have any legal right that need to be protected,
o Legal protection clause is not violated because the 5-year-requirement is
performance and experience based, and
o No violation of due process since the policy is merely internal in nature.
Issue:
(1) W/N the policy of JBC requiring five years of service as judges of first-level
courts before they can qualify as applicant to second-level courts is
constitutional – YES
(2) W/N the policy of JBC requiring five years of service as judges of first-level
courts before they can qualify as applicant to second-level courts is
constitutional
Held:
(1) The said added 5-year-qualification being assailed by the petitioner is constitutional
since as stated in the Sect. 8 (5), Art. VIII, the JBC is mandated to recommend
appointees to the judiciary. Consequently, it was also stated in the said provision
that only the persons nominated by the JBC is transmitted to the president that will
choose whom to nominate as judge in the judiciary.
(2) Procedural Issues:
Before resolving the substantive issues, the Court considers it necessary to first determine
whether or not the action for certiorari, prohibition and mandamus, and declaratory
relief commenced by the petitioner was proper.
One. The remedies of certiorari and prohibition are tenable. "The present Rules of Court
uses two special civil actions for determining and correcting grave abuse of discretion
amounting to lack or excess of jurisdiction. These are the special civil actions for...
certiorari and prohibition, and both are governed by Rule 65."[9] As discussed in the
case of Maria Carolina P. Araullo, etc., et al. v. Benigno Simeon C. Aquino III, etc., et
al.,[10] this Court explained that:
Two. The remedy of mandamus cannot be availed of by the petitioner in assailing JBC's
policy. The petitioner insisted that mandamus is proper because his right was violated
when he was not included in the list of candidates for the RTC courts he applied for. He
said that... his non-inclusion in the list of candidates for these stations has caused him
direct injury.
Three. The petition for declaratory relief is improper. "An action for declaratory relief
should be filed by a person interested under a deed, a will, a contract or other written
instrument, and whose rights are affected by a statute, an executive order, a regulation
or... an ordinance. The relief sought under this remedy includes the interpretation and
determination of the validity of the written instrument and the judicial declaration of the
parties' rights or duties thereunder."[16] "[T]he purpose of the action is to... secure an
authoritative statement of the rights and obligations of the parties under a statute,
deed, contract, etc., for their guidance in its enforcement or compliance and not to
settle issues arising from its alleged breach."
In this case, the petition for declaratory relief did not involve an unsound policy. Rather,
the petition specifically sought a judicial declaration that the petitioner has the right to
be included in the list of applicants although he failed to meet JBC's five-year
requirement... policy. No person possesses a legal right under the Constitution to be
included in the list of nominees for vacant judicial positions. The opportunity of
appointment to judicial office is a mere privilege, and not a judicially enforceable
right... that may be properly claimed by any person. The inclusion in the list of
candidates, which is one of the incidents of such appointment, is not a right either. Thus,
the petitioner cannot claim any right that could have been affected by the assailed
policy.

Furthermore, the instant petition must necessarily fail because this Court does not have
original jurisdiction over a petition for declaratory relief even if only questions of law are
involved.[18] The special civil action of declaratory relief falls under... the exclusive
jurisdiction of the appropriate RTC pursuant to Section 19[19] of Batas Pambansa Blg.
129, as amended by R.A.No. 7691.[20]

Therefore, by virtue of the Court's supervisory duty over the JBC and in the exercise of its
expanded judicial power, the Court assumes jurisdiction over the present petition. But in
any event, even if the Court will set aside procedural infirmities, the instant petition
should... still be dismissed.

Substantive Issues

As an offspring of the 1987 Constitution, the JBC is mandated to recommend

appointees to the judiciary and only those nominated by the JBC in a list officially
transmitted to the President may be appointed by the latter as justice or judge in the
judiciary. Thus, the JBC is... burdened with a great responsibility that is imbued with
public interest as it determines the men and women who will sit on the judicial bench.
While the 1987 Constitution has provided the qualifications of members of the judiciary,
this does not preclude the JBC from having its... own set of rules and procedures and
providing policies to effectively ensure its mandate.

The functions of searching, screening, and selecting are necessary and incidental to the
JBC's principal function of choosing and recommending nominees for vacancies in the
judiciary for appointment by the President. However, the Constitution did not lay down
in precise terms... the process that the JBC shall follow in determining applicants'
qualifications. In carrying out its main function, the JBC has the authority to set the
standards/criteria in choosing its nominees for every vacancy in the judiciary, subject
only to the minimum qualifications... required by the Constitution and law for every
position. The search for these long held qualities necessarily requires a degree of
flexibility in order to determine who is most fit among the applicants. Thus, the JBC has
sufficient but not unbridled license to act in performing... its duties.

JBC's ultimate goal is to recommend nominees and not simply to fill up judicial
vacancies in order to promote an effective and efficient administration of justice. Given
this pragmatic situation, the JBC had to establish a set of uniform criteria in order to
ascertain whether an... applicant meets the minimum constitutional qualifications and
possesses the qualities expected of him and his office. Thus, the adoption of the five-
year requirement policy applied by JBC to the petitioner's case is necessary and
incidental to the function conferred by the

Constitution to the JBC.

 14. RE: PETITION FOR RECOGNITION OF THE EXEMPTION OF THE GSIS FROM PAYMENT
OF LEGAL FEES
FACTS:
 The GSIS seeks exemption from the payment of legal fees imposed on GOCCs
under Sec 22, Rule 141 (Legal Fees) of the ROC. The said provision states:
SEC. 22. Government exempt. – The Republic of the Philippines, its agencies
and instrumentalities are exempt from paying the legal fees provided in this
Rule. Local government corporations and government-owned or controlled
corporations with or without independent charter are not exempt from paying
such fees. xx
 The GSIS anchors its petition on Sec 39 of its charter, RA 8291 (The GSIS Act of 1997):
SEC. 39. Exemption from Tax, Legal Process and Lien. – It is hereby declared to
be the policy of the State that the actuarial solvency of the funds of the GSIS
shall be preserved and maintained at all times and that contribution rates
necessary to sustain the benefits under this Act shall be kept as low as possible
in order not to burden the members of the GSIS and their employers. Taxes
imposed on the GSIS tend to impair the actuarial solvency of its funds and
increase the contribution rate necessary to sustain the benefits of this Act.
Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets,
revenues including accruals thereto, and benefits paid, shall be exempt from
all taxes, assessments, fees, charges or duties of all kinds. These exemptions
shall continue unless expressly and specifically revoked and any assessment
against the GSIS as of the approval of this Act are hereby considered paid.
Consequently, all laws, ordinances, regulations, issuances, opinions or
jurisprudence contrary to or in derogation of this provision are hereby deemed
repealed, superseded and rendered ineffective and without legal force and
effect. xx
 Required to comment on the GSIS’ petition, the OSG maintains that the petition
should be denied.
 On this Court’s order, the Office of the Chief Attorney (OCAT) submitted a report
and recommendation on the petition of the GSIS and the comment of the OSG
thereon. According to the OCAT, the claim of the GSIS for exemption from the
payment of legal fees has no legal basis.
ISSUE: May the legislature exempt the GSIS from legal fees imposed by the Court on
GOCCs and local government units?
HELD: NO
Rule 141 (on Legal Fees) of the ROC was promulgated by this Court in the exercise of its
rule-making powers under Sec 5(5), Art VIII of the Constitution:
Sec. 5. The Supreme Court shall have the following powers:
xxxxxxxxx
(5) Promulgate rules concerning the protection and enforcement of constitutional
rights, pleading, practice, and procedure in all courts, the admission to the
practice of law, the Integrated Bar, and legal assistance to the underprivileged.
xxxxxxxx
Clearly, therefore, the payment of legal fees under Rule 141 of the ROC is an integral
part of the rules promulgated by this Court pursuant to its rule-making power under
Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules concerning
pleading, practice and procedure in courts. Indeed, payment of legal (or docket) fees
is a jurisdictional requirement.
Since the payment of legal fees is a vital component of the rules promulgated by this
Court concerning pleading, practice and procedure, it cannot be validly annulled,
changed or modified by Congress. As one of the safeguards of this Court’s institutional
independence, the power to promulgate rules of pleading, practice and procedure is
now the Court’s exclusive domain. That power is no longer shared by this Court with
Congress, much less with the Executive.
NOTES:
-The GSIS cannot successfully invoke the right to social security of government
employees in support of its petition. It is a corporate entity whose personality is separate
and distinct from that of its individual members. The rights of its members are not its
rights; its rights, powers and functions pertain to it solely and are not shared by its
members.
-Congress could not have carved out an exemption for the GSIS from the payment of
legal fees without transgressing another equally important institutional safeguard of the
Court’s independence — fiscal autonomy. Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect fees, including legal fees. Moreover,
legal fees under Rule 141 have two basic components, the Judiciary Development Fund
(JDF) and the Special Allowance for the Judiciary Fund (SAJF). The laws which
established the JDF and the SAJF[33] expressly declare the identical purpose of these
funds to “guarantee the independence of the Judiciary as mandated by the
Constitution and public policy.”
Legal fees therefore do not only constitute a vital source of the Court’s financial
resources but also comprise an essential element of the Court’s fiscal independence.
Any exemption from the payment of legal fees granted by Congress to government-
owned or controlled corporations and local government units will necessarily reduce
the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs
the Court’s guaranteed fiscal autonomy and erodes its independence.
-Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno
traced the history of the rule-making power of this Court and highlighted its evolution
and development in Echegaray v. Secretary of Justice:
Under the 1935 Constitution, the power of this Court to promulgate rules concerning
pleading, practice and procedure was granted but it appeared to be co-existent with
legislative power for it was subject to the power of Congress to repeal, alter or
supplement. Thus, its Section 13, Article VIII provides:
Sec. 13. The Supreme Court shall have the power to promulgate rules
concerning pleading, practice and procedure in all courts, and the admission
to the practice of law. Said rules shall be uniform for all courts of the same
grade and shall not diminish, increase, or modify substantive rights. The existing
laws on pleading, practice and procedure are hereby repealed as statutes,
and are declared Rules of Court, subject to the power of the Supreme Court to
alter and modify the same. The Congress shall have the power to repeal, alter
or supplement the rules concerning pleading, practice and procedure, and
the admission to the practice of law in the Philippines.
The said power of Congress, however, is not as absolute as it may appear on its surface.
In In re Cunanan, Congress in the exercise of its power to amend rules of the Supreme
Court regarding admission to the practice of law, enacted the Bar Flunkers Act of 1953
which considered as a passing grade, the average of 70% in the bar examinations after
July 4, 1946 up to August 1951 and 71% in the 1952 bar examinations. This Court struck promulgate rules of pleading, practice and procedure is no longer shared by this Court
down the law as unconstitutional. In his ponencia, Mr. Justice Diokno held that “x x x the with Congress, more so with the Executive.
disputed law is not a legislation; it is a judgment – a judgment promulgated by this Court
during the aforecited years affecting the bar candidates concerned; and although this WHEREFORE, the petition of the GSIS for recognition of its exemption from the payment
Court certainly can revoke these judgments even now, for justifiable reasons, it is no less of legal fees imposed under Sec 22 of Rule 141 of the ROC on GOCCs and LGUs is
certain that only this Court, and not the legislative nor executive department, that may hereby DENIED .
do so. Any attempt on the part of these departments would be a clear usurpation of its
function, as is the case with the law in question.” The venerable jurist further ruled: “It is
obvious, therefore, that the ultimate power to grant license for the practice of law
belongs exclusively to this Court, and the law passed by Congress on the matter is of
permissive character, or as other authorities say, merely to fix the minimum conditions for
the license.” By its ruling, this Court qualified the absolutist tone of the power of Congress
to “repeal, alter or supplement the rules concerning pleading, practice and procedure,
and the admission to the practice of law in the Philippines.

The ruling of this Court in In re Cunanan was not changed by the 1973 Constitution. For
the 1973 Constitution reiterated the power of this Court “to promulgate rules concerning
pleading, practice and procedure in all courts, x x x which, however, may be repealed,
altered or supplemented by the Batasang Pambansa x x x.” More completely, Section
5(2)5 of its Article X provided:
xxxxxxxxx
Sec. 5. The Supreme Court shall have the following powers.
xxxxxxxxx
(5) Promulgate rules concerning pleading, practice, and procedure in all
courts, the admission to the practice of law, and the integration of the Bar,
which, however, may be repealed, altered, or supplemented by the Batasang
Pambansa. Such rules shall provide a simplified and inexpensive procedure for
the speedy disposition of cases, shall be uniform for all courts of the same
grade, and shall not diminish, increase, or modify substantive rights.
Well worth noting is that the 1973 Constitution further strengthened the
independence of the judiciary by giving to it the additional power to
promulgate rules governing the integration of the Bar.

The 1987 Constitution molded an even stronger and more independent judiciary.
Among others, it enhanced the rule making power of this Court. Its Section 5(5), Article
VIII provides:
xxxxxxxxx
Section 5. The Supreme Court shall have the following powers:
xxxxxxxxx
(5) Promulgate rules concerning the protection and enforcement of
constitutional rights, pleading, practice and procedure in all courts, the
admission to the practice of law, the Integrated Bar, and legal assistance to
the underprivileged. Such rules shall provide a simplified and inexpensive
procedure for the speedy disposition of cases, shall be uniform for all courts of
the same grade, and shall not diminish, increase, or modify substantive rights.
Rules of procedure of special courts and quasi-judicial bodies shall remain
effective unless disapproved by the Supreme Court.

The rule making power of this Court was expanded. This Court for the first time was given
the power to promulgate rules concerning the protection and enforcement of
constitutional rights. The Court was also granted for the first time the power to
disapprove rules of procedure of special courts and quasi-judicial bodies. But most
importantly, the 1987 Constitution took away the power of Congress to repeal, alter, or
supplement rules concerning pleading, practice and procedure. In fine, the power to
 15. Salvador Estipona vs. Hon. Judge Lobrigo G.R. 226679, 15 Aug. 2017
FACTS:
 Petitioner Salvador Estipona, Jr. was accused in Criminal Case No. 13586 for
violation of Section 11, Article II of R.A. No. 9165, for having illegally have in his
possession 0.084 gram of shabu.
 Under Section 23 of R.A. No. 9165, plea-bargaining is prohibited in all drug cases.
 On June 15, 2016, he filed a Motion to Allow the Accused to Enter into a Plea
Bargaining Agreement, praying to withdraw his not guilty plea and be allowed to
enter a plea of guilty to the lesser offense of violation of Section 12 of R.A. No. 9165
(for Possession of Drug Paraphernalia).
 The trial court denied his Motion holding that Section 23 of R.A. No. 9165 expressly
prohibits plea-bargaining in drugs cases. Estipona filed a Motion for
Reconsideration which was denied by the trial court.
 Arguing that Sec. 23 of RA No. 9165 is unconstitutional for it encroaches upon the
Supreme Court's rule-making power and therefore violative of the equal protection
clause, he filed a Petition before the SC to declare Sec. 23 unconstitutional.
 The Solicitor General opposed the petition on the ground that (1) Congress was not
impleaded, (2) the constitutionality of the law cannot be attached collaterally, (3)
the proper action should have been a petition for relief before the RTC, and (4) the
petition fails to satisfy the requisites for judicial review.
ISSUES:
1. WHETHER SECTION 23 OF REPUBLIC ACT NO. 9165, WHICH PROHIBITS PLEA
BARGAINING IN ALL VIOLATIONS OF THE SAID LAW, IS UNCONSTITUTIONAL FOR
BEING VIOLATIVE OF THE CONSTITUTIONAL RIGHT TO EQUAL PROTECTION OF THE
LAW.
2. WHETHER SECTION 23 OF REPUBLIC ACT NO. 9165 IS UNCONSTITUTIONAL AS IT
ENCROACHED UPON THE POWER OF THE SUPREME COURT TO PROMULGATE RULES
OF PROCEDURE.
3. WHETHER THE REGIONAL TRIAL COURT, AS PRESIDED BY HON. FRANK E. LOBRIGO,
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT REFUSED TO DECLARE SECTION 23 OF REPUBLIC ACT NO. 9165
AS UNCONSTITUTIONAL.
HELD:
On Matters of Technicality:
On matters of technicality, some points raised by the OSG maybe correct. Nonetheless,
without much further ado, it must be underscored that it is within this Court's power to
make exceptions to the rules of court. Under proper conditions, We may permit the full
and exhaustive ventilation of the parties' arguments and positions despite the supposed
technical infirmities of a petition or its alleged procedural flaws. In discharging its solemn
duty as the final arbiter of constitutional issues, the Court shall not shirk from its obligation
to determine novel issues, or issues of first impression, with far-reaching implications.
Likewise, matters of procedure and technicalities normally take a backseat when issues
of substantial and transcendental importance are present. We have acknowledged
that the Philippines' problem on illegal drugs has reached "epidemic," "monstrous," and
"harrowing" proportions, and that its disastrously harmful social, economic, and spiritual
effects have broken the lives, shattered the hopes, and destroyed the future of
thousands especially our young citizens.
Bearing in mind the very important and pivotal issues raised in this petition, technical
matters should not deter Us from having to make the final and definitive
pronouncement that everyone else depends for enlightenment and guidance. When
public interest requires, the Court may brush aside procedural rules in order to resolve a
constitutional issue.
On SC's Rule-Making Power:
The power to promulgate rules of pleading, practice and procedure is now Our
exclusive domain and no longer shared with the Executive and Legislative departments.
It should be stressed that the power to promulgate rules of pleading, practice and
procedure was granted by our Constitutions to this Court to enhance its independence,
for in the words of Justice Isagani Cruz "without independence and integrity, courts will
lose that popular trust so essential to the maintenance of their vigor as champions of
justice." Hence, our Constitutions continuously vested this power to this Court for it
enhances its independence. Under the 1935 Constitution, the power of this Court to
promulgate rules concerning pleading, practice and procedure was granted but it
appeared to be co-existent with legislative power for it was subject to the power of
Congress to repeal, alter or supplement.
While the power to define, prescribe, and apportion the jurisdiction of the various courts
is, by constitutional design, vested unto Congress, the power to promulgate rules
concerning the protection and enforcement of constitutional rights, pleading, practice,
and procedure in all courts belongs exclusively to this Court.
The power of Congress (to repeal, alter or supplement the rules concerning pleading,
practice and procedure, and the admission to the practice of law in the Philippines
under Sec. 13, Art, VIII of he 1935 Constitution), however, is not as absolute as it may
appear on its surface. In In re: Cunanan, Congress in the exercise of its power to amend
rules of the Supreme Court regarding admission to the practice of law, enacted the Bar
Flunkers Act of 1953 which considered as a passing grade, the average of 70% in the
bar examinations after July 4, 1946 up to August 1951 and 71% in the 1952 bar
examinations. This Court struck down the law as unconstitutional.
The rule making power of this [1987] Court was expanded. This Court for the first time
was given the power to promulgate rules concerning the protection and enforcement
of constitutional rights. The Court was also granted for the .first time the power to
disapprove rules of procedure of special courts and quasi-judicial bodies. But most
importantly, the 1987 Constitution took away the power of Congress to repeal, alter, or
supplement rules concerning pleading, practice and procedure. In fine, the power to
promulgate rules of pleading, practice and procedure is no longer shared by this Court
with Congress, more so with the Executive. x x x.
Thus, as it now stands, Congress has no authority to repeal, alter, or supplement rules
concerning pleading, practice, and procedure.x x x. The separation of powers among
the three co-equal branches of our government has erected an impregnable wall that
keeps the power to promulgate rules of pleading, practice and procedure within the
sole province of this Court. The other branches trespass upon this prerogative if they
enact laws or issue orders that effectively repeal, alter or modify any of the procedural
rules promulgated by the Court. Viewed from this perspective, We have rejected
previous attempts on the part of the Congress, in the exercise of its legislative power, to
amend the Rules of Court (Rules).
On Plea-Bargaining:
The Supreme Court's sole prerogative to issue, amend, or repeal procedural rules is
limited to the preservation of substantive rights, i.e., the former should not diminish,
increase or modify the latter. "Substantive law is that part of the law which creates,
defines and regulates rights, or which regulates the right and duties which give rise to a
cause of action; that part of the law which courts are established to administer; as
opposed to adjective or remedial law, which prescribes the method of enforcing rights
or obtain redress for their invasions." Fabian v. Hon. Desierto laid down the test for
determining whether a rule is substantive or procedural in nature.

In determining whether a rule prescribed by the Supreme Court, for the practice and
procedure of the lower courts, abridges, enlarges, or modifies any substantive right, the
test is whether the rule really regulates procedure, that is, the judicial process for
enforcing rights and duties recognized by substantive law and for justly administering
remedy and redress for a disregard or infraction of them. If the rule takes away a vested
right, it is not procedural. If the rule creates a right such as the right to appeal, it may be
classified as a substantive matter; but if it operates as a means of implementing an
existing right then the rule deals merely with procedure.

Does Sec. 23, RA 9165 Violate the Equal Protection Clause?

At this point, We shall not resolve the issue of whether Section 23 of R.A. No. 9165 is
contrary to the constitutional right to equal protection of the law in order not to
preempt any future discussion by the Court on the policy considerations behind Section
23 of R.A. No. 9165. Pending deliberation on whether or not to adopt the statutory
provision in toto or a qualified version thereof, We deem it proper to declare as invalid
the prohibition against plea bargaining on drug cases until and unless it is made part of
the rules of procedure through an administrative circular duly issued for the purpose.
 1. DENNIS A. B. FUNA, PETITIONER, VS. THE CHAIRMAN, COA, REYNALDO A. VILLAR
G.R. No. 192791, April 24, 2012
FACTS:
 Funa challenges the constitutionality of the appointment of Reynaldo A. Villar as
Chairman of the COA.
 Following the retirement of Carague on February 2, 2008 and during the fourth year
of Villar as COA Commissioner, Villar was designated as Acting Chairman of COA
from February 4, 2008 to April 14, 2008.
 Subsequently, on April 18, 2008, Villar was nominated and appointed as Chairman
of the COA.
 Shortly thereafter, on June 11, 2008, the Commission on Appointments confirmed his
appointment.
o He was to serve as Chairman of COA, as expressly indicated in the
appointment papers, until the expiration of the original term of his office
as COA Commissioner or on February 2, 2011.
 Challenged in this recourse, Villar, in an obvious bid to lend color of title to his hold
on the chairmanship, insists that his appointment as COA Chairman accorded him
a fresh term of 7 years which is yet to lapse.
 He would argue, in fine, that his term of office, as such chairman, is up to February
2, 2015, or 7 years reckoned from February 2, 2008 when he was appointed to that
position.
 Before the Court could resolve this petition, Villar, via a letter dated February 22,
2011 addressed to President Benigno S. Aquino III, signified his intention to step
down from office upon the appointment of his replacement.
 True to his word, Villar vacated his position when President Benigno Simeon Aquino
III named Ma. Gracia Pulido-Tan (Chairman Tan) COA Chairman.
 This development has rendered this petition and the main issue tendered therein
moot and academic.
 Although deemed moot due to the intervening appointment of Chairman Tan and
the resignation of Villar, We consider the instant case as falling within the
requirements for review of a moot and academic case, since it asserts at least four
exceptions to the mootness rule discussed in David vs Macapagal Arroyo namely:
o There is a grave violation of the Constitution
o The case involves a situation of exceptional character and is of
paramount public interest
o The constitutional issue raised requires the formulation of controlling
principles to guide the bench, the bar and the public
o The case is capable of repetition yet evading review.
The procedural aspect comes down to the question of whether or not the
following requisites for the exercise of judicial review of an executive act
obtain in this petition, viz:
 There must be an actual case or justiciable controversy before
the court
 The question before it must be ripe for adjudication;
 The person challenging the act must be a proper party; and
 The issue of constitutionality must be raised at the earliest
opportunity and must be the very litis mota of the case
ISSUES:
a. WON the petitioner has Locus Standi to bring the case to court
b. WON Villar’s appointment as COA Chairman, while sitting in that body and
after having served for four (4) years of his seven (7) year term as COA
commissioner, is valid in light of the term limitations imposed under, and the
circumscribing concepts tucked in, Sec. 1 (2), Art. IX(D) of the Constitution
HELD:
a. Issue of Locus Standi:
This case before us is of transcendental importance, since it obviously has “far-reaching
implications,” and there is a need to promulgate rules that will guide the bench, bar,
and the public in future analogous cases. We, thus, assume a liberal stance and allow
petitioner to institute the instant petition.
In David vs Macapagal Arroyo, the Court laid out the bare minimum norm before the
so-called “non-traditional suitors” may be extended standing to sue, thusly:
 For taxpayers, there must be a claim of illegal disbursement of public funds or
that the tax measure is unconstitutional;
 For voters, there must be a showing of obvious interest in the validity of the
election law in question
 For concerned citizens, there must be a showing that the issues raised are of
transcendental importance which must be settled early; and
 For legislators, there must be a claim that the official action complained of
infringes their prerogatives as legislators.
b. Substantive issue:
Sec. 1 (2), Art. IX(D) of the Constitution provides that:
(2) The Chairman and Commissioners [on Audit] shall be appointed by the President
with the consent of the Commission on Appointments for a term of seven years without
reappointment. Of those first appointed, the Chairman shall hold office for seven years,
one commissioner for five years, and the other commissioner for three years, without
reappointment. Appointment to any vacancy shall be only for the unexpired portion of
the term of the predecessor. In no case shall any member be appointed or designated
in a temporary or acting capacity.
Petitioner now asseverates the view that Sec. 1(2), Art. IX(D) of the 1987 Constitution
proscribes reappointment of any kind within the commission, the point being that a
second appointment, be it for the same position (commissioner to another position of
commissioner) or upgraded position (commissioner to chairperson) is a prohibited
reappointment and is a nullity ab initio.
The Court finds petitioner’s position bereft of merit. The flaw lies in regarding the word
“reappointment” as, in context, embracing any and all species of appointment. The
rule is that if a statute or constitutional provision is clear, plain and free from ambiguity, it
must be given its literal meaning and applied without attempted interpretation.
The first sentence is unequivocal enough. The COA Chairman shall be appointed by the
President for a term of seven years, and if he has served the full term, then he can no
longer be reappointed or extended another appointment. In the same vein, a
Commissioner who was appointed for a term of seven years who likewise served the full
term is barred from being reappointed. In short, once the Chairman or Commissioner
shall have served the full term of seven years, then he can no longer be reappointed to
either the position of Chairman or Commissioner. The obvious intent of the framers is to
prevent the president from “dominating” the Commission by allowing him to appoint an
additional or two more commissioners.
On the other hand, the provision, on its face, does not prohibit a promotional
appointment from commissioner to chairman as long as the commissioner has not
served the full term of seven years, further qualified by the third sentence of Sec. 1(2),
Article IX (D) that “the appointment to any vacancy shall be only for the unexpired
portion of the term of the predecessor.” In addition, such promotional appointment to
the position of Chairman must conform to the rotational plan or the staggering of terms
in the commission membership such that the aggregate of the service of the
Commissioner in said position and the term to which he will be appointed to the position
of Chairman must not exceed seven years so as not to disrupt the rotational system in
the commission prescribed by Sec. 1(2), Art. IX(D).
In conclusion, there is nothing in Sec. 1(2), Article IX(D) that explicitly precludes a
promotional appointment from Commissioner to Chairman, provided it is made under
the aforestated circumstances or conditions.
The Court is likewise unable to sustain Villar’s proposition that his promotional
appointment as COA Chairman gave him a completely fresh 7- year term––from
February 2008 to February 2015––given his four (4)-year tenure as COA commissioner
devalues all the past pronouncements made by this Court. While there had been
divergence of opinion as to the import of the word “reappointment,” there has been
unanimity on the dictum that in no case can one be a COA member, either as
chairman or commissioner, or a mix of both positions, for an aggregate term of more
than 7 years. A contrary view would allow a circumvention of the aggregate 7-year
service limitation and would be constitutionally offensive as it would wreak havoc to the
spirit of the rotational system of succession.
3. Members of the Commission, e.g. COA, COMELEC or CSC, who were appointed for a
full term of seven years and who served the entire period, are barred from
reappointment to any position in the Commission. Corollarily, the first appointees in the
Commission under the Constitution are also covered by the prohibition against
reappointment.
4. A commissioner who resigns after serving in the Commission for less than seven years is
eligible for an appointment to the position of Chairman for the unexpired portion of the
term of the departing chairman. Such appointment is not covered by the ban on
reappointment, provided that the aggregate period of the length of service as
commissioner and the unexpired period of the term of the predecessor will not exceed
seven (7) years and provided further that the vacancy in the position of Chairman
resulted from death, resignation, disability or removal by impeachment. The Court
clarifies that “reappointment” found in Sec. 1(2), Art. IX(D) means a movement to one
and the same office (Commissioner to Commissioner or Chairman to Chairman). On the
other hand, an appointment involving a movement to a different position or office
(Commissioner to Chairman) would constitute a new appointment and, hence, not, in
the strict legal sense, a reappointment barred under the Constitution.
5. Any member of the Commission cannot be appointed or designated in a temporary
or acting capacity.

In net effect, then President Macapagal-Arroyo could not have had, under any
circumstance, validly appointed Villar as COA Chairman, for a full 7- year appointment,
as the Constitution decrees, was not legally feasible in light of the 7-year aggregate
rule. Villar had already served 4 years of his 7-year term as COA Commissioner. A shorter
term, however, to comply with said rule would also be invalid as the corresponding
appointment would effectively breach the clear purpose of the Constitution of giving to
every appointee so appointed subsequent to the first set of commissioners, a fixed term
of office of 7 years. To recapitulate, a COA commissioner like respondent Villar who
serves for a period less than seven (7) years cannot be appointed as chairman when
such position became vacant as a result of the expiration of the 7-year term of the
predecessor (Carague). Such appointment to a full term is not valid and constitutional,
as the appointee will be allowed to serve more than seven (7) years under the
constitutional ban.

To sum up, the Court restates its ruling on Sec. 1(2), Art. IX(D) of the Constitution, viz:

1. The appointment of members of any of the three constitutional commissions, after the
expiration of the uneven terms of office of the first set of commissioners, shall always be
for a fixed term of seven (7) years; an appointment for a lesser period is void and
unconstitutional. The appointing authority cannot validly shorten the full term of seven
(7) years in case of the expiration of the term as this will result in the distortion of the
rotational system prescribed by the Constitution.

2. Appointments to vacancies resulting from certain causes (death, resignation,

disability or impeachment) shall only be for the unexpired portion of the term of the
predecessor, but such appointments cannot be less than the unexpired portion as this
will likewise disrupt the staggering of terms laid down under Sec. 1(2), Art. IX(D).
 2. FUNA vs. THE CHAIRMAN, CIVIL SERVICE COMMISSION, FRANCISCO T. DUQUE III,
EXECUTIVE SECRETARY LEANDRO R. MENDOZA, OFFICE OF THE PRESIDENT
FACTS:
 On January 11, 2010, then President Gloria Macapagal-Arroyo appointed Duque as
Chairman of the CSC.
 The Commission on Appointments confirmed Duque’s appointment on February 3,
2010.
 On February 22, 2010, President Arroyo issued Executive Order No. 864: INCLUSION
OF THE CHAIRMAN OF THE CIVIL SERVICE COMMISSION IN THE BOARD OF
TRUSTEES/DIRECTORS OF THE GOVERNMENT SERVICE INSURANCE SYSTEM, PHILIPPINE
HEALTH INSURANCE CORPORATION, EMPLOYEES’ COMPENSATION COMMISSION
AND THE HOME DEVELOPMENT MUTUAL FUND
o Section 1. The Chairman of the Civil Service Commission shall sit as an Ex-
Officio member of the Board of Trustees of the Government Service
Insurance System, Employees’ Compensation Commission and the Home
Development Mutual Fund and the Board of Directors of the Philippine
Health Insurance Corporation pursuant to Section 14, Chapter 3, Title I-A,
Book V of Executive Order No. 292 (Administrative Code of 1987).
 Pursuant to EO 864, Duque was designated as a member of the Board of Directors
or Trustees of the following GOCCs:
(a) GSIS (b) PHILHEALTH (c) ECC and (d) HDMF.
 Dennis A.B. Funa, in his capacity as taxpayer, concerned citizen and lawyer, filed
the instant petition challenging the constitutionality of EO 864, as well as Section 14,
Chapter 3, Title I-A, Book V of Executive Order No. 292 (EO 292), and the
designation of Duque as a member of the Board of Directors or Trustees of the GSIS,
PHIC, ECC and HDMF for being clear violations of Section 1 and Section 2, Article
IX-A of the 1987 Constitution.
 Funa asserts that EO 864 and Section 14, Chapter 3, Title I-A, Book V of EO 292
violate the independence of the CSC, which was constitutionally created to be
protected from outside influences and political pressures due to the significance of
its government functions.
o He further asserts that such independence is violated by the fact that the
CSC is not a part of the Executive Branch of Government while the
concerned GOCCs are considered instrumentalities of the Executive
Branch of the Government.
o In this situation, the President may exercise his power of control over the
CSC considering that the GOCCs in which Duque sits as Board member
are attached to the Executive Department.
o Funa claims that EO 864 and Section 14, Chapter 3, Title I-A, Book V of EO
292 violate the prohibition imposed upon members of constitutional
commissions from holding any other office or employment.
o A conflict of interest may arise in the event that a Board decision of the
GSIS, PHILHEALTH, ECC and HDMF concerning personnel-related matters is
elevated to the CSC considering that such GOCCs have original charters,
and their employees are governed by CSC laws, rules and regulations.
 Respondents submit that the prohibition against holding any other office or
employment under Section 2, Article IX-A of the 1987 Constitution does not cover
positions held without additional compensation in ex officio capacities.
o Relying on the pronouncement in Civil Liberties Union v. Executive
Secretary, they assert that since the 1987 Constitution, which provides a
stricter prohibition against the holding of multiple offices by executive
officials, allows them to hold positions in ex officio capacities, the same
rule is applicable to members of the Constitutional Commissions.
o The mandatory tenor of Section 14, Chapter 3, Title I-A, Book V of EO 292
clearly indicates that the CSC Chairman’s membership in the governing
bodies mentioned therein merely imposes additional duties and functions
as an incident and necessary consequence of his appointment as CSC
Chairman.
ISSUE: W/N the designation of Duque as member of the Board of Directors or Trustees of
the GSIS, PHILHEALTH, ECC and HDMF, in an ex officio capacity, impair the
independence of the CSC and violate the constitutional prohibition against the holding
of dual or multiple offices for the Members of the Constitutional Commissions - YES
HELD:
The Court upholds the constitutionality of Section 14, Chapter 3, Title I-A, Book V of EO
292, but declares unconstitutional EO 864 and the designation of Duque in an ex officio
capacity as a member of the Board of Directors or Trustees of the GSIS, PHILHEALTH, ECC
and HDMF.
The underlying principle for the resolution of the present controversy rests on the correct
application of Section 1 and Section 2, Article IX-A of the 1987 Constitution, which
provide:
Section 1. The Constitutional Commissions, which shall be independent, are the Civil
Service Commission, the Commission on Elections, and the Commission on Audit.
Section 2. No Member of a Constitutional Commission shall, during his tenure, hold any
other office or employment. Neither shall he engage in the practice of any profession or
in the active management or control of any business which in any way may be
affected by the functions of his office, nor shall he be financially interested, directly or
indirectly, in any contract with, or in any franchise or privilege granted by the
Government, any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations or their subsidiaries.
Section 1, Article IX-A of the 1987 Constitution expressly describes all the Constitutional
Commissions as "independent."Although their respective functions are essentially
executive in nature, they are not under the control of the President of the Philippines in
the discharge of such functions.
Each of the Constitutional Commissions conducts its own proceedings under the
applicable laws and its own rules and in the exercise of its own discretion. Its decisions,
orders and rulings are subject only to review on certiorariby the Court as provided by
Section 7, Article IX-A of the 1987 Constitution. To safeguard the independence of these
Commissions, the 1987 Constitution, among others, imposes under Section 2, Article IX-A
of the Constitution certain inhibitions and disqualifications upon the Chairmen and
members to strengthen their integrity, to wit: (a) Holding any other office or employment
during their tenure;
Section 7, paragraph (2),Article IX-B reads:
Unless otherwise allowed by law or the primary functions of his position, no
appointive official shall hold any other office or employment in the
 Government or any subdivision, agency or instrumentality thereof, including
government-owned or controlled corporations or their subsidiaries.
Thus, while all other appointive officials in the civil service are allowed to hold other
office or employment in the government during their tenure when such is allowed by
law or by the primary functions of their positions, members of the Cabinet, their deputies
and assistants may do so only when expressly authorized by the Constitution itself. In
other words, Section 7, Article IX-B is meant to lay down the general rule applicable to
all elective and appointive public officials and employees, while Section 13, Article VII is
meant to be the exception applicable only to the President, the Vice-President,
Members of the Cabinet, their deputies and assistants.
Section 14, Chapter 3, Title I-A, Book V of EO 292 is clear that the CSC Chairman’s
membership in a governing body is dependent on the condition that the functions of
the government entity where he will sit as its Board member must affect the career
development, employment status, rights, privileges, and welfare of government officials
and employees. Based on this, the Court finds no irregularity in Section 14, Chapter 3,
Title I-A, Book V of EO 292 because matters affecting the career development, rights
and welfare of government employees are among the primary functions of the CSC
and are consequently exercised through its Chairman. The CSC Chairman’s
membership therein must, therefore, be considered to be derived from his position as
such. Accordingly, the constitutionality of Section 14, Chapter 3, Title I-A, Book V of EO
292 is upheld.
However, there is a need to determine further whether Duque’s designation as Board
member of the GSIS, PHILHEALTH, ECC and HDMF is in accordance with the 1987
Constitution and the condition laid down in Section 14, Chapter 3, Title I-A, Book V of EO
292.
Constitution, the President exercises control over all government offices in the Executive
Branch. An office that is legally not under the control of the President is not part of the
Executive Branch.
Undoubtedly, the GSIS, PHILHEALTH, ECC and HDMF and the members of their
respective governing Boards are under the control of the President. As such, the CSC
Chairman cannot be a member of a government entity that is under the control of the
President without impairing the independence vested in the CSC by the 1987
Constitution.
In view of the application of the prohibition under Section 2, Article IX-A of the 1987
Constitution, Duque did not validly hold office as Director or Trustee of the GSIS,
PHILHEALTH, ECC and HDMF concurrently with his position of CSC Chairman.
Accordingly, he was not to be considered as a de jure officer while he served his term
as Director or Trustee of these GOCCs. A de jure officer is one who is deemed, in all
respects, legally appointed and qualified and whose term of office has not expired.
That notwithstanding, Duque was a de facto officer during his tenure as a Director or
Trustee of the GSIS, PHILHEALTH, ECC and HDMF.
A de facto officer is one who derives his appointment from one having colorable
authority to appoint, if the office is an appointive office, and whose appointment is
valid on its face. He may also be one who is in possession of an office, and is
discharging its duties under color of authority, by which is meant authority derived from
an appointment, however irregular or informal, so that the incumbent is not a mere
volunteer. Consequently, the acts of the de facto officer are just as valid for all purposes
as those of a de jure officer, in so far as the public or third persons who are interested
therein are concerned.

The GSIS, PHILHEALTH, ECC and HDMF are vested by their respective charters with
various powers and functions to carry out the purposes for which they were created.
While powers and functions associated with appointments, compensation and benefits
affect the career development, employment status, rights, privileges, and welfare of
government officials and employees, the GSIS, PHILHEALTH, ECC and HDMF are also
tasked to perform other corporate powers and functions that are not personnel-related.
All of these powers and functions, whether personnel-related or not, are carried out and
exercised by the respective Boards of the GSIS, PHILHEALTH, ECC and HDMF.

ence, when the CSC Chairman sits as a member of the governing Boards of the GSIS,
PHILHEALTH, ECC and HDMF, he may exercise these powers and functions, which are
not anymore derived from his position as CSC Chairman, such as imposing interest on
unpaid or unremitted contributions, issuing guidelines for the accreditation of health
care providers, or approving restructuring proposals in the payment of unpaid loan
amortizations.

The Court also notes that Duque’s designation as member of the governing Boards of
the GSIS, PHILHEALTH, ECC and HDMF entitles him to receive per diem, a form of
additional compensation that is disallowed by the concept of an ex officio position by
virtue of its clear contravention of the proscription set by Section 2, Article IX-A of the
1987 Constitution. This situation goes against the principle behind an ex officio position,
and must, therefore, be held unconstitutional.

Duque’s designation as member of the governing Boards of the GSIS, PHILHEALTH, ECC
and HDMF impairs the independence of the CSC. Under Section 17, Article VII of the
 3. Civil Service Commission petitioner-appellee, vs. Nita P. Javier respondent- embarrassment or freedom from misgivings of betrayals of personal trust or
appellant confidential matters of state

TOPIC: Fiscal Independence G.R. No. 173264 Feb. 22, 2008 The position of Corporate Secretary of GSIS is clearly in close proximity and intimacy with
NATURE OF ACTION: Petition for review on certiorari of the decision and resolution of the the appointing power, it also calls for the highest degree of confidence between the
CA appointer and appointee. The Court therefore held that Nita reappointment valid and
that the CA did not err when it ruled the position to be primarily confidential in nature.
FACTS:
 Respondent Nita Javier was first employed as a Private Secretary at the GSIS
on a confidential status, she was then promoted to Tabulating Equipment
Operator with a permanent status, this status stayed with her throughout her
career
 Years later, she was appointed Corporate Secretary of the Board of Trustees of
the corporation
 In 2001, shy of her 64th birthday, Nita opted for early retirement
 Apr. 3, 2002 – GSIS President Winston F. Garcia, with the approval of the BOT
reappointed Nita as the Corporate Secretary classifying her position as
“confidential in nature and tenure of office is at the pleasure of the Board”

Side of the Petitioner/Appellee:

 CSC alleges that Nita’s reappointment on confidential status was meant to

illegally extend her service and circumvent the laws on compulsory retirement
 Under RA 8291, the compulsory retirement age is 65 years old, however ‘a
person who has reached the age compulsory retirement may still be
appointed in a confidential position’
 CSC also noted that the position of Corporate Secretary is a permanent
position (career) and not primarily confidential (non-career)

Side of the Respondent/Appellant:

 GSIS and Nita Javier insist that the position of Corporate Secretary is one of
primarily confidential nature

CA RULING:

 Sept 29, 2005 – CA ruled that the position of Corporate Secretary is a position
of primarily confidential nature
 Petitioner CSC filed for reconsideration but this was denied, hence present
petition

ISSUES: WON position of Corporate Secretary is primarily confidential in nature – YES

HELD:

According to Jurisprudence, there are two recognized instances when a position may
be considered primarily confidential;

(1) when the President has declared the position to be primarily confidential
(2) in absence of such declaration, when by the nature of the functions of the
office there exists “close intimacy” between the appointee and the
appointing power which insures freedom of intercourse without
 4. Mary Lou Geturbos Torres v. Corazon Alma C. De Leon, G.R. No. 199440,
January 18, 2016, Third Division, Peralta.

FACTS: (Civil Service Commission’s Appellate Jurisdiction)

 Philippine National Red Cross (PNRC) Internal Auditing Office conducted an audit
of the funds and accounts of the PNRC General Santos City chapter. Based on the
audit report, Torres incurred a technical shortage in the amount of 4.3 Million.
 De Leon, as secretary general of PNRC, charged Torres with Grace Misconduct. De
Leon issued a memorandum imposing penalties of one-month suspension (July 1-
31) and transfer to national headquarters against Torres.
 The latter filed a notice of appeal addressed to the Board of Governors of the
PNRC and furnished copy to the CSC.
 The appeal memorandum was addressed to the CSC and copies were sent to the
PNRC.
 De Leon denied the appeal. However, the CSC promulgated a resolution imposing
a penalty of dismissal from service against Torres.
 The latter questioned the jurisdiction of the CSC because the PNRC is not a
government-owned and controlled corporation.

ISSUE: Do the Civil Service Commission have appellate jurisdiction over the case?

HELD: Yes. The PNRC, although not a GOCC, is sui generis in character. The sui generis
character of PNRC requires the court to approach controversies involving the PNRC on
a case-to-case basis. Since the issue involves in the enforcement of labor laws and
penal statutes, PNRC can be treated as a GOCC. Thus, the CSC has jurisdiction. Having
jurisdiction over the PNRC, the CSC had authority to modify the penalty and order the
dismissal of Torres from the service. Moreover, the CSC has appellate jurisdiction on
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.

ISSUE: Did the CSC lose its appellate jurisdiction when Torres voluntarily served the one-
month suspension?

HELD: No. The CSC did not lose its appellate jurisdiction. A decision becomes final even
before the lapse of the fifteen-day period to appeal when the defendant voluntarily
submits to the execution of the sentence. In the present case, however, it cannot be
said that she voluntarily served her penalty in view of the fact that she appealed
therefrom. Moreover, an appeal shall not stop the decision from being executory, and
in case the penalty is suspension or removal, the respondent shall be considered as
having been under preventive suspension during the pendency of the appeal, in the
event he wins the appeal.

ISSUE: Was the Notice of Appeal properly filed at the CSC?

HELD: Yes. An examination of the Notice of Appeal shows that the same was addressed
to the PNRC and copy furnished the CSC. On the other hand, an examination of the
Appeal Memorandum shows that the same was addressed to the CSC and copies
thereof were sent to both the PNRC and the CSC. It is thus clear that a copy of the
Notice of Appeal was furnished the CSC and the Appeal Memorandum was filed with it.
While the rules required that the notice of appeal including the appeal memorandum
shall be filed with the CSC, it is undeniable that furnishing a copy of the Notice of
Appeal with the CSC and filing with it the Appeal Memorandum substantially complied
with the rule. The important thing is that the Appeal Memorandum was clearly
addressed to the CSC.
 5. CAREER EXECUTIVE SERVICE BOARD vs CIVIL SERVICE COMMISSION review under Rule 43, but We gave due course to the petition to accommodate the
G.R. No. 196890 | Date January 11, 2018 broader interest of justice.

DOCTRINE: It is well-settled that the extraordinary remedies of certiorari and prohibition In allowing the liberal application of procedural rules, We emphasized in the case of
are resorted to only where 1. a tribunal, a board or an officer exercising judicial or quasi- Obut v. Court of Appeals, et al. that placing the administration of justice in a
judicial functions has acted without or in excess of jurisdiction, or with grave abuse of straightjacket, i.e., following technical rules on procedure would result into a poor kind
discretion amounting to lack or excess of jurisdiction; and 2. there is no appeal or any of justice. Thus, a rigid application of the rules of procedure will not be entertained if it
plain, speedy, and adequate remedy in the ordinary course of law except in cases (a) will obstruct rather than serve the broader interests of justice in the light of the prevailing
when public welfare and the advancement of public policy dictate; (b) when the circumstances of the case under consideration.
broader interests of justice so require; (c) when the writs issued are null; and (d) when
the questioned order amounts to an oppressive exercise of judicial authority Considering the foregoing and the circumstances obtaining in this case, We allow the
application of liberality of the rules of procedure to give due course to the petition filed
FACTS: by petitioners as the broader interest of justice so requires.
● Blesilda Lodevico (Lodevico) was appointed by then President Gloria Macapagal-
Arroyo on May 14, 2008 as Director III, Recruitment and Career Development Main Ruling of the Case: Lodevico’s appointment is merely temporary so her services
Service, CESB. may b e terminated with or wihtout cause. Hence, her discharge was proper. CES
● Lodevico possesses a Career Service Executive Eligibility since November 29, 2001, Eligibility and her appointment as Director do not automatically mean that her
as evidenced by the Certificate of Eligibility issued by the CSC. appointment is permanent.
● June 30, 2010: Office of the President (OP) issued Memorandum Circular 1 (MC1)
which declared all non-career executive service positions vacant.
● July 16, 2010: OP promulgated the Implementing Guidelines of MC 1, which states
that all non-Career Executive Service Officers (non-CESO) in all agencies of the
Executive Branch shall remain in office and continue to perform their duties until
July 31, 2010 or until their resignations have been accepted and/or their
replacements have been appointed or designated, whichever comes first.
● Pursuant to MC 1, Abesamis of CESB issued a memorandum informing Lodevico
that she shall only remain in office until July 31, 2010.
● Lodevico filed her appeal on the memorandum issued by Abesamis before the
CSC.
● CSC ruled in favor of Leodevico and declared the memorandum null and void.
● Career Executive Service board filed an MR but it was denied. Hence, this petition
for certiorari under Rule 62.
● Respondents aver that the petitioners resorted to a wrong mode of appeal as Rule
43 is the proper remedy.

ISSUE: WON Certiorari and Prohibition under rule 65 is proper? No

HELD:

It is well-settled that the extraordinary remedies of certiorari and prohibition are resorted
to only where (a) a tribunal, a board or an officer exercising judicial or quasi-judicial
functions has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (b) there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law.

In the case at bar, it is clear that the second requirement is absent as petition for review
under Section 118 of Rule 43 ·is available to petitioners. However, there are exceptions
to the aforementioned rule, namely: (a) when public welfare and the advancement of
public policy dictate; (b) when the broader interests of justice so require; (c) when the
writs issued are null; and (d) when the questioned order amounts to an oppressive
exercise of judicial authority.

In the case of Leyte IV Electric Cooperative, Inc. v. Leyeco IV Employees Union-ALU, We

relaxed the application of the rules of procedure to meet the ends of justice. In Leyte IV,
the petitioners filed a petition for certiorari under Rule 65 instead of filing a petition for
 6. DIMAGIBA V ESPARTERO
FACTS:
 Petitioners Hilarion Dimagiba (Dimagiba), Irma Mendoza (Mendoza), and Ellen
Rasco (Rasco) were employees of The Livelihood Corporation (LIVECOR), a
government-owned and controlled corporation created under Executive Order
No. 866.
 Petitioner Dimagiba was the Group Manager, Petitioners HilarionDimagiba
(Dimagiba), Irma Mendoza (Mendoza), and Ellen Rasco (Rasco) were employees
of The Livelihood Corporation (LIVECOR), a government-owned and controlled
corporation created under Executive Order No. 866.
 Petitioner Dimagiba was the Group Manager, LIVECOR and the Human Settlement
Development Corporation (HSDC), now known as Strategic Investment and
Development Corporation (SIDCOR), also a government-owned and controlled
corporation, created under Presidential Decree (P.D.) 1396, entered into a Trust
Agreement whereby the former would undertake the task of managing,
administering, disposing and liquidating the corporate assets, projects and
accounts of HSDC.
 In HSDC Board Resolution No. 3- 26-A4 dated March 26, 1990, it was provided that
in order to carry out the trust agreement, LIVECOR personnel must be designated
concurrently to operate certain basic HSDC/SIDCOR functions, thus, LIVECOR
personnel, namely, petitioners Dimagiba and Mendoza were designated as
Assistant General Manager for Operations and Head, Inter-Agency Committee on
Assets Disposal and as Treasurer and Controller, respectively.
 The same resolution provided for the designees' monthly honoraria and
commutable reimbursable representation allowances (CRRA).
 In a letter dated November 14, 1997, the Department of Budget and Management
informed LIVECOR of the approval of its organization/staffing pattern modifications
which resulted in the abolition of petitioners' positions.
 As a result, petitioners were separated from the service which entitled them to
separation pay which includes granting gratuity pay
 In a Memorandum dated July 17, 1998 issued by LIVECOR Administrator Manuel
Portes (Portes), it was stated that any payment of gratuities by the HSDC/SIDCOR to
LIVECOR officers concurrently performing HSDC functions shall not be processed
without prior clearance from him as the same shall be first cleared with the COA
and OGCC to avoid any legal problem.
 Portes then sought the opinion of LIVECOR’s Resident COA Auditor, Alejandro
Fumar, regarding petitioners' claim for additional gratuity, who opined that such
gratuity payment would amount to double compensation.
ISSUE: W/N the gratuities granted to petitioners dimagiba, mendoza and rasco by hsdc
constitute double compensation prohibited under article ix (b), section 8 of the 1987
constitution
RULING: YES.
The additional grant of gratuity pay to petitioners amounted to additional
compensation prohibited by the Constitution. Clearly, the only exception for an
employee to receive additional, double and indirect compensation is where the law
allows him to receive extra compensation for services rendered in another position
which is an extension or is connected with his basic work. The prohibition against
additional or double compensation, except when specifically authorized by law, is
considered a “constitutional curb” on the spending power of the government.
In Peralta v. Mathay, we stated the purpose of the prohibition, to wit:
Xxx This is to manifest a commitment to the fundamental principle that a public
office is a public trust. It is expected of a government official or employee that he
keeps uppermost in mind the demands of public welfare. He is there to render
public service. He is of course entitled to be rewarded for the performance of the
functions entrusted to him, but that should not be the overriding consideration. The
intrusion of the thought of private gain should be unwelcome. The temptation to
further personal ends, public employment as a means for the acquisition of wealth,
is to be resisted. That at least is the ideal. There is then to be awareness on the part
of an officer or employee of the government that he is to receive only such
compensation as may be fixed by law. With such a realization, he is expected not
to avail himself of devious or circuitous means to increase the remuneration
attached to his position. xxx
The gratuity pay being given to petitioners by the HSDC Board was by reason of the
satisfactory performance of their work under the trust agreement. It is considered a
bonus and by its very nature, a bonus partakes of an additional remuneration or
compensation.
It bears stressing that when petitioners were separated from LIVECOR, they were given
separation pay which also included gratuity pay for all the years they worked thereat
and concurrently in HSDC/SIDCOR. Granting them another gratuity pay for the works
done in HSDC under the trust agreement would be indirectly giving them additional
compensation for services rendered in another position which is an extension or is
connected with his basic work which is prohibited. This can only be allowed if there is a
law which specifically authorizes them to receive an additional payment of gratuity. The
HSDC Board Resolution No. 05-19-A granting petitioners’ gratuity pay is not a law which
would exempt them from the Constitutional proscription against additional, double or
indirect compensation. Neither does the HSDC law under P.D. 1396 contain a provision
allowing the grant of such gratuity pay to petitioners.
The second paragraph of Section 8, Article IX specifically adds that "pensions and
gratuities shall not be considered as additional, double or indirect compensation." This
has reference to compensation already earned, for instance by a retiree. A retiree
receiving pensions or gratuities after retirement can continue to receive such pension or
gratuity even if he accepts another government position to which compensation is
attached. The grant to designees Dimagiba et al. of another gratuity from HSDC would
not fall under the exception in the second paragraph as the same had not been
primarily earned, but rather being granted for service simultaneously rendered to
LIVECOR and HSDC. Hence, to allow the release of the second gratuity from HSDC
would run afoul over the wellsettled rule that "in the absence of an express legal
exception, pension or gratuity laws should be construed as to preclude any person from
receiving double compensation.
 7. PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS v.
COMMISSION ON AUDIT
Facts:
 The petitioner was incorporated as a juridical entity over one hundred years ago by
virtue of Act No. 1285, enacted on January 19, 1905, by the Philippine Commission.
 The petitioner, at the time it was created, was composed of animal aficionados
and animal propagandists.
 The objects of the petitioner, as stated in Section 2 of its charter, shall be to enforce
laws relating to cruelty inflicted upon animals or the protection of animals in the
Philippine Islands, and generally, to do and perform all things which may tend in
any way to alleviate the suffering of animals and promote their welfare. The
petitioner was initially imbued under its charter with the power to apprehend
violators of animal welfare laws.
 In addition, the petitioner was to share one-half (1/2) of the fines imposed and
collected through its efforts for violations of the laws related thereto.
 Subsequently, however, the power to make arrests as well as the privilege to retain
a portion of the fines collected for violation of animal-related laws were recalled by
virtue of Commonwealth Act (C.A.) No. 148.
 An audit team from COA wanted to conduct an audit survey but petitioner refused
saying that it is a private corporation and not a public one.
Issues: Whether or not petitioner is a private corporation that will not be subject to audit
by COA?
Petitioner argues: first, it exercises no governmental functions because these have been
revoked by C.A. No. 148 and E.O. No. 63...
second, nowhere in its charter is it indicated that it is a public corporation... if it were a
government body, there would... have been no need for the State to grant it tax
exemptions under Republic Act No. 1178, and the fact that it was so exempted
strengthens its position that it is a private institution, the employees of the petitioner are
registered and covered by the Social Security System at the latter's initiative and not
through the Government Service Insurance System...
seventh, no government appointee or representative sits on the board of... trustees of
the petitioner;... respondents contend that since the petitioner is a "body politic"
created by virtue of a special legislation and endowed with a governmental purpose,
then, indubitably, the COA may audit
Ruling: YES.
A reading of petitioner’s charter shows that it is not subject to control or supervision by
any agency of the State, unlike government-owned and -controlled corporations. No
government representative sits on the board of trustees of the petitioner. Like all private
corporations, the successors of its members are determined voluntarily and solely by the
petitioner in accordance with its by-laws, and may exercise those powers generally
accorded to private corporations, such as the powers to hold property, to sue and be
sued, to use a common seal, and so forth. It may adopt by-laws for its internal
operations: the petitioner shall be managed or operated by its officers “in accordance
with its by-laws in force.”
The employees of the petitioner are registered and covered by the Social Security
System at the latter’s initiative, and not through the Government Service Insurance
System, which should be the case if the employees are considered government
employees. This is another indication of petitioner’s nature as a private entity.
The fact that a certain juridical entity is impressed with public interest does not, by that
circumstance alone, make the entity a public corporation, inasmuch as a corporation
may be private although its charter contains provisions of a public character,
incorporated solely for the public good. This class of corporations may be considered
quasi-public corporations, which are private corporations that render public service,
supply public wants, or pursue other eleemosynary objectives. While purposely
organized for the gain or benefit of its members, they are required by law to discharge
functions for the public benefit.
The true criterion, therefore, to determine whether a corporation is public or private is
found in the totality of the relation of the corporation to the State. If the corporation is
created by the State as the latter’s own agency or instrumentality to help it in carrying
out its governmental functions, then that corporation is considered public; otherwise, it is
private. Applying the above test, provinces, chartered cities, and barangays can best
exemplify public corporations. They are created by the State as its own device and
agency for the accomplishment of parts of its own public works.
The test to determine whether a corporation is government owned or controlled, or
private in nature is simple. Is it created by its own charter for the exercise of a public
function, or by incorporation under the general corporation law? Those with special...
charters are government corporations subject to its provisions, and its employees are
under the jurisdiction of the Civil Service Commission, and are compulsory members of
the Government Service Insurance System... reading of petitioner's charter shows that it
is not subject to control or supervision by any agency of the State,... unlike government-
owned and -controlled corporations. No government representative sits on the board
of trustees of the petitioner
The employees of the petitioner are registered and covered by the Social Security
System at the latter's initiative, and not through the Government Service Insurance
System, which should be the case if the employees are considered government
employees.
This is another indication of petitioner's nature as a private entity
The respondents contend that the petitioner is a "body politic" because its primary
purpose is to secure the protection and welfare of animals which, in turn, redounds to
the public good
The fact that a certain juridical entity is impressed with public interest does not, by that
circumstance alone, make the entity a public corporation, inasmuch as a corporation
may be private although its charter contains provisions of... a public character,
incorporated solely for the public good
This class of corporations may be considered quasi-public corporations, which are
private corporations that render public service, supply public wants, or pursue other
eleemosynary... objectives. While purposely organized for the gain or benefit of its
members, they are required by law to discharge functions for the public benefit.
 1. LA BUGAL-BLAAN TRIBAL ASSOCIATION INC. v RAMOS
FACTS:
 The constitutional provision allowing the President to enter into FTAA is a exception
to the rule that participation in the nation’s natural resources is reserved exclusively
to Filipinos. Provision must be construed strictly against their enjoyment by non-
Filipinos.
 RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the
effectivity of RA 7942, or on March 30, 1995, the President signed a Financial and
Technical Assistance Agreement (FTAA) with WMCP, a corporation organized
under Philippine laws, covering close to 100,000 hectares of land in South
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato.
 On August 15, 1995, the Environment Secretary Victor Ramos issued DENR
Administrative Order 95-23, which was later repealed by DENR Administrative Order
96-40, adopted on December 20, 1996.
 Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the
government and WMCP be declared unconstitutional on ground that they allow
fully foreign owned corporations like WMCP to exploit, explore and develop
Philippine mineral resources in contravention of Article XII Section 2 paragraphs 2
and 4 of the Charter.
 In January 2001, WMC – a publicly listed Australian mining and exploration
company – sold its whole stake in WMCP to Sagittarius Mines, 60% of which is
owned by Filipinos while 40% of which is owned by Indophil Resources, an Australian
company. DENR approved the transfer and registration of the FTAA in Sagittarius‘
name but Lepanto Consolidated assailed the same. The latter case is still pending
before the Court of Appeals.
 EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to
accept, consider and evaluate proposals from foreign owned corporations or
foreign investors for contracts or agreements involving wither technical or financial
assistance for large scale exploration, development and utilization of minerals
which upon appropriate recommendation of the (DENR) Secretary, the President
may execute with the foreign proponent.
 WMCP likewise contended that the annulment of the FTAA would violate a treaty
between the Philippines and Australia which provides for the protection of
Australian investments.
ISSUES:
1. Whether the Philippine Mining Act is unconstitutional for allowing fully foreign-
owned corporations to exploit the Philippine mineral resources.
2. Whether or not the FTAA between the government and WMCP is a ―service
contract that permits fully foreign owned companies to exploit the Philippine
mineral resources.
HELD:
First Issue: RA 7942 is Unconstitutional
RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign
owned corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrinewhich states
that ―All lands of the public domain, waters, minerals, coal, petroleum, and other
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. The same section also states that, ―the exploration and development and
utilization of natural resources shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution
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 the public domain through license, concession or lease
is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for
the purpose of exploiting a particular natural resource within a given area. 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.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms
of assistance in the 1973 Charter. The present Constitution now allows only ―technical
and financial assistance. The management and the operation of the mining activities by
foreign contractors, the primary feature of the service contracts was precisely the evil
the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs 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. Therefore, RA 7942 is invalid insofar as the said act authorizes service
contracts. Although the statute employs the phrase ―financial and
technical agreements in accordance with the 1987 Constitution, its pertinent provisions
actually treat these agreements as service contracts that grant beneficial ownership to
foreign contractors contrary to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor
manages the mineral resources just like the foreign contractor in a service contract. By
allowing foreign contractors to manage or operate all the aspects of the mining
operation, RA 7942 has, in effect, conveyed beneficial ownership over the nation‘s
mineral resources to these contractors, leaving the State with nothing but bare title
thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60-40% capitalizationrequirement for corporations or
associations engaged in the exploitation, development and utilization of Philippine
natural resources.
When parts of a 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, then if some parts are unconstitutional, all
provisions that are thus dependent, conditional or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited
only to merely technical or financial assistance to the State for large scale exploration,
development and utilization of minerals, petroleum and other mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise unconstitutional
since the agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive
right to explore, exploit, utilize and dispose of all minerals and by-products that may be
produced from the contract area. Section 1.2 of the same agreement provides that
EMCP shall provide all financing, technology, management, and personnel necessary
for the Mining Operations.

These contractual stipulations and related provisions in the FTAA 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 it aims to suppress. Consequently, the contract from which they spring must
be struck down.
 2. GAMBOA v. TEVES (2011)
FACTS:
 This is a petition to nullify the sale of shares of stock of Philippine
Telecommunications Investment Corporation (PTIC) by the government of the
Republic of the Philippines, acting through the Inter-Agency Privatization Council
(IPC), to Metro Pacific Assets Holdings, Inc.
 (MPAH), an affiliate of First Pacific Company Limited (First Pacific), a Hong Kong-
based investment management and holding company and a shareholder of the
Philippine Long Distance Telephone Company (PLDT).
 The petitioner questioned the sale on the ground that it also involved an indirect
sale of 12 million shares (or about 6.3 percent of the outstanding common shares)
of PLDT owned by PTIC to First Pacific.
 With the this sale, First Pacific’s common shareholdings in PLDT increased from 30.7
percent to 37 percent, thereby increasing the total common shareholdings of
foreigners in PLDT to about 81.47%. This, according to the petitioner, violates Section
11, Article XII of the 1987 Philippine Constitution which limits foreign ownership of the
capital of a public utility to not more than 40%, thus:
o Section 11. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the laws of the
Philippines, at least sixty per centum of whose capital is owned by such
citizens; nor shall such franchise, certificate, or authorization be exclusive in
character or for a longer period than fifty years.
o Neither shall any such franchise or right be granted except under the condition
that it shall be subject to amendment, alteration, or repeal by the Congress
when the common good so requires. The State shall encourage equity
participation in public utilities by the general public. The participation of
foreign investors in the governing body of any public utility enterprise shall be
limited to their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be citizens of the
Philippines. (Emphasis supplied)
ISSUE: Does the term “capital” in Section 11, Article XII of the Constitution refer to the
total common shares only, or to the total outstanding capital stock (combined total of
common and non-voting preferred shares) of PLDT, a public utility?
RULING: [The Court partly granted the petition and held that the term “capital” in
Section 11, Article XII of the Constitution refers only to shares of stock entitled to vote in
the election of directors of a public utility, i.e., to the total common shares in PLDT.]
Considering that common shares have voting rights which translate to control, as
opposed to preferred shares which usually have no voting rights, the term “capital” in
Section 11, Article XII of the Constitution refers only to common shares. However, if the
preferred shares also have the right to vote in the election of directors, then the term
“capital” shall include such preferred shares because the right to participate in the
control or management of the corporation is exercised through the right to vote in the
election of directors. In short, the term “capital” in Section 11, Article XII of the
Constitution refers only to shares of stock that can vote in the election of directors.
To construe broadly the term “capital” as the total outstanding capital stock, including
both common and non-voting preferred shares, grossly contravenes the intent and
letter of the Constitution that the “State shall develop a self-reliant and independent
national economy effectively controlled by Filipinos.” A broad definition unjustifiably
disregards who owns the all-important voting stock, which necessarily equates to control
of the public utility.
Holders of PLDT preferred shares are explicitly denied of the right to vote in the election
of directors. PLDT’s Articles of Incorporation expressly state that “the holders of Serial
Preferred Stock shall not be entitled to vote at any meeting of the stockholders for the
election of directors or for any other purpose or otherwise participate in any action
taken by the corporation or its stockholders, or to receive notice of any meeting of
stockholders.” On the other hand, holders of common shares are granted the exclusive
right to vote in the election of directors. PLDT’s Articles of Incorporation state that “each
holder of Common Capital Stock shall have one vote in respect of each share of such
stock held by him on all matters voted upon by the stockholders, and the holders of
Common Capital Stock shall have the exclusive right to vote for the election of directors
and for all other purposes.”
It must be stressed, and respondents do not dispute, that foreigners hold a majority of
the common shares of PLDT. In fact, based on PLDT’s 2010 General Information Sheet
(GIS), which is a document required to be submitted annually to the Securities and
Exchange Commission, foreigners hold 120,046,690 common shares of PLDT whereas
Filipinos hold only 66,750,622 common shares. In other words, foreigners hold 64.27% of
the total number of PLDT’s common shares, while Filipinos hold only 35.73%. Since
holding a majority of the common shares equates to control, it is clear that foreigners
exercise control over PLDT. Such amount of control unmistakably exceeds the allowable
40 percent limit on foreign ownership of public utilities expressly mandated in Section 11,
Article XII of the Constitution.
As shown in PLDT’s 2010 GIS, as submitted to the SEC, the par value of PLDT common
shares is P5.00 per share, whereas the par value of preferred shares is P10.00 per share.
In other words, preferred shares have twice the par value of common shares but cannot
elect directors and have only 1/70 of the dividends of common shares. Moreover,
99.44% of the preferred shares are owned by Filipinos while foreigners own only a
minuscule 0.56% of the preferred shares. Worse, preferred shares constitute 77.85% of the
authorized capital stock of PLDT while common shares constitute only 22.15%. This
undeniably shows that beneficial interest in PLDT is not with the non-voting preferred
shares but with the common shares, blatantly violating the constitutional requirement of
60 percent Filipino control and Filipino beneficial ownership in a public utility.
In short, Filipinos hold less than 60 percent of the voting stock, and earn less than 60
percent of the dividends, of PLDT. This directly contravenes the express command in
Section 11, Article XII of the Constitution that “[n]o franchise, certificate, or any other
form of authorization for the operation of a public utility shall be granted except to x x x
corporations x x x organized under the laws of the Philippines, at least sixty per centum
of whose capital is owned by such citizens x x x.”
To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which class of
shares exercises the sole right to vote in the election of directors, and thus exercise
control over PLDT; (2) Filipinos own only 35.73% of PLDT’s common shares, constituting a
minority of the voting stock, and thus do not exercise control over PLDT; (3) preferred
shares, 99.44% owned by Filipinos, have no voting rights; (4) preferred shares earn only
1/70 of the dividends that common shares earn; (5) preferred shares have twice the par
value of common shares; and (6) preferred shares constitute 77.85% of the authorized
capital stock of PLDT and common shares only 22.15%. This kind of ownership and
control of a public utility is a mockery of the Constitution.
[Thus, the Respondent Chairperson of the Securities and Exchange Commission
was DIRECTED by the Court to apply the foregoing definition of the term “capital” in
determining the extent of allowable foreign ownership in respondent Philippine Long
Distance Telephone Company, and if there is a violation of Section 11, Article XII of the
Constitution, to impose the appropriate sanctions under the law.]
VELASCO (Separate Dissenting Opinion)
The present petition partakes of a collateral attack on PLDT’s franchise as a public utility
with petitioner pleading as ground PLDT’s alleged breach of the 40% limit on foreign
equity. Such is not allowed. As discussed in PLDT v. National Telecommunications
Commission, a franchise is a property right that can only be questioned in a direct
proceeding.
(1) The intent of the framers of the Constitution was not to limit the application of the
word “capital” to voting or common shares alone. Constitutional Commission records
show that by using the word “capital,” the framers of the Constitution adopted the
definition or interpretation that includes all types of shares, whether voting or non-voting.
(2) Cassus Omissus Pro Omisso Habendus Est––a person, object or thing omitted must
have been omitted intentionally. In this case, the intention of the framers of the
Constitution is very clear––to omit the phrases “voting stock” and “controlling interest.”
(3) The FIA should also be read in harmony with the Constitution. Since the Constitution
only provides for a single requirement for the operation of a public utility under Sec. 11,
i.e., 60% capital must be Filipino-owned, a mere statute cannot add another
requirement. Otherwise, such statute may be considered unconstitutional. Accordingly,
the phrase “entitled to vote” should not be interpreted to be limited to common shares
alone or those shares entitled to vote in the election of members of the Board of
Directors.
(4) Further, the FIA did not say “entitled to vote in the management affairs of the
corporation” or “entitled to vote in the election of the members of the Board of
Directors.” Verily, where the law does not distinguish, neither should We. Hence, the
proper interpretation of the phrase “entitled to vote” under the FIA should be that it
applies to all shares, whether classified as voting or non-voting shares.
(5) Additionally, control is another inherent right of ownership. The circumstances
enumerated in Sec. 6 of the Corporation Code clearly evince this. It gives voting rights
to the stocks deemed as non-voting as to fundamental and major corporate changes.
Thus, the issue should not only dwell on the daily management affairs of the corporation
but also on the equally important fundamental changes that may need to be voted on.
(6) The SEC rules, opinions and jurisprudence use the “control test”, which requires that
the nationality of a corporation is determined by the total outstanding capital stock
irrespective of the number of shares, and “capital” denotes the total shares subscribed
and paid irrespective of their nomenclature.
(7) Lastly, the last sentence of Sec. 11, Art. XII limits the participation of the foreign
investors in the governing body to their proportionate share in the capital of the
corporation.
ABAD (Dissenting Opinion)
(1) Authority to define and interpret the meaning of “capital” in Sec. 11, Art. XII
belongs to Congress as part of it’s policy making powers, as the power to authorize and
control a public utility is a prerogative of Congress. Sec. 11, Art. XII is no self-executing
and requires Congressional action to clarify it’s meaning. FIA is restricted to certain
areas of investment and should not be construed to clarify the meaning of “capital”
under the constitutional provision as they are rules which apply to future investors.
(2) “Capital” refers to the entirety of the corporation’s outstanding voting stock as,
first, the 40 percent limit (if held only to preferred shareholders) would render
meaningless the fourth sentence which limits foreign participation in the governing body
of public utilities, and, second, amicus curiae Dr. Villegas, Chairman of the Committee
of National Economy, said that the term “capital” did not distinguish among the classes
of shares. In both economic and business terms, capital always meant the entire shares
of stock. Further, Philippine policy on foreign ownership already discourages foreign
investments and to impose additional restrictions would aggravate economic growth.
(3) Sec. 11, Article XII already provides 3 limitations on foreign participation in
public utilities and the Court need not add more by restricting the definition of capital.
Section 10, Article XII of the Philippine Constitution provides that the Congress must
reserve certain areas of investment to Filipinos or to corporations or associations of
which at least 60 percent of capital is owned by Filipinos. Section 3 of the Foreign
Investments Act of 1991 defines a “Philippine national” as a citizen of the Philippines or a
domestic partnership or association wholly owned by citizens of the Philippines; or a
corporation organized under the laws of the Philippines of which at least 60 percent of
the capital stock outstanding and entitled to vote is owned and held by citizens of the
Philippines, and where a corporation and its non-Filipino stockholders own stocks in a
SEC registered enterprise, at least 60 percent of the capital stocks outstanding and
entitled to vote of both corporations must be owned and held by citizens of the
Philippines and at least 60 percent of the members of the Board of Directors of both
corporations must be citizens of the Philippines.
In support of this State policy, the Supreme Court, in the case of Heirs of Gamboa v.
Teves, G.R. No.176579 dated 28 June 2011 and in a resolution dated Oct. 9, 2012,
interpreted the term “capital” for the first time. In this case, the Supreme Court ruled that
“capital” under the 1987 Constitution and the Foreign Investments Act of 1991 refers to
shares with voting rights, as well as full beneficial ownership, and not to the total
outstanding capital stock. Simply put, the 60-40 ownership requirement in favor of the
Filipino citizens must apply separately to each class of shares, whether common,
preferred non-voting, preferred voting or any other class of shares.
In arriving at this judgment, the Supreme Court reasoned that the foreign ownership
limitation also applies to non-voting preferred stocks, that, although denied the voting
rights in the election of directors, are nevertheless entitled to vote on certain
fundamental corporate acts like amendment of the articles of incorporation; adoption
and amendment of by-laws; sale, lease, exchange, mortgage, pledge or other
disposition of all or substantially all of the corporate property; incurring, creating or
increasing bonded indebtedness; increase or decrease of capital stock; merger or
consolidation of the corporation with another corporation or other corporations;
investment of corporate funds in another corporation or business; and dissolution of the
corporation.
Pursuant to the Heirs of Gamboa case, the Securities and Exchange Commission issued
on May 20, 2013 Memorandum Circular No. 8, which sets the guidelines for the
compliance of businesses engaged in nationalized and partly nationalized activities. In
gist, the said memorandum circular provides that the required percentage of Filipino
ownership shall be applied to both the total number of outstanding shares of stock
entitled to vote in the election of directors, and the total number of outstanding shares
of stock, whether or not entitled to vote in the election of directors. Consequently, all
existing covered corporations which are not compliant with the guidelines are given a
period of one year from the effectivity of the issuance within which to comply with the
said ownership requirement.
Certainly, the Securities and Exchange Commission issuance upholds the protection of
vital industries and certain investment areas from foreign control. It is effectively backing
Article XII of the Constitution, the Foreign Investment Act definition of what constitutes a
“Philippine national”, and the ruling of the Supreme Court in Heirs of Gamboa case to
reserve certain areas of investment to Filipinos. It adheres to the constitutional directive
without compromising the actual and potential foreign investments. While the Securities
and Exchange Commission issuance is providing a guiding principle in support of the
conservative approach of the government with regard to development of the national
economy, it is likewise recognizing the important role of the foreign investors in the effort
to improve the economic standing of the Philippines.
[Constitutional Law, Corporation]
The term “capital” does not refer to both preferred and common stocks treated as the
same class of shares regardless of differences in voting rights and privileges.
Consistent with the constitutional mandate that the “State shall develop a self-reliant
and independent national economy effectively controlled by Filipinos,” the term
"capital" means the outstanding capital stock entitled to vote (voting stock), coupled
with beneficial ownership, both of which results to "effective control."
"Mere legal title is insufficient to meet the 60 percent Filipino owned “capital” required in
the Constitution for certain industries. Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is required." In
this case, such twin requirements must apply uniformly and across the board to all
classes of shares comprising the capital. Thus, "the 60-40 ownership requirement in favor
of Filipino citizens must apply separately to each class of shares, whether common,
preferred non-voting, preferred voting or any other class of shares." This guarantees that
the “controlling interest” in public utilities always lies in the hands of Filipino citizens.
GAMBOA v. TEVES (2012)
Facts:
 The issue started when petitioner Gamboa questioned the indirect sale of shares
involving almost 12 million shares of the Philippine Long Distance Telephone
Company (PLDT) owned by PTIC to First Pacific.
 Thus, First Pacific’s common shareholdings in PLDT increased from 30.7 percent to 37
percent, thereby increasing the total common shareholdings of foreigners in PLDT
to about 81.47%.
 The petitioner contends that it violates the Constitutional provision on filipinazation
of public utility, stated in Section 11, Article XII of the 1987 Philippine Constitution,
which limits foreign ownership of the capital of a public utility to not more than 40%.
 Then, in 2011, the court ruled the case in favor of the petitioner, hence this new
case, resolving the motion for reconsideration for the 2011 decision filed by the
respondents.
Issue: Whether or not the Court made an erroneous interpretation of the term ‘capital’
in its 2011 decision?
Held/Reason: The Court said that the Constitution is clear in expressing its State policy of
developing an economy ‘effectively controlled’ by Filipinos. Asserting the ideals that our
Constitution’s Preamble want to achieve, that is – to conserve and develop our
patrimony, hence, the State should fortify a Filipino-controlled economy.
In the 2011 decision, the Court finds no wrong in the construction of the term ‘capital’
which refers to the ‘shares with voting rights, as well as with full beneficial ownership’
(Art. 12, sec. 10) which implies that the right to vote in the election of directors, coupled
with benefits, is tantamount to an effective control. Therefore, the Court’s interpretation
of the term ‘capital’ was not erroneous. Thus, the motion for reconsideration is denied.
 3. JOSE M. ROY III, Petitioner, v. CHAIRPERSON TERESITA HERBOSA, THE SECURITIES
AND EXCHANGE COMMISSION, AND PHILILIPPINE LONG DISTANCE TELEPHONE
COMPANY, Respondents. G.R. No. 207246, November 22, 2016
FACTS:
 This is a case of special civil action for certiorari under Rule 65 of the Rules of Court
seeking to annul Memorandum Circular No. 8, Series of 2013 (SEC-MC No. 8)issued
by the SEC for allegedly being in violation of the Court's Decision ("Gamboa
Decision") and Resolution ("Gamboa Resolution") in Gamboa v. Finance Secretary
Teves, G.R. No. 176579 which jurisprudentially established the proper interpretation
of Section 11, Article XII of the Constitution.
 On June 28, 2011, the Court issued the Gamboa Decision, the dispositive portion of
which reads:
o WHEREFORE, we PARTLY GRANT the petition and rule that the term "capital" in
Section 11, Article XII of the 1987 Constitution refers only to shares of stock
entitled to vote in the election of directors, and thus in the present case only to
common shares, and not to the total outstanding capital stock (common and
non-voting preferred shares). Respondent Chairperson of the Securities and
Exchange Commission is DIRECTED to apply this definition of the term "capital"
in determining the extent of allowable foreign ownership in respondent
Philippine Long Distance Telephone Company, and if there is a violation of
Section 11, Article XII of the Constitution, to impose the appropriate sanctions
under the law.
 On May 20, 2013, the SEC, through Chairperson Herbosa, issued SEC-MC No. 8
entitled "Guidelines on Compliance with the Filipino-Foreign Ownership
Requirements Prescribed in the Constitution and/or Existing Laws by Corporations
Engaged in Nationalized and Partly Nationalized Activities." Section 2 of SEC-MC
No. 8 provides:
o Section 2. All covered corporations shall, at all times, observe the constitutional
or statutory ownership requirement. For purposes of determining compliance
therewith, the required percentage of Filipino ownership shall be applied to
BOTH (a) the total number of outstanding shares of stock entitled to vote in the
election of directors; AND (b) the total number of outstanding shares of stock,
whether or not entitled to vote in the election of directors.
 On June 10, 2013, Roy, as a lawyer and taxpayer, filed the Petition, assailing the
validity of SEC-MC No. 8 for not conforming to the letter and spirit of the Gamboa
Decision and Resolution and for having been issued by the SEC with grave abuse of
discretion.
 Petitioner Roy also questions the ruling of the SEC that respondent Philippine Long
Distance Telephone Company ("PLDT") is compliant with the constitutional rule on
foreign ownership.
 He prays that the Court declare SEC-MC No. 8 unconstitutional and direct the SEC
to issue new guidelines regarding the determination of compliance with Section 11,
Article XII of the Constitution in accordance with Gamboa.
ISSUE: Whether the petitioner has standing to question the validity of the subject act or
issuance, i.e., he has a personal and substantial interest in the case that he has
sustained, or will sustain, direct injury as a result of the enforcement of the act or
issuance
RULING:
Petitioners have no legal standing to question the constitutionality of SEC-MC No. 8. The
personal and substantial interest that enables a party to have legal standing is one that
is both material, an interest in issue and to be affected by the government action, as
distinguished from mere interest in the issue involved, or a mere incidental interest, and
real, which means a present substantial interest, as distinguished from a mere
expectancy or a future, contingent, subordinate, or consequential interest.
As to injury, the party must show that (1) he will personally suffer some actual or
threatened injury because of the allegedly illegal conduct of the government; (2) the
injury is fairly traceable to the challenged action; and (3) the injury is likely to be
redressed by a favorable action.
To establish his standing, petitioner Roy merely claimed that he has standing to question
SEC-MC No. 8 "as a concerned citizen, an officer of the Court and as a taxpayer" as well
as "the senior law partner of his own law firm[, which] x x x is a subscriber of PLDT."
The Court has previously emphasized that the locus standi requisite is not met by the
expedient invocation of one's citizenship or membership in the bar who has an interest
in ensuring that laws and orders of the Philippine government are legally and validly
issued as these supposed interests are too general, which are shared by other groups
and by the whole citizenry. Per their allegations, the personal interest invoked by
petitioners as citizens and members of the bar in the validity or invalidity of SEC-MC No.
8 is at best equivocal, and totally insufficient.
Petitioners' status as taxpayers is also of no moment. As often reiterated by the Court, a
taxpayer's suit is allowed only when the petitioner has demonstrated the direct
correlation of the act complained of and the disbursement of public funds in
contravention of law or the Constitution, or has shown that the case involves the
exercise of the spending or taxing power of Congress. SEC-MC No. 8 does not involve
an additional expenditure of public funds and the taxing or spending power of
Congress.
The allegation that petitioner Roy's law firm is a "subscriber of PLDT" is ambiguous. It is
unclear whether his law firm is a "subscriber" of PLDT's shares of stock or of its various
telecommunication services. Petitioner Roy has not identified the specific direct and
substantial injury he or his law firm stands to suffer as "subscriber of PLDT" as a result of the
issuance of SEC-MC No. 8 and its enforcement. Moreover, in the most practical sense, a
PLDT subscriber loses or gains nothing in the event that SEC-MC No. 8 is either sustained
or struck down by [the Court].
Jose M. Roy III Vs Chairperson Teresita Herbosa, The Securities and Exchange
Commission and Philippine Long Distance Company (2017)
Facts:
 Before the Court is the Motion for Reconsideration dated January 19, 2017 (the
Motion) filed by petitioner Jose M. Roy III (movant) seeking the reversal and setting
aside of the Decision dated November 22, 2016 (the Decision) which denied the
movant's petition, and declared that the Securities and Exchange Commission
(SEC) did not commit grave abuse of discretion in issuing Memorandum Circular
No. 8, Series of 2013 (SEC-MC No. 8) as the same was in compliance with, and in
fealty to, the decision of the Court in Gamboa v. Finance Secretary Teves
(Gamboa Decision) and the resolution denying the Motion for Reconsideration
therein (Gamboa Resolution).
 The Motion presents no compelling and new arguments to justify the
reconsideration of the Decision.
 The Decision has already exhaustively discussed and directly passed upon these
grounds. Movant's petition was dismissed based on both procedural and
substantive grounds.
Issue: Whether SEC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued SEC-MC No. 8.

Held:
SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it issued SEC-MC No. 8. The Court finds SEC-MC No. 8 to have been issued in fealty
to the Gamboa Decision and Resolution.

Pursuant to the Court's constitutional duty to exercise judicial review, the Court has
conclusively found no grave abuse of discretion on the part of SEC in issuing SEC-MC
No. 8.

The Decision has painstakingly explained why it considered as obiter dictum that
pronouncement in the Gamboa Resolution that the constitutional requirement on
Filipino ownership should "apply uniformly and across the board to all classes of shares,
regardless of nomenclature and category, comprising the capital of a corporation." The
Court stated that:
The fallo or decretal/dispositive portions of both the Gamboa Decision and
Resolution are definite, clear and unequivocal. While there is a passage in the
body of the Gamboa Resolution that might have appeared contrary to the
fallo of the Gamboa Decision, the definiteness and clarity of the fallo of the
Gamboa Decision must control over the obiter dictum in the Gamboa
Resolution regarding the application of the 60-40 Filipino-foreign ownership
requirement to "each class of shares, regardless of differences in voting rights,
privileges and restrictions."

To the Court's mind and, as exhaustively demonstrated in the Decision, the dispositive
portion of the Gamboa Decision was in no way modified by the Gamboa Resolution.

The heart of the controversy is the interpretation of Section 11, Article XII of the
Constitution, which provides: "No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to citizens of
the Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by such citizens."

The Gamboa Decision already held, in no uncertain terms, that what the Constitution
requires is full and legal beneficial ownership of 60 percent of the outstanding capital
stock, coupled with 60 percent of the voting rights must rest in the hands of Filipino
nationals. And, precisely that is what SEC-MC No. 8 provides; For purposes of
determining compliance with the constitutional or statutory ownership, the required
percentage of Filipino ownership shall be applied to both the total number of
outstanding shares of stock entitled to vote in the election of directors; and (b) the total
number of outstanding shares of stock, whether or not entitled to vote.

In conclusion, the basic issues raised in the Motion having been duly considered and
passed upon by the Court in the Decision and no substantial argument having been
adduced to warrant the reconsideration sought, the Court resolves to deny the Motion
with finality.
 4. IDEALS INC. v. PSALM
Initiatives for Dialogue and Empowerment through Alternative Legal Services, Inc.
(IDEAL, Inc.), et al., petitioners
Power Sector Assets and Liabilities Management Corp., et al. (PSALM), respondents
FACTS:
 PSALM is a GOCC mandated by RA 9136 (Electric Power Industry Reform Act of
2001 or the EPIRA Law) to manage the orderly sale, disposition, and privatization of
the assets of the National Power Corp. (NPC) over a 25-year period.
 In the discharge of its said duties, PSALM held a public bidding for the sale of
AHEPP, a 246-MW hydroelectric power plant. After evaluating the submitted bids,
PSALM awarded the sale to K-Water, a Korean company.
 But even before K-Water was given the Notice of Award, IDEALS had been sending
letters to PSALM to request for copies of documents pertaining to the sale.
 The first letter requested for copies of the Terms of Reference and proposed bids
submitted by the bidders.
 There was no response because at the time no bids have been submitted yet.
Besides, updates about the ongoing bidding were posted on the PSALM website
anyway.
 The second letter requested for information regarding the winning bidder, such as
company profile, contact person, office address, and Philippine registration.
 Despite press releases announcing K-Water as the winning bidder, PSALM failed to
sufficiently provide the petitioners with the information they were asking for, almost
as if PSALM officials were trying to hide something.
In addition, the Court highlighted the difference between duty to disclose information
and duty to access information on matters of public concern. The duty to disclose
information is mandatory under the Constitution, but it only covers transactions involving
public interest. In the absence of an enabling law for Section 28, Art. II (e.g., Freedom of
Information Act, which has been languishing in the congress for more than 20 years),
postings in public bulletin boards and government websites will suffice.
The duty to access information, on the other hand, requires a demand or request for
one to gain access to documents and paper of a particular agency. It has a broader
scope of information, covering not only transactions of public interest, but also matters
contained in official communications and public documents of any government
agency.
Because of this ruling, PSALM was compelled by the Court to provide all the documents
the petitioners were requesting for.
3. Yes.
Foreign ownership of a hydropower facility is not prohibited under existing laws. The
construction, rehabilitation, and development of hydropower plants are among the
infrastructure projects which even wholly-owned foreign corporations are allowed to
undertake under RA 7718 or the Amended Build-Operate-Transfer Law.

ISSUES:
1. Whether or not petitioners have locus standi to file this petition before the Court.
2. Whether or not PSALM violated the Constitution in withholding documents of public
interest.
3. Whether or not a foreign company can own a hydroelectric power facility.

HELD:

1. Yes.
As citizens and taxpayers, petitioners do have legal standing to file this petition before
the Court.

2. Yes.
In failing to provide the petitioners with the information they were asking for on their
second letter, PSALM violated Section 7, Article III of the 1987 Constitution,which
provides for the right of the people to information on matters of public concern. The
Court ruled that people's right to information is intertwined wth the government's
constitutional duty of full public disclosure of all transactions involving public interest,
pursuant to Section 28, Art. II of the 1987 Constitution, which states a policy of full public
disclosure. Both of these provisions are also essential to hold public officials accountable
for their actions. An informed citizenry, said the Court, is essential to the existence and
proper functioning of any democracy.

The Court made it clear that the public is entitled to information even on on-going
negotiations before a final contract, subject to the following exceptions: privileged
information, military and diplomatic secrets, and similar matters relating to national
security and public order.
 5. NARRA NICKEL MINING v. REDMONT CONSOLIDATED (Apr 21 2014)
Facts:
 Redmont is a domestic corporation interested in the mining and exploration of
some areas in Palawan.
 Upon learning that those areas were covered by MPSA applications of other three
(allegedly Filipino) corporations – Narra, Tesoro, and MacArthur, it filed a petition
before the Panel of Arbitrators of DENR seeking to deny their permits on the ground
that these corporations are in reality foreign-owned.
 MBMI, a 100% Canadian corporation, owns 40% of the shares of PLMC (which owns
5,997 shares of Narra), 40% of the shares of MMC (which owns 5,997 shares of
McArthur) and 40% of the shares of SLMC (which, in turn, owns 5,997 shares of
Tesoro).
 Aside from the MPSA, the three corporations also applied for FTAA with the Office
of the President.
 In their answer, they countered that (1) the liberal Control Test must be used in
determining the nationality of a corporation as based on Sec 3 of the Foreign
Investment Act – which as they claimed admits of corporate layering schemes,
and that (2) the nationality question is no longer material because of their
subsequent application for FTAA.
Issue 1: W/N the Grandfather Rule must be applied in this case
Yes. It is the intention of the framers of the Constitution to apply the Grandfather Rule in
cases where corporate layering is present.
First, as a rule in statutory construction, when there is conflict between the Constitution
and a statute, the Constitution will prevail. In this instance, specifically pertaining to the
provisions under Art. XII of the Constitution on National Economy and Patrimony, Sec. 3
of the FIA will have no place of application. Corporate layering is admittedly allowed
by the FIA, but if it is used to circumvent the Constitution and other pertinent laws, then it
becomes illegal.
Second, under the SEC Rule1 and DOJ Opinion2 , the Grandfather Rule must be applied
when the 60-40 Filipino-foreign equity ownership is in doubt. Doubt is present in the
Filipino equity ownership of Narra, Tesoro, and MacArthur since their common investor,
the 100% Canadian-owned corporation – MBMI, funded them.
Under the Grandfather Rule, it is not enough that the corporation does have the
required 60% Filipino stockholdings at face value. To determine the percentage of the
ultimate Filipino ownership, it must first be traced to the level of the investing corporation
and added to the shares directly owned in the investee corporation. Applying this rule,
it turns out that the Canadian corporation owns more than 60% of the equity interests of
Narra, Tesoro and MacArthur. Hence, the latter are disqualified to participate in the
exploration, development and utilization of the Philippine’s natural resources.
Narra Nickel Mining vs Redmont (January 28, 2015)
Facts:
 Narra and its co-petitioner corporations – Tesoro and MacArthur, filed a motion
before the SC to reconsider its April 21, 2014 Decision which upheld the denial of
their MPSA applications.
 The SC affirmed the CA ruling that there is a doubt to their nationality, and that in
applying the Grandfather Rule, the finding is that MBMI, a 100% Canadian-owned
corporation, effectively owns 60% of the common stocks of petitioners by owning
equity interests of the petitioners’ other majority corporate shareholders.
 Narra, Tesoro and MacArthur argued that the application of the Grandfather Rule
to determine their nationality is erroneous and allegedly without basis in the
Constitution, the FIA, the Philippine Mining Act, and the Rules issued by the SEC.
 These laws and rules supposedly espouse the application of the Control Test in
verifying the Philippine nationality of corporate entities for purposes of determining
compliance with Sec. 2, Art. XII of the Constitution that only corporations or
associations at least 60% of whose capital is owned by such Filipino citizens may
enjoy certain rights and privileges, like the exploration and development of natural
resources.
Issue: W/N the application by the SC of the grandfather resulted to the abandonment
of the ‘control test’
Held: No.
The ‘control test’ can be applied jointly with the Grandfather Rule to determine the
observance of foreign ownership restriction in nationalized economic activities. The
Control Test and the Grandfather Rule are not incompatible ownership-determinant
methods that can only be applied alternative to each other. Rather, these methods
can, if appropriate, be used cumulatively in the determination of the ownership and
control of corporations engaged in fully or partly nationalized activities, as the mining
operation involved in this case or the operation of public utilities.
The Grandfather Rule, standing alone, should not be used to determine the Filipino
ownership and control in a corporation, as it could result in an otherwise foreign
corporation rendered qualified to perform nationalized or partly nationalized activities.
Hence, it is only when the Control Test is first complied with that the Grandfather Rule
may be applied. Put in another manner, if the subject corporation’s Filipino equity falls
below the threshold 60%, the corporation is immediately considered foreign-owned, in
which case, the need to resort to the Grandfather Rule disappears.
In this case, using the ‘control test’, Narra, Tesoro and MacArthur appear to have
satisfied the 60-40 equity requirement. But the nationality of these corporations and the
foreign-owned common investor that funds them was in doubt, hence, the need to
apply the Grandfather Rule.
Commercial law; Tests to determine the nationality of a corporation. There are two
acknowledged tests in determining the nationality of a corporation: the control test and
the grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopts the
1967 SEC Rules which implemented the requirement of the Constitution and other laws
pertaining to the controlling interests in enterprises engaged in the exploitation of
natural resources owned by Filipino citizens. The first part of paragraph 7, DOJ Opinion
No. 020, stating “shares belonging to corporations or partnerships at least 60% of the
capital of which is owned by Filipino citizens shall be considered as of Philippine
nationality,” pertains to the control test or the liberal rule. On the other hand, the
second part of the DOJ Opinion which provides, “if the percentage of the Filipino
ownership in the corporation or partnership is less than 60%, only the number of shares
corresponding to such percentage shall be counted as Philippine nationality,” pertains
to the stricter, more stringent grandfather rule.

Application of the Grandfather Rule. Based on the said SEC Rule and DOJ Opinion, the
Grandfather Rule or the second part of the SEC Rule applies only when the 60-40
Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture
corporation with Filipino and foreign stockholders with less than 60% Filipino
stockholdings [or 59%] invests in other joint venture corporation which is either 60-40%
Filipino-alien or the 59% less Filipino). Stated differently, where the 60-40 Filipino- foreign
equity ownership is not in doubt, the Grandfather Rule will not apply.

Existence of doubt. The assertion of petitioners that “doubt” only exists when the
stockholdings are less than 60% fails to convince this Court. DOJ Opinion No. 20, which
petitioners quoted in their petition, only made an example of an instance where
“doubt” as to the ownership of the corporation exists. It would be ludicrous to limit the
application of the said word only to the instances where the stockholdings of non-
Filipino stockholders are more than 40% of the total stockholdings in a corporation. The
corporations interested in circumventing our laws would clearly strive to have “60%
Filipino Ownership” at face value. It would be senseless for these applying corporations
to state in their respective articles of incorporation that they have less than 60% Filipino
stockholders since the applications will be denied instantly. Thus, various corporate
schemes and layerings are utilized to circumvent the application of the Constitution.
 6. RESIDENT MAMMALS OF THE PROTECTED SEASCAPE TANON STRAIT v. REYES
G.R. No. 180771 April 21, 2015
Facts:
 The resident marine mammals of the protected seascape Tañon Strait, including
the whales, dolphins, porpoises and other cetacean species, as well as Gloria
Estenzo Ramos and Rose-Liza Eisma-Osorio, as their legal guardians and friends,
filed an action against the late Department of Energy Secretary Angelo T. Reyes,
former Department of Environment and Natural Resources (DENR) Secretary Jose
L. Atienza, DENR-Region VII Director and Chairman of Tañon Strait Leonardo
Sibbaluca, Japan Petroleum Exploration Co., Ltd. (JAPEX), and Supply Oilfield
Services, Inc. (SOS) due to a service contract granted by the DOE to JAPEX, which
allowed the latter to conduct seismic surveys in and around the protected Tañon
Strait, and thus unconstitutional.
 The respondents argued that the mammals have no legal standing for not being
natural or juridical persons, as required by the Rules of Court, as well as to Ramos
and Osorio for representing those mammals.
 They also alleged that the liberality as to legal standing in Oposa vs. Factoran, Jr.,
224 SCRA 792 (1993) is not applicable, because the petitioners in said case are
natural persons.
 Meanwhile, the petitioners averred that the mammals have legal standing,
because they would either be injured or benefited by the judgment of the case.
 Ramos and Osorio maintained that as forerunners of the campaign in raising
awareness among the residents of the Tañon Strait and as stewards of the
environment, they have legal standing to institute the case.
 Two sets of petitioners filed separate cases challenging the legality of Service
Contract No. 46 (SC-46) awarded to Japan Petroleum Exploration Co. (JAPEX).
 The service contract allowed JAPEX to conduct oil exploration in the Tañon Strait
during which it performed seismic surveys and drilled one exploration well.
 The first petition was brought on behalf of resident marine mammals in the Tañon
Strait by two individuals acting as legal guardians and stewards of the marine
mammals.
 The second petition was filed by a non-governmental organization representing
the interests of fisherfolk, along with individual representatives from fishing
communities impacted by the oil exploration activities.
 The petitioners filed their cases in 2007, shortly after JAPEX began drilling in the
strait.
 In 2008, JAPEX and the government of the Philippines mutually terminated the
service contract and oil exploration activities ceased.
 The Supreme Court consolidated the cases for the purpose of review.
Issue: Whether the resident marine mammals of the protected seascape Tañon Strait, as
well as their legal guardians and friends Gloria Estenzo Ramos and Rose-Liza Eisma-
Osorio, have the legal standing to institute the case
Ruling: Yes, the resident marine mammals of the protected seascape Tañon Strait, as
well as their legal guardians and friends Gloria Estenzo Ramos and Rose-Liza Eisma-
Osorio, have the legal standing to institute the case.
Recently, the Court passed the landmark Rules of Procedure for Environmental Cases,51
which allow for a “citizen suit,” and permit any Filipino citizen to file an action before our
courts for violations of our environmental laws:
“SEC. 5. Citizen suit. – Any Filipino citizen in representation of others, including
minors or generations yet unborn, may file an action to enforce rights or
obligations under environmental laws. Upon the filing of a citizen suit, the court
shall issue an order which shall contain a brief description of the cause of
action and the reliefs prayed for, requiring all interested parties to manifest
their interest to intervene in the case within fifteen (15) days from notice
thereof. The plaintiff may publish the order once in a newspaper of a general
circulation in the Philippines or furnish all affected barangays copies of said
order.
Citizen suits filed under R.A. No. 8749 and R.A. No. 9003 shall be governed by
their respective provisions.”
Explaining the rationale for this rule, the Court, in the Annotations to the Rules of
Procedure for Environmental Cases, commented:
“Citizen suit. To further encourage the protection of the environment, the Rules
enable litigants enforcing environmental rights to file their cases as citizen suits.
This provision liberalizes standing for all cases filed enforcing environmental
laws and collapses the traditional rule on personal and direct interest, on the
principle that humans are stewards of nature. The terminology of the text
reflects the doctrine first enunciated in Oposa v. Factoran, insofar as it refers to
minors and generations yet unborn.
Although this petition was filed in 2007, years before the effectivity of the Rules of
Procedure for Environmental Cases, it has been consistently held that rules of procedure
“may be retroactively applied to actions pending and undetermined at the time of
their passage and will not violate any right of a person who may feel that he is adversely
affected, inasmuch as there is no vested rights in rules of procedure.”
Moreover, even before the Rules of Procedure for Environmental Cases became
effective, this Court had already taken a permissive position on the issue of locus standi
in environmental cases. In Oposa, we allowed the suit to be brought in the name of
generations yet unborn “based on the concept of intergenerational responsibility insofar
as the right to a balanced and healthful ecology is concerned.” Furthermore, we said
that the right to a balanced and healthful ecology, a right that does not even need to
be stated in our Constitution as it is assumed to exist from the inception of humankind,
carries with it the correlative duty to refrain from impairing the environment.
In light of the foregoing, the need to give the Resident Marine Mammals legal standing
has been eliminated by our Rules, which allow any Filipino citizen, as a steward of
nature, to bring a suit to enforce our environmental laws. It is worth noting here that the
Stewards are joined as real parties in the Petition and not just in representation of the
named cetacean species. The Stewards, Ramos and Eisma-Osorio, having shown in
their petition that there may be possible violations of laws concerning the habitat of the
Resident Marine Mammals, are therefore declared to possess the legal standing to file
this petition.
The Petitions in G.R. Nos. 180771 and 181527 are GRANTED, Service Contract No. 46 is
hereby declared NULL AND VOID for violating the 1987 Constitution, Republic Act No.
7586, and Presidential Decree No. 1586.
ISSUE: Whether the service contract violated the Constitution or other domestic laws
HELD:
The Court then held that while SC-46 was authorized Presidential Decree No. 87 on oil
extraction, the contract did not fulfill two additional constitutional requirements. Section
2 Article XII of the 1987 Constitution requires a service contract for oil exploration and
extraction to be signed by the president and reported to congress. Because the JAPEX
contract was executed solely by the Energy Secretary, and not reported to the
Philippine congress, the Court held that it was unconstitutional.

In addition, the Court also ruled that the contract violated the National Integrated
Protected Areas System Act of 1992 (NIPAS Act), which generally prohibits exploitation
of natural resources in protected areas. In order to explore for resources in a protected
area, the exploration must be performed in accordance with an environmental impact
assessment (EIA). The Court noted that JAPEX started the seismic surveys before any EIA
was performed; therefore its activity was unlawful. Id., pp. 33-34. Furthermore, the Tanon
Strait is a NIPAS area, and exploration and utilization of energy resources can only be
authorized through a law passed by the Philippine Congress. Because Congress had not
specifically authorized the activity in Tañon Strait, the Court declared that no energy
exploration should be permitted in that area.
 7. METROPOLITAN CEBU WATER DISTRICT v. MARGARITA ADALA (2007)
FACTS:
 Respondent filed on October 24, 2002 an application with the National Water
Resources Board (NWRB) for the issuance of a Certificate of Public Convenience
(CPC) to operate and maintain waterworks system in sitios San Vicente, Fatima,
and Sambag in Barangay Bulacao, Cebu City.
 At the initial hearing of December 16, 2002 during which respondent submitted
proof of compliance with jurisdictional requirements of notice and publication,
herein petitioner Metropolitan Cebu Water District, a government-owned and
controlled corporation created pursuant to P.D. 198 which took effect upon its
issuance by then President Marcos on May 25, 1973, as amended, appeared
through its lawyers to oppose the application.
 In its Opposition, petitioner prayed for the denial of respondent’s application on the
following grounds: (1) petitioner’s Board of Directors had not consented to the
issuance of the franchise applied for, such consent being a mandatory condition
pursuant to P.D. 198, (2) the proposed waterworks would interfere with petitioner’s
water supply which it has the right to protect, and (3) the water needs of the
residents in the subject area was already being well served by petitioner.
 NWRB granted Adala’s application after hearing and an ocular inspection of the
area and denied MCWD’s MFR.
 RTC denied the appeal and upheld NWRB Decision. RTC denied MFR.
ISSUE/HELD: WON Section 47 of P.D. 198, which vests an "exclusive franchise" upon public
utilities is constitutional and may be relied upon by MCWD in its opposition of Adala’s
application for a CPC – NO
Sec. 47. Exclusive Franchise. — No franchise shall be granted to any other person or
agency for domestic, industrial or commercial water service within the district or any
portion thereof unless and except to the extent that the board of directors of said
district consents thereto by resolution duly adopted, such resolution, however, shall be
subject to review by the Administration.
There being no such consent on the part of its board of directors, petitioner concludes
that respondent’s application for CPC should be denied.
Possession of franchise by a water district does not bar the issuance of a CPC for an
area covered by the water district
A CPC is formal written authority issued by quasi-judicial bodies for the operation and
maintenance of a public utility for which a franchise is not required by law and a CPC
issued by this Board is an authority to operate and maintain a waterworks system or
water supply service.
On the other hand, a franchise is privilege or authority to operate appropriate private
property for public use vested by Congress through legislation. Clearly, therefore, a CPC
is different from a franchise and Section 47 of Presidential Decree 198 refers only to
franchise.
Sec. 47 of P.D. 198 is UNCONSTITUTIONAL
The provision must be deemed void ab initio for being irreconcilable with Article XIV
Section 5 of the 1973 Constitution which was ratified on Jan. 17, 1973 – the constitution in
force when P.D. 198 was issued on May 25, 1973.
SECTION 5. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines at least sixty per centum of
the capital of which is owned by such citizens, nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty years. x x x
This provision has been substantially reproduced in Article XII Section 11 of the 1987
Constitution, including the prohibition against exclusive franchises.
Water districts fall under the term “public utility”
A "public utility" is a business or service engaged in regularly supplying the public with
some commodity or service of public consequence such as electricity, gas, water,
transportation, telephone or telegraph service. x x x (National Power Corp. v. CA)
We agree with petitioner that the NAWASA is a public utility because its primary function
is to construct, maintain and operate water reservoirs and waterworks for the purpose of
supplying water to the inhabitants, as well as consolidate and centralize all water
supplies and drainage systems in the Philippines. x x x (National Waterworks and
Sewerage Authority v. NWSA Consolidated Unions)
MWCD‘s position that an overly strict construction of the term ―franchise as used in
Section 47 of P.D. 198 would lead to an absurd result impresses. If franchises, in this
context, were strictly understood to mean an authorization issuing directly from the
legislature, it would follow that, while Congress cannot issue franchises for operating
waterworks systems without the water district‘s consent, the NWRB may keep on issuing
CPCs authorizing the very same act even without such consent.
In effect, not only would the NWRB be subject to less constraints than Congress in issuing
franchises. The exclusive character of the franchise provided for by Section 47 would be
illusory. While the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for
the reasons discussed above, the same provision must be deemed void ab initio for
being irreconcilable with Article XIV Section 5 of the 1973 Constitution which was ratified
on January 17, 1973 – the constitution in force when P.D. 198 was issued on May 25,
1973.
That the legislative authority – in this instance, then President Marcos – intended to
delegate its power to issue franchises in the case of water districts is clear from the fact
that, pursuant to the procedure outlined in P.D. 198, it no longer plays a direct role in
authorizing the formation and maintenance of water districts, it having vested the same
to local legislative bodies and the Local Water Utilities Administration (LWUA).
 8. Manila International Airport Authority vs CA dominion and are inalienable. As long as the land and buildings are for public use the
GR No. 155650, July 20, 2006, 495 SCRA 591 ownership is with the Republic of the Philippines.

Facts:
 Manila International Airport Authority (MIAA) is the operator of the Ninoy
International Airport located at Paranaque City.
 The Officers of Paranaque City sent notices to MIAA due to real estate tax
delinquency.
 MIAA then settled some of the amount. When MIAA failed to settle the entire
amount, the officers of Paranaque city threatened to levy and subject to auction
the land and buildings of MIAA, which they did.
 MIAA sought for a Temporary Restraining Order from the CA but failed to do so
within the 60 days reglementary period, so the petition was dismissed.
 MIAA then sought for the TRO with the Supreme Court a day before the public
auction, MIAA was granted with the TRO but unfortunately the TRO was received
by the Paranaque City officers 3 hours after the public auction.
 MIAA claims that although the charter provides that the title of the land and
building are with MIAA still the ownership is with the Republic of the Philippines.
 MIAA also contends that it is an instrumentality of the government and as such
exempted from real estate tax.
 That the land and buildings of MIAA are of public dominion therefore cannot be
subjected to levy and auction sale. On the other hand, the officers of Paranaque
City claim that MIAA is a government owned and controlled corporation
therefore not exempted to real estate tax.

Issues:
1) Whether or not MIAA is an instrumentality of the government and not a
government owned and controlled corporation and as such exempted from tax.
2) Whether or not the land and buildings of MIAA are part of the public dominion
and thus cannot be the subject of levy and auction sale.

Ruling:
Under the Local government code, government owned and controlled corporations
are not exempted from real estate tax. MIAA is not a government owned and
controlled corporation, for to become one MIAA should either be a stock or non stock
corporation. MIAA is not a stock corporation for its capital is not divided into shares. It is
not a non stock corporation since it has no members. MIAA is an instrumentality of the
government vested with corporate powers and government functions.

Under the civil code, property may either be under public dominion or private
ownership. Those under public dominion are owned by the State and are utilized for
public use, public service and for the development of national wealth. The ports
included in the public dominion pertain either to seaports or airports. When properties
under public dominion cease to be for public use and service, they form part of the
patrimonial property of the State.

The court held that the land and buildings of MIAA are part of the public dominion.
Since the airport is devoted for public use, for the domestic and international travel and
transportation. Even if MIAA charge fees, this is for support of its operation and for
regulation and does not change the character of the land and buildings of MIAA as
part of the public dominion. As part of the public dominion the land and buildings of
MIAA are outside the commerce of man. To subject them to levy and public auction is
contrary to public policy. Unless the President issues a proclamation withdrawing the
airport land and buildings from public use, these properties remain to be of public
 9. LIBAN v. GORDON

FACTS:

 Respondent filed a motion for partial reconsideration on a Supreme Court decision

which ruled that being chairman of the Philippine National Red Cross (PNRC) did
not disqualify him from being a Senator, and that the charter creating PNRC is
unconstitutional as the PNRC is a private corporation and the Congress is
precluded by the Constitution to create such.The Court then ordered the PNRC to
incorporate itself with the SEC as a private corporation.
 Respondent takes exception to the second part of the ruling, which addressed the
constitutionality of the statute creating the PNRC as a private corporation.
 Respondent avers that the issue of constitutionality was only touched upon in the
issue of locus standi.
 It is a rule that the constitutionality will not be touched upon if it is not the lis mota of
the case.

ISSUE: Was it proper for the Court to have ruled on the constitutionality of the PNRC
statute?

HELD: In the case at bar, the constitutionality of the PNRC statute was raised in the issue
of standing. As such, the Court should not have declared certain provisions of such as
unconstitutional. On the substantive issue, the PNRC is sui generis. It is unlike the private
corporations that the Constitution wants to prevent Congress from creating. First, the
PNRC is not organized for profit. It is an organization dedicated to assist victims of war
and administer relief to those who have been devastated by calamities, among others.
It is entirely devoted to public service. It is not covered by the prohibition since the
Constitution aims to eliminate abuse by the Congress, which tend to favor personal
gain. Secondly, the PNRC was created in order to participate in the mitigation of the
effects of war, as embodied in the Geneva Convention. The creation of the PNRC is
compliance with international treaty obligations. Lastly, the PNRC is a National Society,
an auxiliary of the government. It is not like government instrumentalities and GOCC.

The PNRC is regulated directly by international humanitarian law, as opposed to local

law regulating the other mentioned entities. As such, it was improper for the Court to
have declared certain portions of the PNRC statute as unconstitutional. However, it is
the stand of Justice Carpio that there is no mandate for the Government to create a
National Society to this effect. He also raises the fact that the PNRC is not sui generis in
being a private corporation organized for public needs. Justice Abad is of the opinion
that the PNRC is neither private or governmental, hence it was within the power of
Congress to create.

It has been consistently held in Jurisprudence that the Court should exercise judicial
restraint when it comes to issues of constitutionality where it is not the lis mota of the
case.
 10. BSP v. COA
Art. 45.Juridical persons mentioned in Nos. 1 and 2 of the preceding article are
FACTS: governed by the laws creating or recognizing them.
 This case arose when the COA issued Resolution No. 99-011on August 19, 1999 ("the
COA Resolution"), with the subject "Defining the Commissions policy with respect to Private corporations are regulated by laws of general application on the subject.
the audit of the Boy Scouts of the Philippines."
 In its whereas clauses, the COA Resolution stated that the BSP was created as a Partnerships and associations for private interest or purpose are governed by the
public corporation under Commonwealth Act No. 111, as amended by Presidential provisions of this Code concerning partnerships.
Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines v.
National Labor Relations Commission, the Supreme Court ruled that the BSP, as The purpose of the BSP as stated in its amended charter shows that it was created in
constituted under its charter, was a "government-controlled corporation within the order to implement a State policy declared in Article II, Section 13 of the Constitution,
meaning of Article IX(B)(2)(1) of the Constitution"; and that "the BSP is appropriately which reads:
regarded as a government instrumentality under the 1987 Administrative Code."
 The COA Resolution also cited its constitutional mandate under Section 2(1), Article Section 13. The State recognizes the vital role of the youth in nation-building and shall
IX (D).Finally, the COA Resolution reads: promote and protect their physical, moral, spiritual, intellectual, and social well-being. It
NOW THEREFORE, in consideration of the foregoing premises, the COMMISSION shall inculcate in the youth patriotism and nationalism, and encourage their
PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE,to conduct an annual involvement in public and civic affairs.
financial audit of the Boy Scouts of the Philippines in accordance with
generally accepted auditing standards, and express an opinion on whether Evidently, the BSP, which was created by a special law to serve a public purpose in
the financial statements which include the Balance Sheet, the Income pursuit of a constitutional mandate, comes within the class of "public corporations"
Statement and the Statement of Cash Flows present fairly its financial position defined by paragraph 2, Article 44 of the Civil Code and governed by the law which
and results of operations. creates it, pursuant to Article 45 of the same Code. DENIED.
xxxx
BE IT RESOLVED FURTHERMORE, that for purposes of audit supervision,the Boy
Scouts of the Philippines shall be classified among the government
corporations belonging to the Educational, Social, Scientific, Civic and
Research Sectorunder the Corporate Audit Office I, to be audited, similar to
the subsidiary corporations, by employing the team audit approach

ISSUE: Does COA have jurisdiction over BSP?

HELD:
After looking at the legislative history of its amended charter and carefully studying the
applicable laws and the arguments of both parties, [the Supreme Court found] that the
BSP is a public corporation and its funds are subject to the COA's audit jurisdiction.

The BSP Charter (Commonwealth Act No. 111, approved on October 31, 1936), entitled
"An Act to Create a Public Corporation to be Known as the Boy Scouts of the
Philippines, and to Define its Powers and Purposes" created the BSP as a "public
corporation"

There are three classes of juridical persons under Article 44 of the Civil Code and the
BSP, as presently constituted under Republic Act No. 7278,falls under the second
classification.Article 44 reads:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2)Other corporations,institutions and entities for public interest or purpose created by
law; their personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations forprivate interest or purposeto which
the law grants a juridical personality, separate and distinct from that of each
shareholder, partner or member.
The BSP, which is a corporation created for a public interest or purpose, is subject to the
law creating it under Article 45 of the Civil Code, which provides: