EN BANC

[G.R. No. 104768. July 21, 2003]

Republic of the Philippines, petitioner, vs. Sandiganbayan, Major General Josephus Q. Ramas and Elizabeth Dimaano, respondents. DECISION
CARPIO, J.:

The Case Before this Court is a petition for review on certiorari seeking to set aside the Resolutions of the Sandiganbayan (First Division)[1] dated 18 November 1991 and 25 March 1992 in Civil Case No. 0037. The first Resolution dismissed petitioners Amended Complaint and ordered the return of the confiscated items to respondent Elizabeth Dimaano, while the second Resolution denied petitioners Motion for Reconsideration. Petitioner prays for the grant of the reliefs sought in its Amended Complaint, or in the alternative, for the remand of this case to the Sandiganbayan (First Division) for further proceedings allowing petitioner to complete the presentation of its evidence.

Antecedent Facts Immediately upon her assumption to office following the successful EDSA Revolution, then President Corazon C. Aquino issued Executive Order No. 1 (EO No. 1) creating the Presidential Commission on Good Government (PCGG). EO No. 1 primarily tasked the PCGG to recover all ill-gotten wealth of former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates. EO No. 1 vested the PCGG with the power (a) to conduct investigation as may be necessary in order to accomplish and carry out the purposes of this order and the power (h) to promulgate such rules and regulations as may be necessary to carry out the purpose of this order. Accordingly, the PCGG, through its then Chairman Jovito R. Salonga, created an AFP Anti-Graft Board (AFP Board) tasked to investigate reports of

unexplained wealth and corrupt practices by AFP personnel, whether in the active service or retired.[2] Based on its mandate, the AFP Board investigated various reports of alleged unexplained wealth of respondent Major General Josephus Q. Ramas (Ramas). On 27 July 1987, the AFP Board issued a Resolution on its findings and recommendation on the reported unexplained wealth of Ramas. The relevant part of the Resolution reads:

III. FINDINGS and EVALUATION: Evidence in the record showed that respondent is the owner of a house and lot located at 15-Yakan St., La Vista, Quezon City. He is also the owner of a house and lot located in Cebu City. The lot has an area of 3,327 square meters. The value of the property located in Quezon City may be estimated modestly at P700,000.00. The equipment/items and communication facilities which were found in the premises of Elizabeth Dimaano and were confiscated by elements of the PC Command of Batangas were all covered by invoice receipt in the name of CAPT. EFREN SALIDO, RSO Command Coy, MSC, PA. These items could not have been in the possession of Elizabeth Dimaano if not given for her use by respondent Commanding General of the Philippine Army. Aside from the military equipment/items and communications equipment, the raiding team was also able to confiscate money in the amount of P2,870,000.00 and $50,000 US Dollars in the house of Elizabeth Dimaano on 3 March 1986. Affidavits of members of the Military Security Unit, Military Security Command, Philippine Army, stationed at Camp Eldridge, Los Baos, Laguna, disclosed that Elizabeth Dimaano is the mistress of respondent. That respondent usually goes and stays and sleeps in the alleged house of Elizabeth Dimaano in Barangay Tengga, Itaas, Batangas City and when he arrives, Elizabeth Dimaano embraces and kisses respondent. That on February 25, 1986, a person who rode in a car went to the residence of Elizabeth Dimaano with four (4) attache cases filled with money and owned by MGen Ramas. Sworn statement in the record disclosed also that Elizabeth Dimaano had no visible means of income and is supported by respondent for she was formerly a mere secretary.

Taking in toto the evidence, Elizabeth Dimaano could not have used the military equipment/items seized in her house on March 3, 1986 without the consent of respondent, he being the Commanding General of the Philippine Army. It is also impossible for Elizabeth Dimaano to claim that she owns the P2,870,000.00 and $50,000 US Dollars for she had no visible source of income. This money was never declared in the Statement of Assets and Liabilities of respondent. There was an intention to cover the existence of these money because these are all ill-gotten and unexplained wealth. Were it not for the affidavits of the members of the Military Security Unit assigned at Camp Eldridge, Los Baos, Laguna, the existence and ownership of these money would have never been known. The Statement of Assets and Liabilities of respondent were also submitted for scrutiny and analysis by the Boards consultant. Although the amount of P2,870,000.00 and $50,000 US Dollars were not included, still it was disclosed that respondent has an unexplained wealth of P104,134. 60. IV. CONCLUSION: In view of the foregoing, the Board finds that a prima facie case exists against respondent for ill-gotten and unexplained wealth in the amount of P2,974,134.00 and $50,000 US Dollars. V. RECOMMENDATION: Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be prosecuted and tried for violation of RA 3019, as amended, otherwise known as Anti-Graft and Corrupt Practices Act and RA 1379, as amended, otherwise known as The Act for the Forfeiture of Unlawfully Acquired Property.
[3]

Thus, on 1 August 1987, the PCGG filed a petition for forfeiture under Republic Act No. 1379 (RA No. 1379) [4] against Ramas. Before Ramas could answer the petition, then Solicitor General Francisco I. Chavez filed an Amended Complaint naming the Republic of the Philippines (petitioner), represented by the PCGG, as plaintiff and Ramas as defendant. The Amended Complaint also impleaded Elizabeth Dimaano (Dimaano) as co -defendant. The Amended Complaint alleged that Ramas was the Commanding General of the Philippine Army until 1986. On the other hand, Dimaano was a confidential agent of the Military Security Unit, Philippine Army, assigned as a clerk-typist at the office of Ramas from 1 January 1978 to February 1979. The Amended Complaint further alleged that Ramas acquired funds, assets and properties manifestly out of proportion to his salary as an army officer and his other income from legitimately acquired property by taking

undue advantage of his public office and/or using his power, authority and influence as such officer of the Armed Forces of the Philippines and as a subordinate and close associate of the deposed President Ferdinand Marcos.[5] The Amended Complaint also alleged that the AFP Board, after a previous inquiry, found reasonable ground to believe that respondents have violated RA No. 1379. [6] The Amended Complaint prayed for, among others, the forfeiture of respondents properties, funds and equipment in favor of the State. Ramas filed an Answer with Special and/or Affirmative Defenses and Compulsory Counterclaim to the Amended Complaint. In his Answer, Ramas contended that his property consisted only of a residential house at La Vista Subdivision, Quezon City, valued at P700,000, which was not out of proportion to his salary and other legitimate income. He denied ownership of any mansion in Cebu City and the cash, communications equipment and other items confiscated from the house of Dimaano. Dimaano filed her own Answer to the Amended Complaint. Admitting her employment as a clerk-typist in the office of Ramas from January-November 1978 only, Dimaano claimed ownership of the monies, communications equipment, jewelry and land titles taken from her house by the Philippine Constabulary raiding team. After termination of the pre-trial,[7] the court set the case for trial on the merits on 911 November 1988. On 9 November 1988, petitioner asked for a deferment of the hearing due to its lack of preparation for trial and the absence of witnesses and vital documents to support its case. The court reset the hearing to 17 and 18 April 1989. On 13 April 1989, petitioner filed a motion for leave to amend the complaint in order to charge the delinquent properties with being subject to forfeiture as having been unlawfully acquired by defendant Dimaano alone x x x.[8] Nevertheless, in an order dated 17 April 1989, the Sandiganbayan proceeded with petitioners presentation of evidence on the ground that the motion for leave to amend complaint did not state when petitioner would file the amended complaint. The Sandiganbayan further stated that the subject matter of the amended complaint was on its face vague and not related to the existing complaint. The Sandiganbayan also held that due to the time that the case had been pending in court, petitioner should proceed to present its evidence. After presenting only three witnesses, petitioner asked for a postponement of the trial. On 28 September 1989, during the continuation of the trial, petitioner manifested its inability to proceed to trial because of the absence of other witnesses or lack of further evidence to present. Instead, petitioner reiterated its motion to amend the complaint to conform to the evidence already presented or to change the averments to show that Dimaano alone unlawfully acquired the monies or properties subject of the forfeiture. The Sandiganbayan noted that petitioner had already delayed the case for over a year mainly because of its many postponements. Moreover, petitioner would want the

case to revert to its preliminary stage when in fact the case had long been ready for trial. The Sandiganbayan ordered petitioner to prepare for presentation of its additional evidence, if any. During the trial on 23 March 1990, petitioner again admitted its inability to present further evidence. Giving petitioner one more chance to present further evidence or to amend the complaint to conform to its evidence, the Sandiganbayan reset the trial to 18 May 1990. The Sandiganbayan, however, hinted that the re-setting was without prejudice to any action that private respondents might take under the circumstances. However, on 18 May 1990, petitioner again expressed its inability to proceed to trial because it had no further evidence to present. Again, in the interest of justice, the Sandiganbayan granted petitioner 60 days within which to file an appropriate pleading. The Sandiganbayan, however, warned petitioner that failure to act would constrain the court to take drastic action. Private respondents then filed their motions to dismiss based on Republic v. Migrino.[9] The Court held in Migrino that the PCGG does not have jurisdiction to investigate and prosecute military officers by reason of mere position held without a showing that they are subordinates of former President Marcos. On 18 November 1991, the Sandiganbayan rendered a resolution, the dispositive portion of which states:

WHEREFORE, judgment is hereby rendered dismissing the Amended Complaint, without pronouncement as to costs. The counterclaims are likewise dismissed for lack of merit, but the confiscated sum of money, communications equipment, jewelry and land titles are ordered returned to Elizabeth Dimaano. The records of this case are hereby remanded and referred to the Hon. Ombudsman, who has primary jurisdiction over the forfeiture cases under R.A. No. 1379, for such appropriate action as the evidence warrants. This case is also referred to the Commissioner of the Bureau of Internal Revenue for a determination of any tax liability of respondent Elizabeth Dimaano in connection herewith. SO ORDERED.
On 4 December 1991, petitioner filed its Motion for Reconsideration. In answer to the Motion for Reconsideration, private respondents filed a Joint Comment/Opposition to which petitioner filed its Reply on 10 January 1992. On 25 March 1992, the Sandiganbayan rendered a Resolution denying the Motion for Reconsideration.

Ruling of the Sandiganbayan

The Sandiganbayan dismissed the Amended Complaint on the following grounds:

(1.)

The actions taken by the PCGG are not in accordance with the rulings of the Supreme Court in Cruz, Jr. v. Sandiganbayan and Republic v. Migrino which involve the same issues.
[10] [11]

(2.) (3.) (4.)

No previous inquiry similar to preliminary investigations in criminal cases was conducted against Ramas and Dimaano. The evidence adduced against Ramas does not constitute a prima facie case against him. There was an illegal search and seizure of the items confiscated.
The Issues

Petitioner raises the following issues:

A. RESPONDENT COURT SERIOUSLY ERRED IN CONCLUDING THAT PETITIONERS EVIDENCE CANNOT MAKE A CASE FOR FORFEITURE AND THAT THERE WAS NO SHOWING OF CONSPIRACY, COLLUSION OR RELATIONSHIP BY CONSANGUINITY OR AFFINITY BY AND BETWEEN RESPONDENT RAMAS AND RESPONDENT DIMAANO NOTWITHSTANDING THE FACT THAT SUCH CONCLUSIONS WERE CLEARLY UNFOUNDED AND PREMATURE, HAVING BEEN RENDERED PRIOR TO THE COMPLETION OF THE PRESENTATION OF THE EVIDENCE OF THE PETITIONER. RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE ACTIONS TAKEN BY THE PETITIONER, INCLUDING THE FILING OF THE ORIGINAL COMPLAINT AND THE AMENDED COMPLAINT, SHOULD BE STRUCK OUT IN LINE WITH THE RULINGS OF THE SUPREME COURT IN CRUZ, JR. v. SANDIGANBAYAN, 194 SCRA 474 AND REPUBLIC v. MIGRINO, 189 SCRA 289, NOTWITHSTANDING THE FACT THAT:

B.

1.

The cases of Cruz, Jr. v. Sandiganbayan, supra, and Republic v. Migrino, supra, are clearly not applicable to this case; Any procedural defect in the institution of the complaint in Civil Case No. 0037 was cured and/or waived by respondents with the filing of their respective answers with counterclaim; and

2.

3.

The separate motions to dismiss were evidently improper considering that they were filed after commencement of the presentation of the evidence of the petitioner and even before the latter was allowed to formally offer its evidence and rest its case;

C.

RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE ARTICLES AND THINGS SUCH AS SUMS OF MONEY, COMMUNICATIONS EQUIPMENT, JEWELRY AND LAND TITLES CONFISCATED FROM THE HOUSE OF RESPONDENT DIMAANO WERE ILLEGALLY SEIZED AND THEREFORE EXCLUDED AS EVIDENCE.[12]

The Courts Ruling First Issue: PCGGs Jurisdiction to Investigate Private Respondents This case involves a revisiting of an old issue already decided by this Court in Cruz, Jr. v. Sandiganbayan[13] and Republic v. Migrino.[14] The primary issue for resolution is whether the PCGG has the jurisdiction to investigate and cause the filing of a forfeiture petition against Ramas and Dimaano for unexplained wealth under RA No. 1379. We hold that PCGG has no such jurisdiction. The PCGG created the AFP Board to investigate the unexplained wealth and corrupt practices of AFP personnel, whether in the active service or retired.[15] The PCGG tasked the AFP Board to make the necessary recommendations to appropriate government agencies on the action to be taken based on its findings. [16] The PCGG gave this task to the AFP Board pursuant to the PCGGs power under Section 3 of EO No. 1 to conduct investigation as may be necessary in order to accomplish and to carry out the purposes of this order. EO No. 1 gave the PCGG specific responsibilities, to wit:

SEC. 2. The Commission shall be charged with the task of assisting the President in regard to the following matters: (a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover and sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their

public office and/ or using their powers, authority, influence, connections or relationship. (b) The investigation of such cases of graft and corruption as the President may assign to the Commission from time to time.
x x x. The PCGG, through the AFP Board, can only investigate the unexplained wealth and corrupt practices of AFP personnel who fall under either of the two categories mentioned in Section 2 of EO No. 1. These are: (1) AFP personnel who have accumulated ill-gotten wealth during the administration of former President Marcos by being the latters immediate family, relative, subordinate or close associate, taking undue advantage of their public office or using their powers, influence x x x; [17] or (2) AFP personnel involved in other cases of graft and corruption provided the President assigns their cases to the PCGG.[18] Petitioner, however, does not claim that the President assigned Ramas case to the PCGG. Therefore, Ramas case should fall under the first category of AFP personnel before the PCGG could exercise its jurisdiction over him. Petitioner argues that Ramas was undoubtedly a subordinate of former President Marcos because of his position as the Commanding General of the Philippine Army. Petitioner claims that Ramas position enabled him to receive orders directly from his commander-in-chief, undeniably making him a subordinate of former President Marcos. We hold that Ramas was not a subordinate of former President Marcos in the sense contemplated under EO No. 1 and its amendments. Mere position held by a military officer does not automatically make him a subordinate as this term is used in EO Nos. 1, 2, 14 and 14-A absent a showing that he enjoyed close association with former President Marcos. Migrino discussed this issue in this wise:

A close reading of EO No. 1 and related executive orders will readily show what is contemplated within the term subordinate. The Whereas Clauses of EO No. 1 express the urgent need to recover the ill-gotten wealth amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close associates both here and abroad. EO No. 2 freezes all assets and properties in the Philippines in which former President Marcos and/or his wife, Mrs. Imelda Marcos, their close relatives, subordinates, business associates, dummies, agents, or nominees have any interest or participation. Applying the rule in statutory construction known as ejusdem generis that is-

[W]here general words follow an enumeration of persons or things by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned [Smith, Bell & Co, Ltd. vs. Register of Deeds of Davao, 96 Phil. 53, 58, citing Black on Interpretation of Laws, 2ndEd., 203]. [T]he term subordinate as used in EO Nos. 1 & 2 refers to one who enjoys a close association with former President Marcos and/or his wife, similar to the immediate family member, relative, and close associate in EO No. 1 and the close relative, business associate, dummy, agent, or nominee in EO No. 2. xxx It does not suffice, as in this case, that the respondent is or was a government official or employee during the administration of former President Marcos. There must be a prima facie showing that the respondent unlawfully accumulated wealth by virtue of his close association or relation with former Pres. Marcos and/or his wife. (Emphasis supplied)
Ramas position alone as Commanding General of the Philippine Army with the rank of Major General[19] does not suffice to make him a subordinate of former President Marcos for purposes of EO No. 1 and its amendments. The PCGG has to provide a prima facie showing that Ramas was a close associate of former President Marcos, in the same manner that business associates, dummies, agents or nominees of former President Marcos were close to him. Such close association is manifested either by Ramas complicity with former President Marcos in the accumulation of ill-gotten wealth by the deposed President or by former President Marcos acquiescence in Ramas own accumulation of ill-gotten wealth if any. This, the PCGG failed to do. Petitioners attempt to differentiate the instant case from Migrino does not convince us. Petitioner argues that unlike in Migrino, the AFP Board Resolution in the instant case states that the AFP Board conducted the investigation pursuant to EO Nos. 1, 2, 14 and 14-A in relation to RA No. 1379. Petitioner asserts that there is a presumption that the PCGG was acting within its jurisdiction of investigating crony-related cases of graft and corruption and that Ramas was truly a subordinate of the former President. However, the same AFP Board Resolution belies this contention. Although the Resolution begins with such statement, it ends with the following recommendation:

V. RECOMMENDATION: Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be prosecuted and tried for violation of RA 3019, as amended, otherwise known as Anti-Graft and

Corrupt Practices Act and RA 1379, as amended, otherwise known as The Act for the Forfeiture of Unlawfully Acquired Property.
[20]

Thus, although the PCGG sought to investigate and prosecute private respondents under EO Nos. 1, 2, 14 and 14-A, the result yielded a finding of violation of Republic Acts Nos. 3019 and 1379 without any relation to EO Nos. 1, 2, 14 and 14-A. This absence of relation to EO No. 1 and its amendments proves fatal to petitioners case. EO No. 1 created the PCGG for a specific and limited purpose, and necessarily its powers must be construed to address such specific and limited purpose. Moreover, the resolution of the AFP Board and even the Amended Complaint do not show that the properties Ramas allegedly owned were accumulated by him in his capacity as a subordinate of his commander-in-chief. Petitioner merely enumerated the properties Ramas allegedly owned and suggested that these properties were disproportionate to his salary and other legitimate income without showing that Ramas amassed them because of his close association with former President Marcos. Petitioner, in fact, admits that the AFP Board resolution does not contain a finding that Ramas accumulated his wealth because of his close association with former President Marcos, thus:

10. While it is true that the resolution of the Anti-Graft Board of the New Armed Forces of the Philippines did not categorically find a prima facie evidence showing that respondent Ramas unlawfully accumulated wealth by virtue of his close association or relation with former President Marcos and/or his wife, it is submitted that such omission was not fatal. The resolution of the Anti-Graft Board should be read in the context of the law creating the same and the objective of the investigation which was, as stated in the above, pursuant to Republic Act Nos. 3019 and 1379 in relation to Executive Order Nos. 1, 2, 14 and 14-a; (Emphasis supplied)
[21]

Such omission is fatal. Petitioner forgets that it is precisely a prima facie showing that the ill-gotten wealth was accumulated by a subordinate of former President Marcos that vests jurisdiction on PCGG. EO No. 1[22] clearly premises the creation of the PCGG on the urgent need to recover all ill-gotten wealth amassed by former President Marcos, his immediate family, relatives, subordinates and close associates. Therefore, to say that such omission was not fatal is clearly contrary to the intent behind the creation of the PCGG. In Cruz, Jr. v. Sandiganbayan,[23] the Court outlined the cases that fall under the jurisdiction of the PCGG pursuant to EO Nos. 1, 2,[24] 14,[25] 14-A:[26]

A careful reading of Sections 2(a) and 3 of Executive Order No. 1 in relation with Sections 1, 2 and 3 of Executive Order No. 14, shows what the authority of the respondent PCGG to investigate and prosecute covers:

(a)

the investigation and prosecution of the civil action for the recovery of ill-gotten wealth under Republic Act No. 1379, accumulated by former President Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the take-over or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through his nominees, by taking undue advantage of their public office and/or using their powers, authority and influence, connections or relationships; and the investigation and prosecution of such offenses committed in the acquisition of said ill-gotten wealth as contemplated under Section 2(a) of Executive Order No. 1.

(b)

However, other violations of the Anti-Graft and Corrupt Practices Act not otherwise falling under the foregoing categories, require a previous authority of the President for the respondent PCGG to investigate and prosecute in accordance with Section 2 (b) of Executive Order No. 1. Otherwise, jurisdiction over such cases is vested in the Ombudsman and other duly authorized investigating agencies such as the provincial and city prosecutors, their assistants, the Chief State Prosecutor and his assistants and the state prosecutors. (Emphasis supplied)
The proper government agencies, and not the PCGG, should investigate and prosecute forfeiture petitions not falling under EO No. 1 and its amendments. The preliminary investigation of unexplained wealth amassed on or before 25 February 1986 falls under the jurisdiction of the Ombudsman, while the authority to file the corresponding forfeiture petition rests with the Solicitor General. [27] The Ombudsman Act or Republic Act No. 6770 (RA No. 6770) vests in the Ombudsman the power to conduct preliminary investigation and to file forfeiture proceedings involving unexplained wealth amassed after 25 February 1986.[28] After the pronouncements of the Court in Cruz, the PCGG still pursued this case despite the absence of a prima facie finding that Ramas was a subordinate of former President Marcos. The petition for forfeiture filed with the Sandiganbayan should be dismissed for lack of authority by the PCGG to investigate respondents since there is no prima facieshowing that EO No. 1 and its amendments apply to respondents. The AFP Board Resolution and even the Amended Complaint state that there are violations of RA Nos. 3019 and 1379. Thus, the PCGG should have recommended Ramas case to the Ombudsman who has jurisdiction to conduct the preliminary investigation of ordinary unexplained wealth and graft cases. As stated in Migrino:

[But] in view of the patent lack of authority of the PCGG to investigate and cause the prosecution of private respondent for violation of Rep. Acts Nos. 3019 and 1379, the

PCGG must also be enjoined from proceeding with the case, without prejudice to any action that may be taken by the proper prosecutory agency. The rule of law mandates that an agency of government be allowed to exercise only the powers granted to it.
Petitioners argument that private respondents have waived any defect in the filing of the forfeiture petition by submitting their respective Answers with counterclaim deserves no merit as well. Petitioner has no jurisdiction over private respondents. Thus, there is no jurisdiction to waive in the first place. The PCGG cannot exercise investigative or prosecutorial powers never granted to it. PCGGs powers are specific and limited. Unless given additional assignment by the President, PCGGs sole task is only to recover the ill gotten wealth of the Marcoses, their relatives and cronies. [29] Without these elements, the PCGG cannot claim jurisdiction over a case. Private respondents questioned the authority and jurisdiction of the PCGG to investigate and prosecute their cases by filing their Motion to Dismiss as soon as they learned of the pronouncement of the Court in Migrino. This case was decided on 30 August 1990, which explains why private respondents only filed their Motion to Dismiss on 8 October 1990. Nevertheless, we have held that the parties may raise lack of jurisdiction at any stage of the proceeding.[30] Thus, we hold that there was no waiver of jurisdiction in this case. Jurisdiction is vested by law and not by the parties to an action.[31] Consequently, the petition should be dismissed for lack of jurisdiction by the PCGG to conduct the preliminary investigation. The Ombudsman may still conduct the proper preliminary investigation for violation of RA No. 1379, and if warranted, the Solicitor General may file the forfeiture petition with the Sandiganbayan. [32] The right of the State to forfeit unexplained wealth under RA No. 1379 is not subject to prescription, laches or estoppel.[33]

Second Issue: Propriety of Dismissal of Case Before Completion of Presentation of Evidence Petitioner also contends that the Sandiganbayan erred in dismissing the case before completion of the presentation of petitioners evidence. We disagree. Based on the findings of the Sandiganbayan and the records of this case, we find that petitioner has only itself to blame for non-completion of the presentation of its evidence. First, this case has been pending for four years before the Sandiganbayan dismissed it. Petitioner filed its Amended Complaint on 11 August 1987, and only began to present its evidence on 17 April 1989. Petitioner had almost two years to prepare its evidence. However, despite this sufficient time, petitioner still delayed the presentation of the rest of its evidence by filing numerous motions for postponements and extensions. Even before the date set for the

presentation of its evidence, petitioner filed, on 13 April 1989, a Motion for Leave to Amend the Complaint.[34] The motion sought to charge the delinquent properties (which comprise most of petitioners evidence) with being subject to forfeiture as having been unlawfully acquired by defendant Dimaano alone x x x. The Sandiganbayan, however, refused to defer the presentation of petitioners evidence since petitioner did not state when it would file the amended complaint. On 18 April 1989, the Sandiganbayan set the continuation of the presentation of evidence on 28-29 September and 9-11 October 1989, giving petitioner ample time to prepare its evidence. Still, on 28 September 1989, petitioner manifested its inability to proceed with the presentation of its evidence. The Sandiganbayan issued an Order expressing its view on the matter, to wit:

The Court has gone through extended inquiry and a narration of the above events because this case has been ready for trial for over a year and much of the delay hereon has been due to the inability of the government to produce on scheduled dates for pretrial and for trial documents and witnesses, allegedly upon the failure of the military to supply them for the preparation of the presentation of evidence thereon. Of equal interest is the fact that this Court has been held to task in public about its alleged failure to move cases such as this one beyond the preliminary stage, when, in view of the developments such as those of today, this Court is now faced with a situation where a case already in progress will revert back to the preliminary stage, despite a five-month pause where appropriate action could have been undertaken by the plaintiff Republic.
[35]

On 9 October 1989, the PCGG manifested in court that it was conducting a preliminary investigation on the unexplained wealth of private respondents as mandated by RA No. 1379.[36] The PCGG prayed for an additional four months to conduct the preliminary investigation. The Sandiganbayan granted this request and scheduled the presentation of evidence on 26-29 March 1990. However, on the scheduled date, petitioner failed to inform the court of the result of the preliminary investigation the PCGG supposedly conducted. Again, the Sandiganbayan gave petitioner until 18 May 1990 to continue with the presentation of its evidence and to inform the court of what lies ahead insofar as the status of the case is concerned x x x. [37] Still on the date set, petitioner failed to present its evidence. Finally, on 11 July 1990, petitioner filed its ReAmended Complaint.[38] The Sandiganbayan correctly observed that a case already pending for years would revert to its preliminary stage if the court were to accept the Re-Amended Complaint. Based on these circumstances, obviously petitioner has only itself to blame for failure to complete the presentation of its evidence. The Sandiganbayan gave petitioner more than sufficient time to finish the presentation of its evidence. The Sandiganbayan overlooked petitioners delays and yet petitioner ended the long -string of delays with the filing of a Re-Amended Complaint, which would only prolong even more the disposition of the case.

Moreover, the pronouncements of the Court in Migrino and Cruz prompted the Sandiganbayan to dismiss the case since the PCGG has no jurisdiction to investigate and prosecute the case against private respondents. This alone would have been sufficient legal basis for the Sandiganbayan to dismiss the forfeiture case against private respondents. Thus, we hold that the Sandiganbayan did not err in dismissing the case before completion of the presentation of petitioners evidence.

Third Issue: Legality of the Search and Seizure Petitioner claims that the Sandiganbayan erred in declaring the properties confiscated from Dimaanos house as illegally seized and therefore inadmissible in evidence. This issue bears a significant effect on petitioners case since these properties comprise most of petitioners evidence against private respondents. Petitioner will not have much evidence to support its case against private respondents if these properties are inadmissible in evidence. On 3 March 1986, the Constabulary raiding team served at Dimaanos residence a search warrant captioned Illegal Possession of Firearms and Ammunition. Dimaano was not present during the raid but Dimaanos cousins witnessed the raid. The raiding team seized the items detailed in the seizure receipt together with other items not included in the search warrant. The raiding team seized these items: one baby armalite rifle with two magazines; 40 rounds of 5.56 ammunition; one pistol, caliber .45; communications equipment, cash consisting of P2,870,000 and US$50,000, jewelry, and land titles. Petitioner wants the Court to take judicial notice that the raiding team conducted the search and seizure on March 3, 1986 or five days a fter the successful EDSA revolution.[39] Petitioner argues that a revolutionary government was operative at that time by virtue of Proclamation No. 1 announcing that President Aquino and Vice President Laurel were taking power in the name and by the will of the Filipino people.[40] Petitioner asserts that the revolutionary government effectively withheld the operation of the 1973 Constitution which guaranteed private respondents exclusionary right. Moreover, petitioner argues that the exclusionary right arising from an illegal search applies only beginning 2 February 1987, the date of ratification of the 1987 Constitution. Petitioner contends that all rights under the Bill of Rights had already reverted to its embryonic stage at the time of the search. Therefore, the government may confiscate the monies and items taken from Dimaano and use the same in evidence against her since at the time of their seizure, private respondents did not enjoy any constitutional right. Petitioner is partly right in its arguments. The EDSA Revolution took place on 23-25 February 1986. As succinctly stated in President Aquinos Proclamation No. 3 dated 25 March 1986, the EDSA Revolution

wasdone in defiance of the provisions of the 1973 Constitution.[41] The resulting government was indisputably a revolutionary government bound by no constitution or legal limitations except treaty obligations that the revolutionary government, as the de jure government in the Philippines, assumed under international law. The correct issues are: (1) whether the revolutionary government was bound by the Bill of Rights of the 1973 Constitution during the interregnum, that is, after the actual and effective take-over of power by the revolutionary government following the cessation of resistance by loyalist forces up to 24 March 1986 (immediately before the adoption of the Provisional Constitution); and (2) whether the protection accorded to individuals under the International Covenant on Civil and Political Rights (Covenant) and the Universal Declaration of Human Rights (Declaration) remained in effect during the interregnum. We hold that the Bill of Rights under the 1973 Constitution was not operative during the interregnum. However, we rule that the protection accorded to individuals under the Covenant and the Declaration remained in effect during the interregnum. During the interregnum, the directives and orders of the revolutionary government were the supreme law because no constitution limited the extent and scope of such directives and orders. With the abrogation of the 1973 Constitution by the successful revolution, there was no municipal law higher than the directives and orders of the revolutionary government. Thus, during the interregnum, a person could not invoke any exclusionary right under a Bill of Rights because there was neither a constitution nor a Bill of Rights during the interregnum. As the Court explained in Letter of Associate Justice Reynato S. Puno:[42]

A revolution has been defined as the complete overthrow of the established government in any country or state by those who were previously subject to it or as a sudden, radical and fundamental change in the government or political system, usually effected with violence or at least some acts of violence. In Kelsen's book, General Theory of Law and State, it is defined as that which occurs whenever the legal order of a community is nullified and replaced by a new order . . . a way not prescribed by the first order itself. It was through the February 1986 revolution, a relatively peaceful one, and more popularly known as the people power revolution that the Filipino people tore themselves away from an existing regime. This revolution also saw the unprecedented rise to power of the Aquino government. From the natural law point of view, the right of revolution has been defined as an inherent right of a people to cast out their rulers, change their policy or effect radical reforms in their system of government or institutions by force or a general uprising when the legal and constitutional methods of making such change have proved inadequate or are so obstructed as to be unavailable. It has been said that the locus of positive law-making power lies with the people of the state and from there is

derived the right of the people to abolish, to reform and to alter any existing form of government without regard to the existing constitution. xxx It is widely known that Mrs. Aquinos rise to the presidency was not due to constitutional processes; in fact, it was achieved in violation of the provisions of the 1973 Constitution as a Batasang Pambansa resolution had earlier declared Mr. Marcos as the winner in the 1986 presidential election. Thus it can be said that the organization of Mrs. Aquinos Government which was met by little resistance and her control of the state evidenced by the appointment of the Cabinet and other key officers of the administration, the departure of the Marcos Cabinet officials, revamp of the Judiciary and the Military signaled the point where the legal system then in effect, had ceased to be obeyed by the Filipino. (Emphasis supplied)
To hold that the Bill of Rights under the 1973 Constitution remained operative during the interregnum would render void all sequestration orders issued by the Philippine Commission on Good Government (PCGG) before the adoption of the Freedom Constitution. The sequestration orders, which direct the freezing and even the take-over of private property by mere executive issuance without judicial action, would violate the due process and search and seizure clauses of the Bill of Rights. During the interregnum, the government in power was concededly a revolutionary government bound by no constitution. No one could validly question the sequestration orders as violative of the Bill of Rights because there was no Bill of Rights during the interregnum. However, upon the adoption of the Freedom Constitution, the sequestered companies assailed the sequestration orders as contrary to the Bill of Rights of the Freedom Constitution. In Bataan Shipyard & Engineering Co. Inc. vs. Presidential Commission on Good Government,[43] petitioner Baseco, while conceding there was no Bill of Rights during the interregnum, questioned the continued validity of the sequestration orders upon adoption of the Freedom Constitution in view of the due process clause in its Bill of Rights. The Court ruled that the Freedom Constitution, and later the 1987 Constitution, expressly recognized the validity of sequestration orders, thus:

If any doubt should still persist in the face of the foregoing considerations as to the validity and propriety of sequestration, freeze and takeover orders, it should be dispelled by the fact that these particular remedies and the authority of the PCGG to issue them have received constitutional approbation and sanction. As already mentioned, the Provisional or Freedom Constitution recognizes the power and duty of the President to enact measures to achieve the mandate of the people to . . . (r)ecover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest of the people through orders of sequestration or freezing of assets or accounts. And as also already adverted to, Section 26, Article

XVIII of the 1987 Constitution treats of, and ratifies the authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986.
The framers of both the Freedom Constitution and the 1987 Constitution were fully aware that the sequestration orders would clash with the Bill of Rights. Thus, the framers of both constitutions had to include specific language recognizing the validity of the sequestration orders. The following discourse by Commissioner Joaquin G. Bernas during the deliberations of the Constitutional Commission is instructive:

FR. BERNAS: Madam President, there is something schizophrenic about the arguments in defense of the present amendment. For instance, I have carefully studied Minister Salongas lecture in the Gregorio Araneta University Foundation, of which all of us have been given a copy. On the one hand, he argues that everything the Commission is doing is traditionally legal. This is repeated by Commissioner Romulo also. Minister Salonga spends a major portion of his lecture developing that argument. On the other hand, almost as an afterthought, he says that in the end what matters are the results and not the legal niceties, thus suggesting that the PCGG should be allowed to make some legal shortcuts, another word for niceties or exceptions. Now, if everything the PCGG is doing is legal, why is it asking the CONCOM for special protection? The answer is clear. What they are doing will not stand the test of ordinary due process, hence they are asking for protection, for exceptions. Grandes malos, grandes remedios, fine, as the saying stands, but let us not say grandes malos, grande y malos remedios. That is not an allowable extrapolation. Hence, we should not give the exceptions asked for, and let me elaborate and give three reasons: First, the whole point of the February Revolution and of the work of the CONCOM is to hasten constitutional normalization. Very much at the heart of the constitutional normalization is the full effectivity of the Bill of Rights. We cannot, in one breath, ask for constitutional normalization and at the same time ask for a temporary halt to the full functioning of what is at the heart of constitutionalism. That would be hypocritical; that would be a repetition of Marcosian protestation of due process and rule of law. The New Society word for that is backsliding. It is tragic when we begin to backslide even before we get there. Second, this is really a corollary of the first. Habits tend to become ingrained. The committee report asks for extraordinary exceptions from the Bill of Rights for six months after the convening of Congress, and Congress may even extend this longer.

Good deeds repeated ripen into virtue; bad deeds repeated become vice. What the committee report is asking for is that we should allow the new government to acquire the vice of disregarding the Bill of Rights. Vices, once they become ingrained, become difficult to shed. The practitioners of the vice begin to think that they have a vested right to its practice, and they will fight tooth and nail to keep the franchise. That would be an unhealthy way of consolidating the gains of a democratic revolution. Third, the argument that what matters are the results and not the legal niceties is an argument that is very disturbing. When it comes from a staunch Christian like Commissioner Salonga, a Minister, and repeated verbatim by another staunch Christian like Commissioner Tingson, it becomes doubly disturbing and even discombobulating. The argument makes the PCGG an auctioneer, placing the Bill of Rights on the auction block. If the price is right, the search and seizure clause will be sold. Open your Swiss bank account to us and we will award you the search and seizure clause. You can keep it in your private safe. Alternatively, the argument looks on the present government as hostage to the hoarders of hidden wealth. The hoarders will release the hidden health if the ransom price is paid and the ransom price is the Bill of Rights, specifically the due process in the search and seizure clauses. So, there is something positively revolving about either argument. The Bill of Rights is not for sale to the highest bidder nor can it be used to ransom captive dollars. This nation will survive and grow strong, only if it would become convinced of the values enshrined in the Constitution of a price that is beyond monetary estimation. For these reasons, the honorable course for the Constitutional Commission is to delete all of Section 8 of the committee report and allow the new Constitution to take effect in full vigor. If Section 8 is deleted, the PCGG has two options. First, it can pursue the Salonga and the Romulo argument that what the PCGG has been doing has been completely within the pale of the law. If sustained, the PCGG can go on and should be able to go on, even without the support of Section 8. If not sustained, however, the PCGG has only one honorable option, it must bow to the majesty of the Bill of Rights. The PCGG extrapolation of the law is defended by staunch Christians. Let me conclude with what another Christian replied when asked to toy around with the law. From his prison cell, Thomas More said, "I'll give the devil benefit of law for my nations safety sake. I ask the Commission to give the devil benefit of law for our nations sake. And we should delete Section 8. Thank you, Madam President. (Emphasis supplied)
Despite the impassioned plea by Commissioner Bernas against the amendment excepting sequestration orders from the Bill of Rights, the Constitutional Commission still adopted the amendment as Section 26,[44] Article XVIII of the 1987

Constitution. The framers of the Constitution were fully aware that absent Section 26, sequestration orders would not stand the test of due process under the Bill of Rights. Thus, to rule that the Bill of Rights of the 1973 Constitution remained in force during the interregnum, absent a constitutional provision excepting sequestration orders from such Bill of Rights, would clearly render all sequestration orders void during the interregnum. Nevertheless, even during the interregnum the Filipino people continued to enjoy, under the Covenant and the Declaration, almost the same rights found in the Bill of Rights of the 1973 Constitution. The revolutionary government, after installing itself as the de jure government, assumed responsibility for the States good faith compliance with the Covenant to which the Philippines is a signatory. Article 2(1) of the Covenant requires each signatory State to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights[45] recognized in the present Covenant. Under Article 17(1) of the Covenant, the revolutionary government had the duty to insure that [n]o one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence. The Declaration, to which the Philippines is also a signatory, provides in its Article 17(2) that [n]o one shall be arbitrarily deprived of his property. Although the signatories to the Declaration did not intend it as a legally binding document, being only a declaration, the Court has interpreted the Declaration as part of the generally accepted principles of international law and binding on the State. [46] Thus, the revolutionary government was also obligated under international law to observe the rights[47] of individuals under the Declaration. The revolutionary government did not repudiate the Covenant or the Declaration during the interregnum. Whether the revolutionary government could have repudiated all its obligations under the Covenant or the Declaration is another matter and is not the issue here. Suffice it to say that the Court considers the Declaration as part of customary international law, and that Filipinos as human beings are proper subjects of the rules of international law laid down in the Covenant. The fact is the revolutionary government did not repudiate the Covenant or the Declaration in the same way it repudiated the 1973 Constitution. As the de jure government, the revolutionary government could not escape responsibility for the States good faith compliance with its treaty obligations under international law. It was only upon the adoption of the Provisional Constitution on 25 March 1986 that the directives and orders of the revolutionary government became subject to a higher municipal law that, if contravened, rendered such directives and orders void. The Provisional Constitution adopted verbatim the Bill of Rights of the 1973 Constitution.[48] The Provisional Constitution served as a self-limitation by the revolutionary government to avoid abuses of the absolute powers entrusted to it by the people. During the interregnum when no constitution or Bill of Rights existed, directives and orders issued by government officers were valid so long as these officers did not exceed the authority granted them by the revolutionary government. The directives and

orders should not have also violated the Covenant or the Declaration. In this case, the revolutionary government presumptively sanctioned the warrant since the revolutionary government did not repudiate it. The warrant, issued by a judge upon proper application, specified the items to be searched and seized. The warrant is thus valid with respect to the items specifically described in the warrant. However, the Constabulary raiding team seized items not included in the warrant. As admitted by petitioners witnesses, the raiding team confiscated items not included in the warrant, thus:

Direct Examination of Capt. Rodolfo Sebastian AJ AMORES

Q. According to the search warrant, you are supposed to seize only for weapons. What else, aside from the weapons, were seized from the house of Miss Elizabeth Dimaano? The communications equipment, money in Philippine currency and US dollars, some jewelries, land titles, sir. Now, the search warrant speaks only of weapons to be seized from the house of Elizabeth Dimaano. Do you know the reason why your team also seized other properties not mentioned in said search warrant? During the conversation right after the conduct of said raid, I was informed that the reason why they also brought the other items not included in the search warrant was because the money and other jewelries were contained in attach cases and cartons with markings Sony Trinitron, and I think three (3) vaults or steel safes. Believing that the attach cases and the steel safes were containing firearms, they forced open these containers only to find out that they contained money.

A. Q.

A.

xxx
Q. A. You said you found money instead of weapons, do you know the reason why your team seized this money instead of weapons? I think the overall team leader and the other two officers assisting him decided to bring along also the money because at that time it was already dark and they felt most secured if they will bring that because they might be suspected also of taking money out of those items, your Honor.[49]

Cross-examination Atty. Banaag

Q. A. Q. A. Were you present when the search warrant in connection with this case was applied before the Municipal Trial Court of Batangas, Branch 1? Yes, sir. And the search warrant applied for by you was for the search and seizure of five (5) baby armalite rifles M-16 and five (5) boxes of ammunition? Yes, sir.

xxx AJ AMORES
Q. A. Q. A. Q. A. Q. Before you applied for a search warrant, did you conduct surveillance in the house of Miss Elizabeth Dimaano? The Intelligence Operatives conducted surveillance together with the MSU elements, your Honor. And this party believed there were weapons deposited in the Miss Elizabeth Dimaano? Yes, your Honor. And they so swore before the Municipal Trial Judge? Yes, your Honor. But they did not mention to you, the applicant for the search warrant, any other properties or contraband which could be found in the residence of Miss Elizabeth Dimaano? They just gave us still unconfirmed report about some hidden items, for instance, the communications equipment and money. However, I did not include that in the application for search warrant considering that we have not established concrete evidence about that. So when So that when you applied for search warrant, you had reason to believe that only weapons were in the house of Miss Elizabeth Dimaano? Yes, your Honor.[50] house of

A.

Q. A.

xxx
Q. A. Q. You stated that a .45 caliber pistol was seized along with one armalite rifle M-16 and how many ammunition? Forty, sir. And this became the subject of your complaint with the issuing Court, with the fiscals office who charged Elizabeth Dimaano for Illegal Possession of Firearms and Ammunition? Yes, sir. Do you know what happened to that case? I think it was dismissed, sir. In the fiscals office? Yes, sir. Because the armalite rifle you seized, as well as the .45 caliber pistol had a Memorandum Receipt in the name of Felino Melegrito, is that not correct? I think that was the reason, sir. There were other articles seized which were not included in the search warrant, like for instance, jewelries. Why did you seize the jewelries? I think it was the decision of the overall team leader and his assistant to bring along also the jewelries and other items, sir. I do not really know

A. Q. A. Q. A. Q. A. Q. A.

where it was taken but they brought along also these articles. I do not really know their reason for bringing the same, but I just learned that these were taken because they might get lost if they will just leave this behind.

xxx
Q. A. How about the money seized by your raiding team, they were not also included in the search warrant? Yes sir, but I believe they were also taken considering that the money was discovered to be contained in attach cases. These attach cases were suspected to be containing pistols or other high powered firearms, but in the course of the search the contents turned out to be money. So the team leader also decided to take this considering that they believed that if they will just leave the money behind, it might get lost also. That holds true also with respect to the other articles that were seized by your raiding team, like Transfer Certificates of Title of lands? Yes, sir. I think they were contained in one of the vaults that were opened.[51]

Q. A.

It is obvious from the testimony of Captain Sebastian that the warrant did not include the monies, communications equipment, jewelry and land titles that the raiding team confiscated. The search warrant did not particularly describe these items and the raiding team confiscated them on its own authority. The raiding team had no legal basis to seize these items without showing that these items could be the subject of warrantless search and seizure.[52] Clearly, the raiding team exceeded its authority when it seized these items. The seizure of these items was therefore void, and unless these items are contraband per se,[53] and they are not, they must be returned to the person from whom the raiding seized them. However, we do not declare that such person is the lawful owner of these items, merely that the search and seizure warrant could not be used as basis to seize and withhold these items from the possessor. We thus hold that these items should be returned immediately to Dimaano. WHEREFORE, the petition for certiorari is DISMISSED. The questioned Resolutions of the Sandiganbayan dated 18 November 1991 and 25 March 1992 in Civil Case No. 0037, remanding the records of this case to the Ombudsman for such appropriate action as the evidence may warrant, and referring this case to the Commissioner of the Bureau of Internal Revenue for a determination of any tax liability of respondent Elizabeth Dimaano, are AFFIRMED. SO ORDERED.

THIRD DIVISION
ELIZABETH DIMAANO, Petitioner, G.R. No. 176783 Present: VELASCO, JR., J., Chairperson, BERSAMIN,* DEL CASTILLO,** ABAD, and PERLAS-BERNABE, JJ. Promulgated:

- versus -

THE HON. SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents.

June 27, 2012 x --------------------------------------------------------------------------------------- x

DECISION
ABAD, J.:
This is a case about the propriety of collecting sheriffs percentage fee on the execution of a court order for return to a party of money that the government illegally confiscated from her. The Facts and the Case On March 3, 1986 respondent Republic of the Philippines, acting through the Presidential Commission on Good Government (PCGG), confiscated cash ofP2,868,850.00 and US$50,000.00 and some items from petitioner Elizabeth Dimaanos (Dimaano) house on a belief that they were ill-gotten wealth of an army general who belonged to the martial law regime.[1] The PCGG subsequently filed a forfeiture action against her and others before the Sandiganbayan.[2] On November 18, 1991 the Sandiganbayan dismissed the forfeiture case against Dimaano and ordered the Republic to return the money and items it seized

from her.[3] On July 21, 2003 this Court affirmed the order.[4] Consequently, Dimaano filed with the Sandiganbayan a motion for the release of the seized cash and items[5] which that court granted on March 3, 2005[6] and further affirmed on August 1, 2005.[7] Following the issuance of the writ of execution on February 14, 2006, Dimaano discovered that the PCGG had transferred the money to accounts that needed allocation documents from the Department of Budget and Management (DBM) before it could be withdrawn from the National Treasury. Eventually, however, the mistake was rectified and on April 4, 2006 the Bureau of Treasury released a P4,058,850.00 check to Dimaano in partial satisfaction of the writ.[9] But the Sandiganbayan assessed Dimaano P163,391.50 as sheriffs percentage collection fee[10] pursuant to A.M. 04-2-04-SC Re: Revision of Rule 141 of the Rules of Court.
[8]

Dimaano filed a motion for reconsideration of the Sandiganbayans assessment order.[11] She assailed it as unwarranted since the sheriffs percentage collection fee applied only to actions for money covering collectibles or unsatisfied debts or in actions pertaining to interest-bearing obligations. She also argued that the fee assessment would be iniquitous in her case because a) it penalized her when in fact, she was the wronged party; and b) it rewarded the police officers transgressions of her rights.[12] On January 5, 2007 the Sandiganbayan denied Dimaanos mot ion for reconsideration, holding that the assessment of the challenged fee was not dependent on the nature of the case but on the fact of collection. And since the rule did not distinguish between money collected and money returned through the sheriffs effort, neither should petitioner, hence, Dimaanos recourse to this Court. Issue Presented The sole issue presented in this case is whether or not the Sandiganbayan rightfully assessed Dimaano a sheriffs percentage collection fee on the money that the Republic returned to her pursuant to the writ of execution that the court issued in the case.

Ruling of the Court Dimaano attempts to make a distinction between money ordered collected from the judgment debtor and paid to the judgment creditor and money ordered returned by one party to another from whom such money was unlawfully taken. Dimaano claims that she was already a victim when the government illegally seized her money. It would be unfair that she should still pay the government some fee to get her money back. But, first, the imposition of the sheriffs fee is not a penalty for some wrong that Dimaano had done. It is an assessment for the cost of the sheriffs service in collecting the judgment amount for her benefit. Its collection is authorized under Rule 141 of the Rules of Court, as amended,[13] thus:
xxxx SEC. 3. Persons authorized to collect legal fees. Except as otherwise provided in this rule, the officers and persons hereinafter mentioned, together with their assistants and deputies, may demand, receive, and take the several fees hereinafter mentioned x x x. xxxx SEC. 10. Sheriffs, PROCESS SERVERS and other persons serving processes. x x x (l) For money collected by him x x x by order, execution, attachment, or any other process, judicial or extrajudicial which shall immediately be turned over to the Clerk of Court, x x x.

Second, the order to pay a party the money owed him and the order to pay another the money unlawfully taken from him are both awards of actual or compensatory damages. They compensate for the pecuniary loss that the party suffered and proved in court.[14] The recipients of the award, whether for money owed or taken from him, benefit from the courts intervention and service in collecting the amount. As the Sandiganbayan correctly said, what determines the assessment of the disputed court fee is the fact that the court, through valid processes, ordered a certain sum of money to be placed in the hands of the sheriff for turnover to the winning party.

In addition to raising before the Court the matter of the sheriffs fee, Dimaano also questions the Sandiganbayans failure to award interest on the amount that was to be returned to her considering that the government used and invested the money as if it were its own. But, as the Republic points out, Dimaano could no longer seek the award of interest since she filed no appeal from the decision of the Sandiganbayan that ordered merely the return of such amount with no mention of interest.[15] WHEREFORE, the Court AFFIRMS the Resolutions of the Sandiganbayan dated July 25, 2006 and January 5, 2007 that assessed petitioner Elizabeth Dimaano sheriffs percentage fee for the partial satisfaction o f the writ of execution dated February 14, 2006. SO ORDERED.

EN BANC

PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF. HARRY C. ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY CASTRO, ALTEZ, FRANCIS ALVIN ASILO, SHERYL BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA, ROMINA BERNARDO, VALERIE PAGASA BUENAVENTURA, EDAN MARRI CAETE, VANN ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER, RAOULLE OSEN

G.R No. 187167

Present:

CORONA, C.J., CARPIO, VELASCO, JR., LEONARDO-DE BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ.

FERRER, CARLA REGINA GREPO, ANNA MARIE CECILIA GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA LUISA MANALAYSAY, MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA, WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES MARK TERRY RIDON, JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE ROA, NICHOLAS SANTIZO, MELISSA CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA ANNE TORNO, MARIA ESTER VANGUARDIA, and MARCELINO VELOSO III, Petitioners,

- versus HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO

ROMULO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, HON. ROLANDO ANDAYA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, HON. DIONY VENTURA, IN HIS CAPACITY AS ADMINISTRATOR OF THE NATIONAL MAPPING & RESOURCE INFORMATION AUTHORITY, and HON. HILARIO DAVIDE, JR., IN HIS CAPACITY AS REPRESENTATIVE OF THE PERMANENT MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE UNITED NATIONS, Respondents. July 16, 2011 Promulgated:

x -----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No. 9522 (RA 9522) adjusting the countrys archipelagic baselines and classifying the baseline regime of nearby territories.
1

The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046) demarcating the maritime baselines of the Philippines as an archipelagic State. This law followed the framing of the Convention on the Territorial Sea and the Contiguous Zone in 1958 (UNCLOS I), codifying, among others, the sovereign right of States parties over their territorial sea, the breadth of which, however, was left undetermined. Attempts to fill this void during the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile. Thus, domestically, RA 3046 remained unchanged for nearly five decades, save for legislation passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting typographical errors and reserving the drawing of baselines around Sabah in North Borneo.
2 3 4

In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The change was prompted by the need to make RA 3046 compliant

with the terms of the United Nations Convention on the Law of the Sea (UNCLOS III), which the Philippines ratified on 27 February 1984. Among others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of archipelagic States like the Philippines and sets the deadline for the filing of application for the extended continental shelf. Complying with these requirements, RA 9522 shortened one baseline, optimized the location of some basepoints around the Philippine archipelago and classified adjacent territories, namely, the Kalayaan Island Group (KIG) and the Scarborough Shoal, as regimes of islands whose islands generate their own applicable maritime zones.
5 6 7 8

Petitioners, professors of law, law students and a legislator, in their respective capacities as citizens, taxpayers or x x x legislators, as the case may be, assail the constitutionality of RA 9522 on two principal grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach of the Philippine states sovereign power, in violation of Article 1 of the 1987 Constitution, embodying the terms of the Treaty of Paris and ancillary treaties, and (2) RA 9522 opens the countrys waters landward of the baselines to maritime passage by all vessels and aircrafts, undermining Philippine sovereignty and national security, contravening the countrys nuclear-free policy, and damaging marine resources, in violation of relevant constitutional provisions.
9 10 11 12 13

In addition, petitioners contend that RA 9522s treatment of the KIG as regime of islands not only results in the loss of a large maritime area but also prejudices the livelihood of subsistence fishermen. To buttress their argument of territorial diminution, petitioners facially attack RA 9522 for what it excluded and included its failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS IIIs framework of regime of islands to determine the maritime zones of the KIG and the Scarborough Shoal.
14

Commenting on the petition, respondent officials raised threshold issues questioning (1) the petitions compliance with the case or controversy requirement for judicial

review grounded on petitioners alleged lack of locus standi and (2) the propriety of the writs of certiorari and prohibition to assail the constitutionality of RA 9522. On the merits, respondents defended RA 9522 as the countrys compliance with the terms of UNCLOS III, preserving Philippine territory over the KIG or Scarborough Shoal. Respondents add that RA 9522 does not undermine the countrys security, environment and economic interests or relinquish the Philippines claim over Sabah.

Respondents also question the normative force, under international law, of petitioners assertion that what Spain ceded to the United States under the Treaty of Paris were the islands and all the waters found within the boundaries of the rectangular area drawn under the Treaty of Paris.

We left unacted petitioners prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1. Preliminarily

1. Whether petitioners possess locus standi to bring this suit; and 2. Whether the writs of certiorari and prohibition are the proper remedies to assail the constitutionality of RA 9522.

2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as citizens and (2) the writs of certiorari and prohibition are proper remedies to test the constitutionality of RA 9522. On the merits, we find no basis to declare RA 9522 unconstitutional.

On the Threshold Issues

Petitioners Possess Locus Standi as Citizens

Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers because the petition alleges neither infringement of legislative prerogative nor misuse of public funds, occasioned by the passage and implementation of RA 9522. Nonetheless, we recognize petitioners locus standi as citizens with constitutionally sufficient interest in the resolution of the merits of the case which undoubtedly raises issues of national significance necessitating urgent resolution. Indeed, owing to the peculiar nature of RA 9522, it is understandably difficult to find other litigants possessing a more direct and specific interest to bring the suit, thus satisfying one of the requirements for granting citizenship standing.
15 16 17

The Writs of Certiorari and Prohibition

Are Proper Remedies to Test the Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance of the offices of the writs of certiorari and prohibition, noting that the writs cannot issue absent any showing of grave abuse of discretion in the exercise of judicial, quasi-judicial or ministerial powers on the part of respondents and resulting prejudice on the part of petitioners.
18

Respondents submission holds true in ordinary civil proceedings. When this Court exercises its constitutional power of judicial review, however, we have, by tradition, viewed the writs of certiorari and prohibition as proper remedial vehicles to test the constitutionality of statutes, and indeed, of acts of other branches of government. Issues of constitutional import are sometimes crafted out of statutes which, while having no bearing on the personal interests of the petitioners, carry such relevance in the life of this nation that the Court inevitably finds itself constrained to take cognizance of the case and pass upon the issues raised, non-compliance with the letter of procedural rules notwithstanding. The statute sought to be reviewed here is one such law.
19 20

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool to Demarcate the Countrys Maritime Zones and Continental Shelf Under UNCLOS III, not to

Delineate Philippine Territory

Petitioners submit that RA 9522 dismembers a large portion of the national territory because it discards the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related treaties, successively encoded in the definition of national territory under the 1935, 1973 and 1987 Constitutions. Petitioners theorize that this constitutional definition trumps any treaty or statutory provision denying the Philippines sovereign control over waters, beyond the territorial sea recognized at the time of the Treaty of Paris, that Spain supposedly ceded to the United States. Petitioners argue that from the Treaty of Paris technical description, Philippine sovereignty over territorial waters extends hundreds of nautical miles around the Philippine archipelago, embracing the rectangular area delineated in the Treaty of Paris.
21 22

Petitioners theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating, among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the baselines], contiguous zone [24 nautical miles from the baselines], exclusive economic zone [200 nautical miles from the baselines]), and continental shelves that UNCLOS III delimits. UNCLOS III was the culmination of decades-long negotiations among United Nations members to codify norms regulating the conduct of States in the worlds oceans and subma rine areas, recognizing coastal and archipelagic States graduated authority over a limited span of waters and submarine lands along their coasts.
23

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-out specific basepoints along their coasts from which

baselines are drawn, either straight or contoured, to serve as geographic starting points to measure the breadth of the maritime zones and continental shelf. Article 48 of UNCLOS III on archipelagic States like ours could not be any clearer:

Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive economic zone and the continental shelf. The breadth of the territorial sea, the contiguous zone, the exclusive economic zone and the continental shelf shall be measured from archipelagic baselines drawn in accordance with article 47. (Emphasis supplied) Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with precision the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of the international community of the scope of the maritime space and submarine areas within which States parties exercise treaty-based rights, namely, the exercise of sovereignty over territorial waters (Article 2), the jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article 33), and the right to exploit the living and non-living resources in the exclusive economic zone (Article 56) and continental shelf (Article 77).

Even under petitioners theory that the Philippine territory embraces the islands and all the waters within the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be drawn in accordance with RA 9522 because this is the only way to draw the baselines in conformity with UNCLOS III. The baselines cannot be drawn from the boundaries or other portions of the rectangular area delineated in the Treaty of Paris, but from the outermost islands and drying reefs of the archipelago.
24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners claim, diminution of territory. Under traditional international law typology, States acquire (or conversely, lose) territory through

occupation, accretion, cession and prescription, not by executing multilateral treaties on the regulations of sea-use rights or enacting statutes to comply with th e treatys terms to delimit maritime zones and continental shelves. Territorial claims to land features are outside UNCLOS III, and are instead governed by the rules on general international law.
25 26

RA 9522s Use of the Framework of Regime of Islands to Determine the Maritime Zones of the KIG and the Scarborough Shoal, not Inconsistent with the Philippines Claim of Sovereignty Over these Areas

Petitioners next submit that RA 9522s use of UNCLOS IIIs regime of islands framework to draw the baselines, and to measure the breadth of the applicable maritime zones of the KIG, weakens our territorial claim over that area. Petitioners add that the KIGs (and Scarborough Shoals) exclusion from the Philippine archipelagic baselines results in the loss of about 15,000 square nautical miles of territorial waters, prejudicing the livelihood of subsistence fishermen. A comparison of the configuration of the baselines drawn under RA 3046 and RA 9522 and the extent of maritime space encompassed by each law, coupled with a reading of the text of RA 9522 and its congressional deliberations, vis--vis the Philippines obligations under UNCLOS III, belie this view.
27 28

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely followed the basepoints mapped by RA 3046, save for at least nine

basepoints that RA 9522 skipped to optimize the location of basepoints and adjust the length of one baseline (and thus comply with UNCLOS IIIs limitation on the maximum length of baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough Shoal lie outside of the baselines drawn around the Philippine archipelago. This undeniable cartographic fact takes the wind out of petitioners argument branding RA 9522 as a statutory renunciation of the Philippines claim over the KIG, assuming that baselines are relevant for this purpose.

Petitioners assertion of loss of about 15,000 square nautical miles of territorial waters under RA 9522 is similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of basepoints, increased the Philippines total maritime space (covering its internal waters, territorial sea and exclusive economic zone) by 145,216 square nautical miles, as shown in the table below:
29

Extent of maritime area using RA 3046, as amended, taking into account the Treaty of Paris delimitation (in square nautical miles) Internal or archipelagic waters 166,858

Extent of maritime area using RA 9522, taking into account UNCLOS III (in square nautical miles)

171,435

Territorial Sea

274,136

32,106

Exclusive Economic Zone TOTAL 440,994 382,669

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even extends way beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of course, where there are overlapping exclusive economic zones of opposite or adjacent States, there will have to be a delineation of maritime boundaries in accordance with UNCLOS III.
30

Further, petitioners argument that the KIG now lies outside Philippine territory because the baselines that RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text the Philippines continued claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises sovereignty and jurisdiction shall be determined as Regime of Islands under the Republic of the Philippines consistent with Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS): a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine archipelago, adverse legal effects would have ensued. The Philippines would have committed a breach of two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that [t]he drawing of such baselines shall not depart to any appreciable extent from the general configuration of the archipelago. Second, Article 47 (2) of UNCLOS III requires that the length of the baseline s shall not exceed 100 nautical miles, save for three per cent (3%) of the total number of baselines which can reach up to 125 nautical miles.
31

Although the Philippines has consistently claimed sovereignty over the KIG and the Scarborough Shoal for several decades, these outlying areas are located at an appreciable distance from the nearest shoreline of the Philippine archipelago, such that any straight baseline loped around them from the nearest basepoint will inevitably depart to an appreciable extent from the general configuration of the archipelago.
32 33

The principal sponsor of RA 9522 in the Senate, Senator Miriam DefensorSantiago, took pains to emphasize the foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the Scarborough Shoal are outside our archipelagic baseline because if we put them inside our baselines we might be accused of violating the provision of international law which states: The drawing of such baseline shall not depart to any appreciable extent from the general configuration of the archipelago. So sa loob ng ating baseline, dapat magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi natin masasabing malapit sila sa atin although we are still allowed by international law to claim them as our own. This is called contested islands outside our configuration. We see that our archipelago is defined by the orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon

sa itaas, that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the Spratlys. Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines para lamang masama itong dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng United Nations because of the rule that it should follow the natural configuration of the archipelago . (Emphasis supplied)
34

Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS IIIs limits. The need to shorten this baseline, and in addition, to optimize the location of basepoints using current maps, became imperative as discussed by respondents:

[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer limits of its maritime zones including the extended continental shelf in the manner provided by Article 47 of [UNCLOS III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some technical deficiencies, to wit: 1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is 140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the [UNCLOS III], which states that The length of such baselines shall not exceed 100 nautical miles, except that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed that length, up to a maximum length of 125 nautical miles. 2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from the baselines system. This will enclose an additional 2,195 nautical miles of water. 3. Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic survey methods. Accordingly, some of the points, particularly along the west coasts of Luzon down to Palawan were later found to be located either inland or on water, not on low-water line and drying reefs as prescribed by Article 47.
35

Hence, far from surrendering the Philippines claim over the KIG and the Scarborough Shoal, Congress decision to classify the KIG and the Scarborough Shoal as Regime[s] of Islands under the Republic of the Philippines consistent with Article 121 of UNCLOS III manifests the Philippine States responsible observance of itspacta sunt servanda obligation under UNCLOS III. Under Article 121 of UNCLOS III, any naturally formed area of land, surrounded by water, which is above water at high tide, such as portions of the KIG, qualifies under the category of regime of islands, whose islands generate their own applicable maritime zones.
36 37

Statutory Claim Over Sabah under RA 5446 Retained Petitioners argument for the invalidity of RA 9522 for its failure to textualize the Philippines claim over Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps open the door for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in this Act is without prejudice to the delineation of the baselines of the territorial sea around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has acquired dominion and sovereignty. (Emphasis supplied)

UNCLOS III and RA 9522 not Incompatible with the Constitutions Delineation of Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally converts internal waters into archipelagic waters, hence subjecting these waters to the right of innocent and sea lanes passage under UNCLOS III, including overflight. Petitioners extrapolate that these passage rights indubitably expose Philippine internal waters to nuclear and maritime pollution hazards, in violation of the Constitution.
38

Whether referred to as Philippine internal waters under Article I of the Constitution or as archipelagic waters under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water lying landward of the baselines, including the air space over it and the submarine areas underneath. UNCLOS III affirms this:
39

Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed and subsoil. 1. The sovereignty of an archipelagic State extends to the waters enclosed by the archipelagic baselines drawn in accordance with article 47, described as archipelagic waters, regardless of their depth or distance from the coast. 2. This sovereignty extends to the air space over the archipelagic waters, as well as to their bed and subsoil, and the resources contained therein. xxxx 4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects affect the status of the archipelagic waters, including the sea lanes, or the exercise by the archipelagic State of its sovereignty over such waters and their air space, bed and subsoil, and the resources contained therein. (Emphasis supplied)

The fact of sovereignty, however, does not preclude the operation of municipal and international law norms subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in the interest of maintaining unimpeded, expeditious international navigation, consistent with the international law principle of freedom of navigation. Thus, domestically, the political branches of the Philippine government, in the competent discharge of their constitutional powers, may pass legislation designating routes within the archipelagic waters to regulate innocent and sea lanes passage. Indeed, bills drawing nautical highways for sea lanes passage are now pending in Congress.
40 41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate to grant innocent passage rights over the territorial sea or archipelagic waters, subject to the treatys limitations and conditions for their exercise. Significantly, the right of innocent passage is a customary international law, thus automatically incorporated in the corpus of Philippine law. No modern State can validly invoke its sovereignty to absolutely forbid innocent passage that is exercised in accordance with customary international law without risking retaliatory measures from the international community.
42 43 44

The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent passage and sea lanes passage does not place them in lesser footing vis--vis continental coastal States which are subject, in their territorial sea, to the right of innocent passage and the right of transit passage through international straits. The imposition of these passage rights through archipelagic waters under UNCLOS III was a concession by archipelagic States, in exchange for their right to claim all the waters landward of their baselines, regardless of their depth or distance from the coast, as archipelagic waters subject to their territorial sovereignty. More importantly, the recognition of archipelagic States archipelago and the waters enclosed by their baselines as one cohesive entity prevents the treatment of their islands as separate islands under UNCLOS III. Separate islands generate their own maritime zones, placing the waters between islands separated by more than 24 nautical miles beyond the States territorial sovereignty, subjecting these waters to the rights of other States under UNCLOS III.
45 46 47

Petitioners invocation of non-executory constitutional provisions in Article II (Declaration of Principles and State Policies) must also fail. Our present state of jurisprudence considers the provisions in Article II as mere legislative guides, which, absent enabling legislation, do not embody judicially enforceable constitutional rights x x x. Article II provisions serve as guides in formulating and interpreting implementing legislation, as well as in interpreting executory provisions of the Constitution. Although Oposa v. Factoran treated the right to a healthful and balanced ecology under Section 16 of Article II as an exception, the present petition lacks factual basis to substantiate the claimed constitutional violation. The other provisions petitioners cite, relating to the protection of marine wealth (Article XII, Section 2, paragraph 2 ) and subsistence fishermen (Article XIII, Section 7 ), are not violated by RA 9522.
48 49 50 51 52

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone, reserving solely to the Philippines the exploitation of all living and non-living resources within such zone. Such a maritime delineation binds the international community since the delineation is in strict observance of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the international community will of course reject it and will refuse to be bound by it.

UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui generis maritime space the exclusive economic zone in waters previously part of the high seas. UNCLOS III grants new rights to coastal States to exclusively exploit the resources found within this zone up to 200 nautical miles. UNCLOS III, however, preserves the traditional freedom of navigation of other States that attached to this zone beyond the territorial sea before UNCLOS III.
53

RA 9522 and the Philippines Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to pass RA 9522. We have looked at the relevant provision of UNCLOS III and we find petitioners reading plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to this Court. Moreover, the luxury of choosing this option comes at a very steep price. Absent an UNCLOS III compliant baselines law, an archipelagic State like the Philippines will find itself devoid of internationally acceptable baselines from where the breadth of its maritime zones and continental shelf is measured. This is recipe for a two-fronted disaster: first, it sends an open invitation to the seafaring powers to freely enter and exploit the resources in the waters and submarine areas around our archipelago; and second, it weakens the countrys case in any international dispute over Philippine maritime space. These are consequences Congress wisely avoided.
54 55

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas, as embodied in RA 9522, allows an internationallyrecognized delimitation of the breadth of the Philippines maritime zones and continental shelf. RA 9522 is therefore a most vital step on the part of the Philippines in safeguarding its maritime zones, consistent with the Constitution and our national interest.

WHEREFORE, we DISMISS the petition.

SO ORDERED.

SECOND DIVISION DEPARTMENT OF EDUCATION, DIVISION OF ALBAY represented by its SCHOOLS DIVISION SUPERINTENDENT, Petitioner, G.R. No. 161758 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. Promulgated: CELSO OATE, Respondent. June 8, 2007 x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.: A little neglect may lead to great prejudice. The Case This is a Petition for Review on Certiorari[1] under Rule 45 seeking to reverse and set aside the January 14, 2004 Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No. 60659, which affirmed the November 3, 1997 Decision[3] of the Legaspi City Regional Trial Court (RTC), Branch I, declaring as null and void the December 21, 1998 Deed of Donation[4] executed by the Municipality of Daraga, Albay in favor of petitioner, and directing the latter to return to respondent Celso Oate the possession of the portion of land occupied by the school site of the Daraga North Central Elementary School. The Facts

- versus -

Spouses Claro Oate and Gregoria Los Baos owned Lot No. 6849 (disputed lot) with an area of around 27,907 square meters registered under the Torrens System of land registration under Original Certificate of Title (OCT) No. 2563. Claro Oate had three children, namely: Antonio, Rafael, and Francisco, all surnamed Oate. Respondent Celso Oate is the grandson of Claro Oate, being the son of Francisco Oate. In 1940, Bagumbayan Elementary School of Daraga was constructed on a portion of the disputed lot. The school was eventually renamed Daraga North CentralElementary School. The Municipality of Daraga leveled the area while petitioner Department of Education Culture and Sports (DECS; now Department of Education [DepEd]) developed and built various school buildings and facilities on the disputed lot. Sometime in 1991, respondent filed a reconstitution proceeding of OCT No. 2563 which was granted by the Legaspi City RTC, Branch V after due notice, publication, and hearing. Consequently, OCT No. RO-18971[5] was issued in the name of spouses Claro Oate and Gregoria Los Baos. On August 26, 1991, a Deed of Extrajudicial Settlement of Estate and Cession was executed by respondent and his three (3) sisters, namely: Melba O. Napil, Cielo O. Lardizabal, and Maria Visia O. Maldo, who waived their successional rights in favor of respondent Celso Oate. Asserting that the disputed lot was inherited by his father, Francisco Oate, from the latters father, Claro Oate, by virtue of a prior partition among the three (3) sons of Claro Oate and Gregoria Los Baos, respondent in turn claimed ownership of said lot through the deed of extrajudicial settlement. Meanwhile, the issue of whether respondents father, Francisco Oate, truly acquired the disputed lot through a prior partition among Claro Oates three (3) children had been passed upon in another case, Civil Case No. 8724 for Partition, Reconveyance and Damages filed by the heirs of Rafael Oate before the Legaspi City RTC, Branch IX.[6] In said case, respondent Celso Oate, the defendant, prevailed and the case was dismissed by the trial court.

Thereafter, respondent caused Lot No. 6849 to be subdivided into five (5) lots, all under his name, except Lot No. 6849-B which is under the name of Mariano M. Lim. On October 26, 1992, the subdivided lots were issued Transfer Certificate of Titles (TCTs): (1) Lot No. 6849-A (13,072 square meters) under TCT No. T-83946;[7] (2) Lot No. 6849-B (3,100 square meters) under TCT No. T84049;[8] (3) Lot No. 6849-C (10,000 square meters) under TCT No. T83948;[9] (4) Lot No. 6849-D (1,127 square meters) under TCT No. T83949;[10] and (5) Lot No. 6849-E (608 square meters) under TCT No. T-83950.[11] On December 15, 1992, through his counsel, respondent sent a letter to petitioner apprising it about the facts and circumstances affecting the elementary school and its occupancy of Lot No. 6849-A with an area of 13,072 square meters. Respondent proposed to petitioner DECS that it purchase Lot No. 6849-A at the Fair Market Value (FMV) of PhP 400 per square meter and also requested for reasonable rentals from 1960.[12] The records show that then DECS Director IV Jovencio Revil subsequently referred the matter to the DECS Division Superintendent Rizalina D. Saquido for investigation.[13] On February 24, 1993, through his counsel, respondent likewise wrote to Engr. Orlando Roces, District Engineer, Albay Engineering District about the ongoing construction projects in the school.[14] Engr. Roces then informed respondents counsel that petitioner DECS is the owner of the school site having acquired the disputed lot by virtue of a Deed of Donation executed by the Municipality of Daraga, Albay in favor of petitioner.[15] Consequently, on March 18, 1993, respondent instituted a Complaint[16] for Annulment of Donation and/or Quieting of Title with Recovery of Possession of Lot No. 6849 located at Barrio Bagumbayan, Daraga, Albay before the Legaspi City RTC, docketed as Civil Case No. 8715, against petitioner DECS, Division of Albay, represented by the Division Superintendent of Schools, Mrs. Rizalina D. Saquido; and the Municipality of Daraga, Albay, represented by the Municipal Mayor, Honorable Cicero Triunfante. In its April 28, 1993 Answer,[17] the Municipality of Daraga, Albay, through Mayor Cicero Triunfante, denied respondents ownership of the disputed lot as it alleged that sometime in 1940, the Municipality bought said lot from Claro Oate,

respondents grandfather, and since then it had continually occupied said lot openly and publicly in the concept of an owner until 1988 when the Municipality donated the school site to petitioner DECS; thus asserting that it could also claim ownership also through adverse possession. Moreover, it claimed that the disputed lot had been declared in the name of defendant municipality in the Municipal Assessors Office under Tax Declaration No. 31954 from 1940 until 1988 for purposes of exemption from real estate taxes. Further, defendant Municipality contended that respondent was guilty of laches and was estopped from assailing ownership over the disputed lot. Similarly, petitioners April 29, 1993 Answer[18] reiterated in essence the defenses raised by the Municipality of Daraga, Albay and further contended that respondent had no cause of action because it acquired ownership over the disputed lot by virtue of a Deed of Donation executed on December 21, 1988 in its favor; and that respondents claim was vague as it was derived from a void Deed of Extrajudicial Settlement of Estate and Cession disposing of the disputed lot which was already sold to the Municipality of Daraga, Albay in 1940. Petitioner likewise assailed the issuance of a reconstituted OCT over Lot 6849 when the lower court granted respondents petition for reconstitution without notifying petitioner. During the ensuing trial where both parties presented documentary and testimonial evidence, respondent testified that he came to know of the disputed lot in 1973 when he was 23 years old; that he took possession of the said lot in the same year; that he came to know that the elementary school occupied a portion of the said lot only in 1991; and that it was only in 1992 that he came to know of the Deed of Donation executed by the Municipality of Daraga, Albay.[19] Also, Felicito Armenta, a tenant cultivating a portion of disputed Lot 6849, testified that respondent indeed owned said lot and the share of the crops cultivated were paid to respondent.[20] However, after respondent testified, defendants in said case filed a Joint Motion to Dismiss[21] on the ground that respondents suit was against the State which was prohibited without the latters consent. Respondent countered with his Opposition to Joint Motion to Dismiss.[22] Subsequently, the trial court denied the Joint Motion to Dismiss, ruling that the State had given implied consent by entering into a contract.[23]

Aside from the reconstituted OCT No. RO-18971, respondent presented the TCTs covering the five (5) portions of the partitioned Lot 6849, Tax Declaration No. 04-006-00681[24] issued for said lot, and the April 20, 1992 Certification[25] from the Office of the Treasurer of the Municipality of Daraga, Albay attesting to respondents payment of realty taxes for Lot 6849 from 1980 to 1990. After respondent rested his case, the defense presented and marked their documentary exhibits of Tax Declaration No. 30235 issued in the name of the late Claro Oate, which was cancelled in 1938; Tax Declaration 31954,[26] which cancelled Tax Declaration No. 30235, in the name of Municipality of Daraga with the annotation of Ex-Officio Deputy Assessor Natalio Grageda attesting to the purchase by the Municipality under Municipal Voucher No. 69, August 1940 accounts and the issuance of TCT No. 4812 in favor of the Municipality; Tax Declaration No. 8926[27] in the name of the Municipality which cancelled Tax Declaration No. 31954; and the subsequent Tax Declaration Nos. 22184,[28] 332,[29] and 04-006-00068.[30] The defense presented the testimony of Mr. Jose Adra,[31] the Principal of Daraga North Central Elementary School, who testified on the Municipalitys donation of disputed Lot 6849 to petitioner and the improvements on said lot amounting to more than PhP 11 million; and Mrs. Toribia Milleza,[32] a retired government employee and resident of Bagumbayan, Daraga, Albay since 1955, who testified on the Municipalitys continuous and adverse possession of th e disputed lot since 1940. As mentioned earlier, Civil Case No. 8724 for Partition, Reconveyance and Damages was instituted by the heirs of Rafael Oate in Legaspi City RTC, Branch IX against Spouses Celso Oate and Allem Vellez, involving the same disputed lot. Petitioner and co-defendant Municipality of Daraga, Albay were about to file a complaint for intervention in said case, but it was overtaken by the resolution of the case on August 14, 1995 with the trial court dismissing the complaint. The Ruling of the RTC

On November 3, 1997, the trial court rendered a Decision in favor of respondent Celso Oate. The dispositive portion declared, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants: 1. Declaring the Deed of Donation executed by the Municipality of Daraga, Albay in favor of the defendant Department of Education Culture and Sports through the Albay Schools Division as null and void; 2. Declaring the plaintiff as the owner in fee simple of Lots Nos. 6849A, 6849-C, 6849-D and 6849-E which are registered in his name;

3. Commanding the defendants to return the possession of the portion of the land occupied by the school site to the herein plaintiff Celso Oate; 4. Ordering the plaintiff for reason of equity, to pay the defendant Municipality of Daraga, Albay the amount of Fifty Thousand (50,000.00) Pesos pursuant to Article 479 of the New Civil Code of the Philippines; 5. The defendant Department of Education Culture and Sports being a builder in good faith, the provisions of Article 448 of the New Civil Code of the Philippines shall be observed by the parties; and 6. Ordering the defendants to pay the costs of the suit. No attorneys fees is hereby adjudged in favor of plaintiffs counsel. SO ORDERED.[33]

The trial court ratiocinated that it was clear that subject Lot 6849 was originally registered under the Torrens System in the name of Spouses Claro Oate and Gregoria Los Baos as evidenced by OCT No. RO-18971. The right of respondent Celso Oate over the disputed lot had not been proven otherwise or overturned in Civil Case No. 8724, and this was bolstered by the Deed of Extrajudicial Settlement of Estate and Cession, where respondents sister waived their successional rights in his favor. Thus, the trial court ruled in favor of respondents title. Besides, it further ruled that defendants could not assail the registered title of respondent in a collateral proceeding.

While the Municipality of Daraga, Albay anchored its prior ownership over the disputed lot by virtue of a sale in 1940 and mentioned TCT No. 4812 supposedly issued in its name, it however failed to submit any deed of conveyance in its favor, as well as a copy of the alleged TCT No. 4812. Hence, the trial court held that its claim over disputed Lot 6849 was based solely on adverse prescription which could not prevail over respondents registered title. The trial court concluded that given these factual and evidentiary proofs, petitioner had no right to occupy Lot 6849-A, and the Deed of Donation executed by the Municipality of Daraga, Albay in favor of petitioner must be nullified. Finally, the trial court awarded PhP 50,000 to the Municipality of Daraga, Albay for the cost of landfill and ordered that Article 448[34] of the New Civil Code be followed by the parties as petitioner was a builder in good faith. The Ruling of the Court of Appeals Aggrieved, petitioner DECS and Municipality of Daraga, Albay filed their respective Notices of Appeal[35] assailing the trial courts Decision before the CA. However, on June 17, 1998, the appellate court declared the appeals of both petitioners abandoned and dismissed for their failure to pay the required docket fees within the reglementary period.[36] Petitioner then filed a Motion for Reconsideration[37] of the said June 17, 1998 Resolution and its appeal was subsequently reinstated.[38] The Municipality of Daraga, Albay, however, totally lost its appeal due to inaction, and the appellate court correspondingly issued a Partial Entry of Judgment on July 9, 1998.[39] Moreover, the appellate court held that there was no jurisdictional defect in the reconstitution proceeding being one in rem, and in the issuance of OCT No. RO-18971 based on the destroyed or lost OCT No. 2563, even if no notice was sent to petitioner. Thus, the CA ruled that respondents claim of ownership over Lot 6849-A occupied by the school is conclusive for being soundly predicated on TCT No. T-83946 which cancelled the reconstituted OCT No. RO18971. Furthermore, it reiterated the trial courts holding that petitioner is precluded from attacking collaterally respondents title over the disputed lot in this proceeding.

The CA emphasized that petitioners failure to present TCT No. 4812 allegedly issued in the name of the Municipality of Daraga, Albay in 1940 in lieu of OCT No. 2563 and the Deed of Conveyance executed by the original owner, Claro Oate, in favor of the Municipalitywas fatal to the defense. It reasoned that all the more had their claim of ownership become doubtful when defendantsappellants [sic] failed to explain from their pleadings and the evidence submitted before Us their failure to present the two documents.[40] The appellate court concluded that given these facts, no title in the name of the Municipality ever existed and thus it could not have validly donated the subject property to petitioner. Anent the issue of the applicability of Amigable v. Cuenca,[41] the CA affirmed the doctrine enunciated in said case that to uphold the States immunity from suit would subvert the ends of justice. In fine, the appellate court pointed out the inconvenience and impossibility of restoring possession of Lot 6849-A to respondent considering the substantial improvements built on said lot by the government which amounted to almost PhP 12 million; and that the only relief available was for the government to pay just compensation in favor of respondent computed on the basis of the value of the property at the time of the governments taking of the land. Through its assailed Decision,[42] the CA dismissed petitioners appeal for lack of merit and affirmed the trial courts decision in toto. It reasoned that laches does not apply, its application rests on the sound discretion of the court, and where the court believes that its application would result in manifest wrong or injustice, it is constrained not to be guided strictly by said doctrine. Besides, it opined that laches could not defeat the rights of a registered owner. The Issues Hence, we have the instant petition where petitioner raises the following assignment of errors:
I

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS FINDING THAT RESPONDENTS CAUSE OF ACTION TO RECOVER POSSESSION OF THE SUBJECT PROPERTY IS NOT YET BARRED BY LACHES. II THE COURT OF APPEALS ERRED IN ACCORDING GREAT WEIGHT ON RESPONDENTS RECONSTITUTED ORIGINAL CERTIFICATE OF TITLE (OCT) NO. 2563 COVERING SUBJECT PROPERTY. III THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER MAY BE SUED IN VIOLATION OF THE STATES IMMUNITY FROM SUIT. IV THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER MAY BE SUED INDEPENDENTLY OF THE REPUBLIC OF THE PHILIPPINES.[43]

Petitioner basically raises two issuesthe application of laches and the nonsuability of the State. The threshold issue is whether petitioner DECS can be sued in Civil Case No. 8715 without its consent. A supplementary issue is whether petitioner DECS can be sued independently of the Republic of the Philippines. We rule that petitioner DECS can be sued without its permission as a result of its being privy to the Deed of Donation executed by the Municipality of Daraga, Albay over the disputed property. When it voluntarily gave its consent to the donation, any dispute that may arise from it would necessarily bring petitioner DECS down to the level of an ordinary citizen of the State vulnerable to a suit by an interested or affected party. It has shed off its mantle of immunity and relinquished and forfeited its armor of non-suability of the State.[44] The auxiliary issue of non-joinder of the Republic of the Philippines is likewise resolved in the negative. While it is true that petitioner is an unincorporated government agency, and as such technically requires the Republic

of the Philippines to be impleaded in any suit against the former, nonetheless, considering our resolution of the main issue below, this issue is deemed mooted. Besides, at this point, we deem it best to lift such procedural technicality in order to finally resolve the long litigation this case has undergone. Moreover, even if we give due course to said issue, we will arrive at the same ruling. The Republic of the Philippines need not be impleaded as a party-defendant in Civil Case No. 8715 considering that it impliedly gave its approval to the involvement of petitioner DECS in the Deed of Donation. In a situation involving a contract between a government department and a third party, the Republic of the Philippines need not be impleaded as a party to a suit resulting from said contract as it is assumed that the authority granted to such department to enter into such contract carries with it the full responsibility and authority to sue and be sued in its name.

Main Issue: Equitable Remedy of Laches Petitioner strongly asserts that the Municipality of Daraga, Albay had continuous, open, and adverse possession in the concept of an owner over the disputed lot since 1940 until December 21, 1988 or for about 48 years. Significantly, it maintains that Tax Declaration No. 31954 covering the disputed lot in the name of theMunicipality of Daraga, Albay contains an annotation certifying that said lot was under voucher No. 69, August, 1940 accounts. The corresponding Transfer Title No. 4812 has been issued by the Register of Deeds Office of Albay on August 3, 1940.[45] When petitioner received the lot as donation from the Municipality on December 21, 1988, it possessed the subject lot also in the concept of an owner and continued to introduce improvements on the lot. Consequently, when respondent instituted the instant case in 1993, petitioner and its predecessor-ininterestMunicipality of Daraga, Albay had possessed the subject lot for a combined period of about fifty two (52) years.

Petitioner strongly avers that Claro Oate, the original owner of subject lot, sold it to the Municipality. At the very least it asserts that said Claro Oate allowed the Municipality to enter, possess, and enjoy the lot without protest. In fact, Claro Oate neither protested nor questioned the cancellation of his Tax Declaration No. 30235 covering the disputed lot and its substitution by Tax Declaration No. 31954 in the name of the Municipality on account of his sale of the lot to the latter. In the same vein, when Claro Oate and his spouse died, their children Antonio, Rafael, and Francisco who succeeded them also did not take any steps to question the ownership and possession by the Municipality of the disputed lot until they died on June 8, 1990, June 12, 1991, and October 22, 1957, respectively. Petitioner maintains that significantly, respondent and his siblings succeeding their father Francisco as the alleged owners, from his death on October 22, 1957also did not take any action to recover the questioned lot from 1957 until 1993 when the instant suit was commenced. Petitioner avers that if they were really the owners of said lot, they would not have waited 52 long years to institute the suit assuming they have a cause of action against the Municipality or petitioner. Thus, petitioner submits that the equitable principle of laches has indubitably set in to bar respondents action to recover possession of, and title to, the disputed lot. Laches and its elements Indeed, it is settled that rights and actions can be lost by delay and by the effect of delay as the equitable defense of laches does not concern itself with the character of the defendants title, but only with plaintiffs long inaction or inexcusable neglect to bar the latters action as it would be inequitable and unjust to the defendant. Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that whichby the exercise of due diligence could or should have been done earlier.[46] Verily, laches serves to deprive a party guilty of it to any judicial remedies. Its elements are: (1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant's

rights, the complainant having had knowledge or notice of the defendant's conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.[47] In Felix Gochan and Sons Realty Corporation, we held that [t]hough laches applies even to imprescriptible actions, its elements must be proved positively. Laches is evidentiary in nature which could not be established by mere allegations in the pleadings and can not be resolved in a motion to dismiss (emphases supplied).[48] In the same vein, we explained in Santiago v. Court of Appeals that there is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances.[49] Issue of laches not barred by adverse judgment against Daraga, Albay

It is unfortunate that defendant Municipality of Daraga, Albay lost its appeal in CA-G.R. CV No. 60659 before the CA for its failure to pay the required docket fees within the reglementary period. As a result, a Partial Entry of Judgment was made on July 9, 1998 and consequently, the dispositions in the November 3, 1997 Decision, rendered by the Legaspi City RTC, Branch I in favor of respondent Celso Oate, became final and executory as against defendant Municipality of Daraga, Albay. As an off-shoot, with respect to the Municipality of Daraga, the Deed of Donation in favor of petitioner DECS was annulledrespondent Oate was declared owner in fee simple of the disputed lots and entitled to possession but was required to pay PhP 50,000 to the Daraga Municipal Government and the costs of suit. By reason of the finality of the Decision against the Municipality of Daraga, Tax Declaration Nos. 04-006-00068, 332, 22184, 31954, and 8926 are all cancelled and annulled (if not yet cancelled).

What are the effects of the final judgment against Municipality of Daraga on its co-defendant, petitioner DECS? Generally, it has no impact on the appeal of DECS unless the decision affects its defenses. In this petition, DECS no longer questions the declaration of nullity of the Deed of Donation over the disputed lot and hence can be considered as a final resolution of the issue. Likewise, it does not challenge the ownership of Oate of the disputed lots, but merely relied on the defense of laches. The final directive for Municipality of Daraga to return possession of the land has no significance on DECS appeal since precisely, it is DECS position that it should retain possession of the land. From these considerations, the final RTC November 3, 1997 Decision against the Municipality of Daraga has no substantial and material effect upon the DECS appeal. The only remaining issue left is whether laches can inure to the benefit of petitioner DECS considering the fact that Lot No. 6849-A was devoted to public education when the elementary school was built in 1940 under the supervision and control of DECS up to 1993 when Civil Case No. 8715 was filed by respondent Oate. We rule in the affirmative. Laches has set in A brief scrutiny of the records does show tell-tale signs of laches. The first element is undisputed: the then Bagumbayan Elementary School of Daraga was constructed in 1940 on a portion of disputed Lot 6849, specifically Lot No. 6849-A containing 13,072 square meters under TCT No. T-83946. Moreover, Mrs. Toribia Milleza,[50] a retired government employee and resident of Bagumbayan, Daraga since 1955 pertinently testified, thus:
Q: How long have you been residing Bagumbayan, Daraga, Albay? A: Maybe I stayed there in 1955 until the present.[51] xxxx in this place,

Q: Now, can you further recall was constructed in this property? A: Seva type, building. Q: At present how many this property? A: Plenty of school buildings.

the

kind

of

building

that

buildings

were

constructed

in

Q: Now, how many buildings were first constructed in [sic] this property? A: In 1955 only one, the Seva type, then there was constructed five (5) Marcos Type buildings during the Marcos time.[52]

The devotion of Lot No. 6849-A to education started in 1940 and continued up to December 21, 1988 when said lot was donated to the DECS. From then on, DECS built various buildings and introduced improvements on said lot. Lot No. 6849-A was continuously used for public education until March 18, 1993 when respondent Oate filed Civil Case No. 8715 and thereafter up to the present. Thus, for a total period of more than fifty-two (52) years, Lot No. 6849-A was exclusively and completely utilized by DECS for public education. This fact was not successfully challenged nor refuted by respondent. The second element of laches was likewise proven. No evidence was presented to show that respondent or his predecessors-in-interest ever took any action, administrative or judicial, nor either party questioned or protested the Municipalitys adverse occupation of a portion of Lot 6849. As petitioner had demonstrated laches by persuasive and credible evidence, it is incumbent upon respondent to show that his predecessors-in-interest indeed protected their rights of ownership over the lot. Thus, as early as 1940, when the first Seva type school building was constructed over a portion of the disputed lot, now Lot 6849-A, respondent must prove that his predecessors-in-interest indeed undertook activities to contest the occupation of the portion of the lot by the Municipality and subsequently by petitioner DECS. Unfortunately, respondent failed to substantiate such defense of ownership and possession of the lot and even skirted this issue. Respondent testified that he came to know of Lot 6849 only in 1973 when he was 23 years old.[53] He asserted that he took possession of said lot in the same

year when his two (2) uncles, the brothers of his late father, passed on to him the disputed lot as his fathers share of the inheritance from the late Claro Oate andGregoria Los Baos (his grandparents). However, it is interesting to note that he testified that he only came to know in 1991 that the elementary school was built on a portion of Lot 6849, now Lot 6849-A. These assertions are irreconcilable. Common experience tells us that one who owns a property and takes possession of it cannot fail to discover and know that an existing elementary school was built and standing on the lot from the time that the owner starts possessing a property. Nonetheless, even granting that respondent indeed only came to know of such encroachment or occupation in 1991, his rights cannot be better than that of his predecessors-in-interest, that is, Claro Oate and his uncles, Antonio and Rafael, who died in 1990 and 1991, respectively. Since respondents right over the lot originated from his predecessors-in-interest, then he cannot have better rights over Lot No. 6849-A than the latter. The spring cannot rise higher than its source. Besides, respondent has not proffered any explanation why his predecessors-in-interest did not protest and challenge the Municipalitys occupancy over a portion of their lot. Verily, with the span of around 52 years afforded respondent and his predecessors-in-interest, their inaction and delay in protecting their rights were certainly excessive and unjustified. In the third element, the records clearly bear out the fact that petitioner DECS did not know nor anticipate that their possession and occupancy of a portion ofLot 6849 would later be questioned. In fact, petitioner built additional school buildings and facilities on the school site amounting to more than PhP 11 million. Mr. Jose Adra, School Principal of the Daraga North Central Elementary School, testified on the donation of the disputed lot to petitioner and the cost of the improvements on it.[54] After more than forty-eight (48) years of unquestioned, peaceful, and uninterrupted possession by petitioner DECS, it had no knowledge nor reason to believe that respondent would assert any right over the lot after the lapse of such long occupation coupled with a tax declaration in the name of the Daraga Municipality. Finally, the last element is likewise proven by the antecedent facts that clearly show grave prejudice to the government, in general, and to petitioner, in

particular,if the instant action is not barred without even considering the cost of the construction of the school buildings and facilities and the deleterious effect on the school children and affected school teachers and personnel if Lot No. 6849A would be returned to respondent. Verily, the application of laches is addressed to the sound discretion of the court as its application is controlled by equitable considerations. In the instant case, with the foregoing considerations, we are constrained from giving approbation to the trial and appellate courts ruling that the application of the principle of laches would subvert the ends of justice. Indeed, it is unjust for the State and the affected citizenry to suffer after respondent and his predecessors-ininterest had slept on their rights for 52 years. Also, the inaction of respondent Oate and his predecessors-in-interest for over 50 years has reduced their right to regain possession of Lot 6849-A to a stale demand. Laches holds over the actual area possessed and occupied by petitioner

We, however, make the clear distinction that laches applies in favor of petitioner only as regards Lot 6849-A which is actually possessed and occupied by it. Laches does not apply to Lot Nos. 6849-B, 6849-C, 6849-D, and 6849-E. These portions were never occupied by the Municipality and petitioner. Agricultural tenant Felicito Armenta testified that his father, Antonio Armenta, started cultivating portions of Lot 6849 way back in the 1940s and that he took over the tenancy in 1960 when his father stopped tilling the land. Besides, if the Municipality indeed owned Lot 6849 by virtue of a purchase, it is likewise guilty of laches in not protecting or contesting the cultivation by Oates agricultural tenants of said portions of Lot 6849. Transfer Certificates of Title on portions of Lot 6849 valid Petitioner contends that the reconstitution of OCT No. 2563covering subject lot in 1991 or 52 years after the Municipality owned said lot does not in any way affect the latters preferential and superior right over the disputed lot. In

the same vein, it maintains that it is inconsequential that petitioner and the Municipality failed to present as evidence the deed of conveyance in favor of the Municipality, as well as TCT No. 4812 as a registered land owner may lose the right to recover possession of a registered property by reason of laches. Petitioner concludes that the long delayed reconstitution of OCT No. 2563 by respondent was a mere afterthought and intended to camouflage his and his prede cessors unreasonably long inaction which indicates an awareness that they have no valid claim whatsoever over disputed Lot 6849. We disagree. It must be noted that a reconstitution proceeding is one in rem and is thus binding to the whole world. While it is true that laches has set in so far as it pertains to the portion of Lot 6849, specifically Lot 6849-A where the Municipality and petitioner DECS had constructed the existing school, such does not hold true for the totality of Lot 6849 as explained above. Indeed, the reconstitution proceeding being one in rem, the consequent issuance of OCT No. RO-18971 in lieu of the lost or destroyed OCT No. 2563 is valid. Anent the issue of non-notification, we agree with the observation of the courts a quo that even granting arguendo that petitioner was not notified about the reconstitution proceeding, such deficiency is not jurisdictional as to nullify and prevail over the final disposition of the trial court in a proceeding in rem. More so, while petitioner strongly asserts that the certification in Tax Declaration No. 31954 attesting to the payment of the disputed lot under Municipal Voucher No. 69 and the issuance of TCT No. 4812, which was never disputed nor controverted by respondent, should have been given evidentiary weight by the trial and appellate courts as the presumptions of regularity and validity of such official act have not been overcome, such documents cannot defeat the registered title of respondent. Between a clear showing of ownership evidenced by a registered title and a certification in a tax declaration, albeit done in an official capacity, the former holds as the latter is only persuasive evidence. Indeed, tax declarations in land

cases per se do not constitute ownership without other substantial pieces of evidence. The records do not show and petitioner has not given any cogent explanation why the Deed of Conveyance in favor of the Municipality of Daraga, Albay and TCT No. 4812 were not presented. With clear and affirmative defenses set up by petitioner and Municipality of Daraga, Albay, it is incumbent for them to present these documents. Therefore, the unmistakable inference is that there was indeed no sale and conveyance by Claro Oate of Lot 6849 in favor of the Municipality. Consequently, the TCTs cancelling OCT No. RO-18971 covering Lot Nos. 6849-A, 6849-B, 6849-C, 6849-D, and 6849-E were likewise validly issued. Thus, notwithstanding valid titles over the portions of Lot 6849, respondent Oate cannot now take possession over Lot No. 6849-A for reason of laches. In the recent case of De Vera-Cruz v. Miguel, we reiterated the principle we have consistently applied in laches:
The law[55] provides that no title to registered land in derogation of that of the registered owner can be acquired by prescription or adverse possession. Nonetheless, while it is true that a Torrens Title is indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of his registered property by reason of laches.[56]

Thus, with our resolution of the principal issue of applicability of the equitable remedy of laches, the issue of suability of the State has been mooted. A final word. Considering our foregoing disquisition and upon grounds of equity, a modification of the final decision prevailing between respondent Oate and the Municipality of Daraga, Albay is in order. It would be grossly iniquitous for respondent Oate to pay PhP 50,000 to the Municipality of Daraga, Albay considering that he is not entitled to recover the possession and usufruct of Lot No. 6849-A. WHEREFORE, the instant petition is GRANTED and the January 14, 2004 Decision of the CA in CA-G.R. CV No. 60659 affirming the November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED with the following MODIFICATIONS:

1) Declaring the DepEd (formerly DECS), Division of Albay to have the rights of possession and usufruct over Lot 6849-A with an area of 13,072 square meters under TCT No. T-83946 of the Registry of Deeds of Albay, as a result of laches on the part of respondent Celso Oate and his predecessors-ininterest. Respondent Celso Oate, his heirs, assigns, and successors-in-interest are prohibited from selling, mortgaging, or encumbering Lot 6849-A while the said lot is still being used and occupied by petitioner DECS. However, the rights of possession and usufruct will be restored to respondent the moment petitioner DECS no longer needs the said lot. The Registry of Deeds of Albay is ordered to annotate the aforementioned restrictions and conditions at the back of TCT No. T83946-A in the name of respondent Celso Oate. Item No. 2 of the November 3, 1997 Decision of the Legaspi City RTC is modified accordingly; 2) Declaring Celso Oate as the true and legal owner in fee simple of the following lots: a. Lot 6849-C with an area of 10,000 square meters under TCT No. T-83948 of the Registry of Deeds of Albay; b. Lot 6849-D with an area of 1,127 square meters under TCT No. T-83949 of the Registry of Deeds of Albay; and c. Lot 6849-E with an area of 608 square meters under TCT No. T-83950 of the Registry of Deeds of Albay. 3) Declaring Mariano M. Lim as true and legal owner of Lot 6849-B with an area of 3,100 square meters under TCT No. T-84049 of the Registry of Deeds of Albay; 4) Ordering petitioner DECS and all other persons claiming under said department to return the possession of Lots 6849-C, 6849-D, and 6849-E to respondent Celso Oate and Lot 6849-B to Mariano M. Lim; and

5) Deleting Item No. 4 of the November 3, 1997 Decision of the Legaspi City RTC, which ordered respondent Celso Oate to pay Fifty Thousand Pesos (PhP 50,000) to defendant Municipality of Daraga, Albay. The November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED in all other respects. No costs.

SO ORDERED.

FIRST DIVISION
REPUBLIC OF THE PHILIPPINES, Petitioner, G.R. No. 161657 Present: - versus PUNO, C.J.,Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ.

HON. VICENTE A. HIDALGO, in his capacity as Presiding Judge of the Regional Trial Court of Manila, Branch Promulgated: 37, CARMELO V. CACHERO, in his capacity as Sheriff IV, Regional Trial Court of Manila, and TARCILA October 4, 2007 LAPERAL MENDOZA, Respondents. x----------------------------------------------------------------------------------------x

DECISION
GARCIA, J.:

Via this verified petition for certiorari and prohibition under Rule 65 of the

Rules of Court, the Republic of the Philippines (Republic, for short), thru the Office of the Solicitor General (OSG), comes to this Court to nullify and set aside the decision dated August 27, 2003 and other related issuances of the Regional Trial Court (RTC) of Manila, Branch 37, in its Civil Case No. 99-94075. In directly invoking the Courts original jurisdiction to issue the extraordinary writs of certiorariand prohibition, without challenge from any of the respondents, the Republic gave as justification therefor the fact that the case involves an over TWO BILLION PESO judgment against the State, allegedly rendered in blatant violation of the Constitution, law and jurisprudence.

By any standard, the case indeed involves a colossal sum of money which, on the face of the assailed decision, shall be the liability of the national government or, in fine, the taxpayers. This consideration, juxtaposed with the constitutional and legal questions surrounding the controversy, presents special and compelling reasons of public interests why direct recourse to the Court should be allowed, as an exception to the policy on hierarchy of courts. At the core of the litigation is a 4,924.60-square meter lot once covered by Transfer Certificate of Title (TCT) No. 118527 of the Registry of Deeds of Manila in the name of the herein private respondent Tarcila Laperal Mendoza (Mendoza), married to Perfecto Mendoza. The lot is situated at No. 1440 Arlegui St., San Miguel, Manila, near the Malacaang Palace complex. On this lot, hereinafter referred to as the Arlegui property, now stands the Presidential Guest House which was home to two (2) former Presidents of the Republic and now appears to be used as office building of the Office of the President.[1] The facts: Sometime in June 1999, Mendoza filed a suit with the RTC of Manila for reconveyance and the corresponding declaration of nullity of a deed of sale and title against the Republic, the Register of Deeds of Manila and one Atty. Fidel Vivar. In her complaint, as later amended, docketed as Civil Case No. 9994075 and eventually raffled to Branch 35 of the court, Mendoza essentially alleged being the owner of the disputed Arlegui property which the Republic forcibly dispossessed her of and over which the Register of Deeds of Manila issued TCT No. 118911 in the name of the Republic. Answering, the Republic set up, among other affirmative defenses, the States immunity from suit. The intervening legal tussles are not essential to this narration. What is material is that in an Order of March 17, 2000, the RTC of Manila, Branch 35, dismissed Mendozas complaint. The court would also deny, in another order dated May 12, 2000, Mendozas omnibus motion for reconsideration. On a petition

for certiorari, however, the Court of Appeals (CA), in CA-G.R. SP No. 60749, reversed the trial courts assailed orders and remanded the case to the court a quo for further proceedings.[2] On appeal, this Court, in G.R. No. 155231, sustained the CAs reversal action.[3] From Branch 35 of the trial court whose then presiding judge inhibited himself from hearing the remanded Civil Case No. 99-94075, the case was reraffled to Branch 37 thereof, presided by the respondent judge. On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a Third Amended Complaint with a copy of the intended third amended complaint thereto attached. In the May 16, 2003 setting to hear the motion, the RTC, in open court and in the presence of the Republics counsel, admitted the third amended complaint, ordered the Republic to file its answer thereto within five (5) days from May 16, 2003 and set a date for pre-trial. In her adverted third amended complaint for recovery and reconveyance of the Arlegui property, Mendoza sought the declaration of nullity of a supposed deed of sale dated July 15, 1975 which provided the instrumentation toward the issuance of TCT No. 118911 in the name of the Republic. And aside from the cancellation of TCT No. 118911, Mendoza also asked for the reinstatement of her TCT No. 118527.[4] In the same third amended complaint, Mendoza averred that, since time immemorial, she and her predecessors-in-interest had been in peaceful and adverse possession of the property as well as of the owners duplicate copy of TCT No. 118527. Such possession, she added, continued until the first week of July 1975 when a group of armed men representing themselves to be members of the Presidential Security Group [PSG] of the then President Ferdinand E. Marcos, had forcibly entered [her] residence and ordered [her] to turn over to them her Copy of TCT No. 118525 and compelled her and the members of her household to vacate the same ; thus, out of fear for their lives, [she] handed her Owners Duplicate Certificate Copy of TCT No. 118527 and had left and/or vacated the subject property. Mendoza further alleged the following:
1. Per verification, TCT No. 118527 had already been cancelled by virtue of a deed of sale in favor of the Republic allegedly executed by her and her deceased husband on July 15,

1975 and acknowledged before Fidel Vivar which deed was annotated at the back of TCT No. 118527 under PE: 2035/T-118911 dated July 28, 1975; and 2. That the aforementioned deed of sale is fictitious as she (Mendoza) and her husband have not executed any deed of conveyance covering the disputed property in favor of the Republic, let alone appearing before Fidel Vivar.

Inter alia, she prayed for the following:

4. Ordering the Republic to pay plaintiff [Mendoza] a reasonable compensation or rental for the use or occupancy of the subject property in the sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS a month with a five (5%) per cent yearly increase, plus interest thereon at the legal rate, beginning July 1975 until it finally vacates the same; 5. Ordering the Republic to pay plaintiffs counsel a sum equivalent to TWENTY FIVE (25%) PER CENT of the current value of the subject property and/or whatever amount is recovered under the premises; Further, plaintiff prays for such other relief, just and equitable under the premises.

On May 21, 2003, the Republic, represented by the OSG, filed a Motion for Extension (With Motion for Cancellation of scheduled pre-trial). In it, the Republic manifested its inability to simply adopt its previous answer and, accordingly, asked that it be given a period of thirty (30) days from May 21, 2003 or until June 20, 2003 within which to submit an Answer.[5] June 20, 2003 came and went, but no answer was filed. On July 18, 2003 and again on August 19, 2003, the OSG moved for a 30-day extension at each instance. The filing of the last two motions for extension proved to be an idle gesture, however, since the trial court had meanwhileissued an order[6] dated July 7, 2003 declaring the petitioner Republic as in default and allowing the private respondent to present her evidence ex-parte. The evidence for the private respondent, as plaintiff a quo, consisted of her testimony denying having executed the alleged deed of sale dated July 15, 1975 which paved the way for the issuance of TCT No. 118911. According to her, said deed is fictitious or inexistent, as evidenced by separate certifications, the first (Exh. E), issued by the Register of Deeds for Manila and the second (Exh. F), by the Office of Clerk of Court, RTC Manila. Exhibit E[7] states that a copy of the

supposed conveying deed cannot, despite diligent efforts of records personnel, be located, while Exhibit F[8] states that Fidel Vivar was not a commissioned notary public for and in the City of Manila for the year 1975. Three other witnesses[9] testified, albeit their testimonies revolved around the appraisal and rental values of theArlegui property. Eventually, the trial court rendered a judgment by default[10] for Mendoza and against the Republic. To the trial court, the Republic had veritably confiscated Mendozas property, and deprived her not only of the use t hereof but also denied her of the income she could have had otherwise realized during all the years she was illegally dispossessed of the same. Dated August 27, 2003, the trial courts decision dispositively reads as follows:
WHEREFORE, judgment is hereby rendered: 1. Declaring the deed of sale dated July 15, 1975, annotated at the back of [TCT] No. 118527 as PE:2035/T-118911, as non-existent and/or fictitious, and, therefore, null and void from the beginning; Declaring that [TCT] No. 118911 of the defendant Republic of the Philippines has no basis, thereby making it null and void from the beginning; Ordering the defendant Register of Deeds for the City of Manila to reinstate plaintiff [Mendozas TCT] No. 118527; Ordering the defendant Republic to pay just compensation in the sum of ONE HUNDRED FORTY THREE MILLION SIX HUNDRED THOUSAND (P143,600,000.00) PESOS, plus interest at the legal rate, until the whole amount is paid in full for the acquisition of the subject property; Ordering the plaintiff, upon payment of the just compensation for the acquisition of her property, to execute the necessary deed of conveyance in favor of the defendant Republic ; and, on the other hand, directing the defendant Register of Deeds, upon presentation of the said deed of conveyance, to cancel plaintiffs TCT No. 118527 and to issue, in lieu thereof, a new Transfer Certificate of Title in favor of the defendant Republic;

2.

3.

4.

5.

6.

Ordering the defendant Republic to pay the plaintiff the sum of ONE BILLION FOUR HUNDRED EIGHTY MILLION SIX HUNDRED TWENTY SEVEN THOUSAND SIX HUNDRED EIGHTY EIGHT (P1,480,627,688.00) PESOS, representing the reasonable rental for the use of the subject property, the interest thereon at the legal rate, and the opportunity cost at the rate of three (3%) per cent per annum, commencing July 1975 continuously up to July 30, 2003, plus an additional interest at the legal rate, commencing from this date until the whole amount is paid in full;

Ordering the defendant Republic to pay the plaintiff attorneys fee, in an amount equivalent to FIFTEEN (15%) PER CENT of the amount due to the plaintiff. With pronouncement as to the costs of suit. 7. SO ORDERED. (Words in bracket and emphasis added.)

Subsequently, the Republic moved for, but was denied, a new trial per order of the trial court of October 7, 2003.[11] Denied also was its subsequent plea for reconsideration.[12] These twin denial orders were followed by several orders and processes issued by the trial court on separate dates as hereunder indicated:
1. November 27, 2003 - - Certificate of Finality declaring the August 27, 2003 decision final and executory.[13] 2. December 17, 2003 - - Order denying the Notice of Appeal filed on November 27, 2003, the same having been filed beyond the reglementary period.[14] 3. December 19, 2003 - - Order[15] granting the private respondents motion for execution. 4. December 22, 2003 - - Writ of Execution.[16]

Hence, this petition for certiorari. By Resolution[17] of November 20, 2006, the case was set for oral arguments. On January 22, 2007, when this case was called for the purpose, both parties manifested their willingness to settle the case amicably, for which reason

the Court gave them up to February 28, 2007 to submit the compromise agreement for approval. Following several approved extensions of the February 28, 2007 deadline, the OSG, on August 6, 2007, manifested that it is submitting the case for resolution on the merits owing to the inability of the parties to agree on an acceptable compromise. In this recourse, the petitioner urges the Court to strike down as a nullity the trial courts order declaring it in default and the judgment by default that followed. Sought to be nullified, too, also on the ground that they were issued in grave abuse of discretion amounting to lack or in excess of jurisdiction, are the orders and processes enumerated immediately above issued after the rendition of the default judgment. Petitioner lists five (5) overlapping grounds for allowing its petition. It starts off by impugning the order of default and the judgment by default. To the petitioner, the respondent judge committed serious jurisdictional error when he proceeded to hear the case and eventually awarded the private respondent a staggering amount without so much as giving the petitioner the opportunity to present its defense. Petitioners posture is simply without merit. Deprivation of procedural due process is obviously th e petitioners threshold theme. Due process, in its procedural aspect, guarantees in the minimum the opportunity to be heard.[18] Grave abuse of discretion, however, cannot plausibly be laid at the doorstep of the respondent judge on account of his having issued the default order against the petitioner, then proceeding with the hearing and eventually rendering a default judgment. For, what the respondent judge did hew with what Section 3, Rule 9 of the Rules of Court prescribes and allows in the event the defending party fails to seasonably file a responsive pleading. The provision reads:
SEC. 3. Default; declaration of.- If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in [19] its discretion requires the claimant to submit evidence .

While the ideal lies in avoiding orders of default,[20] the policy of the law being to have every litigated case tried on its full merits,[21] the act of the respondent judge in rendering the default judgment after an order of default was properly issued cannot be struck down as a case of grave abuse of discretion. The term grave abuse of discretion, in its juridical sense, connotes capricious, despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of jurisdiction.[22] The abuse must be of such degree as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in a capricious manner. The word capricious, usually used in tandem with arbitrary, conveys the notion of willful and unreasoning action.[23] Under the premises, the mere issuance by the trial court of the order of default followed by a judgment by default can easily be sustained as correct and doubtless within its jurisdiction. Surely, a disposition directing the Republic to pay an enormous sum without the trial court hearing its side does not, without more, vitiate, on due procedural ground, the validity of the default judgment. The petitioner may have indeed been deprived of such hearing, but this does not mean that its right to due process had been violated. For, consequent to being declared in default, the defaulting defendant is deemed to have waived his right to be heard or to take part in the trial. The handling solicitors simply squandered the Republics opportunity to be heard. But more importantly, the law itself imposes such deprivation of the right to participate as a form of penalty against one unwilling without justification to join issue upon the allegations tendered by the plaintiff. And going to another point, the petitioner would ascribe jurisdictional error on the respondent judge for denying its motion for new trial based on any or a mix of the following factors, viz., (1) the failure to file an answer is attributable to the negligence of the former handling solicitor; (2) the meritorious nature of the petitioners defense; and (3) the value of the property involved. The Court is not convinced. Even as the Court particularly notes what the trial court had said on the matter of negligence: that all of the petitioners

pleadings below bear at least three signatures, that of the handling solicitor, the assistant solicitor and the Solicitor General himself, and hence accountability should go up all the way to the top of the totem pole of authority, the cited reasons advanced by the petitioner for a new trial are not recognized under Section 1, Rule 37 of the Rules of Court for such recourse.[24] Withal, there is no cogent reason to disturb the denial by the trial court of the motion for new trial and the denial of the reiterative motion for reconsideration. Then, too, the issuance by the trial court of the Order dated December 17, 2003 denying the petitioners notice of appeal after the court caused the issuance on November 27, 2003 of a certificate of finality of its August 27, 2003 decision can hardly be described as arbitrary, as the petitioner would have this Court believe. In this regard, the Court takes stock of the following key events and material dates set forth in the assailed December 17, 2003 order, supra: (a) The petitioner, thru the OSG, received on August 29, 2003 a copy of the RTC decision in this case, hence had up to September 13, 2003, a Saturday, within which to perfect an appeal; (b) On September 15, 2003, a Monday, the OSG filed its motion for new trial, which the RTC denied, the OSG receiving a copy of the order of denial on October 9, 2003; and (c) On October 24, 2003, the OSG sought reconsideration of the order denying the motion for new trial. The motion for reconsideration was denied per Order dated November 25, 2003, a copy of which the OSG received on the same date.
[25]

Given the foregoing time perspective, what the trial court wrote in its aforementioned impugned order of December 17, 2003 merits approval:
In the case at bar, it is clear that the motion for new trial filed on the fifteenth (15th) day after the decision was received on August 29, 2003 was denied and the moving party has only the remaining period from notice of notice of denial within which to file a notice of appeal. xxx Accordingly, when defendants [Republic et al.] filed their motion for new trial on the last day of the fifteen day (15) prescribed for taking an appeal, which motion was subsequently denied, they had one (1) day from receipt of a copy of the order denying new trial within which to perfect [an] appeal . Since defendants had received a copy of the order denying their motion for new trial on 09 October 2003, reckoned from that date, they only have one (1) day left within which to file the notice of appeal. But instead of doing so, the defendants filed a motion for reconsideration which was later declared by the Court as pro forma

motion in the Order dated 25 November 2003. The running of the prescriptive period, therefore, can not be interrupted by a pro forma motion. Hence the filing of the notice of appeal on 27 November 2007 came much too late for by then the judgment had already become final and executory.[26](Words in bracket added; Emphasis in the original.)

It cannot be over-emphasized at this stage that the special civil action of certiorari is limited to resolving only errors of jurisdiction; it is not a remedy to correct errors of judgment. Hence, the petitioners lament, partly covered by and discussed under the first ground for allowing its petition, about the trial court taking cognizance of the case notwithstanding private respondents claim or action being barred by prescription and/or laches cannot be considered favorably. For, let alone the fact that an action for the declaration of the inexistence of a contract, as here, does not prescribe;[27] that a void transfer of property can be recovered by accion reivindicatoria;[28] and that the legal fiction of indefeasibility of a Torrens title cannot be used as a shield to perpetuate fraud,[29] the trial courts disinclination not to appreciate in favor of the Republic the general principles of prescription or laches constitutes, at best, errors of judgment not correctable by certiorari. The evidence adduced below indeed adequately supports a conclusion that the Office of the President, during the administration of then President Marcos, wrested possession of the property in question and somehow secured a certificate of title over it without a conveying deed having been executed to legally justify the cancellation of the old title (TCT No. 118527) in the name of the private respondent and the issuance of a new one (TCT No. 118911) in the name of petitioner Republic. Accordingly, granting private respondents basic plea for recovery of the Arlegui property, which was legally hers all along, and the reinstatement of her cancelled certificate of title are legally correct as they are morally right. While not exactly convenient because the Office of the President presently uses it for mix residence and office purposes, restoring private respondent to her possession of the Arlegui property is still legally and physically feasible. For what is before us, after all, is a registered owner of a piece of land who, during the early days of the martial law regime, lost possession thereof to the Government which appropriated the same for some public use, but without going through the legal process of expropriation, let alone paying such owner just compensation.

The Court cannot, however, stop with just restoring the private respondent to her possession and ownership of her property. The restoration ought to be complemented by some form of monetary compensation for having been unjustly deprived of the beneficial use thereof, but not, however, in the varying amounts and level fixed in the assailed decision of the trial court and set to be executed by the equally assailed writ of execution. The Court finds the monetary award set forth therein to be erroneous. And the error relates to basic fundamentals of law as to constitute grave abuse of discretion. As may be noted, private respondent fixed the assessed value of her Arlegui property at P2,388,990.00. And in the prayer portion of her third amended complaint for recovery, she asked to be restored to the possession of her property and that the petitioner be ordered to pay her, as reasonable compensation or rental use or occupancy thereof, the sum of P500,000.00 a month, or P6 Million a year, with a five percent (5%) yearly increase plus interest at the legal rate beginning July 1975. From July 1975 when the PSG allegedly took over the subject property to July 2003, a month before the trial court rendered judgment, or a period of 28 years, private respondents total rental claim would, per the OSGs computation, only amount to P371,440,426.00. In its assailed decision, however, the trial court ordered the petitioner to pay private respondent the total amount of over P1.48 Billion or the mind-boggling amount of P1,480,627,688.00, to be exact, representing the reasonable rental for the property, the interest rate thereon at the legal rate and the opportunity cost. This figure is on top of the P143,600,000.00 which represents the acquisition cost of the disputed property. All told, the trial court would have the Republic pay the total amount of about P1.624 Billion, exclusive of interest, for the taking of a property with a declared assessed value of P2,388,900.00. This is not to mention the award of attorneys fees in an amount equivalent to 15% of the amount due the private respondent. In doing so, the respondent judge brazenly went around the explicit command of Rule 9, Section 3(d) of the Rules of Court[30] which defines the extent of the relief that may be awarded in a judgment by default, i.e., only so much as has been alleged and proved. The court acts in excess of jurisdiction if it awards an amount beyond the claim made in the complaint or beyond that proved by the

evidence.[31] While a defaulted defendant may be said to be at the mercy of the trial court, the Rules of Court and certainly the imperatives of fair play see to it that any decision against him must be in accordance with law.[32] In the abstract, this means that the judgment must not be characterized by outrageous one-sidedness, but by what is fair, just and equitable that always underlie the enactment of a law. Given the above perspective, the obvious question that comes to mind is the level of compensation which for the use and occupancy of the Arlegui propertywould be fair to both the petitioner and the private respondent and, at the same time, be within acceptable legal bounds. The process of balancing the interests of both parties is not an easy one. But surely, the Arlegui property cannot possibly be assigned, even perhaps at the present real estate business standards, a monthlyrental value of at least P500,000.00 or P6,000,000.00 a year, the amount private respondent particularly sought and attempted to prove. This asking figure is clearly unconscionable, if not downright ridiculous, attendant circumstances considered. To the Court, an award of P20,000.00 a month for the use and occupancy of theArlegui property, while perhaps a little bit arbitrary, is reasonable and may be granted pro hac vice considering the following hard realities which the Court takes stock of:
1. The property is relatively small in terms of actual area and had an assessed value of only P2,388,900.00; 2. What the martial law regime took over was not exactly an area with a new and imposing structure, if there was any; and 3. The Arlegui property had minimal rental value during the relatively long martial law years, given the very restrictive entry and egress conditions prevailing at the vicinity at that time and even after.

To be sure, the grant of monetary award is not without parallel. In Alfonso v. Pasay City,[33] a case where a registered owner also lost possession of a piece of lot to a municipality which took it for a public purposes without instituting expropriation proceedings or paying any compensation for the lot, the Court, citing Herrera v. Auditor General,[34] ordered payment of just compensation but in the form of interest when a return of the property was no longer feasible.

The award of attorneys fees equivalent to 15% o f the amount due the private respondent, as reduced herein, is affirmed. The assessment of costs of suit against the petitioner is, however, nullified, costs not being allowed against the Republic, unless otherwise provided by law.[35] The assailed trial courts issuance of the writ of execution [36] against government funds to satisfy its money judgment is also nullified. It is basic that government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments.[37] Republic v. Palacio[38] teaches that a judgment against the State generally operates merely to liquidate and establish the plaintiffs claim in the absence of express provision; otherwise, they can not be enforced by processes of law. Albeit title to the Arlegui property remains in the name of the petitioner Republic, it is actually the Office of the President which has beneficial possession of and use over it since the 1975 takeover. Accordingly, and in accord with the elementary sense of justice, it behooves that office to make the appropriate budgetary arrangements towards paying private respondent what is due her under the premises. This, to us, is the right thing to do. The imperatives of fair dealing demand no less. And the Court would be remiss in the discharge of its duties as dispenser of justice if it does not exhort the Office of the President to comply with what, in law and equity, is its obligation. If the same office will undertake to pay its obligation with reasonable dispatch or in a manner acceptable to the private respondent, then simple justice, while perhaps delayed, will have its day. Private respondent is in the twilight of her life, being now over 90 years of age.[39] Any delay in the implementation of this disposition would be a bitter cut. WHEREFORE, the decision of the Regional Trial Court of Manila dated August 27, 2003 insofar as it nullified TCT No. 118911 of petitioner Republic of the Philippines and ordered the Register of Deeds of Manila to reinstate private respondent Tarcila L. Mendozas TCT No. 118527, or to issue her a new certificate of title is AFFIRMED. Should it be necessary, the Register of Deeds of Manila shall execute the necessary conveying deed to effect the reinstatement of title or the issuance of a new title to her.

It is MODIFIED in the sense that for the use and occupancy of the Arlegui property, petitioner Republic is ordered to pay private respondent the reasonable amount of P20,000.00 a month beginning July 1975 until it vacates the same and the possession thereof restored to the private respondent, plus an additional interest of 6% per annum on the total amount due upon the finality of this Decision until the same is fully paid. Petitioner is further ordered to pay private respondent attorney's fees equivalent to 15% of the amount due her under the premises. Accordingly, a writ of certiorari is hereby ISSUED in the sense that: 1. The respondent courts assailed decision of August 27, 2003 insofar as it ordered the petitioner Republic of the Philippines to pay private respondent Tarcila L. Mendoza the sum of One Billion Four Hundred Eighty Million Six Hundred Twenty Seven Thousand Six Hundred Eighty Eight Pesos (P1,480,627,688.00) representing the purported rental use of the property in question, the interest thereon and the opportunity cost at the rate of 3% per annum plus the interest at the legal rate added thereon is nullified. The portion assessing the petitioner Republic for costs of suit is also declared null and void. 2. The Order of the respondent court dated December 19, 2003 for the issuance of a writ of execution and the Writ of Execution dated December 22, 2003 against government funds are hereby declared null and void. Accordingly, the presiding judge of the respondent court, the private respondent, their agents and persons acting for and in their behalves are permanently enjoined from enforcing said writ of execution. However, consistent with the basic tenets of justice, fairness and equity, petitioner Republic, thru the Office of the President, is hereby strongly enjoined to take the necessary steps, and, with reasonable dispatch, make the appropriate budgetary arrangements to pay private respondent Tarcila L. Mendoza or her assigns the amount adjudged due her under this disposition. SO ORDERED.

IRST DIVISION
LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC., Petitioner, G.R. No. 185918

Present: LEONARDO-DE CASTRO, Acting Chairperson, PERALTA, BERSAMIN, VILLARAMA, JR., and REYES,** JJ

- versus -

UNIVERSITY OF THEPHILIPPINES, Respondent.

Promulgated:

April 18, 2012 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
VILLARAMA, JR., J.: Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the August 20, 2008 Amended Decision[1] and December 23, 2008 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 91281. The antecedent facts of the case are as follows:

Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a contract for security services with respondent University of the Philippines (UP). In 1998, several security guards assigned to UP filed separate complaints against Lockheed and UP for payment of underpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and attorneys fees. On February 16, 2000, the Labor Arbiter rendered a decision as follows:
WHEREFORE, premises considered, respondents Lockheed Detective and Watchman Agency, Inc. and UP as job contractor and principal, respectively, are hereby declared to be solidarily liable to complainants for the following claims of the latter which are found meritorious. Underpaid wages/salaries, premium pay for work on rest day and special holiday, holiday pay, 5 days service incentive leave pay, 13th month pay for 1998, refund of cash bond (deducted at P50.00 per month from January to May 1996, P100.00 per month from June 1996 and P200.00 from November 1997), refund of deduction for Mutual Benefits Aids System at the rate of P50.00 a month, and attorneys fees; in the total amount of P1,184,763.12 broken down as follows per attached computation of the Computation and [E]xamination Unit of this Commission, which computation forms part of this Decision: 1. JOSE SABALAS 2. TIRSO DOMASIAN 3. JUAN TAPEL 4. DINDO MURING 5. ALEXANDER ALLORDE 6. WILFREDO ESCOBAR 7. FERDINAND VELASQUEZ P77,983.62 76,262.70 80,546.03 80,546.03 80,471.78 80,160.63 78,595.53

8. ANTHONY GONZALES 9. SAMUEL ESCARIO 10. PEDRO FAILORINA 11. MATEO TANELA 12. JOB SABALAS 13. ANDRES DACANAYAN 14. EDDIE OLIVAR

76,869.97 80,509.78 80,350.87 70,590.58 59,362.40 77,403.73 77,403.73 P1,077,057.38

plus 10% attorneys fees GRAND TOTAL AWARD

107,705.74 P1,184,763.12

Third party respondent University of the Philippines is hereby declared to be liable to Third Party Complainant and cross claimant Lockheed Detective and Watchman Agency for the unpaid legislated salary increases of the latters security guards for the years 1996 to 1998, in the total amount of P13,066,794.14, out of which amount the amounts due complainants here shall be paid. The other claims are hereby DISMISSED for lack of merit (night shift differential and 13th month pay) or for having been paid in the course of this proceedings (salaries for December 15-31, 1997 in the amount of P40,140.44). The claims of Erlindo Collado, Rogelio Banjao and Amor Banjao are hereby DISMISSED as amicably settled for and in consideration of the amounts of P12,315.72, P12,271.77 and P12,819.33, respectively. SO ORDERED.
[3]

Both Lockheed and UP appealed the Labor Arbiters decision. By Decision[4] dated April 12, 2002, the NLRC modified the Labor Arbiters decision. The NLRC held:
WHEREFORE, the decision appealed from is hereby modified as follows:

1. Complainants claims for premium pay for work on rest day and special holiday, and 5 days service incentive leave pay, are hereby dismissed for lack of basis. 2. The respondent University of the Philippines is still solidarily liable with Lockheed in the payment of the rest of the claims covering the period of their service contract. The Financial Analyst is hereby ordered to recompute the awards of the complainants in accordance with the foregoing modifications. SO ORDERED.
[5]

The complaining security guards and UP filed their respective motions for reconsideration. On August 14, 2002, however, the NLRC denied said motions. As the parties did not appeal the NLRC decision, the same became final and executory on October 26, 2002.[6] A writ of execution was then issued but later quashed by the Labor Arbiter on November 23, 2003 on motion of UP due to disputes regarding the amount of the award. Later, however, said order quashing the writ was reversed by the NLRC by Resolution[7] dated June 8, 2004, disposing as follows:
WHEREFORE, premises considered, we grant this instant appeal. The Order dated 23 November 2003 is hereby reversed and set aside. The Labor Arbiter is directed to issue a Writ of Execution for the satisfaction of the judgment award in favor of ThirdParty complainants. SO ORDERED.[8]

UP moved to reconsider the NLRC resolution. On December 28, 2004, the NLRC upheld its resolution but with modification that the satisfaction of the judgment award in favor of Lockheed will be only against the funds of UP which are not identified as public funds.

The NLRC order and resolution having become final, Lockheed filed a motion for the issuance of an alias writ of execution. The same was granted on May 23, 2005.[9] On July 25, 2005, a Notice of Garnishment[10] was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award ofP12,142,522.69 (inclusive of execution fee). In a letter[11] dated August 9, 2005, PNB informed UP that it has received an order of release dated August 8, 2005 issued by the Labor Arbiter directing PNB UP Diliman Branch to release to the NLRC Cashier, through the assigned NLRC Sheriff Max L. Lago, the judgment award/amount of P12,142,522.69. PNB likewise reminded UP that the bank only has 10 working days from receipt of the order to deliver the garnished funds and unless it receives a notice from UP or the NLRC before the expiry of the 10-day period regarding the issuance of a court order or writ of injunction discharging or enjoining the implementation and execution of the Notice of Garnishment and Writ of Execution, the bank shall be constrained to cause the release of the garnished funds in favor of the NLRC. On August 16, 2005, UP filed an Urgent Motion to Quash

Garnishment.[12] UP contended that the funds being subjected to garnishment at PNB are government/public funds. As certified by the University Accountant, the subject funds are covered by Savings Account No. 275-529999-8, under the name of UP System Trust Receipts, earmarked for Student Guaranty Deposit, Scholarship Fund, Student Fund, Publications, Research Grants, and Miscellaneous Trust Account. UP argued that as public funds, the subject PNB account cannot be disbursed except pursuant to an appropriation required by law. The Labor Arbiter, however, dismissed the urgent motion for lack of merit on August 30, 2005.[13]

On September 2, 2005, the amount of P12,062,398.71 was withdrawn by the sheriff from UPs PNB account.[14] On September 12, 2005, UP filed a petition for certiorari before the CA based on the following grounds:
I. The concept of solidary liability by an indirect employer notwithstanding, respondent NLRC gravely abused its discretion in a manner amounting to lack or excess of jurisdiction by misusing such concept to justify the garnishment by the executing Sheriff of public/government funds belonging to UP. II. Respondents NLRC and Arbiter LORA acted without jurisdiction or gravely abused their discretion in a manner amounting to lack or excess of jurisdiction when, by means of an Alias Writ of Execution against petitioner UP, they authorized respondent Sheriff to garnish UPs public funds. Similarly, respondent LORA gravely abused her discretion when she resolved petitioners Motion to Quash Notice of Garnishment addressed to, and intended for, the NLRC, and when she unilaterally and arbitrarily disregarded an official Certification that the funds garnished are public/government funds, and thereby allowed respondent Sheriff to withdraw the same from PNB. III. Respondents gravely abused their discretion in a manner amounting to lack or excess of jurisdiction when they, despite prior knowledge, effected the execution that caused paralyzation and dislocation to petitioners governmental functions.
[15]

On March 12, 2008, the CA rendered a decision[16] dismissing UPs petition for certiorari. Citing Republic v. COCOFED,[17] which defines public funds as moneys belonging to the State or to any political subdivisions of the State, more specifically taxes, customs, duties and moneys raised by operation of law for the support of the government or the discharge of its obligations, the appellate court ruled that the funds sought to be garnished do not seem to fall within the stated definition.

On reconsideration, however, the CA issued the assailed Amended Decision. It held that without departing from its findings that the funds covered in the savings account sought to be garnished do not fall within the classification of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case ofNational Electrification Administration v. Morales[18] which mandates that all money claims against the government must first be filed with the Commission on Audit (COA). Lockheed moved to reconsider the amended decision but the same was denied in the assailed CA Resolution dated December 23, 2008. The CA cited Manila International Airport Authority v. Court of Appeals[19] which held that UP ranks with MIAA, a government instrumentality exercising corporate powers but not organized as a stock or non-stock corporation. While said corporations are government instrumentalities, they are loosely called government corporate entities but not government-owned and controlled corporations in the strict sense. Hence this petition by Lockheed raising the following arguments:
1. RESPONDENT UP IS A GOVERNMENT ENTITY WITH A SEPARATE AND DISTINCT PERSONALITY FROM THE NATIONAL GOVERNMENT AND HAS ITS OWN CHARTER GRANTING IT THE RIGHT TO SUE AND BE SUED. IT THEREFORE CANNOT AVAIL OF THE IMMUNITY FROM SUIT OF THE GOVERNMENT. NOT HAVING IMMUNITY FROM SUIT, RESPONDENT UP CAN BE HELD LIABLE AND EXECUTION CAN THUS ENSUE. 2. MOREOVER, IF THE COURT LENDS IT ASSENT TO THE INVOCATION OF THE DOCTRINE OF STATE IMMUNITY, THIS WILL RESULT [IN] GRAVE INJUSTICE. 3. FURTHERMORE, THE PROTESTATIONS OF THE RESPONDENT ARE TOO LATE IN THE DAY, AS THE EXECUTION PROCEEDINGS HAVE ALREADY BEEN TERMINATED.
[20]

Lockheed contends that UP has its own separate and distinct juridical entity from the national government and has its own charter. Thus, it can be sued and be held liable. Moreover, Executive Order No. 714 entitled Fiscal Control and

Management of the Funds of UP recognizes that as an institution of higher learning, UP has always granted full management and control of its affairs including its financial affairs.[21] Therefore, it cannot shield itself from its private contractual liabilities by simply invoking the public character of its funds. Lockheed also cites several cases wherein it was ruled that funds of public corporations which can sue and be sued were not exempt from garnishment. Lockheed likewise argues that the rulings in the NEA and MIAA cases are inapplicable. It contends that UP is not similarly situated with NEA because the jurisdiction of COA over the accounts of UP is only on a post-audit basis. As to the MIAA case, the liability of MIAA pertains to the real estate taxes imposed by the City of Paranaque while the obligation of UP in this case involves a private contractual obligation. Lockheed also argues that the declaration in MIAA specifically citing UP was mere obiter dictum. Lockheed moreover submits that UP cannot invoke state immunity to justify and perpetrate an injustice. UP itself admitted its liability and thus it should not be allowed to renege on its contractual obligations. Lockheed contends that this might create a ruinous precedent that would likely affect the relationship between the public and private sectors. Lastly, Lockheed contends that UP cannot anymore seek the quashal of the writ of execution and notice of garnishment as they are already fait accompli. For its part, UP contends that it did not invoke the doctrine of state immunity from suit in the proceedings a quo and in fact, it did not object to being sued before the labor department. It maintains, however, that suability does not necessarily mean liability. UP argues that the CA correctly applied the NEA ruling when it held that all money claims must be filed with the COA.

As to alleged injustice that may result for invocation of state immunity from suit, UP reiterates that it consented to be sued and even participated in the proceedings below. Lockheed cannot now claim that invocation of state immunity, which UP did not invoke in the first place, can result in injustice. On the fait accompli argument, UP argues that Lockheed cannot wash its hands from liability for the consummated garnishment and execution of UPs trust fund in the amount of P12,062,398.71. UP cites that damage was done to UP and the beneficiaries of the fund when said funds, which were earmarked for specific educational purposes, were misapplied, for instance, to answer for the execution fee of P120,123.98 unilaterally stipulated by the sheriff. Lockheed, being the party which procured the illegal garnishment, should be held primarily liable. The mere fact that the CA set aside the writ of garnishment confirms the liability of Lockheed to reimburse and indemnify in accordance with law. The petition has no merit. We agree with UP that there was no point for Lockheed in discussing the doctrine of state immunity from suit as this was never an issue in this case. Clearly, UP consented to be sued when it participated in the proceedings below. What UP questions is the hasty garnishment of its funds in its PNB account. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with the COA. Under Commonwealth Act No. 327,[22] as amended by Section 26 of P.D. No. 1445,[23] it is the COA which has primary jurisdiction to examine, audit and settle all debts and claims of any sort due from or owing the Government or any of its

subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries. With respect to money claims arising from the implementation of Republic Act No. 6758,[24] their allowance or disallowance is for COA to decide, subject only to the remedy of appeal by petition for certiorarito this Court.[25] We cannot subscribe to Lockheeds argument that NEA is not similarly situated with UP because the COAs jurisdiction over the latter is only on postaudit basis. A reading of the pertinent Commonwealth Act provision clearly shows that it does not make any distinction as to which of the government subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries whose debts should be filed before the COA. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds of UP had already been garnished, since the garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred right after the withdrawal of the garnished funds from PNB. WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. Petitioner Lockheed Detective and Watchman Agency, Inc. is ordered toREIMBURSE respondent University of the Philippines the amount of P12,062,398.71 plus interest of 6% per annum, to be computed from September 12, 2005 up to the finality of this Decision, and 12% interest on the entire amount from date of finality of this Decision until fully paid. No pronouncement as to costs.

FIRST DIVISION G.R. No. 171182 August 23, 2012

UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE GUZMAN, RUBEN P. ASPIRAS, EMMANUEL P. BELLO, WILFREDO P. DAVID, CASIANO S. ABRIGO, and JOSEFINA R. LICUANAN, Petitioners, vs. HON. AGUSTIN S. DIZON, his capacity as Presiding Judge of the Regional Trial Court of Quezon City, Branch 80, STERN BUILDERS, INC., and SERVILLANO DELA CRUZ, Respondents. DECISION BERSAMIN, J.: Trial judges should not immediately issue writs of execution or garnishment against the Government or any of its subdivisions, agencies and instrumentalities to enforce money judgments.1 They should bear in mind that the primary jurisdiction to examine, audit and settle all claims of any sort due from the Government or any of its subdivisions, agencies and instrumentalities pertains to the Commission on Audit (COA) pursuant to Presidential Decree No. 1445 (Government Auditing Code of the Philippines). The Case On appeal by the University of the Philippines and its then incumbent officials (collectively, the UP) is the decision promulgated on September 16, 2005,2 whereby the Court of Appeals (CA) upheld the order of the Regional Trial Court (RTC), Branch 80, in Quezon City that directed the garnishment of public funds amounting to P16,370,191.74 belonging to the UP to satisfy the writ of execution issued to enforce the already final and executory judgment against the UP. Antecedents On August 30, 1990, the UP, through its then President Jose V. Abueva, entered into a General Construction Agreement with respondent Stern Builders Corporation (Stern Builders), represented by its President and General Manager Servillano dela Cruz, for the construction of the extension building and the renovation of the College of Arts and Sciences Building in the campus of the University of the Philippines in Los Baos (UPLB).3 In the course of the implementation of the contract, Stern Builders submitted three progress billings corresponding to the work accomplished, but the UP paid only two of the billings. The third billing worth P273,729.47 was not paid due to its disallowance by the Commission on Audit (COA). Despite the lifting of the disallowance, the UP failed to pay the billing, prompting Stern Builders and dela Cruz to sue the UP and its co-respondent officials to collect the unpaid billing and to recover various damages. The suit, entitled Stern Builders Corporation and Servillano R. Dela Cruz v. University of the Philippines Systems, Jose V. Abueva, Raul P. de Guzman, Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David, Casiano S. Abrigo, and Josefina R. Licuanan, was docketed as Civil Case No. Q-93-14971 of the Regional Trial Court in Quezon City (RTC).4 After trial, on November 28, 2001, the RTC rendered its decision in favor of the plaintiffs,5 viz:

Wherefore, in the light of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the latter to pay plaintiff, jointly and severally, the following, to wit: 1. P503,462.74 amount of the third billing, additional accomplished work and retention money 2. P5,716,729.00 in actual damages 3. P10,000,000.00 in moral damages 4. P150,000.00 and P1,500.00 per appearance as attorneys fees; and 5. Costs of suit. SO ORDERED. Following the RTCs denial of its motion for reconsideration on May 7, 2002,6 the UP filed a notice of appeal on June 3, 2002.7 Stern Builders and dela Cruz opposed the notice of appeal on the ground of its filing being belated, and moved for the execution of the decision. The UP countered that the notice of appeal was filed within the reglementary period because the UPs Office of Legal Affairs (OLS) in Diliman, Quezon City received the order of denial only on May 31, 2002. On September 26, 2002, the RTC denied due course to the notice of appeal for having been filed out of time and granted the private respondents motion for execution.8 The RTC issued the writ of execution on October 4, 2002,9 and the sheriff of the RTC served the writ of execution and notice of demand upon the UP, through its counsel, on October 9, 2002.10 The UP filed an urgent motion to reconsider the order dated September 26, 2002, to quash the writ of execution dated October 4, 2002, and to restrain the proceedings.11 However, the RTC denied the urgent motion on April 1, 2003.12 On June 24, 2003, the UP assailed the denial of due course to its appeal through a petition for certiorari in the Court of Appeals (CA), docketed as CA-G.R. No. 77395.13 On February 24, 2004, the CA dismissed the petition for certiorari upon finding that the UPs notice of appeal had been filed late,14 stating: Records clearly show that petitioners received a copy of the Decision dated November 28, 2001 and January 7, 2002, thus, they had until January 22, 2002 within which to file their appeal. On January 16, 2002 or after the lapse of nine (9) days, petitioners through their counsel Atty. Nolasco filed a Motion for Reconsideration of the aforesaid decision, hence, pursuant to the rules, petitioners still had six (6) remaining days to file their appeal. As admitted by the petitioners in their petition (Rollo, p. 25), Atty. Nolasco received a copy of the Order denying their motion for reconsideration on May 17, 2002, thus, petitioners still has until May 23, 2002 (the remaining six (6) days) within which to file their appeal. Obviously, petitioners were not able to file their Notice of Appeal on May 23, 2002 as it was only filed on June 3, 2002. In view of the said circumstances, We are of the belief and so holds that the Notice of Appeal filed by the petitioners was really filed out of time, the same having been filed seventeen (17) days late of the reglementary period. By reason of which, the decision dated November 28, 2001 had already become final and executory. "Settled is the rule that the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but jurisdictional, and failure to perfect that

appeal renders the challenged judgment final and executory. This is not an empty procedural rule but is grounded on fundamental considerations of public policy and sound practice." (Rams Studio and Photographic Equipment, Inc. vs. Court of Appeals, 346 SCRA 691, 696). Indeed, Atty. Nolasco received the order of denial of the Motion for Reconsideration on May 17, 2002 but filed a Notice of Appeal only on June 3, 3003. As such, the decision of the lower court ipso facto became final when no appeal was perfected after the lapse of the reglementary period. This procedural caveat cannot be trifled with, not even by the High Court.15 The UP sought a reconsideration, but the CA denied the UPs motion for reconsideration on April 19, 2004.16 On May 11, 2004, the UP appealed to the Court by petition for review on certiorari (G.R. No. 163501). On June 23, 2004, the Court denied the petition for review.17 The UP moved for the reconsideration of the denial of its petition for review on August 29, 2004,18 but the Court denied the motion on October 6, 2004.19 The denial became final and executory on November 12, 2004.20 In the meanwhile that the UP was exhausting the available remedies to overturn the denial of due course to the appeal and the issuance of the writ of execution, Stern Builders and dela Cruz filed in the RTC their motions for execution despite their previous motion having already been granted and despite the writ of execution having already issued. On June 11, 2003, the RTC granted another motion for execution filed on May 9, 2003 (although the RTC had already issued the writ of execution on October 4, 2002).21 On June 23, 2003 and July 25, 2003, respectively, the sheriff served notices of garnishment on the UPs depository banks, namely: Land Bank of the Philippines (Buendia Branch) and the Development Bank of the Philippines (DBP), Commonwealth Branch.22 The UP assailed the garnishment through an urgent motion to quash the notices of garnishment;23 and a motion to quash the writ of execution dated May 9, 2003.24 On their part, Stern Builders and dela Cruz filed their ex parte motion for issuance of a release order.25 On October 14, 2003, the RTC denied the UPs urgent motion to quash, and granted Stern Builders and dela Cruzs ex parte motion for issuance of a release order.26 The UP moved for the reconsideration of the order of October 14, 2003, but the RTC denied the motion on November 7, 2003.27 On January 12, 2004, Stern Builders and dela Cruz again sought the release of the garnished funds.28 Despite the UPs opposition,29 the RTC granted the motion to release the garnished funds on March 16, 2004.30 On April 20, 2004, however, the RTC held in abeyance the enforcement of the writs of execution issued on October 4, 2002 and June 3, 2003 and all the ensuing notices of garnishment, citing Section 4, Rule 52, Rules of Court, which provided that the pendency of a timely motion for reconsideration stayed the execution of the judgment.31 On December 21, 2004, the RTC, through respondent Judge Agustin S. Dizon, authorized the release of the garnished funds of the UP,32 to wit:

WHEREFORE, premises considered, there being no more legal impediment for the release of the garnished amount in satisfaction of the judgment award in the instant case, let the amount garnished be immediately released by the Development Bank of the Philippines, Commonwealth Branch, Quezon City in favor of the plaintiff. SO ORDERED. The UP was served on January 3, 2005 with the order of December 21, 2004 directing DBP to release the garnished funds.33 On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP in direct contempt of court for its non-compliance with the order of release.34 Thereupon, on January 10, 2005, the UP brought a petition for certiorari in the CA to challenge the jurisdiction of the RTC in issuing the order of December 21, 2004 (CA-G.R. CV No. 88125).35 Aside from raising the denial of due process, the UP averred that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that there was no longer any legal impediment to the release of the garnished funds. The UP argued that government funds and properties could not be seized by virtue of writs of execution or garnishment, as held in Department of Agriculture v. National Labor Relations Commission,36 and citing Section 84 of Presidential Decree No. 1445 to the effect that "revenue funds shall not be paid out of any public treasury or depository except in pursuance of an appropriation law or other specific statutory authority;" and that the order of garnishment clashed with the ruling in University of the Philippines Board of Regents v. LigotTelan37 to the effect that the funds belonging to the UP were public funds. On January 19, 2005, the CA issued a temporary restraining order (TRO) upon application by the UP.38 On March 22, 2005, Stern Builders and dela Cruz filed in the RTC their amended motion for sheriffs assistance to implement the release order dated December 21, 2004, stating that the 60-day period of the TRO of the CA had already lapsed.39 The UP opposed the amended motion and countered that the implementation of the release order be suspended.40 On May 3, 2005, the RTC granted the amended motion for sheriffs assistance and directed the sheriff to proceed to the DBP to receive the check in satisfaction of the judgment.41 The UP sought the reconsideration of the order of May 3, 2005.42 On May 16, 2005, DBP filed a motion to consign the check representing the judgment award and to dismiss the motion to cite its officials in contempt of court.43 On May 23, 2005, the UP presented a motion to withhold the release of the payment of the judgment award.44 On July 8, 2005, the RTC resolved all the pending matters,45 noting that the DBP had already delivered to the sheriff Managers Check No. 811941 for P16,370,191.74 representing the garnished funds payable to the order of Stern Builders and dela Cruz as its compliance with the RTCs order dated December 21, 2004.46 However, the RTC directed in the same order that Stern Builders and dela Cruz should not encash the check or withdraw its amount pending the final resolution of the UPs petition for certiorari, to wit:47

To enable the money represented in the check in question (No. 00008119411) to earn interest during the pendency of the defendant University of the Philippines application for a writ of injunction with the Court of Appeals the same may now be deposited by the plaintiff at the garnishee Bank (Development Bank of the Philippines), the disposition of the amount represented therein being subject to the final outcome of the case of the University of the Philippines et al., vs. Hon. Agustin S. Dizon et al., (CA G.R. 88125) before the Court of Appeals. Let it be stated herein that the plaintiff is not authorized to encash and withdraw the amount represented in the check in question and enjoy the same in the fashion of an owner during the pendency of the case between the parties before the Court of Appeals which may or may not be resolved in plaintiffs favor. With the end in view of seeing to it that the check in question is deposited by the plaintiff at the Development Bank of the Philippines (garnishee bank), Branch Sheriff Herlan Velasco is directed to accompany and/or escort the plaintiff in making the deposit of the check in question. SO ORDERED. On September 16, 2005, the CA promulgated its assailed decision dismissing the UPs petition for certiorari, ruling that the UP had been given ample opportunity to contest the motion to direct the DBP to deposit the check in the name of Stern Builders and dela Cruz; and that the garnished funds could be the proper subject of garnishment because they had been already earmarked for the project, with the UP holding the funds only in a fiduciary capacity,48 viz: Petitioners next argue that the UP funds may not be seized for execution or garnishment to satisfy the judgment award. Citing Department of Agriculture vs. NLRC, University of the Philippines Board of Regents vs. Hon. Ligot-Telan, petitioners contend that UP deposits at Land Bank and the Development Bank of the Philippines, being government funds, may not be released absent an appropriations bill from Congress. The argument is specious. UP entered into a contract with private respondents for the expansion and renovation of the Arts and Sciences Building of its campus in Los Baos, Laguna. Decidedly, there was already an appropriations earmarked for the said project. The said funds are retained by UP, in a fiduciary capacity, pending completion of the construction project. We agree with the trial Court [sic] observation on this score: "4. Executive Order No. 109 (Directing all National Government Agencies to Revert Certain Accounts Payable to the Cumulative Result of Operations of the National Government and for Other Purposes) Section 9. Reversion of Accounts Payable, provides that, all 1995 and prior years documented accounts payable and all undocumented accounts regardless of the year they were incurred shall be reverted to the Cumulative Result of Operations of the National Government (CROU). This shall apply to accounts payable of all funds, except fiduciary funds, as long as the purpose for which the funds were created have not been accomplished and accounts payable under foreign assisted projects for the duration of the said project. In this regard, the Department of Budget and Management issued Joint-Circular No. 99-6 4.0 (4.3) Procedural Guidelines which provides that all accounts payable that reverted to the CROU may be considered for payment upon determination thru administrative process, of the existence, validity and legality of the claim. Thus, the allegation of the defendants that considering no appropriation for the payment of any amount awarded to plaintiffs appellee the funds of defendant-appellants may not be seized pursuant to a writ of execution issued by the regular court is misplaced. Surely when the defendants and the plaintiff entered into the

General Construction of Agreement there is an amount already allocated by the latter for the said project which is no longer subject of future appropriation."49 After the CA denied their motion for reconsideration on December 23, 2005, the petitioners appealed by petition for review. Matters Arising During the Pendency of the Petition On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied Stern Builders and dela Cruzs motion to withdraw the deposit, in consideration of the UPs intention to appeal to the CA,50 stating: Since it appears that the defendants are intending to file a petition for review of the Court of Appeals resolution in CA-G.R. No. 88125 within the reglementary period of fifteen (15) days from receipt of resolution, the Court agrees with the defendants stand that the granting of plaintiffs subject motion is premature. Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in part that the "disposition of the amount represented therein being subject to the final outcome of the case of the University of the Philippines, et. al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court of Appeals) is that the judgment or resolution of said court has to be final and executory, for if the same will still be elevated to the Supreme Court, it will not attain finality yet until the highest court has rendered its own final judgment or resolution.51 However, on January 22, 2007, the UP filed an Urgent Application for A Temporary Restraining Order and/or A Writ of Preliminary Injunction,52 averring that on January 3, 2007, Judge Maria Theresa dela Torre-Yadao (who had meanwhile replaced Judge Dizon upon the latters appointment to the CA) had issued another order allowing Stern Builders and dela Cruz to withdraw the deposit,53 to wit: It bears stressing that defendants liability for the payment of the judgment obligation has become indubitable due to the final and executory nature of the Decision dated November 28, 2001. Insofar as the payment of the [sic] judgment obligation is concerned, the Court believes that there is nothing more the defendant can do to escape liability. It is observed that there is nothing more the defendant can do to escape liability. It is observed that defendant U.P. System had already exhausted all its legal remedies to overturn, set aside or modify the decision (dated November 28, 2001( rendered against it. The way the Court sees it, defendant U.P. Systems petition before the Supreme Court concerns only with the manner by which said judgment award should be satisfied. It has nothing to do with the legality or propriety thereof, although it prays for the deletion of [sic] reduction of the award of moral damages. It must be emphasized that this Courts finding, i.e., that there was sufficient appropriation earmarked for the project, was upheld by the Court of Appeals in its decision dated September 16, 2005. Being a finding of fact, the Supreme Court will, ordinarily, not disturb the same was said Court is not a trier of fact. Such being the case, defendants arguments that there was no sufficient appropriation for the payment of the judgment obligation must fail. While it is true that the former Presiding Judge of this Court in its Order dated January 30, 2006 had stated that: Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in part that the "disposition of the amount represented therein being subject to the final outcome of the case of the University of the Philippines, et. al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before

the Court of Appeals) is that the judgment or resolution of said court has to be final and executory, for if the same will still be elevated to the Supreme Court, it will not attain finality yet until the highest court has rendered its own final judgment or resolution. it should be noted that neither the Court of Appeals nor the Supreme Court issued a preliminary injunction enjoining the release or withdrawal of the garnished amount. In fact, in its present petition for review before the Supreme Court, U.P. System has not prayed for the issuance of a writ of preliminary injunction. Thus, the Court doubts whether such writ is forthcoming. The Court honestly believes that if defendants petition assailing the Order of this Court dated December 31, 2004 granting the motion for the release of the garnished amount was meritorious, the Court of Appeals would have issued a writ of injunction enjoining the same. Instead, said appellate court not only refused to issue a wit of preliminary injunction prayed for by U.P. System but denied the petition, as well.54 The UP contended that Judge Yadao thereby effectively reversed the January 30, 2006 order of Judge Dizon disallowing the withdrawal of the garnished amount until after the decision in the case would have become final and executory. Although the Court issued a TRO on January 24, 2007 to enjoin Judge Yadao and all persons acting pursuant to her authority from enforcing her order of January 3, 2007,55 it appears that on January 16, 2007, or prior to the issuance of the TRO, she had already directed the DBP to forthwith release the garnished amount to Stern Builders and dela Cruz; 56 and that DBP had forthwith complied with the order on January 17, 2007 upon the sheriffs service of the order of Judge Yadao.57 These intervening developments impelled the UP to file in this Court a supplemental petition on January 26, 2007,58 alleging that the RTC (Judge Yadao) gravely erred in ordering the immediate release of the garnished amount despite the pendency of the petition for review in this Court. The UP filed a second supplemental petition59 after the RTC (Judge Yadao) denied the UPs motion for the redeposit of the withdrawn amount on April 10, 2007,60 to wit: This resolves defendant U.P. Systems Urgent Motion to Redeposit Judgment Award praying that plaintiffs be directed to redeposit the judgment award to DBP pursuant to the Temporary Restraining Order issued by the Supreme Court. Plaintiffs opposed the motion and countered that the Temporary Restraining Order issued by the Supreme Court has become moot and academic considering that the act sought to be restrained by it has already been performed. They also alleged that the redeposit of the judgment award was no longer feasible as they have already spent the same. It bears stressing, if only to set the record straight, that this Court did not in its Order dated January 3, 2007 (the implementation of which was restrained by the Supreme Court in its Resolution dated January 24, 2002) direct that that garnished amount "be deposited with the garnishee bank (Development Bank of the Philippines)". In the first place, there was no need to order DBP to make such deposit, as the garnished amount was already deposited in the account of plaintiffs with the DBP as early as May 13, 2005. What the Court granted in its Order dated January 3, 2007 was plaintiffs motion to allow the release of said deposit. It must be recalled that the Court found plaintiffs motion meritorious and, at that time, there was no restraining order or preliminary injunction from either the Court of Appeals or the Supreme Court which could have enjoined the release of plaintiffs deposit. The Court also took into account the following factors:

a) the Decision in this case had long been final and executory after it was rendered on November 28, 2001; b) the propriety of the dismissal of U.P. Systems appeal was upheld by the Supreme Court; c) a writ of execution had been issued; d) defendant U.P. Systems deposit with DBP was garnished pursuant to a lawful writ of execution issued by the Court; and e) the garnished amount had already been turned over to the plaintiffs and deposited in their account with DBP. The garnished amount, as discussed in the Order dated January 16, 2007, was already owned by the plaintiffs, having been delivered to them by the Deputy Sheriff of this Court pursuant to par. (c), Section 9, Rule 39 of the 1997 Rules of Civil Procedure. Moreover, the judgment obligation has already been fully satisfied as per Report of the Deputy Sheriff. Anent the Temporary Restraining Order issued by the Supreme Court, the same has become functus oficio, having been issued after the garnished amount had been released to the plaintiffs. The judgment debt was released to the plaintiffs on January 17, 2007, while the Temporary Restraining Order issued by the Supreme Court was received by this Court on February 2, 2007. At the time of the issuance of the Restraining Order, the act sought to be restrained had already been done, thereby rendering the said Order ineffectual. After a careful and thorough study of the arguments advanced by the parties, the Court is of the considered opinion that there is no legal basis to grant defendant U.P. Systems motion to redeposit the judgment amount. Granting said motion is not only contrary to law, but it will also render this Courts final executory judgment nugatory. Litigation must end and terminate sometime and somewhere, and it is essential to an effective administration of justice that once a judgment has become final the issue or cause involved therein should be laid to rest. This doctrine of finality of judgment is grounded on fundamental considerations of public policy and sound practice. In fact, nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. WHEREFORE, premises considered, finding defendant U.P. Systems Urgent Motion to Redeposit Judgment Award devoid of merit, the same is hereby DENIED. SO ORDERED. Issues The UP now submits that: I

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING THE PETITION, ALLOWING IN EFFECT THE GARNISHMENT OF UP FUNDS, WHEN IT RULED THAT FUNDS HAVE ALREADY BEEN EARMARKED FOR THE CONSTRUCTION PROJECT; AND THUS, THERE IS NO NEED FOR FURTHER APPROPRIATIONS. II THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING GARNISHMENT OF A STATE UNIVERSITYS FUNDS IN VIOLATION OF ARTICLE XIV, SECTION 5(5) OF THE CONSTITUTION. III IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE REVIEW POWERS OF THIS HONORABLE COURT TO MODIFY, IF NOT TOTALLY DELETE THE AWARD OF P10 MILLION AS MORAL DAMAGES TO RESPONDENTS. IV THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED 3 JANUARY 2007 ON THE GROUND OF EQUITY AND JUDICIAL COURTESY. V THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED 16 JANUARY 2007 ON THE GROUND THAT PETITIONER UNIVERSITY STILL HAS A PENDING MOTION FOR RECONSIDERATION OF THE ORDER DATED 3 JANUARY 2007. VI THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING THE REDEPOSIT OF THE GARNISHED AMOUNT TO THE DBP IN VIOLATION OF THE CLEAR LANGUAGE OF THE SUPREME COURT RESOLUTION DATED 24 JANUARY 2007. The UP argues that the amount earmarked for the construction project had been purposely set aside only for the aborted project and did not include incidental matters like the awards of actual damages, moral damages and attorneys fees. In support of its argument, the UP cited Article 12.2 of the General Construction Agreement, which stipulated that no deductions would be allowed for the payment of claims, damages, losses and expenses, including attorneys fees, in case of any litigation arising out of the performance of the work. The UP insists that the CA decision was inconsistent with the rulings in Commissioner of Public Highways v. San Diego61 andDepartment of Agriculture v. NLRC62 to the effect that government funds and properties could not be seized under writs of execution or garnishment to satisfy judgment awards. Furthermore, the UP contends that the CA contravened Section 5, Article XIV of the Constitution by allowing the garnishment of UP funds, because the garnishment resulted in a substantial reduction of the UPs limited budget allocated for the remuneration, job satisfaction and fulfillment of the best available teachers; that Judge Yadao should have exhibited judicial courtesy towards the Court due

to the pendency of the UPs petition for review; and that she should have also desisted from declaring that the TRO issued by this Court had become functus officio. Lastly, the UP states that the awards of actual damages of P5,716,729.00 and moral damages of P10 million should be reduced, if not entirely deleted, due to its being unconscionable, inequitable and detrimental to public service. In contrast, Stern Builders and dela Cruz aver that the petition for review was fatally defective for its failure to mention the other cases upon the same issues pending between the parties (i.e., CA-G.R. No. 77395 and G.R No. 163501); that the UP was evidently resorting to forum shopping, and to delaying the satisfaction of the final judgment by the filing of its petition for review; that the ruling in Commissioner of Public Works v. San Diego had no application because there was an appropriation for the project; that the UP retained the funds allotted for the project only in a fiduciary capacity; that the contract price had been meanwhile adjusted to P22,338,553.25, an amount already more than sufficient to cover the judgment award; that the UPs prayer to reduce or delete the award of damages had no factual basis, because they had been gravely wronged, had been deprived of their source of income, and had suffered untold miseries, discomfort, humiliation and sleepless years; that dela Cruz had even been constrained to sell his house, his equipment and the implements of his trade, and together with his family had been forced to live miserably because of the wrongful actuations of the UP; and that the RTC correctly declared the Courts TRO to be already functus officio by reason of the withdrawal of the garnished amount from the DBP. The decisive issues to be considered and passed upon are, therefore: (a) whether the funds of the UP were the proper subject of garnishment in order to satisfy the judgment award; and (b) whether the UPs prayer for the deletion of the awards of actual damages of P5,716,729.00, moral damages of P10,000,000.00 and attorneys fees of P150,000.00 plus P1,500.00 per appearance could be granted despite the finality of the judgment of the RTC. Ruling The petition for review is meritorious. I. UPs funds, being government funds, are not subject to garnishment The UP was founded on June 18, 1908 through Act 1870 to provide advanced instruction in literature, philosophy, the sciences, and arts, and to give professional and technical training to deserving students.63 Despite its establishment as a body corporate,64 the UP remains to be a "chartered institution"65 performing a legitimate government function. It is an institution of higher learning, not a corporation established for profit and declaring any dividends.66 In enacting Republic Act No. 9500 (The University of the Philippines Charter of 2008), Congress has declared the UP as the national university67 "dedicated to the search for truth and knowledge as well as the development of future leaders."68 Irrefragably, the UP is a government instrumentality,69 performing the States constitutional mandate of promoting quality and accessible education.70 As a government instrumentality, the UP administers special funds sourced from the fees and income enumerated under Act No. 1870 and Section 1 of Executive Order No. 714,71 and from the yearly appropriations, to achieve the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act No. 9500.72 All the funds going into the possession of the UP, including any interest accruing from the deposit of such funds in any

banking institution, constitute a "special trust fund," the disbursement of which should always be aligned with the UPs mission and purpose,73 and should always be subject to auditing by the COA.74 Presidential Decree No. 1445 defines a "trust fund" as a fund that officially comes in the possession of an agency of the government or of a public officer as trustee, agent or administrator, or that is received for the fulfillment of some obligation.75 A trust fund may be utilized only for the "specific purpose for which the trust was created or the funds received."76 The funds of the UP are government funds that are public in character. They include the income accruing from the use of real property ceded to the UP that may be spent only for the attainment of its institutional objectives.77Hence, the funds subject of this action could not be validly made the subject of the RTCs writ of execution or garnishment. The adverse judgment rendered against the UP in a suit to which it had impliedly consented was not immediately enforceable by execution against the UP,78 because suability of the State did not necessarily mean its liability.79 A marked distinction exists between suability of the State and its liability. As the Court succinctly stated inMunicipality of San Fernando, La Union v. Firme:80 A distinction should first be made between suability and liability. "Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable. Also, in Republic v. Villasor,81 where the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment was nullified, the Court said: xxx The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimants action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law. The UP correctly submits here that the garnishment of its funds to satisfy the judgment awards of actual and moral damages (including attorneys fees) was not validly made if there was no special appropriation by Congress to cover the liability. It was, therefore, legally unwarranted for the CA to agree with the RTCs holding in the order issued on April 1, 2003 that no appropriation by Congress to allocate and set aside the payment of the judgment awards was necessary because "there (were) already an appropriations (sic) earmarked for the said project."82The CA and the RTC thereby unjustifiably ignored the legal restriction imposed on the trust funds of the Government and its agencies and instrumentalities to be used exclusively to fulfill the purposes for which the trusts were created or for which the funds were received except upon express authorization by Congress or by the head of a government agency in control of the funds, and subject to pertinent budgetary laws, rules and regulations.83

Indeed, an appropriation by Congress was required before the judgment that rendered the UP liable for moral and actual damages (including attorneys fees) would be satisfied considering that such monetary liabilities were not covered by the "appropriations earmarked for the said project." The Constitution strictly mandated that "(n)o money shall be paid out of the Treasury except in pursuance of an appropriation made by law."84 II COA must adjudicate private respondents claim before execution should proceed The execution of the monetary judgment against the UP was within the primary jurisdiction of the COA. This was expressly provided in Section 26 of Presidential Decree No. 1445, to wit: Section 26. General jurisdiction. - The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non governmental entities subsidized by the government, those funded by donations through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. It was of no moment that a final and executory decision already validated the claim against the UP. The settlement of the monetary claim was still subject to the primary jurisdiction of the COA despite the final decision of the RTC having already validated the claim.85 As such, Stern Builders and dela Cruz as the claimants had no alternative except to first seek the approval of the COA of their monetary claim. On its part, the RTC should have exercised utmost caution, prudence and judiciousness in dealing with the motions for execution against the UP and the garnishment of the UPs funds. The RTC had no authority to direct the immediate withdrawal of any portion of the garnished funds from the depository banks of the UP. By eschewing utmost caution, prudence and judiciousness in dealing with the execution and garnishment, and by authorizing the withdrawal of the garnished funds of the UP, the RTC acted beyond its jurisdiction, and all its orders and issuances thereon were void and of no legal effect, specifically: (a) the order Judge Yadao issued on January 3, 2007 allowing Stern Builders and dela Cruz to withdraw the deposited garnished amount; (b) the order Judge Yadao issued on January 16, 2007 directing DBP to forthwith release the garnish amount to Stern Builders and dela Cruz; (c) the sheriffs report of January 17, 2007 manifesting the full satisfaction of the writ of execution; and (d) the order of April 10, 2007 deying the UPs motion for the redeposit of the withdrawn amount. Hence, such orders and issuances should be struck down without exception. Nothing extenuated Judge Yadaos successive violations of Presidential Decree No. 1445. She was aware of Presidential Decree No. 1445, considering that the Court circulated to all judges its Administrative Circular No. 10-2000,86 issued on October 25, 2000, enjoining them "to observe utmost caution, prudence and judiciousness in the issuance of writs of execution to satisfy money judgments against government agencies and local government units" precisely in order to prevent

the circumvention of Presidential Decree No. 1445, as well as of the rules and procedures of the COA, to wit: In order to prevent possible circumvention of the rules and procedures of the Commission on Audit, judges are hereby enjoined to observe utmost caution, prudence and judiciousness in the issuance of writs of execution to satisfy money judgments against government agencies and local government units. Judges should bear in mind that in Commissioner of Public Highways v. San Diego (31 SCRA 617, 625 1970), this Court explicitly stated: "The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimants action only up to the completion of proceedings anterior to the stage of execution and that the power of the Court ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law. Moreover, it is settled jurisprudence that upon determination of State liability, the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in P.D. No. 1445, otherwise known as the Government Auditing Code of the Philippines (Department of Agriculture v. NLRC, 227 SCRA 693, 701-02 1993 citing Republic vs. Villasor, 54 SCRA 84 1973). All money claims against the Government must first be filed with the Commission on Audit which must act upon it within sixty days. Rejection of the claim will authorize the claimant to elevate the matter to the Supreme Court on certiorari and in effect, sue the State thereby (P.D. 1445, Sections 49-50). However, notwithstanding the rule that government properties are not subject to levy and execution unless otherwise provided for by statute (Republic v. Palacio, 23 SCRA 899 1968; Commissioner of Public Highways v. San Diego, supra) or municipal ordinance (Municipality of Makati v. Court of Appeals, 190 SCRA 206 1990), the Court has, in various instances, distinguished between government funds and properties for public use and those not held for public use. Thus, in Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil 52 1926, the Court ruled that "where property of a municipal or other public corporation is sought to be subjected to execution to satisfy judgments recovered against such corporation, the question as to whether such property is leviable or not is to be determined by the usage and purposes for which it is held." The following can be culled from Viuda de Tan Toco v. Municipal Council of Iloilo: 1. Properties held for public uses and generally everything held for governmental purposes are not subject to levy and sale under execution against such corporation. The same rule applies to funds in the hands of a public officer and taxes due to a municipal corporation. 2. Where a municipal corporation owns in its proprietary capacity, as distinguished from its public or government capacity, property not used or used for a public purpose but for quasi-private purposes, it is the general rule that such property may be seized and sold under execution against the corporation.

3. Property held for public purposes is not subject to execution merely because it is temporarily used for private purposes. If the public use is wholly abandoned, such property becomes subject to execution. This Administrative Circular shall take effect immediately and the Court Administrator shall see to it that it is faithfully implemented. Although Judge Yadao pointed out that neither the CA nor the Court had issued as of then any writ of preliminary injunction to enjoin the release or withdrawal of the garnished amount, she did not need any writ of injunction from a superior court to compel her obedience to the law. The Court is disturbed that an experienced judge like her should look at public laws like Presidential Decree No. 1445 dismissively instead of loyally following and unquestioningly implementing them. That she did so turned her court into an oppressive bastion of mindless tyranny instead of having it as a true haven for the seekers of justice like the UP. III Period of appeal did not start without effective service of decision upon counsel of record; Fresh-period rule announced in Neypes v. Court of Appeals can be given retroactive application The UP next pleads that the Court gives due course to its petition for review in the name of equity in order to reverse or modify the adverse judgment against it despite its finality. At stake in the UPs plea for equity was the return of the amount of P16,370,191.74 illegally garnished from its trust funds. Obstructing the plea is the finality of the judgment based on the supposed tardiness of UPs appeal, which the RTC declared on September 26, 2002. The CA upheld the declaration of finality on February 24, 2004, and the Court itself denied the UPs petition for review on that issue on May 11, 2004 (G.R. No. 163501). The denial became final on November 12, 2004. It is true that a decision that has attained finality becomes immutable and unalterable, and cannot be modified in any respect,87 even if the modification is meant to correct erroneous conclusions of fact and law, and whether the modification is made by the court that rendered it or by this Court as the highest court of the land.88 Public policy dictates that once a judgment becomes final, executory and unappealable, the prevailing party should not be deprived of the fruits of victory by some subterfuge devised by the losing party. Unjustified delay in the enforcement of such judgment sets at naught the role and purpose of the courts to resolve justiciable controversies with finality.89 Indeed, all litigations must at some time end, even at the risk of occasional errors. But the doctrine of immutability of a final judgment has not been absolute, and has admitted several exceptions, among them: (a) the correction of clerical errors; (b) the so-called nunc pro tunc entries that cause no prejudice to any party; (c) void judgments; and (d) whenever circumstances transpire after the finality of the decision that render its execution unjust and inequitable.90 Moreover, in Heirs of Maura So v. Obliosca,91 we stated that despite the absence of the preceding circumstances, the Court is not precluded from brushing aside procedural norms if only to serve the higher interests of justice and equity. Also, in Gumaru v. Quirino State College,92 the Court nullified the proceedings and the writ of execution issued by the RTC for the reason that respondent state college had not been represented in the litigation by the Office of the Solicitor General. We rule that the UPs plea for equity warrants the Courts exercise of the exceptional power to disregard the declaration of finality of the judgment of the RTC for being in clear violation of the UPs right to due process.

Both the CA and the RTC found the filing on June 3, 2002 by the UP of the notice of appeal to be tardy. They based their finding on the fact that only six days remained of the UPs reglementary 15day period within which to file the notice of appeal because the UP had filed a motion for reconsideration on January 16, 2002 vis--vis the RTCs decision the UP received on January 7, 2002; and that because the denial of the motion for reconsideration had been served upon Atty. Felimon D. Nolasco of the UPLB Legal Office on May 17, 2002, the UP had only until May 23, 2002 within which to file the notice of appeal. The UP counters that the service of the denial of the motion for reconsideration upon Atty. Nolasco was defective considering that its counsel of record was not Atty. Nolasco of the UPLB Legal Office but the OLS in Diliman, Quezon City; and that the period of appeal should be reckoned from May 31, 2002, the date when the OLS received the order. The UP submits that the filing of the notice of appeal on June 3, 2002 was well within the reglementary period to appeal. We agree with the submission of the UP. Firstly, the service of the denial of the motion for reconsideration upon Atty. Nolasco of the UPLB Legal Office was invalid and ineffectual because he was admittedly not the counsel of record of the UP. The rule is that it is on the counsel and not the client that the service should be made.93 That counsel was the OLS in Diliman, Quezon City, which was served with the denial only on May 31, 2002. As such, the running of the remaining period of six days resumed only on June 1, 2002,94 rendering the filing of the UPs notice of appeal on June 3, 2002 timely and well within the remaining days of the UPs period to appeal. Verily, the service of the denial of the motion for reconsideration could only be validly made upon the OLS in Diliman, and no other. The fact that Atty. Nolasco was in the employ of the UP at the UPLB Legal Office did not render the service upon him effective. It is settled that where a party has appeared by counsel, service must be made upon such counsel.95 Service on the party or the partys employee is not effective because such notice is not notice in law.96 This is clear enough from Section 2, second paragraph, of Rule 13, Rules of Court, which explicitly states that: "If any party has appeared by counsel, service upon him shall be made upon his counsel or one of them, unless service upon the party himself is ordered by the court. Where one counsel appears for several parties, he shall only be entitled to one copy of any paper served upon him by the opposite side." As such, the period to appeal resumed only on June 1, 2002, the date following the service on May 31, 2002 upon the OLS in Diliman of the copy of the decision of the RTC, not from the date when the UP was notified.97 Accordingly, the declaration of finality of the judgment of the RTC, being devoid of factual and legal bases, is set aside. Secondly, even assuming that the service upon Atty. Nolasco was valid and effective, such that the remaining period for the UP to take a timely appeal would end by May 23, 2002, it would still not be correct to find that the judgment of the RTC became final and immutable thereafter due to the notice of appeal being filed too late on June 3, 2002. In so declaring the judgment of the RTC as final against the UP, the CA and the RTC applied the rule contained in the second paragraph of Section 3, Rule 41 of the Rules of Court to the effect that the filing of a motion for reconsideration interrupted the running of the period for filing the appeal; and that the period resumed upon notice of the denial of the motion for reconsideration. For that reason, the CA and the RTC might not be taken to task for strictly adhering to the rule then prevailing.

However, equity calls for the retroactive application in the UPs favor of the fresh-period rule that the Court first announced in mid-September of 2005 through its ruling in Neypes v. Court of Appeals,98 viz: To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. The retroactive application of the fresh-period rule, a procedural law that aims "to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution,"99 is impervious to any serious challenge. This is because there are no vested rights in rules of procedure.100 A law or regulation is procedural when it prescribes rules and forms of procedure in order that courts may be able to administer justice.101 It does not come within the legal conception of a retroactive law, or is not subject of the general rule prohibiting the retroactive operation of statues, but is given retroactive effect in actions pending and undetermined at the time of its passage without violating any right of a person who may feel that he is adversely affected. We have further said that a procedural rule that is amended for the benefit of litigants in furtherance of the administration of justice shall be retroactively applied to likewise favor actions then pending, as equity delights in equality.102 We may even relax stringent procedural rules in order to serve substantial justice and in the exercise of this Courts equity jurisdiction.103 Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction.104 It is cogent to add in this regard that to deny the benefit of the fresh-period rule to the UP would amount to injustice and absurdity injustice, because the judgment in question was issued on November 28, 2001 as compared to the judgment in Neypes that was rendered in 1998; absurdity, because parties receiving notices of judgment and final orders issued in the year 1998 would enjoy the benefit of the fresh-period rule but the later rulings of the lower courts like that herein would not.105 Consequently, even if the reckoning started from May 17, 2002, when Atty. Nolasco received the denial, the UPs filing on June 3, 2002 of the notice of appeal was not tardy within the context of the fresh-period rule. For the UP, the fresh period of 15-days counted from service of the denial of the motion for reconsideration would end on June 1, 2002, which was a Saturday. Hence, the UP had until the next working day, or June 3, 2002, a Monday, within which to appeal, conformably with Section 1 of Rule 22, Rules of Court, which holds that: "If the last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall not run until the next working day." IV Awards of monetary damages, being devoid of factual and legal bases, did not attain finality and should be deleted Section 14 of Article VIII of the Constitution prescribes that express findings of fact and of law should be made in the decision rendered by any court, to wit: Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based.

No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied without stating the legal basis therefor. Implementing the constitutional provision in civil actions is Section 1 of Rule 36, Rules of Court, viz: Section 1. Rendition of judgments and final orders. A judgment or final order determining the merits of the case shall be in writing personally and directly prepared by the judge, stating clearly and distinctly the facts and the law on which it is based, signed by him, and filed with the clerk of the court. (1a) The Constitution and the Rules of Court apparently delineate two main essential parts of a judgment, namely: thebody and the decretal portion. Although the latter is the controlling part,106 the importance of the former is not to be lightly regarded because it is there where the court clearly and distinctly states its findings of fact and of law on which the decision is based. To state it differently, one without the other is ineffectual and useless. The omission of either inevitably results in a judgment that violates the letter and the spirit of the Constitution and the Rules of Court. The term findings of fact that must be found in the body of the decision refers to statements of fact, not to conclusions of law.107 Unlike in pleadings where ultimate facts alone need to be stated, the Constitution and the Rules of Court require not only that a decision should state the ultimate facts but also that it should specify the supporting evidentiary facts, for they are what are called the findings of fact. The importance of the findings of fact and of law cannot be overstated. The reason and purpose of the Constitution and the Rules of Court in that regard are obviously to inform the parties why they win or lose, and what their rights and obligations are. Only thereby is the demand of due process met as to the parties. As Justice Isagani A. Cruz explained in Nicos Industrial Corporation v. Court of Appeals:108 It is a requirement of due process that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to a higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. Here, the decision of the RTC justified the grant of actual and moral damages, and attorneys fees in the following terse manner, viz: xxx The Court is not unmindful that due to defendants unjustified refusal to pay their outstanding obligation to plaintiff, the same suffered losses and incurred expenses as he was forced to remortgage his house and lot located in Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary obligations in the form of interest and penalties incurred in the course of the construction of the subject project.109 The statement that "due to defendants unjustified refusal to pay their outstanding obligation to plaintiff, the same suffered losses and incurred expenses as he was forced to re-mortgage his house and lot located in Quezon City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary obligations in the form of interest and penalties incurred in the course of the construction of the subject project" was only a conclusion of fact and law that did not comply with the constitutional and

statutory prescription. The statement specified no detailed expenses or losses constituting the P5,716,729.00 actual damages sustained by Stern Builders in relation to the construction project or to other pecuniary hardships. The omission of such expenses or losses directly indicated that Stern Builders did not prove them at all, which then contravened Article 2199, Civil Code, the statutory basis for the award of actual damages, which entitled a person to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. As such, the actual damages allowed by the RTC, being bereft of factual support, were speculative and whimsical. Without the clear and distinct findings of fact and law, the award amounted only to anipse dixit on the part of the RTC,110 and did not attain finality. There was also no clear and distinct statement of the factual and legal support for the award of moral damages in the substantial amount of P10,000,000.00. The award was thus also speculative and whimsical. Like the actual damages, the moral damages constituted another judicial ipse dixit, the inevitable consequence of which was to render the award of moral damages incapable of attaining finality. In addition, the grant of moral damages in that manner contravened the law that permitted the recovery of moral damages as the means to assuage "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury."111 The contravention of the law was manifest considering that Stern Builders, as an artificial person, was incapable of experiencing pain and moral sufferings.112 Assuming that in granting the substantial amount of P10,000,000.00 as moral damages, the RTC might have had in mind that dela Cruz had himself suffered mental anguish and anxiety. If that was the case, then the RTC obviously disregarded his separate and distinct personality from that of Stern Builders.113 Moreover, his moral and emotional sufferings as the President of Stern Builders were not the sufferings of Stern Builders. Lastly, the RTC violated the basic principle that moral damages were not intended to enrich the plaintiff at the expense of the defendant, but to restore the plaintiff to his status quo ante as much as possible. Taken together, therefore, all these considerations exposed the substantial amount of P10,000,000.00 allowed as moral damages not only to be factually baseless and legally indefensible, but also to be unconscionable, inequitable and unreasonable. Like the actual and moral damages, the P150,000.00, plus P1,500.00 per appearance, granted as attorneys fees were factually unwarranted and devoid of legal basis. The general rule is that a successful litigant cannot recover attorneys fees as part of the damages to be assessed against the losing party because of the policy that no premium should be placed on the right to litigate.114 Prior to the effectivity of the present Civil Code, indeed, such fees could be recovered only when there was a stipulation to that effect. It was only under the present Civil Codethat the right to collect attorneys fees in the cases mentioned in Article 2208115 of the Civil Code came to be recognized.116 Nonetheless, with attorneys fees being allowed in the concept of actual damages,117 their amounts must be factually and legally justified in the body of the decision and not stated for the first time in the decretal portion.118 Stating the amounts only in the dispositive portion of the judgment is not enough;119 a rendition of the factual and legal justifications for them must also be laid out in the body of the decision.120 That the attorneys fees granted to the private respondents did not satisfy the foregoing requirement suffices for the Court to undo them.121 The grant was ineffectual for being contrary to law and public policy, it being clear that the express findings of fact and law were intended to bring the case within the exception and thereby justify the award of the attorneys fees. Devoid of such express findings, the award was a conclusion without a premise, its basis being improperly left to speculation and conjecture.122 Nonetheless, the absence of findings of fact and of any statement of the law and jurisprudence on which the awards of actual and moral damages, as well as of attorneys fees, were based was a fatal flaw that invalidated the decision of the RTC only as to such awards. As the Court declared

in Velarde v. Social Justice Society,123 the failure to comply with the constitutional requirement for a clear and distinct statement of the supporting facts and law "is a grave abuse of discretion amounting to lack or excess of jurisdiction" and that "(d)ecisions or orders issued in careless disregard of the constitutional mandate are a patent nullity and must be struck down as void."124 The other item granted by the RTC (i.e., P503,462.74) shall stand, subject to the action of the COA as stated herein. WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision of the Court of Appeals under review; ANNULS the orders for the garnishment of the funds of the University of the Philippines and for the release of the garnished amount to Stern Builders Corporation and Servillano dela Cruz; and DELETES from the decision of the Regional Trial Court dated November 28, 2001 for being void only the awards of actual damages of P5,716,729.00, moral damages of P10,000,000.00, and attorney's fees ofP150,000.00, plus P1,500.00 per appearance, in favor of Stern Builders Corporation and Servillano dela Cruz. The Court ORDERS Stem Builders Corporation and Servillano dela Cruz to redeposit the amount ofP16,370,191.74 within 10 days from receipt of this decision. Costs of suit to be paid by the private respondents. SO ORDERED.

SECOND DIVISION DEUTSCHE GESELLSCHAFT FR G.R. No. 152318 TECHNISCHE ZUSAMMENARBEIT, also known as GERMAN AGENCY Present: FOR TECHNICAL COOPERATION, (GTZ) HANS PETER PAULENZ and QUISUMBING, J., ANNE NICOLAY, Chairperson, Petitioners, CARPIO MORALES, TINGA, VELASCO, and - versus BRION, JJ.

Promulgated: HON. COURT OF APPEALS, HON. ARIEL CADIENTE SANTOS, Labor Arbiter of the Arbitration Branch, National Labor Relations Commission, and BERNADETTE CARMELLA MAGTAAS, CAROLINA DIONCO, CHRISTOPHER RAMOS, MELVIN DELA PAZ, RANDY TAMAYO and EDGARDO RAMILLO, Respondents. April 16, 2009

x----------------------------------------------------------------------------x

DECISION
TINGA, J.:

On 7 September 1971, the governments of the Federal Republic of Germany and the Republic of the Philippines ratified an Agreement concerning Technical Co-operation (Agreement) in Bonn, capital of what was then West Germany. The

Agreement affirmed the countries common interest in promoting the technical and economic development of their States, and recogni[zed] the benefits to be derived by both States from closer technical co-operation, and allowed for the conclusion of arrangements concerning individual projects of technical cooperation.[1] While the Agreement provided for a limited term of effectivity of five (5) years, it nonetheless was stated that [t]he Agreement shall be tacitly extended for successive periods of one year unless either of the two Contracting Parties denounces it in writing three months prior to its expiry, and that even upon the Agreements expiry, its provisions would continue to apply to any projects agreed upon x x x until their completion.[2] On 10 December 1999, the Philippine government, through then Foreign Affairs Secretary Domingo Siazon, and the German government, agreed to an Arrangement in furtherance of the 1971 Agreement. This Arrangement affirmed the common commitment of both governments to promote jointly a project called, Social Health InsuranceNetworking and Empowerment (SHINE), which was designed to enable Philippine familiesespecially poor onesto maintain their health and secure health care of sustainable quality.[3] It appears that SHINE had already been in existence even prior to the effectivity of the Arrangement, though the record does not indicate when exactly SHINE was constituted. Nonetheless, the Arrangement stated the various obligations of the Filipino and German governments. The relevant provisions of the Arrangement are reproduced as follows:
3. The Government of the Federal Republic of Germany shall make the following contributions to the project. It shall (a) second

one expert in health economy, insurance and health systems for up to 48 expert/months,

one expert in system development for up to 10 expert/months short-term experts to deal with special tasks for a total of up to 18 expert/months, project assistants/guest students as required, who shall work on the project as part of their basic and further training and assume specific project tasks under the separately financed junior staff promotion programme of the Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ); (b) provide in situ

short-term experts to deal with diverse special tasks for a total of up to 27 expert/months, five local experts in health economy, health insurance, community health systems, information technology, information systems, training and community mobilization for a total of up to 240 expert/months, local and auxiliary personnel for a total of up to 120 months;

(c) supply inputs, in particular two cross-country vehicles, ten computers with accessories, office furnishings and equipment

up to a total value of DM 310,000 (three hundred and ten thousand Deutsche Mark); (c) meet

the cost of accommodation for the seconded experts and their families in so far as this cost is not met by the seconded experts themselves, the cost of official travel by the experts referred to in sub-paragraph (a) above within and outside the Republic of the Philippines, the cost of seminars and courses, the cost of transport and insurance to the project site of inputs to be supplied pursuant to sub-paragraph (c) above, excluding the charges and storage fees referred to in paragraph 4(d) below,

a proportion of the operating and administrative costs;

xxx 4. The Government of the Republic of the Philippines shall make the following contributions to the project: It shall (a) provide the necessary Philippine experts for the project, in particular one project coordinator in the Philippine Health Insurance Corporation (Philhealth), at least three further experts and a sufficient number of administrative and auxiliary personnel, as well as health personnel in the pilot provinces and in the other project partners, in particular one responsible expert for each pilot province and for each association representing the various target groups, release suitably qualified experts from their duties for attendance at the envisaged basic and further training activities; it shall only nominate such candidates as have given an undertaking to work on the project for at least five years after completing their training and shall ensure that these Philippine experts receive appropriate remuneration, ensure that the project field offices have sufficient expendables, make available the land and buildings required for the project; (b) assume an increasing proportion of the running and operating costs of the project; (c) afford the seconded experts any assistance they may require in carrying out the tasks assigned to them and place at their disposal all necessary records and documents; (d) guarantee that the project is provided with an itemized budget of its own in order to ensure smooth continuation of the project. the necessary legal and administrative framework is created for the project,

the project is coordinated in close cooperation with other national and international agencies relevant to implementation, the inputs supplied for the project on behalf of the Government of the Federal Republic of Germany are exempted from the cost of licenses, harbour dues, import and export duties and other public charges and fees, as well as storage fees, or that any costs thereof are met, and that they are cleared by customs without delay. The aforementioned exemptions shall, at the request of the implementing agencies also apply to inputs procured in the Republic of the Philippines,

the tasks of the seconded experts are taken over as soon as possible by Philippine experts, examinations passed by Philippine nationals pursuant to this Arrangement are recognized in accordance with their respective standards and that the persons concerned are afforded such opportunities with regard to careers, appointments and advancement as are commensurate with their training.[4]

In the arraignment, both governments likewise named their respective implementing organizations for SHINE. The Philippines designated the Department of Health (DOH) and the Philippine Health Insurance Corporation (Philhealth) with the implementation of SHINE. For their part, the German government charge[d] the Deustche Gesellschaft fr Technische Zusammenarbeit[[5]] (GTZ[[6]]) GmbH, Eschborn, with the implementation of its contributions.[7] Private respondents were engaged as contract employees hired by GTZ to work for SHINE on various dates between December of 1998 to September of 1999. Bernadette Carmela Magtaas was hired as an information systems manager and project officer of SHINE;[8] Carolina Dionco as a Project Assistant of SHINE;[9]Christopher Ramos as a project assistant and liason personnel of NHI related SHINE activities by GTZ;[10] Melvin Dela Paz and Randy Tamayo as programmers;[11] and Edgardo Ramilo as driver, messenger and multipurpose service man.[12] The employment contracts of all six private respondents all specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the employer. At the same time, all the contracts commonly provided that [i]t is mutually agreed and understood that [Dr. Tollkotter, as employer] is a seconded GTZ expert who is hiring the Employee on behalf of GTZ and for a Philippine-German bilateral project named Social Health InsuranceNetworking and Empowerment (SHINE) which will end at a given time.[13]

In September of 1999, Anne Nicolay (Nicolay), a Belgian national, assumed the post of SHINE Project Manager. Disagreements eventually arose between Nicolay and private respondents in matters such as proposed salary adjustments, and the course Nicolay was taking in the implementation of SHINE different from her predecessors. The dispute culminated in a letter[14] dated 8 June 2000, signed by the private respondents, addressed to Nicolay, and copies furnished officials of the DOH, Philheath, and the director of the Manila office of GTZ. The letter raised several issues which private respondents claim had been brought up several times in the past, but have not been given appropriate response. It was claimed that SHINE under Nicolay had veered away from its original purpose to facilitate the development of social health insurance by shoring up the national health insurance program and strengthening local initiatives, as Nicolay had refused to support local partners and new initiatives on the premise that community and local government unit schemes were not sustainablea philosophy that supposedly betrayed Nicolays lack of understanding of the purpose of the project. Private respondents further alleged that as a result of Nicolays new thrust, resources have been used inappropriately; that the new management style was not congruent with the original goals of the project; that Nicolay herself suffered from cultural insensitivity that consequently failed to sustain healthy relations with SHINEs partners and staff. The letter ended with these ominous words:
The issues that we [the private respondents] have stated here are very crucial to us in working for the project. We could no longer find any reason to stay with the project unless ALL of these issues be addressed immediately and appropriately.[15]

In response, Nicolay wrote each of the private respondents a letter dated 21 June 2000, all similarly worded except for their respective addressees. She informed private respondents that the projects orientations and evolution were

decided in consensus with partner institutions, Philhealth and the DOH, and thus no longer subject to modifications. More pertinently, she stated:
You have firmly and unequivocally stated in the last paragraph of your 8th June 2000 letter that you and the five other staff could no longer find any reason to stay with the project unless ALL of these issues be addressed immediately and appropriately. Under the foregoing premises and circumstances, it is now imperative that I am to accept your resignation, which I expect to receive as soon as possible.[16]

Taken aback, private respondents replied with a common letter, clarifying that their earlier letter was not intended as a resignation letter, but one that merely intended to raise attention to what they perceived as vital issues.[17] Negotiations ensued between private respondents and Nicolay, but for naught. Each of the private respondents received a letter from Nicolay dated 11 July 2000, informing them of the pre-termination of their contracts of employment on the grounds of serious and gross insubordination, among others, resulting to loss of confidence and trust.[18] On 21 August 2000, the private respondents filed a complaint for illegal dismissal with the NLRC. Named as respondents therein where GTZ, the Director of itsManila office Hans Peter Paulenz, its Assistant Project Manager Christian Jahn, and Nicolay. On 25 October 2005, GTZ, through counsel, filed a Motion to Dismiss, on the ground that the Labor Arbiter had no jurisdiction over the case, as its acts were undertaken in the discharge of the governmental functions and sovereign acts of the Government of the Federal Republic of Germany. This was opposed by private respondents with the arguments that GTZ had failed to secure a certification that it was immune from suit from the Department of Foreign Affairs, and that it was GTZ and not the German government which had implemented the SHINE Project and entered into the contracts of employment.

On 27 November 2000, the Labor Arbiter issued an Order[19] denying the Motion to Dismiss. The Order cited, among others, that GTZ was a private corporation which entered into an employment contract; and that GTZ had failed to secure from the DFA a certification as to its diplomatic status.

On 7 February 2001, GTZ filed with the Labor Arbiter a Reiterating Motion to Dismiss, again praying that the Motion to Dismiss be granted on the jurisdictional ground, and reprising the arguments for dismissal it had earlier raised.[20] No action was taken by the Labor Arbiter on this new motion. Instead, on 15 October 2001, the Labor Arbiter rendered a Decision[21] granting the complaint for illegal dismissal. The Decision concluded that respondents were dismissed without lawful cause, there being a total lack of due process both substantive and procedural [sic].[22] GTZ was faulted for failing to observe the notice requirements in the labor law. The Decision likewise proceeded from the premise that GTZ had treated the letter dated 8 June 2000 as a resignation letter, and devoted some focus in debunking this theory. The Decision initially offered that it need not discuss the jurisdictional aspect considering that the same had already been lengthily discussed in the Order de[n]ying respondents Motion to Dismiss.[23] Nonetheless, it proceeded to discuss the jurisdictional aspect, in this wise:

Under pain of being repetitious, the undersigned Labor Arbiter has jurisdiction to entertain the complaint on the following grounds:

Firstly, under the employment contract entered into between complainants and respondents, specifically Section 10 thereof, it provides that contract partners agree that his contract shall be subject to the LAWS of the jurisdiction of the locality in which the service is performed. Secondly, respondent having entered into contract, they can no longer invoke the sovereignty of the Federal Republic of Germany. Lastly, it is imperative to be immune from suit, respondents should have secured from the Department of Foreign Affairs a certification of respondents diplomatic status and entitlement to diplomatic privileges including immunity from suits. Having failed in this regard, respondents cannot escape liability from the shelter of sovereign immunity.[sic][24]

Notably, GTZ did not file a motion for reconsideration to the Labor Arbiters Decision or elevate said decision for appeal to the NLRC. Instead, GTZ opted to assail the decision by way of a special civil action for certiorari filed with the Court of Appeals.[25] On 10 December 2001, the Court of Appeals promulgated a Resolution[26] dismissing GTZs petition, finding that judicial recourse at this stage of the case is uncalled for[,] [t]he appropriate remedy of the petitioners [being] an appeal to the NLRC x x x.[27] A motion for reconsideration to this Resolution proved fruitless for GTZ.[28] Thus, the present petition for review under Rule 45, assailing the decision and resolutions of the Court of Appeals and of the Labor Arbiter. GTZs arguments center on whether the Court of Appeals could have entertained its petition for certiorari despite its not having undertaken an appeal before the NLRC; and whether the complaint for illegal dismissal should have been dismissed for lack of jurisdiction on account of GTZs insistence that it enjoys immunity from suit. No special arguments are directed with respect to petitioners Hans Peter Paulenz and Anne Nicolay, respectively the then Director and the then Project Manager of GTZ in the Philippines; so we have to presume that the arguments raised in behalf of GTZs alleged immunity from suit extend to them as well.

The Court required the Office of the Solicitor General (OSG) to file a Comment on the petition. In its Comment dated 7 November 2005, the OSG took the side of GTZ, with the prayer that the petition be granted on the ground that GTZ was immune from suit, citing in particular its assigned functions in implementing the SHINE programa joint undertaking of the Philippine and German governments which was neither proprietary nor commercial in nature. The Court of Appeals had premised the dismissal of GTZs petition on its procedural misstep in bypassing an appeal to NLRC and challenging the Labor Arbiters Decision directly with the appellate court by way of a Rule 65 petition. In dismissing the petition, the

Court of Appeals relied on our ruling in Air Service Cooperative v. Court of Appeals.[29] The central issue in that case was whether a decision of a Labor Arbiter rendered without jurisdiction over the subject matter may be annulled in a petition before a Regional Trial Court. That case may be differentiated from the present case, since the Regional Trial Court does not have original or appellate jurisdiction to review a decision rendered by a Labor Arbiter. In contrast, there is no doubt, as affirmed by jurisprudence, that the Court of Appeals has jurisdiction to review, by way of its original certiorari jurisdiction, decisions ruling on complaints for illegal dismissal. Nonetheless, the Court of Appeals is correct in pronouncing the general rule that the proper recourse from the decision of the Labor Arbiter is to first appeal the same to the NLRC. Air Services is in fact clearly detrimental to petitioners position in one regard. The Court therein noted that on account of the failure to correctly appeal the decision of the Labor Arbiter to the NLRC, such judgment consequently became final and executory.[30] GTZ goes as far as to request that the Court re-examine Air Services, a suggestion that is needlessly improvident under the circumstances. Air Services affirms doctrines grounded in sound procedural rules that have allowed for the considered and orderly disposition of labor cases.

The OSG points out, citing Heirs of Mayor Nemencio Galvez v. Court of Appeals,[31] that even when appeal is available, the Court has nonetheless allowed a writ of certiorari when the orders of the lower court were issued either in excess of or without jurisdiction. Indeed, the Court has ruled before that the failure to employ

available intermediate recourses, such as a motion for reconsideration, is not a fatal infirmity if the ruling assailed is a patent nullity. This approach suggested by the OSG allows the Court to inquire directly into what is the main issue whether GTZ enjoys immunity from suit. The arguments raised by GTZ and the OSG are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. The activities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in the Philippines. The fact that GTZ entered into employment contracts with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr.,[32] which set forth what remains valid doctrine:

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.[33]

Beyond dispute is the tenability of the comment points raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particular employment contracts. Yet there is an equally fundamental

premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy the Federal Republics immunity from suit? The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that the State may not be sued without its consent. Who or what consists of the State? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State,[34] necessary as it is to avoid unduly vexing the peace of nations.

If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality of GTZ. Counsel for GTZ characterizes GTZ as the implementing agency of the Government of the Federal Republic of Germany, a depiction similarl y adopted by the OSG. Assuming that characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated. The following lucid discussion from Justice Isagani Cruz is pertinent:
Where suit is filed not against the government itself or its officials but against one of its entities, it must be ascertained whether or not the State, as the principal that may ultimately be held liable, has given its consent to be sued. This ascertainment will depend in the first instance on whether the government agency impleaded is incorporated or unincorporated. An incorporated agency has a charter of its own that invests it with a separate juridical personality, like the Social Security System, the University of the Philippines, and the City of Manila. By contrast, the unincorporated agency is so called because it has no separate juridical personality but is merged in the general machinery of the government, like the Department of Justice, the Bureau of Mines and the Government Printing Office. If the agency is incorporated, the test of its suability is found in its charter. The simple rule is that it is suable if its charter says so, and this is true regardless of the functions it is performing. Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provides that they can sue and be sued.[35]

State immunity from suit may be waived by general or special law.[36] The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued. These include the National Irrigation Administration,[37] the former Central Bank,[38] and the National Power Corporation.[39] In SSS v. Court of Appeals,[40] the Court through Justice MelencioHerrera explained that by virtue of an express provision in its charter allowing it to sue and be sued, the Social Security System did not enjoy immunity from suit:
We come now to the amendability of the SSS to judicial action and legal responsibility for its acts. To our minds, there should be no question on this score considering that the SSS is a juridical entity with a personality of its own. It has corporate powers separate and distinct from the Government. SSS' own organic act specifically provides that it can sue and be sued in Court. These words "sue and be sued" embrace all civil process incident to a legal action. So that, even assuming that the SSS, as it claims, enjoys immunity from suit as an entity performing governmental functions, by virtue of the explicit provision of the aforecited enabling law, the Government must be deemed to have waived immunity in respect of the SSS, although it does not thereby concede its liability. That statutory law has given to the private citizen a remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit to the jurisdiction of the Courts, subject to its right to interpose any lawful defense. Whether the SSS performs governmental or proprietary functions thus becomes unnecessary to belabor. For by that waiver, a private citizen may bring a suit against it for varied objectives, such as, in this case, to obtain compensation in damages arising from contract, and even for tort. A recent case squarely in point anent the principle, involving the National Power Corporation, is that of Rayo v. Court of First Instance of Bulacan, 110 SCRA 457 (1981), wherein this Court, speaking through Mr. Justice Vicente Abad Santos, ruled: "It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental function with respect to the management and operation of the Angat Dam. It is sufficient to say that the government has organized a private corporation, put money in it and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3[d]). As a government, owned and controlled corporation, it has a personality

of its own, distinct and separate from that of the Government. Moreover, the charter provision that the NPC can 'sue and be sued in any court' is without qualification on the cause of action and accordingly it can include a tort claim such as the one instituted by the petitioners."[41]

It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16(g) of which grants the corporation the power to sue and be sued in court. Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, governmental in nature as they may be. Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is the implementing agency of the Government of the Federal Republic of Germany. On the other hand, private respondents asserted before the Labor Arbiter that GTZ was a private corporation engaged in the implemen tation of development projects.[42] The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss,[43] though he was silent on that point in his Decision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation was never controverted, and is therefore deemed admitted.[44] In its Reply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the implementing agency, and not that of a private corporation.[45] In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a private corporation, and the Labor Arbiter acted rashly in accepting such claim without explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare

descriptive implementing agency. There is no doubt that the 1991 Agreement designated GTZ as the implementing agency in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as implementing agency could take us. The term by itself does not supply whethe r GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridical personality independent of the German government or none at all. GTZ itself provides a more helpful clue, inadvertently, through its own official Internet website.[46] In the Corporate Profile section of the English language version of its site, GTZ describes itself as follows:
As an international cooperation enterprise for sustainable development with worldwide operations, the federally owned Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ) GmbH supports the German Government in achieving its development-policy objectives. It provides viable, forward-looking solutions for political, economic, ecological and social development in a globalised world. Working under difficult conditions, GTZ promotes complex reforms and change processes. Its corporate objective is to improve peoples living conditions on a sustainable basis. GTZ is a federal enterprise based in Eschborn near Frankfurt am Main. It was founded in 1975 as a company under private law. The German Federal Ministry for Economic Cooperation and Development (BMZ) is its major client. The company also operates on behalf of other German ministries, the governments of other countries and international clients, such as the European Commission, the United Nations and the World Bank, as well as on behalf of private enterprises. GTZ works on a public-benefit basis. All surpluses generated are channeled [sic] back into its own international cooperation projects for sustainable development.[47]

GTZs own website elicits that petitioner is federally owned, a federal enterprise, and founded in 1975 as a company under private law. GTZ clearly has a very meaningful relationship with the Federal Republic of Germany, which

apparently owns it. At the same time, it appears that GTZ was actually organized not through a legislative public charter, but under private law, in the same way that Philippine corporations can be organized under the Corporation Code even if fully owned by the Philippine government. This self-description of GTZ in its own official website gives further cause for pause in adopting petitioners argument that GTZ is entitled to immunity from suit because it is an implementing agency. The above-quoted statement does not dispute the characterization of GTZ as an implementing agency of the Federal Republic of Germany, yet it bolsters the notion that as a company organized under private law, it has a legal personality independent of that of the Federal Republic of Germany. The Federal Republic of Germany, in its own official website,[48] also makes reference to GTZ and describes it in this manner:

x x x Going by the principle of sustainable development, the German Technical Cooperation (Deutsche Gesellschaft fr Technische Zusammenarbeit GmbH, GTZ) takes on non-profit projects in international technical cooperation. The GTZ is a private company owned by the Federal Republic of Germany.[49]

Again, we are uncertain of the corresponding legal implications under German law surrounding a private company owned by the Federal Republic of Germany. Yet taking the description on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government, or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the

Corporate Code states that [e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name.[50] It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines,[51] and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit. This absence of basis in fact leads to another important point, alluded to by the Labor Arbiter in his rulings. Our ruling in Holy See v. Del Rosario[52] provided a template on how a foreign entity desiring to invoke State immunity from suit could duly prove such immunity before our local courts. The principles enunciated in that case were derived from public international law. We stated then:
In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from

Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.[53]

It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs a certification of respondents diplomatic status and entitlement to diplomatic privileges including immunity from suits.[54] The requirement might not necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immune which the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes of this case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture, we do not see any evidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It may be possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have discussed herein.

Would the fact that the Solicitor General has endorsed GTZs claim of States immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in public international law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue. The arguments raised by the OSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippine government on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited. Holy See made reference to Baer v. Tizon,[55] and that in the said case, the United States Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make a suggestion to the trial court, accomplished by way of a Manifestation and Memorandum, that the petitioner therein enjoyed immunity as the Commander of the Subic Bay Naval Base. Such circumstance is actually not narrated in the text of Baer itself and was likely supplied in Holy See because its author, Justice Camilio Quiason, had appeared as the Solicitor in behalf of the OSG in Baer. Nonetheless, as narrated in Holy See, it was the Secretary of Foreign Affairs which directed the OSG to intervene in behalf of the United States government in the Baer case, and such fact is manifest enough of the endorsement by the Foreign Office. We do not find a similar circumstance that bears here. The Court is thus holds and so rules that GTZ consistently has been unable to establish with satisfaction that it enjoys the immunity from suit generally enjoyed by its parent country, the Federal Republic of Germany. Consequently, both the Labor Arbiter and the Court of Appeals acted within proper bounds when they

refused to acknowledge that GTZ is so immune by dismissing the complaint against it. Our finding has additional ramifications on the failure of GTZ to properly appeal the Labor Arbiters decision to the NLRC. As pointed out by the OSG, the direct recourse to the Court of Appeals while bypassing the NLRC could have been sanctioned had the Labor Arbiters decision been a patent nullity. Since the Labor Arbiter acted properly in deciding the complaint, notwithstanding GTZs claim of immunity, we cannot see how the decision could have translated into a patent nullity. As a result, there was no basis for petitioners in foregoing the appeal to the NLRC by filing directly with the Court of Appeals the petition for certiorari. It then follows that the Court of Appeals acted correctly in dismissing the petition on that ground. As a further consequence, since petitioners failed to perfect an appeal from the Labor Arbiters Decision, the same has long become final and executory. All other questions related to this case, such as whether or not private respondents were illegally dismissed, are no longer susceptible to review, respecting as we do the finality of the Labor Arbiters Decision. A final note. This decision should not be seen as deviation from the more common methodology employed in ascertaining whether a party enjoys State immunity from suit, one which focuses on the particular functions exercised by the party and determines whether these are proprietary or sovereign in nature. The nature of the acts performed by the entity invoking immunity remains the most important barometer for testing whether the privilege of State immunity from suit should apply. At the same time, our Constitution stipulates that a State immunity from suit is conditional on its withholding of consent; hence, the laws and circumstances pertaining to the creation and legal personality of an instrumentality or agency invoking immunity remain relevant. Consent to be sued, as exhibited in this decision, is often conferred by the very same statute or general law creating the instrumentality or agency.

WHEREFORE, the petition is DENIED. No pronouncement as to costs.

SO ORDERED.

EN BANC

CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP), Petitioner, versus

G.R. No. 185572 Present: CORONA, C.J., CARPIO, VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, SERENO, REYES, and PERLAS-BERNABE, JJ.

HON. CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145, Regional Trial Court of Makati City, HERMINIO HARRY L. ROQUE, JR., JOEL R. BUTUYAN, ROGER R. RAYEL, ROMEL R. BAGARES, CHRISTOPHER FRANCISCO C. BOLASTIG, LEAGUE OF URBAN POOR FOR ACTION (LUPA), KILUSAN NG MARALITA SA MEYCAUAYAN (KMM-LUPA CHAPTER), DANILO M. CALDERON, VICENTE C. ALBAN, MERLYN M. VAAL, LOLITA S. QUINONES, RICARDO D. LANOZO, JR., CONCHITA G. GOZO, MA. TERESA D. ZEPEDA, JOSEFINA A. LANOZO, and SERGIO C. LEGASPI, JR., KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY), EDY Promulgated: CLERIGO, RAMMIL DINGAL, NELSON B. TERRADO, CARMEN February 7, 2012 DEUNIDA, and EDUARDO LEGSON, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION SERENO, J.: This is a Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the 30 September 2008 Decision and 5 December 2008 Resolution of the Court of Appeals (CA) in CAG.R. SP No. 103351.[1] On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from Manila to San Fernando, La Union (the Northrail Project).[2] On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China agreed to extend Preferential Buyers Credit to the Philippine government to finance the Northrail Project.[3] The Chinese government designated EXIM Bank as the lender, while the Philippine government named the DOF as the borrower.[4] Under the Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-year grace period, and at the rate of 3% per annum.[5] On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEGs designation as the Prime Co ntractor for the Northrail Project.[6]

On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement).[7] The contract price for the Northrail Project was pegged at USD 421,050,000.[8] On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement).[9] In the Loan Agreement, EXIM Bank agreed to extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance the construction of Phase I of the Northrail Project.[10] On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and Management, the National Economic Development Authority and Northrail.[11] The case was docketed as Civil Case No. 06-203 before the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative Code.[12] RTC Br. 145 issued an Order dated 17 March 2006 setting the case for hearing on the issuance of injunctive reliefs.[13] On 29 March 2006, CNMEG filed an Urgent Motion for Reconsideration of this Order.[14] Before RTC Br. 145 could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have jurisdiction over (a) its person, as it was an agent of the Chinese government, making it immune from suit, and (b) the subject matter, as the Northrail Project was a product of an executive agreement.[15]

On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the case for summary hearing to determine whether the injunctive reliefs prayed for should be issued.[16] CNMEG then filed a Motion for Reconsideration,[17] which was denied by the trial court in an Order dated 10 March 2008.[18] Thus, CNMEG filed before the CA a Petition for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.[19] In the assailed Decision dated 30 September 2008, the appellate court dismissed the Petition for Certiorari.[20] Subsequently, CNMEG filed a Motion for Reconsideration,[21] which was denied by the CA in a Resolution dated 5 December 2008.[22] Thus, CNMEG filed the instant Petition for Review on Certiorari dated 21 January 2009, raising the following issues: [23]
Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China. Whether or not the Northrail contracts are products of an executive agreement between two sovereign states. Whether or not the certification from the Department of Foreign Affairs is necessary under the foregoing circumstances. Whether or not the act being undertaken by petitioner CNMEG is an act jure imperii. Whether or not the Court of Appeals failed to avoid a procedural limbo in the lower court.

Whether or not the Northrail Project is subject to competitive public bidding. Whether or not the Court of Appeals ignored the ruling of this Honorable Court in the Neri case.

CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145 for lack of jurisdiction. It likewise requests this Court for the issuance of a TRO

and, later on, a writ of preliminary injunction to restrain public respondent from proceeding with the disposition of Civil Case No. 06-203. The crux of this case boils down to two main issues, namely: 1. 2. Whether CNMEG is entitled to immunity, precluding it from being sued before a local court. Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or before a local court.

First issue: Whether CNMEG is entitled to immunity This Court explained the doctrine of sovereign immunity in Holy See v. Rosario,[24] to wit:
There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis. (Emphasis supplied; citations omitted.) xxx xxx xxx

The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading.

In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed the Philippines adherence to the restrictive theory as follows:
The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does

not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity of relationships between sovereign states, brought about by their increasing commercial activities, mothered a more restrictive application of the doctrine. xxx xxx xxx

As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign or governmental activities (jure imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts (jure gestionis).[26] (Emphasis supplied.)

Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United States of America v. Ruiz [27]
The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions.[28]

A. CNMEG is engaged in a proprietary activity. A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary activity. The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:[29]
WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos, section I, Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THE PROJECT);

AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including design, manufacturing, supply, construction, commissioning, and training of the Employers personnel; AND WHEREAS the Loan Agreement of the Preferential Buyers Credit between Export-Import Bank of China and Department of Finance of Republic of thePhilippines; NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.

The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the construction of the Luzon railways was meant to be a proprietary endeavor. In order to fully understand the intention behind and the purpose of the entire undertaking, the Contract Agreement must not be read in isolation. Instead, it must be construed in conjunction with three other documents executed in relation to the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between Northrail and CNMEG;[30] (b) the letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho; [31] and (c) the Loan Agreement.[32] 1. Memorandum of Understanding dated 14 September 2002 The Memorandum of Understanding dated 14 September 2002 shows that CNMEG sought the construction of the Luzon Railways as a proprietary venture. The relevant parts thereof read:
WHEREAS, CNMEG has the financial capability, professional competence and technical expertise to assess the state of the [Main Line North (MLN)] and recommend implementation plans as well as undertake its rehabilitation and/or modernization;

WHEREAS, CNMEG has expressed interest in the rehabilitation and/or modernization of the MLN from Metro Manila to San Fernando, La Union passing through the provinces of Bulacan, Pampanga, Tarlac, Pangasinan and La Union (the Project); WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to undertake a Feasibility Study (the Study) at no cost to NORTHRAIL CORP.; WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in undertaking the Project with Suppliers Credit and intends to employ CNMEG as the Contractor for the Project subject to compliance with Philippine and Chinese laws, rules and regulations for the selection of a contractor; WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal advantageous to the Government of the Republic of the Philippines and has therefore agreed to assist CNMEG in the conduct of the aforesaid Study; xxx II. APPROVAL PROCESS 2.1 As soon as possible after completion and presentation of the Study in accordance with Paragraphs 1.3 and 1.4 above and in compliance with necessary governmental laws, rules, regulations and procedures required from both parties, the parties shall commence the preparation and negotiation of the terms and conditions of the Contract (the Contract) to be entered into between them on the implementation of the Project. The parties shall use their best endeavors to formulate and finalize a Contract with a view to signing the Contract within one hundred twenty (120) days from CNMEGs presentation of the Study.[33] (Emphasis supplied) xxx xxx

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was conducted not because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese government, but

was plainly a business strategy employed by CNMEG with a view to securing this commercial enterprise.

2. Letter dated 1 October 2003 That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in his letter dated 1 October 2003, thus:
1. CNMEG has the proven competence and capability to undertake the Project as evidenced by the ranking of 42 given by the ENR among 225 global construction companies. 2. CNMEG already signed an MOU with the North Luzon Railways Corporation last September 14, 2000 during the visit of Chairman Li Peng. Such being the case, they have already established an initial working relationship with your North Luzon Railways Corporation. This would categorize CNMEG as the state corporation within the Peoples Republic of China which initiated our Governments involvement in the Project. 3. Among the various state corporations of the Peoples Republic of China, only CNMEG has the advantage of being fully familiar with the current requirements of the Northrail Project having already accomplished a Feasibility Study which was used as inputs by the North Luzon Railways Corporation in the approvals (sic) process required by the Republic of the Philippines.[34] (Emphasis supplied.)

Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a global construction company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000 for the venture.[35] The use of the term state corporation to refer to CNMEG was only descriptive of its nature as a government-owned and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf of China in the performance of the latters sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese corporations

owned by the state would be automatically considered as performing governmental activities, even if they are clearly engaged in commercial or proprietary pursuits.

3. The Loan Agreement CNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was signed by the Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it was bound to perform a governmental function on behalf of China. However, the Loan Agreement, which originated from the same Aug 30 MOU, belies this reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery of this Agreement by the Borrower constitute, and the Borrowers performance of and compliance with its obligations under this Agreement will constitute, private and commercial acts done and performed for commercial purposes under the laws of the Republic of the Philippines and neither the Borrower nor any of its assets is entitled to any immunity or privilege (sovereign or otherwise) from suit, execution or any other legal process with respect to its obligations under this Agreement, as the case may be, in any jurisdiction. Notwithstanding the foregoing, the Borrower does not waive any immunity with respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower and (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use). (Emphasis supplied.) (k) Proceedings to Enforce Agreement In any proceeding in the Republic of the Philippines to enforce this Agreement, the choice of the laws of the Peoples Republic of China as the governing law hereof will be recognized and such law will be applied. The waiver of immunity by the Borrower, the irrevocable submissions of the Borrower to the nonexclusive jurisdiction of the courts of the Peoples Republic of China and the appointment of the Borrowers Chinese Process Agent is legal, valid, binding and enforceable and any judgment obtained in the Peoples

Republic of China will be if introduced, evidence for enforcement in any proceedings against the Borrower and its assets in the Republic of the Philippines provided that (a) the court rendering judgment had jurisdiction over the subject matter of the action in accordance with its jurisdictional rules, (b) the Republic had notice of the proceedings, (c) the judgment of the court was not obtained through collusion or fraud, and (d) such judgment was not based on a clear mistake of fact or law.[36]

Further, the Loan Agreement likewise contains this express waiver of immunity:
15.5 Waiver of Immunity The Borrower irrevocably and unconditionally waives, any immunity to which it or its property may at any time be or become entitled, whether characterized as sovereign immunity or otherwise, from any suit, judgment, service of process upon it or any agent, execution on judgment, set-off, attachment prior to judgment, attachment in aid of execution to which it or its assets may be entitled in any legal action or proceedings with respect to this Agreement or any of the transactions contemplated hereby or hereunder. Notwithstanding the foregoing, the Borrower does not waive any immunity in respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower, (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to a public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use).[37]

Thus, despite petitioners claim that the EXIM Bank extended financial assistance to Northrail because the bank was mandated by the Chinese government, and not because of any motivation to do business in the Philippines,[38] it is clear from the foregoing provisions that the Northrail Project was a purely commercial transaction. Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of the entire undertaking, nonetheless reveal the

intention of the parties to the Northrail Project to classify the whole venture as commercial or proprietary in character. Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter dated 1 October 2003, and the Loan Agreement would reveal the desire of CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its business. B. CNMEG failed to adduce evidence that it is immune from suit under Chinese law. Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. This view finds support inMalong v. Philippine National Railways, in which this Court held that (i)mmunity from suit is determined by the character of the objects for which the entity was organized.[39] In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische Zusammenarbeit (GTZ) v. CA[40] must be examined. In Deutsche Gesellschaft,Germany and the Philippines entered into a Technical Cooperation Agreement, pursuant to which both signed an arrangement promoting the Social Health InsuranceNetworking and Empowerment (SHINE) project. The two governments named their respective implementing organizations: the Department of Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for the Philippines, and GTZ for the implementation of Germanys contributions. In ruling that GTZ was not immune from suit, this Court held:
The arguments raised by GTZ and the [Office of the Solicitor General (OSG)] are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. The activities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in thePhilippines. The fact that GTZ entered into employment contracts with the private respondents did not

disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr., which set forth what remains valid doctrine: Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. Beyond dispute is the tenability of the comment points (sic) raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particular employment contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy the Federal Republics immunity from suit? The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that the State may not be sued without its consent. Who or what consists of the State? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State, necessary as it is to avoid unduly vexing the peace of nations. If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality of GTZ. Counsel for GTZ characterizes GTZ as the implementing agency of the Government of the Federal Republic of Germany, a depiction similarly adopted by the OSG. Assuming that the characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated.

xxx

xxx

xxx

State immunity from suit may be waived by general or special law. The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued. xxx xxx xxx

It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which grants the corporation the power to sue and be sued in court. Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, (sic) governmental in nature as (sic) they may be. Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is the implementing agency of the Government of the Federal Republic of Germany. On the other hand, private respondents asserted before the Labor Arbiter that GTZ was a private corporation engaged in the implementation of development projects. The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss, though he was silent on that point in his Decision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation was never controverted, and is therefore deemed admitted. In its Reply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the implementing agency, and not that of a private corporation. In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a private corporation, and the Labor Arbiter acted rashly in accepting such claim without explanation. But neither has GTZ supplied any evidence defining its legal nature

beyond that of the bare descriptive implementing agency. There is no doubt that the 1991 Agreement designated GTZ as the implementing agency in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as implementing agency could take us. The term by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridical personality independent of the German government or none at all. xxx xxx xxx

Again, we are uncertain of the corresponding legal implications under German law surrounding a private company owned by the Federal Republic of Germany. Yet taking the description on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government, or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the Corporate Code states that [e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name. It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines, and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit.[41] (Emphasis supplied.)

Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit, even if it contends that it performs governmental functions. Its designation as the Primary Contractor does not automatically grant it immunity, just as the term implementing agency has no precise definition for purposes of ascertaining whether GTZ was immune from suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code. C. CNMEG failed to present a certification from the Department of Foreign Affairs. In Holy See,[42] this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question conclusive upon the courts, to wit:
In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. xxx xxx xxx

In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity . But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S.

Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General embodied the suggestion in a Manifestation and Memorandum as amicus curiae. In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioners claim of sovereign immunity. In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved.[43] (Emphasis supplied.)

The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which may be considered as conclusive upon the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor Relations Commission (NLRC),[44] emphasized the DFAs competence and authority to provide such necessary determination, to wit:
The DFAs function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenge, (sic) entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally of (sic) the DFA as being the highest executive department with the competence and authority

to so act in this aspect of the international arena.[45] (Emphasis supplied.)

Further, the fact that this authority is exclusive to the DFA was also emphasized in this Courts ruling in Deutsche Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs a certification of respondents diplomatic status and entitlement to diplomatic privileges including immunity from suits. The requirement might not necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immune which the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes of this case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture, we do not see any evidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It may be possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have discussed herein. Would the fact that the Solicitor General has endorsed GTZs claim of States immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in public international law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue. The arguments raised by the OSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippine government on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited.[46] (Emphasis supplied.)

In the case at bar, CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of the Peoples Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity.[47] Surely, this is not the kind of certification that can establish CNMEGs entitlement to immunity from suit, as Holy See unequivocally refers to the determination of the Foreign Office of the state where it is sued. Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, as expressly enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification.
D. An agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning behind the waiver in this case. The Conditions of Contract,[48] which is an integral part of the Contract Agreement,[49] states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION 33.1. Amicable Settlement Both parties shall attempt to amicably settle all disputes or controversies arising from this Contract before the commencement of arbitration. 33.2. Arbitration

All disputes or controversies arising from this Contract which cannot be settled between the Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRAL Arbitration Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall be Hong Kong International Arbitration Center. The place of arbitration shall be in Hong Kong at Hong Kong International Arbitration Center (HKIAC).

Under the above provisions, if any dispute arises between Northrail and CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13 thereof provides for the Recognition and Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules, the party to arbitration wishing to have an arbitral award recognized and enforced in the Philippines must petition the proper regional trial court (a) where the assets to be attached or levied upon is located; (b) where the acts to be enjoined are being performed; (c) in the principal place of business in the Philippines of any of the parties; (d) if any of the parties is an individual, where any of those individuals resides; or (e) in the National Capital Judicial Region. From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the Contract Agreement. Second issue: Whether the Contract Agreement is an executive agreement Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty as follows:
[A]n international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.

In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.[50] Despite these differences, to be considered an executive agreement, the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written; and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar. A. CNMEG is neither a government nor a government agency. The Contract Agreement was not concluded between [51] the Philippines and China, but between Northrail and CNMEG. By the terms of the Contract Agreement, Northrail is a government-owned or -controlled corporation, while CNMEG is a corporation duly organized and created under the laws of the Peoples Republic of China.[52] Thus, both Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively. Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact that Amb. Wang, in his letter dated 1 October 2003,[53] described CNMEG as a state corporation and declared its designation as the Primary Contractor in the Northrail Project did not mean it was to perform sovereign functions on behalf of China. That label was only descriptive of its nature as a state-owned corporation, and did not preclude it from engaging in purely commercial or proprietary ventures. B. The Contract Agreement is to be governed by Philippine law. Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the Contract Agreement is an integral part of the latter, states:

APPLICABLE LAW AND GOVERNING LANGUAGE The contract shall in all respects be read and construed in accordance with the laws of the Philippines. The contract shall be written in English language. All correspondence and other documents pertaining to the Contract which are exchanged by the parties shall be written in English language.

Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations thereunder are not governed by international law. It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an executive agreement. It is merely an ordinary commercial contract that can be questioned before the local courts. WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and the Contract Agreement is not an executive agreement. CNMEGs prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic. This case is REMANDED to the Regional Trial Court of Makati, Branch 145, for further proceedings as regards the validity of the contracts subject ofCivil Case No. 06-203. No pronouncement on costs of suit. SO ORDERED.

G.R. No. 169777*

April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as Senate President, JUAN M. FLAVIER, in his capacity as Senate President Pro Tempore, FRANCIS N. PANGILINAN, in his capacity as Majority Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as Minority Leader, SENATORS RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM, M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and MAR ROXAS,Petitioners, vs. EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of the Philippines,Respondents. x-------------------------x G.R. No. 169659 April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep. CRISPIN BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL VIRADOR, COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE DEFENSE OF LIBERTIES (CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners, vs. EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria Macapagal-Arroyo, Respondent. x-------------------------x G.R. No. 169660 April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner, vs. EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his capacity as Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief of Staff, Respondents. x-------------------------x G.R. No. 169667 April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner, vs. HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent. x-------------------------x G.R. No. 169834 April 20, 2006

PDP- LABAN, Petitioner, vs. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent. x-------------------------x G.R. No. 171246 April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B. JOVY C. BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED BAR FOR THE PHILIPPINES, Petitioners, vs. HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent. DECISION CARPIO MORALES, J.: A transparent government is one of the hallmarks of a truly republican state. Even in the early history of republican thought, however, it has been recognized that the head of government may keep certain information confidential in pursuit of the public interest. Explaining the reason for vesting executive power in only one magistrate, a distinguished delegate to the U.S. Constitutional Convention said: "Decision, activity, secrecy, and dispatch will generally characterize the proceedings of one man, in a much more eminent degree than the proceedings of any greater number; and in proportion as the number is increased, these qualities will be diminished."1 History has been witness, however, to the fact that the power to withhold information lends itself to abuse, hence, the necessity to guard it zealously. The present consolidated petitions for certiorari and prohibition proffer that the President has abused such power by issuing Executive Order No. 464 (E.O. 464) last September 28, 2005. They thus pray for its declaration as null and void for being unconstitutional.

In resolving the controversy, this Court shall proceed with the recognition that the issuance under review has come from a co-equal branch of government, which thus entitles it to a strong presumption of constitutionality. Once the challenged order is found to be indeed violative of the Constitution, it is duty-bound to declare it so. For the Constitution, being the highest expression of the sovereign will of the Filipino people, must prevail over any issuance of the government that contravenes its mandates. In the exercise of its legislative power, the Senate of the Philippines, through its various Senate Committees, conducts inquiries or investigations in aid of legislation which call for, inter alia, the attendance of officials and employees of the executive department, bureaus, and offices including those employed in Government Owned and Controlled Corporations, the Armed Forces of the Philippines (AFP), and the Philippine National Police (PNP). On September 21 to 23, 2005, the Committee of the Senate as a whole issued invitations to various officials of the Executive Department for them to appear on September 29, 2005 as resource speakers in a public hearing on the railway project of the North Luzon Railways Corporation with the China National Machinery and Equipment Group (hereinafter North Rail Project). The public hearing was sparked by a privilege speech of Senator Juan Ponce Enrile urging the Senate to investigate the alleged overpricing and other unlawful provisions of the contract covering the North Rail Project. The Senate Committee on National Defense and Security likewise issued invitations2 dated September 22, 2005 to the following officials of the AFP: the Commanding General of the Philippine Army, Lt. Gen. Hermogenes C. Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of Staff for Intelligence of the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence Service of the AFP Brig. Gen. Marlu Q. Quevedo; Assistant Superintendent of the Philippine Military Academy (PMA) Brig. Gen. Francisco V. Gudani; and Assistant Commandant, Corps of Cadets of the PMA, Col. Alexander F. Balutan, for them to attend as resource persons in a public hearing scheduled on September 28, 2005 on the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr., delivered on June 6, 2005 entitled "Bunye has Provided Smoking Gun or has Opened a Can of Worms that Show Massive Electoral Fraud in the Presidential Election of May 2005"; (2) Privilege Speech of Senator Jinggoy E. Estrada delivered on July 26, 2005 entitled "The Philippines as the WireTapping Capital of the World"; (3) Privilege Speech of Senator Rodolfo Biazon delivered on August 1, 2005 entitled "Clear and Present Danger"; (4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo Madrigal Resolution Directing the Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, and in the National Interest, on the Role of the Military in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No. 295 filed by Senator Biazon Resolution Directing the

Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, on the Wire-Tapping of the President of the Philippines. Also invited to the above-said hearing scheduled on September 28 2005 was the AFP Chief of Staff, General Generoso S. Senga who, by letter3 dated September 27, 2005, requested for its postponement "due to a pressing operational situation that demands [his utmost personal attention" while "some of the invited AFP officers are currently attending to other urgent operational matters." On September 28, 2005, Senate President Franklin M. Drilon received from Executive Secretary Eduardo R. Ermita a letter4 dated September 27, 2005 "respectfully request[ing] for the postponement of the hearing [regarding the NorthRail project] to which various officials of the Executive Department have been invited" in order to "afford said officials ample time and opportunity to study and prepare for the various issues so that they may better enlighten the Senate Committee on its investigation." Senate President Drilon, however, wrote5 Executive Secretary Ermita that the Senators "are unable to accede to [his request]" as it "was sent belatedly" and "[a]ll preparations and arrangements as well as notices to all resource persons were completed [the previous] week." Senate President Drilon likewise received on September 28, 2005 a letter6 from the President of the North Luzon Railways Corporation Jose L. Cortes, Jr. requesting that the hearing on the NorthRail project be postponed or cancelled until a copy of the report of the UP Law Center on the contract agreements relative to the project had been secured. On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes,"7 which, pursuant to Section 6 thereof, took effect immediately. The salient provisions of the Order are as follows: SECTION 1. Appearance by Heads of Departments Before Congress. In accordance with Article VI, Section 22 of the Constitution and to implement the Constitutional provisions on the separation of powers between co-equal branches of the government, all heads of departments of the Executive Branch of the government shall secure the consent of the President prior to appearing before either House of Congress. When the security of the State or the public interest so requires and the President so states in writing, the appearance shall only be conducted in executive session.

SECTION. 2. Nature, Scope and Coverage of Executive Privilege. (a) Nature and Scope. - The rule of confidentiality based on executive privilege is fundamental to the operation of government and rooted in the separation of powers under the Constitution (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees provides that Public Officials and Employees shall not use or divulge confidential or classified information officially known to them by reason of their office and not made available to the public to prejudice the public interest. Executive privilege covers all confidential or classified information between the President and the public officers covered by this executive order, including: Conversations and correspondence between the President and the public official covered by this executive order (Almonte vs. Vasquez G.R. No. 95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002); Military, diplomatic and other national security matters which in the interest of national security should not be divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998). Information between inter-government agencies prior to the conclusion of treaties and executive agreements (Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998); Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998); Matters affecting national security and public order (Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002). (b) Who are covered. The following are covered by this executive order: Senior officials of executive departments who in the judgment of the department heads are covered by the executive privilege; Generals and flag officers of the Armed Forces of the Philippines and such other officers who in the judgment of the Chief of Staff are covered by the executive privilege; Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other officers who in the judgment of the Chief of the PNP are covered by the executive privilege;

Senior national security officials who in the judgment of the National Security Adviser are covered by the executive privilege; and Such other officers as may be determined by the President. SECTION 3. Appearance of Other Public Officials Before Congress. All public officials enumerated in Section 2 (b) hereof shall secure prior consent of the President prior to appearing before either House of Congress to ensure the observance of the principle of separation of powers, adherence to the rule on executive privilege and respect for the rights of public officials appearing in inquiries in aid of legislation. (Emphasis and underscoring supplied) Also on September 28, 2005, Senate President Drilon received from Executive Secretary Ermita a copy of E.O. 464, and another letter8 informing him "that officials of the Executive Department invited to appear at the meeting [regarding the NorthRail project] will not be able to attend the same without the consent of the President, pursuant to [E.O. 464]" and that "said officials have not secured the required consent from the President." On even date which was also the scheduled date of the hearing on the alleged wiretapping, Gen. Senga sent a letter9 to Senator Biazon, Chairperson of the Committee on National Defense and Security, informing him "that per instruction of [President Arroyo], thru the Secretary of National Defense, no officer of the [AFP] is authorized to appear before any Senate or Congressional hearings without seeking a written approval from the President" and "that no approval has been granted by the President to any AFP officer to appear before the public hearing of the Senate Committee on National Defense and Security scheduled [on] 28 September 2005." Despite the communications received from Executive Secretary Ermita and Gen. Senga, the investigation scheduled by the Committee on National Defense and Security pushed through, with only Col. Balutan and Brig. Gen. Gudani among all the AFP officials invited attending. For defying President Arroyos order barring military personnel from testifying before legislative inquiries without her approval, Brig. Gen. Gudani and Col. Balutan were relieved from their military posts and were made to face court martial proceedings. As to the NorthRail project hearing scheduled on September 29, 2005, Executive Secretary Ermita, citing E.O. 464, sent letter of regrets, in response to the invitations sent to the following government officials: Light Railway Transit Authority Administrator Melquiades Robles, Metro Rail Transit Authority Administrator Roberto Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then Presidential Legal Counsel Merceditas Gutierrez, Department of Transportation and Communication (DOTC) Undersecretary Guiling Mamonding, DOTC Secretary Leandro Mendoza, Philippine National Railways General Manager Jose Serase II,

Monetary Board Member Juanita Amatong, Bases Conversion Development Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L. Neri.10 NorthRail President Cortes sent personal regrets likewise citing E.O. 464.11 On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and 169667, for certiorari and prohibition, were filed before this Court challenging the constitutionality of E.O. 464. In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives Members Satur Ocampo, Crispin Beltran, Rafael Mariano, Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of government employees, and Counsels for the Defense of Liberties (CODAL), a group of lawyers dedicated to the promotion of justice, democracy and peace, all claiming to have standing to file the suit because of the transcendental importance of the issues they posed, pray, in their petition that E.O. 464 be declared null and void for being unconstitutional; that respondent Executive Secretary Ermita, in his capacity as Executive Secretary and alter-ego of President Arroyo, be prohibited from imposing, and threatening to impose sanctions on officials who appear before Congress due to congressional summons. Additionally, petitioners claim that E.O. 464 infringes on their rights and impedes them from fulfilling their respective obligations. Thus, Bayan Muna alleges that E.O. 464 infringes on its right as a political party entitled to participate in governance; Satur Ocampo, et al. allege that E.O. 464 infringes on their rights and duties as members of Congress to conduct investigation in aid of legislation and conduct oversight functions in the implementation of laws; Courage alleges that the tenure of its members in public office is predicated on, and threatened by, their submission to the requirements of E.O. 464 should they be summoned by Congress; and CODAL alleges that its members have a sworn duty to uphold the rule of law, and their rights to information and to transparent governance are threatened by the imposition of E.O. 464. In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional rights as a citizen, taxpayer and law practitioner, are affected by the enforcement of E.O. 464, prays in his petition that E.O. 464 be declared null and void for being unconstitutional. In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG), alleging that as a coalition of 17 legal resource non-governmental organizations engaged in developmental lawyering and work with the poor and marginalized sectors in different parts of the country, and as an organization of citizens of the Philippines and a part of the general public, it has legal standing to institute the petition to enforce its constitutional right to information on matters of public concern, a right which was denied to the public by E.O. 464,13 prays, that said order be declared null and void for being unconstitutional and that respondent Executive Secretary Ermita be ordered to cease from implementing it.

On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital interest in the resolution of the issue of the validity of E.O. 464 for it stands to suffer imminent and material injury, as it has already sustained the same with its continued enforcement since it directly interferes with and impedes the valid exercise of the Senates powers and functions and conceals information of great public interest and concern, filed its petition for certiorari and prohibition, docketed as G.R. No. 169777 and prays that E.O. 464 be declared unconstitutional. On October 14, 2005, PDP-Laban, a registered political party with members duly elected into the Philippine Senate and House of Representatives, filed a similar petition for certiorari and prohibition, docketed as G.R. No. 169834, alleging that it is affected by the challenged E.O. 464 because it hampers its legislative agenda to be implemented through its members in Congress, particularly in the conduct of inquiries in aid of legislation and transcendental issues need to be resolved to avert a constitutional crisis between the executive and legislative branches of the government. Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation to Gen. Senga for him and other military officers to attend the hearing on the alleged wiretapping scheduled on February 10, 2005. Gen. Senga replied, however, by letter15 dated February 8, 2006, that "[p]ursuant to Executive Order No. 464, th[e] Headquarters requested for a clearance from the President to allow [them] to appear before the public hearing" and that "they will attend once [their] request is approved by the President." As none of those invited appeared, the hearing on February 10, 2006 was cancelled.16 In another investigation conducted jointly by the Senate Committee on Agriculture and Food and the Blue Ribbon Committee on the alleged mismanagement and use of the fertilizer fund under the Ginintuang Masaganang Ani program of the Department of Agriculture (DA), several Cabinet officials were invited to the hearings scheduled on October 5 and 26, November 24 and December 12, 2005 but most of them failed to attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix Jose Montes, Fertilizer and Pesticide Authority Executive Director Norlito R. Gicana,17 and those from the Department of Budget and Management18 having invoked E.O. 464. In the budget hearings set by the Senate on February 8 and 13, 2006, Press Secretary and Presidential Spokesperson Ignacio R. Bunye,19 DOJ Secretary Raul M. Gonzalez20 and Department of Interior and Local Government Undersecretary Marius P. Corpus21 communicated their inability to attend due to lack of appropriate clearance from the President pursuant to E.O. 464. During the February 13, 2005 budget hearing, however, Secretary Bunye was allowed to attend by Executive Secretary Ermita. On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the Board of Governors of the Integrated Bar of the Philippines, as taxpayers, and the Integrated

Bar of the Philippines as the official organization of all Philippine lawyers, all invoking their constitutional right to be informed on matters of public interest, filed their petition for certiorari and prohibition, docketed as G.R. No. 171246, and pray that E.O. 464 be declared null and void. All the petitions pray for the issuance of a Temporary Restraining Order enjoining respondents from implementing, enforcing, and observing E.O. 464. In the oral arguments on the petitions conducted on February 21, 2006, the following substantive issues were ventilated: (1) whether respondents committed grave abuse of discretion in implementing E.O. 464 prior to its publication in the Official Gazette or in a newspaper of general circulation; and (2) whether E.O. 464 violates the following provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec. 1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The procedural issue of whether there is an actual case or controversy that calls for judicial review was not taken up; instead, the parties were instructed to discuss it in their respective memoranda. After the conclusion of the oral arguments, the parties were directed to submit their respective memoranda, paying particular attention to the following propositions: (1) that E.O. 464 is, on its face, unconstitutional; and (2) assuming that it is not, it is unconstitutional as applied in four instances, namely: (a) the so called Fertilizer scam; (b) the NorthRail investigation (c) the Wiretapping activity of the ISAFP; and (d) the investigation on the Venable contract.22 Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on March 7, 2006, while those in G.R. No. 16966725 and G.R. No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in G.R. No. 171246 did not file any memorandum. Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to file memorandum27 was granted, subsequently filed a manifestation28 dated March 14, 2006 that it would no longer file its memorandum in the interest of having the issues resolved soonest, prompting this Court to issue a Resolution reprimanding them.29 Petitioners submit that E.O. 464 violates the following constitutional provisions: Art. VI, Sec. 2130 Art. VI, Sec. 2231 Art. VI, Sec. 132 Art. XI, Sec. 133

Art. III, Sec. 734 Art. III, Sec. 435 Art. XIII, Sec. 16 36 Art. II, Sec. 2837 Respondents Executive Secretary Ermita et al., on the other hand, pray in their consolidated memorandum38 on March 13, 2006 for the dismissal of the petitions for lack of merit. The Court synthesizes the issues to be resolved as follows: 1. Whether E.O. 464 contravenes the power of inquiry vested in Congress; 2. Whether E.O. 464 violates the right of the people to information on matters of public concern; and 3. Whether respondents have committed grave abuse of discretion when they implemented E.O. 464 prior to its publication in a newspaper of general circulation. Essential requisites for judicial review Before proceeding to resolve the issue of the constitutionality of E.O. 464, ascertainment of whether the requisites for a valid exercise of the Courts power of judicial review are present is in order. Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have standing to challenge the validity of the subject act or issuance; otherwise stated, 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; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.39 Except with respect to the requisites of standing and existence of an actual case or controversy where the disagreement between the parties lies, discussion of the rest of the requisites shall be omitted. Standing

Respondents, through the Solicitor General, assert that the allegations in G.R. Nos. 169659, 169660 and 169667 make it clear that they, adverting to the non-appearance of several officials of the executive department in the investigations called by the different committees of the Senate, were brought to vindicate the constitutional duty of the Senate or its different committees to conduct inquiry in aid of legislation or in the exercise of its oversight functions. They maintain that Representatives Ocampo et al. have not shown any specific prerogative, power, and privilege of the House of Representatives which had been effectively impaired by E.O. 464, there being no mention of any investigation called by the House of Representatives or any of its committees which was aborted due to the implementation of E.O. 464. As for Bayan Munas alleged interest as a party-list representing the marginalized and underrepresented, and that of the other petitioner groups and individuals who profess to have standing as advocates and defenders of the Constitution, respondents contend that such interest falls short of that required to confer standing on them as parties "injured-in-fact."40 Respecting petitioner Chavez, respondents contend that Chavez may not claim an interest as a taxpayer for the implementation of E.O. 464 does not involve the exercise of taxing or spending power.41 With regard to the petition filed by the Senate, respondents argue that in the absence of a personal or direct injury by reason of the issuance of E.O. 464, the Senate and its individual members are not the proper parties to assail the constitutionality of E.O. 464. Invoking this Courts ruling in National Economic Protectionism Association v. Ongpin42 and Valmonte v. Philippine Charity Sweepstakes Office,43 respondents assert that to be considered a proper party, one must have a personal and substantial interest in the case, such that he has sustained or will sustain direct injury due to the enforcement of E.O. 464.44 That the Senate of the Philippines has a fundamental right essential not only for intelligent public decision-making in a democratic system, but more especially for sound legislation45 is not disputed. E.O. 464, however, allegedly stifles the ability of the members of Congress to access information that is crucial to law-making.46 Verily, the Senate, including its individual members, has a substantial and direct interest over the outcome of the controversy and is the proper party to assail the constitutionality of E.O. 464. Indeed, legislators have standing to maintain inviolate the prerogative, powers and privileges vested by the Constitution in their office and are allowed to sue to question the validity of any official action which they claim infringes their prerogatives as legislators.47

In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino (Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are allowed to sue to question the constitutionality of E.O. 464, the absence of any claim that an investigation called by the House of Representatives or any of its committees was aborted due to the implementation of E.O. 464 notwithstanding, it being sufficient that a claim is made that E.O. 464 infringes on their constitutional rights and duties as members of Congress to conduct investigation in aid of legislation and conduct oversight functions in the implementation of laws. The national political party, Bayan Muna, likewise meets the standing requirement as it obtained three seats in the House of Representatives in the 2004 elections and is, therefore, entitled to participate in the legislative process consonant with the declared policy underlying the party list system of affording citizens belonging to marginalized and underrepresented sectors, organizations and parties who lack well-defined political constituencies to contribute to the formulation and enactment of legislation that will benefit the nation.48 As Bayan Muna and Representatives Ocampo et al. have the standing to file their petitions, passing on the standing of their co-petitioners Courage and Codal is rendered unnecessary.49 In filing their respective petitions, Chavez, the ALG which claims to be an organization of citizens, and the incumbent members of the IBP Board of Governors and the IBP in behalf of its lawyer members,50 invoke their constitutional right to information on matters of public concern, asserting that the right to information, curtailed and violated by E.O. 464, is essential to the effective exercise of other constitutional rights51 and to the maintenance of the balance of power among the three branches of the government through the principle of checks and balances.52 It is well-settled that when suing as a citizen, the interest of the petitioner in assailing the constitutionality of laws, presidential decrees, orders, and other regulations, must be direct and personal. In Franciso v. House of Representatives,53 this Court held that when the proceeding involves the assertion of a public right, the mere fact that he is a citizen satisfies the requirement of personal interest. As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in view of the transcendental issues raised in its petition which this Court needs to resolve in order to avert a constitutional crisis. For it to be accorded standing on the ground of transcendental importance, however, it must establish (1) the character of the funds (that it is public) or other assets involved in the case, (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government, and (3) the lack of any party with a more direct

and specific interest in raising the questions being raised.54 The first and last determinants not being present as no public funds or assets are involved and petitioners in G.R. Nos. 169777 and 169659 have direct and specific interests in the resolution of the controversy, petitioner PDP-Laban is bereft of standing to file its petition. Its allegation that E.O. 464 hampers its legislative agenda is vague and uncertain, and at best is only a "generalized interest" which it shares with the rest of the political parties. Concrete injury, whether actual or threatened, is that indispensable element of a dispute which serves in part to cast it in a form traditionally capable of judicial resolution.55 In fine, PDP-Labans alleged interest as a political party does not suffice to clothe it with legal standing. Actual Case or Controversy Petitioners assert that an actual case exists, they citing the absence of the executive officials invited by the Senate to its hearings after the issuance of E.O. 464, particularly those on the NorthRail project and the wiretapping controversy. Respondents counter that there is no case or controversy, there being no showing that President Arroyo has actually withheld her consent or prohibited the appearance of the invited officials.56 These officials, they claim, merely communicated to the Senate that they have not yet secured the consent of the President, not that the President prohibited their attendance.57 Specifically with regard to the AFP officers who did not attend the hearing on September 28, 2005, respondents claim that the instruction not to attend without the Presidents consent was based on its role as Commander-in-Chief of the Armed Forces, not on E.O. 464. Respondents thus conclude that the petitions merely rest on an unfounded apprehension that the President will abuse its power of preventing the appearance of officials before Congress, and that such apprehension is not sufficient for challenging the validity of E.O. 464. The Court finds respondents assertion that the President has not withheld her consent or prohibited the appearance of the officials concerned immaterial in determining the existence of an actual case or controversy insofar as E.O. 464 is concerned. For E.O. 464 does not require either a deliberate withholding of consent or an express prohibition issuing from the President in order to bar officials from appearing before Congress. As the implementation of the challenged order has already resulted in the absence of officials invited to the hearings of petitioner Senate of the Philippines, it would make no sense to wait for any further event before considering the present case ripe for adjudication. Indeed, it would be sheer abandonment of duty if this Court would now refrain from passing on the constitutionality of E.O. 464.

Constitutionality of E.O. 464 E.O. 464, to the extent that it bars the appearance of executive officials before Congress, deprives Congress of the information in the possession of these officials. To resolve the question of whether such withholding of information violates the Constitution, consideration of the general power of Congress to obtain information, otherwise known as the power of inquiry, is in order. The power of inquiry The Congress power of inquiry is expressly recognized in Section 21 of Article VI of the Constitution which reads: SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected. (Underscoring supplied) This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution except that, in the latter, it vests the power of inquiry in the unicameral legislature established therein the Batasang Pambansa and its committees. The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v. Nazareno,58 a case decided in 1950 under that Constitution, the Court already recognized that the power of inquiry is inherent in the power to legislate. Arnault involved a Senate investigation of the reportedly anomalous purchase of the Buenavista and Tambobong Estates by the Rural Progress Administration. Arnault, who was considered a leading witness in the controversy, was called to testify thereon by the Senate. On account of his refusal to answer the questions of the senators on an important point, he was, by resolution of the Senate, detained for contempt. Upholding the Senates power to punish Arnault for contempt, this Court held: Although there is no provision in the Constitution expressly investing either House of Congress with power to make investigations and exact testimony to the end that it may exercise its legislative functions advisedly and effectively, such power is so far incidental to the legislative function as to be implied. In other words, the power of inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite information which is not infrequently true recourse must be had to others who do possess it. Experience has shown that mere requests for such information are often

unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion is essential to obtain what is needed.59 . . . (Emphasis and underscoring supplied) That this power of inquiry is broad enough to cover officials of the executive branch may be deduced from the same case. The power of inquiry, the Court therein ruled, is co-extensive with the power to legislate.60 The matters which may be a proper subject of legislation and those which may be a proper subject of investigation are one. It follows that the operation of government, being a legitimate subject for legislation, is a proper subject for investigation. Thus, the Court found that the Senate investigation of the government transaction involved in Arnault was a proper exercise of the power of inquiry. Besides being related to the expenditure of public funds of which Congress is the guardian, the transaction, the Court held, "also involved government agencies created by Congress and officers whose positions it is within the power of Congress to regulate or even abolish." Since Congress has authority to inquire into the operations of the executive branch, it would be incongruous to hold that the power of inquiry does not extend to executive officials who are the most familiar with and informed on executive operations. As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity of information in the legislative process. If the information possessed by executive officials on the operation of their offices is necessary for wise legislation on that subject, by parity of reasoning, Congress has the right to that information and the power to compel the disclosure thereof. As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial power. It may thus be subjected to judicial review pursuant to the Courts certiorari powers under Section 1, Article VIII of the Constitution. For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself might not properly be in aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp judicial functions. Parenthetically, one possible way for Congress to avoid such a result as occurred in Bengzon is to indicate in its invitations to the public officials concerned, or to any person for that matter, the possible needed statute which prompted the need for the inquiry. Given such statement in its invitations, along with the usual indication of the subject of inquiry and the questions relative to and in furtherance thereof, there would be less room for speculation on the part of the person invited on whether the inquiry is in aid of legislation.

Section 21, Article VI likewise establishes crucial safeguards that proscribe the legislative power of inquiry. The provision requires that the inquiry be done in accordance with the Senate or Houses duly published rules of procedure, necessarily implying the constitutional infirmity of an inquiry conducted without duly published rules of procedure. Section 21 also mandates that the rights of persons appearing in or affected by such inquiries be respected, an imposition that obligates Congress to adhere to the guarantees in the Bill of Rights. These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons affected, even if they belong to the executive branch. Nonetheless, there may be exceptional circumstances, none appearing to obtain at present, wherein a clear pattern of abuse of the legislative power of inquiry might be established, resulting in palpable violations of the rights guaranteed to members of the executive department under the Bill of Rights. In such instances, depending on the particulars of each case, attempts by the Executive Branch to forestall these abuses may be accorded judicial sanction. Even where the inquiry is in aid of legislation, there are still recognized exemptions to the power of inquiry, which exemptions fall under the rubric of "executive privilege." Since this term figures prominently in the challenged order, it being mentioned in its provisions, its preambular clauses,62 and in its very title, a discussion of executive privilege is crucial for determining the constitutionality of E.O. 464. Executive privilege The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the promulgation of the 1986 Constitution.63 Being of American origin, it is best understood in light of how it has been defined and used in the legal literature of the United States. Schwartz defines executive privilege as "the power of the Government to withhold information from the public, the courts, and the Congress."64 Similarly, Rozell defines it as "the right of the President and high-level executive branch officers to withhold information from Congress, the courts, and ultimately the public."65 Executive privilege is, nonetheless, not a clear or unitary concept. 66 It has encompassed claims of varying kinds.67 Tribe, in fact, comments that while it is customary to employ the phrase "executive privilege," it may be more accurate to speak of executive privileges "since presidential refusals to furnish information may be actuated by any of at least three distinct kinds of considerations, and may be asserted, with differing degrees of success, in the context of either judicial or legislative investigations."

One variety of the privilege, Tribe explains, is the state secrets privilege invoked by U.S. Presidents, beginning with Washington, on the ground that the information is of such nature that its disclosure would subvert crucial military or diplomatic objectives. Another variety is the informers privilege, or the privilege of the Government not to disclose the identity of persons who furnish information of violations of law to officers charged with the enforcement of that law. Finally, a generic privilege for internal deliberations has been said to attach to intragovernmental documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated. 68 Tribes comment is supported by the ruling in In re Sealed Case, thus: Since the beginnings of our nation, executive officials have claimed a variety of privileges to resist disclosure of information the confidentiality of which they felt was crucial to fulfillment of the unique role and responsibilities of the executive branch of our government. Courts ruled early that the executive had a right to withhold documents that might reveal military or state secrets. The courts have also granted the executive a right to withhold the identity of government informers in some circumstances and a qualified right to withhold information related to pending investigations. x x x"69 (Emphasis and underscoring supplied) The entry in Blacks Law Dictionary on "executive privilege" is similarly instructive regarding the scope of the doctrine. This privilege, based on the constitutional doctrine of separation of powers, exempts the executive from disclosure requirements applicable to the ordinary citizen or organization where such exemption is necessary to the discharge of highly important executive responsibilities involved in maintaining governmental operations, and extends not only to military and diplomatic secrets but also to documents integral to an appropriate exercise of the executive domestic decisional and policy making functions, that is, those documents reflecting the frank expression necessary in intra-governmental advisory and deliberative communications.70 (Emphasis and underscoring supplied) That a type of information is recognized as privileged does not, however, necessarily mean that it would be considered privileged in all instances. For in determining the validity of a claim of privilege, the question that must be asked is not only whether the requested information falls within one of the traditional privileges, but also whether that privilege should be honored in a given procedural setting.71 The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided in 1974. In issue in that case was the validity of President Nixons claim of executive privilege against a subpoena issued by a district court requiring the production of certain tapes and documents relating to the Watergate investigations. The claim of

privilege was based on the Presidents general interest in the confidentiality of his conversations and correspondence. The U.S. Court held that while there is no explicit reference to a privilege of confidentiality in the U.S. Constitution, it is constitutionally based to the extent that it relates to the effective discharge of a Presidents powers. The Court, nonetheless, rejected the Presidents claim of privilege, ruling that the privilege must be balanced against the public interest in the fair administration of criminal justice. Notably, the Court was careful to clarify that it was not there addressing the issue of claims of privilege in a civil litigation or against congressional demands for information. Cases in the U.S. which involve claims of executive privilege against Congress are rare.73 Despite frequent assertion of the privilege to deny information to Congress, beginning with President Washingtons refusal to turn over treaty negotiation records to the House of Representatives, the U.S. Supreme Court has never adjudicated the issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit, in a case decided earlier in the same year as Nixon, recognized the Presidents privilege over his conversations against a congressional subpoena.75 Anticipating the balancing approach adopted by the U.S. Supreme Court in Nixon, the Court of Appeals weighed the public interest protected by the claim of privilege against the interest that would be served by disclosure to the Committee. Ruling that the balance favored the President, the Court declined to enforce the subpoena. 76 In this jurisdiction, the doctrine of executive privilege was recognized by this Court in Almonte v. Vasquez.77Almonte used the term in reference to the same privilege subject of Nixon. It quoted the following portion of the Nixon decision which explains the basis for the privilege: "The expectation of a President to the confidentiality of his conversations and correspondences, like the claim of confidentiality of judicial deliberations, for example, has all the values to which we accord deference for the privacy of all citizens and, added to those values, is the necessity for protection of the public interest in candid, objective, and even blunt or harsh opinions in Presidential decision-making. A President and those who assist him must be free to explore alternatives in the process of shaping policies and making decisions and to do so in a way many would be unwilling to express except privately. These are the considerations justifying a presumptive privilege for Presidential communications. The privilege is fundamental to the operation of government and inextricably rooted in the separation of powers under the Constitution x x x " (Emphasis and underscoring supplied) Almonte involved a subpoena duces tecum issued by the Ombudsman against the therein petitioners. It did not involve, as expressly stated in the decision, the right of the people to information.78 Nonetheless, the Court recognized that there are certain types of information which the government may withhold from the public, thus

acknowledging, in substance if not in name, that executive privilege may be claimed against citizens demands for information. In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law holding that there is a "governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic and other national security matters."80 The same case held that closed-door Cabinet meetings are also a recognized limitation on the right to information. Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to information does not extend to matters recognized as "privileged information under the separation of powers,"82 by which the Court meant Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. It also held that information on military and diplomatic secrets and those affecting national security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused were exempted from the right to information. From the above discussion on the meaning and scope of executive privilege, both in the United States and in this jurisdiction, a clear principle emerges. Executive privilege, whether asserted against Congress, the courts, or the public, is recognized only in relation to certain types of information of a sensitive character. While executive privilege is a constitutional concept, a claim thereof may be valid or not depending on the ground invoked to justify it and the context in which it is made. Noticeably absent is any recognition that executive officials are exempt from the duty to disclose information by the mere fact of being executive officials. Indeed, the extraordinary character of the exemptions indicates that the presumption inclines heavily against executive secrecy and in favor of disclosure. Validity of Section 1 Section 1 is similar to Section 3 in that both require the officials covered by them to secure the consent of the President prior to appearing before Congress. There are significant differences between the two provisions, however, which constrain this Court to discuss the validity of these provisions separately. Section 1 specifically applies to department heads. It does not, unlike Section 3, require a prior determination by any official whether they are covered by E.O. 464. The President herself has, through the challenged order, made the determination that they are. Further, unlike also Section 3, the coverage of department heads under Section 1 is not made to depend on the department heads possession of any information which might be covered by executive privilege. In fact, in marked contrast to Section 3 vis-vis Section 2, there is no reference to executive privilege at all. Rather, the required prior

consent under Section 1 is grounded on Article VI, Section 22 of the Constitution on what has been referred to as the question hour. SECTION 22. The heads of departments may upon their own initiative, with the consent of the President, or upon the request of either House, as the rules of each House shall provide, appear before and be heard by such House on any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the State or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session. Determining the validity of Section 1 thus requires an examination of the meaning of Section 22 of Article VI. Section 22 which provides for the question hour must be interpreted vis--vis Section 21 which provides for the power of either House of Congress to "conduct inquiries in aid of legislation." As the following excerpt of the deliberations of the Constitutional Commission shows, the framers were aware that these two provisions involved distinct functions of Congress. MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the Question Hour] yesterday, I noticed that members of the Cabinet cannot be compelled anymore to appear before the House of Representatives or before the Senate. I have a particular problem in this regard, Madam President, because in our experience in the Regular Batasang Pambansa as the Gentleman himself has experienced in the interim Batasang Pambansa one of the most competent inputs that we can put in our committee deliberations, either in aid of legislation or in congressional investigations, is the testimonies of Cabinet ministers. We usually invite them, but if they do not come and it is a congressional investigation, we usually issue subpoenas. I want to be clarified on a statement made by Commissioner Suarez when he said that the fact that the Cabinet ministers may refuse to come to the House of Representatives or the Senate [when requested under Section 22] does not mean that they need not come when they are invited or subpoenaed by the committee of either House when it comes to inquiries in aid of legislation or congressional investigation. According to Commissioner Suarez, that is allowed and their presence can be had under Section 21. Does the gentleman confirm this, Madam President? MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to what was originally the Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of legislation, under which anybody for that matter, may be summoned and if he refuses, he can be held in contempt of the House.83 (Emphasis and underscoring supplied)

A distinction was thus made between inquiries in aid of legislation and the question hour. While attendance was meant to be discretionary in the question hour, it was compulsory in inquiries in aid of legislation. The reference to Commissioner Suarez bears noting, he being one of the proponents of the amendment to make the appearance of department heads discretionary in the question hour. So clearly was this distinction conveyed to the members of the Commission that the Committee on Style, precisely in recognition of this distinction, later moved the provision on question hour from its original position as Section 20 in the original draft down to Section 31, far from the provision on inquiries in aid of legislation. This gave rise to the following exchange during the deliberations: MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style] We now go, Mr. Presiding Officer, to the Article on Legislative and may I request the chairperson of the Legislative Department, Commissioner Davide, to give his reaction. THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is recognized.|avvphi|.net MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the Question Hour. I propose that instead of putting it as Section 31, it should follow Legislative Inquiries. THE PRESIDING OFFICER. What does the committee say? MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer. MR. MAAMBONG. Actually, we considered that previously when we sequenced this but we reasoned that in Section 21, which is Legislative Inquiry, it is actually a power of Congress in terms of its own lawmaking; whereas, a Question Hour is not actually a power in terms of its own lawmaking power because in Legislative Inquiry, it is in aid of legislation. And so we put Question Hour as Section 31. I hope Commissioner Davide will consider this. MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is precisely as a complement to or a supplement of the Legislative Inquiry. The appearance of the members of Cabinet would be very, very essential not only in the application of check and balance but also, in effect, in aid of legislation. MR. MAAMBONG. After conferring with the committee, we find merit in the suggestion of Commissioner Davide. In other words, we are accepting that and so this Section 31 would now become Section 22. Would it be, Commissioner Davide? MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)

Consistent with their statements earlier in the deliberations, Commissioners Davide and Maambong proceeded from the same assumption that these provisions pertained to two different functions of the legislature. Both Commissioners understood that the power to conduct inquiries in aid of legislation is different from the power to conduct inquiries during the question hour. Commissioner Davides only concern was that the two provisions on these distinct powers be placed closely together, they being complementary to each other. Neither Commissioner considered them as identical functions of Congress. The foregoing opinion was not the two Commissioners alone. From the above-quoted exchange, Commissioner Maambongs committee the Committee on Style shared the view that the two provisions reflected distinct functions of Congress. Commissioner Davide, on the other hand, was speaking in his capacity as Chairman of the Committee on the Legislative Department. His views may thus be presumed as representing that of his Committee. In the context of a parliamentary system of government, the "question hour" has a definite meaning. It is a period of confrontation initiated by Parliament to hold the Prime Minister and the other ministers accountable for their acts and the operation of the government,85 corresponding to what is known in Britain as the question period. There was a specific provision for a question hour in the 1973 Constitution86 which made the appearance of ministers mandatory. The same perfectly conformed to the parliamentary system established by that Constitution, where the ministers are also members of the legislature and are directly accountable to it. An essential feature of the parliamentary system of government is the immediate accountability of the Prime Minister and the Cabinet to the National Assembly. They shall be responsible to the National Assembly for the program of government and shall determine the guidelines of national policy. Unlike in the presidential system where the tenure of office of all elected officials cannot be terminated before their term expired, the Prime Minister and the Cabinet remain in office only as long as they enjoy the confidence of the National Assembly. The moment this confidence is lost the Prime Minister and the Cabinet may be changed.87 The framers of the 1987 Constitution removed the mandatory nature of such appearance during the question hour in the present Constitution so as to conform more fully to a system of separation of powers.88 To that extent, the question hour, as it is presently understood in this jurisdiction, departs from the question period of the parliamentary system. That department heads may not be required to appear in a question hour does not, however, mean that the legislature is rendered powerless to elicit information from them in all circumstances. In fact, in light of the absence of a mandatory question period, the need to enforce Congress right to executive

information in the performance of its legislative function becomes more imperative. As Schwartz observes: Indeed, if the separation of powers has anything to tell us on the subject under discussion, it is that the Congress has the right to obtain information from any source even from officials of departments and agencies in the executive branch. In the United States there is, unlike the situation which prevails in a parliamentary system such as that in Britain, a clear separation between the legislative and executive branches. It is this very separation that makes the congressional right to obtain information from the executive so essential, if the functions of the Congress as the elected representatives of the people are adequately to be carried out. The absence of close rapport between the legislative and executive branches in this country, comparable to those which exist under a parliamentary system, and the nonexistence in the Congress of an institution such as the British question period have perforce made reliance by the Congress upon its right to obtain information from the executive essential, if it is intelligently to perform its legislative tasks. Unless the Congress possesses the right to obtain executive information, its power of oversight of administration in a system such as ours becomes a power devoid of most of its practical content, since it depends for its effectiveness solely upon information parceled out ex gratia by the executive.89 (Emphasis and underscoring supplied) Sections 21 and 22, therefore, while closely related and complementary to each other, should not be considered as pertaining to the same power of Congress. One specifically relates to the power to conduct inquiries in aid of legislation, the aim of which is to elicit information that may be used for legislation, while the other pertains to the power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress oversight function. When Congress merely seeks to be informed on how department heads are implementing the statutes which it has issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in keeping with the separation of powers, states that Congress may only request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is "in aid of legislation" under Section 21, the appearance is mandatory for the same reasons stated in Arnault.90 In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the Constitutional Commission. Ultimately, the power of Congress to compel the appearance of executive officials under Section 21 and the lack of it under Section 22 find their basis in the principle of

separation of powers. While the executive branch is a co-equal branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to comply with its demands for information. When Congress exercises its power of inquiry, the only way for department heads to exempt themselves therefrom is by a valid claim of privilege. They are not exempt by the mere fact that they are department heads. Only one executive official may be exempted from this power the President on whom executive power is vested, hence, beyond the reach of Congress except through the power of impeachment. It is based on her being the highest official of the executive branch, and the due respect accorded to a co-equal branch of government which is sanctioned by a long-standing custom. By the same token, members of the Supreme Court are also exempt from this power of inquiry. Unlike the Presidency, judicial power is vested in a collegial body; hence, each member thereof is exempt on the basis not only of separation of powers but also on the fiscal autonomy and the constitutional independence of the judiciary. This point is not in dispute, as even counsel for the Senate, Sen. Joker Arroyo, admitted it during the oral argument upon interpellation of the Chief Justice. Having established the proper interpretation of Section 22, Article VI of the Constitution, the Court now proceeds to pass on the constitutionality of Section 1 of E.O. 464. Section 1, in view of its specific reference to Section 22 of Article VI of the Constitution and the absence of any reference to inquiries in aid of legislation, must be construed as limited in its application to appearances of department heads in the question hour contemplated in the provision of said Section 22 of Article VI. The reading is dictated by the basic rule of construction that issuances must be interpreted, as much as possible, in a way that will render it constitutional. The requirement then to secure presidential consent under Section 1, limited as it is only to appearances in the question hour, is valid on its face. For under Section 22, Article VI of the Constitution, the appearance of department heads in the question hour is discretionary on their part. Section 1 cannot, however, be applied to appearances of department heads in inquiries in aid of legislation. Congress is not bound in such instances to respect the refusal of the department head to appear in such inquiry, unless a valid claim of privilege is subsequently made, either by the President herself or by the Executive Secretary. Validity of Sections 2 and 3

Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to secure the consent of the President prior to appearing before either house of Congress. The enumeration is broad. It covers all senior officials of executive departments, all officers of the AFP and the PNP, and all senior national security officials who, in the judgment of the heads of offices designated in the same section (i.e. department heads, Chief of Staff of the AFP, Chief of the PNP, and the National Security Adviser), are "covered by the executive privilege." The enumeration also includes such other officers as may be determined by the President. Given the title of Section 2 "Nature, Scope and Coverage of Executive Privilege" , it is evident that under the rule of ejusdem generis, the determination by the President under this provision is intended to be based on a similar finding of coverage under executive privilege. En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that executive privilege actually covers persons. Such is a misuse of the doctrine. Executive privilege, as discussed above, is properly invoked in relation to specific categories of information and not to categories of persons. In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and coverage of executive privilege, the reference to persons being "covered by the executive privilege" may be read as an abbreviated way of saying that the person is in possession of information which is, in the judgment of the head of office concerned, privileged as defined in Section 2(a). The Court shall thus proceed on the assumption that this is the intention of the challenged order. Upon a determination by the designated head of office or by the President that an official is "covered by the executive privilege," such official is subjected to the requirement that he first secure the consent of the President prior to appearing before Congress. This requirement effectively bars the appearance of the official concerned unless the same is permitted by the President. The proviso allowing the President to give its consent means nothing more than that the President may reverse a prohibition which already exists by virtue of E.O. 464. Thus, underlying this requirement of prior consent is the determination by a head of office, authorized by the President under E.O. 464, or by the President herself, that such official is in possession of information that is covered by executive privilege. This determination then becomes the basis for the officials not showing up in the legislative investigation. In view thereof, whenever an official invokes E.O. 464 to justify his failure to be present, such invocation must be construed as a declaration to Congress that the President, or a head of office authorized by the President, has determined that the requested

information is privileged, and that the President has not reversed such determination. Such declaration, however, even without mentioning the term "executive privilege," amounts to an implied claim that the information is being withheld by the executive branch, by authority of the President, on the basis of executive privilege. Verily, there is an implied claim of privilege. The letter dated September 28, 2005 of respondent Executive Secretary Ermita to Senate President Drilon illustrates the implied nature of the claim of privilege authorized by E.O. 464. It reads: In connection with the inquiry to be conducted by the Committee of the Whole regarding the Northrail Project of the North Luzon Railways Corporation on 29 September 2005 at 10:00 a.m., please be informed that officials of the Executive Department invited to appear at the meeting will not be able to attend the same without the consent of the President, pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring Observance Of The Principle Of Separation Of Powers, Adherence To The Rule On Executive Privilege And Respect For The Rights Of Public Officials Appearing In Legislative Inquiries In Aid Of Legislation Under The Constitution, And For Other Purposes". Said officials have not secured the required consent from the President. (Underscoring supplied) The letter does not explicitly invoke executive privilege or that the matter on which these officials are being requested to be resource persons falls under the recognized grounds of the privilege to justify their absence. Nor does it expressly state that in view of the lack of consent from the President under E.O. 464, they cannot attend the hearing. Significant premises in this letter, however, are left unstated, deliberately or not. The letter assumes that the invited officials are covered by E.O. 464. As explained earlier, however, to be covered by the order means that a determination has been made, by the designated head of office or the President, that the invited official possesses information that is covered by executive privilege. Thus, although it is not stated in the letter that such determination has been made, the same must be deemed implied. Respecting the statement that the invited officials have not secured the consent of the President, it only means that the President has not reversed the standing prohibition against their appearance before Congress. Inevitably, Executive Secretary Ermitas letter leads to the conclusion that the executive branch, either through the President or the heads of offices authorized under E.O. 464, has made a determination that the information required by the Senate is privileged, and that, at the time of writing, there has been no contrary pronouncement from the President. In fine, an implied claim of privilege has been made by the executive.

While there is no Philippine case that directly addresses the issue of whether executive privilege may be invoked against Congress, it is gathered from Chavez v. PEA that certain information in the possession of the executive may validly be claimed as privileged even against Congress. Thus, the case holds: There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like internal-deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress, are recognized as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decisionmaking of those tasked to exercise Presidential, Legislative and Judicial power. This is not the situation in the instant case.91 (Emphasis and underscoring supplied) Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere fact that it sanctions claims of executive privilege. This Court must look further and assess the claim of privilege authorized by the Order to determine whether it is valid. While the validity of claims of privilege must be assessed on a case to case basis, examining the ground invoked therefor and the particular circumstances surrounding it, there is, in an implied claim of privilege, a defect that renders it invalid per se. By its very nature, and as demonstrated by the letter of respondent Executive Secretary quoted above, the implied claim authorized by Section 3 of E.O. 464 is not accompanied by any specific allegation of the basis thereof (e.g., whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc.). While Section 2(a) enumerates the types of information that are covered by the privilege under the challenged order, Congress is left to speculate as to which among them is being referred to by the executive. The enumeration is not even intended to be comprehensive, but a mere statement of what is included in the phrase "confidential or classified information between the President and the public officers covered by this executive order." Certainly, Congress has the right to know why the executive considers the requested information privileged. It does not suffice to merely declare that the President, or an authorized head of office, has determined that it is so, and that the President has not overturned that determination. Such declaration leaves Congress in the dark on how the requested information could be classified as privileged. That the message is couched in terms that, on first impression, do not seem like a claim of privilege only makes it more pernicious. It threatens to make Congress doubly blind to the question of why the executive branch is not providing it with the information that it has requested.

A claim of privilege, being a claim of exemption from an obligation to disclose information, must, therefore, be clearly asserted. As U.S. v. Reynolds teaches: The privilege belongs to the government and must be asserted by it; it can neither be claimed nor waived by a private party. It is not to be lightly invoked. There must be a formal claim of privilege, lodged by the head of the department which has control over the matter, after actual personal consideration by that officer. The court itself must determine whether the circumstances are appropriate for the claim of privilege, and yet do so without forcing a disclosure of the very thing the privilege is designed to protect.92 (Underscoring supplied) Absent then a statement of the specific basis of a claim of executive privilege, there is no way of determining whether it falls under one of the traditional privileges, or whether, given the circumstances in which it is made, it should be respected.93 These, in substance, were the same criteria in assessing the claim of privilege asserted against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a committee of the Senate in Senate Select Committee on Presidential Campaign Activities v. Nixon.95 A.O. Smith v. Federal Trade Commission is enlightening: [T]he lack of specificity renders an assessment of the potential harm resulting from disclosure impossible, thereby preventing the Court from balancing such harm against plaintiffs needs to determine whether to override any claims of privilege.96 (Underscoring supplied) And so is U.S. v. Article of Drug:97 On the present state of the record, this Court is not called upon to perform this balancing operation. In stating its objection to claimants interrogatories, government asserts, and nothing more, that the disclosures sought by claimant would inhibit the free expression of opinion that non-disclosure is designed to protect. The government has not shown nor even alleged that those who evaluated claimants product were involved in internal policymaking, generally, or in this particular instance. Privilege cannot be set up by an unsupported claim. The facts upon which the privilege is based must be established. To find these interrogatories objectionable, this Court would have to assume that the evaluation and classification of claimants products was a matter of internal policy formulation, an assumption in which this Court is unwilling to indulge sua sponte.98 (Emphasis and underscoring supplied) Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must provide precise and certain reasons for preserving the confidentiality of requested information."

Black v. Sheraton Corp. of America100 amplifies, thus: A formal and proper claim of executive privilege requires a specific designation and description of the documents within its scope as well as precise and certain reasons for preserving their confidentiality. Without this specificity, it is impossible for a court to analyze the claim short of disclosure of the very thing sought to be protected. As the affidavit now stands, the Court has little more than its sua sponte speculation with which to weigh the applicability of the claim. An improperly asserted claim of privilege is no claim of privilege. Therefore, despite the fact that a claim was made by the proper executive as Reynolds requires, the Court can not recognize the claim in the instant case because it is legally insufficient to allow the Court to make a just and reasonable determination as to its applicability. To recognize such a broad claim in which the Defendant has given no precise or compelling reasons to shield these documents from outside scrutiny, would make a farce of the whole procedure.101 (Emphasis and underscoring supplied) Due respect for a co-equal branch of government, moreover, demands no less than a claim of privilege clearly stating the grounds therefor. Apropos is the following ruling in McPhaul v. U.S:102 We think the Courts decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724, is highly relevant to these questions. For it is as true here as it was there, that if (petitioner) had legitimate reasons for failing to produce the records of the association, a decent respect for the House of Representatives, by whose authority the subpoenas issued, would have required that (he) state (his) reasons for noncompliance upon the return of the writ. Such a statement would have given the Subcommittee an opportunity to avoid the blocking of its inquiry by taking other appropriate steps to obtain the records. To deny the Committee the opportunity to consider the objection or remedy is in itself a contempt of its authority and an obstruction of its processes. His failure to make any such statement was "a patent evasion of the duty of one summoned to produce papers before a congressional committee[, and] cannot be condoned." (Emphasis and underscoring supplied; citations omitted) Upon the other hand, Congress must not require the executive to state the reasons for the claim with such particularity as to compel disclosure of the information which the privilege is meant to protect.103 A useful analogy in determining the requisite degree of particularity would be the privilege against self-incrimination. Thus, Hoffman v. U.S.104 declares: The witness is not exonerated from answering merely because he declares that in so doing he would incriminate himself his say-so does not of itself establish the hazard of incrimination. It is for the court to say whether his silence is justified, and to require him to answer if it clearly appears to the court that he is mistaken. However, if the

witness, upon interposing his claim, were required to prove the hazard in the sense in which a claim is usually required to be established in court, he would be compelled to surrender the very protection which the privilege is designed to guarantee. To sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result." x x x (Emphasis and underscoring supplied) The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is not asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it merely invokes E.O. 464, coupled with an announcement that the President has not given her consent. It is woefully insufficient for Congress to determine whether the withholding of information is justified under the circumstances of each case. It severely frustrates the power of inquiry of Congress. In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated. No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines, binding only on the heads of office mentioned in Section 2(b), on what is covered by executive privilege. It does not purport to be conclusive on the other branches of government. It may thus be construed as a mere expression of opinion by the President regarding the nature and scope of executive privilege. Petitioners, however, assert as another ground for invalidating the challenged order the alleged unlawful delegation of authority to the heads of offices in Section 2(b). Petitioner Senate of the Philippines, in particular, cites the case of the United States where, so it claims, only the President can assert executive privilege to withhold information from Congress. Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a certain information is privileged, such determination is presumed to bear the Presidents authority and has the effect of prohibiting the official from appearing before Congress, subject only to the express pronouncement of the President that it is allowing the appearance of such official. These provisions thus allow the President to authorize claims of privilege by mere silence. Such presumptive authorization, however, is contrary to the exceptional nature of the privilege. Executive privilege, as already discussed, is recognized with respect to information the confidential nature of which is crucial to the fulfillment of the unique role and responsibilities of the executive branch,105 or in those instances where exemption from disclosure is necessary to the discharge of highly important executive responsibilities.106 The doctrine of executive privilege is thus premised on the fact that certain informations must, as a matter of necessity, be kept confidential in pursuit of the

public interest. The privilege being, by definition, an exemption from the obligation to disclose information, in this case to Congress, the necessity must be of such high degree as to outweigh the public interest in enforcing that obligation in a particular case. In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the President the power to invoke the privilege. She may of course authorize the Executive Secretary to invoke the privilege on her behalf, in which case the Executive Secretary must state that the authority is "By order of the President," which means that he personally consulted with her. The privilege being an extraordinary power, it must be wielded only by the highest official in the executive hierarchy. In other words, the President may not authorize her subordinates to exercise such power. There is even less reason to uphold such authorization in the instant case where the authorization is not explicit but by mere silence. Section 3, in relation to Section 2(b), is further invalid on this score. It follows, therefore, that when an official is being summoned by Congress on a matter which, in his own judgment, might be covered by executive privilege, he must be afforded reasonable time to inform the President or the Executive Secretary of the possible need for invoking the privilege. This is necessary in order to provide the President or the Executive Secretary with fair opportunity to consider whether the matter indeed calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither the President nor the Executive Secretary invokes the privilege, Congress is no longer bound to respect the failure of the official to appear before Congress and may then opt to avail of the necessary legal means to compel his appearance. The Court notes that one of the expressed purposes for requiring officials to secure the consent of the President under Section 3 of E.O. 464 is to ensure "respect for the rights of public officials appearing in inquiries in aid of legislation." That such rights must indeed be respected by Congress is an echo from Article VI Section 21 of the Constitution mandating that "[t]he rights of persons appearing in or affected by such inquiries shall be respected." In light of the above discussion of Section 3, it is clear that it is essentially an authorization for implied claims of executive privilege, for which reason it must be invalidated. That such authorization is partly motivated by the need to ensure respect for such officials does not change the infirm nature of the authorization itself. Right to Information E.O 464 is concerned only with the demands of Congress for the appearance of executive officials in the hearings conducted by it, and not with the demands of citizens for information pursuant to their right to information on matters of public concern.

Petitioners are not amiss in claiming, however, that what is involved in the present controversy is not merely the legislative power of inquiry, but the right of the people to information. There are, it bears noting, clear distinctions between the right of Congress to information which underlies the power of inquiry and the right of the people to information on matters of public concern. For one, the demand of a citizen for the production of documents pursuant to his right to information does not have the same obligatory force as a subpoena duces tecum issued by Congress. Neither does the right to information grant a citizen the power to exact testimony from government officials. These powers belong only to Congress and not to an individual citizen. Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to information. To the extent that investigations in aid of legislation are generally conducted in public, however, any executive issuance tending to unduly limit disclosures of information in such investigations necessarily deprives the people of information which, being presumed to be in aid of legislation, is presumed to be a matter of public concern. The citizens are thereby denied access to information which they can use in formulating their own opinions on the matter before Congress opinions which they can then communicate to their representatives and other government officials through the various legal means allowed by their freedom of expression. Thus holds Valmonte v. Belmonte: It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the peoples will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit.107(Emphasis and underscoring supplied) The impairment of the right of the people to information as a consequence of E.O. 464 is, therefore, in the sense explained above, just as direct as its violation of the legislatures power of inquiry. Implementation of E.O. 464 prior to its publication While E.O. 464 applies only to officials of the executive branch, it does not follow that the same is exempt from the need for publication. On the need for publishing even those statutes that do not directly apply to people in general, Taada v. Tuvera states:

The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly to all the people. The subject of such law is a matter of public interest which any member of the body politic may question in the political forums or, if he is a proper party, even in courts of justice.108 (Emphasis and underscoring supplied) Although the above statement was made in reference to statutes, logic dictates that the challenged order must be covered by the publication requirement. As explained above, E.O. 464 has a direct effect on the right of the people to information on matters of public concern. It is, therefore, a matter of public interest which members of the body politic may question before this Court. Due process thus requires that the people should have been apprised of this issuance before it was implemented. Conclusion Congress undoubtedly has a right to information from the executive branch whenever it is sought in aid of legislation. If the executive branch withholds such information on the ground that it is privileged, it must so assert it and state the reason therefor and why it must be respected. The infirm provisions of E.O. 464, however, allow the executive branch to evade congressional requests for information without need of clearly asserting a right to do so and/or proffering its reasons therefor. By the mere expedient of invoking said provisions, the power of Congress to conduct inquiries in aid of legislation is frustrated. That is impermissible. For [w]hat republican theory did accomplishwas to reverse the old presumption in favor of secrecy, based on the divine right of kings and nobles, and replace it with a presumption in favor of publicity, based on the doctrine of popular sovereignty. (Underscoring supplied)109 Resort to any means then by which officials of the executive branch could refuse to divulge information cannot be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into the operations of government, but we shall have given up something of much greater value our right as a people to take part in government.

WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of Executive Order No. 464 (series of 2005), "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes," are declared VOID. Sections 1 and 2(a) are, however, VALID.

G.R. No. 167798

April 19, 2006

KILUSANG MAYO UNO, NATIONAL FEDERATION OF LABOR UNIONSKILUSANG MAYO UNO (NAFLU-KMU), JOSELITO V. USTAREZ, EMILIA P. DAPULANG, SALVADOR T. CARRANZA, MARTIN T. CUSTODIO, JR. and ROQUE M. TAN, Petitioners, vs. THE DIRECTOR-GENERAL, NATIONAL ECONOMIC DEVELOPMENT AUTHORITY, and THE SECRETARY, DEPARTMENT OF BUDGET and MANAGEMENT, Respondents. x-----------------------------------x G.R. No. 167930 April 19, 2006

BAYAN MUNA Representatives SATUR C. OCAMPO, TEODORO A. CASIO, and JOEL G. VIRADOR, GABRIELA WOMENS PARTY Representative LIZA L. MAZA, ANAKPAWIS Representatives RAFAEL V. MARIANO and CRISPIN B. BELTRAN, Rep. FRANCIS G. ESCUDERO, Rep. EDUARDO C. ZIALCITA, Rep. LORENZO R. TAADA III, DR. CAROL PAGADUAN-ARAULLO and RENATO M. REYES, JR. of BAYAN, MARIE HILAO-ENRIQUEZ of KARAPATAN, ANTONIO L. TINIO of ACT, FERDINAND GAITE of COURAGE, GIOVANNI A. TAPANG of AGHAM, WILFREDO MARBELLA GARCIA, of KMP, LANA LINABAN of GABRIELA, AMADO GAT INCIONG, RENATO CONSTANTINO, JR., DEAN PACIFICO H. AGABIN, SHARON R. DUREMDES of the NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES, and BRO. EDMUNDO L. FERNANDEZ (FSC) of the ASSOCIATION OF MAJOR RELIGIOUS SUPERIORS OF THE PHILIPPINES (AMRSP), Petitioners, vs. EDUARDO ERMITA, in his capacity as Executive Secretary, ROMULO NERI, in his capacity as Director-General of the NATIONAL ECONOMIC and DEVELOPMENT AUTHORITY (NEDA) and the Administrator of the NATIONAL STATISTICS OFFICE (NSO), Respondents. DECISION CARPIO, J.: This case involves two consolidated petitions for certiorari, prohibition, and mandamus under Rule 65 of the Rules of Court, seeking the nullification of Executive Order No. 420 (EO 420) on the ground that it is unconstitutional. EO 420, issued by President Gloria Macapagal-Arroyo on 13 April 2005, reads:

REQUIRING ALL GOVERNMENT AGENCIES AND GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS TO STREAMLINE AND HARMONIZE THEIR IDENTIFICATION (ID) SYSTEMS, AND AUTHORIZING FOR SUCH PURPOSE THE DIRECTOR-GENERAL, NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY TO IMPLEMENT THE SAME, AND FOR OTHER PURPOSES WHEREAS, good governance is a major thrust of this Administration; WHEREAS, the existing multiple identification systems in government have created unnecessary and costly redundancies and higher costs to government, while making it inconvenient for individuals to be holding several identification cards; WHEREAS, there is urgent need to streamline and integrate the processes and issuance of identification cards in government to reduce costs and to provide greater convenience for those transacting business with government; WHEREAS, a unified identification system will facilitate private businesses, enhance the integrity and reliability of government-issued identification cards in private transactions, and prevent violations of laws involving false names and identities. NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic of the Philippines by virtue of the powers vested in me by law, do hereby direct the following: Section 1. Adoption of a unified multi-purpose identification (ID) system for government.1avvphil.net All government agencies, including government-owned and controlled corporations, are hereby directed to adopt a unified multi-purpose ID system to ensure the attainment of the following objectives: a. To reduce costs and thereby lessen the financial burden on both the government and the public brought about by the use of multiple ID cards and the maintenance of redundant database containing the same or related information; b. To ensure greater convenience for those transacting business with the government and those availing of government services; c. To facilitate private businesses and promote the wider use of the unified ID card as provided under this executive order; d. To enhance the integrity and reliability of government-issued ID cards; and e. To facilitate access to and delivery of quality and effective government service.

Section 2. Coverage All government agencies and government-owned and controlled corporations issuing ID cards to their members or constituents shall be covered by this executive order. Section 3. Data requirement for the unified ID system The data to be collected and recorded by the participating agencies shall be limited to the following: Name Home Address Sex Picture Signature Date of Birth Place of Birth Marital Status Names of Parents Height Weight Two index fingers and two thumbmarks Any prominent distinguishing features like moles and others Tax Identification Number (TIN) Provided that a corresponding ID number issued by the participating agency and a common reference number shall form part of the stored ID data and, together with at least the first five items listed above, including the print of the right thumbmark, or any of the fingerprints as collected and stored, shall appear on the face or back of the ID card for visual verification purposes. Section 4. Authorizing the Director-General, National Economic and Development Authority, to Harmonize All Government Identification Systems. The Director-

General, National Economic Development Authority, is hereby authorized to streamline and harmonize all government ID systems. Section 5. Functions and responsibilities of the Director-General, National Economic and Development Authority. In addition to his organic functions and responsibilities, the Director-General, National Economic and Development Authority, shall have the following functions and responsibilities: a. Adopt within sixty (60) days from the effectivity of this executive order a unified government ID system containing only such data and features, as indicated in Section 3 above, to validly establish the identity of the card holder: b. Enter into agreements with local governments, through their respective leagues of governors or mayors, the Commission on Elections (COMELEC), and with other branches or instrumentalities of the government, for the purpose of ensuring government-wide adoption of and support to this effort to streamline the ID systems in government; b. Call on any other government agency or institution, or create subcommittees or technical working groups, to provide such assistance as may be necessary or required for the effective performance of its functions; and d. Promulgate such rules or regulations as may be necessary in pursuance of the objectives of this executive order. Section 6. Safeguards. The Director-General, National Economic and Development Authority, and the pertinent agencies shall adopt such safeguard as may be necessary and adequate to ensure that the right to privacy of an individual takes precedence over efficient public service delivery. Such safeguards shall, as a minimum, include the following: a. The data to be recorded and stored, which shall be used only for purposes of establishing the identity of a person, shall be limited to those specified in Section 3 of this executive order; b. In no case shall the collection or compilation of other data in violation of a persons right to privacy shall be allowed or tolerated under this order; c. Stringent systems of access control to data in the identification system shall be instituted; d. Data collected and stored for this purpose shall be kept and treated as strictly confidential and a personal or written authorization of the Owner shall be required for access and disclosure of data;

e. The identification card to be issued shall be protected by advanced security features and cryptographic technology; and f. A written request by the Owner of the identification card shall be required for any correction or revision of relevant data, or under such conditions as the participating agency issuing the identification card shall prescribe. Section 7. Funding. Such funds as may be recommended by the Department of Budget and Management shall be provided to carry out the objectives of this executive order. Section 8. Repealing clause. All executive orders or issuances, or portions thereof, which are inconsistent with this executive order, are hereby revoked, amended or modified accordingly. Section 9. Effectivity. This executive order shall take effect fifteen (15) days after its publication in two (2) newspapers of general circulation. DONE in the City of Manila, this 13th day of April, in the year of Our Lord, Two Thousand and Five. Thus, under EO 420, the President directs all government agencies and governmentowned and controlled corporations to adopt a uniform data collection and format for their existing identification (ID) systems. Petitioners in G.R. No. 167798 allege that EO 420 is unconstitutional because it constitutes usurpation of legislative functions by the executive branch of the government. Furthermore, they allege that EO 420 infringes on the citizens right to privacy.1 Petitioners in G.R. No. 167930 allege that EO 420 is void based on the following grounds: 1. EO 420 is contrary to law. It completely disregards and violates the decision of this Honorable Court inOple v. Torres et al., G.R. No. 127685, July 23, 1998. It also violates RA 8282 otherwise known as the Social Security Act of 1997. 2. The Executive has usurped the legislative power of Congress as she has no power to issue EO 420. Furthermore, the implementation of the EO will use public funds not appropriated by Congress for that purpose. 3. EO 420 violates the constitutional provisions on the right to privacy (i) It allows access to personal confidential data without the owners consent.

(ii) EO 420 is vague and without adequate safeguards or penalties for any violation of its provisions. (iii) There are no compelling reasons that will legitimize the necessity of EO 420. 4. Granting without conceding that the President may issue EO 420, the Executive Order was issued without public hearing. 5. EO 420 violates the Constitutional provision on equal protection of laws and results in the discriminatory treatment of and penalizes those without ID.2 Issues Essentially, the petitions raise two issues. First, petitioners claim that EO 420 is a usurpation of legislative power by the President. Second, petitioners claim that EO 420 infringes on the citizens right to privacy. Respondents question the legal standing of petitioners and the ripeness of the petitions. Even assuming that petitioners are bereft of legal standing, the Court considers the issues raised under the circumstances of paramount public concern or of transcendental significance to the people. The petitions also present a justiciable controversy ripe for judicial determination because all government entities currently issuing identification cards are mandated to implement EO 420, which petitioners claim is patently unconstitutional. Hence, the Court takes cognizance of the petitions. The Courts Ruling The petitions are without merit. On the Alleged Usurpation of Legislative Power Section 2 of EO 420 provides, "Coverage. All government agencies and governmentowned and controlled corporations issuing ID cards to their members or constituents shall be covered by this executive order." EO 420 applies only to government entities that issue ID cards as part of their functions under existing laws. These government entities have already been issuing ID cards even prior to EO 420. Examples of these government entities are the GSIS,3 SSS,4 Philhealth,5 Mayors Office,6 LTO,7 PRC,8 and similar government entities. Section 1 of EO 420 directs these government entities to "adopt a unified multi-purpose ID system." Thus, all government entities that issue IDs as part of their functions under existing laws are required to adopt a uniform data collection and format for their IDs.

Section 1 of EO 420 enumerates the purposes of the uniform data collection and format, namely: a. To reduce costs and thereby lessen the financial burden on both the government and the public brought about by the use of multiple ID cards and the maintenance of redundant database containing the same or related information; b. To ensure greater convenience for those transacting business with the government and those availing of government services; c. To facilitate private businesses and promote the wider use of the unified ID card as provided under this executive order; d. To enhance the integrity and reliability of government-issued ID cards; and e. To facilitate access to and delivery of quality and effective government service. In short, the purposes of the uniform ID data collection and ID format are to reduce costs, achieve efficiency and reliability, insure compatibility, and provide convenience to the people served by government entities. Section 3 of EO 420 limits the data to be collected and recorded under the uniform ID system to only 14 specific items, namely: (1) Name; (2) Home Address; (3) Sex; (4) Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8) Marital Status; (9) Name of Parents; (10) Height; (11) Weight; (12) Two index fingers and two thumbmarks; (13) Any prominent distinguishing features like moles or others; and (14) Tax Identification Number. These limited and specific data are the usual data required for personal identification by government entities, and even by the private sector. Any one who applies for or renews a drivers license provides to the LTO all these 14 specific data. At present, government entities like LTO require considerably more data from applicants for identification purposes. EO 420 will reduce the data required to be collected and recorded in the ID databases of the government entities. Government entities cannot collect or record data, for identification purposes, other than the 14 specific data. Various laws allow several government entities to collect and record data for their ID systems, either expressly or impliedly by the nature of the functions of these government entities. Under their existing ID systems, some government entities collect and record more data than what EO 420 allows. At present, the data collected and recorded by government entities are disparate, and the IDs they issue are dissimilar.

In the case of the Supreme Court,9 the IDs that the Court issues to all its employees, including the Justices, contain 15 specific data, namely: (1) Name; (2) Picture; (3) Position; (4) Office Code Number; (5) ID Number; (6) Height; (7) Weight; (8) Complexion; (9) Color of Hair; (10) Blood Type; (11) Right Thumbmark; (12) Tax Identification Number; (13) GSIS Policy Number; (14) Name and Address of Person to be Notified in Case of Emergency; and (15) Signature. If we consider that the picture in the ID can generally also show the sex of the employee, the Courts ID actually contains 16 data. In contrast, the uniform ID format under Section 3 of EO 420 requires only "the first five items listed" in Section 3, plus the fingerprint, agency number and the common reference number, or only eight specific data. Thus, at present, the Supreme Courts ID contains far more data than the proposed uniform ID for government entities under EO 420. The nature of the data contained in the Supreme Court ID is also far more financially sensitive, specifically the Tax Identification Number. Making the data collection and recording of government entities unified, and making their ID formats uniform, will admittedly achieve substantial benefits. These benefits are savings in terms of procurement of equipment and supplies, compatibility in systems as to hardware and software, ease of verification and thus increased reliability of data, and the user-friendliness of a single ID format for all government entities. There is no dispute that government entities can individually limit the collection and recording of their data to the 14 specific items in Section 3 of EO 420. There is also no dispute that these government entities can individually adopt the ID format as specified in Section 3 of EO 420. Such an act is certainly within the authority of the heads or governing boards of the government entities that are already authorized under existing laws to issue IDs. A unified ID system for all these government entities can be achieved in either of two ways. First, the heads of these existing government entities can enter into a memorandum of agreement making their systems uniform. If the government entities can individually adopt a format for their own ID pursuant to their regular functions under existing laws, they can also adopt by mutual agreement a uniform ID format, especially if the uniform format will result in substantial savings, greater efficiency, and optimum compatibility. This is purely an administrative matter, and does not involve the exercise of legislative power. Second, the President may by executive or administrative order direct the government entities under the Executive department to adopt a uniform ID data collection and format. Section 17, Article VII of the 1987 Constitution provides that the "President shall have control of all executive departments, bureaus and offices." The same Section also mandates the President to "ensure that the laws be faithfully executed."

Certainly, under this constitutional power of control the President can direct all government entities, in the exercise of their functions under existing laws, to adopt a uniform ID data collection and ID format to achieve savings, efficiency, reliability, compatibility, and convenience to the public. The Presidents constitutional power of control is self-executing and does not need any implementing legislation. Of course, the Presidents power of control is limited to the Executive branch of government and does not extend to the Judiciary or to the independent constitutional commissions. Thus, EO 420 does not apply to the Judiciary, or to the COMELEC which under existing laws is also authorized to issue voters ID cards.10 This only shows that EO 420 does not establish a national ID system because legislation is needed to establish a single ID system that is compulsory for all branches of government. The Constitution also mandates the President to ensure that the laws are faithfully executed. There are several laws mandating government entities to reduce costs, increase efficiency, and in general, improve public services.11 The adoption of a uniform ID data collection and format under EO 420 is designed to reduce costs, increase efficiency, and in general, improve public services. Thus, in issuing EO 420, the President is simply performing the constitutional duty to ensure that the laws are faithfully executed. Clearly, EO 420 is well within the constitutional power of the President to promulgate. The President has not usurped legislative power in issuing EO 420. EO 420 is an exercise of Executive power the Presidents constitutional power of control over the Executive department. EO 420 is also compliance by the President of the constitutional duty to ensure that the laws are faithfully executed. Legislative power is the authority to make laws and to alter or repeal them. In issuing EO 420, the President did not make, alter or repeal any law but merely implemented and executed existing laws. EO 420 reduces costs, as well as insures efficiency, reliability, compatibility and user-friendliness in the implementation of current ID systems of government entities under existing laws. Thus, EO 420 is simply an executive issuance and not an act of legislation. The act of issuing ID cards and collecting the necessary personal data for imprinting on the ID card does not require legislation. Private employers routinely issue ID cards to their employees. Private and public schools also routinely issue ID cards to their students. Even private clubs and associations issue ID cards to their members. The purpose of all these ID cards is simply to insure the proper identification of a person as an employee, student, or member of a club. These ID cards, although imposed as a condition for exercising a privilege, are voluntary because a person is not compelled to be an employee, student or member of a club.

What require legislation are three aspects of a government maintained ID card system. First, when the implementation of an ID card system requires a special appropriation because there is no existing appropriation for such purpose. Second, when the ID card system is compulsory on all branches of government, including the independent constitutional commissions, as well as compulsory on all citizens whether they have a use for the ID card or not. Third, when the ID card system requires the collection and recording of personal data beyond what is routinely or usually required for such purpose, such that the citizens right to privacy is infringed. In the present case, EO 420 does not require any special appropriation because the existing ID card systems of government entities covered by EO 420 have the proper appropriation or funding. EO 420 is not compulsory on all branches of government and is not compulsory on all citizens. EO 420 requires a very narrow and focused collection and recording of personal data while safeguarding the confidentiality of such data. In fact, the data collected and recorded under EO 420 are far less than the data collected and recorded under the ID systems existing prior to EO 420. EO 420 does not establish a national ID card system. EO 420 does not compel all citizens to have an ID card. EO 420 applies only to government entities that under existing laws are already collecting data and issuing ID cards as part of their governmental functions. Every government entity that presently issues an ID card will still issue its own ID card under its own name. The only difference is that the ID card will contain only the five data specified in Section 3 of EO 420, plus the fingerprint, the agency ID number, and the common reference number which is needed for cross-verification to ensure integrity and reliability of identification. This Court should not interfere how government entities under the Executive department should undertake cost savings, achieve efficiency in operations, insure compatibility of equipment and systems, and provide user-friendly service to the public. The collection of ID data and issuance of ID cards are day-to-day functions of many government entities under existing laws. Even the Supreme Court has its own ID system for employees of the Court and all first and second level courts. The Court is even trying to unify its ID system with those of the appellate courts, namely the Court of Appeals, Sandiganbayan and Court of Tax Appeals. There is nothing legislative about unifying existing ID systems of all courts within the Judiciary. The same is true for government entities under the Executive department. If government entities under the Executive department decide to unify their existing ID data collection and ID card issuance systems to achieve savings, efficiency, compatibility and convenience, such act does not involve the exercise of any legislative power. Thus, the issuance of EO 420 does not constitute usurpation of legislative power. On the Alleged Infringement of the Right to Privacy

All these years, the GSIS, SSS, LTO, Philhealth and other government entities have been issuing ID cards in the performance of their governmental functions. There have been no complaints from citizens that the ID cards of these government entities violate their right to privacy. There have also been no complaints of abuse by these government entities in the collection and recording of personal identification data. In fact, petitioners in the present cases do not claim that the ID systems of government entities prior to EO 420 violate their right to privacy. Since petitioners do not make such claim, they even have less basis to complain against the unified ID system under EO 420. The data collected and stored for the unified ID system under EO 420 will be limited to only 14 specific data, and the ID card itself will show only eight specific data. The data collection, recording and ID card system under EO 420 will even require less data collected, stored and revealed than under the disparate systems prior to EO 420. Prior to EO 420, government entities had a free hand in determining the kind, nature and extent of data to be collected and stored for their ID systems. Under EO 420, government entities can collect and record only the 14 specific data mentioned in Section 3 of EO 420. In addition, government entities can show in their ID cards only eight of these specific data, seven less data than what the Supreme Courts ID shows. Also, prior to EO 420, there was no executive issuance to government entities prescribing safeguards on the collection, recording, and disclosure of personal identification data to protect the right to privacy. Now, under Section 5 of EO 420, the following safeguards are instituted: a. The data to be recorded and stored, which shall be used only for purposes of establishing the identity of a person, shall be limited to those specified in Section 3 of this executive order; b. In no case shall the collection or compilation of other data in violation of a persons right to privacy be allowed or tolerated under this order; c. Stringent systems of access control to data in the identification system shall be instituted; d. Data collected and stored for this purpose shall be kept and treated as strictly confidential and a personal or written authorization of the Owner shall be required for access and disclosure of data; e. The identification card to be issued shall be protected by advanced security features and cryptographic technology;

f. A written request by the Owner of the identification card shall be required for any correction or revision of relevant data, or under such conditions as the participating agency issuing the identification card shall prescribe. On its face, EO 420 shows no constitutional infirmity because it even narrowly limits the data that can be collected, recorded and shown compared to the existing ID systems of government entities. EO 420 further provides strict safeguards to protect the confidentiality of the data collected, in contrast to the prior ID systems which are bereft of strict administrative safeguards. The right to privacy does not bar the adoption of reasonable ID systems by government entities. Some one hundred countries have compulsory national ID systems, including democracies such as Spain, France, Germany, Belgium, Greece, Luxembourg, and Portugal. Other countries which do not have national ID systems, like the United States, Canada, Australia, New Zealand, Ireland, the Nordic Countries and Sweden, have sectoral cards for health, social or other public services.12 Even with EO 420, the Philippines will still fall under the countries that do not have compulsory national ID systems but allow only sectoral cards for social security, health services, and other specific purposes. Without a reliable ID system, government entities like GSIS, SSS, Philhealth, and LTO cannot perform effectively and efficiently their mandated functions under existing laws. Without a reliable ID system, GSIS, SSS, Philhealth and similar government entities stand to suffer substantial losses arising from false names and identities. The integrity of the LTOs licensing system will suffer in the absence of a reliable ID system. The dissenting opinion cites three American decisions on the right to privacy, namely, Griswold v. Connecticut,13 U.S. Justice Department v. Reporters Committee for Freedom of the Press,14 and Whalen v. Roe.15 The last two decisions actually support the validity of EO 420, while the first is inapplicable to the present case. In Griswold, the U.S. Supreme Court declared unconstitutional a state law that prohibited the use and distribution of contraceptives because enforcement of the law would allow the police entry into the bedrooms of married couples. Declared the U.S. Supreme Court: "Would we allow the police to search the sacred precincts of the marital bedrooms for telltale signs of the use of contraceptives? The very idea is repulsive to the notions of privacy surrounding the marriage relationship." Because the facts and the issue involved in Griswold are materially different from the present case, Griswold has no persuasive bearing on the present case. In U.S. Justice Department, the issue was not whether the State could collect and store information on individuals from public records nationwide but whether the State could withhold such information from the press. The premise of the issue in U.S. Justice

Department is that the State can collect and store in a central database information on citizens gathered from public records across the country. In fact, the law authorized the Department of Justice to collect and preserve fingerprints and other criminal identification records nationwide. The law also authorized the Department of Justice to exchange such information with "officials of States, cities and other institutions." The Department of Justice treated such information as confidential. A CBS news correspondent and the Reporters Committee demanded the criminal records of four members of a family pursuant to the Freedom of Information Act. The U.S. Supreme Court ruled that the Freedom of Information Act expressly exempts release of information that would "constitute an unwarranted invasion of personal privacy," and the information demanded falls under that category of exempt information. With the exception of the 8 specific data shown on the ID card, the personal data collected and recorded under EO 420 are treated as "strictly confidential" under Section 6(d) of EO 420. These data are not only strictly confidential but also personal matters. Section 7, Article III of the 1987 Constitution grants the "right of the people to information on matters of public concern." Personal matters are exempt or outside the coverage of the peoples right to information on matters of public concern. The data treated as "strictly confidential" under EO 420 being private matters and not matters of public concern, these data cannot be released to the public or the press. Thus, the ruling in U.S. Justice Department does not collide with EO 420 but actually supports the validity EO 420. Whalen v. Roe is the leading American case on the constitutional protection for control over information. In Whalen, the U.S. Supreme Court upheld the validity of a New York law that required doctors to furnish the government reports identifying patients who received prescription drugs that have a potential for abuse. The government maintained a central computerized database containing the names and addresses of the patients, as well as the identity of the prescribing doctors. The law was assailed because the database allegedly infringed the right to privacy of individuals who want to keep their personal matters confidential. The U.S. Supreme Court rejected the privacy claim, and declared: Disclosures of private medical information to doctors, to hospital personnel, to insurance companies, and to public health agencies are often an essential part of modern medical practice even when the disclosure may reflect unfavorably on the character of the patient. Requiring such disclosures to representatives of the State having responsibility for the health of the community does not automatically amount to an impermissible invasion of privacy. (Emphasis supplied) Compared to the personal medical data required for disclosure to the New York State in Whalen, the 14 specific data required for disclosure to the Philippine government under EO 420 are far less sensitive and far less personal. In fact, the 14 specific data required

under EO 420 are routine data for ID systems, unlike the sensitive and potentially embarrassing medical records of patients taking prescription drugs. Whalen, therefore, carries persuasive force for upholding the constitutionality of EO 420 as non-violative of the right to privacy. Subsequent U.S. Supreme Court decisions have reiterated Whalen. In Planned Parenthood of Central Missouri v. Danforth,16 the U.S. Supreme Court upheld the validity of a law that required doctors performing abortions to fill up forms, maintain records for seven years, and allow the inspection of such records by public health officials. The U.S. Supreme Court ruled that "recordkeeping and reporting requirements that are reasonably directed to the preservation of maternal health and that properly respect a patients confidentiality and privacy are permissible." Again, in Planned Parenthood of Southeastern Pennsylvania v. Casey,17 the U.S. Supreme Court upheld a law that required doctors performing an abortion to file a report to the government that included the doctors name, the womans age, the number of prior pregnancies and abortions that the woman had, the medical complications from the abortion, the weight of the fetus, and the marital status of the woman. In case of state-funded institutions, the law made such information publicly available. In Casey, the U.S. Supreme Court stated: "The collection of information with respect to actual patients is a vital element of medical research, and so it cannot be said that the requirements serve no purpose other than to make abortion more difficult." Compared to the disclosure requirements of personal data that the U.S. Supreme Court have upheld in Whalen, Danforth and Casey as not violative of the right to privacy, the disclosure requirements under EO 420 are far benign and cannot therefore constitute violation of the right to privacy. EO 420 requires disclosure of 14 personal data that are routine for ID purposes, data that cannot possibly embarrass or humiliate anyone. Petitioners have not shown how EO 420 will violate their right to privacy. Petitioners cannot show such violation by a mere facial examination of EO 420 because EO 420 narrowly draws the data collection, recording and exhibition while prescribing comprehensive safeguards. Ople v. Torres18 is not authority to hold that EO 420 violates the right to privacy because in that case the assailed executive issuance, broadly drawn and devoid of safeguards, was annulled solely on the ground that the subject matter required legislation. As then Associate Justice, now Chief Justice Artemio V. Panganiban noted in his concurring opinion in Ople v. Torres, "The voting is decisive only on the need for appropriate legislation, and it is only on this ground that the petition is granted by this Court." EO 420 applies only to government entities that already maintain ID systems and issue ID cards pursuant to their regular functions under existing laws. EO 420 does not grant such government entities any power that they do not already possess under existing

laws. In contrast, the assailed executive issuance in Ople v. Torres sought to establish a "National Computerized Identification Reference System,"19 a national ID system that did not exist prior to the assailed executive issuance. Obviously, a national ID card system requires legislation because it creates a new national data collection and card issuance system where none existed before. In the present case, EO 420 does not establish a national ID system but makes the existing sectoral card systems of government entities like GSIS, SSS, Philhealth and LTO less costly, more efficient, reliable and user-friendly to the public. Hence, EO 420 is a proper subject of executive issuance under the Presidents constitutional power of control over government entities in the Executive department, as well as under the Presidents constitutional duty to ensure that laws are faithfully executed. WHEREFORE, the petitions are DISMISSED. Executive Order No. 420 is declared VALID.

G.R. No. 174689

October 22, 2007

ROMMEL JACINTO DANTES SILVERIO, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondent. DECISION CORONA, J.: When God created man, He made him in the likeness of God; He created them male and female. (Genesis 5:1-2) Amihan gazed upon the bamboo reed planted by Bathala and she heard voices coming from inside the bamboo. "Oh North Wind! North Wind! Please let us out!," the voices said. She pecked the reed once, then twice. All of a sudden, the bamboo cracked and slit open. Out came two human beings; one was a male and the other was a female. Amihan named the man "Malakas" (Strong) and the woman "Maganda" (Beautiful). (The Legend of Malakas and Maganda) When is a man a man and when is a woman a woman? In particular, does the law recognize the changes made by a physician using scalpel, drugs and counseling with regard to a persons sex? May a person successfully petition for a change of name and sex appearing in the birth certificate to reflect the result of a sex reassignment surgery? On November 26, 2002, petitioner Rommel Jacinto Dantes Silverio filed a petition for the change of his first name and sex in his birth certificate in the Regional Trial Court of Manila, Branch 8. The petition, docketed as SP Case No. 02-105207, impleaded the civil registrar of Manila as respondent. Petitioner alleged in his petition that he was born in the City of Manila to the spouses Melecio Petines Silverio and Anita Aquino Dantes on April 4, 1962. His name was registered as "Rommel Jacinto Dantes Silverio" in his certificate of live birth (birth certificate). His sex was registered as "male." He further alleged that he is a male transsexual, that is, "anatomically male but feels, thinks and acts as a female" and that he had always identified himself with girls since childhood.1 Feeling trapped in a mans body, he consulted several doctors in the United States. He underwent psychological examination, hormone treatment and breast augmentation. His attempts to transform himself to a "woman" culminated on January 27, 2001 when he underwent sex reassignment surgery2 in Bangkok, Thailand. He was thereafter examined by Dr. Marcelino Reysio-Cruz, Jr., a plastic and reconstruction surgeon in the Philippines, who issued a medical certificate attesting that he (petitioner) had in fact undergone the procedure.

From then on, petitioner lived as a female and was in fact engaged to be married. He then sought to have his name in his birth certificate changed from "Rommel Jacinto" to "Mely," and his sex from "male" to "female." An order setting the case for initial hearing was published in the Peoples Journal Tonight, a newspaper of general circulation in Metro Manila, for three consecutive weeks.3 Copies of the order were sent to the Office of the Solicitor General (OSG) and the civil registrar of Manila. On the scheduled initial hearing, jurisdictional requirements were established. No opposition to the petition was made. During trial, petitioner testified for himself. He also presented Dr. Reysio-Cruz, Jr. and his American fianc, Richard P. Edel, as witnesses. On June 4, 2003, the trial court rendered a decision4 in favor of petitioner. Its relevant portions read: Petitioner filed the present petition not to evade any law or judgment or any infraction thereof or for any unlawful motive but solely for the purpose of making his birth records compatible with his present sex. The sole issue here is whether or not petitioner is entitled to the relief asked for. The [c]ourt rules in the affirmative. Firstly, the [c]ourt is of the opinion that granting the petition would be more in consonance with the principles of justice and equity. With his sexual [reassignment], petitioner, who has always felt, thought and acted like a woman, now possesses the physique of a female. Petitioners misfortune to be trapped in a mans body is not his own doing and should not be in any way taken against him. Likewise, the [c]ourt believes that no harm, injury [or] prejudice will be caused to anybody or the community in granting the petition. On the contrary, granting the petition would bring the much-awaited happiness on the part of the petitioner and her [fianc] and the realization of their dreams. Finally, no evidence was presented to show any cause or ground to deny the present petition despite due notice and publication thereof. Even the State, through the [OSG] has not seen fit to interpose any [o]pposition. WHEREFORE, judgment is hereby rendered GRANTING the petition and ordering the Civil Registrar of Manila to change the entries appearing in the

Certificate of Birth of [p]etitioner, specifically for petitioners first name from "Rommel Jacinto" to MELY and petitioners gender from "Male" to FEMALE. 5 On August 18, 2003, the Republic of the Philippines (Republic), thru the OSG, filed a petition for certiorari in the Court of Appeals.6 It alleged that there is no law allowing the change of entries in the birth certificate by reason of sex alteration. On February 23, 2006, the Court of Appeals7 rendered a decision8 in favor of the Republic. It ruled that the trial courts decision lacked legal basis. There is no law allowing the change of either name or sex in the certificate of birth on the ground of sex reassignment through surgery. Thus, the Court of Appeals granted the Republics petition, set aside the decision of the trial court and ordered the dismissal of SP Case No. 02-105207. Petitioner moved for reconsideration but it was denied.9 Hence, this petition. Petitioner essentially claims that the change of his name and sex in his birth certificate is allowed under Articles 407 to 413 of the Civil Code, Rules 103 and 108 of the Rules of Court and RA 9048.10 The petition lacks merit. A Persons First Name Cannot Be Changed On the Ground of Sex Reassignment Petitioner invoked his sex reassignment as the ground for his petition for change of name and sex. As found by the trial court: Petitioner filed the present petition not to evade any law or judgment or any infraction thereof or for any unlawful motive but solely for the purpose of making his birth records compatible with his present sex. (emphasis supplied) Petitioner believes that after having acquired the physical features of a female, he became entitled to the civil registry changes sought. We disagree. The State has an interest in the names borne by individuals and entities for purposes of identification.11 A change of name is a privilege, not a right.12 Petitions for change of name are controlled by statutes.13 In this connection, Article 376 of the Civil Code provides: ART. 376. No person can change his name or surname without judicial authority. This Civil Code provision was amended by RA 9048 (Clerical Error Law). In particular, Section 1 of RA 9048 provides:

SECTION 1. Authority to Correct Clerical or Typographical Error and Change of First Name or Nickname. No entry in a civil register shall be changed or corrected without a judicial order, except for clerical or typographical errors and change of first name or nickname which can be corrected or changed by the concerned city or municipal civil registrar or consul general in accordance with the provisions of this Act and its implementing rules and regulations. RA 9048 now governs the change of first name.14 It vests the power and authority to entertain petitions for change of first name to the city or municipal civil registrar or consul general concerned. Under the law, therefore, jurisdiction over applications for change of first name is now primarily lodged with the aforementioned administrative officers. The intent and effect of the law is to exclude the change of first name from the coverage of Rules 103 (Change of Name) and 108 (Cancellation or Correction of Entries in the Civil Registry) of the Rules of Court, until and unless an administrative petition for change of name is first filed and subsequently denied.15 It likewise lays down the corresponding venue,16 form17 and procedure. In sum, the remedy and the proceedings regulating change of first name are primarily administrative in nature, not judicial. RA 9048 likewise provides the grounds for which change of first name may be allowed: SECTION 4. Grounds for Change of First Name or Nickname. The petition for change of first name or nickname may be allowed in any of the following cases: (1) The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or extremely difficult to write or pronounce; (2) The new first name or nickname has been habitually and continuously used by the petitioner and he has been publicly known by that first name or nickname in the community; or (3) The change will avoid confusion. Petitioners basis in praying for the change of his first name was his sex reassignment. He intended to make his first name compatible with the sex he thought he transformed himself into through surgery. However, a change of name does not alter ones legal capacity or civil status.18 RA 9048 does not sanction a change of first name on the ground of sex reassignment. Rather than avoiding confusion, changing petitioners first name for his declared purpose may only create grave complications in the civil registry and the public interest. Before a person can legally change his given name, he must present proper or reasonable cause or any compelling reason justifying such change.19 In addition, he must show that he will be prejudiced by the use of his true and official name.20 In this

case, he failed to show, or even allege, any prejudice that he might suffer as a result of using his true and official name. In sum, the petition in the trial court in so far as it prayed for the change of petitioners first name was not within that courts primary jurisdiction as the petition should have been filed with the local civil registrar concerned, assuming it could be legally done. It was an improper remedy because the proper remedy was administrative, that is, that provided under RA 9048. It was also filed in the wrong venue as the proper venue was in the Office of the Civil Registrar of Manila where his birth certificate is kept. More importantly, it had no merit since the use of his true and official name does not prejudice him at all. For all these reasons, the Court of Appeals correctly dismissed petitioners petition in so far as the change of his first name was concerned. No Law Allows The Change of Entry In The Birth Certificate As To Sex On the Ground of Sex Reassignment The determination of a persons sex appearing in his birth certificate is a legal issue and the court must look to the statutes.21 In this connection, Article 412 of the Civil Code provides: ART. 412. No entry in the civil register shall be changed or corrected without a judicial order. Together with Article 376 of the Civil Code, this provision was amended by RA 9048 in so far as clerical or typographical errors are involved. The correction or change of such matters can now be made through administrative proceedings and without the need for a judicial order. In effect, RA 9048 removed from the ambit of Rule 108 of the Rules of Court the correction of such errors.22 Rule 108 now applies only to substantial changes and corrections in entries in the civil register.23 Section 2(c) of RA 9048 defines what a "clerical or typographical error" is: SECTION 2. Definition of Terms. As used in this Act, the following terms shall mean: xxx xxx xxx

(3) "Clerical or typographical error" refers to a mistake committed in the performance of clerical work in writing, copying, transcribing or typing an entry in the civil register that is harmless and innocuous, such as misspelled name or misspelled place of birth or the like, which is visible to the eyes or obvious to the understanding, and can be corrected or changed only by reference to other existing record or records: Provided,

however, That no correction must involve the change ofnationality, age, status or sex of the petitioner. (emphasis supplied) Under RA 9048, a correction in the civil registry involving the change of sex is not a mere clerical or typographical error. It is a substantial change for which the applicable procedure is Rule 108 of the Rules of Court. The entries envisaged in Article 412 of the Civil Code and correctable under Rule 108 of the Rules of Court are those provided in Articles 407 and 408 of the Civil Code:24 ART. 407. Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register. ART. 408. The following shall be entered in the civil register: (1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage; (6) judgments declaring marriages void from the beginning; (7) legitimations; (8) adoptions; (9) acknowledgments of natural children; (10) naturalization; (11) loss, or (12) recovery of citizenship; (13) civil interdiction; (14) judicial determination of filiation; (15) voluntary emancipation of a minor; and (16) changes of name. The acts, events or factual errors contemplated under Article 407 of the Civil Code include even those that occur after birth.25 However, no reasonable interpretation of the provision can justify the conclusion that it covers the correction on the ground of sex reassignment. To correct simply means "to make or set aright; to remove the faults or error from" while to change means "to replace something with something else of the same kind or with something that serves as a substitute."26 The birth certificate of petitioner contained no error. All entries therein, including those corresponding to his first name and sex, were all correct. No correction is necessary. Article 407 of the Civil Code authorizes the entry in the civil registry of certain acts (such as legitimations, acknowledgments of illegitimate children and naturalization), events (such as births, marriages, naturalization and deaths) and judicial decrees (such as legal separations, annulments of marriage, declarations of nullity of marriages, adoptions, naturalization, loss or recovery of citizenship, civil interdiction, judicial determination of filiation and changes of name). These acts, events and judicial decrees produce legal consequences that touch upon the legal capacity, status and nationality of a person. Their effects are expressly sanctioned by the laws. In contrast, sex reassignment is not among those acts or events mentioned in Article 407. Neither is it recognized nor even mentioned by any law, expressly or impliedly.

"Status" refers to the circumstances affecting the legal situation (that is, the sum total of capacities and incapacities) of a person in view of his age, nationality and his family membership.27 The status of a person in law includes all his personal qualities and relations, more or less permanent in nature, not ordinarily terminable at his own will, such as his being legitimate or illegitimate, or his being married or not. The comprehensive term status include such matters as the beginning and end of legal personality, capacity to have rights in general, family relations, and its various aspects, such as birth, legitimation, adoption, emancipation, marriage, divorce, and sometimes even succession.28(emphasis supplied) A persons sex is an essential factor in marriage and family relations. It is a part of a persons legal capacity and civil status. In this connection, Article 413 of the Civil Code provides: ART. 413. All other matters pertaining to the registration of civil status shall be governed by special laws. But there is no such special law in the Philippines governing sex reassignment and its effects. This is fatal to petitioners cause. Moreover, Section 5 of Act 3753 (the Civil Register Law) provides: SEC. 5. Registration and certification of births. The declaration of the physician or midwife in attendance at the birth or, in default thereof, the declaration of either parent of the newborn child, shall be sufficient for the registration of a birth in the civil register. Such declaration shall be exempt from documentary stamp tax and shall be sent to the local civil registrar not later than thirty days after the birth, by the physician or midwife in attendance at the birth or by either parent of the newborn child. In such declaration, the person above mentioned shall certify to the following facts: (a) date and hour of birth; (b) sex and nationality of infant; (c) names, citizenship and religion of parents or, in case the father is not known, of the mother alone; (d) civil status of parents; (e) place where the infant was born; and (f) such other data as may be required in the regulations to be issued. xxx xxx xxx (emphasis supplied)

Under the Civil Register Law, a birth certificate is a historical record of the facts as they existed at the time of birth.29 Thus, the sex of a person is determined at birth, visually done by the birth attendant (the physician or midwife) by examining the genitals of the infant. Considering that there is no law legally recognizing sex reassignment, the

determination of a persons sex made at the time of his or her birth, if not attended by error,30is immutable.31 When words are not defined in a statute they are to be given their common and ordinary meaning in the absence of a contrary legislative intent. The words "sex," "male" and "female" as used in the Civil Register Law and laws concerning the civil registry (and even all other laws) should therefore be understood in their common and ordinary usage, there being no legislative intent to the contrary. In this connection, sex is defined as "the sum of peculiarities of structure and function that distinguish a male from a female"32 or "the distinction between male and female."33 Female is "the sex that produces ova or bears young"34 and male is "the sex that has organs to produce spermatozoa for fertilizing ova."35 Thus, the words "male" and "female" in everyday understanding do not include persons who have undergone sex reassignment. Furthermore, "words that are employed in a statute which had at the time a well-known meaning are presumed to have been used in that sense unless the context compels to the contrary."36 Since the statutory language of the Civil Register Law was enacted in the early 1900s and remains unchanged, it cannot be argued that the term "sex" as used then is something alterable through surgery or something that allows a post-operative male-to-female transsexual to be included in the category "female." For these reasons, while petitioner may have succeeded in altering his body and appearance through the intervention of modern surgery, no law authorizes the change of entry as to sex in the civil registry for that reason. Thus, there is no legal basis for his petition for the correction or change of the entries in his birth certificate. Neither May Entries in the Birth Certificate As to First Name or Sex Be Changed on the Ground of Equity The trial court opined that its grant of the petition was in consonance with the principles of justice and equity. It believed that allowing the petition would cause no harm, injury or prejudice to anyone. This is wrong. The changes sought by petitioner will have serious and wide-ranging legal and public policy consequences. First, even the trial court itself found that the petition was but petitioners first step towards his eventual marriage to his male fianc. However, marriage, one of the most sacred social institutions, is a special contract of permanent union between a man and a woman.37 One of its essential requisites is the legal capacity of the contracting parties who must be a male and a female.38 To grant the changes sought by petitioner will substantially reconfigure and greatly alter the laws on marriage and family relations. It will allow the union of a man with another man who has undergone sex reassignment (a male-to-female post-operative transsexual). Second, there are various laws which apply particularly to women such as the provisions of the Labor Code on employment of women,39 certain felonies under the Revised Penal Code40 and

the presumption of survivorship in case of calamities under Rule 131 of the Rules of Court,41 among others. These laws underscore the public policy in relation to women which could be substantially affected if petitioners petition were to be granted. It is true that Article 9 of the Civil Code mandates that "[n]o judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the law." However, it is not a license for courts to engage in judicial legislation. The duty of the courts is to apply or interpret the law, not to make or amend it. In our system of government, it is for the legislature, should it choose to do so, to determine what guidelines should govern the recognition of the effects of sex reassignment. The need for legislative guidelines becomes particularly important in this case where the claims asserted are statute-based. To reiterate, the statutes define who may file petitions for change of first name and for correction or change of entries in the civil registry, where they may be filed, what grounds may be invoked, what proof must be presented and what procedures shall be observed. If the legislature intends to confer on a person who has undergone sex reassignment the privilege to change his name and sex to conform with his reassigned sex, it has to enact legislation laying down the guidelines in turn governing the conferment of that privilege. It might be theoretically possible for this Court to write a protocol on when a person may be recognized as having successfully changed his sex. However, this Court has no authority to fashion a law on that matter, or on anything else. The Court cannot enact a law where no law exists. It can only apply or interpret the written word of its co-equal branch of government, Congress. Petitioner pleads that "[t]he unfortunates are also entitled to a life of happiness, contentment and [the] realization of their dreams." No argument about that. The Court recognizes that there are people whose preferences and orientation do not fit neatly into the commonly recognized parameters of social convention and that, at least for them, life is indeed an ordeal. However, the remedies petitioner seeks involve questions of public policy to be addressed solely by the legislature, not by the courts. WHEREFORE, the petition is hereby DENIED. Costs against petitioner

EN BANC
REPUBLIC OF THE PHILIPPINES, G.R. No. 166429 Represented by Executive Secretary Eduardo R. Ermita, the DEPARTMENT OF TRANSPORTATION AND Present: COMMUNICATIONS (DOTC), and the MANILA INTERNATIONAL AIRPORT DAVIDE, JR., C.J., AUTHORITY (MIAA), PUNO, Petitioners,
PANGANIBAN, QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO, -versusAUSTRIA-MARTINEZ, CORONA, CARPIO-MORALES, CALLEJO, SR., AZCUNA, HON. HENRICK F. GINGOYON, TINGA, In his Presiding NAZARIO, and

capacity

as CHICO-

Judge of the Regional Trial Court, GARCIA, JJ. Branch 117, Pasay City and PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Promulgated: December 19, 2005 x---------------------------------------------------------------------- x Respondents.

DECISION TINGA, J.:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived, designed and constructed to serve as the countrys show window to the world. Regrettably, it has spawned controversies. Regrettably too, despite the apparent completion of the terminal complex way back it has not yet been operated. This has caused immeasurable economic damage to the country, not to mention its deplorable discredit in the international community. In the first case that reached this Court, Agan v. PIATCO,[1] the contracts which the Government had with the contractor were voided for being contrary to law and public policy. The second case now before the Court involves the matter of just compensation due the contractor for the terminal complex it built. We decide the case on the basis of fairness, the same norm that pervades both the Courts 2004 Resolution in the first case and the latest expropriation law.

The present controversy has its roots with the promulgation of the Courts decision in Agan v. PIATCO,[2] promulgated in 2003 (2003 Decision). This decision nullified the Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III entered into between the Philippine Government (Government) and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The agreement had authorized PIATCO to build a new international airport terminal (NAIA 3), as well as a franchise to operate and maintain the said terminal during the concession period of 25 years. The contracts were nullified, among others, that Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial capacity when it was awarded the NAIA 3 contract and that the agreement was contrary to public policy.[3] At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already been built by PIATCO and were nearing completion.[4] However, the ponencia was silent as to the legal status of the NAIA 3 facilities following the nullification of the contracts, as well as whatever rights of PIATCO for reimbursement for its expenses in the construction of the facilities. Still, in his Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as follows:
Should government pay at all for reasonable expenses incurred in the construction of the Terminal? Indeed it should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in particular, its funders, contractors and investors both local and foreign. After all, there is no question that the State needs and will make use of Terminal III, it being part and parcel of the critical infrastructure and transportation-related programs of government.[5]

PIATCO and several respondents-intervenors filed their respective motions for the reconsideration of the 2003 Decision. These motions were denied by the Court in its Resolution dated 21 January 2004 (2004 Resolution).[6] However, the Court this time squarely addressed the issue of the rights of PIATCO to refund, compensation or reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding of the Court on this crucial point follows:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.[7]

After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the possession of PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities.[8] It also appears that arbitral proceedings were commenced before the International Chamber of Commerce International Court of Arbitration and the International Centre for the Settlement of Investment Disputes,[9] although the Government has raised jurisdictional questions before those two bodies.[10]

Then, on 21 December 2004, the Government[11] filed a Complaint for expropriation with the Pasay City Regional Trial Court (RTC), together with an Application for Special Raffle seeking the immediate holding of a special raffle. The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take immediate possession and control over the NAIA 3 facilities.

The Government also declared that it had deposited the amount of P3,002,125,000.00[12] (3 Billion)[13] in Cash with the Land Bank of the Philippines, representing the NAIA 3 terminals assessed value for taxation purposes.[14] The case[15] was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order[16] directing the issuance of a writ of possession to the Government, authorizing it to take or enter upon the possession of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano,[17] the RTC noted that it had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation sufficient in form and substance, and upon deposit made by the government of the amount equivalent to the assessed value of the property subject to expropriation. The RTC found these requisites present, particularly noting that [t]he case record shows that [the Government has] deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the certification attached to their complaint. Also on the same day, the RTC issued a Writ of Possession. According to PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately after the Writ of Possession was issued.[18] However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December 2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition, the RTC noted

that its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as An Act to Facilitate the Acquisition of Right-ofWay, Site or Location for National Government Infrastructure Projects and For Other Purposes and its Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects. There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the Government is required only to make an initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures using the replacement cost method. Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing Rules, the RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that which the

Government specifically made available for the purpose of this expropriation; and such amount to be deducted from the amount of just compensation due PIATCO as eventually determined by the RTC. Second, the Government was directed to submit to the RTC a Certificate of Availability of Funds signed by authorized officials to cover the payment of just compensation. Third, the Government was directed to maintain, preserve and safeguard the NAIA 3 facilities or perform such as acts or activities in preparation for their direct operation of the airport terminal, pending expropriation proceedings and full payment of just compensation. However, the Government was prohibited from performing acts of ownership like awarding concessions or leasing any part of [NAIA 3] to other parties.[19] The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005, the RTC issued another Order, the second now assailed before this Court, which appointed three (3) Commissioners to ascertain the amount of just compensation for the NAIA 3 Complex. That same day, the Government filed a Motion for Inhibition of Hon. Gingoyon. The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005. On the same day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third Order now assailed before this Court. Nonetheless, while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005 Order, it excepted from affirmance the superfluous part of the Order prohibiting the

plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other parties.[20] Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005. The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon from taking further action on the expropriation case. A concurrent prayer for the issuance of a temporary restraining order and preliminary injunction was granted by this Court in a Resolution dated 14 January 2005.[21] The Government, in imputing grave abuse of discretion to the acts of Hon. Gingoyon, raises five general arguments, to wit: (i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation proceedings; (ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of US$62.3 Million to PIATCO considering that the assessed value as alleged in the complaint was only P3 Billion; (iii) that the RTC could not have prohibited the Government from enjoining the performance of acts of ownership;

(iv) that the appointment of the three commissioners was erroneous; and

(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation case.[22] Before we delve into the merits of the issues raised by the Government, it is essential to consider the crucial holding of the Court in its 2004 Resolution in Agan, which we repeat below:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.[23]

This pronouncement contains the fundamental premises which permeate this decision of the Court. Indeed, Agan, final and executory as it is, stands as governing law in this case, and any disposition of the present petition must conform to the conditions laid down by the Court in its 2004 Resolution.

The 2004 Resolution Which Is Law of This Case Generally Permits Expropriation The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i) that PIATCO must receive payment of just compensation determined in accordance with law and equity; and (ii) that the government is

barred from taking over NAIA 3 until such just compensation is paid. The parties cannot be allowed to evade the directives laid down by this Court through any mode of judicial action, such as the complaint for eminent domain. It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass the threshold test of whether such propositions are in accord with the 2004 Resolution. The Government does not contest the efficacy of this pronouncement in the 2004 Resolution,[24] thus its application

to the case at bar is not a matter of controversy. Of course, questions such as what is the standard of just compensation and which particular laws and equitable principles are applicable, remain in dispute and shall be resolved forthwith. The Government has chosen to resort to expropriation, a remedy available under the law, which has the added benefit of an integrated process for the determination of just compensation and the payment thereof to PIATCO. We appreciate that the case at bar is a highly unusual case, whereby the Government seeks to expropriate a building complex constructed on land which the State already owns.[25] There is an inherent illogic in the resort to eminent domain on property already owned by the State. At first blush, since the State already owns the property on which NAIA 3 stands, the proper remedy should be akin to an action for ejectment. However, the reason for the resort by the Government to expropriation proceedings is understandable in this case. The 2004 Resolution, in requiring the payment of just compensation prior to the takeover by the Government of

NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3 through the unilateral exercise of its rights as the owner of the ground on which the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by lawful order on the payment of just compensation to PIATCO as builder of the structures. The determination of just compensation could very well be agreed upon by the parties without judicial intervention, and it appears that steps towards that direction had been engaged in. Still, ultimately, the Government resorted to its inherent power of eminent domain through expropriation proceedings. Is eminent domain appropriate in the first place, with due regard not only to the law on expropriation but also to the Courts 2004 Resolution in Agan? The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered as they are to the soil, are considered as real property.[26] The public purpose for the expropriation is also beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought to be expropriated may be titled in the name of the

Republic of the Philippines, although occupied by private individuals, and in such case an averment to that effect should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex stands on a parcel of land owned by the Bases Conversion Development Authority, another agency of [the Republic of the Philippines].[27] Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain though may be the most effective, as well as the speediest means by which such goals may be accomplished. Not only does it enable immediate possession after satisfaction of the requisites under the law, it also has a built-in procedure through which just compensation may be ascertained. Thus, there should be no question as to the propriety of eminent domain proceedings in this case. Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or construe these rules in accordance with the Courts prescriptions in the 2004 Resolution to achieve the end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and prescriptions that must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be severely diminished.

It is from these premises that we resolve the first question, whether Rule 67 of the Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings in this case. Application of Rule 67 Violates the 2004 Agan Resolution

The Government insists that Rule 67 of the Rules of Court governs the expropriation proceedings in this case to the exclusion of all other laws. On the other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply. Earlier, we had adverted to the basic differences between the statute and the procedural rule. Further elaboration is in order. Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by no means does it serve at present as the solitary guideline through which the State may expropriate private property. For example, Section 19 of the Local Government Code governs as to the exercise by local government units of the power of eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which covers expropriation proceedings intended for national government infrastructure projects. Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner than Rule 67, inescapably applies in instances when the national government expropriates property for national government infrastructure projects.[28]Thus, if expropriation is engaged in by the national government for purposes other than national infrastructure projects, the assessed value

standard and the deposit mode prescribed in Rule 67 continues to apply. Under both Rule 67 and Rep. Act No. 8974, the Government commences expropriation proceedings through the filing of a complaint. Unlike in the case of local governments which necessitate an authorizing ordinance before expropriation may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for legislative authorization before the Government may proceed with a particular exercise of eminent domain. The most crucial difference between Rule 67 and Rep. Act No. 8974 concerns the particular essential step the Government has to undertake to be entitled to a writ of possession.

The first paragraph of Section 2 of Rule 67 provides:

SEC. 2. Entry of plaintiff upon depositing value with authorized government depository. Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved ifhe deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary.

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

SEC. 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to acquire real property for the right-of-way, site or location for any national government infrastructure project through expropriation, the appropriate proceedings before the proper court under the following guidelines: a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under Section 7 hereof; ... c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking into consideration the standards prescribed in Section 5 hereof. Upon completion with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project. Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper official concerned. ...

As can be gleaned from the above-quoted texts, Rule 67 merely requires the Government to deposit with an authorized government depositary the assessed value of the property for expropriation for it to be entitled to a writ of possession. On the other hand, Rep. Act No. 8974 requires that the Government make a direct payment to the property owner before the writ may issue. Moreover, such

payment is based on the zonal valuation of the BIR in the case of land, the value of the improvements or structures under the replacement cost method,[29] or if no such valuation is available and in cases of utmost urgency, the proffered value of the property to be seized. It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any amount to PIATCO before it can obtain the writ of possession since all it need do is deposit the amount equivalent to the assessed value with an authorized government depositary. Hence, it devotes considerable effort to point out that Rep. Act No. 8974 does not apply in this case, notwithstanding the undeniable reality that NAIA 3 is a national government project. Yet, these efforts fail, especially considering the controlling effect of the 2004 Resolution in Agan on the adjudication of this case. It is the finding of this Court that the staging of expropriation proceedings in this case with the exclusive use of Rule 67 would allow for the Government to take over the NAIA 3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan. This Court cannot sanction deviation from its own final and executory orders. Section 2 of Rule 67 provides that the State shall have the right to take or enter upon the possession of the real property involved if [the plaintiff] deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to

the orders of the court.[30] It is thus apparent that under the provision, all the Government need do to obtain a writ of possession is to deposit the amount equivalent to the assessed value with an authorized government depositary. Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the 2004 Resolution that [f]or the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures? Evidently not. If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a single centavo as just compensation before the Government takes over the NAIA 3 facility by virtue of a writ of possession. Such an injunction squarely contradicts the letter and intent of the 2004 Resolution. Hence, the position of the Government sanctions its own disregard or violation the prescription laid down by this Court that there must first be just compensation paid to PIATCO before the Government may take over the NAIA 3 facilities. Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004 Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it does not necessarily follow that Rule 67 should then apply. After all, adherence to the letter of Section 2, Rule 67 would in turn violate the Courts requirement in the 2004 Resolution that there must first be payment of just compensation to PIATCO before the Government may take over the property.

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the scheme of immediate payment in cases involving national government infrastructure projects. The following portion of the Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting to cogitate on the purpose behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). x x x Because the Senate believes that, you know, we have to pay the landowners immediately not by treasury bills but by cash. Since we are depriving them, you know, upon payment, no, of possession, we might as well pay them as much, no, hindi lang 50 percent. xxx THE CHAIRMAN (REP. VERGARA). Accepted. xxx THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e. THE CHAIRMAN (REP. VERGARA). Thats why we need to really secure the availability of funds. xxx THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It says here: iyong first paragraph, diba? Iyong zonal talagang magbabayad muna. In other words, you know, there must be a payment kaagad. (TSN, Bicameral Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp. 14-20) xxx THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unang-una, it is not deposit, no. Its payment. REP. BATERINA. Its payment, ho, payment. (Id., p. 63)[31]

It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is well within the province of the legislature to fix the standard, which it did through the enactment of Rep. Act No. 8974. Specifically, this prescribes the new standards in determining the amount of just compensation in expropriation cases relating to national government infrastructure projects, as well as the manner of payment thereof. At the same time, Section 14 of the Implementing Rules recognizes the continued applicability of Rule 67 on procedural aspects when it provides all matters regarding defenses and objections to the complaint, issues on uncertain ownership and conflicting claims, effects of appeal on the rights of the parties, and such other incidents affecting the complaint shall be resolved under the provisions on expropriation of Rule 67 of the Rules of Court.[32] Given that the 2004 Resolution militates against the continued use of the norm under Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find that it is, and moreover, its application in this case complements rather than contravenes the prescriptions laid down in the 2004 Resolution.

Rep. Act No. 8974 Fits to the Situation at Bar and Complements the

2004 Agan Resolution Rep. Act No. 8974 is entitled An Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For National Government Infrastructure Projects And For Other Purposes. Obviously, the law is intended to cover expropriation proceedings intended for national government infrastructure projects. Section 2 of Rep. Act No. 8974 explains what are considered as national government projects.
Sec. 2. National Government Projects. The term national government projects shall refer to all national government infrastructure, engineering works and service contracts, including projects undertaken by government-owned and controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise known as the BuildOperate-and-Transfer Law, and other related and necessary activities, such as site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement, repair and rehabilitation, regardless of the source of funding.

As acknowledged in the 2003 Decision, the development of NAIA 3 was made pursuant to a build-operate-and-transfer arrangement pursuant to Republic Act No. 6957, as amended,[33] which pertains to infrastructure or development projects normally financed by the public sector but which are now wholly or partly implemented by the private sector.[34] Under the build-operate-and-transfer scheme, it is the project proponent which undertakes the construction, including the financing, of a given infrastructure facility.[35] In Tatad v. Garcia,[36] the Court acknowledged that the operator of the EDSA Light Rail Transit project under a BOT scheme was the owner of the facilities such as

the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power plant.[37] There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the Government resorted to eminent domain proceedings in the first place is a concession on its part of PIATCOs ownership. Indeed, if no such right is recognized, then there should be no impediment for the Government to seize control of NAIA 3 through ordinary ejectment proceedings.

Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these facilities should now be determined. Under Section 415(1) of the Civil Code, these facilities are ineluctably immovable or real property, as they constitute buildings, roads and constructions of all kinds adhered to the soil.[38] Certainly, the NAIA 3 facilities are of such nature that they cannot just be packed up and transported by PIATCO like a traveling circus caravan. Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. This point is critical, considering the Governments insistence that the NAIA 3 facilities cannot be deemed as the right-of-way, site or location of a

national government infrastructure project, within the coverage of Rep. Act No. 8974. There is no doubt that the NAIA 3 is not, under any sensible contemplation, a right-of-way. Yet we cannot agree with the Governments insistence that neither could NAIA 3 be a site or location. The petition quotes the definitions provided in Blacks Law Dictionary of location as the specific place or position of a person or thing and site as pertaining to a place or location or a piece of property set aside for specific use.[39] Yet even Blacks Law Dictionary provides that [t]he term [site] does not of itself necessarily mean a place or tract of land fixed by definite boundaries.[40] One would assume that the Government, to back up its contention, would be able to point to a clear-cut rule that a site or location exclusively refers to soil, grass, pebbles and weeds. There is none. Indeed, we cannot accept the Governments proposition that the only properties that may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974 contemplates within its coverage such real property constituting land, buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974, which sets the declaration of the laws policy, refers to real property acquired for national government infrastructure projects are promptly paid just compensation.[41] Section 4 is quite explicit in stating that the scope of the law relates to the acquisition of real property, which under civil law includes buildings, roads and constructions adhered to the soil.

It is moreover apparent that the law and its implementing rules commonly provide for a rule for the valuation of improvements and/or structures thereupon separate from that of the land on which such are constructed. Section 2 of Rep. Act No. 8974 itself recognizes that the improvements or structures on the land may very well be the subject of expropriation proceedings. Section 4(a), in relation to Section 7 of the law provides for the guidelines for the valuation of the improvements or structures to be expropriated. Indeed, nothing in the law would prohibit the application of Section 7, which provides for the valuation method of the improvements and or structures in the instances wherein it is necessary for the Government to expropriate only the improvements or structures, as in this case. The law classifies the NAIA 3 facilities as real properties just like the soil to which they are adhered. Any sub-classifications of real property and divergent treatment based thereupon for purposes of expropriation must be based on substantial distinctions, otherwise the equal protection clause of the Constitution is violated. There may be perhaps a molecular distinction between soil and the inorganic improvements adhered thereto, yet there are no purposive distinctions that would justify a variant treatment for purposes of expropriation. Both the land itself and the improvements thereupon are susceptible to private ownership independent of each other, capable of pecuniary estimation, and if taken from the owner, considered as a deprivation of property. The owner of improvements seized through expropriation suffers the same degree of loss as the owner of land seized through similar means. Equal protection demands that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities

imposed. For purposes of expropriation, parcels of land are similarly situated as the buildings or improvements constructed thereon, and a disparate treatment between those two classes of real property infringes the equal protection clause. Even as the provisions of Rep. Act No. 8974 call for that laws application in this case, the threshold test must still be met whether its implementation would conform to the dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3 facilities by the Government. The 2004 Resolution does not particularize the extent such payment must be effected before the takeover, but it unquestionably requires at least some degree of payment to the private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the private property owner the payment of, at the very least, the proffered value of the property to be seized. Such payment of the proffered value to the owner, followed by the issuance of the writ of possession in favor of the Government, is precisely the schematic under Rep. Act No. 8974, one which facially complies with the prescription laid down in the 2004 Resolution. Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No. 8974 governs the instant expropriation proceedings. The Proper Amount to be Paid under Rep. Act No. 8974

Then, there is the matter of the proper amount which should be paid to PIATCO by the Government before the writ of possession may issue, consonant to Rep. Act No. 8974. At this juncture, we must address the observation made by the Office of the Solicitor General in behalf of the Government that there could be no BIR zonal valuations on the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal valuations are only for parcels of land, not for airport terminals. The Court agrees with this point, yet does not see it as an impediment for the application of Rep. Act No. 8974. It must be clarified that PIATCO cannot be reimbursed or justly compensated for the value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the land on which the NAIA 3 facility is constructed, and it should not be entitled to just compensation that is inclusive of the value of the land itself. It would be highly disingenuous to compensate PIATCO for the value of land it does not own. Its entitlement to just compensation should be limited to the value of the improvements and/or structures themselves. Thus, the determination of just compensation cannot include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.

Under Rep. Act No. 8974, the Government is required to immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the [BIR];

and (2) the value of the improvements and/or structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment should be limited to the value of the improvements and/or structures as determined under Section 7, with Section 7 referring to the implementing rules and regulations for the equitable valuation of the improvements and/or structures on the land. Under the present implementing rules in place, the valuation of the improvements/structures are to be based using the replacement cost method.[42] However, the replacement cost is only one of the factors to be considered in determining the just compensation. In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well. Admittedly, there is no way, at least for the present, to immediately ascertain the value of the improvements and structures since such valuation is a matter for factual determination.[43] Yet Rep. Act No. 8974 permits an expedited means by which the Government can immediately take possession of the property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that in case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area

concerned, the implementing agency shall immediately pay the owner of the property its proferred value, taking into consideration the standards prescribed in Section 5 [of the law].[44] The proffered value may strike as a highly subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards by which proffered value should be based,[45] as well as the certainty

of judicial determination of the propriety of the proffered value.[46] In filing the complaint for expropriation, the Government alleged to have deposited the amount of P3 Billion earmarked for expropriation, representing the assessed value of the property. The making of the deposit, including the determination of the amount of the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not strictly required to adhere to any predetermined standards, although its proffered value may later be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974. How should we appreciate the questioned order of Hon. Gingoyon, which pegged the amount to be immediately paid to PIATCO at around $62.3 Million? The Order dated 4 January 2005, which mandated such amount, proves problematic in that regard. While the initial sum of P3 Billion may have been based on the assessed value, a standard which should not however apply in this case, the RTC cites without qualification Section 4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3 Million, thus leaving the impression that the BIR zonal valuation may form part of the basis for just compensation, which should not be the case. Moreover, respondent judge made no attempt to apply the enumerated guidelines for determination of just compensation under Section 5

of Rep. Act No. 8974, as required for judicial review of the proffered value. The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the concessions agreement entered into between the Government and PIATCO stated that the actual cost of building NAIA 3 was not less than US$350 Million.[47] The RTC then proceeded to observe that while Rep. Act No. 8974 required the immediate payment to PIATCO the amount equivalent to 100% of the value of NAIA 3, the amount deposited by the Government constituted only 18% of this value. At this point, no binding import should be given to this observation that the actual cost of building NAIA 3 was not less than US$350 Million, as the final conclusions on the amount of just compensation can come only after due ascertainment in accordance with the standards set under Rep. Act No. 8974, not the declarations of the parties. At the same time, the expressed linkage between the BIR zonal valuation and the amount of just compensation in this case, is revelatory of erroneous thought on the part of the RTC. We have already pointed out the irrelevance of the BIR zonal valuation as an appropriate basis for valuation in this case, PIATCO not being the owner of the land on which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to qualify that such standard is inappropriate. It does appear that the amount of US$62.3 Million was based on the certification issued by the LBP-Baclaran that the Republic of the Philippines maintained a total balance in that branch amounting to such amount. Yet the actual representation of the $62.3 Million is not clear. The Land Bank Certification expressing

such amount does state that it was issued upon request of the Manila International Airport Authority purportedly as guaranty deposit for the expropriation complaint.[48] The Government claims in its Memorandum that the entire amount was made available as a guaranty fund for the final and executory judgment of the trial court, and not merely for the issuance of the writ of possession.[49] One could readily conclude that the entire amount of US$62.3 Million was intended by the Government to answer for whatever guaranties may be required for the purpose of the expropriation complaint. Still, such intention the Government may have had as to the entire US$62.3 Million is only inferentially established. In ascertaining the proffered value adduced by the Government, the amount of P3 Billion as the amount deposited characterized in the complaint as to be held by [Land Bank] subject to the [RTCs] orders,[50] should be deemed as controlling. There is no clear evidence that the Government intended to offer US$62.3 Million as the initial payment of just compensation, the wording of the Land Bank Certification notwithstanding, and credence should be given to the consistent position of the Government on that aspect. In any event, for the RTC to be able to justify the payment of US$62.3 Million to PIATCO and not P3 Billion Pesos, he would have to establish that the higher amount represents the valuation of the structures/improvements, and not the BIR zonal valuation on the land wherein NAIA 3 is built. The Order dated 5 January 2005 fails to establish such integral fact, and in the absence of contravening proof, the proffered value of P3 Billion, as presented by the Government, should prevail.

Strikingly, the Government submits that assuming that Rep. Act No. 8974 is applicable, the deposited amount of P3 Billion should be considered as the proffered value, since the amount was based on comparative values made by the City Assessor.[51]Accordingly, it should be deemed as having faithfully complied with the requirements of the statute.[52] While the Court agrees thatP3 Billion should be considered as the correct proffered value, still we cannot deem the Government as having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct payment to the property owner, and not a mere deposit with the authorized government depositary. Without such direct payment, no writ of possession may be obtained. Writ of Possession May Not Be Implemented Until Actual Receipt by PIATCO of Proferred Value The Court thus finds another error on the part of the RTC. The RTC authorized the issuance of the writ of possession to the Government notwithstanding the fact that no payment of any amount had yet been made to PIATCO, despite the clear command of Rep. Act No. 8974 that there must first be payment before the writ of possession can issue. While the RTC did direct the LBPBaclaran to immediately release the amount of US$62 Million to PIATCO, it should have likewise suspended the writ of possession, nay, withdrawn it altogether, until the Government shall have actually paid PIATCO. This is the inevitable consequence of the clear command of Rep. Act No. 8974 that requires immediate payment of the initially determined amount of just compensation should be

effected. Otherwise, the overpowering intention of Rep. Act No. 8974 of ensuring payment first before transfer of repossession would be eviscerated. Rep. Act No. 8974 represents a significant change from previous expropriation laws such as Rule 67, or even Section 19 of the Local Government Code. Rule 67 and the Local Government Code merely provided that the Government deposit the initial amounts[53] antecedent to acquiring possession of the property with, respectively, an authorized Government depositary[54] or the proper court.[55] In both cases, the private owner does not receive compensation prior to the deprivation of property. On the other hand, Rep. Act No. 8974 mandates immediate payment of the initial just compensation prior to the issuance of the writ of possession in favor of the Government. Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate prepayment, and no amount of statutory deconstruction can evade such requisite. It enshrines a new approach towards eminent domain that reconciles the inherent unease attending expropriation proceedings with a position of fundamental equity. While expropriation proceedings have always demanded just compensation in exchange for private property, the previous deposit requirement impeded immediate compensation to the private owner, especially in cases wherein the determination of the final amount of compensation would prove highly disputed. Under the new modality prescribed by Rep. Act No. 8974, the private owner sees immediate monetary recompense with the same degree of speed as the taking of his/her property.

While eminent domain lies as one of the inherent powers of the State, there is no requirement that it undertake a prolonged procedure, or that the payment of the private owner be protracted as far as practicable. In fact, the expedited procedure of payment, as highlighted under Rep. Act No. 8974, is inherently more fair, especially to the layperson who would be hard-pressed to fully comprehend the social value of expropriation in the first place. Immediate payment placates to some degree whatever ill-will that arises from expropriation, as well as satisfies the demand of basic fairness. The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with the requirement of immediate payment in this case. Accordingly, the Writ of Possession dated 21 December 2004 should be held in abeyance, pending proof of actual payment by the Government to PIATCO of the proffered value of the NAIA 3 facilities, which totals P3,002,125,000.00.

Rights of the Government upon Issuance of the Writ of Possession

Once the Government pays PIATCO the amount of the proffered value of P3 Billion, it will be entitled to the Writ of Possession. However, the Government questions the qualification imposed by the RTC in its 4 January 2005 Order consisting of the prohibition on the Government from performing acts of ownership such as awarding concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in its 10 January 2005 Omnibus

Order, expressly stated that it was not affirming the superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from awarding concessions or leasing any part of NAIA [3] to other parties.[56] Still, such statement was predicated on the notion that since the Government was not yet the owner of NAIA 3 until final payment of just compensation, it was obviously incapacitated to perform such acts of ownership. In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly the declaration that [f]or the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The obvious import of this holding is that unless PIATCO is paid just compensation, the Government is barred from taking over, a phrase which in the strictest sense could encompass even a bar of physical possession of NAIA 3, much less operation of the facilities. There are critical reasons for the Court to view the 2004 Resolution less stringently, and thus allow the operation by the Government of NAIA 3 upon the effectivity of the Writ of Possession. For one, the national prestige is diminished every day that passes with the NAIA 3 remaining mothballed. For another, the continued non-use of the facilities contributes to its physical deterioration, if it has not already. And still for another, the economic benefits to the Government and the country at large are beyond dispute once the NAIA 3 is put in operation. Rep. Act No. 8974 provides the appropriate answer for the standard that governs the extent of the acts the Government may be authorized to perform upon the issuance of the writ of possession.

Section 4 states that the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project. We hold that accordingly, once the Writ of Possession is effective, the Government itself is authorized to perform the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession. These would include the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport. The Governments position is more expansive than that adopted by the Court. It argues that with the writ of possession, it is enabled to perform acts de jure on the expropriated property. It cites Republic v. Tagle,[57] as well as the statement therein that the expropriation of real property does not include mere physical entry or occupation of land, and from them concludes that its mere physical entry and occupation of the property fall short of the taking of title, which includes all the rights that may be exercised by an owner over the subject property. This conclusion is indeed lifted directly from statements in Tagle,[58] but not from the ratio decidendi of that case. Tagleconcerned whether a writ of possession in favor of the Government was still necessary in light of the fact that it was already in actual possession of the property. In ruling that the Government was entitled to the writ of possession, the Court in Tagle explains that such writ vested not only physical possession,

but also the legal right to possess the property. Continues the Court, such legal right to possess was particularly important in the case, as there was a pending suit against the Republic for unlawful detainer, and the writ of possession would serve to safeguard the Government from eviction.[59] At the same time, Tagle conforms to the obvious, that there is no transfer of ownership as of yet by virtue of the writ of possession. Tagle may concede that the Government is entitled to exercise more than just the right of possession by virtue of the writ of possession, yet it cannot be construed to grant the Government the entire panoply of rights that are available to the owner. Certainly, neither Tagle nor any other case or law, lends support to the Governments proposition that it acquires beneficial or equitable ownership of the expropriated property merely through the writ of possession. Indeed, this Court has been vigilant in defense of the rights of the property owner who has been validly deprived of possession, yet retains legal title over the expropriated property pending payment of just compensation. We reiterated the various doctrines of such import in our recent holding in Republic v. Lim:[60]
The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other democratic jurisdictions. In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform[[61]], thus: Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment fixing just

compensation is entered and paid, but the condemnors title relates back to the date on which the petition under the Eminent Domain Act, or the commissioners report under the Local Improvement Act, is filed. x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the property taken remains in the owner until payment is actually made. (Emphasis supplied.) In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not pass to the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held that actual payment to the owner of the condemned property was a condition precedent to the investment of the title to the property in the State albeit not to the appropriation of it to public use. In Rexford v. Knight, the Court of Appeals of New York said that the construction upon the statutes was that the fee did not vest in the State until the payment of the compensation although the authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said that both on principle and authority the rule is . . . that the right to enter on and use the property is complete, as soon as the property is actually appropriated under the authority of law for a public use, but that the title does not pass from the owner without his consent, until just compensation has been made to him. Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that: If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until compensation is paid....(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to the expropriator. Otherwise stated, the Republics acquisition of ownership is conditioned upon the full payment of just compensation within a reasonable time. Significantly, in Municipality of Bian v. Garcia[[62]] this Court ruled that the expropriation of lands consists of two stages, to wit: x x x The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint x x x. The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken. This is done by the court with the assistance of not more than three (3) commissioners. x x x. It is only upon the completion of these two stages that expropriation is said to have been completed. In Republic v. Salem Investment Corporation[[63]] , we ruled that, the process is not completed until payment of just compensation. Thus, here, the failure of the Republic to pay respondent and his predecessors-ininterest for a period of 57 years rendered the expropriation process incomplete.

Lim serves fair warning to the Government and its agencies who consistently refuse to pay just compensation due to the private property owner whose property had been expropriated. At the same time, Lim emphasizes the fragility of the rights of the Government as possessor pending the final payment of just compensation, without diminishing the potency of such rights. Indeed, the public policy, enshrined foremost in the Constitution, mandates that the Government must pay for the private property it

expropriates. Consequently, the proper judicial attitude is to guarantee compliance with this primordial right to just compensation. Final Determination of Just Compensation Within 60 Days

The issuance of the writ of possession does not write finis to the expropriation proceedings. As earlier pointed out, expropriation is not completed until payment to the property owner of just compensation. The proffered value stands as merely a provisional determination of the amount of just compensation, the payment of which is sufficient to transfer possession of the property to the Government. However, to effectuate the transfer of ownership, it is necessary for the Government to pay the property owner the final just compensation.

In Lim, the Court went as far as to countenance, given the exceptional circumstances of that case, the reversion of the validly expropriated property to private ownership due to the failure of the Government to pay just compensation in that case.[64] It was noted in that case that the Government deliberately refused to pay just compensation. The Court went on to rule that in cases where the government failed to pay just compensation within five (5) years from the finality of the judgment in the expropriation proceedings, the owners concerned shall have the right to recover possession of their property.[65]

Rep. Act No. 8974 mandates a speedy method by which the final determination of just compensation may be had. Section 4 provides:
In the event that the owner of the property contests the implementing agencys proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.

We hold that this provision should apply in this case. The sixty (60)-day period prescribed in Rep. Act No. 8974 gives teeth to the laws avowed policy to ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation.[66] In this case, there already has been irreversible delay in the prompt payment of PIATCO of just compensation, and it is no longer possible for the RTC to determine the just compensation due PIATCO within sixty (60) days from the filing of the complaint last 21 December 2004, as contemplated by the law. Still, it is feasible to effectuate the spirit of the law by requiring the trial court to make such determination within sixty (60) days from finality of this decision, in accordance with the guidelines laid down in Rep. Act No. 8974 and its Implementing Rules. Of course, once the amount of just compensation has been finally determined, the Government is obliged to pay PIATCO the said amount. As shown in Lim and other like-minded cases, the Governments refusal to make such payment is indubitably actionable in court.

Appointment of Commissioners The next argument for consideration is the claim of the Government that the RTC erred in appointing the three commissioners in its 7 January 2005 Order without prior consultation with either the Government or PIATCO, or without affording the Government the opportunity to object to the appointment of these commissioners. We can dispose of this argument without complication. It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners tasked with the ascertainment of just compensation.[67] This protocol though is sanctioned under Rule 67. We rule that the appointment of commissioners under Rule 67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that regard do not conflict with the statute. As earlier stated, Section 14 of the Implementing Rules does allow such other incidents affecting the complaint to be resolved under the provisions on expropriation of Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to a commissioner of the examination of an issue of fact is sanctioned under Rule 32 of the Rules of Court. But while the appointment of commissioners under the aegis of Rule 67 may be sanctioned in expropriation proceedings under Rep.

Act No. 8974, the standards to be observed for the determination of just compensation are provided not in Rule 67 but in the statute. In particular, the governing standards for the determination of just compensation for the NAIA 3 facilities are found in Section 10 of the Implementing Rules for Rep. Act No. 8974, which provides for the replacement cost method in the valuation of improvements and structures.[68] Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties in the expropriation case on who should be appointed as commissioners. Neither does the Court feel that such a requirement should be imposed in this case. We did rule inMunicipality of Talisay v. Ramirez[69] that there is nothing to prevent [the trial court] from seeking the recommendations of the parties on [the] matter [of appointment of commissioners], the better to ensure their fair representation.[70] At the same time, such solicitation of recommendations is not obligatory on the part of the court, hence we cannot impute error on the part of the RTC in its exercise of solitary discretion in the appointment of the commissioners. What Rule 67 does allow though is for the parties to protest the appointment of any of these commissioners, as provided under Section 5 of the Rule. These objections though must be made filed within ten (10) days from service of the order of appointment of the commissioners.[71] In this case, the proper recourse of the Government to challenge the choice of the commissioners is to file an objection with the trial court, conformably with Section 5, Rule 67, and not as it has done, assail the same through a special civil action for certiorari. Considering that the expropriation proceedings

in this case were effectively halted seven (7) days after the Orderappointing the commissioners,[72] it is permissible to allow the parties to file their objections with the RTC within five (5) days from finality of this decision.

Insufficient Ground for Inhibition of Respondent Judge The final argument for disposition is the claim of the Government is that Hon. Gingoyon has prejudged the expropriation case against the Governments cause and, thus, should be required to inhibit himself. This grave charge is predicated on facts which the Government characterizes as undeniable. In particular, the Government notes that the 4 January 2005 Order was issued motu proprio, without any preceding motion, notice or hearing. Further, such order, which directed the payment of US$62 Million to PIATCO, was attended with error in the computation of just compensation. The Government also notes that the said Order was issued even before summons had been served on PIATCO. The disqualification of a judge is a deprivation of his/her judicial power[73] and should not be allowed on the basis of mere speculations and surmises. It certainly cannot be predicated on the adverse nature of the judges rulings towards the movant for inhibition, especially if these rulings are in accord with law. Neither could inhibition be justified merely on the erroneous nature of the rulings of the judge. We emphasized in Webb v. People:[74]

To prove bias and prejudice on the part of respondent judge, petitioners harp on the alleged adverse and erroneous rulings of respondent judge on their various motions. By themselves, however, they do not sufficiently prove bias and prejudice to disqualify respondent judge. To be disqualifying, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case. Opinions formed in the course of judicial proceedings, although erroneous, as long as they are based on the evidence presented and conduct observed by the judge, do not prove personal bias or prejudice on the part of the judge. As a general rule, repeated rulings against a litigant, no matter how erroneous and vigorously and consistently expressed, are not a basis for disqualification of a judge on grounds of bias and prejudice. Extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose, in addition to the palpable error which may be inferred from the decision or order itself. Although the decision may seem so erroneous as to raise doubts concerning a judge's integrity, absent extrinsic evidence, the decision itself would be insufficient to establish a case against the judge. The only exception to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice.[75]

The Governments contentions against Hon. Gingoyon are severely undercut by the fact that the 21 December 2004 Order, which the 4 January 2005 Order sought to rectify, was indeed severely flawed as it erroneously applied the provisions of Rule 67 of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with the requisites for the issuance of the writ of possession. The 4 January

2005 Order, which according to the Government establishes Hon. Gingoyons bias, was promulgated precisely to correct the previous error by applying the correct provisions of law. It would not speak well of the Court if it sanctions a judge for wanting or even attempting to correct a previous erroneous order which precisely is the right move to take. Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order, without the benefit of notice or hearing, sufficiently evinces bias on the part of Hon. Gingoyon. The motu proprio amendment by a court of an erroneous order previously issued may be sanctioned depending on the circumstances, in line with the long-recognized principle that every court has inherent power to do all things reasonably necessary for the administration of justice within the scope of its jurisdiction.[76] Section 5(g), Rule 135 of the Rules of Court further recognizes the inherent power of courts to amend and control its process and orders so as to make them conformable to law and justice,[77] a power which Hon. Gingoyon noted in his 10 January 2005 Omnibus Order.[78]This inherent power includes the right of the court to reverse itself, especially when in its honest opinion it has committed an error or mistake in judgment, and that to adhere to its decision will cause injustice to a party litigant.[79] Certainly, the 4 January 2005 Order was designed to make the RTCs previous order conformable to law and justice, particularly to apply the correct law of the case. Of course, as earlier established, this effort proved incomplete, as the 4 January 2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at least,

the 4 January 2005 Order correctly reformed the most basic premise of the case that Rep. Act No. 8974 governs the expropriation proceedings. Nonetheless, the Government belittles Hon. Gingoyons invocation of Section 5(g), Rule 135 as patently without merit. Certainly merit can be seen by the fact that the 4 January 2005 Order reoriented the expropriation proceedings towards the correct governing law. Still, the Government claims that the unilateral act of the RTC did not conform to law or justice, as it was not afforded the right to be heard. The Court would be more charitably disposed towards this argument if not for the fact that the earlier order with the 4 January 2005 Order sought to correct was itself issued without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior to the issuance of the writ of possession, which by design is available immediately upon the filing of the complaint provided that the requisites attaching thereto are present. Indeed, this expedited process for the obtention of a writ of possession in expropriation cases comes at the expense of the rights of the property owner to be heard or to be deprived of possession. Considering these predicates, it would be highly awry to demand that an order modifying the earlier issuance of a writ of possession in an expropriation case be barred until the staging of a hearing, when the issuance of the writ of possession itself is not subject to hearing. Perhaps the conduct of a hearing under these circumstances would be prudent. However, hearing is not mandatory, and the failure to conduct one does not establish the manifest bias required for the inhibition of the judge.

The Government likewise faults Hon. Gingoyon for using the amount of US$350 Million as the basis for the 100% deposit under Rep. Act No. 8974. The Court has noted that this statement was predicated on the erroneous belief that the BIR zonal valuation applies as a standard for determination of just compensation in this case. Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed, the Government was not the only victim of the errors of the RTC in the assailed orders. PIATCO itself was injured by the issuance by the RTC of the writ of possession, even though the former had yet to be paid any amount of just compensation. At the same time, the Government was also prejudiced by the erroneous ruling of the RTC that the amount of US$62.3 Million, and not P3 Billion, should be released to PIATCO. The Court has not been remiss in pointing out the multiple errors committed by the RTC in its assailed orders, to the prejudice of both parties. This attitude of error towards all does not ipso facto negate the charge of bias. Still, great care should be had in requiring the inhibition of judges simply because the magistrate did err. Incompetence may be a ground for administrative sanction, but not for inhibition, which requires lack of objectivity or impartiality to sit on a case. The Court should necessarily guard against adopting a standard that a judge should be inhibited from hearing the case if one litigant loses trust in the judge. Such loss of trust on the part of the Government may be palpable, yet inhibition cannot be grounded merely on the feelings of the party-litigants. Indeed, every losing litigant in any case can resort to claiming that the judge was biased,

and he/she will gain a sympathetic ear from friends, family, and people who do not understand the judicial process. The test in believing such a proposition should not be the vehemence of the litigants claim of bias, but the Courts judicious estimation, as people who know better than to believe any old cry of wolf!, whether such bias has been irrefutably exhibited.

The Court acknowledges that it had been previously held that at the very first sign of lack of faith and trust in his actions, whether well-grounded or not, the judge has no other alternative but to inhibit himself from the case.[80] But this doctrine is qualified by the entrenched rule that a judge may not be legally prohibited from sitting in a litigation, but when circumstances appear that will induce doubt to his honest actuations and probity in favor of either party, or incite such state of mind, he should conduct a careful selfexamination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is not impaired.[81] And a selfassessment by the judge that he/she is not impaired to hear the case will be respected by the Court absent any evidence to the contrary. As held in Chin v. Court of Appeals:
An allegation of prejudgment, without more, constitutes mere conjecture and is not one of the "just and valid reasons" contemplated in the second paragraph of Rule 137 of the Rules of Court for which a judge may inhibit himself from hearing the case. We have repeatedly held that mere suspicion that a judge is partial to a party is not enough. Bare allegations of partiality and prejudgment will not suffice in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense

justice according to law and evidence and without fear or favor. There should be adequate evidence to prove the allegations, and there must be showing that the judge had an interest, personal or otherwise, in the prosecution of the case. To be a disqualifying circumstance, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case.[82]

The mere vehemence of the Governments claim of bias does not translate to clear and convincing evidence of impairing bias. There is no sufficient ground to direct the inhibition of Hon. Gingoyon from hearing the expropriation case. In conclusion, the Court summarizes its rulings as follows: (1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases. (2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the determination of just compensation. (3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion,

representing the proffered value of NAIA 3 under Section 4(c) of the law. (4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the Court, such authority encompasses the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport.[83] (5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality of thisDecision. In doing so, the RTC is obliged to comply with law and equity as ordained in Again and the standard set under Implementing Rules of Rep. Act No. 8974 which is the replacement cost method as the standard of valuation of structures and improvements. (6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan.

(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately upon the finality of the said decision. (8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon. All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of the questioned orders. Nonetheless, portions of these orders should be modified to conform with law and the pronouncements made by the Court herein. WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS: 1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEYANCE, pending payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five Thousand Pesos (P3,002,125,000.00), representing the proffered value of the NAIA 3 facilities; 2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the implementation of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are essential to the operation of the said International Airport Passenger Terminal project;

3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine the just compensation to be paid to PIATCO by the Government. The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given ten (10) days from finality of this Decision to file, if they so choose, objections to the appointment of the commissioners decreed therein. The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED. No pronouncement as to costs. SO ORDERED.

OFFICE OF THE COURT ADMINISTRATOR, Complainant,

A.M. No. P-08-2535 (Formerly A.M. OCA IPI No. 042022-P and A.M. No. 04-434-RTC) Present: CORONA, C. J., CARPIO, CARPIO MORALES, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, and MENDOZA, JJ.

- versus -

FLORENCIO M. REYES, [1]Officerin-Charge, and RENE DE GUZMAN, Clerk, Regional Trial Court, Branch 31, Guimba, Nueva Ecija, Promulgated: Respondents. June 23, 2010 x -------------------------------------------------------------------------------------------------x DECISION Per curiam:* This complaint for gross misconduct against Rene de Guzman (De Guzman), Clerk, Regional Trial Court (RTC) of Guimba, Nueva Ecija, Branch 31, is an offshoot of the complaint filed by Atty. Hugo B. Sansano, Jr. (Atty. Sansano) relative to the alleged incompetence/inefficiency of the RTC of Guimba, Nueva Ecija, Branch 31, in the transmittal of the records of Criminal Case No. 1144-G[2] to the Court of Appeals. In our Resolution dated September 17, 2007, we adopted the findings and recommendation of the Office of the Court Administrator (OCA) declaring as closed and terminated the administrative matter relative to the delay in the transmittal of the records of Criminal Case No. 1144-G, and exonerating De Guzman and Florencio M. Reyes (Reyes), the Officer-in-Charge of the RTC of Guimba, Nueva Ecija, Branch 31.

However, in the same Resolution, we also required De Guzman to comment on the allegation that he is using illegal drugs and had been manifesting irrational and queer behavior while at work. According to Reyes, De Guzmans manifestations of absurd behavior prompted Judge Napoleon R. Sta. Romana (Judge Sta. Romana) to request the Philippine National Police Crime Laboratory to perform a drug test on De Guzman. As alleged by Reyes: x x x Mr. Rene de Guzman, the Docket Clerk, was [in] charge of the preparation and transmission of the records on appeal x x x. Nonetheless, x x x Judge Sta. Romana would x x x often x x x [remind him] about the transmittal of records of the appealed cases [for more than] a dozen times, even personally confronting Mr. Rene de Guzman about the matter, x x x though unsuccessfully x x x. Mr. De Guzman would just x x x dismiss the subject in ridicule and with the empty assurance that the task is as good as finished and what x x x need[s] to be done [is] simply retyping of the corrected indices or the like and that he would submit the same in [no] time at all. This was after a number of weeks from March 26, 2003 after Mr. De Guzman made the undersigned sign the transmittal of PP v. Manangan which he allegedly did not transmit before owing to some minor corrections in the indexing. All too often, (it seems to have been customary on his part, for this he would do to other pressing assignment) he would come to the office the next day, jubilant that the problem has been solved at last! But to no avail. This attitude seemingly bordering on the irrational if not to say that a sense of responsibility is utterly lacking may have given cue for Judge Sta. Romana to have Mr. De Guzman undergo a drug test x x x.[3] That Mr. De Guzman could brush aside even the personal importuning by the judge is a fete no other of our co-employees dare emulate. On the contrary, everybody is apprehensive for his well being and in his behalf. x x x

On May 24, 2004, Judge Sta. Romana requested the Nueva Ecija Provincial Crime Laboratory Office to conduct a drug test on De Guzman. On May 26, 2004, De Guzman underwent a qualitative examination the results of which yielded positive for Tetrahydrocannabinol metabolites (marijuana) and Methamphetamine (shabu), both dangerous drugs.

In our Resolution of September 17, 2007, we required De Guzman to submit his comment on the charge of misconduct relative to the alleged use of prohibited drugs within 10 days from notice. Notwithstanding the Courts directive, De Guzman failed to file his Comment. Thus, on January 23, 2008, we directed De Guzman to show cause why he should not be held in contempt for failure to comply with the September 17, 2007 Resolution. At the same time, we resolved to require him to submit his comment within 10 days from notice. De Guzman complied with our directive only on March 12, 2008. In his letter, De Guzman claimed that he failed to comply with the Courts directive because he lost his copy of the September 17, 2007 Resolution. Treating De Guzmans letter as his Comment, we referred the same to the OCA for evaluation, report and recommendation. The OCA submitted its Report and Recommendation on July 23, 2008 which reads in part: xxxx Noticeably, respondent de Guzman did not challenge the authenticity and validity of the chemistry report of the Nueva Ecija Provincial Crime Laboratory Office which found him positive for marijuana and shabu. He did not also promptly submit another test report or other document to controvert the drug test report. His plain refutation of the charge and his willingness to submit himself now to a drug test are token attempts at candor and assertion of innocence. These perfunctory attempts cannot prevail over the solitary yet compelling evidence of misconduct for use of prohibited drugs. Relative to respondents delay in filing his comment to the charge of misconduct, his claim that he lost and misplaced (his) copy of said resolution, and for that (he) almost forgot about it is neither a valid reason nor an excuse for the delay in complying with the order of the Court. His flippant attitude towards the repeated orders of the Court to explain his conduct does not merit consideration and justification for delay. It is settled that respondents indifference to [the resolutions] requiring him to comment on the accusation(s) in the complaint thoroughly and substantially is gross misconduct, and may even be considered as outright disrespect to the Court. After all, a resolution of the Supreme Court is not a mere request and should be complied with promptly and completely. Such

failure to comply accordingly betrays not only a recalcitrant streak in character, but has likewise been considered as an utter lack of interest to remain with, if not contempt of the judicial system. It should be mentioned that this is not the first instance that respondent is ordered to account for his failure to comply with a court order. Earlier, he was required to explain to the Court his failure to promptly submit a copy of the affidavit of retired court stenographer Jorge Caoile and to show cause why he should not be administratively dealt with for his failure to comply with a show cause order. For failure to overcome the charge of use of prohibited drugs and to satisfactorily explain his failure to submit promptly his compliance to the Courts show cause order, respondent may be held guilty of two counts of gross misconduct.

The OCA thus submitted the following recommendations for consideration of the Court viz: 1. The instant matter be RE-DOCKETED as a regular administrative case; and Respondent Rene de Guzman be found guilty of gross misconduct and accordingly be DISMISSED from the service effective immediately with forfeiture of all benefits except accrued leave credits, with prejudice to his re-employment in any branch or instrumentality of the government, including government-owned or controlled agencies, corporations and financial institutions.[4]

2.

On August 27, 2008, we required De Guzman to manifest within 10 days from receipt whether he is willing to submit the case for resolution on the basis of the pleadings/records already filed and submitted. As before, De Guzman simply ignored our directive. Consequently, on September 28, 2009, we deemed waived the filing of De Guzmans manifestation. Our Ruling

We adopt the findings and recommendation of the OCA. We note that De Guzman is adept at ignoring the Courts directives. In his letterexplanation in the administrative matter relative to the delay in the transmittal of the records of Criminal Case No. 1144-G, he requested for a period of 10 days or until November 15, 2004 within which to submit the Affidavit of George Caoile (Caoile), the retired Stenographer, as part of his comment. However, despite the lapse of five months, De Guzman still failed to submit Caoiles affidavit. Subsequently, we furnished him with a copy of the April 18, 2005 Resolution wherein we mentioned that we are awaiting his submission of the affidavit of Caoile which shall be considered as part of his (De Guzmans) comment. Nine months from the time he undertook to submit the affidavit of Caoile, De Guzman has yet to comply with his undertaking. Thus, on August 10, 2005, we required De Guzman to show cause why he should not be disciplinarily dealt with or held in contempt for such failure. Unfortunately, De Guzman merely ignored our show cause order. Consequently, on November 20, 2006, we imposed upon him a fine of P1,000.00. Finally, on January 24, 2007, or after the lapse of one year and two months, De Guzman submitted the affidavit of Caoile. Similarly, we also required De Guzman to file his comment within 10 days from notice as regards the allegation that he was using prohibited drugs. However, he again ignored our directive as contained in the Resolution of September 17, 2007. Thus, on January 23, 2008, we required him to show cause why he should not be held in contempt for such failure. By way of explanation, De Guzman submitted a letter dated March 12, 2008 wherein he claimed that he failed to file his comment on the charge of miscondouct because he allegedly lost his copy of the said September 17, 2007 Resolution. Finally, on August 27, 2008, we required De Guzman to manifest whether he is willing to submit the case for resolution based on the pleadings submitted. As before, he failed to comply with the same.

As correctly observed by the OCA, De Guzman has shown his propensity to defy the directives of this Court.[5] However, at this juncture, we are no longer wont to countenance such disrespectful behavior. As we have categorically declared in Office of the Court Administrator v. Clerk of Court Fe P. Ganzan, MCTC, Jasaan, Claveria, Misamis Oriental:[6] x x x A resolution of the Supreme Court should not be construed as a mere request, and should be complied with promptly and completely. Such failure to comply betrays, not only a recalcitrant streak in character, but also disrespect for the lawful order and directive of the Court. Furthermore, this contumacious conduct of refusing to abide by the lawful directives issued by the Court has likewise been considered as an utter lack of interest to remain with, if not contempt of, the system. Ganzans transgression is highlighted even more by the fact that she is an employee of the Judiciary, who, more than an ordinary citizen, should be aware of her duty to obey the orders and processes of the Supreme Court without delay. x x x

Anent the use of illegal drugs, we have upheld in Social Justice Society (SJS) v. Dangerous Drugs Board[7] the validity and constitutionality of the mandatory but random drug testing of officers and employees of both public and private offices. As regards public officers and employees, we specifically held that: Like their counterparts in the private sector, government officials and employees also labor under reasonable supervision and restrictions imposed by the Civil Service law and other laws on public officers, all enacted to promote a high standard of ethics in the public service. And if RA 9165 passes the norm of reasonableness for private employees, the more reason that it should pass the test for civil servants, who, by constitutional demand, are required to be accountable at all times to the people and to serve them with utmost responsibility and efficiency.[8]

Parenthetically, in A.M. No. 06-1-01-SC[9] dated January 17, 2006, the Court has adopted guidelines for a program to deter the use of dangerous drugs and institute preventive measures against drug abuse for the purpose of eliminating the hazards of drug abuse in the Judiciary, particularly in the first and second level courts. The objectives of the said program are as follows:

1.

To detect the use of dangerous drugs among lower court employees, impose disciplinary sanctions, and provide administrative remedies in cases where an employee is found positive for dangerous drug use. To discourage the use and abuse of dangerous drugs among first and second level court employees and enhance awareness of their adverse effects by information dissemination and periodic random drug testing. To institute other measures that address the menace of drug abuse within the personnel of the Judiciary.

2.

3.

In the instant administrative matter, De Guzman never challenged the authenticity of the Chemistry Report of the Nueva Ecija Provincial Crime Laboratory Office. Likewise, the finding that De Guzman was found positive for use of marijuana and shabu remains unrebutted. De Guzmans general denial that he is not a drug user cannot prevail over this compelling evidence. The foregoing constitutes more than substantial evidence that De Guzman was indeed found positive for use of dangerous drugs. In Dadulo v. Court of Appeals,[10] we held that (a)dministrative proceedings are governed by the substantial evidence rule. Otherwise stated, a finding of guilt in an administrative case would have to be sustained for as long as it is supported by substantial evidence that the respondent has committed acts stated in the complaint. Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise.[11] This Court is a temple of justice. Its basic duty and responsibility is the dispensation of justice. As dispensers of justice, all members and employees of the Judiciary are expected to adhere strictly to the laws of the land, one of which is Republic Act No. 9165[12] which prohibits the use of dangerous drugs.[13] The Court has adhered to the policy of safeguarding the welfare, efficiency, and wellbeing not only of all the court personnel, but also that of the general public whom it

serves. The Court will not allow its front-line representatives, like De Guzman, to put at risk the integrity of the whole judiciary. As we held inBaron v. Anacan,[14] (t)he image of a court of justice is mirrored in the conduct, official and otherwise, of the personnel who work thereat. Thus, the conduct of a person serving the judiciary must, at all times, be characterized by propriety and decorum and above all else, be above suspicion so as to earn and keep the respect of the public for the judiciary. The Court would never countenance any conduct, act or omission on the part of all those in the administration of justice, which will violate the norm of public accountability and diminish or even just tend to diminish the faith of the people in the judiciary. Article XI of the Constitution mandates that: SECTION 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people and serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.

De Guzmans use of prohibited drugs has greatly affected his efficiency in the performance of his functions. De Guzman did not refute the observation of his superior, Judge Sta. Romana, that as a criminal docket court clerk, he (De Guzman) was totally inept and incompetent. Hence, to get across his displeasure and dissatisfaction with his job performance, Judge Sta. Romana gave De Guzman an unsatisfactory rating. Moreover, De Guzmans efficiency as a custodian of court records is also totally wanting. As early as May 12, 2004, Judge Sta. Romana issued a Memorandum addressed to De Guzman relative to the sleeping cases inside the latters drawer. It would appear that several cases have not been proceeded upon because De Guzman hid the records of the same inside his drawer. The text of the said Memorandum reads: An examination of the records found in your drawer reveal that the following cases have not moved because you have not brought the same to the attention of the Presiding Judge, to wit:

1.

Crim. Case No. 1849-C, PP v. Ruben Villanueva Order of transmittal to the Office of the Provincial Prosecutor of Nueva Ecija dated August 6, 2003 to resolve the Motion for Reconsideration. Resolution of the Provincial Prosecutor dated September 23, 2003 denying the Motion for Reconsideration and transmitting the records to the RTC, Br. 31, Guimba, Nueva Ecija received by this court on September 24, 2003;

2.

Crim. Case No. 1993-G, PP vs. JOJO SUPNET Information dated October 14, 2002 received by this Court on November 18, 2002; Crim. Case No. 2013-G, PP vs. Brgy. Capt. BAYANI CAMIS Information dated September 23, 2002 received by this court on January 24, 2003; Crim. Case No. 2007-G, PP vs. Armando Marcos Information dated June 23, 2002; Records received on January 2, 2003. The Presiding Judge caused the issuance of finding of probable causes and the corresponding Warrants of Arrest. You are hereby ordered to assist the OIC/Clerk of Court in sending forthwith the Warrants of Arrest to the proper agencies for implementation.

3.

4.

In the same vein, Reyes also put forth the absurd behavioral manifestations of De Guzman. According to Reyes, Judge Sta. Romana would always remind De Guzman to prepare and transmit the complete records of the appealed cases. However, De Guzman would only make empty assurances to perform his task. Notwithstanding the reminders of his superiors, De Guzman would still fail to transmit the records. Instead, he would report the next day and jubilantly declare that the problem has been solved at last. In fine, we agree with the OCA that by his repeated and contumacious conduct of disrespecting the Courts directives, De Guzman is guilty of gross misconduct and has already forfeited his privilege of being an employee of the Court. Likewise, we can no longer countenance his manifestations of queer behavior, bordering on absurd, irrational and irresponsible, because it has greatly affected his job performance and efficiency. By using prohibited drugs, and being a front-line representative of the Judiciary, De Guzman has

exposed to risk the very institution which he serves. It is only by weeding out the likes of De Guzman from the ranks that we would be able to preserve the integrity of this institution. Two justices disagree with the majority opinion. They opine that the Courts action in this case contravenes an express public policy, i.e., imprisonment for drug dealers and pushers, rehabilitation for their victims. They also posit that De Guzmans failure to properly perform his duties and promptly respond to Court orders precisely springs from his drug addiction that requires rehabilitation. Finally, they state that the Courts real strength is not in its righteousness but in its willingness to understand that men are not perfect and that there is a time to punish and a time to give a chance for contrition and change. However, the legislative policy as embodied in Republic Act No. 9165 in deterring dangerous drug use by resort to sustainable programs of rehabilitation and treatment must be considered in light of this Courts constitutional power of administrative supervision over courts and court personnel. The legislative power imposing policies through laws is not unlimited and is subject to the substantive and constitutional limitations that set parameters both in the exercise of the power itself and the allowable subjects of legislation.[15] As such, it cannot limit the Courts power to impose disciplinary actions against erring justices, judges and court personnel. Neither should such policy be used to restrict the Courts power to preserve and maintain the Judiciarys honor, dignity and integrity and public confidence that can only be achieved by imposing strict and rigid standards of decency and propriety governing the conduct of justices, judges and court employees. Likewise, we cannot subscribe to the idea that De Guzmans irrational behavior stems solely from his being a drug user. Such queer behavior can be attributed to several factors. However, it cannot by any measure be categorically stated at this point that it can be attributed solely to his being a drug user. Finally, it must be emphasized at this juncture that De Guzmans dismissal is not grounded only on his being a drug user. His outright dismissal from the service is likewise anchored on his contumacious and repeated acts of not heeding the directives of this Court. As

we have already stated, such attitude betrays not only a recalcitrant streak of character, but also disrespect for the lawful orders and directives of the Court. ACCORDINGLY, Rene de Guzman, Clerk, Regional Trial Court of Guimba, Nueva Ecija, Branch 31, is hereby DISMISSED from the service with forfeiture of all retirement benefits, except accrued leave credits, and disqualification from reinstatement or appointment to any public office, including government-owned or controlled corporations.

G.R. No. 158540

July 8, 2004

SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. THE PHILIPPINE CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE DEPARTMENT OF TRADE & INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE, and THE COMMISSIONER OF THE BUREAU OF CUSTOMS, respondents.

DECISION

TINGA, J.: "Good fences make good neighbors," so observed Robert Frost, the archetype of traditional New England detachment. The Frost ethos has been heeded by nations adjusting to the effects of the liberalized global market.1 The Philippines, for one, enacted Republic Act (Rep. Act) No. 8751 (on the imposition of countervailing duties), Rep. Act No. 8752 (on the imposition of anti-dumping duties) and, finally, Rep. Act No. 8800, also known as the Safeguard Measures Act ("SMA")2 soon after it joined the General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement.3 The SMA provides the structure and mechanics for the imposition of emergency measures, including tariffs, to protect domestic industries and producers from increased imports which inflict or could inflict serious injury on them.4 The wisdom of the policies behind the SMA, however, is not put into question by the petition at bar. The questions submitted to the Court relate to the means and the procedures ordained in the law to ensure that the determination of the imposition or non-imposition of a safeguard measure is proper. Antecedent Facts Petitioner Southern Cross Cement Corporation ("Southern Cross") is a domestic corporation engaged in the business of cement manufacturing, production, importation and exportation. Its principal stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation, purportedly the largest cement manufacturers in Japan.5

Private respondent Philippine Cement Manufacturers Corporation6 ("Philcemcor") is an association of domestic cement manufacturers. It has eighteen (18) members,7 per Record. While Philcemcor heralds itself to be an association of domestic cement manufacturers, it appears that considerable equity holdings, if not controlling interests in at least twelve (12) of its member-corporations, were acquired by the three largest cement manufacturers in the world, namely Financiere Lafarge S.A. of France, Cemex S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland (formerly Holderbank Financiere Glaris, Ltd., then Holderfin B.V.).8 On 22 May 2001, respondent Department of Trade and Industry ("DTI") accepted an application from Philcemcor, alleging that the importation of gray Portland cement9 in increased quantities has caused declines in domestic production, capacity utilization, market share, sales and employment; as well as caused depressed local prices. Accordingly, Philcemcor sought the imposition at first of provisional, then later, definitive safeguard measures on the import of cement pursuant to the SMA. Philcemcor filed the application in behalf of twelve (12) of its member-companies.10 After preliminary investigation, the Bureau of Import Services of the DTI, determined that critical circumstances existed justifying the imposition of provisional measures.11 On 7 November 2001, the DTI issued an Order,imposing a provisional measure equivalent to Twenty Pesos and Sixty Centavos (P20.60) per forty (40) kilogram bag on all importations of gray Portland cement for a period not exceeding two hundred (200) days from the date of issuance by the Bureau of Customs (BOC) of the implementing Customs Memorandum Order.12 The corresponding Customs Memorandum Order was issued on 10 December 2001, to take effect that same day and to remain in force for two hundred (200) days.13 In the meantime, the Tariff Commission, on 19 November 2001, received a request from the DTI for a formal investigation to determine whether or not to impose a definitive safeguard measure on imports of gray Portland cement, pursuant to Section 9 of the SMA and its Implementing Rules and Regulations. A notice of commencement of formal investigation was published in the newspapers on 21 November 2001. Individual notices were likewise sent to concerned parties, such as Philcemcor, various importers and exporters, the Embassies of Indonesia, Japan and Taiwan, contractors/builders associations, industry associations, cement workers' groups, consumer groups, non-government organizations and concerned government agencies.14 A preliminary conference was held on 27 November 2001, attended by several concerned parties, including Southern Cross.15 Subsequently, the Tariff Commission received several position papers both in support and against Philcemcor's application.16 The Tariff Commission also visited the corporate offices and manufacturing facilities of each of the applicant companies, as well as that of Southern Cross and two other cement importers.17

On 13 March 2002, the Tariff Commission issued its Formal Investigation Report ("Report"). Among the factors studied by the Tariff Commission in its Report were the market share of the domestic industry,18 production and sales,19 capacity utilization,20 financial performance and profitability,21 and return on sales.22 The Tariff Commission arrived at the following conclusions: 1. The circumstances provided in Article XIX of GATT 1994 need not be demonstrated since the product under consideration (gray Portland cement) is not the subject of any Philippine obligation or tariff concession under the WTO Agreement. Nonetheless, such inquiry is governed by the national legislation (R.A. 8800) and the terms and conditions of the Agreement on Safeguards. 2. The collective output of the twelve (12) applicant companies constitutes a major proportion of the total domestic production of gray Portland cement and blended Portland cement. 3. Locally produced gray Portland cement and blended Portland cement (Pozzolan) are "like" to imported gray Portland cement. 4. Gray Portland cement is being imported into the Philippines in increased quantities, both in absolute terms and relative to domestic production, starting in 2000. The increase in volume of imports is recent, sudden, sharp and significant. 5. The industry has not suffered and is not suffering significant overall impairment in its condition, i.e., serious injury. 6. There is no threat of serious injury that is imminent from imports of gray Portland cement. 7. Causation has become moot and academic in view of the negative determination of the elements of serious injury and imminent threat of serious injury.23 Accordingly, the Tariff Commission made the following recommendation, to wit: The elements of serious injury and imminent threat of serious injury not having been established, it is hereby recommended that no definitive general safeguard measure be imposed on the importation of gray Portland cement.24 The DTI received the Report on 14 March 2002. After reviewing the report, then DTI Secretary Manuel Roxas II ("DTI Secretary") disagreed with the conclusion of the Tariff Commission that there was no serious injury to the local cement industry caused by the surge of imports.25 In view of this disagreement, the DTI requested an opinion from the Department of Justice ("DOJ") on the DTI Secretary's scope of options in acting on the

Commission's recommendations. Subsequently, then DOJ Secretary Hernando Perez rendered an opinion stating that Section 13 of the SMA precluded a review by the DTI Secretary of the Tariff Commission's negative finding, or finding that a definitive safeguard measure should not be imposed.26 On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the conclusions of the Tariff Commission, the DTI Secretary noted the DTI's disagreement with the conclusions. However, he also cited the DOJ Opinion advising the DTI that it was bound by the negative finding of the Tariff Commission. Thus, he ruled as follows: The DTI has no alternative but to abide by the [Tariff] Commission's recommendations. IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA 8800 which states: "In the event of a negative final determination; or if the cash bond is in excess of the definitive safeguard duty assessed, the Secretary shall immediately issue, through the Secretary of Finance, a written instruction to the Commissioner of Customs, authorizing the return of the cash bond or the remainder thereof, as the case may be, previously collected as provisional general safeguard measure within ten (10) days from the date a final decision has been made; Provided, that the government shall not be liable for any interest on the amount to be returned. The Secretary shall not accept for consideration another petition from the same industry, with respect to the same imports of the product under consideration within one (1) year after the date of rendering such a decision." The DTI hereby issues the following: The application for safeguard measures against the importation of gray Portland cement filed by PHILCEMCOR (Case No. 02-2001) is hereby denied.27 (Emphasis in the original) Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days later, it filed with the Court of Appeals a Petition for Certiorari, Prohibition and Mandamus28 seeking to set aside the DTI Decision, as well as the Tariff Commission's Report. Philcemcor likewise applied for a Temporary Restraining Order/Injunction to enjoin the DTI and the BOC from implementing the questioned Decision and Report. It prayed that the Court of Appeals direct the DTI Secretary to disregard the Report and to render judgment independently of the Report. Philcemcor argued that the DTI Secretary, vested as he is under the law with the power of review, is not bound to adopt the recommendations of the Tariff Commission; and, that the Report is void, as it is predicated on a flawed framework, inconsistent inferences and erroneous methodology.29

On 10 June 2002, Southern Cross filed its Comment.30 It argued that the Court of Appeals had no jurisdiction over Philcemcor's Petition, for it is on the Court of Tax Appeals ("CTA") that the SMA conferred jurisdiction to review rulings of the Secretary in connection with the imposition of a safeguard measure. It likewise argued that Philcemcor's resort to the special civil action of certiorari is improper, considering that what Philcemcor sought to rectify is an error of judgment and not an error of jurisdiction or grave abuse of discretion, and that a petition for review with the CTA was available as a plain, speedy and adequate remedy. Finally, Southern Cross echoed the DOJ Opinion that Section 13 of the SMA precludes a review by the DTI Secretary of a negative finding of the Tariff Commission. After conducting a hearing on 19 June 2002 on Philcemcor's application for preliminary injunction, the Court of Appeals' Twelfth Division31 granted the writ sought in its Resolution dated 21 June 2002.32 Seven days later, on 28 June 2002, the two-hundred (200)-day period for the imposition of the provisional measure expired. Despite the lapse of the period, the BOC continued to impose the provisional measure on all importations of Portland cement made by Southern Cross. The uninterrupted assessment of the tariff, according to Southern Cross, worked to its detriment to the point that the continued imposition would eventually lead to its closure.33 Southern Cross timely filed a Motion for Reconsideration of the Resolution on 9 September 2002. Alleging that Philcemcor was not entitled to provisional relief, Southern Cross likewise sought a clarificatory order as to whether the grant of the writ of preliminary injunction could extend the earlier imposition of the provisional measure beyond the two hundred (200)-day limit imposed by law. The appeals' court failed to take immediate action on Southern Cross's motion despite the four (4) motions for early resolution the latter filed between September of 2002 and February of 2003. After six (6) months, on 19 February 2003, the Court of Appeals directed Philcemcor to comment on Southern Cross's Motion for Reconsideration.34 After Philcemcor filed itsOpposition35 on 13 March 2003, Southern Cross filed another set of four (4) motions for early resolution. Despite the efforts of Southern Cross, the Court of Appeals failed to directly resolve the Motion for Reconsideration. Instead, on 5 June 2003, it rendered a Decision,36 granting in part Philcemcor's petition. The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged grave abuse of discretion. It refused to annul the findings of the Tariff Commission, citing the rule that factual findings of administrative agencies are binding upon the courts and its corollary, that courts should not interfere in matters addressed to the sound discretion and coming under the special technical knowledge and training of such agencies.37 Nevertheless, it held that the DTI Secretary is not bound by the factual findings of the Tariff Commission since such findings are merely recommendatory and they fall within the ambit of the Secretary's discretionary review. It determined that the legislative intent is to grant the DTI Secretary the power

to make a final decision on the Tariff Commission's recommendation.38 The dispositive portion of the Decision reads: WHEREFORE, based on the foregoing premises, petitioner's prayer to set aside the findings of the Tariff Commission in its assailed Report dated March 13, 2002 is DENIED. On the other hand, the assailed April 5, 2002 Decision of the Secretary of the Department of Trade and Industry is hereby SET ASIDE. Consequently, the case is REMANDED to the public respondent Secretary of Department of Trade and Industry for a final decision in accordance with RA 8800 and its Implementing Rules and Regulations. SO ORDERED.39 On 23 June 2003, Southern Cross filed the present petition, assailing the appellate court's Decision for departing from the accepted and usual course of judicial proceedings, and not deciding the substantial questions in accordance with law and jurisprudence. The petition argues in the main that the Court of Appeals has no jurisdiction over Philcemcor's petition, the proper remedy being a petition for review with the CTA conformably with the SMA, and; that the factual findings of the Tariff Commission on the existence or non-existence conditions warranting the imposition of general safeguard measures are binding upon the DTI Secretary. The timely filing of Southern Cross's petition before this Court necessarily prevented the Court of AppealsDecision from becoming final.40 Yet on 25 June 2003, the DTI Secretary issued a new Decision, ruling this time that that in light of the appellate court's Decision there was no longer any legal impediment to his deciding Philcemcor's application for definitive safeguard measures.41 He made a determination that, contrary to the findings of the Tariff Commission, the local cement industry had suffered serious injury as a result of the import surges.42 Accordingly, he imposed a definitive safeguard measure on the importation of gray Portland cement, in the form of a definitive safeguard duty in the amount of P20.60/40 kg. bag for three years on imported gray Portland Cement.43 On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a Temporary Restraining Order and/or A Writ of Preliminary Injunction" ("TRO Application"), seeking to enjoin the DTI Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition before this Court. Philcemcor filed an opposition, claiming, among others, that it is not this Court but the CTA that has jurisdiction over the application under the law. On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary's 25 June 2003 Decision which imposed the definite safeguard measure. Prescinding from this action, Philcemcor filed with this Court a Manifestation and Motion

to Dismiss in regard to Southern Cross's petition, alleging that it deliberately and willfully resorted to forum-shopping. It points out that Southern Cross's TRO Application seeks to enjoin the DTI Secretary's second decision, while its Petition before the CTA prays for the annulment of the same decision.44 Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor also argues that the CTA, being a special court of limited jurisdiction, could only review the ruling of the DTI Secretary when a safeguard measure is imposed, and that the factual findings of the Tariff Commission are not binding on the DTI Secretary.45 After giving due course to Southern Cross's Petition, the Court called the case for oral argument on 18 February 2004.46 At the oral argument, attended by the counsel for Philcemcor and Southern Cross and the Office of the Solicitor General, the Court simplified the issues in this wise: (i) whether the Decision of the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the Court of Appeals has jurisdiction, whether its Decision is in accordance with law; and, (iii) whether a Temporary Restraining Order is warranted.47 During the oral arguments, counsel for Southern Cross manifested that due to the imposition of the general safeguard measures, Southern Cross was forced to cease operations in the Philippines in November of 2003.48 Propriety of the Temporary Restraining Order Before the merits of the Petition, a brief comment on Southern Cross's application for provisional relief. It sought to enjoin the DTI Secretary from enforcing the definitive safeguard measure he imposed in his 25 June 2003Decision. The Court did not grant the provisional relief for it would be tantamount to enjoining the collection of taxes, a peremptory judicial act which is traditionally frowned upon,49 unless there is a clear statutory basis for it.50 In that regard, Section 218 of the Tax Reform Act of 1997 prohibits any court from granting an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the internal revenue code.51A similar philosophy is expressed by Section 29 of the SMA, which states that the filing of a petition for review before the CTA does not stop, suspend, or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures.52 This evinces a clear legislative intent that the imposition of safeguard measures, despite the availability of judicial review, should not be enjoined notwithstanding any timely appeal of the imposition. The Forum-Shopping Issue In the same breath, we are not convinced that the allegation of forum-shopping has been duly proven, or that sanction should befall upon Southern Cross and its counsel.

The standard by Section 5, Rule 7 of the 1997 Rules of Civil Procedure in order that sanction may be had is that "the acts of the party or his counsel clearly constitute willful and deliberate forum shopping."53 The standard implies a malicious intent to subvert procedural rules, and such state of mind is not evident in this case. The Jurisdictional Issue On to the merits of the present petition. In its assailed Decision, the Court of Appeals, after asserting only in brief that it had jurisdiction over Philcemcor's Petition, discussed the issue of whether or not the DTI Secretary is bound to adopt the negative recommendation of the Tariff Commission on the application for safeguard measure. The Court of Appeals maintained that it had jurisdiction over the petition, as it alleged grave abuse of discretion on the part of the DTI Secretary, thus: A perusal of the instant petition reveals allegations of grave abuse of discretion on the part of the DTI Secretary in rendering the assailed April 5, 2002 Decision wherein it was ruled that he had no alternative but to abide by the findings of the Commission on the matter of safeguard measures for the local cement industry. Abuse of discretion is admittedly within the ambit of certiorari. Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. It is alleged that, in the assailed Decision, the DTI Secretary gravely abused his discretion in wantonly evading to discharge his duty to render an independent determination or decision in imposing a definitive safeguard measure.54 We do not doubt that the Court of Appeals' certiorari powers extend to correcting grave abuse of discretion on the part of an officer exercising judicial or quasi-judicial functions.55 However, the special civil action of certiorari is available only when there is no plain, speedy and adequate remedy in the ordinary course of law.56 Southern Cross relies on this limitation, stressing that Section 29 of the SMA is a plain, speedy and adequate remedy in the ordinary course of law which Philcemcor did not avail of. The Section reads: Section 29. Judicial Review. Any interested party who is adversely affected by the ruling of the Secretary in connection with the imposition of a safeguard measure may file with the CTA, a petition for review of such ruling within thirty (30) days from receipt thereof. Provided, however, that the filing of such petition for review shall not in any way stop, suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures, as the case may be.

The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals.57 (Emphasis supplied) It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. The Court has long recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving internal revenue and customs duties to such a specialized court.58 By the very nature of its function, the CTA is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject.59 At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a case should be clearly conferred and should not be deemed to exist on mere implication.60 Concededly, Rep. Act No. 1125, the statute creating the CTA, does not extend to it the power to review decisions of the DTI Secretary in connection with the imposition of safeguard measures.61 Of course, at that time which was before the advent of trade liberalization the notion of safeguard measures or safety nets was not yet in vogue. Undeniably, however, the SMA expanded the jurisdiction of the CTA by including review of the rulings of the DTI Secretary in connection with the imposition of safeguard measures. However, Philcemcor and the public respondents agree that the CTA has appellate jurisdiction over a decision of the DTI Secretary imposing a safeguard measure, but not when his ruling is not to impose such measure. In a related development, Rep. Act No. 9282, enacted on 30 March 2004, expressly vests unto the CTA jurisdiction over "[d]ecisions of the Secretary of Trade and Industry, in case of nonagricultural product, commodity or article xxx involving xxx safeguard measures under Republic Act No. 8800, where either party may appeal the decision to impose or not to impose said duties."62 Had Rep. Act No. 9282 already been in force at the beginning of the incidents subject of this case, there would have been no need to make any deeper inquiry as to the extent of the CTA's jurisdiction. But as Rep. Act No. 9282 cannot be applied retroactively to the present case, the question of whether such jurisdiction extends to a decision not to impose a safeguard measure will have to be settled principally on the basis of the SMA. Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire jurisdiction over the petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the petition must be filed by an interested party adversely affected by the ruling; and (iii) such ruling must be in connection with the imposition of

a safeguard measure. The first two requisites are clearly present. The third requisite deserves closer scrutiny. Contrary to the stance of the public respondents and Philcemcor, in this case where the DTI Secretary decides not to impose a safeguard measure, it is the CTA which has jurisdiction to review his decision. The reasons are as follows: First. Split jurisdiction is abhorred. Essentially, respondents' position is that judicial review of the DTI Secretary's ruling is exercised by two different courts, depending on whether or not it imposes a safeguard measure, and in either case the court exercising jurisdiction does so to the exclusion of the other. Thus, if the DTI decision involves the imposition of a safeguard measure it is the CTA which has appellate jurisdiction; otherwise, it is the Court of Appeals. Such setup is as novel and unusual as it is cumbersome and unwise. Essentially, respondents advocate that Section 29 of the SMA has established split appellate jurisdiction over rulings of the DTI Secretary on the imposition of safeguard measure. This interpretation cannot be favored, as the Court has consistently refused to sanction split jurisdiction.63 The power of the DTI Secretary to adopt or withhold a safeguard measure emanates from the same statutory source, and it boggles the mind why the appeal modality would be such that one appellate court is qualified if what is to be reviewed is a positive determination, and it is not if what is appealed is a negative determination. In deciding whether or not to impose a safeguard measure, provisional or general, the DTI Secretary would be evaluating only one body of facts and applying them to one set of laws. The reviewing tribunal will be called upon to examine the same facts and the same laws, whether or not the determination is positive or negative. In short, if we were to rule for respondents we would be confirming the exercise by two judicial bodies of jurisdiction over basically the same subject matterprecisely the splitjurisdiction situation which is anathema to the orderly administration of justice.64 The Court cannot accept that such was the legislative motive especially considering that the law expressly confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review without mention of any other court that may exercise corollary or ancillary jurisdiction in relation to the SMA. The provision refers to the Court of Appeals but only in regard to procedural rules and dispositions of appeals from the CTA to the Court of Appeals.65 The principle enunciated in Tejada v. Homestead Property Corporation66 is applicable to the case at bar: The Court agrees with the observation of the [that] when an administrative agency or body is conferred quasi-judicial functions, all controversies relating to

the subject matter pertaining to its specialization are deemed to be included within the jurisdiction of said administrative agency or body. Split jurisdiction is not favored.67 Second. The interpretation of the provisions of the SMA favors vesting untrammeled appellate jurisdiction on the CTA. A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from reviewing a negative determination by the DTI Secretary nor conferred on the Court of Appeals such review authority. Respondents note, on the other hand, that neither did the law expressly grant to the CTA the power to review a negative determination. However, under the clear text of the law, the CTA is vested with jurisdiction to review the ruling of the DTI Secretary "in connection with the imposition of a safeguard measure." Had the law been couched instead to incorporate the phrase "the ruling imposing a safeguard measure," then respondent's claim would have indisputable merit. Undoubtedly, the phrase "in connection with" not only qualifies but clarifies the succeeding phrase "imposition of a safeguard measure." As expounded later, the phrase also encompasses the opposite or converse ruling which is the nonimposition of a safeguard measure. In the American case of Shaw v. Delta Air Lines, Inc.,68 the United States Supreme Court, in interpreting a key provision of the Employee Retirement Security Act of 1974, construed the phrase "relates to" in its normal sense which is the same as "if it has connection with or reference to."69 There is no serious dispute that the phrase "in connection with" is synonymous to "relates to" or "reference to," and that all three phrases are broadly expansive. This is affirmed not just by jurisprudential fiat, but also the acquired connotative meaning of "in connection with" in common parlance. Consequently, with the use of the phrase "in connection with," Section 29 allows the CTA to review not only the ruling imposing a safeguard measure, but all other rulings related or have reference to the application for such measure. Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in Section 29 of the SMA. A literalist reading or linguistic survey may not satisfy. Even the US Supreme Court in New York State Blue Cross Plans v. Travelers Ins.70 conceded that the phrases "relate to" or "in connection with" may be extended to the farthest stretch of indeterminacy for, universally, relations or connections are infinite and stop nowhere.71 Thus, in the case the US High Court, examining the same phrase of the same provision of law involved in Shaw, resorted to looking at the statute and its objectives as the alternative to an "uncritical literalism."72 A similar inquiry into the other provisions of the SMA is in order to determine the scope of review accorded therein to the CTA.73

The authority to decide on the safeguard measure is vested in the DTI Secretary in the case of non-agricultural products, and in the Secretary of the Department of Agriculture in the case of agricultural products.74 Section 29 is likewise explicit that only the rulings of the DTI Secretary or the Agriculture Secretary may be reviewed by the CTA.75 Thus, the acts of other bodies that were granted some powers by the SMA, such as the Tariff Commission, are not subject to direct review by the CTA. Under the SMA, the Department Secretary concerned is authorized to decide on several matters. Within thirty (30) days from receipt of a petition seeking the imposition of a safeguard measure, or from the date he mademotu proprio initiation, the Secretary shall make a preliminary determination on whether the increased imports of the product under consideration substantially cause or threaten to cause serious injury to the domestic industry.76 Such ruling is crucial since only upon the Secretary's positive preliminary determination that a threat to the domestic industry exists shall the matter be referred to the Tariff Commission for formal investigation, this time, to determine whether the general safeguard measure should be imposed or not.77 Pursuant to a positive preliminary determination, the Secretary may also decide that the imposition of a provisional safeguard measure would be warranted under Section 8 of the SMA.78 The Secretary is also authorized to decide, after receipt of the report of the Tariff Commission, whether or not to impose the general safeguard measure, and if in the affirmative, what general safeguard measures should be applied.79 Even after the general safeguard measure is imposed, the Secretary is empowered to extend the safeguard measure,80 or terminate, reduce or modify his previous rulings on the general safeguard measure.81 With the explicit grant of certain powers involving safeguard measures by the SMA on the DTI Secretary, it follows that he is empowered to rule on several issues. These are the issues which arise in connection with, or in relation to, the imposition of a safeguard measure. They may arise at different stages the preliminary investigation stage, the post-formal investigation stage, or the post-safeguard measure stage yet all these issues do become ripe for resolution because an initiatory action has been taken seeking the imposition of a safeguard measure. It is the initiatory action for the imposition of a safeguard measure that sets the wheels in motion, allowing the Secretary to make successive rulings, beginning with the preliminary determination. Clearly, therefore, the scope and reach of the phrase "in connection with," as intended by Congress, pertain to all rulings of the DTI Secretary or Agriculture Secretary which arise from the time an application or motu proprioinitiation for the imposition of a safeguard measure is taken. Indeed, the incidents which require resolution come to the fore only because there is an initial application or action seeking the imposition of a safeguard measure. From the legislative standpoint, it was a matter of sense and practicality to lump up the questions related to the initiatory application or action for safeguard measure and to assign only one court and; that is the CTA to initially review

all the rulings related to such initiatory application or action. Both directions Congress put in place by employing the phrase "in connection with" in the law. Given the relative expanse of decisions subject to judicial review by the CTA under Section 29, we do not doubt that a negative ruling refusing to impose a safeguard measure falls within the scope of its jurisdiction. On a literal level, such negative ruling is "a ruling of the Secretary in connection with the imposition of a safeguard measure," as it is one of the possible outcomes that may result from the initial application or action for a safeguard measure. On a more critical level, the rulings of the DTI Secretary in connection with a safeguard measure, however diverse the outcome may be, arise from the same grant of jurisdiction on the DTI Secretary by the SMA.82 The refusal by the DTI Secretary to grant a safeguard measure involves the same grant of authority, the same statutory prescriptions, and the same degree of discretion as the imposition by the DTI Secretary of a safeguard measure. The position of the respondents is one of "uncritical literalism"83 incongruent with the animus of the law. Moreover, a fundamentalist approach to Section 29 is not warranted, considering the absurdity of the consequences. Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et Absurdum.84 Even assuming arguendo that Section 29 has not expressly granted the CTA jurisdiction to review a negative ruling of the DTI Secretary, the Court is precluded from favoring an interpretation that would cause inconvenience and absurdity.85 Adopting the respondents' position favoring the CTA's minimal jurisdiction would unnecessarily lead to illogical and onerous results. Indeed, it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing a safeguard measure but not to those declining to impose the measure. Respondents might argue that the right to relief from a negative ruling is not lost since the applicant could, as Philcemcor did, question such ruling through a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, in lieu of an appeal to the CTA. Yet these two reliefs are of differing natures and gravamen. While an appeal may be predicated on errors of fact or errors of law, a special civil action for certiorari is grounded on grave abuse of discretion or lack of or excess of jurisdiction on the part of the decider. For a special civil action for certiorari to succeed, it is not enough that the questioned act of the respondent is wrong. As the Court clarified in Sempio v. Court of Appeals: A tribunal, board or officer acts without jurisdiction if it/he does not have the legal power to determine the case. There is excess of jurisdiction where, being clothed with the power to determine the case, the tribunal, board or officer

oversteps its/his authority as determined by law. And there is grave abuse of discretion where the tribunal, board or officer acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction. Certiorari is often resorted to in order to correct errors of jurisdiction. Where the error is one of law or of fact, which is a mistake of judgment, appeal is the remedy.86 It is very conceivable that the DTI Secretary, after deliberate thought and careful evaluation of the evidence, may either make a negative preliminary determination as he is so empowered under Section 7 of the SMA, or refuse to adopt the definitive safeguard measure under Section 13 of the same law. Adopting the respondents' theory, this negative ruling is susceptible to reversal only through a special civil action for certiorari, thus depriving the affected party the chance to elevate the ruling on appeal on the rudimentary grounds of errors in fact or in law. Instead, and despite whatever indications that the DTI Secretary acted with measure and within the bounds of his jurisdiction are, the aggrieved party will be forced to resort to a gymnastic exercise, contorting the straight and narrow in an effort to discombobulate the courts into believing that what was within was actually beyond and what was studied and deliberate actually whimsical and capricious. What then would be the remedy of the party aggrieved by a negative ruling that simply erred in interpreting the facts or the law? It certainly cannot be the special civil action for certiorari, for as the Court held in Silverio v. Court of Appeals: "Certiorari is a remedy narrow in its scope and inflexible in its character. It is not a general utility tool in the legal workshop."87 Fortunately, this theoretical quandary need not come to pass. Section 29 of the SMA is worded in such a way that it places under the CTA's judicial review all rulings of the DTI Secretary, which are connected with the imposition of a safeguard measure. This is sound and proper in light of the specialized jurisdiction of the CTA over tax matters. In the same way that a question of whether to tax or not to tax is properly a tax matter, so is the question of whether to impose or not to impose a definitive safeguard measure. On another note, the second paragraph of Section 29 similarly reveals the legislative intent that rulings of the DTI Secretary over safeguard measures should first be reviewed by the CTA and not the Court of Appeals. It reads: The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals. This is the only passage in the SMA in which the Court of Appeals is mentioned. The express wish of Congress is that the petition conform to the requirements and procedure under Rule 43 of the Rules of Civil Procedure. Since Congress mandated that

the form and procedure adopted be analogous to a review of a CTA ruling by the Court of Appeals, the legislative contemplation could not have been that the appeal be directly taken to the Court of Appeals. Issue of Binding Effect of Tariff Commission's Factual Determination on DTI Secretary. The next issue for resolution is whether the factual determination made by the Tariff Commission under the SMA is binding on the DTI Secretary. Otherwise stated, the question is whether the DTI Secretary may impose general safeguard measures in the absence of a positive final determination by the Tariff Commission. The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of the Tariff Commission do not necessarily constitute a final decision. Section 13 details the procedure for the adoption of a safeguard measure, as well as the steps to be taken in case there is a negative final determination. The implication of the Court of Appeals' holding is that the DTI Secretary may adopt a definitive safeguard measure, notwithstanding a negative determination made by the Tariff Commission. Undoubtedly, Section 13 prescribes certain limitations and restrictions before general safeguard measures may be imposed. However, the most fundamental restriction on the DTI Secretary's power in that respect is contained in Section 5 of the SMAthat there should first be a positive final determination of the Tariff Commissionwhich the Court of Appeals curiously all but ignored. Section 5 reads: Sec. 5. Conditions for the Application of General Safeguard Measures. The Secretary shall apply a general safeguard measure upon a positive final determination of the [Tariff] Commission that a product is being imported into the country in increased quantities, whether absolute or relative to the domestic production, as to be a substantial cause of serious injury or threat thereof to the domestic industry; however, in the case of non-agricultural products, the Secretary shall first establish that the application of such safeguard measures will be in the public interest. (emphasis supplied) The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a "positive final determination." This power lodged in the Tariff Commission, must be distinguished from the power to impose the general safeguard measure which is properly vested on the DTI Secretary.88 All in all, there are two condition precedents that must be satisfied before the DTI Secretary may impose a general safeguard measure on grey Portland cement. First, there must be a positive final determination by the Tariff Commission that a product is being imported into the country in increased quantities (whether absolute or relative to

domestic production), as to be a substantial cause of serious injury or threat to the domestic industry. Second, in the case of non-agricultural products the Secretary must establish that the application of such safeguard measures is in the public interest.89 As Southern Cross argues, Section 5 is quite clear-cut, and it is impossible to finagle a different conclusion even through overarching methods of statutory construction. There is no safer nor better settled canon of interpretation that when language is clear and unambiguous it must be held to mean what it plainly expresses:90 In the quotable words of an illustrious member of this Court, thus: [I]f a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. The verba legis or plain meaning rule rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute.91 Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA,92 which interprets Section 5 of the law, likewise requires a positive final determination on the part of the Tariff Commission before the application of the general safeguard measure. The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI Secretary. The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a "positive final determination." This power, which belongs to the Tariff Commission, must be distinguished from the power to impose general safeguard measure properly vested on the DTI Secretary. The distinction is vital, as a "positive final determination" clearly antecedes, as a condition precedent, the imposition of a general safeguard measure. At the same time, a positive final determination does not necessarily result in the imposition of a general safeguard measure. Under Section 5, notwithstanding the positive final determination of the Tariff Commission, the DTI Secretary is tasked to decide whether or not that the application of the safeguard measures is in the public interest. It is also clear from Section 5 of the SMA that the positive final determination to be undertaken by the Tariff Commission does not entail a mere gathering of statistical data. In order to arrive at such determination, it has to establish causal linkages from the statistics that it compiles and evaluates: after finding there is an importation in increased quantities of the product in question, that such importation is a substantial cause of serious threat or injury to the domestic industry. The Court of Appeals relies heavily on the legislative record of a congressional debate during deliberations on the SMA to assert a purported legislative intent that the findings of the Tariff Commission do not bind the DTI Secretary.93 Yet as explained

earlier, the plain meaning of Section 5 emphasizes that only if the Tariff Commission renders a positive determination could the DTI Secretary impose a safeguard measure. Resort to the congressional records to ascertain legislative intent is not warranted if a statute is clear, plain and free from ambiguity. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute.94 Indeed, the legislative record, if at all to be availed of, should be approached with extreme caution, as legislative debates and proceedings are powerless to vary the terms of the statute when the meaning is clear.95 Our holding in Civil Liberties Union v. Executive Secretary96 on the resort to deliberations of the constitutional convention to interpret the Constitution is likewise appropriate in ascertaining statutory intent: While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional convention in order to arrive at the reason and purpose of the resulting Constitution, resort thereto may be had only when other guides fail as said proceedings are powerless to vary the terms of the Constitution when the meaning is clear. Debates in the constitutional convention "are of value as showing the views of the individual members, and as indicating the reasons for their votes, but they give us no light as to the views of the large majority who did not talk xxx. We think it safer to construe the constitution from what appears upon its face."97 Moreover, it is easy to selectively cite passages, sometimes out of their proper context, in order to assert a misleading interpretation. The effect can be dangerous. Minority or solitary views, anecdotal ruminations, or even the occasional crude witticisms, may improperly acquire the mantle of legislative intent by the sole virtue of their publication in the authoritative congressional record. Hence, resort to legislative deliberations is allowable when the statute is crafted in such a manner as to leave room for doubt on the real intent of the legislature. Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to impose a general safeguard measure by preconditioning such imposition on a positive determination by the Tariff Commission. Such legislative intent should be given full force and effect, as the executive power to impose definitive safeguard measures is but a delegated powerthe power of taxation, by nature and by command of the fundamental law, being a preserve of the legislature.98 Section 28(2), Article VI of the 1987 Constitution confirms the delegation of legislative power, yet ensures that the prerogative of Congress to impose limitations and restrictions on the executive exercise of this power: The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates,

import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.99 The safeguard measures which the DTI Secretary may impose under the SMA may take the following variations, to wit: (a) an increase in, or imposition of any duty on the imported product; (b) a decrease in or the imposition of a tariff-rate quota on the product; (c) a modification or imposition of any quantitative restriction on the importation of the product into the Philippines; (d) one or more appropriate adjustment measures, including the provision of trade adjustment assistance; and (e) any combination of the above-described actions. Except for the provision of trade adjustment assistance, the measures enumerated by the SMA are essentially imposts, which precisely are the subject of delegation under Section 28(2), Article VI of the 1987 Constitution.100 This delegation of the taxation power by the legislative to the executive is authorized by the Constitution itself.101 At the same time, the Constitution also grants the delegating authority (Congress) the right to impose restrictions and limitations on the taxation power delegated to the President.102 The restrictions and limitations imposed by Congress take on the mantle of a constitutional command, which the executive branch is obliged to observe. The SMA empowered the DTI Secretary, as alter ego of the President,103 to impose definitive general safeguard measures, which basically are tariff imposts of the type spoken of in the Constitution. However, the law did not grant him full, uninhibited discretion to impose such measures. The DTI Secretary authority is derived from the SMA; it does not flow from any inherent executive power. Thus, the limitations imposed by Section 5 are absolute, warranted as they are by a constitutional fiat.104 Philcemcor cites our 1912 ruling in Lamb v. Phipps105 to assert that the DTI Secretary, having the final decision on the safeguard measure, has the power to evaluate the findings of the Tariff Commission and make an independent judgment thereon. Given the constitutional and statutory limitations governing the present case, the citation is misplaced. Lamb pertained to the discretion of the Insular Auditor of the Philippine Islands, whom, as the Court recognized, "[t]he statutes of the United States require[d] xxx to exercise his judgment upon the legality xxx [of] provisions of law and resolutions of Congress providing for the payment of money, the means of procuring testimony upon which he may act."106 Thus in Lamb, while the Court recognized the wide latitude of discretion that may have been vested on the Insular Auditor, it also recognized that such latitude flowed from, and is consequently limited by, statutory grant. However, in this case, the provision of the Constitution in point expressly recognizes the authority of Congress to prescribe

limitations in the case of tariffs, export/import quotas and other such safeguard measures. Thus, the broad discretion granted to the Insular Auditor of the Philippine Islands cannot be analogous to the discretion of the DTI Secretary which is circumscribed by Section 5 of the SMA. For that matter, Cario v. Commissioner on Human Rights,107 likewise cited by Philcemcor, is also inapplicable owing to the different statutory regimes prevailing over that case and the present petition. In Cario, the Court ruled that the constitutional power of the Commission on Human Rights (CHR) to investigate human rights' violations did not extend to adjudicating claims on the merits.108 Philcemcor claims that the functions of the Tariff Commission being "only investigatory," it could neither decide nor adjudicate.109 The applicable law governing the issue in Cario is Section 18, Article XIII of the Constitution, which delineates the powers and functions of the CHR. The provision does not vest on the CHR the power to adjudicate cases, but only to investigate all forms of human rights violations.110 Yet, without modifying the thorough disquisition of the Court in Cario on the general limitations on the investigatory power, the precedent is inapplicable because of the difference in the involved statutory frameworks. The Constitution does not repose binding effect on the results of the CHR's investigation.111 On the other hand, through Section 5 of the SMA and under the authority of Section 28(2), Article VI of the Constitution, Congress did intend to bind the DTI Secretary to the determination made by the Tariff Commission.112 It is of no consequence that such determination results from the exercise of investigatory powers by the Tariff Commission since Congress is well within its constitutional mandate to limit the authority of the DTI Secretary to impose safeguard measures in the manner that it sees fit. The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13 of the SMA's Implementing Rules in support of the view that the DTI Secretary may decide independently of the determination made by the Tariff Commission. Admittedly, there are certain infelicities in the language of Section 13 and Rule 13. But reliance should not be placed on the textual imprecisions. Rather, Section 13 and Rule 13 must be viewed in light of the fundamental prescription imposed by Section 5. 113 Section 13 of the SMA lays down the procedure to be followed after the Tariff Commission renders its report. The provision reads in full: SEC. 13. Adoption of Definitive Measures. Upon its positive determination, the Commission shall recommend to the Secretary an appropriate definitive measure, in the form of: (a) An increase in, or imposition of, any duty on the imported product;

(b) A decrease in or the imposition of a tariff-rate quota (MAV) on the product; (c) A modification or imposition of any quantitative restriction on the importation of the product into the Philippines; (d) One or more appropriate adjustment measures, including the provision of trade adjustment assistance; (e) Any combination of actions described in subparagraphs (a) to (d). The Commission may also recommend other actions, including the initiation of international negotiations to address the underlying cause of the increase of imports of the product, to alleviate the injury or threat thereof to the domestic industry, and to facilitate positive adjustment to import competition. The general safeguard measure shall be limited to the extent of redressing or preventing the injury and to facilitate adjustment by the domestic industry from the adverse effects directly attributed to the increased imports: Provided, however, That when quantitative import restrictions are used, such measures shall not reduce the quantity of imports below the average imports for the three (3) preceding representative years, unless clear justification is given that a different level is necessary to prevent or remedy a serious injury. A general safeguard measure shall not be applied to a product originating from a developing country if its share of total imports of the product is less than three percent (3%): Provided, however, That developing countries with less than three percent (3%) share collectively account for not more than nine percent (9%) of the total imports. The decision imposing a general safeguard measure, the duration of which is more than one (1) year, shall be reviewed at regular intervals for purposes of liberalizing or reducing its intensity. The industry benefiting from the application of a general safeguard measure shall be required to show positive adjustment within the allowable period. A general safeguard measure shall be terminated where the benefiting industry fails to show any improvement, as may be determined by the Secretary. The Secretary shall issue a written instruction to the heads of the concerned government agencies to implement the appropriate general safeguard measure as determined by the Secretary within fifteen (15) days from receipt of the report. In the event of a negative final determination, or if the cash bond is in excess of the definitive safeguard duty assessed, the Secretary shall immediately issue, through the Secretary of Finance, a written instruction to the Commissioner of

Customs, authorizing the return of the cash bond or the remainder thereof, as the case may be, previously collected as provisional general safeguard measure within ten (10) days from the date a final decision has been made: Provided, That the government shall not be liable for any interest on the amount to be returned. The Secretary shall not accept for consideration another petition from the same industry, with respect to the same imports of the product under consideration within one (1) year after the date of rendering such a decision. When the definitive safeguard measure is in the form of a tariff increase, such increase shall not be subject or limited to the maximum levels of tariff as set forth in Section 401(a) of the Tariff and Customs Code of the Philippines. To better comprehend Section 13, note must be taken of the distinction between the investigatory and recommendatory functions of the Tariff Commission under the SMA. The word "determination," as used in the SMA, pertains to the factual findings on whether there are increased imports into the country of the product under consideration, and on whether such increased imports are a substantial cause of serious injury or threaten to substantially cause serious injury to the domestic industry.114The SMA explicitly authorizes the DTI Secretary to make a preliminary determination,115 and the Tariff Commission to make the final determination.116 The distinction is fundamental, as these functions are not interchangeable. The Tariff Commission makes its determination only after a formal investigation process, with such investigation initiated only if there is a positive preliminary determination by the DTI Secretary under Section 7 of the SMA.117 On the other hand, the DTI Secretary may impose definitive safeguard measure only if there is a positive final determination made by the Tariff Commission.118 In contrast, a "recommendation" is a suggested remedial measure submitted by the Tariff Commission under Section 13 after making a positive final determination in accordance with Section 5. The Tariff Commission is not empowered to make a recommendation absent a positive final determination on its part.119 Under Section 13, the Tariff Commission is required to recommend to the [DTI] Secretary an "appropriate definitive measure."120The Tariff Commission "may also recommend other actions, including the initiation of international negotiations to address the underlying cause of the increase of imports of the products, to alleviate the injury or threat thereof to the domestic industry and to facilitate positive adjustment to import competition."121 The recommendations of the Tariff Commission, as rendered under Section 13, are not obligatory on the DTI Secretary. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by the Tariff Commission. In fact, the SMA requires that the DTI Secretary establish that the application of such safeguard measures is in the public interest, notwithstanding the Tariff Commission's recommendation on the

appropriate safeguard measure based on its positive final determination.122 The nonbinding force of the Tariff Commission's recommendations is congruent with the command of Section 28(2), Article VI of the 1987 Constitution that only the President may be empowered by the Congress to impose appropriate tariff rates, import/export quotas and other similar measures.123 It is the DTI Secretary, as alter ego of the President, who under the SMA may impose such safeguard measures subject to the limitations imposed therein. A contrary conclusion would in essence unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff measures. That is why the SMA empowers the DTI Secretary to adopt safeguard measures other than those recommended by the Tariff Commission. Unlike the recommendations of the Tariff Commission, its determination has a different effect on the DTI Secretary. Only on the basis of a positive final determination made by the Tariff Commission under Section 5 can the DTI Secretary impose a general safeguard measure. Clearly, then the DTI Secretary is bound by thedetermination made by the Tariff Commission. Some confusion may arise because the sixth paragraph of Section 13124 uses the variant word "determined" in a different context, as it contemplates "the appropriate general safeguard measure as determined by the Secretary within fifteen (15) days from receipt of the report." Quite plainly, the word "determined" in this context pertains to the DTI Secretary's power of choice of the appropriate safeguard measure, as opposed to the Tariff Commission's power to determine the existence of conditions necessary for the imposition of any safeguard measure. In relation to Section 5, such choice also relates to the mandate of the DTI Secretary to establish that the application of safeguard measures is in the public interest, also within the fifteen (15) day period. Nothing in Section 13 contradicts the instruction in Section 5 that the DTI Secretary is allowed to impose the general safeguard measures only if there is a positive determination made by the Tariff Commission. Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned "Final Determination by the Secretary." The assailed Decision and Philcemcor latch on this phraseology to imply that the factual determination rendered by the Tariff Commission under Section 5 may be amended or reversed by the DTI Secretary. Of course, implementing rules should conform, not clash, with the law that they seek to implement, for a regulation which operates to create a rule out of harmony with the statute is a nullity.125 Yet imperfect draftsmanship aside, nothing in Rule 13.2 implies that the DTI Secretary can set aside the determination made by the Tariff Commission under the aegis of Section 5. This can be seen by examining the specific provisions of Rule 13.2, thus: RULE 13.2. Final Determination by the Secretary

RULE 13.2.a. Within fifteen (15) calendar days from receipt of the Report of the Commission, the Secretary shall make a decision, taking into consideration the measures recommended by the Commission. RULE 13.2.b. If the determination is affirmative, the Secretary shall issue, within two (2) calendar days after making his decision, a written instruction to the heads of the concerned government agencies to immediately implement the appropriate general safeguard measure as determined by him. Provided, however, that in the case of nonagricultural products, the Secretary shall first establish that the imposition of the safeguard measure will be in the public interest. RULE 13.2.c. Within two (2) calendar days after making his decision, the Secretary shall also order its publication in two (2) newspapers of general circulation. He shall also furnish a copy of his Order to the petitioner and other interested parties, whether affirmative or negative. (Emphasis supplied.) Moreover, the DTI Secretary does not have the power to review the findings of the Tariff Commission for it is not subordinate to the Department of Trade and Industry ("DTI"). It falls under the supervision, not of the DTI nor of the Department of Finance (as mistakenly asserted by Southern Cross),126 but of the National Economic Development Authority, an independent planning agency of the government of coequal rank as the DTI.127 As the supervision and control of a Department Secretary is limited to the bureaus, offices, and agencies under him,128 the DTI Secretary generally cannot exercise review authority over actions of the Tariff Commission. Neither does the SMA specifically authorize the DTI Secretary to alter, amend or modify in any way the determination made by the Tariff Commission. The most that the DTI Secretary could do to express displeasure over the Tariff Commission's actions is to ignore its recommendation, but not its determination. The word "determination" as used in Rule 13.2 of the Implementing Rules is dissonant with the same word as employed in the SMA, which in the latter case is undeviatingly in reference to the determination made by the Tariff Commission. Beyond the resulting confusion, however, the divergent use in Rule 13.2 is explicable as the Rule textually pertains to the power of the DTI Secretary to review the recommendations of the Tariff Commission, not the latter's determination. Indeed, an examination of the specific provisions show that there is no real conflict to reconcile. Rule 13.2 respects the logical order imposed by the SMA. The Rule does not remove the essential requirement under Section 5 that a positive final determination be made by the Tariff Commission before a definitive safeguard measure may be imposed by the DTI Secretary.

The assailed Decision characterizes the findings of the Tariff Commission as merely recommendatory and points to the DTI Secretary as the authority who renders the final decision.129 At the same time, Philcemcor asserts that the Tariff Commission's functions are merely investigatory, and as such do not include the power to decide or adjudicate. These contentions, viewed in the context of the fundamental requisite set forth by Section 5, are untenable. They run counter to the statutory prescription that a positive final determination made by the Tariff Commission should first be obtained before the definitive safeguard measures may be laid down. Was it anomalous for Congress to have provided for a system whereby the Tariff Commission may preclude the DTI, an office of higher rank, from imposing a safeguard measure? Of course, this Court does not inquire into the wisdom of the legislature but only charts the boundaries of powers and functions set in its enactments. But then, it is not difficult to see the internal logic of this statutory framework. For one, as earlier stated, the DTI cannot exercise review powers over the Tariff Commission which is not its subordinate office. Moreover, the mechanism established by Congress establishes a measure of check and balance involving two different governmental agencies with disparate specializations. The matter of safeguard measures is of such national importance that a decision either to impose or not to impose then could have ruinous effects on companies doing business in the Philippines. Thus, it is ideal to put in place a system which affords all due deliberation and calls to fore various governmental agencies exercising their particular specializations. Finally, if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard measure, it is because such safeguard measure is the exception, rather than the rule. The Philippines is obliged to observe its obligations under the GATT, under whose framework trade liberalization, not protectionism, is laid down. Verily, the GATT actually prescribes conditions before a member-country may impose a safeguard measure. The pertinent portion of the GATT Agreement on Safeguards reads: 2. A Member may only apply a safeguard measure to a product only if that member has determined, pursuant to the provisions set out below, that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products.130 3. (a) A Member may apply a safeguard measure only following an investigation by the competent authorities of that Member pursuant to procedures previously established and made public in consonance with Article X of the GATT 1994.

This investigation shall include reasonable public notice to all interested parties and public hearings or other appropriate means in which importers, exporters and other interested parties could present evidence and their views, including the opportunity to respond to the presentations of other parties and to submit their views, inter alia, as to whether or not the application of a safeguard measure would be in the public interest. The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law.131 The SMA was designed not to contradict the GATT, but to complement it. The two requisites laid down in Section 5 for a positive final determination are the same conditions provided under the GATT Agreement on Safeguards for the application of safeguard measures by a member country. Moreover, the investigatory procedure laid down by the SMA conforms to the procedure required by the GATT Agreement on Safeguards. Congress has chosen the Tariff Commission as the competent authority to conduct such investigation. Southern Cross stresses that applying the provision of the GATT Agreement on Safeguards, the Tariff Commission is clearly empowered to arrive at binding conclusions.132 We agree: binding on the DTI Secretary is the Tariff Commission's determinations on whether a product is imported in increased quantities, absolute or relative to domestic production and whether any such increase is a substantial cause of serious injury or threat thereof to the domestic industry.133 Satisfied as we are with the proper statutory paradigm within which the SMA should be analyzed, the flaws in the reasoning of the Court of Appeals and in the arguments of the respondents become apparent. To better understand the dynamics of the procedure set up by the law leading to the imposition of definitive safeguard measures, a brief step-by-step recount thereof is in order. 1. After the initiation of an action involving a general safeguard measure,134 the DTI Secretary makes a preliminary determination whether the increased imports of the product under consideration substantially cause or threaten to substantially cause serious injury to the domestic industry,135 and whether the imposition of a provisional measure is warranted under Section 8 of the SMA.136 If the preliminary determination is negative, it is implied that no further action will be taken on the application. 2. When his preliminary determination is positive, the Secretary immediately transmits the records covering the application to the Tariff Commission for immediate formal investigation.137 3. The Tariff Commission conducts its formal investigation, keyed towards making a final determination. In the process, it holds public hearings, providing interested parties the opportunity to present evidence or otherwise be heard.138 To repeat, Section 5 enumerates what the Tariff Commission is tasked to determine: (a) whether a product is

being imported into the country in increased quantities, irrespective of whether the product is absolute or relative to the domestic production; and (b) whether the importation in increased quantities is such that it causes serious injury or threat to the domestic industry.139 The findings of the Tariff Commission as to these matters constitute the final determination, which may be either positive or negative. 4. Under Section 13 of the SMA, if the Tariff Commission makes a positive determination, the Tariff Commission "recommends to the [DTI] Secretary an appropriate definitive measure." The Tariff Commission "may also recommend other actions, including the initiation of international negotiations to address the underlying cause of the increase of imports of the products, to alleviate the injury or threat thereof to the domestic industry, and to facilitate positive adjustment to import competition."140 5. If the Tariff Commission makes a positive final determination, the DTI Secretary is then to decide, within fifteen (15) days from receipt of the report, as to what appropriate safeguard measures should he impose. 6. However, if the Tariff Commission makes a negative final determination, the DTI Secretary cannot impose any definitive safeguard measure. Under Section 13, he is instructed instead to return whatever cash bond was paid by the applicant upon the initiation of the action for safeguard measure. The Effect of the Court's Decision The Court of Appeals erred in remanding the case back to the DTI Secretary, with the instruction that the DTI Secretary may impose a general safeguard measure even if there is no positive final determination from the Tariff Commission. More crucially, the Court of Appeals could not have acquired jurisdiction over Philcemcor's petition for certiorari in the first place, as Section 29 of the SMA properly vests jurisdiction on the CTA. Consequently, the assailed Decision is an absolute nullity, and we declare it as such. What is the effect of the nullity of the assailed Decision on the 5 June 2003 Decision of the DTI Secretary imposing the general safeguard measure? We have recognized that any initial judicial review of a DTI ruling in connection with the imposition of a safeguard measure belongs to the CTA. At the same time, the Court also recognizes the fundamental principle that a null and void judgment cannot produce any legal effect. There is sufficient cause to establish that the 5 June 2003 Decision of the DTI Secretary resulted from the assailed Court of Appeals Decision, even if the latter had not yet become final. Conversely, it can be concluded that it was because of the putative imprimatur of the Court of Appeals' Decision that the DTI Secretary issued his ruling imposing the safeguard measure. Since the 5 June 2003 Decision derives its legal effect

from the void Decisionof the Court of Appeals, this ruling of the DTI Secretary is consequently void. The spring cannot rise higher than the source. The DTI Secretary himself acknowledged that he drew stimulating force from the appellate court's Decision for in his own 5 June 2003 Decision, he declared: From the aforementioned ruling, the CA has remanded the case to the DTI Secretary for a final decision. Thus, there is no legal impediment for the Secretary to decide on the application.141 The inescapable conclusion is that the DTI Secretary needed the assailed Decision of the Court of Appeals to justify his rendering a second Decision. He explicitly invoked the Court of Appeals' Decision as basis for rendering his 5 June 2003 ruling, and implicitly recognized that without such Decision he would not have the authority to revoke his previous ruling and render a new, obverse ruling. It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of the void Decision, it being an attempt to carry out such null judgment. There is therefore no choice but to declare it void as well, lest we sanction the perverse existence of a fruit from a non-existent tree. It does not even matter what the disposition of the 25 June 2003 Decision was, its nullity would be warranted even if the DTI Secretary chose to uphold his earlier ruling denying the application for safeguard measures. It is also an unfortunate spectacle to behold the DTI Secretary, seeking to enforce a judicial decision which is not yet final and actually pending review on appeal. Had it been a judge who attempted to enforce a decision that is not yet final and executory, he or she would have readily been subjected to sanction by this Court. The DTI Secretary may be beyond the ambit of administrative review by this Court, but we are capacitated to allocate the boundaries set by the law of the land and to exact fealty to the legal order, especially from the instrumentalities and officials of government. WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is DECLARED NULL AND VOID and SET ASIDE. The Decision of the DTI Secretary dated 25 June 2003 is also DECLARED NULL AND VOID and SET ASIDE. No Costs.

EN BANC

[G.R. No. 161414. January 17, 2005]

SULTAN OSOP B. CAMID, petitioner, vs. THE OFFICE OF THE PRESIDENT, DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AUTONOMOUS REGION IN MUSLIM MINDANAO, DEPARTMENT of FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT, COMMISSION ON AUDIT, and the CONGRESS OF THE PHILIPPINES (HOUSE of REPRESENTATIVES AND SENATE), respondents. DECISION TINGA, J.: This Petition for Certiorari presents this Court with the prospect of our own Brigadoon[1]the municipality of Andong, Lanao del Surwhich like its counterpart in filmdom, is a town that is not supposed to exist yet is anyway insisted by some as actually alive and thriving. Yet unlike in the movies, there is nothing mystical, ghostly or anything even remotely charming about the purported existence of Andong. The creation of the putative municipality was declared void ab initio by this Court four decades ago, but the present petition insists that in spite of this insurmountable obstacle Andong thrives on, and hence, its legal personality should be given judicial affirmation. We disagree. The factual antecedents derive from the promulgation of our ruling in Pelaez v. Auditor General[2] in 1965. As discussed therein, then President Diosdado Macapagal issued several Executive Orders[3] creating thirty-three (33) municipalities in Mindanao. Among them was Andong in Lanao del Sur which was created by virtue of Executive Order No. 107.[4] These executive orders were issued after legislative bills for the creation of municipalities involved in that case had failed to pass Congress.[5] President Diosdado Macapagal justified the creation of these municipalities citing his powers under Section 68 of the Revised Administrative Code. Then Vice-President Emmanuel Pelaez filed a special civil action for a writ of prohibition, alleging in main that the Executive Orders were null and void, Section 68 having been repealed by Republic Act No. 2370,[6] and said orders constituting an undue delegation of legislative power.[7] After due deliberation, the Court unanimously held that the challenged Executive Orders were null and void. A majority of five justices, led by the ponente, Justice (later Chief Justice) Roberto Concepcion, ruled that Section 68 of the Revised Administrative

Code did not meet the well-settled requirements for a valid delegation of legislative power to the executive branch,[8] while three justices opined that the nullity of the issuances was the consequence of the enactment of the 1935 Constitution, which reduced the power of the Chief Executive over local governments.[9] Pelaez was disposed in this wise: WHEREFORE, the Executive Orders in question are declared null and void ab initio and the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered.[10] Among the Executive Orders annulled was Executive Order No. 107 which created the Municipality of Andong. Nevertheless, the core issue presented in the present petition is the continued efficacy of the judicial annulment of the Municipality of Andong. Petitioner Sultan Osop B. Camid (Camid) represents himself as a current resident of Andong,[11] suing as a private citizen and taxpayer whose locus standi is of public and paramount interest especially to the people of the Municipality of Andong, Province of Lanao del Sur.[12] He alleges that Andong has metamorphosed into a full-blown municipality with a complete set of officials appointed to handle essential services for the municipality and its constituents,[13] even though he concedes that since 1968, no person has been appointed, elected or qualified to serve any of the elective local government positions of Andong.[14] Nonetheless, the municipality of Andong has its own high school, Bureau of Posts, a Department of Education, Culture and Sports office, and at least seventeen (17) barangay units with their own respective chairmen.[15] From 1964 until 1972, according to Camid, the public officials of Andong have been serving their constituents through the minimal means and resources with least (sic) honorarium and recognition from the Office of the then former President Diosdado Macapagal. Since the time of Martial Law in 1972, Andong has allegedly been getting by despite the absence of public funds, with the Interim Officials serving their constituents in their own little ways and means.[16] In support of his claim that Andong remains in existence, Camid presents to this Court a Certification issued by the Office of the Community Environment and Natural Resources (CENRO) of the Department of Environment and Natural Resources (DENR) certifying the total land area of the Municipality of Andong, created under Executive Order No. 107 issued [last] October 1, 1964.[17] He also submits a Certification issued by the Provincial Statistics Office of Marawi City concerning the population of Andong, which is pegged at fourteen thousand fifty nine (14,059) strong. Camid also enumerates a list of governmental agencies and private groups that allegedly recognize Andong, and notes that other municipalities have recommended to the Speaker of the Regional Legislative Assembly for the immediate implementation of the revival or reestablishment of Andong.[18]

The petition assails a Certification dated 21 November 2003, issued by the Bureau of Local Government Supervision of the Department of Interior and Local Government (DILG).[19] The Certification enumerates eighteen (18) municipalities certified as existing, per DILG records. Notably, these eighteen (18) municipalities are among the thirty-three (33), along with Andong, whose creations were voided by this Court in Pelaez. These municipalities are Midaslip, Pitogo, Naga, and Bayog in Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in Zamboanga del Norte; Magsaysay, Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo; Maguing in Lanao del Sur; Gloria in Oriental Mindoro; Maasim in Sarangani; Kalilangan and Lantapan in Bukidnon; and Maco in Compostela Valley.[20] Camid imputes grave abuse of discretion on the part of the DILG in not classifying [Andong] as a regular existing municipality and in not including said municipality in its records and official database as [an] existing regular municipality.[21] He characterizes such non-classification as unequal treatment to the detriment of Andong, especially in light of the current recognition given to the eighteen (18) municipalities similarly annulled by reason of Pelaez. As appropriate relief, Camid prays that the Court annul the DILG Certification dated 21 November 2003; direct the DILG to classify Andong as a regular existing municipality; all public respondents, to extend full recognition and support to Andong; the Department of Finance and the Department of Budget and Management, to immediately release the internal revenue allotments of Andong; and the public respondents, particularly the DILG, to recognize the Interim Local Officials of Andong.[22] Moreover, Camid insists on the continuing validity of Executive Order No. 107. He argues that Pelaez has already been modified by supervening events consisting of subsequent laws and jurisprudence. Particularly cited is our Decision in Municipality of San Narciso v. Hon. Mendez,[23] wherein the Court affirmed the unique status of the municipality of San Andres in Quezon as a de facto municipal corporation.[24] Similar to Andong, the municipality of San Andres was created by way of executive order, precisely the manner which the Court in Pelaez had declared as unconstitutional. Moreover, San Narciso cited, as Camid does, Section 442(d) of the Local Government Code of 1991 as basis for the current recognition of the impugned municipality. The provision reads: Section 442. Requisites for Creation. - xxx (d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.[25]

There are several reasons why the petition must be dismissed. These can be better discerned upon examination of the proper scope and application of Section 442(d), which does not sanction the recognition of just any municipality. This point shall be further explained further on. Notably, as pointed out by the public respondents, through the Office of the Solicitor General (OSG), the case is not a fit subject for the special civil actions of certiorari and mandamus, as it pertains to the de novo appreciation of factual questions. There is indeed no way to confirm several of Camids astonishing factual allegations pertaining to the purported continuing operation of Andong in the decades since it was annulled by this Court. No trial court has had the opportunity to ascertain the validity of these factual claims, the appreciation of which is beyond the function of this Court since it is not a trier of facts. The importance of proper factual ascertainment cannot be gainsaid, especially in light of the legal principles governing the recognition of de facto municipal corporations. It has been opined that municipal corporations may exist by prescription where it is shown that the community has claimed and exercised corporate functions, with the knowledge and acquiescence of the legislature, and without interruption or objection for period long enough to afford title by prescription.[26] These municipal corporations have exercised their powers for a long period without objection on the part of the government that although no charter is in existence, it is presumed that they were duly incorporated in the first place and that their charters had been lost.[27] They are especially common in England, which, as well-worth noting, has existed as a state for over a thousand years. The reason for the development of that rule in England is understandable, since that country was settled long before the Roman conquest by nomadic Celtic tribes, which could have hardly been expected to obtain a municipal charter in the absence of a national legal authority. In the United States, municipal corporations by prescription are less common, but it has been held that when no charter or act of incorporation of a town can be found, it may be shown to have claimed and exercised the powers of a town with the knowledge and assent of the legislature, and without objection or interruption for so long a period as to furnish evidence of a prescriptive right.[28] What is clearly essential is a factual demonstration of the continuous exercise by the municipal corporation of its corporate powers, as well as the acquiescence thereto by the other instrumentalities of the state. Camid does not have the opportunity to make an initial factual demonstration of those circumstances before this Court. Indeed, the factual deficiencies aside, Camids plaint should have undergone the usual administrative gauntlet and, once that was done, should have been filed first with the Court of Appeals, which at least would have had the power to make the necessary factual determinations. Camids seeming ignorance of the principles of exhaustion of administrative remedies and hierarchy of courts, as well as the concomitant prematurity of the present petition, cannot be countenanced.

It is also difficult to capture the sense and viability of Camids present actio n. The assailed issuance is the Certification issued by the DILG. But such Certificationdoes not pretend to bear the authority to create or revalidate a municipality. Certainly, the annulment of the Certification will really do nothing to serve Camids ultimate causethe recognition of Andong. Neither does the Certification even expressly refute the claim that Andong still exists, as there is nothing in the document that comments on the present status of Andong. Perhaps the Certification is assailed before this Court if only to present an actual issuance, rather than a long-standing habit or pattern of action that can be annulled through the special civil action of certiorari. Still, the relation of the Certification to Camids central argument is forlornly strained. These disquisitions aside, the central issue remains whether a municipality whose creation by executive fiat was previously voided by this Court may attain recognition in the absence of any curative or reimplementing statute. Apparently, the question has never been decided before, San Narciso and its kindred cases pertaining as they did to municipalities whose bases of creation were dubious yet were never judicially nullified. The effect of Section 442(d) of the Local Government Code on municipalities such as Andong warrants explanation. Besides, the residents of Andong who belabor under the impression that their town still exists, much less those who may comport themselves as the municipalitys Interim Government, would be well served by a rude awakening. The Court can employ a simplistic approach in resolving the substantive aspect of the petition, merely by pointing out that the Municipality of Andong never existed.[29] Executive Order No. 107, which established Andong, was declared null and void ab initio in 1965 by this Court in Pelaez, along with thirty-three (33) other executive orders. The phrase ab initio means from the beginning,[30] at first,[31] from the inception.[32] Pelaez was never reversed by this Court but rather it was expressly affirmed in the cases of Municipality of San Joaquin v. Siva,[33] Municipality of Malabang v. Benito,[34] and Municipality of Kapalong v. Moya.[35] No subsequent ruling by this Court declared Pelaez as overturned or inoperative. No subsequent legislation has been passed since 1965 creating a Municipality of Andong. Given these facts, there is hardly any reason to elaborate why Andong does not exist as a duly constituted municipality. This ratiocination does not admit to patent legal errors and has the additional virtue of blessed austerity. Still, its sweeping adoption may not be advisedly appropriate in light of Section 442(d) of the Local Government Code and our ruling in Municipality of San Narciso, both of which admit to the possibility of de factomunicipal corporations. To understand the applicability of Municipality of San Narciso and Section 442(b) of the Local Government Code to the situation of Andong, it is necessary again to consider the ramifications of our decision in Pelaez. The eminent legal doctrine enunciated in Pelaez was that the President was then, and still is, not empowered to create municipalities through executive issuances. The Court therein recognized that the President has, for many years, issued executive orders creating municipal corporations, and that the same have been organized and in

actual operation . . . .[36] However, the Court ultimately nullified only those thirtythree (33) municipalities, including Andong, created during the period from 4 September to 29 October 1964 whose existence petitioner Vice-President Pelaez had specifically assailed before this Court. No pronouncement was made as to the other municipalities which had been previously created by the President in the exercise of power the Court deemed unlawful. Two years after Pelaez was decided, the issue again came to fore in Municipality of San Joaquin v. Siva.[37] The Municipality of Lawigan was created by virtue of Executive Order No. 436 in 1961. Lawigan was not one of the municipalities ordered annulled in Pelaez. A petition for prohibition was filed contesting the legality of the executive order, again on the ground that Section 68 of the Revised Administrative Code was unconstitutional. The trial court dismissed the petition, but the Supreme Court reversed the ruling and entered a new decision declaring Executive Order No. 436 void ab initio. The Court reasoned without elaboration that the issue had already been squarely taken up and settled in Pelaez which agreed with the argument posed by the challengers to Lawigans validity.[38] In the 1969 case of Municipality of Malabang v. Benito,[39] what was challenged is the validity of the constitution of the Municipality of Balabagan in Lanao del Sur, also created by an executive order,[40] and which, similar to Lawigan, was not one of the municipalities annulled in Pelaez. This time, the officials of Balabagan invokedde facto status as a municipal corporation in order to dissuade the Court from nullifying action. They alleged that its status as a de facto corporation cannot be collaterally attacked but should be inquired into directly in an action for quo warranto at the instance of the State, and not by a private individual as it was in that case. In response, the Court conceded that an inquiry into the legal existence of a municipality is reserved to the State in a proceeding for quo warranto, but only if the municipal corporation is a de facto corporation.[41] Ultimately, the Court refused to acknowledge Balabagan as a de facto corporation, even though it had been organized prior to the Courts decision in Pelaez. The Court declared void the executive order creating Balabagan and restrained its municipal officials from performing their official duties and functions.[42] It cited conflicting American authorities on whether a de facto corporation can exist where the statute or charter creating it is unconstitutional.[43] But the Courts final conclusion was unequivocal that Balabagan was not a de facto corporation. In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it a de facto corporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation.[44]

The Court did clarify in Malabang that the previous acts done by the municipality in the exercise of its corporate powers were not necessarily a nullity.[45] Camid devotes several pages of his petition in citing this point,[46] yet the relevance of the citation is unclear considering that Camid does not assert the validity of any corporate act of Andong prior to its judicial dissolution. Notwithstanding, the Court in Malabang retained an emphatic attitude as to the unconstitutionality of the power of the President to create municipal corporations by way of presidential promulgations, as authorized under Section 68 of the Revised Administrative Code. This principle was most recently affirmed in 1988, in Municipality of Kapalong v. Moya.[47] The municipality of Santo Tomas, created by President Carlos P. Garcia, filed a complaint against another municipality, who challenged Santo Tomass legal personality to institute suit. Again, Santo Tomas had not been expressly nullified by prior judicial action, yet the Court refused to recognize its legal existence. The blunt but simple ruling: Now then, as ruled in the Pelaez case supra, the President has no power to create a municipality. Since [Santo Tomas] has no legal personality, it can not be a party to any civil action.[48] Nevertheless, when the Court decided Municipality of San Narciso[49] in 1995, it indicated a shift in the jurisprudential treatment of municipalities created through presidential issuances. The questioned municipality of San Andres, Quezon was created on 20 August 1959 by Executive Order No. 353 issued by President Carlos P. Garcia. Executive Order No. 353 was not one of the thirty-three issuances annulled by Pelaez in 1965. The legal status of the Municipality of San Andres was first challenged only in 1989, through a petition for quo warranto filed with the Regional Trial Court of Gumaca, Quezon, which did cite Pelaez as authority.[50] The RTC dismissed the petition for lack of cause of action, and the petitioners therein elevated the matter to this Court. In dismissing the petition, the Court delved in the merits of the petition, if only to resolve further doubt on the legal status of San Andres. It noted a circumstance which is not present in the case at barthat San Andres was in existence for nearly thirty (30) years before its legality was challenged. The Court did not declare the executive order creating San Andres null and void. Still, acting on the premise that the said executive order was a complete nullity, the Court noted peculiar circumstances that led to the conclusion that San Andres had attained the unique status of a de facto municipal corporation.[51] It noted that Pelaez limited its nullificatory effect only to those executive orders specifically challenged therein, despite the fact that the Court then could have very well extended the decision to invalidate San Andres as well.[52] This statement squarely contradicts Camids reading of San Narciso that the creation of San Andres, just like Andong, had been declared a complete nullity on the same ground of unconstitutional delegation of legislative power found in Pelaez.[53] The Court also considered the applicability of Section 442(d)[54] of the Local Government Code of 1991. It clarified the implication of the provision as follows:

Equally significant is Section 442(d) of the Local Government Code to the effect that municipal districts "organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities." No pretension of unconstitutionality per se of Section 442(d) of the Local Government Code is preferred. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. Congress did just that when it has incorporated Section 442(d) in the Code. Curative laws, which in essence are retrospective, and aimed at giving "validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with," are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights. (Emphasis supplied)[55] The holding in San Narciso was subsequently affirmed in Municipality of Candijay v. Court of Appeals[56] and Municipality of Jimenez v. Baz[57] In Candijay, the juridical personality of the Municipality of Alicia, created in a 1949 executive order, was attacked only beginning in 1984. Pelaez was again invoked in support of the challenge, but the Court refused to invalidate the municipality, citing San Narciso at length. The Court noted that the situation of the Municipality of Alicia was strikingly similar to that in San Narciso; hence, the town should likewise benefit from the effects of Section 442(d) of the Local Government Code, and should [be] considered as a regular, de jure municipality. [58] The valid existence of Municipality of Sinacaban, created in a 1949 executive order, was among the issues raised in Jimenez. The Court, through Justice Mendoza, provided an expert summation of the evolution of the rule. The principal basis for the view that Sinacaban was not validly created as a municipal corporation is the ruling in Pelaez v. Auditor General that the creation of municipal corporations is essentially a legislative matter and therefore the President was without power to create by executive order the Municipality of Sinacaban. The ruling in this case has been reiterated in a number of cases later decided. However, we have since held that where a municipality created as such by executive order is later impliedly recognized and its acts are accorded legal validity, its creation can no longer be questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr., this Court considered the following factors as having validated the creation of a municipal corporation, which, like the Municipality of Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor General: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never been challenged; (2) the fact that following the ruling in Pelaez no quo warranto suit was filed to question the validity of the executive order creating such municipality; and (3) the fact that the municipality was later classified as a fifth class municipality, organized as part of a municipal circuit court and considered part of a legislative district in the Constitution apportioning the seats in the House of Representatives. Above all, it was held that

whatever doubt there might be as to the de jure character of the municipality must be deemed to have been put to rest by the Local Government Code of 1991 (R. A. No. 7160), 442(d) of which provides that "municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities." Here, the same factors are present so as to confer on Sinacaban the status of at least a de facto municipal corporation in the sense that its legal existence has been recognized and acquiesced publicly and officially. Sinacaban had been in existence for sixteen years when Pelaez v. Auditor General was decided on December 24, 1965. Yet the validity of E.O. No. 258 creating it had never been questioned. Created in 1949, it was only 40 years later that its existence was questioned and only because it had laid claim to an area that apparently is desired for its revenue. This fact must be underscored because under Rule 66, 16 of the Rules of Court, a quo warranto suit against a corporation for forfeiture of its charter must be commenced within five (5) years from the time the act complained of was done or committed. On the contrary, the State and even the Municipality of Jimenez itself have recognized Sinacaban's corporate existence. Under Administrative Order No. 33 dated June 13, 1978 of this Court, as reiterated by 31 of the Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is constituted part of a municipal circuit for purposes of the establishment of Municipal Circuit Trial Courts in the country. For its part, Jimenez had earlier recognized Sinacaban in 1950 by entering into an agreement with it regarding their common boundary. The agreement was embodied in Resolution No. 77 of the Provincial Board of Misamis Occidental. Indeed Sinacaban has attained de jure status by virtue of the Ordinance appended to the 1987 Constitution, apportioning legislative districts throughout the country, which considered Sinacaban part of the Second District of Misamis Occidental. Moreover, following the ruling in Municipality of San Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to have cured any defect in the creation of Sinacaban.[59] From this survey of relevant jurisprudence, we can gather the applicable rules. Pelaez and its offspring cases ruled that the President has no power to create municipalities, yet limited its nullificatory effects to the particular municipalities challenged in actual cases before this Court. However, with the promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities similarly created by executive order but not judicially annulled. The de facto status of such municipalities as San Andres, Alicia and Sinacaban was recognized by this Court, and Section 442(b) of the Local Government Code deemed curative whatever legal defects to title these municipalities had labored under. Is Andong similarly entitled to recognition as a de facto municipal corporation? It is not. There are eminent differences between Andong and municipalities such as San

Andres, Alicia and Sinacaban. Most prominent is the fact that the executive order creating Andong was expressly annulled by order of this Court in 1965. If we were to affirm Andongs de facto status by reason of its alleged continued existence despite its nullification, we would in effect be condoning defiance of a valid order of this Court. Court decisions cannot obviously lose their efficacy due to the sheer defiance by the parties aggrieved. It bears noting that based on Camids own admissions, Andong does not meet the requisites set forth by Section 442(d) of the Local Government Code. Section 442(d) requires that in order that the municipality created by executive order may receive recognition, they must have their respective set of elective municipal officials holding office at the time of the effectivity of [the Local Government] Code. Camid admits that Andong has never elected its municipal officers at all.[60] This incapacity ties in with the fact that Andong was judicially annulled in 1965. Out of obeisance to our ruling in Pelaez, the national government ceased to recognize the existence of Andong, depriving it of its share of the public funds, and refusing to conduct municipal elections for the void municipality. The failure to appropriate funds for Andong and the absence of elections in the municipality in the last four decades are eloquent indicia of the non-recognition by the State of the existence of the town. The certifications relied upon by Camid, issued by the DENR-CENRO and the National Statistics Office, can hardly serve the purpose of attesting to Andongs legal efficacy. In fact, both these certifications qualify that they were issued upon the request of Camid, to support the restoration or re-operation of the Municipality of Andong, Lanao del Sur,[61] thus obviously conceding that the municipality is at present inoperative. We may likewise pay attention to the Ordinance appended to the 1987 Constitution, which had also been relied upon in Jimenez and San Narciso. This Ordinance, which apportioned the seats of the House of Representatives to the different legislative districts in the Philippines, enumerates the various municipalities that are encompassed by the various legislative districts. Andong is not listed therein as among the municipalities of Lanao del Sur, or of any other province for that matter.[62]On the other hand, the municipalities of San Andres, Alicia and Sinacaban are mentioned in the Ordinance as part of Quezon,[63] Bohol,[64] and Misamis Occidental[65]respectively. How about the eighteen (18) municipalities similarly nullified in Pelaez but certified as existing in the DILG Certification presented by Camid? The petition fails to mention that subsequent to the ruling in Pelaez, legislation was enacted to reconstitute these municipalities.[66] It is thus not surprising that the DILG certified the existence of these eighteen (18) municipalities, or that these towns are among the municipalities enumerated in the Ordinance appended to the Constitution. Andong has not been similarly reestablished through statute. Clearly then, the fact that there are valid organic statutes passed by legislation recreating these eighteen (18) municipalities is

sufficient legal basis to accord a different legal treatment to Andong as against these eighteen (18) other municipalities. We thus assert the proper purview to Section 442(d) of the Local Government Codethat it does not serve to affirm or reconstitute the judicially dissolved municipalities such as Andong, which had been previously created by presidential issuances or executive orders. The provision affirms the legal personalities only of those municipalities such as San Narciso, Alicia, and Sinacaban, which may have been created using the same infirm legal basis, yet were fortunate enough not to have been judicially annulled. On the other hand, the municipalities judicially dissolved in cases such as Pelaez, San Joaquin, and Malabang, remain inexistent, unless recreated through specific legislative enactments, as done with the eighteen (18) municipalities certified by the DILG. Those municipalities derive their legal personality not from the presidential issuances or executive orders which originally created them or from Section 442(d), but from the respective legislative statutes which were enacted to revive them. And what now of Andong and its residents? Certainly, neither Pelaez or this decision has obliterated Andong into a hole on the ground. The legal effect of the nullification of Andong in Pelaez was to revert the constituent barrios of the voided town back into their original municipalities, namely the municipalities of Lumbatan, Butig and Tubaran.[67] These three municipalities subsist to this day as part of Lanao del Sur,[68] and presumably continue to exercise corporate powers over the barrios which once belonged to Andong. If there is truly a strong impulse calling for the reconstitution of Andong, the solution is through the legislature and not judicial confirmation of void title. If indeed the residents of Andong have, all these years, been governed not by their proper municipal governments but by a ragtag Interim Government, th en an expedient political and legislative solution is perhaps necessary. Yet we can hardly sanction the retention of Andongs legal personality solely on the basis of collective amnesia that may have allowed Andong to somehow pretend itself into existence despite its judicial dissolution. Maybe those who insist Andong still exists prefer to remain unperturbed in their blissful ignorance, like the inhabitants of the cave in Platos famed allegory. But the time has come for the light to seep in, and for the petitioner and like-minded persons to awaken to legal reality. WHEREFORE, the Petition is DISMISSED for lack of merit. Costs against petitioner. SO ORDERED. Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, ChicoNazario and Garcia, JJ., concur.

BAI SANDRA S. A. SEMA, Petitioner,

G.R. No. 177597

- versus -

COMMISSION ON ELECTIONS and DIDAGEN P. DILANGALEN, Respondents. x------------------------x

PERFECTO F. MARQUEZ, Petitioner,

G.R. No. 178628

Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, VELASCO, JR., NACHURA, REYES, LEONARDO-DE CASTRO, and BRION, JJ.

- versus -

COMMISSION ON ELECTIONS, Respondent.

Promulgated: July 16, 2008

x--------------------------------------------------x

DECISION

CARPIO, J.: The Case

These consolidated petitions[1] seek to annul Resolution No. 7902, dated 10 May 2007, of the Commission on Elections (COMELEC) treating Cotabato City as part of the legislative district of the Province of Shariff Kabunsuan.[2]

The Facts

The Ordinance appended to the 1987 Constitution apportioned two legislative districts for the Province of Maguindanao. The first legislative district consists of Cotabato City and eight municipalities.[3] Maguindanao forms part of the Autonomous Region in Muslim Mindanao (ARMM), created under its Organic Act, Republic Act No. 6734 (RA 6734), as amended by Republic Act No. 9054 (RA 9054).[4] Although under the Ordinance, Cotabato City forms part of Maguindanaos first legislative district, it is not part of the ARMM but of Region XII, having voted against its inclusion in the ARMM in the plebiscite held in November 1989. On 28 August 2006, the ARMMs legislature, the ARMM Regional Assembly, exercising its power to create provinces under Section 19, Article VI of RA 9054,[5] enacted Muslim Mindanao Autonomy Act No. 201 (MMA Act 201) creating the Province of Shariff Kabunsuan composed of the eight municipalities in the first district of Maguindanao. MMA Act 201 provides:

Section 1. The Municipalities of Barira, Buldon, Datu Odin Sinsuat, Kabuntalan, Matanog, Parang, Sultan Kudarat, Sultan Mastura, and Upi are hereby separated from the Province of Maguindanao and constituted into a distinct and independent province, which is hereby created, to be known as the Province of Shariff Kabunsuan.

xxxx Sec. 5. The corporate existence of this province shall commence upon the appointment by the Regional Governor or election of the governor and majority of the regular members of the Sangguniang Panlalawigan. The incumbent elective provincial officials of the Province of Maguindanao shall continue to serve their unexpired terms in the province that they will choose or where they are residents: Provided, that where an elective position in both provinces becomes vacant as a consequence of the creation of the Province of Shariff Kabunsuan, all incumbent elective provincial officials shall have preference for appointment to a higher elective vacant position and for the time being be appointed by the Regional Governor, and shall hold office until their successors shall have been elected and qualified in the next local elections; Provided, further, that they shall continue to receive the salaries they are receiving at the time of the approval of this Act until the new readjustment of salaries in accordance with law. Provided, furthermore, that there shall be no diminution in the number of the members of the Sangguniang Panlalawigan of the mother province. Except as may be provided by national law, the existing legislative district, which includes Cotabato as a part thereof, shall remain.

Later, three new municipalities[6] were carved out of the original nine municipalities constituting Shariff Kabunsuan, bringing its total number of municipalities to 11. Thus, what was left of Maguindanao were the municipalities constituting its second legislative district. Cotabato City, although part of Maguindanaos first legislative district, is not part of the Province of Maguindanao.

The voters of Maguindanao ratified Shariff Kabunsuans creation in a plebiscite held on 29 October 2006. On 6 February 2007, the Sangguniang Panlungsod of Cotabato City passed Resolution No. 3999 requesting the COMELEC to clarify the status of Cotabato City in view of the conversion of the First District of Maguindanao into a regular province under MMA Act 201. In answer to Cotabato Citys query, the COMELEC issued Resolution No. 07-0407 on 6 March 2007 "maintaining the status quo with Cotabato City as part of Shariff Kabunsuan in the First Legislative District of Maguindanao. Resolution No. 07 -0407, which adopted the recommendation of the COMELECs Law Department under a Memorandum dated 27 February 2007,[7] provides in pertinent parts: Considering the foregoing, the Commission RESOLVED, as it hereby resolves, to adopt the recommendation of the Law Department that pending the enactment of the appropriate law by Congress, to maintain the status quo with Cotabato City as part of Shariff Kabunsuan in the First Legislative District of Maguindanao. (Emphasis supplied)

However, in preparation for the 14 May 2007 elections, the COMELEC promulgated on 29 March 2007 Resolution No. 7845 stating that Maguindanaos first legislative district is composed only of Cotabato City because of the enactment of MMA Act 201.[8] On 10 May 2007, the COMELEC issued Resolution No. 7902, subject of these petitions, amending Resolution No. 07-0407 by renaming the legislative district in question as Shariff Kabunsuan Province with Cotabato City (formerly First District of Maguindanao with Cotabato City).[9] In G.R. No. 177597, Sema, who was a candidate in the 14 May 2007 elections for Representative of Shariff Kabunsuan with Cotabato City, prayed for the nullification of COMELEC Resolution No. 7902 and the exclusion from canvassing of the votes cast

in Cotabato City for that office. Sema contended that Shariff Kabunsuan is entitled to one representative in Congress under Section 5 (3), Article VI of the Constitution[10] and Section 3 of the Ordinance appended to the Constitution.[11] Thus, Sema asserted that the COMELEC acted without or in excess of its jurisdiction in issuing Resolution No. 7902 which maintained the status quo in Maguindanaos first legislative district despite the COMELECs earlier directive in Resolution No. 7845 designating Cotabato City as the lone component of Maguindanaos reapportioned first legislative district. [12] Sema further claimed that in issuing Resolution No. 7902, the COMELEC usurped Congress power to create or reapportion legislative districts. In its Comment, the COMELEC, through the Office of the Solicitor General (OSG), chose not to reach the merits of the case and merely contended that (1) Sema wrongly availed of the writ of certiorari to nullify COMELEC Resolution No. 7902 because the COMELEC issued the same in the exercise of its administrative, not quasi-judicial, power and (2) Semas prayer for the writ of prohibition in G.R. No. 177597 became moot with the proclamation of respondent Didagen P. Dilangalen (respondent Dilangalen) on 1 June 2007 as representative of the legislative district of Shariff Kabunsuan Province with Cotabato City. In his Comment, respondent Dilangalen countered that Sema is estopped from questioning COMELEC Resolution No. 7902 because in her certificate of candidacy filed on 29 March 2007, Sema indicated that she was seeking election as representative of Shariff Kabunsuan including Cotabato City. Respondent Dilangalen added that COMELEC Resolution No. 7902 is constitutional because it did not apportion a legislative district for Shariff Kabunsuan or reapportion the legislative districts in Maguindanao but merely renamed Maguindanaos first legislative district. Respondent Dilangalen further claimed that the COMELEC could not reapportion Maguindanaos first legislative district to make Cotabato City its sole component unit as the power to reapportion legislative districts lies exclusively with Congress, not to mention that Cotabato City does not meet the minimum population requirement under Section 5 (3), Article VI of the Constitution for the creation of a legislative district within a city.[13]

Sema filed a Consolidated Reply controverting the matters raised in respondents Comments and reiterating her claim that the COMELEC acted ultra viresin issuing Resolution No. 7902. In the Resolution of 4 September 2007, the Court required the parties in G.R. No. 177597 to comment on the issue of whether a province created by the ARMM Regional Assembly under Section 19, Article VI of RA 9054 is entitled to one representative in the House of Representatives without need of a national law creating a legislative district for such new province. The parties submitted their compliance as follows: (1) Sema answered the issue in the affirmative on the following grounds: (a) the Court in Felwa v. Salas[14] stated that when a province is created by statute, the corresponding representative district comes into existence neither by authority of that statute which cannot provide otherwise nor by apportionment, but by operation of the Constitution, without a reapportionment; (b) Section 462 of Republic Act No. 7160 (RA 7160) affirms the apportionment of a legislative district incident to the creation of a province; and (c) Section 5 (3), Article VI of the Constitution and Section 3 of the Ordinance appended to the Constitution mandate the apportionment of a legislative district in newly created provinces. (2) The COMELEC, again represented by the OSG, apparently abandoned its earlier stance on the propriety of issuing Resolution Nos. 07-0407 and 7902 and joined causes with Sema, contending that Section 5 (3), Article VI of the Constitution is self executing. Thus, every new province created by the ARMM Regional Assembly is ipso facto entitled to one representative in the House of Representatives even in the absence of a national law; and (3) Respondent Dilangalen answered the issue in the negative on the following grounds: (a) the province contemplated in Section 5 (3), Article VI of the Constitution is one that is created by an act of Congress taking into account the provisions in RA 7160 on the creation of provinces; (b) Section 3, Article IV of RA 9054 withheld from the ARMM Regional Assembly the power to enact measures relating to national elections, which encompasses the apportionment of legislative districts for members of the House

of Representatives; (c) recognizing a legislative district in every province the ARMM Regional Assembly creates will lead to the disproportionate representation of the ARMM in the House of Representatives as the Regional Assembly can create provinces without regard to the requirements in Section 461 of RA 7160; and (d) Cotabato City, which has a population of less than 250,000, is not entitled to a representative in the House of Representatives. On 27 November 2007, the Court heard the parties in G.R. No. 177597 in

oral arguments on the following issues: (1) whether Section 19, Article VI of RA 9054, delegating to the ARMM Regional Assembly the power to create provinces, is constitutional; and (2) if in the affirmative, whether a province created under Section 19, Article VI of RA 9054 is entitled to one representative in the House of Representatives without need of a national law creating a legislative district for such new province.[15] In compliance with the Resolution dated 27 November 2007, the parties in G.R. No. 177597 filed their respective Memoranda on the issues raised in the oral arguments.[16] On the question of the constitutionality of Section 19, Article VI of RA 9054, the parties in G.R. No. 177597 adopted the following positions: (1) Sema contended that Section 19, Article VI of RA 9054 is constitutional (a) as a valid delegation by Congress to the ARMM of the power to create provinces under Section 20 (9), Article X of the Constitution granting to the autonomous regions, through their organic acts, legislative powers over other matters as may be authorized by law for the promotion of the general welfare of the people of the region and (b) as an amendment to Section 6 of RA 7160.[17]However, Sema concedes that, if taken literally, the grant in Section 19, Article VI of RA 9054 to the ARMM Regional Assembly of the power to prescribe standards lower than those mandated in RA 7160 in the creation of provinces contravenes Section 10, Article X of the Constitution.[18] Thus, Sema proposed that Section 19 should be construed as prohibiting the Regional Assembly from prescribing standards x x x that do not comply with the minimum criteria under RA 7160.[19]

(2) Respondent Dilangalen contended that Section 19, Article VI of RA 9054 is unconstitutional on the following grounds: (a) the power to create provinces was not among those granted to the autonomous regions under Section 20, Article X of the Constitution and (b) the grant under Section 19, Article VI of RA 9054 to the ARMM Regional Assembly of the power to prescribe standards lower than those mandated in Section 461 of RA 7160 on the creation of provinces contravenes Section 10, Article X of the Constitution and the Equal Protection Clause; and (3) The COMELEC, through the OSG, joined causes with respondent Dilangalen (thus effectively abandoning the position the COMELEC adopted in its Compliance with the Resolution of 4 September 2007) and contended that Section 19, Article VI of RA 9054 is unconstitutional because (a) it contravenes Section 10 and Section 6,[20] Article X of the Constitution and (b) the power to create provinces was withheld from the autonomous regions under Section 20, Article X of the Constitution. On the question of whether a province created under Section 19, Article VI of RA 9054 is entitled to one representative in the House of Representatives without need of a national law creating a legislative district for such new province, Sema and respondent Dilangalen reiterated in their Memoranda the positions they adopted in their Compliance with the Resolution of 4 September 2007. The COMELEC deemed it unnecessary to submit its position on this issue considering its stance that Section 19, Article VI of RA 9054 is unconstitutional. The pendency of the petition in G.R. No. 178628 was disclosed during the oral arguments on 27 November 2007. Thus, in the Resolution of 19 February 2008, the Court ordered G.R. No. 178628 consolidated with G.R. No. 177597. The petition in G.R. No. 178628 echoed Sema's contention that the COMELEC acted ultra vires in issuing Resolution No. 7902 depriving the voters of Cotabato City of a representative in the No. 178628, the House of Representatives. In its Comment to the petition in G.R.

COMELEC, through the OSG, maintained the validity of COMELEC Resolution No. 7902 as a temporary measure pending the enactment by Congress of the appropriate law.

The Issues The petitions raise the following issues: I. In G.R. No. 177597: (A) Preliminarily (1) whether the writs of Certiorari, Prohibition, and Mandamus are proper to test the constitutionality of COMELEC Resolution No. 7902; and (2) whether the proclamation of respondent Dilangalen as representative of Shariff Kabunsuan Province with Cotabato City mooted the petition in G.R. No. 177597.

(B) On the merits (1) whether Section 19, Article VI of RA 9054, delegating to the ARMM Regional Assembly the power to create provinces, cities, municipalities and barangays, is constitutional; and (2) if in the affirmative, whether a province created by the ARMM Regional Assembly under MMA Act 201 pursuant to Section 19, Article VI of RA 9054 is entitled to one representative in the House of Representatives without need of a national law creating a legislative district for such province. II. In G.R No. 177597 and G.R No. 178628, whether COMELEC Resolution No. 7902 is valid for maintaining the status quo in the first legislative district of Maguindanao (as Shariff Kabunsuan Province with Cotabato City [formerly First District of Maguindanao with Cotabato City]), despite the creation of the Province of Shariff Kabunsuan out of such district (excluding Cotabato City). The Ruling of the Court

The petitions have no merit. We rule that (1) Section 19, Article VI of RA 9054 is unconstitutional insofar as it grants to the ARMM Regional Assembly the power to create provinces and cities; (2) MMA Act 201 creating the Province of Shariff Kabunsuan is void; and (3) COMELEC Resolution No. 7902 is valid.

On the Preliminary Matters

The Writ of Prohibition is Appropriate to Test the Constitutionality of Election Laws, Rules and Regulations

The purpose of the writ of Certiorari is to correct grave abuse of discretion by any tribunal, board, or officer exercising judicial or quasi-judicial functions.[21] On the other hand, the writ of Mandamus will issue to compel a tribunal, corporation, board, officer, or person to perform an act which the law specifically enjoins as a duty.[22] True, the COMELEC did not issue Resolution No. 7902 in the exercise of its judicial or quasi-judicial functions.[23] Nor is there a law which specifically enjoins the COMELEC to exclude from canvassing the votes cast in Cotabato City for

representative of Shariff KabunsuanProvince with Cotabato City. These, however, do not justify the outright dismissal of the petition in G.R. No. 177597 because Sema also prayed for the issuance of the writ of Prohibition and we have long recognized this writ as proper for testing the constitutionality of election laws, rules, and regulations.[24]

Respondent Dilangalens Proclamation Does Not Moot the Petition

There is also no merit in the claim that respondent Dilangalens proclamation as winner in the 14 May 2007 elections for representative of

ShariffKabunsuan Province with Cotabato City mooted this petition. This case does not concern respondent Dilangalens election. Rather, it involves an inquiry into the validity of COMELEC Resolution No. 7902, as well as the constitutionality of MMA Act 201 and Section 19, Article VI of RA 9054. Admittedly, the outcome of this petition, one way or another, determines whether the votes cast in Cotabato City for representative of the district of Shariff KabunsuanProvince with Cotabato City will be included in the canvassing of ballots. However, this incidental consequence is no reason for us not to proceed with the resolution of the novel issues raised here. The Courts ruling in these petitions affects not only the recently concluded elections but also all the other succeeding elections for the office in question, as well as the power of the ARMM Regional Assembly to create in the future additional provinces.

On the Main Issues

Whether the ARMM Regional Assembly Can Create the Province of Shariff Kabunsuan

The creation of local government units is governed by Section 10, Article X of the Constitution, which provides:

Sec. 10. No province, city, municipality, or barangay may 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.

Thus, the creation of any of the four local government units province, city, municipality or barangay must comply with three conditions. First, the creation of a local government unit must follow the criteria fixed in the Local Government Code. Second, such creation must not conflict with any provision of the Constitution. Third, there must be a plebiscite in the political units affected.

There is neither an express prohibition nor an express grant of authority in the Constitution for Congress to delegate to regional or local legislative bodies the power to create local government units. However, under its plenary legislative powers, Congress can delegate to local legislative bodies the power to create local government units, subject to reasonable standards and provided no conflict arises with any provision of the Constitution. In fact, Congress has delegated to provincial boards, and city and municipal councils, the power to create barangays within their jurisdiction, [25] subject to compliance with the criteria established in the Local Government Code, and the

plebiscite requirement in Section 10, Article X of the Constitution. However, under the Local Government Code, only x x x an Act of Congress can create provinces, cities or municipalities.[26]

Under Section 19, Article VI of RA 9054, Congress delegated to the ARMM Regional Assembly the power to create provinces, cities, municipalities and barangays within the ARMM. Congress made the delegation under its plenary legislative powers because the power to create local government units is not one of the express legislative powers granted by the Constitution to regional legislative bodies.[27] In the present case, the question arises whether the delegation to the ARMM Regional Assembly of the power to create provinces, cities, municipalities and barangays conflicts with any provision of the Constitution.

There is no provision in the Constitution that conflicts with the delegation to regional legislative bodies of the power to create municipalities and barangays, provided Section 10, Article X of the Constitution is followed. However, the creation of provinces and cities is another matter. Section 5 (3), Article VI of the Constitution provides, Each city with a population of at least two hundred fifty thousand, o r each province, shall have at least one representative in the House of Representatives. Similarly, Section 3 of the Ordinance appended to the Constitution provides, Any province that may hereafter be created, or any city whose population may hereafter increase to more than two hundred fifty thousand shall be entitled in the immediately following election to at least one Member x x x.

Clearly, a province cannot be created without a legislative district because it will violate Section 5 (3), Article VI of the Constitution as well as Section 3 of the Ordinance appended to the Constitution. For the same reason, a city with a population of 250,000 or more cannot also be created without a legislative district. Thus, the power to create a province, or a city with a population of 250,000 or more, requires also the power to

create a legislative district. Even the creation of a city with a population of less than 250,000 involves the power to create a legislative district because once the citys population reaches 250,000, the city automatically becomes entitled to one representative under Section 5 (3), Article VI of the Constitution and Section 3 of the Ordinance appended to the Constitution. Thus, the power to create a province or city inherently involves the power to create a legislative district.

For Congress to delegate validly the power to create a province or city, it must also validly delegate at the same time the power to create a legislative district. The threshold issue then is, can Congress validly delegate to the ARMM Regional Assembly the power to create legislative districts for the House of Representatives? The answer is in the negative.

Legislative Districts are Created or Reapportioned Only by an Act of Congress

Under the present Constitution, as well as in past[28] Constitutions, the power to increase the allowable membership in the House of Representatives, and to reapportion legislative districts, is vested exclusively in Congress. Section 5, Article VI of the Constitution provides:

SECTION 5. (1) The House of Representatives shall be composed of not more than two hundred and fifty members, unless otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and the Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and progressive ratio, and those who, as provided by law, shall be elected

through a party-list system of registered national, regional, and sectoral parties or organizations.

xxxx

(3) Each legislative district shall comprise, as far as practicable, contiguous, compact, and adjacent territory. Each city with a population of at least two hundred fifty thousand, or each province, shall have at least one representative.

(4) Within three years following the return of every census, the Congress shall make a reapportionment of legislative districts based on the standards provided in this section. (Emphasis supplied)

Section 5 (1), Article VI of the Constitution vests in Congress the power to increase, through a law, the allowable membership in the House of

Representatives. Section 5 (4) empowers Congress to reapportion

legislative

districts. The power to reapportion legislative districts necessarily includes the power to create legislative districts out of existing ones. Congress exercises these powers through a law that Congress itself enacts, and not through a law that regional or local legislative bodies enact. The allowable membership of the House of Representatives can be increased, and new legislative districts of Congress can be created, only through a national law passed by Congress. In Montejo v. COMELEC,[29] we held that the power of redistricting x x x is traditionally regarded as part of the power (of Congress) to make laws, and thus is vested exclusively in Congress.

This textual commitment to Congress of the exclusive power to create or reapportion legislative districts is logical. Congress is a national legislature and any increase in its allowable membership or in its incumbent membership through the creation of legislative districts must be embodied in a national law. Only Congress can enact such a law. It would be anomalous for regional or local legislative bodies to create or reapportion legislative districts for a national legislature like Congress. An inferior legislative body, created by a superior legislative body, cannot change the membership of the superior legislative body.

The creation of the ARMM, and the grant of legislative powers to its Regional Assembly under its organic act, did not divest Congress of its exclusive authority to create legislative districts. This is clear from the Constitution and the ARMM Organic Act, as amended. Thus, Section 20, Article X of the Constitution provides:

SECTION 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for legislative powers over: (1) (2) (3) (4) (5) (6) (7) (8) (9) Administrative organization; Creation of sources of revenues; Ancestral domain and natural resources; Personal, family, and property relations; Regional urban and rural planning development; Economic, social, and tourism development; Educational policies; Preservation and development of the cultural heritage; and Such other matters as may be authorized by law for the

promotion of the general welfare of the people of the region.

Nothing in Section 20, Article X of the Constitution authorizes autonomous regions, expressly or impliedly, to create or reapportion legislative districts for Congress.

On the other hand, Section 3, Article IV of RA 9054 amending the ARMM Organic Act, provides, The Regional Assembly may exercise legislative power x x x except on the following matters: x x x (k) National elections. x x x. Since the ARMM Regional Assembly has no legislative power to enact laws relating to national elections, it cannot create a legislative district whose representative is elected in national elections. Whenever Congress enacts a law creating a legislative district, the first representative is always elected in the next national elections from the effectivity of the law.[30] Indeed, the office of a legislative district representative to Congress is a national office, and its occupant, a Member of the House of Representatives, is anational official.[31] It would be incongruous for a regional legislative body like the ARMM Regional Assembly to create a national office when its legislative powers extend only to its regional territory. The office of a district representative is maintained by national funds and the salary of its occupant is paid out of national funds. It is a self-evident inherent limitation on the legislative powers of every local or regional legislative body that it can only create local or regional offices, respectively, and it can never create a national office.

To allow the ARMM Regional Assembly to create a national office is to allow its legislative powers to operate outside the ARMMs territorial jurisdiction. This violates Section 20, Article X of the Constitution which expressly limits the coverage of the Regional Assemblys legislative powers [w]ithin its territorial jurisdiction x x x.

The ARMM Regional Assembly itself, in creating Shariff Kabunsuan, recognized the exclusive nature of Congress power to create or reapportion legislative districts by

abstaining from creating a legislative district for Shariff Kabunsuan. Section 5 of MMA Act 201 provides that:

Except as may be provided by national law, the existing legislative district, which includes Cotabato City as a part thereof, shall remain. (Emphasis supplied) However, a province cannot legally be created without a legislative district because the Constitution mandates that each province shall have at least one representative. Thus, the creation of the Province of Shariff Kabunsuan without a legislative district is unconstitutional. Sema, petitioner in G.R. No. 177597, contends that Section 5 (3), Article VI of the Constitution, which provides:

Each legislative district shall comprise, as far as practicable, contiguous, compact, and adjacent territory. Each city with a population of at least two hundred fifty thousand, or each province, shall have at least one representative. (Emphasis supplied)

and Section 3 of the Ordinance appended to the Constitution, which states:

Any province that may hereafter be created, or any city whose population may hereafter increase to more than two hundred fifty thousand shall be entitled in the immediately following election to at least one Member or such number of Members as it may be entitled to on the basis of the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of Article VI of the Constitution. The number of Members apportioned to the province out of

which such new province was created or where the city, whose population has so increased, is geographically located shall be correspondingly adjusted by the Commission on Elections but such adjustment shall not be made within one hundred and twenty days before the election. (Emphasis supplied)

serve as bases for the conclusion that the Province of Shariff Kabunsuan, created on 29 October 2006, is automatically entitled to one member in the House of Representatives in the 14 May 2007 elections. As further support for her stance, petitioner invokes the statement in Felwa that when a province is created by statute, the corresponding representative district comes into existence neither by authority of that statute which cannot provide otherwise nor by apportionment, but by operation of the Constitution, without a reapportionment.

The contention has no merit.

First. The issue in Felwa, among others, was whether Republic Act No. 4695 (RA 4695), creating the provinces of Benguet, Mountain Province, Ifugao, and KalingaApayao and providing for congressional representation in the old and new provinces, was unconstitutional for creati[ng] congressional districts without the apportionment provided in the Constitution. The Court answered in the negative, thus:

The Constitution ordains: The House of Representatives shall be composed of not more than one hundred and twenty Members who shall be apportioned among the several provinces as nearly as may be according to the number of their respective inhabitants, but each province shall have at least one Member. The Congress shall by law make an apportionment within three years after the return of every enumeration, and

not otherwise. Until such apportionment shall have been made, the House of Representatives shall have the same number of Members as that fixed by law for the National Assembly, who shall be elected by the qualified electors from the present Assembly districts. Each representative district shall comprise as far as practicable, contiguous and compact territory. Pursuant to this Section, a representative district may come into existence: (a) indirectly, through the creation of a province for each province shall have at least one member in the House of Representatives; or (b) by direct creation of several representative districts within a province. The requirements concerning the apportionment of representative districts and the territory thereof refer only to the second method of creation of representative districts, and do not apply to those incidental to the creation of provinces, under the first method. This is deducible, not only from the general tenor of the provision above quoted, but, also, from the fact that the apportionment therein alluded to refers to that which is made by an Act of Congress. Indeed, when a province is created by statute, the corresponding representative district, comes into existence neither by authority of that statute which cannot provide otherwise nor by apportionment, but by operation of the Constitution, without a reapportionment.

There is no constitutional limitation as to the time when, territory of, or other conditions under which a province may be created, except, perhaps, if the consequence thereof were to exceed the maximum of 120 representative districts prescribed in the Constitution, which is not the effect of the legislation under consideration. As a matter of fact, provinces have been created or subdivided into other provinces, with the consequent creation of additional representative districts, without complying supplied) with the aforementioned requirements.[32] (Emphasis

Thus, the Court sustained the constitutionality of RA 4695 because (1) it validly created legislative districts indirectly through a special law enacted by

Congress creating a province and (2) the creation of the legislative districts will not result in breaching the maximum number of legislative districtsprovided under the 1935 Constitution. Felwa does not apply to the present case because in Felwa the new provinces were created by a national law enacted by Congress itself. Here, the new province was created merely by a regional law enacted by the ARMM Regional Assembly.

What Felwa teaches is that the creation of a legislative district by Congress does not emanate alone from Congress power to reapportion legislative districts, but also from Congress power to create provinces which cannot be created without a legislative district. Thus, when a province is created, a legislative district is created by operation of the Constitution because the Constitution provides that each province shall have at least one representative in the House of Representatives. This does not detract from the constitutional principle that the power to create legislative districts belongs exclusively to Congress. It merely prevents any other legislative body, except Congress, from creating provinces because for a legislative body to create a province such legislative body must have the power to create legislative districts. In short, only an act of Congress can trigger the creation of a legislative district by operation of the Constitution. Thus, only Congress has the power to create, or trigger the creation of, a legislative district.

Moreover, if as Sema claims MMA Act 201 apportioned a legislative district to Shariff Kabunsuan upon its creation, this will leave Cotabato City as the lone component of the first legislative district of Maguindanao. However, Cotabato City cannot constitute a legislative district by itself because as of the census taken in 2000, it had a population of only 163,849. To constitute Cotabato City alone as the surviving

first legislative district of Maguindanao will violate Section 5 (3), Article VI of the Constitution which requires that [E]ach city with a population of at least two hundred fifty thousand x x x, shall have at least one representative.

Second. Semas theory also undermines the composition and independence of the House of Representatives. Under Section 19,[33] Article VI of RA 9054, the ARMM Regional Assembly can create provinces and cities within the ARMM with or without regard to the criteria fixed in Section 461 of RA 7160, namely: minimum annual income of P20,000,000, and minimum contiguous territory of 2,000 square kilometers or minimum population of 250,000.[34] The following scenarios thus become distinct possibilities: (1) An inferior legislative body like the ARMM Regional Assembly can create 100 or more provinces and thus increase the membership of a superior legislative body, the House of Representatives, beyond the maximum limit of 250 fixed in the Constitution (unless a national law provides otherwise); (2) The proportional representation in the House of Representatives based on one representative for at least every 250,000 residents will be negated because the ARMM Regional Assembly need not comply with the requirement in Section 461(a)(ii) of RA 7160 that every province created must have a population of at least 250,000; and (3) Representatives from the ARMM provinces can become the majority in the House of Representatives through the ARMM Regional Assemblys continuous creation of provinces or cities within the ARMM.

The following exchange during the oral arguments of the petition in G.R. No. 177597 highlights the absurdity of Semas position that the ARMM Regional Assembly can create provinces:

Justice Carpio: So, you mean to say [a] Local Government can create legislative district[s] and pack Congress with their own representatives [?]

Atty. Vistan II:[35] Yes, Your Honor, because the Constitution allows that. Justice Carpio: So, [the] Regional Assembly of [the] ARMM can create and create x x x provinces x x x and, therefore, they can have thirty-five (35) new representatives in the House of Representatives without Congress agreeing to it, is that what you are saying? That can be done, under your theory[?]

Atty. Vistan II:

Yes, Your Honor, under the correct factual circumstances.

Justice Carpio: Under your theory, the ARMM legislature can create thirty-five (35) new provinces, there may be x x x [only] one hundred thousand (100,000) [population], x x x, and they will each have one representative x x x to Congress without any national law, is that what you are saying?

Atty. Vistan II:

Without law passed by Congress, yes, Your Honor, that is what we are saying.

xxxx Justice Carpio: So, they can also create one thousand (1000) new provinces, sen[d] one thousand (1000) representatives to the House of Representatives without a national law[,] that is legally possible, correct?

Atty. Vistan II:

Yes, Your Honor.[36] (Emphasis supplied)

Neither the framers of the 1987 Constitution in adopting the provisions in Article X on regional autonomy,[37] nor Congress in enacting RA 9054, envisioned or intended these disastrous consequences that certainly would wreck the tri-branch system of government under our Constitution. Clearly, the power to create or reapportion legislative districts cannot be delegated by Congress but must be exercised by Congress itself. Even the ARMM Regional Assembly recognizes this.

The Constitution empowered Congress to create or reapportion legislative districts, not the regional assemblies. Section 3 of the Ordinance to the Constitution which states, [A]ny province that may hereafter be created x x x shall be entitled in the immediately following election to at least one Member,refers to a province created by Congress itself through a national law. The reason is that the creation of a province increases the actual membership of the House of Representatives, an increase that only

Congress can decide. Incidentally, in the present 14th Congress, there are 219[38] district representatives out of the maximum 250 seats in the House of Representatives. Since party-list members shall constitute 20 percent of total membership of the House, there should at least be 50 party-list seats available in every election in case 50 party-list candidates are proclaimed winners. This leaves only 200 seats for district representatives, much less than the 219 incumbent district representatives. Thus, there is a need now for Congress to increase by law the allowable membership of the House, even before Congress can create new provinces.

It is axiomatic that organic acts of autonomous regions cannot prevail over the Constitution. Section 20, Article X of the Constitution expressly provides that the legislative powers of regional assemblies are limited [w]ithin its territorial jurisdiction and subject to the provisions of the Constitution and national laws, x x x. The Preamble of the ARMM Organic Act (RA 9054) itself states that the ARMM Government is established within the framework of the Constitution. This follows Section 15, Article X of the Constitution which mandates that the ARMM shall be created x x x within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines.

The present case involves the creation of a local government unit that necessarily involves also the creation of a legislative district. The Court will not pass upon the constitutionality of the creation of municipalities and barangays that does not comply with the criteria established in Section 461 of RA 7160, as mandated in Section 10, Article X of the Constitution, because the creation of such municipalities and barangays does not involve the creation of legislative districts. We leave the resolution of this issue to an appropriate case.

In summary, we rule that Section 19, Article VI of RA 9054, insofar as it grants to the ARMM Regional Assembly the power to create provinces and cities, is void for being contrary to Section 5 of Article VI and Section 20 of Article X of the Constitution, as well as Section 3 of the Ordinance appended to the Constitution. Only Congress can create provinces and cities because the creation of provinces and cities necessarily includes the creation of legislative districts, a power only Congress can exercise under Section 5, Article VI of the Constitution and Section 3 of the Ordinance appended to the Constitution. The ARMM Regional Assembly cannot create a province without a legislative district because the Constitution mandates that every province shall have a legislative district. Moreover, the ARMM Regional Assembly cannot enact a law creating a national office like the office of a district representative of Congress because the legislative powers of the ARMM Regional Assembly operate only within its territorial jurisdiction as provided in Section 20, Article X of the Constitution. Thus, we rule that MMA Act 201, enacted by the ARMM Regional Assembly and creating the Province of Shariff Kabunsuan, is void.

Resolution No. 7902 Complies with the Constitution

Consequently, we hold that COMELEC Resolution No. 7902, preserving the geographic and legislative district of the First District of Maguindanao with Cotabato City, is valid as it merely complies with Section 5 of Article VI and Section 20 of Article X of the Constitution, as well as Section 1 of the Ordinance appended to the Constitution.

WHEREFORE, we declare Section 19, Article VI of Republic Act No. 9054 UNCONSTITUTIONAL insofar as it grants to the Regional Assembly of the Autonomous Region in Muslim Mindanao the power to create provinces and

cities. Thus, we declare VOID Muslim Mindanao Autonomy Act No. 201 creating the Province of Shariff Kabunsuan. Consequently, we rule that COMELEC Resolution No. 7902 is VALID.

Let a copy of this ruling be served on the President of the Senate and the Speaker of the House of Representatives.

NPC DRIVERS AND MECHANICS ASSOCIATION (NPC DAMA), represented by Its President ROGER S. SAN JUAN, SR., NPC EMPLOYEES & WORKERS UNION (NEWU) NORTHERN LUZON REGIONAL CENTER, represented by its Regional President JIMMY D. SALMAN, in their own individual capacities and in behalf of the members of the associations and all affected officers and employees of National Power Corporation (NPC), ZOL D. MEDINA, NARCISO M. MAGANTE, VICENTE B. CIRIO, JR., NECITAS B. CAMAMA, in their individual capacities as employees of National Power Corporation, Petitioners,

G.R. No. 156208

Present: CORONA, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., DE CASTRO,* and BRION,** JJ.

- versus-

THE NATIONAL POWER CORPORATION (NPC), NATIONAL POWER BOARD OF DIRECTORS (NPB), JOSE ISIDRO N. CAMACHO as Chairman of the National Power Board of Directors (NPB), ROLANDO S. QUILALA, as President Officer-in-charge/CEO of National Power Corporation and Member of National Power Board, and VINCENT S. PEREZ, JR., EMILIA T. BONCODIN, MARIUS P. CORPUS, RUBEN S. REINOSO,

JR., GREGORY L. DOMINGO and NIEVES L. OSORIO, Respondents.

Promulgated:

December 2, 2009 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION

CHICO-NAZARIO, J.:

Under consideration are the following:

1. 2.

Petitioners Manifestation with Urgent Motion dated 9 February 2009; Power Sector Assets and Liabilities Management Corporations

(PSALMs) Manifestation dated 24 February 2009; 3. 2009; 4. 5. March 2009; 6. 7. 8. 2009. PSALMs Submission dated 20 April 2009; NPCs Consolidated Comment dated 26 May 2009; and Petitioners Reply to NPCs Consolidated Comment dated 5 June Petitioners Counter-Manifestation dated 13 March 2009; Petitioners Comment/Manifestation and Urgent Motion dated 23 National Power Corporations (NPCs) Compliance dated 9 March

In Our decision dated 26 September 2006, we declared void and without legal effect National Power Board (NPB) Resolutions No. 2002-124[1] and No. 2002-125,[2] both dated 18 November 2002, which directed, inter alia, the termination from the service of all employees of the National Power Corporation (NPC) on 31 January 2003 in line with

the restructuring of the NPC, and thereafter enjoined the implementation of said resolutions by granting the petition for injunction.[3]

The dispositive portion of the decision reads:

WHEREFORE, premises considered, National Power Board Resolutions No. 2002-124 and No. 2002-125 are hereby declared VOID and WITHOUT LEGAL EFFECT. The Petition for Injunction is hereby GRANTED and respondents are hereby ENJOINED from implementing said NPB Resolutions No. 2002-124 and No. 2002-125.[4]

In a resolution dated 24 January 2007, for lack of merit, we denied with finality the motion for reconsideration of respondent NPC.[5]

In a resolution dated 17 September 2008, the Court resolved to:

(1) PARTIALLY GRANT the Motion for Clarification and/or Amplification of petitioners by affirming that, as a logical and necessary consequence of our Decision dated 26 September 2006 declaring null and without effect NPB Resolutions No. 2002-124 and No. 2002-125 and enjoining the implementation of the same, petitioners have the right to reinstatement, or separation pay in lieu of reinstatement, pursuant to a validly approved Separation Program; plus backwages, wage adjustments, and other benefits accruing from 31 January 2003 to the date of their reinstatement or payment of separation pay; but deducting therefrom the amount of separation benefits which they previously received under the null NPB Resolutions;

(2) PARTIALLY GRANT the Motion for Approval of Charging (Attorneys) Lien of Atty. Aldon and Atty. Orocio and ORDER the entry in the records of this case of their ten percent (10%) charging lien on the amounts recoverable by petitioners from respondent NPC by virtue of our Decision dated 26 September 2006; and

(3) ORDER that Entry of Judgment be finally made in due course in the case at bar.[6]

In a letter dated 29 September 2008, Attys. Victoriano V. Orocio (Orocio) and Cornelio P. Aldon (Aldon) requested that Entry of Judgment be made in the instant case and a resolution implementing the same be issued immediately.[7]

On 27 October 2008, an Entry of Judgment was made in the case stating, among other things, that the judgment herein has become final and executory on10 October 2008 and has been recorded in the Book of Entries of Judgments.[8]

On 14 November 2008, petitioners filed an Urgent Motion for Execution. They ask that the motion be granted by:

(1)

Directing/Ordering the Office of the Clerk and Ex-Officio Sheriff of the Regional Trial Court of Quezon City as being the appropriate forum for the computation of the actual amounts due to the petitioners as well as the total amount of the charging lien of Atty. Cornelio P. Aldon and Atty. Victoriano V. Orocio, to determine and find out the names and number of all NPC personnel/employees terminated and/or separated as a result of or pursuant to the nullified NPB Board Resolution(s) No. 2002-124

and 2002-125, and the amounts due to each of them by way of separation pay, backwages, wage adjustments and other benefits in accordance with applicable jurisprudence on illegal dismissal cases, as well as interests due from the time the decision became final and executory, including the totality of the said amounts for the purpose of determining the 10% charging lien of Attorneys Aldon and Orocio, by summoning and issuing proper subpoenas to the Vice-Pres., Human Resources and to the Senior Department Manager for Finance of the NPC and directing the said responsible NPC officials to make and submit such list and computations under oath;

(2)

Directing/Ordering the said Office of the Clerk of Court and Ex-Officio Sheriff of the Regional Trial Court of Quezon City after and on the basis of the said list and computations submitted by said NPC officials, to issue the corresponding writ of execution; and

(3)

Directing said Office to undertake any and all actions necessary to implement and execute the decision and resolution in this case thru said writ of execution and, thereafter, to submit a report thereon to this Court.[9]

Finding petitioners Motion for Urgent Execution meritorious, we granted the same per resolution dated 10 December 2008, and issued the following order:

1.

The Chairman and Members of the National Power Board and the President of the National Power Corporation (NPC) to cause the preparation of a list, under oath, of (a) the names of all NPC personnel/employees terminated and/or separated as a result of or pursuant to the nullified NPB Board Resolutions No. 2002-124 and

No. 2002-125, and (b) the amounts due to each of them by way of separation pay, backwages, wage adjustments and other benefits in accordance with applicable jurisprudence on illegal dismissal cases, as well as interests due from the time the decision became final and executory. From the totality of the amounts due to the illegally dismissed NPC personnel/employees, the same officers are directed to compute the 10% charging lien thereon of Atty. Cornelio P. Aldon (Aldon) and Atty. Victoriano V. Orocio (Orocio) pursuant to the Resolution dated 17 September 2008 of this Court;

2.

The Chairman and Members of the National Power Board and the President of the NPC to pay or cause to be paid immediately the amounts due to the petitioners and all other illegally dismissed NPC personnel/employees, as well as the amount of charging lien to Atty. Aldon and Atty. Orocio, in accordance with the list and computations prepared under oath pursuant to paragraph 1 hereof; and

3.

The Chairman and Members of the National Power Board and the President of the NPC to respectively submit proof of their compliance of the orders of this Court as stated in paragraphs 1 and 2 hereof within thirty (30) days from receipt of this Resolution.[10]

In their Manifestation with Urgent Omnibus Motions dated 9 February 2009, petitioners asked the Court to: (1) cite the Chairman and the Members of the National Power Board and the President of the NPC in contempt for their willful failure to comply with paragraphs 1 and 2 of the Resolution dated 10 December 2008 which is a mockery of the Courts Order and gross disrespect of its authority; (2) appoi nt the Clerk of Court and Ex-Oficio Sheriff of the Regional Trial Court (RTC) of Quezon City, together with his/her deputies, to enforce by execution the Courts resolution dated 10 December 2008 by garnishing/levying upon the assets of NPC, including but not

limited to the assets of Power Sector Assets and Liabilities Management Corporation (PSALM), based on the list and computations submitted and attested to by the responsible NPC officials hereafter to be summoned; (3) immediately summon the concerned and responsible NPC officials, namely: Mr. Eduardo P. Elroy, Vice-President, Human Resources, Mr. Paquito F. Garcia, Sr., Department Manager, Human Resources & Administration and Ms. Wilma V. Ortega, Manager, Compensation and Benefits Management Division (CBMD), Human Resources Department, NPC, to attest jointly and severally under oath as to the existence of a 212-page list[11] containing the names of NPC personnel/employees terminated and/or separated from the service as a result of the nullified NPB Board Resolutions No. 2002-124 and No. 2002-125 with the amounts due to them and the charging lien due Attys. Orocio and Aldon, and to submit under oath jointly and severally the certified true copies thereof to the Court.[12]

On 11 February 2009, Ora Limpao, Abdullah Ali, Moctar D. Amundia, Macawali D. Minalang, Aliola Cawi, Talib Manudi and Masiding Tanggo, through counsel Casan B. Macabanding, filed a Motion for Implementation of the Issued Writ of Execution. They informed the Court that demand letters have been sent to the National Power Board and to the NPC showing the computations of the amount due each of them. Despite this, no action has been taken thereon. They therefore ask that an order be issued directing the Sheriff of the RTC of Quezon and/or Sheriff of Lanao del Sur, 12th Judicial Region, Marawi City, to seize and attach cash and properties of the NPC and to apply the same to their claim of P16,120,706.00, and to deduct therefrom the attorneys lien of Attys. Aldon and Orocio.[13]

On 17 February 2009, the NPC asked for additional 30 days to address the Courts resolution dated 10 December 2008[14] which petitioners opposed.[15]

On 25 February 2009, PSALM filed a Manifestation stating that petitioners did not furnish it a copy of their Manifestation with Urgent Omnibus Motions dated 9

February 2009 wherein they prayed that the Clerk of Court and Ex-Oficio Sheriff of the RTC of Quezon City be appointed to enforce the Courts Resolution dated 10 December 2008 by garnishment/levy upon the assets of NPC, including but not limited to the assets of PSALM. Not being a party in the case, PSALM said it is not bound by the judgment rendered by the Court. It added that PSALM is mandated to privatize the transferred NPC generation assets, real estate and other disposable assets, and to apply the proceeds thereof to the payment of all existing and outstanding NPC financial obligations and stranded contract costs in an optimal manner. Nothing in the EPIRA[16] allows garnishment and levy of PSALMs assets to satisfy a judgment against NPC. Petitioners are not employees of PSALM but of respondent NPC. PSALM cannot be made liable for the financial obligations of NPC to its employees for it is not one of those liabilities transferred to, and assumed by, PSALM at the effectivity of the EPIRA. It explains that since the privatization proceeds are earmarked specifically for the liquidation of NPCs financial obligations transferred to, and assumed by, PSALM, same are not within the reach of any execution and garnishment. The garnishment and/or levying of PSALMs assets and privatization proceeds will amount to di verting them for the purpose originally contemplated by the EPIRA. Such garnishment and/or levy will amount to a disbursement without proper appropriation as required by law. Finally, it argues that the present executory course of action taken by petitioners is a deviation from the Courts Resolution dated 17 September 2008 which leaves the computation of the actual amounts due them and the enforcement of payment thereof to the proper forum in appropriate proceedings for the Court is not a trier of facts. [17]

In its Compliance[18] dated 9 March 2009, NPC informed the Court that only the services of its top level employees were terminated on 31 January 2003pursuant to the nullified NPB Resolutions No. 2002-124 and No. 2002-125 contrary to the submissions made by petitioner in its Manifestation and Omnibus Motions dated 9 February 2009. More specifically, it said only the services of sixteen (16) NPC employees occupying the positions of Senior Vice-President, Vice-President and Department Manager, were terminated on 31 January 2003, but were rehired on 1 February 2003 after receiving a full separation package pursuant to the EPIRA. It explained that

any additional payment of separation pay, backwages and other benefits to these 16 employees would be iniquitous and would constitute unjust enrichment as they were never unemployed.

It further stated that NPB Resolutions No. 2002-124 and No. 2002-125 were nullified because they were signed by alternates. This infirmity, it explained, was rectified and effectively mooted with the issuance of NPB Resolution No. 200755[19] dated 14 September 2007 which adopted, confirmed and approved the principles and guidelines enunciated in NPB Resolutions No. 2002-124 and No. 2002-125. It likewise pointed out that the validity of NPB Resolution No. 2007-55 has not yet been passed upon by the Court.

On 13 March 2009, petitioners filed a Counter-Manifestation[20] to PSALMs Manifestation dated 24 February 2009 stating that a writ of execution may be issued against non-parties, including the PSALM, under, among others, the following situations: (1) one who is privy to the judgment debtor; (2) a successor-in-interest; and (3) under the principle of piercing the veil of corporate fiction. Petitioners explained that PSALM is privy to NPC because the former was principally organized to manage the orderly sale, disposition, and privatization of NPC generation assets, real estate and other disposable assets, and Independent Power Producers (IPP) contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner. PSALM, also being a successor-in-interest of NPC, is now the owner of the financial obligations/liabilities of NPC and shall be considered as one with NPC and the liability of the latter shall attach to the former. Further, it said PSALM is a mere alter ego or business conduit of NPC as evidenced by the fact that majority of the members of the NPB also constitutes the majority of the PSALM Board and that the NPB and the PSALM Board have held joint board meetings to resist payment in relation to the 10 December 2008 Resolution. Petitioners disclosed that the NPB and the PSALM Board recently issued a joint letter-instruction to the power consumers of NPC that all payments for power sales shall be directly remitted to PSALM. They further claimed

that this letter-instruction violates the EPIRA Law because the payment for power sales to NPC is not enumerated among the funds, assets, contribution and other properties that constitute the property of PSALM, and that these payments constitute gross income revenue and not net profits of NPC. As a garnishee, PSALM need not be summoned or impleaded as a party to the case.

On 24 March 2009, petitioners filed their Comment/Manifestation and Urgent Motions (1) To include for Contempt Respondents Counsels and (2) To Summon the Vice-President, Human Resources and Administration, NPC to Attest and Certify Certain Official Documents.[21] Petitioners point out that respondents, in their compliance, raise two new issues, to wit: (1) there are only 16 NPC personnel (top executives) who were illegally terminated; and (2) the issuance of NPB Resolution No. 2007-55 on 14 September 2007 effectively rectified and mooted the infirmity of the nullified NPB Resolutions No. 2002-124 and No. 2002-125.

On the first issue, petitioners explain that respondents misrepresentation that there were only 16 NPC personnel whose services were terminated on 31 January 2003 is true but is only half-true. They have intentionally suppressed and conveniently omitted in their Compliance to mention and inform the Court of the fact that while under NPB Resolution No. 2002-124 the services of all NPC personnel/employees were deemed legally terminated as of 31 January 2003, for various reasons, their actual termination was effected on different dates, as follows: (a) top executives 31 January 2003; (b) early-leavers 15 January 2003; (c) those no longer employed in NPC after 26 June 2001 date of actual separation; (d) all other personnel 28 February 2003. In support thereof, they mentioned NPB Resolution No. 2003-11, NPC Circular No. 200309 and the Memorandum dated 26 February 2009 of Dr. Eduardo R. Eroy, VicePresident, Human Resources and Administration (HRA), NPC. They revealed that NPB Resolution No. 2003-11 is one of the resolutions ratified and confirmed by NPB Resolution No. 2007-55.

As to the second issue, petitioners argue that since NPB Resolutions No. 2002-124 and No. 2002-125 are null and without legal effect, the same cannot be rectified and ratified since only voidable acts can be validated.

In our Resolution dated 15 April 2009, the Court, among other things, required NPC to file its Comment on Petitioners Manifestation with Urgent Omnibus Motions dated 9 February 2009 and Comment/Manifestation and urgent motions dated 23 March 2009, and on PSALMs Manifestation dated 24 February 2009. The Court deferred action on petitioners motion for implementation of the issued writ of execution dated 10 February 2009 pending filing by NPC of the afore-said comments.[22]

On 5 May 2009, PSALM filed a Submission to petitioners Counter -Manifestation dated 13 March 2009.[23] It argued that a writ of execution can be issued only against a party and not against one who did not have his day in court. It said it is neither a successor-in-interest nor an alter-ego or business conduit of NPC. Being employees of NPC, PSALM cannot be made liable for the financial obligations of NPC to its employees. It claims that petitioners claim on the supposed conduct of joint board meetings of NPC and PSALM Boards is purely conjectural and without factual basis. The sending of letters to distribution utilities, like MERALCO, is a consequence of the implementation of the EPIRA as to the ownership by PSALM of all NPC generation assets, IPP Contracts,etc. On the claim that payment for power sales by customers are not one of those under the EPIRA as constituting properties of PSALM and that they constitute gross income and not net profits of NPC, PSALM argues that same is absurd because as owner of the generation assets, it is entitled to the income derived from the sale of electricity. Said income partakes of the nature of fruits which belong to the owner of the asset. Finally, it argued that not being a party in the case or judgment debtor, its properties cannot be garnished.

On 27 May 2009, petitioners Ora Limpao, Abdullah Ali, Moctar D. Amundia, Macawali D. Minalang, Aliola Cawi, Talib Manudi and Masiding Tanggo filed a Manifestation and Motion reiterating their prayer in their Motion for Implementation of the Issued Writ of Execution motion dated 11 February 2009.[24]

On 28 May 2009, respondent NPC filed its Consolidated Comment[25] on Petitioners Manifestation with Urgent Omnibus Motions dated 9 February 2009 and Comment/Manifestation and urgent motions dated 23 March 2009, and on PSALMs Manifestation dated 24 February 2009.

On PSALMs Manifestation, NPC agreed with PSALM that execution of its properties is improper as it is not a party in the case.

On petitioners Manifestation and Comment, NPC contends that petitioners are either confused or deviously sneaking into the present controversy facts, issues and reliefs that have not been litigated or resolved in the instant case. It argues that it involves the nullification of NPB Resolutions Nos. 2002-124 and 2002-125 did not affect the reorganization of the NPC because other resolutions pursuant thereto remain valid. The Court even declared in its 17 September 2008 Resolution that the NPC can still pursue its reorganization although it cannot implement the same by terminating petitioners employment on 31 January 2003 pursuant to NPB Resolutions No. 2002-124 and 2002125. Under Resolutions No. 2002-124 and No. 2002-125, only the services of 16 top level employees were terminated. As admitted by petitioners, the services of other NPC employees were terminated on 28 February 2003 pursuant to NPB Resolution No. 2003-11. The validity of this latter resolution has not been the subject of the present controversy.

On 5 June 2009, petitioners filed their Reply to NPCs Consolidated Comment.[26] Petitioners reiterated their Counter-Manifestation dated 13 March 2009 to PSALMs Manifestation dated 24 February 2009. In addition, they explained that the purpose of the EPIRA in creating PSALM is to sell and dispose the assets of NPC and to use the proceeds therefrom to liquidate all the financial obligations and liabilities of the NPC. It quoted Congressman Arnulfo P. Fuentebellas opinion which was in response to a legal opinion of Cyril C. del Callar, former NPC President, as to the function of PSALM. The opinion partly reads: The function of PSALM is limited and akin to that of a liquidator of NPC assets as stated in Section 50 of the EPIRA that the principal purpose of PSALM is to manage the orderly sale, disposition, and privatization of NPC generation assets, real estate and other disposable assets, and IPP contracts with the end in view of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.

Petitioners insists it is the NPC and its counsel (Office of the Solicitor General), not them, that are guilty of raising new issues without valid and legal justification. They explained that the Court had settled the following issues: (1) NPB Resolutions No. 2002-124 and No. 2002-125 are null and without legal effect; (2) as a consequence of the declaration of nullity of said resolutions, petitioners have the right to reinstatement or to separation in lieu of reinstatement pursuant to a validly approved Separation Program plus backwages, wage adjustments and other benefits accruing from January 2003 to the date of their reinstatement or payment of separation pay; and (3) 10% charging lien of Attys. Aldon and Orocio.

All these notwithstanding, NPC raised two new issues in a desperate effort to circumvent, frustrate and delay the final and executory orders of the Court, to wit: (1) there are only 16 NPC personnel (top executives) who were illegally terminated on 31 January 2003; and (2) the issuance of NPB Resolution No. 2007-55 on 14 September 2007 effectively rectified and mooted the purported infirmity of the nullified NPB Resolutions No. 2002-124 and No. 2002-125. NPCs raising these issues after the Courts

decision and resolution have become final and executory is a clear case of afterthought and act of desperation. Petitioners claim that the NPC had all the time to raise said issues before the decision and resolution became final and executory, but it did not. Thus, it is guilty of estoppel. Petitioners added that the NPC in its Motion for Reconsideration and Motion for Leave to File Second Motion for Reconsideration admitted that the nullification of National Power Board Resolution Nos. 2002 -124 and 2002-125 have far reaching implications and dreadful aftermath. For one, it would entail a financial liability on the part of respondent in the amount of not less than FOUR BILLION SEVEN HUNDRED ONE MILLION THREE HUNDRED FIFTY-FOUR THOUSAND SEVENTY-THREE PESOS (P4,701,354,073.00), representing the backwages and wage adjustments of employees. (as of October 2006) This admission, petitioners contend, belies NPCs claim that only 16 were illegally terminated pursuant to NPB Resolutions No. 2002-124 and No. 2002-125 considering that such amount cannot obviously cover only 16 employees but thousands of NPC personnel.

Moreover, petitioners alleged that the NPC, through its numerous pleadings, made them and the Court believe that pursuant to the null NPB Resolutions No. 2002124 and No. 2002-125, all NPC personnel were legally terminated as of 31 January 2003. The issue that only 16 employees were terminated on 31 January 2003 was never raised before the Courts decision and resolution became final and executo ry. Now, after eight long years, NPC suddenly tells the Court that only 16 employees were terminated as of 31 January 2003. Such behavior shows lack of candor, honesty and fairness to the Court and to petitioners.

Petitioners pray that: (1) all the respondents and their counsels be held in contempt of court and punished accordingly until or unless they immediately execute the decision/resolution of the Court; (2) to summon and/or direct Mr. Edmund P. Anguluan, the present Vice-President, Human Resources and Administration of NPC, to fully and strictly comply with paragraph 1 of the 10 December 2008 Resolution - the list should include all personnel who were terminated pursuant to or as a result of the

null NPB Resolutions No. 2002-124 and No. 2002-125 regardless of their actual dates of termination; and (3) to appoint and authorize the Clerk of Court and Ex-Oficio Sheriff of the RTC of Quezon City to enforce by execution the Courts 10 December 2008 Resolution by garnishment/levy upon the assets of NPC, including but not limited to the assets of PSALM, based on the list and computations submitted and attested to by the aforenamed Vice-President of NPC.

The principal question to be resolved is: should the execution of our decision and resolution which have become final and executory on 10 October 2008be stopped or be prevented because of the new issues raised by NPC? The two new issues are: (1) whether or not our decision affects only 16 employees or all the employees of NPC; and (2) whether or not NPB Resolutions No. 2002-124 and No. 2002-125 can be ratified by NPB Resolution No. 2007-55[27] which was issued on 14 September 2007.

On the first issue, NPC contends it has complied with the directive of the Supreme Court to list all employees terminated/separated as a result of, or pursuant to, NPB Resolutions No. 2002-124 and No. 2002-125. It stated that only its top-level employees, numbering sixteen (16), occupying the positions of Senior Vice-President, Vice-President and Department Manager were terminated on 31 January 2003 pursuant to the aforesaid resolutions contrary to the position of petitioners that all employees of NPC were terminated/separated on 31 January 2003. NPC added that these 16 employees who were terminated/separated on 31 January 2003 were rehired after receiving a full separation package pursuant to the EPIRA law. Thus, payment of any backwages and other benefits to these 16 employees are unnecessary and unwarranted.

It is unquestionable that when we promulgated our decision on 26 September 2006 and our subsequent resolutions dated 24 January 2007, 17 September 2008 and 10 December 2008, we were referring to all employees of the NPC, not only the 16 top-

level employees, as those whose services were terminated on 31 January 2003. This was based on the nullified NPB Resolution No. 2002-124 which reads in part:

RESOLVED, FURTHER, That, pursuant to Section 63 of the EPIRA and Rule 33 of the IRR, all NPC personnel shall be legally terminated on January 31, 2003, and shall be entitled to the separation benefits as provided in the Guidelines hereunder adopted.[28]

When the instant case was commenced with the filing of the petition, what was sought to be enjoined was the termination of all, not sixteen (16), NPC employees on 31 January 2003 in line with the restructuring of the NPC. All the while, the Court and the parties were on the same wavelength tackling the issue of whether the termination of all NPC employees pursuant to NPB Resolutions No. 2002-124 and No. 2002-125, is valid. In fact, it is NPCs stand that pursuant to NPB Resolutions No. 2002-124 and No. 2002-125, all NPC personnel were legally terminated as of 31 January 2003. It is only after when our decision and resolution on the matter became final and executory did NPC reveal that not all, but only 16 top-level employees, were terminated on 31 January 2003.

We find such action of NPC and its counsel improper. Why only now at this stage of the proceedings? NPC cannot possibly deny that the employees subject of the instant case involves all the personnel/employees of the NPC. As correctly pointed out by petitioners, NPCs statement in its Motion for Reconsideration and Motion for Leave to File Second Motion for Reconsideration that the nullification of NPB Resolutions No. 2002-124 and No. 2002-125 has far reaching implications and dreadful aftermath for it would entail a financial liability on its part in the amount of not less than P4,701,354,073.00 proves that what NPC is alluding to is the termination of all the employees of the NPC for the simple reason that said amount cannot be for the backwages, separation pay and other benefits of just 16 employees but thousands of NPC personnel.

Under

NPB

Resolution

No.

2002-124,

the

services

of

all

NPC

personnel/employees were deemed legally terminated as of 31 January 2003. However, because it was no longer tenable for NPC to complete the legal separation of NPC employees on 31 January 2003, NPB Resolution No. 2003-11 dated 22 January 2003 was issued showing the effectivity of termination of personnel on 28 February 2003. NPC intentionally did not inform the Court that the separation of other employees holding the positions of below Vice-President levels, supervisors and rank-and-file was 28 February 2003 pursuant to NPB Resolution No. 2003-11 dated 22 January 2003. Furthermore, under NPC Circular No. 2003-09,[29] the dates of legal termination of all employees were as follows: (a) key officials 31 January 2003; (b) early-leavers 15 January 2003; (c) those no longer employed in NPC after 26 June 2001 date of actual separation; and (d) all other personnel 28 February 2003. To further show that what is covered by the Courts resolution dated 10 December 2008 are all the NPC employees, petitioners attached a memorandum[30] from Eduardo R. Eroy, Vice-President, HRM, NPC, to NPC President Froilan A. Tampinco explaining the amount of backwages, separation pay and other benefits to be received by the NPC terminated NPC employees.

From all these, it is clear that our ruling, pursuant to NPB Resolution No. 2002124, covers all employees of the NPC and not only the 16 employees as contended by NPC. However, as regards their right to reinstatement, or separation pay in lieu of reinstatement, pursuant to a validly approved Separation Program, plus backwages, wage adjustments, and other benefits, the same shall be computed from the date of legal termination as stated in NPC Circular No. 2003-09, to wit:

a) The legal termination of key officials, i.e., the Corporate Secretary, Vice Presidents and Senior Vice Presidents who were appointed under NP Board Resolution No. 2003-12, shall be at the close of office hours of January 31, 2003.

b) The legal termination of personnel who availed of the early leavers scheme shall be on the last day of service in NPC but not beyond January 15, 2003.

c) The legal termination of personnel who were no longer employed in NPC after June 26, 2001 shall be the date of actual separation in NPC.

d) For all other NPC personnel, their legal termination shall be at the close of office hours/shift schedule of February 28, 2003.[31]

but deducting therefrom the amount of separation benefits which they previously received under the null NPB Resolutions.

On the second issue, NPC contends that when NPB Resolution No. 200755[32] dated 14 September 2007 was issued, the same ratified and confirmed NPB Resolutions No. 2002-124 and No. 2002-125. The purported infirmity of NPB Resolutions No. 2002-124 and No. 2002-125 was rectified and effectively mooted. In so doing, all the principles and guidelines enunciated in both resolutions have been adopted, confirmed and approved. In effect, what NPC is saying is that the decision/resolution can no longer be executed since it has corrected the infirmity or mistake that caused the nullification of NPB Resolutions No. 2002-124 and No. 2002-125 by the issuance of NPB Resolution No. 2007-55.

As answer thereto, petitioners argue that NPB Resolutions No. 2002-124 and No. 2002-125 cannot be ratified because only voidable acts can be ratified. Petitioners contend that both resolutions are void.

Petitioners contention that NPB Resolutions No. 2002-124 and No. 2002-125 are void is correct. In our decision of 26 September 2006, the Court was very categorical in declaring that NPB Resolutions No. 2002-124 and No. 2002-125 are VOID and WITHOUT LEGAL EFFECT. The Court has ruled that said resolutions are void for violating Section 48 of the EPIRA Law which requires the persons enumerated therein to personally exercise their judgment and discretion. An illegal act is void and cannot be validated.[33] In the instant case, the approval of both resolutions was an illegal act for it violated the EPIRA Law.

What then is the effect of the approval of NPB Resolution No. 2007-55 on 14 September 2007? The approval of NPB Resolution No. 2007-55, supposedly by a majority of the National Power Board as designated by law, that adopted, confirmed and approved the contents of NPB Resolutions No. 2002-124 and No. 2002-125 will have a prospective effect, not a retroactive effect. The approval of NPB Resolution No. 200755 cannot ratify and validate NPB Resolutions No. 2002-124 and No. 2002-125 as to make the termination of the services of all NPC personnel/employees on 31 January 2003 valid, because said resolutions were void.

The approval of NPB Resolution No. 2007-55 on 14 September 2007 means that the services of all NPC employees have been legally terminated on this date. All separation pay and other benefits to be received by said employees will be deemed cut on this date. The computation thereof shall, therefore, be from the date of their illegal termination pursuant to NPB Resolutions Nos. 2002-124 and 2002-125 as clarified by NPB Resolution No. 2003-11 and NPC Resolution No. 2003-09 up to 14 September 2007. Although the validity of NPB Resolution No. 2007-55 has not yet been passed

upon by the Court, same has to be given effect because NPB Resolution No. 2007-55 enjoys the presumption of regularity of official acts. The presumption of regularity of official acts may be rebutted by affirmative evidence of irregularity or failure to perform a duty.[34] Thus, until and unless there is clear and convincing evidence that rebuts this presumption, we have no option but to rule that said resolution is valid and effective as of 14 September 2007.

We now resolve the issue of whether or not the assets of PSALM can be the subject of execution it being a non-party in this case.

In their Manifestation with Urgent Omnibus Motions dated 9 February 2009, petitioners prayed that the decision/resolution of the court be enforced by execution by garnishment/levy upon the assets of NPC, including but not limited to the assets of PSALM. In opposition thereto, PSALM stated that not being a party to the case, it is not bound by the decision rendered by the Court. It explained that there is nothing in the EPIRA Law that allows garnishment and/or levy of its assets to satisfy a judgment rendered against NPC. Not being employees of PSALM, the latter states that it cannot be made liable for the financial obligations of NPC to its employees. PSALM explains that when the EPIRA Law was passed on 26 June 2001, ownership of all existing NPC generation assets, IPP contracts, real estate and all other disposable assets were transferred to it by operation of law. All existing liabilities and outstanding financial obligations of NPC arising from loans, issuances of bonds, securities and other instrument of indebtedness were legally transferred and assumed by PSALM. It stressed that the liability of NPC arising from employer-employee relationship is not one of those transferred to, and assumed by, PSALM. The EPIRA, it said, did not contemplate such kind of liability. Further, it claims that its assets and the privatization proceeds cannot be the subject of execution because these were already earmarked specifically for the liquidation of NPCs financial obligations transferred to, and assumed by, PSALM.

Sections 49 and 50 of the EPIRA Law read:

SEC. 49. Creation of Power Sector Assets and Liabilities Management Corporation. There is hereby created a government-owned and controlled corporation to be known as the Power Sector Assets and Liabilities Management Corporation, hereinafter referred to as the PSALM Corp., which shall take ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All outstanding obligations of the NPC arising from loans, issuances of bonds, securities and other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp. within one hundred eighty (180) days from the approval of this Act.

SEC. 50. Purpose and Objective, Domicile and Term of Existence. The principal purpose of the PSALM Corp. is to manage the orderly sale, disposition, and privatization of NPC generation assets, real estate and other disposable assets, and IPP contracts with the objective of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.

The PSALM Corp. shall have its principal office and place of business within Metro Manila.

The PSALM Corp. shall exist for a period of twenty-five (25) years from the effectivity of this Act, unless otherwise provided by law, and all assets held by it, all moneys and properties belonging to it, and all its liabilities outstanding upon the expiration of its term of existence shall revert to and be assumed by the National Government.

Under the EPIRA Law, PSALM shall take ownership of all existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. PSALM acquired ownership over said properties of NPC via the EPIRA Law. It did not deny such fact and even admitted the same.

PSALM argues that the present judgment obligation of NPC arising from employer-employee relationship was neither an existing financial liability nor a contractual liability of NPC at the effectivity of the EPIRA Law. From a reading of said section 49, it appears that only existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets shall be transferred to PSALM. We, however, rule that the word existing is to be construed as to qualify only the term NPC generation assets. In arriving at said ruling, Section 49 must be read in conjunction with Section 50. The interpretation of the word existing should be understood in light of PSALMs purpose and objective during its term of existence (25 years from the effectivity of the law). It would be absurd to interpret the word existing as referring to the assets and liabilities of NPC only existing at the time when the EPIRA Law took effect (26 June 2001). It is more sensible and equitable that the word existing applies only to NPC generation assets because of the intent and purpose of the EPIRA Law which is to privatize NPC generation assets, real estate, and other disposable assets and IPP contracts. Upon the effectivity of the EPIRA Law, most of the assets of NPC, from which it got its income, was transferred to PSALM. When the privatization of NPCs assets is in progress, NPC may still incur liabilities, as what happened in the instant case. Who then shall answer for these liabilities? How can NPC answer for its liabilities if PSALM had already acquired almost all of its assets? It would be, under the circumstances, unfair and unjust if PSALM gets nearly all of NPCs assets but will not pay for liabilities incurred by NPC during this privatization stage. It must be remembered that the restructuring of the NPC was due to the EPIRA Law. It is also the EPIRA Law that authorized PSALM to take ownership of NPCs assets and liabilities. And since the restructuring of NPC, which this Court found to be void, was the cause of NPCs liability, it is but reasonable for PSALM to assume the liabilities of NPC during the privatization of the NPCs assets.

It is well settled that courts are not to give a statute a meaning that would lead to absurdities. If the words of a statute are susceptible of more than one meaning, the absurdity of the result of one construction is a strong argument against its adoption, and in favor of such sensible interpretation. We test a law by its result. A law should not be interpreted so as not to cause an injustice. There are laws which are generally valid but may seem arbitrary when applied in a particular case because of its peculiar circumstances. We are not bound to apply them in slavish obedience to their language.[35] The court may consider the spirit and reason of the statute, where a literal meaning would lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers.[36] Taking into consideration the legislative intent and applying the rule of reason, we hold that the word existing should be interpreted to only qualify the term NPC generation assets and not the word liabilities.

On PSALMs contention that since it was not a party to the case and that the petitioners are not its employees, the properties that it acquired from NPC cannot be levied, is untenable. The issue here is about PSALMs assets that were acquired from NPC. As explained above, PSALM took ownership over most of NPCs assets. There was indeed a transfer of interest over these assets from NPC to PSALM by operation of law. These properties may be used to satisfy our judgment. This being the case, petitioners may go after such properties. The fact that PSALM is a non-party to the case will not prevent the levying of the said properties, including their fruits and proceeds. However, PSALM should not be denied due process. The levying of said properties and their fruits/proceeds, if still needed in case NPCs properties are insufficient to satisfy our judgment, is without prejudice to PSALMs participation in said proceedings. Its participation therein is necessary to prevent the levying of properties other than that it had acquired from NPC. Such a proceeding is to be conducted in the proper forum where petitioners may take the appropriate action.

Section 19, Rule 3 of the 1997 Revised Rules of Civil Procedure reads:

Sec. 19. Transfer of interest. In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.

Under this section, the Court may, upon motion, direct the person to whom the interest is transferred to be substituted in the action or joined with the original party. In petitioners Manifestation with Urgent Omnibus Motions dated 9 February 2009, they prayed that the properties acquired by PSALM from NPC be also levied/garnished. We consider this prayer to be tantamount to a motion to join PSALM as a party-respondent in this case in so far as to the properties, and any income arising therefrom, that PSALM acquired from NPC. It is in this light that we order the Clerk of Court of this division to implead or join PSALM as a party-respondent in this case. As above-explained, PSALM shall not be denied due process for it can participate in the proper forum by preventing the levying of properties other than that it had acquired from NPC.

We now go to the implementation of our decision. Petitioners submitted to this Court a list[37] supposedly containing names of employees separated from the NPC pursuant to the nullified NPB Board Resolutions No. 2002-124 and No. 2002-125 and the respective amounts they will receive. The computation of the benefits due them started on 1 February 2003/1 March 2003 to 30 June 2009. Even if we are to consider said list to be an official document released with authority by the NPC, we unfortunately cannot use the same to determine, at this point, the amounts due each of the affected NPC employees for the simple reason that amounts due should only be from the date of the employees illegal termination (31 January 2003 for key officials; last day of service in NPC but not beyond 15 January 2003 for early leavers; date of actual separation for personnel no longer employed at the NPC after 26 June 2001; and 28 February 2003 for

all other NPC personnel)[38] up to 14 September 2007 when NPB Resolution No. 2007-55 was issued. This list which should contain the names of all, not only 16, the affected NPC employees shall be submitted by the Chairperson and the Members of the National Power Board and the President of the NPC to the proper person to execute this judgment within ten (10) days from receipt of this resolution.

The instant petition for injunction was filed directly to this Court as mandated by Section 78[39] of the EPIRA Law. In as much as this Court does not have a sheriff of its own to execute our decision, we deem it appropriate, pursuant to Section 6, [40] Rule 135 of the Rules of Court and considering that the principal office of NPC is located in Quezon City, to authorize the Clerk of Court of the Regional Trial Court and ExOfficio Sheriff of Quezon City to execute our judgment which became final and executory on 10 October 2008 and for which an entry of judgment was made on 27 October 2008. After receipt of the list containing the names of the affected NPC employees and benefits due each of them, the Clerk of Court of the Regional Trial Court and Ex-Officio Sheriff of Quezon City is directed to forthwith execute our judgment.

WHEREFORE, premises considered, the Court resolves to GRANT petitioners Manifestation with Urgent Omnibus Motions dated 9 February 2009 by:

1. ORDERING the Chairperson and the Members of the National Power Board and the President of the National Power Corporation, and their respective counsels, to SHOW CAUSE why they should not be held in contempt of court for their willful failure to comply with paragraphs 1 and 2 of the Resolution dated 10 December 2008 by claiming that the Courts decision nullifying NPB Board Resolutions No. 2002-124 and No. 2002-125 covered only sixteen employees when it is clear that the Courts decision covered all personnel/employees affected by the restructuring of the NPC;

2. ORDERING the Clerk of Court of this Division to implead or join PSALM as a party-respondent in this case;

3. ORDERING the Chairperson and the Members of the National Power Board and the President of the National Power Corporation to comply with the Court s Resolution dated 10 December 2008. The list shall contain all the names of all, not 16, NPC personnel/employees affected by the restructuring of the NPC. The computation of the amounts due the employees who were terminated and/or separated as a result of, or pursuant to, the nullified NPB Board Resolutions No. 2002-124 and No. 2002-125 shall be from their date of illegal termination up to 14 September 2007 when NPB Resolution No. 2007-55 was issued. Said list shall be submitted to the Clerk of Court of the Regional Trial Court and Ex-Officio Sheriff of Quezon City within ten (10) days from receipt of this resolution. They are also ordered to submit to this Court their compliance to said order within thirty (30) days from receipt of this resolution; and

4. DIRECTING the Clerk of Court of the Regional Trial Court and Ex-Officio Sheriff of Quezon City to cause the immediate execution of our Decision. Said Clerk of Court is further directed to submit to this Court his/her compliance to this directive within thirty (30) days from receipt of this resolution.

RODOLFO R. MAGO, Complainant,

A.M. No. MTJ-08-1715 [Formerly A.M. OCA IPI No. 082037-MTJ] Present: QUISUMBING, J., Chairperson, CARPIO MORALES, VELASCO, JR., NACHURA, and BRION, JJ. Promulgated: March 19, 2009

- versus -

JUDGE AUREA G. PEALOSAFERMO, MTC, LABO, CAMARINES NORTE, Respondent.

x-------------------------------------------------- x DECISION CARPIO MORALES, J.: Rodolfo R. Mago (complainant) filed before the Municipal Trial Court (MTC) of Labo, Camarines Norte a complaint for grave coercion against Sheriff Alex Rodolfo Angeles (of the Department of Agrarian Reform Adjudication Board [DARAB]), et al. The case was docketed as Criminal Case No. 04-7800. Sheriff Angeles filed a counter-charge for grave threats against complainant and his sons, docketed as Criminal Case No. 04-7811. Alleging that Presiding Judge of the MTC Labo, Camarines Sur Judge Aurea G. Pealosa-Fermo (respondent) committed gross ignorance of the law and bias in the disposition of his complaint and of the counter-charge against him, complainant filed the present administrative complaint, the details of which were summarized by the Office of the Court Administrator (OCA) as follows:[1] Mr. Mago claims that on April 21, 2004 he filed a complaint for Grave Coercion against Department of Agrarian Reform Adjudication

Board (DARAB for brevity)Sheriff Alex Roberto Angeles which was docketed as Criminal Case No. 04-7800. However, instead of summoning the accused for a Preliminary Investigation, he received a complaint charging him and his two (2) sons with Grave Threats [which was docketed as Criminal Case No. 04-7811]. He stresses the complaint against him as purely fabricated. He states that the complainant in the said case was not DARAB Sheriff Angeles. He avers that the affidavits of the witnesses in the said case could not be found in the records of the Municipal Trial Court (MTC). Complainant further declares that on July 20, 2004, he received a subpoena to attend the preliminary investigation of Criminal Case No. 04-7811. In compliance, he and his witnesses attended, and even without the assistance of counsel, they were examined through a prepared set of questions handed to them by the stenographer. The respondent judge was not present then. The complainant also states that right after the preliminary investigation, he was immediately arrested and was imprisoned for three (3) days. Thereafter, he was released after he posted bail in the amount of Php12,000 pesos. Complainant also alleges that he filed a Petition for Certiorari, Mandamus, Prohibition with Application for Preliminary Injunction and Ex-Parte Motion for Temporary Restraining Order questioning the order of respondent judge in denying his omnibus motion to quash the information, suppress evidence and produce, inspect and copy documentary evidence. He adds that despite the filing of this petition, the respondent judge continued to direct him to appear at the pre-trial/preliminary conference. He likewise avers that his arraignment was set beyond the period allowed by the Rules of Court. He also laments that he could not locate his lawyer, Atty. Lamberto Bonifacio, Jr. Finally, he alleges that the respondent judge had been biased when hearing his case.[2] (Italics in the original; emphasis an underscoring supplied)

By 2nd Indorsement dated July 31, 2007,[3] respondent gave her side of the case as follows: Contrary to complainants allegation, the complaint in Criminal C ase No. 04-7811 (for grave threats), and the affidavits of the therein complainant-sheriffs witnesses were attached to the record.[4] Admitting complainants allegation that the court stenographer examined complainant and his witnesses during the preliminary investigation of the grave threats

complaint against him with the use of prepared written set of questions, respondent explains as follows: What [complainant] claimed in his Letter-Complaint that the Court Stenographer has a prepared sheet of questions during the preliminary examination is truebecause after a complaint is filed, the undersigned prepares her questions for preliminary examination based on the affidavits of the complaining witnesses and the counter affidavits of the accused. This is done to make it easy for the Stenographers to take/print the transcript of the proceedings. Some witnesses even ask to read/study the question and request that they write down their answers to the questions for the Stenographers to finalize. Also, this is convenient when more than one preliminary examination is scheduled for the day. This procedure makes it easier for the Stenographers and the witnesses, too, considering the cramped office space. After the witnesses are briefed, the [s]tenographers take over since the prepared sheets are given to them so they could propound the questions and the answers are typed directly. x x x[5] (Emphasis, italics and underscoring supplied)

Denying complainants allegation that he was arrested within the court premises on July 20, 2004 or right after the conduct of the preliminary examination conducted in the grave threats complaint against him, respondent alleges that the preliminary examination was conducted at 9:00 oclock in the morning of July 19, 2004; that she issued an Order[6] the following day, July 20, 2004, finding probable cause and directing the issuance of a warrant of arrest[7] against complainant which the warrant officer received at 4:40 p.m. on even date; and that complainant was arrested on July 21, 2004 at the Poblacion, Labo, Camarines Norte, as shown by the Warrant Officers Retu rn of Service.[8] Admitting that there was delay in scheduling the arraignment of complainant after his arrest, respondent surmises that the Clerk of Court or the clerk-in-charge might have overlooked the Return of Service of the warrant officer. Respondent states, however, that when the arraignment was scheduled, complainants counsel opposed the same and filed an Omnibus Motion which resulted in the repeated resetting of the

arraignment. Respondent adds that after complainant was arraigned on June 6, 2006, the preliminary conference/pre-trial was set but was not terminated due to the absence of complainant or his counsel.[9] In fact, respondent goes on to allege that in complainants attempt to block his arraignment and to quash the Information against him, he filed a Petition forCertiorari, Mandamus, Prohibition with Application for Mandatory Injunction and Ex-Parte Motion for Temporary Restraining Order with the Regional Trial Court of Labo which was denied for lack of merit. [10] On the allegation of bias on her part, respondent claims that until the criminal complaints were filed, she did not know any of the parties. By June 18, 2008 Report,[11] the OCA came up with the following Evaluation: xxxx . . . [W]e hold [respondent] administratively liable for her unfamiliarity with the basic rules on preliminary investigation. There was irregularity during the preliminary investigation when the respondent judge allowed the stenographers to handle the latter part of the proceedings. xxxx . . . [R]espondent admitted that after the complaint was filed, she prepared a set of questions based on the affidavits of the complaining witnesses and counter affidavits of the accused. She further added that during the preliminary investigation and after briefing the accused and his witnesses, the stenographers took charge of the proceedings. Hence, the respondent judge violated the rules on preliminary investigation. Respondent should not have allowed her stenographer to handle the latter part of the proceedings even if she only wanted to expedite the proceedings and it was more convenient. Respondent judge should have personally taken charge of the entire proceedings since the power to conduct preliminary investigations vests only on her and not on the stenographer.

x x x x[12] (Emphasis and underscoring supplied)

Finding respondent guilty of gross ignorance of the law or procedure, the OCA recommended that respondent be FINED in the amount of P20,000 in this wise: [W]e deem it proper to recommend the imposition upon the respondent judge of a penalty of fine in the amount of P20,000[,] this being her first offense. As regards the issue of continuous hearing of the case by the respondent judge, we opine that the respondent judge only acted in good faith and in accordance with law when she continued to direct the herein complainant to attend the pre-trial. Based on the records, the Petition for Certiorari, Mandamus, Prohibition with Application for Mandatory Injunction and Ex-Parte Motion for Temporary Restraining Order and the Motion for Reconsideration thereto filed by complainant with the Regional Trial Court, Branch 64, Labo, Camarines Norte were already denied; thus the respondent judge had the authority to proceed with the case. The postponements in the pre-trial were not attributable to the respondent judge but to the accused and his counsel. Finally, on the issue of bias, complainant failed to submit any evidence showing the respondent biased or partial in hearing the case. Bias and partiality of a judge must be proved by clear and convincing evidence. Mere suspicion that a judge is bias or partial would not be enough.[13] (Italics in the original; underscoring supplied)

By Resolution of August 20, 2008,[14] the Court, on the recommendation of the OCA, re-docketed the case and required the parties to manifest within ten days from notice whether they were willing to submit the matter for resolution on the basis of the pleadings filed and submitted. Both parties have manifested in the affirmative. The Court finds the evaluation well-taken. Prior to the amendment on October 3, 2005 of Rules 112 and 114 of the Rules of Court via A.M. No. 05-8-26-SC, Re: Amendment of Rules 112 and 114 of the Revised Rules on

Criminal Procedure by Removing the Conduct of Preliminary Investigation from Judges of the First Level Courts, judges of municipal trial courts were empowered to conduct preliminary investigations in which they exercised discretion in determining whether there was probable cause to hale the respondent into court. Such being the case, they could not delegate the discretion to another. An officer to whom a discretion is entrusted cannot delegate it to another, the presumption being that he was chosen because he was deemed fit and competent to exercise that judgment and discretion, and unless the power to substitute another in his place has been given to him, he cannot delegate his duties to another. In those cases in which the proper execution of the office requires on the part of the officer, the exercise of judgment or discretion, the presumption is that he was chosen because he was deemed fit and competent to exercise that judgment and discretion, and, unless power to substitute another in his place has been given to him, he cannot delegate his duties to another.[15] (Underscoring supplied)

Then, as now, a personal examination of the complainant in a criminal case and his witness/es was required. Thus, under Section 4, Rule 112 of the Revised Rules of Court before its amendment, the investigating fiscal was required to certify under oath that he, or as shown by the record, an authorized officer, has personally examined the complainant and his witnesses . . . By respondents delegation of the examination of the sheriff-complainant in the grave threats case to the stenographer, and worse, by allowing the witnesses to read/study the [written] question[s] to be propounded to them and to write their answers [thereto] upon respondents justification that the scheme was for the convenience of the stenographers, respondent betrayed her lack of knowledge of procedure, thereby contributing to the erosion of public confidence in the judicial system.

Respondent is thus guilty of gross ignorance of the law or procedure which, under Section 8, Rule 140 of the Rules of Court, is a serious charge,[16] for which Section 11 (A) of the same Rule prescribes the following penalty: SEC. 11. Sanctions. A. If the respondent is guilty of a serious charge, any of the following sanctions may be imposed: 1. Dismissal from the service, forfeiture of all or part of the benefits as the Court may determine, and disqualification from reinstatement or appointment to any public office, including government-owned and controlled corporations. Provided, however, That the forfeiture of benefits shall in no case include accrued leave credits; 2. Suspension from office without salary and other benefits for more than three (3) but not exceeding six (6) months; or 3. A fine of more than P20,000 but not exceeding P40,000.00.

The Court thus finds in order the Recommendation of the OCA to impose a fine of P20,000 on respondent. The OCAs recommendation to warn respondent that a repetition of the same act will be dealt with more severely does not lie, however, A.M. No. 05-8-26-SC, which took effect on October 3, 2005, having removed the power of judges of the first level courts[17] to conduct preliminary investigation. A warning that a commission of another infractiontantamount to gross ignorance of law or procedures shall be dealt with more severely lies, however. WHEREFORE, the Court finds respondent, Judge Aurea G. Pealosa-Fermo of the Municipal Trial Court of Labo, Camarines Norte, guilty of Gross Ignorance of the Law or Procedure. She is FINED in the amount of Twenty Thousand (P20,000) Pesos and WARNED that a commission of another infraction which is tantamount to the same charge shall be dealt with more severely.

METROPOLITAN MANILA G.R. Nos. 171947-48 DEVELOPMENT AUTHORITY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, Present: DEPARTMENT OF EDUCATION, CULTURE AND SPORTS,[1] PUNO, C.J., DEPARTMENT OF HEALTH, QUISUMBING, DEPARTMENT OF AGRICULTURE, YNARES-SANTIAGO, DEPARTMENT OF PUBLIC CARPIO, WORKS AND HIGHWAYS, AUSTRIA-MARTINEZ, DEPARTMENT OF BUDGET AND CORONA, MANAGEMENT, PHILIPPINE CARPIO MORALES, COAST GUARD, PHILIPPINE AZCUNA, NATIONAL POLICE MARITIME TINGA, GROUP, and DEPARTMENT OF CHICO-NAZARIO, THE INTERIOR AND LOCAL VELASCO, JR., GOVERNMENT, NACHURA, Petitioners, REYES, LEONARDO-DE CASTRO, and - versus BRION, JJ.

CONCERNED RESIDENTS OF MANILA BAY, represented and joined by DIVINA V. ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEA, PAUL DENNIS QUINTERO, MA. VICTORIA LLENOS, DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, and Promulgated: JAIME AGUSTIN R. OPOSA, Respondents. December 18, 2008 x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.:

The need to address environmental pollution, as a cause of climate change, has of late gained the attention of the international community. Media have finally trained their sights on the ill effects of pollution, the destruction of forests and other critical habitats, oil spills, and the unabated improper disposal of garbage. And rightly so, for the magnitude of environmental destruction is now on a scale few ever foresaw and the wound no longer simply heals by itself.[2] But amidst hard evidence and clear signs of a climate crisis that need bold action, the voice of cynicism, naysayers, and procrastinators can still be heard. This case turns on government agencies and their officers who, by the nature of their respective offices or by direct statutory command, are tasked to protect and preserve, at the first instance, our internal waters, rivers, shores, and seas polluted by human activities. To most of these agencies and their official complement, the pollution menace does not seem to carry the high national priority it deserves, if their track records are to be the norm. Their cavalier attitude towards solving, if not mitigating, the environmental pollution problem, is a sad commentary on bureaucratic efficiency and commitment. At the core of the case is the Manila Bay, a place with a proud historic past, once brimming with marine life and, for so many decades in the past, a spot for different contact recreation activities, but now a dirty and slowly dying expanse mainly because of the abject official indifference of people and institutions that could have otherwise made a difference.

This case started when, on January 29, 1999, respondents Concerned Residents of Manila Bay filed a complaint before the Regional Trial Court (RTC) in Imus, Cavite against several government agencies, among them the petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay. Raffled to Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the complaint alleged that the water quality of the Manila Bay had fallen way below the allowable standards set by law, specifically

Presidential Decree No. (PD) 1152 or the Philippine Environment Code. This environmental aberration, the complaint stated, stemmed from: x x x [The] reckless, wholesale, accumulated and ongoing acts of omission or commission [of the defendants] resulting in the clear and present danger to public health and in the depletion and contamination of the marine life of Manila Bay, [for which reason] ALL defendants must be held jointly and/or solidarily liable and be collectively ordered to clean up Manila Bay and to restore its water quality to class B waters fit for swimming, skin-diving, and other forms of contact recreation.[3]

In their individual causes of action, respondents alleged that the continued neglect of petitioners in abating the pollution of the Manila Bay constitutes a violation of, among others: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Respondents constitutional right to life, health, and a balanced ecology; The Environment Code (PD 1152); The Pollution Control Law (PD 984); The Water Code (PD 1067); The Sanitation Code (PD 856); The Illegal Disposal of Wastes Decree (PD 825); The Marine Pollution Law (PD 979); Executive Order No. 192; The Toxic and Hazardous Wastes Law (Republic Act No. 6969); Civil Code provisions on nuisance and human relations; The Trust Doctrine and the Principle of Guardianship; and International Law

Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to clean the Manila Bay and submit to the RTC a concerted concrete plan of action for the purpose. The trial of the case started off with a hearing at the Manila Yacht Club followed by an ocular inspection of the Manila Bay. Renato T. Cruz, the Chief of the Water Quality Management Section, Environmental Management Bureau, Department of Environment and Natural Resources (DENR), testifying for petitioners, stated that

water samples collected from different beaches around the Manila Bay showed that the amount of fecal coliform content ranged from 50,000 to 80,000 most probable number (MPN)/ml when what DENR Administrative Order No. 34-90 prescribed as a safe level for bathing and other forms of contact recreational activities, or the SB level, is one not exceeding 200 MPN/100 ml.[4] Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in behalf of other petitioners, testified about the MWSS efforts to reduce pollution along the Manila Bay through the Manila Second Sewerage Project. For its part, the Philippine Ports Authority (PPA) presented, as part of its evidence, its memorandum circulars on the study being conducted on ship-generated waste treatment and disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes accumulated or washed to shore. The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay On September 13, 2002, the RTC rendered a Decision[5] in favor of respondents. The dispositive portion reads: WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering the abovenamed defendant-government agencies, jointly and solidarily, to clean up and rehabilitate Manila Bay and restore its waters to SB classification to make it fit for swimming, skin-diving and other forms of contact recreation. To attain this, defendant-agencies, with defendant DENR as the lead agency, are directed, within six (6) months from receipt hereof, to act and perform their respective duties by devising a consolidated, coordinated and concerted scheme of action for the rehabilitation and restoration of the bay. In particular: Defendant MWSS is directed to install, operate and maintain adequate [sewerage] treatment facilities in strategic places under its jurisdiction and increase their capacities. Defendant LWUA, to see to it that the water districts under its wings, provide, construct and operate sewage facilities for the proper disposal of waste.

Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install, operate and maintain waste facilities to rid the bay of toxic and hazardous substances. Defendant PPA, to prevent and also to treat the discharge not only of ship-generated wastes but also of other solid and liquid wastes from docking vessels that contribute to the pollution of the bay. Defendant MMDA, to establish, operate and maintain an adequate and appropriate sanitary landfill and/or adequate solid waste and liquid disposal as well as other alternative garbage disposal system such as reuse or recycling of wastes. Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize the marine life in Manila Bay and restock its waters with indigenous fish and other aquatic animals. Defendant DBM, to provide and set aside an adequate budget solely for the purpose of cleaning up and rehabilitation of Manila Bay. Defendant DPWH, to remove and demolish structures and other nuisances that obstruct the free flow of waters to the bay. These nuisances discharge solid and liquid wastes which eventually end up in Manila Bay. As the construction and engineering arm of the government, DPWH is ordered to actively participate in removing debris, such as carcass of sunken vessels, and other non-biodegradable garbage in the bay. Defendant DOH, to closely supervise and monitor the operations of septic and sludge companies and require them to have proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. Defendant DECS, to inculcate in the minds and hearts of the people through education the importance of preserving and protecting the environment. Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all costs the Manila Bay from all forms of illegal fishing. No pronouncement as to damages and costs. SO ORDERED.

The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the Court of Appeals (CA) individual Notices of Appeal which were eventually consolidated and docketed as CA-G.R. CV No. 76528. On the other hand, the DENR, Department of Public Works and Highways (DPWH), Metropolitan Manila Development Authority (MMDA), Philippine Coast Guard (PCG), Philippine National Police (PNP) Maritime Group, and five other executive departments and agencies filed directly with this Court a petition for review under Rule 45. The Court, in a Resolution of December 9, 2002, sent the said petition to the CA for consolidation with the consolidated appeals of MWSS, LWUA, and PPA, docketed as CA-G.R. SP No. 74944. Petitioners, before the CA, were one in arguing in the main that the pertinent provisions of the Environment Code (PD 1152) relate only to the cleaning of specific pollution incidents and do not cover cleaning in general. And apart from raising concerns about the lack of funds appropriated for cleaning purposes, petitioners also asserted that the cleaning of the Manila Bay is not a ministerial act which can be compelled by mandamus.

The CA Sustained the RTC By a Decision[6] of September 28, 2005, the CA denied petitioners appeal and affirmed the Decision of the RTC in toto, stressing that the trial courts decision did not require petitioners to do tasks outside of their usual basic functions under existing laws.[7] Petitioners are now before this Court praying for the allowance of their Rule 45 petition on the following ground and supporting arguments: THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE PASSED UPON BY THE HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL COURTS DECISION DECLARING THAT SECTION 20 OF [PD] 1152 REQUIRES CONCERNED GOVERNMENT

AGENCIES TO REMOVE ALL POLLUTANTS SPILLED DISCHARGED IN THE WATER SUCH AS FECAL COLIFORMS. ARGUMENTS

AND

I [SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF SPECIFIC POLLUTION INCIDENTS AND [DO] NOT COVER CLEANING IN GENERAL II THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A MINISTERIAL ACT OF PETITIONERS THAT CAN BE COMPELLED BY MANDAMUS.

The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the headings, Upgrading of Water Quality and Clean-up Operations, envisage a cleanup in general or are they limited only to the cleanup of specific pollution incidents? And second, can petitioners be compelled by mandamus to clean up and rehabilitate the Manila Bay? On August 12, 2008, the Court conducted and heard the parties on oral arguments. Our Ruling We shall first dwell on the propriety of the issuance of mandamus under the premises. The Cleaning or Rehabilitation of Manila Bay Can be Compelled by Mandamus Generally, the writ of mandamus lies to require the execution of a ministerial duty.[8] A ministerial duty is one that requires neither the exercise of official discretion nor judgment.[9] It connotes an act in which nothing is left to the discretion of the

person executing it. It is a simple, definite duty arising under conditions admitted or proved to exist and imposed by law.[10] Mandamus is available to compel action, when refused, on matters involving discretion, but not to direct the exercise of judgment or discretion one way or the other. Petitioners maintain that the MMDAs duty to take measures and maintain adequate solid waste and liquid disposal systems necessarily involves policy evaluation and the exercise of judgment on the part of the agency concerned. They argue that the MMDA, in carrying out its mandate, has to make decisions, including choosing where a landfill should be located by undertaking feasibility studies and cost estimates, all of which entail the exercise of discretion. Respondents, on the other hand, counter that the statutory command is clear and that petitioners duty to comply with and act according to the clear mandate of the law does not require the exercise of discretion. According to respondents, petitioners, the MMDA in particular, are without discretion, for example, to choose which bodies of water they are to clean up, or which discharge or spill they are to contain. By the same token, respondents maintain that petitioners are bereft of discretion on whether or not to alleviate the problem of solid and liquid waste disposal; in other words, it is the MMDAs ministerial duty to attend to such services. We agree with respondents. First off, we wish to state that petitioners obligation to perform their duties as defined by law, on one hand, and how they are to carry out such duties, on the other, are two different concepts. While the implementation of the MMDAs mandated tasks may entail a decision-making process, the enforcement of the law or the very act of doing what the law exacts to be done is ministerial in nature and may be compelled by mandamus. We said so in Social Justice Society v. Atienza[11] in which the Court directed the City of Manila to enforce, as a matter of ministerial duty, its Ordinance No. 8027 directing the three big local oil players to cease and desist from operating their business in the so-called Pandacan Terminals within six months from the effectivity of the

ordinance. But to illustrate with respect to the instant case, the MMDAs duty to put up an adequate and appropriate sanitary landfill and solid waste and liquid disposal as well as other alternative garbage disposal systems is ministerial, its duty being a statutory imposition. The MMDAs duty in this regard is spelled out in Sec. 3(c) of Republic Act No. (RA) 7924 creating the MMDA. This section defines and delineates the scope of the MMDAs waste disposal services to include: Solid waste disposal and management which include formulation and implementation of policies, standards, programs and projects for proper and sanitary waste disposal. It shall likewise include the establishment and operation of sanitary land fill and related facilities and the implementation of other alternative programs intended to reduce, reuse and recycle solid waste. (Emphasis added.)

The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste Management Act (RA 9003) which prescribes the minimum criteria for the establishment of sanitary landfills and Sec. 42 which provides the minimum operating requirements that each site operator shall maintain in the operation of a sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003,[12] enjoining the MMDA and local government units, among others, after the effectivity of the law on February 15, 2001, from using and operating open dumps for solid waste and disallowing, five years after such effectivity, the use of controlled dumps. The MMDAs duty in the area of solid waste disposal, as may be noted, is set forth not only in the Environment Code (PD 1152) and RA 9003, but in its charter as well. This duty of putting up a proper waste disposal system cannot be characterized as discretionary, for, as earlier stated, discretion presupposes the power or right given by law to public functionaries to act officially according to their judgment or conscience.[13] A discretionary duty is one that allows a person to exercise judgment and choose to perform or not to perform.[14] Any suggestion that the MMDA has the option whether or not to perform its solid waste disposal-related duties ought to be dismissed for want of legal basis.

A perusal of other petitioners respective charters or like enabling statutes and pertinent laws would yield this conclusion: these government agencies are enjoined, as a matter of statutory obligation, to perform certain functions relating directly or indirectly to the cleanup, rehabilitation, protection, and preservation of the Manila Bay. They are precluded from choosing not to perform these duties. Consider: (1) The DENR, under Executive Order No. (EO) 192,[15] is the primary agency responsible for the conservation, management, development, and proper use of the countrys environment and natural resources. Sec. 19 of the Philippine Clean Water Act of 2004 (RA 9275), on the other hand, designates the DENR as the primary government agency responsible for its enforcement and implementation, more particularly over all aspects of water quality management. On water pollution, the DENR, under the Acts Sec. 19(k), exercises jurisdiction over all aspects of water pollution, determine[s] its location, magnitude, extent, severity, causes and effects and other pertinent information on pollution, and [takes] measures, using available methods and technologies, to prevent and abate such pollution. The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status Report, an Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area Action Plan which is nationwide in scope covering the Manila Bay and adjoining areas. Sec. 19 of RA 9275 provides: Sec. 19 Lead Agency.The [DENR] shall be the primary government agency responsible for the implementation and enforcement of this Act x x x unless otherwise provided herein. As such, it shall have the following functions, powers and responsibilities: a) Prepare a National Water Quality Status report within twenty-four (24) months from the effectivity of this Act: Provided, That the Department shall thereafter review or revise and publish annually, or as the need arises, said report; Prepare an Integrated Water Quality Management Framework within twelve (12) months following the completion of the status report;

b)

c)

Prepare a ten (10) year Water Quality Management Area Action Plan within 12 months following the completion of the framework for each designated water management area. Such action plan shall be reviewed by the water quality management area governing board every five (5) years or as need arises.

The DENR has prepared the status report for the period 2001 to 2005 and is in the process of completing the preparation of the Integrated Water Quality Management Framework.[16] Within twelve (12) months thereafter, it has to submit a final Water Quality Management Area Action Plan.[17] Again, like the MMDA, the DENR should be made to accomplish the tasks assigned to it under RA 9275. Parenthetically, during the oral arguments, the DENR Secretary manifested that the DENR, with the assistance of and in partnership with various government agencies and non-government organizations, has completed, as of December 2005, the final draft of a comprehensive action plan with estimated budget and time frame, denominated as Operation Plan for the Manila Bay Coastal Strategy, for the rehabilitation, restoration, and rehabilitation of the Manila Bay. The completion of the said action plan and even the implementation of some of its phases should more than ever prod the concerned agencies to fast track what are assigned them under existing laws. (2) The MWSS, under Sec. 3 of RA 6234,[18] is vested with jurisdiction, supervision, and control over all waterworks and sewerage systems in the territory comprising what is now the cities of Metro Manila and several towns of the provinces of Rizal and Cavite, and charged with the duty: (g) To construct, maintain, and operate such sanitary sewerages as may be necessary for the proper sanitation and other uses of the cities and towns comprising the System; x x x

(3) The LWUA under PD 198 has the power of supervision and control over local water districts. It can prescribe the minimum standards and regulations for the

operations of these districts and shall monitor and evaluate local water standards. The LWUA can direct these districts to construct, operate, and furnish facilities and services for the collection, treatment, and disposal of sewerage, waste, and storm water. Additionally, under RA 9275, the LWUA, as attached agency of the DPWH, is tasked with providing sewerage and sanitation facilities, inclusive of the setting up of efficient and safe collection, treatment, and sewage disposal system in the different parts of the country.[19] In relation to the instant petition, the LWUA is mandated to provide sewerage and sanitation facilities in Laguna, Cavite, Bulacan, Pampanga, and Bataan to prevent pollution in the Manila Bay. (4) The Department of Agriculture (DA), pursuant to the Administrative Code of 1987 (EO 292),[20] is designated as the agency tasked to promulgate and enforce all laws and issuances respecting the conservation and proper utilization of agricultural and fishery resources. Furthermore, the DA, under the Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local government units (LGUs) and other concerned sectors, in charge of establishing a monitoring, control, and surveillance system to ensure that fisheries and aquatic resources in Philippine waters are judiciously utilized and managed on a sustainable basis.[21] Likewise under RA 9275, the DA is charged with coordinating with the PCG and DENR for the enforcement of water quality standards in marine waters.[22] More specifically, its Bureau of Fisheries and Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall primarily be responsible for the prevention and control of water pollution for the development, management, and conservation of the fisheries and aquatic resources. (5) The DPWH, as the engineering and construction arm of the national government, is tasked under EO 292[23] to provide integrated planning, design, and construction services for, among others, flood control and water resource development systems in accordance with national development objectives and approved government plans and specifications. In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to perform metro-wide services relating to flood control and sewerage management

which include the formulation and implementation of policies, standards, programs and projects for an integrated flood control, drainage and sewerage system. On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH and MMDA, whereby MMDA was made the agency primarily responsible for flood control in Metro Manila. For the rest of the country, DPWH shall remain as the implementing agency for flood control services. The mandate of the MMDA and DPWH on flood control and drainage services shall include the removal of structures, constructions, and encroachments built along rivers, waterways, and esteros (drainages) in violation of RA 7279, PD 1067, and other pertinent laws. (6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast Guard Law of 1974, and Sec. 6 of PD 979,[24] or the Marine Pollution Decree of 1976, shall have the primary responsibility of enforcing laws, rules, and regulations governing marine pollution within the territorial waters of thePhilippines. It shall promulgate its own rules and regulations in accordance with the national rules and policies set by the National Pollution Control Commission upon consultation with the latter for the effective implementation and enforcement of PD 979. It shall, under Sec. 4 of the law, apprehend violators who: a. discharge, dump x x x harmful substances from or out of any ship, vessel, barge, or any other floating craft, or other man-made structures at sea, by any method, means or manner, into or upon the territorial and inland navigable waters of the Philippines; b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown, discharged, or deposited either from or out of any ship, barge, or other floating craft or vessel of any kind, or from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter of any kind or description whatever other than that flowing from streets and sewers and passing therefrom in a liquid state into tributary of any navigable water from which the same shall float or be washed into such navigable water; and c. deposit x x x material of any kind in any place on the bank of any navigable water or on the bank of any tributary of any navigable water, where the same shall be liable to be washed into such navigable water,

either by ordinary or high tides, or by storms or floods, or otherwise, whereby navigation shall or may be impeded or obstructed or increase the level of pollution of such water.

(7) When RA 6975 or the Department of the Interior and Local Government (DILG) Act of 1990 was signed into law on December 13, 1990, the PNP Maritime Group was tasked to perform all police functions over the Philippine territorial waters and rivers. Under Sec. 86, RA 6975, the police functions of the PCG shall be taken over by the PNP when the latter acquires the capability to perform such functions. Since the PNP Maritime Group has not yet attained the capability to assume and perform the police functions of PCG over marine pollution, the PCG and PNP Maritime Group shall coordinate with regard to the enforcement of laws, rules, and regulations governing marine pollution within the territorial waters of the Philippines. This was made clear in Sec. 124, RA 8550 or the Philippine Fisheries Code of 1998, in which both the PCG and PNP Maritime Group were authorized to enforce said law and other fishery laws, rules, and regulations.[25] (8) In accordance with Sec. 2 of EO 513, the PPA is mandated to establish, develop, regulate, manage and operate a rationalized national port system in support of trade and national development.[26] Moreover, Sec. 6-c of EO 513 states that the PPA has police authority within the ports administered by it as may be necessary to carry out its powers and functions and attain its purposes and objectives, without prejudice to the exercise of the functions of the Bureau of Customs and other law enforcement bodies within the area. Such police authority shall include the following: xxxx b) To regulate the entry to, exit from, and movement within the port, of persons and vehicles, as well as movement within the port of watercraft.[27]

Lastly, as a member of the International Marine Organization and a signatory to the International Convention for the Prevention of Pollution from Ships, as amended by

MARPOL 73/78,[28] the Philippines, through the PPA, must ensure the provision of adequate reception facilities at ports and terminals for the reception of sewage from the ships docking in Philippine ports. Thus, the PPA is tasked to adopt such measures as are necessary to prevent the discharge and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at ports and apprehend the violators. When the vessels are not docked at ports but within Philippine territorial waters, it is the PCG and PNP Maritime Group that have jurisdiction over said vessels. (9) The MMDA, as earlier indicated, is duty-bound to put up and maintain adequate sanitary landfill and solid waste and liquid disposal system as well as other alternative garbage disposal systems. It is primarily responsible for the implementation and enforcement of the provisions of RA 9003, which would necessary include its penal provisions, within its area of jurisdiction.[29] Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently violated are dumping of waste matters in public places, such as roads, canals or esteros, open burning of solid waste, squatting in open dumps and landfills, open dumping, burying of biodegradable or non- biodegradable materials in flood-prone areas, establishment or operation of open dumps as enjoined in RA 9003, and operation of waste management facilities without an environmental compliance certificate. Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279), eviction or demolition may be allowed when persons or entities occupy danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks and playgrounds. The MMDA, as lead agency, in coordination with the DPWH, LGUs, and concerned agencies, can dismantle and remove all structures, constructions, and other encroachments built in breach of RA 7279 and other pertinent laws along the rivers, waterways, and esteros in Metro Manila. With respect to rivers, waterways, and esteros in Bulacan, Bataan, Pampanga, Cavite, and Laguna that discharge wastewater directly or eventually into the Manila Bay, the DILG shall direct the concerned LGUs to implement the demolition

and removal of such structures, constructions, and other encroachments built in violation of RA 7279 and other applicable laws in coordination with the DPWH and concerned agencies. (10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water Code), is tasked to promulgate rules and regulations for the establishment of waste disposal areas that affect the source of a water supply or a reservoir for domestic or municipal use. And under Sec. 8 of RA 9275, the DOH, in coordination with the DENR, DPWH, and other concerned agencies, shall formulate guidelines and standards for the collection, treatment, and disposal of sewage and the establishment and operation of a centralized sewage treatment system. In areas not considered as highly urbanized cities, septage or a mix sewerage-septage management system shall be employed. In accordance with Sec. 72[30] of PD 856, the Code of Sanitation of the Philippines, and Sec. 5.1.1[31] of Chapter XVII of its implementing rules, the DOH is also ordered to ensure the regulation and monitoring of the proper disposal of wastes by private sludge companies through the strict enforcement of the requirement to obtain an environmental sanitation clearance of sludge collection treatment and disposal before these companies are issued their environmental sanitation permit. (11) The Department of Education (DepEd), under the Philippine Environment Code (PD 1152), is mandated to integrate subjects on environmental education in its school curricula at all levels.[32] Under Sec. 118 of RA 8550, the DepEd, in collaboration with the DA, Commission on Higher Education, and Philippine Information Agency, shall launch and pursue a nationwide educational campaign to promote the development, management, conservation, and proper use of the environment. Under the Ecological Solid Waste Management Act (RA 9003), on the other hand, it is directed to strengthen the integration of environmental concerns in school curricula at all levels, with an emphasis on waste management principles.[33] (12) The Department of Budget and Management (DBM) is tasked under Sec. 2, Title XVII of the Administrative Code of 1987 to ensure the efficient and sound

utilization of government funds and revenues so as to effectively achieve the countrys development objectives.[34] One of the countrys development objectives is enshrined in RA 9275 or the Philippine Clean Water Act of 2004. This law stresses that the State shall pursue a policy of economic growth in a manner consistent with the protection, preservation, and revival of the quality of our fresh, brackish, and marine waters. It also provides that it is the policy of the government, among others, to streamline processes and procedures in the prevention, control, and abatement of pollution mechanisms for the protection of water resources; to promote environmental strategies and use of appropriate economic instruments and of control mechanisms for the protection of water resources; to formulate a holistic national program of water quality management that recognizes that issues related to this management cannot be separated from concerns about water sources and ecological protection, water supply, public health, and quality of life; and to provide a comprehensive management program for water pollution focusing on pollution prevention. Thus, the DBM shall then endeavor to provide an adequate budget to attain the noble objectives of RA 9275 in line with the countrys development objectives. All told, the aforementioned enabling laws and issuances are in themselves clear, categorical, and complete as to what are the obligations and mandate of each agency/petitioner under the law. We need not belabor the issue that their tasks include the cleanup of the Manila Bay. Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code encompass the cleanup of water pollution in general, not just specific pollution incidents? Secs. 17 and 20 of the Environment Code Include Cleaning in General The disputed sections are quoted as follows:

Section 17. Upgrading of Water Quality.Where the quality of water has deteriorated to a degree where its state will adversely affect its best usage, the government agencies concerned shall take such measures as may be necessary to upgrade the quality of such water to meet the prescribed water quality standards. Section 20. Clean-up Operations.It shall be the responsibility of the polluter to contain, remove and clean-up water pollution incidents at his own expense. In case of his failure to do so, the government agencies concerned shall undertake containment, removal and clean-up operations and expenses incurred in said operations shall be charged against the persons and/or entities responsible for such pollution.

When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, Cleanup Operations, amended the counterpart provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17 of PD 1152 continues, however, to be operational.

The amendatory Sec. 16 of RA 9275 reads: SEC. 16. Cleanup Operations.Notwithstanding the provisions of Sections 15 and 26 hereof, any person who causes pollution in or pollutes water bodies in excess of the applicable and prevailing standards shall be responsible to contain, remove and clean up any pollution incident at his own expense to the extent that the same water bodies have been rendered unfit for utilization and beneficial use: Provided, That in the event emergency cleanup operations are necessary and the polluter fails to immediately undertake the same, the [DENR] in coordination with other government agencies concerned, shall undertake containment, removal and cleanup operations. Expenses incurred in said operations shall be reimbursed by the persons found to have caused such pollution under proper administrative determination x x x. Reimbursements of the cost incurred shall be made to the Water Quality Management Fund or to such other funds where said disbursements were sourced.

As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent than real since the amendment, insofar as it is relevant to this case, merely consists in the designation of the DENR as lead agency in the cleanup operations. Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern themselves only with the matter of cleaning up in specific pollution incidents, as opposed to cleanup in general. They aver that the twin provisions would have to be read alongside the succeeding Sec. 62(g) and (h), which defines the terms cleanup operations and accidental spills, as follows: g. Clean-up Operations [refer] to activities conducted in removing the pollutants discharged or spilled in water to restore it to prespill condition. h. Accidental Spills [refer] to spills of oil or other hazardous substances in water that result from accidents such as collisions and groundings.

Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the government agencies concerned to undertake containment, removal, and cleaning operations of a specific polluted portion or portions of the body of water concerned. They maintain that the application of said Sec. 20 is limited only to water pollution incidents, which are situations that presuppose the occurrence of specific, isolated pollution events requiring the corresponding containment, removal, and cleaning operations. Pushing the point further, they argue that the aforequoted Sec. 62(g) requires cleanup operations to restore the body of water to pre -spill condition, which means that there must have been a specific incident of either intentional or accidental spillage of oil or other hazardous substances, as mentioned in Sec. 62(h). As a counterpoint, respondents argue that petitioners erroneously read Sec. 62(g) as delimiting the application of Sec. 20 to the containment, removal, and cleanup operations for accidental spills only. Contrary to petitioners posture, respondents assert that Sec. 62(g), in fact, even expanded the coverage of Sec. 20. Respondents explain that without its Sec. 62(g), PD 1152 may have indeed covered only pollution accumulating

from the day-to-day operations of businesses around the Manila Bay and other sources of pollution that slowly accumulated in the bay. Respondents, however, emphasize that Sec. 62(g), far from being a delimiting provision, in fact even enlarged the operational scope of Sec. 20, by including accidental spills as among the water pollution incidents contemplated in Sec. 17 in relation to Sec. 20 of PD 1152. To respondents, petitioners parochial view on environmental issues, coupled with their narrow reading of their respective mandated roles, has contributed to the worsening water quality of the Manila Bay. Assuming, respondents assert, that petitioners are correct in saying that the cleanup coverage of Sec. 20 of PD 1152 is constricted by the definition of the phrase cleanup operations embodied in Sec. 62(g), Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases cleanup operations and accidental spills do not appear in said Sec. 17, not even in the chapter where said section is found. Respondents are correct. For one thing, said Sec. 17 does not in any way state that the government agencies concerned ought to confine themselves to the containment, removal, and cleaning operations when a specific pollution incident occurs. On the contrary, Sec. 17 requires them to act even in the absence of a specific pollution incident, as long as water quality has deteriorated to a degree wher e its state will adversely affect its best usage. This section, to stress, commands concerned government agencies, when appropriate, to take such measures as may be necessary to meet the prescribed water quality standards. In fine, the underlying duty t o upgrade the quality of water is not conditional on the occurrence of any pollution incident. For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that it is properly applicable to a specific situation in which the pollution is caused by polluters who fail to clean up the mess they left behind. In such instance, the concerned government agencies shall undertake the cleanup work for the polluters account. Petitioners assertion, that they have to perform cleanup operations in the Manila Bay only when there is a water pollution incident and the erring polluters do not undertake the containment, removal, and cleanup operations, is quite off mark.

As earlier discussed, the complementary Sec. 17 of the Environment Code comes into play and the specific duties of the agencies to clean up come in even if there are no pollution incidents staring at them. Petitioners, thus, cannot plausibly invoke and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that their cleanup mandate depends on the happening of a specific pollution incident. In this regard, what the CA said with respect to the impasse over Secs. 17 and 20 of PD 1152 is at once valid as it is practical. The appellate court wrote: PD 1152 aims to introduce a comprehensive program of environmental protection and management. This is better served by making Secs. 17 & 20 of general application rather than limiting them to specific pollution incidents.[35] Granting arguendo that petitioners position thus described vis--vis the

implementation of Sec. 20 is correct, they seem to have overlooked the fact that the pollution of the Manila Bay is of such magnitude and scope that it is well-nigh impossible to draw the line between a specific and a general pollution incident. And such impossibility extends to pinpointing with reasonable certainty who the polluters are. We note that Sec. 20 of PD 1152 mentions water pollution incidents which may be caused by polluters in the waters of the Manila Bay itself or by polluters in adjoining lands and in water bodies or waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically adverts to any person who causes pollution in or pollutes water bodies, which may refer to an individual or an establishment that pollutes the land mass near the Manila Bay or the waterways, such that the contaminants eventually end up in the bay. In this situation, the water pollution incidents are so numerous and involve nameless and faceless polluters that they can validly be categorized as beyond the specific pollution incident level. Not to be ignored of course is the reality that the government agencies concerned are so undermanned that it would be almost impossible to apprehend the numerous polluters of the Manila Bay. It may perhaps not be amiss to say that the apprehension, if any, of the Manila Bay polluters has been few and far between. Hence, practically nobody has been required to contain, remove, or clean up a given water pollution incident. In this kind of setting, it behooves the Government to step in and undertake

cleanup operations. Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers for all intents and purposes a general cleanup situation. The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage of the long-term solution. The preservation of the water quality of the bay after the rehabilitation process is as important as the cleaning phase. It is imperative then that the wastes and contaminants found in the rivers, inland bays, and other bodies of water be stopped from reaching the Manila Bay. Otherwise, any cleanup effort would just be a futile, cosmetic exercise, for, in no time at all, the Manila Bay water quality would again deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and other relevant laws. It thus behooves the Court to put the heads of the petitionerdepartment-agencies and the bureaus and offices under them on continuing notice about, and to enjoin them to perform, their mandates and duties towards cleaning up the Manila Bay and preserving the quality of its water to the ideal level. Under what other judicial discipline describes as continuing mandamus,[36] the Court may, under extraordinary circumstances, issue directives with the end in view of ensuring that its decision would not be set to naught by administrative inaction or indifference. In India, the doctrine of continuing mandamus was used to enforce directives of the court to clean up the length of the Ganges River from industrial and municipal pollution.[37] The Court can take judicial notice of the presence of shanties and other unauthorized structures which do not have septic tanks along the Pasig-Marikina-San Juan Rivers, the National Capital Region (NCR) (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycuayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and connecting waterways, river banks, and esteros which discharge their waters, with all the accompanying filth, dirt, and garbage, into the major rivers and eventually the Manila Bay. If there is one factor responsible for the pollution of the major river systems and the Manila Bay, these unauthorized structures would be on top of the list. And if the issue of illegal or unauthorized structures is not seriously addressed with sustained resolve, then practically all efforts to cleanse these important bodies of water would be for naught. The DENR Secretary said as much.[38]

Giving urgent dimension to the necessity of removing these illegal structures is Art. 51 of PD 1067 or the Water Code,[39] which prohibits the building of structures within a given length along banks of rivers and other waterways. Art. 51 reads: The banks of rivers and streams and the shores of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas and forty (40) meters in forest areas, along their margins, are subject to the easement of public use in the interest of recreation, navigation, floatage, fishing and salvage. No person shall be allowed to stay in this zone longer than what is necessary for recreation, navigation, floatage, fishing or salvage or to build structures of any kind. (Emphasis added.)

Judicial notice may likewise be taken of factories and other industrial establishments standing along or near the banks of the Pasig River, other major rivers, and connecting waterways. But while they may not be treated as unauthorized constructions, some of these establishments undoubtedly contribute to the pollution of the Pasig River and waterways. The DILG and the concerned LGUs, have, accordingly, the duty to see to it that non-complying industrial establishments set up, within a reasonable period, the necessary waste water treatment facilities and infrastructure to prevent their industrial discharge, including their sewage waters, from flowing into the Pasig River, other major rivers, and connecting waterways. After such period, noncomplying establishments shall be shut down or asked to transfer their operations. At this juncture, and if only to dramatize the urgency of the need for petitionersagencies to comply with their statutory tasks, we cite the Asian Development Bankcommissioned study on the garbage problem in Metro Manila, the results of which are embodied in the The Garbage Book. As there reported, the garbage crisis in the metropolitan area is as alarming as it is shocking. Some highlights of the report: 1. As early as 2003, three land-filled dumpsites in Metro Manila the Payatas, Catmon and Rodriquez dumpsites - generate an alarming quantity of lead and leachate or liquid run-off. Leachate are toxic liquids that flow along the surface and seep into the earth and poison the surface

and groundwater that are used for drinking, aquatic life, and the environment. 2. The high level of fecal coliform confirms the presence of a large amount of human waste in the dump sites and surrounding areas, which is presumably generated by households that lack alternatives to sanitation. To say that Manila Bay needs rehabilitation is an understatement. 3. Most of the deadly leachate, lead and other dangerous contaminants and possibly strains of pathogens seeps untreated into ground water and runs into theMarikina and Pasig River systems and Manila Bay.[40] Given the above perspective, sufficient sanitary landfills should now more than ever be established as prescribed by the Ecological Solid Waste Management Act (RA 9003). Particular note should be taken of the blatant violations by some LGUs and possibly the MMDA of Sec. 37, reproduced below: Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste. No open dumps shall be established and operated, nor any practice or disposal of solid waste by any person, including LGUs which [constitute] the use of open dumps for solid waste, be allowed after the effectivity of this Act: Provided, further that no controlled dumps shall be allowed (5) years following the effectivity of this Act. (Emphasis added.)

RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years which ended on February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies with the prescribed standards under RA 9003 has yet been set up. In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like littering, dumping of waste matters in roads, canals, esteros, and other public places, operation of open dumps, open burning of solid waste, and the like. Some sludge companies which do not have proper disposal facilities simply discharge sludge into the Metro Manila sewerage system that ends up in the Manila Bay. Equally unabated are violations of Sec. 27 of RA 9275, which enjoins the pollution of water bodies, groundwater pollution, disposal of infectious wastes from vessels, and unauthorized

transport or dumping into sea waters of sewage or solid waste and of Secs. 4 and 102 of RA 8550 which proscribes the introduction by human or machine of substances to the aquatic environment including dumping/disposal of waste and other marine litters, discharge of petroleum or residual products of petroleum of carbonaceous materials/substances [and other] radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or air transport or other human-made structure. In the light of the ongoing environmental degradation, the Court wishes to emphasize the extreme necessity for all concerned executive departments and agencies to immediately act and discharge their respective official duties and obligations. Indeed, time is of the essence; hence, there is a need to set timetables for the performance and completion of the tasks, some of them as defined for them by law and the nature of their respective offices and mandates. The importance of the Manila Bay as a sea resource, playground, and as a historical landmark cannot be over-emphasized. It is not yet too late in the day to restore the Manila Bay to its former splendor and bring back the plants and sea life that once thrived in its blue waters. But the tasks ahead, daunting as they may be, could only be accomplished if those mandated, with the help and cooperation of all civicminded individuals, would put their minds to these tasks and take responsibility. This means that the State, through petitioners, has to take the lead in the preservation and protection of the Manila Bay. The era of delays, procrastination, and ad hoc measures is over. Petitioners must transcend their limitations, real or imaginary, and buckle down to work before the problem at hand becomes unmanageable. Thus, we must reiterate that different government agencies and instrumentalities cannot shirk from their mandates; they must perform their basic functions in cleaning up and rehabilitating the Manila Bay. We are disturbed by petitioners hiding behind two untenable claims: (1) that there ought to be a specific pollution incident before they are required to act; and (2) that the cleanup of the bay is a discretionary duty.

RA 9003 is a sweeping piece of legislation enacted to radically transform and improve waste management. It implements Sec. 16, Art. II of the 1987 Constitution, which explicitly provides that the State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and healthful ecology need not even be written in the Constitution for it is assumed, like other civil and political rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of transcendental importance with intergenerational implications.[41] Even assuming the absence of a categorical legal provision specifically prodding petitioners to clean up the bay, they and the men and women representing them cannot escape their obligation to future generations of Filipinos to keep the waters of the Manila Bay clean and clear as humanly as possible. Anything less would be a betrayal of the trust reposed in them. WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in CA-G.R. CV No. 76528 and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No. 1851-99 are AFFIRMED but with MODIFICATIONS in view of subsequent developments or supervening events in the case. The fallo of the RTC Decision shall now read: WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-government agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and maintain its waters to SB level (Class B sea waters per Water Classification Tables under DENR Administrative Order No. 34 [1990]) to make them fit for swimming, skindiving, and other forms of contact recreation. In particular: (1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the conservation, management, development, and proper use of the countrys environment and natural resources, and Sec. 19 of RA 9275, designating the

DENR as the primary government agency responsible for its enforcement and implementation, the DENR is directed to fully implement its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation, restoration, and conservation of the Manila Bay at the earliest possible time. It is ordered to call regular coordination meetings with concerned government departments and agencies to ensure the successful implementation of the aforesaid plan of action in accordance with its indicated completion schedules. (2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the Local Government Code of 1991,[42] the DILG, in exercising the Presidents power of general supervision and its duty to promulgate gu idelines in establishing waste management programs under Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments, and private homes along the banks of the major river systems in their respective areas of jurisdiction, such as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and waterways that eventually discharge water into the Manila Bay; and the lands abutting the bay, to determine whether they have wastewater treatment facilities or hygienic septic tanks as prescribed by existing laws, ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to require non-complying establishments and homes to set up said facilities or septic tanks within a reasonable time to prevent industrial wastes, sewage water, and human wastes from flowing into these rivers, waterways, esteros, and the Manila Bay, under pain of closure or imposition of fines and other sanctions. (3) As mandated by Sec. 8 of RA 9275,[43] the MWSS is directed to provide, install, operate, and maintain the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite where needed at the earliest possible time.

(4) Pursuant to RA 9275,[44] the LWUA, through the local water districts and in coordination with the DENR, is ordered to provide, install, operate, and maintain sewerage and sanitation facilities and the efficient and safe collection, treatment, and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga, and Bataan where needed at the earliest possible time. (5) Pursuant to Sec. 65 of RA 8550,[45] the DA, through the BFAR, is ordered to improve and restore the marine life of the Manila Bay. It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and aquatic resources in the Manila Bay. (6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with Sec. 124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550, and other existing laws and regulations designed to prevent marine pollution in the Manila Bay. (7) Pursuant to Secs. 2 and 6-c of EO 513[46] and the International Convention for the Prevention of Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the discharge and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at ports and apprehend the violators. (8) The MMDA, as the lead agency and implementor of programs and projects for flood control projects and drainage services in Metro Manila, in coordination with the DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and Urban Development Coordinating Council (HUDCC), and other agencies, shall dismantle and remove all structures, constructions, and other encroachments established or built in violation of RA 7279, and other applicable laws along the Pasig-Marikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-TullahanTenejeros Rivers, and connecting waterways and esteros in Metro Manila. The DPWH, as the principal implementor of programs and projects for flood control services in the

rest of the country more particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC, and other concerned government agencies, shall remove and demolish all structures, constructions, and other encroachments built in breach of RA 7279 and other applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other rivers, connecting waterways, and esteros that discharge wastewater into the Manila Bay. In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed by RA 9003, within a period of one (1) year from finality of this Decision. On matters within its territorial jurisdiction and in connection with the discharge of its duties on the maintenance of sanitary landfills and like undertakings, it is also ordered to cause the apprehension and filing of the appropriate criminal cases against violators of the respective penal provisions of RA 9003,[47] Sec. 27 of RA 9275 (the Clean Water Act), and other existing laws on pollution. (9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from finality of this Decision, determine if all licensed septic and sludge companies have the proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. The DOH shall give the companies, if found to be non-complying, a reasonable time within which to set up the necessary facilities under pain of cancellation of its environmental sanitation clearance. (10) Pursuant to Sec. 53 of PD 1152,[48] Sec. 118 of RA 8550, and Sec. 56 of RA 9003,[49] the DepEd shall integrate lessons on pollution prevention, waste management, environmental protection, and like subjects in the school curricula of all levels to inculcate in the minds and hearts of students and, through them, their parents and friends, the importance of their duty toward achieving and maintaining a balanced and healthful ecosystem in the Manila Bay and the entire Philippine archipelago. (11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of 2010 and succeeding years to cover the expenses relating to the

cleanup, restoration, and preservation of the water quality of the Manila Bay, in line with the countrys development objective to attain economic growth in a manner consistent with the protection, preservation, and revival of our marine waters. (12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of continuing mandamus, shall, from finality of this Decision, each submit to the Court a quarterly progressive report of the activities undertaken in accordance with this Decision. No costs.

EN BANC BORACAY FOUNDATION, INC., Petitioner, G.R. No. 196870

Present:

CARPIO, - versus VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, THE PROVINCE OF AKLAN, REPRESENTED BY GOVERNOR CARLITO S. MARQUEZ, THE PHILIPPINE RECLAMATION AUTHORITY, AND THE DENR-EMB (REGION VI), Respondents. BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA,* SERENO, REYES, and PERLAS-BERNABE, JJ. Promulgated:

June 26, 2012

x--------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

In resolving this controversy, the Court took into consideration that all the parties involved share common goals in pursuit of certain primordial State policies and principles that are enshrined in the Constitution and pertinent laws, such as the protection of the environment, the empowerment of the local government units, the promotion of tourism, and the encouragement of the participation of the private sector. The Court seeks to reconcile the respective roles, duties and responsibilities of the petitioner and respondents in achieving these shared goals within the context of our Constitution, laws and regulations.

Nature of the Case

This is an original petition for the issuance of an Environmental Protection Order in the nature of a continuing mandamus under A.M. No. 09-6-8-SC, otherwise known as the Rules of Procedure for Environmental Cases, promulgated on April 29, 2010.

The Parties

Petitioner Boracay Foundation, Inc. (petitioner) is a duly registered, nonstock domestic corporation. Its primary purpose is to foster a united, concerted and environment-conscious development of Boracay Island, thereby preserving and maintaining its culture, natural beauty and ecological balance, marking the island as the crown jewel of Philippine tourism, a prime tourist destination in Asia and the whole world.[1] It counts among its members at least sixty (60) owners and representatives of resorts, hotels, restaurants, and similar institutions; at least five community organizations; and several environmentally-conscious residents and advocates.[2]

Respondent Province of Aklan (respondent Province) is a political subdivision of the government created pursuant to Republic Act No. 1414, represented by Honorable Carlito S. Marquez, the Provincial Governor (Governor Marquez).

Respondent Philippine Reclamation Authority (respondent PRA), formerly called the Public Estates Authority (PEA), is a government entity created by Presidential Decree No. 1084,[3] which states that one of the purposes for which respondent PRA was created was to reclaim land, including foreshore and submerged areas. PEA eventually became the lead agency primarily responsible for all reclamation projects in the country under Executive Order No. 525, series of 1979. In June 2006, the President of the Philippines issued Executive Order No. 543, delegating the power to approve reclamation projects to PRA through its governing Board, subject to compliance with existing laws and rules and further subject to the condition that reclamation contracts to be executed with any person or entity (must) go through public bidding.[4]

Respondent Department of Environment and Natural Resources Environmental Management Bureau (DENR-EMB), Regional Office VI (respondent DENR-EMB RVI), is the government agency in the Western Visayas Region authorized to issue environmental compliance certificates regarding projects that require the environments protection and management in the region.[5]

Summary of Antecedent Facts

Boracay Island (Boracay), a tropical paradise located in the Western Visayas region of the Philippines and one of the countrys most popular tourist destinations, was declared a tourist zone and marine reserve in 1973 under Presidential Proclamation No. 1801.[6] The island comprises the barangays of Manoc-manoc, Balabag, and Yapak, all within the municipality of Malay, in the province of Aklan.[7] Petitioner describes Boracay as follows:
Boracay is well-known for its distinctive powdery white-sand beaches which are the product of the unique ecosystem dynamics of the area. The island itself is known to come from the uplifted remnants of an ancient reef platform. Its beaches, the sandy land strip between the water and the area currently occupied by numerous establishments, is the primary draw for domestic and international tourists for its color, texture and other unique characteristics. Needless to state, it is the premier domestic and international tourist destination in the Philippines.[8]

More than a decade ago, respondent Province built the Caticlan Jetty Port and Passenger Terminal at Barangay Caticlan to be the main gateway to Boracay. It also built the corresponding Cagban Jetty Port and Passenger Terminal to be the receiving end for tourists in Boracay. Respondent Province operates both ports to provide structural facilities suited for locals, tourists and guests and to provide safety and security measures.[9] In 2005, Boracay 2010 Summit was held and participated in by representatives from national government agencies, local government units (LGUs), and the private sector. Petitioner was one of the organizers and participants thereto. The Summit aimed to re-establish a common vision of all stakeholders to ensure the conservation, restoration, and preservation of Boracay Island and to develop an action plan that [would allow] all sectors to work in concert among and with each other for the long term benefit and sustainability of the island and the community.[10] The Summit

yielded a Terminal Report[11] stating that the participants had shared their dream of having world-class land, water and air infrastructure, as well as given their observations that government support was lacking, infrastructure was poor, and, more importantly, the influx of tourists to Boracay was increasing. The Report showed that there was a need to expand the port facilities at Caticlan due to congestion in the holding area of the existing port, caused by inadequate facilities, thus tourists suffered long queues while waiting for the boat ride going to the island.[12] Respondent Province claimed that tourist arrivals to Boracay reached approximately 649,559 in 2009 and 779,666 in 2010, and this was expected to reach a record of 1 million tourist arrivals in the years to come. Thus, respondent Province conceptualized the expansion of the port facilities at Barangay Caticlan.[13]

The Sangguniang Barangay of Caticlan, Malay Municipality, [14] issued Resolution No. 13, s. 2008 on April 25, 2008 stating that it had learned that respondent Province had filed an application with the DENR for a foreshore lease of areas along the shorelines of Barangay Caticlan, and manifesting its strong opposition to said application, as the proposed foreshore lease practically covered almost all the coastlines of said barangay, thereby technically diminishing its territorial jurisdiction, once granted, and depriving its constituents of their statutory right of preference in the development and utilization of the natural resources within its jurisdiction. The resolution further stated that respondent Province did not conduct any consultations with the Sangguniang Barangay of Caticlan regarding the proposed foreshore lease, which failure the Sanggunian considered as an act of bad faith on the part of respondent Province.[15]

On November 20, 2008, the Sangguniang Panlalawigan of respondent Province approved Resolution No. 2008-369,[16] formally authorizing Governor Marquez to enter into negotiations towards the possibility of effecting selfliquidating and income-producing development and livelihood projects to be financed through bonds, debentures, securities, collaterals, notes or other obligations as provided under Section 299 of the Local Government Code, with the following priority projects: (a) renovation/rehabilitation of the

Caticlan/Cagban Passenger Terminal Buildings and Jetty Ports; and (b) reclamation of a portion of Caticlan foreshore for commercial purposes.[17] This step was taken as respondent Provinces existing jetty port and passenger terminal was funded through bond flotation, which was successfully redeemed and paid ahead of the target date. This was allegedly cited as one of the LGUs Best Practices wherein respondent Province was given the appropriate commendation.[18]

Respondent Province included the proposed expansion of the port facilities at Barangay Caticlan in its 2009 Annual Investment Plan,[19] envisioned as its project site the area adjacent to the existing jetty port, and identified additional areas along the coastline of Barangay Caticlan as the site for future project expansion.[20]

Governor Marquez sent a letter to respondent PRA on March 12, 2009 expressing the interest of respondent Province to reclaim about 2.64 hectares of land along the foreshores of Barangay Caticlan, Municipality of Malay, Province of Aklan.
[21]

Sometime in April 2009, respondent Province entered into an agreement with the Financial Advisor/Consultant that won in the bidding process held a month before, to conduct the necessary feasibility study of the proposed project for the Renovation/Rehabilitation of the Caticlan Passenger Terminal Building and Jetty Port, Enhancement and Recovery of Old Caticlan Coastline, and Reclamation of a Portion of Foreshore for Commercial Purposes (the Marina Project), in Malay, Aklan.[22]

Subsequently, on May 7, 2009, the Sangguniang Panlalawigan of respondent Province issued Resolution No. 2009110,[23] which authorized Governor Marquez to file an application to reclaim the 2.64 hectares of foreshore area in Caticlan, Malay, Aklan with respondent PRA.

Sometime in July 2009, the Financial Advisor/Consultant came up with a feasibility study which focused on the land reclamation of 2.64 hectares by way of beach enhancement and recovery of the old Caticlan coastline for the rehabilitation and expansion of the existing jetty port, and for its future plans the construction of commercial building and wellness center. The financial component of the said study was Two Hundred Sixty Million Pesos (P260,000,000.00). Its suggested financing scheme was bond flotation.[24] Meanwhile, the Sangguniang Bayan of the Municipality of Malay expressed its strong opposition to the intended foreshore lease application, throughResolution No. 044,[25] approved on July 22, 2009, manifesting therein that respondent Provinces foreshore lease application was for business enterprise purposes for its benefit, at the expense of the local government of Malay, which by statutory provisions was the rightful entity to develop, utilize and reap benefits from the natural resources found within its jurisdiction.[26]

In August 2009, a Preliminary Geohazard Assessment[27] for the enhancement/expansion of the existing Caticlan Jetty Port and Passenger Terminal through beach zone restoration and Protective Marina Developments in Caticlan, Malay, Aklan was completed.

Thereafter, Governor Marquez submitted an Environmental Performance Report and Monitoring Program (EPRMP)[28] to DENR-EMB RVI, which he had attached to his letter[29] dated September 19, 2009, as an initial step for securing an Environmental Compliance Certificate (ECC). The letter reads in part:

With the project expected to start its construction implementation next month, the province hereby assures your good office that it will give preferential attention to and shall comply with

whatever comments that you may have on this EPRMP.[30] (Emphasis added.)

Respondent Province was then authorized to issue Caticlan Super Marina Bonds for the purpose of funding the renovation of the Caticlan Jetty Port and Passenger Terminal Building, and the reclamation of a portion of the foreshore lease area for commercial purposes in Malay, Aklan through Provincial Ordinance No. 2009-013, approved on September 10, 2009. The said ordinance authorized Governor Marquez to negotiate, sign and execute agreements in relation to the issuance of the Caticlan Super Marina Bonds in the amount not exceeding P260,000,000.00.[31] Subsequently, the Sangguniang Panlalawigan of the Province of Aklan issued Provincial Ordinance No. 2009-015[32] on October 1, 2009, amending Provincial Ordinance No. 2009-013, authorizing the bond flotation of the Province of Aklan through Governor Marquez to fund the Marina Project and appropriate the entire proceeds of said bonds for the project, and further authorizing Governor Marquez to negotiate, sign and execute contracts or agreements pertinent to the transaction.[33]

Within the same month of October 2009, respondent Province deliberated on the possible expansion from its original proposed reclamation area of 2.64 hectares to forty (40) hectares in order to maximize the utilization of its resources and as a response to the findings of the Preliminary Geohazard Assessment study which showed that the recession and retreat of the shoreline caused by coastal erosion and scouring should be the first major concern in the project site and nearby coastal area. The study likewise indicated the vulnerability of the coastal zone within the proposed project site and the nearby coastal area due to the effects of sea level rise and climate change which will greatly affect the social, economic, and environmental situation of Caticlan and nearby Malay coastal communities.[34]

In his letter dated October 22, 2009 addressed to respondent PRA, Governor Marquez wrote:

With our substantial compliance with the requirements under Administrative Order No. 2007-2 relative to our request to PRA for approval of the reclamation of the [proposed Beach Zone Restoration and Protection Marine Development in Barangays Caticlan and ManocManoc] and as a result of our discussion during the [meeting with the respondent PRA on October 12, 2009], may we respectfully submit a revised Reclamation Project Description embodying certain revisions/changes in the size and location of the areas to be reclaimed. x x x.

On another note, we are pleased to inform your Office that the bond flotation we have secured with the Local Government Unit Guarantee Corporation (LGUGC) has been finally approved last October 14, 2009. This will pave the way for the implementation of said project. Briefly, the Province has been recognized by the Bureau of Local Government Finance (BLGF) for its capability to meet its loan obligations. x x x.

With the continued increase of tourists coming to Boracay through Caticlan, the Province is venturing into such development project with the end in view of protection and/or restoring certain segments of the shoreline in Barangays Caticlan (Caticlan side) and Manoc-manoc (Boracay side) which, as reported by experts, has been experiencing tremendous coastal erosion.

For the project to be self-liquidating, however, we will be developing the reclaimed land for commercial and tourism-related facilities and for other complementary uses.[35] (Emphasis ours.)

Then, on November 19, 2009, the Sangguniang [36] Panlalawigan enacted Resolution No. 2009-299 authorizing Governor Marquez to enter into a Memorandum of Agreement (MOA) with respondent PRA in the implementation of the Beach Zone Restoration and Protection Marina Development Project, which shall reclaim a total of 40 hectares in the areas adjacent to the jetty ports at Barangay Caticlan and Barangay Manoc-manoc. The Sangguniang Panlalawigan approved the terms and conditions of the necessary agreements for the implementation of the bond flotation of respondent Province to fund the renovation/rehabilitation of the existing jetty port by way of enhancement and recovery of the Old Caticlan shoreline through reclamation of an area of 2.64 hectares in the amount ofP260,000,000.00 on December 1, 2009.[37] Respondent Province gave an initial presentation of the project with consultation to the Sangguniang Bayan of Malay[38] on December 9, 2009. Respondent PRA approved the reclamation project on April 20, 2010 in its Resolution No. 4094 and authorized its General Manager/Chief Executive Officer (CEO) to enter into a MOA with respondent Province for the implementation of the reclamation project.[39] On April 27, 2010, DENR-EMB RVI issued to respondent Province ECC-R61003-096-7100 (the questioned ECC) for Phase 1 of the Reclamation Project to the extent of 2.64 hectares to be done along the Caticlan side beside the existing jetty port.[40] On May 17, 2010, respondent Province entered into a MOA[41] with respondent PRA. Under Article III, the Project was described therein as follows:

The proposed Aklan Beach Zone Restoration and Protection Marina Development Project involves the reclamation and development of approximately forty (40) hectares of foreshore and offshore areas of the Municipality of Malay x x x. The land use development of the reclamation project shall be for commercial, recreational and institutional and other applicable uses.[42] (Emphases supplied.)

It was at this point that respondent Province deemed it necessary to conduct a series of what it calls information-education campaigns, which provided the venue for interaction and dialogue with the public, particularly the Barangay and Municipal officials of the Municipality of Malay, the residents of Barangay Caticlan and Boracay, the stakeholders, and the non-governmental organizations (NGOs). The details of the campaign are summarized as follows[43]:
a. June 17, 2010 at Casa Pilar Beach Resort, Boracay Island, Malay, Aklan;[44]

b. July 28, 2010 at Caticlan Jetty Port and Passenger Terminal;[45] c. July 31, 2010 at Barangay Caticlan Plaza;[46]

d. September 15, 2010 at the Office of the Provincial Governor with Municipal Mayor of Malay Mayor John P. Yap;[47] e. October 12, 2010 at the Office of the Provincial Governor with the Provincial Development Council Executive Committee;[48] and October 29, 2010 at the Office of the Provincial Governor with Officials of LGU-Malay and Petitioner.[49]

f.

Petitioner claims that during the public consultation meeting belatedly called by respondent Province on June 17, 2010, respondent Province presented the Reclamation Project and only then detailed the actions that it had already undertaken, particularly: the issuance of the Caticlan Super Marina Bonds; the execution of the MOA with respondent PRA; the alleged conduct of an Environmental Impact Assessment (EIA) study for the reclamation project; and the expansion of the project to forty (40) hectares from 2.64 hectares.[50]

In Resolution No. 046, Series of 2010, adopted on June 23, 2010, the Malay Municipality reiterated its strong opposition to respondent Provinces project and denied its request for a favorableendorsement of the Marina Project.[51]

The Malay Municipality subsequently issued Resolution No. 016, Series of 2010, adopted on August 3, 2010, to request respondent PRA not to grant reclamation permit and notice to proceed to the Marina Project of the [respondent] Provincial Government of Aklan located at Caticlan, Malay, Aklan.[52] In a letter[53] dated October 12, 2010, petitioner informed respondent PRA of its opposition to the reclamation project, primarily for the reason that, based on the opinion of Dr. Porfirio M. Alio, an expert from the University of the Philippines Marine Science Institute (UPMSI), which he rendered based on the documents submitted by respondent Province to obtain the ECC, a full EIA study is required to assess the reclamation projects likelihood of rendering critical and lasting effect on Boracay considering the proximity in distance, geographical location, current and wind direction, and many other environmental considerations in the area. Petitioner noted that said documents had failed to deal with coastal erosion concerns in Boracay. It also noted that respondent Province failed to comply with certain mandatory provisions of the Local Government Code, particularly, those requiring the project proponent to conduct consultations with stakeholders.

Petitioner likewise transmitted its Resolution No. 001, Series of 2010, registering its opposition to the reclamation project to respondent Province, respondent PRA, respondent DENR-EMB, the National Economic Development Authority Region VI, the Malay Municipality, and other concerned entities.[54] Petitioner alleges that despite the Malay Municipalitys denial of respondent Provinces request for a favorable endorsement, as well as the strong opposition manifested both by Barangay Caticlan and petitioner as an NGO, respondent Province still continued with the implementation of the Reclamation Project.[55]

On July 26, 2010, the Sangguniang Panlalawigan of respondent Province set aside Resolution No. 046, s. 2010, of the Municipality of Malay and manifested its support for the implementation of the aforesaid project through its Resolution No. 2010-022.[56]

On July 27, 2010, the MOA was confirmed by respondent PRA Board of Directors under its Resolution No. 4130. Respondent PRA wrote to respondent Province on October 19, 2010, informing the latter to proceed with the reclamation and development of phase 1 of site 1 of its proposed project . Respondent PRA attached to said letter its Evaluation Report dated October 18, 2010.[57] Petitioner likewise received a copy of respondent PRAs letter dated October 19, 2010, which authorized respondent Province to proceed with phase 1 of the reclamation project, subject to compliance with the requirements of its Evaluation Report. The reclamation project was described as:
[A] seafront development involving reclamation of an aggregate area of more or less, forty (40) hectares in two (2) separate sites both in Malay Municipality, Aklan Province. Site 1 is in Brgy. Caticlan with a total area of 36.82 hectares and Site 2 in Brgy. Manoc-Manoc, Boracay Island with a total area of 3.18 hectares. Sites 1 and 2 are on the opposite sides of Tabon Strait, about 1,200 meters apart. x x x. [58] (Emphases added.)

The Sangguniang Panlalawigan of Aklan, through Resolution No. 2010034, addressed the apprehensions of petitioner embodied in its Resolution No. 001, s. 2010, and supported the implementation of the project. Said resolution stated that the apprehensions of petitioner with regard to the economic, social and political negative impacts of the projects were mere perceptions and generalities and were not anchored on definite scientific, social and political studies.
[59]

In the meantime, a study was commissioned by the Philippine Chamber of Commerce and Industry-Boracay (PCCI-Boracay), funded by the Department of Tourism (DOT) with the assistance of, among others, petitioner. The study was conducted in November 2010 by several marine biologists/experts from the Marine Environmental Resources Foundation (MERF) of the UPMSI. The study was

intended to determine the potential impact of a reclamation project in the hydrodynamics of the strait and on the coastal erosion patterns in the southern coast of Boracay Island and along the coast of Caticlan.[60] After noting the objections of the respective LGUs of Caticlan and Malay, as well as the apprehensions of petitioner, respondent Province issued a notice to the contractor on December 1, 2010 to commence with the construction of the project.[61] On April 4, 2011, the Sangguniang Panlalawigan of Aklan, through its Committee on Cooperatives, Food, Agriculture, and Environmental Protection and the Committee on Tourism, Trade, Industry and Commerce, conducted a joint committee hearing wherein the study undertaken by the MERF-UPMSI was discussed.[62] In attendance were Mr. Ariel Abriam, President of PCCI-Boracay, representatives from the Provincial Government, and Dr. Cesar Villanoy, a professor from the UPMSI. Dr. Villanoy said that the subject project, consisting of 2.64 hectares, would only have insignificanteffect on the hydrodynamics of the strait traversing the coastline of Barangay Caticlan and Boracay, hence, there was a distant possibility that it would affect the Boracay coastline, which includes the famous white-sand beach of the island.[63] Thus, on April 6, 2011, the Sangguniang Panlalawigan of Aklan enacted Resolution No. 2011-065[64] noting the report on the survey of the channel between Caticlan and Boracay conducted by the UPMSI in relation to the effects of the ongoing reclamation to Boracay beaches, and stating that Dr. Villanoy had admitted that nowhere in their study was it pointed out that there would be an adverse effect on the white-sand beach of Boracay. During the First Quarter Regular Meeting of the Regional Development Council, Region VI (RDC-VI) on April 16, 2011, it approved and supported the subject project (covering 2.64 hectares) through RDC-VI Resolution No. VI-26, series of 2011.[65] Subsequently, Mr. Abriam sent a letter to Governor Marquez dated April 25, 2011 stating that the study conducted by the UPMSI confirms that the water flow across the Caticlan-Boracay channel is primarily tide-driven, therefore, the marine scientists believe that the 2.64-hectare project of respondent Province would not significantly affect the flow in the channel and would unlikely impact the Boracay

beaches. Based on this, PCCI-Boracay stated that it was not opposing the 2.64-hectare Caticlan reclamation project on environmental grounds.[66] On June 1, 2011, petitioner filed the instant Petition for Environmental Protection Order/Issuance of the Writ of Continuing Mandamus. On June 7, 2011, this Court issued a Temporary Environmental Protection Order (TEPO) and ordered the respondents to file their respective comments to the petition.[67] After receiving a copy of the TEPO on June 9, 2011, respondent Province immediately issued an order to the Provincial Engineering Office and the concerned contractor to cease and desist from conducting any construction activities until further orders from this Court.

The petition is premised on the following grounds:

I.

THE RESPONDENT PROVINCE, PROPONENT OF THE RECLAMATION PROJECT, FAILED TO COMPLY WITH RELEVANT RULES AND REGULATIONS IN THE ACQUISITION OF AN ECC.

A. THE RECLAMATION PROJECT IS CO-LOCATED WITHIN ENVIRONMENTALLY CRITICAL AREAS REQUIRING THE PERFORMANCE OF A FULL, OR PROGRAMMATIC, ENVIRONMENTAL IMPACT ASSESSMENT.

B. RESPONDENT PROVINCE FAILED TO OBTAIN THE FAVORABLE ENDORSEMENT OF THE LGU CONCERNED.

C. RESPONDENT PROVINCE FAILED TO CONDUCT THE REQUIRED CONSULTATION PROCEDURES AS REQUIRED BY THE LOCAL GOVERNMENT CODE.

D. RESPONDENT PROVINCE FAILED TO PERFORM A FULL ENVIRONMENTAL IMPACT ASSESSMENT AS REQUIRED BY LAW AND RELEVANT REGULATIONS.

II.

THE RECLAMATION OF LAND BORDERING THE STRAIT BETWEEN CATICLAN AND BORACAY SHALL ADVERSELY AFFECT THE FRAIL ECOLOGICAL BALANCE OF THE AREA.[68]

Petitioner objects to respondent Provinces classification of the reclamation project as single instead of co-located, as non-environmentally critical, and as a mere rehabilitation of the existing jetty port. Petitioner points out that the reclamation project is on two sites (which are situated on the opposite sides of Tabon Strait, about 1,200 meters apart):
36.82 hectares Site 1, in Bgy. Caticlan 3.18 hectares Site 2, in Manoc-manoc, Boracay Island[69]

Phase 1, which was started in December 2010 without the necessary permits,[70] is located on the Caticlan side of a narrow strait separating mainland Aklan from Boracay. In the implementation of the project, respondent Province obtained only an ECC to conduct Phase 1, instead of an ECC on the entire 40 hectares. Thus, petitioner argues that respondent Province abused and exploited

the Revised Procedural Manual for DENR Administrative Order No. 30, Series of 2003 (DENR DAO 2003-30)[71] relating to the acquisition of an ECC by:
1. Declaring the reclamation project under Group II Projects-Non-ECP (environmentally critical project) in ECA (environmentally critical area) based on the type and size of the area, and 2. Failing to declare the reclamation project as a co-located project application which would have required the Province to submit a Programmatic Environmental Impact Statement (PEIS)[72] or Programmatic Environmental [Performance] Report Management Plan [73] (PE[P]RMP). (Emphases ours.)

Petitioner further alleges that the Revised Procedural Manual (on which the classification above is based, which merely requires an Environmental Impact Statement [EIS] for Group II projects) is patently ultra vires, and respondent DENREMB RVI committed grave abuse of discretion because the laws on EIS, namely, Presidential Decree Nos. 1151 and 1586, as well as Presidential Proclamation No. 2146, clearly indicate that projects in environmentally critical areas are to be immediately considered environmentally critical. Petitioner complains that respondent Province applied for an ECC only for Phase 1; hence, unlawfully evading the requirement that co-located projects[74] within Environmentally Critical Areas (ECAs) must submit a PEIS and/or a PEPRMP. Petitioner argues that respondent Province fraudulently classified and misrepresented the project as a Non-ECP in an ECA, and as a single project instead of a co-located one. The impact assessment allegedly performed gives a patently erroneous and wrongly-premised appraisal of the possible environmental impact of the reclamation project. Petitioner contends that respondent Provinces choice of classification was designed to avoid a comprehensive impact assessment of the reclamation project. Petitioner further contends that respondent DENR-EMB RVI willfully and deliberately disregarded its duty to ensure that the environment is protected from harmful developmental projects because it allegedly performed only a cursory and superficial review of the documents submitted by the respondent Province for an

ECC, failing to note that all the information and data used by respondent Province in its application for the ECC were all dated and not current, as data was gathered in the late 1990s for the ECC issued in 1999 for the first jetty port. Thus, petitioner alleges that respondent DENR-EMB RVI ignored the environmental impact to Boracay, which involves changes in the structure of the coastline that could contribute to the changes in the characteristics of the sand in the beaches of both Caticlan and Boracay. Petitioner insists that reclamation of land at the Caticlan side will unavoidably adversely affect the Boracay side and notes that the declared objective of the reclamation project is for the exploitation of Boracays tourist trade, since t he project is intended to enhance support services thereto. But, petitioner argues, the primary reason for Boracays popularity is its white-sand beaches which will be negatively affected by the project. Petitioner alleges that respondent PRA had required respondent Province to obtain the favorable endorsement of the LGUs of Barangay Caticlan and Malay Municipality pursuant to the consultation procedures as required by the Local Government Code.[75] Petitioner asserts that the reclamation project is in violation not only of laws on EIS but also of the Local Government Code as respondent Province failed to enter into proper consultations with the concerned LGUs. In fact, the Liga ng mga Barangay-Malay Chapter also expressed strong opposition against the project.[76] Petitioner cites Sections 26 and 27 of the Local Government Code, which require consultations if the project or program may cause pollution, climactic change, depletion of non-renewable resources,etc. According to petitioner, respondent Province ignored the LGUs opposition expressed as early as 2008. Not only that, respondent Province belatedly called for public consultation meetings on June 17 and July 28, 2010, after an ECC had already been issued and the MOA between respondents PRA and Province had already been executed. As the petitioner saw it, these were not consultations but mere project presentations. Petitioner claims that respondent Province, aided and abetted by respondents PRA and DENR-EMB, ignored the spirit and letter of the Revised Procedural Manual, intended to implement the various regulations governing the Environmental Impact Assessments (EIAs) to ensure that developmental projects are in line with sustainable

development of natural resources. The project was conceptualized without considering alternatives. Further, as to its allegation that respondent Province failed to perform a full EIA, petitioner argues that while it is true that as of now, only the Caticlan side has been issued an ECC, the entire project involves the Boracay side, which should have been considered a co-located project. Petitioner claims that any project involving Boracay requires a full EIA since it is an ECA. Phase 1 of the project will affect Boracay and Caticlan as they are separated only by a narrow strait; thus, it should be considered an ECP. Therefore, the ECC and permit issued must be invalidated and cancelled. Petitioner contends that a study shows that the flow of the water through a narrower channel due to the reclamation project will likely divert sand transport off the southwest part of Boracay, whereas the characteristic coast of the Caticlan side of the strait indicate stronger sediment transport.[77] The white-sand beaches of Boracay and its surrounding marine environment depend upon the natural flow of the adjacent waters. Regarding its claim that the reclamation of land bordering the strait between Caticlan and Boracay shall adversely affect the frail ecological balance of the area, petitioner submits that while the study conducted by the MERF-UPMSI only considers the impact of the reclamation project on the land, it is undeniable that it will also adversely affect the already frail ecological balance of the area. The effect of the project would have been properly assessed if the proper EIA had been performed prior to any implementation of the project. According to petitioner, respondent Provinces intended purposes do not prevail over its duty and obligation to protect the environment. Petitioner believes that rehabilitation of the Jetty Port may be done through other means. In its Comment[78] dated June 21, 2011, respondent Province claimed that application for reclamation of 40 hectares is advantageous to the Provincial Government considering that its filing fee would only cost Php20,000.00 plus Value Added Tax (VAT) which is also the minimum fee as prescribed under Section 4.2 of Administrative Order No. 2007-2.[79]

Respondent Province considers the instant petition to be premature; thus, it must necessarily fail for lack of cause of action due to the failure of petitioner to fully exhaust the available administrative remedies even before seeking judicial relief. According to respondent Province, the petition primarily assailed the decision of respondent DENR-EMB RVI in granting the ECC for the subject project consisting of 2.64 hectares and sought the cancellation of the ECC for alleged failure of respondent Province to submit proper documentation as required for its issuance. Hence, the grounds relied upon by petitioner can be addressed within the confines of administrative processes provided by law. Respondent Province believes that under Section 5.4.3 of DENR Administrative Order No. 2003-30 (DAO 2003-30),[80] the issuance of an ECC[81] is an official decision of DENR-EMB RVI on the application of a project proponent.[82] It cites Section 6 of DENR DAO 2003-30, which provides for a remedy available to the party aggrieved by the final decision on the proponents ECC applications. Respondent Province argues that the instant petition is anchored on a wrong premise that results to petitioners unfounded fears and baseless apprehensions. It is respondent Provinces contention that its 2.64-hectare reclamation project is considered as a stand alone project, separate and independent from the approved area of 40 hectares. Thus, petitioner should have observed the difference between the future development plan of respondent Province from its actual project being undertaken.[83] Respondent Province clearly does not dispute the fact that it revised its original application to respondent PRA from 2.64 hectares to 40 hectares. However, it claims that such revision is part of itsfuture plan, and implementation thereof is still subject to availability of funds, independent scientific environmental study, separate application of ECC and notice to proceed to be issued by respondent PRA.[84] Respondent Province goes on to claim that [p]etitioners version of the Caticlan jetty port expansion project is a bigger project which is still at the conceptualization stage. Although this project was described in the Notice to

Proceed issued by respondent PRA to have two phases, 36.82 hectares in Caticlan and 3.18 hectares in Boracay [Island,] it is totally different from the [ongoing] Caticlan jetty port expansion project.[85] Respondent Province says that the Accomplishment Report[86] of its Engineering Office would attest that the actual project consists of 2.64 hectares only, as originally planned and conceptualized, which was even reduced to 2.2 hectares due to some construction and design modifications. Thus, respondent Province alleges that from its standpoint, its capability to reclaim is limited to 2.64 hectares only, based on respondent PRAs Evaluation Report[87] dated October 18, 2010, which was in turn the basis of the issuance of the Notice to Proceed dated October 19, 2010, because the projects financial component is P260,000,000.00 only. Said Evaluation Report indicates that the implementation of the other phases of the project including site 2, which consists of the other portions of the 40-hectare area that includes a portion in Boracay, is still within the 10-year period and will depend largely on the availability of funds of respondent Province.[88] So, even if respondent PRA approved an area that would total up to 40 hectares, it was divided into phases in order to determine the period of its implementation. Each phase was separate and independent because the source of funds was also separate. The required documents and requirements were also specific for each phase. The entire approved area of 40 hectares could be implemented within a period of 10 years but this would depend solely on the availability of funds.[89] As far as respondent Province understands it, additional reclamations not covered by the ECC, which only approved 2.64 hectares, should undergo another EIA. If respondent Province intends to commence the construction on the other component of the 40 hectares, then it agrees that it is mandated to secure a new ECC.[90] Respondent Province admits that it dreamt of a 40-hectare project, even if it had originally planned and was at present only financially equipped and legally compliant to undertake 2.64 hectares of the project, and only as an expansion of its old jetty port.[91]

Respondent Province claims that it has complied with all the necessary requirements for securing an ECC. On the issue that the reclamation project is within an ECA requiring the performance of a full or programmatic EIA, respondent Province reiterates that the idea of expanding the area to 40 hectares is only a future plan. It only secured an ECC for 2.64 hectares, based on the limits of its funding and authority. From the beginning, its intention was to rehabilitate and expand the existing jetty port terminal to accommodate an increasing projected traffic. The subject project is specifically classified under DENR DAO 2003-30 on its Project Grouping Matrix for Determination of EIA Report Type considered as Minor Reclamation Projects falling under Group II Non ECP in an ECA. Whether 2.64 or 40 hectares in area, the subject project falls within this classification. Consequently, respondent Province claims that petitioner erred in considering the ongoing reclamation project at Caticlan, Malay, Aklan, as co-located within an ECA. Respondent Province, likewise argues that the 2.64-hectare project is not a component of the approved 40-hectare area as it is originally planned for the expansion site of the existing Caticlan jetty port. At present, it has no definite conceptual construction plan of the said portion in Boracay and it has no financial allocation to initiate any project on the said Boracay portion. Furthermore, respondent Province contends that the present project is located in Caticlan while the alleged component that falls within an ECA is in Boracay. Considering its geographical location, the two sites cannot be considered as a contiguous area for the reason that it is separated by a body of water a strait that traverses between the mainland Panay wherein Caticlan is located and Boracay. Hence, it is erroneous to consider the two sites as a co-located project within an ECA. Being a stand alone project and an expansion of the existing jetty port, respondent DENR-EMB RVI had required respondent Province to perform an EPRMP to secure an ECC as sanctioned by Item No. 8(b), page 7 of DENR DAO 2003-30. Respondent Province contends that even if, granting for the sake of argument, it had erroneously categorized its project as Non-ECP in an ECA, this was not a final determination. Respondent DENR-EMB RVI, which was the administrator of the EIS

system, had the final decision on this matter. Under DENR DAO 2003-30, an application for ECC, even for a Category B2 project where an EPRMP is conducted, shall be subjected to a review process. Respondent DENR-EMB RVI had the authority to deny said application. Its Regional Director could either issue an ECC for the project or deny the application. He may also require a more comprehensive EIA study. The Regional Director issued the ECC based on the EPRMP submitted by respondent Province and after the same went through the EIA review process. Thus, respondent Province concludes that petitioners allegation of this being a co-located project is premature if not baseless as the bigger reclamation project is still on the conceptualization stage. Both respondents PRA and Province are yet to complete studies and feasibility studies to embark on another project. Respondent Province claims that an ocular survey of the reclamation project revealed that it had worked within the limits of the ECC.[92] With regard to petitioners allegation that respondent Province failed to get the favorable endorsement of the concerned LGUs in violation of the Local Government Code, respondent Province contends that consultation vis-vis the favorable endorsement from the concerned LGUs as contemplated under the Local Government Code are merely tools to seek advice and not a power clothed upon the LGUs to unilaterally approve or disapprove any government projects. Furthermore, such endorsement is not necessary for projects falling under Category B2 unless required by the DENR-EMB RVI, under Section 5.3 of DENR DAO 2003-30. Moreover, DENR Memorandum Circular No. 08-2007 no longer requires the issuance of permits and certifications as a pre-requisite for the issuance of an ECC. Respondent Province claims to have conducted consultative activities with LGUs in connection with Sections 26 and 27 of the Local Government Code. The vehement and staunch objections of both the Sangguniang Barangay of Caticlan and the Sangguniang Bayan of Malay, according to respondent Province, were not rooted on its perceived impact upon the people and the community in terms of environmental or ecological balance, but due to an alleged conflict with their prin cipal position to develop, utilize and reap benefits from the natural resources found within its jurisdiction.[93] Respondent Province argues that these concerns are not within the

purview of the Local Government Code. Furthermore, the Preliminary Geohazard Assessment Report and EPRMP as well as Sangguniang Panlalawigan Resolution Nos. 2010-022 and 2010-034 should address any environmental issue they may raise. Respondent Province posits that the spirit and intent of Sections 26 and 27 of the Local Government Code is to create an avenue for parties, the proponent and the LGU concerned, to come up with a tool in harmonizing its views and concerns about the project. The duty to consult does not automatically require adherence to the opinions during the consultation process. It is allegedly not within the provisions to give the full authority to the LGU concerned to unilaterally approve or disapprove the project in the guise of requiring the proponent of securing its favorable endorsement. In this case, petitioner is calling a halt to the project without providing an alternative resolution to harmonize its position and that of respondent Province. Respondent Province claims that the EPRMP[94] would reveal that:
[T]he area fronting the project site is practically composed of sand. Dead coral communities may be found along the vicinity. Thus, fish life at the project site is quite scarce due to the absence of marine support systems like the sea grass beds and coral reefs. x x x [T]here is no coral cover at the existing Caticlan jetty port. [From] the deepest point of jetty to the shallowest point, there was no more coral patch and the substrate is sandy. It is of public knowledge that the said foreshore area is being utilized by the residents ever since as berthing or anchorage site of their motorized banca. There will be no possibility of any coral development therein because of its continuous utilization. Likewise, the activity of the strait that traverses between the main land Caticlan and Boracay Island would also be a factor of the coral development. Corals [may] only be formed within the area if there is scientific human intervention, which is absent up to the present. In light of the foregoing premise, it casts serious doubt on petitioners allegations pertaining to the environmental effects of Respondent-LGUs 2.64 hectares reclamation project. The alleged environmental impact of the subject project to the beaches of Boracay Island remains unconfirmed. Petitioner had unsuccessfully proven that the project would cause imminent, grave and irreparable injury to the community.[95]

Respondent Province prayed for the dissolution of the TEPO, claiming that the rules provide that the TEPO may be dissolved if it appears after hearing that its issuance or continuance would cause irreparable damage to the party or person enjoined, while the applicant may be fully compensated for such damages as he may suffer and subject to the posting of a sufficient bond by the party or person enjoined. Respondent Province contends that the TEPO would cause irreparable damage in two aspects: a. Financial dislocation and probable bankruptcy; and b. Grave and imminent danger to safety and health of inhabitants of immediate area, including tourists and passengers serviced by the jetty port, brought about by the abrupt cessation of development works.

As regards financial dislocation, the arguments of respondent Province are summarized below:

1. This project is financed by bonds which the respondent Province had issued to its creditors as the financing scheme in funding the present project is by way of credit financing through bond flotation. 2. The funds are financed by a Guarantee Bank getting payment from bonds, being sold to investors, which in turn would be paid by the income that the project would realize or incur upon its completion. 3. While the project is under construction, respondent Province is appropriating a portion of its Internal Revenue Allotment (IRA) budget from the 20% development fund to defray the interest and principal amortization due to the Guarantee Bank. 4. The respondent Provinces IRA, regular income, and/or such other revenues or funds, as may be permitted by law, are being used as security for the payment of the said loan used for the projects construction. 5. The inability of the subject project to earn revenues as projected upon completion will compel the Province to shoulder the full amount of the obligation, starting from year 2012.

6. Respondent province is mandated to assign its IRA, regular income and/or such other revenues or funds as permitted by law; if project is stopped, detriment of the public welfare and its constituents.[96]

As to the second ground for the dissolution of the TEPO, respondent Province argues:
1. Non-compliance with the guidelines of the ECC may result to environmental hazards most especially that reclaimed land if not properly secured may be eroded into the sea. 2. The construction has accomplished 65.26 percent of the project. The embankment that was deposited on the project has no proper concrete wave protection that might be washed out in the event that a strong typhoon or big waves may occur affecting the strait and the properties along the project site. It is already the rainy season and there is a big possibility of typhoon occurrence. 3. If said incident occurs, the aggregates of the embankment that had been washed out might be transferred to the adjoining properties which could affect its natural environmental state. 4. It might result to the total alteration of the physical landscape of the area attributing to environmental disturbance. 5. The lack of proper concrete wave protection or revetment would cause the total erosion of the embankment that has been dumped on the accomplished area.[97]

Respondent Province claims that petitioner will not stand to suffer immediate, grave and irreparable injury or damage from the ongoing project. The petitioners perceived fear of environmental destruction brought about by its erroneous appreciation of available data is unfounded and does not translate into a matter of extreme urgency. Thus, under the Rules of Procedure on Environmental Cases, the TEPO may be dissolved. Respondent PRA filed its Comment[98] on June 22, 2011. It alleges that on June 24, 2006, Executive Order No. 543 delegated the power to approve reclamation projects to respondent PRA through its governing Board, subject to compliance with

existing laws and rules and further subject to the condition that reclamation contracts to be executed with any person or entity (must) go through public bidding. Section 4 of respondent PRAs Administrative Order No. 2007-2 provides for the approval process and procedures for various reclamation projects to be undertaken. Respondent PRA prepared an Evaluation Report on November 5, 2009[99] regarding Aklans proposal to increase its project to 40 hectares. Respondent PRA contends that it was only after respondent Province had complied with the requirements under the law that respondent PRA, through its Board of Directors, approved the proposed project under its Board Resolution No. 4094.[100] In the same Resolution, respondent PRA Board authorized the General Manager/CEO to execute a MOA with the Aklan provincial government to implement the reclamation project under certain conditions. The issue for respondent PRA was whether or not it approved the respondent Provinces 2.64-hectare reclamation project proposal in willful disregard of alleged numerous irregularities as claimed by petitioner.[101] Respondent PRA claims that its approval of the Aklan Reclamation Project was in accordance with law and its rules. Indeed, it issued the notice to proceed only after Aklan had complied with all the requirements imposed by existing laws and regulations. It further contends that the 40 hectares involved in this project remains a plan insofar as respondent PRA is concerned. What has been approved for reclamation by respondent PRA thus far is only the 2.64-hectare reclamation project. Respondent PRA reiterates that it approved this reclamation project after extensively reviewing the legal, technical, financial, environmental, and operational aspects of the proposed reclamation.[102] One of the conditions that respondent PRA Board imposed before approving the Aklan project was that no reclamation work could be started until respondent PRA has approved the detailed engineering plans/methodology, design and specifications of the reclamation. Part of the required submissions to respondent PRA includes the drainage design as approved by the Public Works Department and the ECC as issued by the DENR, all of which the Aklan government must submit to respondent PRA before starting any reclamation works.[103] Under Article IV(B)(3) of the MOA

between respondent PRA and Aklan, the latter is required to submit, apart from the ECC, the following requirements for respondent PRAs review and approval, as basis for the issuance of a Notice to Proceed (NTP) for Reclamation Works:
(a) Land-form plan with technical description of the metes and bounds of the same land-form; Final master development and land use plan for the project; Detailed engineering studies, detailed engineering design, plans and specification for reclamation works, reclamation plans and methodology, plans for the sources of fill materials; Drainage plan vis-a-vis the land-form approved by DPWH Regional Office to include a cost effective and efficient drainage system as may be required based on the results of the studies; Detailed project cost estimates and quantity take-off per items of work of the rawland reclamation components, e.g. reclamation containment structures and soil consolidation; Organizational chart of the construction arm, manning table, equipment schedule for the project; and, Project timetable (PERT/CPM) for the entire project construction period.[104]

(b) (c)

(d)

(e)

(f)

(g)

In fact, respondent PRA further required respondent Province under Article IV (B)(24) of the MOA to strictly comply with all conditions of the DENR-EMBissued ECC and/or comply with pertinent local and international commitments of the Republic of the Philippines to ensure environmental protection.[105]

In its August 11, 2010 letter,[106] respondent PRA referred for respondent Provinces appropriate action petitioners Resolution 001, series of 2010 and Resolution 46, series of 2010, of the Sangguniang Bayan of Malay. Governor Marquez wrote respondent PRA[107] on September 16, 2010 informing it that respondent Province had already met with the different officials of Malay, furnishing respondent PRA with the copies of the minutes of such

meetings/presentations. Governor Marquez also assured respondent PRA that it had complied with the consultation requirements as far as Malay was concerned.

Respondent PRA claims that in evaluating respondent Provinces project and in issuing the necessary NTP for Phase 1 of Site 1 (2.64 hectares) of the Caticlan Jetty Port expansion and modernization, respondent PRA gave considerable weight to all pertinent issuances, especially the ECC issued by DENR-EMB RVI.[108] Respondent PRA stresses that its earlier approval of the 40-hectare reclamation project under its Resolution No. 4094, series of 2010, still requires a second level of compliance requirements from the proponent. Respondent Province could not possibly begin its reclamation works since respondent PRA had yet to issue an NTP in its favor.

Respondent PRA alleges that prior to the issuance of the NTP to respondent Province for Phase 1 of Site 1, it required the submission of the following preconstruction documents:

(a) Land-Form Plan (with technical description);

(b) Site Development Plan/Land Use Plan including,

(i) sewer and drainage systems and

(ii) waste water treatment;

(c) Engineering Studies and Engineering Design;

(d) Reclamation Methodology;

(e) Sources of Fill Materials, and,

(f) The ECC.[109]

Respondent PRA claims that it was only after the evaluation of the above submissions that it issued to respondent Province the NTP, limited to the 2.64hectare reclamation project. Respondent PRA even emphasized in its evaluation report that should respondent Province pursue the other phases of its project, it would still require the submission of an ECC for each succeeding phases before the start of any reclamation works.[110]

Respondent PRA, being the national governments arm in regulating and coordinating all reclamation projects in the Philippines a mandate conferred by law manifests that it is incumbent upon it, in the exercise of its regulatory functions, to diligently evaluate, based on its technical competencies, all reclamation projects submitted to it for approval. Once the reclamation projects requirements set forth by law and related rules have been complied with, respondent PRA is mandated to approve the same. Respondent PRA claims, *w+ith all the foregoing rigorous and detailed requirements submitted and complied with by Aklan, and the attendant careful and meticulous technical and legal evaluation by respondent PRA, it cannot be argued that the reclamation permit it issued to Aklan is founded upon numerous irregularities; as recklessly and baselessly imputed by BFI.[111]

In its Comment[112] dated July 1, 2011, respondent DENR-EMB RVI asserts that its act of issuing the ECC certifies that the project had undergone the proper

EIA process by assessing, among others, the direct and indirect impact of the project on the biophysical and human environment and ensuring that these impacts are addressed by appropriate environmental protection and enhancement measures, pursuant to Presidential Decree No. 1586, the Revised Procedural Manual for DENR DAO 2003-30, and the existing rules and regulations.[113]

Respondent DENR-EMB RVI stresses that the declaration in 1978 of several islands, which includes Boracay as tourist zone and marine reserve under Proclamation No. 1801, has no relevance to the expansion project of Caticlan Jetty Port and Passenger Terminal for the very reason that the project is not located in the Island of Boracay, being located in Barangay Caticlan, Malay, which is not a part of mainland Panay. It admits that the site of the subject jetty port falls within the ECA under Proclamation No. 2146 (1981), being within the category of a water body. This was why respondent Province had faithfully secured an ECC pursuant to the Revised Procedural Manual for DENR DAO 200330 by submitting the necessary documents as contained in the EPRMP on March 19, 2010, which were the bases in granting ECC No. R6-1003-096-7100 (amended) on April 27, 2010 for the expansion of Caticlan Jetty Port and Passenger Terminal, covering 2.64 hectares.[114]

Respondent DENR-EMB RVI claims that the issues raised by the LGUs of Caticlan and Malay had been considered by the DENR-Provincial Environment and Natural Resources Office (PENRO), Aklan in the issuance of the Order[115] dated January 26, 2010, disregarding the claim of the Municipality of Malay, Aklan of a portion of the foreshore land in Caticlan covered by the application of the Province of Aklan; and another Order of Rejection dated February 5, 2010 of the two foreshore applications, namely FLA No. 060412-43A and FLA No. 060412-43B, of the Province of Aklan.[116]

Respondent DENR-EMB RVI contends that the supporting documents attached to the EPRMP for the issuance of an ECC were merely for the expansion

and modernization of the old jetty port in Barangay Caticlan covering 2.64 hectares, and not the 40-hectare reclamation project in Barangay Caticlan and Boracay. The previous letter of respondent Province dated October 14, 2009 addressed to DENR-EMB RVI Regional Executive Director, would show that the reclamation project will cover approximately 2.6 hectares.[117] This application for ECC was not officially accepted due to lack of requirements or documents.

Although petitioner insists that the project involves 40 hectares in two sites, respondent DENR-EMB RVI looked at the documents submitted by respondent Province and saw that the subject area covered by the ECC application and subsequently granted with ECC-R6-1003-096-7100 consists only of 2.64 hectares; hence, respondent DENR-EMB RVI could not comment on the excess area.[118]
Respondent DENR-EMB RVI admits that as regards the classification of the 2.64-hectare reclamation project under Non ECP in ECA, this does not fall within the definition of a co-located project because the subject project is merely an expansion of the old Caticlan Jetty Port, which had a previously issued ECC (ECC No. 0699-1012-171 on October 12, 1999). Thus, only an EPRMP, not a PEIS or PEPRMP, is required.[119] Respondent Province submitted to respondent DENR-EMB RVI the following documents contained in the EPRMP:
a. The Observations on the Floor Bottom and its Marine Resources at the Proposed Jetty Ports at Caticlan and Manok-manok, Boracay, Aklan, conducted in 1999 by the Bureau of Fisheries Aquatic Resources (BFAR) Central Office, particularly in Caticlan site, and

b. The Study conducted by Dr. Ricarte S. Javelosa, Ph. D, Mines and Geosciences Bureau (MGB), Central Office and Engr. Roger Esto, Provincial Planning and Development Office (PPDO), Aklan in 2009 entitled Preliminary Geo-hazard Assessment for the Enhancement of the Existing Caticlan Jetty Port Terminal through Beach Zone Restoration and Protective Marina Development in Malay, Aklan.

Respondent DENR-EMB RVI claims that the above two scientific studies were enough for it to arrive at a best professional judgment to issue an amended ECC for the Aklan Marina Project covering 2.64 hectares.[120] Furthermore, to confirm that the 2.64-hectare reclamation has no significant negative impact with the surrounding environment particularly in Boracay, a more recent study was conducted, and respondent DENR-EMB RVI alleges that [i]t is very important to highlight that the input data in the [MERF- UPMSI] study utilized the [40-hectare] reclamation and [200-meter] width seaward using the tidal and wave modelling.[121] The study showed that the reclamation of 2.64 hectares had no effect to the hydrodynamics of the strait between Barangay Caticlan and Boracay. Respondent DENR-EMB RVI affirms that no permits and/or clearances from National Government Agencies (NGAs) and LGUs are required pursuant to the DENR Memorandum Circular No. 2007-08, entitled Simplifying the Requirements of ECC or CNC Applications; that the EPRMP was evaluated and processed based on the Revised Procedural Manual for DENR DAO 2003-30 which resulted to the issuance of ECC-R6-1003-096-7100; and that the ECC is not a permit per se but a planning tool for LGUs to consider in its decision whether or not to issue a local permit.[122] Respondent DENR-EMB RVI concludes that in filing this case, petitioner had bypassed and deprived the DENR Secretary of the opportunity to review and/or reverse the decision of his subordinate office, EMB RVI pursuant to the Revised Procedural Manual for DENR DAO 2003-30. There is no extreme urgency that necessitates the granting of Mandamus or issuance of TEPO that put to balance between the life and death of the petitioner or present grave or irreparable damage to environment.[123] After receiving the above Comments from all the respondents, the Court set the case for oral arguments on September 13, 2011. Meanwhile, on September 8, 2011, respondent Province filed a Manifestation and Motion[124] praying for the dismissal of the petition, as the province was no longer pursuing the implementation of the succeeding phases of the project due to its inability to comply with Article IV B.2(3) of the MOA; hence, the issues and fears

expressed by petitioner had become moot. Respondent Province alleges that the petition is premised on a serious misappreciation of the real extent of the contes ted reclamation project as certainly the ECC covered only a total of 2,691 square meters located in Barangay Caticlan, Malay, Aklan; and although the MOA spoke of 40 hectares, respondent Provinces submission of documents to respondent PRA pertaining to said area was but the first of a two-step process of approval. Respondent Province claims that its failure to comply with the documentary requirements of respondent PRA within the period provided, or 120 working days from the effectivity of the MOA, indicated its waiver to pursue the remainder of the project.[125] Respondent Province further manifested: Confirming this in a letter dated 12 August 2011,[126] Governor Marquez informed respondent PRA that the Province of Aklan is no longer pursuing the implementation of the succeeding phases of the project with a total area of 37.4 hectares for our inability to comply with Article IV B.2 (3) of the MOA; hence, the existing MOA will cover only the project area of 2.64 hectares.

In his reply-letter dated August 22, 2011,[127] [respondent] PRA General Manager informed Governor Marquez that the [respondent] PRA Board of Directors has given [respondent] PRA the authority to confirm the position of the Province of Aklan that the Aklan Beach Zone Restoration and Protection Marine Development Project will now be confined to the reclamation and development of the 2.64 hectares, more or less.

It is undisputed from the start that the coverage of the Project is in fact limited to 2.64 hectares, as evidenced by the NTP issued by respondent PRA. The recent exchange of correspondence between respondents Province of Aklan and [respondent] PRA further confirms the intent of the parties all along. Hence, the Project subject of the petition, without doubt, covers only 2.64 and not 40 hectares as feared.

This completely changes the extent of the Project and, consequently, moots the issues and fears expressed by the petitioner.[128] (Emphasis supplied.)

Based on the above contentions, respondent Province prays that the petition be dismissed as no further justiciable controversy exists since the feared adverse effect to Boracay Islands ecology had become academic all together.[129]

The Court heard the parties oral arguments on September 13, 2011 and gave the latter twenty (20) days thereafter to file their respective memoranda.

Respondent Province filed another Manifestation and Motion,[130] which the Court received on April 2, 2012 stating that:

1. 2.

it had submitted the required documents and studies to respondent DENR-EMB RVI before an ECC was issued in its favor; it had substantially complied with the requirements provided under PRA Administrative Order 2007-2, which compliance caused respondent PRAs Board to approve the reclamation project; and it had conducted a series of consultative *presentations+ relative to the reclamation project before the LGU of Malay Municipality, the Barangay Officials of Caticlan, and stakeholders of Boracay Island.

3.

Respondent Province further manifested that the Barangay Council of Caticlan, Malay, Aklan enacted on February 13, 2012 Resolution No. 003, series of 2012, entitled Resolution Favorably Endorsing the 2.6 Hectares Reclamation/MARINA Project of the Aklan Provincial Government at Caticlan

Coastline[131] and that the Sangguniang Bayan of the Municipality of Malay, Aklan enacted Resolution No. 020, series of 2012, entitled Resolution Endorsing the 2.6 Hectares Reclamation Project of the Provincial Government of Aklan Located at Barangay Caticlan, Malay, Aklan.[132]

Respondent Province claims that its compliance with the requirements of respondents DENR-EMB RVI and PRA that led to the approval of the reclamation project by the said government agencies, as well as the recent enactments of the Barangay Council of Caticlan and the Sangguniang Bayan of the Municipality of Malay favorably endorsing the said project, had categorically addressed all the issues raised by the Petitioner in its Petition dated June 1, 2011. Respondent Province prays as follows:

WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that after due proceedings, the following be rendered: 1. The Temporary Environmental Protection Order (TEPO) it issued on June 7, 2011 be lifted/dissolved. 2. The instant petition be dismissed for being moot and academic. 3. Respondent Province of Aklan prays for such other reliefs that are just and equitable under the premises. (Emphases in the original.)

ISSUES

The Court will now resolve the following issues:

I.

Whether or not the petition should be dismissed for having been rendered moot and academic Whether or not the petition is premature because petitioner failed to exhaust administrative remedies before filing this case Whether or not respondent Province failed to perform a full EIA as required by laws and regulations based on the scope and classification of the project Whether or not respondent Province complied with all the requirements under the pertinent laws and regulations Whether or not there was proper, timely, and sufficient public consultation for the project DISCUSSION

II.

III.

IV.

V.

On the issue of whether or not the Petition should be dismissed for having been rendered moot and academic

Respondent Province claims in its Manifestation and Motion filed on April 2, 2012 that with the alleged favorable endorsement of the reclamation project by theSangguniang Barangay of Caticlan and the Sangguniang Bayan of the Municipality of Malay, all the issues raised by petitioner had already been addressed, and this petition should be dismissed for being moot and academic.

On the contrary, a close reading of the two LGUs respective resolutions would reveal that they are not sufficient to render the petition moot and academic, as there are explicit conditions imposed that must be complied with by respondent Province. In Resolution No. 003, series of 2012, of the Sangguniang Barangay of Caticlan it is stated that any vertical structures to be constructed shall be subject for barangay endorsement.[133] Clearly, what the barangay endorsed was the reclamation only, and not the entire project that includes the construction of a commercial building and wellness center, and other tourism-related facilities. Petitioners objections, as may be recalled, pertain not only to the reclamation per se, but also to the building to be constructed and the entire projects perceived ill effects to the surrounding environment.

Resolution No. 020, series of 2012, of the Sangguniang Bayan of Malay is even more specific. It reads in part:
[134]

WHEREAS, noble it seems the reclamation project to the effect that it will generate scores of benefits for the Local Government of Malay in terms of income and employment for its constituents, but the fact cannot be denied that the project will take its toll on the environment especially on the nearby fragile island of Boracay and the fact also remains that the project will eventually displace the local transportation operators/cooperatives;

WHEREAS, considering the sensitivity of the project, this Honorable Body through the Committee where this matter was referred conducted several consultations/committee hearings with concerned departments and the private sector specifically Boracay Foundation, Inc. and they are one in its belief that this Local Government Unit has never been against development so long as compliance with the law and proper procedures have been observed and that paramount consideration have been given to the

environment lest we disturb the balance of nature to the end that progress will be brought to naught;

WHEREAS, time and again, to ensure a healthy intergovernmental relations, this August Body requires no less than transparency and faithful commitment from the Provincial Government of Aklan in the process of going through these improvements in the Municipality because it once fell prey to infidelities in matters of governance;

WHEREAS, as a condition for the grant of this endorsement and to address all issues and concerns, this Honorable Council necessitates a sincere commitment from the Provincial Government of Aklan to the end that:

1. To allocate an office space to LGU-Malay within the building in the reclaimed area;

2. To convene the Cagban and Caticlan Jetty Port Management Board before the resumption of the reclamation project; 3. That the reclamation project shall be limited only to 2.6 hectares in Barangay Caticlan and not beyond; 4. That the local transportation operators/cooperatives will not be displaced; and 5. The Provincial Government of Aklan conduct a simultaneous comprehensive study on the environmental impact of the reclamation project especially during Habagat and Amihan

seasons and put in place as early as possible mitigating measures on the effect of the project to the environment. WHEREAS, having presented these stipulations, failure to comply herewith will leave this August Body no choice but to revoke this endorsement, hence faithful compliance of the commitment of the Provincial Government is highly appealed for[.][135] (Emphases added.)

The Sangguniang Bayan of Malay obviously imposed explicit conditions for respondent Province to comply with on pain of revocation of its endorsement of the project, including the need to conduct a comprehensive study on the environmental impact of the reclamation project, which is the heart of the petition before us. Therefore, the contents of the two resolutions submitted by respondent Province do not support its conclusion that the subsequent favorable endorsement of the LGUs had already addressed all the issues raised and rendered the instant petition moot and academic.

On the issue of failure to exhaust administrative remedies

Respondents, in essence, argue that the present petition should be dismissed for petitioners failure to exhaust administrative remedies and even to observe the hierarchy of courts. Furthermore, as the petition questions the issuance of the ECC and the NTP, this involves factual and technical verification, which are more properly within the expertise of the concerned government agencies.

Respondents anchor their argument on Section 6, Article II of DENR DAO 2003-30, which provides:

Section 6. Appeal

Any party aggrieved by the final decision on the ECC / CNC applications may, within 15 days from receipt of such decision, file an appeal on the following grounds:

a. Grave abuse of discretion on the part of the deciding authority, or b. Serious errors in the review findings.

The DENR may adopt alternative conflict/dispute resolution procedures as a means to settle grievances between proponents and aggrieved parties to avert unnecessary legal action. Frivolous appeals shall not be countenanced.

The proponent or any stakeholder may file an appeal to the following:

Deciding Authority EMB Regional Office Director EMB Central Office Director DENR Secretary

Where to file the appeal Office of the EMB Director Office of the DENR Secretary Office of the President

(Emphases supplied.)

Respondents argue that since there is an administrative appeal provided for, then petitioner is duty bound to observe the same and may not be granted recourse to the regular courts for its failure to do so.

We do not agree with respondents appreciation of the applicability of the rule on exhaustion of administrative remedies in this case. We are reminded of our ruling in Pagara v. Court of Appeals,[136] which summarized our earlier decisions on the procedural requirement of exhaustion of administrative remedies, to wit:

The rule regarding exhaustion of administrative remedies is not a hard and fast rule. It is not applicable (1) where the question in dispute is purely a legal one, or (2) where the controverted act is patently illegal or was performed without jurisdiction or in excess of jurisdiction; or (3) where the respondent is a department secretary, whose acts as an alter ego of the President bear the implied or assumed approval of the latter, unless actually disapproved by him, or (4) where there are circumstances indicating the urgency of judicial intervention, -Gonzales vs. Hechanova, L-21897, October 22, 1963, 9 SCRA 230; Abaya vs. Villegas, L-25641, December 17, 1966, 18 SCRA; Mitra vs. Subido, L-21691, September 15, 1967, 21 SCRA 127.

Said principle may also be disregarded when it does not provide a plain, speedy and adequate remedy, (Cipriano vs. Marcelino, 43 SCRA 291), when there is no due process observed (Villanos vs. Subido, 45 SCRA 299), or where the protestant has no other recourse (Sta. Maria vs. Lopez, 31 SCRA 637).[137] (Emphases supplied.)

As petitioner correctly pointed out, the appeal provided for under Section 6 of DENR DAO 2003-30 is only applicable, based on the first sentence thereof, if the person or entity charged with the duty to exhaust the administrative remedy of appeal to the appropriate government agency has been a party or has been made a party in the proceedings wherein the decision to be appealed was rendered. It has been established by the facts that petitioner was never made a party to the proceedings before respondent DENR-EMB RVI. Petitioner was only informed that the project had already been approved after the ECC was already granted.[138] Not being a party to the said proceedings, it does not appear that petitioner was officially furnished a copy of the decision, from which the 15-day period to appeal should be reckoned, and which would warrant the application of Section 6, Article II of DENR DAO 2003-30.

Although petitioner was not a party to the proceedings where the decision to issue an ECC was rendered, it stands to be aggrieved by the decision,[139] because it claims that the reclamation of land on the Caticlan side would unavoidably adversely affect the Boracay side, where petitioners members own establishments engaged in the tourism trade. As noted earlier, petitioner contends that the declared objective of the reclamation project is to exploit Boracays tourism trade because the project is intended to enhance support services thereto; however, this objective would not be achieved since the whitesand beaches for which Boracay is famous might be negatively affected by the project. Petitioners conclusion is that respondent Province, aided and abetted by respondents PRA and DENR-EMB RVI, ignored the spirit and letter of our environmental laws, and should thus be compelled to perform their duties under said laws.

The new Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC, provides a relief for petitioner under the writ of continuing mandamus, which is a special civil action that may be availed of to compel the performance of an act specifically enjoined by law[140] and which provides for the issuance of a TEPO as an auxiliary remedy prior to the issuance of the writ itself.[141] The Rationale of the said Rules explains the writ in this wise:

Environmental law highlights the shift in the focal-point from the initiation of regulation by Congress to the implementation of regulatory programs by the appropriate government agencies.

Thus, a government agencys inaction, if any, has serious implications on the future of environmental law enforcement. Private individuals, to the extent that they seek to change the scope of the regulatory process, will have to rely on such agencies to take the initial incentives, which may require a judicial component. Accordingly, questions regarding the propriety of an agencys action or inaction will need to be analyzed.

This point is emphasized in the availability of the remedy of the writ of mandamus, which allows for the enforcement of the conduct of the tasks to which the writ pertains: the performance of a legal duty.[142] (Emphases added.)

The writ of continuing mandamus permits the court to retain jurisdiction after judgment in order to ensure the successful implementation of the reliefs mandated under the courts decision and, in order to do this, the court may compel the submission of compliance reports from the respondent government agencies as well as avail of other means to monitor compliance with its decision.[143]

According to petitioner, respondent Province acted pursuant to a MOA with respondent PRA that was conditioned upon, among others, a properly-secured ECC from respondent DENR-EMB RVI. For this reason, petitioner seeks to compel respondent Province to comply with certain environmental laws, rules, and

procedures that it claims were either circumvented or ignored. Hence, we find that the petition was appropriately filed with this Court under Rule 8, Section 1, A.M. No. 09-6-8-SC, which reads:

SECTION 1. Petition for continuing mandamus.When any agency or instrumentality of the government or officer thereof unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station in connection with the enforcement or violation of an environmental law rule or regulation or a right therein, or unlawfully excludes another from the use or enjoyment of such right and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty, attaching thereto supporting evidence, specifying that the petition concerns an environmental law, rule or regulation, and praying that judgment be rendered commanding the respondent to do an act or series of acts until the judgment is fully satisfied, and to pay damages sustained by the petitioner by reason of the malicious neglect to perform the duties of the respondent, under the law, rules or regulations. The petition shall also contain a sworn certification of nonforum shopping.

SECTION 2. Where to file the petition.The petition shall be filed with the Regional Trial Court exercising jurisdiction over the territory where the actionable neglect or omission occurred or with the Court of Appeals or the Supreme Court.

Petitioner had three options where to file this case under the rule: the Regional Trial Court exercising jurisdiction over the territory where the actionable neglect or omission occurred, the Court of Appeals, or this Court.

Petitioner had no other plain, speedy, or adequate remedy in the ordinary course of law to determine the questions of unique national and local importance raised here that pertain to laws and rules for environmental protection, thus it was justified in coming to this Court.

Having resolved the procedural issue, we now move to the substantive issues.

On the issues of whether, based on the scope and classification of the project, a full EIA is required by laws and regulations, and whether respondent Province complied with all the requirements under the pertinent laws and regulations

Petitioners arguments on this issue hinges upon its claim that the reclamation project is misclassified as a single project when in fact it is colocated. Petitioner also questions the classification made by respondent Province that the reclamation project is merely an expansion of the existing jetty port, when the project descriptions embodied in the different documents filed by respondent Province describe commercial establishments to be built, among others, to raise revenues for the LGU; thus, it should have been classified as a new project. Petitioner likewise cries foul to the manner by which respondent Province allegedly circumvented the documentary requirements of the DENREMB RVI by the act of connecting the reclamation project with its previous project in 1999 and claiming that the new project is a mere expansion of the previous one.

As previously discussed, respondent Province filed a Manifestation and Motion stating that the ECC issued by respondent DENR-EMB RVI covered an area of 2,691 square meters in Caticlan, and its application for reclamation of 40 hectares with respondent PRA was conditioned on its submission of specific documents within 120 days. Respondent Province claims that its failure to comply with said condition indicated its waiver to pursue the succeeding phases of the reclamation project and that the subject matter of this case had thus been limited to 2.64 hectares. Respondent PRA, for its part, declared through its General Manager that the Aklan Beach Zone Restoration and Protection Marine Development Project will now be confined to the reclamation and development of the 2.64 hectares, more or less.[144]

The Court notes such manifestation of respondent Province. Assuming, however, that the area involved in the subject reclamation project has been limited to 2.64 hectares, this case has not become moot and academic, as alleged by respondents, because the Court still has to check whether respondents had complied with all applicable environmental laws, rules, and regulations pertaining to the actual reclamation project.

We recognize at this point that the DENR is the government agency vested with delegated powers to review and evaluate all EIA reports, and to grant or deny ECCs to project proponents.[145] It is the DENR that has the duty to implement the EIS system. It appears, however, that respondent DENR-EMB RVIs evaluation of this reclamation project was problematic, based on the valid questions raised by petitioner.

Being the administrator of the EIS System, respondent DENR-EMB RVIs submissions bear great weight in this case. However, the following are the issues that put in question the wisdom of respondent DENR-EMB RVI in issuing the ECC:

1. Its approval of respondent Provinces classification of the project as a mere expansion of the existing jetty port in Caticlan, instead of classifying it as anew project; 2. Its classification of the reclamation project as a single instead of a colocated project; 3. The lack of prior public consultations and approval of local government agencies; and 4. The lack of comprehensive studies regarding the impact of the reclamation project to the environment. The above issues as raised put in question the sufficiency of the evaluation of the project by respondent DENR-EMB RVI. Nature of the project

The first question must be answered by respondent DENR-EMB RVI as the agency with the expertise and authority to state whether this is a new project, subject to the more rigorous environmental impact study requested by petitioner, or it is a mere expansion of the existing jetty port facility.

The second issue refers to the classification of the project by respondent Province, approved by respondent DENR-EMB RVI, as single instead of colocated. Under the Revised Procedural Manual, the Summary List of Additional Non-Environmentally-Critical Project (NECP) Types in ECAs Classified under Group II (Table I-2) lists buildings, storage facilities and other structures as a separate item from transport terminal facilities. This creates the question of whether this project should be considered as consisting of more than one type of activity, and should more properly be classified as co-located, under the following definition from the same Manual, which reads:

f)

Group IV (Co-located Projects in either ECA or NECA): A colocated project is a group of single projects, under one or more proponents/locators, which are located in a contiguous area and managed by one administrator, who is also the ECC applicant. The co-located project may be an economic zone or industrial park, or a mix of projects within a catchment, watershed or river basin, or any other geographical, political or economic unit of area. Since the location or threshold of specific projects within the contiguous area will yet be derived from the EIA process based on the carrying capacity of the project environment, the nature of the project is called programmatic. (Emphasis added.)

Respondent DENR-EMB RVI should conduct a thorough and detailed evaluation of the project to address the question of whether this could be deemed as a group of single projects (transport terminal facility, building, etc.) in a contiguous area managed by respondent Province, or as a single project.

The third item in the above enumeration will be discussed as a separate issue.

The answer to the fourth question depends on the final classification of the project under items 1 and 3 above because the type of EIA study required under the Revised Procedural Manual depends on such classification.

The very definition of an EIA points to what was most likely neglected by respondent Province as project proponent, and what was in turn overlooked by respondent DENR-EMB RVI, for it is defined as follows:

An [EIA] is a process that involves predicting and evaluating the likely impacts of a project (including cumulative impacts) on the environment during construction, commissioning, operation and abandonment. It also includes designing appropriate preventive, mitigating and enhancement measures addressing these consequences to protect the environment and the communitys welfare.[146] (Emphases supplied.)

Thus, the EIA process must have been able to predict the likely impact of the reclamation project to the environment and to prevent any harm that may otherwise be caused.

The project now before us involves reclamation of land that is more than five times the size of the original reclaimed land. Furthermore, the area prior to construction merely contained a jetty port, whereas the proposed expansion, as described in the EPRMP submitted by respondent Province to respondent DENREMB RVI involves so much more, and we quote:

The expansion project will be constructed at the north side of the existing jetty port and terminal that will have a total area of 2.64 hectares, more or less, after reclamation. The Phase 1 of the project construction costing around P260 million includes the following:

1. Reclamation

- 3,000 sq m (expansion of jetty port)

2. Reclamation

- 13,500 sq m (buildable area) - 250 sq m

3. Terminal annex building

4. 2-storey commercial building 2,500 sq m (1,750 sq m of leasable space) 5. Health and wellness center 6. Access road - 12 m (wide)

7. Parking, perimeter fences, lighting and water treatment sewerage system 8. Rehabilitation of existing jetty port and terminal

xxxx

The succeeding phases of the project will consist of [further] reclamation, completion of the commercial center building, bay walk commercial strip, staff building, ferry terminal, a cable car system and wharf marina. This will entail an additional estimated cost of P785 million bringing the total investment requirement to about P1.0 billion.[147] (Emphases added.)

As may be gleaned from the breakdown of the 2.64 hectares as described by respondent Province above, a significant portion of the reclaimed area would be devoted to the construction of a commercial building, and the area to be utilized for the expansion of the jetty port consists of a mere 3,000 square meters (sq. m). To be true to its definition, the EIA report submitted by respondent Province should at the very least predict the impact that the construction of the new buildings on the reclaimed land would have on the surrounding

environment. These new constructions and their environmental effects were not covered by the old studies that respondent Province previously submitted for the construction of the original jetty port in 1999, and which it re-submitted in its application for ECC in this alleged expansion, instead of conducting updated and more comprehensive studies.

Any impact on the Boracay side cannot be totally ignored, as Caticlan and Boracay are separated only by a narrow strait. This becomes more imperative because of the significant contributions of Boracays white-sand beach to the countrys tourism trade, which requires respondent Province to proceed with utmost caution in implementing projects within its vicinity.

We had occasion to emphasize the duty of local government units to ensure the quality of the environment under Presidential Decree No. 1586 in Republic of the Philippines v. The City of Davao,[148] wherein we held:

Section 15 of Republic Act 7160, otherwise known as the Local Government Code, defines a local government unit as a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it performs dual functions, governmental and proprietary. Governmental functions are those that concern the health, safety and the advancement of the public good or welfare as affecting the public generally. Proprietary functions are those that seek to obtain special corporate benefits or earn pecuniary profit and intended for private advantage and benefit. When exercising governmental powers and performing governmental duties, an LGU is an agency of the national government. When engaged in corporate activities, it acts as an agent of the community in the administration of local affairs. Found in Section 16 of the Local Government Code is the duty of the LGUs to promote the peoples right to a balanced ecology. Pursuant to this, an LGU, like the City of Davao, can not claim exemption from the coverage of PD 1586. As a body politic endowed with governmental functions, an LGU has the duty to ensure the quality of the environment, which is the very same objective of PD 1586.

xxxx Section 4 of PD 1586 clearly states that no person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. The Civil Code defines a person as either natural or juridical. The state and its political subdivisions, i.e., the local government units are juridical persons. Undoubtedly therefore, local government units are not excluded from the coverage of PD 1586. Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the policy of the state to achieve a balance between socioeconomic development and environmental protection, which are the twin goals of sustainable development. The above-quoted first paragraph of the Whereas clause stresses that this can only be possible if we adopt a comprehensive and integrated environmental protection program where all the sectors of the community are involved, i.e., the government and the private sectors. The local government units, as part of the machinery of the government, cannot therefore be deemed as outside the scope of the EIS system.[149] (Emphases supplied.)

The Court chooses to remand these matters to respondent DENR-EMB RVI for it to make a proper study, and if it should find necessary, to require respondent Province to address these environmental issues raised by petitioner and submit the correct EIA report as required by the projects specifications. The Court requires respondent DENR-EMB RVI to complete its study and submit a report within a non-extendible period of three months. Respondent DENR-EMB RVI should establish to the Court in said report why the ECC it issued for the subject project should not be canceled. Lack of prior public consultation

The Local Government Code establishes the duties of national government agencies in the maintenance of ecological balance, and requires them to secure prior public consultation and approval of local government units for the projects described therein.

In the case before us, the national agency involved is respondent PRA. Even if the project proponent is the local government of Aklan, it is respondent PRA which authorized the reclamation, being the exclusive agency of the government to undertake reclamation nationwide. Hence, it was necessary for respondent Province to go through respondent PRA and to execute a MOA, wherein respondent PRAs authority to reclaim was delegated to respondent Province. Respondent DENR-EMB RVI, regional office of the DENR, is also a national government institution which is tasked with the issuance of the ECC that is a prerequisite to projects covered by environmental laws such as the one at bar.

This project can be classified as a national project that affects the environmental and ecological balance of local communities, and is covered by the requirements found in the Local Government Code provisions that are quoted below:

Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. - It shall be the duty of every national agency or government-owned or controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or

program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.

Section 27. Prior Consultations Required. - No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution.

In Lina, Jr. v. Pao,[150] we held that Section 27 of the Local Government Code applies only to national programs and/or projects which are to be implemented in a particular local community[151] and that it should be read in conjunction with Section 26. We held further in this manner:

Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose effects are among those enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may eradicate certain animal or plant species from the face of the planet; and (6) other projects or programs that may call for the eviction of a particular group of people residing in the locality where these will be implemented. Obviously, none of these effects will be produced by the introduction of lotto in the province of Laguna.[152] (Emphasis added.)

During the oral arguments held on September 13, 2011, it was established that this project as described above falls under Section 26 because the commercial establishments to be built on phase 1, as described in the EPRMP quoted above, could cause pollution as it could generate garbage, sewage, and possible toxic fuel discharge.[153]

Our ruling in Province of Rizal v. Executive Secretary[154] is instructive:

We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v. Lanzanas, where we held that there was no statutory requirement for the sangguniang bayan of Puerto Galera to approve the construction of a mooring facility, as Sections 26 and 27 are inapplicable to projects which are not environmentally critical.

Moreover, Section 447, which enumerates the powers, duties and functions of the municipality, grants the sangguniang bayan the power to, among other things, enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of th(e) Code. These include:

(1)

Approving ordinances and passing resolutions to protect the environment and impose appropriate penalties for acts which endanger the environment, such as dynamite fishing and other forms of destructive fishing, illegal logging and smuggling of logs, smuggling of natural

resources products and of endangered species of flora and fauna, slash and burn farming, and such other activities which result in pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance; [Section 447 (1)(vi)]

(2)

Prescribing reasonable limits and restraints on the use of property within the jurisdiction of the municipality, adopting a comprehensive land use plan for the municipality, reclassifying land within the jurisdiction of the city, subject to the pertinent provisions of this Code, enacting integrated zoning ordinances in consonance with the approved comprehensive land use plan, subject to existing laws, rules and regulations; establishing fire limits or zones, particularly in populous centers; and regulating the construction, repair or modification of buildings within said fire limits or zones in accordance with the provisions of this Code; [Section 447 (2)(vi-ix)]

(3)

Approving ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to said services and facilities, providing for the establishment, maintenance, protection, and conservation of communal forests and watersheds, tree parks, greenbelts, mangroves, and other similar forest development projects and, subject to existing laws, establishing and providing for the maintenance, repair and operation of an efficient waterworks system to supply water for the inhabitants and purifying the source of the water supply; regulating the construction, maintenance,

repair and use of hydrants, pumps, cisterns and reservoirs; protecting the purity and quantity of the water supply of the municipality and, for this purpose, extending the coverage of appropriate ordinances over all territory within the drainage area of said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct, pumping station, or watershed used in connection with the water service; and regulating the consumption, use or wastage of water. *Section 447 (5)(i) & (vii)]

Under the Local Government Code, therefore, two requisites must be met before a national project that affects the environmental and ecological balance of local communities can be implemented: prior consultation with the affected local communities, and prior approval of the project by the appropriate sanggunian. Absent either of these mandatory requirements, the projects implementation is illegal.[155] (Emphasis added.)

Based on the above, therefore, prior consultations and prior approval are required by law to have been conducted and secured by the respondent Province. Accordingly, the information dissemination conducted months after the ECC had already been issued was insufficient to comply with this requirement under the Local Government Code. Had they been conducted properly, the prior public consultation should have considered the ecological or environmental concerns of the stakeholders and studied measures alternative to the project, to avoid or minimize adverse environmental impact or damage. In fact, respondent Province once tried to obtain the favorable endorsement of the Sangguniang Bayan of Malay, but this was denied by the latter.

Moreover, DENR DAO 2003-30 provides:

5.3

Public Hearing / Consultation Requirements

For projects under Category A-1, the conduct of public hearing as part of the EIS review is mandatory unless otherwise determined by EMB. For all other undertakings, a public hearing is not mandatory unless specifically required by EMB.

Proponents should initiate public consultations early in order to ensure that environmentally relevant concerns of stakeholders are taken into consideration in the EIA study and the formulation of the management plan. All public consultations and public hearings conducted during the EIA process are to be documented. The public hearing/consultation Process report shall be validated by the EMB/EMB RD and shall constitute part of the records of the EIA process. (Emphasis supplied.)

In essence, the above-quoted rule shows that in cases requiring public consultations, the same should be initiated early so that concerns of stakeholders could be taken into consideration in the EIA study. In this case, respondent Province had already filed its ECC application before it met with the local government units of Malay and Caticlan.

The claim of respondent DENR-EMB RVI is that no permits and/or clearances from National Government Agencies (NGAs) and LGUs are required pursuant to the DENR Memorandum Circular No. 2007-08. However, we still find that the LGC requirements of consultation and approval apply in this case. This is because a

Memorandum Circular cannot prevail over the Local Government Code, which is a statute and which enjoys greater weight under our hierarchy of laws.

Subsequent to the information campaign of respondent Province, the Municipality of Malay and the Liga ng mga Barangay-Malay Chapter still opposed the project. Thus, when respondent Province commenced the implementation project, it violated Section 27 of the LGC, which clearly enunciates that *no+ project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2(c) and 26 hereof are complied with, and prior approval of thesanggunian concerned is obtained.

The lack of prior public consultation and approval is not corrected by the subsequent endorsement of the reclamation project by the Sangguniang Barangay of Caticlan on February 13, 2012, and the Sangguniang Bayan of the Municipality of Malay on February 28, 2012, which were both undoubtedly achieved at the urging and insistence of respondent Province. As we have established above, the respective resolutions issued by the LGUs concerned did not render this petition moot and academic.

It is clear that both petitioner and respondent Province are interested in the promotion of tourism in Boracay and the protection of the environment, lest they kill the proverbial hen that lays the golden egg. At the beginning of this decision, we mentioned that there are common goals of national significance that are very apparent from both the petitioners and the respondents respective pleadings and memoranda.

The parties are evidently in accord in seeking to uphold the mandate found in Article II, Declaration of Principles and State Policies, of the 1987 Constitution, which we quote below:

SECTION 16. The State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. xxxx SECTION 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

The protection of the environment in accordance with the aforesaid constitutional mandate is the aim, among others, of Presidential Decree No. 1586, Establishing an Environmental Impact Statement System, Including Other Environmental Management Related Measures and For Other Purposes, which declared in its first Section that it is the policy of the State to attain and maintain a rational and orderly balance between socio-economic growth and environmental protection.

The parties undoubtedly too agree as to the importance of promoting tourism, pursuant to Section 2 of Republic Act No. 9593, or The Tourism Act of 2009, which reads:

SECTION 2. Declaration of Policy. The State declares tourism as an indispensable element of the national economy and an industry of national interest and importance, which must be harnessed as an engine of socioeconomic growth and cultural affirmation to generate investment, foreign exchange and employment, and to continue to mold an enhanced sense of national pride for all Filipinos. (Emphasis ours.)

The primordial role of local government units under the Constitution and the Local Government Code of 1991 in the subject matter of this case is also unquestionable. The Local Government Code of 1991 (Republic Act No. 7160) pertinently provides:

Section 2. Declaration of Policy. - (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the national government to the local government units.[156] (Emphases ours.)

As shown by the above provisions of our laws and rules, the speedy and smooth resolution of these issues would benefit all the parties. Thus, respondent Provinces cooperation with respondent DENR-EMB RVI in the Court-mandated review of the proper classification and environmental impact of the reclamation project is of utmost importance.

WHEREFORE, premises considered, the petition is hereby PARTIALLY GRANTED. The TEPO issued by this Court is hereby converted into a writ of continuing mandamus specifically as follows:

1. Respondent Department of Environment and Natural ResourcesEnvironmental Management Bureau Regional Office VI shall revisit and review the following matters: a. its classification of the reclamation project as a single instead of a co-located project; b. its approval of respondent Provinces classification of the project as a mere expansion of the existing jetty port in Caticlan, instead of classifying it as a new project; and c. the impact of the reclamation project to the environment based on new, updated, and comprehensive studies, which should forthwith be ordered by respondent DENR-EMB RVI. 2. Respondent Province of Aklan shall perform the following: a. fully cooperate with respondent DENR-EMB RVI in its review of the reclamation project proposal and submit to the latter the appropriate report and study; and b. secure approvals from local government units and hold proper consultations with non-governmental organizations and other stakeholders and sectors concerned as required by Section 27 in relation to Section 26 of the Local Government Code. 3. Respondent Philippine Reclamation Authority shall closely monitor the submission by respondent Province of the requirements to be issued by respondent DENR-EMB RVI in connection to the environmental concerns raised by petitioner, and shall coordinate with respondent Province in modifying the MOA, if necessary, based on the findings of respondent DENR-EMB RVI. 4. The petitioner Boracay Foundation, Inc. and the respondents The Province of Aklan, represented by Governor Carlito S. Marquez, The

Philippine Reclamation Authority, and The DENR-EMB (Region VI) are mandated to submit their respective reports to this Court regarding their compliance with the requirements set forth in this Decision no later than three (3) months from the date of promulgation of this Decision. 5. In the meantime, the respondents, their concerned contractor/s, and/or their agents, representatives or persons acting in their place or stead, shall immediately cease and desist from continuing the implementation of the project covered by ECC-R6-1003-096-7100 until further orders from this Court. For this purpose, the respondents shall report within five (5) days to this Court the status of the project as of their receipt of this Decision, copy furnished the petitioner.

This Decision is immediately executory. SO ORDERED.