Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-6339 April 20, 1954

of dismissal to the Court of Appeals which Tribunal after finding only questions of law are involved, certified the case to us. The parties are agreed that the plaintiffs as chauffeurs received no fixed compensation based on the hours or the period of time that they worked. Rather, they were paid on the commission basis, that is to say, each driver received 20 per cent of the gross returns or earnings from the operation of his taxi cab. Plaintiffs claim that as a rule, each drive operated a taxi 12 hours a day with gross earnings ranging from P20 to P25, receiving therefrom the corresponding 20 per cent share ranging from P4 to P5, and that in some cases, especially during Saturdays, Sundays, and holidays when a driver worked 24 hours a day he grossed from P40 to P50, thereby receiving a share of from P8 to P10 for the period of twenty-four hours. The reason given by the trial court in dismissing the complaint is that the defendant being engaged in the taxi or transportation business which is a public utility, came under the exception provided by the Eight-Hour Labor Law (Commonwealth Act No. 444); and because plaintiffs did not work on a salary basis, that is to say, they had no fixed or regular salary or remuneration other than the 20 per cent of their gross earnings "their situation was therefore practically similar to piece workers and hence, outside the ambit of article 302 of the Code of Commerce." For purposes of reference we are reproducing the pertinent provisions of the Eight-Hour Labor Law, namely, sections 1 to 4. SECTION 1. The legal working day for any person employed by another shall not be more than eight hours daily. When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. SEC. 2. This Act shall apply to all persons employed in any industry or occupation, whether public or private, with the

MANUEL LARA, ET AL., plaintiffs-appellants, vs. PETRONILO DEL ROSARIO, JR., defendant-appellee. Manansala and Manansala for appellants. Ramon L. Resurreccion for appellee. MONTEMAYOR, J.: In 1950 defendant Petronilo del Rosario, Jr., owner of twenty-five taxi cabs or cars, operated a taxi business under the name of "Waval Taxi." He employed among others three mechanics and 49 chauffeurs or drivers, the latter having worked for periods ranging from 2 to 37 months. On September 4, 1950, without giving said mechanics and chauffeurs 30 days advance notice, Del Rosario sold his 25 units or cabs to La Mallorca, a transportation company, as a result of which, according to the mechanics and chauffeurs above-mentioned they lost their jobs because the La Mallorca failed to continue them in their employment. They brought this action against Del Rosario to recover compensation for overtime work rendered beyond eight hours and on Sundays and legal holidays, and one month salary (mesada) provided for in article 302 of the Code of Commerce because the failure of their former employer to give them one month notice. Subsequently, the three mechanics unconditionally withdrew their claims. So only the 49 drivers remained as plaintiffs. The defendant filed a motion for dismissal of the complaint on the ground that it stated no cause of action and the trial court for the time being denied the motion saying that it will be considered when the case was heard on the merits. After trial the complaint was dismissed. Plaintiffs appealed from the order

exception of farm laborers, laborers who prefer to be paid on piece work basis, domestic servants and persons in the personal service of another and members of the family of the employer working for him. SEC. 3. Work may be performed beyond eight hours a day in case of actual or impending emergencies, caused by serious accidents, fire flood, typhoon, earthquakes, epidemic, or other disaster or calamity in order to prevent loss of life and property or imminent danger to public safety; or in case of urgent work to be performed on the machines, equipment, or installations in order to avoid a serious loss which the employer would otherwise suffer, or some other just cause of a similar nature; but in all cases the laborers and the employees shall be entitled to receive compensation for the overtime work performed at the same rate as their regular wages or salary, plus at least twenty-five per centum additional. In case of national emergency the Government is empowered to establish rules and regulations for the operation of the plants and factories and to determine the wages to be paid the laborers. SEC. 4. No person, firm, or corporation, business establishment or place or center of work shall compel an employee or laborer to work during Sundays and legal holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: Provided however, That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication. Under section 4, as a public utility, the defendant could have his chauffeurs work on Sundays and legal holidays without paying them an additional sum of at least 25 per cent of their regular remuneration: but that with reference only to work performed on Sundays and holidays. If the work done on such days exceeds 8 hours a day, then the EightHour Labor Law would operate, provided of course that

plaintiffs came under section 2 of the said law. So that the question to be decided here is whether or not plaintiffs are entitled to extra compensation for work performed in excess of 8 hours a day, Sundays and holidays included. It will be noticed that the last part of section 3 of Commonwealth Act 444 provides for extra compensation for over-time work "at the same rate as their regular wages or salary, plus at least twenty-five per centum additional'" and that section 2 of the same act excludes application thereof laborers who preferred to be on piece work basis. This connotes that a laborer or employee with no fixed salary, wages or remuneration but receiving as compensation from his employer uncertain and variable amount depending upon the work done or the result of said work (piece work) irrespective of the amount of time employed, is not covered by the Eight-Hour Labor Law and is not entitled to extra compensation should he work in excess of 8 hours a day. And this seems to be the condition of employment of the plaintiffs. A driver in the taxi business of the defendant, like the plaintiffs, in one day could operate his taxi cab eight hours, or less than eight hours or in excess of 8 hours, or even 24 hours on Saturdays, Sundays, and holidays, with no limit or restriction other than his desire, inclination and state of health and physical endurance. He could drive continuously or intermittently, systematically or haphazardly, fast or slow, etc. depending upon his exclusive wish or inclination. One day when he feels strong, active and enthusiastic he works long, continuously, with diligence and industry and makes considerable gross returns and receives as much as his 20 per cent commission. Another day when he feels despondent, run down, weak or lazy and wants to rest between trips and works for less number of hours, his gross returns are less and so is his commission. In other words, his compensation for the day depends upon the result of his work, which in turn depends on the amount of industry, intelligence and experience applied to it, rather than the period of time employed. In short, he has no fixed salary or wages. In this we agree with the learned trial court

presided by Judge Felicisimo Ocampo which makes the following findings and observations of this point. . . . As already stated, their earnings were in the form of commission based on the gross receipts of the day. Their participation in most cases depended upon their own industry. So much so that the more hours they stayed on the road, the greater the gross returns and the higher their commissions. They have no fixed hours of labor. They can retire at pleasure, they not being paid a fixed salary on the hourly, daily, weekly or monthly basis. It results that the working hours of the plaintiffs as taxi drivers were entirely characterized by its irregularity, as distinguished from the specific regular remuneration predicated on specific and regular hours of work of factories and commercial employees. In the case of the plaintiffs, it is the result of their labor, not the labor itself, which determines their commissions. They worked under no compulsion of turning a fixed income for each given day. . . .. In an opinion dated June 1, 1939 (Opinion No. 115) modified by Opinion No. 22, series 1940, dated June 11, 1940, the Secretary of Justice held that chauffeurs of the Manila Yellow Taxicab Co. who "observed in a loose way certain working hours daily," and "the time they report for work as well as the time they leave work was left to their discretion.," receiving no fixed salary but only 20 per cent of their gross earnings, may be considered as piece workers and therefore not covered by the provisions of the Eight-Hour Labor Law. The Wage Administration Service of the Department of Labor in its Interpretative Bulletin No. 2 dated May 28, 1953, under "Overtime Compensation," in section 3 thereof entitled Coverage, says: The provisions of this bulletin on overtime compensation shall apply to all persons employed in any industry or occupation, whether public or private, with

the exception of farm laborers, non-agricultural laborers or employees who are paid on piece work, contract, pakiao, task or commission basis, domestic servants and persons in the personal service of another and members of the family of the employer working for him. From all this, to us it is clear that the claim of the plaintiffsappellants for overtime compensation under the Eight-Hour Labor Law has no valid support. As to the month pay (mesada) under article 302 of the Code of Commerce, article 2270 of the new Civil Code (Republic Act 386) appears to have repealed said Article 302 when it repealed the provisions of the Code of Commerce governing Agency. This repeal took place on August 30, 1950, when the new Civil Code went into effect, that is, one year after its publication in the Official Gazette. The alleged termination of services of the plaintiffs by the defendant took place according to the complaint on September 4, 1950, that is to say, after the repeal of Article 302 which they invoke. Moreover, said Article 302 of the Code of Commerce, assuming that it were still in force speaks of "salary corresponding to said month." commonly known as "mesada." If the plaintiffs herein had no fixed salary either by the day, week or month, then computation of the month's salary payable would be impossible. Article 302 refers to employees receiving a fixed salary. Dr. Arturo M. Tolentino in his book entitled "Commentaries and Jurisprudence on the Commercial Laws of the Philippines," Vol. 1, 4th edition, p. 160, says that article 302 is not applicable to employees without fixed salary. We quote Employees not entitled to indemnity. This article refers only to those who are engaged under salary basis, and not to those who only receive compensation equivalent to whatever service they may render. (1 Malagarriga 314, citing decision of Argentina Court of Appeals on Commercial Matters.) In view of the foregoing, the order appealed from is hereby affirmed, with costs against appellants.

Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Diokno, JJ., concur. Paras, C.J., concurs in the result.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-6791 March 29, 1954

require the publication in the Official Gazette of said circular issued for the implementation of a law in order to have force and effect. We agree with the Solicitor General that the laws in question do not require the publication of the circulars, regulations and notices therein mentioned in order to become binding and effective. All that said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of Appeals, notices and documents required by law to be of no force and effect. In other words, said two Acts merely enumerate and make a list of what should be published in the Official Gazette, presumably, for the guidance of the different branches of the Government issuing same, and of the Bureau of Printing. However, section 11 of the Revised Administrative Code provides that statutes passed by Congress shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars and regulations especially like the Circular No. 20 of the Central Bank in question which prescribes a penalty for its violation should be published before becoming effective, this, on the general principle and theory that before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specifically informed of said contents and its penalties. Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws, (Article 1

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. QUE PO LAY, defendant-appellant. Prudencio de Guzman for appellant. First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee. MONTEMAYOR, J.: Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and sentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to pay the costs. The charge was that the appellant who was in possession of foreign exchange consisting of U.S. dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to the Central Bank through its agents within one day following the receipt of such foreign exchange as required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not published in the Official Gazette prior to the act or omission imputed to the appellant, and that consequently, said circular had no force and effect. It is contended that Commonwealth Act. No., 638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order or notice of general applicability. The Solicitor General answering this contention says that Commonwealth Act. No. 638 and 2930 do not

thereof), namely, that laws shall be binding twenty days after their promulgation, and that their promulgation shall be understood as made on the day of the termination of the publication of the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws" include regulations and circulars issued in accordance with the same. He says: El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p. 52). In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was not published until November 1951, that is, about 3 months after appellant's conviction of its violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and bound no one until its publication in the Official Gazzette or after November 1951. In other words, appellant could not be held liable for its violation, for it was not binding at the time he was found to have failed to sell the foreign exchange in his possession thereof. But the Solicitor General also contends that this question of non-publication of the Circular is being raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one may raise on appeal any question of law or fact that has been raised in the court below and which is within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But

the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20 had not been published as required by law before its violation, then in the eyes of the law there was no such circular to be violated and consequently appellant committed no violation of the circular or committed any offense, and the trial court may be said to have had no jurisdiction. This question may be raised at any stage of the proceeding whether or not raised in the court below. In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with costs de oficio. Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno, JJ., concur.

Republic of the Philippines SUPREME COURT Manila G.R. No. L-63915 December 29, 1986 LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), petitioners, vs. HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET AL., respondents. RESOLUTION

The petitioners are now before us again, this time to move for reconsideration/clarification of that decision. 1Specifically, they ask the following questions: 1. What is meant by "law of public nature" or "general applicability"? 2. Must a distinction be made between laws of general applicability and laws which are not? 3. What is meant by "publication"? 4. Where is the publication to be made? 5. When is the publication to be made? Resolving their own doubts, the petitioners suggest that there should be no distinction between laws of general applicability and those which are not; that publication means complete publication; and that the publication must be made forthwith in the Official Gazette. 2 In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a request for an advisory opinion and should therefore be dismissed, and, on the merits, that the clause "unless it is otherwise provided" in Article 2 of the Civil Code meant that the publication required therein was not always imperative; that publication, when necessary, did not have to be made in the Official Gazette; and that in any case the subject decision was concurred in only by three justices and consequently not binding. This elicited a Reply 4 refuting these arguments. Came next the February Revolution and the Court required the new Solicitor General to file a Rejoinder in view of the supervening events, under Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances intended only for the internal administration of a government agency or for particular persons did not have to be 'Published; that publication when necessary must be in full and in the Official Gazette; and that, however, the decision under

CRUZ, J.: Due process was invoked by the petitioners in demanding the disclosure of a number of presidential decrees which they claimed had not been published as required by law. The government argued that while publication was necessary as a rule, it was not so when it was "otherwise provided," as when the decrees themselves declared that they were to become effective immediately upon their approval. In the decision of this case on April 24, 1985, the Court affirmed the necessity for the publication of some of these decrees, declaring in the dispositive portion as follows: WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect.

reconsideration was not binding because it was not supported by eight members of this Court. 5 The subject of contention is Article 2 of the Civil Code providing as follows: ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication. After a careful study of this provision and of the arguments of the parties, both on the original petition and on the instant motion, we have come to the conclusion and so hold, that the clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This clause does not mean that the legislature may make the law effective immediately upon approval, or on any other date, without its previous publication. Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day period shall be shortened or extended. An example, as pointed out by the present Chief Justice in his separate concurrence in the original decision, 6 is the Civil Code which did not become effective after fifteen days from its publication in the Official Gazette but "one year after such publication." The general rule did not apply because it was "otherwise provided. " It is not correct to say that under the disputed clause publication may be dispensed with altogether. The reason. is that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern the legislature could validly provide that a law e effective immediately upon its approval notwithstanding the lack of publication (or after an unreasonably short period after publication), it is not unlikely that persons not aware of it would be prejudiced as a result and they would be so not because of a failure to

comply with but simply because they did not know of its existence, Significantly, this is not true only of penal laws as is commonly supposed. One can think of many non-penal measures, like a law on prescription, which must also be communicated to the persons they may affect before they can begin to operate. We note at this point the conclusive presumption that every person knows the law, which of course presupposes that the law has been published if the presumption is to have any legal justification at all. It is no less important to remember that Section 6 of the Bill of Rights recognizes "the right of the people to information on matters of public concern," and this certainly applies to, among others, and indeed especially, the legislative enactments of the government. 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 the courts of justice. In fact, a law without any bearing on the public would be invalid as an intrusion of privacy or as class legislation or as anultra vires act of the legislature. To be valid, the law must invariably affect the public interest even if it might be directly applicable only to one individual, or some of the people only, and t to the public as a whole. We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution. administrative rules and regulations must a also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion of the national territory and directly affects only the inhabitants of that place. All presidential decrees must be published, including even, say, those naming a public place after a favored individual or exempting him from certain prohibitions or requirements. The circulars issued by the Monetary Board must be published if they are meant not merely to interpret but to "fill in the details" of the Central Bank Act which that body is supposed to enforce. However, no publication is required of the instructions issued by, say, the Minister of Social Welfare on the case studies to be made in petitions for adoption or the rules laid down by the head of a government agency on the assignments or workload of his personnel or the wearing of office uniforms. Parenthetically, municipal ordinances are not covered by this rule but by the Local Government Code. We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of the number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary Tuvera"), the supposed date of

effectivity, and in a mere supplement of the Official Gazette cannot satisfy the publication requirement. This is not even substantial compliance. This was the manner, incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of general applicability and interest, was "published" by the Marcos administration. 7 The evident purpose was to withhold rather than disclose information on this vital law. Coming now to the original decision, it is true that only four justices were categorically for publication in the Official Gazette 8 and that six others felt that publication could be made elsewhere as long as the people were sufficiently informed. 9 One reserved his vote 10 and another merely acknowledged the need for due publication without indicating where it should be made. 11 It is therefore necessary for the present membership of this Court to arrive at a clear consensus on this matter and to lay down a binding decision supported by the necessary vote. There is much to be said of the view that the publication need not be made in the Official Gazette, considering its erratic releases and limited readership. Undoubtedly, newspapers of general circulation could better perform the function of communicating, the laws to the people as such periodicals are more easily available, have a wider readership, and come out regularly. The trouble, though, is that this kind of publication is not the one required or authorized by existing law. As far as we know, no amendment has been made of Article 2 of the Civil Code. The Solicitor General has not pointed to such a law, and we have no information that it exists. If it does, it obviously has not yet been published. At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if we find it impractical. That is not our function. That function belongs to the legislature. Our task is merely to interpret and apply the law as conceived and approved by the political departments of the government in accordance with the

prescribed procedure. Consequently, we have no choice but to pronounce that under Article 2 of the Civil Code, the publication of laws must be made in the Official Gazett and not elsewhere, as a requirement for their effectivity after fifteen days from such publication or after a different period provided by the legislature. We also hold that the publication must be made forthwith or at least as soon as possible, to give effect to the law pursuant to the said Article 2. There is that possibility, of course, although not suggested by the parties that a law could be rendered unenforceable by a mere refusal of the executive, for whatever reason, to cause its publication as required. This is a matter, however, that we do not need to examine at this time. Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory opinion is untenable, to say the least, and deserves no further comment. The days of the secret laws and the unpublished decrees are over. This is once again an open society, with all the acts of the government subject to public scrutiny and available always to public cognizance. This has to be so if our country is to remain democratic, with sovereignty residing in the people and all government authority emanating from them. Although they have delegated the power of legislation, they retain the authority to review the work of their delegates and to ratify or reject it according to their lights, through their freedom of expression and their right of suffrage. This they cannot do if the acts of the legislature are concealed.

Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint parry or cut unless the naked blade is drawn. WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their approval, or as soon thereafter as possible, be published in full in the Official Gazette, to become effective only after fifteen days from their publication, or on another date specified by the legislature, in accordance with Article 2 of the Civil Code. SO ORDERED. Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., and Paras, JJ., concur.

Separate Opinions FERNAN, J., concurring: While concurring in the Court's opinion penned by my distinguished colleague, Mr. Justice Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct Batasang Pambansa, I took a strong stand against the insidious manner by which the previous dispensation had promulgated and made effective thousands of decrees, executive orders, letters of instructions, etc. Never has the law-making power which traditionally belongs to the legislature been used and abused to satisfy the whims and caprices of a one-man legislative mill as it happened in the past regime. Thus, in those days, it was not surprising to witness the sad spectacle of two presidential decrees bearing the same number, although covering two different subject matters. In point is the case of two presidential

decrees bearing number 1686 issued on March 19, 1980, one granting Philippine citizenship to Michael M. Keon the then President's nephew and the other imposing a tax on every motor vehicle equipped with airconditioner. This was further exacerbated by the issuance of PD No. 1686-A also on March 19, 1980 granting Philippine citizenship to basketball players Jeffrey Moore and Dennis George Still The categorical statement by this Court on the need for publication before any law may be made effective seeks prevent abuses on the part of the lawmakers and, at the same time, ensures to the people their constitutional right to due process and to information on matters of public concern. FELICIANO, J., concurring: I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A. Cruz. At the same time, I wish to add a few statements to reflect my understanding of what the Court is saying. A statute which by its terms provides for its coming into effect immediately upon approval thereof, is properly interpreted as coming into effect immediately upon publication thereof in the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words, should not be regarded as purporting literally to come into effect immediately upon its approval or enactment and without need of publication. For so to interpret such statute would be to collide with the constitutional obstacle posed by the due process clause. The enforcement of prescriptions which are both unknown to and unknowable by those subjected to the statute, has been throughout history a common tool of tyrannical governments. Such application and enforcement constitutes at bottom a negation of the fundamental principle of legality in the relations between a government and its people. At the same time, it is clear that the requirement of publication of a statute in the Official Gazette, as

distinguished from any other medium such as a newspaper of general circulation, is embodied in a statutory norm and is not a constitutional command. The statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced by Section 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code. A specification of the Official Gazette as the prescribed medium of publication may therefore be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be amended by a subsequent statute providing, for instance, for publication either in the Official Gazette or in a newspaper of general circulation in the country. Until such an amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and publication effected in the Official Gazette and not in any other medium.

Separate Opinions FERNAN, J., concurring: While concurring in the Court's opinion penned by my distinguished colleague, Mr. Justice Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct Batasang Pambansa, I took a strong stand against the insidious manner by which the previous dispensation had promulgated and made effective thousands of decrees, executive orders, letters of instructions, etc. Never has the law-making power which traditionally belongs to the legislature been used and abused to satisfy the whims and caprices of a one-man legislative mill as it happened in the past regime. Thus, in those days, it was not surprising to witness the sad spectacle of two presidential decrees bearing the same number, although covering two different subject matters. In point is the case of two presidential decrees bearing number 1686 issued on March 19, 1980, one granting Philippine citizenship to Michael M. Keon the then President's nephew and the other imposing a tax on every motor vehicle equipped with airconditioner. This was further exacerbated by the issuance of PD No. 1686-A also

on March 19, 1980 granting Philippine citizenship to basketball players Jeffrey Moore and Dennis George Still The categorical statement by this Court on the need for publication before any law may be made effective seeks prevent abuses on the part of the lawmakers and, at the same time, ensures to the people their constitutional right to due process and to information on matters of public concern. FELICIANO, J., concurring: I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A. Cruz. At the same time, I wish to add a few statements to reflect my understanding of what the Court is saying. A statute which by its terms provides for its coming into effect immediately upon approval thereof, is properly interpreted as coming into effect immediately upon publication thereof in the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words, should not be regarded as purporting literally to come into effect immediately upon its approval or enactment and without need of publication. For so to interpret such statute would be to collide with the constitutional obstacle posed by

the due process clause. The enforcement of prescriptions which are both unknown to and unknowable by those subjected to the statute, has been throughout history a common tool of tyrannical governments. Such application and enforcement constitutes at bottom a negation of the fundamental principle of legality in the relations between a government and its people. At the same time, it is clear that the requirement of publication of a statute in the Official Gazette, as distinguished from any other medium such as a newspaper of general circulation, is embodied in a statutory norm and is not a constitutional command. The statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced by Section 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code. A specification of the Official Gazette as the prescribed medium of publication may therefore be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be amended by a subsequent statute providing, for instance, for publication either in the Official Gazette or in a newspaper of general circulation in the country. Until such an amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and publication effected in the Official Gazette and not in any other medium.

SECOND DIVISION [G.R. No. 108461. October 21, 1996] PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioners, vs. HON PRESIDING JUDGE ZOSIMO Z. ANGELES, BRANCH 58, RTC, MAKATI; REMINGTON INDUSTRIAL SALES CORPORATION; AND FIRESTONE CERAMIC, INC., respondents. DECISION TORRES, JR., J.: The PHILIPPINE INTERNATIONAL TRADING CORPORATION (PITC, for brevity) filed this Petition for Review on Certiorari, seeking the reversal of the Decision dated January 4, 1993 of public respondent Hon. Zosimo Z. Angeles. Presiding Judge of the Regional Trial Court of Makati, Branch 58, in civil Case No.92-158 entitled Remington Industrial Sales Corporation, et. al. vs. Philippine Industrial Trading Corporation. The said decision upheld the Petition for Prohibition and Mandamus of REMINGTON INDUSTRIAL SALES CORPORATION (Remington, for brevity) and FIRESTONE CERAMICS, INC. (Firestone, for brevity), and, in the process, declared as null and void and unconstitutional, PITCs Administrative Order No. SOCPEC 89-08-01 and its appurtenant regulations. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of Petitioner and Intervenor and against the Respondent, as follows: 1) Enjoining the further implementation by the respondent of the following issuances relative to the

applications for importation of products from the Peoples Republic of China, to wit: a) Administrative Order No. SOCPEC 89-08-01 dated August 30, 1989 (Annex A, Amended petition); b) Prescribed Export Undertaking Form (Annex B, Id.);

equivalent to the value of the importation from PROC being applied for, or, simply, at one is to one ratio. Pertinent provisions of the questioned administrative order read: 3. COUNTERPART EXPORTS TO PROC In addition to existing requirements for the processing of import application for goods and commodities originating from PROC, it is declared that: 3.1 All applications covered by these rules must be accompanied by a viable and confirmed EXPORT PROGRAM of Philippine products to PROC in an amount equivalent to the value of the importation from PROC being applied for. Such export program must be carried out and completed within six (6) months from date of approval of the Import Application by PITC. PITC shall reject/deny any application for importation from PROC without the accompanying export program mentioned above. 3.2 The EXPORT PROGRAM may be carried out by any of the following: a. By the IMPORTER himself if he has the capabilities and facilities to carry out the export of Philippine products to PROC in his own name; or b. Through a tie-up between the IMPORTER and a legitimate exporter (of Philippine products) who is willing to carry out the export commitments of the IMPORTER under these rules. The tie-up shall not make the IMPORTER the exporter of the goods but shall merely ensure that the importation sought to be approved is matched one-to-one (1:1) in value with a corresponding export of Philippine Products to PROC.[2] 3.3 EXPORT PROGRAM DOCUMENTS which are to be submitted by the importer together with his Import Application are as follows:

c) Prescribed Importer-Exporter Agreement Form for nonexporter-importer (Annex C, Id.); d) Memorandum dated April 16, 1990 relative to amendments of Administrative Order NO. SOCPEC 89-08-01 (Annex D, Id.); e) Memorandum dated May 6, 1991 relative to Revised Schedule of Fees for the processing of import applications (Annexes E, E-1., Ind.); f) Rules and Regulations relative to liquidation of unfulfilled Undertakings and expired export credits (Annex Z, Supplemental Petition), the foregoing being all null and void and unconstitutional; and, 2) Commanding respondent to approve forthwith all the pending applications of, and all those that may hereafter be filed by, the petitioner and the Intervenor, free from and without the requirements prescribed in a the abovementioned issuance. IT IS SO ORDERED." The controversy springs from the issuance by the PITC of Administrative Order No. SOCPEC 89-08-01,[1] under which, applications to the PITC for importation from the Peoples Republic of China (PROC. for brevity) must be accompanied by a viable and confirmed Export Program of Philippine Products to PROC carried out by the importer himself or through a tie-up with a legitimate importer in an amount

a) b)

Firm Contract, Sales Invoice or Letter of Credit. Export Performance Guarantee (See Article 4 hereof).

his importation and provided further that the following documents are submitted to PITC: a) b) c) d) Final Sales Invoice Bill of lading or Airway bill Bank Certificate of Inward remittance PITC EXPORT APPLICATION FOR NO. M-1005

c) IMPORTER-EXPORTER AGREEMENT for non-exporter IMPORTER (PITC Form No. M-1006). This form should be used if IMPORTER has a tie-up with an exporter for the export of Philippine Products to PROC. 4. EXPORT GUARANTEE To ensure that the export commitments of the IMPORTER are carried out in accordance with these rules, all IMPORTERS concerned are required to submit an EXPORT PERFORMANCE GUARANTEE (the Guarantee) at the time of filing of the Import Application. The amount of the guarantee shall be as follows: For essential commodities: 15% of the value of the imports applied for. For other commodities: 50% of the value of the imports applied for. 4.1 The guarantee may be in the form of (i) a noninterest bearing cash deposit; (ii) Bank hold-out in favor of PITC (PITC Form No. M-1007) or (iii) a Domestic Letter of Credit (with all bank opening charges for account of Importer) opened in favor of PITC as beneficiary. 4.2 The guarantee shall be made in favor of PITC and will be automatically forfeited in favor of PITC, fully or partially, if the required export program is not completed by the importer within six (6) months from date of approval of the Import Application. 4.3 Within the six (6) months period above stated, the IMPORTER is entitled to a (i) refund of the cash deposited without interest; (ii) cancellation of the Bank holdout or (iii) Cancellation of the Domestic Letter of Credit upon showing that he has completed the export commitment pertaining to

5. MISCELLANEOUS 5.1 All other requirements for importations of goods and commodities from PROC must be complied with in addition to the above. 5.2 PITC shall have the right to disapprove any and all import application not in accordance with the rules and regulations herein prescribed. 5.3 Should the IMPORTER or any of his duly authorized representatives make any false statements or fraudulent misrepresentations in the Import/Export Application, or falsify, forge or simulate any document required under these rules and regulations, PITC is authorized to reject all pending and future import/export applications of said IMPORTER and/or disqualify said IMPORTER and/or disqualify said IMPORTER from doing any business with SOCPEC through PITC. Desiring to make importations from PROC, private respondents Remington and Firestone, both domestic corporations, organized and existing under Philippines laws, individually applied for authority to import from PROC with the petitioner, They were granted such authority after satisfying the requirements for importers, and after they executed respective undertakings to balance their importations from PROC with corresponding export of Philippine products to PROC.

Private respondent Remington was allowed to import tools, machineries and other similar goods. Firestones, on the other hand, imported Calcine Vauxite, which it used for the manufacture of fire bricks, one of its products. Subsequently, for failing to comply with their undertakings to submit export credits equivalent to the value of their importations, further import applications were withheld by petitioner PITC from private respondents, such that the latter both barred from importing goods from PROC.[3] Consequently, Remington filed a Petition for Prohibition and Mandamus, with prayer for issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction on January 20, 1992, against PITC in the RTC Makati Branch 58.[4] The court issued a Temporary Restraining Order on January 21, 1992, ordering PITC to cease from exercising any power to process applications of goods from PROC. [5] Hearings on the application for writ of preliminary injunction ensued. Private respondents Firestones was allowed to intervene in the petition on July 2, 1992,[6] thus joining Remington in the latters charges against PITC. It specifically asserts that the questioned Administrative Order is an undue restrictions of trade, and hence, unconstitutional. Upon trial, it was agreed that the evidence adduced upon the hearing on the Preliminary Injunction was sufficient to completely adjudicate the case, thus, the parties deemed it proper that the entire case be submitted for decision upon the evidence so far presented. The court rendered its Decision[7] on January 4, 1992. The court ruled that PITCs authority to process and approve applications for imports from SOCPEC and to issue rules and regulations pursuant to LOI 444 and P.D. No. 1071, has already been repealed by EO No. 133, issued on February 27, 1987 by President Aquino. The court observed:

Given such obliteration and/or withdrawal of what used to be PITCs regulatory authority under the Special provisions embodied in LOI 444 from the enumeration of powers that it could exercise effective February 27, 1987 in virtue of Section 16 (d), EO No. 133, it may now be successfully argued that the PITC can no longer exercise such specific regulatory power in question conformably with the legal precept expresio unius est exclusio alterius. Moreover, the court continued, none of the Trade protocols of 1989, 1990 or 1991, has empowered the PITC, expressly or impliedly to formulate or promulgate the assailed Administrative Order. This fact, makes the continued exercise by PITC of the regulatory powers in question unworthy of judicial approval. Otherwise, it would be sanctioning an undue exercise of legislative power vested solely in the Congress of the Philippines by Section 1, Article VII of the 1987 Philippine Constitution. The lower court stated that the subject Administrative Order and other similar issuances by PITC suffer from serious constitutional infirmity, having been promulgated in pursuance of an international agreement (the Memorandum of Agreement between the Philippine and PROC), which has not been concurred in by at least 2/3 of all the members of the Philippine Senate as required by Article VII, Section 21, of the 1987 Constitution, and therefore, null and void. Section 21. No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate. Furthermore, the subject Administrative Order was issued in restraint of trade, in violation of Sections 1 and 19, Article XII of the 1987 Constitution, which reads: Section 1. The goals of the national economy are a more equitable distribution of opportunities, income and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and, an

expanding productivity as the key to raising the equality of life for all, especially the underprivileged. Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combination is restraint of trade or unfair competition shall be allowed. Lastly, the court declared the Administrative Order to be null and void, since the same was not published, contrary to Article 2 of the New Civil Code which provides, that: Article 2. Laws shall take effect fifteen (15) days following the completion of their publication in the Official Gazette, unless the law otherwise provides. xxx Petitioner now comes to us on a Petition for Review on Certiorari,[8] questioning the courts decision particularly on the propriety of the lower courts declarations on the validity of Administrative Order No. 89-08-01. The Court directed the respondents to file their respective Comments. Subsequent events transpired, however, which affect to some extent, the submissions of the parties to the present petition. Following President Fidel V. Ramos trip to Beijing, Peoples Republic of China (PROC), from April 25 to 30, 1993, a new trade agreement was entered into between the Philippines and PROC, encouraging liberalization of trade between the two countries. In line therewith, on April 20, 1993, the President, through Chief Presidential Legal Counsel Antonio T. Carpio, directed the Department of Trade and Industry and the PITC to cease implementing Administrative Order No. SOCPEC 89-08-01, as amended by PITC Board Resolution Nos. 92-01-05 and 92-03-08.[9] In the implementation of such order, PITC President Jose Luis U. Yulo, Jr. issued a corporate Memorandum[10] instructing that all import applications for the PROC filed with the PITC as ofApril 20, 1993 shall no longer be covered by the trade balancing program outlined in the Administrative Order.

Forthwith, the PITC allowed the private respondents to import anew from the PROC, without being required to comply anymore with the lifted requirement of balancing its imports with exports of Philippine products to PROC.[11] In its Constancia[12] filed with the Court on November 22, 1993, Remington expressed its desire to have the present action declared moot and academic considering the new supervening developments. For its part, respondent Firestone made a Manifestation[13] in lieu of its Memorandum, informing the court of the aforesaid developments of the new trade program of the Philippines with China, and prayed for the courts early resolution of the action. To support its submission that the present action is now moot and academic, respondent Remington cites Executive Order No. 244,[14] issued by President Ramos on May 12, 1995. The Executive Order states: WHEREAS, continued coverage of the Peoples Republic of China by letter of Instructions No. 444 is no longer consistent with the countrys national interest, as coursing Republic of the Philippines-Peoples Republic of China Trade through the Philippine International Trading Corporation as provided for under Letter of Instructions No. 444 is becoming an unnecessary barrier to trade; NOW, THEREFORE, I FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order: The Committee on Scientific and Technical Cooperation with Socialist Countries to delete the Peoples Republic of China from the list of countries covered by Letter of Instructions No. 444. Done in the City of Manila, this 12th day of May in the year of Our Lord, Nineteen Hundred and Ninety-Five. PITC filed its own Manifestation[15] on December 15, 1993, wherein it adopted the arguments raised in its Petition as its

Memorandum. PITC disagrees with Remington on the latters submission that the case has become moot and academic as a result of the abrogation of Administrative Order SOCPEC No. 89-08-01, since respondent Remington had incurred obligations to the petitioner consisting of charges for the 0.5% Counter Export Development Service provided by PITC to Remington, which obligations remain outstanding.[16] The propriety of such charges must still be resolved, petitioner argues, thereby maintaining the issue of the validity of SOCPEC Order No. 89-08-01, before it was abrogated by Executive fiat. There is no question that from April 20, 1993, when trade balancing measures with PROC were lifted by the President, Administrative Order SOCPEC No. 89-08-01 no longer has force and effect, and respondents are thus entitled anew to apply for authority to import from the PROC, without the trade balancing requirements previously imposed on proposed importers. Indeed, it appears that since the lifting of the trade balancing measures, Remington had been allowed to import anew from PROC. There remains, however, the matter of outstanding obligations of the respondents for the charges relating to the 0.5% Counter Export Development Service in favor of PITC, for the period when the questioned Administrative Order remained in effect. Is the obligation still subsisting, or are the respondents freed from it? To resolve this issue, we are tasked to consider the constitutionality of Administrative Order No. SOCPEC 89-0801, based on the arguments set up by the parties in their Petition and Comment. In so doing, we must inquire into the nature of the functions of the PITC, in the light of present realities. The PITC is a government owned or controlled corporation created under P.D. No. 252[17] dated August 6, 1973. P.D. No. 1071,[18] issued on May 9, 1977 which revised the provisions of P.D. 252. The purposes and powers of said

governmental entity were enumerated under Section 5 and 6 thereof.[19] On August 9, 1976, the late President Marcos issued Letter of Instruction (LOI) No. 444,[20] directing, inter alia, that trade (export or import of all commodities), whether direct or indirect, between the Philippines and any of the Socialist and other Centrally Planned Economy Countries (SOCPEC), including the Peoples Republic of China (PROC) shall be undertaken or coursed through the PITC. Under the LOI, PITC was mandated to: 1) participate in all official trade and economic discussions between the Philippines and SOCPEC; 2) adopt such measures and issue such rules and regulations as may be necessary for the effective discharge of its functions under its instructions; and 3) Undertake the processing and approval of all applications for export to or import from the SOCPEC. Pertinent provisions of the Letter of Instruction are herein reproduced: LETTER OF INSTRUCTION 444 xxx II. CHANNELS OF TRADE 1. The trade, direct or indirect, between the Philippines and any of the Socialist and other centrally-planned economy countries shall upon issuance hereof, be undertaken by or coursed through the Philippine International Trading Corporation. This shall apply to the export and import of all commodities of products including those specified for export or import by expressly authorized government agencies. xxx 4. The Philippine International Trading Corporation shall participate in all official trade and economic discussions between the Philippines and other centrally-planned economy countries.

xxx V. SPECIAL PROVISIONS The Philippine International Trading Corporation shall adopt such measures and issue such rules and regulations as may be necessary for the effective discharge of its functions under these instructions. In this connection, the processing and approval of applications for export to or import from the Socialist and other centrally-planned economy countries shall, henceforth, be performed by the said Corporation. (Emphasis ours) After the EDSA Revolution, or more specifically on February 27, 1987, then President Corazon C. Aquino promulgated Executive Order (EO) No. 133[21] reorganizing the Department of Trade and Industry (DTI) empowering the said department to be the "primary coordinative, promotive, facilitative and regulatory arm of the government for the countrys trade, industry and investment activities (Sec. 2, EO 133). The PITC was made one of DTIs line agencies.[22] The Executive Order reads in part: EXECUTIVE ORDER NO. 133 XXX Section 16. Line Corporate Agencies and Government Entities. The following line corporate agencies and government entities defined in Section 9 (c) of this Executive Order that will perform their specific regulatory functions, particularly developmental responsibilities and specialized business activities in a manner consonant with the Department mandate, objectives, policies, plans and programs: xxx d) Philippine International Trading Corporation. This corporation, which shall be supervised by the

Undersecretary for International Trade, shall only engage in both export and trading on new or non-traditional products and markets not normally pursued by the private business sector; provide a wide range of export oriented auxiliary services to the private sector; arrange for a establish comprehensive system and physical facilities for handling the collection, processing, and distribution of cargoes and other commodities; monitor or coordinate risk insurance services for the existing institutions; promote and organize, whenever warranted, production enterprises and industrial establishments and collaborate or associate in joint venture with any person, association, company or entity, whether domestic or foreign, in the fields of production, marketing, procurement, and other relate businesses; and provide technical advisory, investigatory, consultancy and management services with respect to any and all of the functions, activities, and operations of the corporation. Sometime in April, 1988, following the State visit of President Aquino to the PROC, the Philippines and PROC entered into a memorandum of Understanding[23] (MOU) wherein the two countries agreed to make joint efforts within the next five years to expand bilateral trade to US $600 US $800 Million by 1992, and to strive for a steady progress towards achieving a balance between the value of their imports and exports during the period, agreeing for the purpose that upon the signing of the Memorandum, both sides shall undertake to establish the necessary steps and procedures to be adopted within the framework of the annual midyear review meeting under the Trade Protocol, in order to monitor and ensure the implementation of the MOU. Conformably with the MOU, the Philippines and PROC entered into a Trade Protocol for the years 1989, 1990 and 1991,[24] under which was specified the commodities to be traded between them. The protocols affirmed their agreement to jointly endeavor to achieve more or less a balance between the values of their imports and exports in their bilateral trade.

It is allegedly in line with its powers under LOI 444 and in keeping with the MOU and Trade Protocols with PROC that PITC issued its now assailed Administrative Order No. SOCPEC 89-08-01[25] on August 30, 1989 (amended in March, 1992). Undoubtedly, President Aquino, in issuing EO 133, is empowered to modify and amend the provisions of LOI 444, which was issued by then President Marcos, both issuances being executive directives. As observed by us in Philippine Association of Service Exporters , Inc. vs. Torres,[26] there is no need for legislative delegation of power to the President to revoke the Letter of Instruction by way of an Executive Order. This is notwithstanding the fact that the subject LOI 1190 was issued by President Marcos, when he was extraordinarily empowered to exercise legislative powers, whereas EO 450 was issued by Pres. Aquino when her transitional legislative powers have already ceased, since it was found that LOI 1190 was a mere administrative directive, hence, may be repealed, altered, or modified by EO 450. We do not agree, however, with the trial courts ruling that PITCs authority to issue rules and regulations pursuant to the Special Provisions of LOI 444 and P.D. No. 1071, have already been repealed by EO 133. While PITCs power to engage in commercial import and export activities is expressly recognized and allowed under Section 16 (d) of EO 133, the same is now limited only to new or non-traditional products and markets not normally pursued by the private business sector. There is no indication in the law of the removal of the powers of the PITC to exercise its regulatory functions in the area of importations from SOCPEC countries. Though it does not mention the grant of regulatory power, EO 133, as worded, is silent as to the abolition or limitation of such powers, previously granted under P.D. 1071, from the PITC.

Likewise, the general repealing clause in EO 133 stating that all laws, ordinances, rules , and regulations, or other parts thereof, which are inconsistent with the Executive Order are hereby repealed or modified accordingly, cannot operate to abolish the grant of regulatory powers to the PITC. There can be no repeal of the said powers, absent any cogency of irreconcilable inconsistency or repugnancy between the issuances, relating to the regulatory power of the PITC. The President, in promulgating EO 133, had not intended to overhaul the functions of the PITC. The DTI was established, and was given powers and duties including those previously held by the PITC as an independent government entity, under P.D. 1071 and LOI 444. The PITC was thereby attached to the DTI as an implementing arm of the said department. EO 133 established the DTI as the primary coordinative, promotive, facilitative and regulatory arm of government for the countrys trade, industry and investment activities, which shall act as a catalyst for intensified private sector activity in order to accelerate and sustain economic growth. [27] In furtherance of this mandate, the DTI was empowered, among others, to plan, implement, and coordinate activities of the government related to trade industry and investments; to formulate and administer policies and guidelines for the investment priorities plan and the delivery of investment incentives; to formulate country and product export strategies which will guide the export promotion and development thrust of the government.[28] Corollarily, the Secretary of Trade and Industry is given the power to promulgate rules and regulations necessary to carry out the departments objectives, policies, plans, programs and projects. The PITC, on the other hand, was attached as an integral part to the said department as one of its line agencies, [29] and was given the focal task of implementing the departments programs.[30] The absence of the regulatory power formerly enshrined in the Special Provisions of LOI

444, from Section 16 of EO 133, and the limitation of its previously wide range of functions, is noted. This does not mean, however, that PITC has lost the authority to issue the questioned Administrative Order. It is our view that PITC still holds such authority, and may legally exercise it, as an implementing arm, and under the supervision of, the Department of Trade and Industry. Furthermore, the lower courts ruling to the effect that the PITCs authority to process and approve applications for imports from SOCPEC and to issue rules and regulations pursuant to LOI 444 and P.D. 1071 has been repealed by EO 133, is misplaced, and did not consider the import behind the issuance of the later presidential edict. The President could not have intended to deprive herself of the power to regulate the flow of trade between the Philippines and PROC under the two countries Memorandum of Understanding, a power which necessarily flows from her office as Chief Executive. In issuing Executive Order 133, the President intended merely to reorganize the Department of Trade and Industry to cope with the need of streamlined bureaucracy. [31] Thus, there is no real inconsistency between LOI 444 and EO 133. There is, admittedly, a rearranging of the administrative functions among the administrative bodies affected by the edict, but not an abolition of executive power. Consistency in statutes as in executive issuances, is of prime importance, and, in the absence of a showing to the contrary, all laws are presumed to be consistent with each other. Where it is possible to do so, it is the duty of courts, in the construction of statutes, to harmonize and reconcile them, and to adopt a constructions of a statutory provision which harmonizes and reconciles it with other statutory provisions.[32] The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the latter, since the law may be cumulative or a continuation of the old one.[33]

Similarly, the grant of quasi-legislative powers in administrative bodies is not unconstitutional. Thus, as a result of the growing complexity of the modern society, it has become necessary to create more and more administrative bodies to help in the regulation of its ramified activities. Specialized in the particular field assigned to them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the legislature or the courts of justice. This is the reason for the increasing vesture of quasi-legislative and quasi-judicial powers in what is now not unreasonably called the fourth department of the government.[34] Evidently, in the exercise of such powers, the agency concerned must commonly interpret and apply contracts and determine the rights of private parties under such contracts. One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer uniquely judicial function, exercisable only by our regular courts. (Antipolo Realty Corporation vs. National Housing Authority, G.R. No. L- 50444, August 31, 1987, 153 SCRA 399). With global trade and business becoming more intricate nay even with new discoveries in technology and electronics notwithstanding, the time has come to grapple with legislations and even judicial decisions aimed at resolving issues affecting not only individual rights but also activities of which foreign governments or entities may have interests. Thus, administrative policies and regulations must be devised to suit these changing business needs in a faster rate than to resort to traditional acts of the legislature. This tendency finds support in a well-stated work on the subject, viz.: Since legislatures had neither the time nor the knowledge to create detailed rules, however, it was soon clear that new governmental arrangements would be needed to handle the job of rule-making. The courts, moreover, many of them

already congested, would have been swamped if they had to adjudicate all the controversies that the new legislation was bound to create; and the judges, already obliged to handle a great diversity of cases, would have been hard pressed to acquire the knowledge they needed to deal intelligently with all the new types of controversy. So the need to create a large number of specialized administrative agencies and to give them broader powers than administrators had traditionally exercised. These included the power to issue regulations having the force of law, and the power to hear and decide cases powers that had previously been reserved to the legislatures and the courts. (Houghteling/Pierce, Lawmaking by Administrative Agencies, p. 166.) The respondents likewise argue that PITC is not empowered to issue the Administrative Order because no grant of such power was made under the Trade Protocols of 1989, 1990 or 1991. We do not agree. The Trade Protocols aforesaid, are only the enumeration of the products and goods which the signatory countries have agreed to trade. They do not bestow any regulatory power, for executive power is vested in the Executive Department, [35] and it is for the latter to delegate the exercise of such power among its designated agencies. In sum, the PITC was legally empowered to issue Administrative Orders, as a valid exercise of a power ancillary to legislation. This does not imply however, that the subject Administrative Order is a valid exercise of such quasi-legislative power. The original Administrative Order issued on August 30, 1989, under which the respondents filed their applications for importations, was not published in the Official Gazette or in a newspaper of general circulation. The questioned Administrative Order, legally, until it is published, is invalid within the context of Article 2 of Civil Code, which reads:

Article 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided. xxx The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published by the UP Law Center in the National Administrative Register, does not cure the defect related to the effectivity of the Administrative Order. This court, in Tanada vs. Tuvera[36] stated, thus: We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed by the legislature. Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers or, at present, directly conferred by the Constitution. Administrative rules and Regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation, Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. xxx We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. The Administrative Order under consideration is one of those issuances which should be published for its effectivity,

since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO 133. Thus, even before the trade balancing measures issued by the petitioner were lifted by President Fidel V. Ramos, the same were never legally effective, and private respondents, therefore, cannot be made subject to them, because Administrative Order 89-08-01 embodying the same was never published, as mandated by law, for its effectivity. It was only on March 30, 1992 when the amendments to the said Administrative Order were filed in the UP Law Center, and published in the National Administrative Register as required by the Administrative Code of 1987. Finally, it is the declared Policy of the Government to develop and strengthen trade relations with the Peoples Republic of China. As declared by the President in EO 244 issued on May 12, 1995, continued coverage of the Peoples Republic of China by Letter of Instructions No. 444 is no longer consistent with the countrys national interest, as coursing RP-PROC trade through the PITC as provided for under Letter of Instructions No. 444 is becoming an unnecessary barrier to trade.[37] Conformably with such avowed policy, any remnant of the restrained atmosphere of trading between the Philippines and PROC should be done away with, so as to allow economic growth and renewed trade relations with our neighbors to flourish and may be encouraged. ACCORDINGLY, the assailed decision of the lower court is hereby AFFIRMED, to the effect that judgment is hereby rendered in favor of the private respondents, subject to the following MODIFICATIONS: 1) Enjoining the petitioner: a) From further charging the petitioners the Counter Export Development Service fee of 0.5% of the total value of

the unliquidated or unfulfilled Undertakings of the private respondents; b) From further implementing the provisions of Administrative Order No. SOCPEC 89-08-01 and its appurtenant rules; and 2) Requiring petitioner to approve forthwith all the pending applications of, and all those that may hereafter be filed by, the petitioner and the Intervenor, free from and without complying with the requirements prescribed in the abovestated issuances. SO ORDERED Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.

additional allowances received by the petitioner judges of the Regional Trial Court (RTC) and Municipal Trial Court (MTC) stationed in Mandaue City. The undisputed facts are as follows: In 1986, the RTC and MTC judges of Mandaue City started receiving monthly allowances of P1,260 each through the yearly appropriation ordinance enacted by the Sangguniang Panlungsod of the said city. In 1991, Mandaue City increased the amount to P1,500 for each judge. On March 15, 1994, the Department of Budget and Management (DBM) issued the disputed Local Budget Circular No. 55 (LBC 55) which provided that: "x x x xxx xxx

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 125350 December 3, 2002

HON. RTC JUDGES MERCEDES G. DADOLE (Executive Judge, Branch 28), ULRIC R. CAETE (Presiding Judge, Branch 25), AGUSTINE R. VESTIL (Presiding Judge, Branch 56), HON. MTC JUDGES TEMISTOCLES M. BOHOLST (Presiding Judge, Branch 1), VICENTE C. FANILAG (Judge Designate, Branch 2), and WILFREDO A. DAGATAN (Presiding Judge, Branch 3), all of Mandaue City, petitioners, vs. COMMISSION ON AUDIT, respondent. DECISION CORONA, J.: Before us is a petition for certiorari under Rule 64 to annul the decision1 and resolution2, dated September 21, 1995 and May 28, 1996, respectively, of the respondent Commission on Audit (COA) affirming the notices of the Mandaue City Auditor which diminished the monthly

2.3.2. In the light of the authority granted to the local government units under the Local Government Code to provide for additional allowances and other benefits to national government officials and employees assigned in their locality, such additional allowances in the form of honorarium at rates not exceeding P1,000.00 in provinces and cities and P700.00 in municipalities may be granted subject to the following conditions: a) That the grant is not mandatory on the part of the LGUs; b) That all contractual and statutory obligations of the LGU including the implementation of R.A. 6758 shall have been fully provided in the budget; c) That the budgetary requirements/limitations under Section 324 and 325 of R.A. 7160 should be satisfied and/or complied with; and d) That the LGU has fully implemented the devolution of functions/personnel in accordance with R.A. 7160.3" (italics supplied) xxx xxx xxx

The said circular likewise provided for its immediate effectivity without need of publication: "5.0 EFFECTIVITY This Circular shall take effect immediately." Acting on the DBM directive, the Mandaue City Auditor issued notices of disallowance to herein petitioners, namely, Honorable RTC Judges Mercedes G. Dadole, Ulric R. Caete, Agustin R. Vestil, Honorable MTC Judges Temistocles M. Boholst, Vicente C. Fanilag and Wilfredo A. Dagatan, in excess of the amount authorized by LBC 55. Beginning October, 1994, the additional monthly allowances of the petitioner judges were reduced to P1,000 each. They were also asked to reimburse the amount they received in excess of P1,000 from April to September, 1994. The petitioner judges filed with the Office of the City Auditor a protest against the notices of disallowance. But the City Auditor treated the protest as a motion for reconsideration and indorsed the same to the COA Regional Office No. 7. In turn, the COA Regional Office referred the motion to the head office with a recommendation that the same be denied. On September 21, 1995, respondent COA rendered a decision denying petitioners' motion for reconsideration. The COA held that: The issue to be resolved in the instant appeal is whether or not the City Ordinance of Mandaue which provides a higher rate of allowances to the appellant judges may prevail over that fixed by the DBM under Local Budget Circular No. 55 dated March 15, 1994. xxx xxx xxx

of Antique; COA letter dated May 17, 1994 re: Request of Hon. Renato Leviste, Cong. 1st Dist. Oriental Mindoro). In this regard, attention is invited to Administrative Order No. 42 issued on March 3, 1993 by the President of the Philippines clarifying the role of DBM in the compensation and classification of local government positions under RA No. 7160 vis-avis the provisions of RA No. 6758 in view of the abolition of the JCLGPA. Section 1 of said Administrative Order provides that: "Section 1. The Department of Budget and Management as the lead administrator of RA No. 6758 shall, through its Compensation and Position Classification Bureau, continue to have the following responsibilities in connection with the implementation of the Local Government Code of 1991: a) Provide guidelines on the classification of local government positions and on the specific rates of pay therefore; b) Provide criteria and guidelines for the grant of all allowances and additional forms of compensation to local government employees; xxx." (underscoring supplied) To operationalize the aforecited presidential directive, DBM issued LBC No. 55, dated March 15, 1994, whose effectivity clause provides that: xxx xxx xxx

"5.0 EFFECTIVITY This Circular shall take effect immediately." It is a well-settled rule that implementing rules and regulations promulgated by administrative or executive officer in accordance with, and as authorized by law, has the force and effect of law or partake the nature of a statute (Victorias Milling Co., Inc., vs. Social Security Commission, 114 Phil. 555, cited in Agpalo's Statutory Construction, 2nd Ed. P. 16; Justice Cruz's Phil. Political Law, 1984 Ed., p. 103;

Applying the foregoing doctrine, appropriation ordinance of local government units is subject to the organizational, budgetary and compensation policies of budgetary authorities (COA 5th Ind., dated March 17, 1994 re: Province

Espanol vs. Phil Veterans Administration, 137 SCRA 314; Antique Sawmills Inc. vs. Tayco, 17 SCRA 316). xxx xxx xxx

There being no statutory basis to grant additional allowance to judges in excess of P1,000.00 chargeable against the local government units where they are stationed, this Commission finds no substantial grounds or cogent reason to disturb the decision of the City Auditor, Mandaue City, disallowing in audit the allowances in question. Accordingly, the above-captioned appeal of the MTC and RTC Judges of Mandaue City, insofar as the same is not covered by Circular Letter No. 91-7, is hereby dismissed for lack of merit. xxx xxx x x x4

HAS THE COMMISSION ON AUDIT CORRECTLY INTERPRETED LOCAL BUDGET CIRCULAR NO. 55 TO INCLUDE MEMBERS OF THE JUDICIARY IN FIXING THE CEILING OF ADDITIONAL ALLOWANCES AND BENEFITS TO BE PROVIDED TO JUDGES STATIONED IN AND ASSIGNED TO MANDAUE CITY BY THE CITY GOVERNMENT AT P1,000.00 PER MONTH NOTWITHSTANDING THAT THEY HAVE BEEN RECEIVING ALLOWANCES OF P1,500.00 MONTHLY FOR THE PAST FIVE YEARS? IV IS LOCAL BUDGET CIRCULAR NO. 55 DATED MARCH 15, 1994 ISSUED BY THE DEPARTMENT OF BUDGET AND MANAGEMENT VALID AND ENFORCEABLE CONSIDERING THAT IT WAS NOT DULY PUBLISHED IN ACCODANCE WITH LAW?5 Petitioner judges argue that LBC 55 is void for infringing on the local autonomy of Mandaue City by dictating a uniform amount that a local government unit can disburse as additional allowances to judges stationed therein. They maintain that said circular is not supported by any law and therefore goes beyond the supervisory powers of the President. They further allege that said circular is void for lack of publication. On the other hand, the yearly appropriation ordinance providing for additional allowances to judges is allowed by Section 458, par. (a)(1)[xi], of RA 7160, otherwise known as the Local Government Code of 1991, which provides that: Sec. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:

On November 27, 1995, Executive Judge Mercedes GozoDadole, for and in behalf of the petitioner judges, filed a motion for reconsideration of the decision of the COA. In a resolution dated May 28, 1996, the COA denied the motion. Hence, this petition for certiorari by the petitioner judges, submitting the following questions for resolution: I HAS THE CITY OF MANDAUE STATUTORY AND CONSTITUTIONAL BASIS TO PROVIDE ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO JUDGES STATIONED IN AND ASSIGNED TO THE CITY? II CAN AN ADMINISTRATIVE CIRCULAR OR GUIDELINE SUCH AS LOCAL BUDGET CIRCULAR NO. 55 RENDER INOPERATIVE THE POWER OF THE LEGISLATIVE BODY OF A CITY BY SETTING A LIMIT TO THE EXTENT OF THE EXERCISE OF SUCH POWER? III

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this connection, shall: xxx xxx xxx

(xi) When the finances of the city government allow, provide for additional allowances and other benefits to judges, prosecutors, public elementary and high school teachers, and other national government officials stationed in or assigned to the city; (italics supplied) Instead of filing a comment on behalf of respondent COA, the Solicitor General filed a manifestation supporting the position of the petitioner judges. The Solicitor General argues that (1) DBM only enjoys the power to review and determine whether the disbursements of funds were made in accordance with the ordinance passed by a local government unit while (2) the COA has no more than auditorial visitation powers over local government units pursuant to Section 348 of RA 7160 which provides for the power to inspect at any time the financial accounts of local government units. Moreover, the Solicitor General opines that "the DBM and the respondent are only authorized under RA 7160 to promulgate a Budget Operations Manual for local government units, to improve and systematize methods, techniques and procedures employed in budget preparation, authorization, execution and accountability" pursuant to Section 354 of RA 7160. The Solicitor General points out that LBC 55 was not exercised under any of the aforementioned provisions. Respondent COA, on the other hand, insists that the constitutional and statutory authority of a city government to provide allowances to judges stationed therein is not absolute. Congress may set limitations on the exercise of autonomy. It is for the President, through the DBM, to check whether these legislative limitations are being followed by the local government units.

One such law imposing a limitation on a local government unit's autonomy is Section 458, par. (a) (1) [xi], of RA 7160, which authorizes the disbursement of additional allowances and other benefits to judges subject to the condition that the finances of the city government should allow the same. Thus, DBM is merely enforcing the condition of the law when it sets a uniform maximum amount for the additional allowances that a city government can release to judges stationed therein. Assuming arguendo that LBC 55 is void, respondent COA maintains that the provisions of the yearly approved ordinance granting additional allowances to judges are still prohibited by the appropriation laws passed by Congress every year. COA argues that Mandaue City gets the funds for the said additional allowances of judges from the Internal Revenue Allotment (IRA). But the General Appropriations Acts of 1994 and 1995 do not mention the disbursement of additional allowances to judges as one of the allowable uses of the IRA. Hence, the provisions of said ordinance granting additional allowances, taken from the IRA, to herein petitioner judges are void for being contrary to law. To resolve the instant petition, there are two issues that we must address: (1) whether LBC 55 of the DBM is void for going beyond the supervisory powers of the President and for not having been published and (2) whether the yearly appropriation ordinance enacted by the City of Mandaue that provides for additional allowances to judges contravenes the annual appropriation laws enacted by Congress. We rule in favor of the petitioner judges. On the first issue, we declare LBC 55 to be null and void. We recognize that, although our Constitution6 guarantees autonomy to local government units, the exercise of local autonomy remains subject to the power of control by Congress and the power of supervision by the President.

Section 4 of Article X of the 1987 Philippine Constitution provides that: Sec. 4. The President of the Philippines shall exercise general supervision over local governments. x x x In Pimentel vs. Aguirre7, we defined the supervisory power of the President and distinguished it from the power of control exercised by Congress. Thus: This provision (Section 4 of Article X of the 1987 Philippine Constitution) has been interpreted to exclude the power of control. In Mondano v. Silvosa,i 5 the Court contrasted the President's power of supervision over local government officials with that of his power of control over executive officials of the national government. It was emphasized that the two terms -- supervision and control -- differed in meaning and extent. The Court distinguished them as follows: "x x x In administrative law, supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his duties and to substitute the judgment of the former for that of the latter."ii 6 In Taule v. Santos,iii 7 we further stated that the Chief Executive wielded no more authority than that of checking whether local governments or their officials were performing their duties as provided by the fundamental law and by statutes. He cannot interfere with local governments, so long as they act within the scope of their authority. "Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not include any restraining authority over such body,"iv 8 we said.

In a more recent case, Drilon v. Lim,v 9 the difference between control and supervision was further delineated. Officers in control lay down the rules in the performance or accomplishment of an act. If these rules are not followed, they may, in their discretion, order the act undone or redone by their subordinates or even decide to do it themselves. On the other hand, supervision does not cover such authority. Supervising officials merely see to it that the rules are followed, but they themselves do not lay down such rules, nor do they have the discretion to modify or replace them. If the rules are not observed, they may order the work done or redone, but only to conform to such rules. They may not prescribe their own manner of execution of the act. They have no discretion on this matter except to see to it that the rules are followed. Under our present system of government, executive power is vested in the President.vi10 The members of the Cabinet and other executive officials are merely alter egos. As such, they are subject to the power of control of the President, at whose will and behest they can be removed from office; or their actions and decisions changed, suspended or reversed.vii 11 In contrast, the heads of political subdivisions are elected by the people. Their sovereign powers emanate from the electorate, to whom they are directly accountable. By constitutional fiat, they are subject to the President's supervision only, not control, so long as their acts are exercised within the sphere of their legitimate powers. By the same token, the President may not withhold or alter any authority or power given them by the Constitution and the law. Clearly then, the President can only interfere in the affairs and activities of a local government unit if he or she finds that the latter has acted contrary to law. This is the scope of the President's supervisory powers over local government units. Hence, the President or any of his or her alter egos cannot interfere in local affairs as long as the concerned local government unit acts within the parameters of the law and the Constitution. Any directive therefore by

the President or any of his or her alter egos seeking to alter the wisdom of a law-conforming judgment on local affairs of a local government unit is a patent nullity because it violates the principle of local autonomy and separation of powers of the executive and legislative departments in governing municipal corporations. Does LBC 55 go beyond the law it seeks to implement? Yes. LBC 55 provides that the additional monthly allowances to be given by a local government unit should not exceedP1,000 in provinces and cities and P700 in municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that supposedly serves as the legal basis of LBC 55, allows the grant of additional allowances to judges "when the finances of the city government allow." The said provision does not authorize setting a definite maximum limit to the additional allowances granted to judges. Thus, we need not belabor the point that the finances of a city government may allow the grant of additional allowances higher than P1,000 if the revenues of the said city government exceed its annual expenditures. Thus, to illustrate, a city government with locally generated annual revenues of P40 million and expenditures of P35 million can afford to grant additional allowances of more thanP1,000 each to, say, ten judges inasmuch as the finances of the city can afford it. Setting a uniform amount for the grant of additional allowances is an inappropriate way of enforcing the criterion found in Section 458, par. (a)(1)(xi), of RA 7160. The DBM over-stepped its power of supervision over local government units by imposing a prohibition that did not correspond with the law it sought to implement. In other words, the prohibitory nature of the circular had no legal basis. Furthermore, LBC 55 is void on account of its lack of publication, in violation of our ruling in Taada vs. Tuvera8where we held that:

xxx. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of an administrative agency and the public, need not be published. Neither is publication required of the so-called letters of instruction issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. Respondent COA claims that publication is not required for LBC 55 inasmuch as it is merely an interpretative regulation applicable to the personnel of an LGU. We disagree. In De Jesus vs. Commission on Audit9 where we dealt with the same issue, this Court declared void, for lack of publication, a DBM circular that disallowed payment of allowances and other additional compensation to government officials and employees. In refuting respondent COA's argument that said circular was merely an internal regulation, we ruled that: On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated in Taada v. Tuvera, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or implement an existing law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines. In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative or internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowance and

additional compensation sorely needed to keep body and soul together. At the very least, before the said circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of subject circular in the Official Gazette or in a newspaper of general circulation in the Philippines to the end that they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts and rudiments of fairness and transparency. (emphasis supplied) In Philippine International Trading Corporation vs. Commission on Audit10, we again declared the same circular as void, for lack of publication, despite the fact that it was re-issued and then submitted for publication. Emphasizing the importance of publication to the effectivity of a regulation, we therein held that: It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in the Official Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication thereof cure the defect and retroact to the time that the above-mentioned items were disallowed in audit? The answer is in the negative, precisely for the reason that publication is required as a condition precedent to the effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and interests are affected by the same. From the time the COA disallowed the expenses in audit up to the filing of herein petition the subject circular remained in legal limbo due to its nonpublication. As was stated in Taada v. Tuvera, "prior publication of laws before they become effective cannot be dispensed with, for the reason that it would deny the public knowledge of the laws that are supposed to govern it."11

We now resolve the second issue of whether the yearly appropriation ordinance enacted by Mandaue City providing for fixed allowances for judges contravenes any law and should therefore be struck down as null and void. According to respondent COA, even if LBC 55 were void, the ordinances enacted by Mandaue City granting additional allowances to the petitioner judges would "still (be) bereft of legal basis for want of a lawful source of funds considering that the IRA cannot be used for such purposes." Respondent COA showed that Mandaue City's funds consisted of locally generated revenues and the IRA. From 1989 to 1995, Mandaue City's yearly expenditures exceeded its locally generated revenues, thus resulting in a deficit. During all those years, it was the IRA that enabled Mandaue City to incur a surplus. Respondent avers that Mandaue City used its IRA to pay for said additional allowances and this violated paragraph 2 of the Special Provisions, page 1060, of RA 7845 (The General Appropriations Act of 1995)12 and paragraph 3 of the Special Provision, page 1225, of RA 7663 (The General Appropriations Act of 1994)13 which specifically identified the objects of expenditure of the IRA. Nowhere in said provisions of the two budgetary laws does it say that the IRA can be used for additional allowances of judges. Respondent COA thus argues that the provisions in the ordinance providing for such disbursement are against the law, considering that the grant of the subject allowances is not within the specified use allowed by the aforesaid yearly appropriations acts. We disagree. Respondent COA failed to prove that Mandaue City used the IRA to spend for the additional allowances of the judges. There was no evidence submitted by COA showing the breakdown of the expenses of the city government and the funds used for said expenses. All the COA presented were the amounts expended, the locally generated revenues, the deficit, the surplus and the IRA received each year. Aside from these items, no data or figures were presented to show

that Mandaue City deducted the subject allowances from the IRA. In other words, just because Mandaue City's locally generated revenues were not enough to cover its expenditures, this did not mean that the additional allowances of petitioner judges were taken from the IRA and not from the city's own revenues. Moreover, the DBM neither conducted a formal review nor ordered a disapproval of Mandaue City's appropriation ordinances, in accordance with the procedure outlined by Sections 326 and 327 of RA 7160 which provide that: Section 326. Review of Appropriation Ordinances of Provinces, Highly Urbanized Cities, Independent Component Cities, and Municipalities within the Metropolitan Manila Area. The Department of Budget and Management shall review ordinances authorizing the annual or supplemental appropriations of provinces, highly-urbanized cities, independent component cities, and municipalities within the Metropolitan Manila Area in accordance with the immediately succeeding Section. Section 327. Review of Appropriation Ordinances of Component Cities and Municipalities.- The sangguninang panlalawigan shall review the ordinance authorizing annual or supplemental appropriations of component cities and municipalities in the same manner and within the same period prescribed for the review of other ordinances. If within ninety (90) days from receipt of copies of such ordinance, the sangguniang panlalawigan takes no action thereon, the same shall be deemed to have been reviewed in accordance with law and shall continue to be in full force and effect. (emphasis supplied) Within 90 days from receipt of the copies of the appropriation ordinance, the DBM should have taken positive action. Otherwise, such ordinance was deemed to have been properly reviewed and deemed to have taken effect. Inasmuch as, in the instant case, the DBM did not

follow the appropriate procedure for reviewing the subject ordinance of Mandaue City and allowed the 90-day period to lapse, it can no longer question the legality of the provisions in the said ordinance granting additional allowances to judges stationed in the said city. WHEREFORE, the petition is hereby GRANTED, and the assailed decision and resolution, dated September 21, 1995 and May 28, 1996, respectively, of the Commission on Audit are hereby set aside. No costs. SO ORDERED. Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, and Callejo, Sr., JJ., concur. Puno, J., on official business. Azcuna, J., on leave.

hearing all testimony shall be taken under oath, reduced to writing and signed by the witnesses. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-42226 July 26, 1935 In this motion the appellants claim that the provisions of section 630 of the Code of Civil Procedure have not been complied with in view of the fact that although the trial judge, on May 29, 1931, ordered the publication of the required notice for "three weeks successively" previous to the time appointed for the hearing on the will, the first publication was on June 6, 1931, the third on June 20, 1931, and the hearing took place on the 27th of that month, only twenty-one days after the date of the first publication instead of three full weeks before the day set for the hearing. Section 630 of our Code of Civil Procedure is taken from the Code of Civil Procedure of the State of Vermont. The Supreme Court of that State, commenting on the phrase "three weeks successively", held: The date of examining and allowing P.A. Barlett's final account of administration, and for decreeing the residue of the estate to the lawful claimants of the same, was set by the probate court for December 19, 1919, at the probate office in Brighton, and an order was made to this effect on November 28, 1919. The order provided also that notice should be given by publication for three weeks successively in the Essex County Herald. In accordance with this order, the notice was published in the issues for December 4, 11 and 18, respectively. This was "public notice" to all persons interested of the time and place of examining and allowing said account and making decree of distribution, and was sufficient under the provisions of G.L. 3276. (Lenehen vs. Spaulding, 57 Vt., 115.) "The proceeding was according to law in all respects, and being in the nature of a proceeding in rem, it binds everybody by its legal effect." (Burbeck vs. Little, 50 Vt., 713.) At the time and place set for the hearing none of the petitioners or other legatees under the will of Nickerson Warner appeared. Thereupon the judge of probate then and there continued the hearing until April 6, 1920, at which time the final account of P.A .Barlett as administrator de bonis non with will annexed was

In re estate of the deceased Ines Basa de Mercado. JOAQUINA BASA, ET AL., petitioners-appellants, vs. ATILANO G. MERCADO, respondent-appellee. Briones and Martinez for appellants. Jose Gutierrez David for appellee. GODDARD, J.: By virtue of an order dated June 27, 1931, the Honorable Hermogenes Reyes, Judge of the Court of First Instance of Pampanga, allowed and probated the last will and testament of Ines Basa, deceased. On January 30, 1932, the same judge approved the account of the administrator of the estate, declared him the only heir of the deceased under the will and closed the administration proceedings. On April 11, 1934, the herein petitioners-appellants filed a motion in which they prayed that said proceedings be reopened and alleged that the court lacked jurisdiction to act in the matter because there was a failure to comply with requirements as to the publication of the notice of hearing prescribed in the following section of the Code of Civil Procedure: SEC. 630. Court to appoint hearing on will. When a will is delivered to a court having jurisdiction of the same, the court shall appoint a time and place when all concerned may appear to contest the allowance of the will, and shall cause public notice thereof to be given by publication in such newspaper or newspapers as the court directs of general circulation in the province, three weeks successively, previous to the time appointed, and no will shall be allowed until such notice has been given. At the

filed and, no one appearing to object, the same was allowed, and the decree of distribution was entered. (In reWarner's Estate [Supreme Court of Vermont] 1925; 127 Atl. Rep., 362, 364; 98 Vt., 254, 261.) It will be noted that in the above cited case the last of the three publications was on December 18, 1919, and the hearing on the administrators's final account was set for December 19 of that year, only fifteen days after the date of the first publication. In view of the foregoing, it is held that the language used in section 630 of the Code of Civil Procedure does not mean that the notice, referred to therein, should be published for three full weeks before the date set for the hearing on the will. In other words the first publication of the notice need not be made twenty-one days before the day appointed for the hearing. The appellants also contend that the trial court erred in ruling that the weekly newspaper, Ing Katipunan, in which the notice of hearing was published, was a newspaper of general circulation in the Province of Pampanga. The record shows that Ing Katipunan is a newspaper of general circulation in view of the fact that it is published for the dissemination of local news and general information; that it has a bona fide subscription list of paying subscribers; that it is published at regular intervals and that the trial court ordered the publication to be made inIng Katipunan precisely because it was a "newspaper of general circulation in the Province of Pampanga." Furthermore no attempt has been made to prove that it was a newspaper devoted to the interests or published for the entertainment of a particular class, profession, trade, calling, race or religious denomination. The fact that there is another paper published in Pampanga that has a few more subscribers (72 to be exact) and that certain Manila dailies also have a larger circulation in that province is unimportant. The law does not require that publication of the notice, referred to in the Code of Civil Procedure, should be made in the newspaper with the largest numbers is necessary to constitute a newspaper of general circulation.

The assignments of error of the appellants are overruled and the appealed order of the trial court is affirmed with costs in this instance against the appellants. Malcolm, Villa-Real, Imperial, and Butte, JJ., concur.

FIRST DIVISION

Ordinance and were informed that it shall be enforced in January, 1998. OnDecember 8, 1997, the petitioners President filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance. Petitioner claimed it was unaware of the posting of the ordinance. Respondent opposed the appeal. It contended that the ordinance took effect on October 6, 1996 and that the ordinance, as approved, was posted as required by law. Hence, it was pointed out that petitioners appeal, made over a year later, was already time-barred. The Secretary of Justice dismissed the appeal on the ground that it was filed out of time, i.e., beyond thirty (30) days from the effectivity of the Ordinance on October 1, 1996, as prescribed under Section 187 of the 1991 Local Government Code. Citing the case of Taada vs. Tuvera, [4] the Secretary of Justice held that the date of effectivity of the subject ordinance retroacted to the date of its approval in October 1996, after the required publication or posting has been complied with, pursuant to Section 3 of said ordinance.[5] After its motion for reconsideration was denied, petitioner appealed to the Court of Appeals. Petitioner did not assail the finding of the Secretary of Justice that their appeal was filed beyond the reglementary period. Instead, it urged that the Secretary of Justice should have overlooked this mere technicality and ruled on its petition on the merits. Unfortunately, its petition for review was dismissed by the Court of Appeals for being formally deficient as it was not accompanied by certified true copies of the assailed Resolutions of the Secretary of Justice.[6] Undaunted, the petitioner moved for reconsideration but it was denied.[7] Hence, this appeal, where petitioner contends that: I THE HONORABLE COURT OF APPEALS, WITH DUE RESPECT, ERRED IN ITS STRICT, RIGID AND TECHNICAL ADHERENCE TO SECTION 6, RULE 43 OF THE 1997 RULES OF COURT AND THIS, IN EFFECT, FRUSTRATED THE VALID LEGAL ISSUES RAISED BY THE PETITIONER THAT ORDINANCE (KAUTUSAN)

[G.R. No. 137621. February 6, 2002]

HAGONOY MARKET VENDOR ASSOCIATION, petitioner, vs. MUNICIPALITY OF HAGONOY, BULACAN, respondent. DECISION PUNO, J.: Laws are of two (2) kinds: substantive and procedural. Substantive laws, insofar as their provisions are unambiguous, are rigorously applied to resolve legal issues on the merits. In contrast, courts generally frown upon an uncompromising application of procedural laws so as not to subvert substantial justice. Nonetheless, it is not totally uncommon for courts to decide cases based on a rigid application of the so-called technical rules of procedure as these rules exist for the orderly administration of justice. Interestingly, the case at bar singularly illustrates both instances, i.e.,when procedural rules are unbendingly applied and when their rigid application may be relaxed. This is a petition for review of the Resolution [1] of the Court of Appeals, dated February 15, 1999, dismissing the appeal of petitioner Hagonoy Market Vendor Association from the Resolutions of the Secretary of Justice for being formally deficient. The facts: On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan, enacted an ordinance, Kautusan Blg. 28,[2] which increased the stall rentals of the market vendors in Hagonoy. Article 3 provided that it shall take effect upon approval. The subject ordinance was posted from November 4-25, 1996.[3] In the last week of November, 1997, the petitioners members were personally given copies of the approved

NO. 28 WAS NOT VALIDLY ENACTED, IS CONTRARY TO LAW AND IS UNCONSTITUTIONAL, TANTAMOUNT TO AN ILLEGAL EXACTION IF ENFORCED RETROACTIVELY FROM THE DATE OF ITS APPROVAL ON OCTOBER 1, 1996. II THE HONORABLE COURT OF APPEALS, WITH DUE RESPECT, ERRED IN DENYING THE MOTION FOR RECONSIDERATION NOTWITHSTANDING PETITIONERS EXPLANATION THAT ITS FAILURE TO SECURE THE CERTIFIED TRUE COPIES OF THE RESOLUTIONS OF THE DEPARTMENT OF JUSTICE WAS DUE TO THE INTERVENTION OF AN ACT OF GOD TYPHOON LOLENG, AND THAT THE ACTUAL COPIES RECEIVED BY THE PETITIONER MAY BE CONSIDERED AS SUBSTANTIAL COMPLIANCE WITH THE RULES. III PETITIONER WILL SUFFER IRREPARABLE DAMAGE IF ORDINANCE/KAUTUSAN NO. 28 BE NOT DECLARED NULL AND VOID AND IS ALLOWED TO BE ENFORCED RETROACTIVELY FROM OCTOBER 1, 1996, CONTRARY TO THE GENERAL RULE, ARTICLE 4 OF THE CIVIL CODE, THAT NO LAW SHALL HAVE RETROACTIVE EFFECT. The first and second assigned errors impugn the dismissal by the Court of Appeals of its petition for review for petitioners failure to attach certified true copies of the assailed Resolutions of the Secretary of Justice. The petitioner insists that it had good reasons for its failure to comply with the rule and the Court of Appeals erred in refusing to accept its explanation. We agree. In its Motion for Reconsideration before the Court of Appeals,[8] the petitioner satisfactorily explained the circumstances relative to its failure to attach to its appeal certified true copies of the assailed Resolutions of the Secretary of Justice, thus: x x x (D)uring the preparation of the petition on October 21, 1998, it was raining very hard due to (t)yphoon Loleng. When the petition was completed, copy was

served on the Department of Justice at about (sic) past4:00 p.m. of October 21, 1998, with (the) instruction to have the Resolutions of the Department of Justice be stamped as certified true copies. However, due to bad weather, the person in charge (at the Department of Justice) was no longer available to certify to (sic) the Resolutions. The following day, October 22, 1998, was declared a non-working holiday because of (t)yphoon Loleng. Thus, petitioner was again unable to have the Resolutions of the Department of Justice stamped certified true copies. In the morning of October 23, 1998, due to time constraint(s), herein counsel served a copy by personal service on (r)espondents lawyer at (sic) Malolos, Bulacan, despite the flooded roads and heavy rains. However, as the herein counsel went back to Manila, (official business in) government offices were suspended in the afternoon and the personnel of the Department of Justice tasked with issuing or stamping certified true copies of their Resolutions were no longer available. To avoid being time-barred in the filing of the (p)etition, the same was filed with the Court of Appeals as is. We find that the Court of Appeals erred in dismissing petitioners appeal on the ground that it was formally deficient. It is clear from the records that the petitioner exerted due diligence to get the copies of its appealed Resolutions certified by the Department of Justice, but failed to do so on account of typhoon Loleng. Under the circumstances, respondent appellate court should have tempered its strict application of procedural rules in view of the fortuitous event considering that litigation is not a game of technicalities.[9] Nonetheless, we hold that the petition should be dismissed as the appeal of the petitioner with the Secretary of Justice is already time-barred . The applicable law is Section 187 of the 1991 Local Government Code which provides: SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for the approval of local tax ordinances and revenue measures shall be in

accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and accrual and payment of the tax, fee or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings. The aforecited law requires that an appeal of a tax ordinance or revenue measure should be made to the Secretary of Justice within thirty (30) days from effectivity of the ordinance and even during its pendency, the effectivity of the assailed ordinance shall not be suspended. In the case at bar, Municipal Ordinance No. 28 took effect in October 1996. Petitioner filed its appeal only in December 1997, more than a year after the effectivity of the ordinance in 1996. Clearly, the Secretary of Justice correctly dismissed it for being time-barred. At this point, it is apropos to state that the timeframe fixed by law for parties to avail of their legal remedies before competent courts is not a mere technicality that can be easily brushed aside. The periods stated in Section 187 of the Local Government Code are mandatory.[10] Ordinance No. 28 is a revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals. Being its lifeblood, collection of revenues by the government is of paramount importance. The funds for the operation of its agencies and provision of basic services to its inhabitants are largely derived from its revenues and collections. Thus, it is essential that the validity of revenue measures is not left uncertain for a considerable length of time.[11] Hence, the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances.

In a last ditch effort to justify its failure to file a timely appeal with the Secretary of Justice, the petitioner contends that its period to appeal should be counted not from the time the ordinance took effect in 1996 but from the time its members were personally given copies of the approved ordinance in November 1997. It insists that it was unaware of the approval and effectivity of the subject ordinance in 1996 on two (2) grounds: first, no public hearing was conducted prior to the passage of the ordinance and, second, the approved ordinance was not posted. We do not agree. Petitioners bold assertion that there was no public hearing conducted prior to the passage of Kautusan Blg. 28 is belied by its own evidence . In petitioners two (2) communications with the Secretary of Justice,[12] it enumerated the various objections raised by its members before the passage of the ordinance in several meetings called by the Sanggunian for the purpose. These show beyond doubt that petitioner was aware of the proposed increase and in fact participated in the public hearings therefor. The respondent municipality likewise submitted the Minutes and Report of the public hearings conducted by the Sangguniang Bayans Committee on Appropriations and Market on February 6, July 15 and August 19, all in 1996, for the proposed increase in the stall rentals.[13] Petitioner cannot gripe that there was practically no public hearing conducted as its objections to the proposed measure were not considered by the Sangguniang Bayan. To be sure, public hearings are conducted by legislative bodies to allow interested parties to ventilate their views on a proposed law or ordinance. These views, however, are not binding on the legislative body and it is not compelled by law to adopt the same. Sanggunian members are elected by the people to make laws that will promote the general interest of their constituents. They are mandated to use their discretion and best judgment in serving the people. Parties who participate in public hearings to give their opinions on a proposed ordinance should not expect that their views would be patronized by their lawmakers. On the issue of publication or posting , Section 188 of the Local Government Code provides:

Section 188. Publication of Tax Ordinance and Revenue Measures. Within ten (10) days after their approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation; Provided, however, That in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places. (emphasis supplied) The records is bereft of any evidence to prove petitioners negative allegation that the subject ordinance was not posted as required by law. In contrast, the respondent Sangguniang Bayan of the Municipality of Hagonoy, Bulacan, presented evidence which clearly shows that the procedure for the enactment of the assailed ordinance was complied with. Municipal Ordinance No. 28 was enacted by the Sangguniang Bayan of Hagonoy on October 1, 1996. Then Acting Municipal Mayor Maria Garcia Santos approved the Ordinance on October 7, 1996. After its approval, copies of the Ordinance were given to the Municipal Treasurer on the same day. On November 9, 1996, the Ordinance was approved by the Sangguniang Panlalawigan. The Ordinance was posted during the period from November 4 - 25, 1996 in three (3) public places, viz: in front of the municipal building, at the bulletin board of the Sta.Ana Parish Church and on the front door of the Office of the Market Master in the public market. [14] Posting was validly made in lieu of publication as there was no newspaper of local circulation in the municipality of Hagonoy. This fact was known to and admitted by petitioner. Thus, petitioners ambiguous and unsupported claim that it was only sometime in November1997 that the Provincial Board approved Municipal Ordinance No. 28 and so the posting could not have been made in November 1996[15] was sufficiently disproved by the positive evidence of respondent municipality. Given the foregoing circumstances, petitioner cannot validly claim lack of knowledge of the approved ordinance. The filing of its appeal a year after the effectivity of the subject ordinance is fatal to its cause.

Finally, even on the substantive points raised, the petition must fail. Section 6c.04 of the 1993 Municipal Revenue Code and Section 191 of the Local Government Code limiting the percentage of increase that can be imposed apply to tax rates, not rentals. Neither can it be said that the rates were not uniformly imposed or that the public markets included in the Ordinance were unreasonably determined or classified. To be sure, the Ordinance covered the three (3) concrete public markets: the twostorey Bagong Palengke, the burnt but reconstructed Lumang Palengke and the more recent Lumang Palengke with wet market. However, the Palengkeng Bagong Munisipyo or Gabaldon was excluded from the increase in rentals as it is only a makeshift, dilapidated place, with no doors or protection for security, intended for transient peddlers who used to sell their goods along the sidewalk.[16] IN VIEW WHEREOF, the petition is DISMISSED for lack of merit. No pronouncement as to costs. SO ORDERED. Davide, Jr., C.J. (Chairman), Pardo, and Ynares-Santiago, JJ., concur. Kapunan,

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 127882 January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAADA, PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE, SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P. TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M. DADING, represented by his father ANTONIO L. DADING, ROMY M. LAGARO, represented by his father TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by his father MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his father DANNY M. SAL, DAISY RECARSE, represented by her mother LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIO CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO JOSE B. TALJA, SHARMAINE R. CUNANAN, represented by her father ALFREDO M. CUNANAN, ANTONIO JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING, represented by her father RIO OLIMPIO A. LINGATING, MARIO JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE L.

NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-WV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners, vs. VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY, and WMC (PHILIPPINES), INC.4 respondents. DECISION CARPIO-MORALES, J.: The present petition for mandamus and prohibition assails the constitutionality of Republic Act No. 7942,5otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing Rules and Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR) Administrative Order 96-40, and of the Financial and Technical Assistance Agreement (FTAA) entered into on March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized under Philippine laws.

On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 authorizing the DENR Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts or agreements involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with the foreign proponent. In entering into such proposals, the President shall consider the real contributions to the economic growth and general welfare of the country that will be realized, as well as the development and use of local scientific and technical resources that will be promoted by the proposed contract or agreement. Until Congress shall determine otherwise, large-scale mining, for purpose of this Section, shall mean those proposals for contracts or agreements for mineral resources exploration, development, and utilization involving a committed capital investment in a single mining unit project of at least Fifty Million Dollars in United States Currency (US $50,000,000.00).7 On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration, development, utilization and processing of all mineral resources."8 R.A. No. 7942 defines the modes of mineral agreements for mining operations,9 outlines the procedure for their filing and approval,10 assignment/transfer11and withdrawal,12 and fixes their terms.13 Similar provisions govern financial or technical assistance agreements.14 The law prescribes the qualifications of contractors15 and grants them certain rights, including timber,16 water17and easement18 rights, and the right to possess explosives.19 Surface owners, occupants, or concessionaires are forbidden from preventing holders of mining rights from entering private lands and concession areas.20 A procedure for the settlement of conflicts is likewise provided for.21 The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the transport, sale and processing of minerals,25 and promotes the development of mining communities, science and mining technology,26 and safety and environmental protection.27

The government's share in the agreements is spelled out and allocated,28 taxes and fees are imposed,29incentives granted.30 Aside from penalizing certain acts,31 the law likewise specifies grounds for the cancellation, revocation and termination of agreements and permits.32 On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two newspapers of general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato.34 On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996. On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No. 9640,35 giving the DENR fifteen days from receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners' letter.37 Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order. They allege that at the time of the filing of the petition, 100 FTAA applications had already been filed, covering an area of 8.4 million hectares,38 64 of which applications are by fully foreign-owned corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining company over offshore areas.39 Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction: I x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the

latter being unconstitutional in that it allows fully foreign owned corporations to explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the Constitution; II x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows the taking of private property without the determination of public use and for just compensation; III x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution; IV x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the Constitution; V x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral resources contrary to Article XII of the Constitution; VI x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it allows the inequitable

sharing of wealth contrary to Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution; VII x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the President of the Republic of the Philippines and Western Mining Corporation Philippines Inc. because the same is illegal and unconstitutional.40 They pray that the Court issue an order: (a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance Agreements; (b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and void; (c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and null and void; and (d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc. as unconstitutional, illegal and null and void.41 Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos, the then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major Australian mining and exploration company."42 By WMCP's information, "it is a 100% owned subsidiary of WMC LIMITED."43

Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial inquiry have not been met and that the petition does not comply with the criteria for prohibition and mandamus. Additionally, respondent WMCP argues that there has been a violation of the rule on hierarchy of courts. After petitioners filed their reply, this Court granted due course to the petition. The parties have since filed their respective memoranda. WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation organized under Philippine laws.44 WMCP was subsequently renamed "Tampakan Mineral Resources Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an Australian company.46 It further claims that by such sale and transfer of shares, "WMCP has ceased to be connected in any way with WMC."47 By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001,48 approved the transfer and registration of the subject FTAA from WMCP to Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President which upheld it by Decision of July 23, 2002.49 Its motion for reconsideration having been denied by the Office of the President by Resolution of November 12, 2002,50 Lepanto filed a petition for review51 before the Court of Appeals. Incidentally, two other petitions for review related to the approval of the transfer and registration of the FTAA to Sagittarius were recently resolved by this Court. 52

It bears stressing that this case has not been rendered moot either by the transfer and registration of the FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order or a preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the President.53 The validity of the transfer remains in dispute and awaits final judicial determination. This assumes, of course, that such transfer cures the FTAA's alleged unconstitutionality, on which question judgment is reserved. WMCP also points out that the original claimowners of the major mineralized areas included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation, are all Filipino-owned corporations,54 each of which was a holder of an approved Mineral Production Sharing Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP FTAA;55 and that these three companies are the same companies that consolidated their interests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP concludes that in the event that the FTAA is invalidated, the MPSAs of the three corporations would be revived and the mineral claims would revert to their original claimants. 57 These circumstances, while informative, are hardly significant in the resolution of this case, it involving the validity of the FTAA, not the possible consequences of its invalidation. Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and the last need be delved into; in the latter, the discussion shall dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue of which order the questioned FTAA was forged. I Before going into the substantive issues, the procedural questions posed by respondents shall first be tackled. REQUISITES FOR JUDICIAL REVIEW

When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following requisites are present: (1) The existence of an actual and appropriate case; (2) A personal and substantial interest of the party raising the constitutional question; (3) The exercise of judicial review is pleaded at the earliest opportunity; and (4) The constitutional question is the lis mota of the case. 58 Respondents claim that the first three requisites are not present. Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable." The power of judicial review, therefore, is limited to the determination of actual cases and controversies.59 An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not conjectural or anticipatory,60 lest the decision of the court would amount to an advisory opinion.61 The power does not extend to hypothetical questions62 since any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.63 "Legal standing" or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged, 64alleging more than a generalized grievance.65 The gist of the question of standing is whether a party alleges "such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions." 66Unless a

person is injuriously affected in any of his constitutional rights by the operation of statute or ordinance, he has no standing.67 Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association, Inc., a farmers and indigenous people's cooperative organized under Philippine laws representing a community actually affected by the mining activities of WMCP, members of said cooperative,68 as well as other residents of areas also affected by the mining activities of WMCP.69 These petitioners have standing to raise the constitutionality of the questioned FTAA as they allege a personal and substantial injury. They claim that they would suffer "irremediable displacement"70 as a result of the implementation of the FTAA allowing WMCP to conduct mining activities in their area of residence. They thus meet the appropriate case requirement as they assert an interest adverse to that of respondents who, on the other hand, insist on the FTAA's validity. In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by authority of which the FTAA was executed. Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting parties to annul it.71 In other words, they contend that petitioners are not real parties in interest in an action for the annulment of contract. Public respondents' contention fails. The present action is not merely one for annulment of contract but for prohibition and mandamus. Petitioners allege that public respondents acted without or in excess of jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case involves constitutional questions, this Court is not concerned with whether petitioners are real parties in interest, but with whether they have legal standing. As held in Kilosbayan v. Morato:72 x x x. "It is important to note . . . that standing because of its constitutional and public policy underpinnings, is very different from questions relating to whether a particular

plaintiff is the real party in interest or has capacity to sue. Although all three requirements are directed towards ensuring that only certain parties can maintain an action, standing restrictions require a partial consideration of the merits, as well as broader policy concerns relating to the proper role of the judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985]) Standing is a special concern in constitutional law because in some cases suits are brought not by parties who have been personally injured by the operation of a law or by official action taken, but by concerned citizens, taxpayers or voters who actually sue in the public interest. Hence, the question in standing is whether such parties have "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].) As earlier stated, petitioners meet this requirement. The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the requisites of justiciability. Although these laws were not in force when the subject FTAA was entered into, the question as to their validity is ripe for adjudication. The WMCP FTAA provides: 14.3 Future Legislation Any term and condition more favourable to Financial &Technical Assistance Agreement contractors resulting from repeal or amendment of any existing law or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement. It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to WMCP, hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.

In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements. SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the provisions of Chapter XIV on government share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a mining lessee or contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said provisions x x x Provided, finally, That such leases, production-sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its implementing rules and regulations. As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA. Misconstruing the application of the third requisite for judicial review that the exercise of the review is pleaded at the earliest opportunity WMCP points out that the petition was filed only almost two years after the execution of the FTAA, hence, not raised at the earliest opportunity. The third requisite should not be taken to mean that the question of constitutionality must be raised immediately after the execution of the state action complained of. That the question of constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised later.73 A contrary rule would mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file a case to challenge the same. PROPRIETY OF PROHIBITION AND MANDAMUS Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read: SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, or person, whether

exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant to desist from further proceeding in the action or matter specified therein. Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from continuing with the commission of an act perceived to be illegal.75 The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract itself may be fait accompli, its implementation is not. Public respondents, in behalf of the Government, have obligations to fulfill under said contract. Petitioners seek to prevent them from fulfilling such obligations on the theory that the contract is unconstitutional and, therefore, void. The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus aspect of the petition is rendered unnecessary. HIERARCHY OF COURTS The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise lie. The rule has been explained thus: Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon the issues of a case. That way, as a particular case goes through the hierarchy of courts, it is shorn of all but the important legal issues or those of first impression, which are the proper subject of attention of the appellate court. This is a procedural rule borne of experience and adopted to improve the administration of justice. This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has concurrent jurisdiction with the Regional Trial Courts and the Court of

Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give a party unrestricted freedom of choice of court forum. The resort to this Court's primary jurisdiction to issue said writs shall be allowed only where the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify such invocation. We held in People v. Cuaresma that: A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only where there are special and important reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy necessary to prevent inordinate demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket x x x.76 [Emphasis supplied.] The repercussions of the issues in this case on the Philippine mining industry, if not the national economy, as well as the novelty thereof, constitute exceptional and compelling circumstances to justify resort to this Court in the first instance. In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual case or legal standing when paramount public interest is involved.77 When the issues raised are of paramount importance to the public, this Court may brush aside technicalities of procedure.78 II Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came after President Aquino had already lost her legislative powers under the Provisional Constitution.

And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates Section 2, Article XII of the Constitution because, among other reasons: (1) It allows foreign-owned companies to extend more than mere financial or technical assistance to the State in the exploitation, development, and utilization of minerals, petroleum, and other mineral oils, and even permits foreign owned companies to "operate and manage mining activities." (2) It allows foreign-owned companies to extend both technical and financial assistance, instead of "either technical or financial assistance." To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision, the concepts contained therein, and the laws enacted pursuant thereto, is in order. Section 2, Article XII reads in full: Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic

zone, and reserve its use and enjoyment exclusively to Filipino citizens. The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons. The President may enter into agreements with foreignowned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. THE SPANISH REGIME AND THE REGALIAN DOCTRINE The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into these Islands, this feudal concept is based on the State's power of dominium, which is the capacity of the State to own or acquire property.79 In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by virtue of his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in which a subject has a right of property or propriedad. These were rights enjoyed during feudal times by the king as the sovereign. The theory of the feudal system was that title to all lands was originally held by the King, and while the use of lands was granted out to others who were permitted to hold them under certain conditions, the King theoretically retained the title. By fiction of law, the King was regarded as the original proprietor of all lands, and the true and only source of title, and from him all lands were held. The theory of jura regalia

was therefore nothing more than a natural fruit of conquest.80 The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier Spanish decrees declared that "all lands were held from the Crown."82 The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in the bowels of the earth."83 Spain, in particular, recognized the unique value of natural resources, viewing them, especially minerals, as an abundant source of revenue to finance its wars against other nations.84 Mining laws during the Spanish regime reflected this perspective.85 THE AMERICAN OCCUPATION AND THE CONCESSION REGIME By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine Islands" to the United States. The Philippines was hence governed by means of organic acts that were in the nature of charters serving as a Constitution of the occupied territory from 1900 to 1935.86 Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902, more commonly known as the Philippine Bill of 1902, through which the United States Congress assumed the administration of the Philippine Islands.87 Section 20 of said Bill reserved the disposition of mineral lands of the public domain from sale. Section 21 thereof allowed the free and open exploration, occupation and purchase of mineral deposits not only to citizens of the Philippine Islands but to those of the United States as well: Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the land in which they are found, to occupation and purchase, by citizens of the United States or of said Islands: Provided, That when on any lands in said Islands entered and occupied as agricultural lands under the provisions of this Act, but not patented, mineral deposits have been found, the working of such mineral deposits is forbidden until the person, association, or

corporation who or which has entered and is occupying such lands shall have paid to the Government of said Islands such additional sum or sums as will make the total amount paid for the mineral claim or claims in which said deposits are located equal to the amount charged by the Government for the same as mineral claims. Unlike Spain, the United States considered natural resources as a source of wealth for its nationals and saw fit to allow both Filipino and American citizens to explore and exploit minerals in public lands, and to grant patents to private mineral lands.88 A person who acquired ownership over a parcel of private mineral land pursuant to the laws then prevailing could exclude other persons, even the State, from exploiting minerals within his property. 89Thus, earlier jurisprudence90 held that: A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the statutes of the United States, has the effect of a grant by the United States of the present and exclusive possession of the lands located, and this exclusive right of possession and enjoyment continues during the entire life of the location. x x x. x x x. The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his location not only against third persons, but also against the Government. x x x. [Italics in the original.] The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the Regalian theory, mineral rights are not included in a grant of land by the state; under the American doctrine, mineral rights are included in a grant of land by the government. 91 Section 21 also made possible the concession (frequently styled "permit", license" or "lease")92 system.93 This was the traditional regime imposed by the colonial administrators for the exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.).94

Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a given area.95 Thus, the concession amounts to complete control by the concessionaire over the country's natural resource, for it is given exclusive and plenary rights to exploit a particular resource at the point of extraction.96 In consideration for the right to exploit a natural resource, the concessionaire either pays rent or royalty, which is a fixed percentage of the gross proceeds.97 Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual framework of the concession.98 For instance, Act No. 2932,99 approved on August 31, 1920, which provided for the exploration, location, and lease of lands containing petroleum and other mineral oils and gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the leasing and development of coal lands in the Philippines, both utilized the concession system.101 THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie Law, the People of the Philippine Islands were authorized to adopt a constitution.102 On July 30, 1934, the Constitutional Convention met for the purpose of drafting a constitution, and the Constitution subsequently drafted was approved by the Convention on February 8, 1935.103 The Constitution was submitted to the President of the United States on March 18, 1935.104 On March 23, 1935, the President of the United States certified that the Constitution conformed substantially with the provisions of the Act of Congress approved on March 24, 1934.105 On May 14, 1935, the Constitution was ratified by the Filipino people.106 The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines, including mineral lands and minerals, to be property belonging to the State.107 As adopted in a republican system, the medieval concept of jura regalia is stripped of royal overtones and ownership of the land is vested in the State.108

Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution provided: SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant. The nationalization and conservation of the natural resources of the country was one of the fixed and dominating objectives of the 1935 Constitutional Convention.109 One delegate relates: There was an overwhelming sentiment in the Convention in favor of the principle of state ownership of natural resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure recognition of the state's power to control their disposition, exploitation, development, or utilization. The delegates of the Constitutional Convention very well knew that the concept of State ownership of land and natural resources was introduced by the Spaniards, however, they were not certain whether it was continued and applied by the Americans. To remove all doubts, the Convention approved the provision in the Constitution affirming the Regalian doctrine.

The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was considered to be a necessary starting point for the plan of nationalizing and conserving the natural resources of the country. For with the establishment of the principle of state ownership of the natural resources, it would not be hard to secure the recognition of the power of the State to control their disposition, exploitation, development or utilization. 110 The nationalization of the natural resources was intended (1) to insure their conservation for Filipino posterity; (2) to serve as an instrument of national defense, helping prevent the extension to the country of foreign control through peaceful economic penetration; and (3) to avoid making the Philippines a source of international conflicts with the consequent danger to its internal security and independence.111 The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to grant licenses, concessions, or leases for the exploitation, development, or utilization of any of the natural resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of which is owned by Filipinos.lawph!l.ne+ The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November 1946, the Parity Amendment, which came in the form of an "Ordinance Appended to the Constitution," was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and exploit our natural resources to citizens of the United States and business enterprises owned or controlled, directly or indirectly, by citizens of the United States:113 Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the foregoing Constitution, during the effectivity of the Executive Agreement entered into by the President of the Philippines with the President of the United States on the fourth of July, nineteen hundred and forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in no case to extend beyond the third of July, nineteen hundred and seventy-four, the disposition, exploitation, development, and utilization of all

agricultural, timber, and mineral lands of the public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces and sources of potential energy, and other natural resources of the Philippines, and the operation of public utilities, shall, if open to any person, be open to citizens of the United States and to all forms of business enterprise owned or controlled, directly or indirectly, by citizens of the United States in the same manner as to, and under the same conditions imposed upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of the Philippines. The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known as the LaurelLangley Agreement, embodied in Republic Act No. 1355. 114 THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved on June 18, 1949. The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's petroleum resources. Among the kinds of concessions it sanctioned were exploration and exploitation concessions, which respectively granted to the concessionaire the exclusive right to explore for116 or develop117 petroleum within specified areas. Concessions may be granted only to duly qualified persons118 who have sufficient finances, organization, resources, technical competence, and skills necessary to conduct the operations to be undertaken.119 Nevertheless, the Government reserved the right to undertake such work itself.120 This proceeded from the theory that all natural deposits or occurrences of petroleum or natural gas in public and/or private lands in the Philippines belong to the State.121 Exploration and exploitation concessions did not confer upon the concessionaire ownership over the petroleum lands and petroleum deposits.122 However, they did grant concessionaires the right to explore, develop, exploit, and

utilize them for the period and under the conditions determined by the law.123 Concessions were granted at the complete risk of the concessionaire; the Government did not guarantee the existence of petroleum or undertake, in any case, title warranty.124 Concessionaires were required to submit information as maybe required by the Secretary of Agriculture and Natural Resources, including reports of geological and geophysical examinations, as well as production reports.125 Exploration126 and exploitation127 concessionaires were also required to submit work programs. lavvphi1.net Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax,128 the object of which is to induce the concessionaire to actually produce petroleum, and not simply to sit on the concession without developing or exploiting it.129 These concessionaires were also bound to pay the Government royalty, which was not less than 12% of the petroleum produced and saved, less that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No. 387, the exploitation tax may be credited against the royalties so that if the concessionaire shall be actually producing enough oil, it would not actually be paying the exploitation tax.131 Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to the Government within one year from the date it becomes due, 133 constituted grounds for the cancellation of the concession. In case of delay in the payment of the taxes or royalty imposed by the law or by the concession, a surcharge of 1% per month is exacted until the same are paid.134 As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong to the exploration or exploitation concessionaire.135 Upon termination of such concession, the concessionaire had a right to remove the same.136 The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the law, through

the Director of Mines, who acted under the Secretary's immediate supervision and control.137 The Act granted the Secretary the authority to inspect any operation of the concessionaire and to examine all the books and accounts pertaining to operations or conditions related to payment of taxes and royalties.138 The same law authorized the Secretary to create an Administration Unit and a Technical Board.139 The Administration Unit was charged, inter alia, with the enforcement of the provisions of the law.140 The Technical Board had, among other functions, the duty to check on the performance of concessionaires and to determine whether the obligations imposed by the Act and its implementing regulations were being complied with.141 Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the benefits and drawbacks of the concession system insofar as it applied to the petroleum industry: Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the concession system is that the State's financial involvement is virtually risk free and administration is simple and comparatively low in cost. Furthermore, if there is a competitive allocation of the resource leading to substantial bonuses and/or greater royalty coupled with a relatively high level of taxation, revenue accruing to the State under the concession system may compare favorably with other financial arrangements. Disadvantages of Concession. There are, however, major negative aspects to this system. Because the Government's role in the traditional concession is passive, it is at a distinct disadvantage in managing and developing policy for the nation's petroleum resource. This is true for several reasons. First, even though most concession agreements contain covenants requiring diligence in operations and production, this establishes only an indirect and passive control of the host country in resource development. Second, and more importantly, the fact that the host country does not directly participate in resource management decisions inhibits its ability to train and employ its nationals in petroleum development. This factor could delay or prevent the country from effectively engaging in the development of its

resources. Lastly, a direct role in management is usually necessary in order to obtain a knowledge of the international petroleum industry which is important to an appreciation of the host country's resources in relation to those of other countries.142 Other liabilities of the system have also been noted: x x x there are functional implications which give the concessionaire great economic power arising from its exclusive equity holding. This includes, first, appropriation of the returns of the undertaking, subject to a modest royalty; second, exclusive management of the project; third, control of production of the natural resource, such as volume of production, expansion, research and development; and fourth, exclusive responsibility for downstream operations, like processing, marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the natural resource being exploited, it has been shorn of all elements of control over such natural resource because of the exclusive nature of the contractual regime of the concession. The concession system, investing as it does ownership of natural resources, constitutes a consistent inconsistency with the principle embodied in our Constitution that natural resources belong to the state and shall not be alienated, not to mention the fact that the concession was the bedrock of the colonial system in the exploitation of natural resources.143 Eventually, the concession system failed for reasons explained by Dimagiba: Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have properly spurred sustained oil exploration activities in the country, since it assumed that such a capital-intensive, high risk venture could be successfully undertaken by a single individual or a small company. In effect, concessionaires' funds were easily exhausted. Moreover, since the concession system practically closed its doors to interested foreign investors, local capital was stretched to the limits. The old system also failed to consider the highly sophisticated technology and expertise required, which would be available only to multinational companies.144

A shift to a new regime for the development of natural resources thus seemed imminent. PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT SYSTEM The promulgation on December 31, 1972 of Presidential Decree No. 87,145 otherwise known as The Oil Exploration and Development Act of 1972 signaled such a transformation. P.D. No. 87 permitted the government to explore for and produce indigenous petroleum through "service contracts."146 "Service contracts" is a term that assumes varying meanings to different people, and it has carried many names in different countries, like "work contracts" in Indonesia, "concession agreements" in Africa, "productionsharing agreements" in the Middle East, and "participation agreements" in Latin America.147 A functional definition of "service contracts" in the Philippines is provided as follows: A service contract is a contractual arrangement for engaging in the exploitation and development of petroleum, mineral, energy, land and other natural resources by which a government or its agency, or a private person granted a right or privilege by the government authorizes the other party (service contractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, in that the latter provides financial or technical resources, undertakes the exploitation or production of a given resource, or directly manages the productive enterprise, operations of the exploration and exploitation of the resources or the disposition of marketing or resources.148 In a service contract under P.D. No. 87, service and technology are furnished by the service contractor for which it shall be entitled to the stipulated service fee.149 The contractor must be technically competent and financially capable to undertake the operations required in the contract.150 Financing is supposed to be provided by the Government to which all petroleum produced belongs.151 In case the Government is unable to finance petroleum exploration

operations, the contractor may furnish services, technology and financing, and the proceeds of sale of the petroleum produced under the contract shall be the source of funds for payment of the service fee and the operating expenses due the contractor.152 The contractor shall undertake, manage and execute petroleum operations, subject to the government overseeing the management of the operations.153 The contractor provides all necessary services and technology and the requisite financing, performs the exploration work obligations, and assumes all exploration risks such that if no petroleum is produced, it will not be entitled to reimbursement.154 Once petroleum in commercial quantity is discovered, the contractor shall operate the field on behalf of the government.155 P.D. No. 87 prescribed minimum terms and conditions for every service contract.156 It also granted the contractor certain privileges, including exemption from taxes and payment of tariff duties,157 and permitted the repatriation of capital and retention of profits abroad.158 Ostensibly, the service contract system had certain advantages over the concession regime.159 It has been opined, though, that, in the Philippines, our concept of a service contract, at least in the petroleum industry, was basically a concession regime with a production-sharing element.160 On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new Constitution. 161Article XIV on the National Economy and Patrimony contained provisions similar to the 1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8, Article XIV thereof provides: Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than

twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant. While Section 9 of the same Article maintained the Filipinoonly policy in the enjoyment of natural resources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service contracts with any person or entity for the exploration or utilization of natural resources. Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to citizens, or to corporations or associations at least sixty per centum of which is owned by such citizens. The Batasang Pambansa, in the national interest, may allow such citizens, corporations or associations to enter into service contracts for financial, technical, management, or other forms of assistance with any person or entity for the exploration, or utilization of any of the natural resources. Existing valid and binding service contracts for financial, technical, management, or other forms of assistance are hereby recognized as such. [Emphasis supplied.] The concept of service contracts, according to one delegate, was borrowed from the methods followed by India, Pakistan and especially Indonesia in the exploration of petroleum and mineral oils.162 The provision allowing such contracts, according to another, was intended to "enhance the proper development of our natural resources since Filipino citizens lack the needed capital and technical know-how which are essential in the proper exploration, development and exploitation of the natural resources of the country." 163 The original idea was to authorize the government, not private entities, to enter into service contracts with foreign entities.164 As finally approved, however, a citizen or private entity could be allowed by the National Assembly to enter into such service contract.165 The prior approval of the National Assembly was deemed sufficient to protect the national interest.166 Notably, none of the laws allowing service contracts were passed by the Batasang Pambansa. Indeed, all of them were enacted by presidential decree.

On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated Presidential Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired lands of the public domain or which own, hold or control such lands to enter into service contracts for financial, technical, management or other forms of assistance with any foreign persons or entity for the exploration, development, exploitation or utilization of said lands.168 Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974, was enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a mining claim may enter into a service contract with a qualified domestic or foreign contractor for the exploration, development and exploitation of his claims and the processing and marketing of the product thereof. Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed Filipinos engaged in commercial fishing to enter into contracts for financial, technical or other forms of assistance with any foreign person, corporation or entity for the production, storage, marketing and processing of fish and fishery/aquatic products.171 Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19, 1975, allowed "forest products licensees, lessees, or permitees to enter into service contracts for financial, technical, management, or other forms of assistance . . . with any foreign person or entity for the exploration, development, exploitation or utilization of the forest resources."173 Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree No. 1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized the Government to enter into service contracts for the exploration, exploitation and development of geothermal resources with a foreign contractor who must be technically and financially capable of undertaking the operations required in the service contract.

Thus, virtually the entire range of the country's natural resources from petroleum and minerals to geothermal energy, from public lands and forest resources to fishery products was well covered by apparent legal authority to engage in the direct participation or involvement of foreign persons or corporations (otherwise disqualified) in the exploration and utilization of natural resources through service contracts.175 THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a revolutionary government. On March 25, 1986, President Aquino issued Proclamation No. 3,176 promulgating the Provisional Constitution, more popularly referred to as the Freedom Constitution. By authority of the same Proclamation, the President created a Constitutional Commission (CONCOM) to draft a new constitution, which took effect on the date of its ratification on February 2, 1987.177 The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII states: "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State." Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the same provision, prohibits the alienation of natural resources, except agricultural lands. The third sentence of the same paragraph is new: "The exploration, development and utilization of natural resources shall be under the full control and supervision of the State." The constitutional policy of the State's "full control and supervision" over natural resources proceeds from the concept of jura regalia, as well as the recognition of the importance of the country's natural resources, not only for national economic development, but also for its security and national defense.178 Under this provision, the

State assumes "a more dynamic role" in the exploration, development and utilization of natural resources. 179 Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable lands of public domain through "license, concession or lease" is no longer allowed under the 1987 Constitution. 180 Having omitted the provision on the concession system, Section 2 proceeded to introduce "unfamiliar language": 181 The State may directly undertake such activities or it may enter into co-production, joint venture, or productionsharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State two "options."182 One, the State may directly undertake these activities itself; or two, it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or entities at least 60% of whose capital is owned by such citizens. A third option is found in the third paragraph of the same section: The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons. While the second and third options are limited only to Filipino citizens or, in the case of the former, to corporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth allows the participation of foreignowned corporations. The fourth and fifth paragraphs of Section 2 provide:

The President may enter into agreements with foreignowned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. Although Section 2 sanctions the participation of foreignowned corporations in the exploration, development, and utilization of natural resources, it imposes certain limitations or conditions to agreements with such corporations. First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino citizen, corporation or association may enter into a service contract with a "foreign person or entity." Second, the size of the activities: only large-scale exploration, development, and utilization is allowed. The term "large-scale usually refers to very capitalintensive activities."183 Third, the natural resources subject of the activities is restricted to minerals, petroleum and other mineral oils, the intent being to limit service contracts to those areas where Filipino capital may not be sufficient.184 Fourth, consistency with the provisions of statute. The agreements must be in accordance with the terms and conditions provided by law. Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements

must be based on real contributions to economic growth and general welfare of the country. Sixth, the agreements must contain rudimentary stipulations for the promotion of the development and use of local scientific and technical resources. Seventh, the notification requirement. The President shall notify Congress of every financial or technical assistance agreement entered into within thirty days from its execution. Finally, the scope of the agreements. While the 1973 Constitution referred to "service contracts for financial, technical, management, or other forms of assistance" the 1987 Constitution provides for "agreements. . . involving either financial or technical assistance." It bears noting that the phrases "service contracts" and "management or other forms of assistance" in the earlier constitution have been omitted. By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing and approval of applications for the exploration, development and utilization of minerals. The omission in the 1987 Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to them in Section 2 thereof: Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal applications and applications for approval of operating agreements and mining service contracts, shall be accepted and processed and may be approved x x x. [Emphasis supplied.] The same law provided in its Section 3 that the "processing, evaluation and approval of all mining applications . . . operating agreements and service contracts . . . shall be governed by Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations. . . ."

As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which the subject WMCP FTAA was executed on March 30, 1995. On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that the Act "shall govern the exploration, development, utilization, and processing of all mineral resources." Such declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes through which the State may undertake the exploration, development, and utilization of natural resources. The State, being the owner of the natural resources, is accorded the primary power and responsibility in the exploration, development and utilization thereof. As such, it may undertake these activities through four modes: The State may directly undertake such activities. (2) The State may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations. (3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens. (4) For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or financial assistance.186 Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and surveys,187and a passing mention of government-owned or controlled corporations,188 R.A. No. 7942 does not specify how the State should go about the first mode. The third mode, on the other hand, is governed by Republic Act No. 7076189 (the People's Small-Scale Mining Act of 1991) and other pertinent laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes. Mineral production sharing, co-production and joint venture agreements are collectively classified by R.A. No. 7942 as

"mineral agreements."191 The Government participates the least in a mineral production sharing agreement (MPSA). In an MPSA, the Government grants the contractor 192 the exclusive right to conduct mining operations within a contract area193 and shares in the gross output.194 The MPSA contractor provides the financing, technology, management and personnel necessary for the agreement's implementation.195 The total government share in an MPSA is the excise tax on mineral products under Republic Act No. 7729,196 amending Section 151(a) of the National Internal Revenue Code, as amended.197 In a co-production agreement (CA),198 the Government provides inputs to the mining operations other than the mineral resource,199 while in a joint venture agreement (JVA), where the Government enjoys the greatest participation, the Government and the JVA contractor organize a company with both parties having equity shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to a share in the gross output. 201 The Government may enter into a CA202 or JVA203 with one or more contractors. The Government's share in a CA or JVA is set out in Section 81 of the law: The share of the Government in co-production and joint venture agreements shall be negotiated by the Government and the contractor taking into consideration the: (a) capital investment of the project, (b) the risks involved, (c) contribution of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing between the Government and the contractor. The Government shall also be entitled to compensations for its other contributions which shall be agreed upon by the parties, and shall consist, among other things, the contractor's income tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area.204 A "qualified person" may enter into any of the mineral agreements with the Government. 205 A "qualified person" is any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines x x x.206 The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a contract involving financial or technical assistance for large-scale exploration, development, and utilization of natural resources."207 Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of natural resources in the Philippines may enter into such agreement directly with the Government through the DENR.208 For the purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation, partnership, association, or cooperative duly registered in accordance with law in which less than 50% of the capital is owned by Filipino citizens)209 is deemed a "qualified person."210 Other than the difference in contractors' qualifications, the principal distinction between mineral agreements and FTAAs is the maximum contract area to which a qualified person may hold or be granted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, as opposed to the amount invested (US $50,000,000.00), which was the standard under E.O. 279. Like a CA or a JVA, an FTAA is subject to negotiation. 212 The Government's contributions, in the form of taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that in an FTAA:

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive.213 III Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a consideration of the substantive issues presented by the petition is now in order. THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279 Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come into effect. E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the opening of Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effect immediately." This provision, according to petitioners, runs counter to Section 1 of E.O. No. 200,215 which provides: SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided. 216[Emphasis supplied.] On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after its publication at which time Congress had already convened and the President's power to legislate had ceased. Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant thereto. Nevertheless, petitioners' contentions have no merit.

It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date other than even before the 15-day period after its publication. Where a law provides for its own date of effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the very essence of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore, applies only when a statute does not provide for its own date of effectivity. What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Taada v. Tuvera,217 is the publication of the law for without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis n[eminem] excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one. While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its invalidation since the Constitution, being "the fundamental, paramount and supreme law of the nation," is deemed written in the law.218 Hence, the due process clause,219 which, so Taada held, mandates the publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No. 200 which provides for publication "either in the Official Gazette or in a newspaper of general circulation in the Philippines," finds suppletory application. It is significant to note that E.O. No. 279 was actually published in the Official Gazette220 on August 3, 1987. From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Taada v. Tuvera, this Court holds that E.O. No. 279 became effective immediately upon its publication in the Official Gazette on August 3, 1987. That such effectivity took place after the convening of the first Congress is irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative powers under the Provisional Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution explicitly states:

Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is convened. The convening of the first Congress merely precluded the exercise of legislative powers by President Aquino; it did not prevent the effectivity of laws she had previously enacted. There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute. THE CONSTITUTIONALITY OF THE WMCP FTAA Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs should be limited to "technical or financial assistance" only. They observe, however, that, contrary to the language of the Constitution, the WMCP FTAA allows WMCP, a fully foreignowned mining corporation, to extend more than mere financial or technical assistance to the State, for it permits WMCP to manage and operate every aspect of the mining activity. 222 Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the instrument must be so construed as to give effect to the intention of the people who adopted it.223 This intention is to be sought in the constitution itself, and the apparent meaning of the words is to be taken as expressing it, except in cases where that assumption would lead to absurdity, ambiguity, or contradiction.224 What the Constitution says according to the text of the provision, therefore, compels acceptance and negates the power of the courts to alter it, based on the postulate that the framers and the people mean what they say.225 Accordingly, following the literal text of the Constitution, assistance accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of petroleum, minerals and mineral oils should be limited to "technical" or "financial" assistance only. WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O. No. 279 encompasses a "broad number of possible services," perhaps, "scientific and/or technological in basis."226 It thus posits that it may

also well include "the area of management or operations . . . so long as such assistance requires specialized knowledge or skills, and are related to the exploration, development and utilization of mineral resources."227 This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of assistance" in the 1973 Constitution was deleted in the 1987 Constitution, which allows only "technical or financial assistance." Casus omisus pro omisso habendus est. A person, object or thing omitted from an enumeration must be held to have been omitted intentionally.228 As will be shown later, the management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate. Respondents insist that "agreements involving technical or financial assistance" is just another term for service contracts. They contend that the proceedings of the CONCOM indicate "that although the terminology 'service contract' was avoided [by the Constitution], the concept it represented was not." They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technical assistance.'"229 And point out how members of the CONCOM referred to these agreements as "service contracts." For instance: SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the past service contracts under Mr. Marcos is the general law to be enacted by the legislature and the notification of Congress by the President? That is the only difference, is it not? MR. VILLEGAS. That is right. SR. TAN. So those are the safeguards[?] MR. VILLEGAS. Yes. There was no law at all governing service contracts before. SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]

WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo who alluded to service contracts as they explained their respective votes in the approval of the draft Article: MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the provision on service contracts. I felt that if we would constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and not guided only by a general law to be promulgated by Congress. x x x.231 [Emphasis supplied.] x x x. MR. GARCIA. Thank you. I vote no. x x x. Service contracts are given constitutional legitimization in Section 3, even when they have been proven to be inimical to the interests of the nation, providing as they do the legal loophole for the exploitation of our natural resources for the benefit of foreign interests. They constitute a serious negation of Filipino control on the use and disposition of the nation's natural resources, especially with regard to those which are nonrenewable.232 [Emphasis supplied.] xxx

MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and Patrimony, going over said provisions meticulously, setting aside prejudice and personalities will reveal that the article contains a balanced set of provisions. I hope the forthcoming Congress will implement such provisions taking into account that Filipinos should have real control over our economy and patrimony, and if foreign equity is permitted, the same must be subordinated to the imperative demands of the national interest. x x x. It is also my understanding that service contracts involving foreign corporations or entities are resorted to only when no Filipino enterprise or Filipinocontrolled enterprise could possibly undertake the exploration or exploitation of our natural resources and that compensation under such contracts cannot and should not equal what should pertain to ownership of capital. In other words, the service contract should not be an instrument to circumvent the basic provision, that the exploration and exploitation of natural resources should be truly for the benefit of Filipinos. Thank you, and I vote yes.233 [Emphasis supplied.] x x x. MR. TADEO. Nais ko lamang ipaliwanag ang aking boto. Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa National Economy and Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on," naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon

pa rin ang parity rights, ang service contract, ang 6040 equity sa natural resources. Habang naghihirap ang sambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man ang Article on National Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang national industrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa Kanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote no.234 [Emphasis supplied.] This Court is likewise not persuaded. As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on National Economy and Patrimony. If the CONCOM intended to retain the concept of service contracts under the 1973 Constitution, it could have simply adopted the old terminology ("service contracts") instead of employing new and unfamiliar terms ("agreements . . . involving either technical or financial assistance"). Such a difference between the language of a provision in a revised constitution and that of a similar provision in the preceding constitution is viewed as indicative of a difference in purpose.235 If, as respondents suggest, the concept of "technical or financial assistance" agreements is identical to that of "service contracts," the CONCOM would not have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the first to a mere euphemism for the second and render the change in phraseology meaningless. An examination of the reason behind the change confirms that technical or financial assistance agreements are not synonymous to service contracts. [T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption, and

the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in light of the history of the times, and the condition and circumstances under which the Constitution was framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the particular provision and the purpose sought to be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and calculated to effect that purpose.236 As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the drafters intended to do away with service contracts which were used to circumvent the capitalization (60%-40%) requirement: MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular Section 3, is there a safeguard against the possible control of foreign interests if the Filipinos go into coproduction with them? MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first attempt to avoid some of the abuses in the past regime in the use of service contracts to go around the 60-40 arrangement. The safeguard that has been introduced and this, of course can be refined is found in Section 3, lines 25 to 30, where Congress will have to concur with the President on any agreement entered into between a foreign-owned corporation and the government involving technical or financial assistance for large-scale exploration, development and utilization of natural resources.237 [Emphasis supplied.] In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada regarding the participation of foreign interests in Philippine natural resources, which was supposed to be restricted to Filipinos. MS. QUESADA. Another point of clarification is the phrase "and utilization of natural resources shall be under the full control and supervision of the State."

In the 1973 Constitution, this was limited to citizens of the Philippines; but it was removed and substituted by "shall be under the full control and supervision of the State." Was the concept changed so that these particular resources would be limited to citizens of the Philippines? Or would these resources only be under the full control and supervision of the State; meaning, noncitizens would have access to these natural resources? Is that the understanding? MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states: Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, productionsharing agreements with Filipino citizens. So we are still limiting it only to Filipino citizens. x x x. MS. QUESADA. Going back to Section 3, the section suggests that: The exploration, development, and utilization of natural resources may be directly undertaken by the State, or it may enter into co-production, joint venture or productionsharing agreement with . . . corporations or associations at least sixty per cent of whose voting stock or controlling interest is owned by such citizens. Lines 25 to 30, on the other hand, suggest that in the largescale exploration, development and utilization of natural resources, the President with the concurrence of Congress may enter into agreements with foreign-owned corporations even for technical or financial assistance. I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign investors will use their enormous capital resources to facilitate the actual exploitation or exploration, development and effective disposition of our natural resources to the detriment of Filipino investors. I am not saying that we should not consider borrowing money from foreign sources. What I

refer to is that foreign interest should be allowed to participate only to the extent that they lend us money and give us technical assistance with the appropriate government permit. In this way, we can insure the enjoyment of our natural resources by our own people. MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to participate. It is only technical or financial assistance they do not own anything but on conditions that have to be determined by law with the concurrence of Congress. So, it is very restrictive. If the Commissioner will remember, this removes the possibility for service contracts which we said yesterday were avenues used in the previous regime to go around the 60-40 requirement.238 [Emphasis supplied.] The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in proposing an amendment to the 60-40 requirement: MR. DAVIDE. May I be allowed to explain the proposal? MR. MAAMBONG. Subject to the three-minute rule, Madam President. MR. DAVIDE. It will not take three minutes. The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino people are sovereign and that one of the objectives for the creation or establishment of a government is to conserve and develop the national patrimony. The implication is that the national patrimony or our natural resources are exclusively reserved for the Filipino people. No alien must be allowed to enjoy, exploit and develop our natural resources. As a matter of fact, that principle proceeds from the fact that our natural resources are gifts from God to the Filipino people and it would be a breach of that special blessing from God if we will allow aliens to exploit our natural resources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien corporations but only for them to render financial or technical assistance. It is not for them to enjoy our natural resources. Madam President, our natural resources are depleting; our population is increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources, there will be no more natural resources for the next generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a certain extent the exploitation of our natural resources, and we became victims of foreign dominance and control. The aliens are interested in coming to the Philippines because they would like to enjoy the bounty of nature exclusively intended for Filipinos by God. And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to preserve and develop the national patrimony for the sovereign Filipino people and for the generations to come," we must at this time decide once and for all that our natural resources must be reserved only to Filipino citizens. Thank you.239 [Emphasis supplied.] The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to the intention of the framers to eliminate service contracts altogether. He writes: Paragraph 4 of Section 2 specifies large-scale, capitalintensive, highly technological undertakings for which the

President may enter into contracts with foreign-owned corporations, and enunciates strict conditions that should govern such contracts. x x x. This provision balances the need for foreign capital and technology with the need to maintain the national sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in their own territory, there is no danger of relinquishing sovereignty to foreign interests. Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign investors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1) Technical Assistance for highly technical enterprises; and (2) Financial Assistance for largescale enterprises. The intent of this provision, as well as other provisions on foreign investments, is to prevent the practice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover of service contracts.241 [Emphasis supplied.] Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National Economy and Patrimony, adopted the concept of "agreements . . . involving either technical or financial assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which was taken into consideration during the deliberation of the CONCOM.243 The former, as well as Article XII, as adopted, employed the same terminology, as the comparative table below shows:

DRAFT OF THE UP LAW CONSTITUTION PROJECT

PROPOSED RESOLUTION NO. 496 OF THE CONSTITUTIONAL COMMISSION

ARTICLE XII OF THE 1987 CONSTITUTION

Sec. 1. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, flora and fauna and other natural resources of

Sec. 3. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests, flora and fauna, and other natural

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and

the Philippines are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. Such activities may be directly undertaken by the state, or it may enter into co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty per cent of whose voting stock or controlling interest is owned by such citizens for a period of not more than twenty-five years, renewable for not more than twenty-five years and under such terms and conditions as may be provided by law. In case as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. The National Assembly may by law allow small scale utilization of natural resources by Filipino citizens. The National Assembly, may, by twothirds vote of all its members by special law provide the terms and conditions under which a foreignowned corporation may enter into agreements with the government involving either technical or financial assistance for large-scale exploration, development, or utilization of natural resources. [Emphasis supplied.]

resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, production-sharing agreements with Filipino citizens or corporations or associations at least sixty per cent of whose voting stock or controlling interest is owned by such citizens. Such agreements shall be for a period of twenty-five years, renewable for not more than twenty-five years, and under such term and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries or industrial uses other than the development for water power, beneficial use may be the measure and limit of the grant. The Congress may by law allow smallscale utilization of natural resources by Filipino citizens, as well as cooperative fish farming in rivers, lakes, bays, and lagoons. The President with the concurrence of Congress, by special law, shall provide the terms and conditions under which a foreign-owned corporation may enter into agreements with the government involving either technical or financial assistance for large-scale exploration, development, and utilization of natural resources.

other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twentyfive years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In case of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens. The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons. The President may enter into

[Emphasis supplied.] agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. [Emphasis supplied.] The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase "technical or financial assistance." In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A. Agabin, who was a member of the working group that prepared the U.P. Law draft, criticized service contracts for they "lodge exclusive management and control of the enterprise to the service contractor, which is reminiscent of the old concession regime. Thus, notwithstanding the provision of the Constitution that natural resources belong to the State, and that these shall not be alienated, the service contract system renders nugatory the constitutional provisions cited."244He elaborates: Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus: 1. Bidding of a selected area, or leasing the choice of the area to the interested party and then negotiating

the terms and conditions of the contract; (Sec. 5, P.D. 87) 2. Management of the enterprise vested on the contractor, including operation of the field if petroleum is discovered; (Sec. 8, P.D. 87) 3. Control of production and other matters such as expansion and development; (Sec. 8) 4. Responsibility for downstream operations marketing, distribution, and processing may be with the contractor (Sec. 8); 5. Ownership of equipment, machinery, fixed assets, and other properties remain with contractor (Sec. 12, P.D. 87);

6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13, P.D. 87); and 7. While title to the petroleum discovered may nominally be in the name of the government, the contractor has almost unfettered control over its disposition and sale, and even the domestic requirements of the country is relegated to a pro rata basis (Sec. 8). In short, our version of the service contract is just a rehash of the old concession regime x x x. Some people have pulled an old rabbit out of a magician's hat, and foisted it upon us as a new and different animal. The service contract as we know it here is antithetical to the principle of sovereignty over our natural resources restated in the same article of the [1973] Constitution containing the provision for service contracts. If the service contractor happens to be a foreign corporation, the contract would also run counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our natural resources.245 [Emphasis supplied. Underscoring in the original.] Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of the system: x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the exploitation or development of the country's natural resources be limited to Filipino citizens or corporations owned or controlled by them. However, the martial-law Constitution allowed them, once these resources are in their name, to enter into service contracts with foreign investors for financial, technical, management, or other forms of assistance. Since foreign investors have the capital resources, the actual exploitation and development, as well as the effective disposition, of the country's natural resources, would be under their direction, and control, relegating the Filipino investors to the role of second-rate partners in joint ventures.

Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the highest level of state policy that which was prohibited under the 1973 Constitution, namely: the exploitation of the country's natural resources by foreign nationals. The drastic impact of [this] constitutional change becomes more pronounced when it is considered that the active party to any service contract may be a corporation wholly owned by foreign interests. In such a case, the citizenship requirement is completely set aside, permitting foreign corporations to obtain actual possession, control, and [enjoyment] of the country's natural resources.246 [Emphasis supplied.] Accordingly, Professor Agabin recommends that: Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership over our natural resources. That is the only way we can exercise effective control over our natural resources. This should not mean complete isolation of the country's natural resources from foreign investment. Other contract forms which are less derogatory to our sovereignty and control over natural resources like technical assistance agreements, financial assistance [agreements], co-production agreements, joint ventures, production-sharing could still be utilized and adopted without violating constitutional provisions. In other words, we can adopt contract forms which recognize and assert our sovereignty and ownership over natural resources, and where the foreign entity is just a pure contractor instead of the beneficial owner of our economic resources.247 [Emphasis supplied.] Still another member of the working group, Professor Eduardo Labitag, proposed that: 2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the government may be allowed, subject to authorization by special law passed by an extraordinary majority to enter into either technical or financial assistance. This is justified by the fact that as presently worded in the 1973 Constitution, a service contract gives full control over the contract area to the service contractor, for him to work, manage and dispose of the

proceeds or production. It was a subterfuge to get around the nationality requirement of the constitution.248 [Emphasis supplied.] In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft summarized the rationale therefor, thus: 5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the 1973 Constitution as amended. This 1973 provision shattered the framework of nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the Constitution"). Through the service contract, the 1973 Constitution had legitimized that which was prohibited under the 1935 constitutionthe exploitation of the country's natural resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were recognized as legitimate arrangements. Service contracts lodge exclusive management and control of the enterprise to the service contractor, not unlike the old concession regime where the concessionaire had complete control over the country's natural resources, having been given exclusive and plenary rights to exploit a particular resource and, in effect, having been assured of ownership of that resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources, as well as the constitutional provision on nationalization or Filipinization of the exploitation of our natural resources. Under the proposed provision, only technical assistance or financial assistance agreements may be entered into, and only for large-scale activities. These are contract forms which recognize and assert our sovereignty and ownership over natural resources since the foreign entity is just a pure contractor and not a beneficial owner of our economic resources. The proposal recognizes the need for capital and technology to develop our natural resources without sacrificing our sovereignty and control over such resources by the safeguard of a special law which requires two-thirds vote of all the members of the Legislature. This will ensure that such agreements will be debated upon exhaustively and thoroughly in the National Assembly to avert prejudice to the nation.249 [Emphasis supplied.]

The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of beneficial ownership of the country's natural resources to foreign owned corporations. While, in theory, the State owns these natural resources and Filipino citizens, their beneficiaries service contracts actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not Filipinos, became the beneficiaries of Philippine natural resources. This arrangement is clearly incompatible with the constitutional ideal of nationalization of natural resources, with the Regalian doctrine, and on a broader perspective, with Philippine sovereignty. The proponents nevertheless acknowledged the need for capital and technical know-how in the large-scale exploitation, development and utilization of natural resources the second paragraph of the proposed draft itself being an admission of such scarcity. Hence, they recommended a compromise to reconcile the nationalistic provisions dating back to the 1935 Constitution, which reserved all natural resources exclusively to Filipinos, and the more liberal 1973 Constitution, which allowed foreigners to participate in these resources through service contracts. Such a compromise called for the adoption of a new system in the exploration, development, and utilization of natural resources in the form of technical agreements or financial agreements which, necessarily, are distinct concepts from service contracts. The replacement of "service contracts" with "agreements involving either technical or financial assistance," as well as the deletion of the phrase "management or other forms of assistance," assumes greater significance when note is taken that the U.P. Law draft proposed other equally crucial changes that were obviously heeded by the CONCOM. These include the abrogation of the concession system and the adoption of new "options" for the State in the exploration, development, and utilization of natural resources. The proponents deemed these changes to be more consistent with the State's ownership of, and its "full control and supervision" (a phrase also employed by the framers) over, such resources. The Project explained: 3. In line with the State ownership of natural resources, the State should take a more active role in the exploration, development, and utilization of natural resources, than the

present practice of granting licenses, concessions, or leases hence the provision that said activities shall be under the full control and supervision of the State. There are three major schemes by which the State could undertake these activities: first, directly by itself; second, by virtue of co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty per cent (60%) of the voting stock or controlling interests of which are owned by such citizens; or third, with a foreign-owned corporation, in cases of large-scale exploration, development, or utilization of natural resources through agreements involving either technical or financial assistance only. x x x. At present, under the licensing concession or lease schemes, the government benefits from such benefits only through fees, charges, ad valorem taxes and income taxes of the exploiters of our natural resources. Such benefits are very minimal compared with the enormous profits reaped by theses licensees, grantees, concessionaires. Moreover, some of them disregard the conservation of natural resources and do not protect the environment from degradation. The proposed role of the State will enable it to a greater share in the profits it can also actively husband its natural resources and engage in developmental programs that will be beneficial to them. 4. Aside from the three major schemes for the exploration, development, and utilization of our natural resources, the State may, by law, allow Filipino citizens to explore, develop, utilize natural resources in small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers, gold panners, and others similarly situated who exploit our natural resources for their daily sustenance and survival.250 Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems, concluded that the service contract regime was but a "rehash" of the concession system. "Old wine in new bottles," as he put it. The rejection of the service contract regime, therefore, is in consonance with the abolition of the concession system. In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other proposed changes, there is no doubt that the framers considered and shared the intent of the U.P. Law proponents in employing the phrase

"agreements . . . involving either technical or financial assistance." While certain commissioners may have mentioned the term "service contracts" during the CONCOM deliberations, they may not have been necessarily referring to the concept of service contracts under the 1973 Constitution. As noted earlier, "service contracts" is a term that assumes different meanings to different people.251 The commissioners may have been using the term loosely, and not in its technical and legal sense, to refer, in general, to agreements concerning natural resources entered into by the Government with foreign corporations. These loose statements do not necessarily translate to the adoption of the 1973 Constitution provision allowing service contracts. It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to Sr. Tan's question, Commissioner Villegas commented that, other than congressional notification, the only difference between "future" and "past" "service contracts" is the requirement of a general law as there were no laws previously authorizing the same.252 However, such remark is far outweighed by his more categorical statement in his exchange with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the nation's natural resources which was exactly what service contracts did except to provide "technical or financial assistance."253 In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the present charter prohibits service contracts.254 Commissioner Gascon was not totally averse to foreign participation, but favored stricter restrictions in the form of majority congressional concurrence.255 On the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and their objections may be interpreted as votes against any foreign participation in our natural resources whatsoever. WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice, expressing the view that a financial or technical assistance agreement "is no different in concept" from the service contract allowed under the 1973 Constitution. This Court is not, however, bound by this interpretation. When an administrative or executive agency

renders an opinion or issues a statement of policy, it merely interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law means.258 In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is an exception to the rule that participation in the nation's natural resources is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very restrictive."259 Commissioner Nolledo also remarked that "entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation and, therefore, being an exception, it should be subject, whenever possible, to stringent rules."260Indeed, exceptions should be strictly but reasonably construed; they extend only so far as their language fairly warrants and all doubts should be resolved in favor of the general provision rather than the exception.261 With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. Although the statute employs the phrase "financial and technical agreements" in accordance with the 1987 Constitution, it actually treats these agreements as service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law. Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No. 7942 states: SEC. 33. Eligibility.Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of mineral resources in the Philippines may enter into a financial or technical assistance agreement directly with the Government through the Department. [Emphasis supplied.] "Exploration," as defined by R.A. No. 7942, means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote

sensing, test pitting, trending, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining them for profit.262 A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests it with the right to conduct exploration for all minerals in specified areas,264 i.e., to enter, occupy and explore the same.265Eventually, the foreign-owned corporation, as such permittee, may apply for a financial and technical assistance agreement.266 "Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities.267 "Utilization" "means the extraction or disposition of minerals."268 A stipulation that the proponent shall dispose of the minerals and byproducts produced at the highest price and more advantageous terms and conditions as provided for under the implementing rules and regulations is required to be incorporated in every FTAA.269 A foreign-owned/-controlled corporation may likewise be granted a mineral processing permit.270 "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products.271 An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with the provisions of R.A. No. 7942 and its implementing rules272 and for work programs and minimum expenditures and commitments.273 And it obliges itself to furnish the Government records of geologic, accounting, and other relevant data for its mining operation.274 "Mining operation," as the law defines it, means mining activities involving exploration, feasibility, development, utilization, and processing.275

The underlying assumption in all these provisions is that the foreign contractor manages the mineral resources, just like the foreign contractor in a service contract. Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining rights that it grants contractors in mineral agreements (MPSA, CA and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor," without distinguishing between FTAA and mineral agreement contractors. And so does "holders of mining rights" in Section 76. A foreign contractor may even convert its FTAA into a mineral agreement if the economic viability of the contract area is found to be inadequate to justify large-scale mining operations,277provided that it reduces its equity in the corporation, partnership, association or cooperative to forty percent (40%).278 Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing, managerial, and technical expertise. . . ."279 This suggests that an FTAA contractor is bound to provide some management assistance a form of assistance that has been eliminated and, therefore, proscribed by the present Charter. By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral resources to these contractors, leaving the State with nothing but bare title thereto. Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60%-40% capitalization requirement for corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources. In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the Constitution: (1) The proviso in Section 3 (aq), which defines "qualified person," to wit:

Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral processing permit. (2) Section 23,280 which specifies the rights and obligations of an exploration permittee, insofar as said section applies to a financial or technical assistance agreement, (3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance agreement; (4) Section 35,281 which enumerates the terms and conditions for every financial or technical assistance agreement; (5) Section 39,282 which allows the contractor in a financial and technical assistance agreement to convert the same into a mineral production-sharing agreement; (6) Section 56,283 which authorizes the issuance of a mineral processing permit to a contractor in a financial and technical assistance agreement; The following provisions of the same Act are likewise void as they are dependent on the foregoing provisions and cannot stand on their own: (1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or technical assistance agreement. Section 34,285 which prescribes the maximum contract area in a financial or technical assistance agreements; Section 36,286 which allows negotiations for financial or technical assistance agreements;

Section 37,287 which prescribes the procedure for filing and evaluation of financial or technical assistance agreement proposals; Section 38,288 which limits the term of financial or technical assistance agreements; Section 40,289 which allows the assignment or transfer of financial or technical assistance agreements; Section 41,290 which allows the withdrawal of the contractor in an FTAA; The second and third paragraphs of Section 81,291 which provide for the Government's share in a financial and technical assistance agreement; and Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to said contractors; When the parts of the statute are so mutually dependent and connected as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a whole, and that if all could not be carried into effect, the legislature would not pass the residue independently, then, if some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them.293 There can be little doubt that the WMCP FTAA itself is a service contract. Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and dispose of all Minerals products and by-products thereof that may be produced from the Contract Area."294 The FTAA also imbues WMCP with the following rights: (b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilised during the Development/Operating Period and the project facilities to be constructed during the Development and Construction Period; (d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to the provisions of Presidential Decree No. 512 (if applicable) and not be prevented from entry into private ands by surface owners and/or occupants thereof when prospecting, exploring and exploiting for minerals therein; xxx (f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types of works on the Contract Area; (g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to the Mining Operations and to use, sell or otherwise dispose of, modify, remove or diminish any and all parts thereof; (h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and the use of timber, sand, clay, stone, water and other natural resources in the Contract Area without cost for the purposes of the Mining Operations; xxx (i) have the right to mortgage, charge or encumber all or part of its interest and obligations under this Agreement, the plant, equipment and infrastructure and the Minerals produced from the Mining Operations; x x x.
295

All materials, equipment, plant and other installations erected or placed on the Contract Area remain the property of WMCP,

which has the right to deal with and remove such items within twelve months from the termination of the FTAA.296 Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and personnel necessary for the Mining Operations." The mining company binds itself to "perform all Mining Operations . . . providing all necessary services, technology and financing in connection therewith,"297 and to "furnish all materials, labour, equipment and other installations that may be required for carrying on all Mining Operations."298> WMCP may make expansions, improvements and replacements of the mining facilities and may add such new facilities as it considers necessary for the mining operations.299 These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources that properly belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down. In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and Protection of Investments between the Philippine and Australian Governments, which was signed in Manila on January 25, 1995 and which entered into force on December 8, 1995. x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that [WMCP's] FTAA was entered into prior to the entry into force of the treaty does not preclude the Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides that "Each Party shall encourage and promote investments in its area by investors of the other Party and shall [admit] such investments in accordance with its Constitution, Laws, regulations and investment policies" and in Article 3 (2), it states that "Each Party shall ensure that investments are accorded fair and equitable treatment." The latter stipulation indicates that it was intended to impose an obligation upon a Party to afford fair and equitable treatment to the investments of the other Party and that a failure to provide such treatment by or under

the laws of the Party may constitute a breach of the treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies of its own laws to deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered into before the enactment of RA 7942 such as those mentioned in PD 87 or EO 279. This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a mere Filipino citizen, but by the Philippine Government itself, through its President no less, which, in entering into said treaty is assumed to be aware of the existing Philippine laws on service contracts over the exploration, development and utilization of natural resources. The execution of the FTAA by the Philippine Government assures the Australian Government that the FTAA is in accordance with existing Philippine laws.300 [Emphasis and italics by private respondents.] The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in turn, would amount to a violation of Section 3, Article II of the Constitution adopting the generally accepted principles of international law as part of the law of the land. One of these generally accepted principles is pacta sunt servanda, which requires the performance in good faith of treaty obligations. Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that "the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered into before the enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty invoked. For this decision herein invalidating the subject FTAA forms part of the legal system of the Philippines.301 The equal protection clause302 guarantees that such decision shall apply to all contracts belonging to the same class, hence, upholding rather than violating, the "fair and equitable treatment" stipulation in said treaty. One other matter requires clarification. Petitioners contend that, consistent with the provisions of Section 2, Article XII of the Constitution, the President may enter into agreements

involving "either technical or financial assistance" only. The agreement in question, however, is a technical and financial assistance agreement. Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead to absurd consequences.303 As WMCP correctly put it: x x x such a theory of petitioners would compel the government (through the President) to enter into contract with two (2) foreign-owned corporations, one for financial assistance agreement and with the other, for technical assistance over one and the same mining area or land; or to execute two (2) contracts with only one foreign-owned corporation which has the capability to provide both financial and technical assistance, one for financial assistance and another for technical assistance, over the same mining area. Such an absurd result is definitely not sanctioned under the canons of constitutional construction.304 [Underscoring in the original.] Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of "either/or." A constitution is not to be interpreted as demanding the impossible or the impracticable; and unreasonable or absurd consequences, if possible, should be avoided.305 Courts are not to give words a meaning that would lead to absurd or unreasonable consequences and a literal interpretation is to be rejected if it would be unjust or lead to absurd results.306 That is a strong argument against its adoption.307 Accordingly, petitioners' interpretation must be rejected. The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the petition. WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void: (1) The following provisions of Republic Act No. 7942: (a) The proviso in Section 3 (aq), (b) Section 23,

(c) Section 33 to 41, (d) Section 56, (e) The second and third paragraphs of Section 81, and (f) Section 90. (2) All provisions of Department of Environment and Natural Resources Administrative Order 96-40, s. 1996 which are not in conformity with this Decision, and (3) The Financial and Technical Assistance Agreement between the Government of the Republic of the Philippines and WMC Philippines, Inc. SO ORDERED. Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur. Vitug, J., see Separate Opinion. Panganiban, J., see Separate Opinion. Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separate opinion. Azcuna, no part, one of the parties was a client.

which Tribunal after finding only questions of law are involved, certified the case to us. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-6339 April 20, 1954 The parties are agreed that the plaintiffs as chauffeurs received no fixed compensation based on the hours or the period of time that they worked. Rather, they were paid on the commission basis, that is to say, each driver received 20 per cent of the gross returns or earnings from the operation of his taxi cab. Plaintiffs claim that as a rule, each drive operated a taxi 12 hours a day with gross earnings ranging from P20 to P25, receiving therefrom the corresponding 20 per cent share ranging from P4 to P5, and that in some cases, especially during Saturdays, Sundays, and holidays when a driver worked 24 hours a day he grossed from P40 to P50, thereby receiving a share of from P8 to P10 for the period of twenty-four hours. The reason given by the trial court in dismissing the complaint is that the defendant being engaged in the taxi or transportation business which is a public utility, came under the exception provided by the Eight-Hour Labor Law (Commonwealth Act No. 444); and because plaintiffs did not work on a salary basis, that is to say, they had no fixed or regular salary or remuneration other than the 20 per cent of their gross earnings "their situation was therefore practically similar to piece workers and hence, outside the ambit of article 302 of the Code of Commerce." For purposes of reference we are reproducing the pertinent provisions of the Eight-Hour Labor Law, namely, sections 1 to 4. SECTION 1. The legal working day for any person employed by another shall not be more than eight hours daily. When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. SEC. 2. This Act shall apply to all persons employed in any industry or occupation, whether public or private, with the exception of farm laborers, laborers who prefer to be paid on piece work basis, domestic servants and persons in the personal service of

MANUEL LARA, ET AL., plaintiffs-appellants, vs. PETRONILO DEL ROSARIO, JR., defendant-appellee. Manansala and Manansala for appellants. Ramon L. Resurreccion for appellee. MONTEMAYOR, J.: In 1950 defendant Petronilo del Rosario, Jr., owner of twentyfive taxi cabs or cars, operated a taxi business under the name of "Waval Taxi." He employed among others three mechanics and 49 chauffeurs or drivers, the latter having worked for periods ranging from 2 to 37 months. On September 4, 1950, without giving said mechanics and chauffeurs 30 days advance notice, Del Rosario sold his 25 units or cabs to La Mallorca, a transportation company, as a result of which, according to the mechanics and chauffeurs above-mentioned they lost their jobs because the La Mallorca failed to continue them in their employment. They brought this action against Del Rosario to recover compensation for overtime work rendered beyond eight hours and on Sundays and legal holidays, and one month salary (mesada) provided for in article 302 of the Code of Commerce because the failure of their former employer to give them one month notice. Subsequently, the three mechanics unconditionally withdrew their claims. So only the 49 drivers remained as plaintiffs. The defendant filed a motion for dismissal of the complaint on the ground that it stated no cause of action and the trial court for the time being denied the motion saying that it will be considered when the case was heard on the merits. After trial the complaint was dismissed. Plaintiffs appealed from the order of dismissal to the Court of Appeals

another and members of the family of the employer working for him. SEC. 3. Work may be performed beyond eight hours a day in case of actual or impending emergencies, caused by serious accidents, fire flood, typhoon, earthquakes, epidemic, or other disaster or calamity in order to prevent loss of life and property or imminent danger to public safety; or in case of urgent work to be performed on the machines, equipment, or installations in order to avoid a serious loss which the employer would otherwise suffer, or some other just cause of a similar nature; but in all cases the laborers and the employees shall be entitled to receive compensation for the overtime work performed at the same rate as their regular wages or salary, plus at least twenty-five per centum additional. In case of national emergency the Government is empowered to establish rules and regulations for the operation of the plants and factories and to determine the wages to be paid the laborers. SEC. 4. No person, firm, or corporation, business establishment or place or center of work shall compel an employee or laborer to work during Sundays and legal holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: Provided however, That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication. Under section 4, as a public utility, the defendant could have his chauffeurs work on Sundays and legal holidays without paying them an additional sum of at least 25 per cent of their regular remuneration: but that with reference only to work performed on Sundays and holidays. If the work done on such days exceeds 8 hours a day, then the Eight-Hour Labor Law would operate, provided of course that plaintiffs came under section 2 of the said law. So that the question to be decided here is whether or not plaintiffs are entitled to extra compensation for work performed in excess of 8 hours a day, Sundays and holidays included.

It will be noticed that the last part of section 3 of Commonwealth Act 444 provides for extra compensation for over-time work "at the same rate as their regular wages or salary, plus at least twenty-five per centum additional'" and that section 2 of the same act excludes application thereof laborers who preferred to be on piece work basis. This connotes that a laborer or employee with no fixed salary, wages or remuneration but receiving as compensation from his employer uncertain and variable amount depending upon the work done or the result of said work (piece work) irrespective of the amount of time employed, is not covered by the Eight-Hour Labor Law and is not entitled to extra compensation should he work in excess of 8 hours a day. And this seems to be the condition of employment of the plaintiffs. A driver in the taxi business of the defendant, like the plaintiffs, in one day could operate his taxi cab eight hours, or less than eight hours or in excess of 8 hours, or even 24 hours on Saturdays, Sundays, and holidays, with no limit or restriction other than his desire, inclination and state of health and physical endurance. He could drive continuously or intermittently, systematically or haphazardly, fast or slow, etc. depending upon his exclusive wish or inclination. One day when he feels strong, active and enthusiastic he works long, continuously, with diligence and industry and makes considerable gross returns and receives as much as his 20 per cent commission. Another day when he feels despondent, run down, weak or lazy and wants to rest between trips and works for less number of hours, his gross returns are less and so is his commission. In other words, his compensation for the day depends upon the result of his work, which in turn depends on the amount of industry, intelligence and experience applied to it, rather than the period of time employed. In short, he has no fixed salary or wages. In this we agree with the learned trial court presided by Judge Felicisimo Ocampo which makes the following findings and observations of this point. . . . As already stated, their earnings were in the form of commission based on the gross receipts of the day. Their participation in most cases depended upon their own industry. So much so that the more hours they stayed on the road, the greater the gross returns and the higher their commissions. They have no fixed hours of labor. They can retire at pleasure, they not

being paid a fixed salary on the hourly, daily, weekly or monthly basis. It results that the working hours of the plaintiffs as taxi drivers were entirely characterized by its irregularity, as distinguished from the specific regular remuneration predicated on specific and regular hours of work of factories and commercial employees. In the case of the plaintiffs, it is the result of their labor, not the labor itself, which determines their commissions. They worked under no compulsion of turning a fixed income for each given day. . . .. In an opinion dated June 1, 1939 (Opinion No. 115) modified by Opinion No. 22, series 1940, dated June 11, 1940, the Secretary of Justice held that chauffeurs of the Manila Yellow Taxicab Co. who "observed in a loose way certain working hours daily," and "the time they report for work as well as the time they leave work was left to their discretion.," receiving no fixed salary but only 20 per cent of their gross earnings, may be considered as piece workers and therefore not covered by the provisions of the Eight-Hour Labor Law. The Wage Administration Service of the Department of Labor in its Interpretative Bulletin No. 2 dated May 28, 1953, under "Overtime Compensation," in section 3 thereof entitled Coverage, says: The provisions of this bulletin on overtime compensation shall apply to all persons employed in any industry or occupation, whether public or private, with the exception of farm laborers, non-agricultural laborers or employees who are paid on piece work, contract, pakiao, task or commission basis, domestic servants and persons in the personal service of another and members of the family of the employer working for him. From all this, to us it is clear that the claim of the plaintiffsappellants for overtime compensation under the Eight-Hour Labor Law has no valid support.

As to the month pay (mesada) under article 302 of the Code of Commerce, article 2270 of the new Civil Code (Republic Act 386) appears to have repealed said Article 302 when it repealed the provisions of the Code of Commerce governing Agency. This repeal took place on August 30, 1950, when the new Civil Code went into effect, that is, one year after its publication in the Official Gazette. The alleged termination of services of the plaintiffs by the defendant took place according to the complaint on September 4, 1950, that is to say, after the repeal of Article 302 which they invoke. Moreover, said Article 302 of the Code of Commerce, assuming that it were still in force speaks of "salary corresponding to said month." commonly known as "mesada." If the plaintiffs herein had no fixed salary either by the day, week or month, then computation of the month's salary payable would be impossible. Article 302 refers to employees receiving a fixed salary. Dr. Arturo M. Tolentino in his book entitled "Commentaries and Jurisprudence on the Commercial Laws of the Philippines," Vol. 1, 4th edition, p. 160, says that article 302 is not applicable to employees without fixed salary. We quote Employees not entitled to indemnity. This article refers only to those who are engaged under salary basis, and not to those who only receive compensation equivalent to whatever service they may render. (1 Malagarriga 314, citing decision of Argentina Court of Appeals on Commercial Matters.) In view of the foregoing, the order appealed from is hereby affirmed, with costs against appellants. Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Diokno, JJ., concur. Paras, C.J., concurs in the result.

FIRST DIVISION

[A.M. No. MTJ-02-1412. March 28, 2003]

On October 11, 1999, complainants filed an administrative case against the respondent Judge for gross ignorance of the law, grave abuse of judicial functions and authority and issuing patently illegal orders. [5] Complainants contended that under Article 360 of the Revised Penal Code, as amended by R.A. No. 4363, the respondent Judge neither has the authority to conduct a preliminary investigation nor to issue warrants for their arrest. In his Comment dated December 23, 1999, [6] the respondent Judge admitted his mistake and explained that the same was his first libel case and that he issued the challenged warrants in good faith. He said that he erroneously relied on a pamphlet of the Revises Penal Code quoting Article 360 which consisted only of four (4) paragraphs, without any word on the conduct of a preliminary investigation.[7] He also expressed that had his attention been earlier called by the parties, he could have easily rectified the mistake by recalling the warrants of arrest. He added that he had been sufficiently chastised in several issues of the Daily Informer which publicized his blunder. Respondent likewise stressed that except for this single honest mistake, he had never brought dishonor to his family and to the court. For his lapse, he promised to keep himself updated on laws, as well as on jurisprudence and circulars of the Supreme Court.[8] In its report, dated January 15, 2002, the Office of the Court Administrator (OCA) found the respondent guilty of gross ignorance of the law and recommended that the case be re-docketed as a regular administrative matter and that respondent Judge be fined in an amount equivalent to one (1) month salary with stern warning that repetition of the same act will be dealt with more severely.[9] Meanwhile, in a Resolution dated April 10, 2002, the First Division docketed the case as a regular administrative matter and required the respondent to file Comment. [10] In respondents Comment dated September 12, 2002, he repleaded his comment of December 23, 1999, and attached therein newspaper articles on the ruling of the RTC in the prohibition case which declared as void the preliminary investigation he conducted and the warrants of arrest he issued.[12]
[11]

BERNIE G. MIAQUE, NOEL R. CABOBOS, RODOLFO H. DIVINAGRACIA and PETER G. JIMENEA, complainants, vs. JUDGE NILO P. PAMONAG, in his capacity as Acting Judge of the Municipal Circuit Trial Court of Pototan-Mina, Branch 008, Iloilo Province, respondent. RESOLUTION YNARES-SANTIAGO, J.: Ignorance of the law, which everyone is bound to know, excuses no one certainly not judges. Ignorantia juris quod quisque scire tenetur non excusat. The provisions of Article 360 of the Revised Penal Code, as amended by R.A. No. 4363, on the persons authorized to conduct preliminary investigation in libel cases is so elementary, not to know it constitutes gross ignorance of the law.[1] On August 27, 1998, complainants, who are connected with the Daily Informer, a widely circulated newspaper in the Western Visayas, were charged before the Municipal Circuit Trial Court of Pototan-Mina, Iloilo, Branch 008, presided by respondent Judge Nilo P. Pamonag, with the crime of libel in Criminal Case No. C-4493, entitled Fraulen Cordero, et al., v. Bernie Miraque, et al.[2] Acting thereon, the respondent Judge conducted a preliminary investigation and thereafter issued on September 2, 1998 warrants for the arrest of the herein complainants, fixing the bail at P10,000.00 each. [3] Consequently, on September 8, 1998, the latter filed a petition for prohibition with prayer for the issuance of a temporary restraining order and/or preliminary injunction seeking to enjoin the respondent judge or any other officer from enforcing the assailed warrants of arrest. [4]

On November 11, 2002, the case was referred for evaluation, report and recommendation to the OCA.[13] On

January 27, 2003, a memorandum was issued by the OCA reiterating its recommendation that respondent Judge be ordered to pay a fine in an amount equivalent to one (1) month salary with stern warning that repetition of similar act will be dealt with more severely. We agree with the finding of the Office of the Court Administrator that the respondent Judge is guilty of gross ignorance of the law. Under Article 360 of the Revised Penal Code, as amended by Republic Act No. 4363, which took effect on June 19, 1965, [14] jurisdiction to conduct preliminary investigation in libel cases is indeed lodged with the provincial or city prosecutor of the province or city or with the municipal court of the city or capital of the province. Moreover, as early as April 5, 1967 the Department of Justice issued a circular relative to the provisions of Article 360 of the Revised Penal Code as amended by R.A. No. 4363. Pertinent portion thereof reads: It should be noted from these provisions that a complaint or information for libel may be filed only in the Court of First Instance. The preliminary investigation of the criminal case may, however, be conducted by the city court of the city or the municipal court of the capital of the province where the case is filed.[15] Thus, in Quizon v. Baltazar, Jr.,[16] Fajota v. Balonso, and in the recent case of Guyud v. Pine,[18] the Court found the respondent Judges therein who were neither judges of the municipal court of the city or capital of the province, guilty of gross ignorance of law for conducting a preliminary investigation in libel cases, contrary to the provisions of Article 360 of the Revised Penal Code, as amended by Republic Act No. 4363.
[17]

imperative that they should have basic knowledge of the law. To be able to render justice and to maintain public confidence in the legal system, judges must keep abreast of the laws and jurisprudence. Rule 1.01, Canon 1 of the Code of Judicial Conduct provides that judges must be the embodiment of competence, integrity and independence. Obviously, they cannot live up to this expectation if they act in a case without jurisdiction through ignorance. [19] While we believe that the reliance of the respondent on the provisions of Article 360 of the Revised Penal Code, prior to its amendment by Republic Act No. 4363, was an honest mistake, we cannot, however condone his failure to keep himself updated with the amendments and latest jurisprudence on the said statute. Judges are expected to exhibit more than just cursory acquaintance with statutes and procedural rules. They must know the laws and apply them properly in all good faith. Judicial competence requires no less.[20] In Osumo v. Serrano,[21] the respondent Judge was fined P5,000.00 for misapplying the fundamental rules on demurrer to evidence by setting the case for reception of evidence for the defense after denying the demurrer to evidence it filed without prior leave of court. In Vilea v. Mapaye,[22] the erring Judge was ordered to pay a fine of P5,000.00 for his apparent unawareness of or unfamiliarity with the application of the Indeterminate Sentence Law and the duration and graduation of penalties. Likewise, in Mutilan v. Adiong[23] the Court imposed a fine of P5,000.00 on the respondent Judge for granting a motion to declare the respondents therein in default, as well as the joint motion for garnishment without giving the opposing party the opportunity to be heard in violation of the provisions of Rule 15, Sections 4 and 6, of the Revised Rules of Court on notice of hearing. In the similar case Guyud v. Pine,[24] involving the provisions of Article 360 of the Revised Penal Code on the conduct of preliminary investigation in libel cases, the Court appreciated as attenuating circumstances the absence of bad faith on the part of the respondent Judge as well as his candor in admitting his blunder. In the said case, the Court imposed the penalty of fine in the amount of P5,000.00. Considering the good faith and candid admission by the respondent judge of his mistake, we find the recommended

In the case at bar, the Municipal Circuit Trial Court of Pototan-Mina, Iloilo, Branch 008, over which respondent Judge presided in an acting capacity, is not a court in the cities of Iloilo province (Iloilo City and Passi City), nor a court in Iloilo City, the capital of the province of Iloilo. He therefore had no authority to conduct a preliminary investigation and to issue the corresponding warrants of arrest in the said libel case. Although judges cannot be held to account or answer criminally, civilly or administratively for every erroneous judgment or decision rendered by him in good faith, it is

penalty of fine in an amount equivalent to one month salary too harsh and excessive. WHEREFORE, in view of all the foregoing, respondent Judge Nilo P. Pamonag is ordered to pay a FINE in the amount of Five Thousand Pesos (P5,000.00) and STERNLY WARNED that a repetition of the same or similar acts shall be dealt with more severely. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 18081 March 3, 1922

IN THE MATTER OF THE ESTATE OF CHEONG BOO, deceased. MORA ADONG, petitioner-appellant, vs. CHEONG SENG GEE, opponent-appellant. Kincaid, Perkins & Kincaid and P. J. Moore for petitionerappellant. Carlos A. Sobral for opponent-appellant. MALCOLM, J.: The two question presented for determination by these appeals may be framed as follows: Is a marriage contracted in China and proven mainly by an alleged matrimonial letter, valid in the Philippines? Are the marriage performed in the Philippines according to the rites of the Mohammedan religion valid? As the decision of the Supreme Court on the last point will affect marriages consummated by not less than one hundred and fifty thousand Moros who profess the Mohammedan faith, the transcendental importance of the cause can be realized. We proposed to give to the subject the serious consideration which it deserves. Cheong Boo, a native of China, died intestate in Zamboanga, Philippine Islands, on August 5, 1919. He left property worth nearly P100,000. The estate of the deceased was claimed, on the one hand, by Cheong Seng Gee, who alleged that he was a legitimate child by a marriage contracted by Cheong Boo with Tan Dit in China in 1895. The estate was claimed, on the other hand, by the Mora Adong who alleged that she had been lawfully married to Cheong Boo in 1896 in Basilan, Philippine Islands, and her daughters, Payang, married to Cheng Bian Chay, and Rosalia Cheong Boo, unmarried.

The conflicting claims to the estate of Cheong Boo were ventilated in the Court of First Instance of Zamboanga. The trial judge, the Honorable Quirico Abeto, after hearing the evidence presented by both sides, reached the conclusion, with reference to the allegations of Cheong Seng Gee, that the proof did not sufficiently establish the Chinese marriage, but that because Cheong Seng Gee had been admitted to the Philippine Islands as the son of the deceased, he should share in the estate as a natural child. With reference to the allegations of the Mora Adong and her daughters Payang and Rosalia, the trial judge reached the conclusion that the marriage between the Mora Adong and the deceased had been adequately proved but that under the laws of the Philippine Islands it could not be held to be a lawful marriage; accordingly, the daughters Payang and Rosalia would inherit as natural children. The order of the trial judge, following these conclusions, was that there should be a partition of the property of the deceased Cheong Boo between the natural children, Cheong Seng Gee, Payang, and Rosalia. From the judgment of the Judge of First Instance both parties perfected appeals. As to the facts, we can say that we agree in substance with the findings of the trial court. As to the legal issues submitted for decision by the numerous assignments of error, these can best be resolved under two heads, namely: (1) The validity of the Chinese marriage; and (2) the validity of the Mohammedan marriage. 1. Validity of the Chinese Marriage The theory advanced on behalf of the claimant Cheong Seng Gee was that Cheong Boo was married in the city of Amoy, China, during the second moon of the twenty-first year of the Emperor Quang Su, or, according to the modern count, on February 16, 1985, to a young lady named Tan Dit. Witnesses were presented who testified to having been present at the marriage ceremony. There was also introduced in evidence a document in Chinese which in translation reads as follows: One hundred years of life and health for both. Your nephew, Tan Chao, respecfully answers the venerable Chiong Ing, father of the bridegroom, accepting his offer of marriage, and let this

document serve as proof of the acceptance of said marriage which is to be celebrated during the merry season of the flowers. I take advantage of this occasion to wish for your and the spouses much happiness, a long life, and prolific issue, as noble and great as that which you brought forth. I consider the marriage of your son Boo with my sister Lit Chia as a mandate of God and I hope that they treat each other with great love and mutual courtesy and that both they and their parents be very happy. Given during the second moon of the twenty-first year of the reign of the Emperor Quang Su. Cheong Boo is said to have remained in China for one year and four months after his marriage during which time there was born to him and his wife a child named Cheong Seng Gee. Cheong Boo then left China for the Philippine Islands and sometime thereafter took to himself a concubine Mora by whom he had two children. In 1910, Cheong Boo was followed to the Philippines by Cheong Seng Gee who, as appears from documents presented in evidence, was permitted to land in the Philippine Islands as the son of Cheong Boo. The deceased, however, never returned to his native hearth and seems never to have corresponded with his Chinese wife or to have had any further relations with her except once when he sent her P10. The trial judge found, as we have said, that the proof did not sustain the allegation of the claimant Cheong Seng Gee, that Cheong Boo had married in China. His Honor noted a strong inclination on the part of the Chinese witnesses, especially the brother of Cheong Boo, to protect the interests of the alleged son, Cheong Seng Gee, by overstepping the limits of truthfulness. His Honor also noted that reliable witnesses stated that in the year 1895, when Cheong Boo was supposed

to have been in China, he was in reality in Jolo, in the Philippine Islands. We are not disposed to disturb this appreciation of fact by the trial court. The immigration documents only go to show the relation of parent and child existing between the deceased Cheong Boo and his son Cheong Seng Gee and do not establish the marriage between the deceased and the mother of Cheong Seng Gee. Section IV of the Marriage Law (General Order No. 68) provides that "All marriages contracted without these Islands, which would be valid by the laws of the country in which the same were contracted, are valid in these Islands." To establish a valid foreign marriage pursuant to this comity provision, it is first necessary to prove before the courts of the Islands the existence of the foreign law as a question of fact, and it is then necessary to prove the alleged foreign marriage by convincing evidence. As a case directly in point is the leading one of Sy Joc Lieng vs. Encarnacion ([1910]), 16 Phil., 137; [1913], 228 U.S., 335). Here, the courts of the Philippines and the Supreme Court of the United States were called upon to decide, as to the conflicting claims to the estate of a Chinese merchant, between the descendants of an alleged Chinese marriage and the descendants of an alleged Philippine marriage. The Supreme Courts of the Philippine Islands and the United States united in holding that the Chinese marriage was not adequately proved. The legal rule was stated by the United States Supreme Court to be this: A Philippine marriage, followed by forty years of uninterrupted marital life, should not be impugned and discredited, after the death of the husband and administration of his estate, though an alleged prior Chinese marriage, "save upon proof so clear, strong, and unequivocal as to produce a moral conviction of the existence of such impediment." Another case in the same category is that of Son Cui vs. Guepangco ([1912], 22 Phil., 216). In the case at bar there is no competent testimony as to what the laws of China in the Province of Amoy concerning marriage were in 1895. As in the Encarnacion case, there is lacking proof so clear, strong, and unequivocal as to produce a moral conviction of the existence of the alleged prior Chinese marriage. Substitute twenty-three years for forty years and the two cases are the same.

The lower court allowed the claimant, Cheong Seng Gee, the testamentary rights of an acknowledged natural child. This finding finds some support in Exhibit 3, the affidavit of Cheong Boo before the American Vice-Consul at Sandakan, British North Borneo. But we are not called upon to make a pronouncement on the question, because the oppositorappellant indicates silent acquiescence by assigning no error. 2. Validity of the Mohammedan Marriage The biographical data relating to the Philippine odyssey of the Chinaman Cheong Boo is fairly complete. He appears to have first landed on Philippine soil sometime prior to the year 1896. At least, in the year las mentioned, we find him in Basilan, Philippine Islands. There he was married to the Mora Adong according to the ceremonies prescribed by the book on marriage of the Koran, by the Mohammedan Iman (priest) Habubakar. That a marriage ceremony took place is established by one of the parties to the marriage, the Mora Adong, by the Iman who solemnized the marriage, and by other eyewitnesses, one of whom was the father of the bride, and another, the chief of the rancheria, now a municipal councilor. The groom complied with Quranic law by giving to the bride a dowry of P250 in money and P250 in goods. The religious rites began with the bride and groom seating themselves in the house of the father of the bride, Marahadja Sahibil. The Iman read from the Koran. Then the Iman asked the parents if they had any objection to the marriage. The marital act was consummated by the groom entering the woman's mosquito net. From the marriage day until the death of Cheong Boo, twenty-three years later, the Chinaman and the Mora Adong cohabited as husband and wife. To them were born five children, two of whom, Payang and Rosalia, are living. Both in his relations with Mora Adong and with third persons during his lifetime, Cheong Boo treated Adong as his lawful wife. He admitted this relationship in several private and public documents. Thus, when different legal documents were executed, including decrees of registration, Cheong Boo stated that he was married to the Mora Adong while as late as 1918, he gave written consent to the marriage of his minor daughter, Payang.

Notwithstanding the insinuation of counsel for the Chinese appellant that the custom is prevalent among the Moros to favor in their testimony, a relative or friend, especially when they do not swear on the Koran to tell the truth, it seems to us that proof could not be more convincing of the fact that a marriage was contracted by the Chinaman Cheong Boo and the Mora Adong, according to the ceremonies of the Mohammedan religion. It is next incumbent upon us to approach the principal question which we announced in the very beginning of this decision, namely, Are the marriages performed in the Philippines according to the rites of the Mohammedan religion valid? Three sections of the Marriage Law (General Order No. 68) must be taken into consideration. Section V of the Marriage Law provides that "Marriage may be solemnized by either a judge of any court inferior to the Supreme Court, justice of the peace, or priest or minister of the Gospel of any denomination . . ." Counsel, failing to take account of the word "priest," and only considering the phrase "minister of the Gospel of any denomination" would limit the meaning of this clause to ministers of the Christian religion. We believe this is a strained interpretation. "Priest," according to the lexicographers, means one especially consecrated to the service of a divinity and considered as the medium through whom worship, prayer, sacrifice, or other service is to be offered to the being worshipped, and pardon, blessing, deliverance, etc., obtained by the worshipper, as a priest of Baal or of Jehovah; a Buddhist priest. "Minister of the Gospel" means all clergymen of every denomination and faith. A "denomination" is a religious sect having a particular name. (Haggin vs. Haggin [1892], 35 Neb., 375; In reReinhart, 9 O. Dec., 441; Hale vs. Everett [1868], 53 N. H. 9.) A Mohammedan Iman is a "priest or minister of the Gospel," and Mohammedanism is a "denomination," within the meaning of the Marriage Law. The following section of the Marriage Law, No. VI, provides that "No particular form for the ceremony of marriage is required, but the parties must declare, in the presence of the person solemnizing the marriage, that they take each other as husband and wife." The law is quite correct in affirming that no precise ceremonial is indispensable requisite for the creation of the marriage contract. The two essentials of a

valid marriage are capacity and consent. The latter element may be inferred from the ceremony performed, the acts of the parties, and habit or repute. In this instance, there is no question of capacity. Nor do we think there can exist any doubt as to consent. While it is true that during the Mohammedan ceremony, the remarks of the priest were addressed more to the elders than to the participants, it is likewise true that the Chinaman and the Mora woman did in fact take each other to be husband and wife and did thereafter live together as husband and wife. (Travers vs. Reinhardt [1907], 205 U.S., 423. It would be possible to leave out of view altogether the two sections of the Marriage Law which have just been quoted and discussed. The particular portion of the law which, in our opinion, is controlling, is section IX, reading as follows: " No marriage heretofore solemnized before any person professing to have authority therefor shall be invalid for want of such authority or on account of any informality, irregularity, or omission, if it was celebrated with the belief of the parties, or either of them, that he had authority and that they have been lawfully married." The trial judge in construing this provision of law said that he did not believe that the legislative intention in promulgating it was to validate marriages celebrated between Mohammedans. To quote the judge: This provisions relates to marriages contracted by virtue of the provisions of the Spanish law before revolutionary authorized to solemnized marriages, and it is not to be presumed that the legislator intended by this law to validate void marriages celebrated during the Spanish sovereignty contrary to the laws which then governed. What authority there is for this statement, we cannot conceive. To our mind, nothing could be clearer than the language used in section IX. Note for a moment the all embracing words found in this section: "No marriage" Could more inclusive words be found? "Heretofore solemnized" Could any other construction than that of retrospective force be given to this phrase? "Before

any person professing to have authority therefor shall be invalid for want of such authority" Could stronger language than this be invoked to announce legislative intention? "Or on account of any informality, irregularity, or omission" Could the legislative mind frame an idea which would more effectively guard the marriage relation against technicality? "If it was celebrated with the belief of the parties, or either of them, that he had authority and that they have been lawfully married" What was the purpose of the legislator here, if it was not to legalize the marriage, if it was celebrated by any person who thought that he had authority to perform the same, and if either of the parties thought that they had been married? Is there any word or hint of any word which would restrict the curative provisions of section IX of the Marriage Law to Christian marriages? By what system of mental gymnastics would it be possible to evolve from such precise language the curious idea that it was restricted to marriages performed under the Spanish law before the revolutionary authorities? In view of the importance of the question, we do not desire to stop here but would ascertain from other sources the meaning and scope of Section IX of General Order No. 68. The purpose of the government toward the Mohammedan population of the Philippines has, time and again, been announced by treaty, organic law, statutory law, and executive proclamation. The Treaty of Paris in its article X, provided that "The inhabitants of the territories over which Spain relinquishes or cedes her sovereignty shall be secured Instructions to the Philippine Commission imposed on every branch of the Government of the Philippine Islands the inviolable rule "that no law shall be made respecting an establishment of religion or prohibiting the free exercise thereof, and that the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed ... That no form of religion and no minister of religion shall be forced upon any community or upon any citizen of the Islands; that, upon the other hand, no minister of religion shall be interfered with or molested in following his calling, and that the separation between state and church shall be real, entire, and absolute." The notable state paper of President McKinley also enjoined the Commission, "to bear in mind that the Government which they are establishing is designed . . . for the happiness,

peace, and prosperity of the people of the Philippine Islands" and that, therefore, "the measures adopted should be made to conform to their customs, their habits, and even their prejudices. . . . The Philippine Bill and the Jones Law reproduced the main constitutional provisions establishing religious toleration and equality. Executive and legislative policy both under Spain and the United States followed in the same path. For instance, in the Treaty of April 30, 1851, entered into by the Captain General of the Philippines and the Sultan of Sulu, the Spanish Government guaranteed "with all solemnity to the Sultan and other inhabitants of Sulu the free exercise of their religion, with which it will not interfere in the slightest way, and it will also respect their customs." (See furtherDecree of the Governor-General of January 14, 1881.) For instance, Act No. 2520 of the Philippine Commission, section 3, provided that "Judges of the Court of First Instance and justices of the peace deciding civil cases in which the parties are Mohammedans or pagans, when such action is deemed wise, may modify the application of the law of the Philippine Islands, except laws of the United States applicable to the Philippine Islands, taking into account local laws and customs. . . ." (See further Act No. 787, sec. 13 [ j]; Act No. 1283, sec. 6 [b]; Act No. 114 of the Legislative Council amended and approved by the Philippine Commission; Cacho vs. Government of the United States [1914], 28 Phil., 616.) Various responsible officials have so oft announced the purpose of the Government not to interfere with the customs of the Moros, especially their religious customs, as to make quotation of the same superfluous. The retrospective provisions of the Philippine Marriage Law undoubtedly were inspired by the governmental policy in the United States, with regard to the marriages of the Indians, the Quakers, and the Mormons. The rule as to Indians marriages is, that a marriage between two Indians entered into according to the customs and laws of the people at a place where such customs and laws are in force, must be recognized as a valid marriage. The rule as to the Society of Quakers is, that they will be left to their own customs and that their marriages will be recognized although they use no solemnization. The rule as to Mormon marriages is that the sealing ceremony entered into before a proper official by

members of that Church competent to contract marriage constitutes a valid marriage. The basis of human society throughout the civilized world is that of marriage. Marriage in this jurisdiction is not only a civil contract, but, it is a new relation, an institution in the maintenance of which the public is deeply interested. Consequently, every intendment of the law leans toward legalizing matrimony. Persons dwelling together in apparent matrimony are presumed, in the absence of any counterpresumption or evidence special to the case, to be in fact married. The reason is that such is the common order of society, and if the parties were not what they thus hold themselves out as being, they would be living in the constant violation of decency and of law. A presumption established by our Code of Civil Procedure is "that a man and woman deporting themselves as husband and wife have entered into a lawful contract of marriage.:" (Sec. 334, No. 28.) Semper praesumitur pro matrimonio Always presume marriage. (U. S. vs. Villafuerte and Rabano [1905], 4 Phil., 476; Son Cui vs.Guepangco, supra; U.S. vs. Memoracion and Uri [1916], 34 Phil., 633; Teter vs. Teter [1884], 101 Ind., 129.) Section IX of the Marriage Law is in the nature of a curative provision intended to safeguard society by legalizing prior marriages. We can see no substantial reason for denying to the legislative power the right to remove impediments to an effectual marriage. If the legislative power can declare what shall be valid marriages, it can render valid, marriages which, when they took place, were against the law. Public policy should aid acts intended to validate marriages and should retard acts intended to invalidate marriages. (Coghsen vs. Stonington [1822], 4 Conn, 209; Baity vs. Cranfill [1884], 91 N. C., 273.) The courts can properly incline the scales of their decisions in favors of that solution which will mot effectively promote the public policy. That is the true construction which will best carry legislative intention into effect. And here the consequences, entailed in holding that the marriage of the Mora Adong and the deceased Cheong Boo, in conformity with the Mohammedan religion and Moro customs, was void, would be far reaching in disastrous result. The last census shows that there are at least one hundred fifty thousand Moros who have been married according to local custom. We

then have it within our power either to nullify or to validate all of these marriages; either to make all of the children born of these unions bastards or to make them legitimate; either to proclaim immorality or to sanction morality; either to block or to advance settled governmental policy. Our duty is a obvious as the law is plain. In moving toward our conclusion, we have not lost sight of the decisions of this court in the cases of United Statesvs. Tubban ([1915]), 29 Phil., 434) and United States vs. Verzola ([1916, 33 Phil., 285). We do not, however, believe these decisions to be controlling. In the first place, these were criminal actions and two Justice dissented.. In the second place, in the Tubban case, the marriage in question was a tribal marriage of the Kalingas, while in the Verzola case, the marriage had been performed during the Spanish regime by a lieutenant of the Guardia Civil. In neither case, in deciding as to whether or not the accused should be given the benefit of the so-called unwritten law, was any consideration given to the provisions of section IX of General Order No. 68. We are free to admit that, if necessary, we would unhesitatingly revoke the doctrine announced in the two cases above mentioned. We regard the evidence as producing a moral conviction of the existence of the Mohammedan marriage. We regard the provisions of section IX of the Marriage law as validating marriages performed according to the rites of the Mohammedan religion. There are other questions presented in the various assignments of error which it is unnecessary to decide. Inresume, we find the Chinese marriage not to be proved and that the Chinaman Cheong Seng Gee has only the rights of a natural child, and we find the Mohammedan marriage to be proved and to be valid, thus giving to the widow and the legitimate children of this union the rights accruing to them under the law. Judgment is reversed in part, and the case shall be returned to the lower court for a partition of the property in accordance with this decision, and for further proceedings in accordance with law. Without special findings as to costs in this instance, it is so ordered.

Araullo, C.J., Johnson, Street, Avancea, Villamor, Ostrand, Johns and Romualdez, JJ., concur.

June 1994. Thus, R.A. No. 7716 is deemed effective on 27 May 1994. Since Section 116 of the NIRC of 1977, which breathed life on the questioned administrative issuances, had already been repealed, RMO 15-91 and RMC 43-91, which depended upon it, are deemed automatically repealed. Hence, even granting that pawnshops are included within the term lending investors, the assessment from 27 May 1994 onward would have no leg to stand on. Adding to the invalidity of the RMC No. 43-91 and RMO No. 15-91 is the absence of publication. While the rule-making authority of the CIR is not doubted, like any other government agency, the CIR may not disregard legal requirements or applicable principles in the exercise of quasilegislative powers. Let us first distinguish between two kinds of administrative issuances: the legislative rule and the interpretative rule. A legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. An interpretative rule, on the other hand, is designed to provide guidelines to the law which the administrative agency is in charge of enforcing. 13 In Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance Secretary,14 this Tribunal ruled: In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this connection, the Administrative Code of 1987 provides: Public Participation. - If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule. (2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been

published in a newspaper of general circulation at least two weeks before the first hearing thereon. (3) In case of opposition, the rules on contested cases shall be observed. In addition, such rule must be published. When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance, for it gives no real consequence more than what the law itself has already prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law.15 RMO No. 15-91 and RMC No. 43-91 cannot be viewed simply as implementing rules or corrective measures revoking in the process the previous rulings of past Commissioners. Specifically, they would have been amendatory provisions applicable to pawnshops. Without these disputed CIR issuances, pawnshops would not be liable to pay the 5% percentage tax, considering that they were not specifically included in Section 116 of the NIRC of 1977, as amended. In so doing, the CIR did not simply interpret the law. The due observance of the requirements of notice, hearing, and publication should not have been ignored. There is no need for us to discuss the ruling in CA-G.R. SP No. 59282 entitled Commissioner of Internal Revenue v. Agencia Exquisite of Bohol Inc., which upheld the validity of RMO No. 15-91 and RMC No. 43-91. Suffice it to say that the judgment in that case cannot be binding upon the Supreme Court because it is only a decision of the Court of Appeals. The Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is; it is the final arbiter of any justifiable controversy. There is only one Supreme Court from whose decisions all other courts should take their bearings.16

In view of the foregoing, RMO No. 15-91 and RMC No. 43-91 are hereby declared null and void. Consequently, Lhuillier is not liable to pay the 5% lending investors tax. WHEREFORE, the petition is hereby DISMISSED for lack of merit. The decision of the Court of Appeals of 20 November 2001 in CA-G.R. SP No. 62463 is AFFIRMED. SO ORDERED. Vitug, Ynarez-Santiago, Carpio, and Azcuna, JJ., concur. Republic of the Philippines SUPREME COURT Baguio City THIRD DIVISION G.R. No. 144074 March 20, 2001

MEDINA INVESTIGATION & SECURITY CORPORATION and ERNESTO Z. MEDINA, petitioners, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and ROMEO TABURNAL, respondents. RESOLUTION GONZAGA-REYES, J.: Before this Court is a Petition for Review seeking to set aside the Resolution dated June 2, 2000 dismissing the petition for being filed beyond the 60-day reglementary period and the Resolution dated July 12, 2000 denying the motion for reconsideration, both issued by the Court of Appeals in CAG.R. SP No. 58968. Respondent Romeo Taburnal was hired by petitioner corporation as security guard on September 8, 1996 and was assigned to one of its clients, Abenson, Inc. at Sta. Lucia Grand Mall. On September 5, 1997, the client requested that respondent Taburnal be relieved due to violations pursuant to the Service Contract such as reporting late for duty, below

standard performance of duties, and exceeding the maximum six (6) months duty in the company. In view of his replacement, respondent Taburnal filed a complaint for Illegal Dismissal claiming for separation pay, non-payment of legal/special holiday and overtime pay, underpayment of 13th month pay and cash bond and tax refund. On April 29, 1999, the Labor Arbiter rendered judgment ordering the reinstatement of respondent Taburnal without loss of seniority rights and the payment of full backwages and salary differentials. Petitioners appealed to the NLRC which dismissed the same for lack of jurisdiction. The Motion for Reconsideration thereto was denied. Herein petitioners filed a petition for certiorari with the Court of Appeals which dismissed the petition outright for having been filed beyond the 60-day reglementary period or on the 67th day per its Resolution on June 2, 2000. The Court of Appeals ruled that the petition was filed on the sixty-seventh (67th) day since petitioners received on November 10, 1999 the Order dated August 26, 1999 of the NLRC and the Motion for Reconsideration thereto was filed of November 19, 1999. Copy of the order denying the said motion was received by petitioners on April 3, 2000, while the petition was filed with the Court of Appeals on May 31, 2000. The Court of Appeals did not discuss the merits of the petition. Hence, the petition raising the following grounds: "THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE PETITION FOR CERTIORARI WAS FILED BEYOND THE REGLEMENTARY PERIOD.1wphi1.nt "PUBLIC APPELLEES COMMITTED A REVERSIBLE ERROR WHEN THEY DISMISSED THE PETITION, THEREBY AFFIRMING THE DECISION OF LABOR ARBITER FELIPE P. PATI WHICH AWARDED MONETARY CLAIMS AND OTHER RELIEF NOT PRAYED FOR IN THE COMPLAINT, IN GRAVE ABUSE OF THEIR DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION. "PUBLIC APPELLEES GROSSLY ERRED AND GRAVELY ABUSED THEIR DISCRETION, WHEN THEY HELD APPELLANT ERNESTO Z. MEDINA JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MISCOR, INSPITE OF THE FACT THAT THERE IS NO EVIDENCE TO THAT EFFECT."

Petitioners' main contention is that their petition for certiorari filed with the Court of Appeals was within the 60-day reglementary period pursuant to Rule 65. They insist that when the assailed Order was received on April 3, 2000, the petition filed on May 31, 2000 was the 58th day, citing Section 1, Rule 22 of the 1997 Rules on Civil Procedure and Article 13 of the Civil Code. In his Comment, private respondent Romeo Taburnal alleges that he is aware that Section 4, Rule 65 of the 1997 Rules on Civil Procedure was later amended, which amendment took effect on September 1, 2000. He insists however that the petition filed with the Court of Appeals was not yet covered by said amendment. Private respondent further avers that Article 223 of the Labor Code and the NLRC Rules of Procedure provide that appeal is the proper remedy for a party aggrieved by a decision of the Labor Arbiter and the filing of a petition forcertiorari with the NLRC by petitioners is definitely a wrong remedy. A.M. No. 00-2-03-SC amending Section 4, Rule 65 of the 1997 Rules of Civil Procedure (as amended by the Resolution of July 21, 1998) took effect on September 1, 2000 and provides, to wit: "SEC. 4. When and where petition filed. --- The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion. The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding fifteen (15) days." Contrary to the position of respondents that such amendment should not apply in this case, we have ruled in the cases of Systems Factors Corporation and Modesto Dean vs. NLRC, et al., G.R. No. 143789 (promulgated on November 27, 2000) and Unity Fishing Development Corp. and/or Antonio Dee vs. CA, et al., G.R. No. 145415 (promulgated on February 2, 2001) that the amendment under A.M. No. 00-2-03-SC wherein the sixty-day period to file a petition for certiorari is reckoned from receipt of the resolution denying the motion for reconsideration should be deemed applicable. We reiterate that remedial statutes or statutes relating to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing, do not come within the legal conception of a retroactive law, or the general rule against retroactive operation of statutes.1 Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent. The retroactive application of procedural laws is not violative of any right of a person who may feel that he is adversely affected.2 The reason is that as a general rule, no vested right may attach to nor arise from procedural laws.3 The above conclusion is consonant with the provision in Section 6, Rule 1 of the 1997 Rules of Civil Procedure that "(T)hese Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding." The other issues raised by petitioners should be addressed and resolved by the court below. WHEREFORE, the Resolutions dated June 2, 2000 and July 12, 2000 are hereby SET ASIDE and the case isREMANDED to the Court of Appeals for further proceedings.1wphi1.nt SO ORDERED.

Melo, Vitug, Panganiban, Sandoval-Gutierrez, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 125297 June 6, 2003

Company (FEBTC). However, said checks were dishonored by EBC for the reason "Account Closed." Dishonor slips were issued for each check that was returned to Novales.4 On October 5, 1992, Novales filed ten separate Informations, docketed as Criminal Cases Nos. 92-26243 to 92-36252 before the RTC of Quezon City charging petitioner with violation of Batas Pambansa Bilang 22, otherwise known as the Bouncing Checks Law.5 Except for the dates and the check numbers, the Informations uniformly allege: That on or about the in Quezon City, Philippines, the said accused did then and there willfully, unlawfully and feloniously make or draw and issue to JOAQUIN P. LOVALES III to apply on account or for value Equitable Banking Corp. Grace Park Caloocan Branch Check No. dated payable to SOLID GOLD INTERNATIONAL TRADERS, INC. in the amount of P50,000.00, Philippine Currency, said accused well knowing that at the time of issue she/he/they did not have sufficient funds in or credit with the drawee bank for payment of such check in full upon its presentment, which check when presented for payment was subsequently dishonored by the drawee bank for insufficiency of funds/Account Closed and despite receipt of notice of such dishonor, said accused failed to pay said SOLID GOLD INTERNATIONAL TRADERS, INC. the amount of said check or to make arrangement for full payment of the same within five (5) banking days after receiving said notice. CONTRARY TO LAW.6 The cases were consolidated and subsequently raffled to Branch 99 of the said RTC. Upon arraignment, accused pleaded not guilty.7 Trial then ensued. On December 22, 1993, the RTC rendered its decision, the dispositive portion of which reads: WHEREFORE, this Court finds the accused GUILTY of ten counts of violation of BP 22 and hereby sentences her to a penalty of one year imprisonment for each count, or a total of ten years, to be served in

ELVIRA YU OH, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents. AUSTRIA-MARTINEZ, J.: Before this Court is a petition for review on certiorari of the decision1 of the Court of Appeals in CA-G.R. No. CR No. 16390, promulgated on January 30, 1996, affirming the conviction of petitioner Elvira Yu Oh by the Regional Trial Court (RTC), Branch 99, Quezon City and the resolution dated May 30, 1996 which denied her motion for reconsideration. The facts as borne by the records are as follows: Petitioner purchased pieces of jewelry from Solid Gold International Traders, Inc., a company engaged in jewelry trading. Due to her failure to pay the purchase price, Solid Gold filed civil cases2 against her for specific performance before the Regional Trial Court of Pasig. On September 17, 1990, petitioner and Solid Gold, through its general manager Joaquin Novales III, entered into a compromise agreement to settle said civil cases.3 The compromise agreement, as approved by the trial court, provided that petitioner shall issue a total of ninety-nine post-dated checks in the amount of P50,000.00 each, dated every 15th and 30th of the month starting October 1, 1990 and the balance of over P1 million to be paid in lump sum on November 16, 1994 which is also the due date of the 99th and last postdated check. Petitioner issued ten checks at P50,000.00 each, for a total of P500,000.00, drawn against her account at the Equitable Banking Corporation (EBC), Grace Park, Caloocan City Branch. Novales then deposited each of the ten checks on their respective due dates with the Far East Bank and Trust

accordance with the limitation prescribed in par. 4, Article 70 of the Revised Penal Code and to indemnify complainant the amount of the checks in their totality, or in the amount of P500,000.00. SO ORDERED.8 Petitioner appealed to the Court of Appeals alleging that: the RTC has no jurisdiction over the offense charged in the ten informations; it overlooked the fact that no notice of dishonor had been given to the appellant as drawer of the dishonored checks; it failed to consider that the reason of "closed account" for the dishonor of the ten checks in these cases is not the statutory cause to warrant prosecution, much more a conviction, under B.P. Blg. 22; it failed to consider that there is only one act which caused the offense, if any, and not ten separate cases; and it disregarded the definition of what a 'check' is under Sec. 185 of the Negotiable Instruments Law. 9 Finding the appeal to be without merit, the Court of Appeals affirmed the decision of the trial court with costs against appellant. Hence, herein petition raising the following errors: I THAT THE COURT OF APPEALS ERRED IN NOT RESOLVING THE JURISDICTIONAL ISSUE IN FAVOR OF THE ACCUSED-APPELLANT BY UNJUSTLY DEPRIVING HER OF THE LEGAL BENEFITS OF GIVING RETROACTIVE EFFECT TO THE PROVISIONS OF R.A. NO. 7691 EXPANDING THE JURISDICTION OF THE INFERIOR COURTS TO COVER THE OFFENSES INVOLVED IN THESE CASES PURSUANT TO ART. 22 OF THE REVISED PENAL CODE, THUS IN EFFECT RENDERING THE JUDGMENT OF CONVICTION PROMULGATED BY THE TRIAL COURT BELOW AND AFFIRMED BY THE COURT OF APPEALS PATENTLY NULL AND VOID FOR HAVING BEEN RENDERED WITHOUT OR IN EXCESS OF JURISDICTION. II

THAT THE COURT OF APPEALS ERRED IN NOT RESOLVING IN FAVOR OF ACCUSED-APPELLANT THE FACT THAT NO NOTICE OF DISHONOR HAD BEEN GIVEN HER AS DRAWER OF THE DISHONORED "CHECKS" PURSUANT TO THE REQUIREMENT EXPRESSLY PROVIDED UNDER BATAS PAMBANSA BILANG 22. III THAT THE COURT OF APPEALS ERRED IN CONSTRUING THE PROVISIONS OF BATAS PAMBANSA BILANG 22 CONTRARY TO THE WELL-ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT "PENAL STATUTES, SUBSTANTIVE AND REMEDIAL OR PROCEDURAL, ARE, BY THE CONSECRATED RULE, CONSTRUED STRICTLY AGAINST THE STATE, OR LIBERALLY IN FAVOR OF THE ACCUSED" AND THAT "IT IS ALWAYS THE DUTY OF THE COURT TO RESOLVE THE CIRCUMSTANCES OF EVIDENCE UPON A THEORY OF INNOCENCE RATHER THAN UPON A THEORY OF GUILT WHERE IT IS POSSIBLE TO DO SO", AND IN SO DOING THE DECISION APPEALED FROM INDULGED ITSELF IN "JUDICIAL LEGISLATION" TO FAVOR THE PROSECUTION AND TO WORK GRAVE INJUSTICE TO THE ACCUSED. Simply worded, the issues of this case may be stated as follows: (1) whether or not the appellate court erred in not granting retroactive effect to Republic Act No. 769110 in view of Art. 22 of the Revised Penal Code (RPC); (2) whether or not notice of dishonor is dispensable in this case; and (3) whether or not the appellate court erred in construing B.P. Blg. 22. We will resolve the first and third issues before considering the second issue. First issue Whether or not the Court of Appeals erred in not giving retroactive effect to R.A. 7690 in view of Article 22 of the RPC. Petitioner argues that: the failure of the appellate court to give retroactive application to R.A. 7691 is a violation of Art. 22 of the Revised Penal Code which provides that penal laws shall have retroactive effect insofar as they favor the person

guilty of the felony; R.A. 7691 is a penal law in the sense that it affects the jurisdiction of the court to take cognizance of criminal cases; taken separately, the offense covered by each of the ten Informations in this case falls within the exclusive original jurisdiction of the Municipal Trial Court under Sec. 2 of R.A. 7691; and the Court of Appeals is guilty of judicial legislation in stating that after the arraignment of petitioner, said cases could no longer be transferred to the MTC without violating the rules on double jeopardy, because that is not so provided in R.A. 7691.11 The Solicitor General, in its Comment, counters that the arguments of petitioner are baseless contending that: penal laws are those which define crimes and provides for their punishment; laws defining the jurisdiction of courts are substantive in nature and not procedural for they do not refer to the manner of trying cases but to the authority of the courts to hear and decide certain and definite cases in the various instances of which they are susceptible; R.A. No. 7691 is a substantive law and not a penal law as nowhere in its provisions does it define a crime neither does it provide a penalty of any kind; the purpose of enacting R.A. No. 7691 is laid down in the opening sentence thereof as "An Act Expanding the Jurisdiction of the Municipal Trial Courts, Municipal Circuit Trial Courts and the Metropolitan Trial Court" whereby it reapportions the jurisdiction of said courts to cover certain civil and criminal case, erstwhile tried exclusively by the Regional Trial Courts; consequently, Art. 22 of the RPC finds no application to the case at bar; jurisdiction is determined by the law in force at the time of the filing of the complaint, and once acquired, jurisdiction is not affected by subsequent legislative enactments placing jurisdiction in another tribunal; in this case, the RTC was vested with jurisdiction to try petitioner's cases when the same were filed in October 1992; at that time, R.A. No. 7691 was not yet effective;12 in so far as the retroactive effect of R.A. No. 7691 is concerned, that same is limited only to pending civil cases that have not reached pre-trial stage as provided for in Section 7 thereof and as clarified by this Court in People vs. Yolanda Velasco13, where it was held: "[a] perusal of R.A. No. 7691 will show that its retroactive provisions apply only to civil cases that have not yet reached the pre-trial stage. Neither from an express proviso nor by implication can it be understood as having retroactive application to criminal cases pending or decided by the RTC prior to its effectivity." 14

On this point, the Court fully agrees with the Solicitor General and holds that Article 22 of the Revised Penal Code finds no application to the case at bar. Said provision reads: ART. 22. Retroactive effect of penal laws. Penal laws shall have a retroactive effect insofar as they favor the person guilty of a felony, who is not a habitual criminal, as this term is defined in Rule 5 of Article 62 of this Code, although at the time of the publication of such laws a final sentence has been pronounced and the convict is serving sentence. A penal law, as defined by this Court, is an act of the legislature that prohibits certain acts and establishes penalties for its violations. It also defines crime, treats of its nature and provides for its punishment.15 R.A. No. 7691 does not prohibit certain acts or provides penalties for its violation; neither does it treat of the nature of crimes and its punishment. Consequently, R.A. No. 7691 is not a penal law, and therefore, Art. 22 of the RPC does not apply in the present case. B. P. Blg. 22, which took effect on April 24, 1979, provides the penalty of imprisonment of not less than thirty days but not more than one year or by a fine of not less than but not more then double the amount of the check which fine shall in no case exceed P200,000.00, or both such fine and imprisonment at the discretion of the court. R.A. No. 7691 which took effect on June 15, 1994, amended B.P. Blg. 129, and vested on the Metropolitan, Municipal and Municipal Circuit Trial Courts jurisdiction to try cases punishable by imprisonment of not more than six (6) years.16 Since R.A. No. 7691 vests jurisdiction on courts, it is apparent that said law is substantive.17 In the case of Cang vs. Court of Appeals,18 this Court held that "jurisdiction being a matter of substantive law, the established rule is that the statute in force at the time of the commencement of the action determines the jurisdiction of the court."19 R.A. No. 7691 was not yet in force at the time of the commencement of the cases in the trial court. It took

effect only during the pendency of the appeal before the Court of Appeals.20 There is therefore no merit in the claim of petitioner that R.A. No. 7691 should be retroactively applied to this case and the same be remanded to the MTC. The Court has held that a "law vesting additional jurisdiction in the court cannot be given retroactive effect."21 Third issue Whether or not the Court of Appeals erroneously construed B.P. Blg. 22. Petitioner insists that: penal statutes must be strictly construed and where there is any reasonable doubt, it must always be resolved in favor of the accused;22 the Court of Appeals, in construing that B.P. Blg. 22 embraces cases of "no funds" or "closed accounts" when the express language of B.P. Blg. 22 penalizes only the issuance of checks that are subsequently dishonored by the drawee bank for "insufficiency" of funds or credit, has enlarged by implication the meaning of the statute which amounts to judicial legislation;23 a postdated check, not being drawn payable on demand, is technically not a special kind of a bill of exchange, called check, but an ordinary bill of exchange payable at a fixed date, which is the date indicated on the face of the postdated check, hence, the instrument is still valid and the obligation covered thereby, but only civilly and not criminally;24 the trial court also erroneously cited a portion in the case of Lozano vs. Martinez25 that the "language of B.P. Blg. 22 is broad enough to cover all kinds of checks, whether present dated or postdated, or whether issued in payment of pre-existing obligations or given in mutual or simultaneous exchange for something of value," since the same is mereobiter dictum;26 in the interpretation of the meaning of a "check", where the law is clear and unambiguous, the law must be taken as it is, devoid of judicial addition or subtraction.27 The Solicitor General counters that a postdated check is still a check and its being a postdated instrument does not necessarily make it a bill of exchange "payable at a fixed or determinable future time" since it is still paid on demand on the date indicated therein or thereafter just like an ordinary check.28 It also points out that the doctrine laid down in Lozano vs. Martinez was reiterated in People vs. Nitafan,29 hence, it can no longer be argued that the

statement in the case of Lozano regarding the scope of "checks" is mere obiter dictum. Again, we agree with the Solicitor General and find petitioner's claim to be without merit. The rationale behind B.P. Blg. 22 was initially explained by the Court in the landmark case of Lozano vs. Martinez30 where we held that: The gravamen of the offense punished by B.P. Blg. 22 is the act of making and issuing a worthless check or a check that is dishonored upon its presentation for payment The thrust of the law is to prohibit, under pain of penal sanctions, the making or worthless checks and putting them in circulation. Because of its deleterious effects on the public interest, the practice is proscribed by law. The law punished the act not as an offense against property, but an offense against public order.31 ... The effects of the issuance of a worthless check transcend the private interests of the parties directly involved in the transaction and touches the interests of the community at large. The mischief it creates is not only a wrong to the payee or holder but also an injury to the public. The harmful practice of putting valueless commercial papers in circulation, multiplied a thousandfold, can very well pollute the channels of trade and commerce, injure the banking system and eventually hurt the welfare of society and the public interest.32 The same is reiterated in Cueme vs. People33 where we pronounced that: . . . B.P. Blg. 22 was purposely enacted to prevent the proliferation of worthless checks in the mainstream of daily business and to avert not only the undermining of the banking system of the country but also the infliction of damage and injury upon trade and commerce occasioned by the indiscriminate issuances

of such checks. By its very nature, the offenses defined under B.P. Blg. 22 are against public interest. 34 In Recuerdo vs. People, this Court also held that the terms and conditions surrounding the issuance of the checks are irrelevant since its primordial intention is to ensure the stability and commercial value of checks as being virtual substitutes for currency.35 Petitioner's claim that cases of "closed accounts" are not included in the coverage of B.P. Blg. 22 has no merit considering the clear intent of the law, which is to discourage the issuance of worthless checks due to its harmful effect to the public. This Court, in Lozano vs. Martinez, was explicit in ruling that the language of B.P. Blg. 22 is broad enough to cover all kinds of checks, whether present dated or postdated, or whether issued in payment of pre-existing obligations or given in mutual or simultaneous exchange for something of value.36 In People vs. Nitafan,37 the Supreme Court reiterated this point and held that: B.P. Blg. 22 does not distinguish but merely provides that "[any person who makes or draws and issues any check knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank which check is subsequently dishonored shall be punished by imprisonment Ubi lex non distinguit nec nos distinguere debemus. But even if We retrace the enactment of the "Bouncing Check Law" to determine the parameters of the concept of "check", we can easily glean that the members of the then Batasang Pambansa intended it to be comprehensive as to include all checks drawn against banks.38 In this light, it is easy to see that the claim of petitioner that B.P. Blg. 22 does not include 'postdated checks' and cases of 'closed accounts' has no leg to stand on. The term "closed accounts" is within the meaning of the phrase "does not have sufficient funds in or credit with the drawee bank".

Anent the second issue: whether or not notice of dishonor is dispensable in the case at bar. Petitioner failed to show any cogent reason for us to disturb the findings of the RTC and the Court of Appeals. B.P. Blg. 22 or the Bouncing Check's Law seeks to prevent the act of making and issuing checks with the knowledge that at the time of issue, the drawer does not have sufficient funds in or credit with the bank for payment and the checks were subsequently dishonored upon presentment.39 To be convicted thereunder, the following elements must be proved: 1. The accused makes, draws or issues any check to apply to account or for value; 2. The accused knows at the time of the issuance that he or she does not have sufficient funds in, or credit with, the drawee bank for the payment of the check in full upon its presentment; and 3. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or it would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment.40 For liability to attach under B.P. Blg. 22, it is not enough that the prosecution establishes that checks were issued and that the same were subsequently dishonored. The prosecution must also prove that the issuer, at the time of the check's issuance, had knowledge that he did not have enough funds or credit in the bank of payment thereof upon its presentment.41 Since the second element involves a state of mind which is difficult to establish, Section 2 of B.P. Blg. 22 created aprima facie presumption of such knowledge, as follows: SEC. 2. Evidence of knowledge of insufficient funds . The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the

check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee. Based on this section, the presumption that the issuer had knowledge of the insufficiency of funds is brought into existence only after it is proved that the issuer had received a notice of dishonor and that within five days from receipt thereof, he failed to pay the amount of the check or to make arrangement for its payment.42 The presumption or prima facie evidence as provided in this section cannot arise, if such notice of non-payment by the drawee bank is not sent to the maker or drawer, or if there is no proof as to when such notice was received by the drawer, since there would simply be no way of reckoning the crucial 5-day period.43 In this case, it is not disputed that checks were issued by petitioner and said checks were subsequently dishonored. The question however is, was petitioner furnished a notice of dishonor? If not, is it sufficient justification to exonerate petitioner from her criminal and civil liabilities for issuing the bouncing checks? The trial court ruled that the second element is present because: the accused knew at the time of issuance of the checks that she did not have sufficient funds in or credit with her drawee bank for the payment of the checks in full upon their presentment [as admitted by her in the Counter-Affidavit she executed during the preliminary investigation of these criminal cases (itals. ours), to wit: 4. That the time of the issuance of the said checks, due notice and information had been so given to Solid Gold anent the actual status of the checks that the same might not be able to cover the amount of the said checks so

stated therein (Exhibit "N", "1", underscoring supplied). This fact became evident again during the crossexamination by the accused's counsel of the prosecution's witness, Joaquin Novales III: ATTY. TAGANAS: Q: And the reason you agreed to the terms and conditions for the issuance of post-dated checks because you are also aware the particular time the accused Mrs. Elvira Yu Oh did not also have enough funds or money in the bank within which to cover the amount of the checks? A: I am not aware, sir. ... Q: To your knowledge when the accused had already admitted to you that she had not enough money to pay you? A: That is the terms and promise and agreed upon, sir. Q: But inspite of the fact that she already told you about that, that you never suspected that she did not have enough money to cover the checks agreed upon and issued to you? A: Yes, sir. Q: And inspite of the fact she told you you never suspected that she did not have enough money to cover you . . . Q: You still believe that although she does not have enough money she still issued checks to you? A: Yes, sir. (TSN, April 6, 1993, pp. 24-26)

At any rate, there is already prima facie evidence of knowledge of insufficiency of funds on the part of the accused from her failure to pay the amount due on the checks or to make arrangements for payment in full by the drawee bank within five banking days after she received notice of their dishonor, each of the checks having been presented within ninety days from their respective dated (B.P. Blg. 22, Sec. 2). The defense did not controvert this evidence. (itals. ours)44 Although the trial court in its decision, mentioned that herein petitioner received notices of dishonor, nowhere in the records is there proof that the prosecution ever presented evidence that petitioner received or was furnished a notice of dishonor. The notices of dishonor that were presented in court and marked as Exhibits "D-2", "E-2", "F-2", "G-2", "H-2", "I-2", "J-2", "K-2", "L-2", "C-2"45 were all sent to the private complainant, Solid Gold, and not to petitioner. In convicting petitioner, the trial court, gave probative weight on the admission of petitioner in her Counter-Affidavit which she submitted during the preliminary investigation that at the time of issuance of the subject checks, she was aware and even told private complainant that the checks might not be able to cover the amount stated therein. The Court of Appeals sustained the RTC, to wit: . . . Neither can We agree that accused-appellant was still entitled to notice of dishonor of the bouncing checks as she had no more checking account with the drawee bank at the time of the dishonor of the ten checks in question. Accused-appellant must have realized that by closing her checking account after issuing the ten postdated checks, all of said checks would bounce. Knowing that she had already closed her checking account with the drawee bank, certainly accused-appellant would not have expected, even in her wildest imagination, that her postdated checks would be honored by the drawee bank. Thus, accusedappellant need not be notified anymore of the obvious dishonor of her rubber checks. (itals. ours)46 Based on the law and existing jurisprudence, we find that the appellate court erred in convicting petitioner.

In cases for violation of B.P. Blg. 22, it is necessary that the prosecution prove that the issuer had received a notice of dishonor. Since service of notice is an issue, the person alleging that the notice was served must prove the fact of service. Basic also is the doctrine that in criminal cases, the quantum of proof required is proof beyond reasonable doubt. Hence, for cases of B.P. Blg. 22 there should be clear proof of notice.47 Indeed, this requirement cannot be taken lightly because Section 2 provides for an opportunity for the drawer to effect full payment of the amount appearing on the check, within five banking days from notice of dishonor. The absence of said notice therefore deprives an accused of an opportunity to preclude criminal prosecution. In other words, procedural due process demands that a notice of dishonor be actually served on petitioner. In the case at bar, appellant has a right to demand and the basic postulate of fairness requires that the notice of dishonor be actually sent to and received by her to afford her to opportunity to aver prosecution under B.P. Blg. 22.48 The Solicitor General contends that notice of dishonor is dispensable in this case considering that the cause of the dishonor of the checks was "Account Closed" and therefore, petitioner already knew that the checks will bounce anyway. This argument has no merit. The Court has decided numerous cases where checks were dishonored for the reason, "Account Closed"49 and we have explicitly held in said cases that "it is essential for the maker or drawer to be notified of the dishonor of her check, so she could pay the value thereof or make arrangements for its payment within the period prescribed by law"50 and omission or neglect on the part of the prosecution to prove that the accused received such notice of dishonor is fatal to its cause.51 A perusal of the testimony of the prosecution witness Joaquin Novales III, General Manager of complainant Solid Gold, discloses that no personal demands were made on appellant before the filing of the complaints against her.52 Thus, absent a clear showing that petitioner actually knew of the dishonor of her checks and was given the opportunity to make arrangements for payment as provided for under the law, we cannot with moral certainty convict her of violation of B.P. Blg. 22. The failure of the prosecution to prove that petitioner

was given the requisite notice of dishonor is a clear ground for her acquittal.53 Moreover, as understood by the trial court itself in the herein aforequoted portion of its decision, General Manager Novales knew of the non-availability of sufficient funds when appellant issued the subject checks to him. This Court has held that there is no violation of B.P. 22 if complainant was told by the drawer that he has no sufficient funds in the bank. 54 For these reasons, we reverse the ruling of the Court of Appeals affirming the trial court's conviction of petitioner for violation of B.P. Blg. 22. This is without prejudice, however, to her civil liability towards private complainant Solid Gold in the amount of P500,000.00 plus interest thereon at the rate of 12% per annum from date of finality of herein judgment. 55 WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. Petitioner Elvira Yu Oh is ACQUITTED of the offense of violation of B.P. Blg. 22 on ten counts for insufficiency of evidence. However, she is ordered to pay complainant Solid Gold International Traders, Inc. the total amount of Five Hundred Thousand Pesos (P500,000.00) with 12% interest per annum from date of finality of herein judgment. SO ORDERED. Bellosillo, Quisumbing, and Callejo, Sr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-4316 May 28, 1952

PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. HIGINIO MACADAEG, HON. POTENCIANO PECSON, HON. RAMON SAN JOSE, as Chairman and Members, respectively; of the Seventh Guerrilla Amnesty Commission, and ANTONIO GUILLERMO, alias, SLIVER, as an interested party, respondents. First Assistant Solicitor General Roberto A. Gianzon and Solicitor Esmeraldo Umali for petitioner. Hon. Higinio B. Macadaeg, Hon. Potenciano Pecson and Hon. Ramon R. San Jose in their own behalf. Antonio V. Raquiza and Marcelino N. Sayo for respondent Antonio Guillermo. LABRADOR, J.: This is an action of prohibition against the Seventh Guerilla Amnesty Commission, composed of Honorables Higinio Macadaeg, Potenciano Pecson, and Ramon R. San Jose, Judges of the Court of First Instance of Manila, to restrain and prevent it from taking jurisdiction and cognizance of a petition for amnesty filed by respondent Antonio Guillermo, alias Silver, who was convicted and sentenced by this Court on May 19, 1950, for murder in G.R. No. L-2188. * The grounds upon which the petition are based are (1) that this Court has already expressly ruled in its judgment of conviction of said case that said Antonio Guillermo is not entitled to the benefits of amnesty, because the murders of which he was convicted were committed "not in furtherance of the resistance movement but in the course of a fratricidal strife between two rival guerilla units," and (2) that the Seventh Guerilla Amnesty Commission can take cognizance only of cases pending appeal in the Supreme Court on October 2, 1946 (date of Administrative Order No. 1 of the President), at that time. The respondents filed answers independently of each other, and with the exception of Judge

Ramon R. San Jose, they oppose the petition, alleging (1) that the decision of this Court does not prevent the respondent Antonio Guillermo from invoking his right to the provisions of the amnesty, because said right was not an issue at the trial on the case against him, and the pronouncement of this Court thereon is not final and conclusive and is merely an obiter dictum, and (2) that under a liberal interpretation of the administrative orders implementing the President's Amnesty Proclamation, the respondent Commission has jurisdiction of said petition. The record discloses that the original information against respondent Antonio Guillermo was filed in the Court of First Instance of Ilocos Norte on September 16, 1946, and as amended information, on July 15, 1947. The Court of First Instance rendered judgment on March 29, 1948. Thereupon, Guillermo presented an appeal to this Court, and this Court rendered its judgement on May 19, 1950. On June 5, 1950, Guillermo's Counsel filed a motion for reconsideration, but this motion was denied on July 13, 1950. On June 20, 1950, even before his motion for reconsideration was acted upon, respondent Guillermo filed a motion with this Court for the suspension of the proceedings and the reference of the case to the Seventh Guerilla Amnesty Commission, but this motion was denied by this Court on July 13, 1950. Antonio Guillermo filed his petition for amnesty for respondent Commission on July 8, 1950. On August 2, 1950, the records of the case against Guillermo were remanded to the clerk of the Court of First Instance of Ilocos Norte for the execution of the judgment, and on October 17, 1950, the respondent Commission required the clerk of the Court of First Instance of Ilocos Norte to forward the records of the case to it, and on November 9, 1950, it is set the case for hearing over the opposition of the Solicitor General. It was at this stage that this action of prohibition was filed in this Court. The first ground upon which the opposition to the petition is based, namely, that the holding of this Court that the respondent Guillermo is not entitled to the benefits of the amnesty proclamation, is merely an obiter dictum, is without any legal foundation, and must be dismissed. An obiter dictum is an opinion "uttered by the way, not upon the point or question pending, as if turning aside from the main topic of the case to collateral subjects" (Newmanvs. Kay, 49 S.E. 926,

931, 57 W. Va. 98, 68 L.R.A. 908, 4 Ann. Cas. 39 citing United States ex rel. Johnston vs.Clark County Court, 96 U.S. 211, 24 Ed. 628), or the opinion of the court upon any point or principle which it is not required to decide (29 Words & Phrases 15), or an opinion of the court which does not embody its determination and is made without argument or full consideration of the point, and is not professed deliberate determinations of the judge himself (29 Words & Phrases 13.). A cursory reading of the decision of this Court in G. R. No. L-2188 **against respondent Antonio Guillermo discloses that the ruling of the Court that the said respondent is not entitled to the benefits of the amnesty is not an obiter dictum, but is a ruling of the Court on an issue expressly raised by the party appellant on facts or evidence adduced in the course of the trial of his case. It is not an opinion uttered by the way; it is a direct ruling on an issue expressly raised by a party. It was not unnecessary to make that ruling; the ruling was absolutely essential to a determination of a question of fact and of law directly in issue. It was not made without argument or full consideration of the point; it was deliberately entered by the Court after arguments on both sides had been heard. This Could not have avoided determining the issue without the peril of rendering an incomplete decision. Hereinbelow we quote portions of the decision of this Court, from it which it can readily be seen that it had before it evidence of the claim of amnesty expressly raised before the Court, and its ruling that appellant was not entitled thereto. xxx xxx xxx

xxx

xxx

xxx

At any rate, the amnesty proclamation now invoked is not applicable. We are satisfied from the proofs that the massacre in question was committed not in furtherance of the resistance movement but in the course of a fracticidad strife between two rival guerrilla units. That was to hinder and not a further the resistance against the Japanese enemy. It was a shame: and it would be adding insult to injury to stigmatize the memory of the unfortunate victims of such lust for power of and supremacy as spies and traitors to their country, in the absence of the competent proof as they really were. We spurn the baseless suggestion as rank injustice. A more serious contention is, May not respondent Guillermo raise the issue before the corresponding guerrilla amnesty commission in view of our ruling in the case of Viray vs. Crisologo, et al.*** G. R. No. L-2540, in which we held that the fact that the defendant has declined to take advantage of the amnesty proclamation at the beginning of his trial before a court martial does not preclude him from invoking it after he was found guilty and convicted. The express holding of this Court is that case is as follows: In our opinion the fact that respondent Crisologo had declined to take advantage of the amnesty proclamation at the beginning of his trial before the court martial does not now preclude him from invoking it, specially after he was found guilty and convicted. Before his trial he may and he must have entertained the idea and the belief that the killing was justified and was done in the performance of his duties as an official according to the criminal law, and that consequently there was no need for amnesty. However, after the court martial had disagreed with him and disabused him of his belief, he realized the necessity of invoking amnesty. There is nothing in the law that stands in his way toward seeking the benefits of a law which in his opinion covers and obliterates the act of which he had been found criminally responsible. We hold that the above cited is not applicable to the case at bar, for in that case the defendant did not invoke the benefits

Apparently realizing the inconsistency and untenability of that position appellant also contends that granting for the sake of argument that the accused was the author of the crime, there is proof "that the ill-starred seven were charged of (with) being spies for the Japanese. The insincerity and weakness of this last-ditch plea is manifest. Appellant does not claim that he killed the seven victims because he had proof and believe that they were spies for the Japanese. He merely says that they were charged (by Sagad) with being spies for the Japanese.

of the amnesty at the time of the trial or on appeal, and only did so after he had been adjudge guilty and convicted, while in the case at bar he did so. It is true that the appellant Guillermo did not expressly plead amnesty, but the facts and circumstances surrounding the commission of the act charged against him as an offense were disclosed at the trial, from which facts and circumstances he later predicated the issue, before this Court, that he was entitled to the benefits of the amnesty. It may be true that the appellant Guillermo did not expressly plead amnesty as a defense at the trial of his case. But the rules on the criminal procedure do not include to be expressly pleaded. (Section 1, Rule 113, Rule of Court.) Even without an express plea of amnesty, a defendant may submit evidence that the commission of the act imputed to him falls within the provisions of the amnesty proclamation, without a previous formal announcement of such a defense before or during the trial. And even without such express plea, if the court finds that the case falls under the provisions of the amnesty proclamation, it is the duty of the court to declare the fact, if the fact justify such a finding, and extend the benefits of the amnesty to him. . . .; and the accused, during such trial, may present evidence to prove that his case falls within the terms of this amnesty. If the fact is legally proved, the trial judge shall so declare and this amnesty shall be immediately affective as to the accused, who shall forthwith be released or discharged. (Proclamation No. 8, September 7, 1946, 42 Off. Gaz., No. 9 p. 2073.) That the respondent herein Guillermo did not submit evidence to that effect is inferred from the claim of his counsel in the case against him that "there is proof that the ill starred seven were charged with being spies for the Japanese." Not only that, he expressly raised that issue in this Court on appeal. May he rise this issue again before the guerrilla amnesty commission, and thus have this administrative body reverse or change the finding of this Court? Under the circumstances of the present case, we hold that he should no longer be permitted to do so in view of "the general rule common to all civilized systems of jurisprudence that the solemn and deliberate sentence of the law, pronounced by its appointed organs, upon a disputed fact or state of facts,

should be regarded as a final and conclusive determination of the question litigated, and should forever set the controversy at rest. Indeed it has been well said that this more maxim is more than a rule of law, more even than an important principle of public policy; and that it is a fundamental concept in the organization of every jural society." (Pealosa vs. Tuason, 22 Phil., 303, 310; section 44, Rule 39, Rules of Court). It is also argued, in support of the claim that this Court had no jurisdiction to make the ruling that respondent Guillermo is not entitled to amnesty, that the guerrilla amnesty commissions are the first ones to pass upon petitions for amnesty, that regular judicial tribunals can not rule upon such an issue (of amnesty) unless it has first been resolved by a commission, and that these are not judicial tribunals but administrative bodies acting as arms of the executive in carrying out the purposes of the amnesty proclamation, which is merely a form of executive clemency. It is true that the grant of amnesty originates in an exclusive act. But the proclamation was issued under expressly authority in the Constitution [Article VII, section 10 (6)], was expressly sanctioned by the Congress (Resolution No. 13 dated September 18, 1946), and has the nature, force, effect, and operation of a law. That the cognizance of applications for amnesty is vested in the guerrilla amnesty commissions are mere screening bodies is not denied, but there is nothing in the proclamation to support the contention that the authority to decide any claim for amnesty is to be exercised but said commissions alone, to the exclusion of the courts. Neither can it be denied that any one charged before the courts may claim as a defense, waive the filing of an application therefor, and submit evidence thereof in the trial of his case. In this latter case it would be a cumbersome procedure, indeed, if said defense were first required to be submitted to commission for decision, latter to be reviewed by a court. The only sensible interpretation of the law is that while all applications should be passed upon by commissions, an accused may, instead of filing an application, choose the alternative remedy of just raising the issue in a court of justice in the trial of his case. And if this second alternative is chosen, the applicant should be declared estopped from contesting the decision, as well as the authority of the court that adversely passed upon his claim.

But there are further and other considerations, also weighty and important, that attend respondent Guillermo's petition for amnesty. He is not one filed during the pendency of this case in the Court of First Instance it is a petition filed after final judgment of conviction in this Supreme Court. It does not appear in the record that during the one and a half-year period (September 16, 1946, to March 29, 1948) that this case was being coursed and tried in the Court of First Instance of Ilocos Norte, that he ever filed an application for amnesty. Neither does it appear that the provincial fiscal has ever reported Guillermo's case to the Guerrilla Amnesty Commission for Ilocos Norte, pursuant to the direct mandate of the amnesty proclamation. Nor did Guillermo ever claim amnesty as his defense at the time of the trial. May we not justly infer from these positive circumstances that, during all the time the case was pending and up to the filling of appellant's brief in the Supreme Court, amnesty was never thought of as a defense, either by the accused himself or by the fiscal, or by the judge trying the case? As a matter of fact, this Court found that the issue of amnesty raised in this Court of Appeal was a "last-ditch plea." Guillermo only thought of amnesty on June 20, 1950, after this Court had found him guilty, overruling his defense of amnesty, and before his motion for reconsideration was denied. We are therefore, constrained to hold that his present petition is not entirely free from a reasonable suspicion as to its ends and purposes. It seems to us to be a last desperate attempt by technicality to avert or delay the execution of the judgment of conviction rendered against him. Of course, no court of justice would countenance such ill-advised attempt. The second ground upon which the petition for prohibition is based is that the Seventh Guerilla Amnesty Commission has no jurisdiction to take cognizance of respondent Guillermo's application. We also find this contention to be correct. Administrative Order No. 11, which creates the guerrilla amnesty commission, expressly assigns to the Seventh "cases from the different provinces and cities now pending appeal in the Supreme Court." (Emphasis ours.) Said administrative order was promulgated on October 2, 1946, on which date the criminal case against respondent Guillermo was still pending in the Court of First Instance of Ilocos Norte. His case was a case in the province (Ilocos Norte) assigned to the Second Guerrilla Amnesty Commission. Respondents cite administrative Order No. 217 of the Department of Justice

dated December 1, 1948 to support their claim that the Seventh has jurisdiction of the application, because of that date Guillermo's case was already pending in the Supreme Court. This department order was issued, as it expressly states, "in view of the appointments of new Judges of First Instances," not for the purpose of setting forth cases cognizable by each of the different commissions, which the President had already done. Besides, it can not be interpreted to modify the President's administrative order apportioning the cases among the amnesty commissions. In resume of our conclusions, we state (1) that the finding of this Court that Guillermo is not entitled to the benefits of amnesty, is not an obiter dictum but a pronouncement on a material issue, and is final and conclusive against him and may not, under the principle of res judicata, be again raised in issue by him in any tribunal, judicial or administrative; (2) that having voluntarily raised the issue in this Court during the consideration of his case, he is now estopped from contesting the judgment, of the jurisdiction of the court that rendered the adverse ruling; (3) that this petition is an illadvised attempt of doubtful good faith, to arrest or delay the execution of a final judgement of conviction; and (4) that the respondent Commission has no jurisdiction to take cognizance of the application for amnesty. Wherefore, the petition for prohibition is hereby granted, and the preliminary injunction issued by this Court on November 24, 1950, made absolute, with costs against respondent Antonio Guillermo, alias Silver. Paras, C. J., Feria, Pablo, Bengzon, Tuason, Montemayor and Bautista Angelo, JJ., concur.

Republic of the Philippines SUPREME COURT FIRST DIVISION G.R. No. 137980 November 15, 2000

original lease contract subsists then, it should have continued to pay the amount of P20,500.00 per month stipulated thereon."1 (underscored in the original) This allegation of non-payment of rentals was in petitioners petition for review filed with the Court of Appeals,2 as well as in the instant petition for review3 before us. Next, respondent assails the application of its security deposit of P1,020,000.00 to rentals for the period of August, 1985 to November, 1989 as erroneous, since the same period only covers 52 months, while the amount of P1,020,000.00 would only account for 49.76 months. A cursory study of Annexes "K" and "L" of the Affidavit of Elizabeth Palma,4 referred to in our Decision,5 readily reveals that the rentals due on the leased property for the period of August, 1985 to November, 1989 was P1,066,000.00. Hence, the whole amount of P1,020,000.00 given by respondent as security deposit was sufficient to cover the rentals, still leaving a balance of P46,000.00. This amount, together with outstanding rentals on other properties likewise leased by respondent from petitioner, was paid for by respondents liquidator as part of its payment of P5,232,325.00. Respondent also contends that the application of its security deposit was improper since it was not authorized under the provisions of the lease contract, and thus amounted to a unilateral amendment of the same. This is untenable. The stipulation in the lease contract that the security deposit shall be applied to the rentals due from the 11th to the 20th years of the lease presupposes that rental payments up to the 10th year are up to date. But this was not the case here. In fact, respondent had an outstanding account of P1,066,000.00 representing unpaid rent for the period of August, 1985 to November, 1989, or from 5th to the 8th years of the lease term. Had the security deposit not been applied for that period, respondent would have been subject to immediate ejectment. Precisely, the security deposit was applied for the said period to cover for the unpaid rentals and to avoid immediate ejectment for non-payment of rentals. Respondents insistence that the security deposit be applied to the 11th to 20th years of the lease as stipulated should thus fail.

TALA REALTY SERVICES CORP., petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent. RESOLUTION YNARES-SANTIAGO, J.: Before us is respondents Motion for Reconsideration of our Decision dated June 20, 2000. Respondent argues that the complaint for ejectment below was not based on non-payment of rentals but on the alleged expiration of respondents lease contract with petitioner and the formers refusal to accept and comply with the new rental rates and conditions. According to respondent, there was no allegation in the complaint of any failure on its part to pay any of the monthly rentals stipulated in the contract of lease and the same, not having been raised as an issue, should not have been passed upon by this Court. The records, however, show that the issue of non-payment of rentals was, in fact, consistently raised from the Municipal Trial Court all the way to this Court. Indeed, petitioners Position Paper before the Municipal Trial Court dedicates an entire portion to respondents "Violation of Terms and Conditions", inclusive of its unpaid rentals. There, petitioner argued as follows "Assuming for the sake of argument that the original lease contract subsists, still the ground for ejectment of non-payment of rental holds. It should be borne in mind that since April, 1994, defendant has not paid plaintiff a single cent. If, according to defendant, the

In demanding that its security deposit be applied to the rentals for the 11th to the 20th years, respondent conveniently overlooks its unpaid obligations for the earlier period for which the said security deposit was actually applied. Does it expect to have such unpaid rentals merely written off? Evidently, that is exactly what respondent intended. Respondent also argues in its present Motion for Reconsideration that, inasmuch as it was closed and under receivership, it should not be answerable for its unpaid rentals over the leased premises during such time, passing the responsibility instead to the Central Bank. Respondent relies on the argument that its closure and consequent lack of access to its funds to pay off its obligations, including the rentals on the leased premises, was a fortuitous event which should excuse it from liability. Granting, without conceding, that liability should not lie with respondent for unpaid rentals on the leased premises while it was under control of the Central Bank, this matter is not an issue in the instant case, where the subject matter is merely ejectment. As the lessee of the premises, respondent had the exclusive obligation to settle any unpaid rentals. Petitioner dealt directly with respondent, and therefore had the right to enforce the lease contract against respondent only. Any right of action that respondent may have against the Central Bank is a matter that can be best ventilated in the proper forum. The fact that the application of respondents security deposit was effected by and between petitioner and respondents liquidator does not have any bearing on its validity, as the basic premise for its operation remains the same. Finally, we reject respondents argument that the principle of res judicata should equally apply to the issue of rent payment. As we have already clearly set out in the challenged Decision, "respondents failure to pay any rentals beginning April 1994, which provided ground for its ejectment from the premises, justifies our departure from the outcome of G.R. No. 129887."6 WHEREFORE, premises considered, the Motion for Reconsideration is DENIED WITH FINALITY for lack of merit. SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

THIRD DIVISION

Decision dated January 7, 1999 and not for [the] Court Order dated January 29, 1999. In view of the foregoing, the Motion for Reconsideration filed by petitioner is hereby DENIED for lack of merit. Meanwhile, the Branch Clerk of Court is hereby ordered to immediately transmit the record of the instant case to the Honorable Court of Appeals within ten (10) days from today.

[G.R. No. 137571. September 21, 2000]

TUNG CHIN HUI, petitioner, vs. RUFUS B. RODRIGUEZ, Commissioner of Immigration; and the BOARD OF COMMISSIONERS, Bureau of Immigration and Deportation, respondents. DECISION PANGANIBAN, J.: Provisions that were not reproduced in the 1997 Rules of Civil Procedure are deemed repealed. Hence, having been omitted from the 1997 Rules, deemed already repealed is Section 18, Rule 41 of the pre-1997 Rules of Court, which had theretofore provided for a 48-hour reglementary period within which to appeal habeas corpus cases. Accordingly, the period for perfecting appeals in said cases and ordinary civil actions is now uniform -- 15 days from notice of the judgment or order.

The Facts

From the records and the pleadings of the parties, the following facts appear undisputed. After obtaining a visa at the Philippine Embassy in Singapore, petitioner, a Taiwanese citizen,[3] arrived in this country on November 5, 1998. On November 15, 1998, he was arrested by several policemen, who subsequently turned him over to the Bureau of Immigration and Deportation (BID). Thereafter, on November 25, 1998, the BID Board of Commissioners, after finding him guilty of possessing a tampered passport earlier canceled by Taiwanese authorities, ordered his summary deportation. On December 11, 1998, petitioner filed before the RTC of Manila a Petition for Habeas Corpus on the ground that his detention was illegal. After respondents filed a Return of Writ controverting his claim, the trial court issued a Decision dated January 7, 1999, granting his Petition and ordering his release from custody. On January 11, 1999, respondents filed a Motion for Reconsideration, which was denied by the trial court in an Order dated January 29, 1999. Respondents then filed a [N]otice of [A]ppeal from the judgment of the Honorable Court in the above-stated case, dated January 29, 1999, a copy of which was received by the Bureau on February 11, 1999 and was received by the undersigned counsel on February 15, 1999 x x x.[4] Dated

The Case

Before us is a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the March 2, 1999 Order [1]of the Regional Trial Court (RTC) of Manila (Branch 26) in Special Proceedings No. 98-92014. The challenged Order reads in full as follows:[2] For resolution is a Motion For Reconsideration filed by petitioner thru counsel with comment/opposition thereto filed by respondents thru counsel. After careful consideration of the grounds relied upon by both parties, this Court finds for the respondents. The Notice of Appeal filed by the respondents is actually fo[r] the Court

February 15, 1999, it was received by the RTC on February 16, 1999 at 9:45 a.m. Petitioner filed an Opposition, claiming that the Notice had been filed beyond the 48-hour reglementary period for filing appeals in habeas corpus cases as prescribed by the pre-1997 Rules of Court. Although respondents alleged that they had received the said Order on February 15, 1999, petitioner contended that they had in fact received it on February 11, 1999, as evidenced by the receipt of the service thereof and by the Sheriffs Return.[5] In an Order dated February 18, 1999, the RTC rejected petitioners contention and granted due course to the Notice of Appeal. Petitioner then filed a Motion for Reconsideration, arguing this time that the Notice should be rejected because it had referred not to the RTC Decision but to the January 29, 1999 Order denying reconsideration. In its assailed March 2, 1999 Order, the trial court denied his Motion. Hence, this Petition raising pure questions of law.[6] In a Resolution dated March 22, 1999, this Court issued a Temporary Restraining Order directing the respondents to cease and desist from deporting the petitioner x x x until further orders.[7]

an Order denying a motion for reconsideration - mandatory or merely discretionary on the part of the lower courts? (d) Are petitions for writs of habeas corpus already brought down to the level of ordinary cases despite the fact that in habeas corpus the liberty of persons illegally detained is involved? In the main, the Court will resolve whether the Notice of Appeal was seasonably filed. In the process, it will determine the applicable reglementary period for filing an appeal in habeas corpuscases.

The Courts Ruling

The Petition is not meritorious.

Main Issue: Reglementary Period for Appealing Habeas Corpus Cases

The Issues

Petitioner submits consideration:[8]

the

following

issues

for

our

Petitioner contends that the Notice of Appeal was late because respondents filed it only on February 16, 1999, five days after they had received the Order denying the Motion for Reconsideration on February 11, 1999. [9] He argues that the reglementary period for filing an appeal is 48 hours, as prescribed in Section 18 of Rule 41 of the pre-1997 Rules of Court, which reads as follows: SEC. 18. Appeal in habeas corpus cases, how taken. - An appeal in habeas corpus cases shall be perfected by filing with the clerk of court or the judge who rendered the judgment, within forty-eight (48) hours from notice of such judgment, a statement that the person making it appeals therefrom. The argument is devoid of merit, because the foregoing provision was omitted from and thereby repealed by the 1997 Revised Rules of Court, which completely replaced Rules 1 to 71. The well-settled rule of statutory construction is that provisions of an old law that were not reproduced in the

(a) Is the reglementary period to appeal [a] habeas corpus [case] now 15 days from notice of judgment as contended by [the] lower court? (b) Is the reglementary period to appeal [a] habeas corpus [case] still 48 hours from notice of judgment as provided for in Section 18, Rule 41 of the Revised Rules of Court? or (c) Is the provision of Sec. 1, sub-paragraph (a) of Rule 41 of the 1997 Rules of Civil Procedure -- prohibiting appeal from

revision thereof covering the same subject are deemed repealed and discarded.[10] The omission shows the intention of the rule-making body, the Supreme Court in this case, [11] to abrogate those provisions of the old laws that are not reproduced in the revised statute or code.[12] Clearly then, the reglementary period for filing an appeal in a habeas corpus case is now similar to that in ordinary civil actions[13] and is governed by Section 3, Rule 41 of the 1997 Rules of Court, which provides: SEC. 3. Period of ordinary appeal. -- The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order. The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. In this light, the appeal was seasonably filed within the 15-day reglementary period.

that stare decisis presupposes that the facts of the precedent and the case to which it is applied are substantially the same. In this case, there is one crucial difference. All the incidents of the present controversy occurred when the 1997 Revised Rules of Court was already in effect. On the other hand, all the cited precedents had been resolved under the pre-1997 Rules. Accordingly, stare decisis cannot compel this Court to apply to the present case the alleged precedents decided during the regime of the pre-1997 Rules. The cited cases applied a specific provision of the Rules in effect at the time. But because that provision had already been repealed when the facts under present consideration occurred, the Court can no longer rely on those cases. Indeed, to rule otherwise is to bar the effectivity of the 1997 amendments, which conflict with jurisprudence decided under an old and repealed rule. Verily, petitioners contention effectively precludes changes and freezes our procedural rules.

Subject of the Notice of Appeal

Stare Decisis

Petitioner insists, however, that the application of Section 18, Rule 41 under the Revised Rules of Court must be maintained under the doctrine of stare decisis.[14], Thus he urges the Court to apply precedents that held that the 48hour period for perfecting an appeal was mandatory and jurisdictional. He specifically cites Saulo v. Cruz,[15] Garcia v. Echiverri[16] and Elepante v. Madayag.[17] The principle cited by petitioner is an abbreviated form of the maxim Stare decisis, et non quieta movere. [18] That is, When the court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same.[19] This principle assures certainty and stability in our legal system.[20] It should be stressed

As earlier observed, the Notice of Appeal referred to the judgment of the Honorable Court in the above-stated case, dated January 29, 1999. Petitioner now argues that the Notice was improper because it referred to the Order denying respondents Motion for Reconsideration, not the Decision itself which was dated January 7, 1999. He cites Section 1 of Rule 41 of the 1997 Rules, which provides that an order denying a motion for a new trial or a reconsideration may not be appealed.[21] Respondents, on the other hand, claim that because the Notice of Appeal contained the word judgment, their clear intent was to appeal the Decision. We agree with respondents. In referring to the trial courts judgment, respondents were clearly appealing the January 7, 1999 Decision. Had they thought otherwise, they would have referred to the Order. Indeed, judgment is normally synonymous with decision.[22] Furthermore, the wrong date of the appealed judgment may be attributed merely to inadvertence. Such error should not, by itself, deprive respondents of their right to appeal. Time and time again, it has been held that courts should proceed with caution so as not to deprive a party of this right. [23] They are

encouraged to hear the merits of appealed cases; hence, the dismissal of an appeal on grounds of technicality is generally frowned upon.[24] Indeed, the postulates of justice and fairness demand that all litigants be afforded the opportunity for a full disposition of their disputes, free as much as legally possible from the constraints of technicalities.[25] To rule otherwise is to let technicality triumph over substantial justice. Indeed, the real essence of justice does not emanate from quibblings over patchwork legal technicality.[26]

Other Matters

Petitioner insists that the Order deporting him is invalid, as he was not given notice or hearing. [27] We reject this argument because it properly pertains to the appeal before the CA, not in these proceedings instituted merely to determine the timeliness of the Notice of Appeal. Likewise, we reject the submission of the Office of the Solicitor General that the promulgation of the CA Decision resolving the appeal rendered the present case moot and academic.[28] It should be stressed that the validity of the proceedings before the appellate court ultimately hinges on the issue before us: whether the Notice of Appeal was seasonably filed. WHEREFORE, the Petition is DENIED and the assailed Order AFFIRMED. The Temporary Restraining Order issued by the Court is hereby immediately LIFTED. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.