Consti Cases Art12 13

G.R. No. 195670. December 3, 2012.
*
WILLEM BEUMER, petitioner, vs. AVELINA AMORES,
respondent.
Civil Law; Succession; Save in cases of hereditary succession,
no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or
hold lands of the public domain.In In Re: Petition For
Separation of Property-Elena Buenaventura Muller v. Helmut
Muller, 500 SCRA 65 (2006), the Court had already denied a
claim for reimbursement of the value of purchased parcels of
Philippine land instituted by a foreigner Helmut Muller, against
his former Filipina spouse, Elena Buenaventura Muller. It held
that Helmut Muller cannot seek reimbursement on the ground
of equity where it is clear that he willingly and knowingly
bought the property despite the prohibition against foreign
ownership of Philippine land enshrined under Section 7, Article
XII of the 1987 Philippine Constitution which reads: Section 7.
Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public
domain.
Same; Equity; The time-honored principle is that he who seeks
equity must do equity, and he who comes into equity must come
with clean hands.As also explained in Muller, the time-
honored principle is that he who seeks equity must do equity,
and he who comes into equity must come with clean hands.
Conversely stated, he who has done inequity shall not be
accorded equity. Thus, a litigant may be denied relief by a court
of equity on the ground that his conduct has been inequitable,
unfair and dishonest, or fraudulent, or deceitful.
Same; Same; Equity as a rule will follow the law and will not
permit that to be done indirectly which, because of public policy,
cannot be done directly. Surely, a contract that violates the
Constitution and the law is null and void, vests no rights, creates
no obligations and produces no legal effect at all.In any event,
the Court cannot, even on the grounds of equity, grant
reimbursement to peti-
_______________
* SECOND DIVISION.
771
VOL. 686, DECEMBER 3, 7
2012 71
Beumer vs. Amores
tioner given that he acquired no right whatsoever over the
subject properties by virtue of its unconstitutional purchase. It
is well-established that equity as a rule will follow the law and
will not permit that to be done indirectly which, because of
public policy, cannot be done directly. Surely, a contract that
violates the Constitution and the law is null and void, vests no
rights, creates no obligations and produces no legal effect at all.
Corollary thereto, under Article 1412 of the Civil Code,
petitioner cannot have the subject properties deeded to him or
allow him to recover the money he had spent for the purchase
thereof. The law will not aid either party to an illegal contract or
agreement; it leaves the parties where it finds them. Indeed, one
cannot salvage any rights from an unconstitutional transaction
knowingly entered into.
Same; Principle of Unjust Enrichment; No person should
unjustly enrich himself at the expense of another.Neither can
the Court grant petitioners claim for reimbursement on the
basis of unjust enrichment. As held in Frenzel v. Catito, a case
also involving a foreigner seeking monetary reimbursement for
money spent on purchase of Philippine land, the provision on
unjust enrichment does not apply if the action is proscribed by
the Constitution, to wit: Futile, too, is petitioners reliance on
Article 22 of the New Civil Code which reads: Art. 22. Every
person who through an act of performance by another, or any
other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall
return the same to him. The provision is expressed in the
maxim: MEMO CUM ALTERIUS DETER DETREMENTO
PROTEST (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been
paid without just cause has been designated as an accion in rem
verso. This provision does not apply if, as in this case, the action
is proscribed by the Constitution or by the application of
the pari delicto doctrine. It may be unfair and unjust to bar the
petitioner from filing an accion in rem verso over the subject
properties, or from recovering the money he paid for the said
properties, but, as Lord Mansfield stated in the early case
of Holman v. Johnson: The objection that a contract is immoral
or illegal as between the plaintiff and the defendant, sounds at
all times very ill in the mouth of the defendant. It is not for his
sake, however, that the objection is ever allowed; but it is
founded in general principles of policy, which the defendant has
the advantage of, contrary to the real justice, as between him
and the plaintiff.772
7 SUPREME COURT
72 REPORTS ANNOTATED
Beumer vs. Amores
Same; The constitutional ban against foreigners applies only
to ownership of Philippine land and not to the improvements
built thereon.Precisely, it is the Constitution itself which
demarcates the rights of citizens and non-citizens in owning
Philippine land. To be sure, the constitutional ban against
foreigners applies only to ownership of Philippine land and not
to the improvements built thereon, such as the two (2) houses
standing on Lots 1 and 2142 which were properly declared to be
co-owned by the parties subject to partition. Needless to state,
the purpose of the prohibition is to conserve the national
patrimony and it is this policy which the Court is duty-bound to
protect.
PETITION for review on certiorari of the decision and resolution
of the Court of Appeals.
The facts are stated in the opinion of the Court.
Hermosa Law Office for petitioner.
Dupio, Dupio & Seires for respondent.
PERLAS-BERNABE, J.:
Before the Court is a Petition for Review on Certiorari under 1
Rule 45 of the Rules of Court assailing the October 8, 2009

Decision and January 24, 2011 Resolution of the Court of
2 3
Appeals (CA) in CA-G.R. CV No. 01940, which affirmed the

February 28, 2007 Decision of the Regional Trial Court (RTC) of
4
Negros Oriental, Branch 34 in Civil Case No. 12884. The

foregoing rulings dissolved the conjugal partnership of gains of
Willem Beumer (petitioner) and Avelina Amores (respon-
_______________
1 Rollo, pp. 11-25.
2 Penned by Acting Executive Justice Franchito N. Diamante, with Associate Justices
Edgardo L. Delos Santos and Samuel H. Gaerlan, concurring. Id., at pp. 26-38.
3 Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices Agnes Reyes-
Carpio and Eduardo B. Peralta, Jr., concurring. Id., at pp. 45-46.
4 Penned by Judge Rosendo B. Bandal, Jr. Id., at pp. 80-86.
773
VOL. 686, DECEMBER 3, 2012 773
Beumer vs. Amores
dent) and distributed the properties forming part of the said
property regime.
The Factual Antecedents
Petitioner, a Dutch National, and respondent, a Filipina,
married in March 29, 1980. After several years, the RTC of
Negros Oriental, Branch 32, declared the nullity of their
marriage in the Decision dated November 10, 2000 on the basis
5
of the formers psychological incapacity as contemplated in
Article 36 of the Family Code.
Consequently, petitioner filed a Petition for Dissolution of
Conjugal Partnership dated December 14, 2000 praying for the
6
distribution of the following described properties claimed to

have been acquired during the subsistence of their marriage, to
wit:
By Purchase:
a. Lot 1, Block 3 of the consolidated survey of Lots 2144 &
2147 of the Dumaguete Cadastre, covered by Transfer
Certificate of Title (TCT) No. 22846, containing an area of
252 square meters (sq.m.), including a residential house
constructed thereon.
b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No.
21974, containing an area of 806 sq.m., including a
residential house constructed thereon.
c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No.
21306, containing an area of 756 sq.m.
d. Lot 4, Block 4 of the consolidated survey of Lots 2144 &
2147 of the Dumaguete Cadastre, covered by TCT No. 21307,
containing an area of 45 sq.m.
_______________
5 See Annex E of the Petition. Penned by Judge Eleuterio E. Chiu (Civil Case No.
11754). Id., at pp. 53-62.
6 Annex E of the Petition. Id., at pp. 47-52.
774
774 SUPREME COURT REPORTS
ANNOTATED
Beumer vs. Amores
By way of inheritance:
e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by
TCT No. 23567, containing an area of 2,635 sq.m. (the area
that appertains to the conjugal partnership is 376.45 sq.m.).
f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by
TCT No. 23575, containing an area of 360 sq.m. (the area
that appertains to the conjugal partnership is 24 sq.m.).7
In defense, respondent averred that, with the exception of
8
their two (2) residential houses on Lots 1 and 2142, she and
petitioner did not acquire any conjugal properties during their
marriage, the truth being that she used her own personal money
to purchase Lots 1, 2142, 5845 and 4 out of her personal funds
and Lots 2055-A and 2055-I by way of inheritance. She 9
submitted a joint affidavit executed by her and petitioner

attesting to the fact that she purchased Lot 2142 and the
improvements thereon using her own money. Accordingly, 10
respondent sought the dismissal of the petition for dissolution as

well as payment for attorneys fees and litigation expenses. 11
During trial, petitioner testified that while Lots 1, 2142, 5845

and 4 were registered in the name of respondent, these
properties were acquired with the money he received from the
Dutch government as his disability benefit since respondent did
12
not have sufficient income to pay for their acquisition. He also

claimed that the joint affidavit they submitted before the
Register of Deeds of Dumaguete City was contrary to Article 89
of the Family Code, hence, invalid. 13
_______________
7 Id., at pp. 48-49a.
8 See attached as Annex E of the Petitioner. Respondents Answer. Id., at pp. 76-79.
9 Id., at p. 76.
10 Id., at p. 79.
11 Id., at p. 77.
12 Id., at p. 81.
13 Id., at p. 82.
775
VOL. 686, DECEMBER 3, 2012 775
Beumer vs. Amores
For her part, respondent maintained that the money used for
the purchase of the lots came exclusively from her personal
funds, in particular, her earnings from selling jewelry as well as
products from Avon, Triumph and Tupperware. She further
14
asserted that after she filed for annulment of their marriage in

1996, petitioner transferred to their second house and brought
along with him certain personal properties, consisting of drills, a
welding machine, grinders, clamps, etc. She alleged that these
tools and equipment have a total cost of P500,000.00. 15
The RTC Ruling

On February 28, 2007, the RTC of Negros Oriental, Branch 34
rendered its Decision, dissolving the parties conjugal
partnership, awarding all the parcels of land to respondent as
her paraphernal properties; the tools and equipment in favor of
petitioner as his exclusive properties; the two (2) houses
standing on Lots 1 and 2142 as co-owned by the parties, the
dispositive of which reads:
WHEREFORE, judgment is hereby rendered granting the
dissolution of the conjugal partnership of gains between
petitioner Willem Beumer and [respondent] Avelina Amores
considering the fact that their marriage was previously annulled
by Branch 32 of this Court. The parcels of land covered by
Transfer Certificate of Titles Nos. 22846, 21974, 21306, 21307,
23567 and 23575 are hereby declared paraphernal properties of
respondent Avelina Amores due to the fact that while these real
properties were acquired by onerous title during their marital
union, Willem Beumer, being a foreigner, is not allowed by law
to acquire any private land in the Philippines, except through
inheritance.
The personal properties, i.e., tools and equipment mentioned
in the complaint which were brought out by Willem from the
conjugal dwelling are hereby declared to be exclusively owned by
the petitioner.
_______________
14 Id.
15 Id.
776
ANNOTATED
Beumer vs. Amores
The two houses standing on the lots covered by Transfer
Certificate of Title Nos. 21974 and 22846 are hereby declared to
be co-owned by the petitioner and the respondent since these
were acquired during their marital union and since there is no
prohibition on foreigners from owning buildings and residential
units. Petitioner and respondent are, thereby, directed to subject
this court for approval their project of partition on the two
house[s] aforementioned.
The Court finds no sufficient justification to award the
counterclaim of respondent for attorneys fees considering the
well settled doctrine that there should be no premium on the
right to litigate. The prayer for moral damages are likewise
denied for lack of merit.
No pronouncement as to costs.
SO ORDERED. 16
It ruled that, regardless of the source of funds for the

acquisition of Lots 1, 2142, 5845 and 4, petitioner could not have
acquired any right whatsoever over these properties as
petitioner still attempted to acquire them notwithstanding his
knowledge of the constitutional prohibition against foreign
ownership of private lands. This was made evident by the
17
sworn statements petitioner executed purporting to show that

the subject parcels of land were purchased from the exclusive
funds of his wife, the herein respondent. Petitioners plea for
18
reimbursement for the amount he had paid to purchase the

foregoing properties on the basis of equity was likewise denied
for not having come to court with clean hands.
The CA Ruling
Petitioner elevated the matter to the CA, contesting only the
RTCs award of Lots 1, 2142, 5845 and 4 in favor of respondent.
He insisted that the money used to purchase the foregoing
properties came from his own capital funds and that
_______________
16 Id., at pp. 85-86.
17 Id., at p. 84, citing Cheesman v. Intermediate Appellate Court, G.R. No. 74833, January 21,
1991, 193 SCRA 93, 103.
18 Id.
777
VOL. 686, DECEMBER 3, 2012 777
Beumer vs. Amores
they were registered in the name of his former wife only because
of the constitutional prohibition against foreign ownership.
Thus, he prayed for reimbursement of one-half (1/2) of the value
of what he had paid in the purchase of the said properties,
waiving the other half in favor of his estranged ex-wife. 19
On October 8, 2009, the CA promulgated a

Decision affirming in toto the judgment rendered by the RTC of
20
Negros Oriental, Branch 34. The CA stressed the fact that

petitioner was well-aware of the constitutional prohibition for
aliens to acquire lands in the Philippines. Hence, he cannot 21
invoke equity to support his claim for reimbursement.

Consequently, petitioner filed the instant Petition for Review
on Certiorari assailing the CA Decision due to the following
error:
UNDER THE FACTS ESTABLISHED, THE COURT
ERRED IN NOT SUSTAINING THE PETITIONERS
ATTEMPT AT SUBSEQUENTLY ASSERTING OR
CLAIMING A RIGHT OF HALF OR WHOLE OF THE
PURCHASE PRICE USED IN THE PURCHASE OF THE
REAL PROPERTIES SUBJECT OF THIS
CASE. (Emphasis supplied)
22
The Ruling of the Court

The petition lacks merit.
The issue to be resolved is not of first impression. In In Re:
Petition For Separation of Property-Elena Buenaventura Muller
v. Helmut Muller the Court had already denied a claim for
23
reimbursement of the value of purchased parcels of Philippine

land instituted by a foreigner Helmut Muller, against his former
Filipina spouse, Elena Buenaventura Muller. It
_______________
19 Id., at p. 91.
20 Id., at pp. 26-38.
21 Id., at p. 33.
22 Id., at p. 17.
23 G.R. No. 149615, August 29, 2006, 500 SCRA 65.
778
ANNOTATED
Beumer vs. Amores
held that Helmut Muller cannot seek reimbursement on the
ground of equity where it is clear that he willingly and
knowingly bought the property despite the prohibition against
foreign ownership of Philippine land enshrined under Section 7,
24
Article XII of the 1987 Philippine Constitution which reads:

Section 7. Save in cases of hereditary succession, no private
lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of
the public domain.
Undeniably, petitioner openly admitted that he is well aware
of the [above-cited] constitutional prohibition and even 25
asseverated that, because of such prohibition, he and respondent

registered the subject properties in the latters name. Clearly,26
petitioners actuations showed his palpable intent to skirt the

constitutional prohibition. On the basis of such admission, the
Court finds no reason why it should not apply the Muller ruling
and accordingly, deny petitioners claim for reimbursement.
As also explained in Muller, the time-honored principle is that
he who seeks equity must do equity, and he who comes into
equity must come with clean hands. Conversely stated, he who
has done inequity shall not be accorded equity. Thus, a litigant
may be denied relief by a court of equity on the ground that his
conduct has been inequitable, unfair and dishonest, or
fraudulent, or deceitful. 27
In this case, petitioners statements regarding the real source

of the funds used to purchase the subject parcels of land dilute
the veracity of his claims: While admitting to have
_______________
24 Id., at p. 72.
25 Rollo, p. 17.
26 Id., at p. 18.
27 Supra note 23 at p. 73, citing University of the Philippines v. Catungal, Jr., 338 Phil. 728,
734-744; 272 SCRA 221, 237 (1997).
779
VOL. 686, DECEMBER 3, 2012 779
Beumer vs. Amores
previously executed a joint affidavit that respondents personal
funds were used to purchase Lot 1, he likewise claimed that his
28
personal disability funds were used to acquire the same.

Evidently, these inconsistencies show his untruthfulness. Thus,
as petitioner has come before the Court with unclean hands, he
is now precluded from seeking any equitable refuge.
In any event, the Court cannot, even on the grounds of equity,
grant reimbursement to petitioner given that he acquired no
right whatsoever over the subject properties by virtue of its
unconstitutional purchase. It is well-established that equity as a
rule will follow the law and will not permit that to be done
indirectly which, because of public policy, cannot be done
directly. Surely, a contract that violates the Constitution and
29
the law is null and void, vests no rights, creates no obligations

and produces no legal effect at all. Corollary thereto, under
30
Article 1412 of the Civil Code, petitioner cannot have the

31
subject properties deeded to him or allow him to recover the
money he had spent for the purchase thereof. The law will not
aid either party to an illegal contract or agreement; it leaves the
parties where it finds them. Indeed, one cannot salvage any
32
rights from an unconstitutional transaction knowingly entered

into.
_______________
28 Id., at p. 82.
29 Frenzel v. Catito, G.R. No. 143958, July 11, 2003, 406 SCRA 55, 70.
30 Id., at pp. 69-70, citing Chavez v. Presidential Commission on Good Government, 307 SCRA
394 (1999).
31 Re: Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he
has given by virtue of the contract, or demand the performance of the others undertaking
xxxx
32 Id., citing Rellosa v. Hun, 93 Phil. 827 (1953).
780
ANNOTATED
Beumer vs. Amores
Neither can the Court grant petitioners claim for
reimbursement on the basis of unjust enrichment. As held 33
in Frenzel v. Catito, a case also involving a foreigner seeking

monetary reimbursement for money spent on purchase of
Philippine land, the provision on unjust enrichment does not
apply if the action is proscribed by the Constitution, to wit:
Futile, too, is petitioners reliance on Article 22 of the New
Civil Code which reads:
Art. 22. Every person who through an act of performance
by another, or any other means, acquires or comes into
possession of something at the expense of the latter without
just or legal ground, shall return the same to him.
The provision is expressed in the maxim: MEMO CUM
ALTERIUS DETER DETREMENTO PROTEST (No person
should unjustly enrich himself at the expense of another). An
action for recovery of what has been paid without just cause has
been designated as an accion in rem verso. This provision does
not apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari delicto doctrine. It
may be unfair and unjust to bar the petitioner from filing
an accion in rem verso over the subject properties, or from
recovering the money he paid for the said properties, but, as
Lord Mansfield stated in the early case of Holman v. Johnson:
The objection that a contract is immoral or illegal as between
the plaintiff and the defendant, sounds at all times very ill in
the mouth of the defendant. It is not for his sake, however, that
the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of,
contrary to the real justice, as between him and the
plaintiff. (Citations omitted)
34
Nor would the denial of his claim amount to an injustice based

on his foreign citizenship. Precisely, it is the Constitution itself
35
which demarcates the rights of citizens and non-

_______________
33 Rollo, p. 20.
34 Supra note 29 at p. 74, citing I. Tolentino, Civil Code of the Philippines (1990), p. 85
and Marissey v. Bologna, 123 So. 2d 537 (1960).
35 Rollo, pp. 19-21.
781
VOL. 686, DECEMBER 3, 2012 781
Beumer vs. Amores
citizens in owning Philippine land. To be sure, the constitutional
ban against foreigners applies only to ownership of Philippine
land and not to the improvements built thereon, such as the two
(2) houses standing on Lots 1 and 2142 which were properly
declared to be co-owned by the parties subject to partition.
Needless to state, the purpose of the prohibition is to conserve
the national patrimony and it is this policy which the Court is
36
duty-bound to protect.
WHEREFORE, the petition is DENIED. Accordingly, the
assailed October 8, 2009 Decision and January 24, 2011
Resolution of the Court of Appeals in CA-G.R. CV No. 01940 are
AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Perez, JJ.,
concur.
Petition denied, judgment and resolution affirmed.
Notes.Unjust enrichment exists when a person unjustly
retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental
principles of justice, equity and good governance. (Bank of the
Philippine Islands vs. Reyes, 664 SCRA 700 [2012])
The doctrine of quantum meruit (as much as one deserves)
prevents undue enrichment based on the equitable postulate
that it is unjust for a person to retain benefit without paying for
it. (Sazon vs. Vasquez-Menancio, 666 SCRA 707 [2012])
o0o
G.R. No. 143855. September 21, 2010.*
REPRESENTATIVES GERARDO S. ESPINA, ORLANDO FUA,
JR., PROSPERO AMATONG, ROBERT ACE S. BARBERS,
RAUL M. GONZALES, PROSPERO PICHAY, JUAN MIGUEL
ZUBIRI and FRANKLIN BAUTISTA, petitioners, vs. HON.
RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR
ROXAS (Secretary of Trade and Industry), HON. FELIPE
MEDALLA (Secretary of National Economic and Development
Authority), GOV. RAFAEL BUENAVENTURA (Bangko Sentral
ng Pilipinas) and HON. LILIA BAUTISTA (Chairman,
Securities and Exchange Commission), respondents.
_______________
* EN BANC.
18
18 SUPREME COURT
REPORTS
ANNOTATED
Espina vs. Zamora, Jr.
Judicial Review; Locus Standi; Words and Phrases; Legal
standing or locus standi refers to the right of a party to come to a
court of justice and make such a challengemore particularly, it
refers to his personal and substantial interest in that he has
suffered or will suffer direct injury as a result of the passage of
that law. The long settled rule is that he who challenges the
validity of a law must have a standing to do so. Legal standing
or locusstandi refers to the right of a party to come to a court of
justice and make such a challenge. More particularly, standing
that law. To put it another way, he must show that he has been
or is about to be denied some right or privilege to which he is
lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the law he complains of. Here,
there is no clear showing that the implementation of the Retail
Trade Liberalization Act prejudices petitioners or inflicts
damages on them, either as taxpayers or as legislators. Still the
Court will resolve the question they raise since the rule on
standing can be relaxed for nontraditional plaintiffs like
ordinary citizens, taxpayers, and legislators when as in this case
the public interest so requires or the matter is of transcendental
importance, of overarching significance to society, or of
paramount public interest.
National Economy and Patrimony; While Section 19, Article
II of the 1987 Constitution requires the development of a self-
reliant and independent national economy effectively controlled
by Filipino entrepreneurs, it does not impose a policy of Filipino
monopoly of the economic environment.As the Court explained
in Taada v. Angara, 272 SCRA 18 (1997), the provisions of
Article II of the 1987 Constitution, the declarations of principles
and state policies, are not self-executing. Legislative failure to
pursue such policies cannot give rise to a cause of action in the
courts. The Court further explained in Taada that Article XII
of the 1987 Constitution lays down the ideals of economic
nationalism: (1) by expressing preference in favor of qualified
Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony and in the use of
Filipino labor, domestic materials and locally-produced goods;
(2) by mandating the State to adopt measures that help make
them competitive; and (3) by requiring the State to develop a
self-reliant and independent national economy effectively
controlled by Filipinos. In other words, while Section 19, Article
II of the 1987 Constitution
19
VOL. 631, 1
SEPTEMBER 21, 2010 9
requires the development of a self-reliant and independent
national economy effectively controlled by Filipino
entrepreneurs, it does not impose a policy of Filipino monopoly
of the economic environment. The objective is simply to prohibit
foreign powers or interests from maneuvering our economic
policies and ensure that Filipinos are given preference in all
areas of development.
Same; While the Constitution mandates a bias in favor of
Filipino goods, services, labor and enterprises, it also recognizes
the need for business exchange with the rest of the world on the
bases of equality and reciprocity and limits protection of Filipino
enterprises only against foreign competition and trade practices
that are unfair.Indeed, the 1987 Constitution takes into
account the realities of the outside world as it requires the
pursuit of a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of
equality and reciprocity; and speaks of industries which are
competitive in both domestic and foreign markets as well as of
the protection of Filipino enterprises against unfair foreign
competition and trade practices. Thus, while the Constitution
mandates a bias in favor of Filipino goods, services, labor and
enterprises, it also recognizes the need for business exchange
with the rest of the world on the bases of equality and
reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair.
Same; Trade and Industry; Police Power; Section 10, Article
XII of the 1987 Constitution gives Congress the discretion to
reserve to Filipinos certain areas of investments upon the
recommendation of the National Economic and Development
Authority (NEDA) and when the national interest requires.
Section 10, Article XII of the 1987 Constitution gives Congress
the discretion to reserve to Filipinos certain areas of
investments upon the recommendation of the NEDA and when
the national interest requires. Thus, Congress can determine
what policy to pass and when to pass it depending on the
economic exigencies. It can enact laws allowing the entry of
foreigners into certain industries not reserved by the
Constitution to Filipino citizens. In this case, Congress has
decided to open certain areas of the retail trade business to
foreign investments instead of reserving them exclusively to
Filipino citizens. The NEDA has not opposed such policy.20
2 SUPREME COURT
0 REPORTS
ANNOTATED
Same; Same; Retail Trade Liberalization Act (R.A. 8762);
Police Power; The control and regulation of trade in the interest
of the public welfare is of course an exercise of the police power of
the State; To the extent that Republic Act (R.A.) No. 8762, the
Retail Trade Liberalization Act, lessens the restraint on the
foreigners right to property or to engage in an ordinarily lawful
business, it cannot be said that the law amounts to a denial of
the Filipinos right to property and to due process of law.The
control and regulation of trade in the interest of the public
welfare is of course an exercise of the police power of the State.
A persons right to property, whether he is a Filipino citizen or
foreign national, cannot be taken from him without due process
of law. In 1954, Congress enacted the Retail Trade
Nationalization Act or R.A. 1180 that restricts the retail
business to Filipino citizens. In denying the petition assailing
the validity of such Act for violation of the foreigners right to
substantive due process of law, the Supreme Court held that the
law constituted a valid exercise of police power. The State had
an interest in preventing alien control of the retail trade and
R.A. 1180 was reasonably related to that purpose. That law is
not arbitrary. Here, to the extent that R.A. 8762, the Retail
Trade Liberalization Act, lessens the restraint on the foreigners
right to property or to engage in an ordinarily lawful business, it
cannot be said that the law amounts to a denial of the Filipinos
right to property and to due process of law. Filipinos continue to
have the right to engage in the kinds of retail business to which
the law in question has permitted the entry of foreign investors.
Same; Same; Police Power; It is not within the province of the
Court to inquire into the wisdom of Republic Act (R.A.) No. 8762
save when it blatantly violates the Constitution.It is not within
the province of the Court to inquire into the wisdom of R.A. 8762
save when it blatantly violates the Constitution. But as the
Court has said, there is no showing that the law has
contravened any constitutional mandate. The Court is not
convinced that the implementation of R.A. 8762 would
eventually lead to alien control of the retail trade business.
Petitioners have not mustered any concrete and strong
argument to support its thesis. The law itself has provided strict
safeguards on foreign participation in that business.
PETITION to declare R.A. No. 8762 Unconstitutional.
The facts are stated in the opinion of the Court.21
VOL. 631, 21
SEPTEMBER 21, 2010
Peoples Law Office for petitioners.
Virgilio A. Sevandal for Secretary of Trade and Industry.
ABAD, J.:
This case calls upon the Court to exercise its power of judicial
review and determine the constitutionality of the Retail Trade
Liberalization Act of 2000, which has been assailed as in breach
of the constitutional mandate for the development of a self-
by Filipinos.
The Facts and the Case
On March 7, 2000 President Joseph E. Estrada signed into law
Republic Act (R.A.) 8762, also known as the Retail Trade
Liberalization Act of 2000. It expressly repealed R.A. 1180,
which absolutely prohibited foreign nationals from engaging in
the retail trade business. R.A. 8762 now allows them to do so
under four categories:
Category Less than Exclusively for
A US$2,500,000.00 Filipino citizens
and
corporations
wholly owned
by Filipino
citizens.
Category US$2,500,000.00 For the first two
B up but less than years of R.A.
Category Less than Exclusively for
A US$2,500,000.00 Filipino citizens
and
corporations
wholly owned
by Filipino
citizens.
US$7,500,000.00 8762s
effectivity,
foreign
ownership is
allowed up to
60%. After the
two-year
period, 100%
foreign equity
shall be
allowed.
Category US$7,500,000.00 May be wholly
C or more owned by
foreigners.
Foreign
investments for
establishing a
store in
Categories B
and C shall not
be less than the
equivalent in
Philippine
Pesos of
US$830,000.00.
22
22 SUPREME COURT
REPORTS ANNOTATED
Category US$250,000.00 May be
D per store of wholly
foreign owned by
enterprises foreigners.
specializing in
high-end or
luxury
products
R.A. 8762 also allows natural-born Filipino citizens, who had
lost their citizenship and now reside in the Philippines, to
engage in the retail trade business with the same rights as
Filipino citizens.
On October 11, 2000 petitioners Magtanggol T. Gunigundo
I,** Michael T. Defensor, Gerardo S. Espina, Benjamin S.
**
Lim, Orlando Fua, Jr., Prospero Amatong, Sergio Apostol,**

**
Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales,

**
Jaime Jacob, Apolinario

** Lozada, Jr., Leonardo
**
Montemayor, Ma. Elena Palma-Gil, Prospero Pichay, Juan

** **
Miguel Zubiri and Franklin Bautista, all members of the House

of Representatives, filed the present petition, assailing the
constitutionality of R.A. 8762 on the following grounds:
First, the law runs afoul of Sections 9, 19, and 20 of Article II
of the Constitution which enjoins the State to place the national
economy under the control of Filipinos to achieve equal
distribution of opportunities, promote industrialization and full
employment, and protect Filipino enterprise against unfair
competition and trade policies.
Second, the implementation of R.A. 8762 would lead to alien
control of the retail trade, which taken together with alien
dominance of other areas of business, would result in the loss of
effective Filipino control of the economy.
Third, foreign retailers like Walmart and K-Mart would crush
Filipino retailers and sari-sari store vendors, destroy self-
employment, and bring about more unemployment.
_______________
** Ordered dropped as petitioners per Supreme Court En Banc Resolution dated August 2,
2005. Rollo, p. 170.
23
VOL. 631, 23
SEPTEMBER 21, 2010
Fourth, the World Bank-International Monetary Fund had
improperly imposed the passage of R.A. 8762 on the government
as a condition for the release of certain loans.
Fifth, there is a clear and present danger that the law would
promote monopolies or combinations in restraint of trade.
Respondents Executive Secretary Ronaldo Zamora, Jr., Trade
and Industry Secretary Mar Roxas, National Economic and
Development Authority (NEDA) Secretary Felipe Medalla,
Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and
Securities and Exchange Commission Chairman Lilia Bautista
countered that:
First, petitioners have no legal standing to file the petition.
They cannot invoke the fact that they are taxpayers since R.A.
8762 does not involve the disbursement of public funds. Nor can
they invoke the fact that they are members of Congress since
they made no claim that the law infringes on their right as
legislators.
Second, the petition does not involve any justiciable
controversy. Petitioners of course claim that, as members of
Congress, they represent the small retail vendors in their
respective districts but the petition does not allege that the
subject law violates the rights of those vendors.
Third, petitioners have failed to overcome the presumption of
constitutionality of R.A. 8762. Indeed, they could not specify how
the new law violates the constitutional provisions they cite.
Sections 9, 19, and 20 of Article II of the Constitution are not
self-executing provisions that are judicially demandable.
Fourth, the Constitution mandates the regulation but not the
prohibition of foreign investments. It directs Congress to reserve
to Filipino citizens certain areas of investments upon the
recommendation of the NEDA and when the national interest so
dictates. But the Constitution leaves to the discretion of the
Congress whether or not to make such reservation.
24
24 SUPREME COURT
REPORTS
ANNOTATED
It does not prohibit Congress from enacting laws allowing the
entry of foreigners into certain industries not reserved by the
Constitution to Filipino citizens.
The Issues Presented
Simplified, the case presents two issues:
1. Whether or not petitioner lawmakers have the legal
standing to challenge the constitutionality of R.A. 8762; and
2. Whether or not R.A. 8762 is unconstitutional.
The Courts Ruling
One. The long settled rule is that he who challenges the
validity of a law must have a standing to do so. Legal standing
1
or locus standi refers to the right of a party to come to a court of

justice and make such a challenge. More particularly, standing
that law. To put it another way, he must show that he has been
2
or is about to be denied some right or privilege to which he is

lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the law he complains of. 3
Here, there is no clear showing that the implementation of the

Retail Trade Liberalization Act prejudices petitioners or inflicts
damages on them, either as taxpayers or as legisla- 4
_______________
1 Jumamil v. Cafe, G.R. No. 144570, September 21, 2005, 470 SCRA 475, 486-487.
2 Abaya v. Ebdane, Jr., G.R. No. 167919, February 14, 2007, 515 SCRA 720, 756.
3 BAYAN (Bagong Alyansang Makabayan) v. Executive Secretary Zamora, 396 Phil. 623, 646-
647; 342 SCRA 449, 478 (2000).
4 Public Interest Center, Inc. v. Roxas, G.R. No. 125509, January 31, 2007, 513 SCRA 457, 470.
25
VOL. 631, 25
SEPTEMBER 21, 2010
tors. Still the Court will resolve the question they raise since
5
the rule on standing can be relaxed for nontraditional plaintiffs

like ordinary citizens, taxpayers, and legislators when as in this
case the public interest so requires or the matter is of
transcendental importance, of overarching significance to
society, or of paramount public interest. 6
Two. Petitioners mainly argue that R.A. 8762 violates the

mandate of the 1987 Constitution for the State to develop a self-
by Filipinos. They invoke the provisions of the Declaration of
Principles and State Policies under Article II of the 1987
Constitution, which read as follows:
Section 9. The State shall promote a just and
dynamic social order that will ensure the prosperity and
independence of the nation and free the people from
poverty through policies that provide adequate social
services, promote full employment, a rising standard of
living, and an improved quality of life for all.
xxxx
Section 19. The State shall develop a self-reliant and
independent national economy effectively controlled by
Filipinos.
Section 20. The State recognizes the indispensable
role of the private sector, encourages private enterprise,
and provides incentives to needed investments.
_______________
5 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), G.R. Nos. 183591, 183752, 183893, 183951 & 183962, October 14,
2008, 568 SCRA 402, 457; Bagatsing v. Committee on Privatization, PN[O]C, 316 Phil. 404, 419;
246 SCRA 334 (1995).
6 Automotive Industry Workers Alliance (AIWA) v. Hon. Romulo, 489 Phil. 710, 719; 449 SCRA
1, 11 (2005).
26
26 SUPREME COURT
REPORTS
ANNOTATED
Petitioners also invoke the provisions of the National Economy
and Patrimony under Article XII of the 1987 Constitution, which
reads:
Section 10. The Congress shall, upon
recommendation of the economic and planning agency,
when the national interest dictates, reserve to citizens of
the Philippines or to corporations or associations at least
sixty per centum of whose capital is owned by such
citizens, or such higher percentage as Congress may
prescribe, certain areas of investments. The Congress
shall enact measures that will encourage the formation
and operation of enterprises whose capital is wholly
owned by Filipinos.
In the grant of rights, privileges, and concessions
covering the national economy and patrimony, the State
shall give preference to qualified Filipinos.
The State shall regulate and exercise authority over
foreign investments within its national jurisdiction and
in accordance with its national goals and priorities.
xxxx
Section 12. The State shall promote the preferential
use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make
them competitive.
Section 13. The State shall pursue a trade policy that
serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and
reciprocity.
But, as the Court explained in Taada v. Angara, the 7
provisions of Article II of the 1987 Constitution, the declarations

of principles and state policies, are not self-executing.
Legislative failure to pursue such policies cannot give rise to a
cause of action in the courts.
_______________
7 338 Phil. 546, 580-581; 272 SCRA 18, 54 (1997).

27
VOL. 631, 27
SEPTEMBER 21, 2010
The Court further explained in Taada that Article XII of
the 1987 Constitution lays down the ideals of economic
nationalism: (1) by expressing preference in favor of qualified
Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony and in the use of
Filipino labor, domestic materials and locally-produced goods;
(2) by mandating the State to adopt measures that help make
them competitive; and (3) by requiring the State to develop a
self-reliant and independent national economy effectively
controlled by Filipinos. 8
In other words, while Section 19, Article II of the 1987
Constitution requires the development of a self-reliant and
independent national economy effectively controlled by Filipino
entrepreneurs, it does not impose a policy of Filipino monopoly
of the economic environment. The objective is simply to prohibit
foreign powers or interests from maneuvering our economic
policies and ensure that Filipinos are given preference in all
areas of development.
Indeed, the 1987 Constitution takes into account the realities
of the outside world as it requires the pursuit of a trade policy
that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and
reciprocity; and speaks of industries which are competitive in
both domestic and foreign markets as well as of the protection of
Filipino enterprises against unfair foreign competition and trade
practices. Thus, while the Constitution mandates a bias in favor
of Filipino goods, services, labor and enterprises, it also
recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign
competition and trade practices that are unfair.
9
In other words, the 1987 Constitution does not rule out the
entry of foreign investments, goods, and services. While it
_______________
8 Id., at p. 584; pp. 57-58.

9 Id., at pp. 584-585; pp. 58-59.
28
28 SUPREME COURT
REPORTS
ANNOTATED
does not encourage their unlimited entry into the country, it
does not prohibit them either. In fact, it allows an exchange on
the basis of equality and reciprocity, frowning only on foreign
competition that is unfair. The key, as in all economies in the
10
world, is to strike a balance between protecting local businesses

and allowing the entry of foreign investments and services.
More importantly, Section 10, Article XII of the 1987
Constitution gives Congress the discretion to reserve to Filipinos
certain areas of investments upon the recommendation of the
NEDA and when the national interest requires. Thus, Congress
can determine what policy to pass and when to pass it
depending on the economic exigencies. It can enact laws
allowing the entry of foreigners into certain industries not
reserved by the Constitution to Filipino citizens. In this case,
Congress has decided to open certain areas of the retail trade
business to foreign investments instead of reserving them
exclusively to Filipino citizens. The NEDA has not opposed such
policy.
The control and regulation of trade in the interest of the public
welfare is of course an exercise of the police power of the State.
A persons right to property, whether he is a Filipino citizen or
foreign national, cannot be taken from him without due process
of law. In 1954, Congress enacted the Retail Trade
Nationalization Act or R.A. 1180 that restricts the retail
business to Filipino citizens. In denying the petition assailing
the validity of such Act for violation of the foreigners right to
substantive due process of law, the Supreme Court held that the
law constituted a valid exercise of police power. The State had
11
an interest in preventing alien control of the retail trade and

R.A. 1180 was reasonably related to that purpose. That law is
not arbitrary.
_______________
10 Id., at p. 585; p. 59.

11 Ichong v. Hernandez, 101 Phil. 1155, 1191 (1957).
29
VOL. 631, 29
SEPTEMBER 21, 2010
Here, to the extent that R.A. 8762, the Retail Trade
Liberalization Act, lessens the restraint on the foreigners right
to property or to engage in an ordinarily lawful business, it
cannot be said that the law amounts to a denial of the Filipinos
right to property and to due process of law. Filipinos continue to
have the right to engage in the kinds of retail business to which
the law in question has permitted the entry of foreign investors.
Certainly, it is not within the province of the Court to inquire
into the wisdom of R.A. 8762 save when it blatantly violates the
Constitution. But as the Court has said, there is no showing that
the law has contravened any constitutional mandate. The Court
is not convinced that the implementation of R.A. 8762 would
eventually lead to alien control of the retail trade business.
Petitioners have not mustered any concrete and strong
argument to support its thesis. The law itself has provided strict
safeguards on foreign participation in that business. Thus
First, aliens can only engage in retail trade business subject to
the categories above-enumerated; Second, only nationals from,
or juridical entities formed or incorporated in countries which
allow the entry of Filipino retailers shall be allowed to engage in
retail trade business; and Third, qualified foreign retailers shall
not be allowed to engage in certain retailing activities outside
their accredited stores through the use of mobile or rolling stores
or carts, the use of sales representatives, door-to-door selling,
restaurants and sari-saristores and such other similar retailing
activities.
In sum, petitioners have not shown how the retail trade
liberalization has prejudiced and can prejudice the local small
and medium enterprises since its implementation about a
decade ago.
WHEREFORE, the Court DISMISSES the petition for lack of
merit. No costs.
o0o
Manila Prince Hotel vs.
Government Service
Insurance System
G.R. No. 122156. February 3, 1997. *
MANILA PRINCE HOTEL, petitioner, vs. GOVERNMENT

SERVICE INSURANCE SYSTEM, MANILA HOTEL
CORPORATION, COMMITTEE ON PRIVATIZATION and
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL,
respondents.
Constitutional Law; Statutes; Contracts; Words and Phrases; A
constitution is a system of fundamental laws for the governance and
administration of a nationit is supreme, imperious, absolute and
unalterable except by the authority from which it emanates. Since the
Constitution is the fundamental, paramount and supreme Iaw of the
nation, it is deemed written in every statute and contract.We now
resolve. A constitution is a system of fundamental laws for the
governance and administration of a nation. It is supreme, imperious,
_______________
*EN BANC.
409
VOL. 267, 4
FEBRUARY 3, 1997 09
Manila Prince Hotel us.
Government Service
lnsurance System
absolute and unalterable except by the authority from which it
emanates. It has been defined as the fundamental and paramount law of
the nation. lt prescribes the permanent framework of a system of
government, assigns to the different departments their respective
powers and duties, and establishes certain fixed principles on which
government is founded. The fundamental conception in other words is
that it is a supreme law to which all other laws must conform and in
accordance with which all private rights must be determined and all
public authority administered. Under the doctrine of constitutional
supremacy, if a law or contract violates any norm of the constitution that
law or contract whether promulgated by the legislative or by the
executive branch or entered into by private persons for private purposes
is null and void and without any force and effect. Thus, since the
Constitution is the fundamental, paramount and supreme law of the
nation, it is deemed written in every statute and contract.
Same; Same; Statutory Construction; A constitutional provision is
self-executing if the nature and extent of the right conferred and the
liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and.construction of its terms, and there is
no language indicating that the subject is referred to the legislature for
action.Admittedly, some constitutions are merely declarations of
policies and principles. Their provisions command the legislature to
enact laws and carry out the purposes of the framers who merely
establish an outline of government providing for the different
departments of the governmental machinery and securing certain
fundamental and inalienable rights of citizens. A provision which lays
down a general principle, such as those found in Art. II of the 1987
Constitution, is usually not self-executing. But a provision which is
complete in itself and becomes operative without the aid of
supplementary or enabling legislation, or that which supplies sufficient
rule by means of which the right it grants may be enjoyed or protected,
is self-executing. Thus a constitutional provision is selfexecuting if the
nature and extent of the right conferred and the liability imposed are
fixed by the constitution itself, so that they can be determined by an
examination and construction of its terms, and there is no language
indicating that the subject is referred to the legislature for action.
Same; Same; Same; Unless it is expressly provided that a legislative
act is necessary to enforce a constitutional mandate, the presumption now
is that all provisions of the constitution are self-
410
4 SUPREME
10 COURT REPORTS
ANNOTATED
Government Service
Insurance System
executing.As against constitutions of the past, modern constitutions
have been generally drafted upon a different principle and have often
become in effect extensive codes of laws intended to operate directly
upon the people in a manner similar to that of statutory enactments,
and the function of constitutional conventions has evolved into one more
like that of a legislative body. Hence, unless it is expressly provided that
a legislative act is necessary to enforce a constitutional mandate, the
presumption now is that all provisions of the constitution are self-
executing. If the constitutional provisions are treated as requiring
legislation instead of self-executing, the legislature would have the
power to ignore and practically nullify the mandate of the fundamental
law. This can be cataclysmic.
Same; Same; Same; Minor details may be left to the legislature
without impairing the self-executing nature of constitutional
provisions.Quite apparently, Sec. 10, second par., of Art. XII is
couched in such a way as not to make it appear that it is non-self-
executing but simply for purposes of style. But, certainly, the legislature
is not precluded from enacting further laws to enforce the constitutional
provision so long as the contemplated statute squares with the
Constitution. Minor details may be left to the legislature without
impairing the self-executing nature of constitutional provisions.
Same; Same; Same; The omission from a constitution of any express
provision for a remedy for enforcing a right or liability is not necessarily
an indication that it was not intended to be self-executingthe rule is
that a self-executing provision of the constitution does not necessarily
exhaust legislative power on the subject, but any legislation must be in
harmony with the constitution, further the exercise of constitutional right
and make it more available.In self-executing constitutional provisions,
the legislature may still enact legislation to facilitate the exercise of
powers directly granted by the constitution, further the operation of
such a provision, prescribe a practice to be used for its enforcement,
provide a convenient remedy for the protection of the rights secured or
the determination thereof, or place reasonable safeguards around the
exercise of the right. The mere fact that legislation may supplement and
add to or prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision ineffective in
the absence of such legislation. The omission from a constitution of any
express provision for a remedy for enforcing a right or liability is not
necessarily an indication that it was not intended to be self-executing.
The rule is that a self-executing provision of the constitution does not
neces-
411
VOL 267, 4
FEBRUARY 3, 1997 11
Government Service
Insurance System
sarily exhaust legislative power on the subject, but any legislation
must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. Subsequent legislation
however does not necessarily mean that the subject constitutional
provision is not, by itself, fully enforceable.
Same; Same; Same; A constitutional provision may be selfexecuting in
one part and non-self-executing in another.Respondents also argue
that the non-self-executing nature of Sec. 10, second par., of Art. XII is
implied from the tenor of the first and third paragraphs of the same
section which undoubtedly are not selfexecuting. The argument is
flawed. If the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation and
operation of enterprises fully owned by Filipinos, as in the first
paragraph, and the State still needs legislation to regulate and exercise
authority over foreign investments within its national jurisdiction, as in
the third paragraph, then a fortiori, by the same logic, the second
paragraph can only be selfexecuting as it does not by its language
require any legislation in order to give preference to qualified Filipinos
in the grant of rights, privileges and concessions covering the national
economy and patrimony. A constitutional provision may be self-
executing in one part and non-self-executing in another.
Same; National Economy and Patrimony; When the Constitution
mandates that in the grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give preference to
qualified Filipinos, it means just thatqualified Filipinos shall be
preferred.On the other hand, Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in
itself and which needs no further guidelines or implementing laws or
rules for its enforcement. From its very words the provision does not
require any legislation to put it in operation. It is per se judicially
enforceable. When our Constitution mandates that [i]n the grant of
rights, privileges, and concessions covering national economy and
patrimony, the State shall give preference to qualified Filipinos,it means
just thatqualified Filipinos shall be preferred.
Same; Same; When the Constitution declares that a right exists in
certain specified circumstances, an action may be maintained to enforce
such right notwithstanding the absence of any legislation on the subject
such right enforces itself by its own inherent potency and puissance.
And when our Constitution declares that a right
412
4 SUPREME
12 COURT REPORTS
ANNOTATED
Government Service
Insurance System
exists in certain specified circumstances an action may be
maintained to enforce such right notwithstanding the absence of any
legislation on the subject; consequently, if there is no statute especially
enacted to enforce such constitutional right, such right enforces itself by
its own inherent potency and puissance, and from which all legislations
must take their bearings. Where there is a right there is a remedy. Ubi
jus ibi remedium.
Same; Same; Words and Phrases; When the Constitution speaks of
national patrimony, it refers not only to the natural resources of the
Philippines but also to the cultural heritage of the Filipinos.In its plain
and ordinary meaning, the term patrimony pertains to heritage. When
the Constitution speaks of national patrimony,it refers not only to the
natural resources of the Philippines, as the Constitution could have very
well used the term natural resources, but also to the cultural heritageof
the Filipinos.
Same; Same; Manila Hotel; Manila Hotel has become a landmarka
living testimonial of Philippine heritage.Manila Hotel has become a
landmarka living testimonial of Philippine heritage. While it was
restrictively an American hotel when it first opened in 1912, it
immediately evolved to be truly Filipino. Formerly a concourse for the
elite, it has since then become the venue of various significant events
which have shaped Philippine history. It was called the Cultural Center
of the 1930s. It was the site of the festivities during the inauguration of
the Philippine Commonwealth, Dubbed as the Official Guest House of
the Philippine Governmentit plays host to dignitaries and official visitors
who are accorded the traditional Philippine hospitality.
Same; Same; Same; Verily, Manila Hotel has become part of our
national economy and patrimony.For more than eight (8) decades
Manila Hotel has bore mute witness to the triumphs and failures, loves
and frustrations of the Filipinos; its existence is impressed with public
interest; its own historicity associated with our struggle for sovereignty,
independence and nationhood. Verily, Manila Hotel has become part of
our national economy and patrimony. For sure, 51% of the equity of the
MHC comes within the purview of the constitutional shelter for it
comprises the majority and controlling stock, so that anyone who
acquires or owns the 51% will have actual control and management of
the hotel. In this instance, 51% of the MHC cannot be disassociated from
the hotel and the land on which the hotel edifice stands.
413
VOL. 267, 4
FEBRUARY 3, 1997 13
Government Service
Insurance System
Same; Same; Same; Filipino First Policy; Words and Phrases; The
term qualified Filipinos as used in the Constitution also includes
corporations at least 60% of which is owned by Filipinos.
Consequently, we cannot sustain respondents claim that the Filipino
First Policy provision is not applicable since what is being sold is only
51% of the outstanding shares of the corporation, not the Hotel building
nor the land upon which the building stands. The argument is pure
sophistry. The term qualified Filipinos as used in our Constitution also
includes corporations at least 60% of which is owned by Filipinos. This is
very clear from the proceedings of the 1986 Constitutional Commission.
Same; Statutory Construction; Even some of the provisions of the
Constitution which evidently need implementing legislation have
juridical life of their own and can be the source of judicial remedy.The
penchant to try to whittle away the mandate of the Constitution by
arguing that the subject provision is not self-executory and requires
implementing legislation is quite disturbing. The attempt to violate a
clear constitutional provisionby the government itselfis only too
distressing. To adopt such a line of reasoning is to renounce the duty to
ensure faithfulness to the Constitution, For, even some of the provisions
of the Constitution which evidently need implementing legislation have
juridical life of their own and can be the source of a judicial remedy. We
cannot simply afford the government a defense that arises out of the
failure to enact further enabling, implementing or guiding legislation.
Same; Same; Words and Phrases; In constitutional jurisprudence, the
acts of a person distinct from the government are considered state
action covered by the Constitution (1) when the activity it engages in is a
public function; (2) when the government is so significantly involved
with the private actor as to make the government responsible for his
action; and, (3) when the government has approved or authorized the
action.Respondentsfurther argue that the constitutional provision is
addressed to the State, not to respondent GSIS which by itself possesses
a separate and distinct personality. This argument again is at best
specious. It is undisputed that the sale of 51% of the MHC could only be
carried out with the prior approval of the State acting through
respondent Committee on Privatization. As correctly pointed out by Fr.
Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of
respondents GSIS and MHC a state action. In constitutional
jurisprudence, the acts of persons distinct from the government are
considered state action
414
4 SUPREME
14 COURT REPORTS
ANNOTATED
Government Service
Insurance System
covered by the Constitution (1) when the activity it engages in is
a public function;(2) when the government is so significantly involved
with the private actor as to make the government responsible for his
action; and, (3) when the government has approved or authorized the
action. It is evident that the act of respondent GSIS in selling 51% of its
share in respondent MHC comes under the second and third categories
of state action. Without doubt therefore the transaction, although
entered into by respondent GSIS, is in fact a transaction of the State and
therefore subject to the constitutional command.
Same; Same; Same; When the Constitution addresses the State it
refers not only to the people but also to the government as elements of
the State.When the Constitution addresses the State it refers not only
to the people but also to the government as elements of the State. After
all, government is composed of three (3) divisions of powerlegislative,
executive and judicial. Accordingly, a constitutional mandate directed to
the State is correspondingly directed to the three (3) branches of
government. It is undeniable that in this case the subject constitutional
injunction is addressed among others to the Executive Department and
respondent GSIS, a government instrumentality deriving its authority
from the State.
Same; National Economy and Patrimony; Filipino First Policy; Bids
and Bidding; Since the Filipino First Policy provision of the Constitution
bestows preference on qualified Filipinos, the mere tending of the highest
bid is not an assurance that the highest bidder will be declared the
winning bidder.It should be stressed that while the Malaysian firm
offered the higher bid it is not yet the winning bidder. The bidding rules
expressly provide that the highest bidder shall only be declared the
winning bidder after it has negotiated and executed the necessary
contracts, and secured the requisite approvals. Since the Filipino First
Policy provision of the Constitution bestows preference on qualified
Filipinosthe mere tending of the highest bid is not an assurance that the
highest bidder will be declared the winning bidder. Resultantly,
respondents are not bound to make the award yet, nor are they under
obligation to enter into one with the highest bidder. For in choosing the
awardee respondents are mandated to abide by the dictates of the 1987
Constitution the provisions of which are presumed to be known to all the
bidders and other interested parties.
415
VOL. 267, 4
FEBRUARY 3, 1997 15
Government Service
Insurance System
Same; Same; Same; Same; Adhering to the doctrine of constitutional
supremacy, the Filipino First Policy constitutional provision is, as it
should be, impliedly written in the bidding rules issued by GSIS, lest the
bidding rules be nullified for being violative of the Constitution.
Adhering to the doctrine of constitutional supremacy, the subject
constitutional provision is, as it should be, impliedly written in the
bidding rules issued by respondent GSIS, lest the bidding rules be
nullified for being violative of the Constitution. It is a basic principle in
constitutional law that all laws and contracts must conform with the
fundamental law of the land. Those which violate the Constitution lose
their reason for being.
Same; Same; Same; Same; Certainly, the constitutional mandate
itself is reason enough not to award the block of shares immediately to
the foreign bidder notwithstanding its submission of a higher, or even the
highest, bidParagraph V.J.1 of the bidding rules provides that [i]f for
any reason the Highest Bidder cannot be awarded the Block of Shares,
GSIS may offer this to other Qualified Bidders that have validly
submitted bids provided that these Qualified Bidders are willing to
match the highest bid in terms of price per share.Certainly, the
constitutional mandate itself is reason enough not to award the block of
shares immediately to the foreign bidder notwithstanding its submission
of a higher, or even the highest, bid. In fact, we cannot conceive of
a stronger reason than the constitutional injunction itself.
Same; Same; Same; Where a foreign firm submits the highest bid in a
public bidding concerning the grant of rights, privileges and concessions
covering the national economy and patrimony, thereby exceeding the bid
of a Filipino, there is no question that the Filipino will have to be allowed
to match the bid of the foreign entity.ln the instant case, where a
foreign firm submits the highest bid in a public bidding concerning the
grant of rights, privileges and concessions covering the national economy
and patrimony, thereby exceeding the bid of a Filipino, there is no
question that the Filipino will have to be allowed to match the bid of the
foreign entity. And if the Filipino matches the bid of a foreign firm the
award should go to the Filipino. It must be so if we are to give life and
meaning to the Filipino First Policy provision of the 1987 Constitution.
For, while this may neither be expressly stated nor contemplated in the
bidding rules, the constitutional fiat is omnipresent to be simply
disregarded. To ignore it would be to sanction a perilous skirting of the
basic law.
416
4 SUPREME
16 COURT REPORTS
ANNOTATED
Government Service
Insurance System
Same; Any person desiring to do business in the Philippines or with
any of its agencies or instrumentalities is presumed to know his rights
and obligations under the Constitution and the laws of the forum.This
Court does not discount the apprehension that this policy may
discourage foreign investors. But the Constitution and laws of the
Philippines are understood to be always open to public scrutiny. These
are given factors which investors must consider when venturing into
business in a foreign jurisdiction. Any person therefore desiring to do
business in the Philippines or with any of its agencies or
instrumentalities is presumed to know his rights and obligations under
the Constitution and the laws of the forum.
Same; Statutory Construction; The miscomprehension of the
Constitution is regrettable, thus the Supreme Court would rather remedy
the indiscretion while there is still an opportunity to do so than let the
government develop the habit of forgetting that the Constitution lays
down the basic conditions and parameters for its actions.Besides, there
is no time frame for invoking the constitutional safeguard unless
perhaps the award has been finally made. To insist on selling the Manila
Hotel to foreigners when there is a Filipino group willing to match the
bid of the foreign group is to insist that government be treated as any
other ordinary market player, and bound by its mistakes or gross errors
of judgment, regardless of the consequences to the Filipino people. The
miscomprehension of the Constitution is regrettable. Thus we would
rather remedy the indiscretion while there is still an opportunity to do
so than let the government develop the habit of forgetting that the
Constitution lays down the basic conditions and parameters for its
actions.
Same; Same; National Economy and Patrimony; Filipino First
Policy; Nationalism; The Filipino First Policy is a product of Philippine
nationalism, embodied in the 1987 Constitution not merely to be used as
a guideline for future legislation but primarily to be enforcedso must it
be enforced.The Filipino First Policy is a product of Philippine
nationalism. lt is embodied in the 1987 Constitution not merely to be
used as a guideline for future legislation but primarily to be enforced; so
must it be enforced. This Court as the ultimate guardian of the
Constitution will never shun, under any reasonable circumstance, the
duty of upholding the majesty of the Constitution which it is tasked to
defend. It is worth emphasizing that it is not the intention of this Court
to impede and diminish, much less undermine, the influx of foreign
investments. Far from it,
417
VOL. 267, 4
FEBRUARY 3, 1997 17
Government Service
Insurance System
the Court encourages and welcomes more business opportunities but
avowedly sanctions the preference for Filipinos whenever such
preference is ordained by the Constitution.
Same; Same; Same; The Supreme Court will always defer to the
Constitution in the proper governance of a free society, after all, there is
nothing so sacrosanct in any economic policy as to draw itself beyond
judicial review when the Constitution is involved.Privatization of a
business asset for purposes of enhancing its business viability and
preventing further losses, regardless of the character of the asset, should
not take precedence over non-material values. A commercial, nay even a
budgetary, objective should not be pursued at the expense of national
pride and dignity. For the Constitution enshrines higher and nobler non-
material values. Indeed, the Court will always defer to the Constitution
in the proper governance of a free society; after all, there is nothing so
sacrosanct in any economic policy as to draw itself beyond judicial
review when the Constitution is involved.
Same; Same; Same; Nationalism; Nationalism is inherent in the very
concept of the Philippines being a democratic and republican state, with
sovereignty residing in the Filipino people and from whom all
government authority emanates.Nationalism is inherent in the very
concept of the Philippines being a democratic and republican state, with
sovereignty residing in the Filipino people and from whom all
government authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can have no
higher purpose. Any interpretation of any constitutional provision must
adhere to such basic concept. Protection of foreign investments, while
laudible, is merely a policy. It cannot override the demands of
nationalism.
Same; Same; Same; Same; Manila Hotel; Manila Hotel has played
and continues to play a significant role as an authentic repository of
twentieth century Philippine history and culture, and in this sense, it has
become truly a reflection of the Filipino soula place with a history of
grandeur, a most historical setting that has played a part in the shaping
of a country.The Manila Hotel or, for that matter, 51% of the MHC, is
not just any commodity to be sold to the highest bidder solely for the
sake of privatization. We are not talking about an ordinary piece of
property in a commercial district. We are talking about a historic relic
that has hosted many of the most important events in the short history
of the Philippines as a nation. We
418
4 SUPREME
18 COURT REPORTS
ANNOTATED
Government Service
Insurance System
are talking about a hotel where heads of states would prefer to be
housed as a strong manifestation of their desire to cloak the dignity of
the highest state function to their official visits to the Philippines. Thus
the Manila Hotel has played and continues to play a significant role as
an authentic repository of twentieth century Philippine history and
culture. In this sense, it has become truly a reflection of the Filipino
soula place with a history of grandeur; a most historical setting that
has played a part in the shaping of a country.
Same; Same; Same; Same; Same; The conveyance of Manila Hotel, an
epic exponent of the Filipino psyche, to alien hands cannot be less than
mephistophelian for it is, in whatever manner viewed, a veritable
alienation of a nations soul for some pieces of foreign silver.This Court
cannot extract rhyme nor reason from the determined efforts of
respondents to sell the historical landmarkthis Grand Old Dame of
hotels in Asiato a total stranger. For, indeed, the conveyance of this
epic exponent of the Filipino psyche to alien hands cannot be less than
mephistophelian for it is, in whatever manner viewed, a veritable
alienation of a nations soul for some pieces of foreign silver. And so we
ask: What advantage, which cannot be equally drawn from a qualified
Filipino, can be gained by the Filipinos if Manila Hoteland all that it
stands foris sold to a non-Filipino? How much of national pride will
vanish if the nations cultural heritage is entrusted to a foreign entity?
On the other hand, how much dignity will be preserved and realized if
the national patrimony is safekept in the hands of a qualified, zealous
and wellmeaning Filipino? This is the plain and simple meaning of
the Filipino First Policyprovision of the Philippine Constitution. And
this Court, heeding the clarion call of the Constitution and accepting the
duty of being the elderly watchman of the nation, will continue to
respect and protect the sanctity of the Constitution.
PADILLA, J ., Concurring Opinion:

Constitutional Law; National Economy and Patrimony; Manila
Hotel; There is no doubt that the Manila Hotel is very much a part of our
national patrimony and, as such, deserves constitutional protection as to
who shall own it and benefit from its operation.There is no doubt in my
mind that the Manila Hotel is very much a part of our national
patrimony and, as such, deserves constitutional protection as to who
shall own it and benefit from its operation. This institution has played
an important role in our nations history, having been the venue of many
a historical event, and serving as it did, and
419
VOL. 267, 4
FEBRUARY 3, 1997 19
Government Service
Insurance System
as it does, as the Philippine Guest House for visiting foreign heads of
state, dignitaries, celebrities, and others.
Same; Same; Same; Bids and Bidding; The Constitutional preference
should give the qualified Filipino an opportunity to match or equal the
higher bid of the non-Filipino bidder if the preference of the qualified
Filipino bidder is to be significant at all.Now, a word on preference. In
my view preference to qualified Filipinos, to be meaningful, must refer
not only to things that are peripheral, collateral, or tangential. It must
touch and affect the very heart of the existing order. In the field of
public bidding in the acquisition of things that pertain to the national
patrimony, preference to qualified Filipinos must allow a qualified
Filipino to match or equal the higher bid of a non-Filipino; the
preference shall not operate only when the bids of the qualified Filipino
and the non-Filipino are equal in which case, the award should
undisputedly be made to the qualified Filipino. The Constitutional
preference should give the qualified Filipino an opportunity to match or
equal the higher bid of the non-Filipino bidder if the preference of the
qualified Filipino bidder is to be significant at all.
Same; Same; Same; It is true that in this present age of globalization
of attitude towards foreign investments in our country, stress is on the
elimination of barriers to foreign trade and investment in the country, yet
we should not preclude ourselves from reserving to us Filipinos certain
areas where our national identity, culture and heritage are involved.It
is true that in this present age of globalization of attitude towards
foreign investments in our country, stress is on the elimination of
barriers to foreign trade and investment in the country. While
government agencies, including the courts should recondition their
thinking to such a trend, and make it easy and even attractive for
foreign investors to come to our shores, yet we should not preclude
ourselves from reserving to us Filipinos certain areas where our national
identity, culture and heritage are involved. In the hotel industry, for
instance, foreign investors have established themselves creditably, such
as in the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels.
This should not stop us from retaining 51% of the capital stock of the
Manila Hotel Corporation in the hands of Filipinos. This would be in
keeping with the intent of the Filipino people to preserve our national
patrimony, including our historical and cultural heritage in the hands of
Filipinos.
420
420 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
VITUG, J., Separate Opinion:
Hotel; Bids and Bidding; In this particular case before us, the only
meaningful preference, it seems, would realty be to allow the qualified
Filipino to match the foreign bid.On the pivotal issue of the degree of
preference to qualified Filipinos, I find it somewhat difficult to take the
same path traversed by the forceful reasoning of Justice Puno. In the
particular case before us, the only meaningful preference it seems, would
really be to allow the qualified Filipino to match the foreign bid for, as a
practical matter, I cannot see any bid that literally calls for millions of
dollars to be at par (to the last cent) with another. The magnitude of the
bids is such that it becomes hardly possible for the competing bids to
stand exactly equal which alone, under the dissenting view, could
trigger the right of preference.
Same; Separation of Powers; Supreme Court; Judicial Review; It is
regrettable that the Supreme Court at times is seen to be the refuge for
bureaucratic inadequacies which create the perception that it even takes
on non-justiciable controversies.It is most unfortunate that Renong
Berhad has not been spared this great disappointment, a letdown that it
did not deserve, by a simple and timely advise of the proper rules of
bidding along with the peculiar constitutional implications of the
proposed transaction. It is also regrettable that. the Court at times is
seen to, instead, be the refuge for bureaucratic inadequacies which
create the perception that it even takes on nonjusticiable controversies.
MENDOZA, J., Concurring in the Judgment:

Hotel; Bids and Bidding; In the context of the present controversy the only
way to enforce the constitutional mandate that "[i]n the grant of rights,
privileges and concessions covering the national patrimony the State
shall give preference to qualified Filipinos is to allow petitioner ioner
Philippine corporation to equal the bid of the Malaysian firm for the
purchase of the controlling shares of stocks in the Manila Hotel
Corporation.I take the view that in the context of the present contro-
versy the only way to enforce the constitutional mandate that "[i]n the
grant of rights, privileges and concessions covering the national
patrimony the State shall give preference to qualified Filipinos is to
allow petitioner Philippine corporation to equal the bid of the Ma-
421
VOL. 267, 4
FEBRUARY 3, 1997 21
Government Service
Insurance System
laysian firm Renong Berhad for the purchase of the controlling
shares of stocks in the Manila Hotel Corporation. Indeed, it is the only
way a qualified Filipino or Philippine corporation can be
given preference in the enjoyment of a right, privilege or concession given
by the State, by favoring it over a foreign national or corporation.
TORRES, JR., J., Separate Opinion:

Hotel; Bids and Bidding; The history of the Manila Hotel should not be
placed in the auction block of a purely business transaction, where profit
subverts the cherished historical values of our people.I subscribe to the
view that history, culture, heritage, and tradition are not legislated and
is the product of events, customs, usages and practices. It is actually a
product of growth and acceptance by the collective mores of a race. It is
the spirit and soul of a people. The Manila Hotel is part of our history,
culture and heritage. Every inch of the Manila Hotel is witness to
historic events (too numerous to mention) which shaped our history for
almost 84 years. As I intimated earlier, it is not my position in this
opinion, to examine the single instances of the legal largesse which have
given rise to this controversy, as I believe that has been exhaustively
discussed in the ponencia. Suffice it to say at this point, that the history
of the Manila Hotel should not be placed in the auction block of a purely
business transaction, where profit subverts the cherished historical
values of our people.
PUNO, J., Dissenting Opinion:

Constitutional Law; Statutory Construction; To determine whether a
particular provision of a Constitution is self-executing, a searching
inquiry should be made to find out if the provision is intended as a
present enactment, complete in itself as a definite law, or if it needs
future legislation for completion and enforcement.To determine
whether a particular provision of a Constitution is selfexecuting is a
hard row to hoe. The key lies on the intent of the framers of the
fundamental law oftentimes submerged in its language. A searching
inquiry should be made to find out if the provision is intended as
a present enactment, complete in itself as a definitive law, or if it
needs future legislation for completion and en-forcement. The inquiry
demands a micro-analysis of the text and the context of the provision in
question.
422
4 SUPREME
22 COURT REPORTS
ANNOTATED
Government Service
Insurance System
Same; Same; Suffused with wisdom of the ages is the unyielding rule
that legislative actions may give breath to constitutional rights but
congressional inaction should not suffocate them.Courts as a rule
consider the provisions of the Constitution as selfexecuting, rather than
as requiring future legislation for their enforcement. The reason is not
difficult to discern. For if they are not treated as self-executing, the
mandate of the fundamental law ratified by the sovereign people can be
easily ignored and nullified by Congress. Suffused with wisdom of the
ages is the unyielding rule that legislative actions may give breath to
constitutional rights but congressional inaction should not suffocate
them.
Same; Same; A constitutional provision is not self-executing where it
merely announces a policy and its language empowers the Legislature to
prescribe the means by which the policy shall be carried into effect.
Contrariwise, case law lays down the rule that a constitutional provision
is not self-executing where it merely announces a policy and its language
empowers the Legislature to prescribe the means by which the policy
shall be carried into effect.
Same; Government-Owned and Controlled Corporations; Government
Service Insurance System; As a state-owned and controlled corporation,
the GSIS is skin-bound to adhere to the policies spelled out in the
Constitution especially those designed to promote the general welfare of
the people.The submission is unimpressive. The GSIS is not a pure
private corporation. It is essentially a public corporation created by
Congress and granted an original charter to serve a public purpose. It is
subject to the jurisdictions of the Civil Service Commission and the
Commission on Audit. As a state-owned and controlled corporation, it is
skin-bound to adhere to the policies spelled out in the Constitution
especially those designed to promote the general welfare of the people.
One of these policies is the Filipino First Policy which the people
elevated as a constitutional command.
Same; Only a constitution strung with elasticity can grow as a living
constitution.The fourth issue demands that we look at the content of
the phrase qualified Filipinos and their preferential right. The
Constitution desisted from defining their contents. This is as it ought to
be for a Constitution only lays down flexible policies and principles
which can be bent to meet todays manifest needs and tomorrows
unmanifested demands. Only a constitution strung with elasticity can
grow as a living constitution.
423
VOL. 267, 4
FEBRUARY 3, 1997 23
Government Service
Insurance System
Same; National Economy and Patrimony; Filipino First Policy; The
second paragraph of Section 10, Article XII of the Constitution is pro-
Filipino but not anti-alienit is pro-Filipino for it gives preference to
Filipinos but it is not anti-alien per se for it does not absolutely bar aliens
in the grant of rights, privileges and concessions covering the national
economy and patrimony.Thus, we come to the critical issue of
the degree of preferencewhich GSIS should have accorded petitioner, a
qualified Filipino, over Renong Berhad, a foreigner, in the purchase of
the controlling shares of the Manila Hotel. Petitioner claims that after
losing the bid, this right of preference gives it a second chance to match
the highest bid of Renong Berhad. With due respect, I cannot sustain
petitioners submission. I prescind from the premise that the second
paragraph of Section 10, Article XII of the Constitution is pro-Filipino
but not anti-alien. It is pro-Filipino for it gives preference to Filipinos. It
is not, however, anti-alien per se for it does not absolutely bar aliens in
the grant of rights, privileges and concessions covering the national
economy and patrimony. Indeed, in the absence of qualified Filipinos,
the State is not prohibited from granting these rights, privileges and
concessions to foreigners if the act will promote the weal of the nation.
Same; Same; Same; In implementing the policy articulated in Section
10, Article XII of the Constitution, the stellar task of our State policy-
makers is to maintain a creative tension between two desideratafirst,
the need to develop our economy and patrimony with the help of
foreigners if necessary, and, second, the need to keep our economy
controlled by Filipinos.In implementing the policy articulated in
Section 10, Article XII of the Constitution, the stellar task of our State
policy-makers is to maintain a creative tension between two desiderata
first, the need to develop our economy and patrimony with the help of
foreigners if necessary, and, second, the need to keep our economy
controlled by Filipinos. Rightfully, the framers of theConstitution did not
define the degree of the right of preference to be given to qualified
Filipinos. They knew that for the right to serve the general welfare, it
must have a malleable content that can be adjusted by our policy-makers
to meet the changing needs of our people. In fine, the right of preference
of qualified Filipinos is to be determined by degree as time dictates and
circumstances warrant. The lesser the need for alien assistance, the
greater the degree of the right of preference can be given to Filipinos and
vice versa.
424
4 SUPREME
24 COURT REPORTS
ANNOTATED
Government Service
Insurance System
Same; Same; Same; Bids and Bidding; 1 submit that the right of
preference of a Filipino bidder arises only if it tied the bid of the foreign
bidder.To date, Congress has not enacted a law defining the degree of
the preferential right. Consequently, we must turn to the rules and
regulations of respondents Committee on Privatization and GSIS to
determine the degree of preference that petitioner is entitled to as a
qualified Filipino in the subject sale. A tearless look at the rules and
regulations will show that they are silent on the degree of preferential
right to be accorded a qualified Filipino bidder. Despite their silence,
however, they cannot be read to mean that they do not grant any degree
of preference to petitioner for paragraph 2, Section 10, Article XII of the
Constitution is deemed part of said rules and regulations. Pursuant to
legal hermeneutics which demand that we interpret rules to save them
from unconstitutionality, I submit that the right of preference of
petitioner arises only if it tied the bid of Renong Berhad. In that instance,
all things stand equal, and petitioner, as a qualified Filipino bidder,
should be preferred.
Same; Same; Same; While the Filipino First Policy requires that we
incline to a Filipino, it does not demand that we wrong an alien.
We support the Filipino First Policy without any reservation. The
visionary nationalist Don Claro M. Recto has warned us that the
greatest tragedy that can befall a Filipino is to be an alien in his own
land. The Constitution has embodied Rectos counsel as a state policy
and our decision should be in sync with this policy. But while the
Filipino First Policy requires that we incline to a Filipino, it does not
demand that we wrong an alien. Our policy makers can write laws and
rules giving favored treatment to the Filipino but we are not free to be
unfair to a foreigner after writing the laws and the rules. After the laws
are written, they must be obeyed as written, by Filipinos and foreigners
alike. The equal protection clause of the Constitution protects all against
unfairness. We can be pro-Filipino without unfairness to foreigners.
PANGANIBAN, J., Dissenting Opinion:

Constitutional Law; National Economy and Patrimony; Filipino First
Policy; Bids and Bidding; The majoritys strained interpretation
constitutes unadulterated judicial legislation, which makes bidding a
ridiculous sham where no Filipino can lose and where no foreigner can
win.The majority contends the Constitution should be interpreted to
mean that, after a bidding process is concluded, the
425
VOL. 267, 4
FEBRUARY 3, 1997 25
Government Service
Insurance System
losing Filipino bidder should be given the right to equal the highest
foreign bid, and thus to win. However, the Constitution [Sec. 10(2), Art.
XII] simply states that in the grant of rights x x x covering the national
economy and patrimony, the State shall give preference to qualified
Filipinos. The majority concedes that there is no law defining the extent
or degree of such preference. Specifically, no statute empowers a losing
Filipino bidder to increase his bid and equal that of the winning
foreigner. In the absence of such empowering law, the majoritys
strained interpretation, I respectfully submit, constitutes
unadulterated judicial legislation, which makes bidding a ridiculous
sham where no Filipino can lose and where no foreigner can win. Only in
the Philippines!
SPECIAL CIVIL ACTION in the Supreme Court. Prohibition
and Mandamus.
Arturo M. Tolentino for petitioner.
Napoleon G. Rama, Adolfo S. Azcuna, Perla Y. Duque &
Francis Y. Gaw for Manila Prince Hotel Corp.
The Government Corporate Counsel for G.S.I.S.
Yulo, Torres, Tarriela & Bello Law Office for Manila Hotel
Corporation.
Jooaquin Bernas and Enrique M. Fernando amici curiae.
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987 Constitution, i.e.,
in the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give preference
to qualified Filipinos, is invoked by petitioner in its bid to
1
acquire 51% of the shares of the Manila Hotel Corporation

(MHC) which owns the historic Manila Hotel. Opposing,
respondents maintain that the provision is not selfexecuting but
requires an implementing legislation for its enforcement.
Corollarily, they ask whether the 51% shares
_______________
1See Sec. 10, par. 2, Art. XII, 1987 Constitution.

426
426 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
form part of the national economy and patrimony covered by the
protective mantle of the Constitution.
The controversy arose when respondent Government Service
Insurance System (GSIS), pursuant to the privatization program
of the Philippine Government under Proclamation No. 50 dated
8 December 1986, decided to sell through public bidding 30% to
51% of the issued and outstanding shares of respondent MHC.
The winning bidder, or the eventual strategic partner, is to
provide management expertise and/or an international
marketing / reservation system, and financial support to
strengthen the profitability and performance of the Manila
Hotel. In a close bidding held on 18 September 1995 only two (2)
2
bidders participated: petitioner Manila Prince Hotel

Corporation, a Filipino corporation, which offered to buy 51% of
the MHC or 15,300,000 shares at P41.58 per share, and Renong
Berhad, a Malaysian firm, with ITT-Sheraton as its hotel
operator, which bid for the same number of shares at P44.00 per
share, or P2.42 more than the bid of petitioner.
Pertinent provisions of the bidding rules prepared by
respondent GSIS state
1. I.EXECUTION OF THE NECESSARY CONTRACTS WITH
GSIS/MHC
1. 1.The Highest Bidder must comply with the conditions set forth
below by October 23, 1995 (reset to November 3, 1995) or the
Highest Bidder will lose the right to purchase the Block of Shares
and GSIS will instead offer the Block of Shares to the other
Qualified Bidders:
1. a.The Highest Bidder must negotiate and execute with the

GSIS/MHC the Management Contract, International
Marketing/Reservation System Contract or other type of contract
specified by the Highest Bidder in its strategic plan for the Manila
Hotel x x x x
2. b.The Highest Bidder must execute the Stock Purchase and Sale
Agreement with GSIS x x x x
_______________
2Par. I. Introduction and Highlights, Guidelines and Procedures: Second Prequalifications
and Public Bidding of the MHC Privatization; Annex A," Consolidated Reply to Comments of
Respondents; Rollo, p. 142.
427
VOL. 267, 427
FEBRUARY 3, 1997
Government Service
Insurance System
1. K.DECLARATION OF THE WINNING BIDDER/STRATEGIC
PARTNER
The Highest Bidder will be declared the Winning Bidder/Strategic Partner after
the following conditions are met:
1.a.Execution of the necessary contracts with GSIS/MHC not later than

October 23, 1995 (reset to November 3, 1995); and
2.b.Requisite approvals from the GSIS/MHC and COP (Committee on
Privatization)/OGCC (Office of the Government Corporate Counsel) are
obtained."
3
Pending the declaration of Renong Berhad as the winning

bidder/strategic partner and the execution of the necessary
contracts, petitioner in a letter to respondent GSIS dated 28
September 1995 matched the bid price of P44.00 per share
tendered by Renong Berhad. In a subsequent letter dated 10
4
October 1995 petitioner sent a managers check issued by

Philtrust Bank for Thirty-three Million Pesos
(P33,000,000.00) as Bid Security to match the bid of the
Malaysian Group, Messrs. Renong Berhad x x x x which 5
respondent GSIS refused to accept.

On 17 October 1995, perhaps apprehensive that respondent
GSIS has disregarded the tender of the matching bid and that
the sale of 51% of the MHC may be hastened by respondent
GSIS and consummated with Renong Berhad, petitioner came to
this Court on prohibition and mandamus. On 18 October 1995
the Court issued a temporary restraining order enjoining
respondents from perfecting and consummating the sale to the
Malaysian firm.
On 10 September 1996 the instant case was accepted by the
Court En Banc after it was was referred to it by the First
Division. The case was then set for oral arguments with former
Chief
______________
3 Par. V. Guidelines for the Public Bidding, id., pp. 153154.
4 Annex A," Petition for Prohibition and Mandamus with Temporary Restraining Order;
Rollo, pp. 1314.
5 Annex B," Petition for Prohibition and Mandamus with Temporary Restraining Order; id.,
p. 15.
428
428 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J.,
as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII,
of the 1987 Constitution and submits that the Manila Hotel has
been identified with the Filipino nation and has practically
become a historical monument which reflects the vibrancy of
Philippine heritage and culture. It is a proud legacy of an earlier
generation of Filipinos who believed in the nobility and
sacredness of independence and its power and capacity to release
the full potential of the Filipino people. To all intents and
purposes, it has become a part of the national
patrimony. Petitioner also argues that since 51% of the shares
6
of the MHC carries with it the ownership of the business of the

hotel which is owned by respondent GSIS, a government-owned
and controlled corporation, the hotel business of respondent
GSIS being a part of the tourism industry is unquestionably a
part of the national economy. Thus, any transaction involving
51% of the shares of stock of the MHC is clearly covered by
the term national economy, to which Sec. 10, second par., Art.
XII, 1987 Constitution, applies. 7
It is also the thesis of petitioner that since Manila Hotel is

part of the national patrimony and its business also
unquestionably part of the national economy petitioner should
be preferred after it has matched the bid offer of the Malaysian
firm. For the bidding rules mandate that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS
may offer this to the other Qualified Bidders that have validly
submitted bids provided that these Qualified Bidders are willing
to match the highest bid in terms of price per share. 8
_______________
6 Petition for Prohibition and Mandamus with Temporary Restraining Order, pp. 56; id., pp.
67.
7 Consolidated Reply to Comments of Respondents, p. 17; id., p. 133.
8 Par. V.J. 1, Guidelines for Public Bidding, Guidelines and Procedures: Second
Prequalifications and Public Bidding of the MHC Privatization, Annex A" Consolidated Reply to
Comments of Respondents; id., p. 154.
429
VOL. 267, 429
FEBRUARY 3, 1997
Government Service
Insurance System
Respondents except. They maintain that: First. Sec. 10, second
par., Art. XII, of the 1987 Constitution is merely a statement of
principle and policy since it is not a self-executing provision and
requires implementing legislation(s) x x x x Thus, for the said
provision to operate, there must be existing laws to lay down
conditions under which business may be done." 9
Second. granting that this provision is self-executing, Manila

Hotel does not fall under the term national patrimony which
only refers to 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 all
marine wealth in its territorial sea, and exclusive marine zone
as cited in the first and second paragraphs of Sec. 2, Art. XII,
1987 Constitution. According to respondents, while petitioner
speaks of the guests who have slept in the hotel and the events
that have transpired therein which make the hotel historic,
these alone do not make the hotel fall under the patrimony of
the nation. What is more, the mandate of the Constitution is
addressed to the State, not to respondent GSIS which possesses
a personality of its own separate and distinct from the
Philippines as a State,
Third, granting that the Manila Hotel forms part of
the national patrimony, the constitutional provision invoked is
still inapplicable since what is being sold is only 51% of the
outstanding shares of the corporation, not the hotel building nor
the land upon which the building stands. Certainly, 51% of the
equity of the MHC cannot be considered part of the national
patrimony. Moreover, if the disposition of the shares of the MHC
is really contrary to the Constitution, petitioner should have
questioned it right from the beginning and not after it had lost
in the bidding.
Fourth. the reliance by petitioner on par. V., subpar. J. 1., of
the bidding rules which provides that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS
_______________
9 Respondents Joint Comment with Urgent Motion to Lift Temporary Restraining Order, p.
9; Rollo, p. 44.
430
430 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
may offer this to the other Qualified Bidders that have validly
submitted bids provided that these Qualified Bidders are willing
to match the highest bid in terms of price per share,is misplaced.
Respondents postulate that the privilege of submitting a
matching bid has not yet arisen since it only takes place if for
any reason, the Highest Bidder cannot be awarded the Block of
Shares. Thus the submission by petitioner of a matching bid is
premature since Renong Berhad could still very well be awarded
the block of shares and the condition giving rise to the exercise
of the privilege to submit a matching bid had not yet taken
place.
Finally, the prayer for prohibition grounded on grave abuse of
discretion should fail since respondent GSIS did not exercise its
discretion in a capricious, whimsical manner, and if ever it did
abuse its discretion it was not so patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to perform a
duty enjoined by law. Similarly, the petition for mandamus
should fail as petitioner has no clear legal right to what it
demands and respondents do not have an imperative duty to
perform the act required of them by petitioner.
We now resolve. A constitution is a system of fundamental
laws for the governance and administration of a nation. It is
supreme, imperious, absolute and unalterable except by the
authority from which it emanates. It has been defined as the
fundamental and paramount law of the nation. It prescribes the
10
permanent framework of a system of government, assigns to the

different departments their respective powers and duties, and
establishes certain fixed principles on which government is
founded. The fundamental conception in other words is that it is
a supreme law to which all other laws must conform and in
accordance with which all private rights must be determined
and all public authority administered. Under the doctrine of
11
constitutional supremacy, if a law or contract violates any norm
of the constitution that law or contract
_______________
10Marbury v. Madison, 5 U.S. 138 (1803).
11Am Jur. 606.
11
431
VOL. 267, 431
FEBRUARY 3, 1997
Government Service
Insurance System
whether promulgated by the legislative or by the executive
branch or entered into by private persons for private purposes is
null and void and without any force and effect. Thus, since the
Constitution is the fundamental, paramount and supreme law of
the nation, it is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations of
policies and principles. Their provisions command the
legislature to enact laws and carry out the purposes of the
framers who merely establish an outline of government
providing for the different departments of the governmental
machinery and securing certain fundamental and inalienable
rights of citizens. A provision which lays down a general
12
principle, such as those found in Art. II of the 1987 Constitution,

is usually not self-executing. But a provision which is complete
in itself and becomes operative without the aid of supplementary
or enabling legislation, or that which supplies sufficient rule by
means of which the right it grants may be enjoyed or protected,
is self-executing. Thus a constitutional provision is self-
executing if the nature and extent of the right conferred and the
liability imposed are fixed by the constitution itself, so that they
can be determined by an examination and construction of its
terms, and there is no language indicating that the subject is
referred to the legislature for action. 13
As against constitutions of the past, modern constitutions
have been generally drafted upon a different principle and have
often become in effect extensive codes of laws intended to
operate directly upon the people in a manner similar to that of
statutory enactments, and the function of constitutional
conventions has evolved into one more like that of a legislative
body. Hence, unless it is expressly provided that a legislative act
is necessary to enforce a constitutional mandate, the
presumption now is that all provisions of the constitution are
self-executing. If the constitutional provisions are treated as
requiring legislation instead of self-executing, the
_______________
16 Am Jur. 2d 281.
12
Id, p. 282.
13
432
432 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
legislature would have the power to ignore and practically
nullify the mandate of the fundamental law. This can be 14
cataclysmic. That is why the prevailing view is, as it has always

been, that
x x x x in case of doubt, the Constitution should be considered self-
executing rather than non-self-executing x x x x Unless the contrary is
clearly intended, the provisions of the Constitution should be considered
self-executing, as a contrary rule would give the legislature discretion to
determine when, or whether, they shall be effective. These provisions
would be subordinated to the will of the lawmaking body, which could
make them entirely meaningless by simply refusing to pass the needed
implementing statute. 15
Respondents argue that Sec. 10, second par., Art. XII, of the 1987
Constitution is clearly not self-executing, as they quote from discussions
on the floor of the 1986 Constitutional Commission
MR. RODRIGO. Madam President, I am asking this question as the
Chairman of the Committee on Style. If the wording of PREFERENCE"
is given to QUALIFIED FILIPINOS," can it be understood as a
preference to qualified Filipinos vis--vis Filipinos who are not qualified.
So, why do we not make it clear? To qualified Filipinos as against aliens?
THE PRESIDENT. What is the question of Commissioner Rodrigo? Is
it to remove the word QUALIFIED?"
MR. RODRIGO; No, no, but say definitely TO QUALIFIED
FILIPINOS" as against whom? As against aliens or over aliens?
MR. NOLLEDO. Madam President, I think that is understood. We use
the word QUALIFIED" because the existing laws or prospective laws
will always lay down conditions under which business may be done. For
example, qualifications on capital, qualifications on the setting up of
other financial structures, et cetera (italics supplied by respondents).
MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes. 16
_______________
14 SeeNote 12.
15 Cruz, Isagani A., Constitutional Law,1993 ed., pp. 810.
16 Record of the Constitutional Commission, Vol. 3, 22 August 1986, p. 608.
433
VOL. 267, 433
FEBRUARY 3, 1997
Government Service
Insurance System
Quite apparently, Sec. 10, second par., of Art. XII is couched in
such a way as not to make it appear that it is nonself-executing
but simply for purposes of style. But, certainly, the legislature is
not precluded from enacting further laws to enforce the
constitutional provision so long as the contemplated statute
squares with the Constitution. Minor details may be left to the
legislature without impairing the selfexecuting nature of
constitutional provisions.
In self-executing constitutional provisions, the legislature may
still enact legislation to facilitate the exercise of powers directly
granted by the constitution, further the operation of such a
provision, prescribe a practice to be used for its enforcement,
provide a convenient remedy for the protection of the rights
secured or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty for
the violation of a self-executing constitutional provision does not
render such a provision ineffective in the absence of such
legislation. The omission from a constitution of any express
provision for a remedy for enforcing a right or liability is not
necessarily an indication that it was not intended to be self-
executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on
the subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and
make it more available. Subsequent legislation however does
17
not necessarily mean that the subject constitutional provision is

not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of
Sec. 10, second par., of Art. XII is implied from the tenor of the
first and third paragraphs of the same section which
undoubtedly are not self-executing. The argument is flawed. If
18
_______________
1716 Am Jur 2d 283284.

18 Sec. 10, first par., reads: The Congress shall, upon recommendation of the economic and
planning agency, when the national interest dictates, reserve to citizens of the Philippines or to
corpora
434
434 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation
and operation of enterprises fully owned by Filipinos, as in the
first paragraph, and the State still needs legislation to regulate
and exercise authority over foreign investments within its
national jurisdiction, as in the third paragraph, then a
fortiori, by the same logic, the second paragraph can only be self-
executing as it does not by its language require any legislation
in order to give preference to qualified Filipinos in the grant of
rights, privileges and concessions covering the national economy
and patrimony. A constitutional provision may be self-executing
in one part and non-self-executing in another. 19
Even the cases cited by respondents holding that certain

constitutional provisions are merely statements of principles
and policies, which are basically not self-executing and only
placed in the Constitution as moral incentives to legislation, not
as judicially enforceable rightsare simply not in point. Basco v.
Philippine Amusements and Gaming Corporation speaks of 20
constitutional provisions on personal dignity, the sanctity of 21
family life, the vital role of the youth in nation-

22
_______________
tions or associations at least sixty per centum of whose capital is owned by such citizens, or
such higher percentage as Congress may prescribe, certain areas of investments. The Congress
shall enact measures that will encourage the formation and operation of enterprises whose capital
is wholly owned by Filipinos.
Sec. 10, third par., reads: The State shall regulate and exercise authority over foreign
investments within its national jurisdiction and in accordance with its national goals and
priorities.
19 State ex rel. Miller v. OMalley, 342 Mo 641, 117 SW2d 319.
20 G.R. No. 91649,14 May 1991, 197 SCRA 52.
21 Sec. 11, Art. II (Declaration of Principles and State Policies), provides that [t]he State values
the dignity of every human person and guarantees full respect for human. rights.
22 Sec. 12, Art. II, provides that [t]he State recognizes the sanctity of family life and shall
protect and strengthen the family as a basic autonomous social institution. It shall equally protect
the life of the mother and the life of the unborn from conception. The natural and primary right
and duty of parents in the rearing of the youth for
435
VOL. 267, 435
FEBRUARY 3, 1997
Government Service
Insurance System
building, the promotion of social justice, and the values of
23 24
education. Tolentino v. Secretary of Finance refers to

25 26
constitutional provisions on social justice and human rights and 27
on
_______________
civic efficiency and the development of moral character shall receive the support of the
government
23 Sec. 13, Art. II, provides that [t]he State recognizes the vital role of the youth in nation-
building and shall promote and protect their physical, moral, spiritual, intellectual, and social
well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their
involvement in public and civic affairs.
24 Sec. 1, Art. XIII (Social Justice and Human Rights), provides that [t]he Congress shall give
highest priority to the enactment of measures that protect and enhance the right of all the people
to human dignity, reduce social, economic and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use, and disposition of property
and its increments. Sec. 2, Art. XIII, provides that [t]he promotion of social justice shall include
the commitment to create economic opportunities based on freedom of initiative and self-reliance.
25 Sec. 2, Art. XIV (Education, Science and Technology, Arts, Culture, and Sports),
provides that [t]he State shall:
1. (1)Establish, maintain, and support a complete, adequate, and integrated system of

education relevant to the needs of the people and society;
2. (2)Establish and maintain a system of free public education in the elementary and high
school levels. Without limiting the natural right of parents to rear their children,
elementary education is compulsory for all children of school age;
3. (3)Establish and maintain a system of scholarship grants, student loan programs,
subsidies, and other incentives which shall be available to deserving students in both
public and private schools, especially to the underprivileged;
4. (4)Encourage non-formal, informal, and indigenous learning, independent, and out-of-
school study programs particularly those that respond to community needs; and
5. (5)Provide adult citizens, the disabled, and out-of-school youth with training in civics,
vocational efficiency, and other skills.
G.R. No. 115455, 25 August 1994, 235 SCRA 630.
26
See Note 25.

27
436
436 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
education. Lastly, Kilosbayan, Inc. v. Morato cites provisions
28 29
on the promotion of general welfare, the sanctity of family 30
life, the vital role of the youth in nation-building and the

31 32
promotion of total human liberation and development. A 33
reading of these provisions indeed clearly shows that they are

not judicially enforceable constitutional rights but merely
guidelines for legislation. The very terms of the provisions
manifest that they are only principles upon which legislations
must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is
complete in itself and which needs no further guidelines or
implementing laws or rules for its enforcement. From its very
words the provision does not require any legislation to put it in
operation. lt is per se judicially enforceable. When our
Constitution mandates that [i]n the grant of rights, privileges,
and concessions covering national economy and patrimony, the
State shall give preference to qualified Filipinos, it means just
thatqualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified
circumstances an action may be maintained to enforce such
right notwithstanding the absence of any legislation on the
________________
28Sec. 1, Art. XIV, provides that [t]he State shall protect and promote the right of all citizens to
quality education at all levels of education and shall take appropriate steps to make such
education accessible to all.
29 G.R. No. 118910,17 July 1995.
30 See. 5, Art. II (Declaration of Principles and State Policies), provides that [t]he maintenance
of peace and order, the protection of life, liberty, and property, and the promotion of the general
welfare are essential for the enjoyment by all the people of the blessings of democracy.
31 See Note 23.
32 See Note 24.
33 Sec. 17, Art. II, provides that [t]he State shall give priority to education, science and
technology, arts, culture, and sports to foster patriotism and nationalism, accelerate social
progress, and promote total human liberation and development.
437
VOL. 267, 437
FEBRUARY 3, 1997
Government Service
Insurance System
subject; consequently, if there is no statute especially enacted to
enforce such constitutional right, such right enforces itself by its
own inherent potency and puissance, and from which all
legislations must take their bearings. Where there is a right
there is a remedy. Ubi jus ibi remedium.
As regards our national patrimony,a member of the 1986
Constitutional Commission explains 34
The patrimony of the Nation that should be conserved and developed

refers not only to our rich natural resources but also to the cultural
heritage of our race. It also refers to our intelligence in arts, sciences and
letters. Therefore, we should develop not only our lands, forests, mines
and other natural resources but also the mental ability or faculty of our
people.
We agree. In its plain and ordinary meaning, the
term patrimony pertains to heritage. When the Constitution 35
speaks of national patrimony, it refers not only to the natural

resources of the Philippines, as the Constitution could have very
well used the term natural resources, but also to the cultural
heritage of the Filipinos.
Manila Hotel has become a landmarka living testimonial of
Philippine heritage. While it was restrictively an American hotel
when it first opened in 1912, it immediately evolved to be truly
Filipino. Formerly a concourse for the elite, it has since then
become the venue of various significant events which have
shaped Philippine history. It was called the Cult ural Center of
the 1930s. It was the site of the festivities during the
inauguration of the Philippine Commonwealth. Dubbed as
the Official Guest House of the PhilippineGovernment it plays
host to dignitaries and official visitors who are accorded the
traditional Philippine hospitality. 36
_______________
34 Nolledo, Jose N., The New Constitution of the Philippines Annotated, 1990 ed., p. 72.
35 Websters Third New International Dictionary, 1986 ed., p. 1656.
36 The guest list of the Manila Hotel includes Gen. Douglas MacArthur, the Duke of Windsor,
President Richard Nixon of U.S.A.,

438
438 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
The history of the hotel has been chronicled in the book The
Manila Hotel: The Heart and Memory of a City. During World 37
War II the hotel was converted by the Japanese Military

Administration into a military headquarters, When the
American forces returned to recapture Manila the hotel was
selected by the Japanese together with Intramuros as the two
(2) places for their final stand. Thereafter, in the 1950s and
1960s, the hotel became the center of political activities, playing
host to almost every political convention. In 1970 the hotel
reopened after a renovation and reaped numerous in-
________________
Emperor Akihito of Japan, President Dwight Eisenhower of U.S.A., President Nguyen Van
Thieu of Vietnam, President Park Chung Hee of Korea, Prime Minister Richard Holt of Australia,
Prime Minister Keith Holyoake of New Zealand, President Lyndon Johnson of U.S.A., President
Jose Lopez Portillo of Mexico, Princess Margaret of England, Prime Minister Malcolm Fraser of
Australia, Prime Minister Pierre Elliot Trudeau of Canada, President Raul Alfonsin of Argentina,
President Felipe Gonzalez of Spain, Prime Minister Noboru Takeshita of Japan, Prime Minister
Hussain Muhammad Ershad of Bangladesh, Prime Minister Bob Hawke of Australia, Prime
Minister Yasuhiro Nakasone of Japan, Premier Li Peng of China, Sultan Hassanal Bolkiah of
Brunei, President Ramaswami Venkataraman of India, Prime Minister Go Chok Tong of
Singapore, Prime Minister Enrique Silva Cimma of Chile, Princess Chulaborn and Mahacharri
Sirindhorn of Thailand, Prime Minister Tomiichi Murayama of Japan, Sultan Azlan Shah and
Raja Permaisuri Agong of Malaysia, President Kim Young Sam of Korea, Princess Infanta Elena
of Spain, President William Clinton of U.S.A., Prime Minister Mahathir Mohamad of Malaysia,
King Juan Carlos I and Queen Sofia of Spain, President Carlos Saul Menem of Argentina, Prime
Ministers Chatichai Choonhavan and Prem Tinsulanonda of Thailand, Prime Minister Benazir
Bhutto of Pakistan, President Vadav Havel of Czech Republic, Gen. Norman Schwarzkopf of
U.S.A., President Ernesto Perez Balladares of Panama, Prime Minister Adolfas Slezevicius of
Lithuania, President Akbar Hashemi Rafsanjani of Iran, President Askar Akayev of Kyrgyztan,
President Ong Teng Cheong of Singapore, President Frei Ruiz Tagle of Chile, President Le Duc
Anh of Vietnam, and Prime Minister Julius Chan of Papua New Guinea, see Memorandum for
Petitioner, pp. 1619.
37 Authored by Beth Day Romulo.
439
VOL. 267, 439
FEBRUARY 3, 1997
Government Service
Insurance System
ternational recognitions, an acknowledgment of the Filipino
talent and ingenuity. In 1986 the hotel was the site of a
failed coup detat where an aspirant for vice-president was
proclaimed President of the Philippine Republic.
For more than eight (8) decades Manila Hotel has bore mute
witness to the triumphs and failures, loves and frustrations of
the Filipinos; its existence is impressed with public interest; its
own historicity associated with our struggle for sovereignty,
independence and nationhood. Verily, Manila Hotel has become
part of our national economy and patrimony. For sure, 51% of
the equity of the MHC comes within the purview of the
constitutional shelter for it comprises the majority and
controlling stock, so that anyone who acquires or owns the 51%
will have actual control and management of the hotel. In this
instance, 51% of the MHC cannot be disassociated from the hotel
and the land on which the hotel edifice stands. Consequently, we
cannot sustain respondents claim that the Filipino First
Policy provision is not applicable since what is being sold is only
51% of the outstanding shares of the corporation, not the Hotel
building nor the land upon which the building stands. 38
The argument is pure sophistry. The term qualified

Filipinos as used in our Constitution also includes corporations
at least 60% of which is owned by Filipinos. This is very clear
from the proceedings of the 1986 Constitutional Commission
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I would like to introduce an amendment to the Nolledo
amendment. And the amendment would consist in substituting the
words QUALIFIED FILIPINOS" with the following: CITIZENS OF
THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS
WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED
BY SUCH CITIZENS."
xxxx
_______________
See Note 9, pp. 1516; Rollo, pp. 5051.

38
440
440 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
MR. MONSOD. Madam President, apparently the proponent is
agreeable, but we have to raise a question. Suppose it is a corporation
that is 80-percent Filipino, do we not give it preference?
MR. DAVIDE. The Nolledo amendment would refer to an individual
Filipino. What about a corporation wholly owned by Filipino citizens?
MR. MONSOD. At least 60 percent, Madam President.
MR. DAVIDE. Is that the intention?
MR. MONSOD. Yes, because, in fact, we would be limiting it if we say
that the preference should only be 100-percent Filipino.
MR. DAVIDE. I want to get that meaning dear because QUALIFIED
FILIPINOS" may refer only to individuals and not to juridical
personalities or entities.
MR. MONSOD. We agree, Madam President. 39
xxxx
MR. RODRIGO. Before we vote, may I request that the amendment be
read again.
MR. NOLLEDO. The amendment will read: IN THE GRANT OF
RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE
NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL
GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word
Filipinos here, as intended by the proponents, will include not only
individual Filipinos but also Filipino-controlled entities or entities fully-
controlled by Filipinos. 40
The phrase preference to qualified Filipinos was explained

thus
MR. FOZ. Madam President, I would like to request commissioner
Nolledo to please restate his amendment so that I can ask a question.
MR. NOLLEDO. IN THE GRANT OF RIGHTS, PRIVILEGES AND
CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO
QUALIFIED FILIPINOS."
_______________
Record of the Constitutional Commission, Vol. 3, 22 August 1986, p. 607.

39
Id., p. 612.
40
441
VOL. 267, 441
FEBRUARY 3, 1997
Government Service
Insurance System
MR. FOZ. In connection with that amendment, if a foreign enterprise is
qualified and a Filipino enterprise is also qualified, will the Filipino
enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some aspects than the
Filipino enterprise, will the Filipino still be preferred?
MR. NOLLEDO. The answer is yes.
MR. FOZ. Thank you. 41
Expounding further on the Filipino First Policy provision

Commissioner Nolledo continues
MR. NOLLEDO. Yes, Madam President. Instead of MUST," it will be
SHALLTHE STATE SHALL GIVE PREFERENCE TO QUALIFIED
FILIPINOS." This embodies the so-called Filipino First policy. That
means that Filipinos should be given preference in the grant of
concessions, privileges and rights covering the national patrimony. 42
The exchange of views in the sessions of the Constitutional

Commission regarding the subject provision was still further
clarified by Commissioner Nolledo 43
Paragraph 2 of Section 10 explicitly mandates the Pro-Filipino bias in

all economic concerns. It is better known as the FILIPINO FIRST Policy
x x x x This provision was never found in previous Constitutions x x x x
The term qualified Filipinos simply means that preference shall be
given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency. It certainly
does NOT mandate the pampering and preferential treatment to
Filipino citizens or organizations that are incompetent or inefficient,
since such an indiscriminate preference would be counterproductive and
inimical to the common good.
________________
41 Id., p. 616.
42 Id., p. p. 606.
43 Nolledo, J.N., The New Constitution of the Philippines Annotated, 1990 ed., pp. 930931.
442
442 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
In the granting of economic rights, privileges, and concessions, when a
choice has to be made between a qualified foreigner and a qualified
Filipino, the latter shall be chosen over the former.
Lastly, the word qualified is also determinable, Petitioner was
so considered by respondent GSIS and selected as one of
the qualified bidders. It was pre-qualified by respondent GSIS in
accordance with its own guidelines so that the sole inference
here is that petitioner has been found to be possessed of proven
management expertise in the hotel industry, or it has significant
equity ownership in another hotel company, or it has an overall
management and marketing proficiency to successfully operate
the Manila Hotel. 44
The penchant to try to whittle away the mandate of the

Constitution by arguing that the subject provision is not
selfexecutory and requires implementing legislation is quite
disturbing. The attempt to violate a clear constitutional
provisionby the government itselfis only too distressing. To
adopt such a line of reasoning is to renounce the duty to ensure
faithfulness to the Constitution. For, even some of the provisions
of the Constitution which evidently need implementing
legislation have juridical life of their own and can be the source
of a judicial remedy. We cannot simply afford the government a
defense that arises out of the failure to enact further enabling,
implementing or guiding legislation. In fine, the discourse of Fr.
Joaquin G. Bernas, S.J., on constitutional government is apt
The executive department has a constitutional duty to implement laws,
including the Constitution, even before Congress actsprovided that
there are discoverable legal standards for executive action. When the
executive acts, it must be guided by its own understanding of the
constitutional command and of applicable laws. The responsibility for
reading and understanding the Constitution and the laws is not the sole
prerogative of Congress. If it were, the executive would have to ask
Congress, or perhaps the Court, for an inter
_______________
44 Bidders were required to have at least one of these qualifications to be able to participate in
the bidding process; see Note 2.
443
VOL. 267, 443
FEBRUARY 3, 1997
Government Service
Insurance System
pretation every time the executive is confronted by a constitutional
command. That is not how constitutional government operates.
45
Respondents further argue that the constitutional provision is

addressed to the State, not to respondent GSIS which by itself
possesses a separate and distinct personality. This argument
again is at best specious. It is undisputed that the sale of 51% of
the MHC could only be carried out with the prior approval of the
State acting through respondent Committee on Privatization. As
correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact
alone makes the sale of the assets of respondents GSIS and
MHC a state action. In constitutional jurisprudence, the acts of
persons distinct from the government are considered state
action covered by the Constitution (1) when the activity it
engages in is a public function; (2) when the government is so
significantly involved with the private actor as to make the
government responsible for his action; and, (3) when the
government has approved or authorized the action. It is evident
that the act of respondent GSIS in selling 51% of its share in
respondent MHC comes under the second and third categories
of state action.Without doubt therefore the transaction,
although entered into by respondent GSIS, is in fact a
transaction of the State and therefore subject to the
constitutional command. 46
When the Constitution addresses the State it refers not only to

the people but also to the government as elements of the State.
After all, government is composed of three (3) divisions of
powerlegislative, executive and judicial. Accordingly, a
constitutional mandate directed to the State is correspondingly
directed to the three (3) branches of government. It is
undeniable that in this case the subject constitutional injunction
is addressed among others to the Executive Department and
respondent GSIS, a government instrumentality deriving its
authority from the State.
_______________
Memorandum of Fr. Joaquin G. Bernas, S.J., p. 6.

45
Id., pp. 34.

46
444
444 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
It should be stressed that while the Malaysian firm offered the
higher bid it is not yet the winning bidder. The bidding rules
expressly provide that the highest bidder shall only be declared
the winning bidder after it has negotiated and executed the
necessary contracts, and secured the requisite approvals. Since
the Filipino First Policy provision of the Constitution bestows
preference on qualified Filipinos the mere tending of the highest
bid is not an assurance that the highest bidder will be declared
the winning bidder. Resultantly, respondents are not bound to
make the award yet, nor are they under obligation to enter into
one with the highest bidder. For in choosing the awardee
respondents are mandated to abide by the dictates of the 1987
Constitution the provisions of which are presumed to be known
to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the
subject constitutional provision is, as it should be, impliedly
written in the bidding rules issued by respondent GSIS, lest the
bidding rules be nullified for being violative of the Constitution.
It is a basic principle in constitutional law that all laws and
contracts must conform with the fundamental law of the land.
Those which violate the Constitution lose their reason for being.
Paragraph V.J.1 of the bidding rules provides that [i]f for any
reason the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer this to other Qualified Bidders that have
validly submitted bids provided that these Qualified Bidders are
willing to match the highest bid in terms of price per
share. Certainly, the constitutional mandate itself is reason
47
enough not to award the block of shares immediately to the

foreign bidder notwithstanding its submission of a higher, or
even the highest, bid. In fact, we cannot conceive of a stronger
reason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest
bid in a public bidding concerning the grant of rights, privileges
and concessions covering the national economy and
_______________
See Note 8.
47
445
VOL. 267, 445
FEBRUARY 3, 1997
Government Service
Insurance System
patrimony, thereby exceeding the bid of a Filipino, there is no
question that the Filipino will have to be allowed to match the
bid of the foreign entity. And if the Filipino matches the bid of a
foreign firm the award should go to the Filipino. lt must be so if
we are to give life and meaning to the Filipino First
Policy provision of the 1987 Constitution. For, while this may
neither be expressly stated nor contemplated in the bidding
rules, the constitutional fiat is omnipresent to be simply
disregarded. To ignore it would be to sanction a perilous skirting
of the basic law.
This Court does not discount the apprehension that this policy
may discourage foreign investors. But the Constitution and laws
of the Philippines are understood to be always open to public
scrutiny. These are given factors which investors must consider
when venturing into business in a foreign jurisdiction. Any
person therefore desiring to do business in the Philippines or
with any of its agencies or instrumentalities is presumed to
know his rights and obligations under the Constitution and the
laws of the forum.
The argument of respondents that petitioner is now estopped
from questioning the sale to Renong Berhad since petitioner was
well aware from the beginning that a foreigner could participate
in the bidding is meritless. Undoubtedly, Filipinos and
foreigners alike were invited to the bidding. But foreigners may
be awarded the sale only if no Filipino qualifies, or if the
qualified Filipino fails to match the highest bid tendered by the
foreign entity. In the case before us, while petitioner was
already preferred at the inception of the bidding because of the
constitutional mandate, petitioner had not yet matched the bid
offered by Renong Berhad. Thus it did not have the right or
personality then to compel respondent GSIS to accept its earlier
bid. Rightly, only after it had matched the bid of the foreign firm
and the apparent disregard by respondent GSIS of petitioners
matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional
safeguard unless perhaps the award has been finally made. To
insist on selling the Manila Hotel to foreigners when
446
446 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
there is a Filipino group willing to match the bid of the foreign
group is to insist that government be treated as any other
ordinary market player, and bound by its mistakes or gross
errors of judgment, regardless of the consequences to the
Filipino people. The miscomprehension of the Constitution is
regrettable. Thus we would rather remedy the indiscretion while
there is still an opportunity to do so than let the government
develop the habit of forgetting that the Constitution lays down
the basic conditions and parameters for its actions.
Since petitioner has already matched the bid price tendered by
Renong Berhad pursuant to the bidding rules, respondent GSIS
is left with no alternative but to award to petitioner the block of
shares of MHC and to execute the necessary agreements and
documents to effect the sale in accordance not only with the
bidding guidelines and procedures but with the Constitution as
well. The refusal of respondent GSIS to execute the
corresponding documents with petitioner as provided in the
bidding rules after the latter has matched the bid of the
Malaysian firm clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine
nationalism. It is embodied in the 1987 Constitution not merely
to be used as a guideline for future legislation but primarily to
be enforced; so must it be enforced. This Court as the ultimate
guardian of the Constitution will never shun, under any
reasonable circumstance, the duty of upholding the majesty of
the Constitution which it is tasked to defend. It is worth
emphasizing that it is not the intention of this Court to impede
and diminish, much less undermine, the influx of foreign
investments. Far from it, the Court encourages and welcomes
more business opportunities but avowedly sanctions the
preference for Filipinos whenever such preference is ordained by
the Constitution. The position of the Court on this matter could
have not been more appropriately articulated by Chief Justice
Narvasa
As scrupulously as it has tried to observe that it is not its function to
substitute its judgment for that of the legislature or the
447
VOL. 267, 447
FEBRUARY 3, 1997
Government Service
Insurance System
executive about the wisdom and feasibility of legislation economic in
nature, the Supreme Court has not been spared criticism for decisions
perceived as obstacles to economic progress and development x x x x in
connection with a temporary injunction issued by the Courts First
Division against the sale of the Manila Hotel to a Malaysian Firm and
its partner, certain statements were published in a major daily to the
effect that that injunction again demonstrates that the Philippine legal
system can be a major obstacle to doing business here.
Let it be stated for the record once again that while it is no business of
the Court to intervene in contracts of the kind referred to or set itself up
as the judge of whether they are viable or attainable, it is its bounden
duty to make sure that they do not violate the Constitution or the laws,
or are not adopted or implemented with grave abuse of discretion
amounting to lack or excess of jurisdiction. It will never shirk that duty,
no matter how buffeted by winds of unfair and ill-informed criticism. 48
Privatization of a business asset for purposes of enhancing its

business viability and preventing further losses, regardless of
the character of the asset, should not take precedence over non-
material values. A commercial, nay even a budgetary, objective
should not be pursued at the expense of national pride and
dignity. For the Constitution enshrines higher and nobler non-
material values. Indeed, the Court will always defer to the
Constitution in the proper governance of a free society; after all,
there is nothing so sacrosanct in any economic policy as to draw
itself beyond judicial review when the Constitution is involved. 49
Nationalism is inherent in the very concept of the Philippines
being a democratic and republican state, with sovereignty
residing in the Filipino people and from whom all gov-
_______________
48 Keynote Address at the ASEAN Regional Symposium on Enforcement of Industrial Property
Rights held 23 October 1995 at New World Hotel, Makati City.
49 Speech of Senior Associate Justice Teodoro R. Padilla at the Induction of Officers and
Directors of the PHILCONSA for 1996 held 16 January 1996 at the Sky-Top, Hotel
Intercontinental, Makati City.
448
448 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
ernment authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can
have no higher purpose. Any interpretation of any constitutional
provision must adhere to such basic concept, Protection of
foreign investments, while laudible, is merely a policy. It cannot
override the demands of nationalism. 50
The Manila Hotel or, for that matter, 51% of the MHC, is not
just any commodity to be sold to the highest bidder solely for the
sake of privatization. We are not talking about an ordinary piece
of property in a commercial district. We are talking about a
historic relic that has hosted many of the most important events
in the short history of the Philippines as a nation. We are
talking about a hotel where heads of states would prefer to be
housed as a strong manifestation of their desire to cloak the
dignity of the highest state function to their official visits to the
Philippines. Thus the Manila Hotel has played and continues to
play a significant role as an authentic repository of twentieth
century Philippine history and culture. In this sense, it has
become truly a reflection of the Filipino soula place with a
history of grandeur; a most historical setting that has played a
part in the shaping of a country. 51
This Court cannot extract rhyme nor reason from the

determined efforts of respondents to sell the historical
landmarkthis Grand Old Dame of hotels in Asiato a total
stranger. For, indeed, the conveyance of this epic exponent of the
Filipino psyche to alien hands cannot be less than
mephistophelian for it is, in whatever manner viewed, a
veritable alienation of a nations soul for some pieces of foreign
silver. And so we ask: What advantage, which cannot be equally
drawn from a qualified Filipino, can be gained by the Filipinos if
Manila Hoteland all that it stands foris sold to a
nonFilipino? How much of national pride will vanish if the
nations cultural heritage is entrusted to a foreign entity? On the
_______________
Memorandum of Authorities submitted by former Chief Justice Enrique M. Fernando, p. 5.

50
8 March 1996 issue of Philippine Daily Inquirer, p. B13.

51
449
VOL. 267, 449
FEBRUARY 3, 1997
Government Service
Insurance System
other hand, how much dignity will be preserved and realized if
the national patrimony is safekept in the hands of
a qualified, zealous and well-meaning Filipino? This is the plain
and simple meaning of the Filipino First Policyprovision of the
Philippine Constitution. And this Court, heeding the clarion call
of the Constitution and accepting the duty of being the elderly
watchman of the nation, will continue to respect and protect the
sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE
INSURANCE SYSTEM, MANILA HOTEL CORPORATION,
COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL are directed to
CEASE and DESIST from selling 51% of the shares of the
Manila Hotel Corporation to RENONG BERHAD, and to
ACCEPT the matching bid of petitioner MANILA PRINCE
HOTEL CORPORATION to purchase the subject 51% of the
shares of the Manila Hotel Corporation at P44.00 per share and
thereafter to execute the necessary agreements and documents
to effect the sale, to issue the necessary clearances and to do
such other acts and deeds as may be necessary for the purpose.
SO ORDERED.
Regalado, Davide,
Jr., Romero, Kapunan, Francisco and Hermosisima, Jr.,
JJ., concur.
Narvasa (C.J.), I join Justice Puno in his dissent.
Padilla, J., See concurring opinion.
Melo, J., I join in the dissent of Justice Puno.
Puno, J., Please see dissent.
Vitug, J., Please see separate (concurring) opinion.
Mendoza, J., See concurring opinion.
Panganiban, J., Please see separate (dissenting) opinion.
Torres, Jr., J., With separate opinion.
450
450 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
CONCURRING OPINION
PADILLA, J.:
I concur with the ponencia of Mr. Justice Bellosillo. At the same
time, I would like to expound a bit more on the concept of
national patrimony as including within its scope and meaning
institutions such as the Manila Hotel.
It is argued by petitioner that the Manila Hotel comes under
national patrimony over which qualified Filipinos have the
preference, in ownership and operation. The Constitutional
provision on point states:
x x x
In the grant of rights, privileges, and concessions covering the
qualified Filipinos." 1
Petitioners argument, I believe, is well taken. Under the 1987

Constitution, national patrimony consists of the natural
resources provided by Almighty God (Preamble) in our territory
(Article I) consisting of land, sea, and air. A study of the 19352
Constitution, where the concept of national patrimony

originated, would show that its framers decided to adopt the
even more comprehensive expression Patrimony of the Nation
in the belief that the phrase encircles a concept embracing not
only the natural resources of the country but practically
everything that belongs to the Filipino people, the tangible and
the material as well as the intangible and the spiritual assets
and possessions of the people. It is to be noted that the framers
did not stop with conservation. They knew that conservation
alone does not spell progress; and that this may be achieved only
through development as a correlative factor to assure to the
people not only the exclusive owner-
_______________
1Article XII, Section 10, par. 2, 1987 Constitution.
2Padilla, The 1987 Constitution of the Republic of the Philippines, Volume III, p. 89.
451
VOL. 267, 451
FEBRUARY 3, 1997
Government Service
Insurance System
ship, but also the exclusive benefits of their national patrimony. 3
Moreover, the concept of national patrimony has been viewed

as referring not only to our rich natural resources but also to the
cultural heritage of our race. 4
There is no doubt in my mind that the Manila Hotel is very

much a part of our national patrimony and, as such, deserves
constitutional protection as to who shall own it and benefit from
its operation. This institution has played an important role in
our nations history, having been the venue of many a historical
event, and serving as it did, and as it does, as the Philippine
Guest House for visiting foreign heads of state, dignitaries,
celebrities, and others. 5
It is therefore our duty to protect and preserve it for future

generations of Filipinos. As President Manuel L. Quezon once
said, we must exploit the natural resources of our country, but
we should do so with an eye to the welfare of the future
generations. In other words, the leaders of today are the trustees
of the patrimony of our race. To preserve our national patrimony
and reserve it for Filipinos was the intent of the distinguished
gentlemen who first framed our Constitution. Thus, in debating
the need for nationalization of our lands and natural resources,
one expounded that we should put more teeth into our laws,
and not make the nationalization of our lands and natural
resources a subject of ordinary legislation but of constitutional
enactment." To quote further: Let not our children be mere
6
tenants and trespassers in their own country. Let us preserve

and bequeath to them what is rightfully theirs, free from all
foreign liens and encumbrances." 7
_______________
3 Sinco, Philippine Political Law, 11th ed., p. 112.
4 Nolledo, The New Constitution of the Philippines, Annotated, 1990 ed., p. 72.
5 Memorandum for Petitioner, p. 1.
6 Laurel, Proceedings of the Philippine Constitutional Convention (19341935), p. 507.

7Id., p. 562.
452
452 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
Now, a word on preference. In my view preference to qualified
Filipinos, to be meaningful, must refer not only to things that
are peripheral, collateral, or tangential. It must touch and affect
the very heart of the existing order In the field of public
bidding in the acquisition of things that pertain to the national
patrimony, preference to qualified Filipinos must allow a
qualified Filipino to match or equal the higher bid of a non-
Filipino; the preference shall not operate only when the bids of
the qualified Filipino and the nonFilipino are equal in which
case, the award should undisputedly be made to the qualified
Filipino. The Constitutional preference should give the qualified
Filipino an opportunity to match or equal the higher bid of the
non-Filipino bidder if the preference of the qualified Filipino
bidder is to be significant at all.
It is true that in this present age of globalization of attitude
towards foreign investments in our country, stress is on the
elimination of barriers to foreign trade and investment in the
country. While government agencies, including the courts should
re-condition their thinking to such a trend, and make it easy and
even attractive for foreign investors to come to our shores, yet
we should not preclude ourselves from reserving to us Filipinos
certain areas where our national identity, culture and heritage
are involved. In the hotel industry, for instance, foreign
investors have established themselves creditably, such as in the
Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels.
This should not stop us from retaining 51% of the capital stock
of the Manila Hotel Corporation in the hands of Filipinos. This
would be in keeping with the intent of the Filipino people to
preserve our national patrimony, including our historical and
cultural heritage in the hands of Filipinos.
453
VOL. 267, 453
FEBRUARY 3, 1997
Government Service
Insurance System
SEPARATE OPINION
VITUG, J.:
I agree with Mr. Justice Josue N. Bellosillo on his clear-cut
statements, shared by Mr. Justice Reynato S. Puno in a well
written separate (dissenting) opinion, that:
First, the provision in our fundamental law which provides
that "(i)n the grant of rights, privileges, and concessions
covering the national economy and patrimony, the State shall
give preference to qualified Filipinos" is self-executory. The
1
provision verily does not need, although it can obviously be

amplified or regulated by, an enabling law or a set of rules.
Second, the term patrimony does not merely refer to the
countrys natural resources but also to its cultural heritage. A
historical landmark, to use the words of Mr. Justice Justo P.
Torres, Jr., Manila Hotel has now indeed become part of
Philippine heritage.
Third, the act of the Government Service Insurance System
(GSIS"), a government entity which derives its authority from
the State, in selling 51% of its share in MHC should be
considered an act of the State subject to the Constitutional
mandate.
On the pivotal issue of the degree of preference to qualified
Filipinos, I find it somewhat difficult to take the same path
traversed by the forceful reasoning of Justice Puno. In the
particular case before us, the only meaningful preference, it
seems, would really be to allow the qualified Filipino to match
the foreign bid for, as a practical matter, I cannot see any bid
that literally calls for millions of dollars to be at par (to the last
cent) with another. The magnitude of the bids is such that it
becomes hardly possible for the competing bids to stand exactly
equal which alone, under the dissenting view, could trigger the
right of preference.
It is most unfortunate that Renong Berhad has not been
spared this great disappointment, a letdown that it did not
_______________
1Second par. Section 10, Art. XII, 1987 Constitution.
454
454 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
deserve, by a simple and timely advise of the proper rules of
bidding along with the peculiar constitutional implications of
the proposed transaction. It is also regrettable that the Court at
times is seen to, instead, be the refuge for bureaucratic
inadequacies which create the perception that it even takes on
non-justiciable controversies.
All told, I am constrained to vote for granting the petition.
SEPARATE OPINION
MENDOZA, J., concurring in the judgment:
I take the view that in the context of the present controversy the
only way to enforce the constitutional mandate that "[i]n the
grant of rights, privileges and concessions covering the national
patrimony the State shall give preference to qualified
Filipinos" is to allow petitioner Philippine corporation to equal
1
the bid of the Malaysian firm Renong Berhad for the purchase of
the controlling shares of stocks in the Manila Hotel Corporation.
Indeed, it is the only way a qualified Filipino or Philippine
corporation can be given preference in the enjoyment of a right,
privilege or concession given by the State, by favoring it over a
foreign national or corporation.
Under the rules on public bidding of the Government Service
and Insurance System, if petitioner and the Malaysian firm had
offered the same price per share, priority [would be given] to
the bidder seeking the larger ownership interest in MHC," so 2
that if petitioner bid for more shares, it would be preferred to

the Malaysian corporation for that reason and not because it is a
Philippine corporation. Consequently, it is only in cases like the
present one, where an alien corporation is the highest bidder,
that preferential treatment of the Philippine corporation is
mandated not by declaring it winner but by allowing it to
match the highest bid in terms of
_______________
1 Art. XII, 10, second paragraph.
2 GUIDELINES AND PROCEDURES: SECOND PREQUALIFICATION AND PUBLIC
BIDDING OF THE MHC PRIVATIZATION (hereafter referred to as GUIDELINES), Part V,
par. H(4).
455
VOL. 267, 455
FEBRUARY 3, 1997
Government Service
Insurance System
price per share before it is awarded the shares of stocks. That,
3
to me, is what preference to qualified Filipinos means in the

context of this caseby favoring Filipinos whenever they are at
a disadvantage vis--visforeigners.
This was the meaning given in Co Chiong v. Cuaderno to a 4
1947 statute giving preference to Filipino citizens in the lease

of public market stalls." This Court upheld the cancellation of
5
existing leases covering market stalls occupied by persons who

were not Filipinos and the award thereafter of the stalls to
qualified Filipino vendors as ordered by the Department of
Finance. Similarly, in Vda. de Salgado v. De la Fuente, this 6
Court sustained the validity of a municipal ordinance passed

pursuant to the statute (R.A. No. 37), terminating existing
leases of public market stalls and granting preference to Filipino
citizens in the issuance of new licenses for the occupancy of the
stalls. In Chua Lao v. Raymundo, the preference granted under
7
the statute was held to apply to cases in which Filipino vendors

sought the same stalls occupied by alien vendors in the public
markets even if there were available other stalls as good as
those occupied by aliens. The law, apparently, is applicable
whenever there is a conflict of interest between Filipino
applicants and aliens for lease of stalls in public markets, in
which situation the right to preference immediately arises." 8
Our legislation on the matter thus antedated by a quarter of a

century efforts began only in the 1970s in America to realize the
promise of equality, through affirmative action and reverse
discrimination programs designed to remedy past discrimination
against colored people in such areas as em-
_______________
3Id.
4 83 Phil. 242 (1949).
5 R.A. No. 37, 1.
6 87 Phil. 343 (1950).
7104 Phil. 302 (1958).
8 Id., at 309.
456
456 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
ployment, contracting and licensing. Indeed, in vital areas of our
9
national economy, there are situations in which the only way to

place Filipinos in control of the national economy as
contemplated in the Constitution is to give them preferential
10
treatment where they can at least stand on equal footing with

aliens.
There need be no fear that thus preferring Filipinos would
either invite foreign retaliation or deprive the country of the
benefit of foreign capital or know-how. We are dealing here not
with common trades or common means of livelihood which are
open to aliens in our midst, but with the sale of government
11
property, which is like the grant of government largess or

benefits. In the words of Art. XII, 10, we are dealing here with
rights, privileges and concessions covering the national
economy and therefore no one should begrudge us if we give
preferential treatment to our citizens. That at any rate is the
command of the Constitution. For the Manila Hotel is a business
owned by the Government. It is being privatized. Privatization
should result in the relinquishment of the business in favor of
private individuals and groups who are Filipino citizens, not in
favor of aliens.
Nor should there be any doubt that by awarding the shares of
stocks to petitioner we would be trading competence and
capability for nationalism. Both petitioner and the Malaysian
firm are qualified, having hurdled the prequalification
process. It is only the result of the public bidding that is sought
12
_______________
9 For an excellent analysis of American cases on reverse discrimination in these areas,
see GERALD GUNTHER, CONSTITUTIONAL LAW 780819 (1991).
10 Art. II, 19: The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos. (Emphasis added)
11 See Villegas v. Hiu Chiung Tsai Pao Ho,86 SCRA 270 (1978) (invalidating an ordinance
imposing a flat fee of P500 on aliens for the privilege of earning a livelihood).
12 Petitioner passed the criteria set forth in the GUIDELINES, Part IV, par. F(4), of the GSIS,
relating to the following:

457
VOL. 267, 457
FEBRUARY 3, 1997
Government Service
Insurance System
to be modified by enabling petitioner to up its bid to equal the
highest bid.
Nor, finally, is there any basis for the suggestion that to allow
a Filipino bidder to match the highest bid of an alien could
encourage speculation, since all that a Filipino entity would
then do would be not to make a bid or make only a token one
and, after it is known that a foreign bidder has submitted the
highest bid, make an offer matching that of the foreign firm.
This is not possible under the rules on public bidding of the
GSIS. Under these rules there is a minimum bid required
(P36.67 per share for a range of 9 to 15 million shares). Bids 13
below the minimum will not be considered. On the other hand, if

the Filipino entity, after passing the prequalification process,
does not submit a bid, he will not be allowed to match the
highest bid of the foreign firm because this is a privilege allowed
only to those who have validly submitted bids." The suggestion 14
is, to say the least, fanciful and has no basis in fact.

For the foregoing reasons, I vote to grant the petition.
SEPARATE OPINION
TORRES, JR., J.:
Constancy in law is not an attribute of a judicious mind. I say
this as we are confronted in the case at bar with legal and
constitutional issuesand yet I am driven so to speak, on the
side of history. The reason perhaps is due to the belief that in
the words of Justice Oliver Wendell Holmes, Jr., a page of
history is worth a volume of logic.
_______________
1. a.Business management expertise, track record, and experience;

2. b.Financial capability;
3. c.Feasibility and acceptability of the proposed strategic plan for The Manila Hotel.
GUIDELINES, Part V, par. C (1)(3), in relation to Part I.

13
Id., Part V, par. V(1).

14
458
458 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
I will, however, attempt to share my thoughts on whether the
Manila Hotel has a historical and cultural aspect within the
meaning of the constitution and thus, forming part of the
patrimony of the nation.
Section 10, Article of the 1987 Constitution provides:
xxx
qualified Filipinos.
The State shall regulate and exercise authority over foreign
investments within its national goals and priorities.
The foregoing provisions should be read in conjunction with
Article II of the same Constitution pertaining to Declaration of
Principles and State Policies which ordain
The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos. (Sec. 19).
Interestingly, the matter of giving preference to qualified
Filipinos was one of the highlights in the 1987 Constitutional
Commission proceedings, thus:
xxx
MR. NOLLEDO. The Amendment will read: IN THE GRANT OF
RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE
NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL
GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word
Filipinos here, as intended by the proponents, will include not only
individual Filipinos but also Filipino-Controlled entities fully controlled
by Filipinos (Vol. III, Records of the Constitutional Commission, p. 608).
MR. MONSOD, We also wanted to add, as Commissioner Villegas
said, this committee and this body already approved what is known as
the Filipino First policy which was suggested by Commissioner de
Castro. So that it is now in our Constitution (Vol. IV, Records of the
Constitutional Commission, p. 225).
Commissioner Jose Nolledo explaining the provision adverted to
above, said:
459
VOL. 267, 459
FEBRUARY 3, 1997
Government Service
Insurance System
MR. NOLLEDO. In the grant of rights, privileges and concessions
covering the national economy and patrimony, the State shall give
preference to qualified Filipinos.
MR. FOZ. In connection with that amendment, if a foreign enterprise
is qualified and the Filipinos enterprise is also qualified, will the
Filipino enterprise still be given a preference?
MR. NOLLEDO. Obviously.
MR. FOZ. If the foreigner is more qualified in some aspects than the
Filipino enterprise, will the Filipino still be preferred?
MR. NOLLEDO. The answer is yes. (Vol. III, p. 616, Records of the
Constitutional Commission).
The nationalistic provisions of the 1987 Constitution reflect the
history and spirit of the Malolos Constitution of 1898, the 1935
Constitution and the 1973 Constitutions. That we have not
reneged on this nationalist policy is articulated in one of the
earliest cases, this Court said
The nationalistic tendency is manifested in various provisions of the
Constitution. x x x It cannot therefore be said that a law imbued with
the same purpose and spirit underlying many of the provisions of the
Constitution is unreasonable, invalid or unconstitutional (Ichong, et al.
vs. Hernandez, et al., 101 Phil. 1155).'"
I subscribe to the view that history, culture, heritage, and tradition are
not legislated and is the product of events, customs, usages and
practices. It is actually a product of growth and acceptance by the
collective mores of a race. It is the spirit and soul of a people.
The Manila Hotel is part of our history, culture and heritage, Every
inch of the Manila Hotel is witness to historic events (too numerous to
mention) which shaped our history for almost 84 years.
As I intimated earlier, it is not my position in this opinion, to examine
the single instances of the legal largesse which have given rise to this
controversy, as I believe that has been exhaustively discussed in
the ponencia. Suffice it to say at this point, that the history of the
Manila Hotel should not be placed in the auction block of a purely
business transaction,
460
460 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
where profit subverts the cherished historical values of our people.
As a historical landmark in this Pearl of the Orient Seas, it has its
enviable tradition which, in the words of the philosopher Salvador de
Madarriaga, (tradition) is more of a river than a stone, it keeps flowing,
and one must view the flowing, and one must view the flow in both
directions If you look towards the hill from which the river flows, you see
tradition in the form of forceful currents that push the river or people
towards the future; and if you look the other way, you progress.
Indeed, tradition and progress are the same, for progress depends on
the kind of tradition. Let us not jettison the tradition of the Manila
Hotel and thereby repeat our colonial history.
I grant, of course, that men of the law can see the same subject in
different lights.
I remember, however, a Spanish proverb which says"He is always
right who suspects that he makes mistakes. On this note, I say that if I
have to make a mistake, I would rather err upholding the belief that the
Filipino be first under his Constitution and in his own land.
I vote to GRANT the petition.
DISSENTING OPINION
PUNO, J.:
This is a petition for prohibition and mandamus filed by the
Manila Prince Hotel Corporation, a domestic corporation, to stop
the Government Service Insurance System (GSIS) from selling
the controlling shares of the Manila Hotel Corporation to a
foreign corporation. Allegedly, the sale violates the second
paragraph of Section 10, Article XII of the Constitution.
Respondent GSIS is a government-owned and controlled
corporation, It is the sole owner of the Manila Hotel which it
operates through its subsidiary, the Manila Hotel Corpora-
461
VOL. 267, 461
FEBRUARY 3, 1997
Government Service
Insurance System
tion. Manila Hotel was included in the privatization program of
the government. In 1995, GSIS proposed to sell to interested
buyers 30% to 51% of its shares, ranging from 9,000,000 to
15,300,000 shares, in the Manila Hotel Corporation. After the
absence of bids at the first public bidding, the block of shares
offered for sale was increased from a maximum of 30% to 51%.
Also, the winning bidder, or the eventual strategic partner of
the GSIS was required to provide management expertise and/or
an international marketing/reservation system, and financial
support to strengthen the profitability and performance of the
Manila Hotel." The proposal was approved by respondent
1
Committee on Privatization.
In July 1995, a conference was held where prequalification
documents and the bidding rules were furnished interested
parties. Petitioner Manila Prince Hotel, a domestic corporation,
and Renong Berhad, a Malaysian firm with ITT Sheratonas
operator, prequalified. The bidding rules and procedures
2
entitled Guidelines and Procedures: Second Prequalification

and Public Bidding of the MHC Privatization provide:
1. IINTRODUCTION AND HIGHLIGHTS
DETERMINING THE WINNING BIDDER/STRATEGIC PARTNER
The party that accomplishes the steps set forth below will be declared the Winning
Bidder/Strategic Partner and will be awarded the Block of Shares:
FirstPass the prequalification process;
________________
1 Introduction and Highlights, Guidelines and Procedures: Second Prequalification and Public
Bidding of the MHC Privatization, Annex A" to Petitioners Consolidated Reply to Comments of
Respondents, Rollo, p. 142.
2 The four bidders who previously prequalified for the first bidding, namely, ITT Sheraton,
Marriot International, Inc., Renaissance Hotel International, Inc., and the consortium of RCBC
and the Ritz Carlton, were deemed prequalified for the second bidding.
462
462 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
SecondSubmit the highest bid on a price per share basis for the Block of Shares;
ThirdNegotiate and execute the necessary contracts with GSIS/MHC not later
than October 23, 1995.
xxx
1. IVGUIDELINES FOR PREQUALIFICATION
1. A.PARTIES WHO MAY APPLY FOR PREQUALIFICATION

The Winning Bidder/Strategic Partner will be expected to provide management
expertise and/or an international marketing reservation system, and financial
support to strengthen the profitability and performance of The Manila Hotel. In
this context, the GSIS is inviting to the prequalification process any local and/or
foreign corporation, consortrum/joint venture or juridical entity with at least one of
the following qualifications:
1.a.Proven management expertise in the hotel industry; or

2.b.Significant equity ownership (i.e. board representation) in another hotel
company; or
3.c.Overall management and marketing expertise to successfully operate the
Manila Hotel.
Parties interested in bidding for MHC should be able to provide access to the
requisite management expertise and/or international marketing/reservation
system for The Manila Hotel.
xxx
1.D.PREQUALIFICATION DOCUMENTS
xxx
1.E.APPLICATION PROCEDURE
1.1.DOCUMENTS AVAILABLE AT THE REGISTRATION OFFICE
The prequalification documents can be secured at the Registration Office

between 9:00 AM to 4:00 PM during working days within the period specified in
Section III. Each set of documents consists of the following:
1.a.Guidelines and Procedures: Second Prequalification and Public Bidding of

the MHC Privatization.
463
VOL. 267, 463
FEBRUARY 3, 1997
Government Service
Insurance System
1. b.Confidential Information Memorandum: The Manila Hotel
Corporation.
2. c.Letter of Invitation to the Prequalification and Bidding
Conference.
xxxx
1. 4.PREQUALIFICATION AND BIDDING CONFERENCE
A prequalification and bidding conference will be held at The Manila

Hotel on the date specified in Section III to allow the Applicant to seek
clarifications and further information regarding the guidelines and
procedures. Only those who purchased the prequalification documents
will be allowed in this conference. Attendance to this conference is
strongly advised, although the Applicant will not be penalized if it does
not attend.
1. 5.SUBMISSION OF PREQUALIFICATION DOCUMENTS
The Applicant should submit 5 sets of the prequalification documents

(1 original set plus 4 copies) at the Registration Office between 9:00 AM
to 4:00 PM during working days within the period specified in Section
III.
1. F.PREQUALIFICATION PROCESS
1. 1.The Applicant will be evaluated by the PBAC with the assistance

of the TEC based on the Information Package and other
information available to the PBAC.
2. 2.If the Applicant is a Consortium/Joint Venture, the evaluation
will consider the overall qualifications of the group, taking into
account the contribution of each member to the venture.
3. 3.The decision of the PBAC with respect to the results of the PBAC
evaluation will be final.
4. 4.The Applicant shall be evaluated according to the criteria set
forth below:
1. a.Business management expertise, track record, and experience.
2. b.Financial capability.
3. c.Feasibility and acceptability of the proposed strategic plan for the
Manila Hotel.
1. 5.The PBAC will shortlist such number of Applicants as it may

deem appropriate.
464
464 SUPREME COURT
REPORTS
ANNOTATED
Government Service
lnsurance System
1. 6.The parties that prequalified in the first MHC public bidding
ITT Sheraton, Marriot International, Inc., Renaissance Hotels
International, Inc., consortium of RCBC Capital/Ritz Carlton
may participate in the Public Bidding without having to undergo
the prequalification process again.
1. G.SHORTLIST OF QUALIFIED BIDDERS
1. 1.A notice of prequalification results containing the shortlist of

Qualified Bidders will be posted at the Registration Office at the
date specified in Section III.
2. 2.In the case of a Consortium/Joint Venture, the withdrawal by a
member whose qualification was a material consideration for being
included in the shortlist is a ground for disqualification of the
Applicant
1. V.GUIDELINES FOR THE PUBLIC BIDDING
1. A.PARTIES WHO MAY PARTICIPATE IN THE PUBLIC

BIDDING
All parties in the shortlist of Qualified Bidders will be eligible to participate in the
Public Bidding.
1. B.BLOCK OF SHARES
A range of Nine Million (9,000,000) to Fifteen Million Three Hundred Thousand
(15,300,000) shares of stock, representing Thirty Percent to Fifty-One Percent
(30%-51%) of the issued and outstanding shares of MHC, will be offered in the
Public Bidding by the GSIS. The Qualified Bidders will have the option of
determining the number of shares within the range to bid for. The range is
intended to attract bidders with different preferences and objectives for the
operation and management of The Manila Hotel.
1. C.MINIMUM BID REQUIRED ON A PRICE PER SHARE BASIS
1. 1.Bids will be evaluated on a price per share basis. The minimum

bid required on a price per share basis for the Block of Shares is
Thirty-Six Pesos and Sixty-Seven Centavos (P36.67).
2. 2.Bids should be in the Philippine currency payable to the GSIS.
3. 3.Bids submitted with an equivalent price per share below the
minimum required will not be considered.
465
VOL. 267, 465
FEBRUARY 3, 1997
Government Service
Insurance System
1. D.TRANSFER COSTS
2. x x x
3. E.OFFICIAL BID FORM
1. 1.Bids must be contained in the prescribed Official Bid Form, a

copy of which is attached as Annex IV. The Official Bid Form must
be properly accomplished in all details; improper accomplishment
may be a sufficient basis for disqualification.
2. 2.During the Public Bidding, the Qualified Bidder will submit the
Official Bid Form, which will indicate the offered purchase price, in
a sealed envelope marked OFFICIAL BID."
1. F.SUPPORTING DOCUMENTS
During the Public Bidding, the following documents should be submitted along
with the bid in a separate envelope marked SUPPORTING DOCUMENTS":
1. 1.WRITTEN AUTHORITY TO BID (UNDER OATH)

If the Qualified Bidder is a corporation, the representative of the Qualified Bidder
should submit a Board resolution which adequately authorizes such representative
to bid for and in behalf of the corporation with full authority to perform such acts
necessary or requisite to bind the Qualified Bidder. If the Qualified Bidder is a
Consortium/Joint Venture, each member of the Consortium/Joint Venture should
submit a Board resolution authorizing one of its members and such members
representative to make the bid on behalf of the group with full authority to perform
such acts necessary or requisite to bind the Qualified Bidder.
1. 2.BID SECURITY
1. a,The Qualified Bidder should deposit Thirty-Three Million Pesos

(P33,000,000.00), in Philippine currency as Bid Security in the
form of:
1. i.Managers check or unconditional demand draft payable to the

Government Service Insurance System and issued by a reputable
banking institution duly licensed to do business in the Philippines
and acceptable to GSIS; or
2. ii.Stand-by letter of credit issued by a reputable banking
institution acceptable to the GSIS.
466
466 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
1. b,The GSIS will reject a bid if:
1. i.The bid does not have a Bid Security; or

2. ii.The Bid Security accompanying the bid is for less than the
required amount.
1. c.If the Bid Security is in the form of a managers check or
unconditional demand draft, the interest earned on the Bid
Security will be for the account of GSIS.
2. d.If the Qualified Bidder becomes the Winning Bidder/Strategic
Partner, the Bid Security will be applied as the downpayment on
the Qualified Bidders offered purchase price.
3. e.The Bid Security of the Qualified Bidder will be returned
immediately after the Public Bidding if the Qualified Bidder is not
declared the Highest Bidder.
4. f.The Bid Security will be returned by October 23, 1995 if the
Highest Bidder is unable to negotiate and execute with GSIS/MHC
the Management Contract, International Marketing/Reservation
System Contract Or other types of contract specified by the
Highest Bidder in its strategic plan for The Manila Hotel.
5. g.The Bid Security of the Highest Bidder will be forfeited in favor
of GSIS if the Highest Bidder, after negotiating and executing the
Management Contract, International Marketing/Reservation
System Contract or other types of contract specified by the Highest
Bidder in its strategic plan for The Manila Hotel, fails or refuses
to:
1. i.Execute the Stock Purchase and Sale Agreement with GSIS not
later than October 23, 1995; or
2. ii.Pay the full amount of the offered purchase price not later than
October 23, 1995; or
3. iii.Consummate the sale of the Block of Shares for any other
reason.
1. G.SUBMISSION OF BIDS
1. 1.The Public Bidding will be held on September 7, 1995 at the

following location:
New GSIS Headquarters Building
Financial Center, Reclamation Area
Roxas Boulevard, Pasay City, Metro Manila
2. 2.The Secretariat of the PBAC will be stationed at the Public
Bidding to accept any and all bids and supporting re
467
VOL. 267, 467
FEBRUARY 3, 1997
Government Service
Insurance System
1. quirements. Representatives from the Commission on Audit and
COP will be invited to witness the proceedings.
2. 3.The Qualified Bidder should submit its bid using the Official Bid
Form. The accomplished Official Bid Form should be submitted in
a sealed envelope marked OFFICIAL BID."
3. 4.The Qualified Bidder should submit the following documents
in another sealed envelope marked SUPPORTING BID
DOCUMENTS."
1. a.Written Authority Bid

2. b.Bid Security
1. 5.The two sealed envelopes marked OFFICIAL BID" and

SUPPORTING BID DOCUMENTS" must be submitted
simultaneously to the Secretariat between 9:00 AM and 2:00 PM,
Philippine Standard Time, on the date of the Public Bidding. No
bid shall be accepted after the closing time. Opened or tampered
bids shall not be accepted.
2. 6.The Secretariat will log and record the actual time of submission
of the two sealed envelopes. The actual time of submission will also
be indicated by the Secretariat on the face of the two envelopes.
3. 7.After Step No. 6, the two sealed envelopes will be dropped in the
corresponding bid boxes provided for the purpose. These boxes will
be in full view of the invited public.
1. H.OPENING AND READING OF BIDS
1. 1.After the closing time of 2:00 PM on the date of the Public

Bidding, the PBAC will open all sealed envelopes marked
SUPPORTING BID DOCUMENTS" for screening, evaluation and
acceptance. Those who submitted incomplete/insufficient
documents or document/s which is/are not substantially in the
form required by PBAC will be disqualified. The envelope
containing their Official Bid Form will be immediately returned to
the disqualified bidders.
2. 2.The sealed envelopes marked OFFICIAL BID" will be opened at
3:00 PM. The name of the bidder and the amount of its bid price
will be read publicly as the envelopes are opened.
3. 3.Immediately following the reading of the bids, the PBAC will
formally announce the highest bid and the Highest Bidder.
468
468 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
1. 4.The highest bid will be determined on a price per share basis. In
the event of a tie wherein two or more bids have the same
equivalent price per share, priority will be given to the bidder
seeking the larger ownership interest in MHC.
2. 5.The Public Bidding will be declared a failed bidding in case:
1. a.No single bid is submitted within the prescribed period; or

2. b.There is only one (1) bid that is submitted and acceptable to the
PBAC.
1. I.EXECUTION OF THE NECESSARY CONTRACTS WITH

GSIS/MHC
1. 1.The Highest Bidder must comply with the conditions set forth
below by October 23, 1995 or the Highest Bidder will lose the right
to purchase the Block of Shares and GSIS will instead offer the
Block of Shares to the other Qualified Bidders:
1. a.The Highest Bidder must negotiate and execute with GSIS/MHC

the Management Contract, International Marketing/Reservation
System Contract or other type of contract specified by the Highest
Bidder in its strategic plan for The Manila Hotel. If the Highest
Bidder is intending to provide only financial support to The Manila
Hotel, a separate institution may enter into the aforementioned
contract/s with GSIS/MHC.
2. b.The Highest Bidder must execute the Stock Purchase and Sale
Agreement with GSIS, a copy of which will be distributed to each
of the Qualified Bidder after the prequalification process is
completed.
1. 2.In the event that the Highest Bidder chooses a Management

Contract for The Manila Hotel, the maximum levels for the
management fee structure that GSIS/MHC are prepared to accept
in the Management Contract are as follows:
1. a.Basic management fee: Maximum of 2.5% of gross revenues.(1)

2. b.Incentive fee: Maximum of 8.0% of gross operating profit(1) after
deducting undistributed overhead expenses and the basic
management fee.
3. c.Fixed component of the international marketing/reservation
system fee: Maximum of 2.0% of gross
469
VOL. 267, 469
FEBRUARY 3, 1997
Government Service
Insurance System
1. room revenues. (1) The Applicant should indicate in its Information
Package if it is wishes to charge this fee.
Note (1): As defined in the uniform system of account for hotels.
The GSIS/MHC have indicated above the acceptable parameters for the hotel
management fees to facilitate the negotiations with the Highest Bidder for the
Management Contract after the Public Bidding.
A Qualified Bidder envisioning a Management Contract for The Manila Hotel
should determine whether or not the management fee structure above is acceptable
before submitting their prequalification documents to GSIS.
1. J.BLOCK SALE TO THE OTHER QUALIFIED BIDDERS
1. 1.If for any reason, the Highest Bidder cannot be awarded the
Block of Shares, GSIS may offer this to the other Qualified Bidders
that have validly submitted bids provided that those Qualified are
willing to match the highest bid in terms of price per share.
2. 2.The order of priority among the interested Qualified Bidders will
be in accordance with the equivalent price per share of their
respective bids in the Public Bidding, i.e. first and second priority
will be given to the Qualified Bidders that submitted the second
and third highest bids on the price per share basis, respectively,
and so on.
1. K.DECLARATION OF THE WINNING BID DER/STRATEGIC

PARTNER
The Highest Bidder will be declared the Winning Bidder/Strategic Partner after
the following conditions are met:
1. a.Execution of the necessary contract with GSIS/MHC not later

than October 23, 1995; and
2. b.Requisite approvals from the GSIS/MHC and COP/OGCC are
obtained.
1. I.FULL PAYMENT FOR THE BLOCK OF SHARES
1. 1.Upon execution of the necessary contracts with GSIS/MHC, the

Winning Bidder/Strategic Partner must fully pay, not later than
October 23, 1995, the offered purchase price for the Block of Shares
after deducting the Bid Security applied as downpayment.
470
470 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
1. 2.All payments should be made in the form of a Managers Check
or unconditional Demand Draft, payable to the Government
Service Insurance System, issued by a reputable banking
institution licensed to do business in the Philippines and
acceptable to GSIS.
1. M.GENERAL CONDITIONS
1. 1.The GSIS unconditionally reserves the right to reject any or all

applications, waive any formality therein, or accept such
application as may be considered most advantageous to the GSIS.
The GSIS similarly reserves the right to require the submission of
any additional information from the Applicant as the PBAC may
deem necessary.
2. 2.The GSIS further reserves the right to call off the Public Bidding
prior to acceptance of the bids and call for a new public bidding
under amended rules, and without any liability whatsoever to any
or all the Qualified Bidders, except the obligation to return the Bid
Security.
3. 3.The GSIS reserves the right to reset the date of the
prequalification/bidding conference, the deadline for the
submission of the prequalification documents, the date of the
Public Bidding or other pertinent activities at least three (3)
calendar days prior to the respective deadlines/target dates.
4. 4.The GSIS sells only whatever rights, interest and participation it
has on the Block of Shares.
5. 5.All documents and materials submitted by the Qualified Bidders,
except the Bid Security, may be returned upon request.
6. 6.The decision of the PBAC/GSIS on the results of the Public
Bidding is final. The Qualified Bidders, by participating in the
Public Bidding, are deemed to have agreed to accept and abide by
these results.
7. 7.The GSIS will be held free and harmless from any liability, suit
or allegation arising out of the Public Bidding by the Qualified
Bidders who have participated in the Public Bidding." 3
________________
3 Annex A" to the Consolidated Reply to Comments of Respondents, Rollo, pp. 140155.
471
VOL. 267, 471
FEBRUARY 3, 1997
Government Service
Insurance System
The second public bidding was held on September 18, 1995.
Petitioner bidded P41.00 per share for 15,300,000 shares and
Renong Berhad bidded P44.00 per share also for 15,300,000
shares. The GSIS declared Renong Berhad the highest bidder
and immediately returned petitioners bid security.
On September 28, 1995, ten days after the bidding, petitioner
wrote to GSIS offering to match the bid price of Renong Berhad.
It requested that the award be made to itself citing the second
paragraph of Section 10, Article XII of the Constitution. It sent a
managers check for thirty-three million pesos (P33,000,000.00)
as bid security.
Respondent GSIS, then in the process of negotiating with
Renong Berhad the terms and conditions of the contract and
technical agreements in the operation of the hotel, refused to
entertain petitioners request
Hence, petitioner filed the present petition. We issued a
temporary restraining order on October 18, 1995.
Petitioner anchors its plea on the second paragraph of Article
XII, Section 10 of the Constitution on the National Economy
4
and Patrimony which provides:

x x x
xxx
The vital issues can be summed up as follows:
1. (1)Whether section 10, paragraph 2 of Article XII of the
Constitution \8 a self-executing provision and does not
need implementing legislation to carry it into effect;
2. (2)Assuming section 10, paragraph 2 of Article XII is
selfexecuting, whether the controlling shares of the Manila
Hotel Corporation form part of our patrimony as a nation;
________________
4 Former Chief Justice Enrique Fernando and Commissioner Joaquin Bernas were invited by
the Court as amicus curiae to shed light on its meaning.
472
472 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
1. (3)Whether GSIS is included in the term State, hence,

mandated to implement section 10, paragraph 2 of Article
XII of the Constitution;
2. (4)Assuming GSIS is part of the State, whether it failed to
give preference to petitioner, a qualified Filipino
corporation, over and above Renong Berhad, a foreign
corporation, in the sale of the controlling shares of the
Manila Hotel Corporation;
3. (5)Whether petitioner is estopped from questioning the sale
of the shares to Renong Berhad, a foreign corporation.
Anent the first issue, it is now familiar learning that a
Constitution provides the guiding policies and principles upon
which is built the substantial foundation and general
framework of the law and government. As a rule, its provisions
5
are deemed self-executing and can be enforced without further

legislative action. Some of its provisions, however, can be
6
implemented only through appropriate laws enacted by the
Legislature, hence not self-executing.
To determine whether a particular provision of a Constitution
is self-executing is a hard row to hoe. The key lies on the intent
of the framers of the fundamental law oftentimes submerged in
its language. A searching inquiry should be made to find out if
the provision is intended as a present enactment, complete in
itself as a definitive law, or if it needs futurelegislation for
completion and enforcemet. The inquiry demands a micro-
7
analysis of the text and the context of the provision in question. 8
________________
5 Lopez v. de los Reyes, 55 Phil. 170, 1901 [1930].
6 16 Am Jur 2d, Constitutional Law, Sec. 139, p. 510 [1979 ed.]; B R.C.L. Sec. 52, p. 57
[1915]; see also Willis v. St. Paul Sanitation Co., 48 48 Minn. 140, 50 N.W. 1110, 31 A.J.R. 626,
16 L.R.A. 281 11-892]; State ex rel. Schneider v. Kennedy, 587 P. 2d 844, 225 Kan 13 [1978].
7 Willis Y. St. Paul Sanitation, supra, at 11101111; see also Cooley, A Treatise on
Constitutional Limitations 167, vol. 111927].
8 16 C.J.S., Constitutional Law, Sec. 48, p. 100.
473
VOL. 267, 473
FEBRUARY 3, 1997
Government Service
Insurance System
Courts as a rule consider the provisions of the Constitution as
self-executing, rather than as requiring future legislation for
9
their enforcement. The reason is not difficult to discern. For if

10
they are not treated as self-executing, the mandate of the

fundamental law ratified by the sovereign people can be easily
ignored and nullified by Congress. Suffused with wisdom of the
11
ages is the unyielding rule that legislative actions may give

breath to constitutional rights but congressional inaction should
not suffocate them. 12
Thus, we have treated as self-executing the provisions in the

Bill of Rights on arrests, searches and seizures, the rights of a 13
person under custodial investigation, the rights of 14 an
accused, and the privilege against self-incrimination. It
15 16
________________
9 Cooley, supra, at 171; 6 R.C.L. Sec. 53, pp. 5758; Brice v. McDow, 116 S.C. 324, 108 S.E. 84,
87 [1921]; see also Gonzales, Philippine Constitutional Law, p. 26 [1969].
10 16 C.J.S., Constitutional Law, Sec. 48, p. 101.
11 Way v. Barney, 116 Minn. 285, 133 N.W. 801, 804 38 L.R.A. (N.S.) 648, Ann. Cas. 1913 A,
719 [1911]; Brice v. McDow, supra, at 87; Morgan v. Board of Supervisors, 67 Ariz. 133, 192 P. 2d
236, 241 [1948]; Gonzales, supra.
12 Ninth Decennial Digest Part I, Constitutional Law, (Key No 28), p. 1638.
13 Article III, Section 2; see Webb v. de Leon, 247 SCRA 652 [1995]; People v. Saycon, 236
SCRA 325 [1994]; Allado v. Diokno 232 SCRA 192 [1994]; Burgos v. Chief of Staff, 133 SCRA
800 [1984]Yee Sue Kuy v. Almeda, 70 Phil. 141 [1940]; Pasion Vda. De Garcia v. Locsin, 65 Phil.
689 [1938]; and a host of other cases.
14 Article III, 12, Section 12, pars. 1 to 3; People v. Alicando, 251 SCRA 293 [1995]; People v.
Bandula, 232 SCRA 566 [1994]- People v. Nito, 228 SCRA 442 [1993]; People v. Duero, 104 SCRA
319 [1981]; People v. Galit, 135 SCRA 465 119851; and a host of other cases.
15 Article III, Section 14; People v. Digno, 250 SCRA 237 [1995]; People v. Godoy, 250 SCRA
676 [1995]; People v. Colcol, 219 SCRA 107 [1993]; Borja v. Mendoza, 77 SCRA 422[1977]; People
v. Dramayo, 42 SCRA 59 [1971]; and a host of other cases.
16 Galman v. Pamaran, 138 SCRA 274[1985]; Chavez v. Court of Appeals, 24 SCRA
663 [1968]; People v. Otadura, 86 Phil. 244
474
474 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
is recognized that legislation is unnecessary to enable courts to
effectuate constitutional provisions guaranteeing the
fundamental rights of life, liberty and.the protection of
property. The same treatment is accorded to constitutional
17
provisions forbidding the taking or damaging of property for

public use without just compensation. 18
Contrariwise, case law lays down the rule that a constitutional

provision is not self-executing where it merely announces a
policy and its language empowers the Legislature to prescribe
the means by which the policy shall be carried into
effect. Accordingly, we have held that the provisions in Article II
19
of our Constitution entitled Declaration of Principles and State

Policies should generally be construed as mere statements of
principles of the State. We have also ruled that some provisions
20
of Article XIII on Social Justice and Human Rights," and 21
Article XIV on Education Science and Technology, Arts, Culture

and Sports" cannot be the basis of judi-
22
________________
[1950]; Bermudez v. Castillo, 64 Phil. 485[1937]; and a host of other cases.

17 Harley v. Schuylkill County, 476 F. Supp. 191, 195196 [1979]; Erdman v. Mitchell, 207 Pa.
St. 79, 56 Atl. 327, 99 A.S.R. 783, 63 L.R.A. 534 [1903]; see Ninth Decennial Digest Part I,
Constitutional Law, (Key No. 28), pp. 16381639.
18 City of Chicago v. George F. Harding Collection, 217 N.E. 2d 381, 383, 70111. App. 2d 254
[1966]; People v. Buellton Dev. Co., 136 P. 2d 793, 796, 58 Cal. App. 2d 178 [1943]; Bordy v.
State, 7 N.W. 2d 632, 635, 142 Neb. 71411943]; Cohen v. City of Chicago, 36 N.E. 2d 220, 224,
377 111. 221 [1941].
19 16 Am Jur 2d, Constitutional Law, Sec. 143, p. 514; 16 C.J.S. Constitutional Law, Sec. 48, p.
100; 6 R.C.L. Sec. 54, p. 59; see alsoState ex rel. Noe v. Knop La. App. 190 So. 135, 142
[1939]; State ex rel. Walker v. Board of Commrs. for Educational Lands and Funds, 3 N.W. 2d
196, 200, 141 Neb. 172 [1942]; Maddox v. Hunt, 83 P. 2d 553, 556, 83 Okl. 465 [1938].
20 Article II, Sections 11, 12 and 13 (Basco v. Phil. Amusements and Gaming Corporation, 197
SCRA 52, 68 [1991]); Sections 5, 12, 13 and 17 (Kilosbayan, Inc. v. Morato, 246 SCRA 540, 564
[1995]).
21 Article XIII, Section 13 (Basco, supra).
22 Article XIV, Section 2 (Basco, supra).
475
VOL. 267, 475
FEBRUARY 3, 1997
Government Service
Insurance System
cially enforceable rights. Their enforcement is addressed to the
discretion of Congress though they provide the framework for
legislation to effectuate their policy content.
23 24
Guided by this map of settled jurisprudence, we now consider

whether Section 10, Article XII of the 1987 Constitution is self-
executing or not. It reads:
Sec. 10. The Congress shall, upon recommendation of the economic and
planning agency, when the national interest dictates, reserve to citizens
of the Philippines or to corporations or associations at least sixty per
centum of whose capital is owned by such citizens, or such higher
percentage as Congress may prescribe, certain areas of investments. The
Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.
The State shall regulate and exercise authority over foreign
investments within its national jurisdiction and in accordance with its
national goals and priorities.
The first paragraph directs Congressto reserve certain areas of
investments in the country to Filipino citizens or to
25
corporations sixty per cent of whose capital stock is owned by

26
Filipinos. It further commands Congress to enact laws that will

encourage the formation and operation of one hundred percent
Filipino-owned enterprises. In checkered contrast, the second
paragraph orders the entire State to give preference to qualified
Filipinos in the grant of rights and privileges covering the
national economy and patrimony. The third para-
________________
23 Kilosbayan v. Morato, supra, at 564.

24 Basco v. Phil. Amusements and Gaming Corporation, supra, at 68.
25 Congress had previously passed the Retail Trade Act (R.A. 1180); the Private Security
Agency Act (R.A. 5487; the law on engaging in the rice and corn industry (R.A. 3018, P.D. 194),
etc.
26 Or such higher percentage as Congress may prescribe.
476
476 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
graph also directs the State to regulate foreign investments in
line with our national goals and well-set priorities.
The first paragraph of Section 10 is not self-executing. By its
express text, there is a categorical command forCongress to
enact laws restricting foreign ownership in certain areas of
investments in the country and to encourage the formation and
operation of wholly-owned Filipino enterprises. The right
granted by the provision is clearly still in esse.Congress has to
breathe life to the right by means of legislation. Parenthetically,
this paragraph was plucked from Section 3, Article XIV of the
1973 Constitution. The provision in the 1973 Constitution
27
affirmed our ruling in the landmark case of Lao Ichong v.

Hernandez, where we upheld the discretionary authority of
28
Congress to Filipinize certain areas of investments. By 29
reenacting the 1973 provision, the first paragraph of Section 10

affirmed the power of Congress to nationalize certain areas of
investments in favor of Filipinos.
The second and third paragraphs of Section 10 are different.
They are directed to the State and not to Congress alone which
is but one of the three great branches of our government. Their
coverage is also broader for they cover the national economy
and patrimony and foreign investments within [the] national
jurisdiction and not merely certain areas of investments.
Beyond debate, they cannot be read as granting Congress
the exclusive power to implement by law
________________
27 Article XIV, Section 3 of the 1973 Constitution reads:
Sec. 3. The Batasang Pambansa shall, upon recommendation of the National Economic and Development
Authority, reserve to citizens of the Philippines or to corporations or associations wholly owned by such
citizens, certain traditional areas of investments when the national interest so dictates.
101 Phil. 1155 [1957].
28
See Bernas, The Constitution of the Republic of the Philippines 450, vol. II [1988]. The Lao
29
lchong case upheld the Filipinization of the retail trade and implied that particular areas of
business may be Filipinized without doing violence to the equal protection clause of the
Constitution.
477
VOL. 267, 477
FEBRUARY 3, 1997
Government Service
Insurance System
the policy of giving preference to qualified Filipinos in the
conferral of rights and privileges covering our national economy
and patrimony. Their language does not suggest that any of the
State agency or instrumentality has the privilege to hedge or to
refuse its implementation for any reason whatsoever. Their duty
to implement is unconditional and it is now. The second and the
third paragraphs of Section 10, Article XII are thus self-
executing.
This submission is strengthened by Article II of the
Constitution entitled Declaration of Principles and State
Policies. Its Section 19 provides that "[T]he State shall develop a
selfreliant and independent national economy effectively
controlled by Filipinos. It engrafts the all-important Filipino
First policy in our fundamental law and by the use of the
mandatory word shall, directs its enforcement by the whole
State without any pause or a half-pause in time. The second
issue is whether the sale of a majority of the stocks of the
Manila Hotel Corporation involves the disposition of part of our
national patrimony. The records of the Constitutional
Commission show that the Commissioners entertained the same
view as to its meaning. According to Commissioner Nolledo,
patrimony refers not only to our rich natural resources but
also to the cultural heritage of our race. By this yardstick, the
30
sale of Manila Hotel falls within the coverage of the

constitutional provision giving preferential treatment to
qualified Filipinos in the grant of rights involving our national
patrimony. The unique value of the Manila Hotel to our history
and culture cannot be viewed with a myopic eye. The value of
the hotel goes beyond pesos and cen-
_______________
30 Nolledo, The New Constitution of the Philippines, Annotated, 1990 ed., p. 72. The word
patrimony first appeared in the preamble of the 1935 Constitution and was understood to cover
everything that belongs to the Filipino people, the tangible and the material as well as the
intangible and the spiritual assets and possessions of the nation (Sinco, Philippine Political Law,
Principles and Concepts [1962 ed.], p. 112; Speech of Delegate Conrado Benitez defending the
draft preamble of the 1935 Constitution in Laurel, Proceedings of the Constitutional Convention,
vol. III, p. 325 [1966]).
478
478 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
tavos. As chronicled by Beth Day Romulo, the hotel first opened 31
on July 4, 1912 as a first-class hotel built by the American

Insular Government for Americans living in, or passing through,
Manila while travelling to the Orient Indigenous materials and
Filipino craftsmanship were utilized in its construction. For
sometime, it was exclusively used by American and Caucasian
travelers and served as the official guesthouse of the American
Insular Government for visiting foreign dignitaries. Filipinos
began coming to the Hotel as guests during the Commonwealth
period. When the Japanese occupied Manila, it served as
military headquarters and lodging for the highest-ranking
officers from Tokyo. It was at the Hotel and the Intramuros that
the Japanese made their last stand during the Liberation of
Manila. After the war, the Hotel again served foreign guests and
Filipinos alike. Presidents and kings, premiers and potentates,
as well as glamorous international film and sports celebrities
were housed in the Hotel. It was also the situs of international
conventions and conferences. In the local scene, it was the venue
of historic meetings, parties and conventions of political parties.
The Hotel has reaped and continues reaping numerous
recognitions and awards from international hotel and travel
awardgiving bodies, a fitting acknowledgment of Filipino talent
and ingenuity. These are judicially cognizable facts which
cannot be bent by a biased mind.
The Hotel may not, as yet, have been declared a national
cultural treasure pursuant to Republic Act No. 4846 but that
does not exclude it from our national patrimony. Republic Act
No. 4846, The Cultural Properties Preservation and Protection
Act, merely provides a procedure whereby a particular cultural
property may be classified a national cultural treasure or an
important cultural property." Approved on June 32
________________
31Commissioned by the Manila Hotel Corporation for the Diamond Jubilee celebration of the
Hotel in 1987; see The Manila Hotel: The Heart and Memory of a City.
32 Section 7 of R.A. 4846 provides:
479
VOL. 267, 479
FEBRUARY 3, 1997
Government Service
Insurance System
18, 1966 and amended by P.D. 374 in 1974, the law is limited in
its reach and cannot be read as the exclusive law implementing
Section 10, Article XII of the 1987 Constitution. To be sure, the
law does not equate cultural treasure and cultural property as
synonymous to the phrase patrimony of the nation.
The third issue is whether the constitutional command to the
State includes the respondent GSIS. A look at its charter will
reveal that GSIS is a government-owned and controlled
corporation that administers funds that come from the monthly
contributions of government employees and the
government. The funds are held in trust for a distinct purpose
33
________________
Sec. 7. In the designation of a particular cultural property as a national cultural treasure, the following
procedure shall be observed:
(a) Before the actual designation, the owner, if the property is privately owned, shall be notified at
least fifteen days prior to the intended designation, and he shall be invited to attend the deliberation and
given a chance to be heard. Failure on the part of the owner to attend the deliberation shall not bar the
panel to render its decision. Decision shall be given by the panel within a week after its deliberation. In
the event that the owner desires to seek reconsideration of the designation made by the panel, he may do
so within thirty days from the date that the decision has been rendered. If no request for reconsideration
is filed after this period, the designation is then considered final and executory. Any request for
reconsideration filed within thirty days and subsequently again denied by the panel, may be further
appealed to another panel chairmanned by the Secretary of Education with two experts as members
appointed by the Secretary of Education. Their decision shall be final and binding.
(b) Within each kind or class of objects, only the rare and unique objects may be designated as
National Cultural Treasures. The remainder, if any, shall be treated as cultural property.
xxx
P.D. 1146, Sec. 5; P.D. 1146, known as The Revised Government Service Insurance Act of
33
1977" amended Commonwealth Act No. 186, the Government Service Insurance Act of 1936.
480
480 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
which cannot be disposed of indifferently. They are to be used 34
to finance the retirement, disability and life insurance benefits

of the employees and the administrative and operational
expenses of the GSIS. Excess funds, however, are are allowed to
35
be invested in business and other ventures for the benefit of the

employees. It is thus contended that the GSIS' investment in
36
the Manila Hotel Corporation is a simple business venture,

hence, an act beyond the contemplation of Section 10, paragraph
2 of Article XII of the Constitution.
The submission is unimpressive, The GSIS is not a pure
private corporation. It is essentially a public corporation created
by Congress and granted an original charter to serve a public
purpose. It is subject to the jurisdictions of the Civil Service
Commission and the Commission on Audit. As a state-owned
37 38
and controlled corporation, it is skin-bound to adhere to the

policies spelled out in the Constitution especially those designed
to promote the general welfare of the people. One of these
policies is the Filipino First Policy which the people elevated as
a constitutional command.
The fourth issue demands that we look at the content of the
phrase qualified Filipinos and their preferential right. The
Constitution desisted from defining their contents. This is as it
ought to be for a Constitution only lays down flexible policies
and principles which.can be bent to meet todays manifest needs
and tomorrows unmanifested demands. Only a constitution
strung with elasticity can grow as a living constitution.
Thus, during the deliberations in the Constitutional
Commission, Commissioner Nolledo brushed aside a suggestion
to define the phrase qualified Filipinos. He explained that
________________
34 Beronilla v. Government Service Insurance System, 36 SCRA 44, 53 [1970]; Social Security
System Employees Association v. Soriano, 7 SCRA 1016, 1023 [1963].
35 Id., Secs. 28 and 29.
36 Id., Sec. 30.
37 Constitution, Article K(B), section 2(1).
38 Constitution, Article K(D), section 2(1).
481
VOL. 267, 481
FEBRUARY 3, 199?
Government Service
Insurance System
present and prospective laws will take care of the problem of
its interpretation, viz:
x x x
THE PRESIDENT. What is the suggestion of Commissioner Rodrigo?
Is it to remove the word QUALIFIED?"
MR. RODRIGO. No, no, but say definitely TO QUALIFIED
FILIPINOS" as against whom? As against aliens over aliens?
MR. NOLLEDO. Madam President, I think that is understood We use
the word QUALIFIED" because the existing laws or the prospective
laws will always lay down conditions under which business may be done.
For example, qualifications on capital, qualifications on the setting up of
other financial structures, et cetera.
MR. RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes.
MR. NOLLEDO. If we say, PREFERENCE TO QUALIFIED
FILIPINOS," it can be understood as giving preference to qualified
Filipinos as against Filipinos who are not qualified.
MR. NOLLEDO. Madam President, that was the intention of the
proponents. The committee has accepted the amendment.
xxx
As previously discussed, the constitutional command to enforce
the Filipino First Policy is addressed to the State and not to
Congress alone. Hence, the word laws should not be
understood as limited to legislations but all state actions which
include applicable rules and regulations adopted by agencies
and instrumentalities of the State in the exercise of their rule-
making power. In the case at bar, the bidding rules and
regulations set forth the standards to measure the qualifications
of bidders, Filipinos and foreigners alike. It is not seriously
disputed that petitioner qualified to bid as did Renong Berhad. 39
________________
39 It is meet to note that our laws do not debar foreigners from engaging in the hotel business.
Republic Act No. 7042, entitled the Foreign Investments Act of 1991" was enacted by Congress
to attract, promote and welcome x x x foreign investments x x x in activities which significantly
contribute to national industrialization
482
482 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
Thus, we come to the critical issue of the degree of
preference which GSIS should have accorded petitioner, a
qualified Filipino, over Renong Berhad, a foreigner, in the
purchase of the controlling shares of the Manila Hotel Petitioner
claims that after losing the bid, this right of preference gives it a
second-chance to match the highest bid of Renong Berhad.
With due respect, I cannot sustain petitioners submission. I
prescind from the premise that the second paragraph of Section
10, Article XII of the Constitution is pro-Filipino but not anti-
alien. It is pro-Filipino for it gives preference to Filipinos. It is
not, however, anti-alien per se for it does not absolutely bar
aliens in the grant of rights, privileges and concessions covering
the national economy and patrimony. Indeed, in the absence of
qualified Filipinos, the State is not prohibited from granting
these rights, privileges and concessions to foreigners if the act
will promote the weal of the nation.
In implementing the policy articulated in Section 10, Article
XII of the Constitution, the stellar task of our State
policymakers is to maintain a creative tension between two
desideratafirst, the need to develop our economy and
patrimony with the help of foreigners if necessary, and, second,
the need to keep our economy controlled by Filipinos. Rightfully,
the framers of the Constitution did not define the degree of the
right of preference to be given to qualified Filipinos. They knew
that for the right to serve the general welfare, it must have
a malleable content that can be adjusted by our policymakers to
meet the changing needs of our people. In fine, the right of
preference of qualified Filipinos is to be determined by degree as
time dictates and circumstances warrant. The lesser
________________
and socio-economic development to the extent that foreign investment is allowed by the
Constitution and relevant laws. The law contains a list, called the Negative List, specifying
areas of economic activity where foreign participation is limited or prohibited. Areas of economic
activity not included in the Negative List are open to foreign participation up to one hundred per
cent (Secs. 6 and 7). Foreigners now own and run a great number of our five-star hotels.
483
VOL. 267, 483
FEBRUARY 3, 1997
Government Service
Insurance System
the need for alien assistance, the greater the degree of the right
of preference can be given to Filipinos and vice versa.
Again, it should be stressed that the right and the duty to
determine the degree of this privilege at any given time is
addressed to the entire State. While under our constitutional
scheme, the right primarily belongs to Congress as the
lawmaking department of our government, other branches of
government, and all their agencies and instrumentalities, share
the power to enforce this state policy. Within the limits of their
authority, they can act or promulgate rules and regulations
defining the degree of this right of preference in cases where
they have to make grants involving the national economy and
judicial duty. On the other hand, our duty is to strike down acts
of the State that violate the policy.
To date, Congress has not enacted a law defining the degree of
the preferential right. Consequently, we must turn to the rules
and regulations of respondents Committee on Privatization and
GSIS to determine the degree of preference that petitioner is
entitled to as a qualified Filipino in the subject sale. A tearless
look at the rules and regulations will show that they are silent
on the degree of preferential right to be accorded a qualified
Filipino bidder. Despite their silence, however, they cannot be
read to mean that they do not grant any degree of preference to
petitioner for paragraph 2, Section 10, Article XII of the
Constitution is deemed part of said rules and regulations.
Pursuant to legal hermeneutics which demand that we interpret
rules to save them from unconstitutionality, I submit that the
right of preference of petitioner arises only if it tied the bid of
Renong Berhad. In that instance, all things stand equal, and
petitioner, as a qualified Filipino bidder, should be preferred.
It is with deep regret that I cannot subscribe to the view that
petitioner has a right to match the bid of Renong
Berhad. Petitioners submission must be supported by the rules
but even if we examine the rules inside-out a thousand times,
they can not justify the claimed right. Under the rules, the right
to match the highest bid arises only if for any reason, the
highest bidder cannot be awarded the block of shares x x x. No
484
484 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
reason has arisen that will prevent the award to Renong
Berhad. It qualified as a bidder. It complied with the procedure
of bidding. It tendered the highest bid. It was declared as the
highest bidder by the GSIS and tke rules say this decision is
final.deserves the award as a matter of right for the rules clearly
did not give to the petitioner as a qualified Filipino the privilege
to match the higher bid of a foreigner. What the rules did not
grant, petitioner cannot demand. Our sympathies may be with
petitioner but the court has no power to extend the latitude and
longtitude of the right of preference as defined by the rules. The
parameters of the right of preference depend on a galaxy of facts
and factors whose determination belongs to the province of the
policy-making branches and agencies of the State. We are duty-
bound to respect that determination even if we differ with the
wisdom of their judgment. The right they grant may be little but
we must uphold the grant for as long as the right of preference is
not denied. It is only when a State action amounts to a denial of
the right that the Court can come in and strike down the denial
as unconstitutional.
Finally, I submit that petitioner is estopped from assailing the
winning bid of Renong Berhad. Petitioner was aware of the rules
and regulations of the bidding. It knew that the rules and
regulations do not provide that a qualified Filipino bidder can
match the winning bid after submitting an inferior bid. It knew
that the bid was open to foreigners and that foreigners qualified
even during the first bidding. Petitioner cannot be allowed to
repudiate the rules which it agreed to respect. It cannot be
allowed to obey the rules when it wins and disregard them when
it loses. If sustained, petitioners stance will wreak havoc on the
essence of bidding. Our laws, rules and regulations require
highest bidding to raise as much funds as possible for the
government to maximize its capacity to deliver essential services
to our people. This is a duty that must be discharged by Filipinos
and foreigners participating in a bidding contest and the rules
are carefully written to attain this objective. Among others,
bidders are prequalified to insure their financial capability. The
bidding is secret and the bids are sealed to prevent collusion
among the parties. This
485
VOL. 267, 485
FEBRUARY 3, 1997
Government Service
Insurance System
objective will be undermined if we grant petitioner the privilege
to know the winning bid and a chance to match it. For plainly, a
second chance to bid will encourage a bidder not to strive to give
the highest bid in the first bidding.
We support the Filipino First Policy without any reservation.
The visionary nationalist Don Claro M. Recto has warned us
that the greatest tragedy that can befall a Filipino is to be an
alien in his own land. The Constitution has embodied Rectos
counsel as a state policy and our decision should be in sync with
this policy. But while the Filipino First Policy requires that we
incline to a Filipino, it does not demand that we wrong an
alien. Our policy makers can write laws and rules giving favored
treatment to the Filipino but we are not free to be unfair to a
foreigner after writing the laws and the rules. After the laws are
written, they must be obeyed as written, by Filipinos and
foreigners alike. The equal protection clause of the Constitution
protects all against unfairness. We can be pro-Filipino without
unfairness to foreigners.
I vote to dismiss the petition.
SEPARATE DISSENTING OPINION
PANGANIBAN, J.:
I regret I cannot join the majority. To the incisive Dissenting
Opinion of Mr. Justice Reynato S. Puno, may I just add: 1. The
majority contends the Constitution should be interpreted to
mean that, after a bidding process is concluded the losing
Filipino bidder should be given the right to equal the highest
foreign bid, and thus to win. However, the Constitution [Sec.
10(2), Art, XII] simply states that in the grant of rights x x x
covering the national economy and patrimony, the State shall
give preference to qualified Filipinos. The majority concedes
that there is no law defining the extent or degree of such
preference. Specifically, no statute empowers a losing Filipino
bidder to increase his bid and equal that of the winning
foreigner. In the absence of such empowering law, the majoritys
strained interpretation, I respectfully submit, constitutes
unadulterated judicial legislation, which makes bid-
486
486 SUPREME COURT
REPORTS
ANNOTATED
Government Service
Insurance System
ding a ridiculous sham where no Filipino can lose and where no
foreigner can win. Only in the Philippines!
2. Aside from being prohibited by the Constitution, such
judicial legislation is short-sighted and, viewed properly, gravely
prejudicial to long-term Filipino interests. It encourages other
countriesin the guise of reverse comity or worse, unabashed
retaliationto discriminate against us in their own jurisdictions
by authorizing their own nationals to similarly equal and defeat
the higher bids of Filipino enterprises solely, while on the other
hand, allowing similar bids of other foreigners to remain
unchallenged by their nationals. The majoritys thesis will thus
marginalize Filipinos as pariahs in the global marketplace with
absolutely no chance of winning any bidding outside our
country. Even authoritarian regimes and hermit kingdoms have
long ago found out that unfairness, greed and isolation are self-
defeating and in the long-term, self-destructing.
The moral lesson here is simple: Do not do unto others what
you do not want others to do unto you.
3. In the absence of a law specifying the degree or extent of the
Filipino First policy of the Constitution, the constitutional
preference for the qualified Filipinos may be allowed only
where all the bids are equal. In this manner, we put the Filipino
ahead without self-destructing him and without being unfair to
the foreigner.
In short, the Constitution mandates a victory for the qualified
Filipino only when the scores are tied. But not when the
ballgame is over and the foreigner clearly posted the highest
score.
Respondents directed to cease and desist from selling 51% of
shares if the Manila Hotel Corporation to Renong Berhad, and
accept matching bid of petitioner.
Notes.The postulates of our Constitution are not mere
platitudes which we should honor only in rhetorics but not in
reality. In fine, the power to contract a foreign loan does not
carry with it the authority to bargain away the ideals of our
487
VOL. 267, 487
FEBRUARY 3, 1997
Gatmaytan vs. Court of
Appeals
Constitution. (National Housing Corporation vs. Commission on
Audit,226 SCRA 55 [1993])
R.A. No. 7181 does not mandate any sequencing for the
disposition of shares in government-owned corporations being
privatized. (Bagatsing vs. Committee on Privatization, 246
SCRA 334 [1995])
o0o
ARTICLE 13
G.R. No. 86186. May 8, 1992. *
RAFAEL GELOS, petitioner, vs. THE HONORABLE COURT

OF APPEALS and ERNESTO ALZONA, respondents.
Appeal; Court; Judgment; Motions; Factual findings of the Court of
Appeals are conclusive as long as they are supported by substantial
evidence.The settled rule is that the factual findings of the Court of
Appeals are conclusive on even this Court as long as they are supported
by substantial evidence. The petitioner has not shown that his case
comes under any of those rare exceptions when such findings may be
validly reversed by this Court.
Land Reform to Public Lands; Tenancy; Tenancy relationship is
determined not by the nature of the work involved but by the intention of
the parties.It is not the nature of the work involved but the intention
of the parties that determines the relationship between them. As this
Court has stressed in a number of cases, tenancy is not a purely factual
relationship dependent on what the alleged tenant does upon the land. It
is also a legal relationship. The intent of the parties, the understanding
when the farmer is installed, and as in this case, their written
agreements, provided these are complied with and are not contrary to
law, are even more important.
PETITION for review of the decision of the Court of Appeals.

Balagtas P. Ilagan for petitioner.
Emil Capulong, Jr. for private respondent.
CRUZ, J.:
The Court is asked to determine the real status of the petitioner,
who claims to be a tenant of the private respondent and entitled
to the benefits of tenancy laws. The private respondent objects,
contending that the petitioner is only a hired laborer whose
right to occupy the subject land ended with the termination of
their contract of employment.
The subject land is a 25,000 square meter farmland situated in
Cabuyao, Laguna, and belonging originally to private re-
_____________
*FIRST DIVISION.
609
VOL. 208, MAY 8, 609
1992
Gelos vs. Court of Appeals
spondent Ernesto Alzona and his parents in equal shares. On
July 5, 1970, they entered into a written contract with petitioner
Rafael Gelos employing him as their laborer on the land at the
stipulated daily wage of P5.00. On September 4, 1973, after
1
Alzona had bought his parents share and acquired full

ownership of the land, he wrote Gelos to inform him of the
termination of his services and to demand that he vacate the
property. Gelos refused and continued working on the land.
On October 1, 1973, Gelos went to the Court of Agrarian
Relations and asked for the fixing of the agricultural lease
rental on the property. He later withdrew the case and went to
the Ministry of Agrarian Reform, which granted his petition. For
his part, Alzona filed a complaint for illegal detainer against
Gelos in the Municipal Court of Cabuyao, but this action was
declared not proper for trial by the Ministry of Agrarian
Reform because of the existence of a tenancy relationship
between the parties. Alzona was rebuffed for the same reason
when he sought the assistance of the Ministry of Labor and later
when he filed a complaint with the Court of Agrarian Relations
for a declaration of non-tenancy and damages against Gelos. On
appeal to the Office of the President, however, the complaint
was declared proper for trial and so de-archived and reinstated.
After hearing, the Regional Trial Court of San Pablo City
(which had taken over the Court of Agrarian Relations under PB
129) rendered a decision dated April 21, 1987, dismissing the
complaint. It found Gelos to be a tenant of the subject property
2
and entitled to remain thereon as such. The plaintiff was also

held liable in attorneys fees and costs.
The decision was subsequently reversed by the Court of
Appeals. In its judgment promulgated on November 25, 1988, it 3
held that Gelos was not a tenant of the land in question and
ordered him to surrender it to Alzona. He was also held liable
for the payment of P10,000.00 as attorneys fees and the costs of
_____________
1 Exhibit D.
2 Rollo, p. 16; penned by Judge Clemente M. Soriano.
3 Ibid., p. 21; penned by Sempio-Diy, J.,with Herrera and Francisco, JJ., concurring.
610
610 SUPREME COURT
REPORTS
ANNOTATED
the suit.
The basic question the petitioner now raises before the Court
is essentially factual and therefore not proper in a petition for
review under Rule 45 of the Rules of Court. Only questions of
law may be raised in this kind of proceeding. The settled rule is
that the factual findings of the Court of Appeals are conclusive
on even this Court as long as they are supported by substantial
evidence. The petitioner has not shown that his case comes
under any of those rare exceptions when such findings may be
validly reversed by this Court.
It is true that in Talavera v. Court of Appeals, we held that a
4
factual conclusion made by the trial court that a person is a

tenant farmer, if it is supported by the minimum evidence
demanded by law, is final and conclusive and cannot be reversed
by the appellate tribunals except for compelling reasons. In the
case at bar, however, we find with the respondent court that
there was such a compelling reason. A careful examination of
the record reveals that, indeed, the trial court misappreciated
the facts when it ruled that the petitioner was a tenant of the
private respondent.
The circumstance that the findings of the respondent court do
not concur with those of the trial court does not, of course, call
for automatic reversal of the appellate court. Precisely the
function of the appellate court is to review and, if warranted,
reverse the findings of the trial court. Disagreement between the
two courts merely calls on us to make a specially careful study of
their respective decisions to determine which of them should be
preferred as more conformable to the facts at hand.
The Court has made this careful study and will sustain the
decision of the respondent court.
The contract of employment dated July 5, 1970, written in
Tagalog and entitled Kasunduan ng Upahang Araw, reads
pertinently as follows:
1. 1.Ang Unang Panig ay siyang may-ari at nagtatangkilik ng
isang lagay na lupa, sinasaka, na tumatayo sa Nayon ng
Baclaran, Cabuyao, Laguna, na siyang gagawa at sasaka
sa lupa, samantalang
_____________
4182 SCRA 778.
611
VOL. 208, MAY 8, 611
1992
1. ang Ikalawang Panig ay magiging upahan at katulong sa

paggawa ng lupa.
2. 2.Ang Unang Panig ay gustong ipagpatuloy ang
pagbubungkal at paggawa ng bukid na binabanggit sa
itaas at ang Ikalawang Panig ay may ibig na magpaupa sa
paggawa sa halagang P5.00 sa bawat araw, walong oras na
trabaho gaya ng mga sumusunod: Patubigan ng linang;
pagpapahalabas ng mga pilapil; pagpapaaldabis sa unang
araw ng pag-aararo; pagpapalinis ng damo sa ibabaw ng
pilapil; pagpapakamot (unang pagpapasuyod),
pagpapahalang at pagpapabalasaw (ikalawat ikatlong
pagpapasuyod); isang tao sa pagsasabog ng abono una sa
pagpapantay ng linang; bago magtanim; isang tao sa
pagaalaga ng dapog; upa sa isang tao ng magbobomba ng
gamot laban sa pagkapit ng mga kulisap (mayroon at
wala); sa nag-we-weeder; upa sa mga tao na maggagamas
at magpapatubig ng palay; magsasapaw ng mga pilapil at
iba pa.
3. 3.Ang Unang Panig at ang Ikalawang Panig ay
nagkasundo na ang huli ay gagawa sa bukid ayon sa
nabanggit sa itaas bilang katulong at upahan lamang. Ang
Unang Panig bukod sa sila ang gagawa at magsasaka ay
maaaring umupa ng iba pang tao manggagawa sa upahang
umiiral sang-ayon sa batas katulad ng pag-aararo,
pagpapahulip, pagpapagamas, pagbobomba, pagweweeder,
pagsasabog ng abono, pagbobomba ng gamot, pagpapatubig
at iba pang mga gawain. Maaaring alisin ang Ikalawang
Panig sa pagpapatrabaho sa ano mang oras ng Unang
Panig.
4. 4.Ipinatatanto ng Ikalawang Panig na siya ay hindi
kasama sa bukid kundi upahan lamang na binabayaran sa
bawat araw ng kanyang paggawa sa bukid na nabanggit.
It is noted that the agreement provides that ang Ikalawang
Panig (meaning Gelos) ay may ibig na magpaupa sa paggawa sa
halagang P5.00 sa bawat araw, walong oras na trabaho (The
Second Party desires to lease his services at the rate of P5.00
per day, eight hours of work) and that Ipinatatanto ng
Ikalawang Panig na siya ay hindi kasama sa bukid kundi
upahan lamang na binabayaran sa bawat araw ng kanyang
paggawa sa bukid na nabanggit. (The Second Party makes it
known that he is not a farm tenant but only a hired laborer who
is paid for every day of work on the said farm.)
These stipulations clearly indicate that the parties did not
enter into a tenancy agreement but only a contract of
employment. The agreement is a lease of services, not of the
land in dispute. This intention is quite consistent with the
undisputed
612
612 SUPREME COURT
REPORTS
ANNOTATED
fact that three days before that agreement was concluded, the
former tenant of the land, Leocadio Punongbayan, had executed
an instrument in which he voluntarily surrendered his tenancy
rights to the private respondent. It also clearly demonstrates
5
that, contrary to the petitioners contention, Alzona intended to

cultivate the land himself instead of placing it again under
tenancy.
The petitioner would now disavow the agreement, but his
protestations are less than convincing. His wifes testimony that
he is illiterate is belied by his own testimony to the contrary in
another proceeding. Her claim that they were tricked into
6
signing the agreement does not stand up against the testimony

of Atty. Santos Pampolina, who declared under his oath as a
witness (and as an attorney and officer of the court) that he
explained the meaning of the document to Gelos, who even read
it himself before signing it. Atty. Pampolina said the agreement
7
was not notarized because his commission as notary public was

good only for Manila and did not cover Laguna, where the
document was executed. At any rate, the lack of notarization did
8
not adversely affect the veracity and effectiveness of the

agreement, which, significantly, Gelos and his wife do not deny
having signed.
Gelos points to the specific tasks mentioned in the agreement
and suggests that they are the work of a tenant and not of a
mere hired laborer. Not so. The work specified is not peculiar to
tenancy. What a tenant may do may also be done by a hired
laborer working under the direction of the landowner, as in the
case at bar. It is not the nature of the work involved but the
intention of the parties that determines the relationship
between them.
As this Court has stressed in a number of cases, tenancy is
9
not a purely factual relationship dependent on what the alleged

______________
5 Exhibit C.
6 TSN, July 22, 1986, pp. 10-13.
7 TSN, January 23, 1985, pp. 13-15; 37-38.
8 Ibid., pp. 21, 32.

9 Gonzales, Jr. v. Alvarez, 182 SCRA 15; See also Magno-Adamos v. Bagasao, 162 SCRA
747; Tuazon v. CA, 118 SCRA 484.
613
VOL. 208, MAY 8, 613
1992
tenant does upon the land. It is also a legal relationship. The
intent of the parties, the understanding when the farmer is
installed, and as in this case, their written agreements, provided
these are complied with and are not contrary to law, are even
more important.
Gelos presented receipts for fertilizer and pesticides he
10
allegedly bought and applied to the land of the private

respondent, but the latter insists that it was his brother who
bought them, being an agriculturist and in charge of the
technical aspect of the farm. Moreover, the receipts do not
indicate to which particular landholding the fertilizers would be
applied and, as pointed out by the private respondent, could
refer to the other parcels of land which Gelos was tenanting.
The petitioners payment of irrigation fees from 1980 to 1985
to the National Irrigation Administration on the said
landholding is explained by the fact that during the pendency of
the CAR case, the Agrarian Reform Office fixed a provisional
leasehold rental after a preliminary finding that Gelos was the
tenant of the private respondent. As such, it was he who had to
pay the irrigation fees. Incidentally, Section 12, subpar. (r) of PD
946 provides that the Secretarys determination of the tenancy
relationship is only preliminary and cannot be conclusive on the
lower court.
It is noteworthy that, except for the self-serving testimony of
the petitioners wife, the records of this case are bereft of
evidence regarding the sharing of harvest between Gelos and
Alzona. No less importantly, as the Court of Appeals observed,
the petitioner has not shown that he paid rentals on the subject
property from 1970 to 1973, before their dispute arose.
A tenant is defined under Section 5(a) of Republic Act No.
1199 as a person who himself and with the aid available from
within his immediate farm household cultivates the land
belonging to or possessed by another, with the latters consent,
for purposes of production, sharing the produce with the
landholder under the share tenancy system, or paying to the
landholder a price-certain or ascertainable in produce or in
money or both, under the leasehold tenancy system. (Emphasis
supplied)
______________
Exhibits 2 and 2-A to 2-H.

10
614
614 SUPREME COURT
REPORTS
ANNOTATED
For this relationship to exist, it is necessary that: 1) the parties
are the landowner and the tenant; 2) the subject is agricultural
land; 3) there is consent; 4) the purpose is agricultural
production; 5) there is personal cultivation; and 6) there is
sharing of harvest or payment of rental. In the absence of any of
these requisites, an occupant of a parcel of land, or a cultivator
thereof, or planter thereon, cannot qualify as a de jure tenant.11
On the other hand, the indications of an employer-employee

relationship are: 1) the selection and engagement of the
employee; 2) the payment of wages; 3) the power of dismissal;
and 4) the power to control the employees conductalthough
the latter is the most important element. 12
According to a well-known authority on the subject, tenancy

13
relationship is distinguished from farm employer-farm worker

relationship in that: In farm employer-farm worker
relationship, the lease is one of labor with the agricultural
laborer as the lessor of his services and the farm employer as the
lessee thereof. In tenancy relationship, it is the landowner who
is the lessor, and the tenant the lessee of agricultural land. The
agricultural worker works for the farm employer and for his
labor he receives a salary or wage regardless of whether the
employer makes a profit. On the other hand, the tenant derives
his income from the agricultural produce or harvest.
The private respondent, instead of receiving payment of
rentals or sharing in the produce of the land, paid the petitioner
lump sums for specific kinds of work on the subject lot or gave
him vales, or advance payment of his wages as laborer thereon.
The petitioners wife claims that Alzona made her husband sign
the invoices all at one time because he allegedly needed them to
reduce his income taxes. Even assuming this to be true, we do
_____________
11 Baranda v. Baguio, 189 SCRA 194; Prudential Bank v. Hon. Filomeno Capultos, 181 SCRA
159; Caballes v. Department of Agrarian Reform, 168 SCRA 247.
12 Deferia v. NLRC, 194 SCRA 525; Singer Sewing Machine Co. v. Hon. Drilon, 193 SCRA
270; Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147 SCRA 49.
13 Alcantara, Philippine Labor and Social Legislation Annotated, Vol. 1, 1991 Revised Edition,
p. 47 citing De Los Reyes v. Espineli, et al., 30 SCRA 574.

615
VOL. 208, MAY 8, 615
1992
not think that made the said payments fictitious, especially so
since the petitioner never denied having received them.
The other issue raised by the petitioner, which is decidedly
legal, is easily resolved. There being no tenancy relationship, the
contention that the private respondents complaint has
prescribed under Section 38 of R.A. 3844 must also fail. That
section is not applicable. It must be noted that at the very
outset, Alzona rejected the petitioners claim of agricultural
tenancy and immediately instituted his action for unlawful
detainer in accordance with Section 1, Rule 70 of the Rules of
Court. As it happened, the said case was held not proper for trial
by the Ministry of Agrarian Reform. He then resorted to other
remedies just so he could recover possession of his land and,
finally, in 1979, he yielded to the jurisdiction of the defunct
Court of Agrarian Relations by filing there an action for
declaration of non-tenancy. The action, which was commenced in
1979, was within the ten-year prescriptive period provided
under Article 1144 of the Civil Code for actions based on a
written contract. **
The Court quotes with approval the following acute

observations made by Justice Alicia Sempio-Diy:
It might not be amiss to state at this juncture that in deciding this case
in favor of defendant, the lower court might have been greatly influenced
by the fact that defendant is a mere farmer who is almost illiterate while
plaintiff is an educated landlord, such that it had felt that it was its duty
to be vigilant for the protection of defendants interests. But the duty of
the court to protect the weak and the underprivileged should not be
carried out to such an extent as to deny justice to the landowner
whenever truth and justice happen to be on his side. Besides,
defendants economic position vis a vis the plaintiff does not necessarily
make him the underprivileged party in this case, for as testified by
plaintiff which defendant never denied, the small land in question was
the only landholding of plaintiff when he and his father bought the
same, at which time he was just a lowly employee who did not even have
a house of his own and his father, a mere farmer, while defendant was
the agricultural tenant of another piece of land and also owns his own
house, a sari sari store, and a caritela.
_______________
Not Article 555 as cited by the appealed decision.

**
616
616 SUPREME COURT
REPORTS
ANNOTATED
Plaintiff also surmised that it was only after defendant had been taken
into its wings by the Federation of Free Farmers that he started
claiming to be plaintiffs agricultural tenant, presumably upon the
Federations instigation and advice. And we cannot discount this
possibility indeed, considering that during the early stages of the
proceedings in this case, defendant even counter-proposed to plaintiff
that he would surrender the land in question to the latter if plaintiff
would convey to him another piece of land adjacent to the land in
question, almost one ha. in area, that plaintiff had also acquired after
buying the land in question, showing that defendant was not as ignorant
as he would want the Court to believe and had the advice of people
knowledgeable on agrarian matters.
This Court has stressed more than once that social justiceor
any justice for that matteris for the deserving, whether he be
a millionaire in his mansion or a pauper in his hovel. It is true
that, in case of reasonable doubt, we are called upon to tilt the
balance in favor of the poor, to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to
prefer the poor simply because they are poor, or to reject the rich
simply because they are rich, for justice must always be served,
for poor and rich alike, according to the mandate of the law.
WHEREFORE, the challenged decision of the Court of Appeals
is AFFIRMED and the petition is DENIED, with costs against
the petitioner. It is so ordered.
Narvasa (C.J.), Grio-Aquino, Medialdea and Bellosillo,
JJ., concur.
Decision affirmed; petition denied.
Note.Personal cultivation by owner-lessor is still a valid
ground for dispossession of a tenant. (Baliguat vs. Court of
Appeals, 142 SCRA 34.)
o0o
G.R. No. 100150. January 5, 1994. *
BRIGIDO R. SIMON, JR., CARLOS QUIMPO, CARLITO
ABELARDO, AND GENEROSO OCAMPO,
petitioners, vs. COMMISSION ON HUMAN RIGHTS, ROQUE
FERMO, AND OTHERS AS JOHN DOES, respondents.
Constitutional Law; Bill of Rights; Human Rights; Commission on
Human Rights; Creation of.The Commission on Human Rights was
created by the 1987 Constitution. It was formally constituted by then
President Corazon Aquino viaExecutive Order No. 163, issued on 5 May
1987, in the exercise of her legislative power at the time. It succeeded,
but so superseded as well, the Presidential Committee on Human
Rights.
Same; Same; Same; Same; Words and Phrases; The phrase human
rights is so generic a term that any attempt to define it could at best be
described as inconclusive.It can hardly be disputed that the phrase
human rights is so generic a term that any attempt to define it, albeit
not a few have tried, could at best be described as inconclusive. The
Universal Declaration of Human Rights, or more specifically, the
International Covenant on Economic, Social and Cultural Rights and
International Covenant on Civil and Political Rights, suggests that the
scope of human rights can be understood to include those that relate to
an individuals social, economic, cultural, political and civil relations. It
thus seems to closely identify the term to the universally accepted traits
and attributes of an individual, along with what is generally considered
to be his inherent and inalienable rights, encompassing almost all
aspects of life.
Same; Same; Same; Same; Same; Civil Rights, defined.The term
civil rights, has been defined as referring(to) those (rights) that
belong to every citizen of the state or country, or, in a wider sense, to all
its inhabitants, and are not connected with the organization or
administration of government. They include the rights of property,
marriage, equal protection of the laws, freedom of contract, etc. Or, as
otherwise defined civil rights are rights appertaining to a person by
virtue of his citizenship in a state or community. Such term may also
refer, in its general sense, to rights capable of being enforced or
redressed in a civil action. Also quite often mentioned are the guaran-
________________
*EN BANC.
118
1 SUPREME
18 COURT REPORTS
ANNOTATED
Simon, Jr. vs.
Commission on Human
Rights
tees against involuntary servitude, religious persecution,
unreasonable searches and seizures, and imprisonment for debt.
Same; Same; Same; Same; Same; Political Rights, explained.
Political rights, on the other hand, are said to refer to the right to
participate, directly or indirectly, in the establishment or administration
of government, the right of suffrage, the right to hold public office, the
right of petition and, in general, the right appurtenant to citizenship vis-
a-vis the management of government.
Same; Same; Same; Same; The Constitutional Commission delegates
envisioned a Commission on Human Rights that would focus its
attention to the more severe cases of human rights violations.Recalling
the deliberation of the Constitutional Commission, aforequoted, it is
readily apparent that the delegates envisioned a Commission on Human
Rights that would focus its attention to the more severe cases of human
rights violations. Delegate Garcia, for instance, mentioned such areas as
the (1) protection of rights of political detainees, (2) treatment of
prisoners and the prevention of tortures, (3) fair and public trials, (4)
cases of disappearances, (5) salvagings and hamletting, and (6) other
crimes committed against the religious. While the enumeration has not
likely been meant to have any preclusive effect, more than just
expressing a statement of priority, it is, nonetheless, significant for the
tone it has set. In any event, the delegates did not apparently take
comfort in peremptorily making a conclusive delineation of the CHRs
scope of investigatorial jurisdiction. They have thus seen it fit to resolve,
instead, that Congress may provide for other cases of violations of
human rights that should fall within the authority of the Commission,
taking into account its recommendation.
Same; Same; Same; Same; Demolition of stalls, sari-sari stores and
carinderia does not fall within the compartment of human rights
violations involving civil and political rights intended by the
Constitution.In the particular case at hand, there is no cavil that what
are sought to be demolished are the stalls, sari-sari stores
and carinderia, as well as temporary shanties, erected by private
respondents on a land which is planned to be developed into a Peoples
Park. More than that, the land adjoins the North EDSA of Quezon City
which, this Court can take judicial notice of, is a busy national highway.
The consequent danger to life and limb is not thus to be likewise simply
ignored. It is indeed paradoxical that a right which is claimed to have
been violated is one that cannot, in the first place, even be invoked, if it
is not, in fact, extant. Be that as it may, looking at the standards
hereinabove discoursed vis-a-visthe circumstances obtaining in this
119
VOL. 229, 1
JANUARY 5, 1994 19
Simon, Jr. vs.
Commission on Human
Rights
instance, we are not prepared to conclude that the order for the
demolition of the stalls, sari-sari stores and carinderia of the private
respondents can fall within the compartment of human rights violations
involving civil and political rights intended by the Constitution.
Same; Same; Same; Same; Contempt; The CHR is constitutionally
authorized to cite or hold any person in direct or indirect contempt.On
its contempt powers, the CHR is constitutionally authorized to adopt its
operational guidelines and rules of procedure, and cite for contempt for
violations thereof in accordance with the Rules of Court. Accordingly,
the CHR acted within its authority in providing in its revised rules, its
power to cite or hold any person in direct or indirect contempt, and to
impose the appropriate penalties in accordance with the procedure and
sanctions provided for in the Rules of Court. That power to cite for
contempt, however, should be understood to apply only to violations of
its adopted operational guidelines and rules of procedure essential to
carry out its investigatorial powers. To exemplify, the power to cite for
contempt could be exercised against persons who refuse to cooperate
with the said body, or who unduly withhold relevant information, or who
decline to honor summons, and the like, in pursuing its investigative
work.
Same; Same; Same; Same; An order to desist, however, is not
investigatorial in character but prescinds from an adjudicative power
that the CHR does not possess.The order to desist (a semantic
interplay for a restraining order) in the instance before us, however, is
not investigatorial in character but prescinds from an adjudicative
power that it does not possess.
Prohibition; Moot and Academic; Prohibition not moot simply because
the hearings in the proceedings sought to be restrained have been
terminated where resolution of the issues raised still to be promulgated.
The public respondent explains that this petition for prohibition filed by
the petitioners has become moot and academic since the case before it
(CHR Case No. 90-1580) has already been fully heard, and that the
matter is merely awaiting final resolution. It is true that prohibition is a
preventive remedy to restrain the doing of an act about to be done, and
not intended to provide a remedy for an act already accomplished. Here,
however, said Commission admittedly has yet to promulgate its
resolution in CHR Case No. 90-1580. The instant petition has been
intended, among other things, to also prevent CHR from precisely doing
that.
SPECIAL CIVIL ACTION for prohibition.

120
120 SUPREME COURT
REPORTS
ANNOTATED
Simon, Jr. vs. Commission
on Human Rights
The City Attorney for petitioners.
The Solicitor General for public respondent.
VITUG, J.:
The extent of the authority and power of the Commission on
Human Rights (CHR) is again placed into focus in this petition
for prohibition, with prayer for a restraining order and
preliminary injunction. The petitioners ask us to prohibit public
respondent CHR from further hearing and investigating CHR
Case No. 90-1580, entitled Fermo, et al. vs. Quimpo, et al.
The case all started when a Demolition Notice, dated 9 July
1990, signed by Carlos Quimpo (one of the petitioners) in his
capacity as an Executive Officer of the Quezon City Integrated
Hawkers Management Council under the Office of the City
Mayor, was sent to, and received by, the private respondents
(being the officers and members of the North EDSA Vendors
Association, Incorporated). In said notice, the respondents were
given a grace-period of three (3) days (up to 12 July, 1990)
within which to vacate the questioned premises of North
EDSA. Prior to their receipt of the demolition notice, the private
1
respondents were informed by petitioner Quimpo that their

stalls should be removed to give way to the Peoples Park. On
2
12 July 1990, the group, led by their President Roque Fermo,

filed a letter-complaint (Pinag-samang Sinumpaang Salaysay)
with the CHR against the petitioners, asking the late CHR
Chairman Mary Concepcion Bautista for a letter to be addressed
to then Mayor Brigido Simon, Jr., of Quezon City to stop the
demolition of the private respondents stalls, sari-sari stores,
and carinderia along NORTH EDSA. The complaint was
docketed as CHR Case No. 90-1580. On 23 July 1990, the CHR
3
issued an order, directing the petitioners to desist from

demolishing the stalls and shanties at North EDSA pending
resolution of the vendors/squatters complaint before the
Commission and ordering said petitioners
_________________
1 Rollo, p. 16.
2 Rollo, p. 17.
3 Ibid., pp. 16-17.
121
VOL. 229, JANUARY 121
5, 1994
on Human Rights
to appear before the CHR. 4
On the basis of the sworn statements submitted by the private

respondents on 31 July 1990, as well as CHRs own ocular
inspection, and convinced that on 28 July 1990 the petitioners
carried out the demolition of private respondents stalls, sari-
saristores and carinderia, the CHR, in its resolution of 1 August
5
1990, ordered the disbursement of financial assistance of not

more than P200,000.00 in favor of the private respondents to
purchase light housing materials and food under the
Commissions supervision and again directed the petitioners to
desist from further demolition, with the warning that violation
of said order would lead to a citation for contempt and arrest.
6
A motion to dismiss, dated 10 September 1990, questioned

7
CHRs jurisdiction. The motion also averred, among other

things, that:
1. 1.this case came about due to the alleged violation by the
(petitioners) of the Inter-Agency Memorandum of
Agreement whereby Metro-Manila Mayors agreed on a
moratorium in the demolition of the dwellings of poor
dwellers in Metro-Manila;
* * * * * *
2. 3.* * *, a perusal of the said Agreement (revealed) that the
moratorium referred to therein refers to moratorium in the
demolition of the structures of poor dwellers;
3. 4.that the complainants in this case (were) not poor
dwellers but independent business entrepreneurs even this
Honorable Office admitted in its resolution of 1 August
1990 that the complainants are indeed vendors;
4. 5.that the complainants (were) occupying government
land, particularly the sidewalk of EDSA corner North
Avenue, Quezon City; * * * and
5. 6.that the City Mayor of Quezon City (had) the sole and
exclusive discretion and authority whether or not a certain
business establishment (should) be allowed to operate
within the jurisdiction of Quezon City, to revoke or cancel a
permit, if already issued, upon grounds clearly specified by
law and ordinance. 8
_________________
4 Ibid., p. 21.
5 Ibid; see also Annex C-3, Rollo, pp. 102-103.
6 Ibid., p. 79.
7 Annex C, Rollo, p. 26.
8 Rollo, pp. 26-27.
122
122 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
During the 12 September 1990 hearing, the petitioners moved
for postponement, arguing that the motion to dismiss set for 21
September 1990 had yet to be resolved. The petitioners likewise
manifested that they would bring the case to the courts.
On 18 September 1990, a supplemental motion to dismiss was
filed by the petitioners, stating that the Commissions authority
should be understood as being confined only to the investigation
of violations of civil and political rights, and that the rights
allegedly violated in this case (were) not civil and political
rights, (but) their privilege to engage in business. 9
On 21 September 1990, the motion to dismiss was heard and

submitted for resolution, along with the contempt charge that
had meantime been filed by the private respondents, albeit
vigorously objected to by the petitioners on the ground that the
motion to dismiss was still then unresolved. 10
In an Order, dated 25 September 1990, the CHR cited the

11
petitioners in contempt for carrying out the demolition of the

stalls, sari-saristores and carinderia despite the order to
desist, and it imposed a fine of P500.00 on each of them.
On 1 March 1991, the CHR issued an Order, denying
12
petitioners motion to dismiss and supplemental motion to

dismiss, in this wise:
Clearly, the Commission on Human Rights under its constitutional
mandate had jurisdiction over the complaint filed by the squatters-
vendors who complained of the gross violations of their human and
constitutional rights. The motion to dismiss should be and is hereby
DENIED for lack of merit. 13
The CHR opined that it was not the intention of the

(Constitutional) Commission to create only a paper tiger limited
only to investigating civil and political rights, but it (should) be
(considered) a quasi-judicial body with the power to provide
appropriate legal measures for the protection of human rights of
all persons
__________________
9 Annex E, Ibid., p. 34.

10 Rollo, p. 5.
11 Annex F, Petition, Rollo, pp. 36-42.
12 Annex G, Petition, Rollo, pp. 44-46.
13 Rollo, p. 46.
123
5, 1994
on Human Rights
within the Philippines * * *. It added:
The right to earn a living is a right essential to ones right to
development, to life and to dignity. All these brazenly and violently
ignored and trampled upon by respondents with little regard at the
same time for the basic rights of women and children, and their health,
safety and welfare. Their actions have psychologically scarred and
traumatized the children, who were witness and exposed to such a
violent demonstration of Mans inhumanity to man.
In an Order, dated 25 April 1991, petitioners motion for
14
reconsideration was denied.

Hence, this recourse.
The petition was initially dismissed in our resolution of 25 15
June 1991; it was subsequently reinstated, however, in our

resolution of 18 June 1991, in which we also issued a temporary
16
restraining order, directing the CHR to CEASE and DESIST

from further hearing CHR No. 90-1580. 17
The petitioners pose the following:

Whether or not the public respondent has jurisdiction:
1. a)to investigate the alleged violations of the business
rights of the private respondents whose stalls were
demolished by the petitioners at the instance and authority
given by the Mayor of Quezon City;
2. b)to impose the fine of P500.00 each on the petitioners; and
3. c)to disburse the amount of P200,000.00 as financial aid to
the vendors affected by the demolition.
In the Courts resolution of 10 October, the Solicitor General was
excused from filing his document for public respondent CHR.
The latter thus filed its own comment, through Hon. Samuel
18
Soriano, one of its Commissioners. The Court also resolved to

dispense with the comment of private respondent Roque Fermo,
who had since failed to comply with the resolution, dated 18
July 1991, requiring such comment.
_______________
14 Annex J, pp. 56-57.
15 Rollo, p. 59.
16 Ibid., p. 66.
17 Ibid., pp. 67.
18 Rollo, pp. 77-88.
124
124 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
The petition has merit.
The Commission on Human Rights was created by the 1987
Constitution. It was formally constituted by then President
19
Corazon Aquino via Executive Order No. 163, issued on 5 May

20
1987, in the exercise of her legislative power at the time. It

succeeded, but so superseded as well, the Presidential
Committee on Human Rights. 21
The powers and functions of the Commission are defined by

22
the 1987 Constitution, thus: to

1. (1)Investigate, on its own or on complaint by any party, all
forms of human rights violation involving civil and political
rights;
2. (2)Adopt its operational guidelines and rules of procedure,
and cite for contempt for violations thereof in accordance
with the Rules of Court;
3. (3)Provide appropriate legal measures for the protection of
human rights of all persons within the Philippines, as well
as Filipinos residing abroad, and provide for preventive
measures and legal aid services to the underprivileged
whose human rights have been violated or need protection;
4. (4)Exercise visitorial powers over jails, prisons, or
detention facilities;
5. (5)Establish a continuing program of research, education,
and information to enhance respect for the primary of
human rights;
6. (6)Recommend to the Congress effective measures to
promote human rights and to provide for compensation to
victims of violations of human rights, or their families;
7. (7)Monitor the Philippine Governments compliance with
international treaty obligations on human rights;
8. (8)Grant immunity from prosecution to any person whose
testimony or whose possession of documents or other
evidence is necessary or convenient to determine the truth
in any investigation conducted by it or under its authority;
9. (9)Request the assistance of any department, bureau,
office, or
__________________
19 Art. XIII, Sec. 17, [1].
20 DECLARING THE EFFECTIVITY OF THE CREATION OF THE COMMISSION ON
HUMAN RIGHTS AS PROVIDED FOR IN THE 1987 CONSTITUTION, PROVIDING
GUIDELINES FOR THE OPERATION THEREOF, AND FOR OTHER PURPOSES.
21 Ibid., Sec. 17, [3]; E.O. No. 163, Sec. 4.
22 Ibid., Sec. 18.
125
5, 1994
on Human Rights
1. agency in the performance of its functions;

2. (10)Appoints its officers and employees in accordance with
law; and
3. (11)Perform such other duties and functions as may be
provided by law.
In its Order of 1 March 1991, denying petitioners motion to
dismiss, the CHR theorizes that the intention of the members of
the Constitutional Commission is to make CHR a quasi-judicial
body. This view, however, has not heretofore been shared by
23
this Court. In Carino v. Commission on Human Rights, The 24

Court, through then Associate Justice, now Chief Justice Andres
Narvasa, has observed that it is only the first of the
enumerated powers and functions that bears any resemblance to
adjudication or adjudgment, but that resemblance can in no
way be synonymous to the adjudicatory power itself. The Court
explained:
* * * (T)he Commission on Human Rights * * * was not meant by the
fundamental law to be another court or quasi-judicial agency in this
country, or duplicate much less take over the functions of the latter.
The most that may be conceded to the Commission in the way of
adjudicative power is that it may investigate, i.e., receive evidence and
make findings of fact as regards claimed human rights violations
involving civil and political rights. But fact finding is not adjudication,
and cannot be likened to the judicial function of a court of justice, or
even a quasi-judicial agency or official. The function of receiving
evidence and ascertaining therefrom the facts of a controversy is not a
judicial function, properly speaking. To be considered such, the faculty of
receiving evidence and making factual conclusions in a controversy must
be accompanied by the authority of applying the law to those factual
conclusions to the end that the controversy may be decided or
determined authoritatively, finally and definitively, subject to such
appeals or modes of review as may be provided by law. This function, to
repeat, the Commission does not have.
After thus laying down at the outset the above rule, we now
proceed to the order kernel of this controversy and, it is, to
determine the extent of CHRs investigative power.
_______________
Rollo, p. 45.
23
204 SCRA 483, 492.

24
126
126 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
It can hardly be disputed that the phrase human rights is so
generic a term that any attempt to define it, albeit not a few
have tried, could at best be described as inconclusive. Let us
observe. In a symposium on human rights in the Philippines,
sponsored by the University of the Philippines in 1977, one of
the questions that has been propounded is (w)hat do you
understand by human rights? The participants representing
different sectors of the society, have given the following varied
answers:
Human rights are the basic rights which inhere in man by virtue of his
humanity. They are the same in all parts of the world, whether the
Philippines or England, Kenya or the Soviet Union, the United States or
Japan, Kenya or Indonesia * * *.
Human rights include civil rights, such as the right to life, liberty,
and property; freedom of speech, of the press, of religion, academic
freedom, and the rights of the accused to due process of law; political
rights, such as the right to elect public officials, to be elected to public
office, and to form political associations and engage in politics; and social
rights, such as the right to an education, employment, and social
services. 25
Human rights are the entitlement that inhere in the individual

person from the sheer fact of his humanity. * * * Because they are
inherent, human rights are not granted by the State but can only be
recognized and protected by it. 26
(Human rights include all) the civil, political, economic, social, and
cultural rights defined in the Universal Declaration of Human Rights. 27
Human rights are rights that pertain to man simply because he is

human. They are part of his natural birth right, innate and
inalienable. 28
The Universal Declaration of Human Rights, as well as, or more

specifically, the International Covenant on Economic, Social and
Cultural Rights and International Covenant on Civil and Politi-
_________________
25 Remigio Agpalo, Roxas Professor of Political Science, University of the Philippines, Human
Rights in the Philippines: An Unassembled Symposium, 1977, pp. 1-2.
26 Emerenciana Arcellana, Department of Political Science, U.P., Ibid., pp. 2-3.
Nick Joaquin, National Artist, Ibid., p. 15.
27
Salvador Lopez, Professor, U.P. Law Center, Ibid., p. 20.

28
127
5, 1994
on Human Rights
cal Rights, suggests that the scope of human rights can be
understood to include those that relate to an individuals social,
economic, cultural, political and civil relations. It thus seems to
closely identify the term to the universally accepted traits and
attributes of an individual, along with what is generally
considered to be his inherent and inalienable rights,
encompassing almost all aspects of life.
Have these broad concepts been equally contemplated by the
framers of our 1986 Constitutional Commission in adopting the
specific provisions on human rights and in creating an
independent commission to safeguard these rights? It may be of
value to look back at the countrys experience under the martial
law regime which may have, in fact, impelled the inclusions of
those provisions in our fundamental law. Many voices have been
heard. Among those voices, aptly representative perhaps of the
sentiments expressed by others, comes from Mr. Justice J.B.L.
Reyes, a respected jurist and an advocate of civil liberties, who,
in his paper, entitled Present State of Human Rights in the
Philip-pines, observes:
29
But while the Constitution of 1935 and that of 1973 enshrined in their
Bill of Rights most of the human rights expressed in the International
Covenant, these rights became unavailable upon the proclamation of
Martial Law on 21 September 1972. Arbitrary action then became the
rule. Individuals by the thousands became subject to arrest upon
suspicion, and were detained and held for indefinite periods, sometimes
for years, without charges, until ordered released by the Commander-in-
Chief or this representative. The right to petition for the redress of
grievances became useless, since group actions were forbidden. So were
strikes. Press and other mass media were subjected to censorship and
short term licensing. Martial law brought with it the suspension of the
writ of habeas corpus, and judges lost independence and security of
tenure, except members of the Supreme Court. They were required to
submit letters of resignation and were dismissed upon the acceptance
thereof. Torture to extort confessions were practiced as declared by
international bodies like Amnesty International and the International
Commission of Jurists.
__________________
29Submitted to the LAWASIA Human Rights Standing Committee: Recent Trends in Human
Rights, circa, 1981-1982, pp. 47-52.
128
128 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
Converging our attention to the records of the Constitutional
Commission, we can see the following discussion during its 26
August 1986 deliberations:
MR. GARCIA. * * *, the primacy of its (CHR) task must be
made clear in view of the importance of human rights and also
because civil and political rights have been determined by
many international covenants and human rights legisla-tions
in the Philippines, as well as the Constitution, specifically the
Bill of Rights and subsequent legislation. Otherwise, if
we cover such a wide territory in area, we might diffuse its
impact and the precise nature of its task, hence, its effectivity
would also be curtailed.
So, it is important to delineate the parameters of its task so that the
commission can be most effective.
MR. BENGZON. That is precisely my difficulty because civil
and political rights are very broad. The Article on the Bill of
Rights covers civil and political rights. Every single right of an
individual involves his civil right or his political right. So,
where do we draw the line?
MR. GARCIA. Actually, these civil and political rights have
been made clear in the language of human rights advocates, as
well as in the Universal Declaration of Human Rights which
addresses a number of articles on the right to life, the right
against torture, the right to fair and public hearing, and so on.
These are very specific rights that are considered enshrined in
many international documents and legal instruments as
constituting civil and political rights, and these are precisely
what we want to defend here.
MR. BENGZON. So, would the commissioner say civil and
political rights as defined in the Universal Declaration of
Human Rights?
MR. GARCIA. Yes, and as I have mentioned, the International
Covenant of Civil and Political Rights distinguished this right
against torture.
MR. BENGZON. So as to distinguish this from the other rights
that we have?
MR. GARCIA. Yes because the other rights will encompass
social and economic rights, and there are other violations of
rights of citizens which can be addressed to the proper courts
and authorities.
129
5, 1994
on Human Rights
* * *
MR. BENGZON. So, we will authorize the commission to define
its functions, and, therefore, in doing that the commission will
be authorized to take under its wings cases which perhaps
heretofore or at this moment are under the jurisdiction of the
ordinary investigative and prosecutorial agencies of the
government. Am I correct?
MR. GARCIA. No. We have already mentioned earlier that we
would like to define the specific parameter which cover civil
and political rights as covered by the international standards
governing the behavior of governments regarding the
particular political and civil rights of citizens, especially of
political detainees or prisoners. This particular aspect we have
experienced during martial law which we would now like to
safeguard.
MR. BENGZON. Then, I go back to that question that I had.
Therefore, what we are really trying to say is, perhaps, at the
proper time we could specify all those rights stated in the
Universal Declaration of Human Rights and defined as human
rights. Those are the rights that we envision here?
MR. GARCIA. Yes. In fact, they are also enshrined in the Bill of
Rights of our Constitution. They are integral parts of that.
MR. BENGZON. Therefore, is the Gentleman saying that all the
rights under the Bill of Rights covered by human rights?
MR. GARCIA. No, only those that pertain to civil and political
rights.
* * *
MR. RAMA. In connection with the discussion on the scope of
human rights. I would like to state that in the past regime,
everytime we invoke the violation of human rights, the Marcos
regime came out with the defense that, as a matter of fact, they
had defended the rights of people to decent living, food, decent
housing and a life consistent with human dignity.
So, I think we should really limit the definition of human rights to
political rights. Is that the sense of the committee, so as not to confuse the
issue?
MR. SARMIENTO. Yes, Madam President.
MR. GARCIA. I would like to continue and respond also to
repeated points raised by the previous speaker.
130
130 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
There are actually six areas where this Commission on Human Rights
could act effectively: 1) protection of rights of political detainees; 2)
treatment of prisoners and the prevention of tortures; 3) fair and public
trials; 4) cases of disappearances; 5) salvagings and hamletting; and 6)
other crimes committed against the religious.
* * *
The PRESIDENT. Commissioner Guingona is recognized.
MR. GUINGONA. Thank you Madam President.
I would like to start by saying that I agree with Commissioner Garcia
that we should, in order to make the proposed Commission more effective,
delimit as much as possible, without prejudice to future expansion. The
coverage of the concept and jurisdictional area of the term hu-man
rights. I was actually disturbed this morning when the reference was
made without qualification to the rights embodied in the Universal
Declaration of Human Rights, although later on, this was qualified to
refer to civil and political rights contained therein.
If I remember correctly, Madam President, Commissioner Garcia,
after mentioning the Universal Declaration of Human Rights of 1948,
mentioned or linked the concept of human right with other human rights
specified in other convention which I do not remember. Am I correct?
MR. GARCIA. Is Commissioner Guingona referring to the Declaration
of Torture of 1985?
MR. GUINGONA. I do not know, but the commissioner
mentioned another.
MR. GARCIA. Madam President, the other one is the
International Convention on Civil and Political Rights of
which we are signatory.
MR. GUINGONA. I see. The only problem is that, although I
have a copy of the Universal Declaration of Human Rights
here, I do not have a copy of the other covenant mentioned. It
is quite possible that there are rights specified in that other
convention which may not be specified here. I was wondering
whether it would be wise to link our concept of human rights
to general terms like convention, rather than specify the
rights contained in the convention.
As far as the Universal Declaration of Human
131
5, 1994
on Human Rights
Rights is concerned, the Committee, before the period of amendments,
could specify to us which of these articles in the Declaration will fall
within the concept of civil and political rights, not for the purpose of
including these in the proposed constitutional article, but to give the
sense of the Commission as to what human rights would be included,
without prejudice to expansion later on, if the need arises. For example,
there was no definite reply to the question of Commissioner Regalado as
to whether the right to marry would be considered a civil or a social
right. It is not a civil right?
MR. GARCIA. Madam President, I have to repeat the various
specific civil and political rights that we felt must be envisioned
initially by this provisionfreedom from political detention
and arrest prevention of torture, right to fair and public trials,
as well as crimes involving disappearance salvagings,
hamlettings and collective violations. So, it is limited to
politically related crimes precisely to protect the civil and
political rights of a specific group of individuals, and therefore,
we are not opening it up to all of the definite areas.
MR. GUINGONA. Correct. Therefore, just for the record, the
Gentlemen is no longer linking his concept or the concept of
the Committee on Human Rights with the so-called civil or
political rights as contained in the Universal Declaration of
Human Rights.
MR. GARCIA. When I mentioned earlier the Universal
Declaration of Human Rights, I was referring to an
international instrument.
MR. GUINGONA. I know.
MR. GARCIA. But it does not mean that we will refer to each
and every specific article therein, but only to those that
pertain to the civil and politically related, as we understand it
in this Commission on Human Rights.
MR. GUINGONA. Madam President, I am not even clear as to
the distinction between civil and social rights.
MR. GARCIA. There are two international covenants: the
International Covenant and Civil and Political Rights and the
International Covenant on Economic, Social and Cultural
Rights. The second covenant contains all the different rights
the rights of labor to organize, the right to education, housing,
shelter, etcetera.
132
132 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
MR. GUINGONA. So we are just limiting at the moment the
sense of the committee to those that the Gentlemen has
specified.
MR. GARCIA. Yes, to civil and political rights.
MR. GUINGONA. Thank you.
* * *
SR. TAN. Madam President, from the standpoint of the victims
of human rights, I cannot stress more on how much we need a
Commission on Human Rights. * * *
* * * human rights victims are usually penniless. They cannot pay and
very few lawyers will accept clients who do not pay. And so, they are the
ones more abused and oppressed. Another reason is, the cases involved
are very delicatetorture, salvaging, picking up without any warrant of
arrest, massacreand the persons who are allegedly guilty are people in
power like politicians, men in the military and big shots. Therefore, this
Human Rights Commission must be independent.
I would like very much to emphasize how much we need this
commission, especially for the little Filipino, the little individual who
needs this kind of help and cannot get it And I think we should
concentrate only on civil and political violations because if we open this
to land, housing and health, we will have no place to go again and we
will not receive any response. * * * (italics supplied.)
30
The final outcome, now written as Section 18, Article XIII, of the
1987 Constitution, is a provision empowering the Commission
on Human Rights to investigate, on its own or on complaint by
any party, all forms of human rights violations involving civil
and political rights(Sec. 1).
The term civil rights, has been defined as referring
31
(to) those (rights) that belong to every citizen of the state or country, or,
in a wider sense, to all its inhabitants, and are not
_______________
30 Records of the Constitutional Commission, Volume 3, pp. 722-723; 731; 738-739.
31 Blacks Law Dictionary, Sixth edition, 1324; Handbook of Ameri-can Constitutional Law,
(4th ed., 1927), p. 524.
133
5, 1994
on Human Rights
connected with the organization or administration of government. They
include the rights of property, marriage, equal protection of the laws,
freedom of contract, etc. Or, as otherwise defined civil rights are rights
appertaining to a person by virtue of his citizenship in a state or
community. Such term may also refer, in its general sense, to rights
capable of being enforced or redressed in a civil action.
Also quite often mentioned are the guarantees against
involuntary servitude, religious persecution, unreasonable
searches and seizures, and imprisonment for debt. 32
Political rights, on the other hand, are said to refer to the

33
right to participate, directly or indirectly, in the establishment

or administration of government, the right of suffrage, the right
to hold public office, the right of petition and, in general, the
rights appurtenant to citizenship vis-a-vis the management of
government. 34
Recalling the deliberations of the Constitutional Commission,

aforequoted, it is readily apparent that the delegates envisioned
a Commission on Humans Rights that would focus its attention
to the more severe cases of human rights violations. Delegate
Garcia, for instance, mentioned such areas as the (1) protection
of rights of political detainees, (2) treatment of prisoners and the
prevention of tortures, (3) fair and public trials, (4) cases of
disappearances, (5) salvagings and hamletting, and (6) other
crimes committed against the religious. While the enumeration
has not likely been meant to have any preclusive effect, more
than just expressing a statement of priority, it is, nonetheless,
significant for the tone it has set. In any event, the delegates did
not apparently take comfort in peremptorily making a
conclusive delineation of the CHRs scope of investigatorial
jurisdiction. They have thus seen it fit to resolve, instead, that
Congress may provide for other cases of violations of human
rights that should fall within the authority of the Commission,
taking into account its recommendation. 35
________________
32 Malcolm, The Constitutional Law of the Philippine Islands, (2nd ed., 1926), pp. 431-457.
33 Blacks Law Dictionary, Ibid., p. 1325.
34 Anthony vs. Burrow, 129 F. 783, 789 [1904].
Sec. 19, Art. XIII.
35
134
134 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
In the particular case at hand, there is no cavil that what are
sought to be demolished are the stalls, sari-saristores
and carinderia, as well as temporary shanties, erected by
private respondents on a land which is planned to be developed
into a Peoples Park. More than that, the land adjoins the
North EDSA of Quezon City which, this Court can take judicial
notice of, is a busy national highway. The consequent danger to
life and limb is not thus to be likewise simply ignored. It is
indeed paradoxical that a right which is claimed to have been
violated is one that cannot, in the first place, even be invoked, if
it is not, in fact, extant. Be that as it may, looking at the
standards hereinabove discoursed vis-a-vis the circumstances
obtaining in this instance, we are not prepared to conclude that
the order for the demolition of the stalls, sari-saristores
and carinderia of the private respondents can fall within the
compartment of human rights violations involving civil and
political rights intended by the Constitution.
On its contempt powers, the CHR is constitutionally
authorized to adopt its operational guidelines and rules of
procedure, and cite for contempt for violations thereof in
accordance with the Rules of Court. Accordingly, the CHR acted
within its authority in providing in its revised rules, its power
to cite or hold any person in direct or indirect contempt, and to
impose the appropriate penalties in accordance with the
procedure and sanctions provided for in the Rules of Court.
That power to cite for contempt, however, should be understood
to apply only to violations of its adopted operational guidelines
and rules of procedure essential to carry out its investigatorial
powers. To exemplify, the power to cite for contempt could be
exercised against persons who refuse to cooperate with the said
body, or who unduly withhold relevant information, or who
decline to honor summons, and the like, in pursuing its
investigative work. The order to desist (a semantic interplay
for a restraining order) in the instance before us, however, is not
investigatorial in character but prescinds from an adjudicative
power that it does not possess. In Export Processing Zone
Authority vs. Commission on Human Rights, the Court, 36
speaking through Madame

_________________
208 SCRA 125, 131.

36
135
5, 1994
on Human Rights
Justice Carolina Grio-Aquino, explained:
The constitutional provision directing the CHR to provide for
preventive measures and legal aid services to the underprivileged whose
human rights have been violated or need protection may not be
construed to confer jurisdiction on the Commission to issue a restraining
order or writ of injunction for, it that were the intention, the
Constitution would have expressly said so. Jurisdiction is conferred only
by the Constitution or by law. It is never derived by implication.
Evidently, the preventive measures and legal aid services mentioned
in the Constitution refer to extrajudicial and judicial remedies (including
a writ of preliminary injunction) which the CHR may seek from the
proper courts on behalf of the victims of human rights violations. Not
being a court of justice, the CHR itself has no jurisdiction to issue the
writ, for a writ of preliminary injunction may only be issued by the
judge of any court in which the action is pending [within his district], or
by a Justice of the Court of Appeals, or of the Supreme Court. * * *. A
writ of preliminary injunction is an ancillary remedy. It is available only
in a pending principal action, for the preservation or protection of the
rights and interest of a party thereto, and for no other purpose.
(footnotes omitted)
The Commission does have legal standing to indorse, for
appropriate action, its findings and recommendations to any
appropriate agency of government. 37
The challenge on the CHRs disbursement of the amount of

P200,000.00 by way of financial aid to the vendors affected by
the demolition is not an appropriate issue in the instant
petition. Not only is there lack of locus standi on the part of the
petitioners to question the disbursement but, more importantly,
the matter lies with the appropriate administrative agencies
concerned to initially consider.
The public respondent explains that this petition for
prohibition filed by the petitioners has become moot and
academic since the case before it (CHR Case No. 90-1580) has
already been fully heard, and that the matter is merely awaiting
final resolution. It is true that prohibition is a preventive
remedy to restrain the doing of an act about to be done, and not
intended to provide a
_________________
See Export Processing Zone Authority vs. Commission on Human Rights, 208 SCRA 125.
37
136
136 SUPREME COURT
REPORTS
ANNOTATED
on Human Rights
remedy for an act already accomplished. Here, however, said
38
Commission admittedly has yet to promulgate its resolution in

CHR Case No. 90-1580. The instant petition has been intended,
among other things, to also prevent CHR from precisely doing
that. 39
WHEREFORE, the writ prayed for in this petition is
GRANTED. The Commission on Human Rights is hereby
prohibited from further proceeding with CHR Case No. 90-1580
and from implementing the P500.00 fine for contempt. The
temporary restraining order heretofore issued by this Court is
made permanent. No costs.
SO ORDERED.
Narvasa (C.J.), Cruz, Feliciano, Bidin, Regalado, Davide,
Jr., Romero, Nocon, Bellosillo, Melo, Quiason and Puno, JJ.,
concur.
Padilla, J., See dissenting opinion.
DISSENTING OPINION
PADILLA, J.:
I reiterate my separate opinion in Carino, et al. vs. The
Commission on Human Rights, et al., G.R. No. 96681, 2
December 1991, 204 SCRA 483 in relation to the resolution of 29
January 1991 and my dissenting opinion in Export Processing
Zone Authority vs. The Commission on Human Rights, et
al., G.R. No. 101476, 14 April 1992, 208 SCRA 125. I am of the
considered view that the CHR can issue a cease and desist order
to maintain the status quopending its investigation of a case
involving an alleged human rights violation; that such cease and
desist order may be necessary in situations involving a
threatened violation of human rights, which the CHR intents to
investigate.
__________________
38 Cabanero vs. Torres, 61 Phil. 523; Agustin vs. dela Fuente, 84 Phil. 515; Navarro vs.
Lardizabal, 25 SCRA 370.
39 See Magallanes vs. Sarita, 18 SCRA 575.
137
5, 1994
on Human Rights
In the case at bench, I would consider the threatened demolition
of the stalls, sari-sari stores and carinderiasas well as the
temporary shanties owned by the private respondent as
posing prima facie a case of human rights violation because it
involves an impairment of the civil rights of said private
respondents, under the definition of civil rights cited by the
majority opinion (pp. 20-21) and which the CHR has
unquestioned authority to investigate (Section 18, Art. XIII,
1987 Constitution).
Human rights demand more than lip service and extend
beyond impressive displays of placards at street corners.
Positive action and results are what count. Certainly, the cause
of human rights is not enhanced when the very constitutional
agency tasked to protect and vindicate human rights is
transformed by us, from the start, into a tiger without dentures
but with maimed legs to boot. I submit the CHR should be given
a wide latitude to look into and investigate situations which may
(or may not ultimately) involve human rights violations.
ACCORDINGLY, I vote to DISMISS the petition and to
remand the case to the CHR for further proceedings.
Petition granted.
Notes.The constitutional provision directing the CHR to
provide for preventive measures and legal aid services to the
underprivileged whose human rights have been violated or need
protection may not be construed to confer jurisdiction on the
Commission to issue a restraining order or writ of injunction for,
if that were the intention, the Constitution would have expressly
said so. Jurisdiction is conferred by the Constitution or by law.
It is never derived by implication (Export Processing Zone
Authority vs. Commission on Human Rights, 208 SCRA
125 [1992]).
In the Philippine setting, the authority to issue Writs of
Certiorari, Prohibition and Mandamus involves the exercise of
original jurisdiction. Thus, such authority has always been
expressly conferred, either by the Constitution or by law. As a
matter of fact, the well-settled rule is that jurisdiction is
conferred only by the Constitution or by law (Garcia vs. De
Jesus, 206 SCRA 779 [1992]).
o0o
CIVIL SERVICE
G.R. No. 93867. December 18, 1990. *
SIXTO S. BRILLANTES, JR., petitioner, vs. HAYDEE B.

YORAC, in her capacity as ACTINGCHAIRPERSON of the
COMMISSION ON ELECTIONS, respondent.
Constitutional Law; Executive Department; Constitutional
Commissions; Commission on Elections; The Constitutional
Commissions, although essentially executive in nature, are not under the
control of the President in the discharge of their functions.Article IX-A,
Section 1, of the Constitution expressly describes all the Constitutional
Commissions as "independent." Although essentially executive in
nature, they are not under the control of the President of the Philippines
in the discharge of their respective functions. Each of these Commissions
conducts its own proceedings under the applicable laws and its own
rules and in the exercise of its own discretion. Its decisions, orders and
rulings are subject only to review on certiorari by this Court as provided
by the Constitution in Article IX-A, Section 7.
Same; Same; Same; Same; Appointments; The choice of a temporary
chairman of the COMELEC, is within the discretion of the Commission
itself, and such discretion cannot be exercised for it, even with its consent,
by the President of the Philippines.The choice of a temporary chairman
in the absence of the regular chairman comes under that discretion.
That discretion cannot be exercised for it, even with its consent, by the
President of the Philippines. x x x The lack of a statutory rule covering
the situation at bar is no justification for the President of the Philippines
to fill the void by extending the temporary designation in favor of the
respondent. This is still a government of laws and not of men. The
problem allegedly sought to be corrected, if it existed at all, did not call
for presidential action. The situation could have been handled by the
members of the Commission on Elections themselves without the
participation of the President, however wellmeaning. In the choice of the
Acting Chairman, the members of the Commission on Elections would
most likely have been guided by the seniority rule as they themselves
would have appreciated it. In any event, that choice and the basis
thereof were for them and not the President to make.
Same; Same; Same; Same; Same; Same; The designation by the
President of the Philippines of respondent Yorac as Acting Chairman of
_______________
*EN BANC.
359
VOL. 192, 3
DECEMBER 18, 1990 59
Brillantes, Jr. vs. Yorac
the COMELEC is unconstitutional.The Court has not the slightest
doubt that the President of the Philippines was moved only by the best
of motives when she issued the challenged designation. But while
conceding her goodwill, we cannot sustain her act because it conflicts
with the Constitution. Hence, even as this Court revoked the
designation in the Bautista case, so too must it annul the designation in
the case at bar. The Constitution provided for many safeguards to the
independence of the Commission on Elections, foremost among which is
the security of tenure of its members. That guaranty is not available to
the respondent as Acting Chairman of the Commission on Elections by
designation of the President of the Philippines. WHEREFORE, the
designation by the President of the Philippines of respondent Haydee B.
Yorac as Acting Chairman of the Commission on Elections is declared
UNCONSTITUTIONAL, and the respondent is hereby ordered to desist
from serving as such. This is without prejudice to the incumbent
Associate Commissioners of the Commission on Elections restoring her
to the same position if they so desire, or choosing another member in her
place, pending the appointment of a permanent Chairman by the
President of the Philippines with the consent of the Commission on
Appointments.
CRUZ, J.:
The petitioner is challenging the designation by the President of
the Philippines of Associate Commissioner Haydee B. Yorac as
Acting Chairman of the Commission on Elections, in place of
Chairman Hilario B. Davide, who had been named chairman of
the fact-finding commission to investigate the December
1989 coup d' etat attempt.
The qualifications of the respondent are conceded by the
petitioner and are not in issue in this case. What is the power of
the President of the Philippines to make the challenged
designation in view of the status of the Commission on Elections
as an independent constitutional body and the specific provision
of Article IX-C, Section 1(2) of the Constitution that "(I)n no case
shall any Member (of the Commission on Elections) be appointed
or designated in a temporary or acting capacity."
The petitioner invokes the case of Nacionalista Party v.
Bautista, 85 Phil. 101, where President Elpidio Quirino
designated the Solicitor General as acting member of the
Commission on Elections and the Court revoked the designation
as contrary to the Constitution. It is also alleged that the
respondent is not
360
360 SUPREME COURT
REPORTS
ANNOTATED
even the senior member of the Commission on Elections, being
outranked by Associate Commissioner Alfredo E. Abueg, Jr.
The petitioner contends that the choice of the Acting
Chairman of the Commission on Elections is an internal matter
that should be resolved by the members themselves and that the
intrusion of the President of the Philippines violates their
independence. He cites the practice in this Court, where the
senior Associate Justice serves as Acting Chief Justice in the
absence of the Chief Justice. No designation from the President
of the Philippines is necessary.
In his Comment, the Solicitor General argues that no such
designation is necessary in the case of the Supreme Court
because the temporary succession cited is provided for in Section
12 of the Judiciary Act of 1948. A similar rule is found in Section
5 of BP 129 for the Court of Appeals. There is no such
arrangement, however, in the case of the Commission on
Elections. The designation made by the President of the
Philippines should therefore be sustained for reasons of
"administrative expediency," to prevent disruption of the
functions of the COMELEC.
Expediency is a dubious justification. It may also be an
overstatement to suggest that the operations of the Commission
on Elections would have been disturbed or stalemated if the
President of the Philippines had not stepped in and designated
an Acting Chairman. There did not seem to be any such
problem. In any event, even assuming that difficulty, we do not
agree that "only the President (could) act to fill the hiatus," as
the Solicitor General maintains.
Article IX-A, Section 1, of the Constitution expressly describes
all the Constitutional Commissions as "independent." Although
essentially executive in nature, they are not under the
control of the President of the Philippines in the discharge of
their respective functions. Each of these Commissions conducts
its own proceedings under the applicable laws and its own rules
and in the exercise of its own discretion. Its decisions, orders
and rulings are subject only to review on certiorari by this Court
as provided by the Constitution in Article IX-A, Section 7.
The choice of a temporary chairman in the absence of the
regular chairman comes under that discretion. That discretion
361
VOL. 192, 361
DECEMBER 18, 1990
cannot be exercised for it, even with its consent, by the
President of the Philippines.
A designation as Acting Chairman is by its very terms
essentially temporary and therefore revocable at will. No cause
need be established to justify its revocation. Assuming its
validity, the designation of the respondent as Acting Chairman
of the Commission on Elections may be withdrawn by the
President of the Philippines at any time and for whatever reason
she sees fit. It is doubtful if the respondent, having accepted
such designation, will not be estopped from challenging its
withdrawal.
It is true, as the Solicitor General points out, that the
respondent cannot be removed at will from her permanent
position as Associate Commissioner. It is no less true, however,
that she can be replaced as Acting Chairman, with or without
cause, and thus deprived of the powers and perquisites of that
temporary position.
The lack of a statutory rule covering the situation at bar is no
justification for the President of the Philippines to fill the void
by extending the temporary designation in favor of the
respondent. This is still a government of laws and not of men.
The problem allegedly sought to be corrected, if it existed at all,
did not call for presidential action. The situation could have
been handled by the members of the Commission on Elections
themselves without the participation of the President, however
wellmeaning.
In the choice of the Acting Chairman, the members of the
Commission on Elections would most likely have been guided by
the seniority rule as they themselves would have appreciated it.
In any event, that choice and the basis thereof were for them
and not the President to make.
The Court has not the slightest doubt that the President of the
Philippines was moved only by the best of motives when she
issued the challenged designation. But while conceding her
goodwill, we cannot sustain her act because it conflicts with the
Constitution. Hence, even as this Court revoked the designation
in the Bautista case, so too must it annul the designation in the
case at bar.
The Constitution provides for many safeguards to the
independence of the Commission on Elections, foremost among
which is the security of tenure of its members. That guaranty is
362
362 SUPREME COURT
REPORTS
ANNOTATED
not available to the respondent as Acting Chairman of the
Commission on Elections by designation of the President of the
Philippines.
WHEREFORE, the designation by the President of the
Philippines of respondent Haydee B. Yorac as Acting Chairman
of the Commission on Elections is declared
UNCONSTITUTIONAL, and the respondent is hereby ordered
to desist from serving as such. This is without prejudice to the
incumbent Associate Commissioners of the Commission on
Elections restoring her to the same position if they so desire, or
choosing another member in her place, pending the appointment
of a permanent Chairman by the President of the Philippines
with the consent of the Commission on Appointments.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez,
Jr.,Paras, Gancayco, Padilla, Bidin, Grio-
Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., On leave.
Sarmiento, J., No Part.
Designation unconstitutional.
Note.The power to appoint, is in essence, discretionary. The
appointing power has the right of choice which he may exercise
freely according to his judgment, deciding for himself, who is
best qualified among those who have the necessary
qualifications and eligibilities. (Pamantasan ng Lungsod ng
Maynila vs. Court of Appeals, 149 SCRA 22.)
o0o
Blo Umpar Adiong vs.
Commission on Elections
G.R. No. 103956. March 31, 1992. *
BLO UMPAR ADIONG, petitioner, vs.COMMISSION ON

ELECTIONS, respondent.
Constitutional Law; Commission on Elections; Freedom of
Speech; The COMELECs prohibition on posting of decals and stickers on
mobile places whether public or private except in designated areas
provided for by the COMELEC itself is null and void on constitutional
grounds.The COMELECs prohibition on posting of decals and stickers
on mobile places whether public or private except in designated areas
provided for by the COMELEC itself is null and void on constitutional
grounds.
Same; Same; Same; The qualitative significance of freedom of
expression arises from the fact that it is the matrix, the indispensable
condition of nearly every other freedom.This qualitative significance of
freedom of expression arises from the fact that it is the matrix, the
indispensable condition of nearly every other freedom. (Palko v.
Connecticut, 302 U.S. 319 [1937]; Salonga v. Pao, 134 SCRA 438
[1985]) It is difficult to imagine how the other provisions of the Bill of
Rights and the right to free elections may be guaranteed if the freedom
to speak and to convince or persuade is denied and taken away.
Same; Same; Same; Verily, the restriction as to where the decals and
stickers should be posted is so broad that it encompasses even the citizens
private property which in this case is a privately-owned vehicle.The
resolution prohibits the posting of decals and stickers not more than
eight and one-half (8-1/2) inches in width and fourteen (14) inches in
length in any place, including mobile placeswhether public or private
except in areas designated by the COMELEC. Verily, the restriction as
to where the decals and stickers should be posted is so broad that it
encompasses even the citizens private property, which in this case is a
privately-owned vehicle. In consequence of this prohibition, another
cardinal rule prescribed by the Constitution would be violated. Section 1,
Article III of the Bill of Rights provides that no person shall be deprived
of his property without due process of law.
Same; Same; Same; Same; The prohibition on posting of decals and
stickers on mobile places whether public or private except in the
_______________
*EN BANC.
713
VOL. 207, 7
MARCH 31, 1992 13
authorized areas designated by the COMELEC becomes censorship
which cannot be justified by the Constitution.In sum, the prohibition
on posting of decals and stickers on mobile places whether public or
private except in the authorized areas designated by the COMELEC
becomes censorship which cannot be justified by the Constitution.
PETITION to review the decision of the Commission on

Elections.
Romulo R. Macalintal for petitioner.
GUTIERREZ, JR., J.:
The specific issue in this petition is whether or not the
Commission on Elections (COMELEC) may prohibit the posting
of decals and stickers on mobile places, public or private, and
limit their location or publication to the authorized posting
areas that it fixes.
On January 13, 1992, the COMELEC promulgated Resolution
No. 2347 pursuant to its powers granted by the Constitution, the
Omnibus Election Code, Republic Acts Nos. 6646 and 7166 and
other election laws.
Section 15(a) of the resolution provides:
SEC. 15. Lawful Election Propaganda.The following are lawful
election propaganda:
(a) Pamphlets, leaflets, cards, decals, stickers, handwritten or printed
letters, or other written or printed materials not more than eight and
one-half (8-1/2) inches in width and fourteen (14) inches in
length: Provided, That decals and stickers may be posted only in any of
the authorized posting areas provided in paragraph (f) of Section 21
hereof.
Section 21 (f) of the same resolution provides:
SEC. 21 (f). Prohibited forms of election propaganda.
It is unlawful:
xxx xxx xxx
(f) To draw, paint, inscribe, post, display or publicly exhibit any
election propaganda in any place, whether public or private, mobile or
stationary, except in the COMELEC common posted areas and/or
billboards, at the campaign headquarters of the candidate or political
714
714 SUPREME COURT
REPORTS
ANNOTATED
party, organization or coalition, or at the candidates own residential
house or one of his residential houses, if he has more than
one: Provided, that such posters or election propaganda shall not exceed
two (2) feet by three (3) feet in size. (Emphasis supplied)
xxx xxx xxx
The statutory provisions sought to be enforced by COMELEC
are Section 82 of the Omnibus Election Code on lawful election
propaganda which provides:
Lawful election propaganda.Lawful election propaganda shall
include:
1. (a)Pamphlets, leaflets, cards, decals, stickers or other written or

printed materials of a size not more than eight and one-half inches
in width and fourteen inches in length;
2. (b)Handwritten or printed letters urging voters to vote for or
against any particular candidate;
3. (c)Cloth, paper or cardboard posters, whether framed or posted,
with an area not exceeding two feet by three feet, except that, at
the cite and on the occasion of a public meeting or rally, or in
announcing the holding of said meeting or rally, streamers not
exceeding three feet by eight feet in size, shall be
allowed: Provided, That said streamers may not be displayed
except one week before the date of the meeting or rally and that it
shall be removed within seventy-two hours after said meeting or
rally; or
4. (d)All other forms of election propaganda not prohibited by this
Code as the Commission may authorize after due notice to all
interested parties and hearing where all the interested parties
were given an equal opportunity to be heard: Provided, That the
Commissions authorization shall be published in two newspapers
of general circulation throughout the nation for at least twice
within one week after the authorization has been granted. (Section
37, 1978 EC)
and Section 11(a) of Republic Act No. 6646 which provides:

Prohibited Forms of Election Propaganda.In addition to the forms of
election propaganda prohibited under Section 85 of Batas Pambansa
Blg. 881, it shall be unlawful: (a) to draw, paint, inscribe, write, post,
display or publicly exhibit any election propaganda in any place, whether
private, or public, except in the common poster areas and/or billboards
provided in the immediately preceding section, at the candidates own
residence, or at the campaign headquarters of the candidate or political
party: Provided, That such posters or election
715
VOL. 207, MARCH 715
31, 1992
propaganda shall in no case exceed two (2) feet by three (3) feet in
area: Provided, Further, That at the site of and on the occasion of a
public meeting or rally, streamers, not more than two (2) and not
exceeding three (3) feet by eight (8) feet each may be displayed five (5)
days before the date of the meeting or rally, and shall be removed within
twenty-four (24) hours after said meeting or rally; x x x (Emphasis
supplied)
Petitioner Blo Umpar Adiong, a senatorial candidate in the May
11, 1992 elections now assails the COMELECs Resolution
insofar as it prohibits the posting of decals and stickers in
mobile places like cars and other moving vehicles. According to
him such prohibition is violative of Section 82 of the Omnibus
Election Code and Section 11(a) of Republic Act No. 6646. In
addition, the petitioner believes that with the ban on radio,
television and print political advertisements, he, being a
neophyte in the field of politics stands to suffer grave and
irreparable injury with this prohibition. The posting of decals
and stickers on cars and other moving vehicles would be his last
medium to inform the electorate that he is a senatorial
candidate in the May 11, 1992 elections. Finally, the petitioner
states that as of February 22, 1992 (the date of the petition) he
has not received any notice from any of the Election Registrars
in the entire country as to the location of the supposed Comelec
Poster Areas.
The petition is impressed with merit. The COMELECs
prohibition on posting of decals and stickers on mobile places
whether public or private except in designated areas provided
for by the COMELEC itself is null and void on constitutional
grounds.
Firstthe prohibition unduly infringes on the citizens
fundamental right of free speech enshrined in the Constitution
(Sec. 4, Article III). There is no public interest substantial
enough to warrant the kind of restriction involved in this case.
There are various concepts surrounding the freedom of speech
clause which we have adopted as part and parcel of our own Bill
of Rights provision on this basic freedom.
All of the protections expressed in the Bill of Rights are
important but we have accorded to free speech the status of a
preferred freedom. (Thomas v. Collins, 323 US 516, 89 L. Ed.
430 [1945]; Mutuc v. Commission on Elections, 36 SCRA
228 [1970])
716
716 SUPREME COURT
REPORTS
ANNOTATED
This qualitative significance of freedom of expression arises from
the fact that it is the matrix, the indispensable condition of
nearly every other freedom. (Palko v. Connecticut, 302 U.S.
319 [1937]; Salonga v. Pao, 134 SCRA 438[1985]) It is difficult
to imagine how the other provisions of the Bill of Rights and the
right to free elections may be guaranteed if the freedom to speak
and to convince or persuade is denied and taken away.
We have adopted the principle that debate on public issues
should be uninhibited, robust, and wide open and that it may
well include vehement, caustic and sometimes unpleasantly
sharp attacks on government and public officials. (New York
Times Co. v. Sullivan, 376 U.S. 254, 11 L. Ed. 686 [1964]; cited
in the concurring opinion of then Chief Justice Enrique
Fernando in Babst v. National Intelligence Board, 132 SCRA
316 [1984]) Too many restrictions will deny to people the robust,
uninhibited, and wide open debate, the generating of interest
essential if our elections will truly be free, clean and honest.
We have also ruled that the preferred freedom of expression
calls all the more for the utmost respect when what may be
curtailed is the dissemination of information to make more
meaningful the equally vital right of suffrage. (Mutuc v.
Commission on Elections, supra)
The determination of the limits of the Governments power to
regulate the exercise by a citizen of his basic freedoms in order
to promote fundamental public interests or policy objectives is
always a difficult and delicate task. The so-called balancing of
interestsindividual freedom on one hand and substantial
public interests on the otheris made even more difficult in
election campaign cases because the Constitution also gives
specific authority to the Commission on Elections to supervise
the conduct of free, honest, and orderly elections.
We recognize the fact that under the Constitution, the
COMELEC during the election period is granted regulatory
powers vis-a-vis the conduct and manner of elections, to wit:
SEC. 4. The Commission may, during the election period supervise or
regulate the enjoyment or utilization of all franchises or permits for the
operation of transportation and other public utilities, media of
communication or information, all grants special privileges, or
concessions granted by the Government or any subdivision, agency,
717
VOL. 207, MARCH 717
31, 1992
or instrumentality thereof, including any government-owned or
controlled corporation or its subsidiary. Such supervision or regulation
shall aim to ensure equal opportunity, time, and space, and the right to
reply, including reasonable equal rates therefore, for public information
campaigns and forms among candidates in connection with the object of
holding free, orderly, honest, peaceful and credible elections. (Article IX
(c) section 4)
The variety of opinions expressed by the members of this Court
in the recent case of National Press Club v. Commission on
Elections (G.R. No. 102653, March 5, 1991) and its companion
cases underscores how difficult it is to draw a dividing line
between permissible regulation of election campaign activities
and indefensible repression committed in the name of free and
honest elections. In the National Press Club, case, the Court had
occasion to reiterate the preferred status of freedom of
expression even as it validated COMELEC regulation of
campaigns through political advertisements. The gray area is
rather wide and we have to go on a case to case basis.
There is another problem involved. Considering that the
period of legitimate campaign activity is fairly limited and, in
the opinion of some, too short, it becomes obvious that unduly
restrictive regulations may prove unfair to affected parties and
the electorate.
For persons who have to resort to judicial action to strike down
requirements which they deem inequitable or oppressive, a court
case may prove to be a hollow remedy. The judicial process, by
its very nature, requires time for rebuttal, analysis and
reflection. We cannot act instantly on knee-jerk impulse. By the
time we revoke an unallowably restrictive regulation or ruling,
time which is of the essence to a candidate may have lapsed and
irredeemable opportunities may have been lost.
When faced with border line situations where freedom to
speak by a candidate or party and freedom to know on the part
of the electorate are invoked against actions intended for
maintaining clean and free elections, the police, local officials
and COMELEC should lean in favor of freedom. For in the
ultimate analysis, the freedom of the citizen and the States
power to regulate are not antagonistic. There can be no free and
honest elections if in the efforts to maintain them, the freedom
to speak and the right to know are unduly curtailed.
718
718 SUPREME COURT
REPORTS
ANNOTATED
There were a variety of opinions expressed in the National Press
Club v. Commission on Elections (supra) case but all of us were
unanimous that regulation of election activity has its limits. We
examine the limits of regulation and not the limits of free
speech. The carefully worded opinion of the Court, through Mr.
Justice Feliciano, shows that regulation of election campaign
activity may not pass the test of validity if it is too general in its
terms or not limited in time and scope in its application, if it
restricts ones expression of belief in a candidate or ones opinion
of his or her qualifications, if it cuts off the flow of media
reporting, and if the regulatory measure bears no clear and
reasonable nexus with the constitutionally sanctioned objective.
Even as the Court sustained the regulation of political
advertisements, with some rather strong dissents, in National
Press Club, we find the regulation in the present case of a
different category. The promotion of a substantial Government
interest is not clearly shown.
A government regulation is sufficiently justified if it is within the
constitutional power of the Government, if it furthers an important or
substantial governmental interest; if the governmental interest is
unrelated to the suppression of free expression; and if the incidental
restriction on alleged First Amendment freedoms is no greater than is
essential to the furtherance of that interest. (Id., at 377, 20 L Ed 2d 672,
88 S Ct 1673. (City Council v. Taxpayers For Vincent, 466 US 789, 80 L
Ed 2d 772, 104 S Ct 2118 [1984])
The posting of decals and stickers in mobile places like cars and
other moving vehicles does not endanger any substantial
government interest. There is no clear public interest threatened
by such activity so as to justify the curtailment of the cherished
citizens right of free speech and expression. Under the clear and
present danger rule not only must the danger be patently clear
and pressingly present but the evil sought to be avoided must be
so substantive as to justify a clamp over ones mouth or a
writing instrument to be stilled:
The case confronts us again with the duty our system places on the
Court to say where the individuals freedom ends and the States power
begins. Choice on that border, now as always delicate, is perhaps
719
VOL. 207, MARCH 719
31, 1992
more so where the usual presumption supporting legislation is balanced
by the preferred place given in our scheme to the great, the
indispensable democratic freedom secured by the First Amendment x x x
That priority gives these liberties a sanctity and a sanction not
permitting dubious intrusions and it is the character of the right, not of
the limitation, which determines what standard governs the choice x x x.
For these reasons any attempt to restrict those liberties must be
justified by clear public interest, threatened not doubtfully or remotely,
but by clear and present danger. The rational connection between the
remedy provided and the evil to be curbed, which in other context might
support legislation against attack on due process grounds, will not
suffice. These rights rest on firmer foundation. Accordingly, whatever
occasion would restrain orderly discussion and persuasion, at
appropriate time and place, must have clear support in public danger,
actual or impending. Only the greatest abuses, endangering permanent
interests, give occasion for permissible limitation. (Thomas V.
Collins, 323 US 516 [1945]. (Emphasis supplied)
Significantly, the freedom of expression curtailed by the
questioned prohibition is not so much that of the candidate or
the political party. The regulation strikes at the freedom of an
individual to express his preference and, by displaying it on his
car, to convince others to agree with him. A sticker may be
furnished by a candidate but once the car owner agrees to have
it placed on his private vehicle, the expression becomes a
statement by the owner, primarily his own and not of anybody
else. If, in the National Press Club case, the Court was careful to
rule out restrictions on reporting by newspapers or radio and
television stations and commentators or columnists as long as
these are not correctly paid-for advertisements or purchased
opinions with less reason can we sanction the prohibition
against a sincere manifestation of support and a proclamation of
belief by an individual person who pastes a sticker or decal on
his private property.
Secondthe questioned prohibition premised on the statute
and as couched in the resolution is void for overbreadth.
A statute is considered void for overbreadth when it offends
the constitutional principle that a governmental purpose to
control or prevent activities constitutionally subject to state
regulations may not be achieved by means which sweep
unnecessarily broadly and thereby invade the area of protected
720
720 SUPREME COURT
REPORTS
ANNOTATED
freedoms. (Zwickler v. Koota, 19 L ed 2d 444 [1967]).
In a series of decisions this Court has held that, even though the
governmental purpose be legitimate and substantial, that purpose
cannot be pursued by means that broadly stifle fundamental personal
liberties when the end can be more narrowly achieved. The breadth of
legislative abridgment must be viewed in the light of less drastic means
for achieving the same basic purpose.
In Lovell v. Griffin, 303 US 444, 82 L ed 949, 58 S Ct 666, the Court
invalidated an ordinance prohibiting all distribution of literature at any
time or place in Griffin, Georgia, without a license, pointing out that so
broad an interference was unnecessary to accomplish legitimate
municipal aims. In Schneider v. Irvington, 308 US 147, 84 L ed 155, 60 S
Ct. 146, the Court dealt with ordinances of four different municipalities
which either banned or imposed prior restraints upon the distribution of
handbills. In holding the ordinances invalid, the court noted that where
legislative abridgment of fundamental personal rights and liberties is
asserted, the courts should be astute to examine the effect of the
challenged legislation. Mere legislative preferences or beliefs respecting
matters of public convenience may well support regulation directed at
other personal activities, but be insufficient to justify such as diminishes
the exercise of rights so vital to the maintenance of democratic
institutions. 308 US, at 161. In Cantwell v. Connecticut, 310 US 296, 84
L ed 1213, 60 S Ct. 900, 128 ALR 1352, the Court said that [c]onduct
remains subject to regulation for the protection of society, but pointed
out that in each case the power to regulate must be so exercised as not,
in attaining a permissible end, unduly to infringe the protected
freedom. (310 US at 304) (Shelton v. Tucker, 364 US 479[1960])
The resolution prohibits the posting of decals and stickers not
more than eight and one-half (8-1/2) inches in width and
fourteen (14) inches in length in any place, including mobile
places whether public or private except in areas designated by
the COMELEC. Verily, the restriction as to where the decals
and stickers should be posted is so broad that it encompasses
even the citizens private property, which in this case is a
privately-owned vehicle. In consequence of this prohibition,
another cardinal rule prescribed by the Constitution would be
violated. Section 1, Article III of the Bill of Rights provides that
no person shall be deprived of his property without due process
of law.
721
VOL. 207, MARCH 721
31, 1992
Property is more than the mere thing which a person owns, it includes
the right to acquire, use, and dispose of it; and the Constitution, in the
14th Amendment, protects these essential attributes.
Property is more than the mere thing which a person owns. It is
elementary that it includes the right to acquire, use, and dispose of it.
The Constitution protects these essential attributes of
property. Holden v. Hardy, 169 U.S. 366, 391, 41 L. ed. 780, 790, 18 Sup.
Ct. Rep. 383. Property consists of the free use, enjoyment, and disposal
of a persons acquisitions without control or diminution save by the law
of the land. 1 Cooleys Bl. Com. 127. (Buchanan v. Warley 245 US 60
[1917])
As earlier stated, we have to consider the fact that in the posting
of decals and stickers on cars and other moving vehicles, the
candidate needs the consent of the owner of the vehicle. In such
a case, the prohibition would not only deprive the owner who
consents to such posting of the decals and stickers the use of his
property but more important, in the process, it would deprive
the citizen of his right to free speech and information:
Freedom to distribute information to every citizen wherever he desires
to receive it is so clearly vital to the preservation of a free society that,
putting aside reasonable police and health regulations of time and
manner of distribution, it must be fully preserved. The danger of
distribution can so easily be controlled by traditional legal methods
leaving to each householder the full right to decide whether he will
receive strangers as visitors, that stringent prohibition can serve no
purpose but that forbidden by the constitution, the naked restriction of
the dissemination of ideas. (Martin v. City of Struthers, Ohio, 319 U.S.
141; 87 L. ed. 1313 [1943])
The right to property may be subject to a greater degree of
regulation but when this right is joined by a liberty interest,
the burden of justification on the part of the Government must
be exceptionally convincing and irrefutable. The burden is not
met in this case.
Section 11 of Rep. Act 6646 is so encompassing and invasive
that it prohibits the posting or display of election propaganda in
any place, whether public or private, except in the common
poster areas sanctioned by COMELEC. This means that a
private person cannot post his own crudely prepared personal
poster on his own front door or on a post in his yard. While the
722
722 SUPREME COURT
REPORTS
ANNOTATED
COMELEC will certainly never require the absurd, there are no
limits to what overzealous and partisan police officers, armed
with a copy of the statute or regulation, may do.
The provisions allowing regulations are so loosely worded that
they include the posting of decals or stickers in the privacy of
ones living room or bedroom. This is delegation running riot. As
stated by Justice Cardozo in his concurrence in Panama
Refining Co. v. Ryan (293 U.S. 388; 79 L. Ed. 446 [1935]), The
delegated power is unconfined and vagrant. . . This is delegation
running riot. No such plentitude of power is susceptible of
transfer.
Thirdthe constitutional objective to give a rich candidate
and a poor candidate equal opportunity to inform the electorate
as regards their candidacies, mandated by Article II, Section 26
and Article XIII, Section 1 in relation to Article IX (c) Section 4
of the Constitution, is not impaired by posting decals and
stickers on cars and other private vehicles. Compared to the
paramount interest of the State in guaranteeing freedom of
expression, any financial considerations behind the regulation
are of marginal significance.
Under section 26 Article II of the Constitution, The State
shall guarantee equal access to opportunities for public service, x
x x while under section 1, Article XIII thereof The Congress
shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity,
reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political
power for the common good. (Emphasis supplied)
It is to be reiterated that the posting of decals and stickers on
cars, calesas, tricycles, pedicabs and other moving vehicles needs
the consent of the owner of the vehicle. Hence, the preference of
the citizen becomes crucial in this kind of election propaganda
not the financial resources of the candidate. Whether the
candidate is rich and, therefore, can afford to doleout more
decals and stickers or poor and without the means to spread out
the number of decals and stickers is not as important as the
right of the owner to freely express his choice and exercise his
right of free speech. The owner can even prepare his own decals
or stickers for posting on his personal property. To strike down
this right and enjoin it is impermissible encroachment of his
liber-
723
VOL. 207, MARCH 723
31, 1992
ties.
In sum, the prohibition on posting of decals and stickers on
mobile places whether public or private except in the
authorized areas designated by the COMELEC becomes
censorship which cannot be justified by the Constitution:
x x x The concept of the Constitution as the fundamental law, setting
forth the criterion for the validity of any public act whether proceeding
from the highest official or the lowest functionary, is a postulate of our
system of government. That is to manifest fealty to the rule of law, with
priority accorded to that which occupies the topmost rung in the legal
hierarchy. The three departments of government in the discharge of the
functions with which it is entrusted have no choice but to yield obedience
to its commands. Whatever limits it imposes must be observed. Congress
in the enactment of statutes must ever be on guard lest the restrictions
on its authority, either substantive or formal, be transcended. The
Presidency in the execution of the laws cannot ignore or disregard what
it ordains. In its task of applying the law to the facts as found in
deciding cases, the judiciary is called upon to maintain inviolate what is
decreed by the fundamental law. Even its power of judicial review to
pass upon the validity of the acts of the coordinate branches in the
course of adjudication is a logical corollary of this basic principle that the
Constitution is paramount. It overrides any governmental measure that
fails to live up to its mandates. Thereby there is a recognition of its
being the supreme law. (Mutuc v. Commission on Elections, supra)
The unusual circumstances of this years national and local
elections call for a more liberal interpretation of the freedom to
speak and the right to know. It is not alone the widest possible
dissemination of information on platforms and programs which
concern us. Nor are we limiting ourselves to protecting the
unfettered interchange of ideas to bring about political change.
(Cf. New York Times v. Sullivan, supra) The big number of
candidates and elective positions involved has resulted in the
peculiar situation where almost all voters cannot name half or
even two-thirds of the candidates running for Senator. The
public does not know who are aspiring to be elected to public
office.
There are many candidates whose names alone evoke
qualifications, platforms, programs and ideologies which the
voter may accept or reject. When a person attaches a sticker
with such
724
724 SUPREME COURT
REPORTS
ANNOTATED
a candidates name on his car bumper, he is expressing more
than the name; he is espousing ideas. Our view of the validity of
the challenged regulation includes its effects in todays
particular circumstances. We are constrained to rule against the
COMELEC prohibition.
WHEREFORE, the petition is hereby GRANTED. The portion
of Section 15(a) of Resolution No. 2347 of the Commission on
Elections providing that decals and stickers may be posted only
in any of the authorized posting areas provided in paragraph (f)
of Section 21 hereof is DECLARED NULL and VOID.
SO ORDERED.
Narvasa (C.J.), Melencio-
Herrera, Paras, Padilla, Bidin, Grio-
Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon,
JJ., concur.
Cruz, J., See concurrence.
Feliciano and Bellosillo, JJ.,On leave.
CRUZ, J.: Concurring:
I join Mr. Justice Gutierrez and reiterate the views expressed in
my dissent in National Press Club v. Commission on Elections.
The stand taken by the Court in the case at bar is a refreshing
change from its usual deferential attitude toward
authoritarianism as a persistent vestige of the past regime.
After the disappointing decision in the ad ban case, I hope that
the present decision will guide us to the opposite direction,
toward liberty and the full recognition of freedom of expression.
This decision is a small step in rectifying the errors of the past,
but it is a step just the same, and on the right track this time.
Regarding the sticker ban, I think we are being swamped with
regulations that unduly obstruct the free flow of information so
vital in an election campaign. The Commission on Elections
seems to be bent on muzzling the candidates and imposing all
manner of silly restraints on their efforts to reach the electorate.
Reaching the electorate is precisely the purpose of an election
campaign, but the Commission on Elections obviously believes
that the candidates should be as quiet as possible.
Instead of limiting the dissemination of information on the
election issues and the qualifications of those vying for public
725
VOL. 207, MARCH 725
31, 1992
office, what the Commission on Elections should concentrate on
is the education of the voters on the proper exercise of their
suffrages. This function is part of its constitutional duty to
supervise and regulate elections and to prevent them from
deteriorating into popularity contests where the victors are
chosen on the basis not of their platforms and competence but on
their ability to sing or dance, or play a musical instrument, or
shoot a basketball, or crack a toilet joke, or exhibit some such
dubious talent irrelevant to their ability to discharge a public
office. The public service is threatened with mediocrity and
indeed sheer ignorance if not stupidity. That is the problem the
Commission on Elections should try to correct instead of wasting
its time on much trivialities as where posters shall be allowed
and stickers should not be attached and speeches may be
delivered.
The real threat in the present election is the influx of the
unqualified professional entertainers whose only asset is the
support of their drooling fans, the demagogues who drumbeat to
the clink of coins their professed present virtues and past
innocence, the opportunists for whom flexibility is a means of
political survival and even of financial gain, and, most
dangerous of all, the elements of our electorate who would, with
their mindless ballots, impose these office-seekers upon the
nation. These are the evils the Commission on Elections should
try to correct, not the inconsequential and inane question of
where stickers should be stuck. I have nothing but praise for the
zeal of the Commission on Elections in pursuing the ideal of
democratic elections, but I am afraid it is barking up the wrong
tree.
Petition granted.
Note.Section 19 of Comelec Resolution No. 2167 prohibiting
columnists, commentators or announcers from using their
columns to campaign for or against the plebiscite issues is a
restriction of freedom of expression (Sanidad vs. Commission on
Elections, 181 SCRA 529).
o0o
G.R. No. 170735. December 17, 2007. *
IMMACULADA L. GARCIA, petitioner, vs. SOCIAL SECURITY

COMMISSION LEGAL AND COLLECTION, SOCIAL
SECURITY SYSTEM, respondents.
Labor Law; Labor Standards; Social Legislation; Social Security
Law; Statutory Construction; A simplistic interpretation of the law is
untenableit is a rule in statutory construction that every part of the
statute must be interpreted with reference to the context, i.e., that every
part of the statute must be considered together with the other parts, and
kept subservient to the general intent of the whole enactment; The
liability imposed as contemplated under Section 28(f) of the Social
Security Law does not preclude the liability of the enumerated corporate
officers for the unremitted premium contributions.Petitioners
argument is ridiculous. The interpretation petitioner would like us to
adopt finds no support in law or in jurisprudence. While the Court of
Appeals Decision provided that Section 28(f) refers to the liabilities
pertaining to penalty for the non-remittance of SSS employee
contributions, holding that it is distinct from the amount of the supposed
SSS remittances, petitioner mistakenly concluded that Section 28(f) is
applicable only to penalties and not to the liability of the employer for
the unremitted premium contributions. Clearly, a simplistic
interpretation of the law is untenable. It is a rule in statutory
construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be
considered together with the other parts, and kept subservient to the
general intent of the whole enactment. The liability imposed as
contemplated under the foregoing Section 28(f) of the Social Security
Law does not preclude the liability for the unremitted amount. Relevant
to Section 28(f) is Section 22 of the same law.
Same; Same; Same; The spirit, rather than the letter of a law
determines construction of a provision of lawit is a cardinal rule in
statutory construction that in interpreting the meaning and scope of a
term used in the law, a careful review of the whole law involved, as well
as the intendment of the law, must be made.Under Section 22(a), every
employer is required to deduct and remit such contribu-
_______________
*THIRD DIVISION.
457
VOL. 540, 4
Garcia vs. Social
Security Commission Legal
and Collection
tions penalty refers to the 3% penalty that automatically attaches to
the delayed SSS premium contributions. The spirit, rather than the
letter of a law determines construction of a provision of law. It is a
cardinal rule in statutory construction that in interpreting the meaning
and scope of a term used in the law, a careful review of the whole
law involved, as well as the intendment of the law, must be made.
Nowhere in the provision or in the Decision can it be inferred that the
persons liable are absolved from paying the unremitted premium
contributions.
Same; Same; Same; Elementary is the rule that when laws are clear,
it is incumbent upon the judge to apply them regardless of personal
beliefs or predilections; A law is deemed ambiguous when it is capable of
being understood by reasonably well-informed persons in either of two or
more sensesthe fact that a law admits of different interpretations is the
best evidence that it is vague and ambiguous.Elementary is the rule
that when laws or rules are clear, it is incumbent upon the judge to
apply them regardless of personal belief or predilectionswhen the law
is unambiguous and unequivocal, application not interpretation thereof
is imperative. However, where the language of a statute is vague and
ambiguous, an interpretation thereof is resorted to. An interpretation
thereof is necessary in instances where a literal interpretation would be
either impossible or absurd or would lead to an injustice. A law is
deemed ambiguous when it is capable of being understood by reasonably
well-informed persons in either of two or more senses. The fact that a
law admits of different interpretations is the best evidence that it is
vague and ambiguous. In the instant case, petitioner interprets Section
28(f) of the Social Security Law as applicable only to penalties and not to
the liability of the employer for the unremitted premium contributions.
Respondents present a more logical interpretation that is consistent
with the provisions as a whole and with the legislative intent behind the
Social Security Law. This Court cannot be made to accept an
interpretation that would defeat the intent of the law and its legislators.
Same; Same; Same; Ejusdem Generis; Words and Phrases; Under the
rule ejusdem generis, where general words follow an enumeration of
persons or things, by words of a particular and specific meaning, such
general words are not to be construed in their widest extent, but are to be
held as applying only to persons or things of the same kind or class as
those specifically mentioned; Section 28(f) of the
458
4 SUPREME
58 COURT REPORTS
ANNOTATED
Garcia vs. Social
and Collection
Social Security Law does not qualify that the director or partner
should likewise be a managing director or managing partner.
Petitioner invokes the rule in statutory construction called ejusdem
generic; that is, where general words follow an enumeration of persons
or things, by words of a particular and specific meaning, such general
words are not to be construed in their widest extent, but are to be held
as applying only to persons or things of the same kind or class as those
specifically mentioned. According to petitioner, to be held liable under
Section 28(f) of the Social Security Law, one must be the managing
head, managing director, or managing part-ner. This Court though
finds no need to resort to statutory construction. Section 28(f) of the
Social Security Law imposes penalty on: (1) the managing head; (2)
directors; or (3) partners, for offenses committed by a juridical person
The said provision does not qualify that the director or partner should
likewise be a managing director or managing partner. The law is
clear and unambiguous.
Corporation Law; A director, officer, and employee of a corporation
are generally not held personally liable for obligations incurred by the
corporation.Basic is the rule that a corporation is invested by law with
a personality separate and distinct from that of the persons composing it
as well as from that of any other legal entity to which it may be related.
A corporation is a juridical entity with legal personality separate and
distinct from those acting for and in its behalf and, in general, from the
people comprising it. Following this, the general rule applied is that
obligations incurred by the corporation, acting through its directors,
officers and employees, are its sole liabilities. A director, officer, and
employee of a corporation are generally not held personally liable for
obligations incurred by the corporation.
Same; A corporate director, a trustee or an officer, may be held
solidarily liable with the corporation when he is made, by specific
provision of law, personally liable for his corporate action.Being a
mere fiction of law, however, there are peculiar situations or valid
grounds that can exist to warrant the disregard of its independent being
and the lifting of the corporate veil. This situation might arise when a
corporation is used to evade a just and due obligation or to justify a
wrong, to shield or perpetrate fraud, to carry out other similar
unjustifiable aims or intentions, or as a subterfuge to commit injustice
and so circumvent the law. Thus, Section 31 of the Corporation Law
provides: Taking a cue from the above provision, a corpo-
459
VOL. 540, 4
Garcia vs. Social
and Collection
rate director, a trustee or an officer, may be held solidarily liable with
the corporation in the following instances: 1. When directors and
trustees or, in appropriate cases, the officers of a corporation(a) vote
for or assent to patently unlawful acts of the corporation; (b) act in bad
faith or with gross negligence in directing the corporate affairs; (c) are
guilty of conflict of interest to the prejudice of the corporation, its
stockholders or members, and other persons. 2. When a director or
officer has consented to the issuance of watered stocks or who, having
knowledge thereof, did not forthwith file with the corporate secretary his
written objection thereto. 3. When a director, trustee or officer has
contractually agreed or stipulated to hold himself personally and
solidarily liable with the Corporation. 4. When a director, trustee or
officer is made, by specific provision of law, personally liable for his
corporate action.
Same; Although a corporation once formed is conferred a juridical
personality separate and distinct from the persons comprising it, it is but
a legal fiction introduced for purposes of convenience and to subserve the
ends of justicethe concept cannot be extended to a point beyond its
reasons and policy.Following the doctrine laid down in Laguna
Transportation Co., Inc. v. Social Security System, 107 Phil. 833 (1960),
this Court rules that although a corporation once formed is conferred a
juridical personality separate and distinct from the persons comprising
it, it is but a legal fiction introduced for purposes of convenience and to
subserve the ends of justice. The concept cannot be extended to a point
beyond its reasons and policy, and when invoked in support of an end
subversive of this policy, will be disregarded by the courts.
PETITION for review on certiorari of the decision and resolution

of the Court of Appeals.
Quisumbing, Ignacio, Guia & Lambino Law Offices for
petitioner.
Amador M. Monteiro, Joselito A. Vivit and Gwendolyn C.
Barrios for Social Security System.
460
460 SUPREME COURT
REPORTS
ANNOTATED
Garcia vs. Social Security
Commission Legal and
Collection
CHICO-NAZARIO, J.:
This is petition for review on Certiorari under Rule 45 of the
Rules of Court is assailing the 2 June 2005 Decision and 8 1
December 2005 Resolution both of the Court of Appeals in CA-

2
G.R. SP No. 85923. the appellate court affirmed theOrder

andResolution both of the Social Security Commission (SSC)
in SSC Case No. 10048, finding Immaculada L. Garcia (Garcia),
the sole surviving director of Impact Corporation, petitioner
herein, liable for unremitted, albeit collected, SSS contributions.
Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo
de Leon, Pacita Fernandez, and Consuelo Villanueva were
directors of Impact Corporation. The corporation was engaged in
3
the business of manufacturing aluminum tube containers and

operated two factories. One was a slug foundry-factory located
in Cuyapo, Nueva Ecija, while the other was an Extrusion Plant
in Cainta, Metro Manila, which processed the slugs into
aluminum collapsible tubes and similar containers for
toothpaste and other related products.
Records show that around 1978, Impact Corporation started
encountering financial problems. By 1980, labor unrest besieged
the corporation.
In March 1983, Impact Corporation filed with the Securities
and Exchange Commission (SEC) a Petition for Suspension of
Payments, docketed as SEC Case No. 02423, in which it stated
4
that:
[Impact Corporation] has been and still is engaged in the business of
manufacturing aluminum tube containers x x x.
_______________
1 Penned by Associate Justice Eugenio S. Labitoria with Associate Justices Eliezer R. De Los
Santos and Arturo D. Brion, concurring; Rollo, pp. 32-43.
2 Id., at p. 44.
3 General Information Sheet of Impact Corporation, as of 31 December 1974.
4 Records, pp. 265-283.
461
VOL. 540, 461
DECEMBER 17, 2007
Collection
xxxx
In brief, it is an on-going, viable, and profitable enterprise.
On 8 May 1985, the union of Impact Corporation filed a Notice
of Strike with the Ministry of Labor which was followed by a
declaration of strike on 28 July 1985. Subsequently, the
Ministry of Labor certified the labor dispute for compulsory
arbitration to the National Labor Relations Commission (NLRC)
in an Order dated 25 August 1985. The Ministry of Labor, in the
5
same Order, noted the inability of Impact Corporation to pay

wages, 13th month pay, and SSS remittances due to cash
liquidity problems. A portion of the order reads:
On the claims of unpaid wages, unpaid 13th month pay and non-
remittance of loan amortization and SSS premiums, we are for directing
the company to pay the same to the workers and to remit loan
amortizations and SSS premiums previously deducted from their wages
to the Social Security System. Such claims were never contested by the
company both during the hearing below and in our office. In fact, such
claims were admitted by the company although it alleged cash liquidity
as the main reason for such non-payment.
WHEREFORE, the dispute at Impact Corporation is hereby certified
to the National Labor Relations Commission for compulsory arbitration
in accordance with Article 264 (g) of the Labor Code, as amended.
xxxx
The company is directed to pay all the entitled workers unpaid wages,
unpaid 13th month pay and to remit to the Social Security System loan
amortizations and SSS premiums previously deducted from the wages of
the workers. 6
On 3 July 1985, the Social Security System (SSS), through its

Legal and Collection Division (LCD), filed a case before the SSC
for the collection of unremitted SSS premium contributions
withheld by Impact Corporation from its employees. The
_______________
5Id., at pp. 390-393.
6Id., at p. 392.
462
462 SUPREME COURT
REPORTS
ANNOTATED
Collection
case which impleaded Impact Corporation as respondent was
docketed as SSC Case No. 10048. 7
Impact Corporation was compulsorily covered by the SSS as
an employer effective 15 July 1963 and was assigned Employer
I.D. No. 03-2745100-21.
In answer to the allegations raised in SSC Case No. 10048,
Impact Corporation, through its then Vice President Ricardo de
Leon, explained in a letter dated 18 July 1985 that it had been
confronted with strikes in 1984 and layoffs were effected
thereafter. It further argued that the P402,988.93 is erroneous.
It explained among other things, that its operations had been
suspended and that it was waiting for the resolution on its
Petition for Suspension of Payments by the SEC under SEC
Case No. 2423. Despite due notice, the corporation failed to
appear at the hearings. The SSC ordered the investigating team
of the SSS to determine if it can still file its claim for unpaid
premium contributions against the corporation under the
Petition for Suspension of Payments.
In the meantime, the Petition for Suspension of Payments was
dismissed which was pending before the SEC in an Or-der dated 8
12 December 1985. Impact Corporation resumed operations but

only for its winding up and dissolution. Due to Impact 9
Corporations liability and cash flow problems, all of its assets,

namely, its machineries, equipment, office furniture and
fixtures, were sold to scrap dealers to answer for its arrears in
rentals.
On 1 December 1995, the SSS-LCD filed an amended
Petition in SSC Case No. 10048 wherein the directors of Impact
10
Corporation were directly impleaded as respondents, namely:

Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, Con-
11
_______________
7 Id., at pp. 1-3.
8 Id., at pp. 395-400.
9 Id., at pp. 192-196.
10 Id., at pp. 223-233.
11 Summons were served on Ricardo de Leon; See Records, p. 259.

463
VOL. 540, 463
DECEMBER 17, 2007
Collection
suelo Villanueva, and petitioner. The amounts sought to be
collected totaled P453,845.78 and P10,856.85 for the periods
August 1980 to December 1984 and August 1981 to July 1984,
respectively, and the penalties for late remittance at the rate of
3% per month from the date the contributions fell due until fully
paid pursuant to Section 22(a) of the Social Security Law, as 12
amended, in the amounts of P49,941.67 and P2,474,662.82.

Period Unremitted Penalties TOTAL
Amount (3% In-
terest Per
Month)
August P P49, 503,787.45
1980 to 453,845.78 941.67
December
1984
August P P2, 474, 2,485,519.67
1981 to 10,856.85 662.82
July 1984
Summonses were not served upon Eduardo de Leon, Pacita
Fernandez, and Consuelo Villanueva, their whereabouts
unknown. They were all later determined to be deceased. On the
other hand, due to failure to file his responsive pleading, Ricardo
de Leon was declared in default.
_______________
12 SEC. 22. Remittance of Contributions.(a) The contribution imposed in the preceding
Section shall be remitted to the SSS within the first ten (10) days of each calendar month
following the month for which they are applicable or within such time as the Commission may
prescribe. Every employer required to deduct and to remit such contributions shall be liable for
their payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay
besides the contribution a penalty thereon of three percent (3%) per month from the date the
contribution falls due until paid. If deemed expedient and advisable by the Commission, the
collection and remittance of contributions shall be made quarterly or semiannually in advance,
the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in advance
but not due shall be credited or refunded to his employer.
464
464 SUPREME COURT
REPORTS
ANNOTATED
Collection
Petitioner filed with the SSC a Motion to Dismiss on grounds of 13
prescription, lack of cause of action and cessation of business,

but the Motion was denied for lack of merit. In her Answer with 14
Counterclaim dated 20 May 1999, petitioner averred that

15
Impact Corporation had ceased operations in 1980. In her

defense, she insisted that she was a mere director without
managerial functions, and she ceased to be such in 1982. Even
as a stockholder and director of Impact Corporation, petitioner
contended that she cannot be made personally liable for the
corporate obligations of Impact Corporation since her liability
extended only up to the extent of her unpaid subscription, of
which she had none since her subscription was already fully
paid. The petitioner raised the same arguments in her Position
Paper. 16
On 23 January 1998, Ricardo de Leon died following the

death, too, of Pacita Fernandez died on 7 February 2000. In an
Order dated 11 April 2000, the SSC directed the System to check
if Impact Corporation had leviable properties to which the
investigating team of respondent SSS manifested that the
Impact Corporation had already been dissolved and its assets
disposed of. 17
In a Resolution dated 28 May 2003, the Social Security
Commission ruled in favor of SSS and declared petitioner liable
to pay the unremitted contributions and penalties, stating the
following:
WHEREFORE, premises considered, this Commission finds, and so
holds, that respondents Impact Corporation and/or Immaculada L.
Garcia, as director and responsible officer of the said corporation, is
liable to pay the SSS the amounts of P442,988.93, represent-
_______________
13 Dated 17 January 1996.

14 Order issued by the SSC on 27 April 1999; Records, pp. 320-325.
15 Records, pp. 336-345.
16 Id., at pp. 493-501.
17 Order dated 11 April 2000.
465
VOL. 540, 465
DECEMBER 17, 2007
Collection
ing the unpaid SS contributions of their employees for the period August
1980 to December 1984, not inclusive, and P10,856.85, representing the
balance of the unpaid SS contributions in favor of Donato Campos,
Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period
August 1980 to December 1984, not inclusive, as well as the 3% per
month penalty imposed thereon for late payment in the amounts of
P3,194,548.63 and P78,441.33, respectively, computed as of April 30,
2003. This is without prejudice to the right of the SSS to collect the
penalties accruing after April 30, 2003 and to institute other appropriate
actions against the respondent corporation and/or its responsible
officers.
Should the respondents pay their liability for unpaid SSS
contributions within sixty (60) days from receipt of a copy of this
Resolution, the 3% per month penalty for late payment thereof shall be
deemed condoned pursuant to SSC Res. No. 397-S.97, as amended by
SSC Res. Nos. 112-S.98 and 982-S.99, implementing the provision on
condonation of penalty under Section 30 of R.A. No. 8282.
In the event the respondents fail to pay their liabilities within the
aforestated period, let a writ of execution be issued, pursuant to Section
22 (c) [2] of the SS Law, as amended, for the satisfaction of their
liabilities to the SSS. 18
Petitioner filed a Motion for Reconsideration of the afore-quoted

19
Decision but it was denied for lack of merit in an Or-der dated 4 20
August 2004, thus:

Nowhere in the questioned Resolution dated May 28, 2003 is it stated
that the other directors of the defunct Impact Corporation are absolved
from their contribution and penalty liabilities to the SSS. It is certainly
farthest from the intention of the petitioner SSS or this Commission to
pin the entire liability of Impact Corporation on movant Immaculada L.
Garcia, to the exclusion of the directors of the corporation namely:
Eduardo de Leon, Ricardo de Leon, Pacita
_______________
18 Rollo, pp. 66-67.
19 Dated 16 June 2003.
20 Adopted/promulgated by the SSC en bancunder its Resolution No. 474 on 4 August 2004;
Penned by Commissioner Aurora R. Arnaez; Rollo, pp. 68-69.

466
466 SUPREME COURT
REPORTS
ANNOTATED
Collection
Fernandez and Conzuelo Villanueva, who were all impleaded as parties-
respondents in this case.
The case record shows that there was failure of service of summonses
upon respondents Eduardo de Leon, Pacita Fernandez and Conzuelo
Villanueva, who are all deceased, for the reason that their whereabouts
are unknown. Moreover, neither the legal heirs nor the estate of the
defaulted respondent Ricardo de Leon were substituted as parties-
respondents in this case when he died on January 23, 1998. Needless to
state, the Commission did not acquire jurisdiction over the persons or
estates of the other directors of Impact Corporation, hence, it could not
validly render any pronouncement as to their liabilities in this case.
Furthermore, the movant cannot raise in a motion for reconsideration
the defense that she was no longer a director of Impact Corporation in
1982, when she was allegedly eased out by the managing directors of
Impact Corporation as purportedly shown in the Deed of Sale and
Assignment of Shares of Stock dated January 22, 1982. This defense was
neither pleaded in her Motion to Dismiss dated January 17, 1996 nor in
her Answer with Counterclaim dated May 18, 1999 and is, thus, deemed
waived pursuant to Section 1, Rule 9 of the 1997 Rules of Civil
Procedure, which has suppletory application to the Revised Rules of
Procedure of the Commission.
Finally, this Commission has already ruled in the Order dated April
27, 1999 that since the original Petition was filed by the SSS on July 3,
1985, and was merely amended on December 1, 1995 to implead the
responsible officers of Impact Corporation, without changing its causes
of action, the same was instituted well within the 20-year prescriptive
period provided under Section 22 (b) of the SS Law, as amended,
considering that the contribution delinquency assessment covered the
period August 1980 to December 1984.
In view thereof, the instant Motion for Reconsideration is hereby
denied for lack of merit.
Petitioner elevated her case to the Court of Appeals via a
Petition for Review. Respondent SSS filed its Comment dated 20
January 2005, and petitioner submitted her Reply thereto on 4
April 2005.
467
VOL. 540, 467
DECEMBER 17, 2007
Collection
The Court of Appeals, applying Section 28(f) of the Social
Security Law, again ruled against petitioner. It dismissed the
21
petitioners Petition in a Decision dated 2 June 2005, the
dispositive portion of which reads:
WHEREFORE, premises considered, the petition is DISMISSED for
lack of merit. The assailed Resolution dated 28 May 2003 and the Order
dated 4 August 2004 of the Social Security Commission are
AFFIRMED in toto. 22
Aggrieved, petitioner filed a Motion for Reconsideration of the

appellate courts Decision but her Motion was denied in a
Resolution dated 8 December 2005.
Hence, the instant Petition in which petitioner insists that the
Court of Appeals committed grave error in holding her solely
liable for the collected but unremitted SSS premium
contributions and the consequent late penalty payments due
thereon. Petitioner anchors her Petition on the following
arguments:
_______________
21 SEC. 28. Penal Clause.x x x.
(e) Whoever fails or refuses to comply with the provisions promulgated by the Commission,
shall be punished by a fine of not less than Five thousand pesos (P5,000.00) nor more than
Twenty thousand pesos (P20,000.00), or imprisonment for not less than six (6) years and one (1)
day nor more than twelve (12) years, or both, at the discretion of the court: Provided, That where
the violation consists in failure or refusal to register employees or himself, in case of the covered
self-employed or to deduct contributions from employees compensation and remit the same to
the SSS, the penalty shall be a fine of not less Five thousand pesos (P5,000.00) nor more than
Twenty thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and one (1)
day nor more than twelve (12) years.
(f) If the act or omission penalized by this Act be committed by an association, partnership,
corporation or any other institution, its managing head, directors or partners shall be liable to
the penalties provided in this Act for the offense.
22 Rollo, pp. 41-42; citations omitted.
468
468 SUPREME COURT
REPORTS
ANNOTATED
Collection
1. I.SECTION 28(F) OF THE SSS LAW PROVIDES THAT A
MANAGING HEAD, DIRECTOR OR PARTNER IS
LIABLE ONLY FOR THE PENALTIES OF THE
EMPLOYER CORPORATION AND NOT FOR UNPAID
SSS CONTRIBUTIONS OF THE EMPLOYER
CORPORATION.
2. II.UNDER THE SSS LAW, IT IS THE MANAGING
HEADS, DIRECTORS OR PARTNERS WHO SHALL BE
LIABLE TOGETHER WITH THE CORPORATION. IN
THIS CASE, PETITIONER HAS CEASED TO BE A
STOCKHOLDER OF IMPACT CORPORATION IN 1982.
EVEN WHILE SHE WAS A STOCK-HOLDER, SHE
NEVER PARTICIPATED IN THE DAILY OPERATIONS
OF IMPACT CORPORATION.
3. III.UNDER SECTION 31 OF THE CORPORATION CODE,
ONLY DIRECTORS, TRUSTEES OR OFFICERS WHO
PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY
OF GROSS NEGLIGENCE AND BAD FAITH SHALL BE
PERSONALLY LIABLE. OTHERWISE, BEING A MERE
STOCKHOLDER, SHE IS LIABLE ONLY TO THE
EXTENT OF HER SUBSCRIPTION.
4. IV.IMPACT CORPORATION SUFFERED
IRREVERSIBLE ECONOMIC LOSSES, EVENTS WHICH
WERE NEITHER DESIRED NOR CAUSED BY ANY ACT
OF THE PETITIONER. THUS, BY REASON OF
FORTUITOUS EVENTS, THE PETITIONER SHOULD BE
ABSOLVED FROM LIABILITY.
5. V.RESPONDENT SOCIAL SECURITY SYSTEM FAILED
MISERABLY IN EXERTING EFFORTS TO ACQUIRE
JURISDICTION OVER THE LEVIABLE ASSETS OF
IMPACT CORPORATION, PERSON/S AND/OR
ESTATE/S OF THE OTHER DIRECTORS OR OFFICERS
OF IMPACT CORPORATION.
6. VI.THE HONORABLE COMMISSION SERIOUSLY
ERRED IN NOT RENDERING A JUDGMENT BY
DEFAULT AGAINST THE DIRECTORS UPON WHOM IT
ACQUIRED JURISDICTION.
Based on the foregoing, petitioner prays that the Decision dated
2 June 2005 and the Resolution dated 8 December 2005 of the
Court of Appeals be reversed and set aside, and a new one be
rendered absolving her of any and all liabilities under the Social
Security Law.
469
VOL. 540, 469
DECEMBER 17, 2007
Collection
In sum, the core issue to be resolved in this case is whether or
not petitioner, as the only surviving director of Impact
Corporation, can be made solely liable for the corporate
obligations of Impact Corporation pertaining to unremitted SSS
premium contributions and penalties therefore.
As a covered employer under the Social Security Law, it is the
obligation of Impact Corporation under the provisions of
Sections 18, 19 and 22 thereof, as amended, to deduct from its
duly covered employees monthly salaries their shares as
premium contributions and remit the same to the SSS, together
with the employers shares of the contributions to the petitioner,
for and in their behalf.
From all indications, the corporation has already been
dissolved. Respondents are now going after petitioner who is the
only surviving director of Impact Corporation.
A cursory review of the alleged grave errors of law committed
by the Court of Appeals above reveals there seems to be no
dispute as to the assessed liability of Impact Corporation for the
unremitted SSS premiums of its employees for the period
January 1980 to December 1984.
There is also no dispute as to the fact that the employees SSS
premium contributions have been deducted from their salaries
by Impact Corporation.
Petitioner in assailing the Court of Appeals Decision,
distinguishes the penalties from the unremitted or unpaid SSS
premium contributions. She points out that although the
appellate court is of the opinion that the concerned officers of an
employer corporation are liable for the penaltiesfor non-
remittance of premiums, it still affirmed the SSC Resolution
holding petitioner liable for the unpaid SSS premium
contributions in addition to the penalties.
Petitioner avers that under the aforesaid provision, the
liability does not include liability for the unremitted SSS
premium contributions.
Petitioners argument is ridiculous. The interpretation
petitioner would like us to adopt finds no support in law or in
470
470 SUPREME COURT
REPORTS
ANNOTATED
Collection
jurisprudence. While the Court of Appeals Decision provided
that Section 28(f) refers to the liabilities pertaining to penalty
for the non-remittance of SSS employee contributions, holding
that it is distinct from the amount of the supposed SSS
remittances, petitioner mistakenly concluded that Section 28(f)
is applicable only to penalties and not to the liability of the
employer for the unremitted premium contributions. Clearly, a
simplistic interpretation of the law is untenable. It is a rule in
statutory construction that every part of the statute must be
interpreted with reference to the context, i.e., that every part of
the statute must be considered together with the other parts,
and kept subservient to the general intent of the whole
enactment. The liability imposed as contemplated under the
23
foregoing Section 28(f) of the Social Security Law does not

preclude the liability for the unremitted amount. Relevant to
Section 28(f) is Section 22 of the same law.
SEC. 22. Remittance of Contributions.(a) The contributions imposed
in the preceding Section shall be remitted to the SSS within the first ten
(10) days of each calendar month following the month for which they are
applicable or within such time as the Commission may prescribe. Every
employer required to deduct and to remit such contributions shall be
liable for their payment and if any contribution is not paid to the SSS as
herein prescribed, he shall pay besides the contribution a penalty
thereon of three percent (3%) per month from the date the contribution
falls due until paid. If deemed expedient and advisable by the
Commission, the collection and remittance of contributions shall be
made quarterly or semiannually in advance, the contributions payable
by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any
contribution so paid in advance but not due shall be credited or refunded
to his employer.
Under Section 22(a), every employer is required to deduct and
remit such contributions penalty refers to the 3% penalty that
automatically attaches to the delayed SSS premium
_______________
Paras v. Commission on Elections, 332 Phil. 56, 64; 264 SCRA 49, 54 (1996).
23
471
VOL. 540, 471
DECEMBER 17, 2007
Collection
contributions. The spirit, rather than the letter of a law
determines construction of a provision of law. It is a cardinal
rule in statutory construction that in interpreting the meaning
and scope of a term used in the law, a careful review of
the whole law involved, as well as the intendment of the law,
must be made. Nowhere in the provision or in the Decision can
24
it be inferred that the persons liable are absolved from paying

the unremitted premium contributions.
Elementary is the rule that when laws or rules are clear, it is
incumbent upon the judge to apply them regardless of personal
belief or predilectionswhen the law is unambiguous and
unequivocal, application not interpretation thereof is
imperative. However, where the language of a statute is vague
25
and ambiguous, an interpretation thereof is resorted to. An

interpretation thereof is necessary in instances where a literal
interpretation would be either impossible or absurd or would
lead to an injustice. A law is deemed ambiguous when it is
capable of being understood by reasonably well-informed
persons in either of two or more senses. The fact that a law 26
admits of different interpretations is the best evidence that it is

vague and ambiguous. In the instant case, petitioner interprets
27
Section 28(f) of the Social Security Law as applicable only to

penalties and not to the liability of the employer for the
unremitted premium contributions. Respondents present a more
logical interpretation that is consistent with the provi-
_______________
24 Alpha Investigation and Security Agency, Inc. v. National Labor Relations Commission, 339
Phil. 40, 44; 272 SCRA 653, 657 (1997).
25 De Guzman, Jr. v. Sison, 407 Phil. 351, 368-369; 355 SCRA 69, 81 (2001), as cited
in Villamor Golf Club v. Pehid, G.R. No. 166152, 4 December 2005, 472 SCRA 36, 47-48.
26 Del Mar v. Phil. Amusement and Gaming Corp., 400 Phil. 307, 357; 346 SCRA 485, 529
(2000).
27 Villamor Golf Club v. Pehid, supra note 25; Abello v. Commissioner of Internal Revenue, 23
February 2005, 452 SCRA 162, 169; Chartered Bank Employees Association v. Ople, G.R. No. L-
44717, 28 August 1985, 138 SCRA 273, 281.
472
472 SUPREME COURT
REPORTS
ANNOTATED
Collection
sions as a whole and with the legislative intent behind the
Social Security Law.
This Court cannot be made to accept an interpretation that
would defeat the intent of the law and its legislators. 28
Petitioner also challenges the finding of the Court of Appeals

that under Section 28(f) of the Social Security Law, a mere
director or officer of an employer corporation, and not
necessarily a managing director or officer, can be held liable
for the unpaid SSS premium contributions.
Section 28(f) of the Social Security Law provides the follow-
ing:
(f) If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its
managing head, directors or partners shall be liable to the penalties
provided in this Act for the offense.
This Court agrees in petitioners observation that the SSS did
not even deny nor rebut the claim that petitioner was not the
managing head of Impact Corporation. However, the Court of
Appeals rightly held that petitioner, as a director of Impact
Corporation, is among those officers covered by Section 28(f) of
the Social Security Law.
Petitioner invokes the rule in statutory construction
called ejusdem generic; that is, where general words follow an
enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in
their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically
mentioned. According to petitioner, to be held liable under
Section 28(f) of the Social Security Law, one must be the
managing head, managing director, or managing partner.
This Court though finds no need to resort to statu-
_______________
Escosura v. San Miguel Brewery, Inc., 114 Phil. 225; 4 SCRA 285 (1962).
28
473
VOL. 540, 473
DECEMBER 17, 2007
Collection
tory construction. Section 28(f) of the Social Security Law
imposes penalty on:
1. (1)the managing head;
2. (2)directors; or
3. (3)partners, for offenses committed by a juridical person
The said provision does not qualify that the director or partner
should likewise be a managing director or managing
partner. The law is clear and unambiguous.
29
Petitioner nonetheless raises the defense that under Section

31 of the Corporation Code, only directors, trustees or officers
who participate in unlawful acts or are guilty of gross negligence
and bad faith shall be personally liable, and that being a mere
stockholder, she is liable only to the extent of her subscription.
Section 31 of the Corporation Code, stipulating on the liability
of directors, trustees, or officers, provides:
SEC. 31. Liability of directors, trustees or officers.Directors or trustees
who willfully and knowingly vote for or assent to patently unlawful acts
of the corporation or who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty as such directors, or
trustees shall be liable jointly and severally for all damages resulting
therefrom suffered by the corporation, its stockholders or members and
other persons.
Basic is the rule that a corporation is invested by law with a
personality separate and distinct from that of the persons
composing it as well as from that of any other legal entity to
which it may be related. A corporation is a juridical entity with
legal personality separate and distinct from those acting for and
in its behalf and, in general, from the people comprising it.
Following this, the general rule applied is that obligations
incurred by the corporation, acting through its directors,
_______________
Decision, page 8.
29
474
474 SUPREME COURT
REPORTS
ANNOTATED
Collection
officers and employees, are its sole liabilities. A director, officer,
30
and employee of a corporation are generally not held personally

liable for obligations incurred by the corporation.
Being a mere fiction of law, however, there are peculiar
situations or valid grounds that can exist to warrant the
disregard of its independent being and the lifting of the
corporate veil. This situation might arise when a corporation is
used to evade a just and due obligation or to justify a wrong, to
shield or perpetrate fraud, to carry out other similar
unjustifiable aims or intentions, or as a subterfuge to commit
injustice and so circumvent the law. Thus, Section 31 of the
31
Corporation Law provides:

Taking a cue from the above provision, a corporate director, a
trustee or an officer, may be held solidarily liable with the
corporation in the following instances:
1. 1.When directors and trustees or, in appropriate cases, the
officers of a corporation
1. (a)vote for or assent to patently unlawful acts of the
corporation;
2. (b)act in bad faith or with gross negligence in directing the
corporate affairs;
3. (c)are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other
persons.
1. 2.When a director or officer has consented to the issuance
of watered stocks or who, having knowledge thereof, did not
forthwith file with the corporate secretary his written
objection thereto.
2. 3.When a director, trustee or officer has contractually
agreed or stipulated to hold himself personally and
solidarily liable with the Corporation.
_______________
30 Uichico v. National Labor Relations Commission, 339 Phil. 242, 252; 273 SCRA 35, 45
(1997), citing Santos v. National Labor Relations Commission, 325 Phil. 145, 158; 254 SCRA 673,
681 (1996).
31 Santos v. National Labor Relations Commission, id.
475
VOL. 540, 475
DECEMBER 17, 2007
Collection
1. 4.When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action. 32
The aforesaid provision states:

SEC. 31. Liability of directors, trustees or officers.Directors or trustees
who willfully and knowingly vote for or assent to patently unlawful acts
of the corporation or who are guilty of gross negligence or bad faith in
directing the affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty as such directors, or
trustees shall be liable jointly and severally for all damages resulting
therefrom suffered by the corporation, its stockholders or members and
other persons.
The situation of petitioner, as a director of Impact Corporation
when said corporation failed to remit the SSS premium
contributions falls exactly under the fourth situation. Section
28(f) of the Social Security Law imposes a civil liability for any
act or omission pertaining to the violation of the Social Security
Law, to wit:
(f) If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its
managing head, directors or partners shall be liable to the penalties
provided in this Act for the offense.
In fact, criminal actions for violations of the Social Security Law
are also provided under the Revised Penal Code. The Social
Security Law provides, in Section 28 thereof, to wit:
(h) Any employer who, after deducting the monthly contributions or
loan amortizations from his employees compensation, fails to remit the
said deductions to the SSS within thirty (30) days from the date they
became due shall be presumed to have misappropriated such
contributions or loan amortizations and shall suffer the penalties
provided in Article Three hundred fifteen of the Revised Penal Code.
_______________
Philex Gold Philippines, Inc. v. Philex Bulawan Supervisors Union, G.R. No. 149758, 25
32
August 2005, 468 SCRA 111, 124.

476
476 SUPREME COURT
REPORTS
ANNOTATED
Collection
(i) Criminal action arising from a violation of the provisions of this Act
may be commenced by the SSS or the employee concerned either under
this Act or in appropriate cases under the Revised Penal Code: x x x.
Respondents would like this Court to apply another exception to
the rule that the persons comprising a corporation are not
personally liable for acts done in the performance of their duties.
The Court of Appeals in the appealed Decision stated:
Anent the unpaid SSS contributions of Impact Corporations employees,
the officers of a corporation are liable in behalf of a corporation, which
no longer exists or has ceased operations. Although as a rule, the officers
and members of a corporation are not personally liable for acts done in
performance of their duties, this rule admits of exception, one of which is
when the employer corporation is no longer existing and is unable to
satisfy the judgment in favor of the employee, the officers should be held
liable for acting on behalf of the corporation. Following the foregoing
pronouncement, petitioner, as one of the directors of Impact Corporation,
together with the other directors of the defunct corporation, are liable for
the unpaid SSS contributions of their employees. 33
On the other hand, the SSC, in its Resolution, presented this

discussion:
Although as a rule, the officers and members of a corporation are not
personally liable for acts done in the performance of their duties, this
rule admits of exceptions, one of which is when the employer corporation
is no longer existing and is unable to satisfy the judgment in favor of the
employee, the officers should be held liable for acting on behalf of the
corporation. x x x.
34
The rationale cited by respondents in the two preceding

paragraphs need not have been applied because the personal
liability for the unremitted SSS premium contributions and
_______________
Rollo, p. 39.
33
Id., at p. 66.
34
477
VOL. 540, 477
DECEMBER 17, 2007
Collection
the late penalty thereof attaches to the petitioner as a director of
Impact Corporation during the period the amounts became due
and demandable by virtue of a direct provision of law.
Petitioners defense that since Impact Corporation suffered
irreversible economic losses, and by reason of fortuitous events,
she should be absolved from liability, is also untenable. The
evidence adduced totally belies this claim. A reference to the
copy of the Petition for Suspension of Payments filed by Impact
Corporation on 18 March 1983 before the SEC contained an
admission that:
[I]t has been and still is engaged in business and has been and still is
engaged in the business of manufacturing aluminum tube containers
and in brief, it is an on-going, viable, and profitable enterprise which
has sufficient assets and actual and potential income-generation
capabilities.
The foregoing document negates petitioners assertion and
supports the contention that during the period involved Impact
Corporation was still engaged in business and was an ongoing,
viable, profitable enterprise. In fact, the latest SSS form RIA
submitted by Impact Corporation is dated 7 May 1984. The
assessed SSS premium contributions and penalty are obligations
imposed upon Impact Corporation by law, and should have been
remitted to the SSS within the first 10 days of each calendar
month following the month for which they are applicable or
within such time as the SSC prescribes. 35
This Court also notes the evident failure on the part of SSS to
issue a judgment in default against Ricardo de Leon, who was
the vice-president and officer of the corporation, upon his non-
filing of a responsive pleading after summons was served
_______________
35 The contributions imposed in the preceding section shall be remitted to the SSS within the
first ten (10) days of each calendar month following the month for which they are applicable or
within such time as the Commission may prescribe... (Section 22, R. A. No. 8282 SSS Law).
478
478 SUPREME COURT
REPORTS
ANNOTATED
Collection
on him. As can be gleaned from Section 11 of the SSS Revised
Rules of Procedure, the Commissioner is mandated to render a
decision either granting or denying the petition. Under the
aforesaid provision, if respondent fails to answer within the time
prescribed, the Hearing Commissioner may, upon motion of
petitioner, or motu proprio, declare respondent in default and
proceed to receive petitioners evidence ex parteand thereafter
recommend to the Commission either the granting or denial of
the petition as the evidence may warrant. 36
On a final note, this Court sees it proper to quote verbatim

respondents prefatory statement in their Comment:
The Social Security System is a government agency imbued with a
salutary purpose to carry out the policy of the State to establish,
develop, promote and perfect a sound and viable tax exempt social
security system suitable to the needs of the people throughout the
Philippines which shall promote social justice and provide meaningful
protection to members and their beneficiaries against the hazards of
disability, sickness, maternity, old-age, death and other contingencies
resulting in loss of income or financial burden.
The soundness and viability of the funds of the SSS in turn depends
on the contributions of its covered employee and employer members,
which it invests in order to deliver the basic social benefits and
privileges to its members. The entitlement to and amount of benefits and
privileges of the covered members are contribution-based. Both the
soundness and viability of the funds of the SSS as well as the
entitlement and amount of benefits and privileges of its members are
adversely affected to a great extent by the non-remittance of the much-
needed contributions. 37
The sympathy of the law on social security is toward its

beneficiaries. This Court will not turn a blind eye on the per-
petration of injustice. This Court cannot and will not allow itself
to be made an instrument nor be privy to any attempt at the
perpetration of injustice.
_______________
Section 11, SSS Rules of Procedure.

36
Rollo, pp. 51-52.

37
479
VOL. 540, 479
DECEMBER 17, 2007
Collection
Following the doctrine laid down in Laguna Transportation Co.,
Inc. v. Social Security System, this Court rules that although a
38
corporation once formed is conferred a juridical personality

separate and distinct from the persons comprising it, it is but a
legal fiction introduced for purposes of convenience and to
subserve the ends of justice. The concept cannot be extended to a
point beyond its reasons and policy, and when invoked in
support of an end subversive of this policy, will be disregarded
by the courts.
WHEREFORE, pursuant to the foregoing, the Decision of the
Court of Appeals dated 2 June 2005 in CA-G.R. SP No. 85923 is
hereby AFFIRMED WITH FINALITY. Petitioner Immaculada
L. Garcia, as sole surviving director of Impact Corporation is
hereby ORDERED to pay for the collected and unremitted SSS
contributions of Impact Corporation. The case is REMANDED to
the SSS for computation of the exact amount and collection
thereof.
SO ORDERED
Ynares-Santiago(Chairperson), Austria-
Martinez, Nachura and Reyes, JJ., concur.
Judgment affirmed with finality.
Notes.It is a canon of legal hermeneutics that instead of
pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them,
remembering that both laws deserve a becoming respect as the
handiwork of a coordinate branch of the government. (Magtajas
vs. Pryce Properties Corporation, Inc., 234 SCRA 255 [1994])
Section 8(j)(5) of R.A. No. 1161, as amended, simply defines
the term employment and does not in any way relate to the
scope of coverage of the Social Security System. (Sta. Rita vs.
Court of Appeals, 247 SCRA 484[1995])
_______________
107 Phil. 833 (1960).

38
480
480 SUPREME COURT
REPORTS
ANNOTATED
Estate of Rogelio G. Ong
vs. Diaz
A farm laborer who has worked exclusively for a sugar
plantation for eighteen (18) years is entitled to compulsory
coverage under the Social Security Law, whether his service was
continuous or broken. (Social Security System vs. Court of
Appeals, 348 SCRA 1 [2000])
o0o

Consti Cases Art12 13

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Consti Cases Art12 13

Uploaded by

Copyright:

Available Formats

G.R. No. 195670. December 3, 2012.

Rule 45 of the Rules of Court assailing the October 8, 2009

Appeals (CA) in CA-G.R. CV No. 01940, which affirmed the

Negros Oriental, Branch 34 in Civil Case No. 12884. The

distribution of the following described properties claimed to

submitted a joint affidavit executed by her and petitioner

respondent sought the dismissal of the petition for dissolution as

During trial, petitioner testified that while Lots 1, 2142, 5845

not have sufficient income to pay for their acquisition. He also

asserted that after she filed for annulment of their marriage in

The RTC Ruling

It ruled that, regardless of the source of funds for the

sworn statements petitioner executed purporting to show that

reimbursement for the amount he had paid to purchase the

On October 8, 2009, the CA promulgated a

Negros Oriental, Branch 34. The CA stressed the fact that

invoke equity to support his claim for reimbursement.

The Ruling of the Court

reimbursement of the value of purchased parcels of Philippine

Article XII of the 1987 Philippine Constitution which reads:

asseverated that, because of such prohibition, he and respondent

petitioners actuations showed his palpable intent to skirt the

In this case, petitioners statements regarding the real source

personal disability funds were used to acquire the same.

the law is null and void, vests no rights, creates no obligations

Article 1412 of the Civil Code, petitioner cannot have the

rights from an unconstitutional transaction knowingly entered

in Frenzel v. Catito, a case also involving a foreigner seeking

Nor would the denial of his claim amount to an injustice based

which demarcates the rights of citizens and non-

Lim, Orlando Fua, Jr., Prospero Amatong, Sergio Apostol,**

Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales,

Jaime Jacob, Apolinario

Montemayor, Ma. Elena Palma-Gil, Prospero Pichay, Juan

Miguel Zubiri and Franklin Bautista, all members of the House

or locus standi refers to the right of a party to come to a court of

or is about to be denied some right or privilege to which he is

Here, there is no clear showing that the implementation of the

the rule on standing can be relaxed for nontraditional plaintiffs

Two. Petitioners mainly argue that R.A. 8762 violates the

provisions of Article II of the 1987 Constitution, the declarations

7 338 Phil. 546, 580-581; 272 SCRA 18, 54 (1997).

8 Id., at p. 584; pp. 57-58.

world, is to strike a balance between protecting local businesses

an interest in preventing alien control of the retail trade and

10 Id., at p. 585; p. 59.

MANILA PRINCE HOTEL, petitioner, vs. GOVERNMENT

PADILLA, J ., Concurring Opinion:

MENDOZA, J., Concurring in the Judgment:

TORRES, JR., J., Separate Opinion:

PUNO, J., Dissenting Opinion:

PANGANIBAN, J., Dissenting Opinion:

acquire 51% of the shares of the Manila Hotel Corporation

1See Sec. 10, par. 2, Art. XII, 1987 Constitution.

bidders participated: petitioner Manila Prince Hotel

1. a.The Highest Bidder must negotiate and execute with the

1.a.Execution of the necessary contracts with GSIS/MHC not later than

Pending the declaration of Renong Berhad as the winning

October 1995 petitioner sent a managers check issued by

respondent GSIS refused to accept.

of the MHC carries with it the ownership of the business of the

It is also the thesis of petitioner that since Manila Hotel is

Second. granting that this provision is self-executing, Manila