Philippine Territory

MAGALLONA v. ERMITA, G.R. 187167, August 16, 2011

Facts:
In 1961, Congress passed R.A. 3046 demarcating the maritime baselines of the
Philippines as an Archepelagic State pursuant to UNCLOS I of 9158, codifying the
sovereignty of State parties over their territorial sea. Then in 1968, it was amended
by R.A. 5446, correcting some errors in R.A. 3046 reserving the drawing of baselines
around Sabah.
In 2009, it was again amended by R.A. 9522, to be compliant with the UNCLOS III of
1984. The requirements complied with are: to shorten one baseline, to optimize the
location of some basepoints and classify KIG and Scarborough Shoal as ‘regime of
islands’.
Petitioner now assails the constitutionality of the law for three main reasons:
1. it reduces the Philippine maritime territory under Article 1;
2. it opens the country’s waters to innocent and sea lanes passages hence
undermining our sovereignty and security; and
3. treating KIG and Scarborough as ‘regime of islands’ would weaken our claim over
those territories.
Issue: Whether R.A. 9522 is constitutional?

Ruling:
1. UNCLOS III has nothing to do with acquisition or loss of territory. it is just a
codified norm that regulates conduct of States. On the other hand, RA 9522 is a
baseline law to mark out basepoints along coasts, serving as geographic starting
points to measure. it merely notices the international community of the scope of our
maritime space.
2. If passages is the issue, domestically, the legislature can enact legislation
designating routes within the archipelagic waters to regulate innocent and sea lanes
passages. but in the absence of such, international law norms operate.
the fact that for archipelagic states, their waters are subject to both passages does
not place them in lesser footing vis a vis continental coastal states. Moreover, RIOP is
a customary international law, no modern state can invoke its sovereignty to forbid
such passage.
3. On the KIG issue, RA 9522 merely followed the basepoints mapped by RA 3046
and in fact, it increased the Phils.’ total maritime space. Moreover, the itself commits
the Phils.’ continues claim of sovereignty and jurisdiction over KIG.
If not, it would be a breach to 2 provisions of the UNCLOS III:
Art. 47 (3): ‘drawing of basepoints shall not depart to any appreciable extent from
the general configuration of the archipelago’.
Art 47 (2): the length of baselines shall not exceed 100 mm.
KIG and SS are far from our baselines, if we draw to include them, we’ll breach the
rules: that it should follow the natural configuration of the archipelago.

G.R. No. 183591 October 14 2008

Province of North Cotabato vs Government of the Republic of the Philippines

FACTS:
On August 5, 2008, the Government of the Republic of the Philippines and the Moro
Islamic Liberation Front (MILF) were scheduled to sign a Memorandum of
Agreement of the Ancestral Domain Aspect of the GRP - MILF Tripoli Agreement on
Peace of 2001 in Kuala Lumpur, Malaysia.
Invoking the right to information on matters of public concern, the petitioners seek
to compel respondents to disclose and furnish them the complete and official copies
of the MA-AD and to prohibit the slated signing of the MOA-AD and the holding of
public consultation thereon. They also pray that the MOA-AD be declared
unconstitutional. The Court issued a TRO enjoining the GRP from signing the same.

ISSUES:
1. Whether or not the constitutionality and the legality of the MOA is ripe for
adjudication;
2. Whether or not there is a violation of the people's right to information on matters
of public concern (Art 3 Sec. 7) under a state policy of full disclosure of all its
transactions involving public interest (Art 2, Sec 28) including public consultation
under RA 7160 (Local Government Code of 1991)
3. Whether or not the signing of the MOA, the Government of the Republic of the
Philippines would be binding itself
a) to create and recognize the Bangsamoro Juridical Entity (BJE) as a separate state,
or a juridical, territorial or political subdivision not recognized by law;
b) to revise or amend the Constitution and existing laws to conform to the MOA;
c) to concede to or recognize the claim of the Moro Islamic Liberation Front for
ancestral domain in violation of Republic Act No. 8371 (THE INDIGENOUS PEOPLES
RIGHTS ACT OF 1997),
particularly Section 3(g) & Chapter VII (DELINEATION,
RECOGNITION OF ANCESTRAL DOMAINS)

RULINGS:
1. Yes, the petitions are ripe for adjudication. The failure of the respondents to
consult the local government units or communities affected constitutes a departure
by respondents from their mandate under EO No. 3. Moreover, the respondents
exceeded their authority by the mere act of guaranteeing amendments to the
Constitution. Any alleged violation of the Constitution by any branch of government
is a proper matter for judicial review.
As the petitions involve constitutional issues which are of paramount public interest
or of transcendental importance, the Court grants the petitioners,
petitioners-in-intervention and intervening respondents the requisite locus standi in
keeping with the liberal stance adopted in David v. Macapagal- Arroyo.
In Pimentel, Jr. v. Aguirre, this Court held:
x x x [B]y the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversy even
without any other overt act . Indeed, even a singular violation of the Constitution
and/or the law is enough to awaken judicial duty.x x x x
By the same token, when an act of the President, who in our constitutional scheme is
a coequal of Congress, is seriously alleged to have infringed the Constitution and the
laws x x x settling the dispute becomes the duty and the responsibility of the courts.
That the law or act in question is not yet effective does not negate ripeness.

2. Yes. The Court finds that there is a grave violation of the Constitution involved in
the matters of public concern (Sec 7 Art III) under a state policy of full disclosure of
all its transactions involving public interest (Art 2, Sec 28) including public
consultation under RA 7160 (Local Government Code of 1991).
(Sec 7 ArtIII) The right to information guarantees the right of the people to demand
information, while Sec 28 recognizes the duty of officialdom to give information
even if nobody demands. The complete and effective exercise of the right to
information necessitates that its complementary provision on public disclosure
derive the same self-executory nature, subject only to reasonable safeguards or
limitations as may be provided by law.
The contents of the MOA-AD is a matter of paramount public concern involving
public interest in the highest order. In declaring that the right to information
contemplates steps and negotiations leading to the consummation of the contract,
jurisprudence finds no distinction as to the executory nature or commercial
character of the agreement.
E.O. No. 3 itself is replete with mechanics for continuing consultations on both
national and local levels and for a principal forum for consensus-building. In fact, it is
the duty of the Presidential Adviser on the Peace Process to conduct regular
dialogues to seek relevant information, comments, advice, and recommendations
from peace partners and concerned sectors of society.

3.
a) to create and recognize the Bangsamoro Juridical Entity (BJE) as a separate state,
or a juridical, territorial or political subdivision not recognized by law;

Yes. The provisions of the MOA indicate, among other things, that the Parties aimed
to vest in the BJE the status of an associated state or, at any rate, a status closely
approximating it.
The concept of association is not recognized under the present Constitution.

No province, city, or municipality, not even the ARMM, is recognized under our laws
as having an “associative” relationship with the national government. Indeed, the
concept implies powers that go beyond anything ever granted by the Constitution to
any local or regional government. It also implies the recognition of the associated
entity as a state. The Constitution, however, does not contemplate any state in this
jurisdiction other than the Philippine State, much less does it provide for a transitory
status that aims to prepare any part of Philippine territory for independence.

The BJE is a far more powerful entity than the autonomous region recognized in the
Constitution. It is not merely an expanded version of the ARMM, the status of its
relationship with the national government being fundamentally different from that
of the ARMM. Indeed, BJE is a state in all but name as it meets the criteria of a state
laid down in the Montevideo Convention, namely, a permanent population, a
defined territory, a government, and a capacity to enter into relations with other
states.

Even assuming arguendo that the MOA-AD would not necessarily sever any portion
of Philippine territory, the spirit animating it – which has betrayed itself by its use of
the concept of association – runs counter to the national sovereignty and territorial
integrity of the Republic.

The defining concept underlying the relationship between the national government
and the BJE being itself contrary to the present Constitution, it is not surprising that
many of the specific provisions of the MOA-AD on the formation and powers of the
BJE are in conflict with the Constitution and the laws. The BJE is more of a state than
an autonomous region. But even assuming that it is covered by the term
“autonomous region” in the constitutional provision just quoted, the MOA-AD would
still be in conflict with it.

b) to revise or amend the Constitution and existing laws to conform to the MOA:

The MOA-AD provides that “any provisions of the MOA-AD requiring amendments to
the existing legal framework shall come into force upon the signing of a
Comprehensive Compact and upon effecting the necessary changes to the legal
framework,” implying an amendment of the Constitution to accommodate the
MOA-AD. This stipulation, in effect, guaranteed to the MILF the amendment of the
Constitution .

It will be observed that the President has authority, as stated in her oath of office,
only to preserve and defend the Constitution. Such presidential power does not,
however, extend to allowing her to change the Constitution, but simply to
recommend proposed amendments or revision. As long as she limits herself to
recommending these changes and submits to the proper procedure for
constitutional amendments and revision, her mere recommendation need not be
construed as an unconstitutional act.

The “suspensive clause” in the MOA-AD viewed in light of the above-discussed

standards.
Given the limited nature of the President’s authority to propose constitutional
amendments, she cannot guarantee to any third party that the required
amendments will eventually be put in place, nor even be submitted to a
plebiscite. The most she could do is submit these proposals as recommendations
either to Congress or the people, in whom constituent powers are vested.

c) to concede to or recognize the claim of the Moro Islamic Liberation Front for
ancestral domain in violation of Republic Act No. 8371 (THE INDIGENOUS PEOPLES
RIGHTS ACT OF 1997),
particularly Section 3(g) & Chapter VII (DELINEATION,
RECOGNITION OF ANCESTRAL DOMAINS)
This strand begins with the statement that it is “the birthright of all Moros and all
Indigenous peoples of Mindanao to identify themselves and be accepted as
‘Bangsamoros.’” It defines “Bangsamoro people” as the natives or original
inhabitants of Mindanao and its adjacent islands including Palawan and the Sulu
archipelago at the time of conquest or colonization, and their descendants whether
mixed or of full blood, including their spouses.

Thus, the concept of “Bangsamoro,” as defined in this strand of the MOA-AD,

includes not only “Moros” as traditionally understood even by Muslims, but all
indigenous peoples of Mindanao and its adjacent islands. The MOA-AD adds that the
freedom of choice of indigenous peoples shall be respected. What this freedom of
choice consists in has not been specifically defined. The MOA-AD proceeds to refer
to the “Bangsamoro homeland,” the ownership of which is vested exclusively in the
Bangsamoro people by virtue of their prior rights of occupation. Both parties to the
MOA-AD acknowledge that ancestral domain does not form part of the public
domain.

Republic Act No. 8371 or the Indigenous Peoples Rights Act of 1997 provides for
clear-cut procedure for the recognition and delineation of ancestral domain, which
entails, among other things, the observance of the free and prior informed consent
of the Indigenous Cultural Communities/Indigenous Peoples. Notably, the statute
does not grant the Executive Department or any government agency the power to
delineate and recognize an ancestral domain claim by mere agreement or
compromise.
Two, Republic Act No. 7160 or the Local Government Code of 1991 requires all
national offices to conduct consultations beforeany project or program critical to the
environment and human ecology including those that may call for the eviction of a
particular group of people residing in such locality, is implemented therein. The
MOA-AD is one peculiar program that unequivocally and unilaterally vests ownership
of a vast territory to the Bangsamoro people, which could pervasively and drastically
result to the diaspora or displacement of a great number of inhabitants from their
total environment.

CONCLUSION:
In sum, the Presidential Adviser on the Peace Process committed grave abuse of
discretion when he failed to carry out the pertinent consultation process, as
mandated by E.O. No. 3, Republic Act No. 7160, and Republic Act No. 8371. The
furtive process by which the MOA-AD was designed and crafted runs contrary to and
in excess of the legal authority, and amounts to a whimsical, capricious, oppressive,
arbitrary and despotic exercise thereof. It illustrates a gross evasion of positive duty
and a virtual refusal to perform the duty enjoined.

The MOA-AD cannot be reconciled with the present Constitution and laws. Not only
its specific provisions but the very concept underlying them, namely, the associative
relationship envisioned between the GRP and the BJE, are unconstitutional, for the
concept presupposes that the associated entity is a state and implies that the same
is on its way to independence.
 Principles of States and Policies
KILOSBAYAN VS. MORATO

G.R. NO. 118910. July 30, 1993

KILOSBAYAN, INCORPORATED, JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C.

CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE,
CHRISTINE TAN, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S.
DOROMAL, SEN. FREDDIE WEBB, SEN. WIGBERTO TAÑADA, REP. JOKER P. ARROYO, petitioners,
vs.
MANUEL L. MORATO, in his capacity as Chairman of the Philippine Charity Sweepstakes Office, and
the PHILIPPINE GAMING MANAGEMENT CORPORATION, respondents.

Facts:

1. GR 113375 (KIlosbayan vs. Guingona) held invalidity of the contract between Philippine
Charity Sweepstakes Office (PCSO) and the privately owned Philippine Gaming Management
Corporation (PGMC) for the operation of a nationwide on-line lottery system. The contract violated
the provision in the PCSO Charter which prohibits PCSO from holding and conducting lotteries
through a collaboration, association, or joint venture.
2. Both parties again signed an Equipment Lease Agreement (ELA) for online lottery equipment
and accessories on January 25, 1995. The agreement are as follow:
1. Rental is 4.3% of gross amount of ticket sales by PCSO at which in no case be less than
an annual rental computed at P35,000 per terminal in commercial operation.
2. Rent is computed bi-weekly.
3. Term is 8 years.
4. PCSO is to employ its own personnel and responsible for the facilities.
5. Upon expiration of term, PCSO can purchase the equipment at P25M.
3. Kilosbayan again filed a petition to declare amended ELA invalid because:

1. It is the same as the old contract of lease.

2. It is still violative of PCSO’s charter.
3. It is violative of the law regarding public bidding. It has not been approved by the
President and it is not most advantageous to the government.
4. PCSO and PGMC filed separate comments

1. ELA is a different lease contract with none of the vestiges in the prior contract.
2. ELA is not subject to public bidding because it fell in the exception provided in EO No.
301.
3. Power to determine if ELA is advantageous vests in the Board of Directors of PCSO.
4. Lack of funds. PCSO cannot purchase its own online lottery equipment.
5. Petitioners seek to further their moral crusade.
6. Petitioners do not have a legal standing because they were not parties to the
contract.
Issues:

1. Whether or not petitioner Kilosbayan, Incorporated has a legal standing to sue.

2. Whether or not the ELA between PCSO and PGMC in operating an online lottery is valid.

Rulings:

In the resolution of the case, the Court held that:

1. Petitioners do not have a legal standing to sue.

1. STARE DECISIS cannot apply. The previous ruling sustaining the standing of the
petitioners is a departure from the settled rulings on real parties in interest because no
constitutional issues were actually involved.
2. LAW OF THE CASE (opinion delivered on a former appeal) cannot also apply. Since
the present case is not the same one litigated by the parties before in Kilosbayan vs. Guingona,
Jr., the ruling cannot be in any sense be regarded as “the law of this case”. The parties are the
same but the cases are not.
3. RULE ON “CONCLUSIVENESS OF JUDGMENT” cannot still apply. An issue actually
and directly passed upon and determine in a former suit cannot again be drawn in question in
any future action between the same parties involving a different cause of action. But the rule
does not apply to issues of law at least when substantially unrelated claims are involved. When
the second proceeding involves an instrument or transaction identical with, but in a form
separable from the one dealt with in the first proceeding, the Court is free in the second
proceeding to make an independent examination of the legal matters at issue.
4. Since ELA is a different contract, the previous decision does not preclude
determination of the petitioner’s standing.
5. Standing is a concept in constitutional law and here no constitutional question is
actually involved. The more appropriate issue is whether the petitioners are ‘real parties of
interest’.
6. Question of contract of law: The real parties are those who are parties to the
agreement or are bound either principally or are prejudiced in their rights with respect to one
of the contracting parties and can show the detriment which would positively result to them
from the contract.
7. Petitioners do not have such present substantial interest. Questions to the nature or
validity of public contracts maybe made before COA or before the Ombudsman.
2. Equipment Lease Agreement (ELA) is valid.

1. It is different with the prior lease agreement: PCSO now bears all losses because the
operation of the system is completely in its hands.
2. Fixing the rental rate to a minimum is a matter of business judgment and the Court
is not inclined to review.
3. Rental rate is within the 15% net receipts fixed by law as a maximum. (4.3% of gross
receipt is discussed in the dissenting opinion of Feliciano, J.)
4. In the contract, it stated that the parties can change their agreement. Petitioners
state that this would allow PGMC to control and operate the on-line lottery system. The Court
 held that the claim is speculative. In any case, in the construction of statutes, the resumption is
that in making contracts, the government has acted in good faith. The doctrine that the
possibility of abuse is not a reason for denying power.
5. It was held in Kilosbayan Vs. Guingona that PCSO does not have the power to enter
into any contract which would involve it in any form of “collaboration, association, or joint
venture” for the holding of sweepstakes activities. This only mentions that PCSO is prohibited
from investing in any activities that would compete in their own activities.
6. It is claimed that ELA is a joint venture agreement which does not compete with
their own activities. The Court held that is also based on speculation. Evidence is needed to show
that the transfer of technology would involve the PCSO and its personnel in prohibited
association with the PGMC.
7. O. 301 (on law of public bidding) applies only to contracts for the purchase of supplies,
materials and equipment and not on the contracts of lease. Public bidding for leases are only for
privately-owned buildings or spaces for government use or of government owned buildings or
spaces for private use.

Petitioners have no standing. ELA is a valid lease contract. The motion for reconsideration of petitioners
is DENIED with finality.
TANADA v. ANGARA
October 26, 2012 § Leave a comment
272 SCRA 18, May 2, 1997
Facts :
This is a petition seeking to nullify the Philippine ratification of the World Trade
Organization (WTO) Agreement. Petitioners question the concurrence of herein
respondents acting in their capacities as Senators via signing the said agreement.
The WTO opens access to foreign markets, especially its major trading partners,
through the reduction of tariffs on its exports, particularly agricultural and industrial
products. Thus, provides new opportunities for the service sector cost and
uncertainty associated with exporting and more investment in the country. These
are the predicted benefits as reflected in the agreement and as viewed by the
signatory Senators, a “free market” espoused by WTO.
Petitioners on the other hand viewed the WTO agreement as one that limits,
restricts and impair Philippine economic sovereignty and legislative power. That the
Filipino First policy of the Constitution was taken for granted as it gives foreign
trading intervention.
Issue : Whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of the Senate in giving its concurrence of the said
WTO agreement.
Held:
In its Declaration of Principles and state policies, the Constitution “adopts the
generally accepted principles of international law as part of the law of the land, and
adheres to the policy of peace, equality, justice, freedom, cooperation and amity ,
with all nations. By the doctrine of incorporation, the country is bound by generally
accepted principles of international law, which are considered automatically part of
our own laws. Pacta sunt servanda – international agreements must be performed in
good faith. A treaty is not a mere moral obligation but creates a legally binding
obligation on the parties.
Through WTO the sovereignty of the state cannot in fact and reality be considered as
absolute because it is a regulation of commercial relations among nations. Such as
when Philippines joined the United Nations (UN) it consented to restrict its
sovereignty right under the “concept of sovereignty as autolimitation.” What Senate
did was a valid exercise of authority. As to determine whether such exercise is wise,
beneficial or viable is outside the realm of judicial inquiry and review. The act of
signing the said agreement is not a legislative restriction as WTO allows withdrawal
of membership should this be the political desire of a member. Also, it should not be
viewed as a limitation of economic sovereignty. WTO remains as the only viable
structure for multilateral trading and the veritable forum for the development of
international trade law. Its alternative is isolation, stagnation if not economic
self-destruction. Thus, the people be allowed, through their duly elected officers,
make their free choice.
Petition is DISMISSED for lack of merit.

Petitioner-Organizations, namely: G.R. Nos. 147036-37

PAMBANSANG KOALISYON NG MGA
SAMAHANG MAGSASAKA AT MANGGAGAWA
SA NIYUGAN (PKSMMN), COCONUT INDUSTRY
REFORM MOVEMENT (COIR), BUKLOD NG
MALAYANG MAGBUBUKID, PAMBANSANG
KILUSAN NG MGA SAMAHANG MAGSASAKA
(PAKISAMA), CENTER FOR AGRARIAN REFORM,
EMPOWERMENT AND TRANSFORMATION
(CARET), PAMBANSANG KATIPUNAN NG MGA
SAMAHAN SA KANAYUNAN (PKSK); Petitioner-
Legislator: REPRESENTATIVE LORETA ANN
ROSALES; and Petitioner-Individuals, namely:
VIRGILIO V. DAVID, JOSE MARIE FAUSTINO,
JOSE CONCEPCION, ROMEO ROYANDOYAN,
JOSE V. ROMERO, JR., ATTY. CAMILO L.
SABIO, and ATTY. ANTONIO T. CARPIO,
Petitioners, Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
- versus - PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, J
J.
EXECUTIVE SECRETARY, SECRETARY OF
AGRICULTURE, SECRETARY OF AGRARIAN
REFORM, PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT, THE SOLICITOR
GENERAL, PHILIPPINE COCONUT PRODUCERS
FEDERATION, INC. (COCOFED), and UNITED
COCONUT PLANTERS BANK (UCPB),
Respondents.
x ------------------------------------------------------ x

TEODORO J. AMOR, representing the Peasant G.R. No. 147811

Alliance of Samar and Leyte (PASALEY),
DOMINGO C. ENCALLADO, representing
Aniban ng Magsasaka at Manggagawa sa Niyugan
(AMMANI), and VIDAL M. PILIIN, representing
the Laguna Coalition,
Petitioners,

- versus -
EXECUTIVE SECRETARY, SECRETARY OF
AGRICULTURE, SECRETARY OF AGRARIAN
REFORM, PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT, THE SOLICITOR
GENERAL, PHILIPPINE COCONUT
PRODUCERS FEDERATION, UNITED Promulgated:
COCONUT PLANTERS BANK,
Respondents. April 10, 2012

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

DECISION

ABAD, J.:

These are consolidated petitions to declare unconstitutional certain

presidential decrees and executive orders of the martial law era relating to
the raising and use of coco-levy funds.

The Facts and the Case

On June 19, 1971 Congress enacted Republic Act (R.A.) 6260[1] that
established a Coconut Investment Fund (CI Fund) for the development of
the coconut industry through capital financing.[2]Coconut farmers were to
capitalize and administer the Fund through the Coconut Investment
Company (CIC)[3] whose objective was, among others, to advance the
coconut farmers interests. For this purpose, the law imposed a levy
of P0.55 on the coconut farmers first domestic sale of every 100
kilograms of copra, or its equivalent, for which levy he was to get a
receipt convertible into CIC shares of stock.[4]

About a year following his proclamation of martial law in the country or

on August 20, 1973 President Ferdinand E. Marcos issued Presidential
Decree (P.D.) 276,[5] which established a Coconut Consumers
Stabilization Fund (CCS Fund), to address the crisis at that time in the
domestic market for coconut-based consumer goods. The CCS Fund was
to be built up through the imposition of a P15.00-levy for every first sale
of 100 kilograms of copra resecada.[6] The levy was to cease after a year
or earlier provided the crisis was over. Any remaining balance of the
Fund was to revert to the CI Fund established under R.A. 6260.[7]
A year later or on November 14, 1974 President Marcos issued P.D.
582,[8] creating a permanent fund called the Coconut Industry
Development Fund (CID Fund) to channel for the ultimate direct benefit
of coconut farmers part of the levies that they were already paying. The
Philippine Coconut Authority (PCA) was to provide P100 million as
initial capital of the CID Fund and, thereafter, give the Fund at
least P0.20 per kilogram of copra resecada out of the PCAs collection of
coconut consumers stabilization levy. In case of the lifting of this levy,
the PCA was then to impose a permanent levy of P0.20 on the first sale of
every kilogram of copra to form part of the CID Fund.[9] Also, under P.D.
582, the Philippine National Bank (PNB), then owned by the Government,
was to receive on deposit, administer, and use the CID Fund.[10] P.D. 582
authorized the PNB to invest the unused portion of the CID Fund in
easily convertible investments, the earnings of which were to form part of
the Fund.[11]
In 1975 President Marcos enacted P.D. 755[12] which approved the
acquisition of a commercial bank for the benefit of the coconut farmers to
enable such bank to promptly and efficiently realize the industrys credit
policy.[13] Thus, the PCA bought 72.2% of the shares of stock of First
United Bank, headed by Pedro Cojuangco.[14] Due to changes in its
corporate identity and purpose, the banks articles of incorporation were
amended in July 1975, resulting in a change in the banks name from First
United Bank to United Coconut Planters Bank (UCPB).[15]

On July 14, 1976 President Marcos enacted P.D. 961,[16] the Coconut
Industry Code, which consolidated and codified existing laws relating to
the coconut industry. The Code provided that surpluses from the CCS
Fund and the CID Fund collections, not used for replanting and other
authorized purposes, were to be invested by acquiring shares of stock of
corporations, including the San Miguel Corporation (SMC), engaged in
undertakings related to the coconut and palm oil industries.[17] UCPB was
to make such investments and equitably distribute these for free to
coconut farmers.[18]These investments constituted the Coconut Industry
Investment Fund (CIIF). P.D. 961 also provided that the coconut levy
funds (coco-levy funds) shall be owned by the coconut farmers in their
private capacities.[19] This was reiterated in the PD 1468[20] amendment of
June 11, 1978.

In 1980, President Marcos issued P.D. 1699,[21] suspending the

collections of the CCS Fund and the CID Fund. But in 1981 he issued
P.D. 1841[22] which revived the collection of coconut levies. P.D. 1841
renamed the CCS Fund into the Coconut Industry Stabilization Fund (CIS
Fund).[23] This Fund was to be earmarked proportionately among several
development programs, such as coconut hybrid replanting program,
insurance coverage for the coconut farmers, and scholarship program for
their children.[24]

In November 2000 then President Joseph Estrada issued Executive Order

(E.O.) 312,[25] establishing a Sagip Niyugan Program which sought to
provide immediate income supplement to coconut farmers and encourage
the creation of a sustainable local market demand for coconut oil and
other coconut products.[26] The Executive Order sought to establish
a P1-billion fund by disposing of assets acquired using coco-levy funds or
assets of entities supported by those funds.[27] A committee was created to
manage the fund under this program.[28] A majority vote of its members
could engage the services of a reputable auditing firm to conduct periodic
audits.[29]

At about the same time, President Estrada issued E.O. 313,[30] which
created an irrevocable trust fund known as the Coconut Trust Fund (the
Trust Fund). This aimed to provide financial assistance to coconut
farmers, to the coconut industry, and to other agri-related
programs.[31] The shares of stock of SMC were to serve as the Trust
Funds initial capital.[32] These shares were acquired with CII Funds and
constituted approximately 27% of the outstanding capital stock of
SMC. E.O. 313 designated UCPB, through its Trust Department, as the
Trust Funds trustee bank. The Trust Fund Committee would administer,
manage, and supervise the operations of the Trust Fund.[33] The
Committee would designate an external auditor to do an annual audit or
as often as needed but it may also request the Commission on Audit
(COA) to intervene.[34]
To implement its mandate, E.O. 313 directed the Presidential
Commission on Good Government, the Office of the Solicitor General,
and other government agencies to exclude the 27% CIIF SMC shares
from Civil Case 0033, entitled Republic of the Philippines v. Eduardo
Cojuangco, Jr., et al., which was then pending before the Sandiganbayan
and to lift the sequestration over those shares.[35]

On January 26, 2001, however, former President Gloria

Macapagal-Arroyo ordered the suspension of E.O.s 312 and 313.[36] This
notwithstanding, on March 1, 2001 petitioner organizations and
individuals brought the present action in G.R. 147036-37 to declare E.O.s
312 and 313 as well as Article III, Section 5 of P.D. 1468
unconstitutional. On April 24, 2001 the other sets of petitioner
organizations and individuals instituted G.R. 147811 to nullify Section 2
of P.D. 755 and Article III, Section 5 of P.D.s 961 and 1468 also for
being unconstitutional.

The Issues Presented

The parties submit the following issues for adjudication:

Procedurally

1. Whether or not petitioners special civil actions

of certiorari under Rule 65 constituted the proper remedy for their
actions; and
2. Whether or not petitioners have legal standing to bring the same
to court.

On the substance

3. Whether or not the coco-levy funds are public funds; and

4. Whether or not (a) Section 2 of P.D. 755, (b) Article III, Section
5 of P.D.s 961 and 1468, (c) E.O. 312, and (d) E.O. 313 are
unconstitutional.

The Rulings of the Court

First. UCPB questions the propriety of the present petitions

for certiorari and mandamus under Rule 65 on the ground that there are
no ongoing proceedings in any tribunal or board or before a government
official exercising judicial, quasi-judicial, or ministerial
[37]
functions. UCPB insists that the Court exercises appellate jurisdiction
with respect to issues of constitutionality or validity of laws and
presidential orders.[38]

But, as the Court previously held, where there are serious

allegations that a law has infringed the Constitution, it becomes not only
the right but the duty of the Court to look into such allegations and, when
warranted, uphold the supremacy of the Constitution.[39] Moreover,
where the issues raised are of paramount importance to the public, as in
this case, the Court has the discretion to brush aside technicalities of
procedure.[40]
 Second. The Court has to uphold petitioners right to institute these
petitions. The petitioner organizations in these cases represent coconut
farmers on whom the burden of the coco-levies attaches. It is also
primarily for their benefit that the levies were imposed.

The individual petitioners, on the other hand, join the petitions as

taxpayers. The Court recognizes their right to restrain officials from
wasting public funds through the enforcement of an unconstitutional
statute.[41] This so-called taxpayers suit is based on the theory that
expenditure of public funds for the purpose of executing an
unconstitutional act is a misapplication of such funds.[42]

Besides, the 1987 Constitution accords to the citizens a greater

participation in the affairs of government. Indeed, it provides for people's
initiative, the right to information on matters of public concern (including
the right to know the state of health of their President), as well as the right
to file cases questioning the factual bases for the suspension of the
privilege of writ of habeas corpus or declaration of martial law. These
provisions enlarge the peoples right in the political as well as the judicial
field. It grants them the right to interfere in the affairs of government and
challenge any act tending to prejudice their interest.

Third. For some time, different and conflicting notions had been
formed as to the nature and ownership of the coco-levy funds. The Court,
however, finally put an end to the dispute when it categorically ruled
in Republic of the Philippines v. COCOFED[43] that these funds are not
only affected with public interest; they are, in fact, prima facie public
funds. Prima facie means a fact presumed to be true unless disproved by
some evidence to the contrary.[44]

The Court was satisfied that the coco-levy funds were raised
pursuant to law to support a proper governmental purpose. They were
raised with the use of the police and taxing powers of the State for the
benefit of the coconut industry and its farmers in general. The COA
reviewed the use of the funds. The Bureau of Internal Revenue (BIR)
treated them as public funds and the very laws governing coconut levies
recognize their public character.[45]

The Court has also recently declared that the coco-levy funds are in
the nature of taxes and can only be used for public purpose. [46] Taxes are
enforced proportional contributions from persons and property, levied by
the State by virtue of its sovereignty for the support of the government
and for all its public needs.[47] Here, the coco-levy funds were imposed
pursuant to law, namely, R.A. 6260 and P.D. 276. The funds were
collected and managed by the PCA, an independent government
corporation directly under the President.[48] And, as the respondent public
officials pointed out, the pertinent laws used the term levy,[49] which
means to tax,[50] in describing the exaction.

Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276
did not raise money to boost the governments general funds but to
provide means for the rehabilitation and stabilization of a threatened
industry, the coconut industry, which is so affected with public interest as
to be within the police power of the State.[51] The funds sought to support
the coconut industry, one of the main economic backbones of the country,
and to secure economic benefits for the coconut farmers and farm
workers. The subject laws are akin to the sugar liens imposed by Sec. 7(b)
of P.D. 388,[52] and the oil price stabilization funds under P.D. 1956,[53] as
amended by E.O. 137.[54]

Respondent UCPB suggests that the coco-levy funds are closely

similar to the Social Security System (SSS) funds, which have been
declared to be not public funds but properties of the SSS members and
held merely in trust by the government.[55] But the SSS Law[56] collects
premium contributions. It does not collect taxes from members for a
specific public purpose. They pay contributions in exchange for insurance
protection and benefits like loans, medical or health services, and
retirement packages. The benefits accrue to every SSS member, not to the
public, in general.[57]

Furthermore, SSS members do not lose ownership of their

contributions. The government merely holds these in trust, together with
his employers contribution, to answer for his future benefits.[58] The
coco-levy funds, on the other hand, belong to the government and are
subject to its administration and disposition. Thus, these funds, including
its incomes, interests, proceeds, or profits, as well as all its assets,
properties, and shares of stocks procured with such funds must be treated,
used, administered, and managed as public funds.[59]

Lastly, the coco-levy funds are evidently special funds. In Gaston v.

Republic Planters Bank,[60] the Court held that the State collected
stabilization fees from sugar millers, planters, and producers for a special
purpose: to finance the growth and development of the sugar industry and
all its components. The fees were levied for a special purpose and,
therefore, constituted special fund when collected. Its character as such
fund was made clear by the fact that they were deposited in the PNB
(then a wholly owned government bank) and not in the Philippine
Treasury. In Osmea v. Orbos,[61] the Court held that the oil price
stabilization fund was a special fund mainly because this was segregated
from the general fund and placed in what the law referred to as a trust
account. Yet it remained subject to COA scrutiny and review. The Court
finds no substantial distinction between these funds and the coco-levy
funds, except as to the industry they each support.

Fourth. Petitioners in G.R. 147811 assert that Section 2 of P.D.

755 above is void and unconstitutional for disregarding the public
character of coco-levy funds. The subject section provides:

Section 2. Financial Assistance. x x x and since the

operations, and activities of the Philippine Coconut Authority
are all in accord with the present social economic plans and
programs of the Government, all collections and levies which
the Philippine Coconut Authority is authorized to levy and
collect such as but not limited to the Coconut Consumers
Stabilization Levy, and the Coconut Industry Development
Fund as prescribed by Presidential Decree No. 582 shall not
be considered or construed, under any law or regulation,
special and/or fiduciary funds and do not form part of the
general funds of the national government within the
contemplation of Presidential Decree No. 711. (Emphasis ours)

The Court has, however, already passed upon this question

in Philippine Coconut Producers Federation, Inc. (COCOFED) v.
Republic of the Philippines.[62] It held as unconstitutional Section 2 of P.D.
755 for effectively authorizing the PCA to utilize portions of the CCS
Fund to pay the financial commitment of the farmers to acquire UCPB
and to deposit portions of the CCS Fund levies with UCPB interest free.
And as there also provided, the CCS Fund, CID Fund and like levies that
PCA is authorized to collect shall be considered as non-special or
fiduciary funds to be transferred to the general fund of the Government,
meaning they shall be deemed private funds.

Identical provisions of subsequent presidential decrees likewise

declared coco-levy funds private properties of coconut farmers. Article III,
Section 5 of P.D. 961 reads:

Section 5. Exemptions. The Coconut Consumers

Stabilization Fund and the Coconut Industry Development
 Fund as well as all disbursements of said funds for the benefit
of the coconut farmers as herein authorized shall not be
construed or interpreted, under any law or regulation, as
special and/or fiduciary funds, or as part of the general
funds of the national government within the contemplation
of P.D. No. 711; nor as a subsidy, donation, levy,
government funded investment, or government share
within the contemplation of P.D. 898, the intention being
that said Fund and the disbursements thereof as herein
authorized for the benefit of the coconut farmers shall be
owned by them in their own private capacities. (Emphasis
ours)

Section 5 of P.D. 1468 basically reproduces the above provision,

thus

Section 5. Exemption. The Coconut Consumers

Stabilization Fund and the Coconut Industry Development
Fund, as well as all disbursements as herein authorized, shall
not be construed or interpreted, under any law or
regulation, as special and/or fiduciary funds, or as part of
the general funds of the national government within the
contemplation of P.D. 711; nor as subsidy, donation, levy
government funded investment, or government share
within the contemplation of P.D. 898, the intention being
that said Fund and the disbursements thereof as herein
authorized for the benefit of the coconut farmers shall be
owned by them in their private capacities: Provided,
however, That the President may at any time authorize the
Commission on Audit or any other officer of the government
to audit the business affairs, administration, and condition of
persons and entities who receive subsidy for coconut-based
consumer products x x x. (Emphasis ours)

Notably, the raising of money by levy on coconut farm production,

a form of taxation as already stated, began in 1971 for the purpose of
developing the coconut industry and promoting the interest of coconut
farmers. The use of the fund was expanded in 1973 to include the
stabilization of the domestic market for coconut-based consumer goods
and in 1974 to divert part of the funds for obtaining direct benefit to
coconut farmers. After five years or in 1976, however, P.D. 961 declared
the coco-levy funds private property of the farmers. P.D. 1468 reiterated
this declaration in 1978. But neither presidential decree actually turned
over possession or control of the funds to the farmers in their private
capacity. The government continued to wield undiminished authority
over the management and disposition of those funds.

In any event, such declaration is void. There is ownership when a

thing pertaining to a person is completely subjected to his will in
everything that is not prohibited by law or the concurrence with the rights
of another.[63] An owner is free to exercise all attributes of ownership:
the right, among others, to possess, use and enjoy, abuse or consume, and
dispose or alienate the thing owned.[64] The owner is of course free to
waive all or some of these rights in favor of others. But in the case of the
coconut farmers, they could not, individually or collectively, waive what
have not been and could not be legally imparted to them.

Section 2 of P.D. 755, Article III, Section 5 of P.D. 961, and

Article III, Section 5 of P.D. 1468 completely ignore the fact that
coco-levy funds are public funds raised through taxation. And since taxes
could be exacted only for a public purpose, they cannot be declared
private properties of individuals although such individuals fall within a
distinct group of persons.[65]

The Court of course grants that there is no hard-and-fast rule for

determining what constitutes public purpose. It is an elastic concept that
could be made to fit into modern standards. Public purpose, for instance,
is no longer restricted to traditional government functions like building
roads and school houses or safeguarding public health and safety. Public
purpose has been construed as including the promotion of social
justice. Thus, public funds may be used for relocating illegal settlers,
building low-cost housing for them, and financing both urban and
agrarian reforms that benefit certain poor individuals. Still, these uses
relieve volatile iniquities in society and, therefore, impact on public order
and welfare as a whole.

But the assailed provisions, which removed the coco-levy funds

from the general funds of the government and declared them private
properties of coconut farmers, do not appear to have a color of social
justice for their purpose. The levy on copra that farmers produce appears,
in the first place, to be a business tax judging by its tax base. The concept
of farmers-businessmen is incompatible with the idea that coconut
farmers are victims of social injustice and so should be beneficiaries of
the taxes raised from their earnings.
 It would altogether be different of course if the laws mentioned set
apart a portion of the coco-levy fund for improving the lives of destitute
coconut farm owners or workers for their social amelioration to establish
a proper government purpose. The support for the poor is generally
recognized as a public duty and has long been an accepted exercise of
police power in the promotion of the common good.[66] But the
declarations do not distinguish between wealthy coconut farmers and the
impoverished ones. And even if they did, the Government cannot just
embark on a philanthropic orgy of inordinate dole-outs for motives
political or otherwise.[67] Consequently, such declarations are void since
they appropriate public funds for private purpose and, therefore, violate
the citizens right to substantive due process.[68]
On another point, in stating that the coco-levy fund shall not be construed
or interpreted, under any law or regulation, as special and/or fiduciary
funds, or as part of the general funds of the national government, P.D.s
961 and 1468 seek to remove such fund from COA scrutiny.

This is also the fault of President Estradas E.O. 312 which deals
with P1 billion to be generated out of the sale of coco-fund acquired
assets. Thus

Section 5. Audit of Fund and Submission of

Report. The Committee, by a majority vote, shall engage the
services of a reputable auditing firm to conduct periodic
audits of the fund. It shall render a quarterly report on all
pertinent transactions and availments of the fund to the Office
of the President within the first three (3) working days of the
succeeding quarter. (Emphasis ours)

E.O. 313 has a substantially identical provision governing the

management and disposition of the Coconut Trust Fund capitalized with
the substantial SMC shares of stock that the coco-fund acquired. Thus

Section 13. Accounting. x x x

The Fund shall be audited annually or as often as

necessary by an external auditor designated by the
Committee. The Committee may also request the Commission
on Audit to conduct an audit of the Fund. (Emphasis ours)

But, since coco-levy funds are taxes, the provisions of

P.D.s 755, 961 and 1468 as well as those of E.O.s 312 and 313 that
remove such funds and the assets acquired through them from the
jurisdiction of the COA violate Article IX-D, Section 2(1)[69] of the 1987
Constitution. Section 2(1) vests in the COA the power and authority to
examine uses of government money and property. The cited P.D.s and
E.O.s also contravene Section 2[70] of P.D. 898 (Providing for the
Restructuring of the Commission on Audit), which has the force of a
statute.

And there is no legitimate reason why such funds should be

shielded from COA review and audit. The PCA, which implements the
coco-levy laws and collects the coco-levy funds, is a government-owned
and controlled corporation subject to COA review and audit.

E.O. 313 suffers from an additional infirmity. Its

title, Rationalizing the Use of the Coconut Levy Funds by Constituting a
Fund for Assistance to Coconut Farmers as an Irrevocable Trust Fund
and Creating a Coconut Trust Fund Committee for the Management
thereof tends to mislead. Apparently, it intends to create a trust fund out
of the coco-levy funds to provide economic assistance to the coconut
farmers and, ultimately, benefit the coconut industry.[71] But on closer
look, E.O. 313 strays from the special purpose for which the law raises
coco-levy funds in that it permits the use of coco-levy funds for
improving productivity in other food areas. Thus:

Section 2. Purpose of the Fund. The Fund shall be

established for the purpose of financing programs of assistance
for the benefit of the coconut farmers, the coconut
industry, and other agri-related programs intended to
maximize food productivity, develop business opportunities
in the countryside, provide livelihood alternatives, and
promote anti-poverty programs. (Emphasis ours)

xxxx

Section 9. Use and Disposition of the Trust Income.

The Coconut Trust Fund Committee, on an annual basis, shall
determine and establish the amount comprising the Trust
Income. After such determination, the Committee shall
earmark, allocate and disburse the Trust Income for the
following purposes, namely:

xxxx
 (d) Thirty percent (30%) of the Trust Income shall
be used to assist and fund agriculturally-related
programs for the Government, as reasonably determined by
the Trust Fund Committee, implemented for the purpose of: (i)
maximizing food productivity in the agriculture areas of the
country, (ii) enhancing the upliftment and well-being of the
living conditions of farmers and agricultural workers, (iii)
developing viable industries and business opportunities in the
countryside, (iv) providing alternative means of livelihood to
the direct dependents of agriculture businesses and enterprises,
and (v) providing financial assistance and support to coconut
farmers in times of economic hardship due to extremely low
prices of copra and other coconut products, natural calamities,
world market dislocation and similar occurrences, including
financial support to the ERAPs Sagip Niyugan Program
established under Executive Order No. 312 dated November 3,
2000; x x x. (Emphasis ours)

Clearly, E.O. 313 above runs counter to the constitutional

provision which directs that all money collected on any tax levied for a
special purpose shall be treated as a special fund and paid out for such
purpose only.[72] Assisting other agriculturally-related programs is way
off the coco-funds objective of promoting the general interests of the
coconut industry and its farmers.

A final point, the E.O.s also transgress P.D. 1445,[73] Section

84(2),[74] the first part by the previously mentioned sections of E.O. 313
and the second part by Section 4 of E.O. 312 and Sections 6 and 7 of E.O.
313. E.O. 313 vests the power to administer, manage, and supervise the
operations and disbursements of the Trust Fund it established (capitalized
with SMC shares bought out of coco-levy funds) in a Coconut Trust Fund
Committee. Thus

Section 6. Creation of the Coconut Trust Fund

Committee. A Committee is hereby created to administer,
manage and supervise the operations of the Trust Fund,
chaired by the President with ten (10) members, as follows:

(a) four (4) representatives from the government

sector, two of whom shall be the Secretary of
 Agriculture and the Secretary of Agrarian Reform
who shall act as Vice Chairmen;
(b) four (4) representatives from coconut farmers
organizations, one of whom shall come from a list
of nominees from the Philippine Coconut
Producers Federation Inc. (COCOFED);
(c) a representative from the CIIF; and
(d) a representative from a non-government
organization (NGO) involved in agricultural and
rural development.

All decisions of the Coconut Trust Fund Committee shall be

determined by a majority vote of all the members.

The Coconut Trust Fund Committee shall perform the

functions and duties set forth in Section 7 hereof, with the skill,
care, prudence and diligence necessary under the
circumstances then prevailing that a prudent man acting in like
capacity would exercise.

The members of the Coconut Trust Fund Committee shall be

appointed by the President and shall hold office at his pleasure.

The Coconut Trust Fund Committee is authorized to hire

administrative, technical and/or support staff as may be
required to enable it to effectively perform its functions and
responsibilities. (Emphasis ours)

Section 7. Functions and Responsibilities of the

Committee. The Coconut Trust Fund Committee shall have the
following functions and responsibilities:
(a) set the investment policy of the Trust Fund;
(b) establish priorities for assistance giving preference to
small coconut farmers and farmworkers which shall be
reviewed periodically and revised as necessary in
accordance with changing conditions;
(c) receive, process and approve project proposals for
financing by the Trust Fund;
(d) decide on the use of the Trust Funds income or
net earnings including final action on applications
for assistance, grants and/or loans;
 (e) avail of professional counsel and services by
retaining an investment and financial manager, if
desired;
(f) formulate the rules and regulations governing the
allocation, utilization and disbursement of the Fund;
and
(g) perform such other acts and things as may be
necessary proper or conducive to attain the purposes of
the Fund. (Emphasis ours)

Section 4 of E.O. 312 does essentially the same thing. It vests the
management and disposition of the assistance fund generated from the
sale of coco-levy fund-acquired assets into a Committee of five
members. Thus, Section 4 of E.O. 312 provides

Section 4. Funding. Assets acquired through the

coconut levy funds or by entities financed by the coconut levy
funds identified by the President for appropriate disposal or
sale, shall be sold or disposed to generate a maximum fund of
ONE BILLION PESOS (P1,000,000,000.00) which shall
be managed by a Committee composed of a Chairman and
four (4) members to be appointed by the President whose
term shall be co-terminus with the Program. x x x
(Emphasis ours)

In effect, the above transfers the power to allocate, use, and

disburse coco-levy funds that P.D. 232 vested in the PCA and transferred
the same, without legislative authorization and in violation of P.D. 232, to
the Committees mentioned above. An executive order cannot repeal a
presidential decree which has the same standing as a statute enacted by
Congress.
UCPB invokes the principle of separability to save the assailed
laws from being struck down. The general rule is that where part of a
statute is void as repugnant to the Constitution, while another part is valid,
the valid portion, if susceptible to being separated from the invalid, may
stand and be enforced. When the parts of a statute, however, are so
mutually dependent and connected, as conditions, considerations, or
compensations for each other, as to warrant a belief that the legislature
intended them as a whole, the nullity of one part will vitiate the rest. In
which case, if some parts are unconstitutional, all the other provisions
which are thus dependent, conditional, or connected must consequently
fall with them.[75]
 But, given that the provisions of E.O.s 312 and 313, which as
already stated invalidly transferred powers over the funds to two
committees that President Estrada created, the rest of their provisions
became non-operational. It is evident that President Estrada would not
have created the new funding programs if they were to be managed by
some other entity. Indeed, he made himself Chairman of the Coconut
Trust Fund and left to his discretion the appointment of the members of
the other committee.

WHEREFORE, the Court GRANTS the petition in

G.R. 147036-37, PARTLY GRANTS the petition in G.R. 147811, and
declares the following VOID:

a) E.O. 312, for being repugnant to Section 84(2) of

P.D. 1445, and Article IX-D, Section 2(1) of the
Constitution; and

b) E.O. 313, for being in contravention of Section

84(2) of P.D. 1445, and Article IX-D, Section 2(1) and
Article VI, Section 29(3) of the Constitution.

The Court has previously declared Section 2 of P.D. 755 and

Article III, Section 5 of P.D.s 961 and 1468 unconstitutional.

SO ORDERED.
Greco Belgica vs Executive Secretary Paquito Ochoa

710 SCRA 1 – Political Law – Constitutional Law – Local Government – Invalid

Delegation

Legislative Department – Invalid Delegation of Legislative Power

This case is consolidated with G.R. No. 208493 and G.R. No. 209251.

The so-called pork barrel system has been around in the Philippines since about 1922. Pork
Barrel is commonly known as the lump-sum, discretionary funds of the members of the
Congress. It underwent several legal designations from “Congressional Pork Barrel” to the
latest “Priority Development Assistance Fund” or PDAF. The allocation for the pork barrel is
integrated in the annual General Appropriations Act (GAA).

Since 2011, the allocation of the PDAF has been done in the following manner:

a. P70 million: for each member of the lower house; broken down to – P40 million for
“hard projects” (infrastructure projects like roads, buildings, schools, etc.), and P30 million
for “soft projects” (scholarship grants, medical assistance, livelihood programs, IT
development, etc.);

b. P200 million: for each senator; broken down to – P100 million for hard projects, P100
million for soft projects;

c. P200 million: for the Vice-President; broken down to – P100 million for hard projects,
P100 million for soft projects.

The PDAF articles in the GAA do provide for realignment of funds whereby certain cabinet
members may request for the realignment of funds into their department provided that the
request for realignment is approved or concurred by the legislator concerned.
Presidential Pork Barrel

The president does have his own source of fund albeit not included in the GAA. The so-called
presidential pork barrel comes from two sources: (a) the Malampaya Funds, from the
Malampaya Gas Project – this has been around since 1976, and (b) the Presidential Social
Fund which is derived from the earnings of PAGCOR – this has been around since about
1983.

Pork Barrel Scam Controversy

Ever since, the pork barrel system has been besieged by allegations of corruption. In July
2013, six whistle blowers, headed by Benhur Luy, exposed that for the last decade, the
corruption in the pork barrel system had been facilitated by Janet Lim Napoles. Napoles had
been helping lawmakers in funneling their pork barrel funds into about 20 bogus NGO’s
(non-government organizations) which would make it appear that government funds are
being used in legit existing projects but are in fact going to “ghost” projects. An audit was
then conducted by the Commission on Audit and the results thereof concurred with the
exposes of Luy et al.

Motivated by the foregoing, Greco Belgica and several others, filed various petitions before
the Supreme Court questioning the constitutionality of the pork barrel system.

ISSUES:

I. Whether or not the congressional pork barrel system is constitutional.

II. Whether or not presidential pork barrel system is constitutional.

HELD:

I. No, the congressional pork barrel system is unconstitutional. It is unconstitutional because

it violates the following principles:

a. Separation of Powers

As a rule, the budgeting power lies in Congress. It regulates the release of funds (power of
the purse). The executive, on the other hand, implements the laws – this includes the GAA
to which the PDAF is a part of. Only the executive may implement the law but under the
pork barrel system, what’s happening was that, after the GAA, itself a law, was enacted,
the legislators themselves dictate as to which projects their PDAF funds should be allocated
to – a clear act of implementing the law they enacted – a violation of the principle of
separation of powers. (Note in the older case of PHILCONSA vs Enriquez, it was ruled that
pork barrel, then called as CDF or the Countrywide Development Fund, was constitutional
insofar as the legislators only recommend where their pork barrel funds go).

This is also highlighted by the fact that in realigning the PDAF, the executive will still have to
get the concurrence of the legislator concerned.

b. Non-delegability of Legislative Power

As a rule, the Constitution vests legislative power in Congress alone. (The Constitution does
grant the people legislative power but only insofar as the processes of referendum and
initiative are concerned). That being, legislative power cannot be delegated by Congress for
it cannot delegate further that which was delegated to it by the Constitution.

Exceptions to the rule are:

(i) delegated legislative power to local government units but this shall involve purely local
matters;

(ii) authority of the President to, by law, exercise powers necessary and proper to carry out
a declared national policy in times of war or other national emergency, or fix within
specified limits, and subject to such limitations and restrictions as Congress may impose,
tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development program of the Government.

In this case, the PDAF articles which allow the individual legislator to identify the projects to
which his PDAF money should go to is a violation of the rule on non-delegability of
legislative power. The power to appropriate funds is solely lodged in Congress (in the two
houses comprising it) collectively and not lodged in the individual members. Further,
nowhere in the exceptions does it state that the Congress can delegate the power to the
individual member of Congress.

c. Principle of Checks and Balances

One feature in the principle of checks and balances is the power of the president to veto
items in the GAA which he may deem to be inappropriate. But this power is already being
undermined because of the fact that once the GAA is approved, the legislator can now
identify the project to which he will appropriate his PDAF. Under such system, how can the
president veto the appropriation made by the legislator if the appropriation is made after
the approval of the GAA – again, “Congress cannot choose a mode of budgeting which
effectively renders the constitutionally-given power of the President useless.”

d. Local Autonomy

As a rule, the local governments have the power to manage their local affairs. Through their
Local Development Councils (LDCs), the LGUs can develop their own programs and policies
concerning their localities. But with the PDAF, particularly on the part of the members of
the house of representatives, what’s happening is that a congressman can either bypass or
duplicate a project by the LDC and later on claim it as his own. This is an instance where
the national government (note, a congressman is a national officer) meddles with the affairs
of the local government – and this is contrary to the State policy embodied in the
Constitution on local autonomy. It’s good if that’s all that is happening under the pork
barrel system but worse, the PDAF becomes more of a personal fund on the part of
legislators.

II. Yes, the presidential pork barrel is valid.

The main issue raised by Belgica et al against the presidential pork barrel is that it is
unconstitutional because it violates Section 29 (1), Article VI of the Constitution which
provides:

No money shall be paid out of the Treasury except in pursuance of

an appropriation made by law.

Belgica et al emphasized that the presidential pork comes from the earnings of the
Malampaya and PAGCOR and not from any appropriation from a particular legislation.

The Supreme Court disagrees as it ruled that PD 910, which created the Malampaya Fund,
as well as PD 1869 (as amended by PD 1993), which amended PAGCOR’s charter,
provided for the appropriation, to wit:

(i) PD 910: Section 8 thereof provides that all fees, among others, collected from certain
energy-related ventures shall form part of a special fund (the Malampaya Fund) which shall
be used to further finance energy resource development and for other purposes which the
President may direct;

(ii) PD 1869, as amended: Section 12 thereof provides that a part of PAGCOR’s earnings
shall be allocated to a General Fund (the Presidential Social Fund) which shall be used in
government infrastructure projects.

These are sufficient laws which met the requirement of Section 29, Article VI of the
Constitution. The appropriation contemplated therein does not have to be a particular
appropriation as it can be a general appropriation as in the case of PD 910 and PD 1869.

METROPOLITAN G.R. No. 177780

BANK & TRUST CO.
(METROBANK),
represented by Present:
ROSELLA A.
SANTIAGO,
Petitioner, CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,
-versus- VILLARAMA, JR., and

*
PERLAS-BERNABE, JJ.

Promulgated:
ANTONINO O. TOBIAS
III,
January 25, 2012
Respondent.

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

DECISION

BERSAMIN, J.:

This appeal assails the adverse decision of the Court of Appeals (CA) that 1

dismissed the petition for certiorari brought by the petitioner to nullify and
set aside the resolutions issued by the Secretary of Justice on July 20,
2004 and November 18, 2005 directing the City Prosecutor of Malabon
2 3

City to withdraw the information in Criminal Case No. 27020

entitled People v. Antonino O. Tobias III.

We affirm the CA in keeping with the principle of non-interference with the

prerogative of the Secretary of Justice to review the resolutions of the public
prosecutor in the latter’s determination of the existence of probable cause,
absent any showing that the Secretary of Justice thereby commits grave
abuse of his discretion.
 Antecedents

In 1997, Rosella A. Santiago, then the OIC-Branch Head of Metropolitan

Bank & Trust Company (METROBANK) in Valero Street, Makati City,
was introduced to respondent Antonino O. Tobias III (Tobias) by one Jose
Eduardo Gonzales, a valued client of METROBANK. Subsequently, Tobias
opened a savings/current account for and in the name of Adam
Merchandising, his frozen meat business. Six months later, Tobias applied
for a loan from METROBANK, which in due course conducted trade and
credit verification of Tobias that resulted in negative findings.
METROBANK next proceeded to appraise the property Tobias offered as
collateral by asking him for a photocopy of the title and other related
documents. The property consisted of four parcels of land located in
4

Malabon City, Metro Manila with a total area of 6,080 square meters and
covered by Transfer Certificate of Title (TCT) No. M-16751. Based on the
5

financial statements submitted by Tobias, METROBANK approved a credit

line for P40,000,000.00. On August 15, 1997, Joselito Bermeo Moreno,
Lead Internal Affairs Investigator of METROBANK, proceeded to the
Registry of Deeds of Malabon to cause the annotation of the deed of real
estate mortgage on TCT No. M-16751. The annotation was Entry No.
26897.6

Thereafter, Tobias initially availed himself of P20,000,000, but took out the
balance within six months. He paid the interest on the loan for about a year
7

before defaulting. His loan was restructured to 5-years upon his request. Yet,
after two months, he again defaulted. Thus, the mortgage was foreclosed,
and the property was sold to METROBANK as the lone bidder. On June 11,
8

1999, the certificate of sale was issued in favor of METROBANK. 9

When the certificate of sale was presented for registration to the Registry of
Deeds of Malabon, no corresponding original copy of TCT No. M-16751
was found in the registry vault. Atty. Sarah Principe-Bido, Deputy Register
of Deeds of Malabon, went on to verify TCT No. M-16751 and learned that
Serial No. 4348590 appearing therein had been issued for TCT No.
M-15363 in the name of one Alberto Cruz; while TCT No. 16751 (now TCT
No. 390146) appeared to have been issued in the name of Eugenio S. Cruz
and Co. for a parcel of land located in Navotas.
10
Given such findings, METROBANK requested the Presidential
Anti-Organized Crime Task Force (PAOCTF) to investigate. In its report
11

dated May 29, 2000, PAOCTF concluded that TCT No. M-16751 and the
12

tax declarations submitted by Tobias were fictitious. PAOCTF

recommended the filing against Tobias of a criminal complaint for estafa
through falsification of public documents under paragraph 2 (a) of Article
315, in relation to Articles 172(1) and 171(7) of the Revised Penal Code.13

The Office of the City Prosecutor of Malabon ultimately charged Tobias

with estafa through falsification of public documents through the following
information, viz:
14

xxx

That on or about the 15th day of August, 1997 in the

Municipality of Malabon, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused,
by means of deceit, false pretense, fraudulent acts and
misrepresentation executed prior to or simultaneous with the
commission of fraud, represented to METROBANK, as
represented by MS. ROSELLA S. SANTIAGO, that he is the
registered owner of a parcel of land covered by TCT No.
M-16751 which he represented to be true and genuine when he
knew the Certificate of Title No. M-16751 is fake and spurious
and executed a Real Estate Mortgage in favor of Metrobank
and offered the same as collateral for a loan and Rosella S.
Santiago relying on said misrepresentation gave to accused, the
amount of P20,000,000.00 and once in possession of the
amount, with intent to defraud, willfully, unlawfully and
feloniously failed to deliver the land covered by spurious title
and misappropriate, misapply and converted the said amount
of P20,000,000.00 to his own personal use and benefit and
despite repeated demands accused failed and refused and still
fails and refuses to return the amount to complainant
METROBANK, and/or delivered the land covered in the
spurious title in the aforementioned amount of P20,000,000.00.
 CONTRARY TO LAW. 15

Tobias filed a motion for re-investigation, which was granted.

16

In his counter-affidavit submitted during the re-investigation, Tobias 17

averred that he had bought the property from one Leonardo Fajardo through
real estate brokers Augusto Munsuyac and Carmelito Pilapil; that Natalio
Bartolome, his financial consultant from Carwin International, had
convinced him to purchase the property due to its being an ideal site for his
meat processing plant and cold storage business; that the actual inspection of
the property as well as the verification made in the Registry of Deeds of
Malabon City had ascertained the veracity of TCT No. 106083 under the
name of Leonardo Fajardo; that he had applied for the loan from
METROBANK to pay the purchase price by offering the property as
collateral; that in order for the final application to be processed and the loan
proceeds to be released, METROBANK had advised him to have the title
first transferred to his name; that he had executed a deed of absolute sale
with Fajardo covering the property, and that said instrument had been
properly registered in the Registry of Deeds; that the transfer of the title,
being under the account of the seller, had been processed by seller Fajardo
and his brokers Munsuyac and Pilapil; that his title and the property had
been inspected and verified by METROBANK’s personnel; and that he did
not have any intention to defraud METROBANK.

Nonetheless, on December 27, 2002, the City Prosecutor of Malabon still

found probable cause against Tobias, and recommended his being charged
with estafa through falsification of public document. 18

Tobias appealed to the Department of Justice (DOJ).

On July 20, 2004, then Acting Secretary of Justice Ma. Merceditas N.

Gutierrez issued a resolution directing the withdrawal of the information
filed against Tobias, to wit:
19
 WHEREFORE, the assailed resolution is hereby
REVERSED and SET ASIDE. The City Prosecutor of
Malabon City is directed to cause the withdrawal of the
Information in Crim. Case No. 27020 against respondent
Antonino O. Tobias III, and report the action taken thereon
within ten (10) days from receipt hereof.

SO ORDERED.

Acting Secretary of Justice Gutierrez opined that Tobias had sufficiently

established his good faith in purchasing the property; that he had even used
part of the proceeds of the loan to pay the seller; that it was METROBANK
that had caused the annotation of the mortgage on the TCT, thereby creating
an impression that the title had been existing in the Registry of Deeds at that
time; that, accordingly, the presumption that the possessor of a falsified
document was the author of the falsification did not apply because it was
always subject to the qualification or reference as to the approximate time of
the commission of the falsification.

METROBANK moved to reconsider, arguing that Tobias had employed

20

deceit or false pretense in offering the property as collateral by using a fake

title; and that the presumption that the possessor of the document was the
author of the falsification applied because no other person could have
falsified the TCT and would have benefitted therefrom except Tobias
himself.

On November 18, 2005, Secretary of Justice Raul M. Gonzalez

denied METROBANK’s motion for reconsideration. 21

Ruling of the CA

METROBANK challenged the adverse resolutions through certiorari.

On December 29, 2006, the CA promulgated its decision, dismissing22

METROBANK’s petition for certiorari by holding that the presumption of

authorship might be disputed through a satisfactory explanation, viz:

We are not unaware of the established presumption and rule

that when it is proved that a person has in his possession a
falsified document and makes use of the same, the presumption
or inference is that such person is the forger (Serrano vs. Court
of Appeals, 404 SCRA 639, 651 [2003]), citing Koh Tieck
Heng vs. People, 192 SCRA 533, 546-547 [1990]). Yet, the
Supreme Court declared that in the absence of satisfactory
explanation, one who is found in possession of a forged
document and who used it is presumed to be the forger (citing
People vs. Sendaydiego, 81 SCRA 120, 141 [1978]). Very
clearly then, a satisfactory explanation could render ineffective
the presumption which, after all, is merely a disputable one.

It is in this score that We affirm the resolution of the

Department of Justice finding no probable cause against
private respondent Tobias for estafa thru falsification of public
document. The record speaks well of Tobias’ good faith and
lack of criminal intention and liability. Consider:

(a) Tobias has in his favor a similar presumption

that good faith is always presumed. Therefore, he who
claims bad faith must prove it (Prinsipio vs. The
Honorable Oscar Barrientos, G.R. 167025, December
19, 2005). No such evidence of bad faith of Tobias
appears on record;

(b) Tobias’ actuation in securing the loan belies

any criminal intent on his part to deceive petitioner
Bank. He was not in a hurry to obtain the loan. He had
to undergo the usual process of the investigative arm
or machine of the Bank not only on the location and
 the physical appearance of the property but likewise
the veracity of its title. Out of the
approved P40,000,000.00 loan he only availed
of P20,000,000.00, for his frozen meat business which
upon investigation of the Bank failed to give negative
results;

(c) Tobias paid the necessary interests for one (1)

year on the loan and two (2) installments on the
restructured loan; and

(d) More importantly, the loan was not released to

him until after the mortgage was duly registered with
the Registry of Deeds of Malabon City and even paid
the amount of P90,000.00 for the registration fees
therefor.

These actuations, for sure, can only foretell that Tobias has the
least intention to deceive the Bank in obtaining the loan. It may
not be surprising to find that Tobias could even be a victim
himself by another person in purchasing the properties he
offered as security for the loan. 23

The CA stressed that the determination of probable cause was an

executive function within the discretion of the public prosecutor and,
ultimately, of the Secretary of Justice, and the courts of law could not
interfere with such determination; that the private complainant in a criminal
24

action was only concerned with its civil aspect; that should the State choose
not to file the criminal action, the private complainant might initiate a civil
action based on Article 35 of the Civil Code, to wit:

In the eventuality that the Secretary of Justice refuses to file

the criminal complaint, the complainant, whose only interest is
the civil aspect of the case and not the criminal aspect thereof,
is not left without a remedy. In Vda. De Jacob vs. Puno, 131
SCRA 144, 149 [1984], the Supreme Court has this for an
answer:

“The remedy of complainant in a case where the

Minister of Justice would not allow the filing of a
criminal complaint against an accused because it is his
opinion that the evidence is not sufficient to sustain an
information for the complaint with which the
respondents are charged of, is to file a civil action as
indicated in Article 35 of the Civil Code, which
provides:

‘Art. 35. When a person, claiming to be injured

by a criminal offense, charges another with the
same, for which no independent civil action is
granted in this Code or any special law, but the
justice of the peace finds no reasonable grounds
to believe that a crime has been committed, or
the prosecuting attorney refuses or fails to
institute criminal proceedings, the complainant
may bring a civil action for damages against the
alleged offender. Such civil action may be
supported by a preponderance of evidence.
Upon the defendant’s motion, the court may
require the plaintiff to file a bond to indemnify
the defendant in case the complainant should be
found to be malicious.

‘If during the pendency of the civil action, an

information should be presented by the
prosecuting attorney, the civil action shall be
suspended until the termination of the criminal
proceedings.’” 25
METROBANK sought reconsideration, but the CA denied its motion for
that purpose, emphasizing that the presumption that METROBANK firmly
relied upon was overcome by Tobias sufficiently establishing his good faith
and lack of criminal intent. The CA relevantly held:

Petitioner should be minded that the subject presumption that

the possessor and user of a forged or falsified document is
presumed to be the falsifier or forger is a mere disputable
presumption and not a conclusive one. Under the law on
evidence, presumptions are divided into two (2) classes:
conclusive and rebuttable. Conclusive or absolute
presumptions are rules determining the quantity of evidence
requisite for the support of any particular averment which is
not permitted to be overcome by any proof that the fact is
otherwise, if the basis facts are established (1 Greenleaf, Ev 44;
29 Am Jur 2d, Evidence 164; 1 Jones on Evidence 6 ed, page
132). Upon the other hand, a disputable presumption has been
defined as species of evidence that may be accepted and acted
on when there is no other evidence to uphold the contention for
which it stands, or one which may be overcome by other
evidence (31A C.J.S., p. 197; People v. de Guzman, G.R. No.
106025, Feb. 9, 1994; Herrera, Remedial Law, Vol. VI, 1999
Edition, pp. 40-41). In fact, Section 3 of Rule 131 provides that
the disputable presumptions therein enumerated are
satisfactory if uncontradicted but may be contradicted and
overcome by other evidence. Thus, as declared in Our decision
in this case, private respondent had shown evidence of good
faith and lack of criminal intention and liability that can
overthrow the controversial disputable presumption. 26

Issue

In this appeal, METROBANK raises the lone issue of—

WHETHER OR NOT THE HONORABLE COURT OF

APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
PROBABLY NOT IN ACCORD WITH LAW OR WITH
 THE APPLICABLE DECISIONS OF THIS HONORABLE
COURT AND THUS, COMMITTED PATENT ERROR IN
RENDERING THE ASSAILED DECISION DATED 29
DECEMBER 2006, DISMISSING METROBANK’S
PETITION FOR CERTIORARI AND AFFIRMING THE
RESOLUTIONS DATED 20 JULY 2004 AND 18
NOVEMBER 2005 OF THE HON. SECRETARY OF
JUDTICE AND IN DENYING METROBANK’S MOTION
FOR RECONSIDERATION.

METROBANK submits that the presumption of authorship was sufficient to

establish probable cause to hold Tobias for trial; that the presumption
applies when a person is found in possession of the forged instrument,
makes use of it, and benefits from it; that contrary to the ruling of the CA,
there is no requirement that the legal presumption shall only apply in the
absence of a valid explanation from the person found to have possessed,
used and benefited from the forged document; that the CA erred in declaring
that Tobias was in good faith, because good faith was merely evidentiary
and best raised in the trial on the merits; and that Tobias was heavily
involved in a modus operandi of using fake titles because he was also being
tried for a similar crime in the RTC, Branch 133, in Makati City.

METROBANK maintains that what the Secretary of Justice did was to

determine the innocence of the accused, which should not be done during
the preliminary investigation; and that the CA disregarded such lapse.

On the other hand, Tobias posits that the core function of the Department of
Justice is to prosecute the guilty in criminal cases, not to persecute; that
although the prosecutors are given latitude to determine the existence of
probable cause, the review power of the Secretary of Justice prevents
overzealous prosecutors from persecuting the innocent; that in reversing the
resolution of Malabon City Assistant Prosecutor Ojer Pacis, the Secretary of
Justice only acted within his authority; that, indeed, the Secretary of Justice
was correct in finding that there was lack of evidence to prove that the
purported fake title was the very cause that had induced the petitioner to
grant the loan; and that the Secretary likewise appropriately found that
Tobias dealt with the petitioner in good faith because of lack of proof that he
had employed fraud and deceit in securing the loan.
Lastly, Tobias argues that the presumption of forgery could not be applied in
his case because it was METROBANK, through a representative, who had
annotated the real estate mortgage with the Registry of Deeds; and that he
had no access to and contact with the Registry of Deeds, and whatever went
wrong after the annotation was beyond his control.

Ruling

The appeal has no merit.

Under the doctrine of separation of powers, the courts have no right to

directly decide matters over which full discretionary authority has been
delegated to the Executive Branch of the Government, or to substitute their
27

own judgments for that of the Executive Branch, represented in this case by
28

the Department of Justice. The settled policy is that the courts will not
interfere with the executive determination of probable cause for the purpose
of filing an information, in the absence of grave abuse of discretion. That 29

abuse of discretion must be 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 or to
act at all in contemplation of law, such as where the power is exercised in an
arbitrary and despotic manner by reason of passion or hostility. For instance,
30

in Balanganan v. Court of Appeals, Special Nineteenth Division, Cebu

City, the Court ruled that the Secretary of Justice exceeded his jurisdiction
31

when he required “hard facts and solid evidence” in order to hold the
defendant liable for criminal prosecution when such requirement should
have been left to the court after the conduct of a trial.

In this regard, we stress that a preliminary investigation for the purpose of

determining the existence of probable cause is not part of a trial. At a 32

preliminary investigation, the investigating prosecutor or the Secretary of

Justice only determines whether the act or omission complained of
constitutes the offense charged. Probable cause refers to facts and
33

circumstances that engender a well-founded belief that a crime has been

committed and that the respondent is probably guilty thereof. There is no
34

definitive standard by which probable cause is determined except to

consider the attendant conditions; the existence of probable cause depends
upon the finding of the public prosecutor conducting the examination, who
is called upon not to disregard the facts presented, and to ensure that his
finding should not run counter to the clear dictates of reason.
35
Tobias was charged with estafa through falsification of public document the
elements of which are: (a) the accused uses a fictitious name, or falsely
pretends to possess power, influence, qualifications, property, credit, agency,
business or imaginary transactions, or employs other similar deceits; (b)
such false pretense, fraudulent act or fraudulent means must be made or
executed prior to or simultaneously with the commission of the fraud; (c)
the offended party must have relied on the false pretense, fraudulent act or
fraudulent means, that is, he was induced to part with his money or property
because of the false pretense, fraudulent act or fraudulent means; and (d) as
a result thereof, the offended party suffered damage. It is required that the
36

false statement or fraudulent representation constitutes the very cause or the

only motive that induced the complainant to part with the thing. 37

METROBANK urges the application of the presumption of authorship

against Tobias based on his having offered the duplicate copy of the
spurious title to secure the loan; and posits that there is no requirement that
the presumption shall apply only when there is absence of a valid
explanation from the person found to have possessed, used and benefited
from the forged document.

We cannot sustain METROBANK’s urging.

Firstly, a presumption affects the burden of proof that is normally lodged in

the State. The effect is to create the need of presenting evidence to
38

overcome the prima facie case that shall prevail in the absence of proof to
the contrary. As such, a presumption of law is material during the actual
39

trial of the criminal case where in the establishment thereof the party against
whom the inference is made should adduce evidence to rebut the
presumption and demolish the prima facie case. This is not so in a
40

preliminary investigation, where the investigating prosecutor only

determines the existence of a prima facie case that warrants the prosecution
of a criminal case in court.
41

Secondly, the presumption of authorship, being disputable, may be accepted

and acted upon where no evidence upholds the contention for which it
stands. It is not correct to say, consequently, that the investigating
42

prosecutor will try to determine the existence of the presumption during

preliminary investigation, and then to disregard the evidence offered by the
respondent. The fact that the finding of probable cause during a preliminary
investigation is an executive function does not excuse the investigating
prosecutor or the Secretary of Justice from discharging the duty to weigh the
evidence submitted by the parties. Towards that end, the investigating
prosecutor, and, ultimately, the Secretary of Justice have ample discretion to
determine the existence of probable cause, a discretion that must be used to
43

file only a criminal charge that the evidence and inferences can properly
warrant.

The presumption that whoever possesses or uses a spurious document is its

forger applies only in the absence of a satisfactory explanation. Accordingly,
44

we cannot hold that the Secretary of Justice erred in dismissing the

information in the face of the controverting explanation by Tobias showing
how he came to possess the spurious document. Much less can we consider
the dismissal as done with abuse of discretion, least of all grave. We concur
with the erudite exposition of the CA on the matter, to wit:

It would seem that under the above proposition of the

petitioner, the moment a person has in his possession a
falsified document and has made use of it, probable cause
or prima facie is already established and that no amount of
satisfactory explanation will prevent the filing of the case in
court by the investigating officer, for any such good
explanation or defense can only be threshed out in the trial on
the merit. We are not to be persuaded. To give meaning to such
argumentation will surely defeat the very purpose for which
preliminary investigation is required in this jurisdiction.

A preliminary investigation is designed to secure the

respondent involved against hasty, malicious and oppressive
prosecution. A preliminary investigation is an inquiry to
determine whether (a) a crime has been committed, and (b)
whether there is probable cause to believe that the accused is
guilty thereof (De Ocampo vs. Secretary of Justice, 480 SCRA
71 [2006]). It is a means of discovering the person or persons
who may be reasonably charged with a crime (Preferred Home
Specialties, Inc. vs. Court of Appeals, 478 SCRA 387, 410
[2005]). Prescindingly, under Section 3 of Rule 112 of the
 Rules of Criminal Procedure, the respondent must be informed
of the accusation against him and shall have the right to
examine the evidence against him and submit his
counter-affidavit to disprove criminal liability. By far,
respondent in a criminal preliminary investigation is legally
entitled to explain his side of the accusation.

We are not unaware of the established presumption and rule

that when it is proved that a person has in his possession a
falsified document and makes use of the same the presumption
or inference is that such person is the forger (Serrano vs. Court
of Appeals, 404 SCRA 639, 651 [2003]), citing Koh Tieck
Heng vs. People, 192 SCRA 533, 546-547 [1990]). Yet, the
Supreme Court declared that in the absence of satisfactory
explanation, one who is found in possession of a forged
document and who used it is presumed to be the forger (citing
People vs. Sendaydiego, 81 SCRA 120, 141 [1978]). Very
clearly then, a satisfactory explanation could render ineffective
the presumption which, after all, is merely a disputable one. 45

We do not lose sight of the fact that METROBANK, a commercial bank

dealing in real property, had the duty to observe due diligence to ascertain
the existence and condition of the realty as well as the validity and integrity
of the documents bearing on the realty. Its duty included the responsibility
46

of dispatching its competent and experience representatives to the realty to

assess its actual location and condition, and of investigating who was its real
owner. Yet, it is evident that METROBANK did not diligently perform a
47

thorough check on Tobias and the circumstances surrounding the realty he

had offered as collateral. As such, it had no one to blame but itself. Verily,
banks are expected to exercise greater care and prudence than others in their
dealings because their business is impressed with public interest. Their 48

failure to do so constitutes negligence on its part.

49

WHEREFORE, the Court DENIES the petition for review on certiorari,

and AFFIRMS the decision of the Court of Appeals promulgated on
December 29, 2006. The petitioner shall pay the costs of suit.

SO ORDERED.
LUCAS P. BERSAMIN

Associate Justice

Boris Mejoff vs Director of

Prisons
90 Phil. 70 – Political Law – Universal Declaration of Human Rights

Boris Mejoff was a Russian citizen who was arrested for being suspected as a Japanese spy after the Philippine
liberation. It was found out that he illegally entered the Philippines in 1944. He was without inspection and
admission by the immigration officials at a designated port of entry. He was then ordered to be deported to
Russia on the first available transportation to said country. But Russian ships refused to take him due to their
alleged lack of authority to do so. He was then transferred to the Bilibid Prison and was kept in detention as the
Commissioner of Immigration believes it is of best interest to detain the unwanted alien while arrangements for
his deportation are being made. Mejoff contends that he was legally brought to the Philippines by the then
Japanese forces and he may not now be deported. He also contends that the statutory period to deport him has
long lapsed and that we cannot detain him for an unreasonable period of time pursuant to the Universal
Declaration on Human rights.

ISSUE: Whether or not Mejoff shall remain in detention?

HELD: Yes. The government has the power and the authority to eject from the Philippines any and all unwanted
aliens. He entered the country illegally in 1944 and was arrested in 1948. Pursuant to Section 37 of the Philippine
Immigration Act of 1940 an unwanted alien is subject to deportation within 5 years from arrest. And he may be
held for a reasonable period of time (depending on the circumstances) while arrangements are being held for his
deportation. There is no allegation however as to the length of time that he has been detained. Hence, the same
cannot be construed as “unreasonable”. Further, there is no indication that the statutory period to deport
Mejoff had lapsed
Crim Pro Case Digest: Mijares V. Ranada (2005)
G.R. No. 139325 April 12, 2005

Lessons Applicable: In all civil actions in which the subject of the litigation is incapable of pecuniary estimation

Laws Applicable:

FACTS:
 May 9 1991: a complaint was filed by ten Filipino citizens representing a class of 10,000 members who each
alleged having suffered human rights abuses such as arbitrary detention, torture and rape in the hands of police or
military forces during the Marcos regime with the United States District Court (US District Court), District of Hawaii,
against the Estate of former Philippine President Ferdinand E. Marcos (Marcos Estate)
 US District Court and Affirmed by US CA: awarded them $1,964,005,859.90
 Petitioners filed Complaint with Makati RTC for the enforcement of the Final Judgment
 Marcos Estate filed a motion to dismiss, raising, among others, the non-payment of the correct filing fees
paying only P410
 Petitioners claimed that an action for the enforcement of a foreign judgment is not capable of pecuniary
estimation
 RTC: estimated the proper amount of filing fees was approximately P472 and dismissing the case without
prejudice
 Petition for Certiorari under Rule 65

ISSUE: W/N the enforcement of a foreign judgment is incapable of pecuniary estimation

HELD: NO. (But belongs to "other actions not involving property") petition is GRANTED.
 There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an
action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an action in personam,
 the foreign judgment is presumptive, and not conclusive, of a right as between the parties and their successors in
interest by a subsequent title
 However, in both cases, the foreign judgment is susceptible to impeachment in our local courts on the
grounds of want of jurisdiction or notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, the
party aggrieved by the foreign judgment is entitled to defend against the enforcement of such decision in the local
forum. It is essential that there should be an opportunity to challenge the foreign judgment, in order for the court in
this jurisdiction to properly determine its efficacy even if such judgment has conclusive effect as in the case of in
rem actions, if only for the purpose of allowing the losing party an opportunity to challenge the foreign judgment.
Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its
validity. Absent perhaps a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of
judgment must be brought before the regular courts.
 There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of
a foreign judgment, and that arising from the facts or allegations that occasioned the foreign judgment. They may
pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to
be vindicated. Extensive litigation is thus conducted on the facts, and from there the right to and amount of
damages are assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for proof is
the foreign judgment itself, and not the facts from which it prescinds.
 As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of
the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. The limitations on
review is in consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims
and issues. Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from
previous litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be
increased by never-ending litigation of the same disputes, and in a larger sense to promote what Lord Coke in the
Ferrer's Case of 1599 stated to be the goal of all law: "rest and quietness." If every judgment of a foreign court
were reviewable on the merits, the plaintiff would be forced back on his/her original cause of action, rendering
immaterial the previously concluded litigation.
 Marcos Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals:
 In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary
estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the
amount of the claim. However, where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court
has considered such actions as cases where the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by courts of first instance (now Regional Trial Courts).
 An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a foreign
judgment, even if capable of pecuniary estimation, would fall under the jurisdiction of the Regional Trial Courts
 The complaint to enforce the US District Court judgment is one capable of pecuniary estimation. But at the
same time, it is also an action based on judgment against an estate, thus placing it beyond the ambit of Section
7(a) of Rule 141. It is covered by Section 7(b)(3), involving as it does, "other actions not involving property." The
petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge
to have applied instead a clearly inapplicable rule and dismissed the complaint.
Agustin v Edu (1979) 88 SCRA 195
Facts:

Leovillo Agustin, the owner of a Beetle, challenged the constitutionality of Letter of Instruction 229 and its
implementing order No. 1 issued by LTO Commissioner Romeo Edu. His car already had warning lights and did not
want to use this.

The letter was promulgation for the requirement of an early warning device installed on a vehicle to reduce accidents
between moving vehicles and parked cars.

The LTO was the issuer of the device at the rate of not more than 15% of the acquisition cost.
The triangular reflector plates were set when the car parked on any street or highway for 30 minutes. It was
mandatory.

Petitioner: 1. LOI violated the provisions and delegation of police power, equal protection, and due process/

2. It was oppressive because the make manufacturers and car dealers millionaires at the expense f car owners at
56-72 pesos per set.

Hence the petition.

The OSG denied the allegations in par X and XI of the petition with regard to the unconstitutionality and undue
delegation of police power to such acts.

The Philippines was also a member of the 1968 Vienna convention of UN on road signs as a regulation. To the
petitioner, this was still an unlawful delegation of police power.

Issue:

Is the LOI constitutional? If it is, is it a valid delegation of police power?

Held: Yes on both. Petition dismissed.

Ratio:

Police power, according to the case of Edu v Ericta, which cited J. Taney, is nothing more or less than the power of
government inherent in every sovereignty.

The case also says that police power is state authority to enact legislation that may interfere with personal liberty or
property to promote the general welfare.

Primicias v Fulgoso- It is the power to describe regulations to promote the health, morals, peace, education, good
order, and general welfare of the people.

J. Carazo- government limitations to protect constitutional rights did not also intend to enable a citizen to obstruct
unreasonable the enactment of measures calculated to insure communal peace.

There was no factual foundation on petitioner to refute validity.

Ermita Malate Hotel-The presumption of constitutionality must prevail in the absence of factual record in over throwing
the statute.

Brandeis- constitutionality must prevail in the absence of some factual foundation in overthrowing the statute.

Even if the car had blinking lights, he must still buy reflectors. His claims that the statute was oppressive was fantastic
because the reflectors were not expensive.

SC- blinking lights may lead to confusion whether the nature and purpose of the driver is concerned.

Unlike the triangular reflectors, whose nature is evident because it’s installed when parked for 30 minutes and placed
from 400 meters from the car allowing drivers to see clearly.

There was no constitutional basis for petitioner because the law doesn’t violate any constitutional provision.

LOI 229 doesn’t force motor vehicle owners to purchase the reflector from the LTO. It only prescribes rge requirement
from any source.

The objective is public safety.

The Vienna convention on road rights and PD 207 both recommended enforcement for installation of ewd’s. Bother
possess relevance in applying rules with the decvlaration of principles in the Constitution.

On the unlawful delegation of legislative power, the petitioners have no settled legal doctrines.
Pharmaceutical and Health Care Association of the Philippines vs. Duque

Named as respondents are the Health Secretary, Undersecretaries, and Assistant Secretaries
of the Department of Health (DOH). For purposes of herein petition, the DOH is deemed
impleaded as a co-respondent since respondents issued the questioned RIRR in their
capacity as officials of said executive agency.1Executive Order No. 51 (Milk Code) was issued
by President Corazon Aquino on October 28, 1986 by virtue of the legislative powers granted
to the president under the Freedom Constitution. One of the preambular clauses of the Milk
Code states that the law seeks to give effect to Article 112 of the International Code of
Marketing of Breastmilk Substitutes (ICMBS), a code adopted by the World Health Assembly
(WHA) in 1981. From 1982 to 2006, the WHA adopted several Resolutions to the effect that
breastfeeding should be supported, promoted and protected, hence, it should be ensured
that nutrition and health claims are not permitted for breastmilk substitutes.In 1990, the
Philippines ratified the International Convention on the Rights of the Child. Article 24 of said
instrument provides that State Parties should take appropriate measures to diminish infant
and child mortality, and ensure that all segments of society, specially parents and children,
are informed of the advantages of breastfeeding. On May 15, 2006, the DOH issued herein
assailed RIRR which was to take effect on July 7, 2006.

Issue: . Whether Administrative Order or the Revised Implementing Rules and Regulations
(RIRR) issued by the Department of Health (DOH) is not constitutional;

Held: YES

under Article 23, recommendations of the WHA do not come into force for members,in the
same way that conventions or agreements under Article 19 and regulations under Article 21
come into force. Article 23 of the WHO Constitution reads:
Article 23. The Health Assembly shall have authority to make recommendations to Members
with respect to any matter within the competence of the Organization
for an international rule to be considered as customary law, it must be established that such
rule is being followed by states because they consider it obligatory to comply with such rules

Under the 1987 Constitution, international law can become part of the sphere of domestic
law either

By transformation or incorporation. The transformation method requires that an

international law be transformed into a domestic law through a constitutional mechanism
such as local legislation. The incorporation method applies when, by mere constitutional
declaration, international law is deemed to have the force of domestic law.

Consequently, legislation is necessary to transform the provisions of the WHA Resolutions

into domestic law. The provisions of the WHA Resolutions cannot be considered as part of
the law of the land that can be implemented by executive agencies without the need of a
law enacted by the legislature

Bayan Muna vs Romulo

G. R. No. 159618, February 01, 2011

Facts:

Petitioner Bayan Muna is a duly registered party-list group established to represent the
marginalized sectors of society. Respondent Blas F. Ople, now deceased, was the Secretary of
Foreign Affairs during the period material to this case. Respondent Alberto Romulo was
impleaded in his capacity as then Executive Secretary.

Rome Statute of the International Criminal Court

Having a key determinative bearing on this case is the Rome Statute establishing the
International Criminal Court (ICC) with “the power to exercise its jurisdiction over persons for
the most serious crimes of international concern x x x and shall be complementary to the
national criminal jurisdictions.” The serious crimes adverted to cover those considered grave
under international law, such as genocide, crimes against humanity, war crimes, and crimes of
aggression.
On December 28, 2000, the RP, through Charge d’Affaires Enrique A. Manalo, signed the Rome
Statute which, by its terms, is “subject to ratification, acceptance or approval” by the signatory
states. As of the filing of the instant petition, only 92 out of the 139 signatory countries appear to
have completed the ratification, approval and concurrence process. The Philippines is not among
the 92.
RP-US Non-Surrender Agreement

On May 9, 2003, then Ambassador Francis J. Ricciardone sent US Embassy Note No. 0470 to the
Department of Foreign Affairs (DFA) proposing the terms of the non-surrender bilateral
agreement (Agreement, hereinafter) between the USA and the RP.
Via Exchange of Notes No. BFO-028-037 dated May 13, 2003 (E/N BFO-028-03, hereinafter), the
RP, represented by then DFA Secretary Ople, agreed with and accepted the US proposals
embodied under the US Embassy Note adverted to and put in effect the Agreement with the US
government. In esse, the Agreement aims to protect what it refers to and defines as “persons”
of the RP and US from frivolous and harassment suits that might be brought against them in
international tribunals.8 It is reflective of the increasing pace of the strategic security and
defense partnership between the two countries. As of May 2, 2003, similar bilateral agreements
have been effected by and between the US and 33 other countries.

The Agreement pertinently provides as follows:

1. For purposes of this Agreement, “persons” are current or former Government officials,
employees (including contractors), or military personnel or nationals of one Party.

2. Persons of one Party present in the territory of the other shall not, absent the express consent
of the first Party,

(a) be surrendered or transferred by any means to any international tribunal for any purpose,
unless such tribunal has been established by the UN Security Council, or

(b) be surrendered or transferred by any means to any other entity or third country, or expelled
to a third country, for the purpose of surrender to or transfer to any international tribunal,
unless such tribunal has been established by the UN Security Council.

3. When the [US] extradites, surrenders, or otherwise transfers a person of the Philippines to a
third country, the [US] will not agree to the surrender or transfer of that person by the third
country to any international tribunal, unless such tribunal has been established by the UN
Security Council, absent the express consent of the Government of the Republic of the
Philippines [GRP].

4. When the [GRP] extradites, surrenders, or otherwise transfers a person of the [USA] to a third
country, the [GRP] will not agree to the surrender or transfer of that person by the third country
to any international tribunal, unless such tribunal has been established by the UN Security
Council, absent the express consent of the Government of the [US].

5. This Agreement shall remain in force until one year after the date on which one party notifies
the other of its intent to terminate the Agreement. The provisions of this Agreement shall
continue to apply with respect to any act occurring, or any allegation arising, before the effective
date of termination.

In response to a query of then Solicitor General Alfredo L. Benipayo on the status of the
non-surrender agreement, Ambassador Ricciardone replied in his letter of October 28, 2003 that
the exchange of diplomatic notes constituted a legally binding agreement under international
law; and that, under US law, the said agreement did not require the advice and consent of the US
Senate.
In this proceeding, petitioner imputes grave abuse of discretion to respondents in concluding and
ratifying the Agreement and prays that it be struck down as unconstitutional, or at least declared
as without force and effect.

Issue: Whether or not the RP-US NON SURRENDER AGREEMENT is void ab initio for contracting
obligations that are either immoral or otherwise at variance with universally recognized
principles of international law.

Ruling: The petition is bereft of merit.

Validity of the RP-US Non-Surrender Agreement

Petitioner’s initial challenge against the Agreement relates to form, its threshold posture being
that E/N BFO-028-03 cannot be a valid medium for concluding the Agreement.

Petitioners’ contention––perhaps taken unaware of certain well-recognized international

doctrines, practices, and jargons––is untenable. One of these is the doctrine of incorporation,
as expressed in Section 2, Article II of the Constitution, wherein the Philippines adopts the
generally accepted principles of international law and international jurisprudence as part of the
law of the land and adheres to the policy of peace, cooperation, and amity with all nations. An
exchange of notes falls “into the category of inter-governmental agreements,” which is an
internationally accepted form of international agreement. The United Nations Treaty Collections
(Treaty Reference Guide) defines the term as follows:

An “exchange of notes” is a record of a routine agreement, that has many similarities with the
private law contract. The agreement consists of the exchange of two documents, each of the
parties being in the possession of the one signed by the representative of the other. Under the
usual procedure, the accepting State repeats the text of the offering State to record its assent.
The signatories of the letters may be government Ministers, diplomats or departmental heads.
The technique of exchange of notes is frequently resorted to, either because of its speedy
procedure, or, sometimes, to avoid the process of legislative approval.

In another perspective, the terms “exchange of notes” and “executive agreements” have been
used interchangeably, exchange of notes being considered a form of executive agreement that
becomes binding through executive action. On the other hand, executive agreements concluded
by the President “sometimes take the form of exchange of notes and at other times that of more
formal documents denominated ‘agreements’ or ‘protocols.’” As former US High Commissioner
to the Philippines Francis B. Sayre observed in his work, The Constitutionality of Trade
Agreement Acts:

The point where ordinary correspondence between this and other governments ends and
agreements – whether denominated executive agreements or exchange of notes or otherwise
– begin, may sometimes be difficult of ready ascertainment. x x x
It is fairly clear from the foregoing disquisition that E/N BFO-028-03––be it viewed as the
Non-Surrender Agreement itself, or as an integral instrument of acceptance thereof or as
consent to be bound––is a recognized mode of concluding a legally binding international
written contract among nations.

Agreement Not Immoral/Not at Variance

with Principles of International Law

Petitioner urges that the Agreement be struck down as void ab initio for imposing immoral
obligations and/or being at variance with allegedly universally recognized principles of
international law. The immoral aspect proceeds from the fact that the Agreement, as petitioner
would put it, “leaves criminals immune from responsibility for unimaginable atrocities that
deeply shock the conscience of humanity; x x x it precludes our country from delivering an
American criminal to the [ICC] x x x.”63

The above argument is a kind of recycling of petitioner’s earlier position, which, as already
discussed, contends that the RP, by entering into the Agreement, virtually abdicated its
sovereignty and in the process undermined its treaty obligations under the Rome Statute,
contrary to international law principles.

The Court is not persuaded. Suffice it to state in this regard that the non-surrender agreement,
as aptly described by the Solicitor General, “is an assertion by the Philippines of its desire to try
and punish crimes under its national law. x x x The agreement is a recognition of the primacy and
competence of the country’s judiciary to try offenses under its national criminal laws and
dispense justice fairly and judiciously.”

Petitioner, we believe, labors under the erroneous impression that the Agreement would allow
Filipinos and Americans committing high crimes of international concern to escape criminal trial
and punishment. This is manifestly incorrect. Persons who may have committed acts penalized
under the Rome Statute can be prosecuted and punished in the Philippines or in the US; or with
the consent of the RP or the US, before the ICC, assuming, for the nonce, that all the formalities
necessary to bind both countries to the Rome Statute have been met. For perspective, what the
Agreement contextually prohibits is the surrender by either party of individuals to international
tribunals, like the ICC, without the consent of the other party, which may desire to prosecute the
crime under its existing laws. With the view we take of things, there is nothing immoral or
violative of international law concepts in the act of the Philippines of assuming criminal
jurisdiction pursuant to the non-surrender agreement over an offense considered criminal by
both Philippine laws and the Rome Statute.
GUDANI VS. SENGA
Posted by kaye lee on 10:51 PM
GR No. 170165, August 15, 2006 [Article VI Sec. 22: Congress' Power of Inquiry;
Legislative Investigation]

FACTS:
The Senate invited Gen. Gudani and Lt. Col. Balutan to clarify allegations of 2004
election fraud and the surfacing of the “Hello Garci” tapes. PGMA issued EO 464
enjoining officials of the executive department including the military establishment
from appearing in any legislative inquiry without her consent. AFP Chief of Staff Gen.
Senga issued a Memorandum, prohibiting Gen. Gudani, Col. Balutan et al from
appearing before the Senate Committee without Presidential approval. However, the
two appeared before the Senate in spite the fact that a directive has been given to
them. As a result, the two were relieved of their assignments for allegedly violating
the Articles of War and the time honoured principle of the “Chain of Command.”
Gen. Senga ordered them to be subjected before the General Court
Martial proceedings for willfuly violating an order of a superior officer.

ISSUE:
Whether or not the President has the authority to issue an order to the members of
the AFP preventing them from testifying before a legislative inquiry.

RULING:
Yes. The SC hold that President has constitutional authority to do so, by virtue of her
power as commander-in-chief, and that as a consequence a military officer who
defies such injunction is liable under military justice. At the same time, any chamber
of Congress which seeks the appearance before it of a military officer against the
consent of the President has adequate remedies under law to compel such
attendance. Any military official whom Congress summons to testify before it may
be compelled to do so by the President. If the President is not so inclined, the
President may be commanded by judicial order to compel the attendance of the
military officer. Final judicial orders have the force of the law of the land which the
President has the duty to faithfully execute.
SC ruled in Senate v. Ermita that the President may not issue a blanket requirement
of prior consent on executive officials summoned by the legislature to attend a
congressional hearing. In doing so, the Court recognized the considerable limitations
on executive privilege, and affirmed that the privilege must be formally invoked on
specified grounds. However, the ability of the President to prevent military officers
from testifying before Congress does not turn on executive privilege, but on the
Chief Executive’s power as commander-in-chief to control the actions and speech of
members of the armed forces. The President’s prerogatives as commander-in-chief
are not hampered by the same limitations as in executive privilege.

At the same time, the refusal of the President to allow members of the military to
appear before Congress is still subject to judicial relief. The Constitution itself
recognizes as one of the legislature’s functions is the conduct of inquiries in aid of
legislation. Inasmuch as it is ill-advised for Congress to interfere with the
President’s power as commander-in-chief, it is similarly detrimental for the President
to unduly interfere with Congress’s right to conduct legislative inquiries. The impasse
did not come to pass in this petition, since petitioners testified anyway despite the
presidential prohibition. Yet the Court is aware that with its pronouncement today
that the President has the right to require prior consent from members of the armed
forces, the clash may soon loom or actualize.

The duty falls on the shoulders of the President, as commander-in-chief, to authorize

the appearance of the military officers before Congress. Even if the President has
earlier disagreed with the notion of officers appearing before the legislature to
testify, the Chief Executive is nonetheless obliged to comply with the final orders of
the courts.
UNITED CHURCH OF CHRIST G.R. No. 171905
IN THE PHILIPPINES, INC.,
Petitioner,

Present:
CARPIO, J.,
-versus- Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
BRADFORD UNITED CHURCH
OF CHRIST, INC., PATRIZIO
EZRA, GERONIMO V.
NAZARETH, RUPERTO
MAYUGA, SR., ROBERT
SCHAARE, HENRY CARIAT,
REYNALDO FERRENAL AND Promulgated:
JOHN DOES,
Respondents. June 20, 2012
x---------------------------------------------------------------------------------------
--x

DECISION

PEREZ, J.:

Before the Court is a petition for review on certiorari under Rule

45 of the 1997 Rules of Civil Procedure assailing the Decision[1] of the
Court of Appeals in CA-G.R. SP No. 83159 which affirmed the Securities
and Exchange Commission[2] (SEC) Decision[3] in SEC Case No.
C-00194.

Petitioner United Church of Christ in the Philippines, Inc. (UCCP)

is a religious corporation duly organized and existing under the laws of
the Philippines. It is a national confederation of incorporated and
unincorporated self-governing Evangelical churches of different
denominations, devised for fellowship, mutual counsel and
cooperation. It is the ecclesiastical successor of the Evangelical Church of
the Philippines, the Philippine Methodist Church and the United
Evangelical Church of the Philippines.[4]
 Respondent Bradford United Church of Christ, Inc. (BUCCI),
formerly known as Bradford Memorial Church, is likewise a religious
corporation with a personality separate and distinct from UCCP. It was
organized at the turn of the 20th century but it was incorporated only on
14 December 1979.

Respondents Patrizio Ezra, Geronimo Nazareth, Ruperto Mayuga,

Sr., Robert Schaare, Henry Cariat, Reynaldo Ferrenal and other John
Does are members of BUCCI.

The following historical background briefly summarizes the

relationship between UCCP and BUCCI, viz:

On May 25, 1948, The United Church of Christ in the

Philippines, Inc. was formally organized. The five ancestor churches
were the Methodist Episcopal Church, the Presbyterian Church, the
Church of Christ (Disciples) and the Congregational Churches. These
churches traced their lineage back to the early Christian Church.
Early on, at the turn of the century, the proponents of these
churches came as missionaries, spreading the faith as ardent offsprings
of the Reformation. Aimed at converting Roman Catholics, Buddhists,
Hindus and spirit worshippers to the Protestant faith, these
missionaries had organized the Evangelical Union by 1901, until it was
superseded by a forerunner of the National Council of Churches in the
Philippines.

During th[o]se times, the precursor of Bradford Memorial

Church, the Presbyterian mission came to the Philippines. It was
organized by the early missionaries of the Presbyterian Church in the
U.S.A. through its Board of Foreign Missions. In 1909, it was alleged
to have acquired real properties in the Philippines funded by one
Matilda R. L. Bradford from whom the congregation attributed its
name, in recognition of her efforts for the church.

While not all churches in the Evangelical Union were equally

strong in their desire for organic church union, such remained as a goal
of the organization. In 1921, it seemed that the plans for the union of
the five churches were not to materialize, so the movement widened its
activities to include all the Presbyterian churches and the
Congregational bodies in the Philippines.

After considerable negotiations, four churches- the Presbyterian,

the Congregational, the United Brethren and the United Church of
Manila were invited and an assembly was held in Manila. On March
15, 1929, the basis of Union was formally adopted and the United
Evangelical Church came into being.
 The new church grew in strength from year to year until the
Second World War when a division was created in the newly formed
Evangelical Church in the Philippines.

In 1946, immediately following the close of World War II, the

Presbyterians and Congregationalist Churches in the Visayas and
Mindanao region under the Rev. Leonardo Dia reconstituted the United
Evangelical Church in the Philippines in those areas. In view of this
development, the Bradford Memorial Church transferred its synodical
connection to the newly reorganized United Evangelical Church in the
Philippines, and thereafter, carried the name BRADFORD Evangelical
Church.

A few years after the war, it was thought wise not to push
through with the church union. However, on May 25, 1948, a total of
167 delegates from three church bodies met at Ellinwood-Malate
Church. They were the Evangelical Church, a federation of evangelical
churches operating in the Luzon area; the Philippine Methodist Church
(a split from the United Methodist-Episcopal Church) and the United
Evangelical Church in the Philipines, a federation of Presbyterian and
Congregationalist churches operating in the Visayas and Mindanao
area. Each body reported that its constituted divisions had voted to
accept the basis of Union and to join the new church. So on May 23-25,
1945, these three major churches convened, organized and declared the
new federation of evangelical churches.

Thus, the United Church of Christ in the Philippines, Inc. or

UCCP was born from the union of these three major churches. Finally,
on April 12, 1949, the UCCP was registered with the Commission.

Thus, by circumstance, the Bradford Evangelical Church

transferred its synodical connection to and became a constituent
Church of the UCCP.

Through the years the UCCP underwent major changes. Per its
Constitution published in April of 1980, it was apportioned into several
Conferences, delineated according to geographical areas as determined
by the General Assembly. Most of its local congregations and
conferences were also registered as separate entities for greater
autonomy such as the Cebu Conference Inc. and Bradford United
Church of Christ, Inc.

On December 14, 1979, Bradford United Church of Christ, Inc.

(BUCCI) was incorporated as a personality separate and distinct from
UCCP. Registered under SEC. Reg. No. 90225, its Articles of
Incorporation declare Bradford United Church of Christ as a Protestant
Congregation. Among its original incorporators are herein
Respondents Patricio Ezra, Robert Schaare and Geronimo V.
Nazareth. Furthermore, Article 3 of its original articles of
incorporation provides:
 That its incorporation is not forbidden by competent
authorities or by the Constitution, rules, regulations or
discipline of the United Church of Christ in the Philippines and
that of the Bradford United Church of Christ.[5]

UCCP has three (3) governing bodies namely: the General

Assembly, the Conference and the Local Church, each having distinct and
separate duties and powers. As a UCCP local church located in Cebu,
BUCCI belonged to the Cebu Conference Inc. (CCI) with whom it
enjoyed peaceful co-existence until late 1989 when BUCCI started
construction of a fence that encroached upon the right-of way allocated
by UCCP for CCI and Visayas jurisdiction.[6]

UCCP General Assembly attempted to settle the dispute. On 7

April 1990, the Cebu Conference Judicial Commission rendered a
decision in favor of CCI.[7] This unfavorable decision triggered a series of
events[8] which further increased the enmity between the parties and led to
the formal break-up of BUCCI from UCCP.[9]

In a Church Council Resolution dated 21 June 1992, BUCCI

disaffiliated from UCCP. The effectivity of the disaffiliation was made to
retroact to 16 September 1990 when BUCCI severed its ties from
CCI. This disaffiliation was duly ratified by BUCCIs members in a
referendum held on 19 July 1992.[10]

Consequently, BUCCI filed its Amended Articles of Incorporation

and By-Laws which provided for and effected its disaffiliation from
UCCP. SEC approved the same on 2 July 1993.[11]

Thereafter, UCCP filed before SEC a complaint/protest for

rejection/annulment of Amended Articles and Incorporation and
Injunction, docketed as SEC Case No. C-00194. UCCP also prayed for
the disallowance of the continued use of BUCCI as corporate name.[12]

UCCP later on filed an Amended Complaint/Protest dated 8 March

1994, abandoning the original Complaint/Protest. The Amended
Complaint/Protest added BUCCI as one of the respondents; alleged that
the separate incorporation and registration of BUCCI is not allowed under
the UCCP Constitution and By-laws; and sought to enjoin BUCCI and
the respondents from using the name BUCCI, both in its Amended
Articles of Incorporation and its dealings with the public, and from using
its properties.[13]
 On 27 January 2004, the SEC en banc dismissed UCCPs petition to
declare as null and void the amendments made to the Articles of
Incorporation of BUCCI. SEC summarized UCCPs arguments into three
main issues, as follow:

1. Whether or not the separation of [BUCCI] from [UCCP] is valid;

2. Whether or not the amendments to the Articles of Incorporation

and By-Laws of BUCCI made after it separated from UCCP are
valid; [and]

3. Whether or not private respondents are entitled to the use of the

name Bradford United Church of Christ, Inc.(BUCCI).[14]

SEC defended the right of BUCCI to disassociate itself from

UCCP in recognition of its constitutional freedom to associate and
disassociate. SEC also pointed out that since UCCP had used the fact of
BUCCIs disaffiliation to consolidate its claim over the property subject of
the unlawful detainer case against BUCCI before the RTC, UCCP cannot
now deny the validity of said disaffiliation. Moreover, SEC found that
UCCP is not the real party in interest to question the amendments made
by BUCCI to its Articles of Incorporation and By-Laws. Finally, SEC
upheld the right of BUCCI to continue using its corporate name.

UCCP filed a petition for review with the Court of Appeals. On 17

June 2005, the Court of Appeals rendered a Decision affirming the SEC.

On 16 September 2005, UCCP filed a motion to drop BUCCI as

respondent.[15]

Its motion for reconsideration having been denied on 21 February

[16]
2006, UCCP filed the present appeal.

UCCP maintains that the issue on whether the disaffiliation of

respondents is valid is purely an ecclesiastical affair. It asserts that it has
the sole power and authority to declare and/or decide whether BUCCI or
any of its local churches could disaffiliate from it.[17] UCCP likewise
restates that individual respondents cannot validly effect amendments to
BUCCIs Articles and By-Laws nor to continue the use of BUCCIs name
after they have disaffiliated from UCCP. Moreover, UCCP asseverates
that the stringent requirements of the Corporation Code to effect
amendments have not been satisfied.[18] UCCP also refutes the holding
that BUCCI no longer forms part of UCCP because the latter had filed
several cases against the former. UCCP explains that the
above-mentioned cases had been filed against individual respondents, and
not against BUCCI; and the inclusion of BUCCIs name in said cases were
merely circumstantial because at the time those cases were filed,
individual respondents were still acting and sabotaging the operation of
BUCCI.[19] Lastly, UCCP criticizes SEC for its finding that UCCP has no
legal personality to prosecute the case before it. UCCP asserts that
individual respondents were its former members and BUCCI, the entity
involved, is its member-local church.[20]

Respondents,[21] on the other hand, counter that UCCPs new

theorythat the determination of membership to UCCP is a purely
ecclesiastical affairis not and cannot be allowed at this late stage of the
proceedings.[22] They maintain that the Court of Appeals and SEC are
correct in ruling that BUCCI had validly disaffiliated from UCCP and is
entitled to continue in the use of its name.[23] As their third point,
respondents assert that the Court of Appeals and SECs finding that UCCP
had no legal personality to question the validity of the amendments to
BUCCIs Articles and By-laws, is in accord with law and settled
jurisprudence.[24] Finally, they point out that the petition should be
dismissed outright for failure to comply with the mandatory requirements
of Rule 45 of the 1997 Rules of Civil Procedure.[25]

The Court denies the Petition.

The issue is not a purely ecclesiastical affair

Notably, UCCP invoked the jurisdiction of SEC when it submitted

for resolution the following issues:

1. Whether or not BUCCI is an organic component of UCCP

subject to the latters Constitution and By-laws;

2. Whether or not the referendum conducted by respondents on

July and November 1992 were valid;
3. Whether or not the supposed separation of BUCCI from
UCCP is valid;

4. Whether or not the amendment of the Articles of Incorporation

and By-laws of BUCCI is valid;

5. Whether or not private respondents are entitled to the use of

the name BUCCI; and

6. Whether or not the use of the name BUCCI is confusingly

similar with UCCP.[26]
 Before the Court of Appeals, UCCP cited the following as grounds
for review:

I. The SEC committed serious reversible error in upholding as

valid the amendments to the constitution and by-laws of
BUCCI when there was absolutely no evidence proving that the
strict requirements for amendments provided (sic) for under the
new Corporation Code were complied with;

II. The SEC committed serious reversible error in disregarding

both testimonial and documentary evidence of the petitioner
proving that respondent did not comply with the proper notice,
deliberation of the issues and the 2/3 vote requirement for
validity of the amendments of its articles of incorporation;

III. The SEC committed serious reversible error in holding that

petitioner UCCP does not have the legal standing to question
the amendments made to BUCCIs articles of incorporation and
by-laws after the latters separation from the petitioner.
Petitioners legal standing to file the case had never been the
issue of the case from the time of its filing, during the pre-trial
conference, during the trial on the merits, and in the respective
memorandum filed by the parties in this case; and

IV. The SEC committed serious reversible error in upholding

respondents continued use of the name BUCCI when in fact
individual respondents by their very own acts have expelled
themselves from membership of the UCCP and its local church
the BUCCI.[27]

Failing to obtain favorable judgment from the SEC and the Court
of Appeals, UCCP now comes before the Court posing ostensibly a
question of law, that the determination of membership in UCCP is a
purely ecclesiastical affair, which theory strips SEC and the Court of
Appeals of any authority to rule on the issues voluntarily submitted to
them by UCCP itself for resolution.

Basic is the rule that a party cannot be allowed to invoke the

jurisdiction of a court to secure affirmative relief and later on renounce or
repudiate the same after it fails to obtain such relief.[28]After voluntarily
submitting a cause and encountering an adverse decision on the merits, it
is too late for the loser to question the jurisdiction or power of the
court. The Court frowns upon the undesirable practice of a party
submitting his case for decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction, when adverse.[29]
 The Court has likewise consistently rejected the pernicious practice
of shifting to a new theory on appeal in the hope of a favorable
result. Fair play, justice and due process require that as a rule new matters
cannot be raised for the first time before an appellate tribunal.[30] Failure
to assert issues and arguments within a reasonable time warrants a
presumption that the party entitled to assert it either has abandoned or
declined to assert it.[31]

In any event, the Court believes that the matter at hand is not
purely an ecclesiastical affair.

An ecclesiastical affair is one that concerns doctrine, creed or form

of worship of the church, or the adoption and enforcement within a
religious association of needful laws and regulations for the government
of the membership, and the power of excluding from such associations
those deemed unworthy of membership.[32] Based on this definition, an
ecclesiastical affair involves the relationship between the church and its
members and relate to matters of faith, religious doctrines, worship and
governance of the congregation. To be concrete, examples of this
so-called ecclesiastical affairs to which the State cannot meddle are
proceedings for excommunication, ordinations of religious ministers,
administration of sacraments and other activities attached with religious
significance.[33]

In the first place, relief from civil courts was sought when the
incident of disaffiliation occurred, in the face of UCCPs assertions that it
continues to recognize BUCCI as one of its local churches and that it has
the sole authority to determine the validity of the disaffiliation.

Secondly, intertwined with the issue of the validity of the

disaffiliation is the question of whether BUCCI had the power under the
law to effect disaffiliation such that it should be given legal consequence
and granted recognition.

UCCP and BUCCI, being corporate entities and grantees of

primary franchises, are subject to the jurisdiction of the SEC. Section 3 of
Presidential Decree No. 902-A provides that SEC shall have absolute
jurisdiction, supervision and control over all corporations. Even with their
religious nature, SEC may exercise jurisdiction over them in matters that
are legal and corporate.[34]
 BUCCI, as a juridical entity separate and distinct from UCCP,
possesses the freedom to determine its steps.

UCCPs statement in its memorandum- [w]here else can petitioner

seek protection and relief x x x?[35] is particularly telling. That UCCP sees
the need to turn to a body for relief is an admission that its authority over
BUCCI is not absolute and is actually more tenuous than alleged.

Thus, UCCP cannot rely on the Courts ruling as restated in Long v.

[36]
Basa, that in matters purely ecclesiastical, the decisions of the proper
church tribunals are conclusive upon the civil tribunals.[37] If in the case at
bar, even with its highest executive officials pronouncement that BUCCI
is still recognized as its member-church,[38] UCCP could not compel
BUCCI to go back to its fold, then the alleged absolute ecclesiastical
authority must not be there to begin with.
In fact, Long may be viewed as supportive of respondents
case. Said case involved a churchs sole prerogative and power to expel its
individual members. Similarly, the case at bar concerns BUCCIs sole
prerogative and power as a church to disconnect ties with another
entity. Such are decisions, that may have religious color and are therefore
ecclesiastical affairs, the Court must respect and cannot review. It is
worth mentioning that in Fonacier v. Court of Appeals,[39] the Court held
that the amendments of the constitution, restatement of articles of religion
and abandonment of faith or abjuration, having to do with faith, practice,
doctrine, form of worship, ecclesiastical law, custom and rule of a church
and having reference to the power of excluding from the church those
allegedly unworthy of membership, are unquestionably ecclesiastical
matters which are outside the province of the civil courts.

Conversely, the Court owes but recognition to BUCCIs decision as

it concerns its legal right as a religious corporation to disaffiliate from
another religious corporation via legitimate meansa secular matter well
within the civil courts purview.

Respondents Validly Effected the Amendments

UCCP contends that respondents have severed their UCCP membership

and consequently, have lost their BUCCI membership. As such, they
have neither the power to bring about the amendments to BUCCIs
Articles of Incorporation nor right to continue the usage of BUCCIs
name.
 The Church Council Resolution dated 21 June 1992, duly ratified
by BUCCIs members in a referendum, carried out BUCCIs corporate act
of disaffiliating from UCCP. By virtue of this disaffiliation, BUCCI
members, including respondents, severed their ties from UCCP but
maintained their membership with BUCCI. UCCPs contention that the
severance of UCCP ties amounts to severance of ties to the local church
does not hold water.

Local church autonomy takes precedence in the UCCP

polity. Section 4 of the 1974 UCCP Constitution provides:
SECTION 4. The autonomy of the local church or congregation
in matters pertaining to its life in its own particular community shall be
respected, consistent with its relation to the Conference, Jurisdiction,
and General Assembly.

According to respondent, UCCP adopted a congregationalist system

where a local church has the right to govern itself by its own laws, rules
and regulations for the furtherance of its own general welfare and the
freedom to practice its own faith and polity of denominational
origin.[40] This congregationalist system was shown in the Basis of Union,
the Declaration of Union and UCCPs Constitution and By-laws.

Article IV of the Basis of Union reads:

ARTICLE IV -- Church Practices and Worship: Congregations

may follow their customary practices and worship.[41]

Section 4, Article VI specifically outlines the duties and powers of the

local church:

(a) Subject only to the general laws and regulations of the Church,
every local church or congregation, shall, with its pastor, be
responsible for watching over its members, keeping its life pure,
ordering its worship, providing Christian education and
proclaiming the Gospel[;] (b) Call a Pastor[;] (c) Recommend
candidates for the ministry[;] (d) Elect delegates to the Annual
Conference.[42]

Statement IV of Declaration of Union provides:

That by adoption of the name UNITED CHURCH OF CHRIST

IN THE PHILIPPINES for this Church Union, no right, interest, or
title in and to their respective names by which the uniting Churches
 have been identified and known, has been nor is surrendered, but all
such rights are specifically reserved against the claims of all persons,
associations and organizations whatsoever.[43]

As a matter of fact, the present UCCP Constitution[44] and By-laws

continue to uphold this tradition of respecting local church
autonomy. The 2005 UCCP Amended Constitution provides in Article II,
Section 14:
Consistent with the heritage and commitment of the United
Church of Christ in the Philippines, the autonomy of the Local Church
shall be respected. The scope of such autonomy shall be defined in the
By-Laws.

Section 28, Article III of the UCCP By-laws provides:

Section 28. Scope of Local Autonomy: The primary locus of

mission is the Local Church. Hence, the UCCP upholds the autonomy
of the Local Church particularly as to its right and power to conduct its
ministry free from outside control, provided the same is in line with the
Constitution, By-Laws and statues of the Church, thereby enabling the
Local Church to become effective instrument in the ministry and
mission of the Church and ensuring its positive contribution to the
unity and strengthening of the whole Church. Specifically, autonomy
of the Local Church includes the authority to do the following:

a. To call and support its Pastor and other Church workers,

keeping in mind the basic policy of the Church to call to its
ministry pastors and Church workers belonging to the UCCP,
subscribing to the UCCP Statement of Faith and paying
allegiance to the Constitution, By-Laws and statutes of the
Church. Pastors, ministers and workers of other churches
affiliated with the National Council of Churches in the
Philippines (NCCP) may be requested to serve in the Local
Church with the prior written permission of the General
Assembly or the National Council, through the General
Secretary;

b. To administer, maintain, encumber or dispose of its personal

or real properties pursuant to a resolution of its Board of
Trustees and approved by its Church Council and, where
real properties are involved, with the written consent of the
General Assembly or the National Council, through the
General Secretary;

c. To invite pastors, ministers, workers and lay leaders of other

churches to speak, preach or otherwise enter into fellowship
with the Local Church, from time to time, in consonance
 with Article II, Section 6, of the Constitution, provided that
the authority and integrity of the UCCP, as well as the unity
of the Local Church, shall never be impaired or
compromised;

d. To nominate and elect its officers, in accordance with the

Constitution and By-Laws, and hold annual and such special
meetings as it may deem necessary and proper;

e. To admit qualified persons into the membership of the

Local Church, help ensure their nurture and spiritual
development, and promote and develop among them the idea
of loving service, stewardship and missionary outreach;

f. To celebrate its worship services that are orderly and solemn,

yet joyful and meaningful, reflective of the faith and life of
the Church and responsive to the needs of the community in
terms of witness, service and prophetic ministry;

g. To support the ministerial and lay formation program of the

Church and recruit, recommend and support candidates for
the ministry;

h. To adopt its own budget and financial program and fulfill its
obligations to the wider bodies; and

i. To do all things as it may deem wise, necessary and proper,

without encroaching on the prerogatives of, and interfering
with, the wider Church bodies, ensuring at all times that its
action contribute to the unity and strengthening of the whole
UCCP.

From the foregoing it can be gleaned that: UCCPs control and authority
over its local churches is not full and supreme; membership of the local
churches in the UCCP is voluntary and not perpetual; local churches
enjoy independence and autonomy and may maintain or continue
church-life with or without UCCP.

Thus, under the law and UCCP polity, BUCCI may validly bring about
its disaffiliation from UCCP through the amendment of its Articles of
Incorporation and By-laws.

Significantly, SEC approved the amendments on 2 July 1993, which

approval has in its favor the presumption of regularity.[45] Government
officials are presumed to have regularly performed their functions and
strong evidence is necessary to rebut this presumption.[46] In the absence
of convincing proof to the contrary, the presumption must be upheld.[47]
More importantly, well-settled is the judicial dictum that factual findings
of quasi-judicial agencies, such as SEC, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally
accorded not only respect but even finality. They are binding upon this
Court which is not a trier of facts. Only upon clear showing of grave
abuse of discretion, or that such factual findings were arrived at
arbitrarily or in disregard of the evidence on record will this Court step in
and proceed to make its own independent evaluation of the facts. No
cogent reason exists in the instant cases to deviate from this settled
rule.[48]

Anent the continued use by respondents of BUCCI, the Court likewise

sustains the rulings of SEC and Court of Appeals. Pertinently, the Court
of Appeals ruled as follows:

As held in Philips Export B.V. vs. Court of Appeals [206 SCRA 457,
463], to fall within the prohibition of the law, two requisites must be
proven, to wit: (1) that the complainant corporation acquired a prior
right over the use of such corporate name; and (2) the proposed name
is either: (a) identical, or (b) deceptively or confusingly similar to that
of any existing corporation or to any other name already protected by
law; or (c) patently deceptive, confusing or contrary to existing law.

The respondent BUCCIs church history would show that it has a better
right to use its corporate name on the ground of priority of adoption.
As thoroughly discussed by the SEC in its assailed decision, the
evolution of respondent BUCCI to what it is today undoubtedly
establishes that it had acquired the right to make use of its corporate
name.

As to whether or not BUCCI is confusingly or deceptively similar to

UCCP, We find in the negative. In determining the existence of
confusing similarity in corporate names, the test is whether the
similarity is such as to mislead a person using ordinary care and
discrimination.[49]

Furthermore, Section 2, Article I of the UCCP Constitution[50] states that,

All local churches and church-owned entities shall bear prominently the
name: United Church of Christ in the Philippines. For this reason, BUCCI
is evidently distinct from UCCP and from all other UCCP local churches
and church-owned entities.

SEC and Court of Appeals correctly ruled that UCCP has no locus
standi to question the amendments to BUCCIs Articles of Incorporation
and By-laws.
 The doctrine of locus standi or the right of appearance in a court of
justice has been adequately discussed by this Court in a number of cases.
The doctrine requires a litigant to have a material interest in the outcome
of a case. In private suits, locus standi requires a litigant to be a real party
in interest, which is defined as the party who stands to be benefited or
injured by the judgment in the suit or the party entitled to the avails of the
suit.[51]

A real party in interest is the party who stands to be benefited or

injured by the judgment in the suit, or the party entitled to the avails of
the suit. And by real interest is meant a present substantial interest, as
distinguished from a mere expectancy, or a future, contingent,
subordinate or consequential interest.[52]

A suit may be dismissed if the plaintiff or the defendant is not a

real party in interest.[53]

After a review of the evidence on record, the SEC, which the Court
of Appeals affirmed, correctly ruled that UCCP, not being a member of
BUCCI, is not the proper party to question the validity of the
amendments of the latters Articles of Incorporation and By-laws. While
UCCP stands to be affected by the disaffiliation, the same is admitted and
accepted by UCCPs polity by the very establishment of its liberal
structure.
Petition failed to comply with the mandatory requirements of Rule 45 of
the 1997 Rules of Civil Procedure

We highlight the fact that when UCCP filed the original complaint
before the SEC, only individual respondents were impleaded. UCCP then
amended the complaint to include BUCCI, only to drop it as respondent
after the Court of Appeals promulgated its Decision, purportedly to show
that it was merely going after individual respondents. We agree with
respondents that failure to implead BUCCI as respondent in the instant
case constitutes a blatant disregard of Section 4(a), Rule 45 of the Rules
of Court,[54] but also renders the assailed decision final and executory and
all subsequent actions on the petition are void considering that BUCCI is
an indispensable party.[55] We cannot countenance this disingenuous
practice of shifting to a new theory on appeal in the hope of obtaining a
favorable result.[56]
Essentially, the three main issues raised by UCCP before the SEC
and the Court of Appeals[57] are the very same issues presented for our
resolution. Finding no serious errors to warrant a reversal of the assailed
Decision, We affirm.
 WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals dated 17 June 2005 is hereby AFFIRMED.

SO ORDERED.
G.R. No. 77875 February 4, 1993

PHILIPPINE AIRLINES, INC., petitioner,

vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS COMMISSION, respondents.

Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D. Ungos, Jr. for
petitioner.

Adolpho M. Guerzon for private respondents.

REGALADO, J.:

The instant petition for certiorari seeks to set aside the decision of The National Labor Relations Commission (NLRC)
in NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1 containing the following disposition:

WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and another one
entered, declaring the suspension of complainants to be illegal and consequently, respondent PAL is directed to pay
complainants their salaries corresponding to the respective period(s) of their suspension, and to delete the disciplinary
action from complainants' service records. 2

These material facts recited in the basic petition are virtually undisputed and we reproduce the same hereunder:
1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services Department of
petitioner. Their duties and responsibilities, among others, are:

Prepares meal orders and checklists, setting up standard equipment in accordance with the requirements of the type
of service for each flight; skiing, binning, and inventorying of Commissary supplies and equipment.

2. On various occasions, several deductions were made from their salary. The deductions represented losses of
inventoried items charged to them for mishandling of company properties . . . which respondents resented. Such that
on August 21, 1984, individual respondents, represented by the union, made a formal notice regarding the deductions
to petitioner thru Mr. Reynaldo Abad, Manager for Catering. . . .

3. As there was no action taken on said representation, private respondents filed a formal grievance on November 4,
1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining Agreement between petitioner and the
union. . . . The topics which the union wanted to be discussed in the said grievance were the illegal/questionable
salary deductions and inventory of bonded goods and merchandise being done by catering service personnel which
they believed should not be their duty.

4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad, Manager for Catering,
who at the time was on vacation leave. . . .

5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on December 5, 1984
addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply was made to their
grievance which "was duly received by your secretary" and considering that petitioner had only five days to resolve the
grievance as provided for in the CBA, said grievance as believed by them (private respondents) was deemed resolved
in their favor. . . .

6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and scheduled a meeting on
December 12, 1984. . . .

7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did not conduct ramp
inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp inventory on December 10. In like manner,
Regino Duran and Houdiel Magadia did not conduct the same on December 10 and 12.

8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved the grievance by
denying the petition of individual respondents and adopted the position that inventory of bonded goods is part of their
duty as catering service personnel, and as for the salary deductions for losses, he rationalized:

1. It was only proper that employees are charged for the amount due to mishandling of company property which
resulted to losses. However, loss may be cost price 1/10 selling price.

9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3, 1985 wrote by an
inter-office memorandum addressed to the grievants, individual respondents herein, for them to explain on (sic) why
no disciplinary action should be taken against them for not conducting ramp inventory. . . .

10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth as:

4. Since the grievance step 1 was not decided and no action was done by your office within 5 days from November 21,
1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is deemed resolved in PALEA's favor.

11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension ranging from
7 days to 30 days were (sic) imposed depending on the number of infractions committed. *

12. After the penalty of suspension was meted down, PALEA filed another grievance asking for lifting of, or at least,
holding in abeyance the execution of said penalty. The said grievance was forthwith denied but the penalty of
suspension with respect to respondent Ramos was modified, such that his suspension which was originally from
January 15, 1985 to April 5, 1985 was shortened by one month and was lifted on March 5, 1985. The union, however,
made a demand for the reimbursement of the salaries of individual respondents during the period of their suspension.

13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was filed before
the
Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in favor of
petitioner by dismissing the complaint. . . . 3
Private respondents appealed the decision of the labor arbiter to respondent commission which rendered the
aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for reconsideration having
been denied, it interposed the present petition.

The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC acted with grave
abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned decision.

Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go so far as to
evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination, but is
limited to issues of jurisdiction and grave abuse of discretion. 4 It has not been shown that respondent
NLRC has unlawfully neglected the performance of an act which the law specifically enjoins it
to perform as a duty or has otherwise unlawfully excluded petitioner from the exercise of a right
to which it is entitled.

The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining
Agreement, (hereinafter, CBA), to wit:

Sec. 2 — Processing of Grievances

xxx xxx xxx

STEP 1 — Any employee who believes that he has a justifiable grievance shall take the matter up with his shop
steward. If the shop steward feels there is justification for taking the matter up with the Company, he shall record the
grievance on the grievance form heretofore agreed upon by the parties. Two (2) copies of the grievance form properly
filled, accepted, and signed shall then be presented to and discussed by the shop steward with the division head. The
division head shall answer the grievance within five (5) days from the date of presentation by inserting his decision on
the grievance form, signing and dating same, and returning one copy to the shop steward. If the division head fails to
act within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If the
division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis of the
decision made, and shall not be eligible for further appeal. 5(Emphasis ours.)

Petitioner submits that since the grievance machinery was established for both labor and management as a vehicle to
thresh out whatever problems may arise in the course of their relationship, every employee is duty bound to present
the matter before management and give the latter an opportunity to impose whatever corrective measure is possible.
Under normal circumstances, an employee should not preempt the resolution of his grievance; rather, he has the duty
to observe the status quo. 6

Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the obligation, just as
management has, to settle all labor disputes through friendly negotiations. Thus, Section 2 of the CBA should not be
narrowly interpreted. 7 Before the prescriptive period of five days begins to run, two concurrent
requirements must be met, i.e., presentment of the grievance and its discussion between the
shop steward and the division head who in this case is Mr. Abad. Section 2 is not
self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive
period.8

Petitioner has sorely missed the point.

It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the Constitution
imposes such sympathy, but because of the one-sided relation between labor and capital. 9 The constitutional
mandate for the promotion of labor is as explicit as it is demanding. The purpose is to place the
workingman on an equal plane with management — with all its power and influence — in
negotiating for the advancement of his interests and the defense of his rights. 10 Under the
policy of social justice, the law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileges in life should have
more privileges in law. 11

Under Section 2 of the

It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12
CBA aforequoted, the division head shall act on the grievance within five (5) days from the
date of presentation thereof, otherwise "the grievance must be resolved in favor of the
aggrieved party." It is not disputed that the grievants knew that division head Reynaldo Abad
was then "on leave" when they filed their grievance which was received by Abad's
secretary. 13 This knowledge, however, should not prevent the application of the CBA.

On this score, respondent NLRC aptly ruled:

. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of complainants
within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act within the reglementary period,
complainants, believing in good faith that the effect of the CBA had already set in, cannot be blamed if they did not
conduct ramp inventory for the days thereafter. In this regard, respondent PAL argued that Reynaldo Abad was on
leave at the time the grievance was presented. This, however, is of no moment, for it is hard to believe that everything
under Abad's authority would have to stand still during his absence from office. To be sure, it is to be expected that
someone has to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on the part of PAL
management, but certainly, complainants should not be made to suffer the consequences. 14

the grievance of employees is not a matter which requires the

Contrary to petitioner's submission, 15
personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have
assigned an officer-in-charge to look into the grievance and possibly make his
recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked into the
grievance upon returning to work, for it must be remembered that the grievants are
workingmen who suffered salary deductions and who rely so much on their meager income for
their daily subsistence and survival. Besides, it is noteworthy that when these employees first
presented their complaint on August 21, 1984, petitioner failed to act on it. It was only after a
formal grievance was filed and after Mr. Abad returned to work on December 7, 1984 that
petitioner decided to turn an ear to their plaints.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's
inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear the dire
effects thereof. Much as the latter were willing to discuss their grievance with their employer,
the latter closed the door to this possibility by not assigning someone else to look into the
matter during Abad's absence. Thus, private respondents should not be faulted for believing
that the effects of the CBA in their favor had already stepped into the controversy.

If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the resolution of
labor problems, the complaints of the workers in particular, and hide under the cloak of its officers being "on leave" to
avoid being caught by the 5-day deadline under the CBA. If this should be allowed, the workingmen will suffer great
injustice for they will necessarily be at the mercy of their employer. That could not have been the intendment of the
pertinent provision of the CBA, much less the benevolent policy underlying our labor laws.

ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of
respondent National Labor Relations Commission is AFFIRMED. This judgment is immediately executory.

SO ORDERED.

G.R. No. 170446, March 23, 2011 ]

EDGEWATER REALTY DEVELOPMENT, INC.,

PETITIONER, VS. METROPOLITAN WATERWORKS AND
SEWERAGE SYSTEM AND MANILA WATER COMPANY,
INC., RESPONDENTS.

DECISION

ABAD, J.:
This case is about the demand of a landowner, on whose land a large number of
informal settlers have lived, to compel the water utility company to discontinue
providing water to such settlers.

The Facts and the Case

Edgewater Realty Development, Inc., (ERDI) a realty company, owned several parcels
of land in Tumana, Concepcion, Marikina City.[1] ERDI filed a complaint for
ejectment against about 200 informal settlers that then occupied portions of its land
but, despite a final court decision evicting them, the settlers refused to leave.

To resolve the problem, on April 14, 1994 ERDI and the Municipality of Marikina
executed a Memorandum of Agreement (MOA), identifying one of ERDI's own
properties[2] as an emergency relocation site.[3] The agreement resulted in the
taking of additional settlers (estimated around 3,500) at the site and the placing of
improvements in it. In turn, the settlers were to buy the land from ERDI. But
because of the inability of the Municipality to control the influx of settlers and its
breach of several other provisions of the MOA, ERDI rescinded the same and filed an
action before the Marikina Regional Trial Court (RTC) for confirmation of the
rescission of the MOA and for injunction against the Municipality, its Mayor Bayani M.
Fernando, the Marikina Settlement Office, and Harry Singh.[4]

On August 5, 1997 the RTC rendered a decision, confirming the rescission of the MOA
and ordering the Municipality to remove all structures, constructions, and projects
that it introduced on ERDI's property and to pay damages. Subsequently, the RTC
decision was affirmed by the Court of Appeals (CA)[5] and later by the Supreme
Court.[6]

On May 7, 1998 the MTC which tried the ejectment case[7] issued a break-open and
demolition order in the case and appointed a Special Sheriff to implement the
order. The ERDI also applied for a writ of execution of the August 5, 1997 RTC
decision.

Meantime, ERDI noticed that the settlers had maintained several facilities on its
property, including a water system, without its consent. On September 13, 1995 it
wrote the Metropolitan Waterworks and Sewerage System (MWSS) a letter to
formalize a water distribution system in the area but asked that it hold actual
implementation of such system until an agreement was signed. To ERDI's dismay,
however, it received information that some of the settlers already have water
connections while the others had pending application for theirs.

Consequently, ERDI filed a complaint for injunction with prayer for temporary
retraining order (TRO) and preliminary injunction against MWSS before the RTC of
Quezon City,[8] praying that it order MWSS to disconnect all water connections in
ERDI's properties and to refrain from putting in place any further connections
without its prior consent. The RTC issued a TRO against MWSS and, after due
hearing, issued a writ of preliminary injunction restraining it from installing water
connections on ERDI's properties.

In its Answer with counterclaims, MWSS averred that ERDI had no cause of action
against it since it provided connections to some of the occupants only after the
Municipality issued clearances to them through the Marikina Settlement Office. But,
from the time it received ERDI's letter in September 1995, MWSS stopped processing
applications for service connection in the area.

On January 15, 1998 the Quezon City RTC issued a Pre-Trial Order, detailing the
issues it needed to resolve as follows: (1) whether or not the existing water
connections within the properties of ERDI were illegal, and if so, whether MWSS has
an obligation to remove or disconnect them; (2) whether or not MWSS may be
enjoined from supplying water into the properties without ERDI's consent; (3)
whether or not ERDI is entitled to the reliefs it asked in its complaint; and (4) whether
or not MWSS is entitled to the reliefs it asked in its counterclaim.

Subsequently, ERDI amended its complaint to join Manila Water Company, Inc.
(MWCI) as additional party defendant based on the concession agreement between
the latter company and MWSS, which gave MWCI the sole right to manage and
operate the MWSS water facilities in Marikina, including those in ERDI
properties. The RTC allowed the amendment and the inclusion of MWCI in the
coverage of the preliminary injunction.

Answering the amended complaint, MWCI denied that it installed a water system in
the area. After it assumed operations, the settlers got clearances from the Marikina
City Government and so MWCI allowed them to apply for the registration of their
illegal connections. But, on receipt of ERDI's letter of July 9, 1998, MWCI stopped
accepting applications for such registration and placed on hold those that it had
already accepted.

On January 15, 2001 the Quezon City RTC rendered judgment, declaring the water
connections on ERDI's land illegal and permanently enjoined MWSS and MWCI from
installing water connections on it. The RTC did not, however, order the removal of
existing water connections, pointing out that ERDI's remedy was to await the eviction
of the settlers pursuant to the decision in the ejectment case. While the RTC
dismissed MWSS's counterclaim, it allowed MWCI to collect payment of water bills by
settlers who had existing water connections prior to the court's issuance of the writ of
preliminary injunction in the case.

Dissatisfied with the decision, ERDI appealed from it to the CA.[9] ERDI
additionally argued that both MWSS and MWCI have the authority under Republic
Act (R.A.) 8041[10] to remove illegal connections. On June 27, 2005 the CA
rendered judgment, affirming the decision of the RTC, hence the present petition for
review.

The Issues Presented

The case presents the following issues:

1. Whether or not the CA erred in failing to rule that MWSS and MWCI can be
compelled to dismantle existing water connections on ERDI's land that was occupied
by informal settlers; and

2. Whether or not MWCI can collect payment of bills for water connections on that
land.

The Court's Rulings

One. ERDI invokes the provisions of R.A. 8041 as cause for rendering a decision in
its favor which would require MWSS and MWCI to disconnect all existing water
service on ERDI's property. But fair play dictates that matters, which ERDI did not
raise in its complaint, are not allowed to be raised for the first time on
appeal.[11] Here, the Court cannot entertain ERDI's new cause of action based on
its alleged right under the provisions of R.A. 8041 since it is only in the course of its
appeal to the CA that ERDI brought up the matter.

Besides, assuming that ERDI could still invoke in its favor the provisions of R.A. 8041,
its claim must still fail. The water connections ERDI complained of are not the
"illegal connections" subject of R.A. 8041.[12] In ERDI's case, those water
connections were either a) installed by MWSS or MWCI and, therefore, cannot be
regarded as illegal or b) illegally installed by the settlers themselves but were
subsequently ratified by the water utility company. To be considered illegal under the
purview of R.A. 8041, the water connections must be unauthorized by the water utility
company, not by any other entity.

Nor can ERDI invoke the charter of MWSS[13] as source of its right to compel MWSS
or MWCI to remove the existing connections. The rights and the remedies for
removal of illegal connections under that charter belong to the water utilities, not to
ERDI.

The Court is not unmindful of its December 2, 1998 resolution in G.R. 135727 that
affirmed the rescission of the MOA between ERDI and the Marikina government.
Before its rescission, the MOA authorized the Marikina government to lay ground
works for infrastructures such as lights and other amenities of community
life.[14] Undoubtedly, it was this provision of the MOA that opened the way for
settlers to apply with the MWSS for water connections. While the witness for ERDI
testified that he did not know when the construction of the water lines began, it may
be assumed that the same took place during the time the MOA was still in
force.[15] No evidence has been presented to show that the water system on ERDI's
land was put in place during the pendency of the earlier ejectment
case. Consequently, it cannot be said that the water connections were illegal from the
beginning.

True, the MOA has been rescinded by final judgment but the obligation to remove the
water connections fell upon the Marikina government, not upon respondent water
utilities who were not parties to the earlier case. For this reason, ERDI's remedy is to
have the final judgments of the Marikina MTC in Civil Case 92-5592 and the Quezon
City RTC in Civil Case Q-96-28338 executed, not only for the eviction of the settlers
but also for the eventual removal of all structures, constructions, and projects that the
Marikina government introduced or allowed to be introduced in the place.

ERDI claims that the RTC and the CA's rulings, which allowed water service to illegal
settlers to continue, are acts of cowardice in the face of the need to enforce its right as
owner of the land to disallow such service. But as ERDI knows, the problem is not
that easy. Its land has become a colony of thousands of informal settlers who have
nowhere to go, posing a serious social problem. ERDI is not exactly blameless for this
result. It ought to know that empty lands in places like Marikina are susceptible to
the entry of such settlers and that both the national and local governments have
difficulty in preventing squatting. Consequently, ERDI has itself to blame for letting
the problem deteriorate. It was of course generous of ERDI to enter into the MOA
with the Marikina government but it failed to exercise adequate prudence and care to
prevent the agreement from being overwhelmed by the uncontrolled surge of settlers.

The task of evicting the large number of settlers from its land belongs to ERDI with
the assistance of the authorities. It had obtained final judgment in its favor against the
initial group of settlers that occupied the same. Still, ERDI had been unable to use
these judgments, no doubt because it frowned on the terrible violence and human
sufferings that such would cause. Surely, ERDI would not be justified in using MWSS
and MWCI as tool for depriving the people on its land of the water they need for
drinking, washing, and sanitation, subjecting them to the diseases that absence or
shortage of water would cause, considering that the water connections were installed
lawfully when the MOA was still in effect.

Two. ERDI contends that MWCI should not be allowed to collect payments for the
water bills of its customers on ERDI's land. But, having ruled that MWSS and MWCI
put the water service in place on that land for certain customers there when this was
still permitted, there is no valid reason for such water service to be severed before the
informal settlers concerned are properly evicted. And if it is not severed, it would be
unreasonable to prevent MWCI from collecting from its customers the cost of its
service.

WHEREFORE, the Court DENIES the petition and AFFIRMS the

Decision of the Court of Appeals in CA-G.R. CV 69925 dated June 27, 2005.

SO ORDERED.
G.R. No. 152991, July 21, 2008] ALBERTO P. OXALES, VS. UNITED LABORATORIES,
INC.,REYES, R.T., J.: appeal by certiorari

RETIREMENT PAY LAW vs PRIVATE RETIREMENT PLAN

A company retirement plan partakes the nature of a contract between the

employer and employee. There arises a contractual obligation where the payment
of retirement benefits is in consideration of continued faithful service tot eh
employer for a required time. The parties may establish applicable terms and
conditions which have the force of law between them, to be complied with in good
faith. But this right is not absolute. The limiation of law is that such terms and
conditions should not be contrary to law, morals, good customs, public order, or
public policy. Existing laws are deemed written in every contract, and when the
provision of the party is lacking, the provision of the law supplies it.聽
Law and jurisprudence state that if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, its literal meaning shall
control.There is no basis for nullifying the URP, since it is not contrary to law,
morals, good customs, public order, or public policy. The benefits received by
Oxales are way above the entitlement he could have received under the New
Retirement Law.

The company URP states that "basic monthly salary" for purposes of computing
the retirement pay refers to the basic rate of pay converted to basic monthly salary
of the employee excluding commissions, overtime, bonuses, or extra
compensations."

R.A. No. 7641 does not apply a the URP gives the retiring employee more than
what the law requires. R.A. No. 7641, The Retirement Pay Law," only applies when:
聽

(1) there is no collective bargaining agreement or other applicable employment

contract providing for retirement benefits for an employee. This is to prevent the
situation where a deserving employeeis denied retirement benefits becauser the
employers in not providing for retirement benefits for their employees; or
(2) there is a collective bargaining agreement or other applicable employment
contract but the retirement benefits are below the requirements by law. This is
because Private contracts cannot derogate from the public law. Five (5) reasons
support this conclusion.

1.The Retirement Pay Law says so.聽

2.legislative history of the Retirement Pay Law. It may be recalled that R.A. No.
7641 traces back to Llora Motors, Inc. v. Drilon, where the Court held that then
Article 287 of the Labor Code and its IRR may not be the source of an employee's
entitlement to retirement pay absent the presence of a collective bargaining
agreement or voluntary company policy that provides for retirement benefits for
the employee.
3. legislative intent of the Retirement Pay Law to compel employers 聽
4. the title of the Retirement Pay Law says it is "An Act Amending Article 287 of
Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of
the Philippines, By Providing for Retirement Pay to Qualified Private Sector in the
Absence of Any Retirement Plan in the Establishment."聽
5. jurisprudence.聽
Oro Enterprises, Inc. v. NLRC: R.A. No. 7641 "is undoubtedly a social legislation
enacted as a labor protection measure and as a curative statute that - absent a
retirement plan devised by, an agreement with, or a voluntary grant from, an
employer - can respond, in part at least, to the financial well-being of workers
during their twilight years soon following their life of labor."

Pantranco North Express, Inc. v. National Labor Relations Commission: Article 287
"makes clear the intention and spirit of the law to give employers and employees a
free hand to determine and agree upon the terms and conditions of retirement,"
and that the law "presumes that employees know what they want and what is
good for them absent any showing that fraud or intimidation was employed to
secure their consent thereto."

Brion v. South Philippine Union Mission of the Seventh Day Adventist Church: a
reading of Article 287 of the Labor Code would reveal that the "employer and
employee are free to stipulate on retirement benefits, as long as these do not fall
below floor limits provided by law."

Villena v. National Labor Relations Commission: the "compulsory retirement" of

Villena was an illegal dismissal in disguise and the Court ordered BLTB to pay
Villena "his full backwages, allowances, and other benefits for a period of three (3)
years after his illegal dismissal, until he reached the compulsory retirement age
plus his retirement benefits equivalent to his gross monthly pay, allowances and
other benefits for every year of service up to age sixty (60), which is the normal
retirement age for him."

In Villena the Court used the regular compensation of Villena in computing his
retirement benefits because the CBA provision CBA for rank-and-file employees is
inapplicable to a managerial employee, and was also decided before the passage
of R.A. No. 7641.

Planters Products, Inc. v. National Labor Relations Commission: petitioning

employees were given termination benefits based on their basic salary. However,
Planters Products, Inc. had integrated the allowances of its remaining employees
into their basic salary, increasing the basic salary . The basic salary as increased still
formed the basis for the computation of the termination benefits of the remaining
employees of the company. The Court held that fairness demanded that the
terminated employees receive the same treatment.

Manuel L. Quezon University v. National Labor Relations Commission: The Court

held that the coverage of the law "applies to establishments with existing
collective bargaining or other agreements or voluntary retirement plans whose
benefits are less than those prescribed under the proviso in question."

Songco v. National Labor Relations Commission: decided before the passage of

RA7641, basic salary plus "allowances" (like transportation and emergency living
allowances) and "earned sales commissions" should be taken into consideration in
computing the backwages and separation pay of the employee. The CBA between
Zuellig and F.E. Zuellig Employees Association, in which Songco was a member, had
no explicit definition of what salary is. Neither was there any inclusions or
exclusions in the determination of the salary of the employee. The present case
has an explicit provision excluding any commissions, overtime, bonuses, or extra
compensations for purposes of computing the basic salary of a retiring employee.
聽

R.A. No. 7641 does not apply because the URP grants to the retiring employee
more than what the law gives. compared to the minimum 陆 month salary for
every year of service set forth by R.A. No. 7641.

Oxales is not entitled to the reinstatement of his medical benefits, which are not
part of the URP. After he retired from UNILAB, he chose to join a rival company. As
a retired employee, Oxales may not claim a vested right on these medical benefits.
While there is nothing wrong in joining a rival company after his retirement, justice
and fair play dictate that by doing so, he cannot now legally demand the
continuance of his medical benefits from UNILAB, else there would be an absurd
situation where Oxales would continue to receive medical benefits from UNILAB
while working in a rival company.聽
The claim of Oxales to moral damages, exemplary damages, and attorney's fees
was denied for want of basis in law or jurisprudence. The person claiming moral
damages must prove bad faith by clear and convincing evidence . It is not enough
that one merely suffered sleepless nights, mental anguish, serious anxiety as the
result of the actuations of the other party. It must be shown to have been willfully
done in bad faith or with ill motive, which must be established with clear and
convincing evidence.聽

Not being entitled moral damages, an award of exemplary damages is baseless,

and the award for attorney's fees must be deleted.

Caleon v. Agus Development Corp. (G.R. No. 77365. April 7, 1992)

18AUG

FACTS:

Agus Development Corporation leased to Rita Caleon its lot for P180.00/month.
Caleon built a 4-door apartment and sub-leased it at P350.00/door/month without
Agus’ consent. Agus’ filed an ejectment suit under Batas Pambansa (B.P.) Blg. 25
after Caleon refused to vacate the lot. Caleon argued that B.P. Blg. 25 cannot be
applied because there is a perfected contract of lease without any express
prohibition on subleasing. The MTC ruled in favor of Agus. It was appealed to the
RTC but was dismissed outright. Hence this petition for review.

ISSUE:

Whether or not B.P. Blg. 25 is unconstitutional for being violative of

“non-impairment clause” on the ground that it impaired the lease contract.

HELD:

No. B.P. Blg. 25 is valid and constitutional. The lease contract is subordinate to the
police power of the state. Petition is denied.
RATIO:

B.P. Blg. 25 is derived from P.D. No. 20 which has been declared by the Supreme
Court as police power legislation so that the applicability thereof to existing
contracts cannot be denied. The constitutional guaranty of non-impairment of
obligations of contract is limited by and subject to the exercise of police power of
the state in the interest of public health, safety, morals and general welfare. In
spite of the constitutional prohibition, the State continues to possess authority to
safeguard the vital interests of its people. Legislation appropriate to safeguarding
said interest may modify or abrogate contracts already in effect.

Case Digest: Chavez v. National Housing Authority

Posted: August 4, 2010 in Case Digests

Tags: case, constitution, digest, land, law, nha, Philippines, territory

G.R. No. 164527 15 August 2007

Ponente: VELASCO, JR., J.

FACTS:

On August 5, 2004, former Solicitor General Francisco Chavez, filed an instant

petition raising constitutional issues on the JVA entered by National Housing
Authority and R-II Builders, Inc.

On March 1, 1988, then-President Cory Aquino issued Memorandum order No.

(MO) 161 approving and directing implementation of the Comprehensive and
Integrated Metropolitan Manila Waste Management Plan. During this time,
Smokey Mountain, a wasteland in Tondo, Manila, are being made residence of
many Filipinos living in a subhuman state.

As presented in MO 161, NHA prepared feasibility studies to turn the dumpsite

into low-cost housing project, thus, Smokey Mountain Development and
Reclamation Project (SMDRP), came into place. RA 6957 (Build-Operate-Transfer
Law) was passed on July 1990 declaring the importance of private sectors as
contractors in government projects. Thereafter, Aquino proclaimed MO 415
applying RA 6957 to SMDRP, among others. The same MO also established
EXECOM and TECHCOM in the execution and evaluation of the plan, respectively,
to be assisted by the Public Estates Authority (PEA).

Notices of public bidding to become NHA’s venture partner for SMDRP were
published in newspapers in 1992, from which R-II Builders, Inc. (RBI) won the
bidding process. Then-President Ramos authorized NHA to enter into a Joint
Venture Agreement with RBI.

Under the JVA, the project involves the clearing of Smokey Mountain for eventual
development into a low cost housing complex and industrial/commercial site. RBI
is expected to fully finance the development of Smokey Mountain and reclaim 40
hectares of the land at the Manila Bay Area. The latter together with the
commercial area to be built on Smokey Mountain will be owned by RBI as enabling
components. If the project is revoked or terminated by the Government through
no fault of RBI or by mutual agreement, the Government shall compensate RBI for
its actual expenses incurred in the Project plus a reasonable rate of return not
exceeding that stated in the feasibility study and in the contract as of the date of
such revocation, cancellation, or termination on a schedule to be agreed upon by
both parties.

To summarize, the SMDRP shall consist of Phase I and Phase II. Phase I of the
project involves clearing, levelling-off the dumpsite, and construction of temporary
housing units for the current residents on the cleared and levelled site. Phase II
involves the construction of a fenced incineration area for the on-site disposal of
the garbage at the dumpsite.

Due to the recommendations done by the DENR after evaluations done, the JVA
was amended and restated (now ARJVA) to accommodate the design changes and
additional work to be done to successfully implement the project. The original
3,500 units of temporary housing were decreased to 2,992. The reclaimed land as
enabling component was increased from 40 hectares to 79 hectares, which was
supported by the issuance of Proclamation No. 465 by President Ramos. The
revision also provided for the 119-hectare land as an enabling component for
Phase II of the project.
Subsequently, the Clean Air Act was passed by the legislature which made the
establishment of an incinerator illegal, making the off-site dumpsite at Smokey
Mountain necessary. On August 1, 1998, the project was suspended, to be later
reconstituted by President Estrada in MO No. 33.

On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement
whereby both parties agreed to terminate the JVA and subsequent
agreements. During this time, NHA reported that 34 temporary housing
structures and 21 permanent housing structures had been turned over by RBI.

ISSUES:

Whether respondents NHA and RBI have been granted the power and authority to
reclaim lands of the public domain as this power is vested exclusively in PEA as
claimed by petitioner

Whether respondents NHA and RBI were given the power and authority by DENR
to reclaim foreshore and submerged lands

Whether respondent RBI can acquire reclaimed foreshore and submerged lands
considered as alienable and outside the commerce of man

Whether respondent RBI can acquire reclaimed lands when there was no
declaration that said lands are no longer needed for public use

Whether there is a law authorizing sale of reclaimed lands

Whether the transfer of reclaimed lands to RBI was done by public bidding

Whether RBI, being a private corporation, is barred by the Constitution to acquire

lands of public domain

Whether respondents can be compelled to disclose all information related to the

SMDRP

Whether the operative fact doctrine applies to the instant position

HELD:

Executive Order 525 reads that the PEA shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government. This does not mean that it shall be responsible for
all. The requisites for a valid and legal reclamation project are approval by the
President (which were provided for by MOs), favourable recommendation of PEA
(which were seen as a part of its recommendations to the EXECOM), and
undertaken either by PEA or entity under contract of PEA or by the National
Government Agency (NHA is a government agency whose authority to reclaim
lands under consultation with PEA is derived under PD 727 and RA 7279).

Notwithstanding the need for DENR permission, the DENR is deemed to have
granted the authority to reclaim in the Smokey Mountain Project for the DENR is
one of the members of the EXECOM which provides reviews for the project. ECCs
and Special Patent Orders were given by the DENR which are exercises of its power
of supervision over the project. Furthermore, it was the President via the
abovementioned MOs that originally authorized the reclamation. It must be
noted that the reclamation of lands of public domain is reposed first in the
Philippine President.

The reclaimed lands were classified alienable and disposable via MO 415 issued by
President Aquino and Proclamation Nos. 39 and 465 by President Ramos.

Despite not having an explicit declaration, the lands have been deemed to be no
longer needed for public use as stated in Proclamation No. 39 that these are to be
“disposed to qualified beneficiaries.” Furthermore, these lands have already been
necessarily reclassified as alienable and disposable lands under the BOT law.

Letter I of Sec. 6 of PD 757 clearly states that the NHA can acquire property rights
and interests and encumber or otherwise dispose of them as it may deem
appropriate.

There is no doubt that respondent NHA conducted a public bidding of the right to
become its joint venture partner in the Smokey Mountain Project. It was noted
that notices were published in national newspapers. The bidding proper was done
by the Bids and Awards Committee on May 18, 1992.

RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid “a

portion as percentage of the reclaimed land” subject to the constitutional
requirement that only Filipino citizens or corporation with at least 60% Filipino
equity can acquire the same. In addition, when the lands were transferred to the
NHA, these were considered Patrimonial lands of the state, by which it has the
power to sell the same to any qualified person.

This relief must be granted. It is the right of the Filipino people to information on
matters of public concerned as stated in Article II, Sec. 28, and Article III, Sec. 7 of
the 1987 Constitution.

When the petitioner filed the case, the JVA had already been terminated by virtue
of MOA between RBI and NHA. The properties and rights in question after the
passage of around 10 years from the start of the project’s implementation cannot
be disturbed or questioned. The petitioner, being the Solicitor General at the time
SMDRP was formulated, had ample opportunity to question the said project, but
did not do so. The moment to challenge has passed.
Digested Case: Imbong v Ochoa, et al. (G.R. Nos. 204819, 204934, 204957, 205003,
205138, 204988, 205043, 205478, 205491, 205720, 206355, 207111,
207172, 207563)

FACTS:
Concerned citizens and the Catholic Church had petitioned for the constitutionality
of the Reproductive Health Bill.
ISSUES:

A. Whether or not (WON) RA 10354/Reproductive Health (RH) Law is

unconstitutional for violating the:

1. Right to life

2. Right to health

3. Freedom of religion and right to free speech

a.) WON the RH Law violates the guarantee of religious freedom since it mandates
the State-sponsored procurement of contraceptives, which contravene the
religious beliefs of e.g. the petitioners

b.) WON the RH Law violates the guarantee of religious freedom by compelling
medical health practitioners, hospitals, and health care providers, under pain of
penalty, to refer patients to other institutions despite their conscientious
objections

c.) WON the RH Law violates the guarantee of religious freedom by requiring
would-be spouses, as a condition for the issuance of a marriage license, to attend a
seminar on parenthood, family planning, breastfeeding and infant nutrition

4. Right to privacy (marital privacy and autonomy)

5. Freedom of expression and academic freedom

6. Due process clause

7. Equal protection clause

8. Prohibition against involuntary servitude

B. WON the delegation of authority to the Food and Drug Administration (FDA) to
determine WON a supply or product is to be included in the Essential Drugs List is
valid

C. WON the RH Law infringes upon the powers devolved to Local Governments and
the Autonomous Region in Muslim Mindanao (ARMM)

* HELD:

A.

1. NO.
2. NO.

3.

a.) NO.

b.) YES.

c.) NO.

4. YES.

5. NO.

6. NO.

7. NO.

8. NO.

B. NO.

C. NO.

* RATIO:

1.) Majority of the Members of the Court believe that the question of when life
begins is a scientific and medical issue that should not be decided, at this stage,
without proper hearing and evidence. However, they agreed that individual
Members could express their own views on this matter.

Article II, Section 12 of the Constitution states: “The 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.”

In its plain and ordinary meaning (a canon in statutory construction), the

traditional meaning of “conception” according to reputable dictionaries cited by
the ponente is that life begins at fertilization. Medical sources also support the
view that conception begins at fertilization.

The framers of the Constitution also intended for (a) “conception” to refer to the
moment of “fertilization” and (b) the protection of the unborn child upon
fertilization. In addition, they did not intend to ban all contraceptives for being
unconstitutional; only those that kill or destroy the fertilized ovum would be
prohibited. Contraceptives that actually prevent the union of the male sperm and
female ovum, and those that similarly take action before fertilization should be
deemed non-abortive, and thus constitutionally permissible.
The intent of the framers of the Constitution for protecting the life of the unborn
child was to prevent the Legislature from passing a measure prevent abortion. The
Court cannot interpret this otherwise. The RH Law is in line with this intent and
actually prohibits abortion. By using the word “or” in defining
abortifacient (Section 4(a)), the RH Law prohibits not only drugs or devices that
prevent implantation but also those that induce abortion and induce the
destruction of a fetus inside the mother’s womb. The RH Law recognizes that the
fertilized ovum already has life and that the State has a bounded duty to protect it.

However, the authors of the IRR gravely abused their office when they redefined
the meaning of abortifacient by using the term “primarily”. Recognizing as
abortifacients only those that “primarily induce abortion or the destruction of a
fetus inside the mother’s womb or the prevention of the fertilized ovum to reach
and be implanted in the mother’s womb” (Sec. 3.01(a) of the IRR) would pave the
way for the approval of contraceptives that may harm or destroy the life of the
unborn from conception/fertilization. This violates Section 12, Article II of the
Constitution. For the same reason, the definition of contraceptives under the IRR
(Sec 3.01(j)), which also uses the term “primarily”, must be struck down.

2.) Petitioners claim that the right to health is violated by the RH Law because it
requires the inclusion of hormonal contraceptives, intrauterine devices, injectables
and other safe, legal, non-abortifacient and effective family planning products and
supplies in the National Drug Formulary and in the regular purchase of essential
medicines and supplies of all national hospitals (Section 9 of the RH Law). They cite
risks of getting diseases gained by using e.g. oral contraceptive pills.

Some petitioners do not question contraception and contraceptives per se. Rather,
they pray that the status quo under RA 4729 and 5921 be maintained. These laws
prohibit the sale and distribution of contraceptives without the prescription of a
duly-licensed physician.

The RH Law does not intend to do away with RA 4729 (1966). With RA 4729 in
place, the Court believes adequate safeguards exist to ensure that only safe
contraceptives are made available to the public. In fulfilling its mandate under Sec.
10 of the RH Law, the DOH must keep in mind the provisions of RA 4729:
the contraceptives it will procure shall be from a duly licensed drug store or
pharmaceutical company and that the actual distribution of these contraceptive
drugs and devices will be done following a prescription of a qualified medical
practitioner.

Meanwhile, the requirement of Section 9 of the RH Law is to be considered

“mandatory” only after these devices and materials have been tested, evaluated
and approved by the FDA. Congress cannot determine that contraceptives are
“safe, legal, non-abortificient and effective”.
3.) The Court cannot determine whether or not the use of contraceptives or
participation in support of modern RH measures (a) is moral from a religious
standpoint; or, (b) right or wrong according to one’s dogma or belief. However, the
Court has the authority to determine whether or not the RH Law contravenes the
Constitutional guarantee of religious freedom.

3a.) The State may pursue its legitimate secular objectives without being dictated
upon the policies of any one religion. To allow religious sects to dictate policy or
restrict other groups would violate Article III, Section 5 of the Constitution or the
Establishment Clause. This would cause the State to adhere to a particular religion,
and thus, establishes a state religion. Thus, the State can enhance its population
control program through the RH Law even if the promotion of contraceptive use is
contrary to the religious beliefs of e.g. the petitioners.

3b.) Sections 7, 23, and 24 of the RH Law obliges a hospital or medical practitioner
to immediately refer a person seeking health care and services under the law to
another accessible healthcare provider despite their conscientious objections
based on religious or ethical beliefs. These provisions violate the religious belief
and conviction of a conscientious objector. They are contrary to Section 29(2),
Article VI of the Constitution or the Free Exercise Clause, whose basis is the respect
for the inviolability of the human conscience.

The provisions in the RH Law compelling non-maternity specialty hospitals and

hospitals owned and operated by a religious group and health care service
providers to refer patients to other providers and penalizing them if they fail to do
so (Sections 7 and 23(a)(3)) as well as compelling them to disseminate information
and perform RH procedures under pain of penalty (Sections 23(a)(1) and (a)(2) in
relation to Section 24) also violate (and inhibit) the freedom of religion. While
penalties may be imposed by law to ensure compliance to
it, a constitutionally-protected right must prevail over the effective
implementation of the law.

Excluding public health officers from being conscientious objectors (under Sec. 5.24
of the IRR) also violates the equal protection clause. There is no perceptible
distinction between public health officers and their private counterparts. In
addition, the freedom to believe is intrinsic in every individual and the protection
of this freedom remains even if he/she is employed in the government.

Using the compelling state interest test, there is no compelling state interest to
limit the free exercise of conscientious objectors. There is no immediate danger to
the life or health of an individual in the perceived scenario of the above-quoted
provisions. In addition, the limits do not pertain to life-threatening cases.

The respondents also failed to show that these provisions are least intrusive
means to achieve a legitimate state objective. The Legislature has already taken
other secular steps to ensure that the right to health is protected, such as RA
4729, RA 6365 (The Population Act of the Philippines) and RA 9710 (The Magna
Carta of Women).

3c.) Section 15 of the RH Law, which requires would-be spouses to attend a

seminar on parenthood, family planning, breastfeeding and infant nutrition as a
condition for the issuance of a marriage license, is a reasonable exercise of police
power by the government. The law does not even mandate the type of family
planning methods to be included in the seminar. Those who attend the seminar
are free to accept or reject information they receive and they retain the freedom
to decide on matters of family life without the intervention of the State.

4.) Section 23(a)(2)(i) of the RH Law, which permits RH procedures even with only
the consent of the spouse undergoing the provision (disregarding spousal
content), intrudes into martial privacy and autonomy and goes against the
constitutional safeguards for the family as the basic social institution. Particularly,
Section 3, Article XV of the Constitution mandates the State to defend: (a) the right
of spouses to found a family in accordance with their religious convictions and the
demands of responsible parenthood and (b) the right of families or family
associations to participate in the planning and implementation of policies and
programs that affect them. The RH Law cannot infringe upon this mutual
decision-making, and endanger the institutions of marriage and the family.

The exclusion of parental consent in cases where a minor undergoing a procedure

is already a parent or has had a miscarriage (Section 7 of the RH Law) is also
anti-family and violates Article II, Section 12 of the Constitution, which states: “The
natural and primary right and duty of parents in the rearing of the youth for civic
efficiency and the development of moral character shall receive the support of the
Government.” In addition, the portion of Section 23(a)(ii) which reads “in the case
of minors, the written consent of parents or legal guardian or, in their absence,
persons exercising parental authority or next-of-kin shall be required only in
elective surgical procedures” is invalid as it denies the right of parental authority in
cases where what is involved is “non-surgical procedures.”

However, a minor may receive information (as opposed to procedures) about

family planning services. Parents are not deprived of parental guidance and control
over their minor child in this situation and may assist her in deciding whether to
accept or reject the information received. In addition, an exception may be made
in life-threatening procedures.

5.) The Court declined to rule on the constitutionality of Section 14 of the RH Law,
which mandates the State to provide Age-and Development-Appropriate
Reproductive Health Education. Although educators might raise their objection to
their participation in the RH education program, the Court reserves its judgment
should an actual case be filed before it.
Any attack on its constitutionality is premature because the Department of
Education has not yet formulated a curriculum on age-appropriate reproductive
health education.

Section 12, Article II of the Constitution places more importance on the role of
parents in the development of their children with the use of the term “primary”.
The right of parents in upbringing their youth is superior to that of the State.

The provisions of Section 14 of the RH Law and corresponding provisions of the IRR
supplement (rather than supplant) the right and duties of the parents in the moral
development of their children.

By incorporating parent-teacher-community associations, school officials, and

other interest groups in developing the mandatory RH program, it could very well
be said that the program will be in line with the religious beliefs of the petitioners.

6.) The RH Law does not violate the due process clause of the Constitution as the
definitions of several terms as observed by the petitioners are not vague.

The definition of “private health care service provider” must be seen in relation to
Section 4(n) of the RH Law which defines a “public health service provider”. The
“private health care institution” cited under Section 7 should be seen as
synonymous to “private health care service provider.

The terms “service” and “methods” are also broad enough to include providing of
information and rendering of medical procedures. Thus, hospitals operated by
religious groups are exempted from rendering RH service and modern family
planning methods (as provided for by Section 7 of the RH Law) as well as from
giving RH information and procedures.

The RH Law also defines “incorrect information”. Used together in relation to

Section 23 (a)(1), the terms “incorrect” and “knowingly” connote a sense of malice
and ill motive to mislead or misrepresent the public as to the nature and effect of
programs and services on reproductive health.

7.) To provide that the poor are to be given priority in the government’s RH
program is not a violation of the equal protection clause. In fact, it is pursuant to
Section 11, Article XIII of the Constitution, which states that the State shall
prioritize the needs of the underprivileged, sick elderly, disabled, women, and
children and that it shall endeavor to provide medical care to paupers.

The RH Law does not only seek to target the poor to reduce their number, since
Section 7 of the RH Law prioritizes poor and marginalized couples who are
suffering from fertility issues and desire to have children. In addition, the RH Law
does not prescribe the number of children a couple may have and does not impose
conditions upon couples who intend to have children. The RH Law only seeks to
provide priority to the poor.

The exclusion of private educational institutions from the mandatory RH education

program under Section 14 is valid. There is a need to recognize the academic
freedom of private educational institutions especially with respect to religious
instruction and to consider their sensitivity towards the teaching of reproductive
health education.

8.) The requirement under Sec. 17 of the RH Law for private and non-government
health care service providers to render 48 hours of pro bono RH services does not
amount to involuntary servitude, for two reasons. First, the practice of medicine is
undeniably imbued with public interest that it is both the power and a duty of the
State to control and regulate it in order to protect and promote the public welfare.
Second, Section 17 only encourages private and non-government RH service
providers to render pro bono service. Besides the PhilHealth accreditation, no
penalty is imposed should they do otherwise.

However, conscientious objectors are exempt from Sec. 17 as long as their religious
beliefs do not allow them to render RH service, pro bono or otherwise (See Part 3b
of this digest.)

B. The delegation by Congress to the FDA of the power to determine whether or

not a supply or product is to be included in the Essential Drugs List is valid, as the
FDA not only has the power but also the competency to evaluate, register and
cover health services and methods (under RA 3720 as amended by RA 9711 or the
FDA Act of 2009).

C. The RH Law does not infringe upon the autonomy of local governments.
Paragraph (c) of Section 17 provides a categorical exception of cases involving
nationally-funded projects, facilities, programs and services. Unless a local
government unit (LGU) is particularly designated as the implementing agency, it
has no power over a program for which funding has been provided by the national
government under the annual general appropriations act, even if the program
involves the delivery of basic services within the jurisdiction of the LGU.

In addition, LGUs are merely encouraged to provide RH services. Provision of these

services are not mandatory. Therefore, the RH Law does not amount to an undue
encroachment by the national government upon the autonomy enjoyed by LGUs.

Article III, Sections 6, 10, and 11 of RA 9054 or the Organic Act of the ARMM
merely delineates the powers that may be exercised by the regional government.
These provisions cannot be seen as an abdication by the State of its power to enact
legislation that would benefit the general welfare.
Digested Case: Imbong v Ochoa, et al. (G.R. Nos. 204819, 204934, 204957, 205003,
205138, 204988, 205043, 205478, 205491, 205720, 206355, 207111,
207172, 207563)

FACTS:
Concerned citizens and the Catholic Church had petitioned for the constitutionality
of the Reproductive Health Bill.

ISSUES:

A. Whether or not (WON) RA 10354/Reproductive Health (RH) Law is

unconstitutional for violating the:

1. Right to life

2. Right to health

3. Freedom of religion and right to free speech

a.) WON the RH Law violates the guarantee of religious freedom since it mandates
the State-sponsored procurement of contraceptives, which contravene the
religious beliefs of e.g. the petitioners

b.) WON the RH Law violates the guarantee of religious freedom by compelling
medical health practitioners, hospitals, and health care providers, under pain of
penalty, to refer patients to other institutions despite their conscientious
objections

c.) WON the RH Law violates the guarantee of religious freedom by requiring
would-be spouses, as a condition for the issuance of a marriage license, to attend a
seminar on parenthood, family planning, breastfeeding and infant nutrition

4. Right to privacy (marital privacy and autonomy)

5. Freedom of expression and academic freedom

6. Due process clause

7. Equal protection clause

8. Prohibition against involuntary servitude

B. WON the delegation of authority to the Food and Drug Administration (FDA) to
determine WON a supply or product is to be included in the Essential Drugs List is
valid

C. WON the RH Law infringes upon the powers devolved to Local Governments and
the Autonomous Region in Muslim Mindanao (ARMM)

* HELD:

A.

1. NO.

2. NO.

3.

a.) NO.

b.) YES.

c.) NO.

4. YES.

5. NO.

6. NO.

7. NO.

8. NO.

B. NO.

C. NO.

* RATIO:

1.) Majority of the Members of the Court believe that the question of when life
begins is a scientific and medical issue that should not be decided, at this stage,
without proper hearing and evidence. However, they agreed that individual
Members could express their own views on this matter.

Article II, Section 12 of the Constitution states: “The 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.”

In its plain and ordinary meaning (a canon in statutory construction), the

traditional meaning of “conception” according to reputable dictionaries cited by
the ponente is that life begins at fertilization. Medical sources also support the
view that conception begins at fertilization.

The framers of the Constitution also intended for (a) “conception” to refer to the
moment of “fertilization” and (b) the protection of the unborn child upon
fertilization. In addition, they did not intend to ban all contraceptives for being
unconstitutional; only those that kill or destroy the fertilized ovum would be
prohibited. Contraceptives that actually prevent the union of the male sperm and
female ovum, and those that similarly take action before fertilization should be
deemed non-abortive, and thus constitutionally permissible.

The intent of the framers of the Constitution for protecting the life of the unborn
child was to prevent the Legislature from passing a measure prevent abortion. The
Court cannot interpret this otherwise. The RH Law is in line with this intent and
actually prohibits abortion. By using the word “or” in defining
abortifacient (Section 4(a)), the RH Law prohibits not only drugs or devices that
prevent implantation but also those that induce abortion and induce the
destruction of a fetus inside the mother’s womb. The RH Law recognizes that the
fertilized ovum already has life and that the State has a bounded duty to protect it.

However, the authors of the IRR gravely abused their office when they redefined
the meaning of abortifacient by using the term “primarily”. Recognizing as
abortifacients only those that “primarily induce abortion or the destruction of a
fetus inside the mother’s womb or the prevention of the fertilized ovum to reach
and be implanted in the mother’s womb” (Sec. 3.01(a) of the IRR) would pave the
way for the approval of contraceptives that may harm or destroy the life of the
unborn from conception/fertilization. This violates Section 12, Article II of the
Constitution. For the same reason, the definition of contraceptives under the IRR
(Sec 3.01(j)), which also uses the term “primarily”, must be struck down.

2.) Petitioners claim that the right to health is violated by the RH Law because it
requires the inclusion of hormonal contraceptives, intrauterine devices, injectables
and other safe, legal, non-abortifacient and effective family planning products and
supplies in the National Drug Formulary and in the regular purchase of essential
medicines and supplies of all national hospitals (Section 9 of the RH Law). They cite
risks of getting diseases gained by using e.g. oral contraceptive pills.

Some petitioners do not question contraception and contraceptives per se. Rather,
they pray that the status quo under RA 4729 and 5921 be maintained. These laws
prohibit the sale and distribution of contraceptives without the prescription of a
duly-licensed physician.

The RH Law does not intend to do away with RA 4729 (1966). With RA 4729 in
place, the Court believes adequate safeguards exist to ensure that only safe
contraceptives are made available to the public. In fulfilling its mandate under Sec.
10 of the RH Law, the DOH must keep in mind the provisions of RA 4729:
the contraceptives it will procure shall be from a duly licensed drug store or
pharmaceutical company and that the actual distribution of these contraceptive
drugs and devices will be done following a prescription of a qualified medical
practitioner.

Meanwhile, the requirement of Section 9 of the RH Law is to be considered

“mandatory” only after these devices and materials have been tested, evaluated
and approved by the FDA. Congress cannot determine that contraceptives are
“safe, legal, non-abortificient and effective”.

3.) The Court cannot determine whether or not the use of contraceptives or
participation in support of modern RH measures (a) is moral from a religious
standpoint; or, (b) right or wrong according to one’s dogma or belief. However, the
Court has the authority to determine whether or not the RH Law contravenes the
Constitutional guarantee of religious freedom.

3a.) The State may pursue its legitimate secular objectives without being dictated
upon the policies of any one religion. To allow religious sects to dictate policy or
restrict other groups would violate Article III, Section 5 of the Constitution or the
Establishment Clause. This would cause the State to adhere to a particular religion,
and thus, establishes a state religion. Thus, the State can enhance its population
control program through the RH Law even if the promotion of contraceptive use is
contrary to the religious beliefs of e.g. the petitioners.

3b.) Sections 7, 23, and 24 of the RH Law obliges a hospital or medical practitioner
to immediately refer a person seeking health care and services under the law to
another accessible healthcare provider despite their conscientious objections
based on religious or ethical beliefs. These provisions violate the religious belief
and conviction of a conscientious objector. They are contrary to Section 29(2),
Article VI of the Constitution or the Free Exercise Clause, whose basis is the respect
for the inviolability of the human conscience.
The provisions in the RH Law compelling non-maternity specialty hospitals and
hospitals owned and operated by a religious group and health care service
providers to refer patients to other providers and penalizing them if they fail to do
so (Sections 7 and 23(a)(3)) as well as compelling them to disseminate information
and perform RH procedures under pain of penalty (Sections 23(a)(1) and (a)(2) in
relation to Section 24) also violate (and inhibit) the freedom of religion. While
penalties may be imposed by law to ensure compliance to
it, a constitutionally-protected right must prevail over the effective
implementation of the law.

Excluding public health officers from being conscientious objectors (under Sec. 5.24
of the IRR) also violates the equal protection clause. There is no perceptible
distinction between public health officers and their private counterparts. In
addition, the freedom to believe is intrinsic in every individual and the protection
of this freedom remains even if he/she is employed in the government.

Using the compelling state interest test, there is no compelling state interest to
limit the free exercise of conscientious objectors. There is no immediate danger to
the life or health of an individual in the perceived scenario of the above-quoted
provisions. In addition, the limits do not pertain to life-threatening cases.

The respondents also failed to show that these provisions are least intrusive
means to achieve a legitimate state objective. The Legislature has already taken
other secular steps to ensure that the right to health is protected, such as RA
4729, RA 6365 (The Population Act of the Philippines) and RA 9710 (The Magna
Carta of Women).

3c.) Section 15 of the RH Law, which requires would-be spouses to attend a

seminar on parenthood, family planning, breastfeeding and infant nutrition as a
condition for the issuance of a marriage license, is a reasonable exercise of police
power by the government. The law does not even mandate the type of family
planning methods to be included in the seminar. Those who attend the seminar
are free to accept or reject information they receive and they retain the freedom
to decide on matters of family life without the intervention of the State.

4.) Section 23(a)(2)(i) of the RH Law, which permits RH procedures even with only
the consent of the spouse undergoing the provision (disregarding spousal
content), intrudes into martial privacy and autonomy and goes against the
constitutional safeguards for the family as the basic social institution. Particularly,
Section 3, Article XV of the Constitution mandates the State to defend: (a) the right
of spouses to found a family in accordance with their religious convictions and the
demands of responsible parenthood and (b) the right of families or family
associations to participate in the planning and implementation of policies and
programs that affect them. The RH Law cannot infringe upon this mutual
decision-making, and endanger the institutions of marriage and the family.
The exclusion of parental consent in cases where a minor undergoing a procedure
is already a parent or has had a miscarriage (Section 7 of the RH Law) is also
anti-family and violates Article II, Section 12 of the Constitution, which states: “The
natural and primary right and duty of parents in the rearing of the youth for civic
efficiency and the development of moral character shall receive the support of the
Government.” In addition, the portion of Section 23(a)(ii) which reads “in the case
of minors, the written consent of parents or legal guardian or, in their absence,
persons exercising parental authority or next-of-kin shall be required only in
elective surgical procedures” is invalid as it denies the right of parental authority in
cases where what is involved is “non-surgical procedures.”

However, a minor may receive information (as opposed to procedures) about

family planning services. Parents are not deprived of parental guidance and control
over their minor child in this situation and may assist her in deciding whether to
accept or reject the information received. In addition, an exception may be made
in life-threatening procedures.

5.) The Court declined to rule on the constitutionality of Section 14 of the RH Law,
which mandates the State to provide Age-and Development-Appropriate
Reproductive Health Education. Although educators might raise their objection to
their participation in the RH education program, the Court reserves its judgment
should an actual case be filed before it.

Any attack on its constitutionality is premature because the Department of

Education has not yet formulated a curriculum on age-appropriate reproductive
health education.

Section 12, Article II of the Constitution places more importance on the role of
parents in the development of their children with the use of the term “primary”.
The right of parents in upbringing their youth is superior to that of the State.

The provisions of Section 14 of the RH Law and corresponding provisions of the IRR
supplement (rather than supplant) the right and duties of the parents in the moral
development of their children.

By incorporating parent-teacher-community associations, school officials, and

other interest groups in developing the mandatory RH program, it could very well
be said that the program will be in line with the religious beliefs of the petitioners.

6.) The RH Law does not violate the due process clause of the Constitution as the
definitions of several terms as observed by the petitioners are not vague.

The definition of “private health care service provider” must be seen in relation to
Section 4(n) of the RH Law which defines a “public health service provider”. The
“private health care institution” cited under Section 7 should be seen as
synonymous to “private health care service provider.
The terms “service” and “methods” are also broad enough to include providing of
information and rendering of medical procedures. Thus, hospitals operated by
religious groups are exempted from rendering RH service and modern family
planning methods (as provided for by Section 7 of the RH Law) as well as from
giving RH information and procedures.

The RH Law also defines “incorrect information”. Used together in relation to

Section 23 (a)(1), the terms “incorrect” and “knowingly” connote a sense of malice
and ill motive to mislead or misrepresent the public as to the nature and effect of
programs and services on reproductive health.

7.) To provide that the poor are to be given priority in the government’s RH
program is not a violation of the equal protection clause. In fact, it is pursuant to
Section 11, Article XIII of the Constitution, which states that the State shall
prioritize the needs of the underprivileged, sick elderly, disabled, women, and
children and that it shall endeavor to provide medical care to paupers.

The RH Law does not only seek to target the poor to reduce their number, since
Section 7 of the RH Law prioritizes poor and marginalized couples who are
suffering from fertility issues and desire to have children. In addition, the RH Law
does not prescribe the number of children a couple may have and does not impose
conditions upon couples who intend to have children. The RH Law only seeks to
provide priority to the poor.

The exclusion of private educational institutions from the mandatory RH education

program under Section 14 is valid. There is a need to recognize the academic
freedom of private educational institutions especially with respect to religious
instruction and to consider their sensitivity towards the teaching of reproductive
health education.

8.) The requirement under Sec. 17 of the RH Law for private and non-government
health care service providers to render 48 hours of pro bono RH services does not
amount to involuntary servitude, for two reasons. First, the practice of medicine is
undeniably imbued with public interest that it is both the power and a duty of the
State to control and regulate it in order to protect and promote the public welfare.
Second, Section 17 only encourages private and non-government RH service
providers to render pro bono service. Besides the PhilHealth accreditation, no
penalty is imposed should they do otherwise.

However, conscientious objectors are exempt from Sec. 17 as long as their religious
beliefs do not allow them to render RH service, pro bono or otherwise (See Part 3b
of this digest.)

B. The delegation by Congress to the FDA of the power to determine whether or

not a supply or product is to be included in the Essential Drugs List is valid, as the
FDA not only has the power but also the competency to evaluate, register and
cover health services and methods (under RA 3720 as amended by RA 9711 or the
FDA Act of 2009).

C. The RH Law does not infringe upon the autonomy of local governments.
Paragraph (c) of Section 17 provides a categorical exception of cases involving
nationally-funded projects, facilities, programs and services. Unless a local
government unit (LGU) is particularly designated as the implementing agency, it
has no power over a program for which funding has been provided by the national
government under the annual general appropriations act, even if the program
involves the delivery of basic services within the jurisdiction of the LGU.

In addition, LGUs are merely encouraged to provide RH services. Provision of these

services are not mandatory. Therefore, the RH Law does not amount to an undue
encroachment by the national government upon the autonomy enjoyed by LGUs.

Article III, Sections 6, 10, and 11 of RA 9054 or the Organic Act of the ARMM
merely delineates the powers that may be exercised by the regional government.
These provisions cannot be seen as an abdication by the State of its power to enact
legislation that would benefit the general welfare.

BOY SCOUTS OF THE PHILIPPINES

Vs

COMMISSION ON AUDIT,

G.R. No. 177131

Promulgated:

June 7, 2011
 DECISION

LEONARDO-DE CASTRO, J.:

The jurisdiction of the Commission on Audit (COA) over the Boy Scouts
of the Philippines (BSP) is the subject matter of this controversy that
reached us via petition for prohibition[1] filed by the BSP under Rule 65
of the 1997 Rules of Court. In this petition, the BSP seeks that the COA
be prohibited from implementing its June 18, 2002 Decision,[2] its
February 21, 2007 Resolution,[3] as well as all other issuances arising
therefrom, and that all of the foregoing be rendered null and void. [4]

Antecedent Facts and Background of

the Case

This case arose when the COA issued Resolution No. 99-011[5] on
August 19, 1999 (the COA Resolution), with the subject Defining the
Commissions policy with respect to the audit of the Boy Scouts of the
Philippines. In its whereas clauses, the COA Resolution stated that the
BSP was created as a public corporation under Commonwealth Act No.
111, as amended by Presidential Decree No. 460 and Republic Act No.
7278; that in Boy Scouts of the Philippines v. National Labor Relations
Commission,[6] the Supreme Court ruled that the BSP, as constituted
under its charter, was a government-controlled corporation within the
meaning of Article IX(B)(2)(1) of the Constitution; and that the BSP is
appropriately regarded as a government instrumentality under the 1987
Administrative Code.[7] The COA Resolution also cited its constitutional
mandate under Section 2(1), Article IX (D). Finally, the COA Resolution
reads:

NOW THEREFORE, in consideration of the foregoing

premises, the COMMISSION PROPER HAS RESOLVED,
AS IT DOES HEREBY RESOLVE, to conduct an annual
financial audit of the Boy Scouts of the Philippines in
accordance with generally accepted auditing standards, and
express an opinion on whether the financial statements which
include the Balance Sheet, the Income Statement and the
Statement of Cash Flows present fairly its financial position
and results of operations.
 xxxx

BE IT RESOLVED FURTHERMORE, that for purposes

of audit supervision, the Boy Scouts of the Philippines shall
be classified among the government corporations belonging
to the Educational, Social, Scientific, Civic and Research
Sector under the Corporate Audit Office I, to be audited,
similar to the subsidiary corporations, by employing the team
audit approach.[8] (Emphases supplied.)

The BSP sought reconsideration of the COA Resolution in

a letter[9] dated November 26, 1999 signed by the BSP National President
Jejomar C. Binay, who is now the Vice President of the Republic,
wherein he wrote:

It is the position of the BSP, with all due respect, that it is not
subject to the Commissions jurisdiction on the following
grounds:

1. We reckon that the ruling in the case of Boy Scouts of the

Philippines vs. National Labor Relations Commission, et al.
(G.R. No. 80767) classifying the BSP as a
government-controlled corporation is anchored on the
substantial Government participation in the National
Executive Board of the BSP. It is to be noted that the case was
decided when the BSP Charter is defined by Commonwealth
Act No. 111 as amended by Presidential Decree 460.

However, may we humbly refer you to Republic Act No.

7278 which amended the BSPs charter after the cited case was
decided. The most salient of all amendments in RA No. 7278
is the alteration of the composition of the National Executive
Board of the BSP.

The said RA virtually eliminated the substantial government

participation in the National Executive Board by removing: (i)
the President of the Philippines and executive secretaries, with
the exception of the Secretary of Education, as members
thereof; and (ii) the appointment and confirmation power of
the President of the Philippines, as Chief Scout, over the
members of the said Board.

The BSP believes that the cited case has been superseded by
RA 7278. Thereby weakening the cases conclusion that the
BSP is a government-controlled corporation (sic). The 1987
Administrative Code itself, of which the BSP vs. NLRC relied
on for some terms, defines government-owned and controlled
corporations as agencies organized as stock or non-stock
corporations which the BSP, under its present charter, is not.

Also, the Government, like in other GOCCs, does not have

funds invested in the BSP. What RA 7278 only provides is
that the Government or any of its subdivisions, branches,
offices, agencies and instrumentalities can from time to time
donate and contribute funds to the BSP.

xxxx

Also the BSP respectfully believes that the BSP is not

appropriately regarded as a government instrumentality under
the 1987 Administrative Code as stated in the COA resolution.
As defined by Section 2(10) of the said code, instrumentality
refers to any agency of the National Government, not
integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if
not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter.

The BSP is not an entity administering special funds. It is not

even included in the DECS National Budget. x x x

It may be argued also that the BSP is not an agency of the

Government. The 1987 Administrative Code, merely referred
the BSP as an attached agency of the DECS as distinguished
from an actual line agency of departments that are included in
the National Budget. The BSP believes that an attached
agency is different from an agency. Agency, as defined in
Section 2(4) of the Administrative Code, is defined as any of
the various units of the Government including a department,
bureau, office, instrumentality, government-owned or
 controlled corporation or local government or distinct unit
therein.

Under the above definition, the BSP is neither a unit of the

Government; a department which refers to an executive
department as created by law (Section 2[7] of the
Administrative Code); nor a bureau which refers to any
principal subdivision or unit of any department (Section 2[8],
Administrative Code).[10]

Subsequently, requests for reconsideration of the COA Resolution

were also made separately by Robert P. Valdellon, Regional Scout
Director, Western Visayas Region, Iloilo City and Eugenio F. Capreso,
Council Scout Executive of Calbayog City.[11]

In a letter[12] dated July 3, 2000, Director Crescencio S. Sunico,

Corporate Audit Officer (CAO) I of the COA, furnished the BSP with a
copy of the Memorandum[13] dated June 20, 2000 of Atty. Santos M.
Alquizalas, the COA General Counsel. In said Memorandum, the COA
General Counsel opined that Republic Act No. 7278 did not supersede the
Courts ruling in Boy Scouts of the Philippines v. National Labor
Relations Commission, even though said law eliminated the substantial
government participation in the selection of members of the National
Executive Board of the BSP.The Memorandum further provides:

Analysis of the said case disclosed that the substantial

government participation is only one (1) of the three (3)
grounds relied upon by the Court in the resolution of the case.
Other considerations include the character of the BSPs
purposes and functions which has a public aspect and the
statutory designation of the BSP as a public corporation. These
grounds have not been deleted by R.A. No. 7278. On the
contrary, these were strengthened as evidenced by the
amendment made relative to BSPs purposes stated in Section 3
of R.A. No. 7278.

On the argument that BSP is not appropriately regarded

as a government instrumentality and agency of the government,
such has already been answered and clarified. The Supreme
Court has elucidated this matter in the BSP case when it
declared that BSP is regarded as, both a government-controlled
corporation with an original charter and as an instrumentality
 of the Government. Likewise, it is not disputed that the
Administrative Code of 1987 designated the BSP as one of the
attached agencies of DECS. Being an attached agency,
however, it does not change its nature as a
government-controlled corporation with original charter and,
necessarily, subject to COA audit jurisdiction. Besides, Section
2(1), Article IX-D of the Constitution provides that COA shall
have the power, authority, and duty to examine, audit and settle
all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in
trust by, or pertaining to, the Government, or any of its
subdivisions, agencies or instrumentalities, including
government-owned or controlled corporations with original
charters.[14]

Based on the Memorandum of the COA General Counsel, Director

Sunico wrote:

In view of the points clarified by said Memorandum

upholding COA Resolution No. 99-011, we have to comply
with the provisions of the latter, among which is to conduct an
annual financial audit of the Boy Scouts of the Philippines.[15]

In a letter dated November 20, 2000 signed by Director Amorsonia

B. Escarda, CAO I, the COA informed the BSP that a preliminary survey
of its organizational structure, operations and accounting system/records
shall be conducted on November 21 to 22, 2000.[16]

Upon the BSPs request, the audit was deferred for thirty (30) days.
The BSP then filed a Petition for Review with Prayer for Preliminary
Injunction and/or Temporary Restraining Order before the COA. This
was denied by the COA in its questioned Decision, which held that the
BSP is under its audit jurisdiction. The BSP moved for reconsideration
but this was likewise denied under its questioned Resolution.[17]

This led to the filing by the BSP of this petition for prohibition
with preliminary injunction and temporary restraining order against the
COA.

The Issue
 As stated earlier, the sole issue to be resolved in this case is
whether the BSP falls under the COAs audit jurisdiction.

The Parties Respective Arguments

The BSP contends that Boy Scouts of the Philippines v. National

Labor Relations Commission is inapplicable for purposes of determining
the audit jurisdiction of the COA as the issue therein was the jurisdiction
of the National Labor Relations Commission over a case for illegal
dismissal and unfair labor practice filed by certain BSP employees.[18]

While the BSP concedes that its functions do relate to those that
the government might otherwise completely assume on its own, it avers
that this alone was not determinative of the COAs audit jurisdiction over
it. The BSP further avers that the Court in Boy Scouts of the Philippines v.
National Labor Relations Commission simply stated x x x that in respect
of functions, the BSP is akin to a public corporation but this was not
synonymous to holding that the BSP is a government corporation or
entity subject to audit by the COA. [19]

The BSP contends that Republic Act No. 7278 introduced crucial
amendments to its charter; hence, the findings of the Court in Boy Scouts
of the Philippines v. National Labor Relations Commission are no longer
valid as the government has ceased to play a controlling influence in
it. The BSP claims that the pronouncements of the Court therein must be
taken only within the context of that case; that the Court had categorically
found that its assets were acquired from the Boy Scouts of America and
not from the Philippine government, and that its operations are financed
chiefly from membership dues of the Boy Scouts themselves as well as
from property rentals; and that the BSP may correctly be characterized as
non-governmental, and hence, beyond the audit jurisdiction of the
COA. It further claims that the designation by the Court of the BSP as a
government agency or instrumentality is mere obiter dictum.[20]

The BSP maintains that the provisions of Republic Act No. 7278
suggest that governance of BSP has come to be overwhelmingly a private
affair or nature, with government participation restricted to the seat of the
Secretary of Education, Culture and Sports.[21] It cites Philippine Airlines
Inc. v. Commission on Audit[22] wherein the Court declared that, PAL,
having ceased to be a government-owned or controlled corporation is no
longer under the audit jurisdiction of the COA.[23] Claiming that the
amendments introduced by Republic Act No. 7278 constituted a
supervening event that changed the BSPs corporate identity in the same
way that the governments privatization program changed PALs, the BSP
makes the case that the government no longer has control over it; thus,
the COA cannot use the Boy Scouts of the Philippines v. National Labor
Relations Commission as its basis for the exercise of its jurisdiction and
the issuance of COA Resolution No. 99-011.[24]The BSP further claims as
follows:

It is not far-fetched, in fact, to concede that BSPs funds and

assets are private in character. Unlike ordinary public
corporations, such as provinces, cities, and municipalities, or
government-owned and controlled corporations, such as Land
Bank of the Philippines and the Development Bank of the
Philippines, the assets and funds of BSP are not derived from any
government grant. For its operations, BSP is not dependent in any
way on any government appropriation; as a matter of fact, it has
not even been included in any appropriations for the government.
To be sure, COA has not alleged, in its Resolution No. 99-011 or
in the Memorandum of its General Counsel, that BSP received,
receives or continues to receive assets and funds from any agency
of the government. The foregoing simply point to the private
nature of the funds and assets of petitioner BSP.

xxxx

As stated in petitioners third argument, BSPs assets and

funds were never acquired from the government. Its operations
are not in any way financed by the government, as BSP has never
been included in any appropriations act for the government.
Neither has the government invested funds with BSP. BSP, has
not been, at any time, a user of government property or funds; nor
have properties of the government been held in trust by BSP. This
is precisely the reason why, until this time, the COA has not
attempted to subject BSP to its audit jurisdiction. x x x.[25]

To summarize its other arguments, the BSP contends that it is not a

government-owned or controlled corporation; neither is it an
instrumentality, agency, or subdivision of the government.
 In its Comment,[26] the COA argues as follows:

1. The BSP is a public corporation created under

Commonwealth Act No. 111 dated October 31, 1936, and
whose functions relate to the fostering of public virtues of
citizenship and patriotism and the general improvement of
the moral spirit and fiber of the youth. The manner of
creation and the purpose for which the BSP was created
indubitably prove that it is a government agency.

2. Being a government agency, the funds and property owned

or held in trust by the BSP are subject to the audit authority
of respondent Commission on Audit pursuant to Section 2
(1), Article IX-D of the 1987 Constitution.

3. Republic Act No. 7278 did not change the character of the
BSP as a government-owned or controlled corporation and
government instrumentality.[27]

The COA maintains that the functions of the BSP that include,
among others, the teaching to the youth of patriotism, courage,
self-reliance, and kindred virtues, are undeniably sovereign functions
enshrined under the Constitution and discussed by the Court in Boy
Scouts of the Philippines v. National Labor Relations Commission. The
COA contends that any attempt to classify the BSP as a private
corporation would be incomprehensible since no less than the law which
created it had designated it as a public corporation and its statutory
mandate embraces performance of sovereign functions.[28]

The COA claims that the only reason why the BSP employees fell
within the scope of the Civil Service Commission even before the 1987
Constitution was the fact that it was a government-owned or controlled
corporation; that as an attached agency of the Department of Education,
Culture and Sports (DECS), the BSP is an agency of the government; and
that the BSP is a chartered institution under Section 1(12) of the Revised
Administrative Code of 1987, embraced under the term government
instrumentality.[29]

The COA concludes that being a government agency, the funds and
property owned or held by the BSP are subject to the audit authority of
the COA pursuant to Section 2(1), Article IX (D) of the 1987
Constitution.

In support of its arguments, the COA cites The Veterans

Federation of the Philippines (VFP) v. Reyes,[30] wherein the Court held
that among the reasons why the VFP is a public corporation is that its
charter, Republic Act No. 2640, designates it as one. Furthermore, the
COA quotes the Court as saying in that case:

In several cases, we have dealt with the issue of whether

certain specific activities can be classified as sovereign functions.
These cases, which deal with activities not immediately apparent
to be sovereign functions, upheld the public sovereign nature of
operations needed either to promote social justice or to stimulate
patriotic sentiments and love of country.

xxxx

Petitioner claims that its funds are not public funds because
no budgetary appropriations or government funds have been
released to the VFP directly or indirectly from the DBM, and
because VFP funds come from membership dues and lease rentals
earned from administering government lands reserved for the
VFP.

The fact that no budgetary appropriations have been released

to the VFP does not prove that it is a private corporation. The
DBM indeed did not see it fit to propose budgetary appropriations
to the VFP, having itself believed that the VFP is a private
corporation. If the DBM, however, is mistaken as to its conclusion
regarding the nature of VFP's incorporation, its previous
assertions will not prevent future budgetary appropriations to the
VFP. The erroneous application of the law by public officers does
not bar a subsequent correct application of the law.[31] (Citations
omitted.)

The COA points out that the government is not precluded by law
from extending financial support to the BSP and adding to its funds, and
that as a government instrumentality which continues to perform a vital
function imbued with public interest and reflective of the governments
policy to stimulate patriotic sentiments and love of country, the BSPs
funds from whatever source are public funds, and can be used solely for
public purpose in pursuance of the provisions of Republic Act No.
[7278].[32]

The COA claims that the fact that it has not yet audited the BSPs
funds may not bar the subsequent exercise of its audit jurisdiction.

The BSP filed its Reply[33] on August 29, 2007 maintaining that its
statutory designation as a public corporation and the public character of
its purpose and functions are not determinative of the COAs audit
jurisdiction; reiterating its stand that Boy Scouts of the Philippines v.
National Labor Relations Commission is not applicable anymore because
the aspect of government ownership and control has been removed by
Republic Act No. 7278; and concluding that the funds and property that it
either owned or held in trust are not public funds and are not subject to
the COAs audit jurisdiction.

Thereafter, considering the BSPs claim that it is a private

corporation, this Court, in a Resolution[34] dated July 20, 2010, required
the parties to file, within a period of twenty (20) days from receipt of said
Resolution, their respective comments on the issue of whether
Commonwealth Act No. 111, as amended by Republic Act No. 7278, is
constitutional.

In compliance with the Courts resolution, the parties filed their

respective Comments.

In its Comment[35] dated October 22, 2010, the COA argues that
the constitutionality of Commonwealth Act No. 111, as amended, is not
determinative of the resolution of the present controversy on the COAs
audit jurisdiction over petitioner, and in fact, the controversy may be
resolved on other grounds; thus, the requisites before a judicial inquiry
may be made, as set forth in Commissioner of Internal Revenue v. Court
of Tax Appeals,[36] have not been fully met.[37] Moreover, the COA
maintains that behind every law lies the presumption of
constitutionality.[38] The COA likewise argues that contrary to the BSPs
position, repeal of a law by implication is not favored.[39] Lastly, the COA
claims that there was no violation of Section 16, Article XII of the 1987
Constitution with the creation or declaration of the BSP as a government
corporation. Citing Philippine Society for the Prevention of Cruelty to
Animals v. Commission on Audit,[40] the COA further alleges:
 The true criterion, therefore, to determine whether a
corporation is public or private is found in the totality of the
relation of the corporation to the State. If the corporation is
created by the State as the latters own agency or instrumentality to
help it in carrying out its governmental functions, then that
corporation is considered public; otherwise, it is private. x x x.[41]

For its part, in its Comment[42] filed on December 3, 2010, the

BSP submits that its charter, Commonwealth Act No. 111, as amended by
Republic Act No. 7278, is constitutional as it does not violate Section 16,
Article XII of the Constitution. The BSP alleges that while [it] is not a
public corporation within the purview of COAs audit jurisdiction, neither
is it a private corporation created by special law falling within the ambit
of the constitutional prohibition x x x.[43] The BSP further alleges:

Petitioners purpose is embodied in Section 3 of C.A. No.

111, as amended by Section 1 of R.A. No. 7278, thus:

xxxx

A reading of the foregoing provision shows that petitioner

was created to advance the interest of the youth, specifically of
young boys, and to mold them into becoming good citizens.
Ultimately, the creation of petitioner redounds to the benefit, not
only of those boys, but of the public good or welfare. Hence, it
can be said that petitioners purpose and functions are more of a
public rather than a private character. Petitioner caters to all boys
who wish to join the organization without any distinction. It does
not limit its membership to a particular class of boys. Petitioners
members are trained in scoutcraft and taught patriotism, civic
consciousness and responsibility, courage, self-reliance, discipline
and kindred virtues, and moral values, preparing them to become
model citizens and outstanding leaders of the country.[44]

The BSP reiterates its stand that the public character of its purpose
and functions do not place it within the ambit of the audit jurisdiction of
the COA as it lacks the government ownership or control that the
Constitution requires before an entity may be subject of said
jurisdiction.[45] It avers that it merely stated in its Reply that the
withdrawal of government control is akin to privatization, but it does not
necessarily mean that petitioner is a private corporation.[46] The BSP
claims that it has a unique characteristic which neither classifies it as a
purely public nor a purely private corporation;[47] that it is not a
quasi-public corporation; and that it may belong to a different class
altogether.[48]

The BSP claims that assuming arguendo that it is a private

corporation, its creation is not contrary to the purpose of Section 16,
Article XII of the Constitution; and that the evil sought to be avoided by
said provision is inexistent in the enactment of the BSPs charter, [49] as, (i)
it was not created for any pecuniary purpose; (ii) those who will primarily
benefit from its creation are not its officers but its entire membership
consisting of boys being trained in scoutcraft all over the country; (iii) it
caters to all boys who wish to join the organization without any
distinction; and (iv) it does not limit its membership to a particular class
or group of boys. Thus, the enactment of its charter confers no special
privilege to particular individuals, families, or groups; nor does it bring
about the danger of granting undue favors to certain groups to the
prejudice of others or of the interest of the country, which are the evils
sought to be prevented by the constitutional provision involved.[50]

Finally, the BSP states that the presumption of constitutionality of

a legislative enactment prevails absent any clear showing of its
repugnancy to the Constitution.[51]

The Ruling of the Court

After looking at the legislative history of its amended charter and

carefully studying the applicable laws and the arguments of both parties,
we find that the BSP is a public corporation and its funds are subject to
the COAs audit jurisdiction.

The BSP Charter (Commonwealth Act No. 111, approved on

October 31, 1936), entitled An Act to Create a Public Corporation to be
Known as the Boy Scouts of the Philippines, and to Define its Powers and
Purposes created the BSP as a public corporation to serve the following
public interest or purpose:

Sec. 3. The purpose of this corporation shall be to

promote through organization and cooperation with other
agencies, the ability of boys to do useful things for themselves
and others, to train them in scoutcraft, and to inculcate in them
patriotism, civic consciousness and responsibility, courage,
 self-reliance, discipline and kindred virtues, and moral values,
using the method which are in common use by boy scouts.

Presidential Decree No. 460, approved on May 17, 1974, amended

Commonwealth Act No. 111 and provided substantial changes in the BSP
organizational structure. Pertinent provisions are quoted below:

Section II. Section 5 of the said Act is also amended to

read as follows:

The governing body of the said corporation shall consist

of a National Executive Board composed of (a) the President
of the Philippines or his representative; (b) the charter and life
members of the Boy Scouts of the Philippines; (c) the
Chairman of the Board of Trustees of the Philippine Scouting
Foundation; (d) the Regional Chairman of the Scout Regions
of the Philippines; (e) the Secretary of Education and Culture,
the Secretary of Social Welfare, the Secretary of National
Defense, the Secretary of Labor, the Secretary of Finance, the
Secretary of Youth and Sports, and the Secretary of Local
Government and Community Development; (f) an equal
number of individuals from the private sector; (g) the National
President of the Girl Scouts of the Philippines; (h) one Scout of
Senior age from each Scout Region to represent the boy
membership; and (i) three representatives of the cultural
minorities. Except for the Regional Chairman who shall be
elected by the Regional Scout Councils during their annual
meetings, and the Scouts of their respective regions, all
members of the National Executive Board shall be either by
appointment or cooption, subject to ratification and
confirmation by the Chief Scout, who shall be the Head of
State. Vacancies in the Executive Board shall be filled by a
majority vote of the remaining members, subject to ratification
and confirmation by the Chief Scout. The by-laws may
prescribe the number of members of the National Executive
Board necessary to constitute a quorum of the board, which
number may be less than a majority of the whole number of the
board. The National Executive Board shall have power to
make and to amend the by-laws, and, by a two-thirds vote of
the whole board at a meeting called for this purpose, may
 authorize and cause to be executed mortgages and liens upon
the property of the corporation.

Subsequently, on March 24, 1992, Republic Act No. 7278 further

amended Commonwealth Act No. 111 by strengthening the volunteer and
democratic character of the BSP and reducing government representation
in its governing body, as follows:

Section 1. Sections 2 and 3 of Commonwealth Act. No.

111, as amended, is hereby amended to read as follows:

"Sec. 2. The said corporation shall have the powers of

perpetual succession, to sue and be sued; to enter into contracts;
to acquire, own, lease, convey and dispose of such real and
personal estate, land grants, rights and choses in action as shall
be necessary for corporate purposes, and to accept and receive
funds, real and personal property by gift, devise, bequest or
other means, to conduct fund-raising activities; to adopt and
use a seal, and the same to alter and destroy; to have offices
and conduct its business and affairs in Metropolitan Manila
and in the regions, provinces, cities, municipalities, and
barangays of the Philippines, to make and adopt by-laws, rules
and regulations not inconsistent with this Act and the laws of
the Philippines, and generally to do all such acts and things,
including the establishment of regulations for the election of
associates and successors, as may be necessary to carry into
effect the provisions of this Act and promote the purposes of
said corporation: Provided, That said corporation shall have no
power to issue certificates of stock or to declare or pay
dividends, its objectives and purposes being solely of
benevolent character and not for pecuniary profit of its
members.

"Sec. 3. The purpose of this corporation shall be to

promote through organization and cooperation with other
agencies, the ability of boys to do useful things for
themselves and others, to train them in scoutcraft, and to
inculcate in them patriotism, civic consciousness and
responsibility, courage, self-reliance, discipline and kindred
virtues, and moral values, using the method which are in
common use by boy scouts."

Sec. 2. Section 4 of Commonwealth Act No. 111, as

amended, is hereby repealed and in lieu thereof, Section 4 shall
read as follows:

"Sec. 4. The President of the Philippines shall be the

Chief Scout of the Boy Scouts of the Philippines."

Sec. 3. Sections 5, 6, 7 and 8 of Commonwealth Act

No. 111, as amended, are hereby amended to read as follows:

"Sec. 5. The governing body of the said corporation

shall consist of a National Executive Board, the members of
which shall be Filipino citizens of good moral character. The
Board shall be composed of the following:

"(a) One (1) charter member of the Boy Scouts of the

Philippines who shall be elected by the members of the
National Council at its meeting called for this purpose;

"(b) The regional chairmen of the scout regions who

shall be elected by the representatives of all the local scout
councils of the region during its meeting called for this purpose:
Provided, That a candidate for regional chairman need not be
the chairman of a local scout council;

"(c) The Secretary of Education, Culture and

Sports;

"(d) The National President of the Girl Scouts of the

Philippines;

"(e) One (1) senior scout, each from Luzon, Visayas and
Mindanao areas, to be elected by the senior scout delegates of
the local scout councils to the scout youth forums in their
respective areas, in its meeting called for this purpose, to
represent the boy scout membership;
 "(f) Twelve (12) regular members to be elected by the
members of the National Council in its meeting called for this
purpose;

"(g) At least ten (10) but not more than fifteen (15)
additional members from the private sector who shall be
elected by the members of the National Executive Board
referred to in the immediately preceding paragraphs (a), (b), (c),
(d), (e) and (f) at the organizational meeting of the newly
reconstituted National Executive Board which shall be held
immediately after the meeting of the National Council wherein
the twelve (12) regular members and the one (1) charter
member were elected.

xxxx

"Sec. 8. Any donation or contribution which from time

to time may be made to the Boy Scouts of the Philippines by
the Government or any of its subdivisions, branches, offices,
agencies or instrumentalities or by a foreign government or by
private, entities and individuals shall be expended by the
National Executive Board in pursuance of this Act.

The BSP as a Public Corporation

under Par. 2, Art. 2 of the Civil Code

There are three classes of juridical persons under Article 44 of the

Civil Code and the BSP, as presently constituted under Republic Act No.
7278, falls under the second classification. Article 44 reads:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for
public interest or purpose created by law; their personality
begins as soon as they have been constituted according to
law;
(3) Corporations, partnerships and associations
for private interest or purpose to which the law grants a
 juridical personality, separate and distinct from that of each
shareholder, partner or member. (Emphases supplied.)

The BSP, which is a corporation created for a public interest or

purpose, is subject to the law creating it under Article 45 of the Civil
Code, which provides:

Art. 45. Juridical persons mentioned in Nos. 1 and 2

of the preceding article are governed by the laws creating
or recognizing them.
Private corporations are regulated by laws of general
application on the subject.
Partnerships and associations for private interest or
purpose are governed by the provisions of this Code
concerning partnerships. (Emphasis and underscoring
supplied.)

The purpose of the BSP as stated in its amended charter shows that
it was created in order to implement a State policy declared in Article II,
Section 13 of the Constitution, which reads:

ARTICLE II - DECLARATION OF PRINCIPLES AND

STATE POLICIES

Section 13. The 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.

Evidently, the BSP, which was created by a special law to serve a

public purpose in pursuit of a constitutional mandate, comes within the
class of public corporations defined by paragraph 2, Article 44 of the
Civil Code and governed by the law which creates it, pursuant to Article
45 of the same Code.

The BSPs Classification Under the

Administrative Code of 1987
 The public, rather than private, character of the BSP is recognized
by the fact that, along with the Girl Scouts of the Philippines, it is
classified as an attached agency of the DECS under Executive Order No.
292, or the Administrative Code of 1987, which states:

TITLE VI EDUCATION, CULTURE AND SPORTS

Chapter 8 Attached Agencies

SEC. 20. Attached Agencies. The following agencies

are hereby attached to the Department:

xxxx

(12) Boy Scouts of the Philippines;

(13) Girl Scouts of the Philippines.

The administrative relationship of an attached agency to the

department is defined in the Administrative Code of 1987 as follows:

BOOK IV

THE EXECUTIVE BRANCH

Chapter 7 ADMINISTRATIVE RELATIONSHIP

SEC. 38. Definition of Administrative Relationship.

Unless otherwise expressly stated in the Code or in other laws
defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as
follows:

xxxx

(3) Attachment. (a) This refers to the lateral relationship

between the department or its equivalent and the attached
agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by
having the department represented in the governing board
of the attached agency or corporation, either as chairman
 or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or
agency comply with a system of periodic reporting which shall
reflect the progress of programs and projects; and having the
department or its equivalent provide general policies through
its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation
or agency. (Emphasis ours.)

As an attached agency, the BSP enjoys operational autonomy, as long as

policy and program coordination is achieved by having at least one
representative of government in its governing board, which in the case
of the BSP is the DECS Secretary. In this sense, the BSP is not under
government control or supervision and control. Still this characteristic
does not make the attached chartered agency a private corporation
covered by the constitutional proscription in question.

Art. XII, Sec. 16 of the Constitution

refers to private corporations created
by government for proprietary or
economic/business purposes

At the outset, it should be noted that the provision of Section 16 in

issue is found in Article XII of the Constitution, entitled National
Economy and Patrimony. Section 1 of Article XII is quoted as follows:

SECTION 1. The goals of the national economy are a

more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people;
and an expanding productivity as the key to raising the quality
of life for all, especially the underprivileged.

The State shall promote industrialization and full

employment based on sound agricultural development and
agrarian reform, through industries that make full and efficient
use of human and natural resources, and which are competitive
in both domestic and foreign markets. However, the State shall
 protect Filipino enterprises against unfair foreign competition
and trade practices.

In the pursuit of these goals, all sectors of the economy

and all regions of the country shall be given optimum
opportunity to develop. Private enterprises, including
corporations, cooperatives, and similar collective organizations,
shall be encouraged to broaden the base of their ownership.

The scope and coverage of Section 16, Article XII of the

Constitution can be seen from the aforementioned declaration of state
policies and goals which pertains to national
economy and patrimony and the interests of the people in economic
development.

Section 16, Article XII deals with the formation, organization, or

regulation of private corporations,[52] which should be done through
a general law enacted by Congress, provides for an exception, that is: if
the corporation is government owned or controlled; its creation is in the
interest of the common good; and it meets the test of economic
viability. The rationale behind Article XII, Section 16 of the 1987
Constitution was explained in Feliciano v. Commission on Audit,[53] in the
following manner:
The Constitution emphatically prohibits the creation of
private corporations except by a general law applicable to all
citizens. The purpose of this constitutional provision is to
ban private corporations created by special charters, which
historically gave certain individuals, families or groups
special privileges denied to other citizens.[54] (Emphasis
added.)

It may be gleaned from the above discussion that Article XII,

Section 16 bans the creation of private corporations by special law. The
said constitutional provision should not be construed so as to prohibit the
creation of public corporations or a corporate agency or instrumentality
of the government intended to serve a public interest or purpose, which
should not be measured on the basis of economic viability, but according
to the public interest or purpose it serves as envisioned by paragraph (2),
of Article 44 of the Civil Code and the pertinent provisions of
the Administrative Code of 1987.
The BSP is a Public Corporation Not
Subject to the Test of Government
Ownership or Control and Economic
Viability

The BSP is a public corporation or a government agency or

instrumentality with juridical personality, which does not fall within the
constitutional prohibition in Article XII, Section 16, notwithstanding the
amendments to its charter. Not all corporations, which
are not government owned or controlled, are ipso facto to be considered
private corporations as there exists another distinct class of corporations
or chartered institutions which are otherwise known as public
corporations. These corporations are treated by law as agencies or
instrumentalities of the government which are not subject to the tests of
ownership or control and economic viability but to different criteria
relating to their public purposes/interests or constitutional policies and
objectives and their administrative relationship to the government or any
of its Departments or Offices.

Classification of Corporations Under

Section 16, Article XII of the
Constitution on National Economy and
Patrimony

The dissenting opinion of Associate Justice Antonio T. Carpio, citing a

line of cases, insists that the Constitution recognizes only two classes of
corporations: private corporations under a general law,
and government-owned or controlled corporations created
by special charters.

We strongly disagree. Section 16, Article XII should not be

construed so as to prohibit Congress from creating public corporations. In
fact, Congress has enacted numerous laws creating public corporations or
government agencies or instrumentalities vested with corporate
powers. Moreover, Section 16, Article XII, which relates to National
Economy and Patrimony, could not have tied the hands of Congress in
creating public corporations to serve any of the constitutional policies or
objectives.
In his dissent, Justice Carpio contends that this ponente introduces
a totally different species of corporation, which is neither a private
corporation nor a government owned or controlled corporation and, in so
doing, is missing the fact that the BSP, which was created as a non-stock,
non-profit corporation, can only be either a private corporation or a
government owned or controlled corporation.

Note that in Boy Scouts of the Philippines v. National Labor

Relations Commission, the BSP, under its former charter, was regarded
as both a government owned or controlled corporation with original
charter and a public corporation. The said case pertinently stated:

While the BSP may be seen to be a mixed type of

entity, combining aspects of both public and private entities,
we believe that considering the character of its purposes and its
functions, the statutory designation of the BSP as "a public
corporation" and the substantial participation of the
Government in the selection of members of the National
Executive Board of the BSP, the BSP, as presently constituted
under its charter, is a government-controlled
corporation within the meaning of Article IX (B) (2) (1) of the
Constitution.

We are fortified in this conclusion when we note that the

Administrative Code of 1987 designates the BSP as one of the
attached agencies of the Department of Education, Culture and
Sports ("DECS"). An "agency of the Government" is defined
as referring to any of the various units of the Government
including a department, bureau, office, instrumentality,
government-owned or -controlled corporation, or local
government or distinct unit therein. "Government
instrumentality" is in turn defined in the 1987 Administrative
Code in the following manner:

Instrumentality - refers to any agency of

the National Government, not integrated within
the department framework, vested with special
functions or jurisdiction by law, endowed with
some if not all corporate powers, administering
special funds, and enjoying operational autonomy
usually through a charter. This term includes
regulatory agencies, chartered institutions and
government-owned or controlled corporations.
 The same Code describes a "chartered institution" in the
following terms:

Chartered institution - refers to

any agency organized or operating under a
special charter, and vested by law with functions
relating to specific constitutional policies or
objectives. This term includes the state
universities and colleges, and the monetary
authority of the State.

We believe that the BSP is appropriately regarded as "a

government instrumentality" under the 1987 Administrative
Code.

It thus appears that the BSP may be regarded as

both a "government controlled corporation with an
original charter" and as an "instrumentality" of the
Government within the meaning of Article IX (B) (2) (1) of
the Constitution. x x x.[55] (Emphases supplied.)

The existence of public or government corporate or juridical

entities or chartered institutions by legislative fiat distinct from private
corporations and government owned or controlled corporation is best
exemplified by the 1987 Administrative Code cited above, which we
quote in part:

Sec. 2. General Terms Defined. Unless the specific

words of the text, or the context as a whole, or a particular
statute, shall require a different meaning:

xxxx

(10) "Instrumentality" refers to any agency of the

National Government, not integrated within the department
framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate
powers, administering special funds, and enjoying
operational autonomy, usually through a charter. This term
 includes regulatory agencies, chartered institutions and
government-owned or controlled corporations. 


xxxx

(12) "Chartered institution" refers to any agency

organized or operating under a special charter, and vested by
law with functions relating to specific constitutional policies
or objectives. This term includes the state universities and
colleges and the monetary authority of the State.

(13) "Government-owned or controlled corporation"

refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs
whether governmental or proprietary in nature, and owned
by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) per cent of
its capital stock: Provided, That government-owned or
controlled corporations may be further categorized by the
Department of the Budget, the Civil Service Commission,
and the Commission on Audit for purposes of the exercise
and discharge of their respective powers, functions and
responsibilities with respect to such corporations.

Assuming for the sake of argument that the BSP ceases to be

owned or controlled by the government because of reduction of the
number of representatives of the government in the BSP Board, it does
not follow that it also ceases to be a government instrumentality as it still
retains all the characteristics of the latter as an attached agency of the
DECS under the Administrative Code. Vesting corporate powers to an
attached agency or instrumentality of the government is not
constitutionally prohibited and is allowed by the above-mentioned
provisions of the Civil Code and the 1987 Administrative Code.

Economic Viability and Ownership

and Control Tests Inapplicable to
Public Corporations
 As presently constituted, the BSP still remains
an instrumentality of the national government. It is a public corporation
created by law for a public purpose, attached to the DECS pursuant to its
Charter and the Administrative Code of 1987. It is not a private
corporation which is required to be owned or controlled by the
government and be economically viable to justify its existence under a
special law.

The dissent of Justice Carpio also submits that by recognizing a

new class of public corporation(s) created by special charter that will not
be subject to the test of economic viability, the constitutional provision
will be circumvented.

However, a review of the Record of the 1986 Constitutional

Convention reveals the intent of the framers of the highest law of our land
to distinguish between government corporations performing
governmental functions and corporations involved in business or
proprietary functions:
THE PRESIDENT. Commissioner Foz is recognized.

MR. FOZ. Madam President, I support the proposal to

insert ECONOMIC VIABILITY as one of the grounds for
organizing government corporations. x x x.

MR. OPLE. Madam President, the reason for this

concern is really that when the government creates a
corporation, there is a sense in which this corporation becomes
exempt from the test of economic performance. We know what
happened in the past. If a government corporation loses, then it
makes its claim upon the taxpayers money through new equity
infusions from the government and what is always invoked is
the common good. x x x

Therefore, when we insert the phrase ECONOMIC

VIABILITY together with the common good, this becomes a
restraint on future enthusiasts for state capitalism to excuse
themselves from the responsibility of meeting the market test
so that they become viable. x x x.

xxxx
 THE PRESIDENT. Commissioner Quesada is
recognized.

MS. QUESADA. Madam President, may we be clarified

by the committee on what is meant by economic viability?

THE PRESIDENT. Please proceed.

MR. MONSOD. Economic viability normally is

determined by cost-benefit ratio that takes into consideration
all benefits, including economic external as well as internal
benefits. These are what they call externalities in economics,
so that these are not strictly financial criteria. Economic
viability involves what we call economic returns or benefits of
the country that are not quantifiable in financial terms. x x x.

xxxx

MS. QUESADA. So, would this particular formulation

now really limit the entry of government corporations into
activities engaged in by corporations?

MR. MONSOD. Yes, because it is also consistent with

the economic philosophy that this Commission approved
that there should be minimum government participation
and intervention in the economy.

MS. QUESDA. Sometimes this Commission would just

refer to Congress to provide the particular requirements when
the government would get into corporations. But this time
around, we specifically mentioned economic viability. x x x.

MR. VILLEGAS. Commissioner Ople will restate the

reason for his introducing that amendment.

MR. OPLE. I am obliged to repeat what I said earlier in

moving for this particular amendment jointly with
Commissioner Foz. During the past three decades, there had
been a proliferation of government corporations, very few of
which have succeeded, and many of which are now earmarked
by the Presidential Reorganization Commission for liquidation
because they failed the economic test. x x x.

xxxx

MS. QUESADA. But would not the Commissioner say

that the reason why many of the government-owned or
controlled corporations failed to come up with the economic
test is due to the management of these corporations, and not
the idea itself of government corporations? It is a problem of
efficiency and effectiveness of management of these
corporations which could be remedied, not by eliminating
government corporations or the idea of getting into
state-owned corporations, but improving management which
our technocrats should be able to do, given the training and the
experience.

MR. OPLE. That is part of the economic viability,

Madam President.

MS. QUESADA. So, is the Commissioner saying then

that the Filipinos will benefit more if these
government-controlled corporations were given to private
hands, and that there will be more goods and services that will
be affordable and within the reach of the ordinary citizens?

MR. OPLE. Yes. There is nothing here, Madam

President, that will prevent the formation of a government
corporation in accordance with a special charter given by
Congress. However, we are raising the standard a little bit
so that, in the future, corporations established by the
government will meet the test of the common good but
within that framework we should also build a certain
standard of economic viability.

xxxx

THE PRESIDENT. Commissioner Padilla is recognized.

MR. PADILLA. This is an inquiry to the committee.

With regard to corporations created by a special charter for
 government-owned or controlled corporations, will these be in
the pioneer fields or in places where the private enterprise does
not or cannot enter? Or is this so general that these government
corporations can compete with private corporations organized
under a general law?

MR. MONSOD. Madam President, x x x. There are

two types of government corporations those that are
involved in performing governmental functions, like garbage
disposal, Manila waterworks, and so on; and those government
corporations that are involved in business functions. As we
said earlier, there are two criteria that should be followed for
corporations that want to go into business. First is for
government corporations to first prove that they can be
efficient in the areas of their proper functions. This is one of
the problems now because they go into all kinds of activities
but are not even efficient in their proper functions. Secondly,
they should not go into activities that the private sector can do
better.

MR. PADILLA. There is no question about

corporations performing governmental functions or
functions that are impressed with public interest. But the
question is with regard to matters that are covered,
perhaps not exhaustively, by private enterprise. It seems
that under this provision the only qualification is economic
viability and common good, but shall government, through
government-controlled corporations, compete with private
enterprise?

MR. MONSOD. No, Madam President. As we said, the

government should not engage in activities that private
enterprise is engaged in and can do better. x x x.[56] (Emphases
supplied.)

Thus, the test of economic viability clearly does not apply to public
corporations dealing with governmental functions, to which category the
BSP belongs. The discussion above conveys the constitutional intent not
to apply this constitutional ban on the creation of public corporations
where the economic viability test would be irrelevant. The said test would
only apply if the corporation is engaged in some economic activity or
business function for the government.

It is undisputed that the BSP performs functions that are impressed with
public interest. In fact, during the consideration of the Senate Bill that
eventually became Republic Act No. 7278, which amended the BSP
Charter, one of the bills sponsors, Senator Joey Lina, described the BSP
as follows:

Senator Lina. Yes, I can only think of two

organizations involving the masses of our youth, Mr. President,
that should be given this kind of a privilege the Boy Scouts of
the Philippines and the Girl Scouts of the Philippines. Outside
of these two groups, I do not think there are other groups
similarly situated.

The Boy Scouts of the Philippines has a long history

of providing value formation to our young, and considering
how huge the population of the young people is, at this
point in time, and also considering the importance of
having an organization such as this that will inculcate
moral uprightness among the young people, and further
considering that the development of these young people at
that tender age of seven to sixteen is vital in the
development of the country producing good citizens, I
believe that we can make an exception of the Boy Scouting
movement of the Philippines from this general prohibition
against providing tax exemption and privileges.[57]

Furthermore, this Court cannot agree with the dissenting opinion which
equates the changes introduced by Republic Act No. 7278 to the BSP
Charter as clear manifestation of the intent of Congress to return the BSP
to the private sector. It was not the intent of Congress in enacting
Republic Act No. 7278 to give up all interests in this basic youth
organization, which has been its partner in forming responsible citizens
for decades.

In fact, as may be seen in the deliberation of the House Bills that

eventually resulted to Republic Act No. 7278, Congress worked closely
with the BSP to rejuvenate the organization, to bring it back to its former
glory reached under its original charter, Commonwealth Act No. 111, and
to correct the perceived ills introduced by the amendments to its Charter
under Presidential Decree No. 460. The BSP suffered from low morale
and decrease in number because the Secretaries of the different
departments in government who were too busy to attend the meetings of
the BSPs National Executive Board (the Board) sent representatives who,
as it turned out, changed from meeting to meeting. Thus, the Scouting
Councils established in the provinces and cities were not in touch with
what was happening on the national level, but they were left to implement
what was decided by the Board.[58]

A portion of the legislators discussion is quoted below to clearly show

their intent:

HON. DEL MAR. x x x I need not mention to you the

value and the tremendous good that the Boy Scout
Movement has done not only for the youth in particular
but for the country in general. And that is why, if we look
around, our past and present national leaders, prominent
men in the various fields of endeavor, public servants in
government offices, and civic leaders in the communities all
over the land, and not only in our country but all over the
world many if not most of them have at one time or
another been beneficiaries of the Scouting Movement. And
so, it is along this line, Mr. Chairman, that we would like to
have the early approval of this measure if only to pay back
what we owe much to the Scouting Movement. Now, going to
the meat of the matter, Mr. Chairman, if I may just the
Scouting Movement was enacted into law in October 31, 1936
under Commonwealth Act No. 111. x x x [W]e were
acknowledged as the third biggest scouting organization in the
world x x x. And to our mind, Mr. Chairman, this erratic
growth and this decrease in membership [number] is because
of the bad policy measures that were enunciated with the
enactment or promulgation by the President before of
Presidential Decree No. 460 which we feel is the culprit of the
ills that is flagging the Boy Scout Movement today. And so,
this is specifically what we are attacking, Mr. Chairman, the
disenfranchisement of the National Council in the election of
the national board. x x x. And so, this is what we would like to
be appraised of by the officers of the Boy [Scouts] of the
Philippines whom we are also confident, have the best interest
of the Boy Scout Movement at heart and it is in this spirit, Mr.
 Chairman, that we see no impediment towards working
together, the Boy Scout of the Philippines officers working
together with the House of Representatives in coming out with
a measure that will put back the vigor and enthusiasm of the
Boy Scout Movement. x x x.[59] (Emphasis ours.)

The following is another excerpt from the discussion on the House

version of the bill, in the Committee on Government Enterprises:

HON. AQUINO: x x x Well, obviously, the two bills as

well as the previous laws that have created the Boy Scouts of
the Philippines did not provide for any direct government
support by way of appropriation from the national budget to
support the activities of this organization. The point here is,
and at the same time they have been subjected to a
governmental intervention, which to their mind has been
inimical to the objectives and to the institution per se, that is
why they are seeking legislative fiat to restore back the original
mandate that they had under Commonwealth Act 111. Such
having been the experience in the hands of government,
meaning, there has been negative interference on their part
and inasmuch as their mandate is coming from a legislative
fiat, then shouldnt it be, this rhetorical question, shouldnt it
be better for this organization to seek a mandate from, lets
say, the government the Corporation Code of the
Philippines and register with the SEC as non-profit
non-stock corporation so that government intervention
could be very very minimal. Maybe thats a rhetorical
question, they may or they may not answer, ano. I dont know
what would be the benefit of a charter or a mandate being
provided for by way of legislation versus a registration with
the SEC under the Corporation Code of the Philippines
inasmuch as they dont get anything from the government
anyway insofar as direct funding. In fact, the only thing that
they got from government was intervention in their
affairs. Maybe we can solicit some commentary comments
from the resource persons. Incidentally, dont take that as an
objection, Im not objecting. Im all for the objectives of these
two bills. It just occurred to me that since you have had very
bad experience in the hands of government and you will
always be open to such possible intervention even in the future
as long as you have a legislative mandate or your mandate or
your charter coming from legislative action.

xxxx

MR. ESCUDERO: Mr. Chairman, there may be a

disadvantage if the Boy Scouts of the Philippines will be
required to register with the SEC. If we are registered with
the SEC, there could be a danger of proliferation of scout
organization. Anybody can organize and then register with the
SEC. If there will be a proliferation of this, then the
organization will lose control of the entire organization.
Another disadvantage, Mr. Chairman, anybody can file a
complaint in the SEC against the Boy Scouts of the Philippines
and the SEC may suspend the operation or freeze the assets of
the organization and hamper the operation of the organization.
I dont know, Mr. Chairman, how you look at it but there could
be a danger for anybody filing a complaint against the
organization in the SEC and the SEC might suspend the
registration permit of the organization and we will not be able
to operate.

HON. AQUINO: Well, that I think would be a problem

that will not be exclusive to corporations registered with the
SEC because even if you are government corporation, court
action may be taken against you in other judicial bodies
because the SEC is simply another quasi-judicial body. But, I
think, the first point would be very interesting, the first
point that you raised. In effect, what you are saying is that
with the legislative mandate creating your charter, in effect,
you have been given some sort of a franchise with this
movement.

MR. ESCUDERO: Yes.

HON. AQUINO: Exclusive franchise of that movement?
MR. ESCUDERO: Yes.
HON. AQUINO: Well, thats very well taken so I will
proceed with other issues, Mr. Chairman. x x
x.[60] (Emphases added.)
 Therefore, even though the amended BSP charter did away with
most of the governmental presence in the BSP Board, this was done to
more strongly promote the BSPs objectives, which were not supported
under Presidential Decree No. 460. The BSP objectives, as pointed out
earlier, are consistent with the public purpose of the promotion of the
well-being of the youth, the future leaders of the country. The
amendments were not done with the view of changing the character of
the BSP into a privatized corporation. The BSP remains an agency
attached to a department of the government, the DECS, and it was not at
all stripped of its public character.

The ownership and control test is likewise irrelevant for a public

corporation like the BSP. To reiterate, the relationship of the BSP, an
attached agency, to the government, through the DECS, is defined in the
Revised Administrative Code of 1987. The BSP meets the minimum
statutory requirement of an attached government agency as the DECS
Secretary sits at the BSP Board ex officio, thus facilitating the policy and
program coordination between the BSP and the DECS.
Requisites for Declaration of
Unconstitutionality Not Met in this
Case

The dissenting opinion of Justice Carpio improperly raised the issue of

unconstitutionality of certain provisions of the BSP Charter. Even if the
parties were asked to Comment on the validity of the BSP charter by the
Court, this alone does not comply with the requisites for judicial review,
which were clearly set forth in a recent case:

When questions of constitutional significance are raised,

the Court can exercise its power of judicial review only if the
following requisites are present: (1) the existence of an actual
and appropriate case; (2) the existence of personal and
substantial interest on the part of the party raising the
constitutional question; (3) recourse to judicial review is
made at the earliest opportunity; and (4) the constitutional
question is the lis mota of the case.[61] (Emphasis added.)

Thus, when it comes to the exercise of the power of judicial review, the
constitutional issue should be the very lis mota, or threshold issue, of the
case, and that it should be raised by either of the parties. These
requirements would be ignored under the dissents rather overreaching
view of how this case should have been decided. True, it was the Court
that asked the parties to comment, but the Court cannot be the one to raise
a constitutional issue. Thus, the Court chooses to once more exhibit
restraint in the exercise of its power to pass upon the validity of a law.

Re: the COAs Jurisdiction

Regarding the COAs jurisdiction over the BSP, Section 8 of its

amended charter allows the BSP to receive contributions or donations
from the government. Section 8 reads:
Section 8. Any donation or contribution which from
time to time may be made to the Boy Scouts of the
Philippines by the Government or any of its subdivisions,
branches, offices, agencies or instrumentalities shall be
expended by the Executive Board in pursuance of this Act.

The sources of funds to maintain the BSP were identified before

the House Committee on Government Enterprises while the bill was
being deliberated, and the pertinent portion of the discussion is quoted
below:

MR. ESCUDERO. Yes, Mr. Chairman. The question is

the sources of funds of the organization. First, Mr. Chairman,
the Boy Scouts of the Philippines do not receive annual
allotment from the government. The organization has to raise
its own funds through fund drives and fund campaigns or fund
raising activities. Aside from this, we have some revenue
producing projects in the organization that gives us funds to
support the operation. x x x From time to time, Mr. Chairman,
when we have special activities we request for assistance or
financial assistance from government agencies, from private
business and corporations, but this is only during special
activities that the Boy Scouts of the Philippines would conduct
during the year. Otherwise, we have to raise our own funds to
support the organization.[62]

The nature of the funds of the BSP and the COAs audit jurisdiction
were likewise brought up in said congressional deliberations, to wit:
HON. AQUINO: x x x Insofar as this organization being a
government created organization, in fact, a government
corporation classified as such, are your funds or your finances
subjected to the COA audit?

MR. ESCUDERO: Mr. Chairman, we are not. Our funds is not

subjected. We dont fall under the jurisdiction of the COA.
HON. AQUINO: All right, but before were you?
MR. ESCUDERO: No, Mr. Chairman.
MR. JESUS: May I? As historical backgrounder,
Commonwealth Act 111 was written by then Secretary Jorge
Vargas and before and up to the middle of the Martial Law
years, the BSP was receiving a subsidy in the form of an
annual a one draw from the Sweepstakes. And, this was the
case also with the Girl Scouts at the Anti-TB, but then this was
and the Boy Scouts then because of this funding partly from
government was being subjected to audit in the
contributions being made in the part of the
Sweepstakes. But this was removed later during the Martial
Law years with the creation of the Human Settlements
Commission. So the situation right now is that the Boy Scouts
does not receive any funding from government, but then in the
case of the local councils and this legislative charter, so to
speak, enables the local councils even the national
headquarters in view of the provisions in the existing law to
receive donations from the government or any of its
instrumentalities, which would be difficult if the Boy Scouts is
registered as a private corporation with the Securities and
Exchange Commission. Government bodies would be estopped
from making donations to the Boy Scouts, which at present is
not the case because there is the Boy Scouts charter, this
Commonwealth Act 111 as amended by PD 463.

xxxx
HON. AMATONG: Mr. Chairman, in connection with that.

THE CHAIRMAN: Yeah, Gentleman from Zamboanga.

HON. AMATONG: There is no auditing being made

because theres no money put in the organization, but how
about donated funds to this organization? What are the
 remedies of the donors of how will they know how their
money are being spent?

MR. ESCUDERO: May I answer, Mr. Chairman?

THE CHAIRMAN: Yes, gentleman.

MR. ESCUDERO: The Boy Scouts of the Philippines has

an external auditor and by the charter we are required to submit
a financial report at the end of each year to the National
Executive Board. So all the funds donated or otherwise is
accounted for at the end of the year by our external auditor. In
this case the SGV.[63]

Historically, therefore, the BSP had been subjected to government

audit in so far as public funds had been infused thereto. However, this
practice should not preclude the exercise of the audit jurisdiction of COA,
clearly set forth under the Constitution, which pertinently provides:

Section 2. (1) The Commission on Audit shall have

the power, authority, and duty to examine, audit, and settle
all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held
in trust by, or pertaining to, the Government, or any of its
subdivisions, agencies, or instrumentalities, including
government-owned and controlled corporations with
original charters, and on a post-audit basis: (a) constitutional
bodies, commissions and offices that have been granted fiscal
autonomy under this Constitution; (b) autonomous state
colleges and universities; (c) other government-owned or
controlled corporations with original charters and their
subsidiaries; and (d) such non-governmental entities receiving
subsidy or equity, directly or indirectly, from or through the
Government, which are required by law of the granting
institution to submit to such audit as a condition of subsidy or
equity. x x x. [64]
 Since the BSP, under its amended charter, continues to be a public
corporation or a government instrumentality, we come to the inevitable
conclusion that it is subject to the exercise by the COA of its audit
jurisdiction in the manner consistent with the provisions of the BSP
Charter.

WHEREFORE, premises considered, the instant petition for

prohibition is DISMISSED.

SO ORDERED.

Soriano vs. La Guardia

G.R. No. 164785. April 29, 2009

Facts:

On August 10, 2004, at around 10:00 p.m., petitioner, as host of the

program Ang Dating Daan, aired on UNTV 37, made obscene
remarks against INC. Two days after, before the MTRCB, separate
but almost identical affidavit-complaints were lodged by Jessie L.
Galapon and seven other private respondents, all members of the
Iglesia ni Cristo (INC), against petitioner in connection with the
above broadcast. Respondent Michael M. Sandoval, who felt directly
alluded to in petitioner’s remark, was then a minister of INC and a
regular host of the TV program Ang Tamang Daan.

Issue:

Whether or not Soriano’s statements during the televised “Ang

Dating Daan” part of the religious discourse and within the
protection of Section 5, Art.III.
Held:

No. Under the circumstances obtaining in this case, therefore, and

considering the adverse effect of petitioner’s utterances on the
viewers’ fundamental rights as well as petitioner’s clear violation of
his duty as a public trustee, the MTRCB properly suspended him
from appearing in Ang Dating Daan for three months. Furthermore,
it cannot be properly asserted that petitioner’s suspension was an
undue curtailment of his right to free speech either as a prior
restraint or as a subsequent punishment. Aside from the reasons
given above (re the paramount of viewers rights, the public
trusteeship character of a broadcaster’s role and the power of the
State to regulate broadcast media), a requirement that indecent
language be avoided has its primary effect on the form, rather than
the content, of serious communication. There are few, if any,
thoughts that cannot be expressed by the use of less offensive
language.

G.R. No. 162540

July 13, 2009

GEMMA T. JACINTO,

Petitionervs.

PEOPLE OF THE PHILIPPINES, RespondentPERALTA,

A petition for review on certiorari filed by petitioner Gemma T. Jacinto seeking

the reversal of the Decision of the Court of Appealsaffirming petitioner's
conviction of the crime of Qualified Theft, and its Resolution denying petitioner's
motion for reconsideration.

Facts:

Baby Aquino handed petitioner Gemma Jacinto a Banco De Oro (BDO) Check
in the amount of P10,000.00. The check waspayment for Baby Aquino's
purchases from Mega Foam Int'l., Inc., and petitioner was then the collector of
MegaFoam. Somehow, the check was deposited in the Land Bank account of
Generoso Capitle, the husband of Jacqueline Capitle; the latter is the sister
of petitioner and the former pricing, merchandising and inventory clerk of Mega
Foam.Later, Rowena Ricablanca, another employee of Mega Foam, received a
phone call from an employee of Land Bank,who was looking for Generoso
Capitle. The reason for the call was to inform Capitle that the subject BDO
checkdeposited in his account had been dishonored. Ricablanca then called
and relayed the message through accusedAnita Valencia, a former
employee/collector of Mega Foam, because the Capitles did not have a phone;
but theycould be reached through Valencia, a neighbor and former co-employee
of Jacqueline Capitle at Mega Foam.Valencia then told Ricablanca that the
check came from Baby Aquino, and instructed Ricablanca to ask Baby Aquinoto
replace the check with cash. Valencia also told Ricablanca of a plan to take the
cash and divide it equally intofour: for herself, Ricablanca, petitioner Jacinto
and Jacqueline Capitle. Ricablanca, upon the advise of Mega Foam'saccountant,
reported the matter to the owner of Mega Foam, Joseph Dyhengco.Thereafter,
Joseph Dyhengco talked to Baby Aquino and was able to confirm that the latter
indeed handedpetitioner a BDO check for P10,000.00 as payment for her
purchases from Mega Foam. Baby Aquino furthertestified that petitioner Jacinto
also called her on the phone to tell her that the BDO check
bounced. Verificationfrom company records showed that petitioner never
remitted the subject check to Mega Foam. However, BabyAquino said that she
had already paid Mega Foam P10,000.00 cash as replacement for the dishonored
check.Dyhengco filed a Complaint with the National Bureau of Investigation
(NBI) and worked out an entrapmentoperation with its agents. Ten pieces of
P1,000.00 bills provided by Dyhengco were marked and dusted withfluorescent
powder by the NBI. Thereafter, the bills were given to Ricablanca, who was
tasked to pretend that shewas going along with Valencia's plan.Ricablanca,
petitioner, her husband, and Valencia then boarded petitioner's jeep and went
on to Baby Aquino'sfactory. Only Ricablanca alighted from the jeep and entered
the premises of Baby Aquino, pretending that shewas getting cash from Baby
Aquino. However, the cash she actually brought out from the premises was
theP10,000.00 marked money previously given to her by Dyhengco. Ricablanca
divided the money and uponreturning to the jeep, gave P5,000.00 each to
Valencia and petitioner. Thereafter, petitioner and Valencia werearrested by
NBI agents, who had been watching the whole time.A case was filed against the
three accused, Jacinto, Valencia and Capitle. RTC rendered its Decisionfinding
them

GUILTY

beyond reasonable doubt of the crime of

QUALIFIED THEFT

and sentenced eachimprisonment of

FIVE (5) YEARS, FIVE (5) MONTHS AND ELEVEN (11) DAYS,

as minimum

, to SIX(6) YEARS, EIGHT (8) MONTHS AND TWENTY (20) DAYS,

as maximum

.The three appealed to the CA and the decision of the trial court was
MODIFIED

in that:(a) thesentence against accused Gemma Jacinto stands; (b) the sentence
against accused Anita Valencia isreduced to 4 months

arresto mayor

medium, and (c) The accused Jacqueline Capitle is acquitted. Hence,the present
Petition for Review on

Certiorari

filed by petitioner alone,

Issue:

Whether or not a worthless check can be the object of theft.

Held:

As may be gleaned from the aforementioned Articles of the Revised Penal Code,

the personal property subject of thetheft must have some value, as the intention
of the accused is to

gain

from the thing stolen

. This isfurther bolstered by Article 309, where the law provides that the penalty
to be imposed on the accused isdependent on the value of the thing stolen.In this
case, petitioner unlawfully took the postdated check belonging to Mega Foam,
but the same was apparentlywithout value, as it was subsequently
dishonored. Thus, the question arises on whether the crime of qualified theftwas
actually produced. The Court must resolve the issue in the negative.

Intod v. Court of Appeals

is highly instructive and applicable to the present case. In

Intod (see doctrines laid out inIntod)

, the Court went on to give an example of

an offense that involved factual impossibility,

i.e.

, a man puts his hand in the coat pocket of another with the intention to steal the
latter's wallet, but gets nothing since the pocket is empty.
Garcia vs. J. Drilon and Garcia, G. R. No. 179267, 25 June 2013
Nature of the Case: Petition for Review of Republic Act (R.A.) 9262

Facts: Private respondent Rosalie filed a petition before the RTC of Bacolod
City a Temporary Protection Order against her husband, Jesus, pursuant to R.A. 9262,
entitled “An Act Defining Violence Against Women and Their Children, Providing for
Protective Measures for Victims, Prescribing Penalties Therefor, and for Other Purposes.”
She claimed to be a victim of physical, emotional, psychological and economic violence,
being threatened of deprivation of custody of her children and of financial support and also
a victim of marital infidelity on the part of petitioner.

The TPO was granted but the petitioner failed to faithfully comply with the conditions set
forth by the said TPO, private-respondent filed another application for the issuance of a TPO
ex parte. The trial court issued a modified TPO and extended the same when petitioner
failed to comment on why the TPO should not be modified. After the given time allowance
to answer, the petitioner no longer submitted the required comment as it would be an
“axercise in futility.”

Petitioner filed before the CA a petition for prohibition with prayer for injunction and TRO
on, questioning the constitutionality of the RA 9262 for violating the due process and equal
protection clauses, and the validity of the modified TPO for being “an unwanted product of
an invalid law.”
The CA issued a TRO on the enforcement of the TPO but however, denied the petition for
failure to raise the issue of constitutionality in his pleadings before the trial court and the
petition for prohibition to annul protection orders issued by the trial court constituted
collateral attack on said law.

Petitioner filed a motion for reconsideration but was denied. Thus, this petition is filed.

Issues: WON the CA erred in dismissing the petition on the theory that the issue of
constitutionality was not raised at the earliest opportunity and that the petition constitutes
a collateral attack on the validity of the law.

WON the CA committed serious error in failing to conclude that RA 9262 is discriminatory,
unjust and violative of the equal protection clause.

WON the CA committed grave mistake in not finding that RA 9262 runs counter to the due
process clause of the Constitution

WON the CA erred in not finding that the law does violence to the policy of the state to
protect the family as a basic social institution

WON the CA seriously erredin declaring RA 9262 as invalid and unconstitutional because it
allows an undue delegation of judicial power to Brgy. Officials.

Decision: 1. Petitioner contends that the RTC has limited authority and jurisdiction,
inadequate to tackle the complex issue of constitutionality. Family Courts have authority and
jurisdiction to consider the constitutionality of a statute. The question of constitutionality
must be raised at the earliest possible time so that if not raised in the pleadings, it may not
be raised in the trial and if not raised in the trial court, it may not be considered in appeal.

2. RA 9262 does not violate the guaranty of equal protection of the laws. Equal protection
simply requires that all persons or things similarly situated should be treated alike, both as
to rights conferred and responsibilities imposed. In Victoriano v. Elizalde Rope Workerkers’
Union, the Court ruled that all that is required of a valid classification is that it be reasonable,
which means that the classification should be based on substantial distinctions which make
for real differences; that it must be germane to the purpose of the law; not limited to
existing conditions only; and apply equally to each member of the class. Therefore, RA9262
is based on a valid classification and did not violate the equal protection clause by favouring
women over men as victims of violence and abuse to whom the Senate extends its
protection.

3. RA 9262 is not violative of the due process clause of the Constitution. The essence of due
process is in the reasonable opportunity to be heard and submit any evidence one may have
in support of one’s defense. The grant of the TPO exparte cannot be impugned as violative
of the right to due process.
4. The non-referral of a VAWC case to a mediator is justified. Petitioner’s contention that
by not allowing mediation, the law violated the policy of the State to protect and strengthen
the family as a basic autonomous social institution cannot be sustained. In a memorandum
of the Court, it ruled that the court shall not refer the case or any issue therof to a mediator.
This is so because violence is not a subject for compromise.

5. There is no undue delegation of judicial power to Barangay officials. Judicial power

includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on any part of any
branch of the Government while executive power is the power to enforce and administer
the laws. The preliminary investigation conducted by the prosecutor is an executive, not a
judicial, function. The same holds true with the issuance of BPO. Assistance by Brgy.
Officials and other law enforcement agencies is consistent with their duty executive
function.

The petition for review on certiorari is denied for lack of merit.

Del Rosario vs Bengzon GR L-88265

21December 1989

POSTED BY RACHEL CHAN IN CASE DIGESTS, CONSTITUTIONAL LAW II

≈ LEAVE A COMMENT

Facts: RA 6675 requiring the use of generic names in all transactions related to purchasing, prescribing,
dispensing and administering of drugs and medicines. Petitioners, officers of Philippine Medical Association
assailed the constitutionality of the said statute and petitioned for declaratory relief. Court treated it as petition
for prohibition. Petitioner’s argument of the RA favouring private sector and giving the act of prescribing the
correct medicine a duty of the salesgirl were all stricken down as misinterpretation of the RA.

Issue: Whether or not Republic Act 6675 (Generics Act of 1988), requiring the use of generic names in all
transactions relating to drugs and medicines constitutional?
Decision: Petition dismissed for lack of merit. Generics Act of 1988 constitutional. RA 6675 secures the patient
the right to choose between the brand name and its generic equivalent since his doctor is allowed to write both
the generic and the brand name in his prescription form. The respondent is implementing the constitutional
mandate of the State “to protect and promote the right to health of the people” and “to make essential goods,
health and other social services available to all the people at affordable cost.

REPUBLIC OF THE PHILIPPINES, represented by the

Department of Environment and Natural Resources (DENR),
Petitioner,
- versus -

PAGADIAN CITY TIMBER CO., INC.,

Respondent.
G.R. No. 159308
Promulgated:

September 16, 2008

DECISION
NACHURA, J.:

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules

of Court seeking to nullify and set aside the Decision[2] dated October 18,
2001 and the Resolution[3] dated July 24, 2003 of the Court of Appeals in
CA-G.R. SP No. 59194 entitled Pagadian City Timber Co., Inc. v.
Antonio Cerilles, as Secretary of the Department of Environment and
Natural Resources (DENR) and Antonio Mendoza, as Regional Executive
Director, DENR, Region IX.

The antecedent facts are as follows:

On October 14, 1994, petitioner, through the DENR, and respondent

Pagadian City Timber Co., Inc. executed Industrial Forest Management
Agreement (IFMA) No. R-9-040[4] whereby petitioner, represented by
then Regional Executive Director (RED) for Region IX, Leonito C.
Umali, authorized respondent, represented by its President Filomena San
Juan, to develop, utilize, and manage a specified forest area covering
1,999.14 hectares located in Barangays Langapod, Cogonan, and Datagan,
Municipality of Labangan, Zamboanga del Sur, for the production of
timber and other forest products subject to a production-sharing scheme.

Respondent later submitted the required Comprehensive Development

and Management Plan (CDMP) which the DENR approved on August 17,
1995.

On October 8, 1998, in response to the numerous complaints filed by

members of the Subanen tribe regarding respondents alleged failure to
implement the CDMP, disrespect of their rights as an indigenous people,
and the constant threats and harassment by armed men employed by
respondent, RED Antonio Mendoza, DENR Region IX, issued Regional
Special Order No. 217 creating a regional team to evaluate and assess
IFMA No. R-9-040.

Thus, the DENR sent a letter dated October 22, 1998 to respondent,
giving notice of the evaluation and assessment to be conducted on the
area from October 22-30, 1998 covering the years 1997 and 1998. In the
notice, the DENR requested any representative of the company to appear
at the CENRO Office, Pagadian City, and bring with him documents and
maps concerning its IFMA operations.
On October 23, 1998, a DENR Evaluation Team composed of Aniceto
Wenceslao (Forester, DENR, Zamboanga del Sur), Isabelo Mangaya-ay
(Intern Chief, RCBF/MCO), Philidor Lluisma (Forester II, Regional
Office), Chanito Paul Siton (C. Forester, CENRO-Pagadian City),
Adelberto Roullo (Forester, CENRO, Pagadian City), and Francisco
Martin (Carto LEP, CENRO, Pagadian City) went to the IFMA site. After
a briefing conference between the Evaluation Team and respondents
Operations Manager, Inocencio Santiago, actual field evaluation and
assessment followed.

On October 29, 1998, an exit conference and dialogue on post evaluation

and assessment of IFMA R-9-04 was held between DENR officials,
namely, CENR Officer Maximo O. Dichoso, IFMA Regional Team
Leader, Forester Isabelo C. Mangaya-ay, and IFMA Regional Team
Member, Forester Philidor O. Lluisma, and IFMA Representative and
Operations Manager Inocencio Santiago at the
[5]
CENRO, Pagadian City. The exit conference was called to order at 1:30
p.m. and was concluded at 3:00 p.m. Forester Mangaya-ay presented the
representative results and findings of the Evaluation Team, to wit:

The presiding officer started with the mango plantation in the

Noran, Langapod side. That out of the estimated number of
seedlings planted of about 2,008 hills, within an equivalent
area of 20 hectares, the result or finding of the inventory
conducted at 100% intensity is only 98 hills of seedlings
survived including the doubtful and badly deformed. The
species planted along trails are Gmelina and Mahogany
species. The said foot trail planted with the aforementioned
species starts from the entrance of the IFMA are where the
notice billboard is posted up to the only existing look-out
tower. The estimated average of percent survival for Gmelina
is more or less 30%. There are also portions where higher
percentage of survival is recorded at 56% and lower at
14%. There are areas planted declared by Kagawad Cerning
Becagas of Barangay Cogonan now covered by CSC. The
areas covered by CSC, a waiver is needed to be issued by the
IFMA holder.

CENR Officer Maximo O. Dichoso commented that during a

meeting held before, the IFMA holder was willing to give up
the said areas.
 The presiding officer continued that on the courtesy call made
to the Barangay Chairman of Barangay Cogonan, Mr. Roberto
Palaran recounted the assistance extended by the IFMA holder
to his barangay as Community Assistance/service which
includes electric generator, handheld radio and laborers for the
repair of Noburan Cogonan road and the repair of the hanging
bridge at Sitio Tialaic to which the said Barangay Chairman
issued a duly signed certification to this effect.

With regards, the seedling stock within the nursery, there are
approximately a total number of about 44,460 seedlings of
Gmelina species. That the infrastructure implemented or
constructed, there exist only one look-out tower of the reported
4 look-out towers constructed. Moreover, the team had also
noted only 1 bunkhouse and 1 stockroom or shedhouse. There
is also 1 Multi-purpose shed and 1 dilapidated or neglected
notice billboard poster at the entrance trail leading to the IFMA
area. That with regards the concrete monument, there are only
2 recorded. The other corners visible are those located at
junctions of creeks and rivers. But the others cannot be visibly
or never planted for the same cannot be pinpointed or shown to
the team allegedly for lack of knowledge by the representative
of the IFMA holder. Finally, the presiding officer reminded the
herein IFMA representative Mr. Inocencio Santiago that per
actual survey, inspection and ground verification, the team
believes that the other reported areas planted are located
outside the designated IFMA area particularly the Noburan and
Langapod sides.[6]

After the presentation, Mangaya-ay asked Santiago if he had comments,

suggestions, or questions regarding the matter and the manner of the
conduct of the evaluation and assessment by the Evaluation
Team. Santiago said he had none, but requested a copy of the report of
the Evaluation Team. Mangaya-ay informed him that it was only RED
Mendoza who may furnish him a copy of the report.

Later, the Evaluation Team submitted a report through a

Memorandum[7] dated November 6, 1998 to the DENR-RED of Region
9, Zamboanga City, on the evaluation and assessment of respondent
under IFMA No. R-9-040. The said Memorandum stated
In compliance with Regional Special Order No. 217, Series of
1998, please be informed that the herein information is the
result or findings of the team for the conduct of evaluation and
assessment following the guidelines setforth under Department
Administrative Order (DAO) No. 11, Series of 1995 of
Pagadian Timber Co., Inc. under IFMA No. R9-040 against
their actual accomplishment as mandated under the terms and
conditions of the IFMA including other applicable laws, rules
and regulations of the department on the matter.

At the onset, the team conducted a briefing conference and

dialogue with the IFMA holder, the CENR Officer
of Pagadian City and personnel concerned for the proper and
orderly implementation and conduct of the evaluation and
assessment (please see attached).

The team was composed of the Regional Evaluating Team, the

CENRO and PENRO representatives and the representatives of
the IFMA holder. The team proceeded to the western portion
of the area of the herein IFMA particularly Barangay Cogonan,
Labangan, Zamboanga del Sur. The evaluation and assessment
was then conducted on the main nursery, the established
plantation, the look-out towers, the boundary of ISF and
claimed or occupied areas, natural or residual forest, the IFMA
boundary, monuments planted, foot trails, other improvements
introduced and the billboard and signboard posted. The
inspection, evaluation and assessment conducted were all
undertaken in the presence of the IFMA holder, representatives,
laborers and other personnel on the area. (please see attached
report, tall sheets, pictorials and map).

In the conduct of the same, the IFMA representatives or

laborers that assisted the team could only show the subject area
under evaluation but the other areas alluded to as accomplished
or undertaken by the company appeared upon actual
verification and inspection to be negative and non-existent thus
dispelling their allegation.

With regard the information and dissemination conducted by

the IFMA holder including other services extended to the
communities within the IFMA area and vicinities, it is
noteworthy for recognition the donations made by the
company. (Please see attached minutes of the dialogue with the
barangay officials of Barangay Cogonan and pictorials).

The evaluation conducted on the nursery operations show that

the facilities and other necessary implements were generally
below par. An inventory of the seedlings stock of pure
Gmelina species have already lapsed its plantability or have
overgrown in the seedbed with an average grand total of about
44,460 within the established 2-hectare main nursery
area. There was no other subsidiary nursery established in the
area. Also noted is the enrichment planting conducted along
both sides of the foot-trail which extends approximately 18
kms. From the entrance of the IFMA area going to the lookout
tower of the four (4) lookout towers reported, only one (1) has
been noted remaining in the area and the rest were destroyed or
burned (pls. see attached pictorials). The signboard posted was
unattended and in the state of disrepair. There were no
monument planted or any marking along the IFMA boundary
and in residual forest except the monuments found in the ISF
boundaries within the IFMA area (please see attached
pictorials). The plantation established is composed of Gmelina
species with 4 x 4 spacing over a total of about 10.18
hectares. Basing on 5% estimate inventory, the result is 43%
seedling survival.

Thereafter, the team also conducted evaluation and assessment

at the eastern portion particularly at Langapod, Labangan,
Zamboanga del Sur. The team inspected and verified on the
ground the reported 20 hectares mango plantation with a
spacing of 10 x 10 meters at 100% intensity inventory. The
accounted number of mango seedlings planted of about 2,008
hills, only 98 seedlings survived. Wherefore, it generally
represents 5% seedling survival. (Please see attached)

Finally, the team conducted an exit conference with the CENR

Officer, and the IFMA holder where the tentative and general
findings of the evaluation and assessment was laid-out and
presented to the body. (Please see attached)[8]
On the basis of such findings, the Evaluation Team made the following
recommendations

1. The lessee should be required to explain why they

failed to develop their IFMA area (Plantation
Development) in accordance with the approved
Comprehensive Development and Management Plan
(CDMP);
2. The boundary and area coverage of IFMA No. R9-040
should be amended to exclude areas covered by
Certificates of Stewardship Contracts (CSC) under the
ISF Program with an area of 226.17 hectares, other areas
previously identified as occupied/claimed and other
conflict areas;

3. The amended boundary should be delineated/surveyed

on the ground with a precise instrument and all corners
appropriately marked/monumented;

4. The company should hire a full time forester.[9]

Acting on the Memorandum dated November 6, 1998, RED

Antonio M. Mendoza, DENR-IX, Zamboanga City, submitted to the
DENR Secretary a Memorandum[10] dated April 7, 1999regarding the
performance evaluation of IFMA No. R-9-040. The RED Memorandum
reads

This has reference with the instruction to validate the

performance/accomplishment of IFMAs of Region
IX, Western Mindanao. Validation of IFMAs is in accordance
with the existing policy of the DENR, to determine the
capabilities of the holders to develop their Lease areas in
consonance with their submitted and approved Comprehensive
Development Management Plan.

xxxx

On 6 November 1998, Foresters Isabelo C. Mangaya-ay

and Philidor Lluisma, pursuant to Regional Special Order No.
217, Series of 1998, conducted the evaluation of the
performance of IFMA No. R9-040 of Pagadian City Timber
Company, Inc. located at Langapod and
Cogonan, Municipality of Labangan and
Datagan, Municipality of Sominot, all of Zamboanga del
Sur. Result of the evaluation reveals that the holder violated
the following DENR existing Rules and Regulations
particularly Section 26 of DAO 97-04 GROUNDS FOR
CANCELLATION of IFMA which provides that, any of the
following violations shall be sufficient grounds for the
cancellation of IFMA.

1. Paragraph 26.5, Section 26, DAO 97-04, Series of 1997,

provides that failure to implement the approved
Comprehensive Development and Management Plan.

As of 1998, the 4th year of existence of IFMA No.

R9-040, the holder must have developed a total of
1,597.0 hectares as per approved CDMP. However,
based on the report submitted by the Evaluation Team
only 365.2 hectares was planted which are about
22.8%. During the evaluation, however, the IFMA
representative could not even pinpoint the planted areas.
Per report of the Pagadian CENRO Composite
Monitoring Team conducted on 21 August 1998 the
plantation area was burned resulting to the damage of
about 300 hectares leaving only about 20.0 hectares
undamaged. No report had been submitted/received
since then.

In infrastructure, the holder managed to put up one (1)

out of four (4) programmed look-out towers; developed
one (1) out of two (2) forest nurseries and constructed
only 6 km. foot trail which is only about 27%
accomplishment of the whole infrastructure.

2. Paragraph 26.8 of Section 26, DAO 97-04, specifically

provides that failure to implement or adopt agreements
made with communities and other relevant sectors.

Attached herewith, please find several petitions, sworn

statements, affidavits and resolutions from various
 sectors particularly the Subanen Communities (IPs)
within the area. The existence and approval of IFMA No.
R9-040 contract is being protested and is demanding for
its cancellation.

The primary complaint was a blatant disrespect to their

rights as an Indigenous People and the non-peaceful
co-existence between them and the holder of the IFMA
R9-040. Accordingly, they were constantly
threatened/harassed by armed men employed by the
holder.

In the same Memorandum, RED Mendoza recommended to the DENR

Secretary the cancellation of IFMA No. R-9-040. [11]

It appears that RED Mendoza issued a subsequent but similar

Memorandum[12] dated April 21, 1999 to the DENR Secretary relative to
IFMA No. R-9-040. It stated

This has reference with the instruction to validate the

performance/accomplishment of IFMAs of Region
IX, Western Mindanao. Validation of IFMAs is in accordance
with the existing policy of the DENR to determine the
capabilities of the holders to develop their Lease areas in
consonance with their approved Comprehensive Development
and Management Plan.

In furtherance thereto, Foresters Isabelo C. Mangaya-ay and

Philidor Lluisma, pursuant to Regional Special Order No. 217,
Series of 1998, conducted the evaluation of the performance of
IFMA No. R9-040 of Pagadian City Timber Company, Inc.
located at the Municipalities of Labangan, Datagan and
Sominot, all of Zamboanga del Sur, on November 6,
1998. Result of the evaluation revealed that the holder violated
Rules and Regulations which are sufficient ground for
cancellation as stipulated under Section 26 of DAO 97-04, they
are as follows

1. FAILURE TO IMPLEMENT THE APPROVED

COMPREHENSIVE DEVELOPMENT AND
MANAGEMENT PLAN.
 Under the approved comprehensive and development
plan, 1,597.0 ha of plantation should have been established
from the Approval of the CDMP. However, only 365.2 ha
were reportedly planted from CY 1995 to 1997. This
represents only 28% of the targeted goal on plantation
establishment.

Field validation of the reported established plantation

revealed otherwise. The findings of the team are:

A. Portion of the area reported as established

plantation by the IFMA holder is an ISF
project with an area of 226.17 ha. These
are covered with Certificate of
Stewardship;

B. Locations and boundaries of reported

plantations established from 1995 to 1997
cannot be located on the ground by the
team neither by the representative of the
IFMA holder who accompanied the
validating team; and

C. No plantation was established during CY

1998.

On Infrastructure, the holder constructed only one (1)

lookout tower as against the goal of 4 towers; established one
(1) nursery as against the goal of two (2); and constructed only
6km foot trail. These represent only 27% of the total
infrastructure to be undertaken by the holder over the area.

2. FAILURE TO IMPLEMENT OR ADOPT

AGREEMENT WITH COMMUNITIES AND OTHER
RELEVANT SECTORS.

Attached herewith are copies of petitions, sworn

statements, affidavit and resolutions from Subanen
Communities (IPs) and other sectors in the area demanding the
cancellation of IFMA R9-040.
 The complaints and demand for cancellation by the
people where the IFMA is located is a manifestation and proof
of non-social acceptance of the project by the residents in the
locality.

In view of the above findings, IFMA No. R9-040 is

hereby recommended for cancellation.[13]

Acting on the latter Memorandum from RED Mendoza, then

DENR Secretary Antonio H. Cerilles, on June 7, 1999, issued an
Order[14] canceling IFMA No. R-9-040 for failure to implement the
approved CDMP and for failure of the lessee to protect the area from
forest fires. The dispositive portion of the Order reads:

WHEREFORE, premises considered, IFMA No. R9-040

issued to Pagadian City Timber Co., Inc. is hereby ordered
cancelled. The IFMA holder is hereby ordered to immediately
vacate the area and to surrender/return copy of the Agreement
to the Regional Executive Director, DENR Region
9, Zamboanga City.

The RED concerned or his duly authorized

representative is hereby directed to serve this Order; determine
best end use of the land; take appropriate measures to protect
the same and inform this Office immediately of his
compliance.

SO ORDERED.[15]

On July 2, 1999, respondents President, Filomena S. San Juan,

wrote DENR Secretary Cerilles that the company was surprised to receive
the Order of the cancellation of IFMA No. R-9-040 on June 22, 1999. She
claimed that

The DENR regional office is fully aware that the

company is doing its best to manage and develop the area by
continually planting trees and protecting the area from forest
fires and illegalities. No company would ever set fire on its
own plantation for obvious reasons. The company observed
 precautionary measures especially during the time of the El
Nio phenomenon. If there have been mistakes and
miscommunications in the reports of the DENR field officers,
these could have been threshed out by a conference between
DENR and the Pagadian Timber Company Inc.

The company was not accorded due process before the

order of cancellation was issued. The company was not
furnished copy of the evaluation and recommendation of the
DENR Regional Executive Director of Region IX. Had the
company been given the opportunity to contest the findings,
evaluation and recommendation of the said office, the result
would be otherwise.[16]

She appealed for the reconsideration of the Order asking that a

re-investigation be conducted to comply with due process.

Even as the said letter for reconsideration was not yet acted upon,
respondent appealed to the Office of the President (OP).

In the Resolution[17] dated January 12, 2000, the OP affirmed the

cancellation order based on the results of the actual evaluation and
assessment of the DENR team. It ruled that the cancellation of IFMA No.
R-9-040 was primarily and specifically governed by Section 26 of
Department Administrative Order (DAO) 97-04. Relative to respondents
invocation of due process, the OP held that respondent was afforded the
right to be heard when it filed its motion for reconsideration and its
subsequent appeal to the OP.

The motion for reconsideration filed by respondent of the January

12, 2000 Resolution was denied by the OP in the
Resolution[18] dated May 8, 2000.

Respondent went up to the Court of Appeals (CA) via a petition for

review with a prayer for the issuance of a writ of preliminary injunction
against the implementation of the assailed Order dated June 7, 1999.

In its Resolution dated January 17, 2001, the CA issued the writ of
preliminary injunction prayed for, directing and ordering respondents
(petitioner) and/or any other person acting under their command,
authority and/or for and in their behalf, to DESIST from implementing
the assailed Order of cancellation dated June 7, 1999, and/or taking over
the IFMA premises of [respondent], pending the termination of this
proceeding.

In its Decision[19] dated October 18, 2001, the CA ruled in favor of

respondents. In striking down the rulings of the OP and the Order
dated June 7, 1999, the CA declared that IFMA No. R-9-040 was a
contract that could not be unilaterally cancelled without infringing on the
rights of respondent to due process and against impairment of
contracts. The appellate court agreed with respondent when the latter
argued that it was entitled to the benefits of Sections 35[20] and 36[21] of
IFMA No. R-9-040 such that respondent should have been given 30 days,
after due notice, to remedy any breach or default of the provisions of the
IFMA and/or that the dispute regarding the bases for the cancellation of
the IFMA should have first been submitted to arbitration.

Petitioner moved to reconsider the CA Decision. In the

Resolution[22] dated July 24, 2003, the motion was denied for lack of
merit. Hence, this petition based on the following grounds:

I. The Court of Appeals gravely erred in ruling that

IFMA No. R9-040 is a contract and not a mere privilege
granted by the State to respondent.

II. The Court of Appeals seriously erred in ordaining

that respondent can rightfully invoke prior resort to arbitration
or the option to mend its violations under IFMA No.
R9-040.[23]

In essence, petitioner argues that an IFMA is not an ordinary

contract which is protected by the Constitution against impairment [24] but
a mere privilege granted by the State to qualified persons by means of a
permit, license, franchise, agreement, or other similar concessions, which
in this case is the exploration, development and utilization of the forest
lands belonging to the State under its full control and supervision. Thus,
the cancellation of the IFMA does not amount to a rescission of a contract
but a mere withdrawal of this privilege. As such, the due process clause
under the Constitution[25] does not likewise apply since the IFMA area
cannot be considered as property of respondent. According to petitioner,
IFMA No. R-9-040, with the forest lands covered by it, is imbued with
paramount considerations of public interest and public welfare such that
whatever rights respondent may have under it must yield to the police
power of the State. In this sense, respondent cannot take refuge in
Sections 35 and 36 of IFMA No. R-9-040 to prevent the IFMAs
cancellation.

Inasmuch as the grounds cited by petitioner are interrelated, they

shall be jointly discussed hereunder.

The petition is impressed with merit.

IFMA No. R-9-040 is a license agreement under Presidential

Decree (P.D.) No. 705 (Revised Forestry Code), the law which is the very
basis for its existence.[26] Under Section 3, paragraph (dd) thereof, a
license agreement is defined as a privilege[27] granted by the State to a
person to utilize forest resources within any forest land with the right of
possession and occupation thereof to the exclusion of others, except the
government, but with the corresponding obligation to develop, protect
and rehabilitate the same in accordance with the terms and conditions set
forth in said agreement.This is evident in the following features, among
others, of IFMA No. R-9-040, to wit:

1. The State agreed to devolve to the holder of IFMA

No. R-9-040 the responsibility to manage the specified IFMA
area for a period of 25 years, specifically until October 14,
2019, which period is automatically renewable for another 25
years thereafter;

2. The State imposed upon respondent, as holder of

IFMA No. R-9-040, the conditions, the means, and the manner
by which the IFMA area shall be managed, developed, and
protected;

3. The State, through the DENR Secretary, shall not

collect any rental within the first five (5) years of the IFMA,
after which it shall be entitled to annual rental of fifty centavos
(P0.50) per hectare from the sixth to the tenth year thereof, and
one peso (P1.00) per hectare thereafter;

4. The IFMA area, except only the trees and other crops
planted and the permanent improvements constructed by the
IFMA holder, remains the property of the State; and
 5. Upon cancellation of the IFMA through the fault of
the holder, all improvements including forest plantations
existing within the IFMA area shall revert to and become the
property of the State.

An IFMA has for its precursor the Timber License Agreement (TLA),
one of the tenurial instruments issued by the State to its grantees for the
efficient management of the countrys dwindling forest
resources. Jurisprudence has been consistent in holding that license
agreements are not contracts within the purview of the due process and
the non-impairment of contracts clauses enshrined in the
Constitution. Our pronouncement in Alvarez v. PICOP Resources,
Inc.[28] is enlightening

In unequivocal terms, we have consistently held that such

licenses concerning the harvesting of timber in the countrys
forests cannot be considered contracts that would bind the
Government regardless of changes in policy and the demands
of public interest and welfare. (citing Oposa v. Factoran,
Jr., G.R. No. 101083, July 30, 1993, 224 SCRA 792,
811) Such unswerving verdict is synthesized in Oposa v.
Factoran, Jr., (id., at pp. 811, 812) where we held:

In the first place, the respondent Secretary did not,

for obvious reasons, even invoke in his motion to
dismiss the non-impairment clause. If he had
done so, he would have acted with utmost
infidelity to the Government by providing undue
and unwarranted benefits and advantages to the
timber license holders because he would have
forever bound the Government to strictly respect
the said licenses according to their terms and
conditions regardless of changes in policy and the
demands of public interest and welfare. He was
aware that as correctly pointed out by petitioners,
into every timber license must be read Section 20
of the Forestry Reform Code (P.D. No. 705)
which provides:

x x x Provided, that when the

national interest so requires, the
 President may amend, modify,
replace or rescind any contract,
concession, permit, licenses or any
other form of privilege granted
herein x x x.

Needless to say, all licenses may thus be revoked

or rescinded by executive action. It is not a
contract, property or a property right protected by
the due process clause of the constitution. In Tan
vs. Director of Forestry, [125 SCRA 302, 325
(1983)] this Court held:

x x x A timber license is an
instrument by which the State
regulates the utilization and
disposition of forest resources to the
end that public welfare is
promoted. A timber license is not a
contract within the purview of the
due process clause; it is only a
license or privilege, which can be
validly withdrawn whenever
dictated by public interest or public
welfare as in this case.

A license is merely a permit or

privilege to do what otherwise
would be unlawful, and is not a
contract between the authority,
federal, state, or municipal, granting
it and the person to whom it is
granted; neither is it property or a
property right, nor does it create a
vested right; nor is it taxation (37
C.J. 168). Thus, this Court held that
the granting of license does not
create irrevocable rights, neither is it
property or property rights. (People
vs. Ong Tin, 54 O.G. 7576). x x x
We reiterated this pronouncement in Felipe
Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary [190 SCRA 673, 684 (1990):

x x x Timber licenses, permits and

license agreements are the principal
instruments by which the State
regulates the utilization and
disposition of forest resources to the
end that public welfare is
promoted. And it can hardly be
gainsaid that they merely evidence a
privilege granted by the State to
qualified entities, and do not vest in
the latter a permanent or irrevocable
right to the particular concession
area and the forest products
therein. They may be validly
amended, modified, replaced or
rescinded by the Chief Executive
when national interests so
require. Thus, they are not deemed
contracts within the purview of the
due process of law clause. [See
Sections 3(ee) and 20 of Pres.
Decree No. 705, as
amended. Also, Tan v. Director of
Forestry, G.R. No.
L-24548, October 27, 1983, 125
SCRA 302].

Since timber licenses are not contracts, the

non-impairment clause, which reads:

SEC. 10. No law impairing, the

obligation of contracts shall be
passed.

cannot be invoked.
Even assuming arguendo that an IFMA can be considered a contract or
an agreement, we agree with the Office of the Solicitor General that the
alleged property rights that may have arisen from it are not absolute.

All Filipino citizens are entitled, by right, to a balanced and healthful

ecology as declared under Section 16,[29] Article II of the
Constitution. This right carries with it the correlative duty to refrain from
impairing the environment,[30] particularly our diminishing forest
resources. To uphold and protect this right is an express policy of the
State.[31] The DENR is the instrumentality of the State mandated to
actualize this policy. It is the primary government agency responsible for
the conservation, management, development and proper use of the
countrys environment and natural resources, including those in
reservation and watershed areas, and lands of the public domain, as well
as the licensing and regulation of all natural resources as may be provided
for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of
Filipinos.[32]

Thus, private rights must yield when they come in conflict with this
public policy and common interest. They must give way to the police or
regulatory power of the State, in this case through the DENR, to ensure
that the terms and conditions of existing laws, rules and regulations, and
the IFMA itself are strictly and faithfully complied with.

Respondent was not able to overturn by sufficient evidence the

presumption of regularity in the performance of official functions of the
Evaluation Team when the latter inspected, assessed, and reported the
violations respondent committed under DAO No. 97-04 which eventually
led to the cancellation of IFMA No. R-9-040.

It is worthy to note that petitioner followed regular procedure regarding

the assessment of IFMA No. R-9-040. It gave notice of the evaluation
on October 22, 1998 to be held within the period October 22-30,
1998. Respondent admitted through the affidavits of its
[33] [34] [35]
President, Operations Manager, and workers that an Evaluation
Team arrived at the IFMA area on October 23, 1998. On October 23,
1998, prior to the actual assessment, a briefing was held on the conduct
thereof in the presence of the IFMA representatives. On October 29, 1998,
an exit conference with IFMA Operations Manager Inocencio Santiago
was held at the CENRO Office, Pagadian City, where the results of the
assessment were presented. That day, the DENR officials asked Santiago
if he had any questions or comments on the assessment results and on the
manner the evaluation was conducted, but the latter replied that he had
none.

We do not understand why Santiago did not lift a finger or raise an

objection to the assessment results, and only much later in his Affidavit
executed almost ten months thereafter, or on August 12, 1999, to claim so
belatedly that there was no notice given on October 22, 1998, that the
Evaluation Team did not actually extensively inspect the IFMA area on
October 23, 1998, and that there was no proper exit conference held on
October 29, 1998. The same observation applies to respondents President
herself, who instead claimed that she vehemently opposed the
appointment of then DENR Secretary Cerilles because he was bent on
canceling the IFMA at all costs, prior to the cancellation of IFMA No.
R-9-040.

Besides, the detailed findings on the failure of respondent to

implement its CDMP under its IFMA, as shown by the November 6,
1998 Report of the Evaluation Team and the Memoranda dated April 7,
1999 and April 21, 1999, together with all its attachments, belie
respondents claim that there was no actual evaluation and assessment that
took place on October 23, 1998. That the Evaluation Report was
dated November 6, 1998 does not conclusively show that the evaluation
was actually held on that date. Neither was this properly proven by the
Memoranda of RED Mendoza which stated that the evaluation was
conducted on November 6, 1998, since RED Mendoza could have been
merely misled into such an assumption because of the date of the
Evaluation Report. The sweeping denials made by the IFMA
representatives and their self-serving accomplishment reports cannot
prevail over the actual inspection conducted, the results of which are
shown by documentary proof.

Respondent, likewise, cannot insist that, pursuant to Section 35 of

IFMA No. R-9-040, it should have been given notice of its breach of the
IFMA and should have been given 30 days therefrom to remedy the
breach. It is worthy to note that Section 35 uses the word may which must
be interpreted as granting petitioner the discretion whether or not to give
such notice and allow the option to remedy the breach. In this case,
despite the lack of any specific recommendation from the Evaluation
Team for the cancellation of the IFMA, DENR Secretary Cerilles deemed
it proper to cancel the IFMA due to the extent and the gravity of
respondents violations.
 It is also futile for respondent to claim that it is entitled to an
arbitration under Section 36 of IFMA No. R-9-040 before the license
agreement may be canceled. A reading of the said Section shows that the
dispute should be based on the provisions of the IFMA to warrant a
referral to arbitration of an irreconcilable conflict between the IFMA
holder and the DENR Secretary. In this case, the cancellation was
grounded on Section 26 of DAO No. 97-04, particularly respondents
failure to implement the approved CDMP and its failure to implement or
adopt agreements made with communities and other relevant sectors. The
contrary notwithstanding, what remains is that respondent never refuted
the findings of the Evaluation Team when given the opportunity to do so
but waited until IFMA No. R-9-040 was already cancelled before it made
its vigorous objections as to the conduct of the evaluation, harping only
on its alleged right to due process.

Indeed, respondent was given the opportunity to contest the

findings that caused the cancellation of its IFMA when it moved to
reconsider the Order of cancellation and when it filed its appeal and
motion for reconsideration before the OP.

The essence of due process is simply an opportunity to be

heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained of. What the
law prohibits is the absolute absence of the opportunity to be
heard; hence, a party cannot feign denial of due process where
he had been afforded the opportunity to present his side.[36]

WHEREFORE, the Decision dated October 18, 2001 and the

Resolution dated July 24, 2003 of the Court of Appeals in CA-G.R. SP
No. 59194 are REVERSED and SET ASIDE, and the Order dated June
7, 1999 of then DENR Secretary Antonio Cerilles, and the Resolutions of
the Office of the President dated January 12, 2000 and May 8, 2000
affirming the said Order, are REINSTATED and AFFIRMED. No
pronouncement as to costs.

SO ORDERED.
CENTRAL MINDANAO UNIVERSITY, G.R. No. 184869
Represented by Officer-In-Charge
Dr. Rodrigo L. Malunhao,

VERSUS

THE HONORABLE EXECUTIVE SECRETARY, THE

HONORABLE SECRETARY OF THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES, THE
CHAIRPERSON AND COMMISSIONERS OF THE NATIONAL
COMMISSION ON INDIGENOUS PEOPLES, and THE LEAD
CONVENOR OF THE NATIONAL ANTI-POVERTY
COMMISSION

Promulgated:
September 21, 2010
DECISION

ABAD, J.:

This case concerns the constitutionality of a presidential

proclamation that takes property from a state university, over its
objections, for distribution to indigenous peoples and cultural
communities.

The Facts and the Case

Petitioner Central Mindanao University (CMU) is a chartered

educational institution owned and run by the State.[1] In 1958, the
President issued Presidential Proclamation 476, reserving 3,401 hectares
of lands of the public domain in Musuan, Bukidnon, as school site for
CMU. Eventually, CMU obtained title in its name over 3,080 hectares of
those lands under Original Certificates of Title (OCTs) 0-160, 0-161, and
0-162. Meanwhile, the government distributed more than 300 hectares of
the remaining untitled lands to several tribes belonging to the areas
cultural communities.

Forty-five years later or on January 7, 2003 President Gloria

Macapagal-Arroyo issued Presidential Proclamation 310 that takes 670
hectares from CMUs registered lands for distribution to indigenous
peoples and cultural communities in Barangay Musuan, Maramag,
Bukidnon.
On April 3, 2003, however, CMU filed a petition for prohibition
against respondents Executive Secretary, Secretary of the Department of
Environment and Natural Resources, Chairperson and Commissioner of
the National Commission on Indigenous Peoples (NCIP), and Lead
Convenor of the National Anti-Poverty Commission (collectively,
NCIP, et al) before the Regional Trial Court (RTC) of Malaybalay City
(Branch 9), seeking to stop the implementation of Presidential
Proclamation 310 and have it declared unconstitutional.

The NCIP, et al moved to dismiss the case on the ground of lack of

jurisdiction of the Malaybalay RTC over the action, pointing out that
since the act sought to be enjoined relates to an official act of the
Executive Department done in Manila, jurisdiction lies with the Manila
RTC. The Malaybalay RTC denied the motion, however, and proceeded
to hear CMUs application for preliminary injunction. Meanwhile,
respondents NCIP, et al moved for partial reconsideration of the RTCs
order denying their motion to dismiss.

On October 27, 2003, after hearing the preliminary injunction

incident, the RTC issued a resolution granting NCIP, et als motion for
partial reconsideration and dismissed CMUs action for lack of
jurisdiction. Still, the RTC ruled that Presidential Proclamation 310 was
constitutional, being a valid State act. The RTC said that the ultimate
owner of the lands is the State and that CMU merely held the same in its
behalf. CMU filed a motion for reconsideration of the resolution but the
RTC denied the same on April 19, 2004. This prompted CMU to appeal
the RTCs dismissal order to the Court of Appeals (CA) Mindanao
Station.[2]

CMU raised two issues in its appeal: 1) whether or not the RTC
deprived it of its right to due process when it dismissed the action; and 2)
whether or not Presidential Proclamation 310 was constitutional.[3]

In a March 14, 2008 decision,[4] the CA dismissed CMUs appeal

for lack of jurisdiction, ruling that CMUs recourse should have been a
petition for review on certiorari filed directly with this Court, because it
raised pure questions lawbearing mainly on the constitutionality of
Presidential Proclamation 310. The CA added that whether the trial court
can decide the merits of the case based solely on the hearings of the
motion to dismiss and the application for injunction is also a pure
question of law.

CMU filed a motion for reconsideration of the CAs order of

dismissal but it denied the same,[5] prompting CMU to file the present
petition for review.

The Issues Presented

The case presents the following issues:

1. Whether or not the CA erred in not finding that the RTC erred in
dismissing its action for prohibition against NCIP, et al for lack of
jurisdiction and at the same time ruling that Presidential Proclamation
310 is valid and constitutional;

2. Whether or not the CA correctly dismissed CMUs appeal on the

ground that it raised purely questions of law that are proper for a petition
for review filed directly with this Court; and

3. Whether or not Presidential Proclamation 310 is valid and

constitutional.

The Courts Rulings

 One. The RTC invoked two reasons for dismissing CMUs
action. The first is that jurisdiction over the action to declare Presidential
Proclamation 310 lies with the RTC of Manila, not the RTC of
Malaybalay City, given that such action relates to official acts of the
Executive done in Manila. The second reason, presumably made on the
assumption that the Malaybalay RTC had jurisdiction over the action,
Presidential Proclamation 310 was valid and constitutional since the State,
as ultimate owner of the subject lands, has the right to dispose of the
same for some purpose other than CMUs use.

There is nothing essentially wrong about a court holding on the one

hand that it has no jurisdiction over a case, and on the other, based on an
assumption that it has jurisdiction, deciding the case on its merits, both
with the same results, which is the dismissal of the action. At any rate, the
issue of the propriety of the RTC using two incompatible reasons for
dismissing the action is academic. The CA from which the present
petition was brought dismissed CMUs appeal on some technical ground.

Two. Section 9(3) of the Judiciary Reorganization Act of

[6]
1980 vests in the CA appellate jurisdiction over the final judgments or
orders of the RTCs and quasi-judicial bodies. But where an appeal from
the RTC raises purely questions of law, recourse should be by a petition
for review on certiorari filed directly with this Court. The question in this
case is whether or not CMUs appeal from the RTCs order of dismissal
raises purely questions of law.

As already stated, CMU raised two grounds for its appeal: 1) the
RTC deprived it of its right to due process when it dismissed the action;
and 2) Presidential Proclamation 310 was constitutional.Did these
grounds raise factual issues that are proper for the CA to hear and
adjudicate?

Regarding the first reason, CMUs action was one for injunction
against the implementation of Presidential Proclamation 310 that
authorized the taking of lands from the university. The fact that the
President issued this proclamation in Manila and that it was being
enforced in Malaybalay City where the lands were located were facts that
were not in issue. These were alleged in the complaint and presumed to
be true by the motion to dismiss. Consequently, the CMUs remedy for
assailing the correctness of the dismissal, involving as it did a pure
question of law, indeed lies with this Court.
 As to the second reason, the CMU claimed that the Malaybalay
RTC deprived it of its right to due process when it dismissed the case
based on the ground that Presidential Proclamation 310, which it
challenged, was constitutional. CMU points out that the issue of the
constitutionality of the proclamation had not yet been properly raised and
heard. NCIP, et al had not yet filed an answer to join issue with CMU on
that score. What NCIP, et al filed was merely a motion to dismiss on the
ground of lack of jurisdiction of the Malaybalay RTC over the injunction
case. Whether the RTC in fact prematurely decided the constitutionality
of the proclamation, resulting in the denial of CMUs right to be heard on
the same, is a factual issue that was proper for the CA Mindanao Station
to hear and ascertain from the parties. Consequently, the CA erred in
dismissing the action on the ground that it raised pure questions of law.

Three. Since the main issue of the constitutionality of Presidential

Proclamation 310 has been raised and amply argued before this Court, it
would serve no useful purpose to have the case remanded to the CA
Mindanao Station or to the Malaybalay RTC for further
proceedings. Ultimately, the issue of constitutionality of the Proclamation
in question will come to this Court however the courts below decide
it. Consequently, the Court should, to avoid delay and multiplicity of suits,
now resolve the same.

The key question lies in the character of the lands taken from
CMU. In CMU v. Department of Agrarian Reform Adjudication Board
(DARAB),[7] the DARAB, a national government agency charged with
taking both privately-owned and government-owned agricultural lands
for distribution to farmers-beneficiaries, ordered the segregation for this
purpose of 400 hectares of CMU lands. The Court nullified the DARAB
action considering the inalienable character of such lands, being part of
the long term functions of an autonomous agricultural educational
institution. Said the Court:

The construction given by the DARAB to Section 10

restricts the land area of the CMU to its present needs or to
a land area presently, actively exploited and utilized by the
university in carrying out its present educational program
with its present student population and academic facility
overlooking the very significant factor of growth of the
university in the years to come. By the nature of the CMU,
which is a school established to promote agriculture and
industry, the need for a vast tract of agricultural land for
future programs of expansion is obvious. At the outset, the
CMU was conceived in the same manner as land grant
colleges in America, a type of educational institution which
blazed the trail for the development of vast tracts of
unexplored and undeveloped agricultural lands in the
Mid-West. What we now know
as Michigan State University, Penn State University and Illi
nois State University, started as small land grant colleges,
with meager funding to support their ever increasing
educational programs. They were given extensive tracts of
agricultural and forest lands to be developed to support
their numerous expanding activities in the fields of
agricultural technology and scientific research.Funds for
the support of the educational programs of land grant
colleges came from government appropriation, tuition and
other student fees, private endowments and gifts, and
earnings from miscellaneous sources. It was in this same
spirit that President Garcia issued Proclamation No. 476,
withdrawing from sale or settlement and reserving for
the Mindanao Agricultural College (forerunner of the
CMU) a land reservation of 3,080 hectares as its future
campus. It was set up in Bukidnon, in the hinterlands of
Mindanao, in order that it can have enough resources and
wide open spaces to grow as an agricultural educational
institution, to develop and train future farmers
of Mindanao and help attract settlers to that part of the
country.

The education of the youth and agrarian reform are

admittedly among the highest priorities in the government
socio-economic programs. In this case, neither need give
way to the other. Certainly, there must still be vast tracts of
agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless
peasants, assuming the claimants here, or some of them,
can qualify as CARP beneficiaries. To our mind, the taking
of the CMU land which had been segregated for
educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority
and jurisdiction granted by law to the DARAB.
 The decision in this case is of far-reaching
significance as far as it concerns state colleges and
universities whose resources and research facilities may be
gradually eroded by misconstruing the exemptions from
the CARP. These state colleges and universities are the
main vehicles for our scientific and technological
advancement in the field of agriculture, so vital to the
existence, growth and development of this country.[8]

It did not matter that it was President Arroyo who, in this case,
attempted by proclamation to appropriate the lands for distribution to
indigenous peoples and cultural communities. As already stated, the lands
by their character have become inalienable from the moment President
Garcia dedicated them for CMUs use in scientific and technological
research in the field of agriculture. They have ceased to be alienable
public lands.

Besides, when Congress enacted the Indigenous Peoples Rights

Act (IPRA) or Republic Act 8371[9] in 1997, it provided in Section 56
that property rights within the ancestral domains already existing and/or
vested upon its effectivity shall be recognized and respected. In this case,
ownership over the subject lands had been vested in CMU as early as
1958. Consequently, transferring the lands in 2003 to the indigenous
peoples around the area is not in accord with the IPRA.

Furthermore, the land registration court considered the claims of

several tribes belonging to the areas cultural communities in the course of
the proceedings for the titling of the lands in CMUs name. Indeed,
eventually, only 3,080 hectares were titled in CMUs name under
OCTs 0-160, 0-161 and 0-162. More than 300 hectares were
acknowledged to be in the possession of and subject to the claims of
those tribes.

WHEREFORE, the Court GRANTS the petition, SETS

ASIDE the March 14, 2008 decision and September 22, 2008 resolution
of the Court of Appeals in CA-G.R. SP 85456,
and DECLARES Presidential Proclamation 310 as null and void for
being contrary to law and public policy.

SO ORDERED.
G.R. No. 157098
NORKIS FREE AND INDEPENDENT
WORKERS UNION
Petitioner
VS
NORKIS TRADING COMPANY,
INC. , Respondent.

Promulgated:JUNE 30, 2005

Decision

Panganiban, j.:
W Age order no. Rovii-06, issued by the regional tripartite wages and productivity
board (rtwpb), merely fixed a new minimum wage rate for private sector employees
in region vii; hence, respondent cannot be compelled to grant an across-the-board
increase to its employees who, at the time of the promulgation of the wage order,
were already being paid more than the existing minimum wage.

The case

Before us is a petition for review[1] under rule 45 of the rules of court, seeking to set
aside the july 30, 2002 decision[2] and the january 16, 2003 resolution[3] of the court
of appeals (ca) in ca-gr sp no. 54611. The disposition of the assailed decision reads as
follows:

Accordingly, we grant the instant petition for certiorari. The decision of public
respondent voluntary arbitrator in va case no. 374-vii-09-014-98e dated july 8, 1999,
and order dated august 13, 1999, denying petitioners motion for reconsideration, are
hereby set aside. Petitioner is hereby declared to have lawfully complied with wage
order no. Rovii-06. No pronouncement as to costs.[4]

The decision[5] of voluntary arbitrator perfecto r. De los reyes iii,[6] reversed by the
ca, disposed as follows:

Wherefore, premises considered, this office hereby decides in favor of complainant.

Respondent is hereby ordered to grant its employees the amount of increases granted
under rtwpb wage order rovii-06 in an across-the-board manner retroactive to the
dates provided for under the said wage order.[7]

The january 16, 2003 resolution denied petitioners motion for reconsideration.

The facts

The ca summarized the undisputed factual antecedents as follows:

The instant case arose as a result of the issuance of wage order no. Rovii-06 by the
regional tripartite wages and productivity board (rtwpb) increasing the minimum
daily wage by p10.00, effective october 1, 1998.

Prior to said issuance, herein parties entered into a collective bargaining agreement
(cba) effective from august 1, 1994 to july 31, 1999.
Sec. 1. Salary increase. The company shall grant a fifteen (p15.00) pesos per day
increase to all its regular or permanent employees effective august 1, 1994.

Sec. 2. Minimum wage law amendment. In the event that a law is enacted increasing
minimum wage, an across-the-board increase shall be granted by the company
according to the provisions of the law.

On january 27, 1998, a re-negotiation of the cba was terminated and pursuant to
which a memorandum of agreement was forged between the parties. It was therein
stated that petitioner shall grant a salary increase to all regular and permanent
employees as follows:

Ten (10) pesos per day increase effective august 1, 1997; ten (10) pesos per day
increase effective august 1, 1998.

Pursuant to said memorandum of agreement, the employees received wage increases

of p10.00 per day effective august 1, 1997 and p10.00 per day effective august 1,
1998. As a result, the agreed p10.00 re-negotiated salary increase effectively raised
the daily wage of the employees to p165.00 retroactive august 1, 1997; and another
increase of p10.00, effective august 1, 1998, raising the employees[] daily wage
to p175.00.

On march 10, 1998, the regional tripartite wage productivity board (rtwpb) of region
vii issued wage order rovii-06 which established the minimum wage of p165.00, by
mandating a wage increase of five (p5.00) pesos per day beginning april 1, 1998,
thereby raising the daily minimum wage to p160.00 and another increase of five
(p5.00) pesos per day beginning october 1, 1998, thereby raising the daily minimum
wage to p165.00 per day.

In accordance with the wage order and section 2, article xii of the cba, [petitioner]
demanded an across-the-board increase. [respondent], however, refused to implement
the wage order, insisting that since it has been paying its workers the new minimum
wage of p165.00 even before the issuance of the wage order, it cannot be made to
comply with said wage order.

Thus, [respondent] argued that long before the passage of wage order rovii-06 on
march 10, 1998, and by virtue of the memorandum of agreement it entered with
herein [petitioner], [respondent] was already paying its employees a daily wage
of p165.00 per day retroactive on august 1, 1997, while the minimum wage at that
time was still p155.00 per day. On august 1, 1998, [respondent] again granted an
increase from p165.00 per day to p175.00, so that at the time of the effectivity of
wage order no. 06 on october 1, 1998 prescribing the new minimum wage of p165.00
per day, [respondents] employees were already receiving p175.00 per day.

For failure of the parties to settle this controversy, a preventive mediation complaint
was filed by herein [petitioner] before the national conciliation and mediation board,
pursuant to which the parties selected public respondent voluntary arbitrator to decide
said controversy.

Submitted for arbitral resolution is the sole issue of whether or not [respondent] has
complied with wage order no. Rovii-06, in relation to the cba provision mandating an
across-the-board increase in case of the issuance of a wage order.

In his decision, public respondent arbitrator found herein [respondent] not to have
complied with the wage order, through the following dispositions:

The cba provision in question (providing for an across-the-board increase in case of a

wage order) is worded and couched in a vague and unclear manner.

X x x in order to judge the intention of the contracting parties, their contemporaneous

and subsequent acts shall be principally considered (art. 1371, new civil code). Thus,
this office x x x required the parties to submit additional evidence in order to be able
to know and interpret the parties working intent and application of wage order no. 06
issued by the regional tripartite wages and productivity board, regional office vii in
relation to section 2, article xii provided for in the parties[] existing cba.

X x x viewed from the foregoing facts and evidence, the working intent and
application of rtwpb wage order rovii-06 in relation to section 2, article xii of the
parties[] existing cba is clearly established. The evidence submitted by the parties, all
point to the fact that their true intention on how to implement existing wage orders is
to grant such wage orders in an across-the-board manner in relation to the provisions
of section 2, article xii of their existing cba. Respondent in this case [has] failed to
comply with its contractual obligation of implementing the increase under rtwpb
wage order rovii-06 in an across-the-board manner as provided in section 2, article xii
of its cba with [petitioner].

X x x x x x x x x[8]

Respondent elevated the case to the ca via a petition for certiorari and prohibition
under rule 65 of the rules of court.

Ruling of the court of appeals

The ca noted that the grant of an across-the-board increase, provided under section 2
of article xii of the cba, was qualified by the phrase according to the provisions of the
law. It thus stressed the necessity of determining the import of wage order no.
Rovii-06, the law involved in the present controversy. Taking into consideration the
opinion of the rtwpb, region vii, the appellate court held that respondent had
sufficiently complied with wage order no. Rovii-06. The board had opined that since
adjustments granted are only to raise the minimum wage or the floor wage as a matter
of policy, x x x wages granted over the above amount set by this board is deemed a
compliance.

The ca added that the policy and intent of the wage order was to cushion the impact of
the regional economic crisis upon both the workers and the employers, not to enrich
the employees at the expense of the employers. Further, it held that to compel
respondent to grant an across-the-board wage increase, notwithstanding that it was
already paying salaries to its employees above the minimum wage, would be to
penalize generous employers and effectively make them wait for the passage of a new
wage order before granting any increase. This would be counter-productive [insofar]
as securing the interests of labor is concerned.[9]

The appellate court said that the wage order exempted from compliance those
enterprises already paying salaries equal to or more than the prescribed minimum
wage; thus, the order effectively made the previous voluntary increases given by
respondent to its employees creditable against the law-mandated increase.
Consequently, there was no need for the collective bargaining agreement (cba) to
provide expressly for such creditability.

Finally, the ca sustained respondents explanation that the across-the-board increases

provided in the cba was required only when a minimum wage law caused a distortion
in the wage structure.

Hence, this petition.[10]

Issues

In its memorandum, petitioner submits the following issues for our consideration:

I. Whether or not the honorable court of appeals gravely abused its discretion in
setting aside the decision and resolution of the honorable voluntary arbitrator[.]

Ii. Whether or not the honorable court of appeals gravely abused its discretion in
considering the supplemental memorandum of respondent and giving merit to
evidence presented for the first time on appeal and filed after the lapse of the
non[-]extendible period of time to file memorandum and despite an extension granted
to respondent[.]

Iii. Whether or not the honorable court of appeals gravely abused its
discretion in disregarding established jurisprudence on statutory construction.[11]

The main issue is whether respondent violated the cba in its refusal to grant its
employees an across-the-board increase as a result of the passage of wage order no.
Rovii-06. Also raised is the procedural issue relating to the propriety of the admission
by the ca of rtwpbs letter-opinion, which was attached to respondents supplemental
memorandum submitted to that court on august 30, 2000, beyond the july 17, 2000
extended deadline.

The courts ruling

The petition lacks merit.

Main issue:
Effect of wage order no. Rovii-06
On the parties cba

Petitioner insists that respondent should have granted to the employees the increase
stated in wage order no. Rovii-06. In addition to the increases both parties had
mutually agreed upon, the cba supposedly imposed upon respondent the obligation to
implement the increases mandated by law without any condition or qualification. To
support its claim, petitioner repeatedly invokes section 2 of article xii of the cba,
which reads:

Section 2. Minimum wage law amendment. In the event that a law is enacted
increasing minimum wage, an across-the-board increase shall be granted by the
company according to the provisions of the law.

Interestingly, petitioner disregards altogether in its argument the qualifying phrase

according to the provisions of the law and merely focuses its attention on the
across-the-board increase clause. Given the entire sentence, it is clear that the
above-quoted cba provision does not support the unyielding view of petitioner that
the issuance of wage order no. Rovii-06 entitles its members to an across-the-board
increase, absolutely and without any condition.

Stipulations in a contract must be read together,[12] not in isolation from one another.
When the terms of its clauses are clear and leave no room for doubt as to the intention
of the contracting parties, it would not be necessary to interpret those terms, whose
literal meanings should prevail.[13]

The ca correctly observed that the import of wage order no. Rovii-06 should be
considered in the implementation of the government-decreed increase. The present
petition makes no denial or refutation of this finding, but merely an averment of the
silence of the cba on the creditability of increases provided under the agreement
against those in the minimum wage under a wage order. It insists that the parties
intended no such creditability; otherwise, they would have expressly stated such
intent in the cba.

We hold that the issue here is not about creditability, but the applicability of wage
order no. Rovii-06 to respondents employees. The wage order was intended to fix a
new minimum wage only, not to grant across-the-board wage increases to all
employees in region vii. The intent of the order is indicated in its title, establishing
new minimum wage rates, as well as in its preamble: The purpose, reason or
justification for its enactment was to adjust the minimum wage of workers to cushion
the impact brought about by the latest economic crisis not only in the philippines but
also in the asian region.

In cagayan sugar milling company v. Secretary of labor and

employment [14] and manila mandarin employees union v. Nlrc,[15] the wage orders
that were the subjects of those cases were substantially and similarly worded as wage
order no. Rovii-06. In those cases, this court construed the orders along the same line
that it follows now: As providing for an increase in the prevailing statutory minimum
wage rates of workers. No across-the-board increases were granted.

Parenthetically, there are two methods of adjusting the minimum wage. In employers
confederation of the phils. V. National wages and productivity commission,[16] these
were identified as the floor wage and the salary-ceiling methods. The floor wage
method involves the fixing of a determinate amount to be added to the prevailing
statutory minimum wage rates. On the other hand, in the salary-ceiling method, the
wage adjustment was to be applied to employees receiving a certain denominated
salary ceiling. In other words, workers already being paid more than the existing
minimum wage (up to a certain amount stated in the wage order) are also to be given
a
wage increase.

A cursory reading of the subject wage order convinces us that the intention of the
regional board of region vii was to prescribe a minimum or floor wage; not to
determine a salary ceiling. Had the latter been its intention, the board would have
expressly provided accordingly. The text of sections 2 and 3 of the order states:

Section 2. Amount and manner of increase. Upon the effectivity of this order, the
daily minimum wage rates for all the workers and employees in the private sector
shall be increased by ten pesos (p10.00) per day to be given in the following manner:

I. Five pesos (p5.00) per day effective april 1, 1998, and

Ii. Additional five pesos (p5.00) per day effective october 1, 1998.

Section 3. Uniform wage rate per area classification. To effect a uniform wage rate
pursuant to section 1 hereof, the prescribed minimum wage after full implementation
of this order for each area classification shall be as follows:
Area classification non-agriculture sector agriculture sector
Class a 165.00 150.00
Class b 155.00 140.00
Class c 145.00 130.00
Class d 135.00 120.00

These provisions show that the prescribed minimum wage after full implementation
of the p10 increase in the wage order is p165 for class a private non-agriculture
sectors. It would be reasonable and logical, therefore, to infer that those employers
already paying their employees more than p165 at the time of the issuance of the
order are sufficiently complying with the order.

Further supporting this construction of wage order no. Rovii-06 is the opinion of its
drafter, the rtwpb region vii. In its letter-opinion[17] answering respondents queries,
the board gave a similar interpretation of the essence of the wage order: To fix a new
floor wage or to upgrade the wages of the employees receiving lower than the
minimum wage set by the order.

Notably, the rtwpb was interpreting only its own issuance, not a statutory provision.
The best authority to construe a rule or an issuance is its very source,[18] in this case
the rtwpb. Without a doubt, the board, like any other executive agency, has the
authority to interpret its own rules and issuances; any phrase contained in its
interpretation becomes a part of those rules or issuances themselves.[19] therefore, it
was proper for the ca to consider the letter dated june 13, 2000, written by the rtwpb
to explain the
scope and import of the latters own order, as such interpretation is deemed a part of
the order itself. That the letter was belatedly submitted to that court is not fatal in the
determination of this particular case.

We cannot sustain petitioner, even if we assume that its contention is right and that
the implementation of any government-decreed increase under the cba is absolute.
The cba is no ordinary contract, but one impressed with public interest.[20] therefore,
it is subject to special orders on wages,[21] such as those issued by the rtwpb. Capitol
wireless v. Bate[22] is squarely in point. The union in that case claimed that all
government-mandated increases in salaries should be granted to all employees
across-the-board without any qualification whatsoever, pursuant to the cba provision
that any government-mandated wage increases should be over and above the benefits
granted in the cba. The court denied such claim and held that the provisions of the
agreement should be read in harmony with the wage orders. Applying that ruling to
the present case, we hold that the implementation of a wage increase for respondents
employees should be controlled by the stipulations of wage order no. Rovii-06.

At the risk of being repetitive, we stress that the employees are not entitled to the
claimed salary increase, simply because they are not within the coverage of the wage
order, as they were already receiving salaries greater than the minimum wage fixed
by the order. Concededly, there is an increase necessarily resulting from raising the
minimum wage level, but not across-the-board. Indeed, a double burden cannot be
imposed upon an employer except by clear provision of law.[23] it would be unjust,
therefore, to interpret wage order no. Rovii-06 to mean that respondent should grant
an across-the-board increase. Such interpretation of the order is not sustained by its
text.[24]

In the resolution of labor cases, this court has always been guided by the state policy
enshrined in the constitution: Social justice[25] and the protection of the working
class.[26] social justice does not, however, mandate that every dispute should be
automatically decided in favor of labor. In every case, justice is to be granted to the
deserving and dispensed in the light of the established facts and the applicable law
and doctrine.[27]

Wherefore, the petition is denied, and the assailed decision and

resolution affirmed. Costs against petitioner.

So ordered.
 G.R. No. 118536. June 9, 1997]

LAWIN SECURITY SERVICES, INC., JUAN C. ABAGA, EDWIN V.

ETCOBANEZ, ARSENIO A. GODOY, ANTERO O. OALIN
JR., RICARDO G. SANTOS, EMILIO J. MAZO, JUANITO S.
SOBREDILLA, ANTONIO BOLANIO, ANICETO B.
BELARMINO, FLORENCIO H. CIDRO, SALVADOR P.
AGUILAR and ANTONIO B.
BRUTAS, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (First Division) and ALLIED INTEGRATED
STEEL CORPORATION, respondents.

DECISION
BELLOSILLO, J.:

LAWIN SECURITY SERVICES, INC. (LAWIN) entered into a

contract for security services with Allied Integrated Steel Corporation
(ALLIED). Petitioners Juan C. Abaga, Edwin V. Etcobanez, Arsenio A.
Godoy, Antero O. Oalin Jr., Ricardo G. Santos, Emilio J. Mazo,
Juanito S. Sobredilla, Antonio Bolanio, Aniceto B. Belarmino,
Florencio H. Cidro, Salvador P. Aguilar and Antonio B. Brutas were
security guards posted by petitioner LAWIN in the premises of
ALLIED. During the pendency of the contract, various wage increases
were decreed under Wage Order Nos. 4, 5 and 6, E.O. Nos. 178-A
and 178-B as well as under R.A. Nos. 6640 and 6727. Pursuant
therewith, requests for wage adjustments were made by petitioners
on respondent company but the same were not granted. Thus
petitioners were constrained to bring the matter before the Labor
[1]

Arbiter.
Respondent ALLIED assailed the jurisdiction of the Labor Arbiter
on the ground of absence of employer-employee relationship between
it and the security guards as it claimed that the latter were employees
of petitioner LAWIN. It advanced the view that what was involved in
the instant case was a breach of contract properly cognizable by the
regular courts.
The Labor Arbiter on the other hand insisted on his authority and
competence to pass upon the controversy, invoking Sec. 5, par. B, of
the Rules Implementing Wage Order No. 6 and Arts. 107 and
[2] [3]

109 of the Labor Code. He opined that wage increases should be

[4]

granted taking into account the contract between petitioner LAWIN

and respondent ALLIED and that the individual complainants were the
ones assigned to secure the premises of ALLIED. On 29 June 1992
ALLIED was thus ordered to pay the individual complainants wage
adjustments for services rendered from 14 December 1987 to 28
February 1990 in the total amount of P195,560.56. [5]

On appeal by ALLIED, respondent NLRC observed that the

procedure adopted by the complainants was not in accord with its
rules since they should have instituted the action against both
petitioner LAWIN and respondent ALLIED as direct and indirect
employers, respectively, or against petitioner LAWIN only and for the
latter to file a third-party complaint against ALLIED. Nevertheless,
respondent NLRC did not find the infirmity fatal as to warrant its
outright dismissal. After all, the complaint was geared towards the
objective of enforcing the rights of the individual complainants under
existing labor standard laws. Thus on 28 February 1994 respondent
NLRC affirmed the award of the Labor Arbiter. [6]

ALLIED moved for reconsideration anchored on its primary claim

that not all the individual complainants were assigned to it and those
who were properly assigned rendered work only on an intermittent
basis.ALLIED attached to its motion the service records of the
individual complainants as Annexes "B" to "DD," inclusive.
Petitioners opposed the motion claiming that respondent NLRC's
resolution was already final and executory.
Respondent NLRC found the opposition untenable because a
verification of the records disclosed that copy of its subject resolution
was served on the security guard of the building where ALLIED's
counsel had his office. Therefore, the service was improper and the
10-day period within which the aggrieved party could avail of the
remedies provided for by its rules had not commenced to run. As for
the merits of the motion, respondent NLRC was swayed to change its
prior stand -

There may have been some lapses on the part of the respondent in having
failed to present its documentary evidence below as it anchored its defense
solely on the alleged lack of jurisdiction of the Commission, nevertheless, in
the interest of substantial justice and equity, it behooves Us to relax the
application of technicalities x x x x
[7]

Thus on 26 September 1994 respondent NLRC set aside its 28

February 1994 resolution as well as the 29 June 1992 decision of the
Labor Arbiter. It ordered that the case be remanded to the Labor
Arbiter for further proceedings. Petitioners sought reconsideration
[8]

but was denied on 28 November 1994. [9]

Petitioners impute grave abuse of discretion on respondent NLRC

in having acted favorably on respondent company's motion for
reconsideration. Petitioners argue that prior to the filing of respondent
company's motion for reconsideration there was already an entry of
judgment of the resolution subject thereof and, therefore, respondent
NLRC no longer had jurisdiction to take any further action except to
cause its execution. They argue next that the evidence to be
presented by respondent company in the second proceedings before
the Labor Arbiter constitutes forgotten evidence which cannot serve
as justification for granting retrial or new trial.
We are not persuaded. Section 4, Rule 13 of the Rules of Court,
which is suppletory to the rules of respondent NLRC, provides -

Sec. 4. Personal Service. - Service of the papers may be made by delivering

personally a copy to the party or his attorney, or by leaving it in his office
with his clerk or with a person having charge thereof. If no person is found
in his office, or his office is not known, then by leaving the copy, between
the hours of eight in the morning and six in the evening, at the party's or
attorney's residence, if known, with a person of sufficient discretion to
receive the same (underscoring supplied).

In Adamson Ozanam Educational Institution, Inc. v. Adamson

University Faculty and Employees Association, which was correctly
[10]
relied upon by respondent NLRC, this Court applied the
aforementioned rule and explained that -

Under the foregoing rule, service of papers should be delivered personally to

the attorney or by leaving it (sic) at his office with his clerk or with a person
having charge thereof. The service of the court's order upon any person
other than the party's counsel is not legally effective. Where the copy of
[11]

the decision is served on a person who is neither a clerk or one in charge of

the attorney's office, such service is invalid and the decision does not
therefore become executory. The security guard of the building where the
[12]

attorney is holding office is neither the office clerk nor a person in charge
thereof as contemplated in the rules (underscoring supplied).

And so it was in the present case. The service of

subject resolution on the security guard of the building where the
counsel for respondent company was holding office was an invalid
service. Consequently, the period after which the resolution would
have become final and executory had not commenced to run. On
[13]

this basis, the entry of judgment was patently erroneous and

respondent NLRC was still vested with jurisdiction to entertain
respondent companys motion for reconsideration. Article 221of the
Labor Code provides -

Art. 221. Technical rules not binding and prior resort to amicable
settlement. - In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not
be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law or procedure, all in the interest of
due process x x x x

In Philippine Telegraph and Telephone Corporation v.

NLRC petitioner submitted on appeal to respondent NLRC
[14]

uncontradicted evidence showing payment to private respondent of

his holiday pay and rest day pay and his non-entitlement to incentive
leave pay due to his enjoyment of vacation leave privileges. Such
evidence was however rejected by respondent NLRC on the
rationalization that it was not presented at the first opportunity,
presumably when the case was pending with the Labor
Arbiter. Respondent NLRC's action did not merit our approval -
The belated presentation of the evidence notwithstanding, respondent
commission should have considered them just the same. As correctly
pointed out by the Solicitor General x x x x technical rules of evidence are
not binding in labor cases. Labor officials should use every and reasonable
means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, all in the interest of due process.

Thus, even if the evidence was not submitted to the labor arbiter, the fact
that it was duly introduced on appeal to respondent commission is enough
basis for the latter to have been more judicious in admitting the same,
instead of falling back on the mere technicality that said evidence can no
longer be considered on appeal. Certainly, the first course of action would
be more consistent with equity and the basic notions of fairness.

Along the same line, we ruled in Bristol Laboratories Employees'

Association-DFA v. NLRC that -[15]

x x x x Procedural technicalities do not strictly apply to proceedings before

labor arbiters for they may avail themselves of all reasonable means to
speedily ascertain the facts of a controversy (Art. 221, Labor Code).

No grave abuse of discretion may be attributed to the NLRC for having

considered additional documentary evidence submitted by the
respondent-employer on appeal, to prove breach of trust and loss of
confidence as bases for the dismissal of the petitioner.

Even in the earlier cases of Firestone Filipinas Employees

Association v. Firestone Tire and Rubber Company of the
Philippines and Philippine Maritime Industrial Union v. Court of
[16]

Industrial Relations we reaffirmed the well-settled doctrine that in

[17]

labor cases before this Tribunal no undue sympathy is to be accorded

to any claim of a procedural misstep, the idea being that its powers
should be exercised according to justice and equity and the
substantial merits of the controversy.
It is noteworthy that petitioners unyielding stance to respondent
NLRCs order for further proceedings is in fine anchored on
respondent companys non-observance of procedural rules. Yet it
would be more in keeping with the directive of Art. 221 for us to
sustain the NLRC. Technicality should not be allowed to stand in the
way of equitably and completely resolving the rights and obligations of
the parties, especially considering the primary claim of respondent
[18]

company, supported by evidence, that not all the individual

complainants were assigned to it and those who were actually
assigned worked only on an intermittent basis. Respondent NLRC
was no less emphatic -

As in this case, the complainants appear to have been unduly awarded with
wage differentials. It would be the height of injustice as it would
undoubtedly amount to unjust enrichment if the Commission will opt to
remain silent and refuse to correct itself even after having been made aware
of certain material facts which, if taken cognizance of, would substantially
change the original judgment. [19]

While the Constitution is committed to the policy of social justice

and the protection of the working class, it should not be supposed that
every labor dispute will be automatically decided in favor of
labor.Management has also its own rights which are equally entitled
to respect and enforcement in the interest of simple fair play. Out of its
concern for those with less in life, this Court has inclined more often
than not toward the worker and has upheld his cause in his conflicts
with his employer. Such partiality for labor however has not in any
way diminished our belief that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine. Hence, absent any showing of grave
[20]

abuse of discretion, certiorari will not lie against respondent NLRC.

WHEREFORE, the petition is DISMISSED. The Resolution of
respondent National Labor Relations Commission of 26 September
1994 ordering the remand of the case to the Labor Arbiter for further
proceedings as well as the Resolution of 28 November 1994 denying
reconsideration is AFFIRMED.
SO ORDERED.
Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.
Padilla, (Chairman), J., on leave.
ICHONG VS HERNANDEZ
G.R. No. L-7995 May 31, 1957
LAO H. ICHONG, in his own behalf and in behalf of other alien residents,
corporations and partnerships adversely affected. by Republic Act No. 1180,
petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City
Treasurer of Manila, respondents.
Facts:
Driven by aspirations for economic independence and national security, the Congress
enacted Act No. 1180 entitled “An Act to Regulate the Retail Business.” The main
provisions of the Act, among others, are:
(1) Prohibition against persons, not citizens of the Philippines, and against
associations, among others, from engaging directly or indirectly in the retail trade; and
(2) Prohibition against the establishment or opening by aliens actually engaged in the
retail business of additional stores or branches of retail business.

Lao H. Ichong, in his own behalf and on behalf of other alien residents, corporations
and partnerships adversely affected by the said Act, brought an action to obtain a
judicial declaration, and to enjoin the Secretary of Finance, Jaime Hernandez, and all
other persons acting under him, particularly city and municipal treasurers, from
enforcing its provisions. Petitioner attacked the constitutionality of the Act,
contending that:

 It denies to alien residents the equal protection of the laws and deprives of
their liberty and property without due process of law.
 The subject of the Act is not expressed or comprehended in the title thereof.
 The Act violates international and treaty obligations of the Republic of the
Philippines.

Issue/s:
Whether or not a law may invalidate or supersede treaties or generally accepted
principles.

Discussions:
A generally accepted principle of international law, should be observed by us in good
faith. If a treaty would be in conflict with a statute then the statute must be upheld
because it represented an exercise of the police power which, being inherent could not
be bargained away or surrendered through the medium of a treaty.
Ruling/s:
Yes, a law may supersede a treaty or a generally accepted principle. In this case, the
Supreme Court saw no conflict between the raised generally accepted principle and
with RA 1180. The equal protection of the law clause “does not demand absolute
equality amongst residents; it merely requires that all persons shall be treated alike,
under like circumstances and conditions both as to privileges conferred and liabilities
enforced”; and, that the equal protection clause “is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all
persons within such class, and reasonable grounds exist for making a distinction
between those who fall within such class and those who do not.”
G.R. No. 143855
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,

VERSUS

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),

Promulgated:
September 21, 2010

DECISION
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-reliant and
independent national economy effectively controlled 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 A Less than Exclusively for Filipino

US$2,500,000.00 citizens and corporations
wholly owned by
Filipino citizens.
Category B US$2,500,000.00 up but For the first two years of
less than US$7,500,000.00 R.A. 8762s effectivity,
foreign ownership is
allowed up to 60%. After
the two-year period,
100% foreign equity
shall be allowed.
Category C US$7,500,000.00 or more May be wholly 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.
Category D US$250,000.00 per store May be wholly owned
of foreign enterprises by 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.

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. 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.[1] Legal standing
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 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.[2] 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.[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[4] or as legislators.[5] 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.[6]

Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the
1987 Constitution for the State to develop a self-reliant and independent
national economy effectively controlled 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.
 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,[7] 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.[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 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.[10] The key, as in all
economies in the 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.[11] 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.

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-sari stores 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.

SO ORDERED.
Rodolfo Ganzon vs Court of Appeals
FACT: Rodolfo Ganzon was the then mayor of Iloilo City. 10 complaints
were filed against him on grounds of misconduct and misfeasance of
office. The Secretary of Local Government issued several suspension
orders against Ganzon based on the merits of the complaints filed against
him hence Ganzon was facing about 600 days of suspension. Ganzon
appealed the issue to the CA and the CA affirmed the suspension order by
the Secretary. Ganzon asserted that the 1987 Constitution does not
authorize the President nor any of his alter ego to suspend and remove
local officials; this is because the 1987 Constitution supports local
autonomy and strengthens the same. What was given by the present
Constitution was mere supervisory power.

ISSUE: Whether or not the Secretary of Local Government, as the

President’s alter ego, can suspend and or remove local officials.

HELD: Yes. Ganzon is under the impression that the Constitution has
left the President mere supervisory powers, which supposedly excludes
the power of investigation, and denied her control, which allegedly
embraces disciplinary authority. It is a mistaken impression because
legally, “supervision” is not incompatible with disciplinary authority.
The SC had occasion to discuss the scope and extent of the power of
supervision by the President over local government officials in contrast to
the power of control given to him over executive officials of our
government wherein it was emphasized that the two terms, control and
supervision, are two different things which differ one from the other in
meaning and extent. “In administration law supervision means overseeing
or the power or authority of an officer to see that subordinate officers
perform their duties. If the latter fail or neglect to fulfill them the former
may take such action or step as prescribed by law to make them perform
their duties.
Control, on the other hand, means the power of an officer to alter or
modify or nullify of set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for
that of the latter.” But from this pronouncement it cannot be reasonably
inferred that the power of supervision of the President over local
government officials does not include the power of investigation when in
his opinion the good of the public service so requires.
The Secretary of Local Government, as the alter ego of the president, in
suspending Ganzon is exercising a valid power. He however overstepped
by imposing a 600 day suspension.
Rodolfo Ganzon was the then mayor of Iloilo City. 10 complaints were filed against him on
grounds of misconduct and misfeasance of office. The Secretary of Local Government issued
several suspension orders against Ganzon based on the merits of the complaints filed against
him hence Ganzon was facing about 600 days of suspension. Ganzon appealed the issue to
the CA and the CA affirmed the suspension order by the Secretary. Ganzon asserted that
the 1987 Constitution does not authorize the President nor any of his alter ego to suspend
and remove local officials; this is because the 1987 Constitution supports local autonomy
and strengthens the same. What was given by the present Constitution was mere
supervisory power.

ISSUE: Whether or not the Secretary of Local Government, as the President’s alter ego, can
suspend and or remove local officials.

HELD: Yes. Ganzon is under the impression that the Constitution has left the President
mere supervisory powers, which supposedly excludes the power of investigation, and denied
her control, which allegedly embraces disciplinary authority. It is a mistaken impression
because legally, “supervision” is not incompatible with disciplinary authority.

The SC had occasion to discuss the scope and extent of the power of supervision by the
President over local government officials in contrast to the power of control given to him
over executive officials of our government wherein it was emphasized that the two terms,
control and supervision, are two different things which differ one from the other in
meaning and extent. “In administration law supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. If the latter fail
or neglect to fulfill them the former may take such action or step as prescribed by law to
make them perform their duties.

Control, on the other hand, means the power of an officer to alter or modify or nullify of set
aside what a subordinate officer had done in the performance of his duties and to substitute
the judgment of the former for that of the latter.” But from this pronouncement it cannot
be reasonably inferred that the power of supervision of the President over local government
officials does not include the power of investigation when in his opinion the good of the
public service so requires.

The Secretary of Local Government, as the alter ego of the president, in suspending Ganzon
is exercising a valid power. He however overstepped by imposing a 600 day suspension.