GR Nos.
147036-37 corporate identity and purpose, the banks articles of incorporation were amended in July
Petitioner-Organizations, namely:
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
vs Executive Secretary
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 aP15.00-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
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
declareE.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 functions.[37] 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 faciemeans 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 allattributes 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.
GR No. 159618, February 1, 2011
BAYAN MUNA vs ALBERTO ROMULO, in his capacity as Executive Secretary, and
BLAS F. OPLE, in his capacity as Secretary of Foreign Affairs
VELASCO, JR., J.:
The Case
This petition[1] for certiorari, mandamus and prohibition under Rule 65 assails
and seeks to nullify the Non-Surrender Agreement concluded by and between the
Republic of the Philippines (RP) and the United States of America (USA).
The 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.[2]
Rome Statute of the International Criminal Court
Having a key determinative bearing on this case is the Rome
Statute[3] 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.[4] The serious crimes
adverted to cover those considered grave under international law, such as genocide,
crimes against humanity, war crimes, and crimes of aggression.[5]
On December 28, 2000, the RP, through Charge dAffaires Enrique A. Manalo,
signed the Rome Statute which, by its terms, is subject to ratification, acceptance or
approval by the signatory states.[6] As of the filing of the instant petition, only 92 out of
the139 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-028-03[7] 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.[9]
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.[10]
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.
For their part, respondents question petitioners standing to maintain a suit and
counter that the Agreement, being in the nature of an executive agreement, does not
require Senate concurrence for its efficacy. And for reasons detailed in their comment,
respondents assert the constitutionality of the Agreement.
The Issues
I. WHETHER THE [RP] PRESIDENT AND THE [DFA] SECRETARY x x x
GRAVELY ABUSED THEIR DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION FOR CONCLUDING THE RP-US
NON SURRENDER AGREEMENT BY MEANS OF [E/N] BFO-028-
03 DATED 13 MAY 2003, WHEN THE PHILIPPINE GOVERNMENT
HAS ALREADY SIGNED THE ROME STATUTE OF THE
[ICC] ALTHOUGH THIS IS PENDING RATIFICATION BY THE
PHILIPPINE SENATE.
A. Whether by entering into the x x x Agreement Respondents
gravely abused their discretion when they capriciously
abandoned, waived and relinquished our only legitimate
recourse through the Rome Statute of the [ICC] to prosecute
and try persons as defined in the x x x Agreement, x x x or
literally any conduit of American interests, who have
committed crimes of genocide, crimes against humanity, war
crimes and the crime of aggression, thereby abdicating
Philippine Sovereignty.
B. Whether after the signing and pending ratification of
the Rome Statute of the [ICC] the [RP] President and the
[DFA] Secretary x x x are obliged by the principle of good
faith to refrain from doing all acts which would substantially
impair the value of the undertaking as signed.
C. Whether the x x x Agreement constitutes an act which
defeats the object and purpose of the Rome Statute of the
International Criminal Court and contravenes the obligation
of good faith inherent in the signature of the President
affixed on the Rome Statute of the International Criminal
Court, and if so whether the x x x Agreement is void and
unenforceable on this ground.
D. Whether the RP-US Non-Surrender Agreement is void and
unenforceable for grave abuse of discretion amounting to
lack or excess of jurisdiction in connection with its
execution.
II. WHETHER THE RP-US NON SURRENDER AGREEMENT IS
VOID AB INITIO FOR CONTRACTING OBLIGATIONS THATARE
EITHER IMMORAL OR OTHERWISE AT VARIANCE WITH
UNIVERSALLY RECOGNIZED PRINCIPLES OF INTERNATIONAL
LAW.
III. WHETHER THE x x x AGREEMENT IS VALID, BINDING AND
EFFECTIVE WITHOUT THE CONCURRENCE BY AT LEAST TWO-
THIRDS (2/3) OF ALL THE MEMBERS OF THE SENATE x x x.[11]
The foregoing issues may be summarized into two: first, whether or not
the Agreement was contracted validly, which resolves itself into the question of whether
or not respondents gravely abused their discretion in concluding it; and second, whether
or not theAgreement, which has not been submitted to the Senate for concurrence,
contravenes and undermines the Rome Statute and other treaties. But because
respondents expectedly raised it, we shall first tackle the issue of petitioners legal
standing.
The Courts Ruling
This petition is bereft of merit.
Procedural Issue: Locus Standi of Petitioner
Petitioner, through its three party-list representatives, contends that the issue
of the validity or invalidity of the Agreementcarries with it constitutional significance and
is of paramount importance that justifies its standing. Cited in this regard is what is
usually referred to as the emergency powers cases,[12] in which ordinary citizens and
taxpayers were accorded the personality to question the constitutionality of executive
issuances.
Locus standi is a right of appearance in a court of justice on a given
question.[13] Specifically, it is a partys personal and substantial interest in a case where
he has sustained or will sustain direct injury as a result[14] of the act being challenged,
and calls for more than just a generalized grievance.[15] The term interest refers to
material interest, as distinguished from one that is merely incidental.[16] The rationale for
requiring a party who challenges the validity of a law or international agreement to
allege such a personal stake in the outcome of the controversy is to assure the concrete
adverseness which sharpens the presentation of issues upon which the court so largely
depends for illumination of difficult constitutional questions.[17]
Locus standi, however, is merely a matter of procedure and it has been
recognized that, in some cases, suits are not brought by parties who have been
personally injured by the operation of a law or any other government act, but by
concerned citizens, taxpayers, or voters who actually sue in the public
interest.[18] Consequently, in a catena of cases,[19] this Court has invariably adopted a
liberal stance on locus standi.
Going by the petition, petitioners representatives pursue the instant suit
primarily as concerned citizens raising issues of transcendental importance, both for the
Republic and the citizenry as a whole.
When suing as a citizen to question the validity of a law or other government
action, a petitioner needs to meet certain specific requirements before he can be clothed
with standing. Francisco, Jr. v. Nagmamalasakit na mga Manananggol ng mga
Manggagawang Pilipino, Inc.[20] expounded on this requirement, thus:
In a long line of cases, however, concerned citizens,
taxpayers and legislators when specific requirements have been met
have been given standing by this Court.
When suing as a citizen, the interest of the petitioner
assailing the constitutionality of a statute must be direct and personal.
He must be able to show, not only that the law or any government act
is invalid, but also that he sustained or is in imminent danger of
sustaining some direct injury as a result of its enforcement, and not
merely that he suffers thereby in some indefinite way. It must appear
that the person complaining 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 statute or
act complained of. In fine, when the proceeding involves the assertion
of a public right, the mere fact that he is a citizen satisfies the
requirement of personal interest.[21]
In the case at bar, petitioners representatives have complied with the qualifying
conditions or specific requirements exacted under the locus standi rule. As citizens, their
interest in the subject matter of the petition is direct and personal. At the very least, their
assertions questioning the Agreement are made of a public right, i.e., to ascertain that
the Agreement did not go against established national policies, practices, and obligations
bearing on the States obligation to the community of nations.
 At any event, the primordial importance to Filipino citizens in general of the
issue at hand impels the Court to brush aside the procedural barrier posed by the
traditional requirement of locus standi, as we have done in a long line of earlier cases,
notably in the old but oft-cited emergency powers cases[22] and Kilosbayan v. Guingona,
Jr.[23] In cases of transcendental importance, we wrote again in Bayan v. Zamora,[24] The
Court may relax the standing requirements and allow a suit to prosper even where there
is no direct injury to the party claiming the right of judicial review.
Moreover, bearing in mind what the Court said in Taada v. Angara, that it will
not shirk, digress from or abandon its sacred duty and authority to uphold the
Constitution in matters that involve grave abuse of discretion brought before it in
appropriate cases, committed by any officer, agency, instrumentality or department of
the government,[25] we cannot but resolve head on the issues raised before us. Indeed,
where an action of any branch of government is seriously alleged to have infringed the
Constitution or is done with grave abuse of discretion, it becomes not only the right but
in fact the duty of the judiciary to settle it. As in this petition, issues are precisely raised
putting to the fore the propriety of the Agreement pending the ratification of the Rome
Statute.
Validity of the RP-US Non-Surrender Agreement
Petitioners 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 contentionperhaps taken unaware of certain well-recognized
international doctrines, practices, and jargonsis 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.[26] An exchange of notes falls into the
category of inter-governmental agreements,[27] 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.[28]
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.[29] 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.[30] 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.[31] x x x
It is fairly clear from the foregoing disquisition that E/N BFO-028-03be it
viewed as the Non-Surrender Agreement itself, or as an integral instrument of
acceptance thereof or as consent to be boundis a recognized mode of concluding a legally
binding international written contract among nations.
Senate Concurrence Not Required
Article 2 of the Vienna Convention on the Law of Treaties defines a treaty as an
international agreement concluded between states in written form and governed by
international law, whether embodied in a single instrument or in two or more related Trading case, and that may be covered by an executive agreement, such as

instruments and whatever its particular designation.[32] International agreements may commercial/consular relations, most-favored nation rights, patent rights, trademark and

be in the form of (1) treaties that require legislative concurrence after executive copyright protection, postal and navigation arrangements and settlement of claims.

ratification; or (2) executive agreements that are similar to treaties, except that they do

not require legislative concurrence and are usually less formal and deal with a narrower In addition, petitioner foists the applicability to the instant case of Adolfo v. CFI

range of subject matters than treaties.[33] of Zambales and Merchant,[41] holding that an executive agreement through an exchange

of notes cannot be used to amend a treaty.

Under international law, there is no difference between treaties and executive

agreements in terms of their binding effects on the contracting states concerned, [34] as We are not persuaded.

long as the negotiating functionaries have remained within their powers.[35] Neither, on

the domestic sphere, can one be held valid if it violates the Constitution. [36] Authorities The categorization of subject matters that may be covered by international

are, however, agreed that one is distinct from another for accepted reasons apart from agreements mentioned in Eastern Sea Trading is not cast in stone. There are no hard and

the concurrence-requirement aspect.[37] As has been observed by US constitutional fast rules on the propriety of entering, on a given subject, into a treaty or an executive

scholars, a treaty has greater dignity than an executive agreement, because its agreement as an instrument of international relations. The primary consideration in the

constitutional efficacy is beyond doubt, a treaty having behind it the authority of the choice of the form of agreement is the parties intent and desire to craft an international

President, the Senate, and the people;[38] a ratified treaty, unlike an executive agreement, agreement in the form they so wish to further their respective interests. Verily, the

takes precedence over any prior statutory enactment.[39] matter of form takes a back seat when it comes to effectiveness and binding effect of the
enforcement of a treaty or an executive agreement, as the parties in either international

Petitioner parlays the notion that the Agreement is of dubious validity, agreement each labor under the pacta sunt servanda[42] principle.

partaking as it does of the nature of a treaty; hence, it must be duly concurred in by the

Senate. Petitioner takes a cue from Commissioner of Customs v. Eastern Sea Trading, in As may be noted, almost half a century has elapsed since the Court rendered its

which the Court reproduced the following observations made by US legal scholars: decision in Eastern Sea Trading. Since then, the conduct of foreign affairs has become

[I]nternational agreements involving political issues or changes of national policy and more complex and the domain of international law wider, as to include such subjects as

those involving international arrangements of a permanent character usually take the human rights, the environment, and the sea. In fact, in the US alone, the executive

form of treaties [while] those embodying adjustments of detail carrying out well agreements executed by its President from 1980 to 2000 covered subjects such as

established national policies and traditions and those involving arrangements of a more defense, trade, scientific cooperation, aviation, atomic energy, environmental
or less temporary nature take the form of executive agreements. [40] cooperation, peace corps, arms limitation, and nuclear safety, among others.[43] Surely,

the enumeration in Eastern Sea Trading cannot circumscribe the option of each state on

Pressing its point, petitioner submits that the subject of the Agreement does not the matter of which the international agreement format would be convenient to serve its

fall under any of the subject-categories that are enumerated in the Eastern Sea best interest. As Francis Sayre said in his work referred to earlier:
 x x x It would be useless to undertake to discuss here the
large variety of executive agreements as such concluded from time to
time. Hundreds of executive agreements, other than those entered
into under the trade-agreement act, have been negotiated with foreign
governments. x x x They cover such subjects as the inspection of
vessels, navigation dues, income tax on shipping profits, the
admission of civil air craft, custom matters and commercial relations
generally, international claims, postal matters, the registration of
trademarks and copyrights, etc. x x x
And lest it be overlooked, one type of executive agreement is a treaty-
authorized[44] or a treaty-implementing executive agreement,[45] which necessarily
inEastern Sea Trading,[48] as reiterated in Bayan,[49] given recognition to the obligatory
effect of executive agreements without the concurrence of the Senate:
x x x [T]he right of the Executive to enter into binding
agreements without the necessity of subsequent Congressional
approval has been confirmed by long usage. From the earliest days of
our history, we have entered executive agreements covering such
subjects as commercial and consular relations, most favored-nation
rights, patent rights, trademark and copyright protection, postal and
navigation arrangements and the settlement of claims. The validity of
these has never been seriously questioned by our courts.

would cover the same matters subject of the underlying treaty.

The Agreement Not in Contravention of the Rome Statute

But over and above the foregoing considerations is the fact thatsave for the
It is the petitioners next contention that the Agreement undermines the
situation and matters contemplated in Sec. 25, Art. XVIII of the Constitution[46]when a
establishment of the ICC and is null and void insofar as it unduly restricts the ICCs
treaty is required, the Constitution does not classify any subject, like that involving
jurisdiction and infringes upon the effectivity of the Rome Statute. Petitioner posits that
political issues, to be in the form of, and ratified as, a treaty. What the Constitution
the Agreementwas constituted solely for the purpose of providing individuals or groups
merely prescribes is that treaties need the concurrence of the Senate by a vote defined
of individuals with immunity from the jurisdiction of the ICC; and such grant of immunity
therein to complete the ratification process.
through non-surrender agreements allegedly does not legitimately fall within the scope

of Art. 98 of the Rome Statute. It concludes that state parties with non-surrender
Petitioners reliance on Adolfo[47] is misplaced, said case being inapplicable
agreements are prevented from meeting their obligations under the Rome Statute,
owing to different factual milieus. There, the Court held that an executive agreement
thereby constituting a breach of Arts. 27,[50] 86,[51] 89[52] and 90[53] thereof.
cannot be used to amend a duly ratified and existing treaty, i.e., the Bases Treaty. Indeed,
Petitioner stresses that the overall object and purpose of the Rome Statute is to
an executive agreement that does not require the concurrence of the Senate for its
ensure that those responsible for the worst possible crimes are brought to justice in all
ratification may not be used to amend a treaty that, under the Constitution, is the
cases, primarily by states, but as a last resort, by the ICC; thus, any agreementlike the
product of the ratifying acts of the Executive and the Senate. The presence of a treaty,
non-surrender agreementthat precludes the ICC from exercising its complementary
purportedly being subject to amendment by an executive agreement, does not obtain
function of acting when a state is unable to or unwilling to do so, defeats the object and
under the premises.
purpose of the Rome Statute.

Considering the above discussion, the Court need not belabor at length the
Petitioner would add that the President and the DFA Secretary, as
third main issue raised, referring to the validity and effectivity of the Agreement without
representatives of a signatory of the Rome Statute, are obliged by the imperatives of
the concurrence by at least two-thirds of all the members of the Senate. The Court has,
good faith to refrain from performing acts that substantially devalue the purpose and
object of the Statute, as signed. Adding a nullifying ingredient to the Agreement,
according to petitioner, is the fact that it has an immoral purpose or is otherwise at
variance with a priorly executed treaty.
Contrary to petitioners pretense, the Agreement does not contravene or
undermine, nor does it differ from, the Rome Statute.Far from going against each other,
one complements the other. As a matter of fact, the principle of complementarity
underpins the creation of the ICC. As aptly pointed out by respondents and admitted by
petitioners, the jurisdiction of the ICC is to be complementary to national criminal
jurisdictions [of the signatory states].[54] Art. 1 of the Rome Statute pertinently provides:
Article 1
The Court
An International Crimininal Court (the Court) is hereby
established. It x x x shall have the power to exercise its
jurisdiction over persons for the most serious crimes of international
concern, as referred to in this Statute, and shall be complementary
to national criminal jurisdictions. The jurisdiction and functioning
of the Court shall be governed by the provisions of this
Statute. (Emphasis ours.)
Significantly, the sixth preambular paragraph of the Rome Statute declares that
it is the duty of every State to exercise its criminal jurisdiction over those responsible for
international crimes. This provision indicates that primary jurisdiction over the so-called
international crimes rests, at the first instance, with the state where the crime was
committed; secondarily, with the ICC in appropriate situations contemplated under Art.
17, par. 1[55] of the Rome Statute.
Of particular note is the application of the principle of ne bis in idem[56] under
par. 3 of Art. 20, Rome Statute, which again underscores the primacy of the jurisdiction
of a state vis-a-vis that of the ICC. As far as relevant, the provision states that no person
who has been tried by another court for conduct x x x [constituting crimes within its
jurisdiction] shall be tried by the [International Criminal] Court with respect to the same
conduct x x x.
The foregoing provisions of the Rome Statute, taken collectively, argue against
the idea of jurisdictional conflict between thePhilippines, as party to the non-surrender
agreement, and the ICC; or the idea of the Agreement substantially impairing the value of
the RPs undertaking under the Rome Statute. Ignoring for a while the fact that the RP
signed the Rome Statute ahead of theAgreement, it is abundantly clear to us that the
Rome Statute expressly recognizes the primary jurisdiction of states, like the RP, over
serious crimes committed within their respective borders, the complementary
jurisdiction of the ICC coming into play only when the signatory states are unwilling or
unable to prosecute.
Given the above consideration, petitioners suggestionthat the RP, by entering
into the Agreement, violated its duty required by the imperatives of good faith and
breached its commitment under the Vienna Convention[57] to refrain from performing
any act tending to impair the value of a treaty, e.g., the Rome Statutehas to be rejected
outright. For nothing in the provisions of theAgreement, in relation to the Rome Statute,
tends to diminish the efficacy of the Statute, let alone defeats the purpose of the ICC.Lest
it be overlooked, the Rome Statute contains a proviso that enjoins the ICC from seeking
the surrender of an erring person, should the process require the requested state to
perform an act that would violate some international agreement it has entered into.We
refer to Art. 98(2) of the Rome Statute, which reads:
Article 98
Cooperation with respect to waiver of immunity
and consent to surrender
xxxx
 2. The Court may not proceed with a request for
surrender which would require the requested State to act
inconsistently with its obligations under international
agreements pursuant to which the consent of a sending State is
required to surrender a person of that State to the Court, unless
the Court can first obtain the cooperation of the sending State for
the giving of consent for the surrender.
Moreover, under international law, there is a considerable difference between a
State-Party and a signatory to a treaty. Under the Vienna Convention on the Law of
Treaties, a signatory state is only obliged to refrain from acts which would defeat the
object and purpose of a treaty;[58] whereas a State-Party, on the other hand, is legally
obliged to follow all the provisions of a treaty in good faith.
In the instant case, it bears stressing that the Philippines is only a signatory to
the Rome Statute and not a State-Party for lack of ratification by the Senate. Thus, it is
only obliged to refrain from acts which would defeat the object and purpose of the Rome
Statute. Any argument obliging the Philippines to follow any provision in the treaty
would be premature.
As a result, petitioners argument that State-Parties with non-surrender
agreements are prevented from meeting their obligations under the Rome Statute,
specifically Arts. 27, 86, 89 and 90, must fail. These articles are only legally binding upon
State-Parties, not signatories.
Furthermore, a careful reading of said Art. 90 would show that the Agreement is
not incompatible with the Rome Statute. Specifically, Art. 90(4) provides that [i]f the
requesting State is a State not Party to this Statute the requested State, if it is not under
an international obligation to extradite the person to the requesting State, shall give
priority to the request for surrender from the Court. x x x In applying the provision,
certain undisputed facts should be pointed out: first, the US is neither a State-Party nor a
signatory to the Rome Statute; and second, there is an international agreement between
the US and the Philippines regarding extradition or surrender of persons, i.e.,
the Agreement. Clearly, even assuming that the Philippines is a State-Party, the Rome
Statute still recognizes the primacy of international agreements entered into between
States, even when one of the States is not a State-Party to the Rome Statute.
Sovereignty Limited by International Agreements
Petitioner next argues that the RP has, through the Agreement, abdicated its
sovereignty by bargaining away the jurisdiction of the ICC to prosecute US nationals,
government officials/employees or military personnel who commit serious crimes of
international concerns in the Philippines. Formulating petitioners argument a bit
differently, the RP, by entering into the Agreement, does thereby abdicate its sovereignty,
abdication being done by its waiving or abandoning its right to seek recourse through
the Rome Statute of the ICC for erring Americans committing international crimes in the
country.
We are not persuaded. As it were, the Agreement is but a form of affirmance and
confirmance of the Philippines national criminal jurisdiction. National criminal
jurisdiction being primary, as explained above, it is always the responsibility and within
the prerogative of the RP either to prosecute criminal offenses equally covered by the
Rome Statute or to accede to the jurisdiction of the ICC. Thus, the Philippines may decide
to try persons of the US, as the term is understood in the Agreement, under our national
criminal justice system. Or it may opt not to exercise its criminal jurisdiction over its
erring citizens or over US persons committing high crimes in the country and defer to the
secondary criminal jurisdiction of the ICC over them. As to persons of the US whom the
Philippines refuses to prosecute, the country would, in effect, accord discretion to the US
to exercise either its national criminal jurisdiction over the person concerned or to give
its consent to the referral of the matter to the ICC for trial. In the same breath,
theUS must extend the same privilege to the Philippines with respect to persons of the
RP committing high crimes within US territorial jurisdiction.

In the context of the Constitution, there can be no serious objection to
the Philippines agreeing to undertake the things set forth in the Agreement. Surely, one
State can agree to waive jurisdictionto the extent agreed uponto subjects of another State
due to the recognition of the principle of extraterritorial immunity. What the Court wrote
in Nicolas v. Romulo[59]a case involving the implementation of the criminal jurisdiction
provisions of the RP-US Visiting Forces Agreementis apropos:
Nothing in the Constitution prohibits such agreements
recognizing immunity from jurisdiction or some aspects of
jurisdiction (such as custody), in relation to long-recognized subjects
of such immunity like Heads of State, diplomats and members of the
armed forces contingents of a foreign State allowed to enter another
States territory. x x x
To be sure, the nullity of the subject non-surrender agreement cannot be
predicated on the postulate that some of its provisions constitute a virtual abdication of
its sovereignty. Almost every time a state enters into an international agreement, it
voluntarily sheds off part of its sovereignty. The Constitution, as drafted, did not envision
a reclusive Philippines isolated from the rest of the world. It even adheres, as earlier
stated, to the policy of cooperation and amity with all nations.[60]
By their nature, treaties and international agreements actually have a limiting
effect on the otherwise encompassing and absolute nature of sovereignty. By their
voluntary act, nations may decide to surrender or waive some aspects of their state
power or agree to limit the exercise of their otherwise exclusive and absolute
jurisdiction. The usual underlying consideration in this partial surrender may be the
greater benefits derived from a pact or a reciprocal undertaking of one contracting party
to grant the same privileges or immunities to the other. On the rationale that the
Philippines has adopted the generally accepted principles of international law as part of
the law of the land, a portion of sovereignty may be waived without violating the
Constitution.[61] Such waiver does not amount to an unconstitutional diminution or
deprivation of jurisdiction of Philippine courts.[62]
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 theAgreement, 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 petitioners 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.[64]
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 countrys 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 executive altogether. The right of the President to enter into or ratify binding executive

bind both countries to the Rome Statute have been met. For perspective, what agreements has been confirmed by long practice.[66]

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 In thus agreeing to conclude the Agreement thru E/N BFO-028-03, then

desire to prosecute the crime under its existing laws. With the view we take of things, President Gloria Macapagal-Arroyo, represented by the Secretary of Foreign Affairs,

there is nothing immoral or violative of international law concepts in the act of acted within the scope of the authority and discretion vested in her by the

the Philippines of assuming criminal jurisdiction pursuant to the non-surrender Constitution. At the end of the day, the Presidentby ratifying, thru her deputies, the non-

agreement over an offense considered criminal by both Philippine laws and the Rome surrender agreementdid nothing more than discharge a constitutional duty and exercise

Statute. a prerogative that pertains to her office.

No Grave Abuse of Discretion

While the issue of ratification of the Rome Statute is not determinative of the

Petitioners final point revolves around the necessity of the Senates concurrence other issues raised herein, it may perhaps be pertinent to remind all and sundry that

in the Agreement. And without specifically saying so, petitioner would argue that the about the time this petition was interposed, such issue of ratification was laid to rest

non-surrender agreement was executed by the President, thru the DFA Secretary, in inPimentel, Jr. v. Office of the Executive Secretary.[67] As the Court emphasized in said case,

grave abuse of discretion. the power to ratify a treaty, the Statute in that instance, rests with the President, subject

to the concurrence of the Senate, whose role relative to the ratification of a treaty is

The Court need not delve on and belabor the first portion of the above posture limited merely to concurring in or withholding the ratification. And concomitant with
of petitioner, the same having been discussed at length earlier on. As to the second this treaty-making power of the President is his or her prerogative to refuse to submit a

portion, We wish to state that petitioner virtually faults the President for performing, treaty to the Senate; or having secured the latters consent to the ratification of the treaty,

through respondents, a task conferred the President by the Constitutionthe power to refuse to ratify it.[68] This prerogative, the Court hastened to add, is the Presidents alone

enter into international agreements. and cannot be encroached upon via a writ of mandamus. Barring intervening events,

then, the Philippines remains to be just a signatory to the Rome Statute. Under Art.
By constitutional fiat and by the nature of his or her office, the President, as 125[69] thereof, the final acts required to complete the treaty process and, thus, bring it
head of state and government, is the sole organ and authority in the external affairs of into force, insofar as the Philippines is concerned, have yet to be done.
the country.[65] The Constitution vests in the President the power to enter into

international agreements, subject, in appropriate cases, to the required concurrence Agreement Need Not Be in the Form of a Treaty
votes of the Senate. But as earlier indicated, executive agreements may be validly

entered into without such concurrence. As the President wields vast powers and On December 11, 2009, then President Arroyo signed into law Republic Act No.
influence, her conduct in the external affairs of the nation is, as Bayan would put it, (RA) 9851, otherwise known as the Philippine Act on Crimes Against International
Humanitarian Law, Genocide, and Other Crimes Against Humanity. Sec. 17 of RA 9851, of RA 9851 is not subject to the consent of the US, and any derogation of Sec. 17 of RA

particularly the second paragraph thereof, provides: 9851, such as requiring the consent of the US before the Philippines can exercise such

option, requires an amendatory law. In line with this scenario, the view strongly argues
Section 17. Jurisdiction. x x x x
In the interest of justice, the relevant Philippine that the Agreement prevents the Philippineswithout the consent of the USfrom
authorities may dispense with the investigation or prosecution of a surrendering to any international tribunal US nationals accused of crimes covered by RA
crime punishable under this Act if another court or international
tribunal is already conducting the investigation or undertaking the 9851, and, thus, in effect amends Sec. 17 of RA 9851. Consequently, the view is strongly
prosecution of such crime.Instead, the authorities may surrender
or extradite suspected or accused persons in the Philippines to impressed that the Agreement cannot be embodied in a simple executive agreement in
the appropriate international court, if any, or to another State
the form of an exchange of notes but must be implemented through an extradition law or
pursuant to the applicable extradition laws and
treaties. (Emphasis supplied.) a treaty with the corresponding formalities.

A view is advanced that the Agreement amends existing municipal laws on the Moreover, consonant with the foregoing view, citing Sec. 2, Art. II of the
States obligation in relation to grave crimes against the law of nations, i.e., genocide,
Constitution, where the Philippines adopts, as a national policy, the generally accepted
crimes against humanity and war crimes. Relying on the above-quoted statutory proviso,
principles of international law as part of the law of the land, the Court is further
the view posits that the Philippine is required to surrender to the proper international
impressed to perceive the Rome Statute as declaratory of customary international law. In
tribunal those persons accused of the grave crimes defined under RA 9851, if it does not

exercise its primary jurisdiction to prosecute them. other words, the Statute embodies principles of law which constitute customary

The basic premise rests on the interpretation that if it does not decide to international law or custom and for which reason it assumes the status of an enforceable

prosecute a foreign national for violations of RA 9851, the Philippines has only two domestic law in the context of the aforecited constitutional provision. As a corollary, it is
options, to wit: (1) surrender the accused to the proper international tribunal; or (2)
argued that any derogation from the Rome Statute principles cannot be undertaken via a
surrender the accused to another State if such surrender is pursuant to the applicable
mere executive agreement, which, as an exclusive act of the executive branch, can only
extradition laws and treaties. But the Philippines may exercise these options only in
implement, but cannot amend or repeal, an existing law. The Agreement, so the argument
cases where another court or international tribunal is already conducting the

investigation or undertaking the prosecution of such crime; otherwise, goes, seeks to frustrate the objects of the principles of law or alters customary rules

the Philippines must prosecute the crime before its own courts pursuant to RA 9851. embodied in the Rome Statute.

Posing the situation of a US national under prosecution by an international

Prescinding from the foregoing premises, the view thus advanced considers
tribunal for any crime under RA 9851, thePhilippines has the option to surrender
the Agreement inefficacious, unless it is embodied in a treaty duly ratified with the
such US national to the international tribunal if it decides not to prosecute
concurrence of the Senate, the theory being that a Senate- ratified treaty partakes of the
such US national here. The view asserts that this option of the Philippines under Sec. 17
nature of a municipal law that can amend or supersede another law, in this instance Sec.

17 of RA 9851 and the status of the Rome Statute as constitutive of enforceable domestic
law under Sec. 2, Art. II of the Constitution.
We are unable to lend cogency to the view thus taken. For one, we find that
the Agreement does not amend or is repugnant to RA 9851. For another, the view does
not clearly state what precise principles of law, if any, the Agreement alters. And for a
third, it does not demonstrate in the concrete how the Agreement seeks to frustrate the
objectives of the principles of law subsumed in the Rome Statute.
Far from it, as earlier explained, the Agreement does not undermine the Rome
Statute as the former merely reinforces the primacy of the national jurisdiction of
the US and the Philippines in prosecuting criminal offenses committed by their
respective citizens and military personnel, among others. The jurisdiction of the ICC
pursuant to the Rome Statute over high crimes indicated thereat is clearly and
unmistakably complementary to the national criminal jurisdiction of the signatory states.
Moreover, RA 9851 clearly: (1) defines and establishes the crimes against
international humanitarian law, genocide and other crimes against humanity; [70] (2)
provides penal sanctions and criminal liability for their commission; [71] and (3)
establishes special courts for the prosecution of these crimes and for the State to exercise
primary criminal jurisdiction.[72] Nowhere in RA 9851 is there a proviso that goes against
the tenor of the Agreement.
The view makes much of the above quoted second par. of Sec. 17, RA 9851
as requiring the Philippine State to surrender to the proper international tribunal those
persons accused of crimes sanctioned under said law if it does not exercise its primary
jurisdiction to prosecute such persons. This view is not entirely correct, for the above
quoted proviso clearly provides discretion to the Philippine State on whether to
surrender or not a person accused of the crimes under RA 9851. The statutory proviso
uses the word may. It is settled doctrine in statutory construction that the word may
denotes discretion, and cannot be construed as having mandatory effect. [73] Thus, the
pertinent second pararagraph of Sec. 17, RA 9851 is simply permissive on the part of the
Philippine State.
Besides, even granting that the surrender of a person is mandatorily required
when the Philippines does not exercise its primary jurisdiction in cases where another
court or international tribunal is already conducting the investigation or undertaking the
prosecution of such crime, still, the tenor of the Agreement is not repugnant to Sec. 17 of
RA 9851. Said legal proviso aptly provides that the surrender may be made to another
State pursuant to the applicable extradition laws and treaties. The Agreement can already
be considered a treaty following this Courts decision in Nicolas v. Romulo[74] which
cited Weinberger v. Rossi.[75] In Nicolas, We held that an executive agreement is a treaty
within the meaning of that word in international law and constitutes enforceable
domestic law vis--vis the United States.[76]
Likewise, the Philippines and the US already have an existing extradition
treaty, i.e., RP-US Extradition Treaty, which was executed on November 13, 1994. The
pertinent Philippine law, on the other hand, is Presidential Decree No. 1069, issued on
January 13, 1977. Thus, the Agreement, in conjunction with the RP-US Extradition Treaty,
would neither violate nor run counter to Sec. 17 of RA 9851.
The views reliance on Suplico v. Neda[77] is similarly improper. In that case,
several petitions were filed questioning the power of the President to enter into foreign
loan agreements. However, before the petitions could be resolved by the Court, the Office
of the Solicitor General filed a Manifestation and Motion averring that the Philippine
Government decided not to continue with the ZTE National Broadband Network Project,
thus rendering the petition moot. In resolving the case, the Court took judicial notice of
the act of the executive department of the Philippines (the President) and found the
petition to be indeed moot. Accordingly, it dismissed the petitions.
In his dissent in the abovementioned case, Justice Carpio discussed the legal
implications of an executive agreement. He stated that an executive agreement has the
force and effect of law x x x [it] cannot amend or repeal prior laws.[78] Hence, this
argument finds no application in this case seeing as RA 9851 is a subsequent law, not a
prior one. Notably, this argument cannot be found in the ratio decidendi of the case, but
only in the dissenting opinion.
The view further contends that the RP-US Extradition Treaty is inapplicable to
RA 9851 for the reason that under par. 1, Art. 2 of the RP-US Extradition Treaty, [a]n
offense shall be an extraditable offense if it is punishable under the laws in both

Contracting Parties x x x,[79] and thereby concluding that while the Philippines has
criminalized under RA 9851 the acts defined in the Rome Statute as war crimes, genocide
and other crimes against humanity, there is no similar legislation in the US. It is further
argued that, citing U.S. v. Coolidge, in the US, a person cannot be tried in the federal courts
for an international crime unless Congress adopts a law defining and punishing the
offense.
This view must fail.
On the contrary, the US has already enacted legislation punishing the high
crimes mentioned earlier. In fact, as early as October 2006, the US enacted a law
criminalizing war crimes. Section 2441, Chapter 118, Part I, Title 18 of the United States
Code Annotated (USCA) provides for the criminal offense of war crimes which is similar
to the war crimes found in both the Rome Statute and RA 9851, thus:
(a) Offense Whoever, whether inside or outside the United States,
commits a war crime, in any of the circumstances described in
subsection (b), shall be fined under this title or imprisoned for
life or any term of years, or both, and if death results to the
victim, shall also be subject to the penalty of death.
(b) Circumstances The circumstances referred to in subsection (a)
are that the person committing such war crime or the victim of
such war crime is a member of the Armed Forces of the United
States or a national of the United States (as defined in Section 101
of the Immigration and Nationality Act).
(c) Definition As used in this Section the term war crime means any
conduct
(1) Defined as a grave breach in any of the international
conventions signed at Geneva 12 August 1949, or any
protocol to such convention to which the United States is a
party;
(2) Prohibited by Article 23, 25, 27 or 28 of the Annex to the
Hague Convention IV, Respecting the Laws and Customs of
War on Land, signed 18 October 1907;
(3) Which constitutes a grave breach of common Article 3 (as
defined in subsection [d]) when committed in the context of
and in association with an armed conflict not of an
international character; or
(4) Of a person who, in relation to an armed conflict and
contrary to the provisions of the Protocol on Prohibitions or
Restrictions on the Use of Mines, Booby-Traps and Other
Devices as amended at Geneva on 3 May 1996 (Protocol II as
amended on 3 May 1996), when the United States is a party
to such Protocol, willfully kills or causes serious injury to
civilians.[80]
Similarly, in December 2009, the US adopted a law that criminalized genocide,
to wit:
1091. Genocide
(a) Basic Offense Whoever, whether in the time of
peace or in time of war and with specific intent to destroy, in
whole or in substantial part, a national, ethnic, racial or
religious group as such
(1) kills members of that group;
(2) causes serious bodily injury to members of that
group;
(3) causes the permanent impairment of the mental
faculties of members of the group through drugs,
torture, or similar techniques;
(4) subjects the group to conditions of life that are
intended to cause the physical destruction of the group
in whole or in part;
(5) imposes measures intended to prevent births
within the group; or
(6) transfers by force children of the group to another
group;
shall be punished as provided in subsection (b).[81]
Arguing further, another view has been advanced that the current US laws do
not cover every crime listed within the jurisdiction of the ICC and that there is a gap
between the definitions of the different crimes under the US laws versus the Rome
Statute. The view used a report written by Victoria K. Holt and Elisabeth W. Dallas,
entitled On Trial: The US Military and the International Criminal Court, as its basis.
At the outset, it should be pointed out that the report used may not have any weight or
value under international law. Article 38 of the Statute of the International Court of
Justice (ICJ) lists the sources of international law, as follows: (1) international
conventions, whether general or particular, establishing rules expressly recognized by
the contesting states; (2) international custom, as evidence of a general practice accepted
as law; (3) the general principles of law recognized by civilized nations; and (4) subject
to the provisions of Article 59, judicial decisions and the teachings of the most highly
qualified publicists of the various nations, as subsidiary means for the determination
of rules of law. The report does not fall under any of the foregoing enumerated sources. It

cannot even be considered as the teachings of highly qualified publicists. A highly
qualified publicist is a scholar of public international law and the term usually refers to
legal scholars or academic writers.[82] It has not been shown that the authors[83] of this
report are highly qualified publicists.
Assuming arguendo that the report has weight, still, the perceived gaps in the
definitions of the crimes are nonexistent. To highlight, the table below shows the
definitions of genocide and war crimes under the Rome Statute vis--vis the definitions
under US laws:
Rome Statute
Article 6
Genocide
For the purpose of this Statute, genocide
means any of the following acts
committed with intent to destroy, in
whole or in part, a national, ethnical,
racial or religious group, as such:
(a) Killing members of the group;
(b) Causing serious bodily or mental
harm to members of the group;
(c) Deliberately inflicting on the group
conditions of life calculated to bring
about its physical destruction in
whole or in part;
(d) Imposing measures intended to
prevent births within the group;
(e) Forcibly transferring children of the
group to another group.
Article 8
War Crimes
2. For the purpose of this Statute, war
crimes means:
(a) Grave breaches of the Geneva
Conventions of 12 August 1949, namely,
any of the following acts against persons
or property protected under the
provisions of the relevant Geneva
Convention: x x x[84]
US Law
1091. Genocide
(a) Basic Offense Whoever, whether in the
time of peace or in time of war and with
specific intent to destroy, in whole or in
substantial part, a national, ethnic, racial or
religious group as such
(1) kills members of that group;
(2) causes serious bodily injury to members
of that group;
(3) causes the permanent impairment of the
mental faculties of members of the
group through drugs, torture, or
similar techniques;
(4) subjects the group to conditions of life
that are intended to cause the
physical destruction of the group in
whole or in part;
(5) imposes measures intended to prevent
births within the group; or
(6) transfers by force children of the group
to another group;
shall be punished as provided in subsection
(b).
(a) Definition As used in this Section the
term war crime means any conduct
(1) Defined as a grave breach in any of
the international conventions
signed at Geneva12 August 1949, or
any protocol to such convention to
which the United States is a party;
(2) Prohibited by Article 23, 25, 27 or
28 of the Annex to the
Hague Convention IV, Respecting
(b) Other serious violations of the laws the Laws and Customs of War on
and customs applicable in international Land, signed 18 October 1907;
armed conflict, within the established (3) Which constitutes a grave breach of
framework of international law, namely, common Article 3 (as defined in
any of the following acts: subsection [d][85]) when committed
xxxx in the context of and in association
(c) In the case of an armed conflict not of with an armed conflict not of an
an international character, serious international character; or
violations of article 3 common to the four (4) Of a person who, in relation to an
Geneva Conventions of 12 August 1949, armed conflict and contrary to the
namely, any of the following acts provisions of the Protocol on
committed against persons taking no Prohibitions or Restrictions on the
active part in the hostilities, including Use of Mines, Booby-Traps and
members of armed forces who have laid Other Devices as amended at
down their arms and those placed hors Geneva on 3 May 1996 (Protocol II
de combat by sickness, wounds, as amended on 3 May 1996), when
detention or any other cause: the United States is a party to such
xxxx Protocol, willfully kills or causes
(d) Paragraph 2 (c) applies to armed serious injury to civilians.[86]
conflicts not of an international character
and thus does not apply to situations of
internal disturbances and tensions, such
as riots, isolated and sporadic acts of
violence or other acts of a similar nature.
(e) Other serious violations of the laws
and customs applicable in armed conflicts
not of an international character, within
the established framework of
international law, namely, any of the
following acts: x x x.
Evidently, the gaps pointed out as to the definition of the crimes are not present. In fact,
the report itself stated as much, to wit:
Few believed there were wide differences between the
crimes under the jurisdiction of the Court and crimes within the
Uniform Code of Military Justice that would expose US personnel to
the Court. Since US military lawyers were instrumental in drafting the
elements of crimes outlined in the Rome Statute, they ensured that
most of the crimes were consistent with those outlined in the UCMJ
and gave strength to complementarity for the US. Small areas of
potential gaps between the UCMJ and the Rome Statute, military
experts argued, could be addressed through existing military
laws.[87] x x x
The report went on further to say that [a]ccording to those involved, the
elements of crimes laid out in the Rome Statute have been part of US military doctrine
for decades.[88] Thus, the argument proffered cannot stand.

Nonetheless, despite the lack of actual domestic legislation, the US notably
follows the doctrine of incorporation. As early as 1900, the esteemed Justice Gray in The
Paquete Habana[89] case already held international law as part of the law of the US, to
wit:
International law is part of our law, and must be
ascertained and administered by the courts of justice of appropriate
jurisdiction as often as questions of right depending upon it are duly
presented for their determination. For this purpose, where there is no
treaty and no controlling executive or legislative act or judicial
decision, resort must be had to the customs and usages of civilized
nations, and, as evidence of these, to the works of jurists and
commentators who by years of labor, research, and experience have
made themselves peculiarly well acquainted with the subjects of
which they treat. Such works are resorted to by judicial tribunals, not
for the speculations of their authors concerning what the law ought to
be, but for the trustworthy evidence of what the law really
is.[90] (Emphasis supplied.)
Thus, a person can be tried in the US for an international crime despite the lack
of domestic legislation. The cited ruling inU.S. v. Coolidge,[91] which in turn is based on the
holding in U.S. v. Hudson,[92] only applies to common law and not to the law of nations or
international law.[93] Indeed, the Court in U.S. v. Hudson only considered the question,
whether the Circuit Courts of theUnited States can exercise a common law jurisdiction
in criminal cases.[94] Stated otherwise, there is no common law crime in theUS but this is
considerably different from international law.
The US doubtless recognizes international law as part of the law of the land,
necessarily including international crimes, even without any local statute. [95] In fact,
years later, US courts would apply international law as a source of criminal liability
despite the lack of a local statute criminalizing it as such. So it was that in Ex Parte
Quirin[96] the US Supreme Court noted that [f]rom the very beginning of its history this
Court has recognized and applied the law of war as including that part of the law of
nations which prescribes, for the conduct of war, the status, rights and duties of enemy
nations as well as of enemy individuals.[97] It went on further to explain that Congress
had not undertaken the task of codifying the specific offenses covered in the law of war,
thus:
It is no objection that Congress in providing for the trial of
such offenses has not itself undertaken to codify that branch of
international law or to mark its precise boundaries, or to
enumerate or define by statute all the acts which that law
condemns. An Act of Congress punishing the crime of piracy as
defined by the law of nations is an appropriate exercise of its
constitutional authority, Art. I, s 8, cl. 10, to define and punish the
offense since it has adopted by reference the sufficiently precise
definition of international law. x x x Similarly by the reference in the
15th Article of War to offenders or offenses that x x x by the law of
war may be triable by such military commissions. Congress has
incorporated by reference, as within the jurisdiction of military
commissions, all offenses which are defined as such by the law of war
x x x, and which may constitutionally be included within that
jurisdiction.[98] x x x (Emphasis supplied.)
This rule finds an even stronger hold in the case of crimes against humanity. It
has been held that genocide, war crimes and crimes against humanity have attained the
status of customary international law. Some even go so far as to state that these crimes
have attained the status of jus cogens.[99]
Customary international law or international custom is a source of
international law as stated in the Statute of the ICJ.[100] It is defined as the general and
consistent practice of states recognized and followed by them from a sense of legal
obligation.[101] In order to establish the customary status of a particular norm, two
elements must concur: State practice, the objective element; andopinio juris sive
necessitates, the subjective element.[102]
State practice refers to the continuous repetition of the same or similar kind of
acts or norms by States.[103] It is demonstrated upon the existence of the following
elements: (1) generality; (2) uniformity and consistency; and (3)
duration.[104]While, opinio juris, the psychological element, requires that the state
practice or norm be carried out in such a way, as to be evidence of a belief that this
practice is rendered obligatory by the existence of a rule of law requiring it.[105]
The term jus cogens means the compelling law.[106] Corollary, a jus cogens norm
holds the highest hierarchical position among all other customary norms and
principles.[107] As a result, jus cogens norms are deemed peremptory and non-
derogable.[108] When applied to international crimes, jus cogens crimes have been

deemed so fundamental to the existence of a just international legal order that states
cannot derogate from them, even by agreement.[109]
These jus cogens crimes relate to the principle of universal jurisdiction, i.e., any
state may exercise jurisdiction over an individual who commits certain heinous and
widely condemned offenses, even when no other recognized basis for jurisdiction
exists.[110] The rationale behind this principle is that the crime committed is so egregious
that it is considered to be committed against all members of the international
community[111] and thus granting every State jurisdiction over the crime.[112]
Therefore, even with the current lack of domestic legislation on the part of the US, it still
has both the doctrine of incorporation and universal jurisdiction to try these crimes.
Consequently, no matter how hard one insists, the ICC, as an international
tribunal, found in the Rome Statute is notdeclaratory of customary international law.
The first element of customary international law, i.e., established, widespread,
and consistent practice on the part of States,[113] does not, under the premises, appear to
be obtaining as reflected in this simple reality: As of October 12, 2010, only 114[114]States
have ratified the Rome Statute, subsequent to its coming into force eight (8) years
earlier, or on July 1, 2002. The fact that 114 States out of a total of 194[115] countries in
the world, or roughly 58.76%, have ratified the Rome Statute casts doubt on whether or
not the perceived principles contained in the Statute have attained the status of
customary law and should be deemed as obligatory international law. The numbers even
tend to argue against the urgency of establishing international criminal courts
envisioned in the Rome Statute. Lest it be overlooked, the Philippines, judging by the
action or inaction of its top officials, does not even feel bound by the Rome Statute. Res
ipsa loquitur. More than eight (8) years have elapsed since the Philippine representative
signed the Statute, but the treaty has not been transmitted to the Senate for the
ratification process.
And this brings us to what Fr. Bernas, S.J. aptly said respecting the application
of the concurring elements, thus:
Custom or customary international law means a general and
consistent practice of states followed by them from a sense of legal
obligation [opinio juris] x x x. This statement contains the two basic
elements of custom: the material factor, that is how the states behave,
and the psychological factor or subjective factor, that is, why they
behave the way they do.
xxxx
The initial factor for determining the existence of custom is the actual
behavior of states. This includes several elements: duration,
consistency, and generality of the practice of states.
The required duration can be either short or long. x x x
xxxx
Duration therefore is not the most important element. More
important is the consistency and the generality of the practice. x x x
xxxx
Once the existence of state practice has been
established, it becomes necessary to determine why states behave
the way they do. Do states behave the way they do because they
consider it obligatory to behave thus or do they do it only as a matter
of courtesy?Opinio juris, or the belief that a certain form of behavior is
obligatory, is what makes practice an international rule. Without it,
practice is not law.[116] (Emphasis added.)
Evidently, there is, as yet, no overwhelming consensus, let alone prevalent
practice, among the different countries in the world that the prosecution of
internationally recognized crimes of genocide, etc. should be handled by a particular
international criminal court.
Absent the widespread/consistent-practice-of-states factor, the second or
the psychological element must be deemed non-existent, for an inquiry on why states
behave the way they do presupposes, in the first place, that they are actually behaving, as
a matter of settled and consistent practice, in a certain manner. This implicitly requires
belief that the practice in question is rendered obligatory by the existence of a rule of law
requiring it.[117] Like the first element, the second element has likewise not been shown
to be present.
 Further, the Rome Statute itself rejects the concept of universal jurisdiction
over the crimes enumerated therein as evidenced by it requiring State consent. [118] Even
further, the Rome Statute specifically and unequivocally requires that: This Statute
issubject to ratification, acceptance or approval by signatory States.[119] These clearly
negate the argument that such has already attained customary status.

More importantly, an act of the executive branch with a foreign government

must be afforded great respect. The power to enter into executive agreements has long
been recognized to be lodged with the President. As We held in Neri v. Senate Committee
on Accountability of Public Officers and Investigations, [t]he power to enter into an
executive agreement is in essence an executive power. This authority of the President to
enter into executive agreements without the concurrence of the Legislature has
traditionally been recognized in Philippine jurisprudence.[120] The rationale behind this
principle is the inviolable doctrine of separation of powers among the legislative,
executive and judicial branches of the government. Thus, absent any clear contravention
of the law, courts should exercise utmost caution in declaring any executive agreement
invalid.

In light of the above consideration, the position or view that the challenged RP-

US Non-Surrender Agreement ought to be in the form of a treaty, to be effective, has to be

rejected.

WHEREFORE, the petition for certiorari, mandamus and prohibition is

hereby DISMISSED for lack of merit. No costs.

SO ORDERED.
 [G.R. No. 141284. August 15, 2000]
INTEGRATED BAR OF THE PHILIPPINES, petitioner, vs. HON. RONALDO B. ZAMORA,
GEN. PANFILO M. LACSON, GEN. EDGAR B. AGLIPAY, and GEN. ANGELO
REYES, respondents.
KAPUNAN, J.:
At bar is a special civil action for certiorari and prohibition with prayer for issuance
of a temporary restraining order seeking to nullify on constitutional grounds the order of
President Joseph Ejercito Estrada commanding the deployment of the Philippine Marines
(the Marines) to join the Philippine National Police (the PNP) in visibility patrols around
the metropolis.
In view of the alarming increase in violent crimes in Metro Manila, like
robberies, kidnappings and carnappings, the President, in a verbal directive, ordered the
PNP and the Marines to conduct joint visibility patrols for the purpose of crime
prevention and suppression. The Secretary of National Defense, the Chief of Staff of the
Armed Forces of the Philippines (the AFP), the Chief of the PNP and the Secretary of the
Interior and Local Government were tasked to execute and implement the said order. In
compliance with the presidential mandate, the PNP Chief, through Police Chief
Superintendent Edgar B. Aglipay, formulated Letter of Instruction 02/2000[1] (the LOI)
which detailed the manner by which the joint visibility patrols, called Task
Force Tulungan, would be conducted.[2] Task Force Tulungan was placed under the
leadership of the Police Chief of Metro Manila.
Subsequently, the President confirmed his previous directive on the deployment of
the Marines in a Memorandum, dated 24 January 2000, addressed to the Chief of Staff of
the AFP and the PNP Chief.[3] In the Memorandum, the President expressed his desire to
improve the peace and order situation in Metro Manila through a more effective crime
prevention program including increased police patrols.[4] The President further stated
that to heighten police visibility in the metropolis, augmentation from the AFP is
necessary.[5] Invoking his powers as Commander-in-Chief under Section 18, Article VII of
the Constitution, the President directed the AFP Chief of Staff and PNP Chief to
coordinate with each other for the proper deployment and utilization of the Marines to
assist the PNP in preventing or suppressing criminal or lawless violence.[6] Finally, the
President declared that the services of the Marines in the anti-crime campaign are
merely temporary in nature and for a reasonable period only, until such time when the
situation shall have improved.[7]
The LOI explains the concept of the PNP-Philippine Marines joint visibility patrols
as follows:
xxx
2. PURPOSE:
The Joint Implementing Police Visibility Patrols between the PNP NCRPO and the Philippine
Marines partnership in the conduct of visibility patrols in Metro Manila for the suppression
of crime prevention and other serious threats to national security.
3. SITUATION:
Criminal incidents in Metro Manila have been perpetrated not only by ordinary criminals
but also by organized syndicates whose members include active and former police/military
personnel whose training, skill, discipline and firepower prove well-above the present
capability of the local police alone to handle. The deployment of a joint PNP NCRPO-
Philippine Marines in the conduct of police visibility patrol in urban areas will reduce the
incidence of crimes specially those perpetrated by active or former police/military
personnel.
4. MISSION:
The PNP NCRPO will organize a provisional Task Force to conduct joint NCRPO-PM
visibility patrols to keep Metro Manila streets crime-free, through a sustained street
patrolling to minimize or eradicate all forms of high-profile crimes especially those
perpetrated by organized crime syndicates whose members include those that are well-
trained, disciplined and well-armed active or former PNP/Military personnel.
5. CONCEPT IN JOINT VISIBILITY PATROL OPERATIONS:
a. The visibility patrols shall be conducted jointly by the NCRPO [National Capital Regional
Police Office] and the Philippine Marines to curb criminality in Metro Manila and to
preserve the internal security of the state against insurgents and other serious threat to
national security, although the primary responsibility over Internal Security Operations
still rests upon the AFP.
b. The principle of integration of efforts shall be applied to eradicate all forms of high-
profile crimes perpetrated by organized crime syndicates operating in Metro Manila. This
concept requires the military and police to work cohesively and unify efforts to ensure a
focused, effective and holistic approach in addressing crime prevention. Along this line, the
role of the military and police aside from neutralizing crime syndicates is to bring a
wholesome atmosphere wherein delivery of basic services to the people and development is
achieved. Hand-in-hand with this joint NCRPO-Philippine Marines visibility patrols, local
Police Units are responsible for the maintenance of peace and order in their locality.
c. To ensure the effective implementation of this project, a provisional Task Force
TULUNGAN shall be organized to provide the mechanism, structure, and procedures for the
integrated planning, coordinating, monitoring and assessing the security situation.
xxx.[8]
The selected areas of deployment under the LOI are: Monumento Circle, North Edsa
(SM City), Araneta Shopping Center, Greenhills, SM Megamall, Makati Commercial Center,
LRT/MRT Stations and the NAIA and Domestic Airport.[9]
On 17 January 2000, the Integrated Bar of the Philippines (the IBP) filed the instant
petition to annul LOI 02/2000 and to declare the deployment of the Philippine Marines,
null and void and unconstitutional, arguing that:
I
THE DEPLOYMENT OF THE PHILIPPINE MARINES IN METRO MANILA IS VIOLATIVE OF
THE CONSTITUTION, IN THAT:
A) NO EMERGENCY SITUATION OBTAINS IN METRO MANILA AS WOULD JUSTIFY, EVEN
ONLY REMOTELY, THE DEPLOYMENT OF SOLDIERS FOR LAW ENFORCEMENT WORK;
HENCE, SAID DEPLOYMENT IS IN DEROGATION OF ARTICLE II, SECTION 3 OF THE
CONSTITUTION;
B) SAID DEPLOYMENT CONSTITUTES AN INSIDIOUS INCURSION BY THE MILITARY IN A
CIVILIAN FUNCTION OF GOVERNMENT (LAW ENFORCEMENT) IN DEROGATION OF
ARTICLE XVI, SECTION 5 (4), OF THE CONSTITUTION;
C) SAID DEPLOYMENT CREATES A DANGEROUS TENDENCY TO RELY ON THE MILITARY
TO PERFORM THE CIVILIAN FUNCTIONS OF THE GOVERNMENT.
II
IN MILITARIZING LAW ENFORCEMENT IN METRO MANILA, THE ADMINISTRATION IS
UNWITTINGLY MAKING THE MILITARY MORE POWERFUL THAN WHAT IT SHOULD
REALLY BE UNDER THE CONSTITUTION.[10]
Asserting itself as the official organization of Filipino lawyers tasked with the
bounden duty to uphold the rule of law and the Constitution, the IBP questions the
validity of the deployment and utilization of the Marines to assist the PNP in law
enforcement.
Without granting due course to the petition, the Court in a Resolution,[11]
dated 25
January 2000, required the Solicitor General to file his Comment on the petition. On 8
February 2000, the Solicitor General submitted his Comment.
The Solicitor General vigorously defends the constitutionality of the act of the
President in deploying the Marines, contending, among others, that petitioner has no
legal standing; that the question of deployment of the Marines is not proper for judicial
scrutiny since the same involves a political question; that the organization and conduct
of police visibility patrols, which feature the team-up of one police officer and one
Philippine Marine soldier, does not violate the civilian supremacy clause in the
Constitution.
The issues raised in the present petition are: (1) Whether or not petitioner has
legal standing; (2) Whether or not the Presidents factual determination of the necessity
of calling the armed forces is subject to judicial review; and, (3) Whether or not the
calling of the armed forces to assist the PNP in joint visibility patrols violates the
constitutional provisions on civilian supremacy over the military and the civilian
character of the PNP.
The petition has no merit.
First, petitioner failed to sufficiently show that it is in possession of the requisites
of standing to raise the issues in the petition. Second, the President did not commit grave
abuse of discretion amounting to lack or excess of jurisdiction nor did he commit a
violation of the civilian supremacy clause of the Constitution.
The power of judicial review is set forth in Section 1, Article VIII of the Constitution,
to wit:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
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 grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.
When questions of constitutional significance are raised, the Court can exercise its
power of judicial review only if the following requisites are complied with, namely:
(1) the existence of an actual and appropriate case; (2) a personal and substantial
interest of the party raising the constitutional question; (3) the exercise of judicial
review is pleaded at the earliest opportunity; and (4) the constitutional questionis the lis
mota of the case.[12]
The IBP has not sufficiently complied with the requisites of standing in this case.
Legal standing or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury as a
result of the governmental act that is being challenged.[13] The term interest means a
material interest, an interest in issue affected by the decree, as distinguished from mere
interest in the question involved, or a mere incidental interest.[14] The gist of the question
of standing is whether a party alleges such personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court depends for illumination of difficult constitutional
questions.[15]
In the case at bar, the IBP primarily anchors its standing on its alleged
responsibility to uphold the rule of law and the Constitution. Apart from this declaration,
however, the IBP asserts no other basis in support of its locus standi. The mere
invocation by the IBP of its duty to preserve the rule of law and nothing more, while
undoubtedly true, is not sufficient to clothe it with standing in this case. This is too
general an interest which is shared by other groups and the whole citizenry. Based on
the standards above-stated, the IBP has failed to present a specific and substantial
interest in the resolution of the case. Its fundamental purpose which, under Section 2,
Rule 139-A of the Rules of Court, is to elevate the standards of the law profession and to
improve the administration of justice is alien to, and cannot be affected by the
deployment of the Marines. It should also be noted that the interest of the National
President of the IBP who signed the petition, is his alone, absent a formal board
resolution authorizing him to file the present action. To be sure, members of the BAR,
those in the judiciary included, have varying opinions on the issue. Moreover, the IBP,
assuming that it has duly authorized the National President to file the petition, has not
shown any specific injury which it has suffered or may suffer by virtue of the questioned
governmental act. Indeed, none of its members, whom the IBP purportedly represents,
has sustained any form of injury as a result of the operation of the joint visibility
patrols. Neither is it alleged that any of its members has been arrested or that their civil
liberties have been violated by the deployment of the Marines. What the IBP projects as
injurious is the supposed militarization of law enforcement which might threaten
Philippine democratic institutions and may cause more harm than good in the long
run. Not only is the presumed injury not personal in character, it is likewise too vague,
highly speculative and uncertain to satisfy the requirement of standing. Since petitioner
has not successfully established a direct and personal injury as a consequence of the
questioned act, it does not possess the personality to assail the validity of the
deployment of the Marines.This Court, however, does not categorically rule that the IBP
has absolutely no standing to raise constitutional issues now or in the future.The IBP
must, by way of allegations and proof, satisfy this Court that it has sufficient stake to
obtain judicial resolution of the controversy.
Having stated the foregoing, it must be emphasized that this Court has the
discretion to take cognizance of a suit which does not satisfy the requirement of legal
standing when paramount interest is involved.[16] In not a few cases, the Court has
adopted a liberal attitude on thelocus standi of a petitioner where the petitioner is able to
craft an issue of transcendental significance to the people.[17] Thus, when the issues
raised are of paramount importance to the public, the Court may brush aside
technicalities of procedure.[18] In this case, a reading of the petition shows that the IBP
has advanced constitutional issues which deserve the attention of this Court in view of
their seriousness, novelty and weight as precedents. Moreover, because peace and order
are under constant threat and lawless violence occurs in increasing tempo, undoubtedly
aggravated by the Mindanao insurgency problem, the legal controversy raised in the
petition almost certainly will not go away. It will stare us in the face again. It, therefore,
behooves the Court to relax the rules on standing and to resolve the issue now, rather
than later.
The President did not commit grave abuse of discretion in calling out the Marines.
In the case at bar, the bone of contention concerns the factual determination of the
President of the necessity of calling the armed forces, particularly the Marines, to aid the
PNP in visibility patrols. In this regard, the IBP admits that the deployment of the
military personnel falls under the Commander-in-Chief powers of the President as stated
in Section 18, Article VII of the Constitution, specifically, the power to call out the armed
forces to prevent or suppress lawless violence, invasion or rebellion. What the IBP
questions, however, is the basis for the calling of the Marines under the aforestated
provision. According to the IBP, no emergency exists that would justify the need for the
calling of the military to assist the police force. It contends that no lawless violence,
invasion or rebellion exist to warrant the calling of the Marines. Thus, the IBP prays that
this Court review the sufficiency of the factual basis for said troop [Marine]
deployment.[19]
The Solicitor General, on the other hand, contends that the issue pertaining to the
necessity of calling the armed forces is not proper for judicial scrutiny since it involves a
political question and the resolution of factual issues which are beyond the review
powers of this Court.
As framed by the parties, the underlying issues are the scope of presidential
powers and limits, and the extent of judicial review. But, while this Court gives
considerable weight to the parties formulation of the issues, the resolution of the
controversy may warrant a creative approach that goes beyond the narrow confines of
the issues raised. Thus, while the parties are in agreement that the power exercised by
the President is the power to call out the armed forces, the Court is of the view that the
power involved may be no more than the maintenance of peace and order and
promotion of the general welfare.[20] For one, the realities on the ground do not show
that there exist a state of warfare, widespread civil unrest or anarchy. Secondly, the full
brunt of the military is not brought upon the citizenry, a point discussed in the latter part
of this decision. In the words of the late Justice Irene Cortes in Marcos v. Manglapus:
More particularly, this case calls for the exercise of the Presidents powers as protector of
the peace. [Rossiter, The American Presidency].The power of the President to keep the
peace is not limited merely to exercising the commander-in-chief powers in times of
emergency or to leading the State against external and internal threats to its
existence. The President is not only clothed with extraordinary powers in times of
emergency, but is also tasked with attending to the day-to-day problems of maintaining
peace and order and ensuring domestic tranquility in times when no foreign foe appears
on the horizon. Wide discretion, within the bounds of law, in fulfilling presidential duties
in times of peace is not in any way diminished by the relative want of an emergency
specified in the commander-in-chief provision. For in making the President commander-
in-chief the enumeration of powers that follow cannot be said to exclude the Presidents
exercising as Commander-in-Chief powers short of the calling of the armed forces, or
suspending the privilege of the writ of habeas corpus or declaring martial law, in order to
keep the peace, and maintain public order and security.
xxx[21]
Nonetheless, even if it is conceded that the power involved is the Presidents power
to call out the armed forces to prevent or suppress lawless violence, invasion or
rebellion, the resolution of the controversy will reach a similar result.
We now address the Solicitor Generals argument that the issue involved is not
susceptible to review by the judiciary because it involves a political question, and thus,
not justiciable.
As a general proposition, a controversy is justiciable if it refers to a matter which is
appropriate for court review.[22] It pertains to issues which are inherently susceptible of
being decided on grounds recognized by law. Nevertheless, the Court does not
automatically assume jurisdiction over actual constitutional cases brought before it even
in instances that are ripe for resolution. One class of cases wherein the Court hesitates to
rule on are political questions. The reason is that political questions are concerned with
issues dependent upon the wisdom, not the legality, of a particular act or measure being
assailed. Moreover, the political question being a function of the separation of powers,
the courts will not normally interfere with the workings of another co-equal branch
unless the case shows a clear need for the courts to step in to uphold the law and the
Constitution.
 As Taada v. Cuenco[23] puts it, political questions refer to those questions which,
under the Constitution, are to be decided by the people in their sovereign capacity, or in
regard to which full discretionary authority has been delegated to the legislative or
executive branch of government. Thus, if an issue is clearly identified by the text of the
Constitution as matters for discretionary action by a particular branch of government or
to the people themselves then it is held to be a political question. In the classic
formulation of Justice Brennan in Baker v. Carr,[24] [p]rominent on the surface of any case
held to involve a political question is found a textually demonstrable constitutional
commitment of the issue to a coordinate political department; or a lack of judicially
discoverable and manageable standards for resolving it; or the impossibility of deciding
without an initial policy determination of a kind clearly for nonjudicial discretion; or the
impossibility of a courts undertaking independent resolution without expressing lack of
the respect due coordinate branches of government; or an unusual need for
unquestioning adherence to a political decision already made; or the potentiality of
embarassment from multifarious pronouncements by various departments on the one
question.
The 1987 Constitution expands the concept of judicial review by providing that
(T)he Judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law. Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government.[25] Under this definition, the Court cannot agree with the Solicitor
General that the issue involved is a political question beyond the jurisdiction of this
Court to review. When the grant of power is qualified, conditional or subject to
limitations, the issue of whether the prescribed qualifications or conditions have been
met or the limitations respected, is justiciable - the problem being one of legality or
validity, not its wisdom.[26]Moreover, the jurisdiction to delimit constitutional
boundaries has been given to this Court.[27] When political questions are involved, the
Constitution limits the determination as to whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of the official whose
action is being questioned.[28]
By grave abuse of discretion is meant simply capricious or whimsical exercise of
judgment that is patent and gross as to amount to an evasion of positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason of passion
or hostility.[29] Under this definition, a court is without power to directly decide matters
over which full discretionary authority has been delegated. But while this Court has no
power to substitute its judgment for that of Congress or of the President, it may look into
the question of whether such exercise has been made in grave abuse of discretion. [30]A
showing that plenary power is granted either department of government, may not be an
obstacle to judicial inquiry, for the improvident exercise or abuse thereof may give rise
to justiciable controversy.[31]
When the President calls the armed forces to prevent or suppress lawless violence,
invasion or rebellion, he necessarily exercises a discretionary power solely vested in his
wisdom. This is clear from the intent of the framers and from the text of the Constitution
itself. The Court, thus, cannot be called upon to overrule the Presidents wisdom or
substitute its own. However, this does not prevent an examination of whether such
power was exercised within permissible constitutional limits or whether it was
exercised in a manner constituting grave abuse of discretion. In view of the
constitutional intent to give the President full discretionary power to determine the
necessity of calling out the armed forces, it is incumbent upon the petitioner to show that
the Presidents decision is totally bereft of factual basis. The present petition fails to
discharge such heavy burden as there is no evidence to support the assertion that there
exist no justification for calling out the armed forces. There is, likewise, no evidence to
support the proposition that grave abuse was committed because the power to call was
exercised in such a manner as to violate the constitutional provision on civilian
supremacy over the military. In the performance of this Courts duty of purposeful
hesitation[32] before declaring an act of another branch as unconstitutional, only where
such grave abuse of discretion is clearly shown shall the Court interfere with the
Presidents judgment. To doubt is to sustain.
There is a clear textual commitment under the Constitution to bestow on the
President full discretionary power to call out the armed forces and to determine the
necessity for the exercise of such power. Section 18, Article VII of the Constitution, which
embodies the powers of the President as Commander-in-Chief, provides in part:
The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or
suppress lawless violence, invasion or rebellion. In case of invasion or rebellion, when
the public safety requires it, he may, for a period not exceeding sixty days, suspend the
privilege of the writ of habeas corpus, or place the Philippines or any part thereof under
martial law.
xxx
The full discretionary power of the President to determine the factual basis for the
exercise of the calling out power is also implied and further reinforced in the rest of
Section 18, Article VII which reads, thus:
xxx
Within forty-eight hours from the proclamation of martial law or the suspension of the
privilege of the writ of habeas corpus, the President shall submit a report in person or in
writing to the Congress. The Congress, voting jointly, by a vote of at least a majority of all
its Members in regular or special session, may revoke such proclamation or suspension,
which revocation shall not be set aside by the President. Upon the initiative of the
President, the Congress may, in the same manner, extend such proclamation or
suspension for a period to be determined by the Congress, if the invasion or rebellion
shall persist and public safety requires it.
The Congress, if not in session, shall within twenty-four hours following such
proclamation or suspension, convene in accordance with its rules without need of a call.
The Supreme Court may review, in an appropriate proceeding filed by any citizen, the
sufficiency of the factual basis of the proclamation of martial law or the suspension of the
privilege of the writ or the extension thereof, and must promulgate its decision thereon
within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor supplant
the functioning of the civil courts or legislative assemblies, nor authorize the conferment
of jurisdiction on military courts and agencies over civilians where civil courts are able
to function, nor automatically suspend the privilege of the writ.
The suspension of the privilege of the writ shall apply only to persons judicially charged
for rebellion or offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or detained
shall be judicially charged within three days, otherwise he shall be released.
Under the foregoing provisions, Congress may revoke such proclamation or
suspension and the Court may review the sufficiency of the factual basis
thereof. However, there is no such equivalent provision dealing with the revocation or
review of the Presidents action to call out the armed forces. The distinction places the
calling out power in a different category from the power to declare martial law and the
power to suspend the privilege of the writ of habeas corpus, otherwise, the framers of the
Constitution would have simply lumped together the three powers and provided for
their revocation and review without any qualification. Expressio unius est exclusio
alterius. Where the terms are expressly limited to certain matters, it may not, by
interpretation or construction, be extended to other matters.[33] That the intent of the
Constitution is exactly what its letter says, i.e., that the power to call is fully discretionary
to the President, is extant in the deliberation of the Constitutional Commission, to wit:
FR. BERNAS. It will not make any difference. I may add that there is a graduated power of
the President as Commander-in-Chief. First, he can call out such Armed Forces as may be
necessary to suppress lawless violence; then he can suspend the privilege of the writ
of habeas corpus, then he can impose martial law. This is a graduated sequence.
When he judges that it is necessary to impose martial law or suspend the privilege of the
writ of habeas corpus, his judgment is subject to review. We are making it subject to
review by the Supreme Court and subject to concurrence by the National Assembly. But
when he exercises this lesser power of calling on the Armed Forces, when he says it is
necessary, it is my opinion that his judgment cannot be reviewed by anybody.
xxx
FR. BERNAS. Let me just add that when we only have imminent danger, the matter can be
handled by the first sentence: The President may call out such armed forces to prevent or
suppress lawless violence, invasion or rebellion. So we feel that that is sufficient for
handling imminent danger.
MR. DE LOS REYES. So actually, if a President feels that there is imminent danger, the
matter can be handled by the First Sentence: The President....may call out such Armed
Forces to prevent or suppress lawless violence, invasion or rebellion. So we feel that that
is sufficient for handling imminent danger, of invasion or rebellion, instead of imposing
martial law or suspending the writ of habeas corpus, he must necessarily have to call the
Armed Forces of the Philippines as their Commander-in-Chief. Is that the idea?
MR. REGALADO. That does not require any concurrence by the legislature nor is it
subject to judicial review.[34]
The reason for the difference in the treatment of the aforementioned powers
highlights the intent to grant the President the widest leeway and broadest discretion in
using the power to call out because it is considered as the lesser and more benign power
compared to the power to suspend the privilege of the writ of habeas corpus and the
power to impose martial law, both of which involve the curtailment and suppression of
certain basic civil rights and individual freedoms, and thus necessitating safeguards by
Congress and review by this Court.
Moreover, under Section 18, Article VII of the Constitution, in the exercise of the
power to suspend the privilege of the writ of habeas corpus or to impose martial law, two
conditions must concur: (1) there must be an actual invasion or rebellion and, (2) public
safety must require it. These conditions are not required in the case of the power to call
out the armed forces. The only criterion is that whenever it becomes necessary, the
President may call the armed forces to prevent or suppress lawless violence, invasion or
rebellion." The implication is that the President is given full discretion and wide latitude
in the exercise of the power to call as compared to the two other powers.
If the petitioner fails, by way of proof, to support the assertion that the President
acted without factual basis, then this Court cannot undertake an independent
investigation beyond the pleadings. The factual necessity of calling out the armed forces
is not easily quantifiable and cannot be objectively established since matters considered
for satisfying the same is a combination of several factors which are not always
accessible to the courts. Besides the absence of textual standards that the court may use
to judge necessity, information necessary to arrive at such judgment might also prove
unmanageable for the courts. Certain pertinent information might be difficult to verify,
or wholly unavailable to the courts. In many instances, the evidence upon which the
President might decide that there is a need to call out the armed forces may be of a
nature not constituting technical proof.
On the other hand, the President as Commander-in-Chief has a vast intelligence
network to gather information, some of which may be classified as highly confidential or
affecting the security of the state. In the exercise of the power to call, on-the-spot
decisions may be imperatively necessary in emergency situations to avert great loss of
human lives and mass destruction of property. Indeed, the decision to call out the
military to prevent or suppress lawless violence must be done swiftly and decisively if it
were to have any effect at all. Such a scenario is not farfetched when we consider the
present situation in Mindanao, where the insurgency problem could spill over the other
parts of the country. The determination of the necessity for the calling out power if
subjected to unfettered judicial scrutiny could be a veritable prescription for disaster, as
such power may be unduly straitjacketed by an injunction or a temporary restraining
order every time it is exercised.
Thus, it is the unclouded intent of the Constitution to vest upon the President, as
Commander-in-Chief of the Armed Forces, full discretion to call forth the military when
in his judgment it is necessary to do so in order to prevent or suppress lawless violence,
invasion or rebellion. Unless the petitioner can show that the exercise of such discretion
was gravely abused, the Presidents exercise of judgment deserves to be accorded respect
from this Court.
 The President has already determined the necessity and factual basis for calling the
armed forces. In his Memorandum, he categorically asserted that, [V]iolent crimes like
bank/store robberies, holdups, kidnappings and carnappings continue to occur in Metro
Manila...[35] We do not doubt the veracity of the Presidents assessment of the situation,
especially in the light of present developments. The Court takes judicial notice of the
recent bombings perpetrated by lawless elements in the shopping malls, public utilities,
and other public places. These are among the areas of deployment described in the LOI
2000. Considering all these facts, we hold that the President has sufficient factual basis to
call for military aid in law enforcement and in the exercise of this constitutional power.
The deployment of the Marines does not violate the civilian supremacy clause nor
does it infringe the civilian character of the police force.
Prescinding from its argument that no emergency situation exists to justify the
calling of the Marines, the IBP asserts that by the deployment of the Marines, the civilian
task of law enforcement is militarized in violation of Section 3, Article II[36] of the
Constitution.
We disagree. The deployment of the Marines does not constitute a breach of the
civilian supremacy clause. The calling of the Marines in this case constitutes permissible
use of military assets for civilian law enforcement. The participation of the Marines in the
conduct of joint visibility patrols is appropriately circumscribed. The limited
participation of the Marines is evident in the provisions of the LOI itself, which
sufficiently provides the metes and bounds of the Marines authority. It is noteworthy
that the local police forces are the ones in charge of the visibility patrols at all times, the
real authority belonging to the PNP. In fact, the Metro Manila Police Chief is the overall
leader of the PNP-Philippine Marines joint visibility patrols.[37] Under the LOI, the police
forces are tasked to brief or orient the soldiers on police patrol procedures.[38] It is their
responsibility to direct and manage the deployment of the Marines.[39] It is, likewise,
their duty to provide the necessary equipment to the Marines and render logistical
support to these soldiers.[40] In view of the foregoing, it cannot be properly argued that
military authority is supreme over civilian authority. Moreover, the deployment of the
Marines to assist the PNP does not unmake the civilian character of the police
force. Neither does it amount to an insidious incursion of the military in the task of law
enforcement in violation of Section 5(4), Article XVI of the Constitution.[41]
In this regard, it is not correct to say that General Angelo Reyes, Chief of Staff of the
AFP, by his alleged involvement in civilian law enforcement, has been virtually appointed
to a civilian post in derogation of the aforecited provision. The real authority in these
operations, as stated in the LOI, is lodged with the head of a civilian institution, the PNP,
and not with the military. Such being the case, it does not matter whether the AFP Chief
actually participates in the Task Force Tulungan since he does not exercise any authority
or control over the same. Since none of the Marines was incorporated or enlisted as
members of the PNP, there can be no appointment to civilian position to speak of. Hence,
the deployment of the Marines in the joint visibility patrols does not destroy the civilian
character of the PNP.
Considering the above circumstances, the Marines render nothing more than
assistance required in conducting the patrols. As such, there can be no insidious
incursion of the military in civilian affairs nor can there be a violation of the civilian
supremacy clause in the Constitution.
It is worth mentioning that military assistance to civilian authorities in various
forms persists in Philippine jurisdiction. The Philippine experience reveals that it is not
averse to requesting the assistance of the military in the implementation and execution
of certain traditionally civil functions. As correctly pointed out by the Solicitor General,
some of the multifarious activities wherein military aid has been rendered, exemplifying
the activities that bring both the civilian and the military together in a relationship of
cooperation, are:
1. Elections;[42]
2. Administration of the Philippine National Red Cross;[43]
3. Relief and rescue operations during calamities and disasters;[44]
4. Amateur sports promotion and development;[45]
5. Development of the culture and the arts;[46]
6. Conservation of natural resources;[47]
7. Implementation of the agrarian reform program;[48]
8. Enforcement of customs laws;[49]
9. Composite civilian-military law enforcement activities;[50]
10. Conduct of licensure examinations;[51]
11. Conduct of nationwide tests for elementary and high school students;[52]
12. Anti-drug enforcement activities;[53]
13. Sanitary inspections;[54]
14. Conduct of census work;[55]
15. Administration of the Civil Aeronautics Board;[56]
16. Assistance in installation of weather forecasting devices;[57]
17. Peace and order policy formulation in local government units.[58]
This unquestionably constitutes a gloss on executive power resulting from a
systematic, unbroken, executive practice, long pursued to the knowledge of Congress
and, yet, never before questioned.[59] What we have here is mutual support and
cooperation between the military and civilian authorities, not derogation of civilian
supremacy.
In the United States, where a long tradition of suspicion and hostility towards the
use of military force for domestic purposes has persisted,[60] and whose Constitution,
unlike ours, does not expressly provide for the power to call, the use of military
personnel by civilian law enforcement officers is allowed under circumstances similar to
those surrounding the present deployment of the Philippine Marines.Under the Posse
Comitatus Act[61] of the US, the use of the military in civilian law enforcement is generally
prohibited, except in certain allowable circumstances. A provision of the Act states:
1385. Use of Army and Air Force as posse comitatus
Whoever, except in cases and under circumstances expressly authorized by the
Constitution or Act of Congress, willfully uses any part of the Army or the Air Force
as posse comitatus or otherwise to execute the laws shall be fined not more than $10,000
or imprisoned not more than two years, or both.[62]
To determine whether there is a violation of the Posse Comitatus Act in the use of
military personnel, the US courts[63] apply the following standards, to wit:
Were Army or Air Force personnel used by the civilian law enforcement officers at
Wounded Knee in such a manner that the military personnel subjected the citizens to the
exercise of military power which was regulatory, proscriptive, or compulsory[64] George
Washington Law Review, pp. 404-433 (1986), which discusses the four divergent
standards for assessing acceptable involvement of military personnel in civil law
enforcement. Seelikewise HONORED IN THE BREECH: PRESIDENTIAL AUTHORITY TO
EXECUTE THE LAWS WITH MILITARY FORCE, 83 Yale Law Journal, pp. 130-152,
1973.64 in nature, either presently or prospectively?
It appears that the present petition is anchored on fear that once the armed forces
are deployed, the military will gain ascendancy, and thus place in peril our cherished
liberties. Such apprehensions, however, are unfounded. The power to call the armed
forces is just that - calling out the armed forces. Unless, petitioner IBP can show, which it
has not, that in the deployment of the Marines, the President has violated the
fundamental law, exceeded his authority or jeopardized the civil liberties of the people,
this Court is not inclined to overrule the Presidents determination of the factual basis for
the calling of the Marines to prevent or suppress lawless violence.
One last point. Since the institution of the joint visibility patrol in January, 2000, not
a single citizen has complained that his political or civil rights have been violated as a
result of the deployment of the Marines. It was precisely to safeguard peace, tranquility
and the civil liberties of the people that the joint visibility patrol was conceived. Freedom
and democracy will be in full bloom only when people feel secure in their homes and in
the streets, not when the shadows of violence and anarchy constantly lurk in their midst.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.

xxx

When this concept is transplanted into the present legal context, we take it to mean
that military involvement, even when not expressly authorized by the Constitution or a
statute, does not violate the Posse Comitatus Act unless it actually regulates, forbids or
compels some conduct on the part of those claiming relief. A mere threat of some future
injury would be insufficient. (emphasis supplied)

Even if the Court were to apply the above rigid standards to the present case to
determine whether there is permissible use of the military in civilian law enforcement,
the conclusion is inevitable that no violation of the civilian supremacy clause in the
Constitution is committed. On this point, the Court agrees with the observation of the
Solicitor General:

3. The designation of tasks in Annex A[65] does not constitute the exercise of
regulatory, proscriptive, or compulsory military power. First, the soldiers do not
control or direct the operation. This is evident from Nos. 6,[66] 8(k)[67] and
9(a)[68] of Annex A. These soldiers, second, also have no power to prohibit or
condemn.In No. 9(d)[69] of Annex A, all arrested persons are brought to the nearest
police stations for proper disposition. And last, these soldiers apply no coercive
force. The materials or equipment issued to them, as shown in No. 8(c)[70] of Annex
A, are all low impact and defensive in character. The conclusion is that there being
no exercise of regulatory, proscriptive or compulsory military power, the
deployment of a handful of Philippine Marines constitutes no impermissible use of
military power for civilian law enforcement.[71]
 [G.R. No. 138570. October 10, 2000]
BAYAN (Bagong Alyansang Makabayan), a JUNK VFA MOVEMENT, BISHOP TOMAS
MILLAMENA (Iglesia Filipina Independiente), BISHOP ELMER BOLOCAN
(United Church of Christ of the Phil.), DR. REYNALDO LEGASCA, MD,
KILUSANG MAMBUBUKID NG PILIPINAS, KILUSANG MAYO UNO,
GABRIELA, PROLABOR, and the PUBLIC INTEREST LAW
CENTER, petitioners, vs. EXECUTIVE SECRETARY RONALDO ZAMORA,
FOREIGN AFFAIRS SECRETARY DOMINGO SIAZON, DEFENSE SECRETARY
ORLANDO MERCADO, BRIG. GEN. ALEXANDER AGUIRRE, SENATE
PRESIDENT MARCELO FERNAN, SENATOR FRANKLIN DRILON, SENATOR
BLAS OPLE, SENATOR RODOLFO BIAZON, and SENATOR FRANCISCO
TATAD, respondents.
[G.R. No. 138572. October 10, 2000]
PHILIPPINE CONSTITUTION ASSOCIATION, INC.(PHILCONSA), EXEQUIEL B. GARCIA,
AMADOGAT INCIONG, CAMILO L. SABIO, AND RAMON A.
GONZALES, petitioners, vs. HON. RONALDO B. ZAMORA, as Executive
Secretary, HON. ORLANDO MERCADO, as Secretary of National Defense,
and HON. DOMINGO L. SIAZON, JR., as Secretary of Foreign
Affairs, respondents.
[G.R. No. 138587. October 10, 2000]
TEOFISTO T. GUINGONA, JR., RAUL S. ROCO, and SERGIO R. OSMEA III, petitioners,
vs. JOSEPH E. ESTRADA, RONALDO B. ZAMORA, DOMINGO L. SIAZON, JR.,
ORLANDO B. MERCADO, MARCELO B. FERNAN, FRANKLIN M. DRILON,
BLAS F. OPLE and RODOLFO G. BIAZON, respondents.
[G.R. No. 138680. October 10, 2000]
INTEGRATED BAR OF THE PHILIPPINES, Represented by its National President,
Jose Aguila Grapilon,petitioners, vs. JOSEPH EJERCITO ESTRADA, in his
capacity as President, Republic of the Philippines, and HON. DOMINGO
SIAZON, in his capacity as Secretary of Foreign Affairs, respondents.
[G.R. No. 138698. October 10, 2000]
JOVITO R. SALONGA, WIGBERTO TAADA, ZENAIDA QUEZON-AVENCEA, ROLANDO
SIMBULAN, PABLITO V. SANIDAD, MA. SOCORRO I. DIOKNO, AGAPITO A.
AQUINO, JOKER P. ARROYO, FRANCISCO C. RIVERA JR., RENE A.V.
SAGUISAG, KILOSBAYAN, MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(MABINI), petitioners, vs. THE EXECUTIVE SECRETARY, THE SECRETARY
OF FOREIGN AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE, SENATE
PRESIDENT MARCELO B. FERNAN, SENATOR BLAS F. OPLE, SENATOR
RODOLFO G. BIAZON, AND ALL OTHER PERSONS ACTING THEIR CONTROL,
SUPERVISION, DIRECTION, AND INSTRUCTION IN RELATION TO THE
VISITING FORCES AGREEMENT (VFA), respondents.
DECISION
BUENA, J.:
Confronting the Court for resolution in the instant consolidated petitions for
certiorari and prohibition are issues relating to, and borne by, an agreement forged in
the turn of the last century between the Republic of the Philippines and the United States
of America -the Visiting Forces Agreement.
The antecedents unfold.
On March 14, 1947, the Philippines and the United States of America forged a
Military Bases Agreement which formalized, among others, the use of installations in the
Philippine territory by United States military personnel. To further strengthen their
defense and security relationship, the Philippines and the United States entered into a
Mutual Defense Treaty on August 30, 1951. Under the treaty, the parties agreed to
respond to any external armed attack on their territory, armed forces, public vessels, and
aircraft.[1]
In view of the impending expiration of the RP-US Military Bases Agreement in
1991, the Philippines and the United States negotiated for a possible extension of the
military bases agreement. On September 16, 1991, the Philippine Senate rejected the
proposed RP-US Treaty of Friendship, Cooperation and Security which, in effect, would
have extended the presence of US military bases in the Philippines.[2]With the expiration
of the RP-US Military Bases Agreement, the periodic military exercises conducted
between the two countries were held in abeyance. Notwithstanding, the defense and
security relationship between the Philippines and the United States of America
continued pursuant to the Mutual Defense Treaty.
On July 18, 1997, the United States panel, headed by US Defense Deputy Assistant
Secretary for Asia Pacific Kurt Campbell, met with the Philippine panel, headed by
Foreign Affairs Undersecretary Rodolfo Severino Jr., to exchange notes on the
complementing strategic interests of the United States and the Philippines in the Asia-
Pacific region. Both sides discussed, among other things, the possible elements of the
Visiting Forces Agreement (VFA for brevity). Negotiations by both panels on the VFA led
to a consolidated draft text, which in turn resulted to a final series of conferences and
negotiations[3] that culminated in Manila on January 12 and 13, 1998. Thereafter, then
President Fidel V. Ramos approved the VFA, which was respectively signed by public
respondent Secretary Siazon and Unites States Ambassador Thomas Hubbard on
February 10, 1998.
On October 5, 1998, President Joseph E. Estrada, through respondent Secretary of
Foreign Affairs, ratified the VFA.[4]
On October 6, 1998, the President, acting through respondent Executive Secretary
Ronaldo Zamora, officially transmitted to the Senate of the Philippines,[5] the Instrument
of Ratification, the letter of the President[6] and the VFA, for concurrence pursuant to
Section 21, Article VII of the 1987 Constitution. The Senate, in turn, referred the VFA to
its Committee on Foreign Relations, chaired by Senator Blas F. Ople, and its Committee
on National Defense and Security, chaired by Senator Rodolfo G. Biazon, for their joint
consideration and recommendation. Thereafter, joint public hearings were held by the
two Committees.[7]
On May 3, 1999, the Committees submitted Proposed Senate Resolution No.
443[8] recommending the concurrence of the Senate to the VFA and the creation of a
Legislative Oversight Committee to oversee its implementation. Debates then ensued.
On May 27, 1999, Proposed Senate Resolution No. 443 was approved by the Senate,
by a two-thirds (2/3) vote[9] of its members. Senate Resolution No. 443 was then re-
numbered as Senate Resolution No. 18.[10]
On June 1, 1999, the VFA officially entered into force after an Exchange of Notes
between respondent Secretary Siazon and United States Ambassador Hubbard.
The VFA, which consists of a Preamble and nine (9) Articles, provides for the
mechanism for regulating the circumstances and conditions under which US Armed
Forces and defense personnel may be present in the Philippines, and is quoted in its full
text, hereunder:
Article I
Definitions
As used in this Agreement, United States personnel means United States military
and civilian personnel temporarily in the Philippines in connection with activities
approved by the Philippine Government.
Within this definition:
1. The term military personnel refers to military members of the United
States Army, Navy, Marine Corps, Air Force, and Coast Guard.
2. The term civilian personnel refers to individuals who are neither nationals
of, nor ordinary residents in the Philippines and who are employed by the
United States armed forces or who are accompanying the United States
armed forces, such as employees of the American Red Cross and the
United Services Organization.
Article II
Respect for Law
It is the duty of the United States personnel to respect the laws of the Republic of
the Philippines and to abstain from any activity inconsistent with the spirit of this
agreement, and, in particular, from any political activity in the Philippines. The
Government of the United States shall take all measures within its authority to
ensure that this is done.
Article III
Entry and Departure
1. The Government of the Philippines shall facilitate the admission of United States
personnel and their departure from the Philippines in connection with
activities covered by this agreement.
2. United States military personnel shall be exempt from passport and visa
regulations upon entering and departing the Philippines.
3. The following documents only, which shall be presented on demand, shall be
required in respect of United States military personnel who enter the
Philippines:
(a) personal identity card issued by the appropriate United States authority
showing full name, date of birth, rank or grade and service number (if
any), branch of service and photograph;
(b) individual or collective document issued by the appropriate United States
authority, authorizing the travel or visit and identifying the individual or
group as United States military personnel; and
(c) the commanding officer of a military aircraft or vessel shall present a
declaration of health, and when required by the cognizant
representative of the Government of the Philippines, shall conduct a
quarantine inspection and will certify that the aircraft or vessel is free
from quarantinable diseases. Any quarantine inspection of United States
aircraft or United States vessels or cargoes thereon shall be conducted
by the United States commanding officer in accordance with the
international health regulations as promulgated by the World Health
Organization, and mutually agreed procedures.
4. United States civilian personnel shall be exempt from visa requirements but shall
present, upon demand, valid passports upon entry and departure of the
Philippines.
5. If the Government of the Philippines has requested the removal of any United
States personnel from its territory, the United States authorities shall be
responsible for receiving the person concerned within its own territory or
otherwise disposing of said person outside of the Philippines.
Article IV
Driving and Vehicle Registration
1. Philippine authorities shall accept as valid, without test or fee, a driving permit
or license issued by the appropriate United States authority to United States
personnel for the operation of military or official vehicles.
2. Vehicles owned by the Government of the United States need not be registered,
but shall have appropriate markings.
Article V
Criminal Jurisdiction
1. Subject to the provisions of this article:
(a) Philippine authorities shall have jurisdiction over United States
personnel with respect to offenses committed within the Philippines
and punishable under the law of the Philippines.
(b) United States military authorities shall have the right to exercise
within the Philippines all criminal and disciplinary jurisdiction
conferred on them by the military law of the United States over United
States personnel in the Philippines.
2. (a) Philippine authorities exercise exclusive jurisdiction over United
States personnel with respect to offenses, including offenses
relating to the security of the Philippines, punishable under the
laws of the Philippines, but not under the laws of the United
States.
(b) United States authorities exercise exclusive jurisdiction over
United States personnel with respect to offenses, including
offenses relating to the security of the United States, punishable
under the laws of the United States, but not under the laws of
the Philippines.
(c) For the purposes of this paragraph and paragraph 3 of this article,
an offense relating to security means:
(1) treason;
(2) sabotage, espionage or violation of any law relating to national
defense.
3. In cases where the right to exercise jurisdiction is concurrent, the following
rules shall apply:
(a) Philippine authorities shall have the primary right to exercise
jurisdiction over all offenses committed by United States personnel,
except in cases provided for in paragraphs 1(b), 2 (b), and 3 (b) of this
Article.
(b) United States military authorities shall have the primary right to
exercise jurisdiction over United States personnel subject to the
military law of the United States in relation to.
(1) offenses solely against the property or security of the United States
or offenses solely against the property or person of United States
personnel; and
(2) offenses arising out of any act or omission done in performance of
official duty.
(c) The authorities of either government may request the authorities of
the other government to waive their primary right to exercise
jurisdiction in a particular case.
(d) Recognizing the responsibility of the United States military authorities
to maintain good order and discipline among their forces, Philippine
authorities will, upon request by the United States, waive their
primary right to exercise jurisdiction except in cases of particular
 importance to the Philippines. If the Government of the Philippines
determines that the case is of particular importance, it shall
communicate such determination to the United States authorities
within twenty (20) days after the Philippine authorities receive the
United States request.
(e) When the United States military commander determines that an
offense charged by authorities of the Philippines against United states
personnel arises out of an act or omission done in the performance of
official duty, the commander will issue a certificate setting forth such
determination. This certificate will be transmitted to the appropriate
authorities of the Philippines and will constitute sufficient proof of
performance of official duty for the purposes of paragraph 3(b)(2) of
this Article. In those cases where the Government of the Philippines
believes the circumstances of the case require a review of the duty
certificate, United States military authorities and Philippine
authorities shall consult immediately. Philippine authorities at the
highest levels may also present any information bearing on its validity.
United States military authorities shall take full account of the
Philippine position. Where appropriate, United States military
authorities will take disciplinary or other action against offenders in
official duty cases, and notify the Government of the Philippines of the
actions taken.
(f) If the government having the primary right does not exercise
jurisdiction, it shall notify the authorities of the other government as
soon as possible.
(g) The authorities of the Philippines and the United States shall notify
each other of the disposition of all cases in which both the authorities
of the Philippines and the United States have the right to exercise
jurisdiction.
4. Within the scope of their legal competence, the authorities of the
Philippines and United States shall assist each other in the arrest of
United States personnel in the Philippines and in handling them over to
authorities who are to exercise jurisdiction in accordance with the
provisions of this article.
5. United States military authorities shall promptly notify Philippine
authorities of the arrest or detention of United States personnel who are
subject of Philippine primary or exclusive jurisdiction. Philippine
authorities shall promptly notify United States military authorities of the
arrest or detention of any United States personnel.
6. The custody of any United States personnel over whom the Philippines is to
exercise jurisdiction shall immediately reside with United States military
authorities, if they so request, from the commission of the offense until
completion of all judicial proceedings. United States military authorities
shall, upon formal notification by the Philippine authorities and without
delay, make such personnel available to those authorities in time for any
investigative or judicial proceedings relating to the offense with which the
person has been charged in extraordinary cases, the Philippine
Government shall present its position to the United States Government
regarding custody, which the United States Government shall take into
full account. In the event Philippine judicial proceedings are not
completed within one year, the United States shall be relieved of any
obligations under this paragraph. The one-year period will not include the
time necessary to appeal. Also, the one-year period will not include any
time during which scheduled trial procedures are delayed because United
States authorities, after timely notification by Philippine authorities to
arrange for the presence of the accused, fail to do so.
7. Within the scope of their legal authority, United States and Philippine
authorities shall assist each other in the carrying out of all necessary
investigation into offenses and shall cooperate in providing for the
attendance of witnesses and in the collection and production of evidence,
including seizure and, in proper cases, the delivery of objects connected
with an offense.
8. When United States personnel have been tried in accordance with the
provisions of this Article and have been acquitted or have been convicted
and are serving, or have served their sentence, or have had their sentence
remitted or suspended, or have been pardoned, they may not be tried
again for the same offense in the Philippines. Nothing in this paragraph,
however, shall prevent United States military authorities from trying
United States personnel for any violation of rules of discipline arising
from the act or omission which constituted an offense for which they
were tried by Philippine authorities.
9. When United States personnel are detained, taken into custody, or
prosecuted by Philippine authorities, they shall be accorded all
procedural safeguards established by the law of the Philippines. At the
minimum, United States personnel shall be entitled:
(a) To a prompt and speedy trial;
(b) To be informed in advance of trial of the specific charge or charges
made against them and to have reasonable time to prepare a defense;
(c) To be confronted with witnesses against them and to cross examine
such witnesses;
(d) To present evidence in their defense and to have compulsory process
for obtaining witnesses;
(e) To have free and assisted legal representation of their own choice on
the same basis as nationals of the Philippines;
(f) To have the service of a competent interpreter; and
(g) To communicate promptly with and to be visited regularly by United
States authorities, and to have such authorities present at all judicial
proceedings. These proceedings shall be public unless the court, in
accordance with Philippine laws, excludes persons who have no role
in the proceedings.
10. The confinement or detention by Philippine authorities of United States
personnel shall be carried out in facilities agreed on by appropriate
Philippine and United States authorities. United States Personnel serving
sentences in the Philippines shall have the right to visits and material
assistance.
11. United States personnel shall be subject to trial only in Philippine courts
of ordinary jurisdiction, and shall not be subject to the jurisdiction of
Philippine military or religious courts.
Article VI
Claims
1. Except for contractual arrangements, including United States foreign
military sales letters of offer and acceptance and leases of military
 equipment, both governments waive any and all claims against each other
for damage, loss or destruction to property of each others armed forces or
for death or injury to their military and civilian personnel arising from
activities to which this agreement applies.
2. For claims against the United States, other than contractual claims and
those to which paragraph 1 applies, the United States Government, in
accordance with United States law regarding foreign claims, will pay just
and reasonable compensation in settlement of meritorious claims for
damage, loss, personal injury or death, caused by acts or omissions of
United States personnel, or otherwise incident to the non-combat
activities of the United States forces.
Article VII
Importation and Exportation
1. United States Government equipment, materials, supplies, and other
property imported into or acquired in the Philippines by or on behalf of
the United States armed forces in connection with activities to which this
agreement applies, shall be free of all Philippine duties, taxes and other
similar charges. Title to such property shall remain with the United States,
which may remove such property from the Philippines at any time, free
from export duties, taxes, and other similar charges. The exemptions
provided in this paragraph shall also extend to any duty, tax, or other
similar charges which would otherwise be assessed upon such property
after importation into, or acquisition within, the Philippines. Such
property may be removed from the Philippines, or disposed of therein,
provided that disposition of such property in the Philippines to persons
or entities not entitled to exemption from applicable taxes and duties
shall be subject to payment of such taxes, and duties and prior approval of
the Philippine Government.
2. Reasonable quantities of personal baggage, personal effects, and other
property for the personal use of United States personnel may be imported
into and used in the Philippines free of all duties, taxes and other similar
charges during the period of their temporary stay in the Philippines.
Transfers to persons or entities in the Philippines not entitled to import
privileges may only be made upon prior approval of the appropriate
Philippine authorities including payment by the recipient of applicable
duties and taxes imposed in accordance with the laws of the Philippines.
The exportation of such property and of property acquired in the
Philippines by United States personnel shall be free of all Philippine
duties, taxes, and other similar charges.
Article VIII
Movement of Vessels and Aircraft
1. Aircraft operated by or for the United States armed forces may enter the
Philippines upon approval of the Government of the Philippines in
accordance with procedures stipulated in implementing arrangements.
2. Vessels operated by or for the United States armed forces may enter the
Philippines upon approval of the Government of the Philippines. The
movement of vessels shall be in accordance with international custom
and practice governing such vessels, and such agreed implementing
arrangements as necessary.
3. Vehicles, vessels, and aircraft operated by or for the United States armed
forces shall not be subject to the payment of landing or port fees,
navigation or over flight charges, or tolls or other use charges, including
light and harbor dues, while in the Philippines. Aircraft operated by or for
the United States armed forces shall observe local air traffic control
regulations while in the Philippines. Vessels owned or operated by the
United States solely on United States Government non-commercial service
shall not be subject to compulsory pilotage at Philippine ports.
Article IX
Duration and Termination
This agreement shall enter into force on the date on which the parties have notified
each other in writing through the diplomatic channel that they have completed
their constitutional requirements for entry into force. This agreement shall remain
in force until the expiration of 180 days from the date on which either party gives
the other party notice in writing that it desires to terminate the agreement.
Via these consolidated[11] petitions for certiorari and prohibition, petitioners - as
legislators, non-governmental organizations, citizens and taxpayers - assail the
constitutionality of the VFA and impute to herein respondents grave abuse of discretion
in ratifying the agreement.
We have simplified the issues raised by the petitioners into the following:
I
Do petitioners have legal standing as concerned citizens, taxpayers, or legislators to
question the constitutionality of the VFA?
II
Is the VFA governed by the provisions of Section 21, Article VII or of Section 25,
Article XVIII of the Constitution?
III
Does the VFA constitute an abdication of Philippine sovereignty?
a. Are Philippine courts deprived of their jurisdiction to hear and try offenses
committed by US military personnel?
b. Is the Supreme Court deprived of its jurisdiction over offenses punishable
by reclusion perpetua or higher?
IV
Does the VFA violate:
a. the equal protection clause under Section 1, Article III of the Constitution?
b. the Prohibition against nuclear weapons under Article II, Section 8?
c. Section 28 (4), Article VI of the Constitution granting the exemption from
taxes and duties for the equipment, materials supplies and other
properties imported into or acquired in the Philippines by, or on behalf, of
the US Armed Forces?
LOCUS STANDI
At the outset, respondents challenge petitioners standing to sue, on the ground that
the latter have not shown any interest in the case, and that petitioners failed to
substantiate that they have sustained, or will sustain direct injury as a result of the
operation of the VFA.[12]Petitioners, on the other hand, counter that the validity or
invalidity of the VFA is a matter of transcendental importance which justifies their
standing.[13]
A party bringing a suit challenging the constitutionality of a law, act, or statute
must show not only that the law is invalid, but also that he has sustained or in is in
immediate, or imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that he suffers thereby in some indefinite 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 statute complained of.[14]
In the case before us, petitioners failed to show, to the satisfaction of this Court,
that they have sustained, or are in danger of sustaining any direct injury as a result of the
enforcement of the VFA. As taxpayers, petitioners have not established that the VFA
involves the exercise by Congress of its taxing or spending powers.[15] On this point, it
bears stressing that a taxpayers suit refers to a case where the act complained of directly
involves the illegal disbursement of public funds derived from taxation.[16] Thus,
in Bugnay Const. & Development Corp. vs. Laron[17], we held:
x x x it is exigent that the taxpayer-plaintiff sufficiently show that he would be benefited
or injured by the judgment or entitled to the avails of the suit as a real party in
interest. Before he can invoke the power of judicial review, he must specifically prove
that he has sufficient interest in preventing the illegal expenditure of money raised by
taxation and that he will sustain a direct injury as a result of the enforcement of the
questioned statute or contract. It is not sufficient that he has merely a general interest
common to all members of the public.
Clearly, inasmuch as no public funds raised by taxation are involved in this case,
and in the absence of any allegation by petitioners that public funds are being misspent
or illegally expended, petitioners, as taxpayers, have no legal standing to assail the
legality of the VFA.
Similarly, Representatives Wigberto Taada, Agapito Aquino and Joker Arroyo, as
petitioners-legislators, do not possess the requisitelocus standi to maintain the present
suit. While this Court, in Phil. Constitution Association vs. Hon. Salvador
Enriquez,[18] sustained the legal standing of a member of the Senate and the House of
Representatives to question the validity of a presidential veto or a condition imposed on
an item in an appropriation bull, we cannot, at this instance, similarly uphold petitioners
standing as members of Congress, in the absence of a clear showing of any direct injury
to their person or to the institution to which they belong.
Beyond this, the allegations of impairment of legislative power, such as the
delegation of the power of Congress to grant tax exemptions, are more apparent than
real. While it may be true that petitioners pointed to provisions of the VFA which
allegedly impair their legislative powers, petitioners failed however to sufficiently show
that they have in fact suffered direct injury.
In the same vein, petitioner Integrated Bar of the Philippines (IBP) is stripped of
standing in these cases. As aptly observed by the Solicitor General, the IBP lacks the legal
capacity to bring this suit in the absence of a board resolution from its Board of
Governors authorizing its National President to commence the present action.[19]
Notwithstanding, in view of the paramount importance and the constitutional
significance of the issues raised in the petitions, this Court, in the exercise of its sound
discretion, brushes aside the procedural barrier and takes cognizance of the petitions, as
we have done in the early Emergency Powers Cases,[20] where we had occasion to rule:
x x x ordinary citizens and taxpayers were allowed to question the constitutionality of
several executive orders issued by President Quirino although they were involving only
an indirect and general interest shared in common with the public. The Court dismissed
the objection that they were not proper parties and ruled that transcendental
importance to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure. We have since
then applied the exception in many other cases. (Association of Small Landowners in the
Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343). (Underscoring Supplied)
This principle was reiterated in the subsequent cases of Gonzales vs.
COMELEC,[21] Daza vs. Singson,[22] and Basco vs. Phil. Amusement and Gaming
Corporation,[23] where we emphatically held:
Considering however the importance to the public of the case at bar, and in keeping with
the Courts duty, under the 1987 Constitution, to determine whether or not the other
branches of the government have kept themselves within the limits of the Constitution
and the laws and that they have not abused the discretion given to them, the Court has
brushed aside technicalities of procedure and has taken cognizance of this petition. x x x
Again, in the more recent case of Kilosbayan vs. Guingona, Jr.,[24] thisCourt ruled
that in cases of transcendental importance, the Court may relax the standing
requirements and allow a suit to prosper even where there is no direct injury to
the party claiming the right of judicial review.
Although courts generally avoid having to decide a constitutional question based
on the doctrine of separation of powers, which enjoins upon the departments of the
government a becoming respect for each others acts,[25] this Court nevertheless resolves
to take cognizance of the instant petitions.
APPLICABLE CONSTITUTIONAL PROVISION
One focal point of inquiry in this controversy is the determination of which
provision of the Constitution applies, with regard to the exercise by the senate of its
constitutional power to concur with the VFA. Petitioners argue that Section 25, Article
XVIII is applicable considering that the VFA has for its subject the presence of foreign
military troops in the Philippines. Respondents, on the contrary, maintain that Section
21, Article VII should apply inasmuch as the VFA is not a basing arrangement but an
agreement which involves merely the temporary visits of United States personnel
engaged in joint military exercises.
The 1987 Philippine Constitution contains two provisions requiring the
concurrence of the Senate on treaties or international agreements. Section 21, Article VII,
which herein respondents invoke, reads:
No treaty or international agreement shall be valid and effective unless concurred in by
at least two-thirds of all the Members of the Senate.
Section 25, Article XVIII, provides:
After the expiration in 1991 of the Agreement between the Republic of the Philippines
and the United States of America concerning Military Bases, foreign military bases,
troops, or facilities shall not be allowed in the Philippines except under a treaty duly
concurred in by the senate and, when the Congress so requires, ratified by a majority of
the votes cast by the people in a national referendum held for that purpose, and
recognized as a treaty by the other contracting State.
Section 21, Article VII deals with treatise or international agreements in general, in
which case, the concurrence of at least two-thirds (2/3) of all the Members of the Senate
is required to make the subject treaty, or international agreement, valid and binding on
the part of the Philippines. This provision lays down the general rule on treatise or
international agreements and applies to any form of treaty with a wide variety of subject
matter, such as, but not limited to, extradition or tax treatise or those economic in
nature. All treaties or international agreements entered into by the Philippines,
regardless of subject matter, coverage, or particular designation or appellation, requires
the concurrence of the Senate to be valid and effective.
In contrast, Section 25, Article XVIII is a special provision that applies to treaties
which involve the presence of foreign military bases, troops or facilities in the
Philippines. Under this provision, the concurrence of the Senate is only one of the
requisites to render compliance with the constitutional requirements and to consider the
agreement binding on the Philippines. Section 25, Article XVIII further requires that
foreign military bases, troops, or facilities may be allowed in the Philippines only by
virtue of a treaty duly concurred in by the Senate, ratified by a majority of the votes cast
in a national referendum held for that purpose if so required by Congress, and
recognized as such by the other contracting state.
It is our considered view that both constitutional provisions, far from contradicting
each other, actually share some common ground.These constitutional provisions both
embody phrases in the negative and thus, are deemed prohibitory in mandate and
character. In particular, Section 21 opens with the clause No treaty x x x, and Section 25
contains the phrase shall not be allowed. Additionally, in both instances, the concurrence
of the Senate is indispensable to render the treaty or international agreement valid and
effective.
To our mind, the fact that the President referred the VFA to the Senate under
Section 21, Article VII, and that the Senate extended its concurrence under the same
provision, is immaterial. For in either case, whether under Section 21, Article VII or
Section 25, Article XVIII, the fundamental law is crystalline that the concurrence of the
Senate is mandatory to comply with the strict constitutional requirements.
On the whole, the VFA is an agreement which defines the treatment of United
States troops and personnel visiting the Philippines. It provides for the guidelines to
govern such visits of military personnel, and further defines the rights of the United
States and the Philippine government in the matter of criminal jurisdiction, movement of
vessel and aircraft, importation and exportation of equipment, materials and supplies.
Undoubtedly, Section 25, Article XVIII, which specifically deals with treaties
involving foreign military bases, troops, or facilities, should apply in the instant case. To a
certain extent and in a limited sense, however, the provisions of section 21, Article VII
will find applicability with regard to the issue and for the sole purpose of determining
the number of votes required to obtain the valid concurrence of the Senate, as will be
further discussed hereunder.
It is a finely-imbedded principle in statutory construction that a special provision
or law prevails over a general one. Lex specialis derogat generali. Thus, where there is
in the same statute a particular enactment and also a general one which, in its most
comprehensive sense, would include what is embraced in the former, the particular
enactment must be operative, and the general enactment must be taken to affect only
such cases within its general language which are not within the provision of the
particular enactment.[26]
In Leveriza vs. Intermediate Appellate Court,[27] we enunciated:
x x x that another basic principle of statutory construction mandates that general
legislation must give way to a special legislation on the same subject, and generally be so
interpreted as to embrace only cases in which the special provisions are not applicable
(Sto. Domingo vs. de los Angeles, 96 SCRA 139), that a specific statute prevails over a
general statute (De Jesus vs. People, 120 SCRA 760) and that where two statutes are of
equal theoretical application to a particular case, the one designed therefor specially
should prevail (Wil Wilhensen Inc. vs. Baluyot, 83 SCRA 38).
Moreover, it is specious to argue that Section 25, Article XVIII is inapplicable to
mere transient agreements for the reason that there is no permanent placing of structure
for the establishment of a military base. On this score, the Constitution makes no
distinction between transient and permanent. Certainly, we find nothing in Section 25,
Article XVIII that requires foreign troops or facilities to be stationed or
placed permanently in the Philippines.
It is a rudiment in legal hermenuetics that when no distinction is made by law, the
Court should not distinguish- Ubi lex non distinguit nec nos distinguire debemos.
In like manner, we do not subscribe to the argument that Section 25, Article XVIII is
not controlling since no foreign military bases, but merely foreign troops and facilities,
are involved in the VFA. Notably, a perusal of said constitutional provision reveals that
the proscription covers foreign military bases, troops, or facilities. Stated differently, this
prohibition is not limited to the entry of troops and facilities without any foreign bases
being established. The clause does not refer to foreign military bases,
troops, or facilities collectively but treats them as separate and independent subjects. The
use of comma and the disjunctive word or clearly signifies disassociation and
independence of one thing from the others included in the enumeration,[28] such that, the
provision contemplates three different situations - a military treaty the subject of which
could be either (a) foreign bases, (b) foreign troops, or (c) foreign facilities - any of the
three standing alone places it under the coverage of Section 25, Article XVIII.
To this end, the intention of the framers of the Charter, as manifested during the
deliberations of the 1986 Constitutional Commission, is consistent with this
interpretation:
MR. MAAMBONG. I just want to address a question or two to Commissioner Bernas.
This formulation speaks of three things: foreign military bases, troops or
facilities. My first question is: If the country does enter into such kind of a
treaty, must it cover the three-bases, troops or facilities-or could the
treaty entered into cover only one or two?
FR. BERNAS. Definitely, it can cover only one. Whether it covers only one or it
covers three, the requirement will be the same.
MR. MAAMBONG. In other words, the Philippine government can enter into a
treaty covering not bases but merely troops?
FR. BERNAS. Yes.
MR. MAAMBONG. I cannot find any reason why the government can enter into a
treaty covering only troops.
FR. BERNAS. Why not? Probably if we stretch our imagination a little bit more, we
will find some. We just want to cover everything.[29] (Underscoring Supplied)
Moreover, military bases established within the territory of another state is no
longer viable because of the alternatives offered by new means and weapons of warfare
such as nuclear weapons, guided missiles as well as huge sea vessels that can stay afloat
in the sea even for months and years without returning to their home country. These
military warships are actually used as substitutes for a land-home base not only of
military aircraft but also of military personnel and facilities. Besides, vessels are mobile
as compared to a land-based military headquarters.
At this juncture, we shall then resolve the issue of whether or not the requirements
of Section 25 were complied with when the Senate gave its concurrence to the VFA.
Section 25, Article XVIII disallows foreign military bases, troops, or facilities in the
country, unless the following conditions are sufficiently met, viz: (a) it must be under
a treaty; (b) the treaty must be duly concurred in by the Senate and, when so required
by congress, ratified by a majority of the votes cast by the people in a national
referendum; and (c) recognized as a treaty by the other contracting state.
There is no dispute as to the presence of the first two requisites in the case of the
VFA. The concurrence handed by the Senate through Resolution No. 18 is in accordance
with the provisions of the Constitution, whether under the general requirement in
Section 21, Article VII, or the specific mandate mentioned in Section 25, Article XVIII, the
provision in the latter article requiring ratification by a majority of the votes cast in a
national referendum being unnecessary since Congress has not required it.
As to the matter of voting, Section 21, Article VII particularly requires that a
treaty or international agreement, to be valid and effective, must be concurred in by at
least two-thirds of all the members of the Senate. On the other hand, Section 25,
Article XVIII simply provides that the treaty be duly concurred in by the Senate.
Applying the foregoing constitutional provisions, a two-thirds vote of all the
members of the Senate is clearly required so that the concurrence contemplated by law
may be validly obtained and deemed present. While it is true that Section 25, Article
XVIII requires, among other things, that the treaty-the VFA, in the instant case-be duly
concurred in by the Senate, it is very true however that said provision must be related
and viewed in light of the clear mandate embodied in Section 21, Article VII, which in
more specific terms, requires that the concurrence of a treaty, or international
agreement, be made by a two -thirds vote of all the members of the Senate. Indeed,
Section 25, Article XVIII must not be treated in isolation to section 21, Article, VII.
As noted, the concurrence requirement under Section 25, Article XVIII must be
construed in relation to the provisions of Section 21, Article VII. In a more particular
language, the concurrence of the Senate contemplated under Section 25, Article XVIII
means that at least two-thirds of all the members of the Senate favorably vote to concur
with the treaty-the VFA in the instant case.
Under these circumstances, the charter provides that the Senate shall be composed
of twenty-four (24) Senators.[30] Without a tinge of doubt, two-thirds (2/3) of this figure,
or not less than sixteen (16) members, favorably acting on the proposal is an
unquestionable compliance with the requisite number of votes mentioned in Section 21
of Article VII. The fact that there were actually twenty-three (23) incumbent Senators at
the time the voting was made,[31] will not alter in any significant way the circumstance
that more than two-thirds of the members of the Senate concurred with the proposed
VFA, even if the two-thirds vote requirement is based on this figure of actual members
(23). In this regard, the fundamental law is clear that two-thirds of the 24 Senators, or at
least 16 favorable votes, suffice so as to render compliance with the strict constitutional
mandate of giving concurrence to the subject treaty.
Having resolved that the first two requisites prescribed in Section 25, Article XVIII
are present, we shall now pass upon and delve on the requirement that the VFA should
be recognized as a treaty by the United States of America.
Petitioners content that the phrase recognized as a treaty, embodied in section 25,
Article XVIII, means that the VFA should have the advice and consent of the United States
Senate pursuant to its own constitutional process, and that it should not be considered
merely an executive agreement by the United States.
In opposition, respondents argue that the letter of United States Ambassador
Hubbard stating that the VFA is binding on the United States Government is conclusive,
on the point that the VFA is recognized as a treaty by the United States of
America. According to respondents, the VFA, to be binding, must only be accepted as a
treaty by the United States.
This Court is of the firm view that the phrase recognized as a treaty means that
the other contracting party accepts or acknowledgesthe agreement as a treaty.[32] To
require the other contracting state, the United States of America in this case, to
submit the VFA to the United States Senate for concurrence pursuant to its
Constitution,[33] is to accord strict meaning to the phrase.
Well-entrenched is the principle that the words used in the Constitution are to be
given their ordinary meaning except where technical terms are employed, in which case
the significance thus attached to them prevails. Its language should be understood in the
sense they have in common use.[34]
Moreover, it is inconsequential whether the United States treats the VFA only as an
executive agreement because, under international law, an executive agreement is as
binding as a treaty.[35] To be sure, as long as the VFA possesses the elements of an
agreement under international law, the said agreement is to be taken equally as a treaty.
A treaty, as defined by the Vienna Convention on the Law of Treaties, is an
international instrument concluded between States in written form and governed by
international law, whether embodied in a single instrument or in two or more related
instruments, and whatever its particular designation.[36] There are many other terms
used for a treaty or international agreement, some of which are: act, protocol,
agreement, compromis d arbitrage, concordat, convention, declaration, exchange of
notes, pact, statute, charter and modus vivendi. All writers, from Hugo Grotius onward,
have pointed out that the names or titles of international agreements included under the
general term treatyhave little or no legal significance. Certain terms are useful, but they
furnish little more than mere description.[37]
Article 2(2) of the Vienna Convention provides that the provisions of paragraph 1
regarding the use of terms in the present Convention are without prejudice to the use of
those terms, or to the meanings which may be given to them in the internal law of the
State.
Thus, in international law, there is no difference between treaties and executive
agreements in their binding effect upon states concerned, as long as the negotiating
functionaries have remained within their powers.[38] International law continues to make
no distinction between treaties and executive agreements: they are equally binding
obligations upon nations.[39]
In our jurisdiction, we have recognized the binding effect of executive agreements
even without the concurrence of the Senate or Congress. In Commissioner of Customs
vs. Eastern Sea Trading,[40] we had occasion to pronounce:
x x x the right of the Executive to enter into binding agreements without the necessity of
subsequent congressional approval has been confirmed by long usage. From the earliest
days of our history we have entered into executive agreements covering such subjects as
commercial and consular relations, most-favored-nation rights, patent rights, trademark
and copyright protection, postal and navigation arrangements and the settlement of
claims. The validity of these has never been seriously questioned by our courts.
xxxxxxxxx
Furthermore, the United States Supreme Court has expressly recognized the validity and
constitutionality of executive agreements entered into without Senate approval. (39
Columbia Law Review, pp. 753-754) (See, also, U.S. vs. Curtis Wright Export
Corporation, 299 U.S. 304, 81 L. ed. 255; U.S.vs. Belmont, 301 U.S. 324, 81 L. ed.
1134; U.S. vs. Pink, 315 U.S. 203, 86 L. ed. 796; Ozanic vs. U.S. 188 F. 2d. 288; Yale
Law Journal, Vol. 15 pp. 1905-1906; California Law Review, Vol. 25, pp. 670-675;
Hyde on International Law [revised Edition], Vol. 2, pp. 1405, 1416-1418;
willoughby on the U.S. Constitution Law, Vol. I [2d ed.], pp. 537-540; Moore,
International Law Digest, Vol. V, pp. 210-218; Hackworth, International Law
Digest, Vol. V, pp. 390-407). (Italics Supplied) (Emphasis Ours)
The deliberations of the Constitutional Commission which drafted the 1987
Constitution is enlightening and highly-instructive:
MR. MAAMBONG. Of course it goes without saying that as far as ratification of the
other state is concerned, that is entirely their concern under their own laws.
FR. BERNAS. Yes, but we will accept whatever they say. If they say that we have done
everything to make it a treaty, then as far as we are concerned, we will accept it
as a treaty.[41]
The records reveal that the United States Government, through Ambassador
Thomas C. Hubbard, has stated that the United States government has fully committed to
living up to the terms of the VFA.[42] For as long as the united States of America accepts
or acknowledges the VFA as a treaty, and binds itself further to comply with its
obligations under the treaty, there is indeed marked compliance with the mandate of the
Constitution.
Worth stressing too, is that the ratification, by the President, of the VFA and the
concurrence of the Senate should be taken as a clear an unequivocal expression of our
nations consent to be bound by said treaty, with the concomitant duty to uphold the
obligations and responsibilities embodied thereunder.
Ratification is generally held to be an executive act, undertaken by the head of the
state or of the government, as the case may be, through which the formal acceptance of
the treaty is proclaimed.[43] A State may provide in its domestic legislation the process of
ratification of a treaty. The consent of the State to be bound by a treaty is expressed by
ratification when: (a) the treaty provides for such ratification, (b) it is otherwise
established that the negotiating States agreed that ratification should be required, (c) the
representative of the State has signed the treaty subject to ratification, or (d) the
intention of the State to sign the treaty subject to ratification appears from the full
powers of its representative, or was expressed during the negotiation.[44]
In our jurisdiction, the power to ratify is vested in the President and not, as
commonly believed, in the legislature. The role of the Senate is limited only to giving or
withholding its consent, or concurrence, to the ratification.[45]
With the ratification of the VFA, which is equivalent to final acceptance, and with
the exchange of notes between the Philippines and the United States of America, it now
becomes obligatory and incumbent on our part, under the principles of international law,
to be bound by the terms of the agreement. Thus, no less than Section 2, Article II of the
Constitution,[46] declares that the Philippines 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.
As a member of the family of nations, the Philippines agrees to be bound by
generally accepted rules for the conduct of its international relations. While the
international obligation devolves upon the state and not upon any particular branch,
institution, or individual member of its government, the Philippines is nonetheless
responsible for violations committed by any branch or subdivision of its government or
any official thereof. As an integral part of the community of nations, we are responsible
to assure that our government, Constitution and laws will carry out our international
obligation.[47] Hence, we cannot readily plead the Constitution as a convenient excuse for
non-compliance with our obligations, duties and responsibilities under international law.
Beyond this, Article 13 of the Declaration of Rights and Duties of States adopted by
the International Law Commission in 1949 provides:Every State has the duty to carry out
in good faith its obligations arising from treaties and other sources of international law,
and it may not invoke provisions in its constitution or its laws as an excuse for failure to
perform this duty.[48]
Equally important is Article 26 of the convention which provides that Every treaty
in force is binding upon the parties to it and must be performed by them in good
faith. This is known as the principle of pacta sunt servanda which preserves the sanctity
of treaties and have been one of the most fundamental principles of positive
international law, supported by the jurisprudence of international tribunals.[49]
NO GRAVE ABUSE OF DISCRETION
In the instant controversy, the President, in effect, is heavily faulted for exercising a
power and performing a task conferred upon him by the Constitution-the power to enter
into and ratify treaties. Through the expediency of Rule 65 of the Rules of Court,
petitioners in these consolidated cases impute grave abuse of discretion on the part of
the chief Executive in ratifying the VFA, and referring the same to the Senate pursuant to
the provisions of Section 21, Article VII of the Constitution.
On this particular matter, grave abuse of discretion implies such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, when the
power is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, and it must be so patent and gross as to amount to an evasion of positive duty
enjoined or to act at all in contemplation of law.[50]
By constitutional fiat and by the intrinsic nature of his office, the President, as head
of State, is the sole organ and authority in the external affairs of the country. In many
ways, the President is the chief architect of the nations foreign policy; his dominance in
the field of foreign relations is (then) conceded.[51] Wielding vast powers an influence, his
conduct in the external affairs of the nation, as Jefferson describes, is executive
altogether."[52]
As regards the power to enter into treaties or international agreements, the
Constitution vests the same in the President, subject only to the concurrence of at least
two-thirds vote of all the members of the Senate. In this light, the negotiation of the VFA
and the subsequent ratification of the agreement are exclusive acts which pertain solely
to the President, in the lawful exercise of his vast executive and diplomatic powers
granted him no less than by the fundamental law itself. Into the field of negotiation the
Senate cannot intrude, and Congress itself is powerless to invade it.[53] Consequently, the
acts or judgment calls of the President involving the VFA-specifically the acts of
ratification and entering into a treaty and those necessary or incidental to the exercise of
such principal acts - squarely fall within the sphere of his constitutional powers and thus,
may not be validly struck down, much less calibrated by this Court, in the absence of
clear showing of grave abuse of power or discretion.
It is the Courts considered view that the President, in ratifying the VFA and in
submitting the same to the Senate for concurrence, acted within the confines and limits
of the powers vested in him by the Constitution. It is of no moment that the President, in
the exercise of his wide latitude of discretion and in the honest belief that the VFA falls
within the ambit of Section 21, Article VII of the Constitution, referred the VFA to the
Senate for concurrence under the aforementioned provision. Certainly, no abuse of
discretion, much less a grave, patent and whimsical abuse of judgment, may be imputed
to the President in his act of ratifying the VFA and referring the same to the Senate for
the purpose of complying with the concurrence requirement embodied in the
fundamental law. In doing so, the President merely performed a constitutional task and
exercised a prerogative that chiefly pertains to the functions of his office. Even if he erred
in submitting the VFA to the Senate for concurrence under the provisions of Section 21 of
Article VII, instead of Section 25 of Article XVIII of the Constitution, still, the President
may not be faulted or scarred, much less be adjudged guilty of committing an abuse of
discretion in some patent, gross, and capricious manner.
For while it is conceded that Article VIII, Section 1, of the Constitution has
broadened the scope of judicial inquiry into areas normally left to the political
departments to decide, such as those relating to national security, it has not altogether
done away with political questions such as those which arise in the field of foreign
relations.[54] The High Tribunals function, as sanctioned by Article VIII, Section 1, is
merely (to) check whether or not the governmental branch or agency has gone beyond the
constitutional limits of its jurisdiction, not that it erred or has a different view. In the
absence of a showing (of) grave abuse of discretion amounting to lack of jurisdiction, there
is no occasion for the Court to exercise its corrective powerIt has no power to look into
what it thinks is apparent error.[55]
 As to the power to concur with treaties, the constitution lodges the same with the
Senate alone. Thus, once the Senate[56] performs that power, or exercises its prerogative
within the boundaries prescribed by the Constitution, the concurrence cannot, in like
manner, be viewed to constitute an abuse of power, much less grave abuse
thereof. Corollarily, the Senate, in the exercise of its discretion and acting within the
limits of such power, may not be similarly faulted for having simply performed a task
conferred and sanctioned by no less than the fundamental law.
For the role of the Senate in relation to treaties is essentially legislative in
character;[57] the Senate, as an independent body possessed of its own erudite mind, has
the prerogative to either accept or reject the proposed agreement, and whatever action it
takes in the exercise of its wide latitude of discretion, pertains to the wisdom rather than
the legality of the act. In this sense, the Senate partakes a principal, yet delicate, role in
keeping the principles of separation of powers and of checks and balances alive and
vigilantly ensures that these cherished rudiments remain true to their form in a
democratic government such as ours. The Constitution thus animates, through this
treaty-concurring power of the Senate, a healthy system of checks and balances
indispensable toward our nations pursuit of political maturity and growth.True enough,
rudimentary is the principle that matters pertaining to the wisdom of a legislative act are
beyond the ambit and province of the courts to inquire.
In fine, absent any clear showing of grave abuse of discretion on the part of
respondents, this Court- as the final arbiter of legal controversies and staunch sentinel of
the rights of the people - is then without power to conduct an incursion and meddle with
such affairs purely executive and legislative in character and nature. For the Constitution
no less, maps out the distinct boundaries and limits the metes and bounds within which
each of the three political branches of government may exercise the powers exclusively
and essentially conferred to it by law.
WHEREFORE, in light of the foregoing disquisitions, the instant petitions are
hereby DISMISSED.
SO ORDERED.
G.R. No. 151445 April 11, 2002
ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY as alter ego of HER EXCELLENCEY GLORIA
MACAPAGAL-ARROYO, and HONORABLE ANGELO REYES in his capacity as
Secretary of National Defense,respondents.
----------------------------------------
SANLAKAS and PARTIDO NG MANGGAGAWA, petitioners-intervenors,
vs.
GLORIA MACAPAGA-ARROYO, ALBERTO ROMULO, ANGELO REYES, respondents.
DE LEON, JR., J.:
This case involves a petition for certiorari and prohibition as well as a petition-in-
intervention, praying that respondents be restrained from proceeding with the so-called
"Balikatan 02-1" and that after due notice and hearing, that judgment be rendered
issuing a permanent writ of injunction and/or prohibition against the deployment of U.S.
troops in Basilan and Mindanao for being illegal and in violation of the Constitution.
The facts are as follows:
Beginning January of this year 2002, personnel from the armed forces of the United
States of America started arriving in Mindanao to take part, in conjunction with the
Philippine military, in "Balikatan 02-1." These so-called "Balikatan" exercises are the
largest combined training operations involving Filipino and American troops. In theory,
they are a simulation of joint military maneuvers pursuant to the Mutual Defense
Treaty,1 a bilateral defense agreement entered into by the Philippines and the United
States in 1951.
Prior to the year 2002, the last "Balikatan" was held in 1995. This was due to the paucity
of any formal agreement relative to the treatment of United States personnel visiting the
Philippines. In the meantime, the respective governments of the two countries agreed to
hold joint exercises on a reduced scale. The lack of consensus was eventually cured when
the two nations concluded the Visiting Forces Agreement (V FA) in 1999.
The entry of American troops into Philippine soil is proximately rooted in the
international anti-terrorism campaign declared by President George W. Bush in reaction
to the tragic events that occurred on September 11, 2001. On that day, three (3)
commercial aircrafts were hijacked, flown and smashed into the twin towers of the
World Trade Center in New York City and the Pentagon building in Washington, D.C. by
terrorists with alleged links to the al-Qaeda ("the Base"), a Muslim extremist
organization headed by the infamous Osama bin Laden. Of no comparable historical
parallels, these acts caused billions of dollars worth of destruction of property and
incalculable loss of hundreds of lives.
On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed this petition
for certiorari and prohibition, attacking the constitutionality of the joint exercise.2 They
were joined subsequently by SANLAKAS and PARTIDO NG MANGGAGAWA, both party-
Iist organizations, who filed a petition-in-intervention on February 11, 2002.
Lim and Ersando filed suit in their capacities as citizens, lawyers and taxpayers.
SANLAKAS and PARTIDO, on the other hand, aver that certain members of their
organization are residents of Zamboanga and Sulu, and hence will be directly affected by
the operations being conducted in Mindanao. They likewise pray for a relaxation on the
rules relative to locus standi citing the unprecedented importance of the issue involved.
On February 71 2002 the Senate conducted a hearing on the "Balikatan" exercise
wherein Vice-President Teofisto T. Guingona, Jr., who is concurrently Secretary of
Foreign. Affairs, presented the Draft Terms of Reference (TOR).3 Five days later, he
approved the TOR, which we quote hereunder:
I. POLICY LEVEL
1. The Exercise shall be consistent with the Philippine Constitution and all its
activities shall be in consonance with the laws of the land and the provisions of
the RP-US Visiting Forces Agreement (VFA).
2. The conduct of this training Exercise is in accordance with pertinent United
Nations resolutions against global terrorism as understood by the respective
parties.
3. No permanent US basing and support facilities shall be established.
Temporary structures such as those for troop billeting, classroom instruction
and messing may be set up for use by RP and US Forces during the Exercise.
4. The Exercise shall be implemented jointly by RP and US Exercise Co-
Directors under the authority of the Chief of Staff, AFP. In no instance will US
Forces operate independently during field training exercises (FTX). AFP and US
Unit Commanders will retain command over their respective forces under the
overall authority of the Exercise Co-Directors. RP and US participants shall
comply with operational instructions of the AFP during the FTX.
5. The exercise shall be conducted and completed within a period of not more
than six months, with the projected participation of 660 US personnel and
3,800 RP Forces. The Chief of Staff, AFP shall direct the Exercise Co-Directors to
wind up and terminate the Exercise and other activities within the six month
Exercise period.
6. The Exercise is a mutual counter-terrorism advising, assisting and training
Exercise relative to Philippine efforts against the ASG, and will be conducted on
the Island of Basilan. Further advising, assisting and training exercises shall be
conducted in Malagutay and the Zamboanga area. Related activities in Cebu will
be for support of the Exercise.
7. Only 160 US Forces organized in 12-man Special Forces Teams shall be
deployed with AFP field, commanders. The US teams shall remain at the
Battalion Headquarters and, when approved, Company Tactical headquarters
where they can observe and assess the performance of the AFP Forces.
8. US exercise participants shall not engage in combat, without prejudice to
their right of self-defense.
9. These terms of Reference are for purposes of this Exercise only and do not
create additional legal obligations between the US Government and the
Republic of the Philippines.
II. EXERCISE LEVEL
1. TRAINING
a. The Exercise shall involve the conduct of mutual military assisting,
advising and training of RP and US Forces with the primary objective
of enhancing the operational capabilities of both forces to combat
terrorism.
b. At no time shall US Forces operate independently within RP
territory.
c. Flight plans of all aircraft involved in the exercise will comply with
the local air traffic regulations.
2. ADMINISTRATION & LOGISTICS
a. RP and US participants shall be given a country and area briefing at
the start of the Exercise. This briefing shall acquaint US Forces on the
culture and sensitivities of the Filipinos and the provisions of the VF
A. The briefing shall also promote the full cooperation on the part of
the RP and US participants for the successful conduct of the Exercise.
b. RP and US participating forces may share, in accordance with their
respective laws and regulations, in the use of their resources,
equipment and other assets. They will use their respective logistics
channels.
c. Medical evaluation shall be jointly planned and executed utilizing
RP and US assets and resources.
d. Legal liaison officers from each respective party shall be appointed
by the Exercise Directors.
3. PUBLIC AFFAIRS
a. Combined RP-US Information Bureaus shall be established at the
Exercise Directorate in Zamboanga City and at GHQ, AFP in Camp
Aguinaldo, Quezon City.
b. Local media relations will be the concern of the AFP and all public
affairs guidelines shall be jointly developed by RP and US Forces.
c. Socio-Economic Assistance Projects shall be planned and executed
jointly by RP and US Forces in accordance with their respective laws
and regulations, and in consultation with community and local
government officials.
Contemporaneously, Assistant Secretary for American Affairs Minerva Jean A. Falcon and
United States Charge d' Affaires Robert Fitts signed the Agreed Minutes of the discussion
between the Vice-President and Assistant Secretary Kelly.4
Petitioners Lim and Ersando present the following arguments:
I
THE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL DEFENSE
TREATY (MDT) in 1951 TO PROVIDE MUTUAL MILITARY ASSIST ANCE IN
ACCORDANCE WITH THE 'CONSTITUTIONAL PROCESSE-S' OF EACH COUNTRY
ONLY IN THE CASE OF AN ARMED ATTACK BY AN EXTERNAL AGGRESSOR,
MEANING A THIRD COUNTRY AGAINST ONE OF THEM.
BY NO STRETCH OF THE IMAGINA TION CAN IT BE SAID THAT THE ABU
SAYYAF BANDITS IN BASILAN CONSTITUTE AN EXTERNAL ARMED FORCE
THAT HAS SUBJECT THE PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO
WARRANT U.S. MILITARY ASSISTANCE UNDER THE MDT OF 1951.
II
NEITHER DOES THE VFA OF 1999 AUTHORIZE AMERICAN SOLDIERS TO
ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE TERRITORY, NOT EVEN TO
FIRE BACK "IF FIRED UPON".
Substantially the same points are advanced by petitioners SANLAKAS and PARTIDO.
In his Comment, the Solicitor General points to infirmities in the petitions
regarding, inter alia, Lim and Ersando's standing to file suit, the prematurity of the
action, as well as the impropriety of availing of certiorari to ascertain a question of fact.
Anent their locus standi, the Solicitor General argues that first, they may not file suit in
their capacities as, taxpayers inasmuch as it has not been shown that "Balikatan 02-1 "
involves the exercise of Congress' taxing or spending powers. Second, their being lawyers
does not invest them with sufficient personality to initiate the case, citing our ruling
in Integrated Bar of the Philippines v. Zamora.5 Third, Lim and Ersando have failed to
demonstrate the requisite showing of direct personal injury. We agree.
It is also contended that the petitioners are indulging in speculation. The Solicitor
General is of the view that since the Terms of Reference are clear as to the extent and
duration of "Balikatan 02-1," the issues raised by petitioners are premature, as they are
based only on a fear of future violation of the Terms of Reference. Even petitioners'
resort to a special civil action for certiorari is assailed on the ground that the writ may
only issue on the basis of established facts.
Apart from these threshold issues, the Solicitor General claims that there is actually no
question of constitutionality involved. The true object of the instant suit, it is said, is to
obtain an interpretation of the V FA. The Solicitor General asks that we accord due
deference to the executive determination that "Balikatan 02-1" is covered by the VFA,
considering the President's monopoly in the field of foreign relations and her role as
commander-in-chief of the Philippine armed forces.
Given the primordial importance of the issue involved, it will suffice to reiterate our view
on this point in a related case:
Notwithstanding, in view of the paramount importance and the
constitutional significance of the issues raised in the petitions, this
Court, in the exercise of its sound discretion, brushes aside the
procedural barrier and takes cognizance of the petitions, as we have
done in the early Emergency Powers Cases, where we had occasion
to rule:
'x x x ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President
Quirino although they were involving only an indirect and general
interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled
that 'transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing
aside, if we must, technicalities of procedure.' We have since then
applied the exception in many other cases. [citation omitted]
This principle was reiterated in the subsequent cases of Gonzales vs.
COMELEC, Daza vs. Singson, and Basco vs. Phil, Amusement and Gaming
Corporation, where we emphatically held:
Considering however the importance to the public of the case at bar,
and in keeping with the Court's duty, under the 1987 Constitution, to
determine whether or not the other branches of the government have
kept themselves within the limits of the Constitution and the laws that
they have not abused the discretion given to them, the Court has
brushed aside technicalities of procedure and has taken cognizance of
this petition. xxx'
Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this Court ruled
that in cases of transcendental importance, the Court may relax the standing
requirements and allow a suit to prosper even where there is no direct
injury to the party claiming the right of judicial review.
Although courts generally avoid having to decide a constitutional question
based on the doctrine of separation of powers, which enjoins upon the
department of the government a becoming respect for each other's act, this
Court nevertheless resolves to take cognizance of the instant petition.6
Hence, we treat with similar dispatch the general objection to the supposed prematurity
of the action. At any rate, petitioners' concerns on the lack of any specific regulation on
the latitude of activity US personnel may undertake and the duration of their stay has
been addressed in the Terms of Reference.
The holding of "Balikatan 02-1" must be studied in the framework of the treaty
antecedents to which the Philippines bound itself. The first of these is the Mutual
Defense Treaty (MDT, for brevity). The MDT has been described as the "core" of the
defense relationship between the Philippines and its traditional ally, the United States.
Its aim is to enhance the strategic and technological capabilities of our armed forces
through joint training with its American counterparts; the "Balikatan" is the largest such
training exercise directly supporting the MDT's objectives. It is this treaty to which the V
FA adverts and the obligations thereunder which it seeks to reaffirm.
The lapse of the US-Philippine Bases Agreement in 1992 and the decision not to renew it
created a vacuum in US-Philippine defense relations, that is, until it was replaced by the
Visiting Forces Agreement. It should be recalled that on October 10, 2000, by a vote of
eleven to three, this Court upheld the validity of the VFA.7 The V FA provides the
"regulatory mechanism" by which "United States military and civilian personnel [may
visit] temporarily in the Philippines in connection with activities approved by the
Philippine Government." It contains provisions relative to entry and departure of
American personnel, driving and vehicle registration, criminal jurisdiction, claims,
importation and exportation, movement of vessels and aircraft, as well as the duration of
the agreement and its termination. It is the VFA which gives continued relevance to the
MDT despite the passage of years. Its primary goal is to facilitate the promotion of
optimal cooperation between American and Philippine military forces in the event of an
attack by a common foe.
The first question that should be addressed is whether "Balikatan 02-1" is covered by the
Visiting Forces Agreement. To resolve this, it is necessary to refer to the V FA itself: Not
much help can be had therefrom, unfortunately, since the terminology employed is itself
the source of the problem. The VFA permits United States personnel to engage, on an
impermanent basis, in "activities," the exact meaning of which was left undefined. The
expression is ambiguous, permitting a wide scope of undertakings subject only to the
approval of the Philippine government.8 The sole encumbrance placed on its definition is
couched in the negative, in that United States personnel must "abstain from any
activity inconsistent with the spirit of this agreement, and in particular, from any political
activity."9 All other activities, in other words, are fair game.
We are not left completely unaided, however. The Vienna Convention on the Law of
Treaties, which contains provisos governing interpretations of international agreements,
state:
SECTION 3. INTERPRETATION OF TREATIES
Article 31
General rule of interpretation
1. A treaty shall be interpreted in good faith ill accordance with the ordinary
meaning to be given to the tenus of the treaty in their context and in the light of
its object and purpose.
2. The context for the purpose of the interpretation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all
the parties in connexion with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in
connexion with the conclusion of the treaty and accepted by the other
parties as an instrument related to the party .
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the relations
between the parties.
4. A special meaning shall be given to a term if it is established that the parties
so intended.
Article 32
Supplementary means of interpretation
Recourse may be had to supplementary means of interpretation, including the
preparatory work of the treaty and the circumstances of its conclusion, in order
to confirm the meaning resulting from the application of article 31, or to
determine the meaning when the interpretation according to article 31 :
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd unreasonable.
It is clear from the foregoing that the cardinal rule of interpretation must involve an
examination of the text, which is presumed to verbalize the parties' intentions. The
Convention likewise dictates what may be used as aids to deduce the meaning of terms,
which it refers to as the context of the treaty, as well as other elements may be taken into
account alongside the aforesaid context. As explained by a writer on the Convention ,
[t]he Commission's proposals (which were adopted virtually without change by
the conference and are now reflected in Articles 31 and 32 of the Convention)
were clearly based on the view that the text of a treaty must be presumed to be
the authentic expression of the intentions of the parties; the Commission
accordingly came down firmly in favour of the view that 'the starting point of
interpretation is the elucidation of the meaning of the text, not an
investigation ab initio into the intentions of the parties'. This is not to say that
the travauxpreparatoires of a treaty , or the circumstances of its conclusion, are
relegated to a subordinate, and wholly ineffective, role. As Professor Briggs
points out, no rigid temporal prohibition on resort to travaux preparatoires of a
treaty was intended by the use of the phrase 'supplementary means of
interpretation' in what is now Article 32 of the Vienna Convention. The
distinction between the general rule of interpretation and the supplementary
means of interpretation is intended rather to ensure that the supplementary
means do not constitute an alternative, autonomous method of interpretation
divorced from the general rule.10
The Terms of Reference rightly fall within the context of the VFA.
After studied reflection, it appeared farfetched that the ambiguity surrounding the
meaning of the word .'activities" arose from accident. In our view, it was deliberately
made that way to give both parties a certain leeway in negotiation. In this manner,
visiting US forces may sojourn in Philippine territory for purposes other than military. As
conceived, the joint exercises may include training on new techniques of patrol and
surveillance to protect the nation's marine resources, sea search-and-rescue operations
to assist vessels in distress, disaster relief operations, civic action projects such as the
building of school houses, medical and humanitarian missions, and the like.
Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is
only logical to assume that .'Balikatan 02-1," a "mutual anti- terrorism advising, assisting
and training exercise," falls under the umbrella of sanctioned or allowable activities in
the context of the agreement. Both the history and intent of the Mutual Defense Treaty
and the V FA support the conclusion that combat-related activities -as opposed
to combat itself -such as the one subject of the instant petition, are indeed authorized.
That is not the end of the matter, though. Granted that "Balikatan 02-1" is permitted
under the terms of the VFA, what may US forces legitimately do in furtherance of their
aim to provide advice, assistance and training in the global effort against terrorism?
Differently phrased, may American troops actually engage in combat in Philippine
territory? The Terms of Reference are explicit enough. Paragraph 8 of section I stipulates
that US exercise participants may not engage in combat "except in self-defense." We
wryly note that this sentiment is admirable in the abstract but difficult in
implementation. The target of "Balikatan 02-1 I" the Abu Sayyaf, cannot reasonably be
expected to sit idly while the battle is brought to their very doorstep. They cannot be
expected to pick and choose their targets for they will not have the luxury of doing so.
We state this point if only to signify our awareness that the parties straddle a fine line,
observing the honored legal maxim "Nemo potest facere per alium quod non potest facere
per directum."11 The indirect violation is actually petitioners' worry, that in reality,
"Balikatan 02-1 " is actually a war principally conducted by the United States
government, and that the provision on self-defense serves only as camouflage to conceal
the true nature of the exercise. A clear pronouncement on this matter thereby becomes
crucial.
In our considered opinion, neither the MDT nor the V FA allow foreign troops to engage
in an offensive war on Philippine territory. We bear in mind the salutary proscription
stated in the Charter of the United Nations, to wit:
Article 2
The Organization and its Members, in pursuit of the Purposes stated in Article
1, shall act in accordance with the following Principles.
xxx xxx xxx xxx
4. All Members shall refrain in their international relations from the threat or
use of force against the territorial integrity or political independence of any
state, or in any other manner inconsistent with the Purposes of the United
Nations.
xxx xxx xxx xxx
In the same manner, both the Mutual Defense Treaty and the Visiting Forces Agreement,
as in all other treaties and international agreements to which the Philippines is a party,
must be read in the context of the 1987 Constitution. In particular, the Mutual Defense
Treaty was concluded way before the present Charter, though it nevertheless remains in
effect as a valid source of international obligation. The present Constitution contains key
provisions useful in determining the extent to which foreign military troops are allowed
in Philippine territory. Thus, in the Declaration of Principles and State Policies, it is
provided that:
xxx xxx xxx xxx
SEC. 2. The Philippines renounces war as an instrument of national policy,
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.
xxx xxx xxx xxx
SEC. 7. The State shall pursue an independent foreign policy. In its relations
with other states the paramount consideration shall be national sovereignty,
territorial integrity, national interest, and the right to self- determination.
SEC. 8. The Philippines, consistent with the national interest, adopts and
pursues a policy of freedom from nuclear weapons in the country.
xxx xxx xxx xxx
The Constitution also regulates the foreign relations powers of the Chief Executive when
it provides that "[n]o treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the members of the Senate."12 Even more
pointedly, the Transitory Provisions state:
Sec. 25. After the expiration in 1991 of the Agreement between the Republic of
the Philippines and the United States of America concerning Military Bases,
foreign military bases, troops or facilities shall not be allowed in the Philippines
except under a treaty duly concurred in by the Senate and, when the Congress
so requires, ratified by a majority of the votes cast by the people in a national
referendum held for that purpose, and recognized as a treaty by the other
contracting state.
The aforequoted provisions betray a marked antipathy towards foreign military
presence in the country, or of foreign influence in general. Hence, foreign troops are
allowed entry into the Philippines only by way of direct exception. Conflict arises then
between the fundamental law and our obligations arising from international agreements.
A rather recent formulation of the relation of international law vis-a-vis municipal law
was expressed in Philip Morris, Inc. v. Court of Appeals,13 to wit:
xxx Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing equal,
not superior, to national legislation.
This is not exactly helpful in solving the problem at hand since in trying to find a middle
ground, it favors neither one law nor the other, which only leaves the hapless seeker
with an unsolved dilemma. Other more traditional approaches may offer valuable
insights.
From the perspective of public international law, a treaty is favored over municipal law
pursuant to the principle ofpacta sunt servanda. Hence, "[e]very treaty in force is binding
upon the parties to it and must be performed by them in good faith."14 Further, a party to
a treaty is not allowed to "invoke the provisions of its internal law as justification for its
failure to perform a treaty."15
Our Constitution espouses the opposing view. Witness our jurisdiction as I stated in
section 5 of Article VIII:
The Supreme Court shall have the following powers:
xxx xxx xxx xxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law
or the Rules of Court may provide, final judgments and order of lower courts in:
(A) All cases in which the constitutionality or validity of any treaty, international
or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.
xxx xxx xxx xxx
In Ichong v. Hernandez,16 we ruled that the provisions of a treaty are always subject to
qualification or amendment by a subsequent law, or that it is subject to the police power
of the State. In Gonzales v. Hechanova,17
xxx As regards the question whether an international agreement may be
invalidated by our courts, suffice it to say that the Constitution of the
Philippines has clearly settled it in the affirmative, by providing, in Section 2 of
Article VIII thereof, that the Supreme Court may not be deprived "of its
jurisdiction to review, revise, reverse, modify, or affirm on appeal, certiorari, or
writ of error as the law or the rules of court may provide, final judgments and
decrees of inferior courts in -( I) All cases in which
the constitutionality or validity of anytreaty, law, ordinance, or executive order
or regulation is in question." In other words, our Constitution authorizes the
nullification of a treaty, not only when it conflicts with the fundamental
law, but, also, when it runs counter to an act of Congress.
The foregoing premises leave us no doubt that US forces are prohibited / from engaging
in an offensive war on Philippine territory.
Yet a nagging question remains: are American troops actively engaged in combat
alongside Filipino soldiers under the guise of an alleged training and assistance exercise?
Contrary to what petitioners would have us do, we cannot take judicial notice of the
events transpiring down south,18 as reported from the saturation coverage of the media.
As a rule, we do not take cognizance of newspaper or electronic reports per se, not
because of any issue as to their truth, accuracy, or impartiality, but for the simple reason
that facts must be established in accordance with the rules of evidence. As a result, we
cannot accept, in the absence of concrete proof, petitioners' allegation that the Arroyo
government is engaged in "doublespeak" in trying to pass off as a mere training exercise
an offensive effort by foreign troops on native soil. The petitions invite us to speculate
on what is really happening in Mindanao, to issue I make factual findings on matters well
beyond our immediate perception, and this we are understandably loath to do.
It is all too apparent that the determination thereof involves basically a question of
fact. On this point, we must concur with the Solicitor General that the present subject
matter is not a fit topic for a special civil action forcertiorari. We have held in too many
instances that questions of fact are not entertained in such a remedy. The sole object of
the writ is to correct errors of jurisdiction or grave abuse of discretion: The phrase
"grave abuse of discretion" has a precise meaning in law, denoting abuse of discretion
"too patent and gross as to amount to an evasion of a positive duty, or a virtual refusal to
perform the duty enjoined or act in contemplation of law, or where the power is
exercised in an arbitrary and despotic manner by reason of passion and personal
hostility."19
In this connection, it will not be amiss to add that the Supreme Court is not a trier of
facts.20
Under the expanded concept of judicial power under the Constitution, courts are charged
with the duty "to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the government."21 From the facts obtaining, we find that the holding of "Balikatan 02-
1" joint military exercise has not intruded into that penumbra of error that would
otherwise call for correction on our part. In other words, respondents in the case at bar
have not committed grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, the petition and the petition-in-intervention are
hereby DISMISSED without prejudice to the filing of a new petition sufficient in form and
substance in the proper Regional Trial Court.
SO ORDERED.
Footnotes
1 For ready reference, the text of the treaty is reproduced herein:
"MUTUAL DEFENSE TREATY
BETWEEN THE REPUBLIC OF THE PHILIPPINES
AND THE UNITED STATES OF AMERICA
30 August 1951
"The parties to this Treaty,
'"Reaffirming their faith in the purposes and principles of the Charter of the United
Nations and their desire to live in peace with all peoples and all Governments, and
desiring to strengthen the fabric of peace in the Pacific Area,
"Recalling with mutual pride the historic relationship which brought their two peoples
together in a common bond of sympathy and mutual ideals to fight side-by-side against
imperialist aggression during the last war,
"Desiring to declare publicly and formally their sense of unity and their common
determination to defend themselves against external armed attack, so that no potential
aggressor could be under the illusion that either of them stands alone in the Pacific Area,
"Desiring further to strengthen their present efforts for collective defense for the
preservation of peace and security pending the development of a more comprehensive
system of regional security in the Pacific Area,
"Agreeing that nothing in this present instrument shall be considered or interpreted as in
any way , or sense altering or diminishing any existing agreements or understandings
between the United States of America and the Republic of the Philippines,
"Have agreed as follows:
"ARTICLE I.
"The Parties undertake, as set forth in the Charter of the United Nations, to settle any
international disputes in which they may be involved by peaceful means in such a manner
that international peace and security and justice are not endangered and to refrain in
their international relations from the threat or use of force in any manner inconsistent
with the purpose of the United Nations.
"ARTICLE II.
"In order more effectively to achieve the objective of this Treaty, the Parties separately
and jointly by self-help and mutual aid will maintain and develop their individual and
collective capacity to resist armed attack.
"ARTICLE III.
"The Parties, through their Foreign Ministers or their deputies, will consult together from
time to time regarding the implementation of this Treaty and whenever in the opinion of
either of them the territorial integrity, political independence or security of either of the
Parties is threatened by external.'
I armed attack in the Pacific.
"ARTICLE IV.
"Each Party recognizes that an armed attack in the Pacific Area on either of the Parties
would be dangerous to its own peace and safety and declares that it would act to meet the
common dangers in accordance with its constitutional processes.
" Any such armed attack and all measures taken as a result thereof shall be immediately
reported to the Security Council of the United Nations. Such measures shall be terminated
when the Security Council has taken the measures necessary to restore and maintain
international peace and security.
"ARTICLE V.
"For the purpose of Article IV, an armed attack on either of the Parties is deemed to
include an attack on the metropolitan territory of either of the Parties, or on the island
territories under its jurisdiction in the Pacific or on its armed forces, public vessels or
aircraft used in the Pacific.
"ARTICLE VI.
"This Treaty does not affect and shall not be interpreted as affecting in any way the rights
and obligations of the Parties under the Charter of the United Nations or the
responsibility of the United Nations for the maintenance of international peace and
security.
"ARTICLE VII.
"This Treaty shall be ratified by the United States of America and the Republic of the
Philippines in accordance with their respective constitutional processes and will come
into force when instruments of ratification thereof have been exchanged by them at
Manila.
"ARTICLE VIII.
"This Treaty shall remain in force indefinitely. Either Party may terminate it one year
after notice has been given to the other party.
"IN WITNESS WHEREOF the undersigned Plenipotentiaries have signed this Treaty.
"DONE in duplicate at Washington this thirtieth day of August, 1951."
xxx xxx xxx xxx
2 The day before, the first petition in connection with the joint military enterprise was
filed --G.R. No.151433, entitled "In the Matter of Declaration as Constitutional and Legal
the 'Balikatan' RP- US Military Exercises." Petitioner therein Atty. Eduardo B. Inlayo
manifested that he would be perfectly "comfortable" should the Court merely "note" his
petition. We did not oblige him; in a Resolution dated February 12, 2002, we dismissed
his petition on the grounds of insufficiency in form and substance and lack of jurisdiction.
After extending a hearty Valentine's greeting to the Court en banc, Atty. Inlayo promised
to laminate the aforesaid resolution as a testimonial of his "once upon a time"
participation in an issue of national consequence.
3 Annex 1 of the Comment.
4 Annex 2 of the Comment. The Minutes state:
"Secretary Guingona and Assistant Secretary Kelly welcomed the holding of Balikatan 02-
1 exercise ('the Exercise") and the conclusion of the Terms of Reference for the Exercise.
Assistant Secretary Kelly thanked Secretary Guingona for Secretary Guingona's personal
approval of the Terms of Reference.
"Both Secretary Guingona and Assistant Secretary Kelly emphasized the importance of
cooperating, within the bounds provided for by their respective constitutions and laws, in
the fight against international terrorism.
"Both Secretary Guingona and Assistant Secretary Kelly expressed the belief that the
Exercise shall not in any way contribute to any escalation of other conflicts in Mindanao,
shall not adversely affect the progress of ongoing peace negotiations between the
Government of the Philippines and other parties, and shall not put at risk the friendly
relations between the Philippines and its neighbors as well as with other states. Secretary
Guingona stated that he had in mind the ongoing peace negotiations with the NDF and the
MILF and he emphasized that it is important to make sure that the Exercsie shall not in
any way hinder those negotiations.
"Both Secretary Guingona and Assistant Secretary Kelly stated that they look forward to
the realization of the nearly US$100 million in security assistance for fiscal years 2001-
2002 agreed upon between H.E. President Gloria Macapagal-Arroyo and H.E. President
George W. Bush last November 2001.
"Secretary Guingona stated that the Philippines welcomes the assistance that the U.S. will
be providing, saying that while Filipino soldier does not lack experience, courage and
determination, they could benefit from additional knowledge and updated military
technologies.
"Assistant Secretary Kelly said that he is glad the U.S. is able to provide advice, assistance
and training and reiterated the policy position expressed by H.E. President George W.
Bush during his State of the Nation Address that U.S. forces are in the Philippines to
advise, assist and train Philippine military forces.
"Both Secretary Guingona and Assistant Secretary Kelly reiterated that, as provided in the
Terms of Reference, U.S. Forces shall not engage in combat during the Exercise, except in
accordance with their right to act in self-defense.
Both Secretary Guingona and Assistant Secretary Kelly reiterated that, pursuant to Article
II of the Visiting Forces Agreement, U.S. forces are bound to respect the laws of the
Philippines during the Exercise.
"Both Secretary Guingona and Assistant Secretary Kelly recognized that, pursuant to
Article VI of the Visiting Forces Agreement, both the U.S. and Philippine Governments
waive any and all claims against the other for any deaths or injuries to their military and
civilian personnel from the Exercise.
"Secretary Guingona and Assistant Secretary Kelly designated Ambassador Minerva
Falcon and Charge d' Affaires, a.i. Robert Fitts to initial these minutes.
"Both Secretary Guingona and Assistant Secretary Kelly agreed to consult from time to
time on matters relating to the Exercise as well as on other matters."
Notwithstanding, in view of the paramount importance and the constitutional
significance of the issues raised in the petitions, this Court, in the exercise of its
sound discretion, brushes aside the procedural barrier and takes cognizance of
 the petitions, as we have done in the early Emergency Powers Cases, where we notice of matters which are of public knowledge, or are capable of unquestionable
had occasion to rule: demonstration, or ought to be known to judges because of their judicial functions."
5 338 SCRA 81, 100-101 (2000). 19 Sanchez v. National Labor Relations Commission, 312 SCRA 727 ( 1999).

'x x x ordinary citizens and taxpayers were allowed to question the 20 Hervas v. Court of Appeals, 319 SCRA 776 (1999); Valmonte v. Court of Appeals, 303

constitutionality of several executive orders issued by President SCRA 278 ( 1999).

Quirino although they were involving only an indirect and general 21 Article VIII, section 1.

interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that
'transcendental importance to the public of these cases demands
that they be settled promptly and definitely, brushing aside, if we
must, technicalities of procedure. ' We have since then applied the
exception in many other cases. [ citation omitted]
This principle was reiterated in the subsequent cases of Gonzales vs.
COMELEC, Daza vs. Singson, and Basco vs. Phil. Amusement and Gaming
Corporation, where we emphatically held:
'Considering however the importance to the public of the case at
bar, and in keeping with the Court's duty, under the 1987
Constitution, to detemine whether or not the other branches of the
governrnent have kept themselves within the limits of the
Constitution and the laws that that they have not abused the
discretion given to them, the Court has brushed aside technicalities
of procedure and has taken cognizance of this petition.xxx
Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this Court ruled
that in cases of i transcendental importance, the Court may relax the standing
requirements and allow a suit to prosper even , where there is no direct injury
to the party claiming the right of judicial review.
Although courts generally avoid having to decide a constitutional question
based on the doctrine of separation, of powers, which enjoins upon the
departments of the government a becoming respect for each others' acts, this
Court nevertheless resolves to take cognizance of the instant petitions.6
6 BAYAN, et. al. Y. Zamora, 342 SCRA 449 (2000).
7 BAYAN, et. al. v. Zamora, et. al., 342 SCRA 449 (2000).
8 Article I [Definitions], VFA.
9 Article II [Respect for Law], VFA.
10 l.M. SINCLA1R, THE VIENNA CONVENTION ON THE LAW OF TREATIES 71-72 (1973).
II "No one is allowed to do indirectly what he is prohibited to do directly." 12 Sec.

. 12 SEC.21, Art. VII.

13 224 SCRA 576, 593 (1993).
14 Vienna Convention on the Law of Treaties, art. 26.
15 Id, art. 27. However, this is without prejudice to the provisions of art. 46 of the

Convention, which provides:

"1. A State may not invoke the fact that its consent to be bound by a treaty has been
expressed in violation of a provision of its internal law regarding competence to conclude
treaties as invalidating its consent unless that violation was manifest and concerned a
rule of its internal law of fundamental importance.
"2. A violation is manifest if it would be objectively evident to any State conducting itself
in the manner in accordance with normal practice and in good faith."
16 101 Phil. 1155, 1191 (1957).
17 9 SCRA 230,242 (1963).
18 Pertinent sections of Rule 129 provide: "SECTION I. Judicial notice, when mandatory.-

A court shall take judicial notice, without the introduction of evidence, of the existence
and territorial extent of states, their political history , forms of government and symbols
of nationality, the law of nations, the admiralty and maritime courts of the world and
their seals, the political constitution and history of the Philippines, the official acts of the
legislative, executive and judicial departments of the Philippines, the laws of nature, the
measure of time, and the geographical divisions." Likewise, it is also provided in the next
succeeding section: "SEC. 2. Judicial notice, when discretionary.-A court may take judicial
 [G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.
Maximo Calalang in his own behalf.
Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents
Williams, Fragante and Bayan
City Fiscal Mabanag for the other respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648;
DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS
AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES
AND REGULATIONS. — The provisions of section 1 of Commonwealth Act No. 648 do not
confer legislative power upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred upon them and under
which they promulgated the rules and regulations now complained of is not to determine
what public policy demands but merely to carry out the legislative policy laid down by
the National Assembly in said Act, to wit, "to promote safe transit upon, and avoid
obstructions on, roads and streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the determination of what the
law shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the
use of national roads and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the traffic thereon and the
requirements of public convenience and interest, is an administrative function which
cannot be directly discharged by the National Assembly. It must depend on the discretion
of some other government official to whom is confided the duty of determining whether
the proper occasion exists for executing the law. But it cannot be said that the exercise of
such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. —
Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the
paramount police power of the state. Said Act, by virtue of which the rules and
regulations complained of were promulgated, aims to promote safe transit upon and
avoid obstructions on national roads, in the interest and convenience of the public. In
enacting said law, therefore, the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to relieve congestion of
traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the
bottom of the enactment of said law, and the state in order to promote the general
welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state (U.S.
v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of
the individual are subordinated. Liberty is a blessing without which life is a misery, but
liberty should not be made to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over liberty because then the
individual will fall into slavery. The citizen should achieve the required balance of liberty
and authority in his mind through education and, personal discipline, so that there may
be established the resultant equilibrium, which means peace and order and happiness
for all. The moment greater authority is conferred upon the government, logically so
much is withdrawn from the residuum of liberty which resides in the people. The
paradox lies in the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preservation.
3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema
lex. Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before this court this petition for a writ of prohibition against the respondents, A. D.
Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director
of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications;
Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of
Police of Manila.
It is alleged in the petition that the National Traffic Commission, in its resolution of July
17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of
Public Works and Communications that animal-drawn vehicles be prohibited from
passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas
Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal
Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7
a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940
recommended to the Director of Public Works the adoption of the measure proposed in
the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No.
548 which authorizes said Director of Public Works, with the approval of the Secretary of
Public Works and Communications, to promulgate rules and regulations to regulate and
control the use of and traffic on national roads; that on August 2, 1940, the Director of
Public Works, in his first indorsement to the Secretary of Public Works and
Communications, recommended to the latter the approval of the recommendation made
by the Chairman of the National Traffic Commission as aforesaid, with the modification
that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the
portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga
Street; that on August 10, 1940, the Secretary of Public Works and Communications, in
his second indorsement addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of
animal-drawn vehicles, between the points and during the hours as above indicated, for
a period of one year from the date of the opening of the Colgante Bridge to traffic; that
the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to
be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers
in the places above-mentioned to the detriment not only of their owners but of the riding
public as well.
It is contended by the petitioner that Commonwealth Act No. 548 by which the Director
of Public Works, with the approval of the Secretary of Public Works and
Communications, is authorized to promulgate rules and regulations for the regulation
and control of the use of and traffic on national roads and streets is unconstitutional
because it constitutes an undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil,
660, 700), "The rule has nowhere been better stated than in the early Ohio case decided
by Judge Ranney, and since followed in a multitude of cases, namely: ’The true distinction
therefore is between the delegation of power to make the law, which necessarily involves
a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to
the latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton
County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v.
Southard (10 Wheat., 1) may be committed by the Legislature to an executive
department or official. The Legislature may make decisions of executive departments or
subordinate officials thereof, to whom it has committed the execution of certain acts,
final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the
decisions is to give prominence to the ’necessity’ of the case."cralaw virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of
the President of the Philippines, the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, shall promulgate the necessary rules
and regulations to regulate and control the use of and traffic on such roads and streets.
Such rules and regulations, with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other structures within a
reasonable distance from along the national roads. Such roads may be temporarily
closed to any or all classes of traffic by the Director of Public Works and his duly
authorized representatives whenever the condition of the road or the traffic thereon
makes such action necessary or advisable in the public convenience and interest, or for a
specified period, with the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power upon the Director of Public
Works and the Secretary of Public Works and Communications. The authority therein
conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out
the legislative policy laid down by the National Assembly in said Act, to wit, "to promote
safe transit upon and avoid obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes of traffic "whenever the
condition of the road or the traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all, therefore, is not the
determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate
rules and regulations on the use of national roads and to determine when and how long a
national road should be closed to traffic, in view of the condition of the road or the traffic
thereon and the requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly. It must depend
on the discretion of some other government official to whom is confided the duty of
determining whether the proper occasion exists for executing the law. But it cannot be
said that the exercise of such discretion is the making of the law. As was said in Locke’s
Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is made to depend
on a future event or act, is to rob the Legislature of the power to act wisely for the public
welfare whenever a law is passed relating to a state of affairs not yet developed, or to
things future and impossible to fully know." The proper distinction the court said was
this: "The Legislature cannot delegate its power to make the law; but it can make a law to
delegate a power to determine some fact or state of things upon which the law makes, or
intends to make, its own action depend. To deny this would be to stop the wheels of
government. There are many things upon which wise and useful legislation must depend
which cannot be known to the law-making power, and, must, therefore, be a subject of
inquiry and determination outside of the halls of legislation." (Field v. Clark, 143 U. S.
649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated
June 12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R.
No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the
principle of separation of powers has been made to adapt itself to the complexities of
modern governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation," not only in the United States and England but in practically all
modern governments. Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers
has, to a large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the promulgation of certain
rules and regulations calculated to promote public interest.
The petitioner further contends that the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
unlawful interference with legitimate business or trade and abridge the right to personal
liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of the state.
Said Act, by virtue of which the rules and regulations complained of were promulgated, should be equally and evenly extended to all groups as a combined force in our social and
aims to promote safe transit upon and avoid obstructions on national roads, in the economic life, consistent with the fundamental and paramount objective of the state of
interest and convenience of the public. In enacting said law, therefore, the National promoting the health, comfort, and quiet of all persons, and of bringing about "the
Assembly was prompted by considerations of public convenience and welfare. It was greatest good to the greatest number."cralaw virtua1aw library
inspired by a desire to relieve congestion of traffic. which is, to say the least, a menace to
public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs
state in order to promote the general welfare may interfere with personal liberty, with against the petitioner. So ordered.
property, and with business and occupations. Persons and property may be subjected to
all kinds of restraints and burdens, in order to secure the general comfort, health, and Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our
Government the rights of the individual are subordinated. Liberty is a blessing without
which life is a misery, but liberty should not be made to prevail over authority because
then society will fall into anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and personal
discipline, so that there may be established the resultant equilibrium, which means
peace and order and happiness for all. The moment greater authority is conferred upon
the government, logically so much is withdrawn from the residuum of liberty which
resides in the people. The paradox lies in the fact that the apparent curtailment of liberty
is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the
case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise
the police power is a continuing one, and a business lawful today may in the future,
because of the changed situation, the growth of population or other causes, become a
menace to the public health and welfare, and be required to yield to the public good."
And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is
bringing within the police power of the state today things which were not thought of as
being within such power yesterday. The development of civilization, the rapidly
increasing population, the growth of public opinion, with an increasing desire on the part
of the masses and of the government to look after and care for the interests of the
individuals of the state, have brought within the police power many questions for
regulation which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon
the constitutional precept regarding the promotion of social justice to insure the well-
being and economic security of all the people. The promotion of social justice, however,
is to be achieved not through a mistaken sympathy towards any given group. Social
justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all
the competent elements of society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the existence of all
governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection that
G.R. No. 167614, March 24, 2009 By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
Antonio M. Serrano vs Gallant Maritime Services December 8, 2004 Decision[3] and April 1, 2005 Resolution[4] of the Court of Appeals (CA), which
AUSTRIA-MARTINEZ, J.: applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

For decades, the toil of solitary migrants has helped lift entire families Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
and communities out of poverty. Their earnings have built houses, provided
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract
health care, equipped schools and planted the seeds of businesses. They have
woven together the world by transmitting ideas and knowledge from country to of Employment with the following terms and conditions:
country. They have provided the dynamic human link between cultures, Duration of contract 12 months
societies and economies. Yet, only recently have we begun to understand not Position Chief Officer
only how much international migration impacts development, but how Basic monthly salary US$1,400.00
smart public policies can magnify this effect. Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month[5]
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and
Development
Brussels, July 10, 2007[1] On March 19, 1998, the date of his departure, petitioner was constrained to accept a

downgraded employment contract for the position of Second Officer with a monthly salary of

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief

Section 10, Republic Act (R.A.) No. 8042,[2]to wit: Officer by the end of April 1998.[6]

Sec. 10. Money Claims. - x x x In case of termination of overseas

employment without just, valid or authorized cause as defined by law or Respondents did not deliver on their promise to make petitioner Chief Officer.[7] Hence,
contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per annum, plus his salaries petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26,
for the unexpired portion of his employment contract or for three (3) months
1998.[8]
for every year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

Petitioner's employment contract was for a period of 12 months or from March 19, 1998

up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2)
does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but
months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and
exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal
twenty-three (23) days.
dismissal to their lump-sum salary either for the unexpired portion of their employment contract or

for three months for every year of the unexpired term, whichever is less (subject clause). Petitioner
Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for
claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their
constructive dismissal and for payment of his money claims in the total amount of US$26,442.73,
contract, deprives them of equal protection and denies them due process.
broken down as follows:

May 27/31, 1998 US$ 413.90

(5 days) incl.
Leave pay
 June 01/30, 1998 2,590.00
July 01/31, 1998 2,590.00 The claims of the complainant for moral and exemplary damages are hereby
August 01/31, 2,590.00 DISMISSED for lack of merit.
1998
Sept. 01/30, 1998 2,590.00 All other claims are hereby DISMISSED.
Oct. 01/31, 1998 2,590.00
Nov. 01/30, 1998 2,590.00 SO ORDERED.[13] (Emphasis supplied)
Dec. 01/31, 1998 2,590.00
Jan. 01/31, 1999 2,590.00
Feb. 01/28, 1999 2,590.00 In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on
Mar. 1/19, 1999 1,640.00
(19 days) incl. the salary period of three months only -- rather than the entire unexpired portion of nine months and
leave pay
-------------------------------------------------------------------------------- 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the
25,382.23
salary rate of US$2,590.00, consisting of petitioner's [b]asic salary, US$1,400.00/month +
Amount adjusted
to chief mate's US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay =
salary
(March 19/31, 1,060.50[10] US$2,590.00/compensation per month.[14]
1998 to April
1/30, 1998) +
---------------------------------------------------------------------------------------------- Respondents appealed[15] to the National Labor Relations Commission (NLRC) to question
TOTAL CLAIM US$ 26,442.73[11]
the finding of the LA that petitioner was illegally dismissed.

as well as moral and exemplary damages and attorney's fees.

Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not applying

the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission[17] that
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal
in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their
and awarding him monetary benefits, to wit:
contracts.[18]
WHEREFORE, premises considered, judgment is hereby rendered declaring that
the dismissal of the complainant (petitioner) by the respondents in the above-
entitled case was illegal and the respondents are hereby ordered to pay the
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
complainant [petitioner], jointly and severally, in Philippine Currency, based on
the rate of exchange prevailing at the time of payment, the amount of EIGHT
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED.
THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
Respondents are hereby ordered to pay complainant, jointly and severally, in
representing the complainants salary for three (3) months of the unexpired
Philippine currency, at the prevailing rate of exchange at the time of payment the
portion of the aforesaid contract of employment.
following:
The respondents are likewise ordered to pay the complainant [petitioner],
1. Three (3) months salary
jointly and severally, in Philippine Currency, based on the rate of exchange
$1,400 x 3 US$4,200.00
prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS
2. Salary differential 45.00
(US$ 45.00),[12] representing the complainants claim for a salary differential. In
US$4,245.00
addition, the respondents are hereby ordered to pay the complainant, jointly and
3. 10% Attorneys fees 424.50
severally, in Philippine Currency, at the exchange rate prevailing at the time of
TOTAL US$4,669.50
payment, the complainants (petitioner's) claim for attorneys fees equivalent to
ten percent (10%) of the total amount awarded to the aforesaid employee under
The other findings are affirmed.
this Decision.
SO ORDERED.[19]
 The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already

reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not old and sickly, and he intends to make use of the monetary award for his medical treatment and

provide for the award of overtime pay, which should be proven to have been actually performed, and medication.[29] Required to comment, counsel for petitioner filed a motion, urging the court to allow

for vacation leave pay.[20] partial execution of the undisputed monetary award and, at the same time, praying that the

constitutional question be resolved.[30]

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the

constitutionality of the subject clause.[21] The NLRC denied the motion.[22] Considering that the parties have filed their respective memoranda, the Court now takes up

the full merit of the petition mindful of the extreme importance of the constitutional question raised

Petitioner filed a Petition for Certiorari[23] with the CA, reiterating the constitutional therein.

challenge against the subject clause.[24] After initially dismissing the petition on a technicality, the CA On the first and second issues

eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is
granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.
not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of
three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to
the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.[25]
petitioner by reason of his illegal dismissal.
His Motion for Reconsideration[26] having been denied by the CA,[27] petitioner brings his
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
cause to this Court on the following grounds:
I petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the
The Court of Appeals and the labor tribunals have decided the case in
a way not in accord with applicable decision of the Supreme Court involving unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
similar issue of granting unto the migrant worker back wages equal to the Impugning the constitutionality of the subject clause, petitioner contends that, in addition to
unexpired portion of his contract of employment instead of limiting it to three
(3) months the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of
II
In the alternative that the Court of Appeals and the Labor Tribunals US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment
were merely applying their interpretation of Section 10 of Republic Act No.
contract, computed at the monthly rate of US$2,590.00.[31]
8042, it is submitted that the Court of Appeals gravely erred in law when it failed
to discharge its judicial duty to decide questions of substance not theretofore The Arguments of Petitioner
determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
wages of overseas workers to three (3) months.
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate
III employment period and a fixed salary package.[32] It also impinges on the equal protection clause, for it
Even without considering the constitutional limitations [of] Sec. 10 of
Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount
from petitioners award the overtime pay and vacation pay provided in his
contract since under the contract they form part of his salary.[28] of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the
same monetary award for local workers when their dismissal is declared illegal; that the disparate The Arguments of Respondents

treatment is not reasonable as there is no substantial distinction between the two groups;[33] and that In their Comment and Memorandum, respondents contend that the constitutional issue

it defeats Section 18,[34] Article II of the Constitution which guarantees the protection of the rights and should not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,

welfare of all Filipino workers, whether deployed locally or overseas.[35] and not at the earliest opportunity, which was when he filed an appeal before the NLRC.[40]

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in The Arguments of the Solicitor General

line with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July 15, 1995,

there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042

affected OFWs.[36] having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon

serves no other purpose but to benefit local placement agencies. He marks the statement made by the by the parties.[42]

Solicitor General in his Memorandum, viz.: Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature
Often, placement agencies, their liability being solidary, shoulder the
payment of money claims in the event that jurisdiction over the foreign employer of their employment, such that their rights to monetary benefits must necessarily be treated
is not acquired by the court or if the foreign employer reneges on its obligation. differently. The OSG enumerates the essential elements that distinguish OFWs from local workers:
Hence, placement agencies that are in good faith and which fulfill their obligations
are unnecessarily penalized for the acts of the foreign employer. To protect them first, while local workers perform their jobs within Philippine territory, OFWs perform their jobs for
and to promote their continued helpful contribution in deploying Filipino
migrant workers, liability for money claims was reduced under Section 10 of foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is
R.A. No. 8042. [37] (Emphasis supplied)
almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject
Commission[43] and Millares v. National Labor Relations Commission,[44] OFWs are contractual
clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better
employees who can never acquire regular employment status, unlike local workers who are or can
off than local employers because in cases involving the illegal dismissal of employees, foreign
become regular employees. Hence, the OSG posits that there are rights and privileges exclusive to local
employers are liable for salaries covering a maximum of only three months of the unexpired
workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for
employment contract while local employers are liable for the full lump-sum salaries of their
the differentiated treatment under the subject clause of the money claims of OFWs who are illegally
employees. As petitioner puts it:
dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of
In terms of practical application, the local employers are not limited to the Constitution.[45]
the amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the Lastly, the OSG defends the rationale behind the subject clause as a police power measure
matter. On the other hand, foreign employers will only be limited to giving the
illegally dismissed migrant workers the maximum of three (3) months unpaid adopted to mitigate the solidary liability of placement agencies for this redounds to the benefit of the
salaries notwithstanding the unexpired term of the contract that can be more migrant workers whose welfare the government seeks to promote. The survival of legitimate
than three (3) months.[38]
placement agencies helps [assure] the government that migrant workers are properly deployed and
Lastly, petitioner claims that the subject clause violates the due process clause, for it
are employed under decent and humane conditions.[46]
deprives him of the salaries and other emoluments he is entitled to under his fixed-period
The Court's Ruling
employment contract.[39] The Court sustains petitioner on the first and second issues.
 unexpired portion of his 12-month employment contract, and not just for a period of three months,

When the Court is called upon to exercise its power of judicial review of the acts of its co- strikes at the very core of the subject clause.

equals, such as the Congress, it does so only when these conditions obtain: (1) that there is an actual Thus, the stage is all set for the determination of the constitutionality of the subject clause.

case or controversy involving a conflict of rights susceptible of judicial determination;[47] (2) that the Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
constitutional question is raised by a proper party[48] and at the earliest opportunity;[49] and (3) that of contracts?
the constitutional question is the very lis mota of the case,[50] otherwise the Court will dismiss the case The answer is in the negative.
or decide the same on some other ground.[51] Petitioner's claim that the subject clause unduly interferes with the stipulations in his
Without a doubt, there exists in this case an actual controversy directly involving petitioner contract on the term of his employment and the fixed salary package he will receive[57] is not tenable.
who is personally aggrieved that the labor tribunals and the CA computed his monetary award based Section 10, Article III of the Constitution provides:
on the salary period of three months only as provided under the subject clause.
No law impairing the obligation of contracts shall be passed.
The constitutional challenge is also timely. It should be borne in mind that the requirement
The prohibition is aligned with the general principle that laws newly enacted have only a
that a constitutional issue be raised at the earliest opportunity entails the interposition of the issue in
prospective operation,[58] and cannot affect acts or contracts already perfected;[59] however, as to laws
the pleadings before a competent court, such that, if the issue is not raised in the pleadings before that
already in existence, their provisions are read into contracts and deemed a part thereof.[60] Thus, the
competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be
non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted
considered on appeal.[52]Records disclose that the issue on the constitutionality of the subject clause
that would in any way derogate from existing acts or contracts by enlarging, abridging or in any
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration
manner changing the intention of the parties thereto.
with said labor tribunal,[53] and reiterated in his Petition for Certiorari before the CA.[54] Nonetheless,
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
the issue is deemed seasonably raised because it is not the NLRC but the CA which has the
execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot
competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a
be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the
quasi-judicial function its function in the present case is limited to determining questions of fact to
parties. Rather, when the parties executed their 1998 employment contract, they were deemed to
which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in
have incorporated into it all the provisions of R.A. No. 8042.
accordance with the standards laid down by the law itself;[55] thus, its foremost function is to
But even if the Court were to disregard the timeline, the subject clause may not be declared
administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in
the other hand, is vested with the power of judicial review or the power to declare unconstitutional a
the exercise of the police power of the State to regulate a business, profession or calling, particularly
law or a provision thereof, such as the subject clause.[56] Petitioner's interposition of the constitutional
the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the
issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the
dignity and well-being of OFWs wherever they may be employed.[61] Police power legislations
issue in its decision.
adopted by the State to promote the health, morals, peace, education, good order, safety, and general
The third condition that the constitutional issue be critical to the resolution of the case
welfare of the people are generally applicable not only to future contracts but even to those already in
likewise obtains because the monetary claim of petitioner to his lump-sum salary for the entire
existence, for all private contracts must yield to the superior and legitimate measures taken by the
State to promote public welfare.[62]
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of
law nor shall any person be denied the equal protection of the law.
Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed by workers
of similar category, while all monetary obligations should be borne by them in equal degree; none
should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on,
others in like circumstances.[65]
Such rights are not absolute but subject to the inherent power of Congress to incorporate,
when it sees fit, a system of classification into its legislation; however, to be valid, the classification
must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the
purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all
members of the class.[66]
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged
classification needs only be shown to be rationally related to serving a legitimate state interest;[67] b)
the middle-tier or intermediate scrutiny in which the government must show that the
challenged classification serves an important state interest and that the classification is at least
substantially related to serving that interest;[68] and c) strict judicial
scrutiny[69] in which alegislative classification which impermissibly interferes with the exercise of a
fundamental right[70] or operates to the peculiar disadvantage of a suspect class[71] is
presumed unconstitutional, and the burden is upon the government to prove that the classification is
necessary to achieve acompelling state interest and that it is the least restrictive means to protect
such interest.[72]
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications[73] based on race[74] or gender[75] but not when the classification is drawn along income
categories.[76]
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas,[77] the constitutionality of a provision in the
charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was
challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL),
even when the rank-and-file employees of other GFIs had been exempted from the SSL by their
respective charters. Finding that the disputed provision contained a suspect classification based on
salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the
constitutionality of said provision. More significantly, it was in this case that the Court revealed the
broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid
classification, and its policies should be accorded recognition and respect by the
courts of justice except when they run afoul of the Constitution. The deference
stops where the classification violates a fundamental right, or prejudices
persons accorded special protection by the Constitution. When these
violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special
protection by the Constitution requires a stricter judicial scrutiny finds no
support in American or English jurisprudence. Nevertheless, these foreign
decisions and authorities are not per se controlling in this jurisdiction. At
best, they are persuasive and have been used to support many of our decisions.
We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice. Our laws must be construed in
accordance with the intention of our own lawmakers and such intent may be
deduced from the language of each law and the context of other local legislation
related thereto. More importantly, they must be construed to serve our own
public interest which is the be-all and the end-all of all our laws. And it need not
be stressed that our public interest is distinct and different from others.
xxxx
Further, the quest for a better and more equal world calls for the use
of equal protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in
the Constitution. The Preamble proclaims equality as an ideal precisely in
protest against crushing inequities in Philippine society. The command to
promote social justice in Article II, Section 10, in all phases of national
development, further explicitated in Article XIII, are clear commands to the State
to take affirmative action in the direction of greater equality. x x x [T]here is thus
in the Philippine Constitution no lack of doctrinal support for a more vigorous
state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital
social and economic rights to marginalized groups of society, including
labor. 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 privilege in life should have more in law. And the
obligation to afford protection to labor is incumbent not only on the
legislative and executive branches but also on the judiciary to translate this
pledge into a living reality. Social justice calls for the humanization of laws
and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be
approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in
deciding questions of constitutionality, recognizing the broad discretion given to
Congress in exercising its legislative power. Judicial scrutiny would be based on
the rational basis test, and the legislative discretion would be given deferential
treatment.
But if the challenge to the statute is premised on the denial of a
fundamental right, or the perpetuation of prejudice against persons favored
by the Constitution with special protection, judicial scrutiny ought to be
more strict. A weak and watered down view would call for the abdication of
this Courts solemn duty to strike down any law repugnant to the Constitution
and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the
character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the
salary grade or officer-employee status. It is akin to a distinction based on
economic class and status, with the higher grades as recipients of a benefit
specifically withheld from the lower grades. Officers of the BSP now receive
higher compensation packages that are competitive with the industry, while the
poorer, low-salaried employees are limited to the rates prescribed by the
SSL. The implications are quite disturbing: BSP rank-and-file employees are paid
the strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file employees consist
of people whose status and rank in life are less and limited, especially in
terms of job marketability, it is they - and not the officers - who have the real
economic and financial need for the adjustment . This is in accord with the
policy of the Constitution "to free the people from poverty, provide adequate
social services, extend to them a decent standard of living, and improve the
quality of life for all. Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it
can pass muster. (Emphasis supplied)
Imbued with the same sense of obligation to afford protection to labor, the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a
suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis
OFWs with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one
year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts
of less than one year vis--vis OFWs
with employment contracts of one
year or more
As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission[79] (Second Division, 1999) that the Court laid down the following rules on the
application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which
amount to award an illegally dismissed overseas contract worker, i.e.,
 whether his salaries for the unexpired portion of his employment contract
or three (3) months salary for every year of the unexpired term, whichever is
less, comes into play only when the employment contract concerned has a The Marsaman interpretation of Section 10(5) has since been adopted in the following
term of at least one (1) year or more. This is evident from the words for
every year of the unexpired term which follows the words salaries x x x for cases:
three months. To follow petitioners thinking that private respondent is entitled
to three (3) months salary only simply because it is the lesser amount is to
completely disregard and overlook some words used in the statute while giving Period Applied in
effect to some. This is contrary to the well-established rule in legal hermeneutics Case Title Contract Period of Unexpired the Computation of
that in interpreting a statute, care should be taken that every part or word Period Service Period the Monetary
thereof be given effect since the law-making body is presumed to know the Award
meaning of the words employed in the statue and to have used them advisedly.
Ut res magis valeat quam pereat.[80] (Emphasis supplied) Skippers v. 6 months 2 months 4 months 4 months
Maguad[84]
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
Bahia Shipping v. 9 months 8 months 4 months 4 months
contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract. Reynaldo
Chua [85]
Prior to Marsaman, however, there were two cases in which the Court made conflicting
Centennial 9 months 4 months 5 months 5 months
rulings on Section 10(5). One was Asian Center for Career and Employment System and Services v. Transmarine v.
dela Cruz l[86]
National Labor Relations Commission (Second Division, October 1998),[81] whichinvolved an OFW who
Talidano v. 12 months 3 months 9 months 3 months
was awarded a two-year employment contract, but was dismissed after working for one year and two Falcon[87]
months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary Univan v. 12 months 3 months 9 months 3 months
CA [88]
covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award
Oriental v. 12 months more than 2 10 months 3 months
to SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit: CA [89] months
PCL v. NLRC[90] 12 months more than 2 more or less 9 3 months
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas
months months
employment without just, valid or authorized cause is entitled to his salary for
the unexpired portion of his employment contract or for three (3) months for Olarte v. 12 months 21 days 11 months and 9 3 months
every year of the unexpired term, whichever is less. Nayona[91] days
JSS v. 12 months 16 days 11 months and 24 3 months
In the case at bar, the unexpired portion of private respondents
Ferrer[92] days
employment contract is eight (8) months. Private respondent should therefore
be paid his basic salary corresponding to three (3) months or a total of Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23
SR3,600.[82] Adelantar[93] 7 days days days
Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Paramio,
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations et al.[94]
Commission (Third Division, December 1998),[83] which involved an OFW (therein respondent Erlinda Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for each
Osdana) who was originally granted a 12-month contract, which was deemed renewed for another Almanzor [95] year of contract
12 months. After serving for one year and seven-and-a-half months, respondent Osdana was illegally Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for each
dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half Villanos[96] 28 days year of contract
months of her contract.
 ATCI v. CA, 2 years 2 months 22 months 22 months
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
et al.[98]
categories. The first category includes OFWs with fixed-period employment contracts of less than one Phil. Integrated v. 2 years 7 days 23 months and 23 months and 23
year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of NLRC[99] 23 days days
JGB v. NLC[100] 2 years 9 months 15 months 15 months
their contract. The second category consists of OFWs with fixed-period employment contracts of one
Agoy v. NLRC[101] 2 years 2 months 22 months 22 months
year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3
EDI v. NLRC, et 2 years 5 months 19 months 19 months
months of the unexpired portion of their contracts. al.[102]
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the Barros v. NLRC, et 12 months 4 months 8 months 8 months
al.[103]
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries
Philippine 12 months 6 months 5 months and 5 months and 18 days
for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also Transmarine v. and 22 days 18 days
Carilla[104]
worked for about 2 months out of their 12-month contracts were awarded their salaries for only 3

months of the unexpired portion of their contracts. Even the OFWs involved

in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
contracts before being illegally dismissed were awarded their salaries for only 3 months.
portions thereof, were treated alike in terms of the computation of their monetary benefits in case of

illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with
multiplied by the entire unexpired portion of their employment contracts.
an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical

OFW-B with an employment contract of 15 months with the same monthly salary rate of
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
US$1,000.00. Both commenced work on the same day and under the same employer, and were
computation of the money claims of illegally dismissed OFWs based on their employment periods, in
illegally dismissed after one month of work.Under the subject clause, OFW-A will be entitled to
the process singling out one category whose contracts have an unexpired portion of one year or
US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B
more and subjecting them to the peculiar disadvantage of having their monetary awards limited to
will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of
their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while
his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the
sparing the other category from such prejudice, simply because the latter's unexpired contracts fall
US$3,000.00 is the lesser amount.
short of one year.
The disparity becomes more aggravating when the Court takes into account jurisprudence
Among OFWs With Employment
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,[97] illegally dismissed OFWs, no matter
Contracts of More Than One Year
how long the period of their employment contracts, were entitled to their salaries for the entire
unexpired portions of their contracts. The matrix below speaks for itself: Upon closer examination of the terminology employed in the subject clause, the Court now

has misgivings on the accuracy of theMarsaman interpretation.

Case Title Contract Period of Unexpired Period Applied in the
Period Service Period Computation of the The Court notes that the subject clause or for three (3) months for every year of the
Monetary Award
unexpired term, whichever is less contains the qualifying phrases every year and unexpired term. By

its ordinary meaning, the word term means a limited or definite extent of time.[105]Corollarily, that
every year is but part of an unexpired term is significant in many ways: first, the unexpired term
must be at least one year, for if it were any shorter, there would be no occasion for such unexpired
term to be measured by every year; and second, the original term must be more than one year, for
otherwise, whatever would be the unexpired term thereof will not reach even a year. Consequently,
the more decisive factor in the determination of when the subject clause for three (3) months
for every year of the unexpired term, whichever is less shall apply is not the length of the original
contract period as held in Marsaman,[106] but the length of the unexpired portion of the contract period
-- the subject clause applies in cases when the unexpired portion of the contract period is at least one
year, which arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally dismissed with less than
one year left in their contracts shall be entitled to their salaries for the entire unexpired portion
thereof, while those who are illegally dismissed with one year or more remaining in their contracts
shall be covered by the subject clause, and their monetary benefits limited to their salaries for three
months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause,
the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary
rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the
13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C,
the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be
entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the
contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-
month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the
subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be
entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month
unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
monetary awards of illegally dismissed OFWs was in place. This uniform system was applicable even
to local workers with fixed-term employment.[107]
The earliest rule prescribing a uniform system of computation was actually Article 299 of
the Code of Commerce (1888),[108] to wit:
Article 299. If the contracts between the merchants and their shop
clerks and employees should have been made of a fixed period, none of the
contracting parties, without the consent of the other, may withdraw from
the fulfillment of said contract until the termination of the period agreed
upon.
Persons violating this clause shall be subject to indemnify the loss and
damage suffered, with the exception of the provisions contained in the following
articles.
In Reyes v. The Compaia Maritima,[109] the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers prior to the
expiration of their fixed-term employment. The Court therein held the shipping company liable for the
salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew
with the agent should be for a definite period or voyage, they cannot be
discharged until the fulfillment of their contracts, except for reasons of
insubordination in serious matters, robbery, theft, habitual drunkenness, and
damage caused to the vessel or to its cargo by malice or manifest or proven
negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,[110] in
which the Court held the shipping company liable for the salaries and subsistence allowance of its
illegally dismissed employees for the entireunexpired portion of their employment contracts.
While Article 605 has remained good law up to the present,[111] Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers
hired for a certain time and for a certain work cannot leave or be dismissed
without sufficient cause, before the fulfillment of the contract. (Emphasis
supplied.)
 awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the

Citing Manresa, the Court in Lemoine v. Alkan[112] read the disjunctive "or" in Article 1586 as a same ruling in Anderson v. National Labor Relations Commission,[121] which involved a foreman hired in

conjunctive "and" so as to apply the provision to local workers who are employed for a time certain 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine

although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired

Hotel de France Company.[113] And in both Lemoine and Palomar, the Court adopted the general portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,[122] a

principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining

recover damages to the extent of the amount stipulated to be paid to them by the terms of their period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc.

contract. On the computation of the amount of such damages, the Court in Aldaz v. Gay[114] held: v. National Labor Relations Commission,[123] an OFW whose 12-month contract was illegally cut short in
The doctrine is well-established in American jurisprudence, and
nothing has been brought to our attention to the contrary under Spanish the second month was declared entitled to his salaries for the remaining 10 months of his contract.
jurisprudence, that when an employee is wrongfully discharged it is his duty to In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
seek other employment of the same kind in the same community, for the
purpose of reducing the damages resulting from such wrongful discharge. illegally discharged were treated alike in terms of the computation of their money claims: they were
However, while this is the general rule, the burden of showing that he failed to
make an effort to secure other employment of a like nature, and that other uniformly entitled to their salaries for the entire unexpired portions of their contracts.But with the
employment of a like nature was obtainable, is upon the defendant. When an
enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs
employee is wrongfully discharged under a contract of employment his
prima facie damage is the amount which he would be entitled to had he with an unexpired portion of one year or more in their employment contract have since been
continued in such employment until the termination of the period. (Howard
vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation
No. 2, 98 Mich., 43.)[115] (Emphasis supplied)
is imposed on local workers with fixed-term employment.
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
The Court concludes that the subject clause contains a suspect classification in that, in
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of
the computation of the monetary benefits of fixed-term employees who are illegally discharged,
Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.[116] Much like Article 1586 of
it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in
the Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies
their contracts, but none on the claims of other OFWs or local workers with fixed-term
available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio
employment. The subject clause singles out one classification of OFWs and burdens it with a
& Telegraph Co., Inc. v. Rich,[117] the Court carried over the principles on the payment of damages
peculiar disadvantage.
underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal
There being a suspect classification involving a vulnerable sector protected by the
discharge of a local worker whose fixed-period employment contract was entered into in 1952, when
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines
the new Civil Code was already in effect.[118]
whether it serves a compelling state interest through the least restrictive means.
More significantly, the same principles were applied to cases involving overseas Filipino
What constitutes compelling state interest is measured by the scale of rights and powers
workers whose fixed-term employment contracts were illegally terminated, such as in First Asian
arrayed in the Constitution and calibrated by history.[124] It is akin to the paramount interest of the
Trans & Shipping Agency, Inc. v. Ople,[119] involving seafarers who were illegally discharged. In Teknika
state[125] for which some individual liberties must give way, such as the public interest in safeguarding
Skills and Trade Services, Inc. v. National Labor Relations Commission,[120] an OFW who was illegally
health or maintaining medical standards,[126] or in maintaining access to information on matters of
dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was
public concern.[127]

In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure designed to protect the
employment of Filipino seafarers overseas x x x.By limiting the liability to three months [sic], Filipino
seafarers have better chance of getting hired by foreign employers. The limitation also protects the
interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in
termination pay.[128]
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the
payment of money claims in the event that jurisdiction over the foreign
employer is not acquired by the court or if the foreign employer reneges on its
obligation. Hence, placement agencies that are in good faith and which fulfill
their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money
are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose
welfare the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly
deployed and are employed under decent and humane
conditions.[129] (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;[130] but the speech
makes no reference to the underlying reason for the adoption of the subject clause.That is only natural
for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to
wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising out
of an employer-employee relationship or by virtue of the complaint, the claim
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas employment including claims
for actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency
or any and all claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on
any money claims exclusive of damages under this Section shall not be less than
fifty percent (50%) of such money claims: Provided, That any installment
payments, if applicable, to satisfy any such compromise or voluntary settlement
shall not be more than two (2) months. Any compromise/voluntary agreement
in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases
provided under this Section shall subject the responsible officials to any or all of
the following penalties:
(1) The salary of any such official who fails to render his
decision or resolution within the prescribed period shall
be, or caused to be, withheld until the said official complies
therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold
any appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be
without prejudice to any liability which any such official may have incurred
under other existing laws or rules and regulations as a consequence of violating
the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money
claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the
rationale of the subject clause in the transcripts of the Bicameral Conference Committee (Conference
Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077
and House Bill No. 14314).However, the Court finds no discernible state interest, let alone a
compelling one, that is sought to be protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against OFWs
under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and

cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the
Constitution commands. The idea that private business interest can be elevated to the level of a
compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-
Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers and/or
their Philippine agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures
against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding
local placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the
right of petitioner and other OFWs to equal protection.
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly violates state
policy on labor under Section 3,[131] Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,,[132] there are some
which this Court has declared not judicially enforceable, Article XIII being
one,[133] particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor
Relations Commission,[134] has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security
of tenure may be deemed as self-executing in the sense that these are
automatically acknowledged and observed without need for any enabling
legislation. However, to declare that the constitutional provisions are enough to
guarantee the full exercise of the rights embodied therein, and the realization of
ideals therein expressed, would be impractical, if not unrealistic. The espousal of
such view presents the dangerous tendency of being overbroad and
exaggerated. The guarantees of "full protection to labor" and "security of tenure",
when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor against any
form of removal regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment-a utopian notion, doubtless-but
still hardly within the contemplation of the framers. Subsequent legislation is still
needed to define the parameters of these guaranteed rights to ensure the
protection and promotion, not only the rights of the labor sector, but of the
employers' as well. Without specific and pertinent legislation, judicial bodies will
be at a loss, formulating their own conclusion to approximate at least the aims of
the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be
a source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or hearing. As
manifested by several framers of the 1987 Constitution, the provisions on social
justice require legislative enactments for their enforceability.[135] (Emphasis
added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional. It may
unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable
violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial
recognition. Its utility is best limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to protect the welfare of the working
class. And it was in fact consistent with that constitutional agenda that the Court in Central Bank
(now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the
judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice
against persons favored by the Constitution with special protection -- such as the working class
or a section thereof -- the Court may recognize the existence of a suspect classification and
subject the same to strict judicial scrutiny.
 The view that the concepts of suspect classification and strict judicial scrutiny formulated The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers

in Central Bank Employee Associationexaggerate the significance of Section 3, Article XIII is a like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment

groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay

clause. Article XIII, by itself, without the application of the equal protection clause, has no life or force of and other bonuses; whereas overtime pay is compensation for all work performed in excess of the

its own as elucidated in Agabon. regular eight hours, and holiday pay is compensation for any work performed on designated rest days

Along the same line of reasoning, the Court further holds that the subject clause violates and holidays.

petitioner's right to substantive due process, for it deprives him of property, consisting of monetary By the foregoing definition alone, there is no basis for the automatic inclusion of overtime

benefits, without any existing valid governmental purpose.[136] and holiday pay in the computation of petitioner's monetary award, unless there is evidence that he

The argument of the Solicitor General, that the actual purpose of the subject clause of performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela

limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them Cruz,[138]
However, the payment of overtime pay and leave pay should be
a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, disallowed in light of our ruling in Cagampan v. National Labor Relations
there is nothing in the text of the law or the records of the deliberations leading to its enactment or the Commission, to wit:

pleadings of respondent that would indicate that there is an existing governmental purpose for the The rendition of overtime work and the
submission of sufficient proof that said was actually
subject clause, or even just a pretext of one. performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which should be
The subject clause does not state or imply any definitive governmental purpose; and it is for
computed on the basis of 30% of the basic monthly salary.
that precise reason that the clause violates not just petitioner's right to equal protection, but also her In short, the contract provision guarantees the right to
overtime pay but the entitlement to such benefit must first
right to substantive due process under Section 1,[137] Article III of the Constitution. be established.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire In the same vein, the claim for the day's leave pay for the
unexpired period of nine months and 23 days of his employment contract, pursuant to law and unexpired portion of the contract is unwarranted since the
same is given during the actual service of the seamen.
jurisprudence prior to the enactment of R.A. No. 8042.

WHEREFORE, the Court GRANTS the Petition. The subject clause or for three months for
On the Third Issue
every year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act

Petitioner contends that his overtime and leave pay should form part of the salary basis in No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1,

the computation of his monetary award, because these are fixed benefits that have been stipulated 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his

into his contract. salaries for the entire unexpired portion of his employment contract consisting of nine months and 23

days computed at the rate of US$1,400.00 per month.

Petitioner is mistaken. No costs.

SO ORDERED.
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D.
GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE,
CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J.
SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO
B. MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON
S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA,
HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE,
INC., Victorias Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM,
HON. JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT,
and Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and
ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES,respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules
for his life on his way to Mycenae after performing his eleventh labor. The two wrestled
mightily and Hercules flung his adversary to the ground thinking him dead, but Antaeus
rose even stronger to resume their struggle. This happened several times to Hercules'
increasing amazement. Finally, as they continued grappling, it dawned on Hercules that
Antaeus was the son of Gaea and could never die as long as any part of his body was
touching his Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air,
beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch
even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the
elemental forces of life and death, of men and women who, like Antaeus need the
sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a slogan.
Through the brooding centuries, it has become a battle-cry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to
"insure the well-being and economic security of all the people," 1 especially the less
privileged. In 1973, the new Constitution affirmed this goal adding specifically that "the
State shall regulate the acquisition, ownership, use, enjoyment and disposition of private
property and equitably diffuse property ownership and profits." 2 Significantly, there
was also the specific injunction to "formulate and implement an agrarian reform
program aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it
also adopted one whole and separate Article XIII on Social Justice and Human Rights,
containing grandiose but undoubtedly sincere provisions for the uplift of the common
people. These include a call in the following words for the adoption by the State of an
agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farmworkers, who are landless, to own
directly or collectively the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the State shall encourage
and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking
into account ecological, developmental, or equity considerations and subject to
the payment of just compensation. In determining retention limits, the State
shall respect the right of small landowners. The State shall further provide
incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code,
had already been enacted by the Congress of the Philippines on August 8, 1963, in line
with the above-stated principles. This was substantially superseded almost a decade
later by P.D. No. 27, which was promulgated on October 21, 1972, along with martial law,
to provide for the compulsory acquisition of private lands for distribution among tenant-
farmers and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the
thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued
E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and
providing for the valuation of still unvalued lands covered by the decree as well as the
manner of their payment. This was followed on July 22, 1987 by Presidential
Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP), and
E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took
over legislative power from the President and started its own deliberations, including
extensive public hearings, on the improvement of the interests of farmers. The result,
after almost a year of spirited debate, was the enactment of R.A. No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988, which President Aquino
signed on June 10, 1988. This law, while considerably changing the earlier mentioned
enactments, nevertheless gives them suppletory effect insofar as they are not
inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common legal
questions, including serious challenges to the constitutionality of the several measures
mentioned above. They will be the subject of one common discussion and resolution, The
different antecedents of each case will require separate treatment, however, and will
first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and
229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned
by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four
tenants and owned by petitioner Augustin Hermano, Jr. The tenants were declared full
owners of these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter
alia of separation of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use without just
compensation.
They contend that President Aquino usurped legislative power when she promulgated
E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section 4, of the
Constitution, for failure to provide for retention limits for small landowners. Moreover, it
does not conform to Article VI, Section 25(4) and the other requisites of a valid
appropriation.
In connection with the determination of just compensation, the petitioners argue that the
same may be made only by a court of justice and not by the President of the Philippines.
They invoke the recent cases of EPZA v. Dulay 5and Manotok v. National Food
Authority. 6 Moreover, the just compensation contemplated by the Bill of Rights is
payable in money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also
deprives the petitioners of their property rights as protected by due process. The equal
protection clause is also violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No similar obligation is
imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be
the owners of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and
so violated due process. Worse, the measure would not solve the agrarian problem
because even the small farmers are deprived of their lands and the retention rights
guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in
the earlier cases ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform Council. 9 The determination
of just compensation by the executive authorities conformably to the formula prescribed
under the questioned order is at best initial or preliminary only. It does not foreclose
judicial intervention whenever sought or warranted. At any rate, the challenge to the
order is premature because no valuation of their property has as yet been made by the
Department of Agrarian Reform. The petitioners are also not proper parties because the
lands owned by them do not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not
provide for retention limits on tenanted lands and that in any event their petition is a
class suit brought in behalf of landowners with landholdings below 24 hectares. They
maintain that the determination of just compensation by the administrative authorities
is a final ascertainment. As for the cases invoked by the public respondent, the
constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was decided
in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O.
Nos. 228 and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No.
6657. Nevertheless, this statute should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz,
owner of a 1. 83- hectare land, who complained that the DAR was insisting on the
implementation of P.D. No. 27 and E.O. No. 228 despite a compromise agreement he had
reached with his tenant on the payment of rentals. In a subsequent motion dated April
10, 1989, he adopted the allegations in the basic amended petition that the above-
mentioned enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks to prohibit the implementation
of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform
Program as decreed by the Constitution belongs to Congress and not the President.
Although they agree that the President could exercise legislative power until the
Congress was convened, she could do so only to enact emergency measures during the
transition period. At that, even assuming that the interim legislative power of the
President was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to be
annulled for violating the constitutional provisions on just compensation, due process,
and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the
Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00)
to cover the estimated cost of the Comprehensive Agrarian Reform Program from 1987
to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset
Privatization Trust and Receipts of sale of ill-gotten wealth received through the
Presidential Commission on Good Government and such other sources as government
may deem appropriate. The amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this Proclamation
the amount appropriated is in futuro, not in esse. The money needed to cover the cost of
the contemplated expropriation has yet to be raised and cannot be appropriated at this
time.
Furthermore, they contend that taking must be simultaneous with payment of just
compensation as it is traditionally understood, i.e., with money and in full, but no such
payment is contemplated in Section 5 of the E.O. No. 229. On the contrary, Section 6,
thereof provides that the Land Bank of the Philippines "shall compensate the landowner
in an amount to be established by the government, which shall be based on the owner's
declaration of current fair market value as provided in Section 4 hereof, but subject to
certain controls to be defined and promulgated by the Presidential Agrarian Reform
Council." This compensation may not be paid fully in money but in any of several modes
that may consist of part cash and part bond, with interest, maturing periodically, or
direct payment in cash or bond as may be mutually agreed upon by the beneficiary and
the landowner or as may be prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made
to make a careful study of the sugar planters' situation. There is no tenancy problem in
the sugar areas that can justify the application of the CARP to them. To the extent that
the sugar planters have been lumped in the same legislation with other farmers,
although they are a separate group with problems exclusively their own, their right to
equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of
Sugarcane Planters (NASP) which claims a membership of at least 20,000 individual
sugar planters all over the country. On September 10, 1987, another motion for
intervention was filed, this time by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform
Program and that, in any event, the appropriation is invalid because of uncertainty in the
amount appropriated. Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229
provide for an initial appropriation of fifty billion pesos and thus specifies the minimum
rather than the maximum authorized amount. This is not allowed. Furthermore, the
stated initial amount has not been certified to by the National Treasurer as actually
available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear
and convincing evidence the necessity for the exercise of the powers of eminent domain,
and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the
expropriation of the said land for an amount equal to the government assessor's
valuation of the land for tax purposes. On the other hand, if the landowner declares his
own valuation he is unjustly required to immediately pay the corresponding taxes on the
land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of
constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity
for the expropriation as explained in the "whereas" clauses of the Proclamation and
submits that, contrary to the petitioner's contention, a pilot project to determine the
feasibility of CARP and a general survey on the people's opinion thereon are not
indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to
show that they belong to a different class and should be differently treated. The
Comment also suggests the possibility of Congress first distributing public agricultural
lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the
payment of public money without the corresponding appropriation. There is no rule that
only money already in existence can be the subject of an appropriation law. Finally, the
earmarking of fifty billion pesos as Agrarian Reform Fund, although denominated as an
initial amount, is actually the maximum sum appropriated. The word "initial" simply
means that additional amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own
behalf, assailing the constitutionality of E.O. No. 229. In addition to the arguments
already raised, Serrano contends that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on July 2,
1987; and
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in
violation of due process and the requirement for just compensation, placed his
landholding under the coverage of Operation Land Transfer. Certificates of Land Transfer
were subsequently issued to the private respondents, who then refused payment of lease
rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small
landholding under Operation Land transfer and asked for the recall and cancellation of
the Certificates of Land Transfer in the name of the private respondents. He claims that
on December 24, 1986, his petition was denied without hearing. On February 17, 1987,
he filed a motion for reconsideration, which had not been acted upon when E.O. Nos. 228
and 229 were issued. These orders rendered his motion moot and academic because
they directly effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.
(2) The said executive orders are violative of the constitutional
provision that no private property shall be taken without due process
or just compensation.
(3) The petitioner is denied the right of maximum retention provided
for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before
Congress convened is anomalous and arbitrary, besides violating the doctrine of
separation of powers. The legislative power granted to the President under the
Transitory Provisions refers only to emergency measures that may be promulgated in
the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due
process of law and to the retention of his small parcels of riceholding as guaranteed
under Article XIII, Section 4 of the Constitution. He likewise argues that, besides denying
him just compensation for his land, the provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his contention that the
inclusion of even small landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the
motion for reconsideration filed with the Minister of Agrarian Reform is still unresolved.
As for the validity of the issuance of E.O. Nos. 228 and 229, he argues that they were
enacted pursuant to Section 6, Article XVIII of the Transitory Provisions of the 1987
Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first
Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated
on October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the
land he was tilling. The leasehold rentals paid after that date should therefore be
considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed
was resolved on December 14, 1987. An appeal to the Office of the President would be
useless with the promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the
validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners
of rice and corn lands not exceeding seven hectares as long as they are cultivating or
intend to cultivate the same. Their respective lands do not exceed the statutory limit but
are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and
corn shall be ejected or removed from his farmholding until such time
as the respective rights of the tenant- farmers and the landowner shall
have been determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their
right of retention because the Department of Agrarian Reform has so far not issued the
implementing rules required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI
474 removing any right of retention from persons who own other agricultural lands of
more than 7 hectares in aggregate area or lands used for residential, commercial,
industrial or other purposes from which they derive adequate income for their family.
And even assuming that the petitioners do not fall under its terms, the regulations
implementing P.D. No. 27 have already been issued, to wit, the Memorandum dated July
10, 1975 (Interim Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated
December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by
Small Landowners), and DAR Administrative Order No. 1, series of 1985 (Providing for a
Cut-off Date for Landowners to Apply for Retention and/or to Protest the Coverage of
their Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure
to file the corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this
case notwithstanding the pendency of their appeal to the President of the Philippines.
Moreover, the issuance of the implementing rules, assuming this has not yet been done,
involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a
separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to
them because they do not own more than seven hectares of agricultural land. Moreover,
assuming arguendo that the rules were intended to cover them also, the said measures
are nevertheless not in force because they have not been published as required by law
and the ruling of this Court in Tanada v. Tuvera. 10 As for LOI 474, the same is ineffective
for the additional reason that a mere letter of instruction could not have repealed the
presidential decree.
I not in reality nullify or invalidate an act of the Legislature, but only
Although holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to
annul the acts of either the legislative or the executive or of both when not conformable
to the fundamental law. This is the reason for what some quarters call the doctrine of
judicial supremacy. Even so, this power is not lightly assumed or readily exercised. The
doctrine of separation of powers imposes upon the courts a proper restraint, born of the
nature of their functions and of their respect for the other departments, in striking down
the acts of the legislative and the executive as unconstitutional. The policy, indeed, is a
blend of courtesy and caution. To doubt is to sustain. The theory is that before the act
was done or the law was enacted, earnest studies were made by Congress or the
President, or both, to insure that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of
the Supreme Court who took part in the deliberations and voted on the issue during their
session en banc. 11 And as established by judge made doctrine, the Court will assume
jurisdiction over a constitutional question only if it is shown that the essential requisites
of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual
case or controversy involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been opportunely raised by the
proper party, and the resolution of the question is unavoidably necessary to the decision
of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases before
us, we hold that the same is satisfied by the petitioners and intervenors because each of
them has sustained or is in danger of sustaining an immediate injury as a result of the
acts or measures complained of. 13 And even if, strictly speaking, they are not covered by
the definition, it is still within the wide discretion of the Court to waive the requirement
and so remove the impediment to its addressing and resolving the serious constitutional
questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino
although they were invoking only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were not proper parties and
ruled that "the transcendental importance to the public of these cases demands that they
be settled promptly and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not hesitate to
declare a law or act invalid when it is convinced that this must be done. In arriving at this
conclusion, its only criterion will be the Constitution as God and its conscience give it the
light to probe its meaning and discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its decision. Blandishment is as
ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate
to "make the hammer fall, and heavily," to use Justice Laurel's pithy language, where the
acts of these departments, or of any public official, betray the people's will as expressed
in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does
asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them. This
is in truth all that is involved in what is termed "judicial supremacy"
which properly is the power of judicial review under the
Constitution. 16
The cases before us categorically raise constitutional questions that this Court must
categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more
serious challenges to the constitutionality of the several measures involved in these
petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under
martial law has already been sustained in Gonzales v. Estrella and we find no reason to
modify or reverse it on that issue. As for the power of President Aquino to promulgate
Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized under Section 6 of the
Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the
Congress of the Philippines was formally convened and took over legislative power from
her. They are not "midnight" enactments intended to pre-empt the legislature because
E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131 and
E.O. No. 229, were both issued on July 22, 1987. Neither is it correct to say that these
measures ceased to be valid when she lost her legislative power for, like any statute, they
continue to be in force unless modified or repealed by subsequent law or declared
invalid by the courts. A statute does not ipso facto become inoperative simply because of
the dissolution of the legislature that enacted it. By the same token, President Aquino's
loss of legislative power did not have the effect of invalidating all the measures enacted
by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact
substantially affirmed the challenged measures and has specifically provided that they
shall be suppletory to R.A. No. 6657 whenever not inconsistent with its
provisions. 17 Indeed, some portions of the said measures, like the creation of the P50
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have
been incorporated by reference in the CARP Law.18
That fund, as earlier noted, is itself being questioned on the ground that it does not
conform to the requirements of a valid appropriation as specified in the Constitution.
Clearly, however, Proc. No. 131 is not an appropriation measure even if it does provide
for the creation of said fund, for that is not its principal purpose. An appropriation law is
one the primary and specific purpose of which is to authorize the release of public funds
from the treasury.19 The creation of the fund is only incidental to the main objective of
the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and
Section 25(4) of Article VI, are not applicable. With particular reference to Section 24,
this obviously could not have been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate appropriation measures,
had not yet been convened when the proclamation was issued. The legislative power was
then solely vested in the President of the Philippines, who embodied, as it were, both
houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be
invalidated because they do not provide for retention limits as required by Article XIII,
Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does provide for such
limits now in Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or private
agricultural land, the size of which shall vary according to factors
governing a viable family-sized farm, such as commodity produced,
terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but
in no case shall retention by the landowner exceed five (5) hectares.
Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen
(15) years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep
the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall
have only one subject, to be expressed in its title, deserves only short attention. It is
settled that the title of the bill does not have to be a catalogue of its contents and will
suffice if the matters embodied in the text are relevant to each other and may be inferred
from the title. 20
The Court wryly observes that during the past dictatorship, every presidential issuance,
by whatever name it was called, had the force and effect of law because it came from
President Marcos. Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important thing is that it was
issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to
comply with the requirement for publication as this Court held in Tanada v.
Tuvera. 21 Hence, unless published in the Official Gazette in accordance with Article 2 of
the Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was published, though, in the
Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of
mandamus cannot issue to compel the performance of a discretionary act, especially by a
specific department of the government. That is true as a general proposition but is
subject to one important qualification. Correctly and categorically stated, the rule is that
mandamus will lie to compel the discharge of the discretionary duty itself but not to
control the discretion to be exercised. In other words, mandamus can issue to require
action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary
and unreasonable delay in the exercise of such duty occurs, if it is a
clear duty imposed by law, the courts will intervene by the
extraordinary legal remedy of mandamus to compel action. If the duty
is purely ministerial, the courts will require specific action. If the duty
is purely discretionary, the courts by mandamus will require action
only. For example, if an inferior court, public official, or board should,
for an unreasonable length of time, fail to decide a particular question
to the great detriment of all parties concerned, or a court should
refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a
decision, and in the second to require that jurisdiction be taken of the
cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a
plain, speedy and adequate remedy available from the administrative authorities, resort
to the courts may still be permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent
domain that logically preclude the application of both powers at the same time on the
same subject. In the case of City of Baguio v. NAWASA, 24 for example, where a law
required the transfer of all municipal waterworks systems to the NAWASA in exchange
for its assets of equivalent value, the Court held that the power being exercised was
eminent domain because the property involved was wholesome and intended for a
public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be demolished
for the public safety, or obscene materials, which should be destroyed in the interest of
public morals. The confiscation of such property is not compensable, unlike the taking of
property under the power of expropriation, which requires the payment of just
compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the
police power in a famous aphorism: "The general rule at least is that while property may
be regulated to a certain extent, if regulation goes too far it will be recognized as a
taking." The regulation that went "too far" was a law prohibiting mining which might
cause the subsidence of structures for human habitation constructed on the land surface.
This was resisted by a coal company which had earlier granted a deed to the land over its
mine but reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained without
compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that
there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of
the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights in
property without making compensation. But restriction imposed to
protect the public health, safety or morals from dangers threatened is
not a taking. The restriction here in question is merely the prohibition
of a noxious use. The property so restricted remains in the possession
of its owner. The state does not appropriate it or make any use of it.
The state merely prevents the owner from making a use which
interferes with paramount rights of the public. Whenever the use
prohibited ceases to be noxious — as it may because of further
changes in local or social conditions — the restriction will have to be
removed and the owner will again be free to enjoy his property as
heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police
power and the power of eminent domain, with the latter being used as an implement of
the former like the power of taxation. The employment of the taxing power to achieve a
police purpose has long been accepted. 26 As for the power of expropriation, Prof. John J.
Costonis of the University of Illinois College of Law (referring to the earlier case of Euclid
v. Ambler Realty Co., 272 US 365, which sustained a zoning law under the police power)
makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public
acquisition of private property for improvements that would be
available for public use," literally construed. To the police power, on
the other hand, they assigned the less intrusive task of preventing
harmful externalities a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of zoning. So long
as suppression of a privately authored harm bore a plausible relation
to some legitimate "public purpose," the pertinent measure need have
afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two
powers has contracted considerably. Today government often
employs eminent domain interchangeably with or as a useful
complement to the police power-- a trend expressly approved in the
Supreme Court's 1954 decision in Berman v. Parker, which broadened
the reach of eminent domain's "public use" test to match that of the
police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted
areas in the District of Columbia as a proper exercise of the police power. On the role of
eminent domain in the attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize
it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the
U.S Supreme Court sustained the respondent's Landmarks Preservation Law under
which the owners of the Grand Central Terminal had not been allowed to construct a
multi-story office building over the Terminal, which had been designated a historic
landmark. Preservation of the landmark was held to be a valid objective of the police
power. The problem, however, was that the owners of the Terminal would be deprived of
the right to use the airspace above it although other landowners in the area could do so
over their respective properties. While insisting that there was here no taking, the Court
nonetheless recognized certain compensatory rights accruing to Grand Central Terminal
which it said would "undoubtedly mitigate" the loss caused by the regulation. This "fair
compensation," as he called it, was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was
authorized to transfer to neighboring properties the authorized but unused rights
accruing to the site prior to the Terminal's designation as a landmark — the rights which
would have been exhausted by the 59-story building that the city refused to countenance
atop the Terminal. Prevailing bulk restrictions on neighboring sites were proportionately
relaxed, theoretically enabling Penn Central to recoup its losses at the Terminal site by
constructing or selling to others the right to construct larger, hence more profitable
buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of
compensable taking is concerned. To the extent that the measures under challenge
merely prescribe retention limits for landowners, there is an exercise of the police power
for the regulation of private property in accordance with the Constitution. But where, to
carry out such regulation, it becomes necessary to deprive such owners of whatever
lands they may own in excess of the maximum area allowed, there is definitely a taking
under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What
is required is the surrender of the title to and the physical possession of the said excess
and all beneficial rights accruing to the owner in favor of the farmer-beneficiary. This is
definitely an exercise not of the police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the
several measures before us are challenged as violative of the due process and equal
protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention
limits are prescribed has already been discussed and dismissed. It is noted that although
they excited many bitter exchanges during the deliberation of the CARP Law in Congress,
the retention limits finally agreed upon are, curiously enough, not being questioned in
these petitions. We therefore do not discuss them here. The Court will come to the other
claimed violations of due process in connection with our examination of the adequacy of
just compensation as required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection because
of the absence of retention limits has also become academic under Section 6 of R.A. No.
6657. Significantly, they too have not questioned the area of such limits. There is also the
complaint that they should not be made to share the burden of agrarian reform, an
objection also made by the sugar planters on the ground that they belong to a particular
class with particular interests of their own. However, no evidence has been submitted to
the Court that the requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other
in certain particulars and different from each other in these same particulars. 31 To be
valid, it must conform to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited
to existing conditions only; and (4) it must apply equally to all the members of the
class. 32 The Court finds that all these requisites have been met by the measures here
challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be
treated alike both as to the rights conferred and the liabilities imposed. 33 The petitioners
have not shown that they belong to a different class and entitled to a different treatment.
The argument that not only landowners but also owners of other properties must be
made to share the burden of implementing land reform must be rejected. There is a
substantial distinction between these two classes of owners that is clearly visible except
to those who will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its decision is
accorded recognition and respect by the courts of justice except only where its discretion
is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police
power only if there is a concurrence of the lawful subject and the lawful method. Put
otherwise, the interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the purpose sought to be
achieved and not unduly oppressive upon individuals. 34 As the subject and purpose of
agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the
method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the
individual are concerned, the end does not justify the means. It is not enough that there
be a valid objective; it is also necessary that the means employed to pursue it be in
keeping with the Constitution. Mere expediency will not excuse constitutional shortcuts.
There is no question that not even the strongest moral conviction or the most urgent
public need, subject only to a few notable exceptions, will excuse the bypassing of an
individual's rights. It is no exaggeration to say that a, person invoking a right guaranteed
under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article
III of the Constitution. With regard to his property, the owner enjoys the added
protection of Section 9, which reaffirms the familiar rule that private property shall not
be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to
forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions
offered by the vendee, that the power of eminent domain will come
into play to assert the paramount authority of the State over the
interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored
justification, as in the case of the police power, that the welfare of the
people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute
(as indeed no power is absolute). The limitation is found in the constitutional injunction
that "private property shall not be taken for public use without just compensation" and
in the abundant jurisprudence that has evolved from the interpretation of this principle.
Basically, the requirements for a proper exercise of the power are: (1) public use and (2)
just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the
State should first distribute public agricultural lands in the pursuit of agrarian reform
instead of immediately disturbing property rights by forcibly acquiring private
agricultural lands. Parenthetically, it is not correct to say that only public agricultural
lands may be covered by the CARP as the Constitution calls for "the just distribution of all
agricultural lands." In any event, the decision to redistribute private agricultural lands in
the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that
discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments
when they decide what is known as the political question. As explained by Chief Justice
Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions
which, under the Constitution, are to be decided by the people in their
sovereign capacity; or in regard to which full discretionary authority
has been delegated to the legislative or executive branch of the
government." It is concerned with issues dependent upon the wisdom,
not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "to
determine whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as a license for us to reverse the
other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the
CARP the redistribution of private landholdings (even as the distribution of public
agricultural lands is first provided for, while also continuing apace under the Public Land
Act and other cognate laws). The Court sees no justification to interpose its authority,
which we may assert only if we believe that the political decision is not unwise, but
illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3,1909 that
the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present ship
 canal, throughout its entire length, was "necessary for the purpose of
navigation of said waters, and the waters connected therewith," that
determination is conclusive in condemnation proceedings instituted
by the United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the
reason why private agricultural lands are to be taken from their owners, subject to the
prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc. No.
131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that the
State adopt the necessary measures "to encourage and undertake the just distribution of
all agricultural lands to enable farmers who are landless to own directly or collectively
the lands they till." That public use, as pronounced by the fundamental law itself, must be
binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its
owner by the expropriator. 39 It has been repeatedly stressed by this Court that the
measure is not the taker's gain but the owner's loss.40 The word "just" is used to intensify
the meaning of the word "compensation" to convey the idea that the equivalent to be
rendered for the property to be taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate more
than a mere regulation of the use of private lands under the police power. We deal here
with an actual taking of private agricultural lands that has dispossessed the owners of
their property and deprived them of all its beneficial use and enjoyment, to entitle them
to the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the
following conditions concur: (1) the expropriator must enter a private property; (2) the
entry must be for more than a momentary period; (3) the entry must be under warrant
or color of legal authority; (4) the property must be devoted to public use or otherwise
informally appropriated or injuriously affected; and (5) the utilization of the property for
public use must be in such a way as to oust the owner and deprive him of beneficial
enjoyment of the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon
its taking possession of the condemned property, as "the compensation is a public
charge, the good faith of the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount." 43 Nevertheless, Section 16(e) of the
CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the deposit
with an accessible bank designated by the DAR of the compensation in
cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified
beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in case of
the rejection or disregard by the owner of the offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the landowner,
the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of
the notice. After the expiration of the above period, the matter is
deemed submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts
of justice and may not be usurped by any other branch or official of the
government. EPZA v. Dulay 44 resolved a challenge to several decrees promulgated by
President Marcos providing that the just compensation for property under expropriation
should be either the assessment of the property by the government or the sworn
valuation thereof by the owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which
under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for the
property, following the applicable decrees, its task would be relegated
to simply stating the lower value of the property as declared either by
the owner or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause in
the taking of private property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the proceedings
would be nothing short of a mere formality or charade as the court
has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The
court cannot exercise its discretion or independence in determining
what is just or fair. Even a grade school pupil could substitute for the
judge insofar as the determination of constitutional just compensation
is concerned.
xxx
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor decrees,
still have the power and authority to determine just compensation,
independent of what is stated by the decree and to this effect, to
appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to
prove that the valuation in the tax documents is unfair or wrong. And
it is repulsive to the basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to absolutely prevail
over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and
 considerations essential to a fair and just determination have been
judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from
the arbitrariness that rendered the challenged decrees constitutionally objectionable.
Although the proceedings are described as summary, the landowner and other
interested parties are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, the determination of the just
compensation by the DAR is not by any means final and conclusive upon the landowner
or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to
the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality
the said determination in the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as
easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP shall
compensate the landowner in such amount as may be agreed upon by
the landowner and the DAR and the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.
The compensation shall be paid in one of the following modes, at the
option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned — Twenty-five percent (25%) cash,
the balance to be paid in government financial instruments
negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty
(50) hectares — Thirty percent (30%) cash, the balance to
be paid in government financial instruments negotiable at
any time.
(c) For lands twenty-four (24) hectares and below — Thirty-
five percent (35%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments
in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill
rates. Ten percent (10%) of the face value of the bonds shall
mature every year from the date of issuance until the tenth
(10th) year: Provided, That should the landowner choose to
forego the cash portion, whether in full or in part, he shall be
paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the
landowner, his successors-in- interest or his assigns, up to the amount of their
face value, for any of the following:
(i) Acquisition of land or other real properties of the government,
including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid are
situated;
(ii) Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private
corporations;
(iii) Substitution for surety or bail bonds for the provisional release of
accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an economic
enterprise, preferably in a small and medium- scale industry, in the
same province or region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to government: Provided, That
the use of these bonds for these purposes will be limited to a certain
percentage of the outstanding balance of the financial instruments;
Provided, further, That the PARC shall determine the percentages
mentioned above;
(vi) Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools, and
other institutions;
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above
provision is unconstitutional insofar as it requires the owners of the
expropriated properties to accept just compensation therefor in less
than money, which is the only medium of payment allowed. In
support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of
the property expropriated is entitled to a just compensation, which
should be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation
. 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is
more, and anything short of that is less, than just compensation. It
means a fair and full equivalent for the loss sustained, which is the
measure of the indemnity, not whatever gain would accrue to the
expropriating entity. The market value of the land taken is the just
compensation to which the owner of condemned property is entitled,
the market value being that sum of money which a person desirous,
but not compelled to buy, and an owner, willing, but not compelled to
 sell, would agree on as a price to be given and received for such
property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived,
the weight of authority is also to the effect that just compensation for property
expropriated is payable only in money and not otherwise. Thus —
The medium of payment of compensation is ready money or cash. The
condemnor cannot compel the owner to accept anything but money,
nor can the owner compel or require the condemnor to pay him on
any other basis than the value of the property in money at the time
and in the manner prescribed by the Constitution and the statutes.
When the power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and the law
has fixed that standard as money in cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of
compensation. 48
"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable
time after the taking, and it is not within the power of the Legislature
to substitute for such payment future obligations, bonds, or other
valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been
paid in the past solely in that medium. However, we do not deal here with the traditional
excercise of the power of eminent domain. This is not an ordinary expropriation where
only a specific property of relatively limited area is sought to be taken by the State from
its owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed
their owners. This kind of expropriation is intended for the benefit not only of a
particular community or of a small segment of the population but of the entire Filipino
nation, from all levels of our society, from the impoverished farmer to the land-glutted
owner. Its purpose does not cover only the whole territory of this country but goes
beyond in time to the foreseeable future, which it hopes to secure and edify with the
vision and the sacrifice of the present generation of Filipinos. Generations yet to come
are as involved in this program as we are today, although hopefully only as beneficiaries
of a richer and more fulfilling life we will guarantee to them tomorrow through our
thoughtfulness today. And, finally, let it not be forgotten that it is no less than the
Constitution itself that has ordained this revolution in the farms, calling for "a just
distribution" among the farmers of lands that have heretofore been the prison of their
dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed, far more indeed than the
amount of P50 billion initially appropriated, which is already staggering as it is by our
present standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they
called for agrarian reform as a top priority project of the government. It is a part of this
assumption that when they envisioned the expropriation that would be needed, they also
intended that the just compensation would have to be paid not in the orthodox way but a
less conventional if more practical method. There can be no doubt that they were aware
of the financial limitations of the government and had no illusions that there would be
enough money to pay in cash and in full for the lands they wanted to be distributed
among the farmers. We may therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law, particularly the payment of
the balance (if the owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may also suppose that
what they had in mind was a similar scheme of payment as that prescribed in P.D. No. 27,
which was the law in force at the time they deliberated on the new Charter and with
which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any categorical
agreement among the members regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform program being
contemplated. There was the suggestion to "fine tune" the requirement to suit the
demands of the project even as it was also felt that they should "leave it to Congress" to
determine how payment should be made to the landowner and reimbursement required
from the farmer-beneficiaries. Such innovations as "progressive compensation" and
"State-subsidized compensation" were also proposed. In the end, however, no special
definition of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against the
assumptions we are making of the general sentiments and intention of the members on
the content and manner of the payment to be made to the landowner in the light of the
magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the
just compensation provided for in the afore- quoted Section 18 of the CARP Law is not
violative of the Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all this Court is not a
cloistered institution removed from the realities and demands of society or oblivious to
the need for its enhancement. The Court is as acutely anxious as the rest of our people to
see the goal of agrarian reform achieved at last after the frustrations and deprivations of
our peasant masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and resurrecting the spectre
of discontent and dissent in the restless countryside. That is not in our view the intention
of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be
made fully in money, we find further that the proportion of cash payment to the other
things of value constituting the total payment, as determined on the basis of the areas of
the lands expropriated, is not unduly oppressive upon the landowner. It is noted that the
smaller the land, the bigger the payment in money, primarily because the small
landowner will be needing it more than the big landowners, who can afford a bigger
balance in bonds and other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any time." The
other modes, which are likewise available to the landowner at his option, are also not
unreasonable because payment is made in shares of stock, LBP bonds, other properties
or assets, tax credits, and other things of value equivalent to the amount of just
compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big
and small, not a little inconvenience. As already remarked, this cannot be avoided.
Nevertheless, it is devoutly hoped that these countrymen of ours, conscious as we know
they are of the need for their forebearance and even sacrifice, will not begrudge us their
indispensable share in the attainment of the ideal of agrarian reform. Otherwise, our
pursuit of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does
not seem to be viable any more as it appears that Section 4 of the said Order has been
superseded by Section 14 of the CARP Law. This repeats the requisites of registration as
embodied in the earlier measure but does not provide, as the latter did, that in case of
failure or refusal to register the land, the valuation thereof shall be that given by the
provincial or city assessor for tax purposes. On the contrary, the CARP Law says that the
just compensation shall be ascertained on the basis of the factors mentioned in its
Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even
before actual payment to him in full of just compensation, in contravention of a well-
accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the petition under the Eminent
Domain Act, or the commissioner's report under the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete at the time
of entry, title to the property taken remains in the owner until payment is actually
made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title
to property does not pass to the condemnor until just compensation had actually been
made. In fact, the decisions appear to be uniformly to this effect. As early as 1838,
in Rubottom v. McLure, 54 it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to the
property in the State" albeit "not to the appropriation of it to public use." In Rexford v.
Knight, 55 the Court of Appeals of New York said that the construction upon the statutes
was that the fee did not vest in the State until the payment of the compensation although
the authority to enter upon and appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and authority the rule is ... that the right to
enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass
from the owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid ...
. (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as
October 21, 1972 and declared that he shall "be deemed the owner" of a portion of land
consisting of a family-sized farm except that "no title to the land owned by him was to be
actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers' cooperative." It was understood, however, that full payment of the
just compensation also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after
proof of full-fledged membership in the farmers' cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the Order to also provide in its
Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary after
October 21, 1972 (pending transfer of ownership after full payment of just
compensation), shall be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the
land to the government on receipt by the landowner of the corresponding payment or
the deposit by the DAR of the compensation in cash or LBP bonds with an accessible
bank. Until then, title also remains with the landowner. 57 No outright change of
ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D.
No. 27, as recognized under E.O. No. 228, are retained by him even now under R.A. No.
6657. This should counter-balance the express provision in Section 6 of the said law that
"the landowners whose lands have been covered by Presidential Decree No. 27 shall be
allowed to keep the area originally retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own the original homestead at
the time of the approval of this Act shall retain the same areas as long as they continue to
cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742 that the
appeal filed by the petitioners with the Office of the President has already been resolved.
Although we have said that the doctrine of exhaustion of administrative remedies need
not preclude immediate resort to judicial action, there are factual issues that have yet to
be examined on the administrative level, especially the claim that the petitioners are not
covered by LOI 474 because they do not own other agricultural lands than the subjects of
their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the
petitioners have not yet exercised their retention rights, if any, under P.D. No. 27, the
Court holds that they are entitled to the new retention rights provided for by R.A. No.
6657, which in fact are on the whole more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been the
subject of bitter attack from those who point to the shortcomings of these measures and
ask that they be scrapped entirely. To be sure, these enactments are less than perfect;
indeed, they should be continuously re-examined and rehoned, that they may be sharper
instruments for the better protection of the farmer's rights. But we have to start
somewhere. In the pursuit of agrarian reform, we do not tread on familiar ground but
grope on terrain fraught with pitfalls and expected difficulties. This is inevitable. The
CARP Law is not a tried and tested project. On the contrary, to use Justice Holmes's
words, "it is an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection although
we should strive for it by all means. Meantime, we struggle as best we can in freeing the
farmer from the iron shackles that have unconscionably, and for so long, fettered his soul
to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian
reform program are removed, to clear the way for the true freedom of the farmer. We
may now glimpse the day he will be released not only from want but also from the
exploitation and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the farm on which he
toils will be his farm. It will be his portion of the Mother Earth that will give him not only
the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at
last can he banish from his small plot of earth his insecurities and dark resentments and
"rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229
are SUSTAINED against all the constitutional objections raised in the
herein petitions.
2. Title to all expropriated properties shall be transferred to the State
only upon full payment of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No.
27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A. No.
6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
G.R. No. 171101 July 5, 2011
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING
CORPORATION,Petitioners-in-Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER
PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA
MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI,
and JULIO SUNIGA1 and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC.
and WINDSOR ANDAYA, Respondents.
DECISION
VELASCO, JR., J.:
"Land for the landless," a shibboleth the landed gentry doubtless has received with much
misgiving, if not resistance, even if only the number of agrarian suits filed serves to be
the norm. Through the years, this battle cry and root of discord continues to reflect the
seemingly ceaseless discourse on, and great disparity in, the distribution of land among
the people, "dramatizing the increasingly urgent demand of the dispossessed x x x for a
plot of earth as their place in the sun."2 As administrations and political alignments
change, policies advanced, and agrarian reform laws enacted, the latest being what is
considered a comprehensive piece, the face of land reform varies and is masked in
myriads of ways. The stated goal, however, remains the same: clear the way for the true
freedom of the farmer.3
Land reform, or the broader term "agrarian reform," has been a government policy even
before the Commonwealth era. In fact, at the onset of the American regime, initial steps
toward land reform were already taken to address social unrest.4 Then, under the 1935
Constitution, specific provisions on social justice and expropriation of landed estates for
distribution to tenants as a solution to land ownership and tenancy issues were
incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting in motion
the expropriation of all tenanted estates.5
On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was
enacted,6 abolishing share tenancy and converting all instances of share tenancy into
leasehold tenancy.7 RA 3844 created the Land Bank of the Philippines (LBP) to provide
support in all phases of agrarian reform.
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice and
corn, supposedly to be accomplished by expropriating lands in excess of 75 hectares for
their eventual resale to tenants. The law, however, had this restricting feature: its
operations were confined mainly to areas in Central Luzon, and its implementation at
any level of intensity limited to the pilot project in Nueva Ecija.8
Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring the
entire country a land reform area, and providing for the automatic conversion of tenancy
to leasehold tenancy in all areas. From 75 hectares, the retention limit was cut down to
seven hectares.9
Barely a month after declaring martial law in September 1972, then President Ferdinand
Marcos issued Presidential Decree No. 27 (PD 27) for the "emancipation of the tiller from
the bondage of the soil."10 Based on this issuance, tenant-farmers, depending on the size
of the landholding worked on, can either purchase the land they tilled or shift from share
to fixed-rent leasehold tenancy.11 While touted as "revolutionary," the scope of the
agrarian reform program PD 27 enunciated covered only tenanted, privately-owned rice
and corn lands.12
Then came the revolutionary government of then President Corazon C. Aquino and the
drafting and eventual ratification of the 1987 Constitution. Its provisions foreshadowed
the establishment of a legal framework for the formulation of an expansive approach to
land reform, affecting all agricultural lands and covering both tenant-farmers and regular
farmworkers.13
So it was that Proclamation No. 131, Series of 1987, was issued instituting a
comprehensive agrarian reform program (CARP) to cover all agricultural lands,
regardless of tenurial arrangement and commodity produced, as provided in the
Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as its
title14 indicates, the mechanisms for CARP implementation. It created the Presidential
Agrarian Reform Council (PARC) as the highest policy-making body that formulates all
policies, rules, and regulations necessary for the implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, also
known as CARL or the CARP Law, took effect, ushering in a new process of land
classification, acquisition, and distribution. As to be expected, RA 6657 met stiff
opposition, its validity or some of its provisions challenged at every possible
turn.Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform 15 stated the observation that the assault was inevitable, the CARP being an
untried and untested project, "an experiment [even], as all life is an experiment," the
Court said, borrowing from Justice Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary
injunctive relief, petitioner Hacienda Luisita, Inc. (HLI) assails and seeks to set aside
PARC Resolution No. 2005-32-0116 and Resolution No. 2006-34-0117 issued on
December 22, 2005 and May 3, 2006, respectively, as well as the implementing Notice of
Coverage dated January 2, 2006 (Notice of Coverage).18
The Facts
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once a 6,443-
hectare mixed agricultural-industrial-residential expanse straddling several
municipalities of Tarlac and owned by Compañia General de Tabacos de Filipinas
(Tabacalera). In 1957, the Spanish owners of Tabacalera offered to sell Hacienda Luisita
as well as their controlling interest in the sugar mill within the hacienda, the Central
Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac Development
Corporation (Tadeco), then owned and/or controlled by the Jose Cojuangco, Sr. Group,
was willing to buy. As agreed upon, Tadeco undertook to pay the purchase price for
Hacienda Luisita in pesos, while that for the controlling interest in CAT, in US dollars.19
To facilitate the adverted sale-and-purchase package, the Philippine government,
through the then Central Bank of the Philippines, assisted the buyer to obtain a dollar
loan from a US bank.20 Also, the Government Service Insurance System (GSIS) Board of
Trustees extended on November 27, 1957 a PhP 5.911 million loan in favor of Tadeco to
pay the peso price component of the sale. One of the conditions contained in the
approving GSIS Resolution No. 3203, as later amended by Resolution No. 356, Series of
1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be subdivided by the applicant-
corporation and sold at cost to the tenants, should there be any, and whenever
conditions should exist warranting such action under the provisions of the Land Tenure
Act;21
As of March 31, 1958, Tadeco had fully paid the purchase price for the acquisition of
Hacienda Luisita and Tabacalera’s interest in CAT.22
The details of the events that happened next involving the hacienda and the political
color some of the parties embossed are of minimal significance to this narration and
need no belaboring. Suffice it to state that on May 7, 1980, the martial law administration
filed a suit before the Manila Regional Trial Court (RTC) against Tadeco, et al., for them to
surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR, now the
Department of Agrarian Reform [DAR]) so that the land can be distributed to farmers at
cost. Responding, Tadeco or its owners alleged that Hacienda Luisita does not have
tenants, besides which sugar lands––of which the hacienda consisted––are not covered
by existing agrarian reform legislations. As perceived then, the government commenced
the case against Tadeco as a political message to the family of the late Benigno Aquino,
Jr.23
Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda
Luisita to the MAR. Therefrom, Tadeco appealed to the Court of Appeals (CA).
On March 17, 1988, the Office of the Solicitor General (OSG) moved to withdraw the
government’s case against Tadeco, et al. By Resolution of May 18, 1988, the CA dismissed
the case the Marcos government initially instituted and won against Tadeco, et al. The
dismissal action was, however, made subject to the obtention by Tadeco of the PARC’s
approval of a stock distribution plan (SDP) that must initially be implemented after such
approval shall have been secured.24 The appellate court wrote:
The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x x
governmental agencies concerned in moving for the dismissal of the case subject,
however, to the following conditions embodied in the letter dated April 8, 1988 (Annex
2) of the Secretary of the [DAR] quoted, as follows:
1. Should TADECO fail to obtain approval of the stock distribution plan for
failure to comply with all the requirements for corporate landowners set forth
in the guidelines issued by the [PARC]: or
2. If such stock distribution plan is approved by PARC, but TADECO fails to
initially implement it.
xxxx
WHEREFORE, the present case on appeal is hereby dismissed without prejudice, and
should be revived if any of the conditions as above set forth is not duly complied with by
the TADECO.25
Markedly, Section 10 of EO 22926 allows corporate landowners, as an alternative to the
actual land transfer scheme of CARP, to give qualified beneficiaries the right to purchase
shares of stocks of the corporation under a stock ownership arrangement and/or land-
to-share ratio.
Like EO 229, RA 6657, under the latter’s Sec. 31, also provides two (2) alternative
modalities, i.e., land or stock transfer, pursuant to either of which the corporate
landowner can comply with CARP, but subject to well-defined conditions and timeline
requirements. Sec. 31 of RA 6657 provides:
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily transfer
ownership over their agricultural landholdings to the Republic of the Philippines
pursuant to Section 20 hereof or to qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of
the corporation that the agricultural land, actually devoted to agricultural
activities, bears in relation to the company’s total assets, under such terms and
conditions as may be agreed upon by them. In no case shall the compensation received
by the workers at the time the shares of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock,
equity or participation in favor of their workers or other qualified beneficiaries under
this section shall be deemed to have complied with the provisions of this Act: Provided,
That the following conditions are complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to
dividends and other financial benefits, the books of the corporation or
association shall be subject to periodic audit by certified public accountants
chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or association,
the beneficiaries shall be assured of at least one (1) representative in the board
of directors, or in a management or executive committee, if one exists, of the
corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same
rights and features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab
initio unless said transaction is in favor of a qualified and registered beneficiary
within the same corporation.
If within two (2) years from the approval of this Act, the [voluntary] land or stock
transfer envisioned above is not made or realized or the plan for such stock distribution
approved by the PARC within the same period, the agricultural land of the corporate
owners or corporation shall be subject to the compulsory coverage of this Act. (Emphasis
added.)
Vis-à-vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued
Administrative Order No. 10, Series of 1988 (DAO 10),27 entitled Guidelines and
Procedures for Corporate Landowners Desiring to Avail Themselves of the Stock
Distribution Plan under Section 31 of RA 6657.
From the start, the stock distribution scheme appeared to be Tadeco’s preferred option,
for, on August 23, 1988,28 it organized a spin-off corporation, HLI, as vehicle to facilitate
stock acquisition by the farmworkers. For this purpose, Tadeco assigned and conveyed
to HLI the agricultural land portion (4,915.75 hectares) and other farm-related
properties of Hacienda Luisita in exchange for HLI shares of stock.29
Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and Paz C.
Teopaco were the incorporators of HLI.30
To accommodate the assets transfer from Tadeco to HLI, the latter, with the Securities
and Exchange Commission’s (SEC’s) approval, increased its capital stock on May 10,
1989 from PhP 1,500,000 divided into 1,500,000 shares with a par value of PhP 1/share
to PhP 400,000,000 divided into 400,000,000 shares also with par value of PhP 1/share,
150,000,000 of which were to be issued only to qualified and registered beneficiaries of
the CARP, and the remaining 250,000,000 to any stockholder of the corporation.31
As appearing in its proposed SDP, the properties and assets of Tadeco contributed to the
capital stock of HLI, as appraised and approved by the SEC, have an aggregate value of
PhP 590,554,220, or after deducting the total liabilities of the farm amounting to PhP
235,422,758, a net value of PhP 355,531,462. This translated to 355,531,462 shares with
a par value of PhP 1/share.32
On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of
Hacienda Luisita signified in a referendum their acceptance of the proposed HLI’s Stock
Distribution Option Plan. On May 11, 1989, the Stock Distribution Option Agreement
(SDOA), styled as a Memorandum of Agreement (MOA),33 was entered into by Tadeco,
HLI, and the 5,848 qualified FWBs34 and attested to by then DAR Secretary Philip Juico.
The SDOA embodied the basis and mechanics of the SDP, which would eventually be
submitted to the PARC for approval. In the SDOA, the parties agreed to the following:
1. The percentage of the value of the agricultural land of Hacienda Luisita
(P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred
 and conveyed to the SECOND PARTY [HLI] is 33.296% that, under the law, is
the proportion of the outstanding capital stock of the SECOND PARTY, which is
P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share,
that has to be distributed to the THIRD PARTY [FWBs] under the stock
distribution plan, the said 33.296% thereof being P118,391,976.85
or 118,391,976.85 shares.
2. The qualified beneficiaries of the stock distribution plan shall be the
farmworkers who appear in the annual payroll, inclusive of the permanent and
seasonal employees, who are regularly or periodically employed by the
SECOND PARTY.
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY
shall arrange with the FIRST PARTY [Tadeco] the acquisition and
distribution to the THIRD PARTY on the basis of number of days worked and
at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the
capital stock of the SECOND PARTY that are presently owned and held by the
FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall
have been completely acquired and distributed to the THIRD PARTY.
4.The SECOND PARTY shall guarantee to the qualified beneficiaries of the [SDP]
that every year they will receive on top of their regular compensation, an
amount that approximates the equivalent of three (3%) of the total gross sales
from the production of the agricultural land, whether it be in the form of cash
dividends or incentive bonuses or both.
5. Even if only a part or fraction of the shares earmarked for distribution will
have been acquired from the FIRST PARTY and distributed to the THIRD
PARTY, FIRST PARTY shall execute at the beginning of each fiscal year an
irrevocable proxy, valid and effective for one (1) year, in favor of the
farmworkers appearing as shareholders of the SECOND PARTY at the start of
said year which will empower the THIRD PARTY or their representative to vote
in stockholders’ and board of directors’ meetings of the SECOND PARTY
convened during the year the entire 33.296% of the outstanding capital stock of
the SECOND PARTY earmarked for distribution and thus be able to gain such
number of seats in the board of directors of the SECOND PARTY that the whole
33.296% of the shares subject to distribution will be entitled to.
6. In addition, the SECOND PARTY shall within a reasonable time subdivide and
allocate for free and without charge among the qualified family-beneficiaries
residing in the place where the agricultural land is situated, residential or
homelots of not more than 240 sq.m. each, with each family-beneficiary being
assured of receiving and owning a homelot in the barangay where it actually
resides on the date of the execution of this Agreement.
7. This Agreement is entered into by the parties in the spirit of the (C.A.R.P.) of
the government and with the supervision of the [DAR], with the end in view of
improving the lot of the qualified beneficiaries of the [SDP] and obtaining for
them greater benefits. (Emphasis added.)
As may be gleaned from the SDOA, included as part of the distribution plan are: (a)
production-sharing equivalent to three percent (3%) of gross sales from the production
of the agricultural land payable to the FWBs in cash dividends or incentive bonus; and
(b) distribution of free homelots of not more than 240 square meters each to family-
beneficiaries. The production-sharing, as the SDP indicated, is payable "irrespective of
whether [HLI] makes money or not," implying that the benefits do not partake the nature
of dividends, as the term is ordinarily understood under corporation law.
While a little bit hard to follow, given that, during the period material, the assigned value
of the agricultural land in the hacienda was PhP 196.63 million, while the total assets of
HLI was PhP 590.55 million with net assets of PhP 355.53 million, Tadeco/HLI would
admit that the ratio of the land-to-shares of stock corresponds to 33.3% of the
outstanding capital stock of the HLI equivalent to 118,391,976.85 shares of stock with a
par value of PhP 1/share.
Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for Stock
Distribution under C.A.R.P.,"35which was substantially based on the SDOA.
Notably, in a follow-up referendum the DAR conducted on October 14, 1989, 5,117
FWBs, out of 5,315 who participated, opted to receive shares in HLI.36 One hundred
thirty-two (132) chose actual land distribution.37
After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec. Defensor-
Santiago) addressed a letter dated November 6, 198938 to Pedro S. Cojuangco
(Cojuangco), then Tadeco president, proposing that the SDP be revised, along the
following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure
that there will be no dilution in the shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of
the percentage shareholdings of the [FWBs], i.e., that the 33% shareholdings of
the [FWBs] will be maintained at any given time;
3. That the mechanics for distributing the stocks be explicitly stated in the
[MOA] signed between the [Tadeco], HLI and its [FWBs] prior to the
implementation of the stock plan;
4. That the stock distribution plan provide for clear and definite terms for
determining the actual number of seats to be allocated for the [FWBs] in the
HLI Board;
5. That HLI provide guidelines and a timetable for the distribution of homelots
to qualified [FWBs]; and
6. That the 3% cash dividends mentioned in the [SDP] be expressly provided
for [in] the MOA.
In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI explained
that the proposed revisions of the SDP are already embodied in both the SDP and
MOA.39 Following that exchange, the PARC, under then Sec. Defensor-Santiago,
by Resolution No. 89-12-240 dated November 21, 1989, approved the SDP of
Tadeco/HLI.41
At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, more
or less, composed of permanent, seasonal and casual master list/payroll and non-master
list members.
From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe
benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500
hectares of converted agricultural land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares
at 80 million pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death benefits and no
interest bearing salary/educational loans and rice sugar accounts. 42
Two separate groups subsequently contested this claim of HLI.
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the
hacienda from agricultural to industrial use,43 pursuant to Sec. 65 of RA 6657, providing:
SEC. 65. Conversion of Lands.¾After the lapse of five (5) years from its award, when the
land ceases to be economically feasible and sound for agricultural purposes, or the
locality has become urbanized and the land will have a greater economic value for
residential, commercial or industrial purposes, the DAR, upon application of the
beneficiary or the landowner, with due notice to the affected parties, and subject to
existing laws, may authorize the reclassification, or conversion of the land and its
disposition: Provided, That the beneficiary shall have fully paid its obligation.
The application, according to HLI, had the backing of 5,000 or so FWBs, including
respondent Rene Galang, and Jose Julio Suniga, as evidenced by the Manifesto of Support
they signed and which was submitted to the DAR.44After the usual processing, the DAR,
thru then Sec. Ernesto Garilao, approved the application on August 14, 1996, per DAR
Conversion Order No. 030601074-764-(95), Series of 1996,45 subject to payment of three
percent (3%) of the gross selling price to the FWBs and to HLI’s continued compliance
with its undertakings under the SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks
of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to
the latter.46 Consequently, HLI’s Transfer Certificate of Title (TCT) No. 28791047 was
canceled and TCT No. 29209148 was issued in the name of Centennary. HLI transferred
the remaining 200 hectares covered by TCT No. 287909 to Luisita Realty Corporation
(LRC)49 in two separate transactions in 1997 and 1998, both uniformly involving 100
hectares for PhP 250 million each.50
Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided
into 12,100,000 shares and wholly-owned by HLI, had the following incorporators:
Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Ernesto G. Teopaco, and Bernardo
R. Lahoz.
Subsequently, Centennary sold51 the entire 300 hectares to Luisita Industrial Park
Corporation (LIPCO) for PhP 750 million. The latter acquired it for the purpose of
developing an industrial complex.52 As a result, Centennary’s TCT No. 292091 was
canceled to be replaced by TCT No. 31098653 in the name of LIPCO.
From the area covered by TCT No. 310986 was carved out two (2) parcels, for which two
(2) separate titles were issued in the name of LIPCO, specifically: (a) TCT No.
36580054 and (b) TCT No. 365801,55 covering 180 and four hectares, respectively. TCT
No. 310986 was, accordingly, partially canceled.
Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO transferred
the parcels covered by its TCT Nos. 365800 and 365801 to the Rizal Commercial Banking
Corporation (RCBC) by way of dacion en pagoin payment of LIPCO’s PhP 431,695,732.10
loan obligations. LIPCO’s titles were canceled and new ones, TCT Nos. 391051 and
391052, were issued to RCBC.
Apart from the 500 hectares alluded to, another 80.51 hectares were later detached from
the area coverage of Hacienda Luisita which had been acquired by the government as
part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. In absolute terms, 4,335.75
hectares remained of the original 4,915 hectares Tadeco ceded to HLI.56
Such, in short, was the state of things when two separate petitions, both undated,
reached the DAR in the latter part of 2003. In the first, denominated as
Petition/Protest,57 respondents Jose Julio Suniga and Windsor Andaya, identifying
themselves as head of the Supervisory Group of HLI (Supervisory Group), and 60 other
supervisors sought to revoke the SDOA, alleging that HLI had failed to give them their
dividends and the one percent (1%) share in gross sales, as well as the thirty-three
percent (33%) share in the proceeds of the sale of the converted 500 hectares of land.
They further claimed that their lives have not improved contrary to the promise and
rationale for the adoption of the SDOA. They also cited violations by HLI of the SDOA’s
terms.58 They prayed for a renegotiation of the SDOA, or, in the alternative, its
revocation.
Revocation and nullification of the SDOA and the distribution of the lands in the hacienda
were the call in the second petition, styled as Petisyon (Petition).59 The Petisyon was
ostensibly filed on December 4, 2003 by Alyansa ng mga Manggagawang Bukid ng
Hacienda Luisita (AMBALA), where the handwritten name of respondents Rene Galang
as "Pangulo AMBALA" and Noel Mallari as "Sec-Gen. AMBALA"60 appeared. As alleged,
the petition was filed on behalf of AMBALA’s members purportedly composing about
80% of the 5,339 FWBs of Hacienda Luisita.
HLI would eventually answer61 the petition/protest of the Supervisory Group. On the
other hand, HLI’s answer62to the AMBALA petition was contained in its letter dated
January 21, 2005 also filed with DAR.
Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to the
SDP of HLI. Among other duties, the Special Task Force was mandated to review the
terms and conditions of the SDOA and PARC Resolution No. 89-12-2 relative to HLI’s
SDP; evaluate HLI’s compliance reports; evaluate the merits of the petitions for the
revocation of the SDP; conduct ocular inspections or field investigations; and
recommend appropriate remedial measures for approval of the Secretary.63
After investigation and evaluation, the Special Task Force submitted its "Terminal
Report: Hacienda Luisita, Incorporated (HLI) Stock Distribution Plan (SDP)
Conflict"64 dated September 22, 2005 (Terminal Report), finding that HLI has not
complied with its obligations under RA 6657 despite the implementation of the
SDP.65 The Terminal Report and the Special Task Force’s recommendations were
adopted by then DAR Sec. Nasser Pangandaman (Sec. Pangandaman).66
Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee
(Excom) (a) the recall/revocation of PARC Resolution No. 89-12-2 dated November 21,
1989 approving HLI’s SDP; and (b) the acquisition of Hacienda Luisita through the
compulsory acquisition scheme. Following review, the PARC Validation Committee
favorably endorsed the DAR Secretary’s recommendation afore-stated.67
On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01,
disposing as follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY RESOLVED, to
approve and confirm the recommendation of the PARC Executive Committee adopting in
toto the report of the PARC ExCom Validation Committee affirming the recommendation
of the DAR to recall/revoke the SDO plan of Tarlac Development Corporation/Hacienda
Luisita Incorporated.
RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI SDO plan be
forthwith placed under the compulsory coverage or mandated land acquisition scheme
of the [CARP].
APPROVED.68
A copy of Resolution No. 2005-32-01 was served on HLI the following day, December 23,
without any copy of the documents adverted to in the resolution attached. A letter-
request dated December 28, 200569 for certified copies of said documents was sent to,
but was not acted upon by, the PARC secretariat.
Therefrom, HLI, on January 2, 2006, sought reconsideration.70 On the same day, the DAR
Tarlac provincial office issued the Notice of Coverage71 which HLI received on January 4,
2006.
Its motion notwithstanding, HLI has filed the instant recourse in light of what it
considers as the DAR’s hasty placing of Hacienda Luisita under CARP even before PARC
could rule or even read the motion for reconsideration.72 As HLI later rued, it "can not
know from the above-quoted resolution the facts and the law upon which it is based."73
PARC would eventually deny HLI’s motion for reconsideration via Resolution No. 2006-
34-01 dated May 3, 2006.
By Resolution of June 14, 2006,74 the Court, acting on HLI’s motion, issued a temporary
restraining order,75enjoining the implementation of Resolution No. 2005-32-01 and the
notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed its
Comment76 on the petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his capacity as
"Sec-Gen. AMBALA," filed his Manifestation and Motion with Comment Attached dated
December 4, 2006 (Manifestation and Motion).77 In it, Mallari stated that he has broken
away from AMBALA with other AMBALA ex-members and formed Farmworkers
Agrarian Reform Movement, Inc. (FARM).78 Should this shift in alliance deny him
standing, Mallari also prayed that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of ways with other FARM members,
particularly would-be intervenors Renato Lalic, et al. As things stand, Mallari returned to
the AMBALA fold, creating the AMBALA-Noel Mallari faction and leaving Renato Lalic, et
al. as the remaining members of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group79 and the AMBALA-Rene Galang faction
submitted their Comment/Opposition dated December 17, 2006.80
On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File and Admit
Attached Petition-In-Intervention dated October 18, 2007.81 LIPCO later followed with a
similar motion.82 In both motions, RCBC and LIPCO contended that the assailed
resolution effectively nullified the TCTs under their respective names as the properties
covered in the TCTs were veritably included in the January 2, 2006 notice of coverage. In
the main, they claimed that the revocation of the SDP cannot legally affect their rights as
innocent purchasers for value. Both motions for leave to intervene were granted and the
corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and intervening petitioners on oral
arguments. On the other hand, the Court, on August 24, 2010, heard public respondents
as well as the respective counsels of the AMBALA-Mallari-Supervisory Group, the
AMBALA-Galang faction, and the FARM and its 27 members83 argue their case.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the
Supervisory Group, represented by Suniga and Andaya; and the United Luisita Workers
Union, represented by Eldifonso Pingol, filed with the Court a joint submission and
motion for approval of a Compromise Agreement (English and Tagalog versions)dated
August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the dispute through an amicable
settlement, issued a Resolution84 creating a Mediation Panel composed of then Associate
Justice Ma. Alicia Austria-Martinez, as chairperson, and former CA Justices Hector
Hofileña and Teresita Dy-Liacco Flores, as members. Meetings on five (5) separate dates,
i.e., September 8, 9, 14, 20, and 27, 2010, were conducted. Despite persevering and
painstaking efforts on the part of the panel, mediation had to be discontinued when no
acceptable agreement could be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY
PANGANDAMAN HAVE JURISDICTION, POWER AND/OR AUTHORITY TO
NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA.
II.
[IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION, POWER AND/OR
AUTHORITY AT THIS TIME, I.E., AFTER SIXTEEN (16) YEARS FROM THE
EXECUTION OF THE SDOA AND ITS IMPLEMENTATION WITHOUT VIOLATING
SECTIONS 1 AND 10 OF ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION
AGAINST DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF LAW AND
THE IMPAIRMENT OF CONTRACTUAL RIGHTS AND OBLIGATIONS?
MOREOVER, ARE THERE LEGAL GROUNDS UNDER THE CIVIL CODE, viz,
ARTICLE 1191 x x x, ARTICLES 1380, 1381 AND 1382 x x x ARTICLE 1390 x x x
AND ARTICLE 1409 x x x THAT CAN BE INVOKED TO NULLIFY, RECALL,
REVOKE, OR RESCIND THE SDOA?
III.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR RESCIND THE
SDOA HAVE ANY LEGAL BASIS OR GROUNDS AND WHETHER THE
PETITIONERS THEREIN ARE THE REAL PARTIES-IN-INTEREST TO FILE SAID
PETITIONS.
IV.
WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES
TO THE SDOA ARE NOW GOVERNED BY THE CORPORATION CODE (BATAS
PAMBANSA BLG. 68) AND NOT BY THE x x x [CARL] x x x.
On the other hand, RCBC submits the following issues:
I.
RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT EXCLUDE THE
SUBJECT PROPERTY FROM THE COVERAGE OF THE CARP DESPITE THE FACT
THAT PETITIONER-INTERVENOR RCBC HAS ACQUIRED VESTED RIGHTS AND
INDEFEASIBLE TITLE OVER THE SUBJECT PROPERTY AS AN INNOCENT
PURCHASER FOR VALUE.
A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF
COVERAGE DATED 02 JANUARY 2006 HAVE THE EFFECT OF
NULLIFYING TCT NOS. 391051 AND 391052 IN THE NAME OF
PETITIONER-INTERVENOR RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONER-
INTERVENOR RCBC CANNOT BE PREJUDICED BY A SUBSEQUENT
REVOCATION OR RESCISSION OF THE SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE
DATED 02 JANUARY 2006 WERE ISSUED WITHOUT AFFORDING PETITIONER-
INTERVENOR RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT
PURCHASER FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over certain
portions of the converted property, and, hence, would ascribe on PARC the commission
of grave abuse of discretion when it included those portions in the notice of coverage.
And apart from raising issues identical with those of HLI, such as but not limited to the
absence of valid grounds to warrant the rescission and/or revocation of the SDP, LIPCO
would allege that the assailed resolution and the notice of coverage were issued without
affording it the right to due process as an innocent purchaser for value. The government,
LIPCO also argues, is estopped from recovering properties which have since passed to
innocent parties.
Simply formulated, the principal determinative issues tendered in the main petition and
to which all other related questions must yield boil down to the following: (1) matters of
standing; (2) the constitutionality of Sec. 31 of RA 6657; (3) the jurisdiction of PARC to
recall or revoke HLI’s SDP; (4) the validity or propriety of such recall or revocatory
action; and (5) corollary to (4), the validity of the terms and conditions of the SDP, as
embodied in the SDOA.
Our Ruling
I.
We first proceed to the examination of the preliminary issues before delving on the more
serious challenges bearing on the validity of PARC’s assailed issuance and the grounds
for it.
Supervisory Group, AMBALA and their
respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the purported leaders of the Supervisory
Group and AMBALA, i.e., Julio Suniga, Windsor Andaya, and Rene Galang, who filed the
revocatory petitions before the DAR. As HLI would have it, Galang, the self-styled head of
AMBALA, gained HLI employment in June 1990 and, thus, could not have been a party to
the SDOA executed a year earlier.85 As regards the Supervisory Group, HLI alleges that
supervisors are not regular farmworkers, but the company nonetheless considered them
FWBs under the SDOA as a mere concession to enable them to enjoy the same benefits
given qualified regular farmworkers. However, if the SDOA would be canceled and land
distribution effected, so HLI claims, citing Fortich v. Corona,86 the supervisors would be
excluded from receiving lands as farmworkers other than the regular farmworkers who
are merely entitled to the "fruits of the land."87
The SDOA no less identifies "the SDP qualified beneficiaries" as "the farmworkers who
appear in the annual payroll, inclusive of the permanent and seasonal employees, who
are regularly or periodically employed by [HLI]."88 Galang, per HLI’s own admission, is
employed by HLI, and is, thus, a qualified beneficiary of the SDP; he comes within the
definition of a real party-in-interest under Sec. 2, Rule 3 of the Rules of Court, meaning,
one who stands to be benefited or injured by the judgment in the suit or is the party
entitled to the avails of the suit.
The same holds true with respect to the Supervisory Group whose members were
admittedly employed by HLI and whose names and signatures even appeared in the
annex of the SDOA. Being qualified beneficiaries of the SDP, Suniga and the other 61
supervisors are certainly parties who would benefit or be prejudiced by the judgment
recalling the SDP or replacing it with some other modality to comply with RA 6657.
Even assuming that members of the Supervisory Group are not regular farmworkers, but
are in the category of "other farmworkers" mentioned in Sec. 4, Article XIII of the
Constitution,89 thus only entitled to a share of the fruits of the land, as indeed Fortich
teaches, this does not detract from the fact that they are still identified as being among
the "SDP qualified beneficiaries." As such, they are, thus, entitled to bring an action upon
the SDP.90 At any rate, the following admission made by Atty. Gener Asuncion, counsel of
HLI, during the oral arguments should put to rest any lingering doubt as to the status of
protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified
farmer beneficiaries of Hacienda Luisita were real parties in interest?
Atty. Asuncion: Yes, Your Honor please, real party in interest which that question refers
to the complaints of protest initiated before the DAR and the real party in interest there
be considered as possessed by the farmer beneficiaries who initiated the protest. 91
Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly allowed to
represent themselves, their fellow farmers or their organizations in any proceedings
before the DAR. Specifically:
SEC. 50. Quasi-Judicial Powers of the DAR.¾x x x
xxxx
Responsible farmer leaders shall be allowed to represent themselves, their fellow
farmers or their organizations in any proceedings before the DAR: Provided,
however, that when there are two or more representatives for any individual or group,
the representatives should choose only one among themselves to represent such party
or group before any DAR proceedings. (Emphasis supplied.)
Clearly, the respective leaders of the Supervisory Group and AMBALA are contextually
real parties-in-interest allowed by law to file a petition before the DAR or PARC.
This is not necessarily to say, however, that Galang represents AMBALA, for as records
show and as HLI aptly noted,92 his "petisyon" filed with DAR did not carry the usual
authorization of the individuals in whose behalf it was supposed to have been instituted.
To date, such authorization document, which would logically include a list of the names
of the authorizing FWBs, has yet to be submitted to be part of the records.
PARC’s Authority to Revoke a Stock Distribution Plan
On the postulate that the subject jurisdiction is conferred by law, HLI maintains that
PARC is without authority to revoke an SDP, for neither RA 6657 nor EO 229 expressly
vests PARC with such authority. While, as HLI argued, EO 229 empowers PARC to
approve the plan for stock distribution in appropriate cases, the empowerment only
includes the power to disapprove, but not to recall its previous approval of the SDP after
it has been implemented by the parties.93 To HLI, it is the court which has jurisdiction
and authority to order the revocation or rescission of the PARC-approved SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan
for stock distribution of the corporate landowner belongs to PARC. However, contrary to
petitioner HLI’s posture, PARC also has the power to revoke the SDP which it previously
approved. It may be, as urged, that RA 6657 or other executive issuances on agrarian
reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP.
Such power or authority, however, is deemed possessed by PARC under the principle of
necessary implication, a basic postulate that what is implied in a statute is as much a part
of it as that which is expressed.94
We have explained that "every statute is understood, by implication, to contain all such
provisions as may be necessary to effectuate its object and purpose, or to make effective
rights, powers, privileges or jurisdiction which it grants, including all such collateral and
subsidiary consequences as may be fairly and logically inferred from its
terms."95 Further, "every statutory grant of power, right or privilege is deemed to include
all incidental power, right or privilege.96
Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication, even if not expressly granted,
the power to revoke it. By extension, the power to revoke is limited by the authority to
grant the license, from which it is derived in the first place. Thus, if the FDA grants a
license upon its finding that the applicant drug store has complied with the requirements
of the general laws and the implementing administrative rules and regulations, it is only
for their violation that the FDA may revoke the said license. By the same token, having
granted the permit upon his ascertainment that the conditions thereof as applied x x x
have been complied with, it is only for the violation of such conditions that the mayor
may revoke the said permit.97 (Emphasis supplied.)
Following the doctrine of necessary implication, it may be stated that the conferment of
express power to approve a plan for stock distribution of the agricultural land of
corporate owners necessarily includes the power to revoke or recall the approval of the
plan.
As public respondents aptly observe, to deny PARC such revocatory power would reduce
it into a toothless agency of CARP, because the very same agency tasked to ensure
compliance by the corporate landowner with the approved SDP would be without
authority to impose sanctions for non-compliance with it.98 With the view We take of the
case, only PARC can effect such revocation. The DAR Secretary, by his own authority as
such, cannot plausibly do so, as the acceptance and/or approval of the SDP sought to be
taken back or undone is the act of PARC whose official composition includes, no less, the
President as chair, the DAR Secretary as vice-chair, and at least eleven (11) other
department heads.99
On another but related issue, the HLI foists on the Court the argument that subjecting its
landholdings to compulsory distribution after its approved SDP has been implemented
would impair the contractual obligations created under the SDOA.
The broad sweep of HLI’s argument ignores certain established legal precepts and must,
therefore, be rejected.
A law authorizing interference, when appropriate, in the contractual relations between
or among parties is deemed read into the contract and its implementation cannot
successfully be resisted by force of the non-impairment guarantee. There is, in that
instance, no impingement of the impairment clause, the non-impairment protection
being applicable only to laws that derogate prior acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties. Impairment, in fine,
obtains if a subsequent law changes the terms of a contract between the parties, imposes
new conditions, dispenses with those agreed upon or withdraws existing remedies for
the enforcement of the rights of the parties.100 Necessarily, the constitutional
proscription would not apply to laws already in effect at the time of contract execution,
as in the case of RA 6657, in relation to DAO 10, vis-à-vis HLI’s SDOA. As held in Serrano
v. Gallant Maritime Services, Inc.:
The prohibition [against impairment of the obligation of contracts] is aligned with the
general principle that laws newly enacted have only a prospective operation, and cannot
affect acts or contracts already perfected; however, as to laws already in existence, their
provisions are read into contracts and deemed a part thereof. Thus, the non-impairment
clause under Section 10, Article II [of the Constitution] is limited in application to laws
about to be enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties
thereto.101 (Emphasis supplied.)
Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of issuance
within the ambit of Sec. 10, Art. III of the Constitution providing that "[n]o law impairing
the obligation of contracts shall be passed."
Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as such, a breach
of its terms and conditions is not a PARC administrative matter, but one that gives rise to
a cause of action cognizable by regular courts.102 This contention has little to commend
itself. The SDOA is a special contract imbued with public interest, entered into and
crafted pursuant to the provisions of RA 6657. It embodies the SDP, which requires for
its validity, or at least its enforceability, PARC’s approval. And the fact that the certificate
of compliance103––to be issued by agrarian authorities upon completion of the
distribution of stocks––is revocable by the same issuing authority supports the idea that
everything about the implementation of the SDP is, at the first instance, subject to
administrative adjudication.
HLI also parlays the notion that the parties to the SDOA should now look to the
Corporation Code, instead of to RA 6657, in determining their rights, obligations and
remedies. The Code, it adds, should be the applicable law on the disposition of the
agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and remedies of the parties to the
SDOA embodying the SDP are primarily governed by RA 6657. It should abundantly be
made clear that HLI was precisely created in order to comply with RA 6657, which the
OSG aptly described as the "mother law" of the SDOA and the SDP.104 It is, thus,
paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive
applicability of the Corporation Code under the guise of being a corporate entity.
Without in any way minimizing the relevance of the Corporation Code since the FWBs of
HLI are also stockholders, its applicability is limited as the rights of the parties arising
from the SDP should not be made to supplant or circumvent the agrarian reform
program.
Without doubt, the Corporation Code is the general law providing for the formation,
organization and regulation of private corporations. On the other hand, RA 6657 is the
special law on agrarian reform. As between a general and special law, the latter shall
prevail—generalia specialibus non derogant.105 Besides, the present impasse between
HLI and the private respondents is not an intra-corporate dispute which necessitates the
application of the Corporation Code. What private respondents questioned before the
DAR is the proper implementation of the SDP and HLI’s compliance with RA 6657.
Evidently, RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural land of Hacienda Luisita under
the coverage of CARP and the eventual distribution of the land to the FWBs would
amount to a disposition of all or practically all of the corporate assets of HLI. HLI would
add that this contingency, if ever it comes to pass, requires the applicability of the
Corporation Code provisions on corporate dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on corporate dissolution would apply
insofar as the winding up of HLI’s affairs or liquidation of the assets is concerned.
However, the mere inclusion of the agricultural land of Hacienda Luisita under the
coverage of CARP and the land’s eventual distribution to the FWBs will not, without
more, automatically trigger the dissolution of HLI. As stated in the SDOA itself, the
percentage of the value of the agricultural land of Hacienda Luisita in relation to the total
assets transferred and conveyed by Tadeco to HLI comprises only 33.296%, following
this equation: value of the agricultural lands divided by total corporate assets. By no
stretch of imagination would said percentage amount to a disposition of all or practically
all of HLI’s corporate assets should compulsory land acquisition and distribution ensue.
This brings us to the validity of the revocation of the approval of the SDP sixteen (16)
years after its execution pursuant to Sec. 31 of RA 6657 for the reasons set forth in the
Terminal Report of the Special Task Force, as endorsed by PARC Excom. But first, the
matter of the constitutionality of said section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the
corporation, as a mode of CARP compliance, to resort to stock distribution, an
arrangement which, to FARM, impairs the fundamental right of farmers and
farmworkers under Sec. 4, Art. XIII of the Constitution.106
To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657 permits stock
transfer in lieu of outright agricultural land transfer; in fine, there is stock certificate
ownership of the farmers or farmworkers instead of them owning the land, as envisaged
in the Constitution. For FARM, this modality of distribution is an anomaly to be annulled
for being inconsistent with the basic concept of agrarian reform ingrained in Sec. 4, Art.
XIII of the Constitution.107
Reacting, HLI insists that agrarian reform is not only about transfer of land ownership to
farmers and other qualified beneficiaries. It draws attention in this regard to Sec. 3(a) of
RA 6657 on the concept and scope of the term "agrarian reform." The constitutionality
of a law, HLI added, cannot, as here, be attacked collaterally.
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and necessarily its
counterpart provision in EO 229 must fail as explained below.
When the Court is called upon to exercise its power of judicial review over, and pass
upon the constitutionality of, acts of the executive or legislative departments, it does so
only when the following essential requirements are first met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the earliest possible opportunity
by a proper party or one with locus standi; and
(3) the issue of constitutionality must be the very lis mota of the case.108
Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM, composed of a
small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionality of Sec. 3l of RA 6657, since as early as November 21, l989 when PARC
approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter and
why its members received benefits from the SDP without so much of a protest. It was
only on December 4, 2003 or 14 years after approval of the SDP via PARC Resolution No.
89-12-2 dated November 21, 1989 that said plan and approving resolution were sought
to be revoked, but not, to stress, by FARM or any of its members, but by petitioner
AMBALA. Furthermore, the AMBALA petition did NOT question the constitutionality of
Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the subsequent
implementation of the SDP. Even the public respondents, as represented by the Solicitor
General, did not question the constitutionality of the provision. On the other hand, FARM,
whose 27 members formerly belonged to AMBALA, raised the constitutionality of Sec. 31
only on May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it
took FARM some eighteen (18) years from November 21, 1989 before it challenged the
constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM
members slept on their rights and even accepted benefits from the SDP with nary a
complaint on the alleged unconstitutionality of Sec. 31 upon which the benefits were
derived. The Court cannot now be goaded into resolving a constitutional issue that FARM
failed to assail after the lapse of a long period of time and the occurrence of numerous
events and activities which resulted from the application of an alleged unconstitutional
legal provision.
It has been emphasized in a number of cases that the question of constitutionality will
not be passed upon by the Court unless it is properly raised and presented in an
appropriate case at the first opportunity.109 FARM is, therefore, remiss in belatedly
questioning the constitutionality of Sec. 31 of RA 6657. The second requirement that the
constitutional question should be raised at the earliest possible opportunity is clearly
wanting.
The last but the most important requisite that the constitutional issue must be the very
lis mota of the case does not likewise obtain. The lis mota aspect is not present, the
constitutional issue tendered not being critical to the resolution of the case. The
unyielding rule has been to avoid, whenever plausible, an issue assailing the
constitutionality of a statute or governmental act.110 If some other grounds exist by
which judgment can be made without touching the constitutionality of a law, such
recourse is favored.111 Garcia v. Executive Secretary explains why:
Lis Mota — the fourth requirement to satisfy before this Court will undertake judicial
review — means that the Court will not pass upon a question of unconstitutionality,
although properly presented, if the case can be disposed of on some other ground, such
as the application of the statute or the general law. The petitioner must be able to show
that the case cannot be legally resolved unless the constitutional question raised is
determined. This requirement is based on the rule that every law has in its favor the
presumption of constitutionality; to justify its nullification, there must be a clear and
unequivocal breach of the Constitution, and not one that is doubtful, speculative, or
argumentative.112 (Italics in the original.)
The lis mota in this case, proceeding from the basic positions originally taken by
AMBALA (to which the FARM members previously belonged) and the Supervisory Group,
is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for
its revocation. And before the Court, the lis mota is whether or not PARC acted in grave
abuse of discretion when it ordered the recall of the SDP for such non-compliance and
the fact that the SDP, as couched and implemented, offends certain constitutional and
statutory provisions. To be sure, any of these key issues may be resolved without
plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into
the underlying petitions of AMBALA, et al., it is not the said section per se that is invalid,
but rather it is the alleged application of the said provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700,113 amending Sec. 7 of RA
6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock distribution
component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: "[T]hat after
June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and
compulsory acquisition." Thus, for all intents and purposes, the stock distribution
scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The
question of whether or not it is unconstitutional should be a moot issue.
It is true that the Court, in some cases, has proceeded to resolve constitutional issues
otherwise already moot and academic114 provided the following requisites are present:
x x x first, there is a grave violation of the Constitution; second, the exceptional character
of the situation and the paramount public interest is involved; third, when the
constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; fourth, the case is capable of repetition yet evading
review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the fundamental law. Sec. 4, Article XIII of the
Constitution reads:
The State shall, by law, undertake an agrarian reform program founded on the right of
the farmers and regular farmworkers, who are landless, to OWN directly or
COLLECTIVELY THE LANDS THEY TILL or, in the case of other farmworkers, to receive a
just share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing.
(Emphasis supplied.)
The wording of the provision is unequivocal––the farmers and regular farmworkers have
a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic law
allows two (2) modes of land distribution—direct and indirect ownership. Direct
transfer to individual farmers is the most commonly used method by DAR and widely
accepted. Indirect transfer through collective ownership of the agricultural land is the
alternative to direct ownership of agricultural land by individual farmers. The
aforequoted Sec. 4 EXPRESSLY authorizes collective ownership by farmers. No language
can be found in the 1987 Constitution that disqualifies or prohibits corporations or
cooperatives of farmers from being the legal entity through which collective ownership
can be exercised. The word "collective" is defined as "indicating a number of persons or
things considered as constituting one group or aggregate,"115 while "collectively" is
defined as "in a collective sense or manner; in a mass or body."116 By using the word
"collectively," the Constitution allows for indirect ownership of land and not just outright
agricultural land transfer. This is in recognition of the fact that land reform may become
successful even if it is done through the medium of juridical entities composed of
farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows
workers’ cooperatives or associations to collectively own the land, while the second
paragraph of Sec. 31 allows corporations or associations to own agricultural land with
the farmers becoming stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.—In
the case of farms owned or operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker beneficiaries who shall form a workers’ cooperative or
association which will deal with the corporation or business association. x x x (Emphasis
supplied.)
SEC. 31. Corporate Landowners.— x x x
xxxx
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities, bears in
relation to the company’s total assets, under such terms and conditions as may be agreed
upon by them. In no case shall the compensation received by the workers at the time the
shares of stocks are distributed be reduced. The same principle shall be applied to
associations, with respect to their equity or participation. x x x (Emphasis supplied.)
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and corporations
or associations under the succeeding Sec. 31, as differentiated from individual farmers,
are authorized vehicles for the collective ownership of agricultural land. Cooperatives
can be registered with the Cooperative Development Authority and acquire legal
personality of their own, while corporations are juridical persons under the Corporation
Code. Thus, Sec. 31 is constitutional as it simply implements Sec. 4 of Art. XIII of the
Constitution that land can be owned COLLECTIVELY by farmers. Even the framers of the
l987 Constitution are in unison with respect to the two (2) modes of ownership of
agricultural lands tilled by farmers––DIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean the principle
of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we mean communal ownership,
stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’ cooperatives
owning the land, not the State.
MR. NOLLEDO. And when we talk of "collectively," referring to farmers’ cooperatives, do
the farmers own specific areas of land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the
"moshave" type of agriculture and the "kibbutz." So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa
lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari – directly –
at ang tinatawag na sama-samang gagawin ng mga magbubukid. Tulad sa Negros, ang
gusto ng mga magbubukid ay gawin nila itong "cooperative or collective farm." Ang ibig
sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own directly or collectively the lands they
till," is this land for the tillers rather than land for the landless? Before, we used to hear
"land for the landless," but now the slogan is "land for the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin ng
"directly" ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga
magsasaka ang lupang binubungkal nila. Ang ibig sabihin naman ng "collectively" ay
sama-samang paggawa sa isang lupain o isang bukid, katulad ng sitwasyon sa
Negros.117 (Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work on the agricultural land "sama-
sama" or collectively. Thus, the main requisite for collective ownership of land is
collective or group work by farmers of the agricultural land. Irrespective of whether the
landowner is a cooperative, association or corporation composed of farmers, as long as
concerted group work by the farmers on the land is present, then it falls within the ambit
of collective ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment on the part
of the State to pursue,by law, an agrarian reform program founded on the policy of land
for the landless, but subject to such priorities as Congress may prescribe, taking into
account such abstract variable as "equity considerations." The textual reference to a law
and Congress necessarily implies that the above constitutional provision is not self-
executoryand that legislation is needed to implement the urgently needed program of
agrarian reform. And RA 6657 has been enacted precisely pursuant to and as a
mechanism to carry out the constitutional directives. This piece of legislation, in fact,
restates118 the agrarian reform policy established in the aforementioned provision of the
Constitution of promoting the welfare of landless farmers and farmworkers. RA 6657
thus defines "agrarian reform" as "the redistribution of lands … to farmers and regular
farmworkers who are landless … to lift the economic status of the beneficiaries and all
other arrangements alternative to the physical redistribution of lands, such as
production or profit sharing, labor administration and the distribution of shares of
stock which will allow beneficiaries to receive a just share of the fruits of the lands they
work."
With the view We take of this case, the stock distribution option devised under Sec. 31 of
RA 6657 hews with the agrarian reform policy, as instrument of social justice under Sec.
4 of Article XIII of the Constitution. Albeit land ownership for the landless appears to be
the dominant theme of that policy, We emphasize that Sec. 4, Article XIII of the
Constitution, as couched, does not constrict Congress to passing an agrarian reform law
planted on direct land transfer to and ownership by farmers and no other, or else the
enactment suffers from the vice of unconstitutionality. If the intention were otherwise,
the framers of the Constitution would have worded said section in a manner mandatory
in character.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not
inconsistent with the State’s commitment to farmers and farmworkers to advance their
interests under the policy of social justice. The legislature, thru Sec. 31 of RA 6657, has
chosen a modality for collective ownership by which the imperatives of social justice
may, in its estimation, be approximated, if not achieved. The Court should be bound by
such policy choice.
FARM contends that the farmers in the stock distribution scheme under Sec. 31 do not
own the agricultural land but are merely given stock certificates. Thus, the farmers lose
control over the land to the board of directors and executive officials of the corporation
who actually manage the land. They conclude that such arrangement runs counter to the
mandate of the Constitution that any agrarian reform must preserve the control over the
land in the hands of the tiller.
This contention has no merit.
While it is true that the farmer is issued stock certificates and does not directly own the
land, still, the Corporation Code is clear that the FWB becomes a stockholder who
acquires an equitable interest in the assets of the corporation, which include the
agricultural lands. It was explained that the "equitable interest of the shareholder in the
property of the corporation is represented by the term stock, and the extent of his
interest is described by the term shares. The expression shares of stock when qualified
by words indicating number and ownership expresses the extent of the owner’s interest
in the corporate property."119 A share of stock typifies an aliquot part of the
corporation’s property, or the right to share in its proceeds to that extent when
distributed according to law and equity and that its holder is not the owner of any part of
the capital of the corporation.120 However, the FWBs will ultimately own the agricultural
lands owned by the corporation when the corporation is eventually dissolved and
liquidated.
Anent the alleged loss of control of the farmers over the agricultural land operated and
managed by the corporation, a reading of the second paragraph of Sec. 31 shows
otherwise. Said provision provides that qualified beneficiaries have "the right to
purchase such proportion of the capital stock of the corporation that the agricultural
land, actually devoted to agricultural activities, bears in relation to the company’s total
assets." The wording of the formula in the computation of the number of shares that can
be bought by the farmers does not mean loss of control on the part of the farmers. It
must be remembered that the determination of the percentage of the capital stock that
can be bought by the farmers depends on the value of the agricultural land and the value
of the total assets of the corporation.
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy
on agrarian reform is that control over the agricultural land must always be in the hands
of the farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers
should always own majority of the common shares entitled to elect the members of the
board of directors to ensure that the farmers will have a clear majority in the board.
Before the SDP is approved, strict scrutiny of the proposed SDP must always be
undertaken by the DAR and PARC, such that the value of the agricultural land
contributed to the corporation must always be more than 50% of the total assets of the
corporation to ensure that the majority of the members of the board of directors are
composed of the farmers. The PARC composed of the President of the Philippines and
cabinet secretaries must see to it that control over the board of directors rests with the
farmers by rejecting the inclusion of non-agricultural assets which will yield the majority
in the board of directors to non-farmers. Any deviation, however, by PARC or DAR from
the correct application of the formula prescribed by the second paragraph of Sec. 31 of
RA 6675 does not make said provision constitutionally infirm. Rather, it is the
application of said provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not
trench on the constitutional policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian reform unless there is land
distribution and that actual land distribution is the essential characteristic of a
constitutional agrarian reform program. On the contrary, there have been so many
instances where, despite actual land distribution, the implementation of agrarian reform
was still unsuccessful. As a matter of fact, this Court may take judicial notice of cases
where FWBs sold the awarded land even to non-qualified persons and in violation of the
prohibition period provided under the law. This only proves to show that the mere fact
that there is land distribution does not guarantee a successful implementation of
agrarian reform.
As it were, the principle of "land to the tiller" and the old pastoral model of land
ownership where non-human juridical persons, such as corporations, were prohibited
from owning agricultural lands are no longer realistic under existing conditions.
Practically, an individual farmer will often face greater disadvantages and difficulties
than those who exercise ownership in a collective manner through a cooperative or
corporation. The former is too often left to his own devices when faced with failing crops
and bad weather, or compelled to obtain usurious loans in order to purchase costly
fertilizers or farming equipment. The experiences learned from failed land reform
activities in various parts of the country are lack of financing, lack of farm equipment,
lack of fertilizers, lack of guaranteed buyers of produce, lack of farm-to-market roads,
among others. Thus, at the end of the day, there is still no successful implementation of
agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a corporation stands in a better
position to secure funding and competently maintain the agri-business than the
individual farmer. While direct singular ownership over farmland does offer advantages,
such as the ability to make quick decisions unhampered by interference from others, yet
at best, these advantages only but offset the disadvantages that are often associated with
such ownership arrangement. Thus, government must be flexible and creative in its
mode of implementation to better its chances of success. One such option is collective
ownership through juridical persons composed of farmers.
Aside from the fact that there appears to be no violation of the Constitution, the
requirement that the instant case be capable of repetition yet evading review is also
wanting. It would be speculative for this Court to assume that the legislature will enact
another law providing for a similar stock option.
As a matter of sound practice, the Court will not interfere inordinately with the exercise
by Congress of its official functions, the heavy presumption being that a law is the
product of earnest studies by Congress to ensure that no constitutional prescription or
concept is infringed.121 Corollarily, courts will not pass upon questions of wisdom,
expediency and justice of legislation or its provisions. Towards this end, all reasonable
doubts should be resolved in favor of the constitutionality of a law and the validity of the
acts and processes taken pursuant thereof.122
Consequently, before a statute or its provisions duly challenged are voided, an
unequivocal breach of, or a clear conflict with the Constitution, not merely a doubtful or
argumentative one, must be demonstrated in such a manner as to leave no doubt in the
mind of the Court. In other words, the grounds for nullity must be beyond reasonable
doubt.123 FARM has not presented compelling arguments to overcome the presumption
of constitutionality of Sec. 31 of RA 6657.
The wisdom of Congress in allowing an SDP through a corporation as an alternative
mode of implementing agrarian reform is not for judicial determination. Established
jurisprudence tells us that it is not within the province of the Court to inquire into the
wisdom of the law, for, indeed, We are bound by words of the statute.124
II.
The stage is now set for the determination of the propriety under the premises of the
revocation or recall of HLI’s SDP. Or to be more precise, the inquiry should be: whether
or not PARC gravely abused its discretion in revoking or recalling the subject SDP and
placing the hacienda under CARP’s compulsory acquisition and distribution scheme.
The findings, analysis and recommendation of the DAR’s Special Task Force contained
and summarized in its Terminal Report provided the bases for the assailed PARC
revocatory/recalling Resolution. The findings may be grouped into two: (1) the SDP is
contrary to either the policy on agrarian reform, Sec. 31 of RA 6657, or DAO 10; and (2)
the alleged violation by HLI of the conditions/terms of the SDP. In more particular terms,
the following are essentially the reasons underpinning PARC’s revocatory or recall
action:
(1) Despite the lapse of 16 years from the approval of HLI’s SDP, the lives of the
FWBs have hardly improved and the promised increased income has not
materialized;
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented;
(3) The issuance of HLI shares of stock on the basis of number of hours
worked––or the so-called "man days"––is grossly onerous to the FWBs, as HLI,
in the guise of rotation, can unilaterally deny work to anyone. In elaboration of
this ground, PARC’s Resolution No. 2006-34-01, denying HLI’s motion for
reconsideration of Resolution No. 2005-32-01, stated that the man days
criterion worked to dilute the entitlement of the original share beneficiaries;125
(4) The distribution/transfer of shares was not in accordance with the
timelines fixed by law;
(5) HLI has failed to comply with its obligations to grant 3% of the gross sales
every year as production-sharing benefit on top of the workers’ salary; and
(6) Several homelot awardees have yet to receive their individual titles.
Petitioner HLI claims having complied with, at least substantially, all its obligations
under the SDP, as approved by PARC itself, and tags the reasons given for the revocation
of the SDP as unfounded.
Public respondents, on the other hand, aver that the assailed resolution rests on solid
grounds set forth in the Terminal Report, a position shared by AMBALA, which, in some
pleadings, is represented by the same counsel as that appearing for the Supervisory
Group.
FARM, for its part, posits the view that legal bases obtain for the revocation of the SDP,
because it does not conform to Sec. 31 of RA 6657 and DAO 10. And training its sight on
the resulting dilution of the equity of the FWBs appearing in HLI’s masterlist, FARM
would state that the SDP, as couched and implemented, spawned disparity when there
should be none; parity when there should have been differentiation.126
The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that the SDP violates the agrarian
reform policy under Sec. 2 of RA 6657, as the said plan failed to enhance the dignity and
improve the quality of lives of the FWBs through greater productivity of agricultural
lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.¾It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers
and farm workers will receive the highest consideration to promote social justice and to
move the nation towards sound rural development and industrialization, and the
establishment of owner cultivatorship of economic-sized farms as the basis of Philippine
agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the
rights of landowners to just compensation and to the ecological needs of the nation, shall
be undertaken to provide farmers and farm workers with the opportunity to enhance
their dignity and improve the quality of their lives through greater productivity of
agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm
workers, who are landless, to own directly or collectively the lands they till or, in the case
of other farm workers, to receive a share of the fruits thereof. To this end, the State shall
encourage the just distribution of all agricultural lands, subject to the priorities and
retention limits set forth in this Act, having taken into account ecological, developmental,
and equity considerations, and subject to the payment of just compensation. The State
shall respect the right of small landowners and shall provide incentives for voluntary
land-sharing. (Emphasis supplied.)
Paragraph 2 of the above-quoted provision specifically mentions that "a more equitable
distribution and ownership of land x x x shall be undertaken to provide farmers and farm
workers with the opportunity to enhance their dignity and improve the quality of their
lives through greater productivity of agricultural lands." Of note is the term
"opportunity" which is defined as a favorable chance or opening offered by
circumstances.127 Considering this, by no stretch of imagination can said provision be
construed as a guarantee in improving the lives of the FWBs. At best, it merely provides
for a possibility or favorable chance of uplifting the economic status of the FWBs, which
may or may not be attained.
Pertinently, improving the economic status of the FWBs is neither among the legal
obligations of HLI under the SDP nor an imperative imposition by RA 6657 and DAO 10, a
violation of which would justify discarding the stock distribution option. Nothing in that
option agreement, law or department order indicates otherwise.
Significantly, HLI draws particular attention to its having paid its FWBs, during the
regime of the SDP (1989-2005), some PhP 3 billion by way of salaries/wages and higher
benefits exclusive of free hospital and medical benefits to their immediate family. And
attached as Annex "G" to HLI’s Memorandum is the certified true report of the finance
manager of Jose Cojuangco & Sons Organizations-Tarlac Operations, captioned as
"HACIENDA LUISITA, INC. Salaries, Benefits and Credit Privileges (in Thousand Pesos)
Since the Stock Option was Approved by PARC/CARP," detailing what HLI gave their
workers from 1989 to 2005. The sum total, as added up by the Court, yields the following
numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP 2,927,848; Total
Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303,040. The cash out figures, as
stated in the report, include the cost of homelots; the PhP 150 million or so representing
3% of the gross produce of the hacienda; and the PhP 37.5 million representing 3% from
the proceeds of the sale of the 500-hectare converted lands. While not included in the
report, HLI manifests having given the FWBs 3% of the PhP 80 million paid for the 80
hectares of land traversed by the SCTEX.128 On top of these, it is worth remembering that
the shares of stocks were given by HLI to the FWBs for free. Verily, the FWBs have
benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not
anyway earned profits through the years, it cannot be over-emphasized that, as a matter
of common business sense, no corporation could guarantee a profitable run all the time.
As has been suggested, one of the key features of an SDP of a corporate landowner is the
likelihood of the corporate vehicle not earning, or, worse still, losing money.129
The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider
the advisability of approving a stock distribution plan is the likelihood that the plan
"would result in increased income and greater benefits to [qualified beneficiaries] than if
the lands were divided and distributed to them individually."130 But as aptly noted
during the oral arguments, DAO 10 ought to have not, as it cannot, actually exact
assurance of success on something that is subject to the will of man, the forces of nature
or the inherent risky nature of business.131 Just like in actual land distribution, an SDP
cannot guarantee, as indeed the SDOA does not guarantee, a comfortable life for the
FWBs. The Court can take judicial notice of the fact that there were many instances
wherein after a farmworker beneficiary has been awarded with an agricultural land, he
just subsequently sells it and is eventually left with nothing in the end.
In all then, the onerous condition of the FWBs’ economic status, their life of hardship, if
that really be the case, can hardly be attributed to HLI and its SDP and provide a valid
ground for the plan’s revocation.
Neither does HLI’s SDP, whence the DAR-attested SDOA/MOA is based, infringe Sec. 31 of
RA 6657, albeit public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec. 31 are without relevance to the
issue on the propriety of the assailed order revoking HLI’s SDP, for the paragraph deals
with the transfer of agricultural lands to the government, as a mode of CARP compliance,
thus:
SEC. 31. Corporate Landowners.¾Corporate landowners may voluntarily transfer
ownership over their agricultural landholdings to the Republic of the Philippines
pursuant to Section 20 hereof or to qualified beneficiaries under such terms and
conditions, consistent with this Act, as they may agree, subject to confirmation by the
DAR.
The second and third paragraphs, with their sub-paragraphs, of Sec. 31 provide as
follows:
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of
the corporation that the agricultural land, actually devoted to agricultural
activities, bears in relation to the company’s total assets, under such terms and
conditions as may be agreed upon by them. In no case shall the compensation received
by the workers at the time the shares of stocks are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock,
equity or participation in favor of their workers or other qualified beneficiaries under
this section shall be deemed to have complied with the provisions of this Act: Provided,
That the following conditions are complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to
dividends and other financial benefits, the books of the corporation or
association shall be subject to periodic audit by certified public accountants
chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or association,
the beneficiaries shall be assured of at least one (1) representative in the board
of directors, or in a management or executive committee, if one exists, of the
corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same
rights and features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab
initio unless said transaction is in favor of a qualified and registered beneficiary
within the same corporation.
The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or
allocated to qualified beneficiaries, adverting to what Sec. 31 of RA 6657 refers to as that
"proportion of the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total assets" had
been observed.
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec. 31 of RA
6657. The stipulation reads:
1. The percentage of the value of the agricultural land of Hacienda Luisita
(P196,630,000.00) in relation to the total assets (P590,554,220.00) transferred and
conveyed to the SECOND PARTY is 33.296% that, under the law, is the proportion of the
outstanding capital stock of the SECOND PARTY, which is P355,531,462.00 or
355,531,462 shares with a par value of P1.00 per share, that has to be distributed to the
THIRD PARTY under the stock distribution plan, the said 33.296% thereof
being P118,391,976.85 or 118,391,976.85 shares.
The appraised value of the agricultural land is PhP 196,630,000 and of HLI’s other assets
is PhP 393,924,220. The total value of HLI’s assets is, therefore, PhP 590,554,220. 132 The
percentage of the value of the agricultural lands (PhP 196,630,000) in relation to the
total assets (PhP 590,554,220) is 33.296%, which represents the stockholdings of the
6,296 original qualified farmworker-beneficiaries (FWBs) in HLI. The total number of
shares to be distributed to said qualified FWBs is 118,391,976.85 HLI shares. This was
arrived at by getting 33.296% of the 355,531,462 shares which is the outstanding capital
stock of HLI with a value of PhP 355,531,462. Thus, if we divide the 118,391,976.85 HLI
shares by 6,296 FWBs, then each FWB is entitled to 18,804.32 HLI shares. These shares
under the SDP are to be given to FWBs for free.
The Court finds that the determination of the shares to be distributed to the 6,296 FWBs
strictly adheres to the formula prescribed by Sec. 31(b) of RA 6657.
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs shall be
assured of at least one (1) representative in the board of directors or in a management or
executive committee irrespective of the value of the equity of the FWBs in HLI, the Court
finds that the SDOA contained provisions making certain the FWBs’ representation in
HLI’s governing board, thus:
5. Even if only a part or fraction of the shares earmarked for distribution will have been
acquired from the FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall
execute at the beginning of each fiscal year an irrevocable proxy, valid and effective for
one (1) year, in favor of the farmworkers appearing as shareholders of the SECOND
PARTY at the start of said year which will empower the THIRD PARTY or their
representative to vote in stockholders’ and board of directors’ meetings of the SECOND
PARTY convened during the year the entire 33.296% of the outstanding capital stock of
the SECOND PARTY earmarked for distribution and thus be able to gain such number of
seats in the board of directors of the SECOND PARTY that the whole 33.296% of the
shares subject to distribution will be entitled to.
Also, no allegations have been made against HLI restricting the inspection of its books by
accountants chosen by the FWBs; hence, the assumption may be made that there has
been no violation of the statutory prescription under sub-paragraph (a) on the auditing
of HLI’s accounts.
Public respondents, however, submit that the distribution of the mandatory minimum
ratio of land-to-shares of stock, referring to the 118,391,976.85 shares with par value of
PhP 1 each, should have been made in full within two (2) years from the approval of RA
6657, in line with the last paragraph of Sec. 31 of said law.133
Public respondents’ submission is palpably erroneous. We have closely examined the last
paragraph alluded to, with particular focus on the two-year period mentioned, and
nothing in it remotely supports the public respondents’ posture. In its pertinent part,
said Sec. 31 provides:
SEC. 31. Corporate Landowners x x x
If within two (2) years from the approval of this Act, the [voluntary] land or stock
transfer envisioned above is not made or realized or the plan for such stock distribution
approved by the PARC within the same period, the agricultural land of the corporate
owners or corporation shall be subject to the compulsory coverage of this Act. (Word in
bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to the period within which the
corporate landowner, to avoid land transfer as a mode of CARP coverage under RA 6657,
is to avail of the stock distribution option or to have the SDP approved. The HLI secured
approval of its SDP in November 1989, well within the two-year period reckoned from
June 1988 when RA 6657 took effect.
Having hurdled the alleged breach of the agrarian reform policy under Sec. 2 of RA 6657
as well as the statutory issues, We shall now delve into what PARC and respondents
deem to be other instances of violation of DAO 10 and the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita
unfragmented is also not among the imperative impositions by the SDP, RA 6657, and
DAO 10.
The Terminal Report states that the proposed distribution plan submitted in 1989 to the
PARC effectively assured the intended stock beneficiaries that the physical integrity of
the farm shall remain inviolate. Accordingly, the Terminal Report and the PARC-assailed
resolution would take HLI to task for securing approval of the conversion to non-
agricultural uses of 500 hectares of the hacienda. In not too many words, the Report and
the resolution view the conversion as an infringement of Sec. 5(a) of DAO 10 which
reads: "a. that the continued operation of the corporation with its agricultural land intact
and unfragmented is viable with potential for growth and increased profitability."
The PARC is wrong.
In the first place, Sec. 5(a)––just like the succeeding Sec. 5(b) of DAO 10 on increased
income and greater benefits to qualified beneficiaries––is but one of the stated criteria to
guide PARC in deciding on whether or not to accept an SDP. Said Sec. 5(a) does not exact
from the corporate landowner-applicant the undertaking to keep the farm intact and
unfragmented ad infinitum. And there is logic to HLI’s stated observation that the key
phrase in the provision of Sec. 5(a) is "viability of corporate operations": "[w]hat is thus
required is not the agricultural land remaining intact x x x but the viability of the
corporate operations with its agricultural land being intact and unfragmented. Corporate
operation may be viable even if the corporate agricultural land does not remain intact or
[un]fragmented."134
It is, of course, anti-climactic to mention that DAR viewed the conversion as not violative
of any issuance, let alone undermining the viability of Hacienda Luisita’s operation, as
the DAR Secretary approved the land conversion applied for and its disposition via his
Conversion Order dated August 14, 1996 pursuant to Sec. 65 of RA 6657 which reads:
Sec. 65. Conversion of Lands.¾After the lapse of five years from its award when the land
ceases to be economically feasible and sound for agricultural purposes, or the locality
has become urbanized and the land will have a greater economic value for residential,
commercial or industrial purposes, the DAR upon application of the beneficiary or
landowner with due notice to the affected parties, and subject to existing laws, may
authorize the x x x conversion of the land and its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross
production sales of the hacienda and pay dividends from profit, the entries in its financial
books tend to indicate compliance by HLI of the profit-sharing equivalent to 3% of the
gross sales from the production of the agricultural land on top of (a) the salaries and
wages due FWBs as employees of the company and (b) the 3% of the gross selling price
of the converted land and that portion used for the SCTEX. A plausible evidence of
compliance or non-compliance, as the case may be, could be the books of account of HLI.
Evidently, the cry of some groups of not having received their share from the gross
production sales has not adequately been validated on the ground by the Special Task
Force.
Indeed, factual findings of administrative agencies are conclusive when supported by
substantial evidence and are accorded due respect and weight, especially when they are
affirmed by the CA.135 However, such rule is not absolute. One such exception is when the
findings of an administrative agency are conclusions without citation of specific evidence
on which they are based,136 such as in this particular instance. As culled from its
Terminal Report, it would appear that the Special Task Force rejected HLI’s claim of
compliance on the basis of this ratiocination:
 The Task Force position: Though, allegedly, the Supervisory Group receives the
3% gross production share and that others alleged that they received 30
million pesos still others maintain that they have not received anything yet.
Item No. 4 of the MOA is clear and must be followed. There is a distinction
between the total gross sales from the production of the land and the proceeds
from the sale of the land. The former refers to the fruits/yield of the
agricultural land while the latter is the land itself. The phrase "the beneficiaries
are entitled every year to an amount approximately equivalent to 3% would
only be feasible if the subject is the produce since there is at least one harvest
per year, while such is not the case in the sale of the agricultural land. This
negates then the claim of HLI that, all that the FWBs can be entitled to, if any, is
only 3% of the purchase price of the converted land.
 Besides, the Conversion Order dated 14 August 1996 provides that "the
benefits, wages and the like, presently received by the FWBs shall not in any
way be reduced or adversely affected. Three percent of the gross selling price of
the sale of the converted land shall be awarded to the beneficiaries of the SDO."
The 3% gross production share then is different from the 3% proceeds of the
sale of the converted land and, with more reason, the 33% share being claimed
by the FWBs as part owners of the Hacienda, should have been given the FWBs,
as stockholders, and to which they could have been entitled if only the land
were acquired and redistributed to them under the CARP.
xxxx
 The FWBs do not receive any other benefits under the MOA except the
aforementioned [(viz: shares of stocks (partial), 3% gross production sale (not
all) and homelots (not all)].
Judging from the above statements, the Special Task Force is at best silent on whether
HLI has failed to comply with the 3% production-sharing obligation or the 3% of the
gross selling price of the converted land and the SCTEX lot. In fact, it admits that the
FWBs, though not all, have received their share of the gross production sales and in the
sale of the lot to SCTEX. At most, then, HLI had complied substantially with this SDP
undertaking and the conversion order. To be sure, this slight breach would not justify the
setting to naught by PARC of the approval action of the earlier PARC. Even in contract
law, rescission, predicated on violation of reciprocity, will not be permitted for a slight or
casual breach of contract; rescission may be had only for such breaches that are
substantial and fundamental as to defeat the object of the parties in making the
agreement.137
Despite the foregoing findings, the revocation of the approval of the SDP is not without
basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or
business associations owning or operating farms which opted for land distribution. Sec.
30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.¾The individual members
of the cooperatives or corporations mentioned in the preceding section shall be provided
with homelots and small farmlots for their family use, to be taken from the land owned
by the cooperative or corporation.
The "preceding section" referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.¾In the
case of farms owned or operated by corporations or other business associations, the
following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker-beneficiaries who shall form a workers’ cooperative or
association which will deal with the corporation or business association. Until a new
agreement is entered into by and between the workers’ cooperative or association and
the corporation or business association, any agreement existing at the time this Act takes
effect between the former and the previous landowner shall be respected by both the
workers’ cooperative or association and the corporation or business association.
Noticeably, the foregoing provisions do not make reference to corporations which opted
for stock distribution under Sec. 31 of RA 6657. Concomitantly, said corporations are not
obliged to provide for it except by stipulation, as in this case.
Under the SDP, HLI undertook to "subdivide and allocate for free and without charge
among the qualified family-beneficiaries x x x residential or homelots of not more than
240 sq. m. each, with each family beneficiary being assured of receiving and owning a
homelot in the barrio or barangay where it actually resides," "within a reasonable time."
More than sixteen (16) years have elapsed from the time the SDP was approved by PARC,
and yet, it is still the contention of the FWBs that not all was given the 240-square meter
homelots and, of those who were already given, some still do not have the corresponding
titles.
During the oral arguments, HLI was afforded the chance to refute the foregoing
allegation by submitting proof that the FWBs were already given the said homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the
qualified family beneficiaries were not given the 240 square meters each. So, can you
also [prove] that the qualified family beneficiaries were already provided the 240 square
meter homelots.
Atty. Asuncion: We will, your Honor please.138
Other than the financial report, however, no other substantial proof showing that all the
qualified beneficiaries have received homelots was submitted by HLI. Hence, this Court is
constrained to rule that HLI has not yet fully complied with its undertaking to distribute
homelots to the FWBs under the SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock
distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA
states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall
arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD
PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-
thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that
are presently owned and held by the FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired and distributed to the
THIRD PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to the FWBs,
albeit not entailing a cash out from them, is contingent on the number of "man days," that
is, the number of days that the FWBs have worked during the year. This formula deviates
from Sec. 1 of DAO 10, which decrees the distribution of equal number of shares to the
FWBs as the minimum ratio of shares of stock for purposes of compliance with Sec. 31 of
RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.¾The [SDP] submitted by the corporate landowner-
applicant shall provide for the distribution of an equal number of shares of the same
class and value, with the same rights and features as all other shares, to each of the
qualified beneficiaries. This distribution plan in all cases, shall be at least the minimum
ratio for purposes of compliance with Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of this Implementing Guideline,
the corporate landowner-applicant may adopt additional stock distribution schemes
taking into account factors such as rank, seniority, salary, position and other
circumstances which may be deemed desirable as a matter of sound company policy.
(Emphasis supplied.)
The above proviso gives two (2) sets or categories of shares of stock which a qualified
beneficiary can acquire from the corporation under the SDP. The first pertains, as earlier
explained, to the mandatory minimum ratio of shares of stock to be distributed to the
FWBs in compliance with Sec. 31 of RA 6657. This minimum ratio contemplates of that
"proportion of the capital stock of the corporation that the agricultural land, actually
devoted to agricultural activities, bears in relation to the company’s total assets."139 It is
this set of shares of stock which, in line with Sec. 4 of DAO 10, is supposed to be allocated
"for the distribution of an equal number of shares of stock of the same class and value,
with the same rights and features as all other shares, to each of the qualified
beneficiaries."
On the other hand, the second set or category of shares partakes of a gratuitous extra
grant, meaning that this set or category constitutes an augmentation share/s that the
corporate landowner may give under an additional stock distribution scheme, taking into
account such variables as rank, seniority, salary, position and like factors which the
management, in the exercise of its sound discretion, may deem desirable.140
Before anything else, it should be stressed that, at the time PARC approved HLI’s SDP,
HLI recognized 6,296individuals as qualified FWBs. And under the 30-year stock
distribution program envisaged under the plan, FWBs who came in after 1989, new
FWBs in fine, may be accommodated, as they appear to have in fact been accommodated
as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs shall
depend on the number of "man days," HLI violated the afore-quoted rule on stock
distribution and effectively deprived the FWBs of equal shares of stock in the
corporation, for, in net effect, these 6,296 qualified FWBs, who theoretically had given up
their rights to the land that could have been distributed to them, suffered a dilution of
their due share entitlement. As has been observed during the oral arguments, HLI has
chosen to use the shares earmarked for farmworkers as reward system chips to water
down the shares of the original 6,296 FWBs.141 Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have happened is
that there would be CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: That’s the only point I want to know x x x. Now, but they chose to enter
SDOA instead of placing the land under CARP. And for that reason those who would have
gotten their shares of the land actually gave up their rights to this land in place of the
shares of the stock, is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way, gave up its right to own the land
because that way the government takes own [sic] the land and distribute it to the
farmers and pay for the land, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to the
farmers at that time that numbered x x x those who signed five thousand four hundred
ninety eight (5,498) beneficiaries, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their shares, some workers came in from
1989, 1990, 1991, 1992 and the rest of the years that you gave additional shares who
were not in the original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right that would have belong to them in
1989 when the land was supposed to have been placed under CARP?
Atty. Dela Merced: If you are talking or referring… (interrupted)
Justice Abad: None! You tell me. None. They gave up no rights to land?
Atty. Dela Merced: They did not do the same thing as we did in 1989, Your Honor.
Justice Abad: No, if they were not workers in 1989 what land did they give up? None, if
they become workers later on.
Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the original…
(interrupted)
Justice Abad: So why is it that the rights of those who gave up their lands would be
diluted, because the company has chosen to use the shares as reward system for new
workers who come in? It is not that the new workers, in effect, become just workers of
the corporation whose stockholders were already fixed. The TADECO who has shares
there about sixty six percent (66%) and the five thousand four hundred ninety eight
(5,498) farmers at the time of the SDOA? Explain to me. Why, why will you x x x what
right or where did you get that right to use this shares, to water down the shares of those
who should have been benefited, and to use it as a reward system decided by the
company?142
From the above discourse, it is clear as day that the original 6,296 FWBs, who were
qualified beneficiaries at the time of the approval of the SDP, suffered from watering
down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI
shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per
beneficiary, because the acquisition and distribution of the HLI shares were based on
"man days" or "number of days worked" by the FWB in a year’s time. As explained by
HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she
becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not
get any share at year end. The number of HLI shares distributed varies depending on the
number of days the FWBs were allowed to work in one year. Worse, HLI hired
farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the
Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of
farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include
the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares
representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the
minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a
result of the use of "man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-
year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec.
11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved
stock distribution plan within three (3) months from receipt by the corporate landowner
of the approval of the plan by PARC. In fact, based on the said provision, the transfer of
the shares of stock in the names of the qualified FWBs should be recorded in the stock
and transfer books and must be submitted to the SEC within sixty (60) days from
implementation. As stated:
Section 11. Implementation/Monitoring of Plan.¾The approved stock distribution plan
shall be implemented within three (3) months from receipt by the corporate landowner-
applicant of the approval thereof by the PARC, and the transfer of the shares of stocks in
the names of the qualified beneficiaries shall be recorded in stock and transfer books and
submitted to the Securities and Exchange Commission (SEC) within sixty (60) days from
the said implementation of the stock distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the implementation, that is, the
distribution of the shares of stock to the FWBs, must be made within three (3) months
from receipt by HLI of the approval of the stock distribution plan by PARC. While neither
of the clashing parties has made a compelling case of the thrust of this provision, the
Court is of the view and so holds that the intent is to compel the corporate landowner to
complete, not merely initiate, the transfer process of shares within that three-month
timeframe. Reinforcing this conclusion is the 60-day stock transfer recording (with the
SEC) requirement reckoned from the implementation of the SDP.
To the Court, there is a purpose, which is at once discernible as it is practical, for the
three-month threshold. Remove this timeline and the corporate landowner can veritably
evade compliance with agrarian reform by simply deferring to absurd limits the
implementation of the stock distribution scheme.
The argument is urged that the thirty (30)-year distribution program is justified by the
fact that, under Sec. 26 of RA 6657, payment by beneficiaries of land distribution under
CARP shall be made in thirty (30) annual amortizations. To HLI, said section provides a
justifying dimension to its 30-year stock distribution program.
HLI’s reliance on Sec. 26 of RA 6657, quoted in part below, is obviously misplaced as the
said provision clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.¾Lands awarded pursuant to this Act shall be paid for
by the beneficiaries to the LBP in thirty (30) annual amortizations x x x.
Then, too, the ones obliged to pay the LBP under the said provision are the beneficiaries.
On the other hand, in the instant case, aside from the fact that what is involved is stock
distribution, it is the corporate landowner who has the obligation to distribute the shares
of stock among the FWBs.
Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay
the cost of the land thus awarded them to make it less cumbersome for them to pay the
government. To be sure, the reason underpinning the 30-year accommodation does not
apply to corporate landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much shorter period of time.
Taking into account the above discussion, the revocation of the SDP by PARC should be
upheld for violating DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC
and the DAR have the power to issue rules and regulations, substantive or procedural.
Being a product of such rule-making power, DAO 10 has the force and effect of law and
must be duly complied with.143 The PARC is, therefore, correct in revoking the SDP.
Consequently, the PARC Resolution No. 89-12-2 dated November 21, l989 approving the
HLI’s SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at bottom, uniformly pray for the
exclusion from the coverage of the assailed PARC resolution those portions of the
converted land within Hacienda Luisita which RCBC and LIPCO acquired by purchase.
Both contend that they are innocent purchasers for value of portions of the converted
farm land. Thus, their plea for the exclusion of that portion from PARC Resolution 2005-
32-01, as implemented by a DAR-issued Notice of Coverage dated January 2, 2006, which
called for mandatory CARP acquisition coverage of lands subject of the SDP.
To restate the antecedents, after the conversion of the 500 hectares of land in Hacienda
Luisita, HLI transferred the 300 hectares to Centennary, while ceding the remaining 200-
hectare portion to LRC. Subsequently, LIPCO purchased the entire three hundred (300)
hectares of land from Centennary for the purpose of developing the land into an
industrial complex.144 Accordingly, the TCT in Centennary’s name was canceled and a
new one issued in LIPCO’s name. Thereafter, said land was subdivided into two (2) more
parcels of land. Later on, LIPCO transferred about 184 hectares to RCBC by way of dacion
en pago, by virtue of which TCTs in the name of RCBC were subsequently issued.
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered owner
receiving a certificate of title in pursuance of a decree of registration and every
subsequent purchaser of registered land taking a certificate of title for value and in good
faith shall hold the same free from all encumbrances except those noted on the certificate
and enumerated therein."145
It is settled doctrine that one who deals with property registered under the Torrens
system need not go beyond the four corners of, but can rely on what appears on, the title.
He is charged with notice only of such burdens and claims as are annotated on the title.
This principle admits of certain exceptions, such as when the party has actual knowledge
of facts and circumstances that would impel a reasonably cautious man to make such
inquiry, or when the purchaser has knowledge of a defect or the lack of title in his vendor
or of sufficient facts to induce a reasonably prudent man to inquire into the status of the
title of the property in litigation.146 A higher level of care and diligence is of course
expected from banks, their business being impressed with public interest.147
Millena v. Court of Appeals describes a purchaser in good faith in this wise:
x x x A purchaser in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property at the time of such
purchase, or before he has notice of the claim or interest of some other persons in the
property. Good faith, or the lack of it, is in the final analysis a question of intention; but in
ascertaining the intention by which one is actuated on a given occasion, we are
necessarily controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined. Truly, good faith is not a
visible, tangible fact that can be seen or touched, but rather a state or condition of mind
which can only be judged by actual or fancied tokens or signs. Otherwise stated, good
faith x x x refers to the state of mind which is manifested by the acts of the individual
concerned.148 (Emphasis supplied.)
In fine, there are two (2) requirements before one may be considered a purchaser in
good faith, namely: (1) that the purchaser buys the property of another without notice
that some other person has a right to or interest in such property; and (2) that the
purchaser pays a full and fair price for the property at the time of such purchase or
before he or she has notice of the claim of another.
It can rightfully be said that both LIPCO and RCBC are––based on the above
requirements and with respect to the adverted transactions of the converted land in
question––purchasers in good faith for value entitled to the benefits arising from such
status.
First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial
land, there was no notice of any supposed defect in the title of its transferor, Centennary,
or that any other person has a right to or interest in such property. In fact, at the time
LIPCO acquired said parcels of land, only the following annotations appeared on the TCT
in the name of Centennary: the Secretary’s Certificate in favor of Teresita Lopa, the
Secretary’s Certificate in favor of Shintaro Murai, and the conversion of the property
from agricultural to industrial and residential use.149
The same is true with respect to RCBC. At the time it acquired portions of Hacienda
Luisita, only the following general annotations appeared on the TCTs of LIPCO: the Deed
of Restrictions, limiting its use solely as an industrial estate; the Secretary’s Certificate in
favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to
guarantee the payment of PhP 300 million.
It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that
were previously covered by the SDP. Good faith "consists in the possessor’s belief that
the person from whom he received it was the owner of the same and could convey his
title. Good faith requires a well-founded belief that the person from whom title was
received was himself the owner of the land, with the right to convey it. There is good
faith where there is an honest intention to abstain from taking any unconscientious
advantage from another."150 It is the opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to
CARP coverage by means of a stock distribution plan, as the DAR conversion order was
annotated at the back of the titles of the lots they acquired. However, they are of the
honest belief that the subject lots were validly converted to commercial or industrial
purposes and for which said lots were taken out of the CARP coverage subject of PARC
Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all,
Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands
previously covered by CARP land acquisition "after the lapse of five (5) years from its
award when the land ceases to be economically feasible and sound for agricultural
purposes or the locality has become urbanized and the land will have a greater economic
value for residential, commercial or industrial purposes." Moreover, DAR notified all the
affected parties, more particularly the FWBs, and gave them the opportunity to comment
or oppose the proposed conversion. DAR, after going through the necessary processes,
granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary
jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform
matters and its original exclusive jurisdiction over all matters involving the
implementation of agrarian reform. The DAR conversion order became final and
executory after none of the FWBs interposed an appeal to the CA. In this factual setting,
RCBC and LIPCO purchased the lots in question on their honest and well-founded belief
that the previous registered owners could legally sell and convey the lots though these
were previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in
acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value.
Undeniably, LIPCO acquired 300 hectares of land from Centennary for the amount of PhP
750 million pursuant to a Deed of Sale dated July 30, 1998.151 On the other hand, in a
Deed of Absolute Assignment dated November 25, 2004, LIPCO conveyed portions of
Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of PhP
431,695,732.10.
As bona fide purchasers for value, both LIPCO and RCBC have acquired rights which
cannot just be disregarded by DAR, PARC or even by this Court. As held in Spouses Chua
v. Soriano:
With the property in question having already passed to the hands of purchasers in good
faith, it is now of no moment that some irregularity attended the issuance of the SPA,
consistent with our pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v.
Court of Appeals, to wit:
x x x the general rule that the direct result of a previous void contract cannot be valid, is
inapplicable in this case as it will directly contravene the Torrens system of
registration. Where innocent third persons, relying on the correctness of the
certificate of title thus issued, acquire rights over the property, the court cannot
disregard such rights and order the cancellation of the certificate. The effect of such
outright cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the
property registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law.
Being purchasers in good faith, the Chuas already acquired valid title to the
property. A purchaser in good faith holds an indefeasible title to the property and
he is entitled to the protection of the law.152 x x x (Emphasis supplied.)
To be sure, the practicalities of the situation have to a point influenced Our disposition
on the fate of RCBC and LIPCO. After all, the Court, to borrow from Association of Small
Landowners in the Philippines, Inc.,153 is not a "cloistered institution removed" from the
realities on the ground. To note, the approval and issuances of both the national and local
governments showing that certain portions of Hacienda Luisita have effectively ceased,
legally and physically, to be agricultural and, therefore, no longer CARPable are a matter
of fact which cannot just be ignored by the Court and the DAR. Among the
approving/endorsing issuances:154
(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang Bayan of
Tarlac favorably endorsing the 300-hectare industrial estate project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20 December 1996 issued
in accordance with the Omnibus Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997,
approving LIPCO’s application for a mixed ecozone and proclaiming the three
hundred (300) hectares of the industrial land as a Special Economic Zone;
(d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of
Tarlac, approving the Final Development Permit for the Luisita Industrial Park
II Project;
(e) Development Permit dated 13 August 1997 for the proposed Luisita
Industrial Park II Project issued by the Office of the Sangguniang Bayan of
Tarlac;155
(f) DENR Environmental Compliance Certificate dated 01 October 1997 issued
for the proposed project of building an industrial complex on three hundred
(300) hectares of industrial land;156
(g) Certificate of Registration No. 00794 dated 26 December 1997 issued by the
HLURB on the project of Luisita Industrial Park II with an area of three million
(3,000,000) square meters;157
(h) License to Sell No. 0076 dated 26 December 1997 issued by the HLURB
authorizing the sale of lots in the Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring Certain
Parcels of Private Land in Barangay San Miguel, Municipality of Tarlac, Province
of Tarlac, as a Special Economic Zone pursuant to Republic Act No. 7916,"
designating the Luisita Industrial Park II consisting of three hundred hectares
(300 has.) of industrial land as a Special Economic Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued by the
PEZA, stating that pursuant to Presidential Proclamation No. 1207 dated 22
April 1998 and Republic Act No. 7916, LIPCO has been registered as an Ecozone
Developer/Operator of Luisita Industrial Park II located in San Miguel, Tarlac,
Tarlac.
While a mere reclassification of a covered agricultural land or its inclusion in an
economic zone does not automatically allow the corporate or individual landowner to
change its use,158 the reclassification process is a prima facie indicium that the land has
ceased to be economically feasible and sound for agricultural uses. And if only to stress,
DAR Conversion Order No. 030601074-764-(95) issued in 1996 by then DAR Secretary
Garilao had effectively converted 500 hectares of hacienda land from agricultural to
industrial/commercial use and authorized their disposition.
In relying upon the above-mentioned approvals, proclamation and conversion order,
both RCBC and LIPCO cannot be considered at fault for believing that certain portions of
Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of
CARP. The PARC, and consequently DAR, gravely abused its discretion when it placed
LIPCO’s and RCBC’s property which once formed part of Hacienda Luisita under the
CARP compulsory acquisition scheme via the assailed Notice of Coverage.
As regards the 80.51-hectare land transferred to the government for use as part of the
SCTEX, this should also be excluded from the compulsory agrarian reform coverage
considering that the transfer was consistent with the government’s exercise of the power
of eminent domain159 and none of the parties actually questioned the transfer.
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC
Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain
"operative facts" that had occurred in the interim. Pertinently, the "operative fact"
doctrine realizes that, in declaring a law or executive action null and void, or, by
extension, no longer without force and effect, undue harshness and resulting unfairness
must be avoided. This is as it should realistically be, since rights might have accrued in
favor of natural or juridical persons and obligations justly incurred in the
meantime.160 The actual existence of a statute or executive act is, prior to such a
determination, an operative fact and may have consequences which cannot justly be
ignored; the past cannot always be erased by a new judicial declaration. 161
The oft-cited De Agbayani v. Philippine National Bank162 discussed the effect to be given
to a legislative or executive act subsequently declared invalid:
x x x It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with. This is
so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled
to obedience and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be had
to what has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that prior to its
being nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the government organ which has the
final say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a
statute, prior to such a determination of [unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects,––with respect to particular relations,
individual and corporate, and particular conduct, private and official." x x x
Given the above perspective and considering that more than two decades had passed
since the PARC’s approval of the HLI’s SDP, in conjunction with numerous activities
performed in good faith by HLI, and the reliance by the FWBs on the legality and validity
of the PARC-approved SDP, perforce, certain rights of the parties, more particularly the
FWBs, have to be respected pursuant to the application in a general way of the operative
fact doctrine.
A view, however, has been advanced that the operative fact doctrine is of minimal or
altogether without relevance to the instant case as it applies only in considering the
effects of a declaration of unconstitutionality of a statute, and not of a declaration of
nullity of a contract. This is incorrect, for this view failed to consider is that it is NOT the
SDOA dated May 11, 1989 which was revoked in the instant case. Rather, it is PARC’s
approval of the HLI’s Proposal for Stock Distribution under CARP which embodied the
SDP that was nullified.
A recall of the antecedent events would show that on May 11, 1989, Tadeco, HLI, and the
qualified FWBs executed the SDOA. This agreement provided the basis and mechanics of
the SDP that was subsequently proposed and submitted to DAR for approval. It was only
after its review that the PARC, through then Sec. Defensor-Santiago, issued the assailed
Resolution No. 89-12-2 approving the SDP. Considerably, it is not the SDOA which gave
legal force and effect to the stock distribution scheme but instead, it is the approval of
the SDP under the PARC Resolution No. 89-12-2 that gave it its validity.
The above conclusion is bolstered by the fact that in Sec. Pangandaman’s
recommendation to the PARC Excom, what he proposed is the recall/revocation of PARC
Resolution No. 89-12-2 approving HLI’s SDP, and not the revocation of the SDOA. Sec.
Pangandaman’s recommendation was favorably endorsed by the PARC Validation
Committee to the PARC Excom, and these recommendations were referred to in the
assailed Resolution No. 2005-32-01. Clearly, it is not the SDOA which was made the basis
for the implementation of the stock distribution scheme.
That the operative fact doctrine squarely applies to executive acts––in this case, the
approval by PARC of the HLI proposal for stock distribution––is well-settled in our
jurisprudence. In Chavez v. National Housing Authority,163We held:
Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case
because it is an equitable doctrine which could not be used to countenance an
inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the
various agreements implementing the SMDRP is an operative fact that can no longer be
disturbed or simply ignored, citing Rieta v. People of the Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it
is stated that a legislative or executive act, prior to its being declared as unconstitutional
by the courts, is valid and must be complied with, thus:
xxx xxx xxx
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service
Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Government's order of suspension, as we
have no reason to do so, much less retroactively apply such nullification to deprive
private respondent of a compelling and valid reason for not filing the leave application.
For as we have held, a void act though in law a mere scrap of paper nonetheless confers
legitimacy upon past acts or omissions done in reliance thereof. Consequently, the
existence of a statute or executive order prior to its being adjudged void is an operative
fact to which legal consequences are attached. It would indeed be ghastly unfair to
prevent private respondent from relying upon the order of suspension in lieu of a formal
leave application. (Citations omitted; Emphasis supplied.)
The applicability of the operative fact doctrine to executive acts was further explicated
by this Court in Rieta v. People,164 thus:
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO)
No. 4754 was invalid, as the law upon which it was predicated — General Order No. 60,
issued by then President Ferdinand E. Marcos — was subsequently declared by the
Court, in Tañada v. Tuvera, 33 to have no force and effect. Thus, he asserts, any evidence
obtained pursuant thereto is inadmissible in evidence.
We do not agree. In Tañada, the Court addressed the possible effects of its declaration of
the invalidity of various presidential issuances. Discussing therein how such a
declaration might affect acts done on a presumption of their validity, the Court said:
". . .. In similar situations in the past this Court had taken the pragmatic and realistic
course set forth in Chicot County Drainage District vs. Baxter Bank to wit:
‘The courts below have proceeded on the theory that the Act of Congress, having been
found to be unconstitutional, was not a law; that it was inoperative, conferring no rights
and imposing no duties, and hence affording no basis for the challenged decree. . . . It is
quite clear, however, that such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence of a statute,
prior to [the determination of its invalidity], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects — with respect to particular conduct, private and
official. Questions of rights claimed to have become vested, of status, of prior
determinations deemed to have finality and acted upon accordingly, of public policy in
the light of the nature both of the statute and of its previous application, demand
examination. These questions are among the most difficult of those which have engaged
the attention of courts, state and federal, and it is manifest from numerous decisions that
an all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.’
xxx xxx xxx
"Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is ‘an operative fact which may have consequences
which cannot be justly ignored. The past cannot always be erased by a new judicial
declaration . . . that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified.’"
The Chicot doctrine cited in Tañada advocates that, prior to the nullification of a statute,
there is an imperative necessity of taking into account its actual existence as an operative
fact negating the acceptance of "a principle of absolute retroactive invalidity." Whatever
was done while the legislative or the executive act was in operation should be duly
recognized and presumed to be valid in all respects. The ASSO that was issued in 1979
under General Order No. 60 — long before our Decision in Tañada and the arrest of
petitioner — is an operative fact that can no longer be disturbed or simply ignored.
(Citations omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 2005-32-01 states that it revokes or
recalls the SDP, what it actually revoked or recalled was the PARC’s approval of the SDP
embodied in Resolution No. 89-12-2. Consequently, what was actually declared null and
void was an executive act, PARC Resolution No. 89-12-2,165and not a contract (SDOA). It
is, therefore, wrong to say that it was the SDOA which was annulled in the instant case.
Evidently, the operative fact doctrine is applicable.
 IV.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are
upheld, the revocation must, by application of the operative fact principle, give way to
the right of the original 6,296 qualified FWBs to choose whether they want to remain as
HLI stockholders or not. The Court cannot turn a blind eye to the fact that in 1989, 93%
of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP
approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989
to 2005, the FWBs were said to have received from HLI salaries and cash benefits,
hospital and medical benefits, 240-square meter homelots, 3% of the gross produce from
agricultural lands, and 3% of the proceeds of the sale of the 500-hectare converted land
and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were
distributed as of April 22, 2005.166 On August 6, 20l0, HLI and private respondents
submitted a Compromise Agreement, in which HLI gave the FWBs the option of acquiring
a piece of agricultural land or remain as HLI stockholders, and as a matter of fact, most
FWBs indicated their choice of remaining as stockholders. These facts and circumstances
tend to indicate that some, if not all, of the FWBs may actually desire to continue as HLI
shareholders. A matter best left to their own discretion.
With respect to the other FWBs who were not listed as qualified beneficiaries as of
November 21, 1989 when the SDP was approved, they are not accorded the right to
acquire land but shall, however, continue as HLI stockholders. All the benefits and
homelots167 received by the 10,502 FWBs (6,296 original FWBs and 4,206 non-qualified
FWBs) listed as HLI stockholders as of August 2, 2010 shall be respected with no
obligation to refund or return them since the benefits (except the homelots) were
received by the FWBs as farmhands in the agricultural enterprise of HLI and other fringe
benefits were granted to them pursuant to the existing collective bargaining agreement
with Tadeco. If the number of HLI shares in the names of the original FWBs who opt to
remain as HLI stockholders falls below the guaranteed allocation of 18,804.32 HLI shares
per FWB, the HLI shall assign additional shares to said FWBs to complete said minimum
number of shares at no cost to said FWBs.
With regard to the homelots already awarded or earmarked, the FWBs are not obliged to
return the same to HLI or pay for its value since this is a benefit granted under the SDP.
The homelots do not form part of the 4,915.75 hectares covered by the SDP but were
taken from the 120.9234 hectare residential lot owned by Tadeco. Those who did not
receive the homelots as of the revocation of the SDP on December 22, 2005 when PARC
Resolution No. 2005-32-01 was issued, will no longer be entitled to homelots. Thus, in
the determination of the ultimate agricultural land that will be subjected to land
distribution, the aggregate area of the homelots will no longer be deducted.
There is a claim that, since the sale and transfer of the 500 hectares of land subject of the
August 14, 1996 Conversion Order and the 80.51-hectare SCTEX lot came after
compulsory coverage has taken place, the FWBs should have their corresponding share
of the land’s value. There is merit in the claim. Since the SDP approved by PARC
Resolution No. 89-12-2 has been nullified, then all the lands subject of the SDP will
automatically be subject of compulsory coverage under Sec. 31 of RA 6657. Since the
Court excluded the 500-hectare lot subject of the August 14, 1996 Conversion Order and
the 80.51-hectare SCTEX lot acquired by the government from the area covered by SDP,
then HLI and its subsidiary, Centennary, shall be liable to the FWBs for the price received
for said lots. HLI shall be liable for the value received for the sale of the 200-hectare land
to LRC in the amount of PhP 500,000,000 and the equivalent value of the 12,000,000
shares of its subsidiary, Centennary, for the 300-hectare lot sold to LIPCO for the
consideration of PhP 750,000,000. Likewise, HLI shall be liable for PhP 80,511,500 as
consideration for the sale of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of the 500-
hectare land and 80.51-hectare SCTEX lot to the FWBs. We also take into account the
payment of taxes and expenses relating to the transfer of the land and HLI’s statement
that most, if not all, of the proceeds were used for legitimate corporate purposes. In
order to determine once and for all whether or not all the proceeds were properly
utilized by HLI and its subsidiary, Centennary, DAR will engage the services of a
reputable accounting firm to be approved by the parties to audit the books of HLI to
determine if the proceeds of the sale of the 500-hectare land and the 80.51-hectare
SCTEX lot were actually used for legitimate corporate purposes, titling expenses and in
compliance with the August 14, 1996 Conversion Order. The cost of the audit will be
shouldered by HLI. If after such audit, it is determined that there remains a balance from
the proceeds of the sale, then the balance shall be distributed to the qualified FWBs.
A view has been advanced that HLI must pay the FWBs yearly rent for use of the land
from 1989. We disagree. It should not be forgotten that the FWBs are also stockholders
of HLI, and the benefits acquired by the corporation from its possession and use of the
land ultimately redounded to the FWBs’ benefit based on its business operations in the
form of salaries, and other fringe benefits under the CBA. To still require HLI to pay rent
to the FWBs will result in double compensation.
For sure, HLI will still exist as a corporation even after the revocation of the SDP
although it will no longer be operating under the SDP, but pursuant to the Corporation
Code as a private stock corporation. The non-agricultural assets amounting to PhP
393,924,220 shall remain with HLI, while the agricultural lands valued at PhP
196,630,000 with an original area of 4,915.75 hectares shall be turned over to DAR for
distribution to the FWBs. To be deducted from said area are the 500-hectare lot subject
of the August 14, 1996 Conversion Order, the 80.51-hectare SCTEX lot, and the total area
of 6,886.5 square meters of individual lots that should have been distributed to FWBs by
DAR had they not opted to stay in HLI.
HLI shall be paid just compensation for the remaining agricultural land that will be
transferred to DAR for land distribution to the FWBs. We find that the date of the
"taking" is November 21, 1989, when PARC approved HLI’s SDP per PARC Resolution No.
89-12-2. DAR shall coordinate with LBP for the determination of just compensation. We
cannot use May 11, 1989 when the SDOA was executed, since it was the SDP, not the
SDOA, that was approved by PARC.
The instant petition is treated pro hac vice in view of the peculiar facts and
circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated
December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands
subject of HLI’s SDP under compulsory coverage on mandated land acquisition scheme of
the CARP, are hereby AFFIRMED with the MODIFICATION that the original 6,296
qualified FWBs shall have the option to remain as stockholders of HLI. DAR shall
immediately schedule meetings with the said 6,296 FWBs and explain to them the
effects, consequences and legal or practical implications of their choice, after which the
FWBs will be asked to manifest, in secret voting, their choices in the ballot, signing their
signatures or placing their thumbmarks, as the case may be, over their printed names.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is entitled to
18,804.32 HLI shares, and, in case the HLI shares already given to him or her is less than
18,804.32 shares, the HLI is ordered to issue or distribute additional shares to complete
said prescribed number of shares at no cost to the FWB within thirty (30) days from
finality of this Decision. Other FWBs who do not belong to the original 6,296 qualified
beneficiaries are not entitled to land distribution and shall remain as HLI shareholders.
All salaries, benefits, 3% production share and 3% share in the proceeds of the sale of
the 500-hectare converted land and the 80.51-hectare SCTEX lot and homelots already
received by the 10,502 FWBs, composed of 6,296 original FWBs and 4,206 non-qualified
FWBs, shall be respected with no obligation to refund or return them.
Within thirty (30) days after determining who from among the original FWBs will stay as
stockholders, DAR shall segregate from the HLI agricultural land with an area of 4,915.75
hectares subject of PARC’s SDP-approving Resolution No. 89-12-2 the following: (a) the
500-hectare lot subject of the August 14, l996 Conversion Order; (b) the 80.51-hectare
lot sold to, or acquired by, the government as part of the SCTEX complex; and (c) the
aggregate area of 6,886.5 square meters of individual lots that each FWB is entitled to
under the CARP had he or she not opted to stay in HLI as a stockholder. After the
segregation process, as indicated, is done, the remaining area shall be turned over to
DAR for immediate land distribution to the original qualified FWBs who opted not to
remain as HLI stockholders.
The aforementioned area composed of 6,886.5-square meter lots allotted to the FWBs
who stayed with the corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000 received by
it from Luisita Realty, Inc. for the sale to the latter of 200 hectares out of the 500 hectares
covered by the August 14, 1996 Conversion Order, the consideration of PhP 750,000,000
received by its owned subsidiary, Centennary Holdings, Inc. for the sale of the remaining
300 hectares of the aforementioned 500-hectare lot to Luisita Industrial Park
Corporation, and the price of PhP 80,511,500 paid by the government through the Bases
Conversion Development Authority for the sale of the 80.51-hectare lot used for the
construction of the SCTEX road network. From the total amount of PhP 1,330,511,500
(PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall be
deducted the 3% of the total gross sales from the production of the agricultural land and
the 3% of the proceeds of said transfers that were paid to the FWBs, the taxes and
expenses relating to the transfer of titles to the transferees, and the expenditures
incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes. For
this purpose, DAR is ordered to engage the services of a reputable accounting firm
approved by the parties to audit the books of HLI and Centennary Holdings, Inc. to
determine if the PhP 1,330,511,500 proceeds of the sale of the three (3) aforementioned
lots were used or spent for legitimate corporate purposes. Any unspent or unused
balance as determined by the audit shall be distributed to the 6,296 original FWBs.
HLI is entitled to just compensation for the agricultural land that will be transferred to
DAR to be reckoned from November 21, 1989 per PARC Resolution No. 89-12-2. DAR and
LBP are ordered to determine the compensation due to HLI.
DAR shall submit a compliance report after six (6) months from finality of this judgment.
It shall also submit, after submission of the compliance report, quarterly reports on the
execution of this judgment to be submitted within the first 15 days at the end of each
quarter, until fully implemented.
The temporary restraining order is lifted.
SO ORDERED.