Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 122156 February 3, 1997

MANILA PRINCE HOTEL petitioner,

vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL
CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, respondents.

BELLOSILLO, J.:

The FiIipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights,
privileges, and concessions covering the national economy and patrimony, the State shall
give preference to qualified Filipinos,1 is in oked by petitioner in its bid to acquire 51% of
the shares of the Manila Hotel Corporation (MHC) which owns the historic Manila Hotel.
Opposing, respondents maintain that the provision is not self-executing but requires an
implementing legislation for its enforcement. Corollarily, they ask whether the 51%
shares form part of the national economy and patrimony covered by the protective mantle
of the Constitution.

The controversy arose when respondent Government Service Insurance System (GSIS),
pursuant to the privatization program of the Philippine Government under Proclamation
No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the
issued and outstanding shares of respondent MHC. The winning bidder, or the eventual
"strategic partner," is to provide management expertise and/or an international
marketing/reservation system, and financial support to strengthen the profitability and
performance of the Manila Hotel.2 In a close bidding held on 18 September 1995 only
two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino
corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per
share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator,
which bid for the same number of shares at P44.00 per share, or P2.42 more than the bid
of petitioner.

Pertinent provisions of the bidding rules prepared by respondent GSIS state —

I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC —

1. The Highest Bidder must comply with the conditions set forth below by October 23,
1995 (reset to November 3, 1995) or the Highest Bidder will lose the right to purchase the
Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified
Bidders:

a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management
Contract, International Marketing/Reservation System Contract or other type of contract
specified by the Highest Bidder in its strategic plan for the Manila Hotel. . . .

b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS . .
..

K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER —

The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the
following conditions are met:

a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995
(reset to November 3, 1995); and

b. Requisite approvals from the GSIS/MHC and COP (Committee on

Privatization)/OGCC (Office of the Government Corporate Counsel) are obtained.3

Pending the declaration of Renong Berhad as the winning bidder/strategic partner and the
execution of the necessary contracts, petitioner in a letter to respondent GSIS dated 28
September 1995 matched the bid price of P44.00 per share tendered by Renong
Berhad.4 In a subsequent letter dated 10 October 1995 petitioner sent a manager's check
issued by Philtrust Bank for Thirty-three Million Pesos (P33.000.000.00) as Bid Security
to match the bid of the Malaysian Group, Messrs. Renong Berhad . . .5 which respondent
GSIS refused to accept.

On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the
tender of the matching bid and that the sale of 51% of the MHC may be hastened by
respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on
prohibition and mandamus. On 18 October 1995 the Court issued a temporary restraining
order enjoining respondents from perfecting and consummating the sale to the Malaysian
firm.

On 10 September 1996 the instant case was accepted by the Court En Banc after it was
referred to it by the First Division. The case was then set for oral arguments with former
Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.

In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution
and submits that the Manila Hotel has been identified with the Filipino nation and has
practically become a historical monument which reflects the vibrancy of Philippine
heritage and culture. It is a proud legacy of an earlier generation of Filipinos who
believed in the nobility and sacredness of independence and its power and capacity to
release the full potential of the Filipino people. To all intents and purposes, it has become
a part of the national patrimony.6 Petitioner also argues that since 51% of the shares of
the MHC carries with it the ownership of the business of the hotel which is owned by
respondent GSIS, a government-owned and controlled corporation, the hotel business of
respondent GSIS being a part of the tourism industry is unquestionably a part of the
national economy. Thus, any transaction involving 51% of the shares of stock of the
MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art.
XII, 1987 Constitution, applies.7

It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony
and its business also unquestionably part of the national economy petitioner should be
preferred after it has matched the bid offer of the Malaysian firm. For the bidding rules
mandate that if for any reason, the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted
bids provided that these Qualified Bidders are willing to match the highest bid in terms of
price per share.8

Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987
Constitution is merely a statement of principle and policy since it is not a self-executing
provision and requires implementing legislation(s) . . . Thus, for the said provision to
Operate, there must be existing laws "to lay down conditions under which business may
be done."9

Second, granting that this provision is self-executing, Manila Hotel does not fall under the
term national patrimony which only refers to lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna and all marine wealth in its territorial sea, and
exclusive marine zone as cited in the first and second paragraphs of Sec. 2, Art. XII, 1987
Constitution. According to respondents, while petitioner speaks of the guests who have
slept in the hotel and the events that have transpired therein which make the hotel
historic, these alone do not make the hotel fall under the patrimony of the nation. What is
more, the mandate of the Constitution is addressed to the State, not to respondent GSIS
which possesses a personality of its own separate and distinct from the Philippines as a
State.

Third, granting that the Manila Hotel forms part of the national patrimony, the
constitutional provision invoked is still inapplicable since what is being sold is only 51%
of the outstanding shares of the corporation, not the hotel building nor the land upon
which the building stands. Certainly, 51% of the equity of the MHC cannot be considered
part of the national patrimony. Moreover, if the disposition of the shares of the MHC is
really contrary to the Constitution, petitioner should have questioned it right from the
beginning and not after it had lost in the bidding.

Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which
provides that if for any reason, the Highest Bidder cannot be awarded the Block of
Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted
bids provided that these Qualified Bidders are willing to match the highest bid in terms of
price per share, is misplaced. Respondents postulate that the privilege of submitting a
matching bid has not yet arisen since it only takes place if for any reason, the Highest
Bidder cannot be awarded the Block of Shares. Thus the submission by petitioner of a
matching bid is premature since Renong Berhad could still very well be awarded the
block of shares and the condition giving rise to the exercise of the privilege to submit a
matching bid had not yet taken place.

Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since
respondent GSIS did not exercise its discretion in a capricious, whimsical manner, and if
ever it did abuse its discretion it was not so patent and gross as to amount to an evasion of
a positive duty or a virtual refusal to perform a duty enjoined by law. Similarly, the
petition for mandamus should fail as petitioner has no clear legal right to what it demands
and respondents do not have an imperative duty to perform the act required of them by
petitioner.

We now resolve. A constitution is a system of fundamental laws for the governance and
administration of a nation. It is supreme, imperious, absolute and unalterable except by
the authority from which it emanates. It has been defined as the fundamental and
paramount law of the nation. 10 It prescribes the permanent framework of a system of
government, assigns to the different departments their respective powers and duties, and
establishes certain fixed principles on which government is founded. The fundamental
conception in other words is that it is a supreme law to which all other laws must conform
and in accordance with which all private rights must be determined and all public
authority administered. 11 Under the doctrine of constitutional supremacy, if a law or
contract violates any norm of the constitution that law or contract whether promulgated
by the legislative or by the executive branch or entered into by private persons for private
purposes is null and void and without any force and effect. Thus, since the Constitution is
the fundamental, paramount and supreme law of the nation, it is deemed written in every
statute and contract.

Admittedly, some constitutions are merely declarations of policies and principles. Their
provisions command the legislature to enact laws and carry out the purposes of the
framers who merely establish an outline of government providing for the different
departments of the governmental machinery and securing certain fundamental and
inalienable rights of citizens. 12 A provision which lays down a general principle, such as
those found in Art. II of the 1987 Constitution, is usually not self-executing. But a
provision which is complete in itself and becomes operative without the aid of
supplementary or enabling legislation, or that which supplies sufficient rule by means of
which the right it grants may be enjoyed or protected, is self-executing. Thus a
constitutional provision is self-executing if the nature and extent of the right conferred
and the liability imposed are fixed by the constitution itself, so that they can be
determined by an examination and construction of its terms, and there is no language
indicating that the subject is referred to the legislature for action. 13
As against constitutions of the past, modern constitutions have been generally drafted
upon a different principle and have often become in effect extensive codes of laws
intended to operate directly upon the people in a manner similar to that of statutory
enactments, and the function of constitutional conventions has evolved into one more like
that of a legislative body. Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now is that all provisions
of the constitution are self-executing If the constitutional provisions are treated as
requiring legislation instead of self-executing, the legislature would have the power to
ignore and practically nullify the mandate of the fundamental law. 14 This can be
cataclysmic. That is why the prevailing view is, as it has always been, that —

. . . in case of doubt, the Constitution should be considered self-executing rather than non-
self-executing . . . . Unless the contrary is clearly intended, the provisions of the
Constitution should be considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be effective. These
provisions would be subordinated to the will of the lawmaking body, which could make
them entirely meaningless by simply refusing to pass the needed implementing statute. 15

Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly
not self-executing, as they quote from discussions on the floor of the 1986 Constitutional
Commission —

MR. RODRIGO. Madam President, I am asking this question as the Chairman of the
Committee on Style. If the wording of "PREFERENCE" is given to QUALIFIED
FILIPINOS," can it be understood as a preference to qualified Filipinos vis-a-
vis Filipinos who are not qualified. So, why do we not make it clear? To qualified
Filipinos as against aliens?

THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the

word "QUALIFIED?".

MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as against
whom? As against aliens or over aliens?

MR. NOLLEDO. Madam President, I think that is understood. We use the word
"QUALIFIED" because the existing laws or prospective laws will always lay down
conditions under which business may be done. For example, qualifications on the setting
up of other financial structures, et cetera (emphasis supplied by respondents)

MR. RODRIGO. It is just a matter of style.

MR. NOLLEDO Yes, 16

Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make
it appear that it is non-self-executing but simply for purposes of style. But, certainly, the
legislature is not precluded from enacting other further laws to enforce the constitutional
provision so long as the contemplated statute squares with the Constitution. Minor details
may be left to the legislature without impairing the self-executing nature of constitutional
provisions.

In self-executing constitutional provisions, the legislature may still enact legislation to

facilitate the exercise of powers directly granted by the constitution, further the operation
of such a provision, prescribe a practice to be used for its enforcement, provide a
convenient remedy for the protection of the rights secured or the determination thereof, or
place reasonable safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty for the violation of a self-
executing constitutional provision does not render such a provision ineffective in the
absence of such legislation. The omission from a constitution of any express provision for
a remedy for enforcing a right or liability is not necessarily an indication that it was not
intended to be self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the subject, but any
legislation must be in harmony with the constitution, further the exercise of constitutional
right and make it more available. 17 Subsequent legislation however does not necessarily
mean that the subject constitutional provision is not, by itself, fully enforceable.

Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art.
XII is implied from the tenor of the first and third paragraphs of the same section which
undoubtedly are not self-executing. 18 The argument is flawed. If the first and third
paragraphs are not self-executing because Congress is still to enact measures to
encourage the formation and operation of enterprises fully owned by Filipinos, as in the
first paragraph, and the State still needs legislation to regulate and exercise authority over
foreign investments within its national jurisdiction, as in the third paragraph, then
a fortiori, by the same logic, the second paragraph can only be self-executing as it does
not by its language require any legislation in order to give preference to qualified
Filipinos in the grant of rights, privileges and concessions covering the national economy
and patrimony. A constitutional provision may be self-executing in one part and non-self-
executing in another. 19

Even the cases cited by respondents holding that certain constitutional provisions are
merely statements of principles and policies, which are basically not self-executing and
only placed in the Constitution as moral incentives to legislation, not as judicially
enforceable rights — are simply not in point. Basco v. Philippine Amusements and
Gaming Corporation 20 speaks of constitutional provisions on personal dignity, 21 the
sanctity of family life, 22 the vital role of the youth in nation-building 23 the promotion of
social justice, 24 and the values of education. 25 Tolentino v. Secretary of Finance 26 refers
to the constitutional provisions on social justice and human rights 27 and on
education. 28 Lastly, Kilosbayan, Inc. v. Morato 29 cites provisions on the promotion of
general welfare, 30 the sanctity of family life, 31 the vital role of the youth in nation-
building 32 and the promotion of total human liberation and development. 33A reading of
these provisions indeed clearly shows that they are not judicially enforceable
constitutional rights but merely guidelines for legislation. The very terms of the
provisions manifest that they are only principles upon which the legislations must be
based. Res ipsa loquitur.

On the other hand, Sec. 10, second par., Art. XII of the of the 1987 Constitution is a
mandatory, positive command which is complete in itself and which needs no further
guidelines or implementing laws or rules for its enforcement. From its very words the
provision does not require any legislation to put it in operation. It is per se judicially
enforceable When our Constitution mandates that [i]n the grant of rights, privileges, and
concessions covering national economy and patrimony, the State shall give preference to
qualified Filipinos, it means just that — qualified Filipinos shall be preferred. And when
our Constitution declares that a right exists in certain specified circumstances an action
may be maintained to enforce such right notwithstanding the absence of any legislation
on the subject; consequently, if there is no statute especially enacted to enforce such
constitutional right, such right enforces itself by its own inherent potency and puissance,
and from which all legislations must take their bearings. Where there is a right there is a
remedy. Ubi jus ibi remedium.

As regards our national patrimony, a member of the 1986 Constitutional

Commission 34 explains —

The patrimony of the Nation that should be conserved and developed refers not only to
out rich natural resources but also to the cultural heritage of out race. It also refers to our
intelligence in arts, sciences and letters. Therefore, we should develop not only our lands,
forests, mines and other natural resources but also the mental ability or faculty of our
people.

We agree. In its plain and ordinary meaning, the term patrimony pertains to
heritage. 35 When the Constitution speaks of national patrimony, it refers not only to the
natural resources of the Philippines, as the Constitution could have very well used the
term natural resources, but also to the cultural heritage of the Filipinos.

Manila Hotel has become a landmark — a living testimonial of Philippine heritage. While
it was restrictively an American hotel when it first opened in 1912, it immediately
evolved to be truly Filipino, Formerly a concourse for the elite, it has since then become
the venue of various significant events which have shaped Philippine history. It was
called the Cultural Center of the 1930's. It was the site of the festivities during the
inauguration of the Philippine Commonwealth. Dubbed as the Official Guest House of
the Philippine Government. it plays host to dignitaries and official visitors who are
accorded the traditional Philippine hospitality. 36

The history of the hotel has been chronicled in the book The Manila Hotel: The Heart
and Memory of a City. 37During World War II the hotel was converted by the Japanese
Military Administration into a military headquarters. When the American forces returned
to recapture Manila the hotel was selected by the Japanese together with Intramuros as
the two (2) places fro their final stand. Thereafter, in the 1950's and 1960's, the hotel
became the center of political activities, playing host to almost every political convention.
In 1970 the hotel reopened after a renovation and reaped numerous international
recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel
was the site of a failed coup d' etat where an aspirant for vice-president was "proclaimed"
President of the Philippine Republic.

For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and
failures, loves and frustrations of the Filipinos; its existence is impressed with public
interest; its own historicity associated with our struggle for sovereignty, independence
and nationhood. Verily, Manila Hotel has become part of our national economy and
patrimony. For sure, 51% of the equity of the MHC comes within the purview of the
constitutional shelter for it comprises the majority and controlling stock, so that anyone
who acquires or owns the 51% will have actual control and management of the hotel. In
this instance, 51% of the MHC cannot be disassociated from the hotel and the land on
which the hotel edifice stands. Consequently, we cannot sustain respondents' claim that
the Filipino First Policy provision is not applicable since what is being sold is only
51% of the outstanding shares of the corporation, not the Hotel building nor the land
upon which the building stands. 38

The argument is pure sophistry. The term qualified Filipinos as used in Our Constitution
also includes corporations at least 60% of which is owned by Filipinos. This is very clear
from the proceedings of the 1986 Constitutional Commission

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And
the amendment would consist in substituting the words "QUALIFIED FILIPINOS" with
the following: "CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR
ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY
OWNED BY SUCH CITIZENS.

xxx xxx xxx

MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to
raise a question. Suppose it is a corporation that is 80-percent Filipino, do we not give it
preference?

MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What
about a corporation wholly owned by Filipino citizens?

MR. MONSOD. At least 60 percent, Madam President.

MR. DAVIDE. Is that the intention?

MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the
preference should only be 100-percent Filipino.
MR: DAVIDE. I want to get that meaning clear because "QUALIFIED FILIPINOS" may
refer only to individuals and not to juridical personalities or entities.

MR. MONSOD. We agree, Madam President. 39

xxx xxx xxx

MR. RODRIGO. Before we vote, may I request that the amendment be read again.

MR. NOLLEDO. The amendment will read: "IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED
FILIPINOS." And the word "Filipinos" here, as intended by the proponents, will include
not only individual Filipinos but also Filipino-controlled entities or entities fully-
controlled by Filipinos. 40

The phrase preference to qualified Filipinos was explained thus —

MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please
restate his amendment so that I can ask a question.

MR. NOLLEDO. "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS

COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL
GIVE PREFERENCE TO QUALIFIED FILIPINOS."

MR FOZ. In connection with that amendment, if a foreign enterprise is qualified and a

Filipino enterprise is also qualified, will the Filipino enterprise still be given a
preference?

MR. NOLLEDO. Obviously.

MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise,
will the Filipino still be preferred?

MR. NOLLEDO. The answer is "yes."

MR. FOZ. Thank you, 41

Expounding further on the Filipino First Policy provision Commissioner Nolledo

continues —

MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it will be "SHALL — THE
STATE SHALL GlVE PREFERENCE TO QUALIFIED FILIPINOS. This embodies the
so-called "Filipino First" policy. That means that Filipinos should be given preference in
the grant of concessions, privileges and rights covering the national patrimony. 42
The exchange of views in the sessions of the Constitutional Commission regarding the
subject provision was still further clarified by Commissioner Nolledo 43 —

Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all economic

concerns. It is better known as the FILIPINO FIRST Policy . . . This provision was never
found in previous Constitutions . . . .

The term "qualified Filipinos" simply means that preference shall be given to those
citizens who can make a viable contribution to the common good, because of credible
competence and efficiency. It certainly does NOT mandate the pampering and
preferential treatment to Filipino citizens or organizations that are incompetent or
inefficient, since such an indiscriminate preference would be counter productive and
inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be
made between a "qualified foreigner" end a "qualified Filipino," the latter shall be chosen
over the former."

Lastly, the word qualified is also determinable. Petitioner was so considered by

respondent GSIS and selected as one of the qualified bidders. It was pre-qualified by
respondent GSIS in accordance with its own guidelines so that the sole inference here is
that petitioner has been found to be possessed of proven management expertise in the
hotel industry, or it has significant equity ownership in another hotel company, or it has
an overall management and marketing proficiency to successfully operate the Manila
Hotel. 44

The penchant to try to whittle away the mandate of the Constitution by arguing that the
subject provision is not self-executory and requires implementing legislation is quite
disturbing. The attempt to violate a clear constitutional provision — by the government
itself — is only too distressing. To adopt such a line of reasoning is to renounce the duty
to ensure faithfulness to the Constitution. For, even some of the provisions of the
Constitution which evidently need implementing legislation have juridical life of their
own and can be the source of a judicial remedy. We cannot simply afford the government
a defense that arises out of the failure to enact further enabling, implementing or guiding
legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional
government is apt —

The executive department has a constitutional duty to implement laws, including the
Constitution, even before Congress acts — provided that there are discoverable legal
standards for executive action. When the executive acts, it must be guided by its own
understanding of the constitutional command and of applicable laws. The responsibility
for reading and understanding the Constitution and the laws is not the sole prerogative of
Congress. If it were, the executive would have to ask Congress, or perhaps the Court, for
an interpretation every time the executive is confronted by a constitutional command.
That is not how constitutional government operates. 45
Respondents further argue that the constitutional provision is addressed to the State, not
to respondent GSIS which by itself possesses a separate and distinct personality. This
argument again is at best specious. It is undisputed that the sale of 51% of the MHC
could only be carried out with the prior approval of the State acting through respondent
Committee on Privatization. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this
fact alone makes the sale of the assets of respondents GSIS and MHC a "state action." In
constitutional jurisprudence, the acts of persons distinct from the government are
considered "state action" covered by the Constitution (1) when the activity it engages in
is a "public function;" (2) when the government is so significantly involved with the
private actor as to make the government responsible for his action; and, (3) when the
government has approved or authorized the action. It is evident that the act of respondent
GSIS in selling 51% of its share in respondent MHC comes under the second and third
categories of "state action." Without doubt therefore the transaction. although entered
into by respondent GSIS, is in fact a transaction of the State and therefore subject to the
constitutional command. 46

When the Constitution addresses the State it refers not only to the people but also to the
government as elements of the State. After all, government is composed of three (3)
divisions of power — legislative, executive and judicial. Accordingly, a constitutional
mandate directed to the State is correspondingly directed to the three(3) branches of
government. It is undeniable that in this case the subject constitutional injunction is
addressed among others to the Executive Department and respondent GSIS, a
government instrumentality deriving its authority from the State.

It should be stressed that while the Malaysian firm offered the higher bid it is not yet the
winning bidder. The bidding rules expressly provide that the highest bidder shall only be
declared the winning bidder after it has negotiated and executed the necessary contracts,
and secured the requisite approvals. Since the "Filipino First Policy provision of the
Constitution bestows preference on qualified Filipinos the mere tending of the highest bid
is not an assurance that the highest bidder will be declared the winning bidder.
Resultantly, respondents are not bound to make the award yet, nor are they under
obligation to enter into one with the highest bidder. For in choosing the awardee
respondents are mandated to abide by the dictates of the 1987 Constitution the provisions
of which are presumed to be known to all the bidders and other interested parties.

Adhering to the doctrine of constitutional supremacy, the subject constitutional provision

is, as it should be, impliedly written in the bidding rules issued by respondent GSIS, lest
the bidding rules be nullified for being violative of the Constitution. It is a basic principle
in constitutional law that all laws and contracts must conform with the fundamental law
of the land. Those which violate the Constitution lose their reason for being.

Paragraph V. J. 1 of the bidding rules provides that [if] for any reason the Highest Bidder
cannot be awarded the Block of Shares, GSIS may offer this to other Qualified Bidders
that have validly submitted bids provided that these Qualified Bidders are willing to
match the highest bid in terms of price per
47
share. Certainly, the constitutional mandate itself is reason enough not to award the
block of shares immediately to the foreign bidder notwithstanding its submission of a
higher, or even the highest, bid. In fact, we cannot conceive of a stronger reason than the
constitutional injunction itself.

In the instant case, where a foreign firm submits the highest bid in a public bidding
concerning the grant of rights, privileges and concessions covering the national economy
and patrimony, thereby exceeding the bid of a Filipino, there is no question that the
Filipino will have to be allowed to match the bid of the foreign entity. And if the Filipino
matches the bid of a foreign firm the award should go to the Filipino. It must be so if we
are to give life and meaning to the Filipino First Policy provision of the 1987
Constitution. For, while this may neither be expressly stated nor contemplated in the
bidding rules, the constitutional fiat is, omnipresent to be simply disregarded. To ignore it
would be to sanction a perilous skirting of the basic law.

This Court does not discount the apprehension that this policy may discourage foreign
investors. But the Constitution and laws of the Philippines are understood to be always
open to public scrutiny. These are given factors which investors must consider when
venturing into business in a foreign jurisdiction. Any person therefore desiring to do
business in the Philippines or with any of its agencies or instrumentalities is presumed to
know his rights and obligations under the Constitution and the laws of the forum.

The argument of respondents that petitioner is now estopped from questioning the sale to
Renong Berhad since petitioner was well aware from the beginning that a foreigner could
participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike were
invited to the bidding. But foreigners may be awarded the sale only if no Filipino
qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign
entity. In the case before us, while petitioner was already preferred at the inception of the
bidding because of the constitutional mandate, petitioner had not yet matched the bid
offered by Renong Berhad. Thus it did not have the right or personality then to compel
respondent GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the
foreign firm and the apparent disregard by respondent GSIS of petitioner's matching bid
did the latter have a cause of action.

Besides, there is no time frame for invoking the constitutional safeguard unless perhaps
the award has been finally made. To insist on selling the Manila Hotel to foreigners when
there is a Filipino group willing to match the bid of the foreign group is to insist that
government be treated as any other ordinary market player, and bound by its mistakes or
gross errors of judgment, regardless of the consequences to the Filipino people. The
miscomprehension of the Constitution is regrettable. Thus we would rather remedy the
indiscretion while there is still an opportunity to do so than let the government develop
the habit of forgetting that the Constitution lays down the basic conditions and parameters
for its actions.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant
to the bidding rules, respondent GSIS is left with no alternative but to award to petitioner
the block of shares of MHC and to execute the necessary agreements and documents to
effect the sale in accordance not only with the bidding guidelines and procedures but with
the Constitution as well. The refusal of respondent GSIS to execute the corresponding
documents with petitioner as provided in the bidding rules after the latter has matched the
bid of the Malaysian firm clearly constitutes grave abuse of discretion.

The Filipino First Policy is a product of Philippine nationalism. It is embodied in the

1987 Constitution not merely to be used as a guideline for future legislation but primarily
to be enforced; so must it be enforced. This Court as the ultimate guardian of the
Constitution will never shun, under any reasonable circumstance, the duty of upholding
the majesty of the Constitution which it is tasked to defend. It is worth emphasizing that it
is not the intention of this Court to impede and diminish, much less undermine, the influx
of foreign investments. Far from it, the Court encourages and welcomes more business
opportunities but avowedly sanctions the preference for Filipinos whenever such
preference is ordained by the Constitution. The position of the Court on this matter could
have not been more appropriately articulated by Chief Justice Narvasa —

As scrupulously as it has tried to observe that it is not its function to substitute its
judgment for that of the legislature or the executive about the wisdom and feasibility of
legislation economic in nature, the Supreme Court has not been spared criticism for
decisions perceived as obstacles to economic progress and development . . . in connection
with a temporary injunction issued by the Court's First Division against the sale of the
Manila Hotel to a Malaysian Firm and its partner, certain statements were published in a
major daily to the effect that injunction "again demonstrates that the Philippine legal
system can be a major obstacle to doing business here.

Let it be stated for the record once again that while it is no business of the Court to
intervene in contracts of the kind referred to or set itself up as the judge of whether they
are viable or attainable, it is its bounden duty to make sure that they do not violate the
Constitution or the laws, or are not adopted or implemented with grave abuse of
discretion amounting to lack or excess of jurisdiction. It will never shirk that duty, no
matter how buffeted by winds of unfair and ill-informed criticism. 48

Privatization of a business asset for purposes of enhancing its business viability and
preventing further losses, regardless of the character of the asset, should not take
precedence over non-material values. A commercial, nay even a budgetary, objective
should not be pursued at the expense of national pride and dignity. For the Constitution
enshrines higher and nobler non-material values. Indeed, the Court will always defer to
the Constitution in the proper governance of a free society; after all, there is nothing so
sacrosanct in any economic policy as to draw itself beyond judicial review when the
Constitution is involved. 49

Nationalism is inherent, in the very concept of the Philippines being a democratic and
republican state, with sovereignty residing in the Filipino people and from whom all
government authority emanates. In nationalism, the happiness and welfare of the people
must be the goal. The nation-state can have no higher purpose. Any interpretation of any
constitutional provision must adhere to such basic concept. Protection of foreign
investments, while laudible, is merely a policy. It cannot override the demands of
nationalism. 50

The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be
sold to the highest bidder solely for the sake of privatization. We are not talking about an
ordinary piece of property in a commercial district. We are talking about a historic relic
that has hosted many of the most important events in the short history of the Philippines
as a nation. We are talking about a hotel where heads of states would prefer to be housed
as a strong manifestation of their desire to cloak the dignity of the highest state function
to their official visits to the Philippines. Thus the Manila Hotel has played and continues
to play a significant role as an authentic repository of twentieth century Philippine history
and culture. In this sense, it has become truly a reflection of the Filipino soul — a place
with a history of grandeur; a most historical setting that has played a part in the shaping
of a country. 51

This Court cannot extract rhyme nor reason from the determined efforts of respondents to
sell the historical landmark — this Grand Old Dame of hotels in Asia — to a total
stranger. For, indeed, the conveyance of this epic exponent of the Filipino psyche to alien
hands cannot be less than mephistophelian for it is, in whatever manner viewed, a
veritable alienation of a nation's soul for some pieces of foreign silver. And so we ask:
What advantage, which cannot be equally drawn from a qualified Filipino, can be gained
by the Filipinos Manila Hotel — and all that it stands for — is sold to a non-Filipino?
How much of national pride will vanish if the nation's cultural heritage is entrusted to a
foreign entity? On the other hand, how much dignity will be preserved and realized if the
national patrimony is safekept in the hands of a qualified, zealous and well-meaning
Filipino? This is the plain and simple meaning of the Filipino First Policy provision of
the Philippine Constitution. And this Court, heeding the clarion call of the Constitution
and accepting the duty of being the elderly watchman of the nation, will continue to
respect and protect the sanctity of the Constitution.

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM,

MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE
OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and
DESIST from selling 51% of the shares of the Manila Hotel Corporation to RENONG
BERHAD, and to ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL
CORPORATION to purchase the subject 51% of the shares of the Manila Hotel
Corporation at P44.00 per share and thereafter to execute the necessary clearances and to
do such other acts and deeds as may be necessary for purpose.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-14639 March 25, 1919

ZACARIAS VILLAVICENCIO, ET AL., petitioners,

vs.
JUSTO LUKBAN, ET AL., respondents.

Alfonso Mendoza for petitioners.

City Fiscal Diaz for respondents.

MALCOLM, J.:

The annals of juridical history fail to reveal a case quite as remarkable as the one which
this application for habeas corpus submits for decision. While hardly to be expected to be
met with in this modern epoch of triumphant democracy, yet, after all, the cause presents
no great difficulty if there is kept in the forefront of our minds the basic principles of
popular government, and if we give expression to the paramount purpose for which the
courts, as an independent power of such a government, were constituted. The primary
question is — Shall the judiciary permit a government of the men instead of a government
of laws to be set up in the Philippine Islands?

Omitting much extraneous matter, of no moment to these proceedings, but which might
prove profitable reading for other departments of the government, the facts are these: The
Mayor of the city of Manila, Justo Lukban, for the best of all reasons, to exterminate vice,
ordered the segregated district for women of ill repute, which had been permitted for a
number of years in the city of Manila, closed. Between October 16 and October 25, 1918,
the women were kept confined to their houses in the district by the police. Presumably,
during this period, the city authorities quietly perfected arrangements with the Bureau of
Labor for sending the women to Davao, Mindanao, as laborers; with some government
office for the use of the coastguard cutters Corregidor and Negros, and with the
Constabulary for a guard of soldiers. At any rate, about midnight of October 25, the
police, acting pursuant to orders from the chief of police, Anton Hohmann and the Mayor
of the city of Manila, Justo Lukban, descended upon the houses, hustled some 170
inmates into patrol wagons, and placed them aboard the steamers that awaited their
arrival. The women were given no opportunity to collect their belongings, and apparently
were under the impression that they were being taken to a police station for an
investigation. They had no knowledge that they were destined for a life in Mindanao.
They had not been asked if they wished to depart from that region and had neither
directly nor indirectly given their consent to the deportation. The involuntary guests were
received on board the steamers by a representative of the Bureau of Labor and a
detachment of Constabulary soldiers. The two steamers with their unwilling passengers
sailed for Davao during the night of October 25.

The vessels reached their destination at Davao on October 29. The women were landed
and receipted for as laborers by Francisco Sales, provincial governor of Davao, and by
Feliciano Yñigo and Rafael Castillo. The governor and the hacendero Yñigo, who appear
as parties in the case, had no previous notification that the women were prostitutes who
had been expelled from the city of Manila. The further happenings to these women and
the serious charges growing out of alleged ill-treatment are of public interest, but are not
essential to the disposition of this case. Suffice it to say, generally, that some of the
women married, others assumed more or less clandestine relations with men, others went
to work in different capacities, others assumed a life unknown and disappeared, and a
goodly portion found means to return to Manila.

To turn back in our narrative, just about the time the Corregidor and the Negros were
putting in to Davao, the attorney for the relatives and friends of a considerable number of
the deportees presented an application for habeas corpus to a member of the Supreme
Court. Subsequently, the application, through stipulation of the parties, was made to
include all of the women who were sent away from Manila to Davao and, as the same
questions concerned them all, the application will be considered as including them. The
application set forth the salient facts, which need not be repeated, and alleged that the
women were illegally restrained of their liberty by Justo Lukban, Mayor of the city of
Manila, Anton Hohmann, chief of police of the city of Manila, and by certain unknown
parties. The writ was made returnable before the full court. The city fiscal appeared for
the respondents, Lukban and Hohmann, admitted certain facts relative to sequestration
and deportation, and prayed that the writ should not be granted because the petitioners
were not proper parties, because the action should have been begun in the Court of First
Instance for Davao, Department of Mindanao and Sulu, because the respondents did not
have any of the women under their custody or control, and because their jurisdiction did
not extend beyond the boundaries of the city of Manila. According to an exhibit attached
to the answer of the fiscal, the 170 women were destined to be laborers, at good salaries,
on the haciendas of Yñigo and Governor Sales. In open court, the fiscal admitted, in
answer to question of a member of the court, that these women had been sent out of
Manila without their consent. The court awarded the writ, in an order of November 4, that
directed Justo Lukban, Mayor of the city of Manila, Anton Hohmann, chief of police of
the city of Manila, Francisco Sales, governor of the province of Davao, and Feliciano
Yñigo, an hacenderoof Davao, to bring before the court the persons therein named,
alleged to be deprived of their liberty, on December 2, 1918.
Before the date mentioned, seven of the women had returned to Manila at their own
expense. On motion of counsel for petitioners, their testimony was taken before the clerk
of the Supreme Court sitting as commissioners. On the day named in the order, December
2nd, 1918, none of the persons in whose behalf the writ was issued were produced in
court by the respondents. It has been shown that three of those who had been able to
come back to Manila through their own efforts, were notified by the police and the secret
service to appear before the court. The fiscal appeared, repeated the facts more
comprehensively, reiterated the stand taken by him when pleading to the original petition
copied a telegram from the Mayor of the city of Manila to the provincial governor of
Davao and the answer thereto, and telegrams that had passed between the Director of
Labor and the attorney for that Bureau then in Davao, and offered certain affidavits
showing that the women were contained with their life in Mindanao and did not wish to
return to Manila. Respondents Sales answered alleging that it was not possible to fulfill
the order of the Supreme Court because the women had never been under his control,
because they were at liberty in the Province of Davao, and because they had married or
signed contracts as laborers. Respondent Yñigo answered alleging that he did not have
any of the women under his control and that therefore it was impossible for him to obey
the mandate. The court, after due deliberation, on December 10, 1918, promulgated a
second order, which related that the respondents had not complied with the original order
to the satisfaction of the court nor explained their failure to do so, and therefore directed
that those of the women not in Manila be brought before the court by respondents
Lukban, Hohmann, Sales, and Yñigo on January 13, 1919, unless the women should, in
written statements voluntarily made before the judge of first instance of Davao or the
clerk of that court, renounce the right, or unless the respondents should demonstrate some
other legal motives that made compliance impossible. It was further stated that the
question of whether the respondents were in contempt of court would later be decided
and the reasons for the order announced in the final decision.

Before January 13, 1919, further testimony including that of a number of the women, of
certain detectives and policemen, and of the provincial governor of Davao, was taken
before the clerk of the Supreme Court sitting as commissioner and the clerk of the Court
of First Instance of Davao acting in the same capacity. On January 13, 1919, the
respondents technically presented before the Court the women who had returned to the
city through their own efforts and eight others who had been brought to Manila by the
respondents. Attorneys for the respondents, by their returns, once again recounted the
facts and further endeavored to account for all of the persons involved in the habeas
corpus. In substance, it was stated that the respondents, through their representatives and
agents, had succeeded in bringing from Davao with their consent eight women; that
eighty-one women were found in Davao who, on notice that if they desired they could
return to Manila, transportation fee, renounced the right through sworn statements; that
fifty-nine had already returned to Manila by other means, and that despite all efforts to
find them twenty-six could not be located. Both counsel for petitioners and the city fiscal
were permitted to submit memoranda. The first formally asked the court to find Justo
Lukban, Mayor of the city of Manila, Anton Hohmann, chief of police of the city of
Manila, Jose Rodriguez and Fernando Ordax, members of the police force of the city of
Manila, Feliciano Yñigo, an hacendero of Davao, Modesto Joaquin, the attorney for the
Bureau of Labor, and Anacleto Diaz, fiscal of the city of Manila, in contempt of court.
The city fiscal requested that the replica al memorandum de los recurridos, (reply to
respondents' memorandum) dated January 25, 1919, be struck from the record.

In the second order, the court promised to give the reasons for granting the writ of habeas
corpus in the final decision. We will now proceed to do so.

One fact, and one fact only, need be recalled — these one hundred and seventy women
were isolated from society, and then at night, without their consent and without any
opportunity to consult with friends or to defend their rights, were forcibly hustled on
board steamers for transportation to regions unknown. Despite the feeble attempt to prove
that the women left voluntarily and gladly, that such was not the case is shown by the
mere fact that the presence of the police and the constabulary was deemed necessary and
that these officers of the law chose the shades of night to cloak their secret and stealthy
acts. Indeed, this is a fact impossible to refute and practically admitted by the
respondents.

With this situation, a court would next expect to resolve the question — By authority of
what law did the Mayor and the Chief of Police presume to act in deporting by duress
these persons from Manila to another distant locality within the Philippine Islands? We
turn to the statutes and we find —

Alien prostitutes can be expelled from the Philippine Islands in conformity with an Act of
congress. The Governor-General can order the eviction of undesirable aliens after a
hearing from the Islands. Act No. 519 of the Philippine Commission and section 733 of
the Revised Ordinances of the city of Manila provide for the conviction and punishment
by a court of justice of any person who is a common prostitute. Act No. 899 authorizes
the return of any citizen of the United States, who may have been convicted of vagrancy,
to the homeland. New York and other States have statutes providing for the commitment
to the House of Refuge of women convicted of being common prostitutes. Always a law!
Even when the health authorities compel vaccination, or establish a quarantine, or place a
leprous person in the Culion leper colony, it is done pursuant to some law or order. But
one can search in vain for any law, order, or regulation, which even hints at the right of
the Mayor of the city of Manila or the chief of police of that city to force citizens of the
Philippine Islands — and these women despite their being in a sense lepers of society are
nevertheless not chattels but Philippine citizens protected by the same constitutional
guaranties as are other citizens — to change their domicile from Manila to another
locality. On the contrary, Philippine penal law specifically punishes any public officer
who, not being expressly authorized by law or regulation, compels any person to change
his residence.

In other countries, as in Spain and Japan, the privilege of domicile is deemed so

important as to be found in the Bill of Rights of the Constitution. Under the American
constitutional system, liberty of abode is a principle so deeply imbedded in jurisprudence
and considered so elementary in nature as not even to require a constitutional sanction.
Even the Governor-General of the Philippine Islands, even the President of the United
States, who has often been said to exercise more power than any king or potentate, has no
such arbitrary prerogative, either inherent or express. Much less, therefore, has the
executive of a municipality, who acts within a sphere of delegated powers. If the mayor
and the chief of police could, at their mere behest or even for the most praiseworthy of
motives, render the liberty of the citizen so insecure, then the presidents and chiefs of
police of one thousand other municipalities of the Philippines have the same privilege. If
these officials can take to themselves such power, then any other official can do the same.
And if any official can exercise the power, then all persons would have just as much right
to do so. And if a prostitute could be sent against her wishes and under no law from one
locality to another within the country, then officialdom can hold the same club over the
head of any citizen.

Law defines power. Centuries ago Magna Charta decreed that — "No freeman shall be
taken, or imprisoned, or be disseized of his freehold, or liberties, or free customs, or be
outlawed, or exiled, or any other wise destroyed; nor will we pass upon him nor condemn
him, but by lawful judgment of his peers or by the law of the land. We will sell to no
man, we will not deny or defer to any man either justice or right." (Magna Charta, 9 Hen.,
111, 1225, Cap. 29; 1 eng. stat. at Large, 7.) No official, no matter how high, is above the
law. The courts are the forum which functionate to safeguard individual liberty and to
punish official transgressors. "The law," said Justice Miller, delivering the opinion of the
Supreme Court of the United States, "is the only supreme power in our system of
government, and every man who by accepting office participates in its functions is only
the more strongly bound to submit to that supremacy, and to observe the limitations
which it imposes upon the exercise of the authority which it gives." (U.S. vs. Lee [1882],
106 U.S., 196, 220.) "The very idea," said Justice Matthews of the same high tribunal in
another case, "that one man may be compelled to hold his life, or the means of living, or
any material right essential to the enjoyment of life, at the mere will of another, seems to
be intolerable in any country where freedom prevails, as being the essence of slavery
itself." (Yick Wo vs. Hopkins [1886], 118 U.S., 356, 370.) All this explains the motive in
issuing the writ of habeas corpus, and makes clear why we said in the very beginning that
the primary question was whether the courts should permit a government of men or a
government of laws to be established in the Philippine Islands.

What are the remedies of the unhappy victims of official oppression? The remedies of the
citizen are three: (1) Civil action; (2) criminal action, and (3) habeas corpus.

The first is an optional but rather slow process by which the aggrieved party may recoup
money damages. It may still rest with the parties in interest to pursue such an action, but
it was never intended effectively and promptly to meet any such situation as that now
before us.

As to criminal responsibility, it is true that the Penal Code in force in these Islands
provides:

Any public officer not thereunto authorized by law or by regulations of a general

character in force in the Philippines who shall banish any person to a place more than two
hundred kilometers distant from his domicile, except it be by virtue of the judgment of a
court, shall be punished by a fine of not less than three hundred and twenty-five and not
more than three thousand two hundred and fifty pesetas.

Any public officer not thereunto expressly authorized by law or by regulation of a general
character in force in the Philippines who shall compel any person to change his domicile
or residence shall suffer the penalty of destierro and a fine of not less than six hundred
and twenty-five and not more than six thousand two hundred and fifty pesetas. (Art. 211.)

We entertain no doubt but that, if, after due investigation, the proper prosecuting officers
find that any public officer has violated this provision of law, these prosecutors will
institute and press a criminal prosecution just as vigorously as they have defended the
same official in this action. Nevertheless, that the act may be a crime and that the persons
guilty thereof can be proceeded against, is no bar to the instant proceedings. To quote the
words of Judge Cooley in a case which will later be referred to — "It would be a
monstrous anomaly in the law if to an application by one unlawfully confined, ta be
restored to his liberty, it could be a sufficient answer that the confinement was a crime,
and therefore might be continued indefinitely until the guilty party was tried and punished
therefor by the slow process of criminal procedure." (In the matter of Jackson [1867], 15
Mich., 416, 434.) The writ of habeas corpus was devised and exists as a speedy and
effectual remedy to relieve persons from unlawful restraint, and as the best and only
sufficient defense of personal freedom. Any further rights of the parties are left untouched
by decision on the writ, whose principal purpose is to set the individual at liberty.

Granted that habeas corpus is the proper remedy, respondents have raised three specific
objections to its issuance in this instance. The fiscal has argued (l) that there is a defect in
parties petitioners, (2) that the Supreme Court should not a assume jurisdiction, and (3)
that the person in question are not restrained of their liberty by respondents. It was finally
suggested that the jurisdiction of the Mayor and the chief of police of the city of Manila
only extends to the city limits and that perforce they could not bring the women from
Davao.

The first defense was not presented with any vigor by counsel. The petitioners were
relatives and friends of the deportees. The way the expulsion was conducted by the city
officials made it impossible for the women to sign a petition for habeas corpus. It was
consequently proper for the writ to be submitted by persons in their behalf. (Code of
Criminal Procedure, sec. 78; Code of Civil Procedure, sec. 527.) The law, in its zealous
regard for personal liberty, even makes it the duty of a court or judge to grant a writ
of habeas corpus if there is evidence that within the court's jurisdiction a person is
unjustly imprisoned or restrained of his liberty, though no application be made therefor.
(Code of Criminal Procedure, sec. 93.) Petitioners had standing in court.

The fiscal next contended that the writ should have been asked for in the Court of First
Instance of Davao or should have been made returnable before that court. It is a general
rule of good practice that, to avoid unnecessary expense and inconvenience, petitions
for habeas corpus should be presented to the nearest judge of the court of first instance.
But this is not a hard and fast rule. The writ of habeas corpus may be granted by the
Supreme Court or any judge thereof enforcible anywhere in the Philippine Islands. (Code
of Criminal Procedure, sec. 79; Code of Civil Procedure, sec. 526.) Whether the writ shall
be made returnable before the Supreme Court or before an inferior court rests in the
discretion of the Supreme Court and is dependent on the particular circumstances. In this
instance it was not shown that the Court of First Instance of Davao was in session, or that
the women had any means by which to advance their plea before that court. On the other
hand, it was shown that the petitioners with their attorneys, and the two original
respondents with their attorney, were in Manila; it was shown that the case involved
parties situated in different parts of the Islands; it was shown that the women might still
be imprisoned or restrained of their liberty; and it was shown that if the writ was to
accomplish its purpose, it must be taken cognizance of and decided immediately by the
appellate court. The failure of the superior court to consider the application and then to
grant the writ would have amounted to a denial of the benefits of the writ.

The last argument of the fiscal is more plausible and more difficult to meet. When the
writ was prayed for, says counsel, the parties in whose behalf it was asked were under no
restraint; the women, it is claimed, were free in Davao, and the jurisdiction of the mayor
and the chief of police did not extend beyond the city limits. At first blush, this is a
tenable position. On closer examination, acceptance of such dictum is found to be
perversive of the first principles of the writ of habeas corpus.

A prime specification of an application for a writ of habeas corpus is restraint of liberty.

The essential object and purpose of the writ of habeas corpus is to inquire into all manner
of involuntary restraint as distinguished from voluntary, and to relieve a person therefrom
if such restraint is illegal. Any restraint which will preclude freedom of action is
sufficient. The forcible taking of these women from Manila by officials of that city, who
handed them over to other parties, who deposited them in a distant region, deprived these
women of freedom of locomotion just as effectively as if they had been imprisoned.
Placed in Davao without either money or personal belongings, they were prevented from
exercising the liberty of going when and where they pleased. The restraint of liberty
which began in Manila continued until the aggrieved parties were returned to Manila and
released or until they freely and truly waived his right.

Consider for a moment what an agreement with such a defense would mean. The chief
executive of any municipality in the Philippines could forcibly and illegally take a private
citizen and place him beyond the boundaries of the municipality, and then, when called
upon to defend his official action, could calmly fold his hands and claim that the person
was under no restraint and that he, the official, had no jurisdiction over this other
municipality. We believe the true principle should be that, if the respondent is within the
jurisdiction of the court and has it in his power to obey the order of the court and thus to
undo the wrong that he has inflicted, he should be compelled to do so. Even if the party to
whom the writ is addressed has illegally parted with the custody of a person before the
application for the writ is no reason why the writ should not issue. If the mayor and the
chief of police, acting under no authority of law, could deport these women from the city
of Manila to Davao, the same officials must necessarily have the same means to return
them from Davao to Manila. The respondents, within the reach of process, may not be
permitted to restrain a fellow citizen of her liberty by forcing her to change her domicile
and to avow the act with impunity in the courts, while the person who has lost her
birthright of liberty has no effective recourse. The great writ of liberty may not thus be
easily evaded.

It must be that some such question has heretofore been presented to the courts for
decision. Nevertheless, strange as it may seem, a close examination of the authorities fails
to reveal any analogous case. Certain decisions of respectable courts are however very
persuasive in nature.

A question came before the Supreme Court of the State of Michigan at an early date as to
whether or not a writ of habeas corpus would issue from the Supreme Court to a person
within the jurisdiction of the State to bring into the State a minor child under
guardianship in the State, who has been and continues to be detained in another State.
The membership of the Michigan Supreme Court at this time was notable. It was
composed of Martin, chief justice, and Cooley, Campbell, and Christiancy, justices. On
the question presented the court was equally divided. Campbell, J., with whom concurred
Martin, C. J., held that the writ should be quashed. Cooley, J., one of the most
distinguished American judges and law-writers, with whom concurred Christiancy, J.,
held that the writ should issue. Since the opinion of Justice Campbell was predicated to a
large extent on his conception of the English decisions, and since, as will hereafter
appear, the English courts have taken a contrary view, only the following eloquent
passages from the opinion of Justice Cooley are quoted:

I have not yet seen sufficient reason to doubt the power of this court to issue the present
writ on the petition which was laid before us. . . .

It would be strange indeed if, at this late day, after the eulogiums of six centuries and a
half have been expended upon the Magna Charta, and rivers of blood shed for its
establishment; after its many confirmations, until Coke could declare in his speech on the
petition of right that "Magna Charta was such a fellow that he will have no sovereign,"
and after the extension of its benefits and securities by the petition of right, bill of rights
and habeas corpus acts, it should now be discovered that evasion of that great clause for
the protection of personal liberty, which is the life and soul of the whole instrument, is so
easy as is claimed here. If it is so, it is important that it be determined without delay, that
the legislature may apply the proper remedy, as I can not doubt they would, on the subject
being brought to their notice. . . .

The second proposition — that the statutory provisions are confined to the case of
imprisonment within the state — seems to me to be based upon a misconception as to the
source of our jurisdiction. It was never the case in England that the court of king's bench
derived its jurisdiction to issue and enforce this writ from the statute. Statutes were not
passed to give the right, but to compel the observance of rights which existed. . . .
The important fact to be observed in regard to the mode of procedure upon this writ is,
that it is directed to and served upon, not the person confined, but his jailor. It does not
reach the former except through the latter. The officer or person who serves it does not
unbar the prison doors, and set the prisoner free, but the court relieves him by compelling
the oppressor to release his constraint. The whole force of the writ is spent upon the
respondent, and if he fails to obey it, the means to be resorted to for the purposes of
compulsion are fine and imprisonment. This is the ordinary mode of affording relief, and
if any other means are resorted to, they are only auxiliary to those which are usual. The
place of confinement is, therefore, not important to the relief, if the guilty party is within
reach of process, so that by the power of the court he can be compelled to release his
grasp. The difficulty of affording redress is not increased by the confinement being
beyond the limits of the state, except as greater distance may affect it. The important
question is, where the power of control exercised? And I am aware of no other remedy.
(In the matter of Jackson [1867], 15 Mich., 416.)

The opinion of Judge Cooley has since been accepted as authoritative by other courts.
(Rivers vs. Mitchell [1881], 57 Iowa, 193; Breene vs. People [1911], Colo., 117 Pac.
Rep., 1000; Ex parte Young [1892], 50 Fed., 526.)

The English courts have given careful consideration to the subject. Thus, a child had been
taken out of English by the respondent. A writ of habeas corpus was issued by the
Queen's Bench Division upon the application of the mother and her husband directing the
defendant to produce the child. The judge at chambers gave defendant until a certain date
to produce the child, but he did not do so. His return stated that the child before the
issuance of the writ had been handed over by him to another; that it was no longer in his
custody or control, and that it was impossible for him to obey the writ. He was found in
contempt of court. On appeal, the court, through Lord Esher, M. R., said:

A writ of habeas corpus was ordered to issue, and was issued on January 22. That writ
commanded the defendant to have the body of the child before a judge in chambers at the
Royal Courts of Justice immediately after the receipt of the writ, together with the cause
of her being taken and detained. That is a command to bring the child before the judge
and must be obeyed, unless some lawful reason can be shown to excuse the
nonproduction of the child. If it could be shown that by reason of his having lawfully
parted with the possession of the child before the issuing of the writ, the defendant had no
longer power to produce the child, that might be an answer; but in the absence of any
lawful reason he is bound to produce the child, and, if he does not, he is in contempt of
the Court for not obeying the writ without lawful excuse. Many efforts have been made in
argument to shift the question of contempt to some anterior period for the purpose of
showing that what was done at some time prior to the writ cannot be a contempt. But the
question is not as to what was done before the issue of the writ. The question is whether
there has been a contempt in disobeying the writ it was issued by not producing the child
in obedience to its commands. (The Queen vs. Bernardo [1889], 23 Q. B. D., 305. See
also to the same effect the Irish case of In re Matthews, 12 Ir. Com. Law Rep. [N. S.],
233; The Queen vs. Barnardo, Gossage's Case [1890], 24 Q. B. D., 283.)
A decision coming from the Federal Courts is also of interest. A habeas corpus was
directed to the defendant to have before the circuit court of the District of Columbia three
colored persons, with the cause of their detention. Davis, in his return to the writ, stated
on oath that he had purchased the negroes as slaves in the city of Washington; that, as he
believed, they were removed beyond the District of Columbia before the service of the
writ of habeas corpus, and that they were then beyond his control and out of his custody.
The evidence tended to show that Davis had removed the negroes because he suspected
they would apply for a writ of habeas corpus. The court held the return to be evasive and
insufficient, and that Davis was bound to produce the negroes, and Davis being present in
court, and refusing to produce them, ordered that he be committed to the custody of the
marshall until he should produce the negroes, or be otherwise discharged in due course of
law. The court afterwards ordered that Davis be released upon the production of two of
the negroes, for one of the negroes had run away and been lodged in jail in Maryland.
Davis produced the two negroes on the last day of the term. (United States vs. Davis
[1839], 5 Cranch C.C., 622, Fed. Cas. No. 14926. See also Robb vs. Connolly [1883], 111
U.S., 624; Church on Habeas, 2nd ed., p. 170.)

We find, therefore, both on reason and authority, that no one of the defense offered by the
respondents constituted a legitimate bar to the granting of the writ of habeas corpus.

There remains to be considered whether the respondent complied with the two orders of
the Supreme Court awarding the writ of habeas corpus, and if it be found that they did
not, whether the contempt should be punished or be taken as purged.

The first order, it will be recalled, directed Justo Lukban, Anton Hohmann, Francisco
Sales, and Feliciano Yñigo to present the persons named in the writ before the court on
December 2, 1918. The order was dated November 4, 1918. The respondents were thus
given ample time, practically one month, to comply with the writ. As far as the record
discloses, the Mayor of the city of Manila waited until the 21st of November before
sending a telegram to the provincial governor of Davao. According to the response of the
attorney for the Bureau of Labor to the telegram of his chief, there were then in Davao
women who desired to return to Manila, but who should not be permitted to do so
because of having contracted debts. The half-hearted effort naturally resulted in none of
the parties in question being brought before the court on the day named.

For the respondents to have fulfilled the court's order, three optional courses were open:
(1) They could have produced the bodies of the persons according to the command of the
writ; or (2) they could have shown by affidavit that on account of sickness or infirmity
those persons could not safely be brought before the court; or (3) they could have
presented affidavits to show that the parties in question or their attorney waived the right
to be present. (Code of Criminal Procedure, sec. 87.) They did not produce the bodies of
the persons in whose behalf the writ was granted; they did not show impossibility of
performance; and they did not present writings that waived the right to be present by
those interested. Instead a few stereotyped affidavits purporting to show that the women
were contended with their life in Davao, some of which have since been repudiated by
the signers, were appended to the return. That through ordinary diligence a considerable
number of the women, at least sixty, could have been brought back to Manila is
demonstrated to be found in the municipality of Davao, and that about this number either
returned at their own expense or were produced at the second hearing by the respondents.

The court, at the time the return to its first order was made, would have been warranted
summarily in finding the respondents guilty of contempt of court, and in sending them to
jail until they obeyed the order. Their excuses for the non-production of the persons were
far from sufficient. The, authorities cited herein pertaining to somewhat similar facts all
tend to indicate with what exactitude a habeas corpus writ must be fulfilled. For example,
in Gossage's case, supra, the Magistrate in referring to an earlier decision of the Court,
said: "We thought that, having brought about that state of things by his own illegal act, he
must take the consequences; and we said that he was bound to use every effort to get the
child back; that he must do much more than write letters for the purpose; that he must
advertise in America, and even if necessary himself go after the child, and do everything
that mortal man could do in the matter; and that the court would only accept clear proof
of an absolute impossibility by way of excuse." In other words, the return did not show
that every possible effort to produce the women was made by the respondents. That the
court forebore at this time to take drastic action was because it did not wish to see
presented to the public gaze the spectacle of a clash between executive officials and the
judiciary, and because it desired to give the respondents another chance to demonstrate
their good faith and to mitigate their wrong.

In response to the second order of the court, the respondents appear to have become more
zealous and to have shown a better spirit. Agents were dispatched to Mindanao, placards
were posted, the constabulary and the municipal police joined in rounding up the women,
and a steamer with free transportation to Manila was provided. While charges and
counter-charges in such a bitterly contested case are to be expected, and while a critical
reading of the record might reveal a failure of literal fulfillment with our mandate, we
come to conclude that there is a substantial compliance with it. Our finding to this effect
may be influenced somewhat by our sincere desire to see this unhappy incident finally
closed. If any wrong is now being perpetrated in Davao, it should receive an executive
investigation. If any particular individual is still restrained of her liberty, it can be made
the object of separate habeas corpus proceedings.

Since the writ has already been granted, and since we find a substantial compliance with
it, nothing further in this connection remains to be done.

The attorney for the petitioners asks that we find in contempt of court Justo Lukban,
Mayor of the city of Manila, Anton Hohmann, chief of police of the city of Manila, Jose
Rodriguez, and Fernando Ordax, members of the police force of the city of Manila,
Modesto Joaquin, the attorney for the Bureau of Labor, Feliciano Yñigo, an hacendero of
Davao, and Anacleto Diaz, Fiscal of the city of Manila.

The power to punish for contempt of court should be exercised on the preservative and
not on the vindictive principle. Only occasionally should the court invoke its inherent
power in order to retain that respect without which the administration of justice must
falter or fail. Nevertheless when one is commanded to produce a certain person and does
not do so, and does not offer a valid excuse, a court must, to vindicate its authority,
adjudge the respondent to be guilty of contempt, and must order him either imprisoned or
fined. An officer's failure to produce the body of a person in obedience to a writ
of habeas corpus when he has power to do so, is a contempt committed in the face of the
court. (Ex parte Sterns [1888], 77 Cal., 156; In re Patterson [1888], 99 N. C., 407.)

With all the facts and circumstances in mind, and with judicial regard for human
imperfections, we cannot say that any of the respondents, with the possible exception of
the first named, has flatly disobeyed the court by acting in opposition to its authority.
Respondents Hohmann, Rodriguez, Ordax, and Joaquin only followed the orders of their
chiefs, and while, under the law of public officers, this does not exonerate them entirely,
it is nevertheless a powerful mitigating circumstance. The hacendero Yñigo appears to
have been drawn into the case through a misconstruction by counsel of telegraphic
communications. The city fiscal, Anacleto Diaz, would seem to have done no more than
to fulfill his duty as the legal representative of the city government. Finding him innocent
of any disrespect to the court, his counter-motion to strike from the record the
memorandum of attorney for the petitioners, which brings him into this undesirable
position, must be granted. When all is said and done, as far as this record discloses, the
official who was primarily responsible for the unlawful deportation, who ordered the
police to accomplish the same, who made arrangements for the steamers and the
constabulary, who conducted the negotiations with the Bureau of Labor, and who later, as
the head of the city government, had it within his power to facilitate the return of the
unfortunate women to Manila, was Justo Lukban, the Mayor of the city of Manila. His
intention to suppress the social evil was commendable. His methods were unlawful. His
regard for the writ of habeas corpus issued by the court was only tardily and reluctantly
acknowledged.

It would be possible to turn to the provisions of section 546 of the Code of Civil
Procedure, which relates to the penalty for disobeying the writ, and in pursuance thereof
to require respondent Lukban to forfeit to the parties aggrieved as much as P400 each,
which would reach to many thousands of pesos, and in addition to deal with him as for a
contempt. Some members of the court are inclined to this stern view. It would also be
possible to find that since respondent Lukban did comply substantially with the second
order of the court, he has purged his contempt of the first order. Some members of the
court are inclined to this merciful view. Between the two extremes appears to lie the
correct finding. The failure of respondent Lukban to obey the first mandate of the court
tended to belittle and embarrass the administration of justice to such an extent that his
later activity may be considered only as extenuating his conduct. A nominal fine will at
once command such respect without being unduly oppressive — such an amount is P100.

In resume — as before stated, no further action on the writ of habeas corpus is necessary.
The respondents Hohmann, Rodriguez, Ordax, Joaquin, Yñigo, and Diaz are found not to
be in contempt of court. Respondent Lukban is found in contempt of court and shall pay
into the office of the clerk of the Supreme Court within five days the sum of one hundred
pesos (P100). The motion of the fiscal of the city of Manila to strike from the record
the Replica al Memorandum de los Recurridos of January 25, 1919, is granted. Costs
shall be taxed against respondents. So ordered.

In concluding this tedious and disagreeable task, may we not be permitted to express the
hope that this decision may serve to bulwark the fortifications of an orderly government
of laws and to protect individual liberty from illegal encroachment.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-2662 March 26, 1949

SHIGENORI KURODA, petitioner,

vs.
Major General RAFAEL JALANDONI, Brigadier General CALIXTO DUQUE,
Colonel MARGARITO TORALBA, Colonel IRENEO BUENCONSEJO, Colonel
PEDRO TABUENA, Major FEDERICO ARANAS, MELVILLE S. HUSSEY and
ROBERT PORT, respondents.

Pedro Serran, Jose G. Lukban, and Liberato B. Cinco for petitioner.

Fred Ruiz Castro Federico Arenas Mariano Yengco, Jr., Ricardo A. Arcilla and S.
Melville Hussey for respondents.

MORAN, C.J.:

Shigenori Kuroda, formerly a Lieutenant-General of the Japanese Imperial Army and

Commanding General of the Japanese Imperial Forces in The Philippines during a period
covering 19433 and 19444 who is now charged before a military Commission convened
by the Chief of Staff of the Armed forces of the Philippines with having unlawfully
disregarded and failed "to discharge his duties as such command, permitting them to
commit brutal atrocities and other high crimes against noncombatant civilians and
prisoners of the Imperial Japanese Forces in violation of the laws and customs of war" —
comes before this Court seeking to establish the illegality of Executive Order No. 68 of
the President of the Philippines: to enjoin and prohibit respondents Melville S. Hussey
and Robert Port from participating in the prosecution of petitioner's case before the
Military Commission and to permanently prohibit respondents from proceeding with the
case of petitioners.

In support of his case petitioner tenders the following principal arguments.

First. — "That Executive Order No. 68 is illegal on the ground that it violates not only
the provision of our constitutional law but also our local laws to say nothing of the fact
(that) the Philippines is not a signatory nor an adherent to the Hague Convention on Rules
and Regulations covering Land Warfare and therefore petitioners is charged of 'crimes'
not based on law, national and international." Hence petitioner argues — "That in view
off the fact that this commission has been empanelled by virtue of an unconstitutional law
an illegal order this commission is without jurisdiction to try herein petitioner."
Second. — That the participation in the prosecution of the case against petitioner before
the Commission in behalf of the United State of America of attorneys Melville Hussey
and Robert Port who are not attorneys authorized by the Supreme Court to practice law in
the Philippines is a diminution of our personality as an independent state and their
appointment as prosecutor are a violation of our Constitution for the reason that they are
not qualified to practice law in the Philippines.

Third. — That Attorneys Hussey and Port have no personality as prosecution the United
State not being a party in interest in the case.

Executive Order No. 68, establishing a National War Crimes Office prescribing rule and
regulation governing the trial of accused war criminals, was issued by the President of the
Philippines on the 29th days of July, 1947 This Court holds that this order is valid and
constitutional. Article 2 of our Constitution provides in its section 3, that —

The Philippines renounces war as an instrument of national policy and adopts the
generally accepted principles of international law as part of the of the nation.

In accordance with the generally accepted principle of international law of the present
day including the Hague Convention the Geneva Convention and significant precedents
of international jurisprudence established by the United Nation all those person military
or civilian who have been guilty of planning preparing or waging a war of aggression and
of the commission of crimes and offenses consequential and incidental thereto in
violation of the laws and customs of war, of humanity and civilization are held
accountable therefor. Consequently in the promulgation and enforcement of Execution
Order No. 68 the President of the Philippines has acted in conformity with the generally
accepted and policies of international law which are part of the our Constitution.

The promulgation of said executive order is an exercise by the President of his power as
Commander in chief of all our armed forces as upheld by this Court in the case of
Yamashita vs. Styer (L-129, 42 Off. Gaz., 664) 1 when we said —

War is not ended simply because hostilities have ceased. After cessation of armed
hostilities incident of war may remain pending which should be disposed of as in time of
war. An importance incident to a conduct of war is the adoption of measure by the
military command not only to repel and defeat the enemies but to seize and subject to
disciplinary measure those enemies who in their attempt to thwart or impede our military
effort have violated the law of war. (Ex parte Quirin 317 U.S., 1; 63 Sup. Ct., 2.) Indeed
the power to create a military commission for the trial and punishment of war criminals is
an aspect of waging war. And in the language of a writer a military commission has
jurisdiction so long as a technical state of war continues. This includes the period of an
armistice or military occupation up to the effective of a treaty of peace and may extend
beyond by treaty agreement. (Cowles Trial of War Criminals by Military Tribunals,
America Bar Association Journal June, 1944.)
Consequently, the President as Commander in Chief is fully empowered to consummate
this unfinished aspect of war namely the trial and punishment of war criminal through the
issuance and enforcement of Executive Order No. 68.

Petitioner argues that respondent Military Commission has no Jurisdiction to try

petitioner for acts committed in violation of the Hague Convention and the Geneva
Convention because the Philippines is not a signatory to the first and signed the second
only in 1947. It cannot be denied that the rules and regulation of the Hague and Geneva
conventions form, part of and are wholly based on the generally accepted principals of
international law. In facts these rules and principles were accepted by the two belligerent
nation the United State and Japan who were signatories to the two Convention, Such rule
and principles therefore form part of the law of our nation even if the Philippines was not
a signatory to the conventions embodying them for our Constitution has been deliberately
general and extensive in its scope and is not confined to the recognition of rule and
principle of international law as continued inn treaties to which our government may have
been or shall be a signatory.

Furthermore when the crimes charged against petitioner were allegedly committed the
Philippines was under the sovereignty of United States and thus we were equally bound
together with the United States and with Japan to the right and obligation contained in the
treaties between the belligerent countries. These rights and obligation were not erased by
our assumption of full sovereignty. If at all our emergency as a free state entitles us to
enforce the right on our own of trying and punishing those who committed crimes against
crimes against our people. In this connection it is well to remember what we have said in
the case of Laurel vs. Misa (76 Phil., 372):

. . . The change of our form government from Commonwealth to Republic does not affect
the prosecution of those charged with the crime of treason committed during then
Commonwealth because it is an offense against the same sovereign people. . . .

By the same token war crimes committed against our people and our government while
we were a Commonwealth are triable and punishable by our present Republic.

Petitioner challenges the participation of two American attorneys namely Melville S.

Hussey and Robert Port in the prosecution of his case on the ground that said attorney's
are not qualified to practice law in Philippines in accordance with our Rules of court and
the appointment of said attorneys as prosecutors is violative of our national sovereignty.

In the first place respondent Military Commission is a special military tribunal governed
by a special law and not by the Rules of court which govern ordinary civil court. It has
already been shown that Executive Order No. 68 which provides for the organization of
such military commission is a valid and constitutional law. There is nothing in said
executive order which requires that counsel appearing before said commission must be
attorneys qualified to practice law in the Philippines in accordance with the Rules of
Court. In facts it is common in military tribunals that counsel for the parties are usually
military personnel who are neither attorneys nor even possessed of legal training.
Secondly the appointment of the two American attorneys is not violative of our nation
sovereignty. It is only fair and proper that United States, which has submitted the
vindication of crimes against her government and her people to a tribunal of our nation
should be allowed representation in the trial of those very crimes. If there has been any
relinquishment of sovereignty it has not been by our government but by the United State
Government which has yielded to us the trial and punishment of her enemies. The least
that we could do in the spirit of comity is to allow them representation in said trials.

Alleging that the United State is not a party in interest in the case petitioner challenges
the personality of attorneys Hussey and Port as prosecutors. It is of common knowledge
that the United State and its people have been equally if not more greatly aggrieved by
the crimes with which petitioner stands charged before the Military Commission. It can
be considered a privilege for our Republic that a leader nation should submit the
vindication of the honor of its citizens and its government to a military tribunal of our
country.

The Military Commission having been convened by virtue of a valid law with jurisdiction
over the crimes charged which fall under the provisions of Executive Order No. 68, and
having said petitioner in its custody, this Court will not interfere with the due process of
such Military commission.

For all the foregoing the petition is denied with costs de oficio.

Paras, Feria, Pablo, Bengzon, Tuason, Montemayor and Reyes, JJ., concur.

Separate Opinions

PERFECTO, J., dissenting:

A military commission was empanelled on December 1, 1948 to try Lt. Gen. Shigenori
Kuroda for Violation of the laws and customs of land warfare.

Melville S. Hussey and Robert Port, American citizens and not authorized by the
Supreme Court to practice law were appointed prosecutor representing the American CIC
in the trial of the case.

The commission was empanelled under the authority of Executive Order No. 68 of the
President of the Philippines the validity of which is challenged by petitioner on
constitutional grounds. Petitioner has also challenged the personality of Attorneys Hussey
and Port to appear as prosecutors before the commission.

The charges against petitioner has been filed since June 26, 1948 in the name of the
people of the Philippines as accusers.
We will consideration briefly the challenge against the appearance of Attorneys Hussey
and Port. It appearing that they are aliens and have not been authorized by the Supreme
Court to practice law there could not be any question that said person cannot appear as
prosecutors in petitioner case as with such appearance they would be practicing law
against the law.

Said violation vanishes however into insignificance at the side of the momentous
question involved in the challenge against the validity of Executive Order No. 68. Said
order is challenged on several constitutional ground. To get a clear idea of the question
raised it is necessary to read the whole context of said order which is reproduced as
follows:

EXECUTIVE ORDER NO. 68.

ESTABLISHING A NATIONAL WAR CRIMES OFFICE AND PRESCRIBING RULES

AND REGULATION GOVERNING THE TRIAL OF ACCUSED WAR CRIMINAL.

I, Manuel Roxas president of the Philippines by virtue of the power vested in me by the
Constitution and laws of the Philippines do hereby establish a National War Crimes
Office charged with the responsibility of accomplishing the speedy trial of all Japanese
accused of war crimes committed in the Philippines and prescribe the rules and regulation
such trial.

The National War crimes office is established within the office of the Judge Advocate
General of the Army of the Philippines and shall function under the direction supervision
and control of the Judge Advocate General. It shall proceed to collect from all available
sources evidence of war crimes committed in the Philippines from the commencement of
hostilities by Japan in December 1941, maintain a record thereof and bring about the
prompt trial maintain a record thereof and bring about the prompt trial of the accused.

The National War Crimes Office shall maintain direct liaison with the Legal Section
General Headquarters, Supreme Commander for the Allied power and shall exchange
with the said Office information and evidence of war crimes.

The following rules and regulation shall govern the trial off person accused as war
criminals:

ESTABLISHMENT OF MILITARY COMMISSIONS

(a) General. — person accused as war criminal shall be tried by military commission to
be convened by or under the authority of the Philippines.

II. JURISDICTION
(a) Over Person. — Thee military commission appointed hereunder shall have
jurisdiction over all persons charged with war crimes who are in the custody of the
convening authority at the time of the trial.

(b) Over Offenses. — The military commission established hereunder shall have
jurisdiction over all offenses including but not limited to the following:

(1) The planning preparation initiation or waging of a war of aggression or a war in

violation of international treaties agreement or assurance or participation in a common
plan or conspiracy for the accomplishment of any of the foregoing.

(2) Violation of the laws or customs of war. Such violation shall include but not be
limited to murder ill-treatment or deportation to slave labor or for other purpose of
civilian population of or in occupied territory; murder or ill-treatment of prisoners of war
or internees or person on the seas or elsewhere; improper treatment of hostage; plunder of
public or private property wanton destruction of cities towns or village; or devastation not
justified by military necessity.

(3) Murder extermination enslavement deportation and other inhuman acts committed
against civilian population before or during the war or persecution on political racial or
religion ground in executive of or in connection with any crime defined herein whether or
not in violation of the local laws.

III. MEMBERSHIP OF COMMISSIONS

(a) Appointment. — The members of each military commission shall be appointed by the
President of the Philippines or under authority delegated by him. Alternates may be
appointed by the convening authority. Such shall attend all session of the commission,
and in case of illness or other incapacity of any principal member, an alternate shall take
the place of that member. Any vacancy among the members or alternates, occurring after
a trial has begun, may be filled by the convening authority but the substance of all
proceeding had evidence taken in that case shall be made known to the said new member
or alternate. This facts shall be announced by the president of the commission in open
court.

(b) Number of Members. — Each commission shall consist of not less than three (3)
members.

(c) Qualifications. — The convening authority shall appoint to the commission persons
whom he determines to be competent to perform the duties involved and not disqualified
by personal interest or prejudice, provided that no person shall be appointed to hear a
case in which he personally investigated or wherein his presence as a witness is required.
One specially qualified member whose ruling is final in so far as concerns the
commission on an objection to the admissibility of evidence offered during the trial.
(d) Voting. — Except as to the admissibility of evidence all rulings and finding of the
Commission shall be by majority vote except that conviction and sentence shall be by the
affirmative vote of not less than conviction and sentence shall be by the affirmative vote
of not less than two-thirds (2\3) of the member present.

(e) Presiding Member. — In the event that the convening authority does not name one of
the member as the presiding member, the senior officer among the member of the
Commission present shall preside.

IV. PROSECUTORS

(a) Appointment. — The convening authority shall designate one or more person to
conduct the prosecution before each commission.

(b) Duties. — The duties of the prosecutor are:

(1) To prepare and present charges and specifications for reference to a commission.

(2) To prepare cases for trial and to conduct the prosecution before the commission of all
cases referred for trial.

V. POWER AND PROCEDURE OF COMMISSION

(a) Conduct of the Trial. — A Commission shall:

(1) Confine each trial strictly to fair and expeditious hearing on the issues raised by the
charges, excluding irrelevant issues or evidence and preventing any unnecessary delay or
interference.

(2) Deal summarily with any contumacy or contempt, imposing any appropriate
punishment therefor.

(3) Hold public session when otherwise decided by the commission.

(4) Hold each session at such time and place as it shall determine, or as may be directed
by the convening authority.

(b) Rights of the Accused. — The accused shall be entitled:

(1) To have in advance of the trial a copy of the charges and specifications clearly worded
so as to apprise the accused of each offense charged.

(2) To be represented, prior to and during trial, by counsel appointed by the convening
authority or counsel of his own choice, or to conduct his own defense.
(3) To testify in his own behalf and have his counsel present relevant evidence at the trial
in support of his defense, and cross-examine each adverse witness who personally
appears before the commission.

(4) To have the substance of the charges and specifications, the proceedings and any
documentary evidence translated, when he is unable otherwise to understand them.

(c) Witnesses. — The Commission shall have power:

(1) To summon witnesses and require their attendance and testimony; to administer oaths
or affirmations to witnesses and other persons and to question witnesses.

(2) To require the production of documents and other evidentiary material.

(3) To delegate the Prosecutors appointed by the convening authority the powers and
duties set forth in (1) and (2) above.

(4) To have evidence taken by a special commissioner appointed by the commission.

(d) Evidence.

(1) The commission shall admit such evidence as in its opinion shall be of assistance in
proving or disproving the charge, or such as in the commission's opinion would have
probative value in the mind of a reasonable man. The commission shall apply the rules of
evidence and pleading set forth herein with the greatest liberality to achieve expeditious
procedure. In particular, and without limiting in any way the scope of the foregoing
general rules, the following evidence may be admitted:

(a) Any document, irrespective of its classification, which appears to the commission to
have been signed or issued by any officer, department, agency or member of the armed
forces of any Government without proof of the signature or of the issuance of the
document.

(b) Any report which appears to the commission to have been signed or issued by the
International Red Cross or a member of any medical service personnel, or by any
investigator or intelligence officer, or by any other person whom commission considers as
possessing knowledge of the matters contained in the report.

(c) Affidavits, depositions or other signed statements.

(d) Any diary, letter to other document, including sworn statements, appearing to the
commission to contain information relating to the charge.

(e) A copy of any document or other secondary evidence of the contents, if the original is
not immediately available.
(2) The commission shall take judicial notice of facts of common knowledge, official
government documents of any nation, and the proceedings, records and findings of
military or other agencies of any of the United Nation.

(3) A commission may require the prosecution and the defense to make a preliminary
offer of proof whereupon the commission may rule in advance on the admissibility of
such evidence.

(4) The official position of the accused shall not absolve him from responsibility nor be
considered in mitigation of punishment. Further action pursuant to an order of the
accused's superior, or of his Government, shall not constitute a defense, but may be
considered in mitigation of punishment if the commission determines that justice so
requires.

(5) All purposed confessions or statements of the accused shall bee admissible in
evidence without any showing that they were voluntarily made. If it is shown that such
confession or statement was procured by mean which the commission believe to have
been of such a character that may have caused the accused to make a false statement the
commission may strike out or disregard any such portion thereof as was so procured.

(e) Trial Procedure. — The proceedings of each trial shall be conducted substantially as
follows unless modified by the commission to suit the particular circumstances:

(1) Each charge and specification shall be read or its substance stated in open court.

(2) The presiding member shall ask each accused whether he pleads "Guilty" or "Not
guilty."

(3) The prosecution shall make its opening statement."(4) The presiding member may at
this or any other time require the prosecutor to state what evidence he proposes to submit
to the commission and the commission thereupon may rule upon the admissibility of such
evidence.

(4) The witnesses and other evidence for the prosecution shall be heard or presented. At
the close of the case for the prosecution, the commission may, on motion of the defense
for a finding of not guilty, consider and rule whether he evidence before the commission
may defer action on any such motion and permit or require the prosecution to reopen its
case and produce any further available evidence.

(5) The defense may make an opening statement prior to presenting its case. The
presiding member may, at this any other time require the defense to state what evidence it
proposes to submit to the commission where upon the commission may rule upon the
admissibility of such evidence.
(6) The witnesses and other evidence for the defense shall be heard or presented.
Thereafter, the prosecution and defense may introduce such evidence in rebuttal as the
commission may rule as being admissible.

(7) The defense and thereafter the prosecution shall address the commission.

(8) The commission thereafter shall consider the case in closed session and unless
otherwise directed by the convening authority, announce in open court its judgment and
sentence if any. The commission may state the reason on which judgment is based.

( f ) Record of Proceedings. — Each commission shall make a separate record of its

proceeding in the trial of each case brought before it. The record shall be prepared by the
prosecutor under the direction of the commission and submitted to the defense counsel.
The commission shall be responsible for its accuracy. Such record, certified by the
presiding member of the commission or his successor, shall be delivered to the convening
authority as soon as possible after the trial.

(g) Sentence. — The commission may sentence an accused, upon conviction to death by
hanging or shooting, imprisonment for life or for any less term, fine or such other
punishment as the commission shall determine to be proper.

(h) Approval of Sentence. — No. sentence of a military commission shall be carried into
effect until approved by the chief off Staff: Provided, That no sentence of death or life
imprisonment shall be carried into execution until confirmed by the President of the
Philippines. For the purpose of his review the Chief of Staff shall create a Board of
Review to be composed of not more than three officers none of whom shall be on duty
with or assigned to the Judge Advocate General's Office. The Chief of Staff shall have
authority to approve, mitigate remit in whole or in part, commute, suspend, reduce or
otherwise alter the sentence imposed, or (without prejudice to the accused) remand the
case for rehearing before a new military commission; but he shall not have authority to
increase the severity of the sentence. Except as herein otherwise provided the judgment
and sentence of a commission shall final and not subject to review by any other tribunal.

VI. RULE-MAKING POWER

Supplementary Rule and Forms. — Each commission shall adopt rules and forms to
govern its procedure, not inconsistent with the provision of this Order, or such rules and
forms as may be prescribed by the convening authority]or by the President of the
Philippines.

VII. The amount of amount of seven hundred thousand pesos is hereby set aside out of
the appropriations for the Army of the Philippines for use by the National War Crimes
Office in the accomplishment of its mission as hereinabove set forth, and shall be
expended in accordance with the recommendation of the Judge Advocate General as
approved by the President. The buildings, fixtures, installations, messing, and billeting
equipment and other property herefore used by then Legal Section, Manila Branch, of the
General Headquarters, Supreme Commander for the Allied Power, which will be turned
over by the United States Army to the Philippines Government through the Foreign
Liquidation Commission and the Surplus Property Commission are hereby specification
reserved for use off the National War Crimes Office.

Executive Order No. 64, dated August 16, 1945, is hereby repealed.

Done in the City of Manila, this 29th day of July in the year of Our Lord, nineteen
hundred and forty-seven, and of the Independence of the Philippines, the second.

MANUEL ROXAS
President of the Philippines

By the President:

EMILIO ABELLO
Chief of the Executive Office

EXECUTIVE LEGISLATION

Executive Order No. 68 is a veritable piece of Legislative measure, without the benefit of
congressional enactment.

The first question that is trust at our face spearheading a group of other no less important
question, is whether or not the President of the Philippines may exercise the legislative
power expressly vested in Congress by the Constitution. .

The Constitution provides:

The Legislative powers shall be vested in a Congress of the Philippines which shall
consist of a Senate and House of Representatives. (Section 1, Article VI.)

While there is no express provision in the fundamental law prohibiting the exercise of
legislative power by agencies other than Congress, a reading of the whole context of the
Constitution would dispel any doubt as to the constitutional intent that the legislative
power is to be exercised exclusively by Congress, subject only to the veto power of the
President of the President of the Philippines, to the specific provision which allow the
president of the Philippines to suspend the privileges of the writ of habeas corpus and to
place any part of the Philippines under martial law, and to the rule-making power
expressly vested by the Constitution in the Supreme Court.

There cannot be any question that the member of the Constitutional Convention were
believers in the tripartite system of government as originally enunciated by Aristotle,
further elaborated by Montequieu and accepted and practiced by modern democracies,
especially the United State of America, whose Constitution, after which ours has been
patterned, has allocated the three power of government — legislative, executive, judicial
— to distinct and separate department of government.

Because the power vested by our Constitution to the several department of the
government are in the nature of grants, not recognition of pre-existing power, no
department of government may exercise any power or authority not expressly granted by
the Constitution or by law by virtue express authority of the Constitution.

Executive Order No. 68 establishes a National War Crimes Office and the power to
establish government office is essentially legislative.

The order provides that person accused as war criminals shall be tried by military
commissions. Whether such a provision is substantive or adjective, it is clearly legislative
in nature. It confers upon military commissions jurisdiction to try all persons charge with
war crimes. The power to define and allocate jurisdiction for the prosecution of person
accused of any crime is exclusively vested by the Constitution in Congress. .

It provides rules of procedure for the conduct of trial of trial. This provision on
procedural subject constitutes a usurpation of the rule-making power vested by
Constitution in the Supreme Court.

It authorized military commission to adopt additional rule of procedure. If the President

of the Philippines cannot exercise the rule -making power vested by the Constitution in
the Supreme Court, he cannot, with more reason, delegate that power to military
commission.

It appropriates the sum of P7000,000 for the expenses of the National War Crimes office
established by the said Executive Order No. 68. This constitutes another usurpation of
legislative power as the power to vote appropriations belongs to Congress.

Executive Order No. 68., is, therefore, null and void, because, though it the President of
the Philippines usurped power expressly vested by the Constitution in Congress and in
the Supreme Court.

Challenged to show the constitutional or legal authority under which the President issued
Executive Order No. 68, respondent could not give any definite answer. They attempted,
however, to suggest that the President of the Philippines issued Executive Order No. 68
under the emergency power granted to him by Commonwealth Act No. 600, as amended
by Commonwealth Act No. 620, and Commonwealth Act No. 671, both of which are
transcribed below:

COMMONWEALTH ACT NO. 600.

 AN ACT DECLARING A STATE OF EMERGENCY AND AUTHORIZING THE
PRESIDENT TO PROMULGATE RULES AND REGULATION TO SAFEGUARD
THE INTEGRITY OF THE PHILIPPINES AND TO INSURE THE TRANQUILITY OF
ITS INHABITANTS.

Be it enacted by the National Assembly of the Philippines:

SECTION 1. The existence of war in many parts of the world has created a national
emergency which makes it necessary to invest the President of the Philippines with
extraordinary power in order to safeguard the integrity of the Philippines and to insure the
tranquility of its inhabitants, by suppressing espionage, lawlessness, and all subversive to
the people adequate shelter and clothing and sufficient food supply, and by providing
means for the speedy evacuation of the civilian population the establishment of an air
protective service and the organization of volunteer guard units, and to adopt such other
measures as he may deem necessary for the interest of the public. To carry out this policy
the President is authorized to promulgate rules and regulations which shall have the force
and effect off law until the date of adjournment of the next regulation which shall have
the force and effect of law until the date of adjournment of the next regular session of the
First Congress of the Philippines, unless sooner amended or repealed by the Congress of
Philippines. Such rules and regulation may embrace the following objects: (1) to suppress
espionage and other subversive activities; (2) to require all able-bodied citizens (a) when
not engaged in any lawful occupation, to engage in farming or other productive activities
or (b) to perform such services as may bee necessary in the public interest; (3) to take
over farm lands in order to prevent or shortage of crops and hunger and destitution; (4) to
take over industrial establishment in order to insure adequate production, controlling
wages and profits therein; (5) to prohibit lockouts and strikes whenever necessary to
prevent the unwarranted suspension of work in productive enterprises or in the interest of
national security; (6) to regulate the normal hours of work for wage-earning and salaried
employees in industrial or business undertakings of all kinds; (7) to insure an even
distribution of labor among the productive enterprises; (8) to commandership and other
means of transportation in order to maintain, as much as possible, adequate and continued
transportation facilities; (9) to requisition and take over any public service or enterprise
for use or operation by the Government;(10) to regulate rents and the prices of articles or
commodities of prime necessity, both imported and locally produced or manufactured;
and (11) to prevent, locally or generally, scarcity, monopolization, hoarding injurious
speculations, and private control affecting the supply, distribution and movement of
foods, clothing, fuel, fertilizer, chemical, building, material, implements, machinery, and
equipment required in agriculture and industry, with power to requisition these
commodities subject to the payment of just compensation. (As amended by Com. Act No.
620.)

SEC. 2. For the purpose of administering this Act and carrying out its objective, the
President may designate any officer, without additional compensation, or any department,
bureau, office, or instrumentality of the National Government.
SEC. 3. Any person, firm, or corporation found guilty of the violation of any provision of
this Act or of this Act or any of the rules or regulations promulgated by the President
under the authority of section one of this Act shall be punished by imprisonment of not
more than ten years or by a fine of not more than ten thousand pesos, or by both. If such
violation is committed by a firm or corporation, the manager, managing director, or
person charge with the management of the business of such firm, or corporation shall be
criminally responsible therefor.

SEC. 4. The President shall report to the national Assembly within the first ten days from
the date of the opening of its next regular session whatever action has been taken by him
under the authority herein granted.

SEC. 5. To carry out the purposed of this Act, the President is authorized to spend such
amounts as may be necessary from the sum appropriated under section five
Commonwealth Act Numbered four hundred and ninety-eight.

SEC. 6. If any province of this Act shall be declared by any court of competent
jurisdiction to be unconstitutional and void, such declaration shall not invalidate the
remainder of this Act.

SEC. 7. This Act shall take upon its approval.

Approved, August 19, 1940.

COMMONWEALTH ACT NO. 671

AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR

INVOLVING THE PHILIPPINES AND AUTHORIZING THE PRESIDENT TO
PROMULGATE RULE AND REGULATIONS TO MEET SUCH EMERGENCY.

Be it enacted the National Assembly of the Philippines;

SECTION 1. The existed of war between the United State and other countries of Europe
and Asia, which involves the Philippines, makes it necessary to invest the President with
extraordinary powers in order to meet the resulting emergency.

SEC. 2. Pursuant to the provision of Article VI, section 16, of the Constitution, the
President is hereby authorized, during the existence of the emergency, to promulgate such
rules and regulation as he may deem necessary to carry out the national policy declared in
section 1 hereof. Accordingly, he is, among other things, empowered (a) to transfer the
seat of the Government or any of its subdivisions, branches, department, offices, agencies
or instrumentalities; (b) to reorganize the Government of the Commonwealth including
the determination of the order of precedence of the heads of the Executive Department;
(c) to create new subdivision, branches, departments, offices, agency or instrumentalities
of government and to abolish any of those already existing; (d) to continue in force laws
and appropriation which would lapse or otherwise became inoperative, and to modify or
suspend the operation or application of those of an administrative character; (e) to
imposed new taxes or to increase, reduce, suspend, or abolish those in existence; (f) to
raise funds through the issuance of bonds or otherwise, and to authorize the expensive of
the proceeds thereof; (g) to authorize the National, provincial, city or municipal
governments to incur in overdrafts for purposes that he may approve; (h) to declare the
suspension of the collection of credits or the payment of debts; and (i) to exercise such
other power as he may deem necessary to enable the Government to fulfill its
responsibilities and to maintain and enforce its authority.

SEC. 3. The President of the Philippines report thereto all the rules and regulation
promulgated by him under the power herein granted.

SEC. 4. This Act shall take effect upon its approval and the rules and regulations.
promulgated hereunder shall be in force and effect until the Congress of the Philippines
shall otherwise provide.

Approved December 16, 1941.

The above Acts cannot validly be invoked, Executive Order No. 68 was issued on July
29, 1947. Said Acts had elapsed upon the liberation of the Philippines form the Japanese
forces or, at the latest, when the surrender of Japan was signed in Tokyo on September 2,
1945.

When both Acts were enacted by the Second National Assembly, we happened to have
taken direct part in their consideration and passage, not only as one of the members of
said legislative body as chairman of the Committee on Third Reading population Known
as the "Little Senate." We are, therefore in a position to state that said measures were
enacted by the second national Assembly for the purpose of facing the emergency of
impending war and of the Pacific War that finally broke out with the attack of Pearl
Harbor on December 7, 1941. We approved said extraordinary measures, by which under
the exceptional circumstances then prevailing legislative power were delegated to the
President of the Philippines, by virtue of the following provisions of the Constitution:

In time of war or other national emergency, the Congress may by law authorize the
President, for a limited period and subject to such restrictions as it may prescribe to
promulgate rules and regulations to carry out declared national policy. (Article VI, section
26.)

It has never been the purpose of the National Assembly to extend the delegation beyond
the emergency created by the war as to extend it farther would be violative of the express
provision of the Constitution. We are of the opinion that there is no doubt on this
question.; but if there could still be any the same should be resolved in favor of the
presumption that the National Assembly did not intend to violate the fundamental law.
The absurdity of the contention that the emergency Acts continued in effect even after the
surrender of Japan can not be gainsaid. Only a few months after liberation and even
before the surrender of Japan, or since the middle of 1945, the Congress started to
function normally. In the hypothesis that the contention can prevail, then, since 1945, that
is, four years ago, even after the Commonwealth was already replaced by the Republic of
the Philippines with the proclamation of our Independence, two district, separate and
independence legislative organs, — Congress and the President of the Philippines —
would have been and would continue enacting laws, the former to enact laws of every
nature including those of emergency character, and the latter to enact laws, in the form of
executive orders, under the so-called emergency powers. The situation would be pregnant
with dangers to peace and order to the rights and liberties of the people and to Philippines
democracy.

Should there be any disagreement between Congress and the President of the Philippines,
a possibility that no one can dispute the President of the Philippines may take advantage
of he long recess of Congress (two-thirds of every year ) to repeal and overrule legislative
enactments of Congress, and may set up a veritable system of dictatorship, absolutely
repugnant to the letter and spirit of the Constitution.

Executive Order No. 68 is equally offensive to the Constitution because it violates the
fundamental guarantees of the due process and equal protection of the law. It is especially
so, because it permit the admission of many kinds evidence by which no innocent person
can afford to get acquittal and by which it is impossible to determine whether an accused
is guilty or not beyond all reasonable doubt.

The rules of evidence adopted in Executive Order No. 68 are a reproduction of the
regulation governing the trial of twelve criminal, issued by General Douglas Mac Arthur,
Commander in Chief of the United State Armed Forces in Western Pacific, for the
purpose of trying among other, General Yamashita and Homma. What we said in our
concurring and dissenting opinion to the decision promulgated on December 19, 1945, in
the Yamashita case, L-129, and in our concurring and dissenting opinion to the resolution
of January 23, 1946 in disposing the Homma case, L-244, are perfectly applicable to the
offensive rules of evidence in Executive Order No. 68. Said rules of evidence are
repugnant to conscience as under them no justice can expected.

For all the foregoing, conformably with our position in the Yamashita and Homma cases,
we vote to declare Executive Order No. 68 null and void and to grant petition.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-7995 May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other alien residents,
corporations and partnerships adversely affected. by Republic Act No.
1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO,
City Treasurer of Manila,respondents.

Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for
petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for
respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent
City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.

LABRADOR, J.:
 I. The case and issue, in general

This Court has before it the delicate task of passing upon the validity and constitutionality
of a legislative enactment, fundamental and far-reaching in significance. The enactment
poses questions of due process, police power and equal protection of the laws. It also
poses an important issue of fact, that is whether the conditions which the disputed law
purports to remedy really or actually exist. Admittedly springing from a deep, militant,
and positive nationalistic impulse, the law purports to protect citizen and country from
the alien retailer. Through it, and within the field of economy it regulates, Congress
attempts to translate national aspirations for economic independence and national
security, rooted in the drive and urge for national survival and welfare, into a concrete
and tangible measures designed to free the national retailer from the competing
dominance of the alien, so that the country and the nation may be free from a supposed
economic dependence and bondage. Do the facts and circumstances justify the
enactment?

II. Pertinent provisions of Republic Act No. 1180

Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it
nationalizes the retail trade business. The main provisions of the Act are: (1) a prohibition
against persons, not citizens of the Philippines, and against associations, partnerships, or
corporations the capital of which are not wholly owned by citizens of the Philippines,
from engaging directly or indirectly in the retail trade; (2) an exception from the above
prohibition in favor of aliens actually engaged in said business on May 15, 1954, who are
allowed to continue to engaged therein, unless their licenses are forfeited in accordance
with the law, until their death or voluntary retirement in case of natural persons, and for
ten years after the approval of the Act or until the expiration of term in case of juridical
persons; (3) an exception therefrom in favor of citizens and juridical entities of the United
States; (4) a provision for the forfeiture of licenses (to engage in the retail business) for
violation of the laws on nationalization, control weights and measures and labor and other
laws relating to trade, commerce and industry; (5) a prohibition against the establishment
or opening by aliens actually engaged in the retail business of additional stores or
branches of retail business, (6) a provision requiring aliens actually engaged in the retail
business to present for registration with the proper authorities a verified statement
concerning their businesses, giving, among other matters, the nature of the business, their
assets and liabilities and their offices and principal offices of judicial entities; and (7) a
provision allowing the heirs of aliens now engaged in the retail business who die, to
continue such business for a period of six months for purposes of liquidation.

III. Grounds upon which petition is based-Answer thereto

Petitioner, for and in his own behalf and on behalf of other alien residents corporations
and partnerships adversely affected by the provisions of Republic Act. No. 1180, brought
this action to obtain a judicial declaration that said Act is unconstitutional, and to enjoin
the Secretary of Finance and all other persons acting under him, particularly city and
municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality
of the Act, contending that: (1) it denies to alien residents the equal protection of the laws
and deprives of their liberty and property without due process of law ; (2) the subject of
the Act is not expressed or comprehended in the title thereof; (3) the Act violates
international and treaty obligations of the Republic of the Philippines; (4) the provisions
of the Act against the transmission by aliens of their retail business thru hereditary
succession, and those requiring 100% Filipino capitalization for a corporation or entity to
entitle it to engage in the retail business, violate the spirit of Sections 1 and 5, Article XIII
and Section 8 of Article XIV of the Constitution.

In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the
Act was passed in the valid exercise of the police power of the State, which exercise is
authorized in the Constitution in the interest of national economic survival; (2) the Act
has only one subject embraced in the title; (3) no treaty or international obligations are
infringed; (4) as regards hereditary succession, only the form is affected but the value of
the property is not impaired, and the institution of inheritance is only of statutory origin.

IV. Preliminary consideration of legal principles involved

a. The police power. —

There is no question that the Act was approved in the exercise of the police power, but
petitioner claims that its exercise in this instance is attended by a violation of the
constitutional requirements of due process and equal protection of the laws. But before
proceeding to the consideration and resolution of the ultimate issue involved, it would be
well to bear in mind certain basic and fundamental, albeit preliminary, considerations in
the determination of the ever recurrent conflict between police power and the guarantees
of due process and equal protection of the laws. What is the scope of police power, and
how are the due process and equal protection clauses related to it? What is the province
and power of the legislature, and what is the function and duty of the courts? These
consideration must be clearly and correctly understood that their application to the facts
of the case may be brought forth with clarity and the issue accordingly resolved.

It has been said the police power is so far - reaching in scope, that it has become almost
impossible to limit its sweep. As it derives its existence from the very existence of the
State itself, it does not need to be expressed or defined in its scope; it is said to be co-
extensive with self-protection and survival, and as such it is the most positive and active
of all governmental processes, the most essential, insistent and illimitable. Especially is it
so under a modern democratic framework where the demands of society and of nations
have multiplied to almost unimaginable proportions; the field and scope of police power
has become almost boundless, just as the fields of public interest and public welfare have
become almost all-embracing and have transcended human foresight. Otherwise stated, as
we cannot foresee the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent or scope of
police power by which and through which the State seeks to attain or achieve interest or
welfare. So it is that Constitutions do not define the scope or extent of the police power of
the State; what they do is to set forth the limitations thereof. The most important of these
are the due process clause and the equal protection clause.

b. Limitations on police power. —

The basic limitations of due process and equal protection are found in the following
provisions of our Constitution:

SECTION 1.(1) No person shall be deprived of life, liberty or property without due
process of law, nor any person be denied the equal protection of the laws. (Article III,
Phil. Constitution)

These constitutional guarantees which embody the essence of individual liberty and
freedom in democracies, are not limited to citizens alone but are admittedly universal in
their application, without regard to any differences of race, of color, or of nationality.
(Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)

c. The, equal protection clause. —

The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not
intended to prohibit legislation, which is limited either in the object to which it is directed
or by territory within which is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced. The
equal protection clause is not infringed by legislation which applies only to those persons
falling within a specified class, if it applies alike to all persons within such class, and
reasonable grounds exists for making a distinction between those who fall within such
class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)

d. The due process clause. —

The due process clause has to do with the reasonableness of legislation enacted in
pursuance of the police power. Is there public interest, a public purpose; is public welfare
involved? Is the Act reasonably necessary for the accomplishment of the legislature's
purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or
reason in connection with the matter involved; or has there not been a capricious use of
the legislative power? Can the aims conceived be achieved by the means used, or is it not
merely an unjustified interference with private interest? These are the questions that we
ask when the due process test is applied.

The conflict, therefore, between police power and the guarantees of due process and
equal protection of the laws is more apparent than real. Properly related, the power and
the guarantees are supposed to coexist. The balancing is the essence or, shall it be said,
the indispensable means for the attainment of legitimate aspirations of any democratic
society. There can be no absolute power, whoever exercise it, for that would be tyranny.
Yet there can neither be absolute liberty, for that would mean license and anarchy. So the
State can deprive persons of life, liberty and property, provided there is due process of
law; and persons may be classified into classes and groups, provided everyone is given
the equal protection of the law. The test or standard, as always, is reason. The police
power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. And if distinction and
classification has been made, there must be a reasonable basis for said distinction.

e. Legislative discretion not subject to judicial review. —

Now, in this matter of equitable balancing, what is the proper place and role of the
courts? It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of determining the
policy of the State, is by force of circumstances primarily the judge of necessity,
adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the
police power, or of the measures adopted to implement the public policy or to achieve
public interest. On the other hand, courts, although zealous guardians of individual liberty
and right, have nevertheless evinced a reluctance to interfere with the exercise of the
legislative prerogative. They have done so early where there has been a clear, patent or
palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts
are not supposed to override legitimate policy, and courts never inquire into the wisdom
of the law.

V. Economic problems sought to be remedied

With the above considerations in mind, we will now proceed to delve directly into the
issue involved. If the disputed legislation were merely a regulation, as its title indicates,
there would be no question that it falls within the legitimate scope of legislative power.
But it goes further and prohibits a group of residents, the aliens, from engaging therein.
The problem becomes more complex because its subject is a common, trade or
occupation, as old as society itself, which from the immemorial has always been open to
residents, irrespective of race, color or citizenship.

a. Importance of retail trade in the economy of the nation. —

In a primitive economy where families produce all that they consume and consume all
that they produce, the dealer, of course, is unknown. But as group life develops and
families begin to live in communities producing more than what they consume and
needing an infinite number of things they do not produce, the dealer comes into
existence. As villages develop into big communities and specialization in production
begins, the dealer's importance is enhanced. Under modern conditions and standards of
living, in which man's needs have multiplied and diversified to unlimited extents and
proportions, the retailer comes as essential as the producer, because thru him the infinite
variety of articles, goods and needed for daily life are placed within the easy reach of
consumers. Retail dealers perform the functions of capillaries in the human body, thru
which all the needed food and supplies are ministered to members of the communities
comprising the nation.

There cannot be any question about the importance of the retailer in the life of the
community. He ministers to the resident's daily needs, food in all its increasing forms, and
the various little gadgets and things needed for home and daily life. He provides his
customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices
needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew
them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the
owner of a small sari-sari store, to the operator of a department store or, a supermarket is
so much a part of day-to-day existence.

b. The alien retailer's trait. —

The alien retailer must have started plying his trades in this country in the bigger centers
of population (Time there was when he was unknown in provincial towns and villages).
Slowly but gradually be invaded towns and villages; now he predominates in the cities
and big centers of population. He even pioneers, in far away nooks where the beginnings
of community life appear, ministering to the daily needs of the residents and purchasing
their agricultural produce for sale in the towns. It is an undeniable fact that in many
communities the alien has replaced the native retailer. He has shown in this trade,
industry without limit, and the patience and forbearance of a slave.

Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of
ill-bred and insolent neighbors and customers are made in his face, but he heeds them not,
and he forgets and forgives. The community takes note of him, as he appears to be
harmless and extremely useful.

c. Alleged alien control and dominance. —

There is a general feeling on the part of the public, which appears to be true to fact, about
the controlling and dominant position that the alien retailer holds in the nation's economy.
Food and other essentials, clothing, almost all articles of daily life reach the residents
mostly through him. In big cities and centers of population he has acquired not only
predominance, but apparent control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods
and articles. And were it not for some national corporations like the Naric, the Namarco,
the Facomas and the Acefa, his control over principal foods and products would easily
become full and complete.

Petitioner denies that there is alien predominance and control in the retail trade. In one
breath it is said that the fear is unfounded and the threat is imagined; in another, it is
charged that the law is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also so many unmanageable
factors in the retail business make control virtually impossible. The first argument which
brings up an issue of fact merits serious consideration. The others are matters of opinion
within the exclusive competence of the legislature and beyond our prerogative to pass
upon and decide.

The best evidence are the statistics on the retail trade, which put down the figures in black
and white. Between the constitutional convention year (1935), when the fear of alien
domination and control of the retail trade already filled the minds of our leaders with
fears and misgivings, and the year of the enactment of the nationalization of the retail
trade act (1954), official statistics unmistakably point out to the ever-increasing
dominance and control by the alien of the retail trade, as witness the following tables:

Assets Gross Sales

Per cent Per cent

Year and Retailers No.-
Pesos Distributi Pesos Distributi
Nationality Establishments
on on

1941
:

Filipino .......... 106,671 200,323,13 55.82 174,181,92 51.74

8 4

Chinese .......... 15,356 118,348,69 32.98 148,813,23 44.21

. 2 9

Others ............ 1,646 40,187,090 11.20 13,630,239 4.05

1947
:

Filipino .......... 111,107 208,658,94 65.05 279,583,33 57.03

6 3

Chinese .......... 13,774 106,156,21 33.56 205,701,13 41.96

. 8 4

Others ........... 354 8,761,260 .49 4,927,168 1.01

1948 (Census)
:
 Filipino .......... 113,631 213,342,26 67.30 467,161,66 60.51
4 7

Chinese .......... 12,087 93,155,459 29.38 294,894,22 38.20

7

Others .......... 422 10,514,675 3.32 9,995,402 1.29

1949
:

Filipino .......... 113,659 213,451,60 60.89 462,532,90 53.47

2 1

Chinese .......... 16,248 125,223,33 35.72 392,414,87 45.36

6 5

Others .......... 486 12,056,365 3.39 10,078,364 1.17

1951
:

Filipino ......... 119,352 224,053,62 61.09 466,058,05 53.07

0 2

Chinese .......... 17,429 134,325,30 36.60 404,481,38 46.06

3 4

Others .......... 347 8,614,025 2.31 7,645,327 87

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT

Item Gross
Year and Retailer's
Assets Sales
Nationality
(Pesos) (Pesos)
1941:

Filipino ............................................ 1,878 1,633

.

Chinese ............................................ 7,707 9,691

..

Others .............................................. 24,415 8,281

.

1947:

Filipino ............................................ 1,878 2,516

.

Chinese ........................................... 7,707 14,934

Others .............................................. 24,749 13,919

1948: (Census)

Filipino ............................................ 1,878 4,111

.

Chinese ............................................ 7,707 24,398

.

Others .............................................. 24,916 23,686

1949:

Filipino ............................................ 1,878 4,069

.
 Chinese ............................................ 7,707 24,152
..

Others .............................................. 24,807 20,737

1951:

Filipino ............................................ 1,877 3,905

.

Chinese ............................................ 7,707 33,207

.

Others .............................................. 24,824 22,033

.

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of
Owners, Benchmark: 1948 Census, issued by the Bureau of Census and Statistics,
Department of Commerce and Industry; pp. 18-19 of Answer.)

The above statistics do not include corporations and partnerships, while the figures on
Filipino establishments already include mere market vendors, whose capital is necessarily
small..

The above figures reveal that in percentage distribution of assests and gross sales, alien
participation has steadily increased during the years. It is true, of course, that Filipinos
have the edge in the number of retailers, but aliens more than make up for the numerical
gap through their assests and gross sales which average between six and seven times
those of the very many Filipino retailers. Numbers in retailers, here, do not imply
superiority; the alien invests more capital, buys and sells six to seven times more, and
gains much more. The same official report, pointing out to the known predominance of
foreign elements in the retail trade, remarks that the Filipino retailers were largely
engaged in minor retailer enterprises. As observed by respondents, the native investment
is thinly spread, and the Filipino retailer is practically helpless in matters of capital,
credit, price and supply.

d. Alien control and threat, subject of apprehension in Constitutional convention. —

It is this domination and control, which we believe has been sufficiently shown to exist,
that is the legislature's target in the enactment of the disputed nationalization would never
have been adopted. The framers of our Constitution also believed in the existence of this
alien dominance and control when they approved a resolution categorically declaring
among other things, that "it is the sense of the Convention that the public interest requires
the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine
Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years ago;
and the events since then have not been either pleasant or comforting. Dean Sinco of the
University of the Philippines College of Law, commenting on the patrimony clause of the
Preamble opines that the fathers of our Constitution were merely translating the general
preoccupation of Filipinos "of the dangers from alien interests that had already brought
under their control the commercial and other economic activities of the country" (Sinco,
Phil. Political Law, 10th ed., p. 114); and analyzing the concern of the members of the
constitutional convention for the economic life of the citizens, in connection with the
nationalistic provisions of the Constitution, he says:

But there has been a general feeling that alien dominance over the economic life of the
country is not desirable and that if such a situation should remain, political independence
alone is no guarantee to national stability and strength. Filipino private capital is not big
enough to wrest from alien hands the control of the national economy. Moreover, it is but
of recent formation and hence, largely inexperienced, timid and hesitant. Under such
conditions, the government as the instrumentality of the national will, has to step in and
assume the initiative, if not the leadership, in the struggle for the economic freedom of
the nation in somewhat the same way that it did in the crusade for political freedom. Thus
. . . it (the Constitution) envisages an organized movement for the protection of the nation
not only against the possibilities of armed invasion but also against its economic
subjugation by alien interests in the economic field. (Phil. Political Law by Sinco, 10th
ed., p. 476.)

Belief in the existence of alien control and predominance is felt in other quarters. Filipino
businessmen, manufacturers and producers believe so; they fear the dangers coming from
alien control, and they express sentiments of economic independence. Witness thereto is
Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino
Businessmen, and a similar resolution, approved on March 20, 1954, of the Second
National Convention of Manufacturers and Producers. The man in the street also believes,
and fears, alien predominance and control; so our newspapers, which have editorially
pointed out not only to control but to alien stranglehold. We, therefore, find alien
domination and control to be a fact, a reality proved by official statistics, and felt by all
the sections and groups that compose the Filipino community.

e. Dangers of alien control and dominance in retail. —

But the dangers arising from alien participation in the retail trade does not seem to lie in
the predominance alone; there is a prevailing feeling that such predominance may truly
endanger the national interest. With ample capital, unity of purpose and action and
thorough organization, alien retailers and merchants can act in such complete unison and
concert on such vital matters as the fixing of prices, the determination of the amount of
goods or articles to be made available in the market, and even the choice of the goods or
articles they would or would not patronize or distribute, that fears of dislocation of the
national economy and of the complete subservience of national economy and of the
consuming public are not entirely unfounded. Nationals, producers and consumers alike
can be placed completely at their mercy. This is easily illustrated. Suppose an article of
daily use is desired to be prescribed by the aliens, because the producer or importer does
not offer them sufficient profits, or because a new competing article offers bigger profits
for its introduction. All that aliens would do is to agree to refuse to sell the first article,
eliminating it from their stocks, offering the new one as a substitute. Hence, the producers
or importers of the prescribed article, or its consumers, find the article suddenly out of the
prescribed article, or its consumers, find the article suddenly out of circulation. Freedom
of trade is thus curtailed and free enterprise correspondingly suppressed.

We can even go farther than theoretical illustrations to show the pernicious influences of
alien domination. Grave abuses have characterized the exercise of the retail trade by
aliens. It is a fact within judicial notice, which courts of justice may not properly
overlook or ignore in the interests of truth and justice, that there exists a general feeling
on the part of the public that alien participation in the retail trade has been attended by a
pernicious and intolerable practices, the mention of a few of which would suffice for our
purposes; that at some time or other they have cornered the market of essential
commodities, like corn and rice, creating artificial scarcities to justify and enhance profits
to unreasonable proportions; that they have hoarded essential foods to the inconvenience
and prejudice of the consuming public, so much so that the Government has had to
establish the National Rice and Corn Corporation to save the public from their continuous
hoarding practices and tendencies; that they have violated price control laws, especially
on foods and essential commodities, such that the legislature had to enact a law (Sec. 9,
Republic Act No. 1168), authorizing their immediate and automatic deportation for price
control convictions; that they have secret combinations among themselves to control
prices, cheating the operation of the law of supply and demand; that they have connived
to boycott honest merchants and traders who would not cater or yield to their demands, in
unlawful restraint of freedom of trade and enterprise. They are believed by the public to
have evaded tax laws, smuggled goods and money into and out of the land, violated
import and export prohibitions, control laws and the like, in derision and contempt of
lawful authority. It is also believed that they have engaged in corrupting public officials
with fabulous bribes, indirectly causing the prevalence of graft and corruption in the
Government. As a matter of fact appeals to unscrupulous aliens have been made both by
the Government and by their own lawful diplomatic representatives, action which
impliedly admits a prevailing feeling about the existence of many of the above practices.

The circumstances above set forth create well founded fears that worse things may come
in the future. The present dominance of the alien retailer, especially in the big centers of
population, therefore, becomes a potential source of danger on occasions of war or other
calamity. We do not have here in this country isolated groups of harmless aliens retailing
goods among nationals; what we have are well organized and powerful groups that
dominate the distribution of goods and commodities in the communities and big centers
of population. They owe no allegiance or loyalty to the State, and the State cannot rely
upon them in times of crisis or emergency. While the national holds his life, his person
and his property subject to the needs of his country, the alien may even become the
potential enemy of the State.

f. Law enacted in interest of national economic survival and security. —

We are fully satisfied upon a consideration of all the facts and circumstances that the
disputed law is not the product of racial hostility, prejudice or discrimination, but the
expression of the legitimate desire and determination of the people, thru their authorized
representatives, to free the nation from the economic situation that has unfortunately been
saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the interest of
the public, nay of the national security itself, and indisputably falls within the scope of
police power, thru which and by which the State insures its existence and security and the
supreme welfare of its citizens.

VI. The Equal Protection Limitation

a. Objections to alien participation in retail trade. — The next question that now poses
solution is, Does the law deny the equal protection of the laws? As pointed out above, the
mere fact of alienage is the root and cause of the distinction between the alien and the
national as a trader. The alien resident owes allegiance to the country of his birth or his
adopted country; his stay here is for personal convenience; he is attracted by the lure of
gain and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral,
but he is naturally lacking in that spirit of loyalty and enthusiasm for this country where
he temporarily stays and makes his living, or of that spirit of regard, sympathy and
consideration for his Filipino customers as would prevent him from taking advantage of
their weakness and exploiting them. The faster he makes his pile, the earlier can the alien
go back to his beloved country and his beloved kin and countrymen. The experience of
the country is that the alien retailer has shown such utter disregard for his customers and
the people on whom he makes his profit, that it has been found necessary to adopt the
legislation, radical as it may seem.

Another objection to the alien retailer in this country is that he never really makes a
genuine contribution to national income and wealth. He undoubtedly contributes to
general distribution, but the gains and profits he makes are not invested in industries that
would help the country's economy and increase national wealth. The alien's interest in
this country being merely transient and temporary, it would indeed be ill-advised to
continue entrusting the very important function of retail distribution to his hands.

The practices resorted to by aliens in the control of distribution, as already pointed out
above, their secret manipulations of stocks of commodities and prices, their utter
disregard of the welfare of their customers and of the ultimate happiness of the people of
the nation of which they are mere guests, which practices, manipulations and disregard do
not attend the exercise of the trade by the nationals, show the existence of real and actual,
positive and fundamental differences between an alien and a national which fully justify
the legislative classification adopted in the retail trade measure. These differences are
certainly a valid reason for the State to prefer the national over the alien in the retail
trade. We would be doing violence to fact and reality were we to hold that no reason or
ground for a legitimate distinction can be found between one and the other.

b. Difference in alien aims and purposes sufficient basis for distinction. —

The above objectionable characteristics of the exercise of the retail trade by the aliens,
which are actual and real, furnish sufficient grounds for legislative classification of retail
traders into nationals and aliens. Some may disagree with the wisdom of the legislature's
classification. To this we answer, that this is the prerogative of the law-making power.
Since the Court finds that the classification is actual, real and reasonable, and all persons
of one class are treated alike, and as it cannot be said that the classification is patently
unreasonable and unfounded, it is in duty bound to declare that the legislature acted
within its legitimate prerogative and it can not declare that the act transcends the limit of
equal protection established by the Constitution.

Broadly speaking, the power of the legislature to make distinctions and classifications
among persons is not curtailed or denied by the equal protection of the laws clause. The
legislative power admits of a wide scope of discretion, and a law can be violative of the
constitutional limitation only when the classification is without reasonable basis. In
addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs.
Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined
the application of equal protection clause to a law sought to be voided as contrary thereto:

. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the
state the power to classify in the adoption of police laws, but admits of the exercise of the
wide scope of discretion in that regard, and avoids what is done only when it is without
any reasonable basis, and therefore is purely arbitrary. 2. A classification having some
reasonable basis does not offend against that clause merely because it is not made with
mathematical nicety, or because in practice it results in some inequality. 3. When the
classification in such a law is called in question, if any state of facts reasonably can be
conceived that would sustain it, the existence of that state of facts at the time the law was
enacted must be assumed. 4. One who assails the classification in such a law must carry
the burden of showing that it does not rest upon any reasonable basis but is essentially
arbitrary."

c. Authorities recognizing citizenship as basis for classification. —

The question as to whether or not citizenship is a legal and valid ground for classification
has already been affirmatively decided in this jurisdiction as well as in various courts in
the United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where the
validity of Act No. 2761 of the Philippine Legislature was in issue, because of a condition
therein limiting the ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States, thus denying the right to
aliens, it was held that the Philippine Legislature did not violate the equal protection
clause of the Philippine Bill of Rights. The legislature in enacting the law had as ultimate
purpose the encouragement of Philippine shipbuilding and the safety for these Islands
from foreign interlopers. We held that this was a valid exercise of the police power, and
all presumptions are in favor of its constitutionality. In substance, we held that the
limitation of domestic ownership of vessels engaged in coastwise trade to citizens of the
Philippines does not violate the equal protection of the law and due process or law
clauses of the Philippine Bill of Rights. In rendering said decision we quoted with
approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9
Wheat., I, as follows:

"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example,
acts licensing gaming houses, retailers of spirituous liquors, etc. The act, in this instance,
is distinctly of that character, and forms part of an extensive system, the object of which
is to encourage American shipping, and place them on an equal footing with the shipping
of other nations. Almost every commercial nation reserves to its own subjects a
monopoly of its coasting trade; and a countervailing privilege in favor of American
shipping is contemplated, in the whole legislation of the United States on this subject. It
is not to give the vessel an American character, that the license is granted; that effect has
been correctly attributed to the act of her enrollment. But it is to confer on her American
privileges, as contra distinguished from foreign; and to preserve the Government from
fraud by foreigners; in surreptitiously intruding themselves into the American commercial
marine, as well as frauds upon the revenue in the trade coastwise, that this whole system
is projected."

The rule in general is as follows:

Aliens are under no special constitutional protection which forbids a classification

otherwise justified simply because the limitation of the class falls along the lines of
nationality. That would be requiring a higher degree of protection for aliens as a class
than for similar classes than for similar classes of American citizens. Broadly speaking,
the difference in status between citizens and aliens constitutes a basis for reasonable
classification in the exercise of police power. (2 Am., Jur. 468-469.)

In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the

licensing of hawkers and peddlers, which provided that no one can obtain a license unless
he is, or has declared his intention, to become a citizen of the United States, was held
valid, for the following reason: It may seem wise to the legislature to limit the business of
those who are supposed to have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and conclusion. In Bloomfield
vs. State, 99 N. E. 309 (Ohio, 1912), a statute which prevented certain persons, among
them aliens, from engaging in the traffic of liquors, was found not to be the result of race
hatred, or in hospitality, or a deliberate purpose to discriminate, but was based on the
belief that an alien cannot be sufficiently acquainted with "our institutions and our life as
to enable him to appreciate the relation of this particular business to our entire social
fabric", and was not, therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S.
392, 71 L. ed. 115 (1926), the U.S. Supreme Court had under consideration an ordinance
of the city of Cincinnati prohibiting the issuance of licenses (pools and billiard rooms) to
aliens. It held that plainly irrational discrimination against aliens is prohibited, but it does
not follow that alien race and allegiance may not bear in some instances such a relation to
a legitimate object of legislation as to be made the basis of permitted classification, and
that it could not state that the legislation is clearly wrong; and that latitude must be
allowed for the legislative appraisement of local conditions and for the legislative choice
of methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E.
129 (Ohio, 1919) is a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P.
30 (Washington, 1922), the business of pawn brooking was considered as having
tendencies injuring public interest, and limiting it to citizens is within the scope of police
power. A similar statute denying aliens the right to engage in auctioneering was also
sustained in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs.
Van Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are judicially known to
have different interests, knowledge, attitude, psychology and loyalty, hence the
prohibitions of issuance of licenses to them for the business of pawnbroker, pool, billiard,
card room, dance hall, is not an infringement of constitutional rights. In Templar vs.
Michigan State Board of Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting
the licensing of aliens as barbers was held void, but the reason for the decision was the
court's findings that the exercise of the business by the aliens does not in any way affect
the morals, the health, or even the convenience of the community. In Takahashi vs. Fish
and Game Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance
of commercial fishing licenses to person ineligible to citizenship was held void, because
the law conflicts with Federal power over immigration, and because there is no public
interest in the mere claim of ownership of the waters and the fish in them, so there was no
adequate justification for the discrimination. It further added that the law was the
outgrowth of antagonism toward the persons of Japanese ancestry. However, two Justices
dissented on the theory that fishing rights have been treated traditionally as natural
resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257 (Pennsylvania, 1897), a
state law which imposed a tax on every employer of foreign-born unnaturalized male
persons over 21 years of age, was declared void because the court found that there was no
reason for the classification and the tax was an arbitrary deduction from the daily wage of
an employee.

d. Authorities contra explained. —

It is true that some decisions of the Federal court and of the State courts in the United
States hold that the distinction between aliens and citizens is not a valid ground for
classification. But in this decision the laws declared invalid were found to be either
arbitrary, unreasonable or capricious, or were the result or product of racial antagonism
and hostility, and there was no question of public interest involved or pursued. In Yu
Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared
invalid a Philippine law making unlawful the keeping of books of account in any
language other than English, Spanish or any other local dialect, but the main reasons for
the decisions are: (1) that if Chinese were driven out of business there would be no other
system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud,
because they would be deprived of their right to be advised of their business and to direct
its conduct. The real reason for the decision, therefore, is the court's belief that no public
benefit would be derived from the operations of the law and on the other hand it would
deprive Chinese of something indispensable for carrying on their business. In Yick Wo vs.
Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold
consent in the operation of laundries both as to persons and place, was declared invalid,
but the court said that the power granted was arbitrary, that there was no reason for the
discrimination which attended the administration and implementation of the law, and that
the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine,
1900), a law prohibiting aliens to engage as hawkers and peddlers was declared void,
because the discrimination bore no reasonable and just relation to the act in respect to
which the classification was proposed.

The case at bar is radically different, and the facts make them so. As we already have
said, aliens do not naturally possess the sympathetic consideration and regard for the
customers with whom they come in daily contact, nor the patriotic desire to help bolster
the nation's economy, except in so far as it enhances their profit, nor the loyalty and
allegiance which the national owes to the land. These limitations on the qualifications of
the aliens have been shown on many occasions and instances, especially in times of crisis
and emergency. We can do no better than borrow the language of Anton vs. Van Winkle,
297 F. 340, 342, to drive home the reality and significance of the distinction between the
alien and the national, thus:

. . . . It may be judicially known, however, that alien coming into this country are without
the intimate knowledge of our laws, customs, and usages that our own people have. So it
is likewise known that certain classes of aliens are of different psychology from our
fellow countrymen. Furthermore, it is natural and reasonable to suppose that the foreign
born, whose allegiance is first to their own country, and whose ideals of governmental
environment and control have been engendered and formed under entirely different
regimes and political systems, have not the same inspiration for the public weal, nor are
they as well disposed toward the United States, as those who by citizenship, are a part of
the government itself. Further enlargement, is unnecessary. I have said enough so that
obviously it cannot be affirmed with absolute confidence that the Legislature was without
plausible reason for making the classification, and therefore appropriate discriminations
against aliens as it relates to the subject of legislation. . . . .

VII. The Due Process of Law Limitation.

a. Reasonability, the test of the limitation; determination by legislature decisive. —

We now come to due process as a limitation on the exercise of the police power. It has
been stated by the highest authority in the United States that:

. . . . And the guaranty of due process, as has often been held, demands only that the law
shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a
real and substantial relation to the subject sought to be attained. . . . .

xxx xxx xxx

So far as the requirement of due process is concerned and in the absence of other
constitutional restriction a state is free to adopt whatever economic policy may
reasonably be deemed to promote public welfare, and to enforce that policy by legislation
adapted to its purpose. The courts are without authority either to declare such policy, or,
when it is declared by the legislature, to override it. If the laws passed are seen to have a
reasonable relation to a proper legislative purpose, and are neither arbitrary nor
discriminatory, the requirements of due process are satisfied, and judicial determination
to that effect renders a court functus officio. . . . (Nebbia vs. New York, 78 L. ed. 940,
950, 957.)

Another authority states the principle thus:

. . . . Too much significance cannot be given to the word "reasonable" in considering the
scope of the police power in a constitutional sense, for the test used to determine the
constitutionality of the means employed by the legislature is to inquire whether the
restriction it imposes on rights secured to individuals by the Bill of Rights are
unreasonable, and not whether it imposes any restrictions on such rights. . . .

xxx xxx xxx

. . . . A statute to be within this power must also be reasonable in its operation upon the
persons whom it affects, must not be for the annoyance of a particular class, and must not
be unduly oppressive. (11 Am. Jur. Sec. 302., 1:1)- 1074-1075.)

In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:

. . . . To justify the state in thus interposing its authority in behalf of the public, it must
appear, first, that the interests of the public generally, as distinguished from those of a
particular class, require such interference; and second, that the means are reasonably
necessary for the accomplishment of the purpose, and not unduly oppressive upon
individuals. . . .

Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test
of constitutionality:

In determining whether a given act of the Legislature, passed in the exercise of the police
power to regulate the operation of a business, is or is not constitutional, one of the first
questions to be considered by the court is whether the power as exercised has a sufficient
foundation in reason in connection with the matter involved, or is an arbitrary,
oppressive, and capricious use of that power, without substantial relation to the health,
safety, morals, comfort, and general welfare of the public.

b. Petitioner's argument considered. —

Petitioner's main argument is that retail is a common, ordinary occupation, one of those
privileges long ago recognized as essential to the orderly pursuant of happiness by free
men; that it is a gainful and honest occupation and therefore beyond the power of the
legislature to prohibit and penalized. This arguments overlooks fact and reality and rests
on an incorrect assumption and premise, i.e., that in this country where the occupation is
engaged in by petitioner, it has been so engaged by him, by the alien in an honest
creditable and unimpeachable manner, without harm or injury to the citizens and without
ultimate danger to their economic peace, tranquility and welfare. But the Legislature has
found, as we have also found and indicated, that the privilege has been so grossly abused
by the alien, thru the illegitimate use of pernicious designs and practices, that he now
enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on
the nation's economy endangering the national security in times of crisis and emergency.

The real question at issue, therefore, is not that posed by petitioner, which overlooks and
ignores the facts and circumstances, but this, Is the exclusion in the future of aliens from
the retail trade unreasonable. Arbitrary capricious, taking into account the illegitimate and
pernicious form and manner in which the aliens have heretofore engaged therein? As thus
correctly stated the answer is clear. The law in question is deemed absolutely necessary to
bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights
and privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a law is the
appropriateness or adequacy under all circumstances of the means adopted to carry out its
purpose into effect (Id.) Judged by this test, disputed legislation, which is not merely
reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.

The necessity of the law in question is explained in the explanatory note that
accompanied the bill, which later was enacted into law:

This bill proposes to regulate the retail business. Its purpose is to prevent persons who are
not citizens of the Philippines from having a strangle hold upon our economic life. If the
persons who control this vital artery of our economic life are the ones who owe no
allegiance to this Republic, who have no profound devotion to our free institutions, and
who have no permanent stake in our people's welfare, we are not really the masters of our
destiny. All aspects of our life, even our national security, will be at the mercy of other
people.

In seeking to accomplish the foregoing purpose, we do not propose to deprive persons

who are not citizens of the Philippines of their means of livelihood. While this bill seeks
to take away from the hands of persons who are not citizens of the Philippines a power
that can be wielded to paralyze all aspects of our national life and endanger our national
security it respects existing rights.

The approval of this bill is necessary for our national survival.

If political independence is a legitimate aspiration of a people, then economic

independence is none the less legitimate. Freedom and liberty are not real and positive if
the people are subject to the economic control and domination of others, especially if not
of their own race or country. The removal and eradication of the shackles of foreign
economic control and domination, is one of the noblest motives that a national legislature
may pursue. It is impossible to conceive that legislation that seeks to bring it about can
infringe the constitutional limitation of due process. The attainment of a legitimate
aspiration of a people can never be beyond the limits of legislative authority.

c. Law expressly held by Constitutional Convention to be within the sphere of legislative

action. —

The framers of the Constitution could not have intended to impose the constitutional
restrictions of due process on the attainment of such a noble motive as freedom from
economic control and domination, thru the exercise of the police power. The fathers of
the Constitution must have given to the legislature full authority and power to enact
legislation that would promote the supreme happiness of the people, their freedom and
liberty. On the precise issue now before us, they expressly made their voice clear; they
adopted a resolution expressing their belief that the legislation in question is within the
scope of the legislative power. Thus they declared the their Resolution:

That it is the sense of the Convention that the public interest requires the nationalization
of retail trade; but it abstain from approving the amendment introduced by the Delegate
for Manila, Mr. Araneta, and others on this matter because it is convinced that the
National Assembly is authorized to promulgate a law which limits to Filipino and
American citizens the privilege to engage in the retail trade. (11 Aruego, The Framing of
the Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the
Petitioner.)

It would do well to refer to the nationalistic tendency manifested in various provisions of

the Constitution. Thus in the preamble, a principle objective is the conservation of the
patrimony of the nation and as corollary the provision limiting to citizens of the
Philippines the exploitation, development and utilization of its natural resources. And in
Section 8 of Article XIV, it is provided that "no franchise, certificate, or any other form of
authorization for the operation of the public utility shall be granted except to citizens of
the Philippines." The nationalization of the retail trade is only a continuance of the
nationalistic protective policy laid down as a primary objective of the Constitution. Can it
be said that a law imbued with the same purpose and spirit underlying many of the
provisions of the Constitution is unreasonable, invalid and unconstitutional?

The seriousness of the Legislature's concern for the plight of the nationals as manifested
in the approval of the radical measures is, therefore, fully justified. It would have been
recreant to its duties towards the country and its people would it view the sorry plight of
the nationals with the complacency and refuse or neglect to adopt a remedy
commensurate with the demands of public interest and national survival. As the
repository of the sovereign power of legislation, the Legislature was in duty bound to face
the problem and meet, through adequate measures, the danger and threat that alien
domination of retail trade poses to national economy.
d. Provisions of law not unreasonable. —

A cursory study of the provisions of the law immediately reveals how tolerant, how
reasonable the Legislature has been. The law is made prospective and recognizes the right
and privilege of those already engaged in the occupation to continue therein during the
rest of their lives; and similar recognition of the right to continue is accorded associations
of aliens. The right or privilege is denied to those only upon conviction of certain
offenses. In the deliberations of the Court on this case, attention was called to the fact that
the privilege should not have been denied to children and heirs of aliens now engaged in
the retail trade. Such provision would defeat the law itself, its aims and purposes. Beside,
the exercise of legislative discretion is not subject to judicial review. It is well settled that
the Court will not inquire into the motives of the Legislature, nor pass upon general
matters of legislative judgment. The Legislature is primarily the judge of the necessity of
an enactment or of any of its provisions, and every presumption is in favor of its validity,
and though the Court may hold views inconsistent with the wisdom of the law, it may not
annul the legislation if not palpably in excess of the legislative power. Furthermore, the
test of the validity of a law attacked as a violation of due process, is not its
reasonableness, but its unreasonableness, and we find the provisions are not
unreasonable. These principles also answer various other arguments raised against the
law, some of which are: that the law does not promote general welfare; that thousands of
aliens would be thrown out of employment; that prices will increase because of the
elimination of competition; that there is no need for the legislation; that adequate
replacement is problematical; that there may be general breakdown; that there would be
repercussions from foreigners; etc. Many of these arguments are directed against the
supposed wisdom of the law which lies solely within the legislative prerogative; they do
not import invalidity.

VIII. Alleged defect in the title of the law

A subordinate ground or reason for the alleged invalidity of the law is the claim that the
title thereof is misleading or deceptive, as it conceals the real purpose of the bill which is
to nationalize the retail business and prohibit aliens from engaging therein. The
constitutional provision which is claimed to be violated in Section 21 (1) of Article VI,
which reads:

No bill which may be enacted in the law shall embrace more than one subject which shall
be expressed in the title of the bill.

What the above provision prohibits is duplicity, that is, if its title completely fails to
appraise the legislators or the public of the nature, scope and consequences of the law or
its operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory
consideration of the title and the provisions of the bill fails to show the presence of
duplicity. It is true that the term "regulate" does not and may not readily and at first
glance convey the idea of "nationalization" and "prohibition", which terms express the
two main purposes and objectives of the law. But "regulate" is a broader term than either
prohibition or nationalization. Both of these have always been included within the term
regulation.

Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may
prohibit the sale of intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in
page 41 of Answer.)

Within the meaning of the Constitution requiring that the subject of every act of the
Legislature shall be stated in the tale, the title to regulate the sale of intoxicating liquors,
etc." sufficiently expresses the subject of an actprohibiting the sale of such liquors to
minors and to persons in the habit of getting intoxicated; such matters being properly
included within the subject of regulating the sale. (Williams vs. State, 48 Ind. 306, 308,
quoted in p. 42 of Answer.)

The word "regulate" is of broad import, and necessarily implies some degree of
restraint and prohibition of acts usually done in connection with the thing to be regulated.
While word regulate does not ordinarily convey meaning of prohibit, there is no absolute
reason why it should not have such meaning when used in delegating police power in
connection with a thing the best or only efficacious regulation of which involves
suppression. (State vs. Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.)

The general rule is for the use of general terms in the title of a bill; it has also been said
that the title need not be an index to the entire contents of the law (I Sutherland, Statutory
Construction, See. 4803, p. 345.) The above rule was followed the title of the Act in
question adopted the more general term "regulate" instead of "nationalize" or "prohibit".
Furthermore, the law also contains other rules for the regulation of the retail trade which
may not be included in the terms "nationalization" or "prohibition"; so were the title
changed from "regulate" to "nationalize" or "prohibit", there would have been many
provisions not falling within the scope of the title which would have made the Act
invalid. The use of the term "regulate", therefore, is in accord with the principle
governing the drafting of statutes, under which a simple or general term should be
adopted in the title, which would include all other provisions found in the body of the
Act.

One purpose of the constitutional directive that the subject of a bill should be embraced in
its title is to apprise the legislators of the purposes, the nature and scope of its provisions,
and prevent the enactment into law of matters which have received the notice, action and
study of the legislators or of the public. In the case at bar it cannot be claimed that the
legislators have been appraised of the nature of the law, especially the nationalization and
the prohibition provisions. The legislators took active interest in the discussion of the law,
and a great many of the persons affected by the prohibitions in the law conducted a
campaign against its approval. It cannot be claimed, therefore, that the reasons for
declaring the law invalid ever existed. The objection must therefore, be overruled.

IX. Alleged violation of international treaties and obligations

Another subordinate argument against the validity of the law is the supposed violation
thereby of the Charter of the United Nations and of the Declaration of the Human Rights
adopted by the United Nations General Assembly. We find no merit in the Nations
Charter imposes no strict or legal obligations regarding the rights and freedom of their
subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the
Declaration of Human Rights contains nothing more than a mere recommendation or a
common standard of achievement for all peoples and all nations (Id. p. 39.) That such is
the import of the United Nations Charter aid of the Declaration of Human Rights can be
inferred the fact that members of the United Nations Organizations, such as Norway and
Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the
world laws against foreigners engaged in domestic trade are adopted.

The Treaty of Amity between the Republic of the Philippines and the Republic of China
of April 18, 1947 is also claimed to be violated by the law in question. All that the treaty
guarantees is equality of treatment to the Chinese nationals "upon the same terms as the
nationals of any other country." But the nationals of China are not discriminating against
because nationals of all other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from engaging in the retail
trade. But even supposing that the law infringes upon the said treaty, the treaty is always
subject to qualification or amendment by a subsequent law (U. S. vs. Thompson, 258,
Fed. 257, 260), and the same may never curtail or restrict the scope of the police power of
the State (plaston vs. Pennsylvania, 58 L. ed. 539.)

X. Conclusion

Resuming what we have set forth above we hold that the disputed law was enacted to
remedy a real actual threat and danger to national economy posed by alien dominance
and control of the retail business and free citizens and country from dominance and
control; that the enactment clearly falls within the scope of the police power of the State,
thru which and by which it protects its own personality and insures its security and future;
that the law does not violate the equal protection clause of the Constitution because
sufficient grounds exist for the distinction between alien and citizen in the exercise of the
occupation regulated, nor the due process of law clause, because the law is prospective in
operation and recognizes the privilege of aliens already engaged in the occupation and
reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its
objectives appear to us to be plainly evident — as a matter of fact it seems not only
appropriate but actually necessary — and that in any case such matter falls within the
prerogative of the Legislature, with whose power and discretion the Judicial department
of the Government may not interfere; that the provisions of the law are clearly embraced
in the title, and this suffers from no duplicity and has not misled the legislators or the
segment of the population affected; and that it cannot be said to be void for supposed
conflict with treaty obligations because no treaty has actually been entered into on the
subject and the police power may not be curtailed or surrendered by any treaty or any
other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the law could
have been made less harsh in its impact on the aliens. Thus it is stated that the more time
should have been given in the law for the liquidation of existing businesses when the time
comes for them to close. Our legal duty, however, is merely to determine if the law falls
within the scope of legislative authority and does not transcend the limitations of due
process and equal protection guaranteed in the Constitution. Remedies against the
harshness of the law should be addressed to the Legislature; they are beyond our power
and jurisdiction.

The petition is hereby denied, with costs against petitioner.

EN BANC

G.R. No. 139465

January 18, 2000
SECRETARY OF JUSTICE, petitioner,
vs.
HON. RALPH C. LANTION, Presiding Judge, Regional Trial Court of Manila,
Branch 25, and MARK B. JIMENEZ, respondents.

MELO, J.:

The individual citizen is but a speck of particle or molecule vis-à-vis the vast and
overwhelming powers of government. His only guarantee against oppression and tyranny
are his fundamental liberties under the Bill of Rights which shield him in times of need.
The Court is now called to decide whether to uphold a citizen's basic due process rights,
or the government's ironclad duties under a treaty. The bugle sounds and this Court must
once again act as the faithful guardian of the fundamental writ.

The petition at our doorstep is cast against the following factual backdrop:

On January 13, 1977, then President Ferdinand E. Marcos issued Presidential Decree No.
1069 "Prescribing the Procedure for the Extradition of Persons Who Have Committed
Crimes in a Foreign Country". The Decree is founded on: the doctrine of incorporation
under the Constitution; the mutual concern for the suppression of crime both in the state
where it was committed and the state where the criminal may have escaped; the
extradition treaty with the Republic of Indonesia and the intention of the Philippines to
enter into similar treaties with other interested countries; and the need for rules to guide
the executive department and the courts in the proper implementation of said treaties.

On November 13, 1994, then Secretary of Justice Franklin M. Drilon, representing the
Government of the Republic of the Philippines, signed in Manila the "Extradition Treaty
Between the Government of the Republic of the Philippines and the Government of the
United States of America" (hereinafter referred to as the RP-US Extradition Treaty). The
Senate, by way of Resolution No. 11, expressed its concurrence in the ratification of said
treaty. It also expressed its concurrence in the Diplomatic Notes correcting Paragraph (5)
(a), Article 7 thereof (on the admissibility of the documents accompanying an extradition
request upon certification by the principal diplomatic or consular officer of the requested
state resident in the Requesting State).

On June 18, 1999, the Department of Justice received from the Department of Foreign
Affairs U.S. Note Verbale No. 0522 containing a request for the extradition of private
respondent Mark Jimenez to the United States. Attached to the Note Verbale were the
Grand Jury Indictment, the warrant of arrest issued by the U.S. District Court, Southern
District of Florida, and other supporting documents for said extradition. Based on the
papers submitted, private respondent appears to be charged in the United States with
violation of the following provisions of the United States Code (USC):

A) 18 USC 371 (Conspiracy to commit offense or to defraud the United States; two [2]
counts; Maximum Penalty — 5 years on each count);
B) 26 USC 7201 (Attempt to evade or defeat tax; four [4] counts; Maximum Penalty — 5
years on each count);

C) 18 USC 1343 (Fraud by wire, radio, or television; two [2] counts; Maximum Penalty
— 5 years on each count);

D) 18 USC 1001 (False statement or entries; six [6] counts; Maximum Penalty — 5 years
on each count);

E) 2 USC 441f (Election contributions in name of another; thirty-three [33] counts;

Maximum Penalty — less than one year).

(p. 14, Rollo.)

On the same day, petitioner issued Department Order No. 249 designating and
authorizing a panel of attorneys to take charge of and to handle the case pursuant to
Section 5(1) of Presidential Decree No. 1069. Accordingly, the panel began with the
"technical evaluation and assessment" of the extradition request and the documents in
support thereof. The panel found that the "official English translation of some documents
in Spanish were not attached to the request and that there are some other matters that
needed to be addressed" (p. 15, Rollo).

Pending evaluation of the aforestated extradition documents, private respondent, through

counsel, wrote a letter dated July 1, 1999 addressed to petitioner requesting copies of the
official extradition request from the U.S. Government, as well as all documents and
papers submitted therewith; and that he be given ample time to comment on the request
after he shall have received copies of the requested papers. Private respondent also
requested that the proceedings on the matter be held in abeyance in the meantime.

Later, private respondent requested that preliminary, he be given at least a copy of, or
access to, the request of the United States Government, and after receiving a copy of the
Diplomatic Note, a period of time to amplify on his request.

In response to private respondent's July 1, 1999 letter, petitioner, in a reply-letter dated

July 13, 1999 (but received by private respondent only on August 4, 1999), denied the
foregoing requests for the following reasons:

1. We find it premature to furnish you with copies of the extradition request and
supporting documents from the United States Government, pending evaluation by this
Department of the sufficiency of the extradition documents submitted in accordance with
the provisions of the extradition treaty and our extradition law. Article 7 of the
Extradition Treaty between the Philippines and the United States enumerates the
documentary requirements and establishes the procedures under which the documents
submitted shall be received and admitted as evidence. Evidentiary requirements under our
domestic law are also set forth in Section 4 of P.D. No. 1069.
Evaluation by this Department of the aforementioned documents is not a preliminary
investigation nor akin to preliminary investigation of criminal cases. We merely
determine whether the procedures and requirements under the relevant law and treaty
have been complied with by the Requesting Government. The constitutionally guaranteed
rights of the accused in all criminal prosecutions are therefore not available.

It is only after the filing of the petition for extradition when the person sought to be
extradited will be furnished by the court with copies of the petition, request and
extradition documents and this Department will not pose any objection to a request for
ample time to evaluate said documents.

2. The formal request for extradition of the United States contains grand jury information
and documents obtained through grand jury process covered by strict secrecy rules under
United States law. The United States had to secure orders from the concerned District
Courts authorizing the United States to disclose certain grand jury information to
Philippine government and law enforcement personnel for the purpose of extradition of
Mr. Jimenez. Any further disclosure of the said information is not authorized by the
United States District Courts. In this particular extradition request the United States
Government requested the Philippine Government to prevent unauthorized disclosure of
the subject information. This Department's denial of your request is consistent with
Article 7 of the RP-US Extradition Treaty which provides that the Philippine Government
must represent the interests of the United States in any proceedings arising out of a
request for extradition. The Department of Justice under P.D. No. 1069 is the counsel of
the foreign governments in all extradition requests.

3. This Department is not in a position to hold in abeyance proceedings in connection

with an extradition request. Article 26 of the Vienna Convention on the Law of Treaties,
to which we are a party provides that "[E]very treaty in force is binding upon the parties
to it and must be performed by them in good faith". Extradition is a tool of criminal law
enforcement and to be effective, requests for extradition or surrender of accused or
convicted persons must be processed expeditiously.

(pp. 77-78, Rollo.)

Such was the state of affairs when, on August 6, 1999, private respondent filed with the
Regional Trial Court of the National Capital Judicial Region a petition against the
Secretary of Justice, the Secretary of Foreign Affairs, and the Director of the National
Bureau of Investigation, for mandamus (to compel herein petitioner to furnish private
respondent the extradition documents, to give him access thereto, and to afford him an
opportunity to comment on, or oppose, the extradition request, and thereafter to evaluate
the request impartially, fairly and objectively); certiorari(to set aside herein petitioner's
letter dated July 13, 1999); and prohibition (to restrain petitioner from considering the
extradition request and from filing an extradition petition in court; and to enjoin the
Secretary of Foreign Affairs and the Director of the NBI from performing any act
directed to the extradition of private respondent to the United States), with an application
for the issuance of a temporary restraining order and a writ of preliminary injunction (pp.
104-105, Rollo).

The aforementioned petition was docketed as Civil Case No. 99-94684 and thereafter
raffled to Branch 25 of said regional trial court stationed in Manila which is presided over
by the Honorable Ralph C. Lantion.

After due notice to the parties, the case was heard on August 9, 1999. Petitioner, who
appeared in his own behalf, moved that he be given ample time to file a memorandum,
but the same was denied.

On August 10, 1999, respondent judge issued an order dated the previous day, disposing:

WHEREFORE, this Court hereby Orders the respondents, namely: the Secretary of
Justice, the Secretary of Foreign Affairs and the Director of the National Bureau of
Investigation, their agents and/or representatives to maintain the status quo by refraining
from committing the acts complained of; from conducting further proceedings in
connection with the request of the United States Government for the extradition of the
petitioner; from filing the corresponding Petition with a Regional Trial court; and from
performing any act directed to the extradition of the petitioner to the United States, for a
period of twenty (20) days from service on respondents of this Order, pursuant to Section
5, Rule 58 of the 1997 Rules of Court.

The hearing as to whether or not this Court shall issue the preliminary injunction, as
agreed upon by the counsels for the parties herein, is set on August 17, 1999 at 9:00
o'clock in the morning. The respondents are, likewise, ordered to file their written
comment and/or opposition to the issuance of a Preliminary Injunction on or before said
date.

SO ORDERED.

(pp. 110-111, Rollo.)

Forthwith, petitioner initiated the instant proceedings, arguing that:

PUBLIC RESPONDENT ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR

WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN ISSUING THE TEMPORARY RESTRAINING ORDER
BECAUSE:

I.

BY ORDERING HEREIN PETITIONER TO REFRAIN FROM COMMITTING THE

ACTS COMPLAINED OF, I.E., TO DESIST FROM REFUSING PRIVATE
RESPONDENT ACCESS TO THE OFFICIAL EXTRADITION REQUEST AND
DOCUMENTS AND FROM DENYING PRIVATE RESPONDENT AN
OPPORTUNITY TO FILE A COMMENT ON, OR OPPOSITION TO, THE REQUEST,
THE MAIN PRAYER FOR A WRIT OF MANDAMUS IN THE PETITION
FOR MANDAMUS, CERTIORARI AND PROHIBITION WAS, IN EFFECT, GRANTED
SO AS TO CONSTITUTE AN ADJUDICATION ON THE MERITS OF
THE MANDAMUS ISSUES;

II.

PETITIONER WAS UNQUALIFIEDLY PREVENTED FROM PERFORMING LEGAL

DUTIES UNDER THE EXTRADITION TREATY AND THE PHILIPPINE
EXTRADITION LAW;

III.

THE PETITION FOR (MANDAMUS), CERTIORARI AND PROHIBITION IS, ON ITS

FACE, FORMALLY AND SUBSTANTIALLY DEFICIENT; AND

IV.

PRIVATE RESPONDENT HAS NO RIGHT IN ESSE THAT NEEDS PROTECTION

AND ENFORCEMENT, AND WILL NOT SUFFER ANY IRREPARABLE INJURY.

(pp. 19-20, Rollo.)

On August 17, 1999, the Court required private respondent to file his comment. Also
issued, as prayed for, was a temporary restraining order (TRO) providing:

NOW, THEREFORE, effective immediately and continuing until further orders from this
Court, You, Respondent Judge Ralph C. Lantion, your agents, representatives or any
person or persons acting in your place or stead are hereby ORDERED to CEASE and
DESIST from enforcing the assailed order dated August 9, 1999 issued by public
respondent in Civil Case No. 99-94684.

GIVEN by the Honorable HILARIO G. DAVIDE, JR., Chief Justice, Supreme Court of
the Philippines, this 17th day of August 1999.

(pp. 120-121, Rollo.)

The case was heard on oral argument on August 31, 1999, after which the parties, as
directed, filed their respective memoranda.

From the pleadings of the opposing parties, both procedural and substantive issues are
patent. However, a review of these issues as well as the extensive arguments of both
parties, compel us to delineate the focal point raised by the pleadings: During the
evaluation stage of the extradition proceedings, is private respondent entitled to the two
basic due process rights of notice and hearing? An affirmative answer would necessarily
render the proceedings at the trial court, moot and academic (the issues of which are
substantially the same as those before us now), while a negative resolution would call for
the immediate lifting of the TRO issued by this Court dated August 24, 1999, thus
allowing petitioner to fast-track the process leading to the filing of the extradition petition
with the proper regional trial court. Corollarily, in the event that private respondent is
adjudged entitled to basic due process rights at the evaluation stage of the extradition
proceedings, would this entitlement constitute a breach of the legal commitments and
obligations of the Philippine Government under the RP-US Extradition Treaty? And
assuming that the result would indeed be a breach, is there any conflict between private
respondent's basic due process rights and the provisions of the RP-US Extradition Treaty?

The issues having transcendental importance, the Court has elected to go directly into the
substantive merits of the case, brushing aside peripheral procedural matters which
concern the proceedings in Civil Case No. 99-94684, particularly the propriety of the
filing of the petition therein, and of the issuance of the TRO of August 17, 1999 by the
trial court.

To be sure, the issues call for a review of the extradition procedure. The RP-US
Extradition Treaty which was executed only on November 13, 1994, ushered into force
the implementing provisions of Presidential Decree No. 1069, also called as the
Philippine Extradition Law. Section 2(a) thereof defines extradition as "the removal of an
accused from the Philippines with the object of placing him at the disposal of foreign
authorities to enable the requesting state or government to hold him in connection with
any criminal investigation directed against him or the execution of a penalty imposed on
him under the penal or criminal law of the requesting state or government." The portions
of the Decree relevant to the instant case which involves a charged and not convicted
individual, are abstracted as follows:

The Extradition Request

The request is made by the Foreign Diplomat of the Requesting State, addressed to the
Secretary of Foreign Affairs, and shall be accompanied by:

1. The original or an authentic copy of the criminal charge and the warrant of arrest
issued by the authority of the Requesting State having jurisdiction over the matter, or
some other instruments having equivalent legal force;

2. A recital of the acts for which extradition is requested, with the fullest particulars as to
the name and identity of the accused, his whereabouts in the Philippines, if known, the
acts or omissions complained of, and the time and place of the commission of these acts;

3. The text of the applicable law or a statement of the contents of said law, and the
designation or description of the offense by the law, sufficient for evaluation of the
request; and

4. Such other documents or information in support of the request.

(Sec. 4. Presidential Decree No. 1069.)

Sec. 5 of the Presidential Decree, which sets forth the duty of the Secretary of Foreign
Affairs, pertinently provides

. . . (1) Unless it appears to the Secretary of Foreign Affairs that the request fails to meet
the requirements of this law and the relevant treaty or convention, he shall forward the
request together with the related documents to the Secretary of Justice, who shall
immediately designate and authorize an attorney in his office to take charge of the case.

The above provision shows only too clearly that the executive authority given the task of
evaluating the sufficiency of the request and the supporting documents is the Secretary of
Foreign Affairs. What then is the coverage of this task?

In accordance with Paragraphs 2 and 3, Article 7 of the RP-US Extradition Treaty, the
executive authority must ascertain whether or not the request is supported by:

1. Documents, statements, or other types of information which describe the identity and
probable location of the person sought;

2. A statement of the facts of the offense and the procedural history of the case;

3. A statement of the provisions of the law describing the essential elements of the offense
for which extradition is requested;

4. A statement of the provisions of law describing the punishment for the offense;

5. A statement of the provisions of the law describing any time limit on the prosecution or
the execution of punishment for the offense;

6. Documents, statements, or other types of information specified in paragraph 3 or

paragraph 4 of said Article, as applicable.

(Paragraph 2, Article 7, Presidential Decree No. 1069.)

7. Such evidence as, according to the law of the Requested State, would provide probable
cause for his arrest and committal for trial if the offense had been committed there;

8. A copy of the warrant or order of arrest issued by a judge or other competent authority;
and

9. A copy of the charging document.

(Paragraph 3, ibid.)
The executive authority (Secretary of Foreign Affairs) must also see to it that the
accompanying documents received in support of the request had been certified by the
principal diplomatic or consular officer of the Requested State resident in the Requesting
State (Embassy Note No. 052 from U. S. Embassy; Embassy Note No. 951309 from the
Department of Foreign Affairs).

In this light, Paragraph 3, Article 3 of the Treaty provides that "[e]xtradition shall not be
granted if the executive authority of the Requested State determines that the request is
politically motivated, or that the offense is a military offense which is not punishable
under non-military penal legislation."

The Extradition Petition

Upon a finding made by the Secretary of Foreign Affairs that the extradition request and
its supporting documents are sufficient and complete in form and substance, he shall
deliver the same to the Secretary of Justice, who shall immediately designate and
authorize an attorney in his office to take charge of the case (Paragraph [1], Section 5,
P.D. No. 1069). The lawyer designated shall then file a written petition with the proper
regional trial court of the province or city, with a prayer that the court take the extradition
request under consideration (Paragraph [2], ibid.).

The presiding judge of the regional trial court, upon receipt of the petition for extradition,
shall, as soon as practicable, issue an order summoning the prospective extraditee to
appear and to answer the petition on the day and hour fixed in the order. The judge may
issue a warrant of arrest if it appears that the immediate arrest and temporary detention of
the accused will best serve the ends of justice (Paragraph [1], Section 6, ibid.),
particularly to prevent the flight of the prospective extraditee.

The Extradition Hearing

The Extradition Law does not specifically indicate whether the extradition proceeding is
criminal, civil, or a special proceeding. Nevertheless, Paragraph [1], Section 9 thereof
provides that in the hearing of the extradition petition, the provisions of the Rules of
Court, insofar as practicable and not inconsistent with the summary nature of the
proceedings, shall apply. During the hearing, Section 8 of the Decree provides that the
attorney having charge of the case may, upon application by the Requesting State,
represent the latter throughout the proceedings.

Upon conclusion of the hearing, the court shall render a decision granting the extradition
and giving the reasons therefor upon a showing of the existence of a prima facie case, or
dismiss the petition (Section 10, ibid.). Said decision is appealable to the Court of
Appeals, whose decision shall be final and immediately executory (Section 12, ibid.). The
provisions of the Rules of Court governing appeal in criminal cases in the Court of
Appeals shall apply in the aforementioned appeal, except for the required 15-day period
to file brief (Section 13, ibid.).
The trial court determines whether or not the offense mentioned in the petition is
extraditable based on the application of the dual criminality rule and other conditions
mentioned in Article 2 of the RP-US Extradition Treaty. The trial court also determines
whether or not the offense for which extradition is requested is a political one (Paragraph
[1], Article 3, RP-US Extradition Treaty).1âwphi1.nêt

With the foregoing abstract of the extradition proceedings as backdrop, the following
query presents itself: What is the nature of the role of the Department of Justice at the
evaluation stage of the extradition proceedings?

A strict observance of the Extradition Law indicates that the only duty of the Secretary of
Justice is to file the extradition petition after the request and all the supporting papers are
forwarded to him by the Secretary of Foreign Affairs. It is the latter official who is
authorized to evaluate the extradition papers, to assure their sufficiency, and under
Paragraph [3], Article 3 of the Treaty, to determine whether or not the request is
politically motivated, or that the offense is a military offense which is not punishable
under non-military penal legislation. Ipso facto, as expressly provided in Paragraph [1],
Section 5 of the Extradition Law, the Secretary of Justice has the ministerial duty of filing
the extradition papers.

However, looking at the factual milieu of the case before us, it would appear that there
was failure to abide by the provisions of Presidential Decree No. 1069. For while it is true
that the extradition request was delivered to the Department of Foreign Affairs on June
17, 1999, the following day or less than 24 hours later, the Department of Justice received
the request, apparently without the Department of Foreign Affairs discharging its duty of
thoroughly evaluating the same and its accompanying documents. The statement of an
assistant secretary at the Department of Foreign Affairs that his Department, in this
regard, is merely acting as a post office, for which reason he simply forwarded the
request to the Department of Justice, indicates the magnitude of the error of the
Department of Foreign Affairs in taking lightly its responsibilities. Thereafter, the
Department of Justice took it upon itself to determine the completeness of the documents
and to evaluate the same to find out whether they comply with the requirements laid
down in the Extradition Law and the RP-US Extradition Treaty. Petitioner ratiocinates in
this connection that although the Department of Justice had no obligation to evaluate the
extradition documents, the Department also had to go over them so as to be able to
prepare an extradition petition (tsn, August 31, 1999, pp. 24-25). Notably, it was also at
this stage where private respondent insisted on the following; (1) the right to be furnished
the request and the supporting papers; (2) the right to be heard which consists in having a
reasonable period of time to oppose the request, and to present evidence in support of the
opposition; and (3) that the evaluation proceedings be held in abeyance pending the filing
of private respondent's opposition to the request.

The two Departments seem to have misread the scope of their duties and authority, one
abdicating its powers and the other enlarging its commission. The Department of Foreign
Affairs, moreover, has, through the Solicitor General, filed a manifestation that it is
adopting the instant petition as its own, indirectly conveying the message that if it were to
evaluate the extradition request, it would not allow private respondent to participate in the
process of evaluation.

Plainly then, the record cannot support the presumption of regularity that the Department
of Foreign Affairs thoroughly reviewed the extradition request and supporting documents
and that it arrived at a well-founded judgment that the request and its annexed documents
satisfy the requirements of law. The Secretary of Justice, eminent as he is in the field of
law, could not privately review the papers all by himself. He had to officially constitute a
panel of attorneys. How then could the DFA Secretary or his undersecretary, in less than
one day, make the more authoritative determination?

The evaluation process, just like the extradition proceedings proper, belongs to a class by
itself. It is sui generis. It is not a criminal investigation, but it is also erroneous to say that
it is purely an exercise of ministerial functions. At such stage, the executive authority has
the power: (a) to make a technical assessment of the completeness and sufficiency of the
extradition papers; (b) to outrightly deny the request if on its face and on the face of the
supporting documents the crimes indicated are not extraditable; and (c) to make a
determination whether or not the request is politically motivated, or that the offense is a
military one which is not punishable under non-military penal legislation (tsn, August 31,
1999, pp. 28-29; Article 2 & and Paragraph [3], Article 3, RP-US Extradition Treaty).
Hence, said process may be characterized as an investigative or inquisitorial process in
contrast to a proceeding conducted in the exercise of an administrative body's quasi-
judicial power.

In administrative law, a quasi-judicial proceeding involves: (a) taking and evaluation of

evidence; (b) determining facts based upon the evidence presented; and (c) rendering an
order or decision supported by the facts proved (De Leon, Administrative Law: Text and
Cases, 1993 ed., p. 198, citing Morgan vs. United States, 304 U.S. 1). Inquisitorial power,
which is also known as examining or investigatory power, is one or the determinative
powers of an administrative body which better enables it to exercise its quasi-judicial
authority (Cruz, Phil. Administrative Law, 1996 ed., p. 26). This power allows the
administrative body to inspect the records and premises, and investigate the activities, of
persons or entities coming under its jurisdiction (Ibid., p. 27), or to require disclosure of
information by means or accounts, records, reports, testimony of witnesses, production of
documents, or otherwise (De Leon, op. cit., p. 64).

The power of investigation consists in gathering, organizing, and analyzing evidence,

which is a useful aid or tool in an administrative agency's performance of its rule-making
or quasi-judicial functions. Notably, investigation is indispensable to prosecution.

In Ruperto v. Torres (100 Phil. 1098 [1957], unreported), the Court had occasion to rule
on the functions of an investigatory body with the sole power of investigation. It does not
exercise judicial functions and its power is limited to investigating the facts and making
findings in respect thereto. The Court laid down the test of determining whether an
administrative body is exercising judicial functions or merely investigatory functions:
Adjudication signifies the exercise of power and authority to adjudicate upon the rights
and obligations of the parties before it. Hence, if the only purpose for investigation is to
evaluate evidence submitted before it based on the facts and circumstances presented to
it, and if the agency is not authorized to make a final pronouncement affecting the parties,
then there is an absence of judicial discretion and judgment.

The above description in Ruperto applies to an administrative body authorized to evaluate

extradition documents. The body has no power to adjudicate in regard to the rights and
obligations of both the Requesting State and the prospective extraditee. Its only power is
to determine whether the papers comply with the requirements of the law and the treaty
and, therefore, sufficient to be the basis of an extradition petition. Such finding is thus
merely initial and not final. The body has no power to determine whether or not the
extradition should be effected. That is the role of the court. The body's power is limited to
an initial finding of whether or not the extradition petition can be filed in court.

It is to be noted, however, that in contrast to ordinary investigations, the evaluation

procedure is characterized by certain peculiarities. Primarily, it sets into motion the
wheels of the extradition process. Ultimately, it may result in the deprivation of liberty of
the prospective extraditee. This deprivation can be effected at two stages: First, the
provisional arrest of the prospective extraditee pending the submission of the request.
This is so because the Treaty provides that in case of urgency, a contracting party may
request the provisional arrest of the person sought pending presentation of the request
(Paragraph [1], Article 9, RP-US Extradition Treaty), but he shall be automatically
discharged after 60 days if no request is submitted (Paragraph 4). Presidential Decree No.
1069 provides for a shorter period of 20 days after which the arrested person could be
discharged (Section 20[d]). Logically, although the Extradition Law is silent on this
respect, the provisions only mean that once a request is forwarded to the Requested State,
the prospective extraditee may be continuously detained, or if not, subsequently
rearrested (Paragraph [5], Article 9, RP-US Extradition Treaty), for he will only be
discharged if no request is submitted. Practically, the purpose of this detention is to
prevent his possible flight from the Requested State. Second, the temporary arrest of the
prospective extraditee during the pendency of the extradition petition in court (Section 6,
Presidential Decree No. 1069).

Clearly, there is an impending threat to a prospective extraditee's liberty as early as during

the evaluation stage. It is not only an imagined threat to his liberty, but a very imminent
one.

Because of these possible consequences, we conclude that the evaluation process is akin
to an administrative agency conducting an investigative proceeding, the consequences of
which are essentially criminal since such technical assessment sets off or commences the
procedure for, and ultimately, the deprivation of liberty of a prospective extraditee. As
described by petitioner himself, this is a "tool" for criminal law enforcement (p.
78, Rollo). In essence, therefore, the evaluation process partakes of the nature of a
criminal investigation. In a number of cases, we had occasion to make available to a
respondent in an administrative case or investigation certain constitutional rights that are
ordinarily available only in criminal prosecutions. Further, as pointed out by Mr. Justice
Mendoza during the oral arguments, there are rights formerly available only at the trial
stage that had been advanced to an earlier stage in the proceedings, such as the right to
counsel and the right against self-incrimination (tsn, August 31, 1999, p. 135; Escobedo
vs. Illinois, 378 U.S. 478; Gideon vs. Wainwright, 372 U.S. 335; Miranda vs. Arizona,
384 U.S. 436).

In Pascual v. Board of Medical Examiners (28 SCRA 344 [1969]), we held that the right
against self-incrimination under Section 17, Article III of the 1987 Constitution which is
ordinarily available only in criminal prosecutions, extends to administrative proceedings
which possess a criminal or penal aspect, such as an administrative investigation of a
licensed physician who is charged with immorality, which could result in his loss of the
privilege to practice medicine if found guilty. The Court, citing the earlier case of Cabal
vs. Kapunan (6 SCRA 1059 [1962]), pointed out that the revocation of one's license as a
medical practitioner, is an even greater deprivation than forfeiture of property.

Cabal vs. Kapunan (supra) involved an administrative charge of unexplained wealth

against a respondent which was filed under Republic Act No. 1379, or the Anti-Graft
Law. Again, we therein ruled that since the investigation may result in forfeiture of
property, the administrative proceedings are deemed criminal or penal, and such
forfeiture partakes the nature of a penalty. There is also the earlier case of Almeda,
Sr. vs. Perez (5 SCRA 970 [1962]), where the Court, citing American jurisprudence, laid
down the test to determine whether a proceeding is civil or criminal: If the proceeding is
under a statute such that if an indictment is presented the forfeiture can be included in the
criminal case, such proceeding is criminal in nature, although it may be civil in form; and
where it must be gathered from the statute that the action is meant to be criminal in its
nature, it cannot be considered as civil. If, however, the proceeding does not involve the
conviction of the wrongdoer for the offense charged, the proceeding is civil in nature.

The cases mentioned above refer to an impending threat of deprivation of one's property
or property right. No less is this true, but even more so in the case before us, involving as
it does the possible deprivation of liberty, which, based on the hierarchy of
constitutionally protected rights, is placed second only to life itself and enjoys precedence
over property, for while forfeited property can be returned or replaced, the time spent in
incarceration is irretrievable and beyond recompense.

By comparison, a favorable action in an extradition request exposes a person to eventual

extradition to a foreign country, thus saliently exhibiting the criminal or penal aspect of
the process. In this sense, the evaluation procedure is akin to a preliminary investigation
since both procedures may have the same result — the arrest and imprisonment of the
respondent or the person charged. Similar to the evaluation stage of extradition
proceedings, a preliminary investigation, which may result in the filing of an information
against the respondent, can possibly lead to his arrest, and to the deprivation of his
liberty.

Petitioner's reliance on Wright vs. Court of Appeals (235 SCRA 241 [1992]) (p. 8,
petitioner's Memorandum) that the extradition treaty is neither a piece of criminal
legislation nor a criminal procedural statute is not well-taken. Wright is not authority for
petitioner's conclusion that his preliminary processing is not akin to a preliminary
investigation. The characterization of a treaty in Wright was in reference to the
applicability of the prohibition against an ex post factolaw. It had nothing to do with the
denial of the right to notice, information, and hearing.

As early as 1884, the United States Supreme Court ruled that "any legal proceeding
enforced by public authority, whether sanctioned by age or custom, or newly devised in
the discretion of the legislative power, in furtherance of the general public good, which
regards and preserved these principles of liberty and justice, must be held to be due
process of law" (Hurtado vs. California, 110 U.S. 516). Compliance with due process
requirements cannot be deemed non-compliance with treaty commitments.

The United States and the Philippines share a mutual concern about the suppression and
punishment of crime in their respective jurisdictions. At the same time, both States accord
common due process protection to their respective citizens.

The due process clauses in the American and Philippine Constitutions are not only
worded in exactly identical language and terminology, but more importantly, they are
alike in what their respective Supreme Courts have expounded as the spirit with which
the provisions are informed and impressed, the elasticity in their interpretation, their
dynamic and resilient character which make them capable of meeting every modern
problem, and their having been designed from earliest time to the present to meet the
exigencies of an undefined and expanding future. The requirements of due process are
interpreted in both the United States and the Philippines as not denying to the law the
capacity for progress and improvement. Toward this effect and in order to avoid the
confines of a legal straitjacket, the courts instead prefer to have the meaning of the due
process clause "gradually ascertained by the process of inclusion and exclusion in the
course of the decisions of cases as they arise" (Twining vs. New Jersey, 211 U.S. 78).
Capsulized, it refers to "the embodiment of the sporting idea of fair play" (Ermita-Malate
Hotel and Motel Owner's Association vs. City Mayor of Manila, 20 SCRA 849 [1967]). It
relates to certain immutable principles of justice which inhere in the very idea of free
government (Holden vs. Hardy, 169 U.S. 366).

Due process is comprised of two components — substantive due process which requires
the intrinsic validity of the law in interfering with the rights of the person to his life,
liberty, or property, and procedural due process which consists of the two basic rights of
notice and hearing, as well as the guarantee of being heard by an impartial and competent
tribunal (Cruz, Constitutional Law, 1993 Ed., pp. 102-106).

True to the mandate of the due process clause, the basic rights of notice and hearing
pervade not only in criminal and civil proceedings, but in administrative proceedings as
well. Non-observance of these rights will invalidate the proceedings. Individuals are
entitled to be notified of any pending case affecting their interests, and upon notice, they
may claim the right to appear therein and present their side and to refute the position of
the opposing parties (Cruz, Phil. Administrative Law, 1996 ed., p. 64).
In a preliminary investigation which is an administrative investigatory proceeding,
Section 3, Rule 112 of the Rules of Court guarantees the respondent's basic due process
rights, granting him the right to be furnished a copy of the complaint, the affidavits, and
other supporting documents, and the right to submit counter-affidavits and other
supporting documents within ten days from receipt thereof. Moreover, the respondent
shall have the right to examine all other evidence submitted by the complainant.

These twin rights may, however, be considered dispensable in certain instances, such as:

1. In proceeding where there is an urgent need for immediate action, like the summary
abatement of a nuisance per se (Article 704, Civil Code), the preventive suspension of a
public servant facing administrative charges (Section 63, Local Government Code, B.P.
Blg. 337), the padlocking of filthy restaurants or theaters showing obscene movies or like
establishments which are immediate threats to public health and decency, and the
cancellation of a passport of a person sought for criminal prosecution;

2. Where there is tentativeness of administrative action, that is, where the respondent is
not precluded from enjoying the right to notice and hearing at a later time without
prejudice to the person affected, such as the summary distraint and levy of the property of
a delinquent taxpayer, and the replacement of a temporary appointee; and

3. Where the twin rights have previously been offered but the right to exercise them had
not been claimed.

Applying the above principles to the case at bar, the query may be asked: Does the
evaluation stage of the extradition proceedings fall under any of the described situations
mentioned above?

Let us take a brief look at the nature of American extradition proceedings which are quite
noteworthy considering that the subject treaty involves the U.S. Government.

American jurisprudence distinguishes between interstate rendition or extradition which is

based on the Extradition Clause in the U.S. Constitution (Art. IV, §2 cl 2), and
international extradition proceedings. In interstate rendition or extradition, the governor
of the asylum state has the duty to deliver the fugitive to the demanding state. The
Extradition Clause and the implementing statute are given a liberal construction to carry
out their manifest purpose, which is to effect the return as swiftly as possible of persons
for trial to the state in which they have been charged with crime (31A Am Jur 2d 754-
755). In order to achieve extradition of an alleged fugitive, the requisition papers or the
demand must be in proper form, and all the elements or jurisdictional facts essential to
the extradition must appear on the face of the papers, such as the allegation that the
person demanded was in the demanding state at the time the offense charged was
committed, and that the person demanded is charged with the commission of the crime or
that prosecution has been begun in the demanding state before some court or magistrate
(35 C.J.S. 406-407). The extradition documents are then filed with the governor of the
asylum state, and must contain such papers and documents prescribed by statute, which
essentially include a copy of the instrument charging the person demanded with a crime,
such as an indictment or an affidavit made before a magistrate. Statutory requirements
with respect to said charging instrument or papers are mandatory since said papers are
necessary in order to confer jurisdiction on the government of the asylum state to effect
extradition (35 C.J.S. 408-410). A statutory provision requiring duplicate copies of the
indictment, information, affidavit, or judgment of conviction or sentence and other
instruments accompanying the demand or requisitions be furnished and delivered to the
fugitive or his attorney is directory. However, the right being such a basic one has been
held to be a right mandatory on demand (Ibid., p. 410, citing Ex parte Moore, 256 S.W.
2d 103, 158 Tex. Cr. 407 and Ex parte Tucker, Cr., 324, S.W.2d 853).

In international proceedings, extradition treaties generally provide for the presentation to

the executive authority of the Requested State of a requisition or demand for the return of
the alleged offender, and the designation of the particular officer having authority to act
in behalf of the demanding nation (31A Am Jur 2d 815).

In petitioner's memorandum filed on September 15, 1999, he attached thereto a letter

dated September 13, 1999 from the Criminal Division of the U.S. Department of Justice,
summarizing the U.S. extradition procedures and principles, which are basically governed
by a combination of treaties (with special reference to the RP-US Extradition Treaty),
federal statutes, and judicial decisions, to wit:

1. All requests for extradition are transmitted through the diplomatic channel. In urgent
cases, requests for the provincial arrest of an individual may be made directly by the
Philippine Department of Justice to the U.S. Department of Justice, and vice-versa. In the
event of a provisional arrest, a formal request for extradition is transmitted subsequently
through the diplomatic channel.

2. The Department of State forwards the incoming Philippine extradition request to the
Department of Justice. Before doing so, the Department of State prepares a declaration
confirming that a formal request has been made, that the treaty is in full force and effect,
that under Article 17 thereof the parties provide reciprocal legal representation in
extradition proceedings, that the offenses are covered as extraditable offenses under
Article 2 thereof, and that the documents have been authenticated in accordance with the
federal statute that ensures admissibility at any subsequent extradition hearing.

3. A judge or magistrate judge is authorized to issue a warrant for the arrest of the
prospective extraditee (18 U.S.C. §3184). Said judge or magistrate is authorized to hold a
hearing to consider the evidence offered in support of the extradition request (Ibid.)

4. At the hearing, the court must determine whether the person arrested is extraditable to
the foreign country. The court must also determine that (a) it has jurisdiction over the
defendant and jurisdiction to conduct the hearing; (b) the defendant is being sought for
offenses for which the applicable treaty permits extradition; and (c) there is probable
cause to believe that the defendant is the person sought and that he committed the
offenses charged (Ibid.)
5. The judge or magistrate judge is vested with jurisdiction to certify extraditability after
having received a "complaint made under oath, charging any person found within his
jurisdiction" with having committed any of the crimes provided for by the governing
treaty in the country requesting extradition (Ibid.) [In this regard, it is noted that a long
line of American decisions pronounce that international extradition proceedings partake
of the character of a preliminary examination before a committing magistrate, rather than
a trial of the guilt or innocence of the alleged fugitive (31A Am Jur 2d 826).]

6. If the court decides that the elements necessary for extradition are present, it
incorporates its determinations in factual findings and conclusions of law and certifies the
person's extraditability. The court then forwards this certification of extraditability to the
Department of State for disposition by the Secretary of State. The ultimate decision
whether to surrender an individual rests with the Secretary of State (18 U.S.C. §3186).

7. The subject of an extradition request may not litigate questions concerning the motives
of the requesting government in seeking his extradition. However, a person facing
extradition may present whatever information he deems relevant to the Secretary of State,
who makes the final determination whether to surrender an individual to the foreign
government concerned.

From the foregoing, it may be observed that in the United States, extradition begins and
ends with one entity — the Department of State — which has the power to evaluate the
request and the extradition documents in the beginning, and, in the person of the
Secretary of State, the power to act or not to act on the court's determination of
extraditability. In the Philippine setting, it is the Department of Foreign Affairs which
should make the initial evaluation of the request, and having satisfied itself on the points
earlier mentioned (see pp. 10-12), then forwards the request to the Department of Justice
for the preparation and filing of the petition for extradition. Sadly, however, the
Department of Foreign Affairs, in the instant case, perfunctorily turned over the request to
the Department of Justice which has taken over the task of evaluating the request as well
as thereafter, if so warranted, preparing, filing, and prosecuting the petition for
extradition.

Private respondent asks what prejudice will be caused to the U.S. Government should the
person sought to be extradited be given due process rights by the Philippines in the
evaluation stage. He emphasizes that petitioner's primary concern is the possible delay in
the evaluation process.

We agree with private respondent's citation of an American Supreme Court ruling:

The establishment of prompt efficacious procedures to achieve legitimate state ends is a

proper state interest worthy of cognizance in constitutional adjudication. But the
Constitution recognizes higher values than speed and efficiency. Indeed, one might fairly
say of the Bill of Rights in general, and the Due Process Clause, in particular, that they
were designed to protect the fragile values of a vulnerable citizenry from the overbearing
concern for efficiency and efficacy that may characterize praiseworthy government
officials no less, and perhaps more, than mediocre ones.

(Stanley vs. Illinois, 404 U.S. 645, 656)

The United States, no doubt, shares the same interest as the Philippine Government that
no right — that of liberty — secured not only by the Bills of Rights of the Philippines
Constitution but of the United States as well, is sacrificed at the altar of expediency.

(pp. 40-41, Private Respondent's Memorandum.)

In the Philippine context, this Court's ruling is invoked:

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 (Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform, 175 SCRA 343, 375-376 [1989]).

There can be no dispute over petitioner's argument that extradition is a tool of criminal
law enforcement. To be effective, requests for extradition or the surrender of accused or
convicted persons must be processed expeditiously. Nevertheless, accelerated or fast-
tracked proceedings and adherence to fair procedures are, however, not always
incompatible. They do not always clash in discord. Summary does not mean precipitous
haste. It does not carry a disregard of the basic principles inherent in "ordered liberty."

Is there really an urgent need for immediate action at the evaluation stage? At that point,
there is no extraditee yet in the strict sense of the word. Extradition may or may not
occur. In interstate extradition, the governor of the asylum state may not, in the absence
of mandatory statute, be compelled to act favorably (37 C.J.S. 387) since after a close
evaluation of the extradition papers, he may hold that federal and statutory requirements,
which are significantly jurisdictional, have not been met (31 Am Jur 2d 819). Similarly,
under an extradition treaty, the executive authority of the requested state has the power to
deny the behest from the requesting state. Accordingly, if after a careful examination of
the extradition documents the Secretary of Foreign Affairs finds that the request fails to
meet the requirements of the law and the treaty, he shall not forward the request to the
Department of Justice for the filing of the extradition petition since non-compliance with
the aforesaid requirements will not vest our government with jurisdiction to effect the
extradition.
In this light, it should be observed that the Department of Justice exerted notable efforts
in assuring compliance with the requirements of the law and the treaty since it even
informed the U.S. Government of certain problems in the extradition papers (such as
those that are in Spanish and without the official English translation, and those that are
not properly authenticated). In fact, petitioner even admits that consultation meetings are
still supposed to take place between the lawyers in his Department and those from the
U.S. Justice Department. With the meticulous nature of the evaluation, which cannot just
be completed in an abbreviated period of time due to its intricacies, how then can we say
that it is a proceeding that urgently necessitates immediate and prompt action where
notice and hearing can be dispensed with?

Worthy of inquiry is the issue of whether or not there is tentativeness of administrative

action. Is private respondent precluded from enjoying the right to notice and hearing at a
later time without prejudice to him? Here lies the peculiarity and deviant characteristic of
the evaluation procedure. On one hand there is yet no extraditee, but ironically on the
other, it results in an administrative if adverse to the person involved, may cause his
immediate incarceration. The grant of the request shall lead to the filing of the extradition
petition in court. The "accused" (as Section 2[c] of Presidential Decree No. 1069 calls
him), faces the threat of arrest, not only after the extradition petition is filed in court, but
even during the evaluation proceeding itself by virtue of the provisional arrest allowed
under the treaty and the implementing law. The prejudice to the "accused" is thus blatant
and manifest.

Plainly, the notice and hearing requirements of administrative due process cannot be
dispensed with and shelved aside.

Apart from the due process clause of the Constitution, private respondent likewise
invokes Section 7 of Article III which reads:

Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.

The above provision guarantees political rights which are available to citizens of the
Philippines, namely: (1) the right to information on matters of public concern, and (2) the
corollary right of access to official records documents. The general right guaranteed by
said provision is the right to information on matters of public concern. In its
implementation, the right of access to official records is likewise conferred. These
cognate or related rights are "subject to limitations as may be provided by law" (Bernas,
The 1987 Phil. Constitution A Reviewer-Primer, 1997 ed., p. 104) and rely on the premise
that ultimately it is an informed and critical public opinion which alone can protect the
values of democratic government (Ibid.).
Petitioner argues that the matters covered by private respondent's letter-request dated July
1, 1999 do not fall under the guarantee of the foregoing provision since the matters
contained in the documents requested are not of public concern. On the other hand,
private respondent argues that the distinction between matters vested with public interest
and matters which are of purely private interest only becomes material when a third
person, who is not directly affected by the matters requested, invokes the right to
information. However, if the person invoking the right is the one directly affected
thereby, his right to information becomes absolute.

The concept of matters of public concerns escapes exact definition. Strictly speaking,
every act of a public officer in the conduct of the governmental process is a matter of
public concern (Bernas, The 1987 Constitution of the Republic of the Philippines, 1996
ed., p. 336). This concept embraces a broad spectrum of subjects which the public may
want to know, either because these directly affect their lives or simply because such
matters arouse the interest of an ordinary citizen (Legaspi v. Civil Service Commission,
150 SCRA 530 [1987]). Hence, the real party in interest is the people and any citizen has
"standing".

When the individual himself is involved in official government action because said action
has a direct bearing on his life, and may either cause him some kind of deprivation or
injury, he actually invokes the basic right to be notified under Section 1 of the Bill of
Rights and not exactly the right to information on matters of public concern. As to an
accused in a criminal proceeding, he invokes Section 14, particularly the right to be
informed of the nature and cause of the accusation against him.

The right to information is implemented by the right of access to information within the
control of the government (Bernas, The 1987 Constitution of the Republic of the
Philippines, 1996 ed., p. 337). Such information may be contained in official records, and
in documents and papers pertaining to official acts, transactions, or decisions.

In the case at bar, the papers requested by private respondent pertain to official
government action from the U.S. Government. No official action from our country has
yet been taken. Moreover, the papers have some relation to matters of foreign relations
with the U.S. Government. Consequently, if a third party invokes this constitutional
provision, stating that the extradition papers are matters of public concern since they may
result in the extradition of a Filipino, we are afraid that the balance must be tilted, at such
particular time, in favor of the interests necessary for the proper functioning of the
government. During the evaluation procedure, no official governmental action of our own
government has as yet been done; hence the invocation of the right is premature. Later,
and in contrast, records of the extradition hearing would already fall under matters of
public concern, because our government by then shall have already made an official
decision to grant the extradition request. The extradition of a fellow Filipino would be
forthcoming.

We now pass upon the final issue pertinent to the subject matter of the instant
controversy: Would private respondent's entitlement to notice and hearing during the
evaluation stage of the proceedings constitute a breach of the legal duties of the
Philippine Government under the RP-Extradition Treaty? Assuming the answer is in the
affirmative, is there really a conflict between the treaty and the due process clause in the
Constitution?

First and foremost, let us categorically say that this is not the proper time to pass upon the
constitutionality of the provisions of the RP-US Extradition Treaty nor the Extradition
Law implementing the same. We limit ourselves only to the effect of the grant of the
basic rights of notice and hearing to private respondent on foreign relations.

The rule of pacta sunt servanda, one of the oldest and most fundamental maxims of
international law, requires the parties to a treaty to keep their agreement therein in good
faith. The observance of our country's legal duties under a treaty is also compelled by
Section 2, Article II of the Constitution which provides that "[t]he 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 nations." Under the doctrine of
incorporation, rules of international law form part of the law of the and land no further
legislative action is needed to make such rules applicable in the domestic sphere (Salonga
& Yap, Public International Law, 1992 ed., p. 12).

The doctrine of incorporation is applied whenever municipal tribunals (or local courts)
are confronted with situations in which there appears to be a conflict between a rule of
international law and the provisions of the constitution or statute of the local state. Efforts
should first be exerted to harmonize them, so as to give effect to both since it is to be
presumed that municipal law was enacted with proper regard for the generally accepted
principles of international law in observance of the observance of the Incorporation
Clause in the above-cited constitutional provision (Cruz, Philippine Political Law, 1996
ed., p. 55). In a situation, however, where the conflict is irreconcilable and a choice has to
be made between a rule of international law and municipal law, jurisprudence dictates
that municipal law should be upheld by the municipal courts (Ichong vs. Hernandez, 101
Phil. 1155 [1957]; Gonzales vs. Hechanova, 9 SCRA 230 [1963]; In re: Garcia, 2 SCRA
984 [1961]) for the reason that such courts are organs of municipal law and are
accordingly bound by it in all circumstances (Salonga & Yap, op. cit., p. 13). The fact that
international law has been made part of the law of the land does not pertain to or imply
the primacy of international law over national or municipal law in the municipal sphere.
The doctrine of incorporation, as applied in most countries, decrees that rules of
international law are given equal standing with, but are not superior to, national
legislative enactments. Accordingly, the principle lex posterior derogat priori takes effect
— a treaty may repeal a statute and a statute may repeal a treaty. In states where the
constitution is the highest law of the land, such as the Republic of the Philippines, both
statutes and treaties may be invalidated if they are in conflict with the constitution (Ibid.).

In the case at bar, is there really a conflict between international law and municipal or
national law? En contrario, these two components of the law of the land are not pined
against each other. There is no occasion to choose which of the two should be upheld.
Instead, we see a void in the provisions of the RP-US Extradition Treaty, as implemented
by Presidential Decree No. 1069, as regards the basic due process rights of a prospective
extraditee at the evaluation stage of extradition proceedings. From the procedures earlier
abstracted, after the filing of the extradition petition and during the judicial determination
of the propriety of extradition, the rights of notice and hearing are clearly granted to the
prospective extraditee. However, prior thereto, the law is silent as to these rights.
Reference to the U.S. extradition procedures also manifests this silence.

Petitioner interprets this silence as unavailability of these rights. Consequently, he

describes the evaluation procedure as an "ex parte technical assessment" of the
sufficiency of the extradition request and the supporting documents.

We disagree.

In the absence of a law or principle of law, we must apply the rules of fair play. An
application of the basic twin due process rights of notice and hearing will not go against
the treaty or the implementing law. Neither the Treaty nor the Extradition Law precludes
these rights from a prospective extraditee. Similarly, American jurisprudence and
procedures on extradition pose no proscription. In fact, in interstate extradition
proceedings as explained above, the prospective extraditee may even request for copies of
the extradition documents from the governor of the asylum state, and if he does, his right
to be supplied the same becomes a demandable right (35 C.J.S. 410).

Petitioner contends that the United States requested the Philippine Government to prevent
unauthorized disclosure of confidential information. Hence, the secrecy surrounding the
action of the Department of Justice Panel of Attorneys. The confidentiality argument is,
however, overturned by petitioner's revelation that everything it refuses to make available
at this stage would be obtainable during trial. The Department of Justice states that the
U.S. District Court concerned has authorized the disclosure of certain grand jury
information. If the information is truly confidential, the veil of secrecy cannot be lifted at
any stage of the extradition proceedings. Not even during trial.

A libertarian approach is thus called for under the premises.

One will search in vain the RP-US Extradition Treaty, the Extradition Law, as well as
American jurisprudence and procedures on extradition, for any prohibition against the
conferment of the two basic due process rights of notice and hearing during the
evaluation stage of the extradition proceedings. We have to consider similar situations in
jurisprudence for an application by analogy.

Earlier, we stated that there are similarities between the evaluation process and a
preliminary investigation since both procedures may result in the arrest of the respondent
or the prospective extraditee. In the evaluation process, a provisional arrest is even
allowed by the Treaty and the Extradition Law (Article 9, RP-US Extradition Treaty; Sec.
20, Presidential Decree No. 1069). Following petitioner's theory, because there is no
provision of its availability, does this imply that for a period of time, the privilege of the
writ of habeas corpus is suspended, despite Section 15, Article III of the Constitution
which states that "[t]he privilege of the writ or habeas corpus shall not be suspended
except in cases of invasion or rebellion when the public safety requires it"? Petitioner's
theory would also infer that bail is not available during the arrest of the prospective
extraditee when the extradition petition has already been filed in court since Presidential
Decree No. 1069 does not provide therefor, notwithstanding Section 13, Article III of the
Constitution which provides that "[a]ll persons, except those charged with offenses
punishable by reclusion perpetua when evidence of guilt is strong, shall, before
conviction, be bailable by sufficient sureties, or be released on recognizance as may be
provided by law. The right to bail shall not be impaired even when the privilege of the
writ of habeas corpus is suspended. . ." Can petitioner validly argue that since these
contraventions are by virtue of a treaty and hence affecting foreign relations, the
aforestated guarantees in the Bill of Rights could thus be subservient thereto?

The basic principles of administrative law instruct us that "the essence of due process in
administrative proceeding is an opportunity to explain one's side or an opportunity to
seek reconsideration of the actions or ruling complained of (Mirano vs. NLRC, 270
SCRA 96 [1997]; Padilla vs. NLRC, 273 SCRA 457 [1997]; PLDT vs. NLRC, 276 SCRA
1 [1997]; Helpmate, Inc. vs. NLRC, 276 SCRA 315 [1997]; Aquinas School vs.
Magnaye, 278 SCRA 602 [1997]; Jamer vs. NLRC, 278 SCRA 632 [1997]). In essence,
procedural due process refers to the method or manner by which the law is enforced
(Corona vs. United Harbor Pilots Association of the Phils., 283 SCRA 31 [1997]). This
Court will not tolerate the least disregard of constitutional guarantees in the enforcement
of a law or treaty. Petitioner's fears that the Requesting State may have valid objections to
the Requested State's non-performance of its commitments under the Extradition Treaty
are insubstantial and should not be given paramount consideration.

How then do we implement the RP-US Extradition Treaty? Do we limit ourselves to the
four corners of Presidential Decree No. 1069?

Of analogous application are the rulings in Government Service Insurance System

vs. Court of Appeals (201 SCRA 661 [1991]) and Go vs. National Police
Commission (271 SCRA 447 [1997]) where we ruled that in summary proceedings under
Presidential Decree No. 807 (Providing for the Organization of the Civil Service
Commission in Accordance with Provisions of the Constitution, Prescribing its Powers
and Functions and for Other Purposes), and Presidential Decree No. 971 (Providing Legal
Assistance for Members of the Integrated National Police who may be charged for
Service-Connected Offenses and Improving the Disciplinary System in the Integrated
National Police, Appropriating Funds Therefor and for other purposes), as amended by
Presidential Decree No. 1707, although summary dismissals may be effected without the
necessity of a formal investigation, the minimum requirements of due process still
operate. As held in GSIS vs. Court of Appeals:

. . . [I]t is clear to us that what the opening sentence of Section 40 is saying is that an
employee may be removed or dismissed even without formal investigation, in certain
instances. It is equally clear to us that an employee must be informed of the charges
preferred against him, and that the normal way by which the employee is so informed is
by furnishing him with a copy of the charges against him. This is a basic procedural
requirement that a statute cannot dispense with and still remain consistent with the
constitutional provision on due process. The second minimum requirement is that the
employee charged with some misfeasance or malfeasance must have a reasonable
opportunity to present his side of the matter, that is to say, his defenses against the
charges levelled against him and to present evidence in support of his defenses. . . .

(at p. 671)

Said summary dismissal proceedings are also non-litigious in nature, yet we upheld the
due process rights of the respondent.

In the case at bar, private respondent does not only face a clear and present danger of loss
of property or employment, but of liberty itself, which may eventually lead to his forcible
banishment to a foreign land. The convergence of petitioner's favorable action on the
extradition request and the deprivation of private respondent's liberty is easily
comprehensible.

We have ruled time and again that this Court's equity jurisdiction, which is aptly
described as "justice outside legality," may be availed of only in the absence of, and never
against, statutory law or judicial pronouncements (Smith Bell & Co., Inc. vs. Court of
Appeals, 267 SCRA 530 [1997]; David-Chan vs. Court of Appeals, 268 SCRA 677
[1997]). The constitutional issue in the case at bar does not even call for "justice outside
legality," since private respondent's due process rights, although not guaranteed by statute
or by treaty, are protected by constitutional guarantees. We would not be true to the
organic law of the land if we choose strict construction over guarantees against the
deprivation of liberty. That would not be in keeping with the principles of democracy on
which our Constitution is premised.

Verily, as one traverses treacherous waters of conflicting and opposing currents of liberty
and government authority, he must ever hold the oar of freedom in the stronger arm, lest
an errant and wayward course be laid.

WHEREFORE, in view of the foregoing premises, the instant petition is hereby

DISMISSED for lack of merit. Petitioner is ordered to furnish private respondent copies
of the extradition request and its supporting papers, and to grant him a reasonable period
within which to file his comment with supporting evidence. The incidents in Civil Case
No. 99-94684 having been rendered moot and academic by this decision, the same is
hereby ordered dismissed.

SO ORDERED.
EN BANC

June 23, 1987

G.R. No. L-69401

RIZAL ALIH, NASIM ALIH, AISAN ALIH, MIJAL ALIH, OMAR ALIH, EDRIS
MUKSAN, MULSIDI WARADIL, BILLY ASMAD RAMSID ASALI, BANDING
USMAN, ANGGANG HADANI, WARMIKHAN HAPA, GABRAL JIKIRI, ALLAN
TAN, MUJAHIRIN MARAJUKI, KENNEDY GONZALES, URDUJA ALIH,
MERLA ALIH, and NURAISA ALIH VDA DE FEROLINO, petitioners,
vs.
MAJOR GENERAL DELFIN C. CASTRO, IN HIS CAPACITY AS
COMMANDER SOUTHCOM AND REGIONAL UNIFIED COMMAND, REGION
IX, ZAMBOANGA CITY, COLONEL ERNESTO CALUPIG, IN HIS CAPACITY
AS COMMANDING OFFICER OF THE SPECIAL FORCES GROUP
(AIRBORNE) AND INTERNAL DEFENSE COMMAND, OTHERWISE KNOWN
AS IdC MAJOR ARNOLD BLANCO IN HIS CAPACITY AS COMMANDING
OFFICER OF THE PHILIPPINE MARINES AND 1ST LIEUTENANT DARWIN
GUERRA IN HIS CAPACITY AS ACTS SUPERVISOR, INTERNAL DEFENSE
COMMAND, ARMED FORCES OF THE PHILIPPINES, respondents.

CRUZ, J.:

On November 25, 1984, a contingent of more than two hundred Philippine marines and
elements of the home defense forces raided the compound occupied by the petitioners at
Gov. Alvarez street, Zamboanga City, in search of loose firearms, ammunition and other
explosives. 1

The military operation was commonly known and dreaded as a "zona," which was not
unlike the feared practice of the kempeitai during the Japanese Occupation of rounding up
the people in a locality, arresting the persons fingered by a hooded informer, and
executing them outright (although the last part is not included in the modern refinement).

The initial reaction of the people inside the compound was to resist the invasion with a
burst of gunfire. No one was hurt as presumably the purpose was merely to warn the
intruders and deter them from entering. Unfortunately, as might be expected in incidents
like this, the situation aggravated soon enough. The soldiers returned fire and a bloody
shoot-out ensued, resulting in a number of casualties. 2

The besieged compound surrendered the following morning, and sixteen male occupants
were arrested, later to be finger-printed, paraffin-tested and photographed over their
objection. The military also inventoried and confiscated nine M16 rifles, one M14 rifle,
nine rifle grenades, and several rounds of ammunition found in the premises. 3

On December 21, 1984, the petitioners came to this Court in a petition for prohibition
and mandamus with preliminary injunction and restraining order. Their purpose was to
recover the articles seized from them, to prevent these from being used as evidence
against them, and to challenge their finger-printing, photographing and paraffin-testing as
violative of their right against self-incrimination.4

The Court, treating the petition as an injunction suit with a prayer for the return of the
articles alleged to have been illegally seized, referred it for hearing to Judge Omar U.
Amin of the regional trial court, Zamboanga City. 5 After receiving the testimonial and
documentary evidence of the parties, he submitted the report and recommendations on
which this opinion is based. 6

The petitioners demand the return of the arms and ammunition on the ground that they
were taken without a search warrant as required by the Bill of Rights. This is confirmed
by the said report and in fact admitted by the respondents, "but with avoidance. 7

Article IV, Section 3, of the 1973 Constitution, which was in force at the time of the
incident in question, provided as follows:

Sec. 3. The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose shall
not be violated, and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined by the judge, or such other responsible officer as may be
authorized by law, after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched, and the
persons or things to be seized.

It was also declared in Article IV, Section 4(2) that-

Sec. 4(2) Any evidence obtained in violation of this or the preceding section shall be
inadmissible for any purpose in any proceeding.

The respondents, while admitting the absence of the required such warrant, sought to
justify their act on the ground that they were acting under superior orders. 8 There was
also the suggestion that the measure was necessary because of the aggravation of the
peace and order problem generated by the assassination of Mayor Cesar Climaco. 9

Superior orders" cannot, of course, countermand the Constitution. The fact that the
petitioners were suspected of the Climaco killing did not excuse the constitutional short-
cuts the respondents took. As eloquently affirmed by the U.S. Supreme Court in Ex parte
Milligan: 10

The Constitution is a law for rulers and people, equally in war and in peace, and covers
with the shield of its protection all classes of men, at all times and under all
circumstances. No doctrine, involving more pernicious consequences, was ever invented
by the wit of man than that any of its provisions can be suspended during any of the great
exigencies of government.
The precarious state of lawlessness in Zamboanga City at the time in question certainly
did not excuse the non-observance of the constitutional guaranty against unreasonable
searches and seizures. There was no state of hostilities in the area to justify, assuming it
could, the repressions committed therein against the petitioners.

It is so easy to say that the petitioners were outlaws and deserved the arbitrary treatment
they received to take them into custody; but that is a criminal argument. It is also
fallacious. Its obvious flaw lies in the conclusion that the petitioners were unquestionably
guilty on the strength alone of unsubstantiated reports that they were stockpiling
weapons.

The record does not disclose that the petitioners were wanted criminals or fugitives from
justice. At the time of the "zona," they were merely suspected of the mayor's slaying and
had not in fact even been investigated for it. As mere suspects, they were presumed
innocent and not guilty as summarily pronounced by the military.

Indeed, even if were assumed for the sake of argument that they were guilty, they would
not have been any less entitled to the protection of the Constitution, which covers both
the innocent and the guilty. This is not to say, of course, that the Constitution coddles
criminals. What it does simply signify is that, lacking the shield of innocence, the guilty
need the armor of the Constitution, to protect them, not from a deserved sentence, but
from arbitrary punishment. Every person is entitled to due process. It is no exaggeration
that the basest criminal, ranged against the rest of the people who would condemn him
outright, is still, under the Bill of Rights, a majority of one.

If the respondents did not actually disdain the Constitution when they made their illegal
raid, they certainly gave every appearance of doing so. This is truly regrettable for it was
incumbent on them, especially during those tense and tindery times, to encourage rather
than undermine respect for the law, which it was their duty to uphold.

In acting as they did, they also defied the precept that "civilian authority is at all times
supreme over the military" so clearly proclaimed in the 1973 Constitution. 11 In the
instant case, the respondents simply by-passed the civil courts, which had the authority to
determine whether or not there was probable cause to search the petitioner's premises.
Instead, they proceeded to make the raid without a search warrant on their own
unauthorized determination of the petitioner's guilt.

The respondents cannot even plead the urgency of the raid because it was in fact not
urgent. They knew where the petitioners were. They had every opportunity to get a search
warrant before making the raid. If they were worried that the weapons inside the
compound would be spirited away, they could have surrounded the premises in the
meantime, as a preventive measure. There was absolutely no reason at all why they
should disregard the orderly processes required by the Constitution and instead insist on
arbitrarily forcing their way into the petitioner's premises with all the menace of a
military invasion.
Conceding that the search was truly warrantless, might not the search and seizure be
nonetheless considered valid because it was incidental to a legal arrest? Surely not. If all
the law enforcement authorities have to do is force their way into any house and then pick
up anything they see there on the ground that the occupants are resisting arrest, then we
might as well delete the Bill of Rights as a fussy redundancy.

When the respondents could have easily obtained a search warrant from any of the TEN
civil courts then open and functioning in Zamboanga City, 12 they instead simply barged
into the beleaguered premises on the verbal order of their superior officers. One cannot
just force his way into any man's house on the illegal orders of a superior, however lofty
his rank. Indeed, even the humblest hovel is protected from official intrusion because of
the ancient rule, revered in all free regimes, that a man's house is his castle.

It may be frail; its roof may shake; the wind may enter; the rain may enter. But the King
of England may not enter. All the forces of the Crown dare not cross the threshold of the
ruined tenement. 13

If the arrest was made under Rule 113, Section 5, of the Rules of Court in connection
with a crime about to be committed, being committed, or just committed, what was that
crime? There is no allegation in the record of such a justification. Parenthetically, it may
be observed that under the Revised Rule 113, Section 5(b), the officer making the arrest
must have personal knowledge of the ground therefor as stressed in the recent case
of People v. Burgos.14

If follows that as the search of the petitioners' premises was violative of the Constitution,
all the firearms and ammunition taken from the raided compound are inadmissible in
evidence in any of the proceedings against the petitioners. These articles are "fruits of the
poisonous tree. 15 As Judge Learned Hand observed, "Only in case the prosecution which
itself controls the seizing officials, knows that it cannot profit by their wrong, will the
wrong be repressed. 16 Pending determination of the legality of such articles, however,
they shall remain in custodia legis, subject to such appropriate disposition as the
corresponding courts may decide. 17

The objection to the photographing, fingerprinting and paraffin-testing of the petitioners

deserves slight comment. The prohibition against self-incrimination applies to testimonial
compulsion only. As Justice Holmes put it in Holt v. United States, 18 "The prohibition of
compelling a man in a criminal court to be a witness against himself is a prohibition of
the use of physical or moral compulsion to extort communications from him, not an
exclusion of his body as evidence when it may be material."

The fearful days of hamleting salvaging, "zona" and other dreaded operations should
remain in the past, banished with the secret marshals and their covert license to kill
without trial. We must be done with lawlessness in the name of law enforcement. Those
who are supposed to uphold the law must not be the first to violate it. As Chief Justice
Claudio Teehankee stressed in his concurring opinion in Lacanilao v. De Leon, 19 "It is
time that the martial law regime's legacy of the law of force be discarded and that there be
a return to the force and rule of law."

All of us must exert efforts to make our country truly free and democratic, where every
individual is entitled to the full protection of the Constitution and the Bill of Rights can
stand as a stolid sentinel for all, the innocent as well as the guilty, including the basest of
criminals.

WHEREFORE, the search of the petitioners' premises on November 25, 1984, is hereby
declared ILLEGAL and all the articles seized as a result thereof are inadmissible in
evidence against the petitioners in any proceedings. However, the said articles shall
remain in custodia legis pending the outcome of the criminal cases that have been or may
later be filed against the petitioners.

SO ORDERED.

FIRST DIVISION

[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,
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. 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
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."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs
against the petitioner. So ordered.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-47178 May 16, 1980

ESTRELLA B. ONDOY, petitioner,

vs.
VIRGILIO IGNACIO, Proprietor M/B LADY ESTRELLITA and/or IMPERIAL
FISHING ENTERPRISES and/or THE SECRETARY OF LABOR and/or THE
COMPENSATION APPEALS AND REVIEW STAFF, Department of
Labor, respondents.

Fernardo R. Moreno for petitioner.

Feliciano Tumale for private respondents.

E. V. Espanol for public respondent.

FERNANDO, C.J.:têñ.£îhqwâ£

The undisputed facts argue strongly for the granting of the claim for compensation filed
by petitioner, the mother of one Jose Ondoy, who was drowned while in the employ of
private respondent, Virgilio Ignacio. Whatever be the cause for the failure to do so, it is
admitted that there was no controversion. Such omission, fatal in character, was sought to
be minimized by the filing of a motion to dismissed based on the alleged absence of an
employment relationship. What cannot be ignored, however, is that subsequently, in the
hearing of such claim private respondent submitted affidavits executed by the chief
engineer and oiler of the fishing vessel that the deceased a fisherman, was in that ship,
undeniably a member of the working force, but after being invited by friends to a
drinking spree, left the vessel, and thereafter was found dead. The referee summarily
ignored the affidavit of the chief-mate of respondent employer to the effect "that
sometime in October, 1968, while Jose Ondoy, my co-worker, was in the actual
performance of his work with said fishing enterprises, he was drowned and died on
October 22, 1968. That the deceased died in line of Duty." 1 The hearing officer or referee
dismissed the claim for lack of merit. 2 A motion for reconsideration was duly filed, but in
an order dated August 29, 1977, the then Secretary of Labor, now Minister Blas F. Ople,
denied such motion for reconsideration for lack of merit. 3 Hence this petition for review.

1. In La Mallorca v. Workmen's Compensation Commission, 4 this Court explicitly held

that the failure to controvert "is fatal to any defense that petitioner could interpose. So we
have held in a host of decisions in compliance with the clear and express language of the
Workmen's Compensation Act. Any Assertion to the contrary is doomed to futility. 5 The
opinion noted thirty decisions starting from Bachrach Motor Co. v. Workmen's
Compensation Commission 6 to Northwest Orient Airlines, Inc. v. Workmen's
Compensation Commission. 7 Thereafter, in Regal Auto Works, Inc. v. Workmen's
Compensation Commission, 8 such a doctrine was reaffirmed. It was further noted that
nine more decisions had been rendered by this Court starting from Republic v. Workmen's
Compensation Commission 9 to Abong v. Workmen's Compensation Commission. 10 By
the time respondent secretary of Labor denied the motion for reconsideration, a host of
decisions that speaks to the same effect had been promulgated. 11 It clearly, appears,
therefore, that the failure of the referee to grant the award ought to have been remedied
and the motion for reconsideration granted.
2. The deceased in this case met his death because of drowning. In Camotes Shipping
Corporation v. Otadoy, 12there was not even any direct testimony that the deceased was
drowned while in the performance of his duty. All that could be alleged was that he "was
lost at sea while in the employ of petitioner. 13 Nonetheless, the award for compensation
was sustained. Likewise, the ruling in Caltex (Phil.) Inc. v. Villanueva 14 was cited with
approval. Thus: "The fact that the employee was found missing while on board the
petitioner's vessel MV 'Caltex Mindanao' became known to the captain of the vessel on
10 October 1956 but it was only on 6 November 1956 when the petitioner transmitted to
the respondent Compensation WCC For in No. 3 stating that the employee was 'Lost at
sea and presumed dead as of October 10, 1956,' and that it was controverting the
respondent's claim. 15 In the present case, there is evidence of the fact of death due to
drowning. That was not controverted. Under the circumstances, the failure to grant the
claim finds no justification in law.

3. It bears repeating that there is evidence, direct and categorical, to the effect that the
deceased was drowned while "in the actual performance of his work" with the shipping
enterprise of private respondent. Even without such evidence, the petitioner could have
relied on the presumption of compensability under the Act once it is shown that the death
or disability arose in the course of employment, with the burden of overthrowing it being
cast on the person or entity resisting the claim. Time and time again this Court has
stressed such statutory provision. It suffices to mention cases decided from January to
April of this year. 16 An appraisal of the counter-affidavits submitted by two employees of
private respondent and thereafter beholden to him to the effect that the deceased left the
vessel for a drinking spree certainly cannot meet the standard required to negate the force
of the presumption of compensability.

4. Nor is an affirmance of the finding of the referee adverse to the claim warranted
because of the doctrine that the findings of facts of an administrative agency must be
accorded due weight and consideration. An excerpt from the recent case of Uy v.
Workmen's Compensation Commission 17 finds pertinence: "The claim merits scant
consideration for this Court is authorized to inquire into the facts when the conclusions
are not supported by substantial or credible evidence. 18

5. This Court, in recognizing the right of petitioner to the award, merely adheres to the
interpretation uninterruptedly followed by this Court resolving all doubts in favor of the
claimant. So it has been since the first leading case of Francisco v. Conching 19 decided a
year after the 1935 Constitution took effect. What was said in Victorias Milling Co., Inc.
v. Workmen's Compensation Commission 20 is not amiss: "There is need, it seems, even at
this late date, for [private respondent] and other employers to be reminded of the high
estate accorded the Workmen's Compensation Act in the constitutional scheme of social
justice and protection to labor. 21 Further: "No other judicial attitude may be expected in
the face of a clearly expressed legislative determination which antedated the
constitutionally avowed concern for social justice and protection to labor. It is easily
understandable why the judiciary frowns on resort to doctrines, which even if deceptively
plausible, would result in frustrating such a national policy. 22 Lastly, to quote from the
opinion therein rendered: "To be more specific, the principle of social justice is in this
sphere strengthened and vitalized. A realistic view is that expressed in Agustin v.
Workmen's Compensation Commission: 'As between a laborer, usually poor and
unlettered, and the employer, who has resources to secure able legal advice, the law has
reason to demand from the latter stricter compliance. Social justice in these cases is not
equality but protection.' 23

WHEREFORE, the petition for review is granted and petitioner Estrelita B. Ondoy is
awarded the sum of, P6,000.00 as compensation for the death of her son, Jose Ondoy;
P300.00 for burial expenses; and P600.00 as attorney's fees. This decision is immediately
executory. Costs against private respondent Virgilio Ignacio.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-47088 July 10, 1981

CONSOLACION DUQUE SALONGA, assisted by her husband WENCESLAO

SALONGA, plaintiff-appellant,
vs.
JULITA B. FARRALES, and THE SHERIFF OF OLONGAPO CITY, defendants-
appellees.

FERNANDEZ, J.:

This is an appeal certified to this Court by the Court of Appeals 1 from the decision of the
Court of First Instance of Zambales and Olongapo City, Third Judicial District, Branch
III, Olongapo City, in Civil Case No. 1144-0, entitled "Consolacion Duque Salonga,
assisted by her husband, Wenceslao Salonga, Plaintiff, versus Julita B. Farrales, and The
Sheriff of Olongapo City, Defendants," the dispositive part of which reads:

FOR THE REASONS GIVEN, judgment is hereby rendered dismissing plaintiff's

complaint, as well as defendants' counterclaim.

Costs against plaintiff.

SO ORDERED. 2

The records disclose that on January 2, 1973; the appellant, Consolacion Duque Salonga
assisted by her husband, filed a complaint against Julita B. Farrales and the Sheriff of
Olongapo City with the Court of First Instance of Zambales and Olongapo City, Third
Judicial District, Branch III, Olongapo City, seeking the following relief:

WHEREFORE, plaintiff most respectfully prays for the following relief:

a) Ordering defendant Julita Farrales to sell to plaintiff the parcel of land containing an
area of 156 Square Meters, more or less, where the house of strong materials of plaintiff
exists.
b) Ordering the defendants not to disturb nor interfere in the peaceful possession or
occupation of the land by plaintiff, until a final decision is rendered in this case.

c) Ordering defendants jointly and severally to pay costs; and

d) Granting plaintiff such other relief conformable to law, justice and equity.

Sta. Rita, Olongapo City, December 28, 1972. 3

that on January 9, 1973, plaintiff-appellant, Salonga filed an urgent petition for the
issuance of a writ of preliminary injunction which was duly amended on January 16,
1973, 4 with the following prayer:

WHEREFORE, plaintiff assisted by counsel most respectfully prays the Hon. Court the
following relief:

a) That a restraining order be issued pending resolution of the instant petition for issuance
of a Writ of Preliminary Injunction enjoining defendants, particularly the Sheriff of
Olongapo City to restrain from enforcing the Writ of Execution issued in connection with
the judgment rendered in Civil Case 650 for ejectment in the City Court of Olongapo
City;

b) That after due hearing of the present amended petition, a Writ of Preliminary
Injunction conditioned upon a reasonable bond be issued enjoining the defendants,
particularly, the Sheriff of Olongapo City, to restrain from enforcing the Writ of
Execution issued in connection with the judgment rendered in Civil Case No. 650 for
ejectment in the City Court of Olongapo City, in order to maintain the status of the
parties; in order to prevent the infliction of irreparable injury to plaintiff; and in order that
whatever judgment may be rendered in this case, may not become moot, academic,
illusory and ineffectual, and

c) Granting plaintiff such other relief conformable to law, justice and equity;

that on January 22, 1973, the court a quo issued an order temporarily restraining the
carrying out of the writ of execution issued pursuant to the judgment rendered by the City
Court of Olongapo City in Civil Case No. 650, a suit for ejectment filed by defendant-
appellee Farrales against five defendants, among whom the herein appellant, Consolacion
Duque Salonga; 5 that on January 23, 1973, defendant-appellee Farrales filed a motion to
deny the motion for the issuance of a preliminary injunction for being vague and her
answer with counterclaim to the complaint; 6 that an opposition to the amended petition
for the issuance of a writ of preliminary injunction was also filed by the defendant-
appellee Farrales on January 25, 1973; 7 that in an order dated January 20, 1973, the
court a quo denied the petition for the issuance of a preliminary injunction and lifted the
restraining order issued on January 22, 1973; 8 that plaintiff-appellant moved for
reconsideration of the order denying the motion for issuance of a preliminary injunction
on January 5, 1973; 9 which was also denied by the court a quo on February 21,
1973; 10 that after the trial on the merits of Civil Case No. 1144-0, the trial court rendered
the judgment under review, dismissing plaintiff's complaint; 11 that on August 13, 1973,
the plaintiff, Consolacion Duque Salonga, appealed from the said decision to the Court of
Appeals; 12 that on February 25, 1974, the plaintiff-appellant, Consolacion Duque
Salonga, filed with the Court of Appeals a motion for the issuance of a writ of
preliminary injunction in aid of appeal; 13 that in a resolution dated March 6, 1974, the
Court of Appeals denied the said motion on the ground that "the writ of preliminary
injunction prayed for being intended to restrain the enforcement of the writ of execution
issued in Civil Case No. 650 for Ejectment, which is not involved in this appeal, and
there being no justification for the issuance of the writ ... " 14 that on January 13, 1975, the
defendant-appellee Julita B. Farrales filed a motion to dismiss the appeal on the ground
that the appeal has become moot and academic because "the house of the plaintiffs-
appellants, subject matter of this appeal was demolished on October 21, 1974, Annex
"A", Sheriff's return and the land where this house was built was delivered to her and she
is now the one in possession ... ; 15 that the plaintiffs-appellants having failed to comment
on the said motion to dismiss when required by the Court of Appeals in its resolution
dated January 16, 1975, 16 the Court of Appeals resolved to submit the motion for
decision in a resolution dated April 17, 1975; 17 and that, likewise, the plaintiffs-
appellants having failed to show cause why the case should not be submitted for decision
without the benefit of appellant's reply brief when required to do so in a Court of Appeals
resolution dated May 14, 1975, 18 the Court of Appeals resolved on July 8, 1975 to submit
the case for decision without the benefit of appellants' reply brief. 19

In a resolution promulgated on September 15, 1977 the Court of Appeals certified the
case to the Supreme Court because the issue raised in the appeal is purely legal. 20

The plaintiffs-appellants assign the following errors:

I — THE COURT A QUO SERIOUSLY ERRED IN DISMISSING APPELLANTS'

COMPLAINT AND IN DENYING SAID APPELLANTS' RELIEF TO PURCHASE
FROM DEFENDANT-APPELLEE JULITA FARRALES THE PIECE OF LAND IN
QUESTION.

II — THE COURT A QUO SERIOUSLY ERRED IN NOT APPLYING TO THE SUIT

AT BAR, SECTION 6, UNDER ARTICLE 11 OF THE NEW CONSTITUTION,
WHICH CONTROLS, DELIMITS AND REGULATES PROPERTY RIGHTS AND
PRIVATE GAINS. 21

The main legal question involved in this appeal is whether or not the court a quo erred in
dismissing the complaint for specific performance or the ground that there exists no
legally enforceable compromise agreement upon which the defendant-appellee Farrales
can be compelled to sell the piece of land in question to plaintiff-appellant, Consolacion
Duque Salonga.

The facts, as found by the trial court, are:

At the pre-trial conference, the parties stipulated on the following facts -

(1) THAT the personal circumstances of the parties as alleged in the complaint are
admitted:

(2) THAT defendant Farrales is the titled owner of a parcel of residential land situated in
Sta. Rita, Olongapo City, Identity of which is not disputed, formerly acquired by her from
one Leoncio Dytuco who, in turn, acquired the same from the Corpuz Family of which
only 361 square meters, more or less, not actually belong to said defendant after portions
thereof had been sold to Marciala Zarsadias, Catalino Pascual and Rosanna Quiocson*;
(*Per Deed of Absolute Sale, Exhibit B, the vendee is actually Dionisio Quiocson);

3) THAT even prior to the acquisition by defendant Farrales (if the land aforesaid,
plaintiff was already in possession as lessee of some 156 square meters thereof, on which
she had erected a house, paying rentals thereon first to the original owners and later to
defendant Farrales.

(4) THAT, sometime prior to November, 1968, defendant Farrales filed an ejectment case
for non-payment of rentals against plaintiff and her husband-jointly with other lessees of
other portions of the land, to wit, Jorge Carvajal, Catalino Pascua, Marciala Zarsadias,
and the spouses Cesar and Rosalina Quiocson - Civil Case No. 650 of the Olongapo City
Court, Branch 1, in which, on November 20, 1968, and reiterated on February 4, 1970, a
decision was rendered in favor of defendant Farrales and ordering the therein defendants,
including plaintiff herein and her husband, to vacate the portion occupied by them and to
pay rentals in arrears, attorney's fees and costs;

(5) THAT the decision aforesaid was elevated on appeal to the Court of First Instance of
Zambales and Olongapo City, Civil Case No. 581-0 thereof, and, in a Decision dated
November 11, 1971 of Branch III thereof, the same was affirmed with modification only
as to the amount of rentals arrears to be paid;

(6) THAT the affirmatory decision of the Court of First Instance aforesaid is now final
and executory the records of the case had been remanded to the Court for execution, and
the corresponding writ of execution had been issued partially satisfied, as far as plaintiff
herein is concerned, by the payment of all rentals in arrears although the removal of said
plaintiff's house from the land still remains to be carried out by defendant Sheriff: and

(7) THAT, even before the rendition of the affirmatory decision of the Court of First
Instance, by common consent amongst themselves defendant sold to Catalino Pascua,
Marciala Zarsadias and the spouses Cesar and Rosalina Quiocson the areas respectly
occupied by them; while, with respect to Jorge Carvajal, in a suit thereafter filed between
him and defendant Farrales, a compromise. agreement was entered into whereunder said
defendant undertook to pay for Carvajal's house on her land, so that the decision
aforesaid is now being executed, as far as ejectment is concerned, only against plaintiff
herein. (Pre-Trial Order, May 17, 1973, pp. 2-5) 22
The lower court explained its conclusion thus:

... From the very allegations of the complaint, it is clearly admitted -

5. That plaintiff herein, in view of the sale to three tenants defendants of the portions of
land occupied by each of said three tenant-defendants, by defendant Julita B.
Farrales, also offered to purchase from said defendant the area of One Hundred Fifty-Six
(156) Square Meters, more or less, where plaintiff's house of strong materials exists, but,
defendant Julita B. Farrales, despite the fact that said plaintiff's order to purchase was
just, fair and reasonable persistently refused such offer, and instead insisted to execute the
judgment rendered in the ejectment case, before the City Court of Olongapo City, thru the
herein defendant Sheriff of Olongapo City, with the sole and only purpose of causing
damage and prejudice to the plaintiff (Complaint, p. 3 emphasis supplied).

Being a judicial admission, the foregoing binds plaintiff who cannot subsequently take a
position contradictory thereto or inconsistent therewith (Section 2, Rule 129, Rules of
Court; McDaniel vs. Apacible, 44 Phil. 248 Cunanan vs. Amparo, 80 Phil., 227). Hence,
if plaintiff's offer to purchase was, as aforesaid persistently refused by defendant, it is
obvious that no meeting of the and, took place and, accordingly, no contract, either to sell
or of sale, was ever perfected between them. This is only firmed up even more by
plaintiff's admission on the witness stand that no agreement respecting the purchase and
sale of the disputed land was finalized because, while defendant Farrales purportedly
wanted payment in cash, plaintiff did not have any money for that purpose and neither
were negotiations ever had respecting any possible arrangement for payment in
installments. On all fours to the case at bar, therefore, is Velasco et al., vs. Court of
Appeals, et al, G.R. No. L-31018, June 29, 1973, which was a case for specific
performance to compel the therein respondent Magdalena Estate, Inc. to sell a parcel of
land to petitioner per an alleged contract of sale in which the Supreme Court ruled:

It is not difficult to glean from the aforequoted averments that the petitioners themselves
admit that they and the respondent still had to meet and agree on how and when the down
payment and the installment payments were to be paid. Such being the situation, it
cannot, therefore be said that a definite and firm sales agreement between the parties had
been perfected over the lot in question. Indeed this Court has already ruled before that a
definite agreement on the manner of payment of the purchase price is an essential
element in the formation of a binding and enforceable contract of sale.

Since contracts are enforceable only from the moment of perfection (Articles 1315 and
1475, Civil Code of the Philippines; Pacific Oxygen and Acetylene Co. vs. Central Bank,
G.R. No. L-21881, March 1, 1968; Atkins, Kroll and Co., Inc. vs. B. Cua Hian Teck G.R.
No. L-9817, January 31, 1958), and there is here no perfected contract at all, it goes
without saying that plaintiff has absolutely nothing to enforce against defendant Farrales,
and the fact that defendant Farrales previously sold portions of the land to other lessees
similarly situated as plaintiff herein, does not change the situation because, as to said
other lessees, a perfected contract existed - which is not the case with plaintiff. 23
The trial court found as a fact that no compromise agreement to sell the land in question
was ever perfected between the defendant-appellee as vendor and the plaintiffs-appellants
as vendees. 24

It is elementary that consent is an essential element for the existence of a contract, and
where it is wanting, the contract is non-existent. The essence of consent is the conformity
of the parties on the terms of the contract, the acceptance by one of the offer made by the
other. The contract to sell is a bilateral contract. Where there is merely an offer by one
party, without the acceptance of the other, there is no consent. 25

It appears in this case that the offeree, the defendant-appellee Julita B. Farrales not only
did not accept, but rejected the offer of plaintiffs-appellants, spouses Salonga to buy the
land in question. There being no consent there is. therefore, no contract to sell to speak of.

Likewise, it must be borne in mind that the alleged compromise agreement to sell the
land in question is unenforceable under the Statute of Frauds, 26 and thus, renders all the
more ineffective the action for specific performance in the court a quo.

Moreover, as correctly found by the trial court, the plaintiffs-appellants, as lessees, are
neither builders in good faith nor in bad faith. Their rights are governed not by Article
448 but by Art. 1678 of the New Civil Code. 27 As lessees, they may remove the
improvements should the lessor refuse to reimburse them, but the lessee does not have the
right to buy the land. 28

Anent the appellants' claim that since the appellee sold to the three (3) other defendants in
the ejectment suit the three (3) portions of the land in question occupied by them, it
follows that "she must also sell that portion of the land where appellants' residential house
was found to appellants" is unmeritorious. The trial court correctly ruled that the fact that
defendant-appellee sold portions of the land to the other lessees similarly situated as
plaintiffs-appellants Salonga does not change the situation because as to said other
lessees, a perfected contract of sale existed which, as previously shown was not the case
with the plaintiff. 29

As to the contention that Sec. 6, Article II of the New Constitution is applicable to the
case at bar, it must be remembered that social justice cannot be invoked to trample on the
rights of property owners who under our Constitution and laws are also entitled to
protection. The social justice consecrated in our constitution was not intended to take
away rights from a person and give them to another who is not entitled thereto. Evidently,
the plea for social justice cannot nullify the law on obligations and contracts, and is,
therefore, beyond the power of the Court to grant.

There is no showing that the trial court committed any reversible error.

WHEREFORE, the appeal is DISMISSED for lack of merit and the judgment appealed
from is hereby affirmed, without pronouncement as to costs.
SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila
 SECOND DIVISION

G.R. No. L-25843 July 25, 1974

MELCHORA CABANAS, plaintiff-appellee,

vs.
FRANCISCO PILAPIL, defendant-appellant.

Seno, Mendoza & Associates for plaintiff-appellee.

Emilio Benitez, Jr. for defendant-appellant.

FERNANDO, J.:p

The disputants in this appeal from a question of law from a lower court decision are the
mother and the uncle of a minor beneficiary of the proceeds of an insurance policy issued
on the life of her deceased father. The dispute centers as to who of them should be
entitled to act as trustee thereof. The lower court applying the appropriate Civil Code
provisions decided in favor of the mother, the plaintiff in this case. Defendant uncle
appealed. As noted, the lower court acted the way it did following the specific mandate of
the law. In addition, it must have taken into account the principle that in cases of this
nature the welfare of the child is the paramount consideration. It is not an unreasonable
assumption that between a mother and an uncle, the former is likely to lavish more care
on and pay greater attention to her. This is all the more likely considering that the child is
with the mother. There are no circumstances then that did militate against what conforms
to the natural order of things, even if the language of the law were not as clear. It is not to
be lost sight of either that the judiciary pursuant to its role as an agency of the State
as parens patriae, with an even greater stress on family unity under the present
Constitution, did weigh in the balance the opposing claims and did come to the
conclusion that the welfare of the child called for the mother to be entrusted with such
responsibility. We have to affirm.

The appealed decision made clear: "There is no controversy as to the facts. " 1 The
insured, Florentino Pilapil had a child, Millian Pilapil, with a married woman, the
plaintiff, Melchora Cabanas. She was ten years old at the time the complaint was filed on
October 10, 1964. The defendant, Francisco Pilapil, is the brother of the deceased. The
deceased insured himself and instituted as beneficiary, his child, with his brother to act as
trustee during her minority. Upon his death, the proceeds were paid to him. Hence this
complaint by the mother, with whom the child is living, seeking the delivery of such sum.
She filed the bond required by the Civil Code. Defendant would justify his claim to the
retention of the amount in question by invoking the terms of the insurance policy.2
After trial duly had, the lower court in a decision of May 10, 1965, rendered judgment
ordering the defendant to deliver the proceeds of the policy in question to plaintiff. Its
main reliance was on Articles 320 and 321 of the Civil Code. The former provides: "The
father, or in his absence the mother, is the legal administrator of the property pertaining to
the child under parental authority. If the property is worth more than two thousand pesos,
the father or mother shall give a bond subject to the approval of the Court of First
Instance."3 The latter states: "The property which the unemancipated child has acquired
or may acquire with his work or industry, or by any lucrative title, belongs to the child in
ownership, and in usufruct to the father or mother under whom he is under parental
authority and whose company he lives; ...4

Conformity to such explicit codal norm is apparent in this portion of the appealed
decision: "The insurance proceeds belong to the beneficiary. The beneficiary is a minor
under the custody and parental authority of the plaintiff, her mother. The said minor lives
with plaintiff or lives in the company of the plaintiff. The said minor acquired this
property by lucrative title. Said property, therefore, belongs to the minor child in
ownership, and in usufruct to the plaintiff, her mother. Since under our law the
usufructuary is entitled to possession, the plaintiff is entitled to possession of the
insurance proceeds. The trust, insofar as it is in conflict with the above quoted provision
of law, is pro tanto null and void. In order, however, to protect the rights of the minor,
Millian Pilapil, the plaintiff should file an additional bond in the guardianship
proceedings, Sp. Proc. No. 2418-R of this Court to raise her bond therein to the total
amount of P5,000.00."5

It is very clear, therefore, considering the above, that unless the applicability of the two
cited Civil Code provisions can be disputed, the decision must stand. There is no
ambiguity in the language employed. The words are rather clear. Their meaning is
unequivocal. Time and time again, this Court has left no doubt that where codal or
statutory norms are cast in categorical language, the task before it is not one of
interpretation but of application.6 So it must be in this case. So it was in the appealed
decision.

1. It would take more than just two paragraphs as found in the brief for the defendant-
appellant7 to blunt the force of legal commands that speak so plainly and so unqualifiedly.
Even if it were a question of policy, the conclusion will remain unaltered. What is
paramount, as mentioned at the outset, is the welfare of the child. It is in consonance with
such primordial end that Articles 320 and 321 have been worded. There is recognition in
the law of the deep ties that bind parent and child. In the event that there is less than full
measure of concern for the offspring, the protection is supplied by the bond required.
With the added circumstance that the child stays with the mother, not the uncle, without
any evidence of lack of maternal care, the decision arrived at can stand the test of the
strictest scrutiny. It is further fortified by the assumption, both logical and natural, that
infidelity to the trust imposed by the deceased is much less in the case of a mother than in
the case of an uncle. Manresa, commenting on Article 159 of the Civil Code of Spain, the
source of Article 320 of the Civil Code, was of that view: Thus "El derecho y la
obligacion de administrar el Patrimonio de los hijos es una consecuencia natural y lógica
de la patria potestad y de la presunción de que nadie cuidará de los bienes de acquéllos
con mas cariño y solicitude que los padres. En nuestro Derecho antiguo puede decirse que
se hallaba reconocida de una manera indirecta aquelia doctrina, y asi se desprende de la
sentencia del Tribunal Supremeo de 30 de diciembre de 1864, que se refiere a la ley 24,
tit. XIII de la Partida 5. De la propia suerte aceptan en general dicho principio los
Codigos extranjeros, con las limitaciones y requisitos de que trataremos mis adelante."8

2. The appealed decision is supported by another cogent consideration. It is buttressed by

its adherence to the concept that the judiciary, as an agency of the State acting
as parens patriae, is called upon whenever a pending suit of litigation affects one who is
a minor to accord priority to his best interest. It may happen, as it did occur here, that
family relations may press their respective claims. It would be more in consonance not
only with the natural order of things but the tradition of the country for a parent to be
preferred. it could have been different if the conflict were between father and mother.
Such is not the case at all. It is a mother asserting priority. Certainly the judiciary as the
instrumentality of the State in its role of parens patriae, cannot remain insensible to the
validity of her plea. In a recent case, 9 there is this quotation from an opinion of the United
States Supreme Court: "This prerogative of parens patriae is inherent in the supreme
power of every State, whether that power is lodged in a royal person or in the legislature,
and has no affinity to those arbitrary powers which are sometimes exerted by
irresponsible monarchs to the great detriment of the people and the destruction of their
liberties." What is more, there is this constitutional provision vitalizing this concept. It
reads: "The State shall strengthen the family as a basic social institution." 10 If, as the
Constitution so wisely dictates, it is the family as a unit that has to be strengthened, it
does not admit of doubt that even if a stronger case were presented for the uncle, still
deference to a constitutional mandate would have led the lower court to decide as it did.

WHEREFORE, the decision of May 10, 1965 is affirmed. Costs against defendant-
appellant.
357 Phil. 987

PANGANIBAN, J.:
Republic Act No. 7610 penalizes child prostitution and other sexual abuses. It was
enacted in consonance with the policy of the State to "provide special protection to
children from all forms of abuse." The Court thus applies this law to the present case and
grants the victim the full vindication and protection that RA 7610 accords to this helpless
sector of society.

Statement of the Case

Ernesto Larin seeks reversal of the Decision[1] of the Regional Trial Court of Calamba,
Laguna, Branch 34, which found him guilty of violating Section 5(b) of RA 7610.[2] The
decretal portion of the appealed Decision reads:
"ACCORDINGLY, this Court finds accused Ernesto Larin y Bondad GUILTY beyond
reasonable doubt of the crime of violation of Section 5(b) of Republic Act No. 7610 and
hereby sentences him to suffer the penalty of [r]eclusion [p]erpetua with all its attendant
accessory penalty and to indemnify Carla Lenore Calumpang [in] the sum of ONE
HUNDRED THOUSAND (P100,000.00) PESOS as moral damages.

"Pursuant to Supreme Court Administrative Circular No. 2-92 dated January 20, 1992,
the bail bond posted by the accused for his provisional liberty is hereby cancelled and
accused is ordered confined at the National Penitentiary pending resolution of his
appeal."
State Prosecutor Lilian Doris S. Alejo accused herein appellant of violating Section 5(b),
in relation to Section 31(e) of RA 7610, in the following Information[3] dated May 27,
1996:
"The undersigned, upon the prior sworn complaint of the offended party, fourteen (14)
year old Carla Lenore Calumpang, assisted by her parents Spouses Rene and Susan
Calumpang, accuses ERNESTO LARIN Y BONDAD of violation of Sec. 5(b) in relation
to Sec. 31(e) of RA 7610 (An Act Providing for Stronger Deterrence and Special
Protection Against Child Abuse, Exploitation and Discrimination, Providing Penalties for
its Violation and for Other Purposes) committed as follows:

"That on or about April 17, 1996, inside the ladies' shower room located at the Baker's
Hall, UP Los Baños, Laguna, and within the jurisdiction of this Honorable Court, the
above-named accused, who is a public employee of the U.P. Los Baños, by taking
advantage of his authority, influence and moral ascendancy as trainor/swimming
instructor of minor CARLA LENORE CALUMPANG, and through moral compulsion,
did then and there, willfully, unlawfully and feloniously, commit lascivious conduct on
the person of said minor Carla Lenore Calumpang by shaving her pubic hair, performing
the lewd act of cunnilingus on her, licking her breasts, forcing her to hold and squeeze his
penis; and forcibly kissing her on the cheeks and lips the day after, against her will and
consent, to her damage and prejudice."[4]

When arraigned on July 17, 1996,[5] the appellant, with the assistance of Counsel de
Parte Cayetano T. Santos, entered a plea of not guilty and thereafter waived the pretrial
proceedings. After trial in due course, the court a quo rendered its assailed Decision.

Hence, this appeal.[6]

Statement of Facts Version of the Prosecution

The prosecution presented (1) Carla Lenore Calumpang, the complainant herself; (2) Dr.
Nectarina Rabor-Fellizar, who examined and determined that Carla had not been raped,
though her pubic hair was partially shaved; (3) Susan Calumpang, the victim's mother;
and (4) Elizabeth Ventura, a practicing clinical child psychologist. Their testimonies were
summarized by the trial court as follows:
"On April 17, 1996, at around 4:00 o'clock in the afternoon, after a practice swim at the
university pool in Baker's Hall, U.P. Los Baños, [private complainant] proceeded to the
bath house to shower and dress up; unknown to her, accused followed and then instructed
her to remove the towel wrapped around her; clad in her swimsuit, accused again ordered
her to undress to allow him to shave her public hair which he allegedly noticed was
visible [sic]; accused then went outside while she undressed and wrapped a towel around
her body; when the accused came back, he asked her to sit down while he took a
squatting position in front of her holding on to a shaving instrument; but instead of
shaving her pubic hair as he committed to do, accused performed the act of cunnilingus;
she backed away saying "Nandidiri ako" but accused kept on saying "Huwag mong
lagyan ng malisya"; accused then asked her to stand up and told her to simply pretend
that he was her boyfriend and thereupon accused removed the right cap of her brassiere
and licked her right breast while touching her vagina at the same time; she was then told
to lie down but she sat down instead and again accused performed the act of cunnilingus
on her as she repeatedly said "Nandidiri ako."; accused then told her to stand up as he
pulled down his shorts and forced her to hold and squeeze his penis saying "if your
boyfriend will do this, just tell him, 'huwag mo itong ipapasok sa katawan ko'"; thereafter,
accused left after instructing her to shave her public hair; the next day, she went to see the
accused to return a book and there she told him that she was confused, bothered and
terribly upset with what happened and accused replied "Ako rin. Hindi ako nakatulog
kagabi at para mawala ang kaba mo, halik lang ang kailangan." and forced her to kiss him
on the right cheek and on the lips; that on the night after the incident, she experienced a
nightmare about rape and she then decided to quit swimming; she told her mother about
her decision as she narrated what the accused actually did to her; she was then brought to
Dr. Nectarina Rabor-Fellizar and thereafter in [the] company of her parents, went to the
National Bureau of Investigation where she filed her complaint."[7]

Version of the Defense

During the trial, appellant denied committing the alleged acts. He added that he was only
a lifeguard at the University pool, and not a swimming instructor or trainor of the victim.
The defense also presented the following witnesses: (1) Patricio Laurel,[8] lifeguard at
UPLB (University of the Philippines, Los Baños); (2) Veneranda Genio,[9] chairman of
the UPLB PE Department; (3) Elmer Suñaz,[10] a student; and (4) Prof. Almond
Oquendo,[11] PE 1 instructor at UPLB who testified as a rebuttal witness. The facts, as
concisely narrated in the Appellant's Brief,[12] are as follows:
"x x x [T]hat on the day in question, there were around seven (7) people in the pool and
that Carla was not alone as she was with a classmate until 5:45 p.m. when they dressed
up. When the classmate left, [the appellant] even accompanied Carla to the boarding area
in the company of two (2) other girls and a security guard' (Ibid., p. 4)."[13]

Finding the above abbreviated narration insufficient, we hereby reproduce the trial court's
digest of the testimonies of the defense witnesses:[14]
"PATRICIO LAUREL, a lifeguard at UPLB who testified that he ha[d] known the
accused since 1992 and that by virtue of a university memorandum, they [were]
prohibited from conducting swimming lessons to high school students. He further averred
that on the day in question, he saw Carla and a companion still swimming in the pool
with another individual by the time he left the area, but that he ha[d] no knowledge as to
what transpired inside the premises of the bathhouse.

"VENERANDA L. GENIO, Chairman of the P.E. Department of UPLB with the rank of
Associate Professor, attested to the appointment of accused as a lifeguard in the P.E.
Department but belied the prosecution's claim that accused was a swimming instructor.

"ELMER SUÑAZ, a fourth year high school student at UP Rural High School, was at
Baker's Hall on April 17, 1996, and took a dip at the pool for about five minutes; that he
saw Carla in the pool talking to the accused but that he never saw Carla enter the
bathroom during the time that he was there and when he left, Carla was all alone in the
pool.

"ERNESTO LARIN, the accused himself, who vehemently denied the charge and
maintained that he was only a lifeguard and never a trainer of the victim in swimming.
Accused averred that on the day in question, there were around seven (7) people
swimming in the pool and that Carla was not alone as she was with a classmate until 5:45
p.m. when they dressed up. When the classmate left, he even accompanied Carla to the
boarding area in the company of two other girls and a security guard.

"On rebuttal, the prosecution called to the witness stand defense witness Professor Genio
and Tony Ann A. Cortez, a college sophomore at UPLB, who averred that while still in
first year high, she tried out for the freshmen swimming team and singled out the accused
as her trainer; that for accused's efforts, their batch paid him P500.00 during the summer
and P70.00 each during the semestral break.

"By way of sur-rebuttal, defense presented Almond Oquendo, swimming instructor at UP

Rural High who disclaimed the testimony of Tony Anne Cortez [o]n the matter of her
training by the accused and the amount of remuneration paid to the latter."

The Trial Court's Ruling

The court a quo found the testimony of Carla Lenore Calumpang worthy of full faith and
credence. It reasoned that, unless motivated by a genuine desire to seek justice, a young
girl like her will not fabricate a story, undergo medical examination, appear in court and
announce to the whole world that she was sexually abused. The trial court also found that
the defense failed to prove ill motive on the part of the private complainant and to
overcome the evidence adduced by the prosecution. Thus, it imposed upon appellant the
penalty of reclusion perpetua and ordered him to pay the sum of P100,000 as moral
damages.

Assignment of Errors

In support of his appeal, appellant alleges:

"A. That the lower court erred in finding the accused-appellant guilty of a violation of
Sec. 5 (b) of R.A. No. 7610.

"B. That the lower court erred in giving weight to the highly incredible and unnatural
testimony of the offended party as the lone eyewitness for the prosecution.

"C. That, assuming the accused-appellant to be guilty, the lower court erred in imposing
the penalty of reclusion perpetua."[15]

In fine, appellant assails the sufficiency of the evidence adduced against him.

This Court's Ruling

The appeal is unmeritorious.

First Issue: Sexual Abuse Under RA 7610

Section 5, Article III[16] of RA 7610, states:

"SEC. 5. Child Prostitution and Other Sexual Abuse. -- Children, whether male or female,
who for money, profit, or any other consideration or due to the coercion or influence of
any adult, syndicate or group, indulge in sexual intercourse or lascivious conduct, are
deemed to be children exploited in prostitution and other sexual abuse.

"The penalty of reclusion temporal in its medium period to reclusion perpetua shall be
imposed upon the following:

x x x x x x x x x

"(b) Those who commit the act of sexual intercourse or lascivious conduct with a child
exploited in prostitution or subjected to other sexual abuse; Provided, That when the
victim is under twelve (12) years of age, the perpetrators shall be prosecuted under
Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended, the
Revised Penal Code, for rape or lascivious conduct, as the case may be: Provided, That
the penalty for lascivious conduct when the victim is under twelve (12) years of age shall
be reclusion temporal in its medium period; x x x."(Italics supplied.)

The elements of the offense penalized under this provision are as follows:
1. The accused commits the act of sexual intercourse or lascivious conduct.

2. The said act is performed with a child exploited in prostitution or subjected to other
sexual abuse.

3. The child, whether male or female, is below 18 years of age.

A child is deemed exploited in prostitution or subjected to other sexual abuse, when the
child indulges in sexual intercourse or lascivious conduct (a) for money, profit, or any
other consideration; or (b) under the coercion or influence of any adult, syndicate or
group. Under RA 7610, children are "persons below eighteen years of age or those unable
to fully take care of themselves or protect themselves from abuse, neglect, cruelty,
exploitation or discrimination because of their age or mental disability or condition."[17]

It must be noted that the law covers not only a situation in which a child is abused for
profit; but also one in which a child, through coercion or intimidation, engages in any
lascivious conduct. Hence, the foregoing provision penalizes not only child prostitution,
the essence of which is profit, but also other forms of sexual abuse of children. This is
clear from the deliberations of the Senate:[18]
"Senator Angara. I refer to line 9, 'who for money or profit'. I would like to amend this,
Mr. President, to cover a situation where the minor may have been coerced or intimidated
into this lascivious conduct, not necessarily for money or profit, so that we can cover
those situations and not leave loophole in this section.

"The proposal I have is something like this: WHO FOR MONEY, PROFIT, OR ANY
OTHER CONSIDERATION OR DUE TO THE COERCION OR INFLUENCE OF ANY
ADULT, SYNDICATE OR GROUP INDULGE, et cetera.

"The President Pro Tempore. I see. That would mean also changing the subtitle of
Section 4. Will it no longer be child prostitution?

"Senator Angara. No, no. Not necessarily, Mr. President, because we are still talking of
the child who is being misused for sexual purposes either for money or for consideration.
What I am trying to cover is the other consideration. Because, here, it is limited only to
the child being abused or misused for sexual purposes, only for money or profit.

"I am contending, Mr. President, that there may be situations where the child may not
have been used for profit or ...

"The President Pro Tempore. So, it is no longer prostitution. Because the essence of
prostitution is profit.

"Senator Angara. Well, the Gentleman is right. Maybe the heading ought to be
expanded. But, still, the President will agree that that is a form or manner of child abuse.

"The President Pro Tempore. What does the Sponsor say? Will the Gentleman kindly
restate the amendment?

"ANGARA AMENDMENT

"Senator Angara. The new section will read something like this, Mr. President:
MINORS, WHETHER MALE OR FEMALE, WHO FOR MONEY, PROFIT, OR ANY
OTHER CONSIDERATION OR INFLUENCE OF ANY ADULT, SYNDICATE OR
GROUP INDULGE IN SEXUAL INTERCOURSE, et cetera.

"Senator Lina. It is accepted, Mr. President.

"The President Pro Tempore. Is there any objection? [Silence] Hearing none, the
amendment is approved.

"How about the title, "Child Prostitution," shall we change that too?

"Senator Angara. Yes, Mr. President, to cover the expanded scope.

"The President Pro Tempore. Is that not what we would call probable 'child abuse'?
"Senator Angara. Yes, Mr. President.

"The President Pro Tempore. Subject to rewording. Is there any objection? [Silence]
Hearing none, the amendment is approved. x x x' (Italicization supplied.)

The defense argues that "there is no proof or allegation that complainant 'indulged in
lascivious conduct' with the accused-appellant 'for money, profit or any other
consideration'"; or "that she was 'coerced or influenced' by accused-appellant 'to indulge
in lascivious conduct.'"[19]

The argument is untenable. That appellant sexually abused Carla Lenore Calumpang, in
violation of RA 7610, was duly alleged in the Information and proven during the trial.

The Information clearly states: "x x x [T]he above-named accused, x x x, by taking

advantage of his authority, influence and moral ascendancy as trainor/swimming
instructor of minor CARLA LENORE CALUMPANG, and through moral
compulsion, did then and there, willfully, unlawfully and feloniously, commit lascivious
conduct against the person of said minor Carla Lenore Calumpang by shaving her pubic
hair, performing the lewd act of cunnilingus on her, licking her breasts, forcing her to
hold and squeeze his penis; and forcibly kissing her on the cheeks and lips x x
x."[20] (Italics supplied.)

During the trial, the allegations in the Information were proved and established by the
victim,[21] who testified:
Q Carla where were you on April 17, 1996?
A We went to Baker Hall at the UPLB campus to practice swimming.
Q Were you able to practice swimming?
A Yes, ma'am.
Q After practicing what did you do next if any?
A I went to the bath house or the lady shower room to shower and dress-up.
Q What happened next, if any, when you were there in the shower room?
A Mr. Larin followed me to the shower room.
Q Who is this Mr. Larin?
He is Mr. Ernesto Larin, my swimming trainor for two years since 1994 when
A
I was still a freshman.
Is he inside the chambers now? Will you point him out or describe him to this
Q
Honorable Court?
That man (witness pointed to a man who when asked gave his name as
A
Ernesto Larin alias Erning).
Q Mr. Larin followed you inside the shower room[;] what happened next, if any?
A He ordered me to remove the towel around my body.
Q And did you remove the towel around your body or did you not?
A I did.
Q What happened next, if any?
He ordered me to remove the swimsuit so that he could shave the pubic hair
A
which he noticed was showing out of my swimsuit.
Q What happened next, if any?
A He went out of the bath house and then I decided to remove my swimsuit.
Q What happened next, if any?
A He came back when I ha[d] a towel around my body.
Q After he actually came back, what did he do, if any?
He made [me] sit down and then he squatted in front of me with the shaving
A
instrument.
Q Did he do anything if any?
A Yes, ma'am.
Fiscal
Your Honor may we make of record that the witness is sobbing.
ALEJO:
A Instead of shaving, he licked my vagina.
Q What did you do, if any, when he licked your vagina?
I backed out, telling him "nandidiri ako" but he kept on saying "huwag mong
A
lagyan ng malisya".
Q After that what happened next, if any?
A He made me stand up.
Q And then?
As I stood up he said "boyfriends and girlfriends in college indulge in [an] act
A
like this" so he told me to pretend that he was my boyfriend.
Q After that what else did he do, if there [was] anything else that he did?
He said that guys do like this and he attempted to remove the towel around
A
my body.
Q And was he able to remove the towel around your body?
A Yes, ma'am.
Q After that what did he do next if there is anything else that he did?
A He removed the right cap of my brassiere.
Q What did he do, if any?
A He licked my right breast and at the same time he touched my vagina.
Q And then what happened?
A He told me to lie down on the bench.
Q Did you lie down on the bench?
A No, I did not.
Q What happened when you did not lie down?
A Since I did not lie down I sat down on the bench.
Q And then what happened?
A And then he licked my vagina again.
Q What did you do, if any, when he was licking your vagina?
A I kept on telling him "nandidiri ako."
Q What did he do when you told him "nandidiri ka?"
A He stood up and ordered me to stand up.
Q What happened next, if any?
He pulled down his shorts and he forced me to hold and squeeze his penis
A
pretending that he was my boyfriend.
Q Pretending or asking or telling you?
A Telling me to pretend that he was my boyfriend.
Q What else did he tell you, if any?
He said that if your boyfriend will do this just tell him "huwag mo itong
A
ipasok sa katawan ko."
Q Thereafter, what else happened?
A He told me to shave my public hair and he went out.
Q And then after he left, was there anything else that happened?
A I changed then and went out.
Q Was there any other incident if any?
Then he said the reason why he let me [touch] his penis was to let me know
A
how it [felt].
Q After that is there any other incident?
A I went home already.
After you went home what happened next? Did you report back to school the
Q
next day or not?
A No I ha[d] to return the book.
Q So you returned the book, to whom?
A To Mr. Larin.
Q What happened when you returned the book to Mr. Larin, if any?
I told him that "nakukunsensya ako" and he replied that "ako rin hindi ako
A
makatulog kagabi."
Q By words "nakukusensya ako," what exactly d[id] you mean?
A I was confused, bothered and terribly upset about what had happened.
Why then did you say that "nakukusensya ka" when what you really mean[t]
Q
was you were bothered, confused and terribly upset?
A I'm not good [at] expressing myself in Tagalog.
After telling him "na nakukusensya ka" and [his] telling you na "hindi siya
Q
nakatulog kagabi" what else happened?
A He told me na "para mawala ang kaba mo, halik lang ang kailangan."
Q What happened, if any?
A He forced me to kiss him at the right cheek and on the lips.
Q And after that what happened next, if there is any?
A I went home already.
Incidentally Carla on April 17, 1996 when you narrated [t]his incident which
Q you just said [sic] a while ago were there any other person inside the bath
room?
A There was nobody inside the bath room.
You said that you went home already[;] at home was there any unusual
Q
incident that occurred?
I had a nightmare about rape and then I decided the next day to quit
A
swimming.
Q When you decided to quit swimming, what happened?
I told my mother about my decision and after that she found out about what
A
Mr. Larin did to me."[22]
Second Issue: Credibility of the Offended Party

Appellant disputes the credibility of the victim, contending that it was unnatural for her to
"mechanically submi[t]" to his "lascivious suggestions and advances," to remove her
swimsuit, allow appellant to shave her pubic hair and simply utter "nandidiri ako" in
feeble protest while appellant performed cunnilingus on her.

We do not agree. Well-entrenched is the rule that the trial court's evaluation of the
credibility of a witness and his or her testimony is entitled to the highest degree of
respect. Unlike appellate magistrates, a trial judge can observe the demeanor of a witness
on the stand and is, thus, in a better position to assess the truthfulness of the testimony.
[23] In the absence of any clear showing that the trial judge had overlooked,
misunderstood or misapplied some facts or circumstances of weight and substance, this
Court will not disturb such finding.[24] The defense failed to present any convincing
argument to justify a deviation from this rule.

The victim's testimony, given in a categorical, straightforward, spontaneous and candid

manner, is worthy of faith and belief.[25] No proof of ill motive on her part to falsely
accuse and testify against appellant has been offered. We stress that no young and decent
girl like Carla would fabricate a story of sexual abuse, subject herself to medical
examination and undergo public trial, with concomitant ridicule and humiliation, if she is
not motivated by a sincere desire to put behind bars the person who assaulted her.[26]

In sum, the prosecution presented proof beyond reasonable doubt that appellant, through
his moral ascendancy and influence over the fourteen-year-old Carla, committed
lascivious conduct upon her.

Acts that Constitute Lascivious Conduct

Section 32, Article XIII of the Implementing Rules and Regulations of RA 7610,
[27] defines lascivious conduct, as follows:
"[T]he intentional touching, either directly or through clothing, of the genitalia, anus,
groin, breast, inner thigh, or buttocks, or the introduction of any object into the genitalia,
anus or mouth, of any person, whether of the same or opposite sex, with an intent to
abuse, humiliate, harass, degrade, or arouse or gratify the sexual desire of any person,
bestiality, masturbation, lascivious exhibition of the genitals or pubic area of a person."

In this case, appellant shaved the pubic hair of the victim, performed cunnilingus on her,
licked her breast, touched her genitalia, and forced her to hold his sexual organ. These
actions cannot be brushed aside as innocent; rather, they manifest sexual perversity and
lewd intentions. Larin was the swimming instructor or trainor of Carla, a mere child. We
find no justification for Larin's conduct.

Coercion or Influence

Appellant also asserts that no proof was presented that he gave private complainant
money or any other consideration, or that he coerced or influenced her to "indulge in
lascivious conduct.'
We hold otherwise. The prosecution established that appellant employed moral and
psychological coercion on the victim. Dr. Elizabeth Ventura, a psychologist who made a
professional assessment of Carla, stated the following in her affidavit:
"That Carla's swimming trainor, a certain Mr. Ernesto Larin had built a relationship with
Carla for the past year before the incident in question. During that year, Mr. Larin
presented himself as a person Carla could trust. Mr. Larin would give Carla special
attention and be perceptive [of] Carla's needs and protective towards her. There was a
certain degree of manipulation by Mr. Larin as he would intimidate Carla by attacking her
self-esteem, after which he would offer himself as someone who could help solve her
inadequacies.

"Carla manifested all the symptoms of Post-Traumatic Stress Disorder, i.e., sleeplessness,
nightmares, anxiousness about going back to school, paranoia and fear that people would
know and talk about what happened to her. At the same time, she is angry at Mr. Larin for
what he has done to her and how he could have manipulated and intimidated her so."[28]

During her direct examination, she clarified the meaning of psychological coercion:
"Q What exactly is a psychological coer[c]ion?

A It involves the use of influence of a more powerful person who is in position of

power. It can be a parent or an adult but basically that person has to have had some kind
of continued relationship with the child. It cannot happen that you just meet the child or
the other person or to submit right away to the person because in psychological coercion,
a relationship is built up with the victim and to my knowledge in this particular case there
was such, if I may refer to this case, there was such a relationship between [C]arla and
her coach in swimming. Generally in psychological coercion there is a form of trust. That
is what I mean by relation. A trust in relation is built up and it is understandable that this
happened in this particular case because you know it was a skill that was being taught and
at the same time, because a teacher cannot be effective unless there [is] some kind of
rapport. x x x"[29]

x x x x x x x x x

"A I was saying that in everything that [C]arla communicated to me, I could say that the
perpetrator continued to communicate or tried to continue that feeling of trust even he
was doing all of those things to her, so that made her particularly vulnerable and that is
part of psychological coercion."[30]

Dr. Ventura explained why Carla, an intelligent child, succumbed to such lewd acts:

"COURT: Could you explain the utter submissiveness displayed by [C]arla to the acts
committed by the accused considering that she is a very intelligent girl?

A It can happen to children, no matter how intelligent they are that they will submit
themselves to these acts because of what we refer to [in] psychology so basically there
was [a] trusting relationship that was established by the perpetrator or by the child
molester[,] and given that particular trust it was easy for this person, for the adult, to use
this influence on the child."[31]

It is an accepted rule that different people react differently to a given situation or type of
situation.[32] One cannot reasonably expect uniform reactions from victims of sexual
assault.[33] Carla's submissiveness to Larin's lascivious conduct does not exonerate him
from criminal liability, as the law does not require physical violence on the person of the
victim. Moral coercion or ascendancy is sufficient.

Third Issue: The Imposable Penaly

Appellant submits that the law does not provide the penalty in the event the victim, as in
this case, is above twelve (12) and below eighteen (18) years of age. Thus, he argues for
the imposition of prision correccional, the penalty for acts of lasciviousness under Article
336 of the Revised Penal Code.

Appellant's argument is misleading. The penalty of reclusion temporal, in its medium

period, to reclusion perpetua is imposed by RA 7610 on those who perform sexual
intercourse with or lascivious conduct on a child exploited in prostitution or subjected to
any other form of sexual abuse. As earlier stated, RA 7610 defines child as a person
below eighteen (18) years of age, or one who is unable to fully take care of or protect
from abuse, neglect, cruelty, exploitation or discrimination because of a physical or
mental disability or condition.[34] Contrary to appellant's interpretation, the law does not
confine its protective mantle only to children under twelve (12) years of age. Carla, who
was fourteen (14) years of age when the crime was committed, is considered a child for
purposes of RA 7610. Her molester, therefore, may be punished with imprisonment
of reclusion temporal, in its medium period, to reclusion perpetua.[35]

The law, however, mandates that the "penalty provided for in this Act shall be imposed in
its maximum period if the offender is a public officer."[36] Larin's employment at UPLB
as swimming instructor or, as he insists, a lifeguard[37] makes him a part of the civil
service[38]and a public officer.[39] Thus, we affirm the ruling of the trial court imposing
upon him the maximum penalty of reclusion perpetua.Consistent with the express
provision of RA 7610, the penalty of perpetual absolute disqualification is likewise meted
upon appellant.[40]

Damages

The trial court ordered the appellant to pay the victim the sum of P100,000 as moral
damages. Carla Calumpang testified that she "was confused, bothered and terribly upset
about what had happened."[41] In fact, the incident affected her profoundly that she
suffered nightmares and eventually decided to quit swimming.[42] While the award of
moral damages is clearly justified, this Court deems it proper to reduce the amount to
P50,000, in view of prevailing jurisprudence.[43]

WHEREFORE, the appeal is hereby DENIED and the assailed Decision

is AFFIRMED, but the award of moral damages is reduced to P50,000. Costs against
appellant.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 118978 May 23, 1997

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN, respondents.

REGALADO, J.:

Seeking relief through the extraordinary writ of certiorari, petitioner Philippine

Telegraph and Telephone Company (hereafter, PT & T) invokes the alleged concealment
of civil status and defalcation of company funds as grounds to terminate the services of
an employee. That employee, herein private respondent Grace de Guzman, contrarily
argues that what really motivated PT & T to terminate her services was her having
contracted marriage during her employment, which is prohibited by petitioner in its
company policies. She thus claims that she was discriminated against in gross violation of
law, such a proscription by an employer being outlawed by Article 136 of the Labor
Code.

Grace de Guzman was initially hired by petitioner as a reliever, specifically as a

"Supernumerary Project Worker," for a fixed period from November 21, 1990 until April
20, 1991 vice one C.F. Tenorio who went on maternity leave. 1Under the Reliever
Agreement which she signed with petitioner company, her employment was to be
immediately terminated upon expiration of the agreed period. Thereafter, from June 10,
1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent's
services as reliever were again engaged by petitioner, this time in replacement of one
Erlinda F. Dizon who went on leave during both periods. 2 After August 8, 1991, and
pursuant to their Reliever Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner
company as a probationary employee, the probationary period to cover 150 days. In the
job application form that was furnished her to be filled up for the purpose, she indicated
in the portion for civil status therein that she was single although she had contracted
marriage a few months earlier, that is, on May 26, 1991.3

It now appears that private respondent had made the same representation in the two
successive reliever agreements which she signed on June 10, 1991 and July 8, 1991.
When petitioner supposedly learned about the same later, its branch supervisor in Baguio
City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992
requiring her to explain the discrepancy. In that memorandum, she was reminded about
the company's policy of not accepting married women for employment.4

In her reply letter dated January 17, 1992, private respondent stated that she was not
aware of PT&T's policy regarding married women at the time, and that all along she had
not deliberately hidden her true civil status. 5Petitioner nonetheless remained unconvinced
by her explanations. Private respondent was dismissed from the company effective
January 29, 1992,6 which she readily contested by initiating a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living allowances (COLA),
before the Regional Arbitration Branch of the National Labor Relations Commission in
Baguio City.

At the preliminary conference conducted in connection therewith, private respondent

volunteered the information, and this was incorporated in the stipulation of facts between
the parties, that she had failed to remit the amount of P2,380.75 of her collections. She
then executed a promissory note for that amount in favor of petitioner7. All of these took
place in a formal proceeding and with the agreement of the parties and/or their counsel.

On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision
declaring that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of the
corresponding back wages and COLA, was correspondingly ordered, the labor arbiter
being of the firmly expressed view that the ground relied upon by petitioner in dismissing
private respondent was clearly insufficient, and that it was apparent that she had been
discriminated against on account of her having contracted marriage in violation of
company rules.

On appeal to the National Labor Relations Commission (NLRC), said public respondent
upheld the labor arbiter and, in its decision dated April 29, 1994, it ruled that private
respondent had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT & T. However, the decision of the labor arbiter was modified with the
qualification that Grace de Guzman deserved to be suspended for three months in view of
the dishonest nature of her acts which should not be condoned. In all other respects, the
NLRC affirmed the decision of the labor arbiter, including the order for the reinstatement
of private respondent in her employment with PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent
NLRC in its resolution of November 9, 1994, hence this special civil action assailing the
aforestated decisions of the labor arbiter and respondent NLRC, as well as the denial
resolution of the latter.

1. Decreed in the Bible itself is the universal norm that women should be regarded with
love and respect but, through the ages, men have responded to that injunction with
indifference, on the hubristic conceit that women constitute the inferior sex. Nowhere has
that prejudice against womankind been so pervasive as in the field of labor, especially on
the matter of equal employment opportunities and standards. In the Philippine setting,
women have traditionally been considered as falling within the vulnerable groups or
types of workers who must be safeguarded with preventive and remedial social
legislation against discriminatory and exploitative practices in hiring, training, benefits,
promotion and retention.

The Constitution, cognizant of the disparity in rights between men and women in almost
all phases of social and political life, provides a gamut of protective provisions. To cite a
few of the primordial ones, Section 14, Article II 8 on the Declaration of Principles and
State Policies, expressly recognizes the role of women in nation-building and commands
the State to ensure, at all times, the fundamental equality before the law of women and
men. Corollary thereto, Section 3 of Article XIII9 (the progenitor whereof dates back to
both the 1935 and 1973 Constitution) pointedly requires the State to afford full protection
to labor and to promote full employment and equality of employment opportunities for
all, including an assurance of entitlement to tenurial security of all workers. Similarly,
Section 14 of Article XIII 10 mandates that the State shall protect working women through
provisions for opportunities that would enable them to reach their full potential.

2. Corrective labor and social laws on gender inequality have emerged with more
frequency in the years since the Labor Code was enacted on May 1, 1974 as Presidential
Decree No. 442, largely due to our country's commitment as a signatory to the United
Nations Convention on the Elimination of All Forms of Discrimination Against Women
(CEDAW). 11

Principal among these laws are Republic Act No. 6727 12 which explicitly prohibits
discrimination against women with respect to terms and conditions of employment,
promotion, and training opportunities; Republic Act No. 6955 13which bans the "mail-
order-bride" practice for a fee and the export of female labor to countries that cannot
guarantee protection to the rights of women workers; Republic Act No. 7192 14 also
known as the "Women in Development and Nation Building Act," which affords women
equal opportunities with men to act and to enter into contracts, and for appointment,
admission, training, graduation, and commissioning in all military or similar schools of
the Armed Forces of the Philippines and the Philippine National Police; Republic Act No.
7322 15 increasing the maternity benefits granted to women in the private sector; Republic
Act No. 7877 16 which outlaws and punishes sexual harassment in the workplace and in
the education and training environment; and Republic Act No. 8042, 17 or the "Migrant
Workers and Overseas Filipinos Act of 1995," which prescribes as a matter of
policy, inter alia, the deployment of migrant workers, with emphasis on women, only in
countries where their rights are secure. Likewise, it would not be amiss to point out that
in the Family Code, 18 women's rights in the field of civil law have been greatly enhanced
and expanded.

In the Labor Code, provisions governing the rights of women workers are found in
Articles 130 to 138 thereof. Article 130 involves the right against particular kinds of night
work while Article 132 ensures the right of women to be provided with facilities and
standards which the Secretary of Labor may establish to ensure their health and safety.
For purposes of labor and social legislation, a woman working in a nightclub, cocktail
lounge, massage clinic, bar or other similar establishments shall be considered as an
employee under Article 138. Article 135, on the other hand, recognizes a woman's right
against discrimination with respect to terms and conditions of employment on account
simply of sex. Finally, and this brings us to the issue at hand, Article 136 explicitly
prohibits discrimination merely by reason of the marriage of a female employee.

3. Acknowledged as paramount in the due process scheme is the constitutional guarantee

of protection to labor and security of tenure. Thus, an employer is required, as a
condition sine qua non prior to severance of the employment ties of an individual under
his employ, to convincingly establish, through substantial evidence, the existence of a
valid and just cause in dispensing with the services of such employee, one's labor being
regarded as constitutionally protected property.

On the other hand, it is recognized that regulation of manpower by the company falls
within the so-called management prerogatives, which prescriptions encompass the matter
of hiring, supervision of workers, work assignments, working methods and assignments,
as well as regulations on the transfer of employees, lay-off of workers, and the discipline,
dismissal, and recall of employees. 19 As put in a case, an employer is free to regulate,
according to his discretion and best business judgment, all aspects of employment, "from
hiring to firing," except in cases of unlawful discrimination or those which may be
provided by law. 20

In the case at bar, petitioner's policy of not accepting or considering as disqualified from
work any woman worker who contracts marriage runs afoul of the test of, and the right
against, discrimination, afforded all women workers by our labor laws and by no less
than the Constitution. Contrary to petitioner's assertion that it dismissed private
respondent from employment on account of her dishonesty, the record discloses clearly
that her ties with the company were dissolved principally because of the company's
policy that married women are not qualified for employment in PT & T, and not merely
because of her supposed acts of dishonesty.

That it was so can easily be seen from the memorandum sent to private respondent by
Delia M. Oficial, the branch supervisor of the company, with the reminder, in the words
of the latter, that "you're fully aware that the company is not accepting married women
employee (sic), as it was verbally instructed to you." 21 Again, in the termination notice
sent to her by the same branch supervisor, private respondent was made to understand
that her severance from the service was not only by reason of her concealment of her
married status but, over and on top of that, was her violation of the company's policy
against marriage ("and even told you that married women employees are not applicable
[sic] or accepted in our company.") 22 Parenthetically, this seems to be the curious reason
why it was made to appear in the initiatory pleadings that petitioner was represented in
this case only by its said supervisor and not by its highest ranking officers who would
otherwise be solidarily liable with the corporation. 23

Verily, private respondent's act of concealing the true nature of her status from PT & T
could not be properly characterized as willful or in bad faith as she was moved to act the
way she did mainly because she wanted to retain a permanent job in a stable company. In
other words, she was practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from work. While loss of
confidence is a just cause for termination of employment, it should not be simulated. 24 It
must rest on an actual breach of duty committed by the employee and not on the
employer's caprices. 25 Furthermore, it should never be used as a subterfuge for causes
which are improper, illegal, or unjustified. 26

In the present controversy, petitioner's expostulations that it dismissed private respondent,

not because the latter got married but because she concealed that fact, does have a hollow
ring. Her concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of
confidence in her which justified her dismissal.

Petitioner would asseverate, therefore, that while it has nothing against marriage, it
nonetheless takes umbrage over the concealment of that fact. This improbable reasoning,
with interstitial distinctions, perturbs the Court since private respondent may well be
minded to claim that the imputation of dishonesty should be the other way around.

Petitioner would have the Court believe that although private respondent defied its policy
against its female employees contracting marriage, what could be an act of
insubordination was inconsequential. What it submits as unforgivable is her concealment
of that marriage yet, at the same time, declaring that marriage as a trivial matter to which
it supposedly has no objection. In other words, PT & T says it gives its blessings to its
female employees contracting marriage, despite the maternity leaves and other benefits it
would consequently respond for and which obviously it would have wanted to avoid. If
that employee confesses such fact of marriage, there will be no sanction; but if such
employee conceals the same instead of proceeding to the confessional, she will be
dismissed. This line of reasoning does not impress us as reflecting its true management
policy or that we are being regaled with responsible advocacy.

This Court should be spared the ennui of strained reasoning and the tedium of
propositions which confuse through less than candid arguments. Indeed, petitioner
glosses over the fact that it was its unlawful policy against married women, both on the
aspects of qualification and retention, which compelled private respondent to conceal her
supervenient marriage. It was, however, that very policy alone which was the cause of
private respondent's secretive conduct now complained of. It is then apropos to recall the
familiar saying that he who is the cause of the cause is the cause of the evil caused.

Finally, petitioner's collateral insistence on the admission of private respondent that she
supposedly misappropriated company funds, as an additional ground to dismiss her from
employment, is somewhat insincere and self-serving. Concededly, private respondent
admitted in the course of the proceedings that she failed to remit some of her collections,
but that is an altogether different story. The fact is that she was dismissed solely because
of her concealment of her marital status, and not on the basis of that supposed defalcation
of company funds. That the labor arbiter would thus consider petitioner's submissions on
this supposed dishonesty as a mere afterthought, just to bolster its case for dismissal, is a
perceptive conclusion born of experience in labor cases. For, there was no showing that
private respondent deliberately misappropriated the amount or whether her failure to
remit the same was through negligence and, if so, whether the negligence was in nature
simple or grave. In fact, it was merely agreed that private respondent execute a
promissory note to refund the same, which she did, and the matter was deemed settled as
a peripheral issue in the labor case.

Private respondent, it must be observed, had gained regular status at the time of her
dismissal. When she was served her walking papers on January 29, 1992, she was about
to complete the probationary period of 150 days as she was contracted as a probationary
employee on September 2, 1991. That her dismissal would be effected just when her
probationary period was winding down clearly raises the plausible conclusion that it was
done in order to prevent her from earning security of tenure. 27 On the other hand, her
earlier stints with the company as reliever were undoubtedly those of a regular employee,
even if the same were for fixed periods, as she performed activities which were essential
or necessary in the usual trade and business of PT & T. 28 The primary standard of
determining regular employment is the reasonable connection between the activity
performed by the employee in relation to the business or trade of the employer. 29

As an employee who had therefore gained regular status, and as she had been dismissed
without just cause, she is entitled to reinstatement without loss of seniority rights and
other privileges and to full back wages, inclusive of allowances and other benefits or their
monetary equivalent. 30 However, as she had undeniably committed an act of dishonesty
in concealing her status, albeit under the compulsion of an unlawful imposition of
petitioner, the three-month suspension imposed by respondent NLRC must be upheld to
obviate the impression or inference that such act should be condoned. It would be unfair
to the employer if she were to return to its fold without any sanction whatsoever for her
act which was not totally justified. Thus, her entitlement to back wages, which shall be
computed from the time her compensation was withheld up to the time of her actual
reinstatement, shall be reduced by deducting therefrom the amount corresponding to her
three months suspension.

4. The government, to repeat, abhors any stipulation or policy in the nature of that
adopted by petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.

This provision had a studied history for its origin can be traced to Section 8 of
Presidential Decree No. 148, 31 better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No.
679, 32 entitled "An Act to Regulate the Employment of Women and Children, to Provide
Penalties for Violations Thereof, and for Other Purposes." The forerunner to Republic Act
No. 679, on the other hand, was Act No. 3071 which became law on March 16, 1923 and
which regulated the employment of women and children in shops, factories, industrial,
agricultural, and mercantile establishments and other places of labor in the then
Philippine Islands.

It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et
al. vs. Philippine Air Lines, 33 a decision that emanated from the Office of the President.
There, a policy of Philippine Air Lines requiring that prospective flight attendants must
be single and that they will be automatically separated from the service once they marry
was declared void, it being violative of the clear mandate in Article 136 of the Labor
Code with regard to discrimination against married women. Thus:

Of first impression is the incompatibility of the respondent's policy or regulation with the
codal provision of law. Respondent is resolute in its contention that Article 136 of the
Labor Code applies only to women employed in ordinary occupations and that the
prohibition against marriage of women engaged in extraordinary occupations, like flight
attendants, is fair and reasonable, considering the pecularities of their chosen profession.

We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew
that the controverted policy has already met its doom as early as March 13, 1973 when
Presidential Decree No. 148, otherwise known as the Women and Child Labor Law, was
promulgated. But for the timidity of those affected or their labor unions in challenging the
validity of the policy, the same was able to obtain a momentary reprieve. A close look at
Section 8 of said decree, which amended paragraph (c) of Section 12 of Republic Act No.
679, reveals that it is exactly the same provision reproduced verbatim in Article 136 of
the Labor Code, which was promulgated on May 1, 1974 to take effect six (6) months
later, or on November 1, 1974.

It cannot be gainsaid that, with the reiteration of the same provision in the new Labor
Code, all policies and acts against it are deemed illegal and therefore abrogated. True,
Article 132 enjoins the Secretary of Labor to establish standards that will ensure the
safety and health of women employees and in appropriate cases shall by regulation
require employers to determine appropriate minimum standards for termination in special
occupations, such as those of flight attendants, but that is precisely the factor that
militates against the policy of respondent. The standards have not yet been established as
set forth in the first paragraph, nor has the Secretary of Labor issued any regulation
affecting flight attendants.

It is logical to presume that, in the absence of said standards or regulations which are as
yet to be established, the policy of respondent against marriage is patently illegal. This
finds support in Section 9 of the New Constitution, which provides:

Sec. 9. The State shall afford protection to labor, promote full employment and equality
in employment, ensure equal work opportunities regardless of sex, race, or creed, and
regulate the relations between workers and employees. The State shall assure the rights of
workers to self-organization, collective bargaining, security of tenure, and just and
humane conditions of work . . . .

Moreover, we cannot agree to the respondent's proposition that termination from

employment of flight attendants on account of marriage is a fair and reasonable standard
designed for their own health, safety, protection and welfare, as no basis has been laid
therefor. Actually, respondent claims that its concern is not so much against the continued
employment of the flight attendant merely by reason of marriage as observed by the
Secretary of Labor, but rather on the consequence of marriage-pregnancy. Respondent
discussed at length in the instant appeal the supposed ill effects of pregnancy on flight
attendants in the course of their employment. We feel that this needs no further discussion
as it had been adequately explained by the Secretary of Labor in his decision of May 2,
1976.

In a vain attempt to give meaning to its position, respondent went as far as invoking the
provisions of Articles 52 and 216 of the New Civil Code on the preservation of marriage
as an inviolable social institution and the family as a basic social institution, respectively,
as bases for its policy of non-marriage. In both instances, respondent predicates absence
of a flight attendant from her home for long periods of time as contributory to an unhappy
married life. This is pure conjecture not based on actual conditions, considering that, in
this modern world, sophisticated technology has narrowed the distance from one place to
another. Moreover, respondent overlooked the fact that married flight attendants can
program their lives to adapt to prevailing circumstances and events.

Article 136 is not intended to apply only to women employed in ordinary occupations, or
it should have categorically expressed so. The sweeping intendment of the law, be it on
special or ordinary occupations, is reflected in the whole text and supported by Article
135 that speaks of non-discrimination on the employment of women.

The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining &
Industrial Corporation 34considered as void a policy of the same nature. In said case,
respondent, in dismissing from the service the complainant, invoked a policy of the firm
to consider female employees in the project it was undertaking as separated the moment
they get married due to lack of facilities for married women. Respondent further claimed
that complainant was employed in the project with an oral understanding that her services
would be terminated when she gets married. Branding the policy of the employer as an
example of "discriminatory chauvinism" tantamount to denying equal employment
opportunities to women simply on account of their sex, the appellate court struck down
said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential
Decree No. 148 and the Constitution.

Under American jurisprudence, job requirements which establish employer preference or

conditions relating to the marital status of an employee are categorized as a "sex-plus"
discrimination where it is imposed on one sex and not on the other. Further, the same
should be evenly applied and must not inflict adverse effects on a racial or sexual group
which is protected by federal job discrimination laws. Employment rules that forbid or
restrict the employment of married women, but do not apply to married men, have been
held to violate Title VII of the United States Civil Rights Act of 1964, the main federal
statute prohibiting job discrimination against employees and applicants on the basis of,
among other things, sex. 35

Further, it is not relevant that the rule is not directed against all women but just against
married women. And, where the employer discriminates against married women, but not
against married men, the variable is sex and the discrimination is unlawful. 36 Upon the
other hand, a requirement that a woman employee must remain unmarried could be
justified as a "bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A requirement of
that nature would be valid provided it reflects an inherent quality reasonably necessary
for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both
male and female flight attendants, was regarded as unlawful since the restriction was not
related to the job performance of the flight attendants. 37

5. Petitioner's policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals and
public policy, tending as it does to deprive a woman of the freedom to choose her status, a
privilege that by all accounts inheres in the individual as an intangible and inalienable
right. 38 Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be contrary to
law, morals, good customs, public order, or public policy. 39 Carried to its logical
consequences, it may even be said that petitioner's policy against legitimate marital bonds
would encourage illicit or common-law relations and subvert the sacrament of marriage.

Parenthetically, the Civil Code provisions on the contract of labor state that the relations
between the parties, that is, of capital and labor, are not merely contractual, impressed as
they are with so much public interest that the same should yield to the common good. 40 It
goes on to intone that neither capital nor labor should visit acts of oppression against the
other, nor impair the interest or convenience of the public. 41 In the final reckoning, the
danger of just such a policy against marriage followed by petitioner PT & T is that it
strikes at the very essence, ideals and purpose of marriage as an inviolable social
institution and, ultimately, of the family as the foundation of the nation. 42 That it must be
effectively interdicted here in all its indirect, disguised or dissembled forms as
discriminatory conduct derogatory of the laws of the land is not only in order but
imperatively required.

ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone

Company is hereby DISMISSED for lack of merit, with double costs against petitioner.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA,
minors, and represented by their parents ANTONIO and RIZALINA OPOSA,
ROBERTA NICOLE SADIUA, minor, represented by her parents CALVIN and
ROBERTA SADIUA, CARLO, AMANDA SALUD and PATRISHA, all surnamed
FLORES, minors and represented by their parents ENRICO and NIDA FLORES,
GIANINA DITA R. FORTUN, minor, represented by her parents SIGRID and
DOLORES FORTUN, GEORGE II and MA. CONCEPCION, all surnamed MISA,
minors and represented by their parents GEORGE and MYRA MISA, BENJAMIN
ALAN V. PESIGAN, minor, represented by his parents ANTONIO and ALICE
PESIGAN, JOVIE MARIE ALFARO, minor, represented by her parents JOSE and
MARIA VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, minor,
represented by her parents FREDENIL and JANE CASTRO, JOHANNA
DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO
JOAQUIN T. NARVASA, minor, represented by his parents GREGORIO II and
CRISTINE CHARITY NARVASA, MA. MARGARITA, JESUS IGNACIO, MA.
ANGELA and MARIE GABRIELLE, all surnamed SAENZ, minors, represented by
their parents ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN,
MAY, GOLDA MARTHE and DAVID IAN, all surnamed KING, minors,
represented by their parents MARIO and HAYDEE KING, DAVID, FRANCISCO
and THERESE VICTORIA, all surnamed ENDRIGA, minors, represented by their
parents BALTAZAR and TERESITA ENDRIGA, JOSE MA. and REGINA MA., all
surnamed ABAYA, minors, represented by their parents ANTONIO and MARICA
ABAYA, MARILIN, MARIO, JR. and MARIETTE, all surnamed CARDAMA,
minors, represented by their parents MARIO and LINA CARDAMA, CLARISSA,
ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and
represented by their parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH,
STEPHEN JOHN and ISAIAH JAMES, all surnamed QUIPIT, minors, represented
by their parents JOSE MAX and VILMI QUIPIT, BUGHAW CIELO, CRISANTO,
ANNA, DANIEL and FRANCISCO, all surnamed BIBAL, minors, represented by
their parents FRANCISCO, JR. and MILAGROS BIBAL, and THE PHILIPPINE
ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the
Secretary of the Department of Environment and Natural Resources, and THE
HONORABLE ERIBERTO U. ROSARIO, Presiding Judge of the RTC, Makati,
Branch 66, respondents.

Oposa Law Office for petitioners.

The Solicitor General for respondents.

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of Filipinos to a balanced and
healthful ecology which the petitioners dramatically associate with the twin concepts of
"inter-generational responsibility" and "inter-generational justice." Specifically, it touches
on the issue of whether the said petitioners have a cause of action to "prevent the
misappropriation or impairment" of Philippine rainforests and "arrest the unabated
hemorrhage of the country's vital life support systems and continued rape of Mother
Earth."

The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch
66 (Makati, Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial
Region. The principal plaintiffs therein, now the principal petitioners, are all minors duly
represented and joined by their respective parents. Impleaded as an additional plaintiff is
the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared
for the protection of our environment and natural resources. The original defendant was
the Honorable Fulgencio S. Factoran, Jr., then Secretary of the Department of
Environment and Natural Resources (DENR). His substitution in this petition by the new
Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion
by the petitioners.1 The complaint2 was instituted as a taxpayers' class suit 3 and alleges
that the plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and
entitled to the full benefit, use and enjoyment of the natural resource treasure that is the
country's virgin tropical forests." The same was filed for themselves and others who are
equally concerned about the preservation of said resource but are "so numerous that it is
impracticable to bring them all before the Court." The minors further asseverate that they
"represent their generation as well as generations yet unborn."4 Consequently, it is prayed
for that judgment be rendered:

. . . ordering defendant, his agents, representatives and other persons acting in his behalf
to —

(1) Cancel all existing timber license agreements in the country;

(2) Cease and desist from receiving, accepting, processing, renewing or approving new
timber license agreements.

and granting the plaintiffs ". . . such other reliefs just and equitable under the premises."5

The complaint starts off with the general averments that the Philippine archipelago of
7,100 islands has a land area of thirty million (30,000,000) hectares and is endowed with
rich, lush and verdant rainforests in which varied, rare and unique species of flora and
fauna may be found; these rainforests contain a genetic, biological and chemical pool
which is irreplaceable; they are also the habitat of indigenous Philippine cultures which
have existed, endured and flourished since time immemorial; scientific evidence reveals
that in order to maintain a balanced and healthful ecology, the country's land area should
be utilized on the basis of a ratio of fifty-four per cent (54%) for forest cover and forty-
six per cent (46%) for agricultural, residential, industrial, commercial and other uses; the
distortion and disturbance of this balance as a consequence of deforestation have resulted
in a host of environmental tragedies, such as (a) water shortages resulting from drying up
of the water table, otherwise known as the "aquifer," as well as of rivers, brooks and
streams, (b) salinization of the water table as a result of the intrusion therein of salt water,
incontrovertible examples of which may be found in the island of Cebu and the
Municipality of Bacoor, Cavite, (c) massive erosion and the consequential loss of soil
fertility and agricultural productivity, with the volume of soil eroded estimated at one
billion (1,000,000,000) cubic meters per annum — approximately the size of the entire
island of Catanduanes, (d) the endangering and extinction of the country's unique, rare
and varied flora and fauna, (e) the disturbance and dislocation of cultural communities,
including the disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers
and seabeds and consequential destruction of corals and other aquatic life leading to a
critical reduction in marine resource productivity, (g) recurrent spells of drought as is
presently experienced by the entire country, (h) increasing velocity of typhoon winds
which result from the absence of windbreakers, (i) the floodings of lowlands and
agricultural plains arising from the absence of the absorbent mechanism of forests, (j) the
siltation and shortening of the lifespan of multi-billion peso dams constructed and
operated for the purpose of supplying water for domestic uses, irrigation and the
generation of electric power, and (k) the reduction of the earth's capacity to process
carbon dioxide gases which has led to perplexing and catastrophic climatic changes such
as the phenomenon of global warming, otherwise known as the "greenhouse effect."

Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This notwithstanding, they expressed their
intention to present expert witnesses as well as documentary, photographic and film
evidence in the course of the trial.

As their cause of action, they specifically allege that:

CAUSE OF ACTION

7. Plaintiffs replead by reference the foregoing allegations.

8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of
rainforests constituting roughly 53% of the country's land mass.

9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million
hectares of said rainforests or four per cent (4.0%) of the country's land area.

10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth
rainforests are left, barely 2.8% of the entire land mass of the Philippine archipelago and
about 3.0 million hectares of immature and uneconomical secondary growth forests.

11. Public records reveal that the defendant's, predecessors have granted timber license
agreements ('TLA's') to various corporations to cut the aggregate area of 3.89 million
hectares for commercial logging purposes.

A copy of the TLA holders and the corresponding areas covered is hereto attached as
Annex "A".

12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25
hectares per hour — nighttime, Saturdays, Sundays and holidays included — the
Philippines will be bereft of forest resources after the end of this ensuing decade, if not
earlier.
13. The adverse effects, disastrous consequences, serious injury and irreparable damage
of this continued trend of deforestation to the plaintiff minor's generation and to
generations yet unborn are evident and incontrovertible. As a matter of fact, the
environmental damages enumerated in paragraph 6 hereof are already being felt,
experienced and suffered by the generation of plaintiff adults.

14. The continued allowance by defendant of TLA holders to cut and deforest the
remaining forest stands will work great damage and irreparable injury to plaintiffs —
especially plaintiff minors and their successors — who may never see, use, benefit from
and enjoy this rare and unique natural resource treasure.

This act of defendant constitutes a misappropriation and/or impairment of the natural

resource property he holds in trust for the benefit of plaintiff minors and succeeding
generations.

15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and
are entitled to protection by the State in its capacity as the parens patriae.

16. Plaintiff have exhausted all administrative remedies with the defendant's office. On
March 2, 1990, plaintiffs served upon defendant a final demand to cancel all logging
permits in the country.

A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".

17. Defendant, however, fails and refuses to cancel the existing TLA's to the continuing
serious damage and extreme prejudice of plaintiffs.

18. The continued failure and refusal by defendant to cancel the TLA's is an act violative
of the rights of plaintiffs, especially plaintiff minors who may be left with a country that
is desertified (sic), bare, barren and devoid of the wonderful flora, fauna and indigenous
cultures which the Philippines had been abundantly blessed with.

19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the
public policy enunciated in the Philippine Environmental Policy which, in pertinent part,
states that it is the policy of the State —

(a) to create, develop, maintain and improve conditions under which man and nature can
thrive in productive and enjoyable harmony with each other;

(b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;

(c) to ensure the attainment of an environmental quality that is conductive to a life of

dignity and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is
contradictory to the Constitutional policy of the State to —

a. effect "a more equitable distribution of opportunities, income and wealth" and "make
full and efficient use of natural resources (sic)." (Section 1, Article XII of the
Constitution);

b. "protect the nation's marine wealth." (Section 2, ibid);

c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section 14,
Article XIV, id.);

d. "protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature." (Section 16, Article II, id.)

21. Finally, defendant's act is contrary to the highest law of humankind — the natural law
— and violative of plaintiffs' right to self-preservation and perpetuation.

22. There is no other plain, speedy and adequate remedy in law other than the instant
action to arrest the unabated hemorrhage of the country's vital life support systems and
continued rape of Mother Earth. 6

On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to
Dismiss the complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause
of action against him and (2) the issue raised by the plaintiffs is a political question which
properly pertains to the legislative or executive branches of Government. In their 12 July
1990 Opposition to the Motion, the petitioners maintain that (1) the complaint shows a
clear and unmistakable cause of action, (2) the motion is dilatory and (3) the action
presents a justiciable question as it involves the defendant's abuse of discretion.

On 18 July 1991, respondent Judge issued an order granting the aforementioned motion
to dismiss.7 In the said order, not only was the defendant's claim — that the complaint
states no cause of action against him and that it raises a political question — sustained,
the respondent Judge further ruled that the granting of the relief prayed for would result
in the impairment of contracts which is prohibited by the fundamental law of the land.

Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the
Revised Rules of Court and ask this Court to rescind and set aside the dismissal order on
the ground that the respondent Judge gravely abused his discretion in dismissing the
action. Again, the parents of the plaintiffs-minors not only represent their children, but
have also joined the latter in this case.8

On 14 May 1992, We resolved to give due course to the petition and required the parties
to submit their respective Memoranda after the Office of the Solicitor General (OSG)
filed a Comment in behalf of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as
it contains sufficient allegations concerning their right to a sound environment based on
Articles 19, 20 and 21 of the Civil Code (Human Relations), Section 4 of Executive
Order (E.O.) No. 192 creating the DENR, Section 3 of Presidential Decree (P.D.) No.
1151 (Philippine Environmental Policy), Section 16, Article II of the 1987 Constitution
recognizing the right of the people to a balanced and healthful ecology, the concept of
generational genocide in Criminal Law and the concept of man's inalienable right to self-
preservation and self-perpetuation embodied in natural law. Petitioners likewise rely on
the respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard the
people's right to a healthful environment.

It is further claimed that the issue of the respondent Secretary's alleged grave abuse of
discretion in granting Timber License Agreements (TLAs) to cover more areas for
logging than what is available involves a judicial question.

Anent the invocation by the respondent Judge of the Constitution's non-impairment

clause, petitioners maintain that the same does not apply in this case because TLAs are
not contracts. They likewise submit that even if TLAs may be considered protected by the
said clause, it is well settled that they may still be revoked by the State when the public
interest so requires.

On the other hand, the respondents aver that the petitioners failed to allege in their
complaint a specific legal right violated by the respondent Secretary for which any relief
is provided by law. They see nothing in the complaint but vague and nebulous allegations
concerning an "environmental right" which supposedly entitles the petitioners to the
"protection by the state in its capacity as parens patriae." Such allegations, according to
them, do not reveal a valid cause of action. They then reiterate the theory that the
question of whether logging should be permitted in the country is a political question
which should be properly addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners' resources is not to file an action to
court, but to lobby before Congress for the passage of a bill that would ban logging
totally.

As to the matter of the cancellation of the TLAs, respondents submit that the same cannot
be done by the State without due process of law. Once issued, a TLA remains effective
for a certain period of time — usually for twenty-five (25) years. During its effectivity,
the same can neither be revised nor cancelled unless the holder has been found, after due
notice and hearing, to have violated the terms of the agreement or other forestry laws and
regulations. Petitioners' proposition to have all the TLAs indiscriminately cancelled
without the requisite hearing would be violative of the requirements of due process.

Before going any further, We must first focus on some procedural matters. Petitioners
instituted Civil Case No. 90-777 as a class suit. The original defendant and the present
respondents did not take issue with this matter. Nevertheless, We hereby rule that the said
civil case is indeed a class suit. The subject matter of the complaint is of common and
general interest not just to several, but to all citizens of the Philippines. Consequently,
since the parties are so numerous, it, becomes impracticable, if not totally impossible, to
bring all of them before the court. We likewise declare that the plaintiffs therein are
numerous and representative enough to ensure the full protection of all concerned
interests. Hence, all the requisites for the filing of a valid class suit under Section 12,
Rule 3 of the Revised Rules of Court are present both in the said civil case and in the
instant petition, the latter being but an incident to the former.

This case, however, has a special and novel element. Petitioners minors assert that they
represent their generation as well as generations yet unborn. We find no difficulty in
ruling that they can, for themselves, for others of their generation and for the succeeding
generations, file a class suit. Their personality to sue in behalf of the succeeding
generations can only be based on the concept of intergenerational responsibility insofar as
the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter
expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety.9 Such
rhythm and harmony indispensably include, inter alia, the judicious disposition,
utilization, management, renewal and conservation of the country's forest, mineral, land,
waters, fisheries, wildlife, off-shore areas and other natural resources to the end that their
exploration, development and utilization be equitably accessible to the present as well as
future generations. 10Needless to say, every generation has a responsibility to the next to
preserve that rhythm and harmony for the full enjoyment of a balanced and healthful
ecology. Put a little differently, the minors' assertion of their right to a sound environment
constitutes, at the same time, the performance of their obligation to ensure the protection
of that right for the generations to come.

The locus standi of the petitioners having thus been addressed, We shall now proceed to
the merits of the petition.

After a careful perusal of the complaint in question and a meticulous consideration and
evaluation of the issues raised and arguments adduced by the parties, We do not hesitate
to find for the petitioners and rule against the respondent Judge's challenged order for
having been issued with grave abuse of discretion amounting to lack of jurisdiction. The
pertinent portions of the said order reads as follows:

xxx xxx xxx

After a careful and circumspect evaluation of the Complaint, the Court cannot help but
agree with the defendant. For although we believe that plaintiffs have but the noblest of
all intentions, it (sic) fell short of alleging, with sufficient definiteness, a specific legal
right they are seeking to enforce and protect, or a specific legal wrong they are seeking to
prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the Court notes that the
Complaint is replete with vague assumptions and vague conclusions based on unverified
data. In fine, plaintiffs fail to state a cause of action in its Complaint against the herein
defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed with
political color and involving a matter of public policy, may not be taken cognizance of by
this Court without doing violence to the sacred principle of "Separation of Powers" of the
three (3) co-equal branches of the Government.

The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist from receiving, accepting,
processing, renewing or approving new timber license agreements. For to do otherwise
would amount to "impairment of contracts" abhored (sic) by the fundamental law. 11

We do not agree with the trial court's conclusions that the plaintiffs failed to allege with
sufficient definiteness a specific legal right involved or a specific legal wrong committed,
and that the complaint is replete with vague assumptions and conclusions based on
unverified data. A reading of the complaint itself belies these conclusions.

The complaint focuses on one specific fundamental legal right — the right to a balanced
and healthful ecology which, for the first time in our nation's constitutional history, is
solemnly incorporated in the fundamental law. Section 16, Article II of the 1987
Constitution explicitly provides:

Sec. 16. The State shall protect and advance the right of the people to a balanced and
healthful ecology in accord with the rhythm and harmony of nature.

This right unites with the right to health which is provided for in the preceding section of
the same article:

Sec. 15. The State shall protect and promote the right to health of the people and instill
health consciousness among them.

While the right to a balanced and healthful ecology is to be found under the Declaration
of Principles and State Policies and not under the Bill of Rights, it does not follow that it
is less important than any of the civil and political rights enumerated in the latter. Such a
right belongs to a different category of rights altogether for it concerns nothing less than
self-preservation and self-perpetuation — aptly and fittingly stressed by the petitioners —
the advancement of which may even be said to predate all governments and constitutions.
As a matter of fact, these basic rights need not even be written in the Constitution for they
are assumed to exist from the inception of humankind. If they are now explicitly
mentioned in the fundamental charter, it is because of the well-founded fear of its framers
that unless the rights to a balanced and healthful ecology and to health are mandated as
state policies by the Constitution itself, thereby highlighting their continuing importance
and imposing upon the state a solemn obligation to preserve the first and protect and
advance the second, the day would not be too far when all else would be lost not only for
the present generation, but also for those to come — generations which stand to inherit
nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain
from impairing the environment. During the debates on this right in one of the plenary
sessions of the 1986 Constitutional Commission, the following exchange transpired
between Commissioner Wilfrido Villacorta and Commissioner Adolfo Azcuna who
sponsored the section in question:

MR. VILLACORTA:

Does this section mandate the State to provide sanctions against all forms of pollution —
air, water and noise pollution?

MR. AZCUNA:

Yes, Madam President. The right to healthful (sic) environment necessarily carries with it
the correlative duty of not impairing the same and, therefore, sanctions may be provided
for impairment of environmental balance. 12

The said right implies, among many other things, the judicious management and
conservation of the country's forests.

Without such forests, the ecological or environmental balance would be irreversiby

disrupted.

Conformably with the enunciated right to a balanced and healthful ecology and the right
to health, as well as the other related provisions of the Constitution concerning the
conservation, development and utilization of the country's natural resources, 13 then
President Corazon C. Aquino promulgated on 10 June 1987 E.O. No. 192, 14 Section 4 of
which expressly mandates that the Department of Environment and Natural Resources
"shall be the primary government agency responsible for the conservation, management,
development and proper use of the country's environment and natural resources,
specifically forest and grazing lands, mineral, resources, including those in reservation
and watershed areas, and lands of the public domain, as well as the licensing and
regulation of all natural resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the welfare of the present and
future generations of Filipinos." Section 3 thereof makes the following statement of
policy:

Sec. 3. Declaration of Policy. — It is hereby declared the policy of the State to ensure the
sustainable use, development, management, renewal, and conservation of the country's
forest, mineral, land, off-shore areas and other natural resources, including the protection
and enhancement of the quality of the environment, and equitable access of the different
segments of the population to the development and the use of the country's natural
resources, not only for the present generation but for future generations as well. It is also
the policy of the state to recognize and apply a true value system including social and
environmental cost implications relative to their utilization, development and
conservation of our natural resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the
Administrative Code of 1987,15 specifically in Section 1 thereof which reads:

Sec. 1. Declaration of Policy. — (1) The State shall ensure, for the benefit of the Filipino
people, the full exploration and development as well as the judicious disposition,
utilization, management, renewal and conservation of the country's forest, mineral, land,
waters, fisheries, wildlife, off-shore areas and other natural resources, consistent with the
necessity of maintaining a sound ecological balance and protecting and enhancing the
quality of the environment and the objective of making the exploration, development and
utilization of such natural resources equitably accessible to the different segments of the
present as well as future generations.

(2) The State shall likewise recognize and apply a true value system that takes into
account social and environmental cost implications relative to the utilization,
development and conservation of our natural resources.

The above provision stresses "the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment." Section 2 of the same Title,
on the other hand, specifically speaks of the mandate of the DENR; however, it makes
particular reference to the fact of the agency's being subject to law and higher authority.
Said section provides:

Sec. 2. Mandate. — (1) The Department of Environment and Natural Resources shall be
primarily responsible for the implementation of the foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying out the State's
constitutional mandate to control and supervise the exploration, development, utilization,
and conservation of the country's natural resources.

Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which
will serve as the bases for policy formulation, and have defined the powers and functions
of the DENR.

It may, however, be recalled that even before the ratification of the 1987 Constitution,
specific statutes already paid special attention to the "environmental right" of the present
and future generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy)
and P.D. No. 1152 (Philippine Environment Code) were issued. The former "declared a
continuing policy of the State (a) to create, develop, maintain and improve conditions
under which man and nature can thrive in productive and enjoyable harmony with each
other, (b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos, and (c) to insure the attainment of an environmental quality that
is conducive to a life of dignity and well-being." 16 As its goal, it speaks of the
"responsibilities of each generation as trustee and guardian of the environment for
succeeding generations." 17 The latter statute, on the other hand, gave flesh to the said
policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful
ecology is as clear as the DENR's duty — under its mandate and by virtue of its powers
and functions under E.O. No. 192 and the Administrative Code of 1987 — to protect and
advance the said right.

A denial or violation of that right by the other who has the corelative duty or obligation to
respect or protect the same gives rise to a cause of action. Petitioners maintain that the
granting of the TLAs, which they claim was done with grave abuse of discretion, violated
their right to a balanced and healthful ecology; hence, the full protection thereof requires
that no further TLAs should be renewed or granted.

A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of the other;
and its essential elements are legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation of said legal right. 18

It is settled in this jurisdiction that in a motion to dismiss based on the ground that the
complaint fails to state a cause of action, 19 the question submitted to the court for
resolution involves the sufficiency of the facts alleged in the complaint itself. No other
matter should be considered; furthermore, the truth of falsity of the said allegations is
beside the point for the truth thereof is deemed hypothetically admitted. The only issue to
be resolved in such a case is: admitting such alleged facts to be true, may the court render
a valid judgment in accordance with the prayer in the complaint? 20 In Militante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise the utmost
care and circumspection in passing upon a motion to dismiss on the ground of the
absence thereof [cause of action] lest, by its failure to manifest a correct appreciation of
the facts alleged and deemed hypothetically admitted, what the law grants or recognizes
is effectively nullified. If that happens, there is a blot on the legal order. The law itself
stands in disrepute."

After careful examination of the petitioners' complaint, We find the statements under the
introductory affirmative allegations, as well as the specific averments under the sub-
heading CAUSE OF ACTION, to be adequate enough to show, prima facie, the claimed
violation of their rights. On the basis thereof, they may thus be granted, wholly or partly,
the reliefs prayed for. It bears stressing, however, that insofar as the cancellation of the
TLAs is concerned, there is the need to implead, as party defendants, the grantees thereof
for they are indispensable parties.

The foregoing considered, Civil Case No. 90-777 be said to raise a political question.
Policy formulation or determination by the executive or legislative branches of
Government is not squarely put in issue. What is principally involved is the enforcement
of a right vis-a-vis policies already formulated and expressed in legislation. It must,
nonetheless, be emphasized that the political question doctrine is no longer, the
insurmountable obstacle to the exercise of judicial power or the impenetrable shield that
protects executive and legislative actions from judicial inquiry or review. The second
paragraph of section 1, Article VIII of the Constitution states that:

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.

Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice
Isagani A. Cruz, a distinguished member of this Court, says:

The first part of the authority represents the traditional concept of judicial power,
involving the settlement of conflicting rights as conferred as law. The second part of the
authority represents a broadening of judicial power to enable the courts of justice to
review what was before forbidden territory, to wit, the discretion of the political
departments of the government.

As worded, the new provision vests in the judiciary, and particularly the Supreme Court,
the power to rule upon even the wisdom of the decisions of the executive and the
legislature and to declare their acts invalid for lack or excess of jurisdiction because
tainted with grave abuse of discretion. The catch, of course, is the meaning of "grave
abuse of discretion," which is a very elastic phrase that can expand or contract according
to the disposition of the judiciary.

In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:

In the case now before us, the jurisdictional objection becomes even less tenable and
decisive. The reason is that, even if we were to assume that the issue presented before us
was political in nature, we would still not be precluded from revolving it under the
expanded jurisdiction conferred upon us that now covers, in proper cases, even the
political question. Article VII, Section 1, of the Constitution clearly provides: . . .

The last ground invoked by the trial court in dismissing the complaint is the non-
impairment of contracts clause found in the Constitution. The court a quo declared that:

The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber
license agreements in the country and to cease and desist from receiving, accepting,
processing, renewing or approving new timber license agreements. For to do otherwise
would amount to "impairment of contracts" abhored (sic) by the fundamental law. 24

We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a
sweeping pronouncement. In the first place, the respondent Secretary did not, for obvious
reasons, even invoke in his motion to dismiss the non-impairment clause. If he had done
so, he would have acted with utmost infidelity to the Government by providing undue and
unwarranted benefits and advantages to the timber license holders because he would have
forever bound the Government to strictly respect the said licenses according to their terms
and conditions regardless of changes in policy and the demands of public interest and
welfare. He was aware that as correctly pointed out by the petitioners, into every timber
license must be read Section 20 of the Forestry Reform Code (P.D. No. 705) which
provides:

. . . Provided, That when the national interest so requires, the President may amend,
modify, replace or rescind any contract, concession, permit, licenses or any other form of
privilege granted herein . . .

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is
not a contract, property or a property right protested by the due process clause of the
Constitution. In Tan vs. Director of Forestry, 25 this Court held:

. . . A timber license is an instrument by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. A timber license
is not a contract within the purview of the due process clause; it is only a license or
privilege, which can be validly withdrawn whenever dictated by public interest or public
welfare as in this case.

A license is merely a permit or privilege to do what otherwise would be unlawful, and is

not a contract between the authority, federal, state, or municipal, granting it and the
person to whom it is granted; neither is it property or a property right, nor does it create a
vested right; nor is it taxation (37 C.J. 168). Thus, this Court held that the granting of
license does not create irrevocable rights, neither is it property or property rights (People
vs. Ong Tin, 54 O.G. 7576).

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary: 26

. . . Timber licenses, permits and license agreements are the principal instruments by
which the State regulates the utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid that they merely evidence a
privilege granted by the State to qualified entities, and do not vest in the latter a
permanent or irrevocable right to the particular concession area and the forest products
therein. They may be validly amended, modified, replaced or rescinded by the Chief
Executive when national interests so require. Thus, they are not deemed contracts within
the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree
No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27,
1983, 125 SCRA 302].

Since timber licenses are not contracts, the non-impairment clause, which reads:

Sec. 10. No law impairing, the obligation of contracts shall be passed. 27

cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant
case does not involve a law or even an executive issuance declaring the cancellation or
modification of existing timber licenses. Hence, the non-impairment clause cannot as yet
be invoked. Nevertheless, granting further that a law has actually been passed mandating
cancellations or modifications, the same cannot still be stigmatized as a violation of the
non-impairment clause. This is because by its very nature and purpose, such as law could
have only been passed in the exercise of the police power of the state for the purpose of
advancing the right of the people to a balanced and healthful ecology, promoting their
health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:

The freedom of contract, under our system of government, is not meant to be absolute.
The same is understood to be subject to reasonable legislative regulation aimed at the
promotion of public health, moral, safety and welfare. In other words, the constitutional
guaranty of non-impairment of obligations of contract is limited by the exercise of the
police power of the State, in the interest of public health, safety, moral and general
welfare.

The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted
in Philippine American Life Insurance Co. vs. Auditor General,30 to wit:

Under our form of government the use of property and the making of contracts are
normally matters of private and not of public concern. The general rule is that both shall
be free of governmental interference. But neither property rights nor contract rights are
absolute; for government cannot exist if the citizen may at will use his property to the
detriment of his fellows, or exercise his freedom of contract to work them harm. Equally
fundamental with the private right is that of the public to regulate it in the common
interest.

In short, the non-impairment clause must yield to the police power of the state. 31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause
could apply with respect to the prayer to enjoin the respondent Secretary from receiving,
accepting, processing, renewing or approving new timber licenses for, save in cases
of renewal, no contract would have as of yet existed in the other instances. Moreover,
with respect to renewal, the holder is not entitled to it as a matter of right.

WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED,
and the challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case No.
90-777 is hereby set aside. The petitioners may therefore amend their complaint to
implead as defendants the holders or grantees of the questioned timber license
agreements.

No pronouncement as to costs.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 111088. June 13, 1997]

C & M TIMBER CORPORATION (CMTC), petitioner, vs. HON. ANGEL C.

ALCALA, Secretary of the Department of Environment & Natural
Resources, HON. ANTONIO T. CARPIO, Chief Presidential Legal Counsel,
and HON. RENATO C. CORONA, Assistant Executive Secretary for Legal
Affairs, respondents.

DECISION
MENDOZA, J.:

This is a petition for certiorari by which C & M Timber Corporation seeks the
nullification of the order dated February 26, 1993 and the resolution dated June 7, 1993
of the Office of the President, declaring as of no force and effect Timber License
Agreement (TLA) No. 106 issued to petitioner on June 30, 1972. TLA No. 106, with the
expiry date June 30, 1997, covers 67,680 hectares of forest land in the municipalities of
Dipaculao and Dinalongan in the Province of Aurora and the Municipality of Maddela in
Quirino province.[1]
It appears that in a letter dated July 20, 1984[2] to President Marcos, Filipinas Loggers
Development Corporation (FLDC), through its president and general manager, requested
a timber concession over the same area covered by petitioners TLA No. 106, alleging that
the same had been cancelled pursuant to a presidential directive banning all forms of
logging in the area.The request was granted in a note dated August 14, 1984 by President
Marcos who wrote, as was his wont, on the margin of the letter of FLDC: Approved.[3]
Accordingly, on September 21, 1984, the Ministry of Natural Resources, as it was
then called, issued TLA No. 360, with the expiry date September 30, 1994, to FLDC,
covering the area subject of TLA No. 106. In 1985, FLDC began logging operations.
On June 26, 1986, then Minister of Natural Resources Ernesto M. Maceda suspended
TLA No. 360 for FLDCs gross violation of the terms and conditions thereof, especially
the reforestation and selective logging activities and in consonance with the national
policy on forest conservation.[4] On July 26, 1986, Minister Maceda issued another order
cancelling the license of FLDC on the ground that in spite of the suspension order dated
June 26, 1986, said concessionaire has continued logging operations in violation of
forestry rules and regulations.[5]
Learning of the cancellation of FLDCs TLA, petitioner, through its officer-in-charge,
wrote Minister Maceda a letter dated October 10, 1986, requesting revalidation of
its TLA No. 106.[6]As FLDC sought a reconsideration of the order cancelling its TLA,
petitioner wrote another letter dated February 13, 1987,[7] alleging that because of the log
ban imposed by the previous administration it had to stop its logging operations, but that
when the ban was lifted on September 21, 1984, its concession area was awarded to
FLDC as a result of [FLDCs] covetous maneuvers and unlawful machinations. (Petitioner
was later to say that those behind FLDC, among them being the former Presidents sister,
Mrs. Fortuna Barba, were very influential because of their very strong connections with
the previous Marcos regime.)[8] Petitioner prayed that it be allowed to resume logging
operations.
In his order dated May 2, 1988,[9] Secretary Fulgencio Factoran, Jr., of the DENR,
declared petitioners TLA No. 106 as of no more force and effect and consequently denied
the petition for its restoration, even as he denied FLDCs motion for reconsideration of the
cancellation of TLA No. 360. Secretary Factoran, Jr. ruled that petitioners petition was
barred by reason of laches, because petitioner did not file its opposition to the issuance of
a TLA to FLDC until February 13, 1987, after FLDC had been logging under its license
for almost two years. On the other hand, FLDCs motion for reconsideration was denied,
since the findings on which the cancellation order had been based, notably gross violation
of the terms and conditions of its license, such as reforestation and selective logging
activities appear to be firmly grounded.
Both petitioner CMTC and FLDC appealed to the Office of the President. Petitioner
denied that it was guilty of laches. It alleged that it had sent a letter to the then Minister of
Natural Resources Rodolfo del Rosario dated September 24, 1984 protesting the grant of
a TLA to FLDC over the area covered by its (petitioners) TLA and, for this reason,
requesting nullification of FLDCs TLA.
In a decision dated March 21, 1991,[10] the Office of the President, through then
Executive Secretary Oscar Orbos, affirmed the DENRs order of May 2, 1988. Like the
DENR it found petitioner guilty of laches, the alleged filing by petitioner of a protest on
September 24, 1984 not having been duly proven. The decision of the Office of the
President stated:[11]

As disclosed by the records, this Office, in a letter of June 1, 1989, had requested the
DENR to issue a certification as to the authenticity/veracity of CMTCs aforesaid
Annex A to enable it to resolve this case judiciously and expeditiously. Said letter-
request pertinently reads:

x x x C & M Timber Corporation has attached to its Supplemental Petition For Review,
dated June 1, 1988, a xerox copy of (Annex A) of its letter to the Minister of Natural
Resources Rodolfo del Rosario, dated September 24, 1984, prepared by its counsel, Atty.
Norberto J. Quisumbing, protesting against the award of the contested area to Filipinas
Loggers Development Corporation and requesting that it be annulled and voided.

Considering that the aforementioned Annex A constitutes a vital defense to C & M

Timber Corporation and could be a pivotal factor in the resolution by this Office of the
instant appeal, may we request your good office for a certification as to the
authenticity/veracity of said document (Annex A) to enable us to resolve the case
judiciously and expeditiously.

In reply thereto, the DENR, thru Assistant Secretary for Legal Affairs Romulo D. San
Juan, in a letter of July 7, 1989, informed this Office, thus:

xxx

Despite diligent efforts exerted to locate the alleged aforementioned Annex A, no such
document could be found or is on file in this Office.

This Office, therefore, regrets that it can not issue the desired certification as to the
authenticity/veracity of the document.

On September 10, 1990, this Office requested an updated comment of the DENR on (a)
the duplicate original copy of Annex A; (b) a xerox copy of Page 164, entry No. 2233, of
the MNRs logbook tending to show that the original copy of Annex A was received by
the MNR; and (c) a xerox copy of Page 201 of the logbook of the BFD indicating that the
original copy of Annex A was received by BFD from the MNR.

On October 26, 1990, DENR Assistant Secretary San Juan endorsed to this Office the
updated comment of Director of Forest Management Bureau (FMB) in a 2nd
endorsement of October 25, 1990, which pertinently reads as follows:

Please be informed that this Office is not the addressee and repository of the letter dated
September 24, 1984 of Atty. Norberto Quisumbing. This Office was just directed by then
Minister Rodolfo del Rosario to act on the purported letter of Atty. Quisumbing and as
directed, we prepared a memorandum to the President which was duly complied with as
shown by the entries in the logbook. Annex A, which is the main document of the letter-
appeal of C & M Timber Corporation is presumed appended to the records when it was
acted upon by the BFD (now FMB) and forwarded to the Secretary (then
Minister).Therefore this Office is not in a position to certify as to the authenticity of
Annex A.

Clearly therefore, CMTCs reliance on its Annex A is misplaced, the authenticity thereof
not having been duly proven or established. Significantly, we note that in all the
pleadings filed by CMTC in the office a quo, and during the hearing conducted, nothing
is mentioned therein about its letter of September 24, 1984 (Annex A). Jurisprudence
teaches that issues neither averred in the pleadings nor raised during the trial below
cannot be raised for the first time on appeal (City of Manila vs. Ebay, 1 SCRA 1086,
1089); that issues of fact not adequately brought to the attention of the trial court need not
be considered by a reviewing court, as they cannot be raised for the first time on appeal
(Santos v. Intermediate Appellate Court, 145 SCRA 592, 595); and that parties, may not,
on appeal, adopt a position inconsistent with what they sustained below (People v.
Archilla, 1 SCRA 698, 700-701)

The Office of the President also declined to set aside the DENRs order of July 31,
1986, cancelling FLDCs TLA No. 360, after finding the same to be fully substantiated.
Petitioner and FLDC moved for reconsideration. In its order dated January 25, 1993,
[12]
the Office of the President, through Chief Presidential Legal Counsel Antonio T.
Carpio, denied petitioners motion for reconsideration. It held that even assuming that
CMTC did file regularly its letter-protest of September 24, 1984 with MNR on
September 25, 1984, CMTC failed to protect its rights for more than two (2) years until it
opposed reinstatement of FLDCs TLA on February 13, 1987. Within that two (2) year
period, FLDC logged the area without any opposition from CMTC. In the same order, the
Office of the President, however, directed the reinstatement of FLDCs TLA No. 360, in
view of the favorable report of the Bureau of Forest Development dated March 23,
1987. Later, the Presidents office reconsidered its action after the Secretary of
Environment and Natural Resources Angel C. Alcala, on February 15, 1993, expressed
concern that reinstatement of FLDCs TLA No. 360 might negate efforts to enhance the
conservation and protection of our forest resources. In a new order dated February 26,
1993,[13] the Office of the President reinstated its March 21, 1991 decision.
 Petitioner again moved for a reconsideration of the decision dated March 21, 1991
and for its license to be revived/restored. Petitioners motion was, however, denied by the
Office of the President on June 7, 1993 [14] in a resolution signed by Assistant Executive
Secretary for Legal Affairs Renato C. Corona. The Presidents office ruled:

The above Order of February 26, 1993 was predicated, as stated therein, on a new
policy consideration on forest conservation and protection, unmistakably implied
from the Presidents handwritten instruction. Accordingly, this Order shall be taken
not only as an affirmation of the March 21, 1991 decision, but also as
a FINAL disposition of the case and ALL matters incident thereto, like CMTCs
motion for reconsideration, dated April 16, 1991.

Hence, this petition. Petitioner contends that laches cannot be imputed to it because it
did not incur delay in asserting its rights and even if there was delay, the delay did not
work to the prejudice of other parties, particularly FLDC, because the cancellation of the
FLDCs TLA was attributable only to its own actions. Petitioner also denies that its license
had been suspended by reason of mediocre performance in reforestation by order of then
Minister of Natural Resources Teodoro O. Pea. It says that it did not receive any order to
this effect. Finally, petitioner claims that the denial of its petition, because of a new policy
consideration on forest conservation and protection, unmistakably implied from the
Presidents handwritten instruction, as stated in the resolution of June 7, 1993 of the
Office of the President, would deny it the due process of law. Petitioner points out that
there is no total log ban in the country; that Congress has yet to make a pronouncement
on the issue; that any notice to this effect must be stated in good form, not implied; and
that in any case, any new policy consideration should be prospective in application and
cannot affect petitioners vested rights in its TLA No. 106.
We find the petition to be without merit.
First. As already stated, the DENR order of May 2, 1988, declaring petitioners TLA
No. 106 as no longer of any force and effect, was based on its finding that although TLA
No. 106s date of expiry was June 30, 1997 it had been suspended on June 3, 1983
because of CMTCs mediocre performance in reforestation and petitioners laches in
failing to protest the subsequent award of the same area to FLDC. There is considerable
dispute whether there was really an order dated June 3, 1983 suspending petitioners TLA
because of mediocre performance in reforestation, just as there is a dispute whether there
indeed was a letter written on September 24, 1984 on behalf of petitioner protesting the
award of the concession covered by its TLA No. 106 to FLDC, so as to show that
petitioner did not sleep on its rights.
The alleged order of June 3, 1983 cannot be produced. The Office of the Solicitor
General was given until May 14, 1997 to secure a copy of the order but on May 7, 1997
the OSG manifested that the order in question could not be found in the records of this
case in which the order might be.[15] Earlier, petitioner requested a copy of the order but
the DENR, through Regional Executive Director Antonio G. Principe, said that based
from our records there is no file copy of said alleged order.[16]
 On the other hand, the alleged letter of September 24, 1984 written by Atty. Norberto
J. Quisumbing, protesting the award of the concession in question to FLDC cannot be
found in the records of the DENR either. The Assistant Secretary for Legal Affairs of the
DENR certified that Despite diligent efforts exerted to locate the alleged [letter], no such
document could be found or is on file in this Office. [17] In a later certification, however,
Ofelia Castro Biron of the DENR, claimed that she was a receiving clerk at the Records
and Documents Section of the Ministry of Natural Resources and that on September 25,
1984 she received the letter of Atty. Quisumbing and placed on all copies thereof the
stamp of the MNR. She stated that the copy in the possession of petitioner was a faithful
copy of the letter in question.[18]
The difficulty of ascertaining the existence of the two documents is indeed a
reflection on the sorry state of record keeping in an important office of the executive
department. Yet these two documents are vital to the presentation of the evidence of both
parties in this case. Fortunately, there are extant certain records from which it is possible
to determine whether these documents even existed.
With respect to the alleged order of June 3, 1983 suspending petitioners TLA No.
106 for mediocre performance in reforestation, the Court will presume that there is such
an order in accordance with the presumption of regularity in the performance of official
functions inasmuch as such order is cited both in the order dated May 2, 1988 of the
DENR, declaring as of no force and effect TLA No. 106, and in the decision dated March
21, 1991 of the Office of the President affirming the order of the DENR. It is improbable
that so responsible officials as the Secretary of the DENR and the Executive Secretary
would cite an order that did not exist.
On the other hand, with respect to the letter dated September 24, 1984, there are
circumstances indicating that it existed. In addition to the aforesaid certification of Ofelia
Castro Biron that she was the person who received the letter for the DENR, the logbook
of the Ministry of Natural Resources contains entries indicating that the letter was
received by the Bureau of Forest Development from the MNR. [19] DENR Assistant
Secretary Romulo San Juan likewise informed the Office of the President that the Bureau
of Forest Management prepared a memorandum on the aforesaid letter of September 24,
1984,[20] thereby implying that there was such a letter.
On the premise that there was an order dated June 3, 1983, we find that after
suspending petitioners TLA for mediocre performance in reforestation under this order,
the DENR cancelled the TLA, this time because of a Presidential directive imposing a log
ban. The records of G.R. No. 76538, entitled Felipe Ysmael, Jr. & Co. v. Deputy
Executive Secretary, the decision in which is reported in 190 SCRA 673 (1990), contain a
copy of the memorandum of then Director Edmundo V. Cortes of the Bureau of Forest
Development to the Regional Director of Region 2, in Tuguegarao, Cagayan, informing
the latter that pursuant to the instruction of the President and the memorandum dated
August 18, 1983 of then Minister Teodoro Q. Pea, the log ban previously declared
included the concessions of the companies enumerated in Cortes memorandum, in
consequence of which the concessions in question were deemed cancelled. The
memorandum of Director Cortes stated:
MEMORANDUM ORDER

TO : The Regional Director

Region 2, Tuguegarao, Cagayan

FROM : The Director

DATE : 24 August 1983

SUBJECT : Stopping of all logging operations

in Nueva Vizcaya and Quirino

REMARKS :

Following Presidential Instructions and Memorandum Order of Minister Teodoro Q. Pea

dated 18 August 1983, and in connection with my previous radio message, please be
informed that the coverage of the logging ban in Quirino and Nueva Vizcaya provinces
include the following concessions which are deemed cancelled as of the date of the
previous notice:

- Felipe Ysmael Co., Inc.

- Industries Dev. Corp.
- Luzon Loggers, Inc.
- C & M Timber Corporation
- Buzon Industrial Dev. Corporation
- Dominion Forest Resources Corp.
- FCA Timber Development Corp.
- Kasibu Logging Corp.
- RCC Timber Company
- Benjamin Cuaresma

You are hereby reminded to insure full compliance with this order to stop logging
operations by all licensees above mentioned and submit a report on the pullout of
equipment and inventory of logs within five days upon receipt hereof.

ACTION
DESIRED : For your immediate implementation.

EDMUNDO V. CORTES

(Emphasis added)

It thus appears that petitioners license had been cancelled way back in 1983, a year
before its concession was awarded to FLDC. It is noteworthy that petitioner admits that at
the time of the award to FLDC in 1984 petitioner was no longer operating its concession
because of a log ban although it claims that the suspension of operations was only
temporary. As a result of the log ban, the TLA of petitioner, along with those of other
loggers in the region, were cancelled and petitioner and others were ordered to stop
operations. Petitioner also admits that it received a telegram sent on August 24, 1983 by
Director Cortes of the BFD, directing it to stop all logging operations to conserve our
remaining forests.[21] It is then not true, as Atty. Quisumbing stated in protesting the award
of the concession to FLDC, that the logging ban did not cancel [petitioners] timber
license agreement.
Now petitioner did not protest the cancellation of its TLA. Consequently, even if
consideration is given to the fact that a year later, on September 24, 1984, its counsel
protested the grant of the concession to another party (FLDC), this failure of petitioner to
contest first the suspension of its license on June 3, 1983 and later its cancellation on
August 24, 1983 must be deemed fatal to its present action.
Second. Except for the letter of its counsel to the Minister of Natural Resources,
which it reiterated in its letter to the President of the Philippines, petitioner took no legal
steps to protect its interest. After receiving no favorable response to its two letters,
petitioner could have brought the necessary action in court for the restoration of its
license. It did not. Instead it waited until FLDCs concession was cancelled in 1986 by
asking for the revalidation of its (petitioners) on TLA No. 106.
Petitioners excuse before the DENR is that it did not pursue its protest because its
president, Ricardo C. Silverio, had been told by President Marcos that the area in
question had been awarded to the Presidents sister, Mrs. Fortuna Barba, and petitioner
was afraid to go against the wishes of the former President. [22] This is a poor excuse for
petitioners inaction. In Felipe Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary,[23] a
similar excuse was given that Ysmael & Cos license had been cancelled and its
concession awarded to entities controlled or owned by relatives or cronies of then
President Marcos. For this reason, after the EDSA Revolution, Ysmael & Co. sought in
1986 the reinstatement of its timber license agreement and the revocation of those issued
to the alleged presidential cronies. As its request was denied by the Office of the
President, Ysmael & Co. filed a petition for certiorari with this Court. On the basis of the
facts stated, this Court denied the petition: (1) because the August 25, 1983 order of the
Bureau of Forest Development, cancelling petitioners timber license agreement had
become final and executory. Although petitioner sent a letter dated September 19, 1983 to
President Marcos seeking reconsideration of the 1983 order of cancellation of the BFD,
the grounds stated there were different from those later relied upon by petitioner for
seeking its reinstatement; (2) because the fact that petitioner failed to seasonably take
judicial recourse to have the earlier administrative actions [cancelling its license and
granting another one covering the same concession to respondent] reviewed by the court
through a petition for certiorari is prejudicial to its cause. Such special civil action
of certiorari should have been filed within a reasonable time. And since none was filed
within such period, petitioners action was barred by laches; and (3) because executive
evaluation of timber licenses and their consequent cancellation in the process of
formulating policies with regard to the utilization of timber lands is a prerogative of the
executive department and in the absence of evidence showing grave abuse of discretion
courts will not interfere with the exercise of that discretion.
 This case is governed by the decision in Felipe Ysmael, Jr. & Co., Inc. v. Deputy
Executive Secretary.
Third. It is finally contended that any policy consideration on forest conservation and
protection justifying the decision of the executive department not to reinstate petitioners
license must be formally enunciated and cannot merely be implied from the Presidents
instruction to his subordinates and that, at all events, the new policy cannot be applied to
existing licenses such as petitioners.
The Presidents order reconsidering the resolution of the Presidential Legal Adviser
(insofar as it reinstated the license of FLDC) was prompted by concerns expressed by the
then Secretary of Environment and Natural Resources that said reinstatement [of FLDCs
license] may negate our efforts to enhance conservation and protection of our forest
resources. There was really no new policy but, as noted in Felipe Ysmael, Jr. &
Co., Inc., a mere reiteration of a policy of conservation and protection. The policy is
contained in Art. II, 16 of the Constitution which commands the State to protect and
promote the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature. There is therefore no merit in petitioners contention that
no new policy can be applied to existing licenses.
As to petitioners contention that the cancellation of its license constitutes an
impairment of the obligation of its contract, suffice it for us to quote what we held
in Felipe Ysmael, Jr. & Co. Inc. v. Deputy Executive Secretary:[24]

A cursory reading of the assailed orders issued by public respondent Minister Maceda of
the MNR, which were affirmed by the Office of the President, will disclose public policy
considerations which effectively forestall judicial interference in the case at bar.

Public respondents herein, upon whose shoulders rests the task of implementing the
policy to develop and conserve the countrys natural resources, have indicated an ongoing
department evaluation of all timber license agreements entered into, and permits or
licenses issued, under the previous dispensation. . . .

The ongoing administrative reassessment is apparently in response to the renewed and

growing global concern over the despoliation of forest lands and the utter disregard of
their crucial role in sustaining a balanced ecological system. The legitimacy of such
concern can hardly be disputed, most especially in this country. . . .

Thus, while the administration grapples with the complex and multifarious problems
caused by unbridled exploitation of these resources, the judiciary will stand clear. . . .
More so where, as in the present case, the interests of a private logging company are
pitted against that of the public at large on the pressing public policy issue of forest
conservation. . . . Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization and disposition of forest resources
to the end that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the latter
a permanent or irrevocable right to the particular concession area and the forest products
therein. They may be validly amended, modified, replaced or rescinded by the Chief
Executive when national interests so require. Thus, they are not deemed contracts within
the purview of the due process of law clause [See Sections 3(33) and 20 of Pres. Decree
No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27,
1983, 125 SCRA 302].

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 112844 June 2, 1995

PHILIPPINE MERCHANT MARINE SCHOOL, INC., represented by JUAN O.

NOLASCO III, petitioner,
vs.
COURT OF APPEALS, THE OFFICE OF THE EXECUTIVE SECRETARY,
EDELMIRO AMANTE, RENATO CORONA, and the DEPARTMENT OF
EDUCATION, CULTURE AND SPORTS, respondents.

BELLOSILLO, JR., J.:

PHILIPPINE MERCHANT MARINE SCHOOL, INC. (PMMSI), was established in

Manila in 1950 to train and produce competent marine officers. It offers a two-year
course in Marine Engineering (A.M.E.) and a four-year course in Marine Transportation
(B.S.M.T.). In 1978 it established a branch in Talon, Las Piñas, Metro Manila. But we are
here concerned only with the main school in Manila.
For several times prior to 1985 respondent Department of Education, Culture and Sports
(DECS) disapproved petitioner's requests for renewal permit/recognition. However, on 11
March 1986 the DECS issued petitioner a renewal permit for SY 1985-1986. Later,
petitioner applied for a summer permit for 1986 which the DECS favorably indorsed to
the Minister of Education in consideration of the graduating students for summer.
Thereafter the application was returned to Director Modesta Boquiren of the DECS for
evaluation and decision pursuant to the authority delegated to the Regions under
Department Order No. 22, series of 1975. Director Boquiren issued petitioner the summer
permit for 1986 based on the previously stated humanitarian reason but subject to the
condition that petitioner should not enroll students for the first semester of SY 1986-1987
until a permit therefor was granted and that the enrollment list for the summer term be
submitted immediately.

Sometime in 1986 the DECS received a complaint from Felixberto B. Galvez, president
of petitioner's Faculty Association, NAFLU-KMU, concerning the issuance of summer
permit to petitioner and of its holding of classes for courses not recognized by the
Government. Galvez requested that the matter be looked into as well as the possible
revocation of petitioner's authority due to persistent violation of the orders of the DECS.

In response, the DECS through Director Boquiren recommended that petitioner's summer
permit be revoked and that the school be closed effective SY 1986-1987 on the ground
that: (a) petitioner did not have a renewal permit/recognition for SY 1986-1987; (b)
several communications were sent to petitioner's head telling him not to operate without
permit and to explain within seventy-two (72) hours from receipt of Director Boquiren's
letter dated 9 July 1986 why no drastic action should be taken against it but said
communication was never answered; and, (c) petitioner did not correct the deficiencies
indicated in the renewal permit for 1985-1986.

Accordingly, in a 3rd Indorsement dated 23 September 1986 the DECS through then
Minister Lourdes R. Quisumbing approved the following courses of action for petitioner:
(a) the students in the two courses who were graduating for SY 1986-1987 would be
allowed to graduate even without permit for said courses as a special case provided that
they completed the requirements for graduation and subject to prior issuance of Special
Order; and, (b) the remaining students should be allowed to transfer to other authorized
schools.

In a letter dated 30 September 1986 Director Boquiren, informed petitioner of the

aforementioned courses of action and directed immediate implementation thereof.

On 9 April 1987 the DECS Inter-Agency Technical Committee (IATCOM) recommended

renewal of permits for the maritime courses offered by petitioner provided that a
development plan for the improvement of its buildings classrooms, laboratory rooms,
library offices and other rooms be formulated and implemented before the start of school
year 1987-1988.
Despite lack of permit, petitioner continued to enroll students and offer courses in Marine
Engineering and Marine Transportation for SY 1987-1988. This prompted the DECS
through Director Hernando Dizon to write petitioner on 4 August 1988 directing it not to
operate without permit and inviting its attention to the provisions of the Private School
Law 1 as reiterated in the Education Act of 1982 2 which prohibits operation of
unauthorized schools/courses.

On 28 October 1988 petitioner sent a letter to Director Dizon applying for

permit/recognition to conduct classes for the two (2) maritime courses retroactive from
summer of 1987 up to SY 1988-1989 and informing him of its transfer to the 5th Floor of
the Republic Supermarket Building, corner Rizal Avenue and Soler St., Sta. Cruz,
Manila.

On the basis of the favorable report of a supervisor of the Bureau of Higher Education
who visited the premises of petitioner on 14 November 1988, a director of said Bureau
recommended renewal of petitioner's permit. However, in a DECS-PAMI survey
conducted by the DECS technical staff in 1988, petitioner scored only 32 points out of a
possible 1,026 points for requirements in Nautical Engineering, and only 207 points out
of 905 points in Marine Engineering, way below the DECS requirements.

Subsequent inspection of petitioner's premises by the Bureau of Higher Education-DECS

Technical Panel for Maritime Education (TPME) affirmed the findings of the DECS-
PAMI survey. It found petitioner deficient in terms of the minimum requirements as
provided in DECS Order No. III, series of 1987, which refers to the policies and
standards for Maritime Education Plan. In a memorandum dated 19 January 1989
addressed to DECS Director Nilo Rosas, it set forth the following recommendations:

1. The PMMS administration may be given a last chance to put up at least 60% of the
minimum standard equipment for a period of about two months (January-March 1989).

2. The DECS with TPME will conduct a re-inspection sometime the first week of April to
monitor the progress of the requirements.

3. No new and old students will be allowed to enroll during summer of 1989 and the
subsequent semesters pending issuance of a permit.

4. Therefore, issuance of a school permit for 1987-1988 to 1988-89 shall be held in

abeyance pending compliance of at least 60% of the requirements.

5. DECS higher authorities shall decide whether the graduating students for the second
semester 1988-89 will be allowed to graduate and a retroactive school permit for the
school years 1987-88, 1988-89 can be granted. 3

As recommended, the TPME Secretariat conducted a reinspection of petitioner's

premises, then submitted a report dated 18 April 1989 with the following new
recommendations —
1. Gradual phasing out of the BSMT Nautical Studies and Associate in Marine
Engineering programs. Under this scheme, no new enrollees should be accepted anymore
for the 1st year BSMT Nautical Studies and AME starting 1st semester of school year
1989-90.

2. If the school can come up with the DECS minimum standard within the phasing out
period, suspension order may be lifted.

3. If the school fails to meet the DECS minimum standard at the end of the phasing out
period, closure order will be issued.

4. No special permit for the BSMT Nautical Studies and AME courses should be granted
as a special case. However, during the phasing out period students may be allowed to
graduate under PMMS, Talon, Las Piñas,

based on these considerations —

1. PMMS, Manila, has inadequate training facilities and equipment for BSMT Nautical
Studies and AME programs.

2. The school has not acquired its own school site and building. The present school
campus is not conducive for training and is found to be very limited in space so that there
is difficulty for school development and expansion.

3. On 23 September 1986, the Secretary of Education, Culture and Sports already issued a
cease to operate order to the school head of PMMS. The said indorsement letter also
provided humanitarian decision (reason?) which granted permit to PMMS as a special
case, just to allow BSMT and AME students to graduate and the remaining students were
advised to transfer to authorized/recognized schools.

4. Labor dispute occurred in 1987. The conflict between the employees and employer is a
manifestation of mismanagement of school. 4

In a letter dated 27 April 1989 Director Rosas informed petitioner of the TPME report
and recommendations and invited it for a conference on 2 May 1989 before any major
decision and action would be made.

On 2 May 1989, the TPME Secretariat submitted another memorandum on its

reinspection of petitioner's premises made on 28 April 1989. Based on its findings that no
substantial improvement in terms of minimum requirements, equipment and training
facilities since the January 1989 inspection was made, it reiterated the recommendations
it submitted to the DECS Bureau of Higher Education. For this reason, in the letter dated
25 May 1989 Director Rosas notified petitioner about the aforementioned report and the
DECS' decision that:
1. The BSMT Nautical Studies and Associate in Marine Engineering courses be gradually
phased out. Such being the case, the school shall no longer be allowed to accept 1st year
students and new enrollees starting 1st semester of school year 1989-90.

2. The second year and third year students may be allowed to remain until they graduate.
However, the school may opt to transfer these students to PMMS, Talon, Las Piñas,

due to the following considerations:

1. The school's training equipment and instructional facilities are very far below the
standards set by DECS.

2. The school site and building are not owned by the school but only leased with contract
of renewal to be made annually.

3. The present location of the school does not warrant for expansion, development and
improvement.

4. The present location of the school is not conducive for learning, it being located on the
5th floor of a supermarket in the downtown section of the city.

5. A cease to operate order was issued by Secretary Lourdes R. Quisumbing sometime in

1986, which order was violated by the
school. 5

In a letter dated 11 July 1989 the DECS through Secretary Quisumbing informed
petitioner that it had received reports that petitioner enrolled freshmen for its maritime
programs which were ordered phased out effective SY 1989-1990 per letter of Director
Rosas dated 25 May 1989; called petitioner's attention to the provision of Sec. 1, Rule 1,
Part V, of the Implementing Rules of the Education Act of 1982 which makes it
punishable and subject to penalties the operation of a school through the conduct or
offering of Educational Programs or Courses of Studies/Training, without prior
government authorization and/or in violation of any of the terms and conditions of said
permit or recognition; directed that in accordance with the phase-out order, petitioner's
Manila campus is allowed to operate only the 2nd, 3rd and 4th years of the authorized
maritime programs which shall be gradually phased out; and, required petitioner to
comment on the reported unauthorized enrollment.

In its letter to the DECS dated 26 July 1989, petitioner moved for reconsideration stating
that the finding that it had not complied with the minimum requirements was due to the
following: that as early as 21 June 1989 it filed a letter requesting reconsideration of the
letter dated 25 May 1989 of Director Rosas; that since there was no reply it believed that
the 25 May 1989 order was reconsidered sub-silencio and that petitioner was allowed to
enroll 1st year students for SY 1989-1990; and, that it had undertaken improvements in
all of its facilities in compliance with DECS requirements. In this regard, it requested
another inspection of its premises.
Pursuant to petitioner's request, another inspection of the Manila premises was conducted
by the TPME-Secretariat on 8 August 1989. However, petitioner only obtained a general
rating of 31.17% for Nautical Studies and 28.53% for Marine Engineering. Consequently,
the inspection team reiterated its previous recommendation to gradually phase out the
maritime programs of petitioner's Manila campus effective SY 1990-1991 and that no
new freshman students be accepted beginning SY 1990-1991.

Accordingly, in a letter dated 25 September 1989 the DECS through Secretary

Quisumbing ordered petitioner to discontinue its Maritime program in the Manila campus
effective school year 1990-1991 and suggested that efforts be made towards the
development of PMMS, Las Piñas, which has a great potential of being a good Maritime
School. 6 The phase-out order was reiterated in subsequent letters dated 19 February 1990
and 9 May 1990 of Director Rosas and then DECS Secretary Isidro D. Cariño,
respectively.

Subsequently, petitioner moved to reconsider the phase-out order in its letter of 21 May
1990, which request was denied by the DECS through Undersecretary Benjamin Tayabas
in his letter of 1 June 1990. The letter reads —

With reference to your request to rescind an order to phase-out the maritime courses at
PMMS, Manila, please be informed that this Department sees no reason for such action
as the conditions obtaining in the school when the phase-out order was issued haven't
shown any significant improvement inspite of the fact that the PMMS had been given
reasonable period to comply with the minimum standard requirements prescribed by the
Department of Education, Culture and Sports.

Maritime Education courses are highly specialized and require adequate training facilities
and equipment in order to ensure quality. However, the series of visits made by the staff
of the BHE, NCR, and members of the Technical Panel on Maritime Education revealed
the following findings:

(a) On April 9, 1987 the Inter-Agency Technical Committee (IATCOM) recommended

the renewal of permits of the maritime courses, provided, that a development plan for the
improvement of the buildings, classrooms, laboratory rooms, library offices and other
rooms shall be formulated and implemented before the start of SY 1987-1988.

(b) In 1988, the DECS-PAMI survey conducted by technical persons, revealed that
PMMS, then located at the 5th floor of the Republic Supermarket, obtained a general
score of 32 out of 1,026 points for requirements in the Nautical course and 207 out of 905
points for the Marina Engineering course. It is needless to say that these findings are way
below the DECS requirements. Above all, the school site was described as not conducive
for offering maritime program due to its limited area. Furthermore, the lease on the
premises is not a long term lease (2 years), a condition which would deter the school from
fully developing the school site.
(c) In January of 1989, the findings of the Secretariat for the Technical Panel for
Maritime Education (TPME) re-affirmed the findings of the DECS-PAMI Survey. Very
few equipment were found for the Maritime courses. You concurred with these findings
in a dialogue with the Director of the Bureau of Higher Education Secretariat. You
appealed for another chance and requested for re-inspection before the opening of SY
1989-1990.

(d) As per agreement, on April 28, 1989 another re-inspection was made and it showed
that the school did not show any substantial improvement.

Then on May 25, 1989, Secretary Lourdes Quisumbing issued the phase-out order of our
maritime programs in Manila campus.

However, the Department again allowed PMMS, Manila, to operate the maritime courses
for SY 1989-1990 despite the above phase-out order.

(e) Another evaluation of your school was conducted by technical people on August 8,
1989, as requested. The findings revealed that your school obtained a general rating of
31.17% for Nautical Studies and 28.53% for Marine Engineering.

The PMMS has been provided with the Policies and Standards for Maritime Education
and, as revealed by the foregoing facts, the series of inspection and evaluation were (sic)
done by technical persons who have expertise in the field of maritime education.
Therefore, the requests relative to these are not valid.

It is therefore with regrets that this Department cannot rescind its order to phase-out the
Maritime courses at PMMS, Manila and the school is admonished not to accept incoming
first year students starting school year 1990-1991. So that by school year 1992-1993, the
maritime courses at the Manila campus would be fully phased-out. . . . 7

It is suggested that PMMS concentrate its development plans in the Las Piñas Campus
which has a great potential of being a good maritime school.

Not satisfied therewith, petitioner appealed the matter to respondent Office of the
President.

During the pendency of the appeal the DECS thru Secretary Cariño issued a Closure
Order dated 27 August 1991 —

In view of the report which was confirmed by the evaluation team from the National
Capital Region DECS Regional Office, that Philippine Merchant Marine School
(PMMS), Manila, has been accepting freshman students of the maritime programs despite
the phase-out order which was issued last September 28, (sic) 1989 by former Secretary
Lourdes R. Quisumbing and further reiterated by the undersigned, dated May 9, 1990, the
Department, hereby orders Closure of your maritime programs of your school effective
second semester school year 1991-1992, otherwise this Department shall be constrained
to institute the appropriate administrative, civil and criminal proceedings against you and
the other responsible officers of your school pursuant to Section 68, Batas Pambansa Blg.
232. . . .

The transfer of the affected students shall be facilitated by the National Capital Region in
accordance with our Memorandum dated August 16, 1991, xerox copy of which is hereto
attached for your information.

For your guidance and strict compliance. 8

In a Letter dated 24 August 1992 petitioner sought reconsideration of the 27 August 1991
Closure Order and at the same time requested that special orders be issued to its graduates
for SY 1991-1992. In letters filed with the Office of the President dated 2 and 3 October
1992 petitioner alleged compliance with DECS requirements. The letters were referred to
the DECS for consideration.

On 10 November 1992 the Office of the President through respondent Executive

Secretary Edelmiro Amante rendered a Resolution dismissing petitioner's appeal. 9 It
found no plausible reason to disturb the action of the DECS Secretary in the light of the
conspicuous fact that petitioner had repeatedly failed to comply with the phase-out order
since 1986. Moreover, the grounds advanced by petitioner have already been passed upon
by the DECS.

Petitioner moved for reconsideration praying that the case be remanded to the DECS for
another ocular inspection and evaluation of its alleged improved facilities. Petitioner
anchored its motion on the proposition that since it had made substantial improvements
on school equipment and facilities there existed no valid ground to deny them a permit to
offer maritime courses. After another circumspect review of the case, the Office of the
President found no cogent reason to set aside its previous resolution. It opined that —

Mere alleged efforts to improve the facilities and equipments (sic) which were long due
since 1986, do not warrant the reversal of our previous resolution. It bears stressing as the
records may show, that the phase-out order of DECS was based not only on PMMSI's
failure to provide adequate equipment and facilities but also on PMMSI's failure to
comply with the standard requirements prescribed for a school site.

xxx xxx xxx

Apart from these, PMMSI's adamant refusal to comply with the orders of the DECS to
phase out its unauthorized courses is sufficient ground to uphold the order appealed from.
Since 1986, PMMSI has been applying for a permit to offer maritime courses but has
been invariably denied for failure to comply with the minimum requirements prescribed
by DECS. Notwithstanding these denials, PMMSI continues to offer maritime courses
and to admit freshmen students in clear violation of Section 1, Rule 1, of the Education
Act of 1982 . . . .
 xxx xxx xxx

PMMSI's refusal to comply with the phase-out order on the ground that the same is not
yet final and executory is untenable. While said phase-out may not be final and executory,
there was no reason for PMMSI to offer maritime courses without the requisite prior
authority of the DECS. PMMSI possessed no valid permit prior to the issuance of the
phase-out. There was no authority to speak of. 10

Thus the motion was denied in the Resolution dated 12 January 1993 through respondent
Assistant Executive Secretary Renato Corona. 11

Petitioner assailed both resolutions of the Office of the President before respondent Court
of Appeals by way of certiorari. It alleged that the resolutions failed to meet the
constitutional requirement of due process because the basis for affirming the DECS
phase-out and closure orders was not sufficiently disclosed. Furthermore, its letters dated
2 and 3 October 1992 which presented incontrovertible proof that it had introduced
substantial improvements on its facilities for the past two and a half years while its appeal
was pending were not taken into account, thereby gravely abusing its discretion.

Respondent Court of Appeals brushed aside the allegations of petitioner since —

[T]he Office of the President, in the resolution dated November 10, 1992, appears to have
restated the report of the respondent DECS, meaning, that it adopted as its own the
DECS' report, but that is not a violation of the Constitution and the Rules of Court, in line
with Alba Patio De Makati vs. Alba Patio De Makati Employees Association, 128 SCRA
253, 264- 265 . . . Petitioner's latest attempt at improving its facilities does not warrant a
reversal of the phase-out order. For, in spite of the claim that it spent on improvements,
the basic problem remained as it still occupies the fifth floor of the William Liao
building, which is not conducive to learning and has a limited area for expansion and
development. 12

On 22 July 1993 the petition was dismissed. 13 On 26 November 1993 the motion for
reconsideration was denied. 14

Petitioner imputes error on respondent court: (1) in not setting aside the questioned
resolutions and orders of public respondents which were rendered without due process of
law since (a) petitioner was not afforded the right to fully present its case and submit
evidence in support thereof; (b) public respondents did not consider the evidence
presented by petitioner; (c) public respondents' decisions have no substantial evidence to
support them; (d) public respondents' decisions did not disclose the bases therefor; and,
(2) in implementing the closure orders which had not become final and executory.

Petitioner asseverates that the DECS denied its right to a hearing on the supposed
deficiencies which allegedly justified denial of its request for issuance of a renewal
permit. Likewise, the DECS denied petitioner the opportunity to correct such
deficiencies. The Office of the President totally ignored supervening events properly
brought to its attention in the letters of petitioner dated 2 and 3 October 1992. It issued
resolutions strictly on the basis of the DECS' representations which do not amount to
substantial evidence. The 10 November 1992 Resolution failed to sufficiently disclose the
basis for affirmation of the DECS' phase-out and closure orders. The 12 January 1993
Resolution still refused to take into consideration petitioner's compliance with the DECS'
requirements. Petitioner did not violate the Education Act of 1992 because it was
authorized to operate by virtue of the provisional authorities issued by the DECS. The
DECS orders were not final and executory because petitioner challenged them and
appropriately availed itself of the remedies available to it under the law.

Before proceeding to resolve the merits of this case, we shall state briefly the concept
regarding establishment of schools. The educational operation of schools is subject to
prior authorization of the government and is effected by recognition. In the case of
government-operated schools, whether local, regional or national, recognition of
educational programs and/or operations is deemed granted simultaneously with
establishment. In all other cases the rules and regulations governing recognition are
prescribed and enforced by the DECS, defining therein who are qualified to apply,
providing for a permit system, stating the conditions for the grant of recognition and for
its cancellation and withdrawal, and providing for related matters. 15 The requirement on
prior government authorization is pursuant to the State policy that educational programs
and/or operations shall be of good quality and therefore shall at least satisfy minimum
standards with respect to curricula, teaching staff, physical plant and facilities and of
administrative or management viability. 16

Set against the records of the case, the assertion of petitioner that it was deprived of its
right to a hearing and any opportunity whatsoever to correct the alleged deficiencies
readily collapses. The earlier narration of facts clearly demonstrates that before the DECS
issued the phase-out and closure orders, petitioner was duly notified, warned and given
several opportunities to correct its deficiencies and to comply with pertinent orders and
regulations.

Petitioner has gone all the way up to the Office of the President to seek a reversal of the
phase-out and closure orders. There is thus no reason to complain of lack of opportunity
to explain its side as well as to comply with the alleged deficiencies. 17 We agree with the
observation of the Office of the Solicitor General that —

As long as the parties were given opportunity to be heard before judgment was rendered,
the demands of due process were sufficiently met (Lindo v. COMELEC, 194 SCRA 25).
It should also be noted that petitioner herein repeatedly sought reconsideration of the
various orders of respondent DECS and its motions were duly considered by respondent
DECS to the extent of allowing and granting its request for re-inspection of its premises.
In connection therewith, it has been ruled that the opportunity to be heard is the essence
of procedural due process and that any defect is cured by the filing of a motion for
reconsideration (Medenilla v. Civil Service Commission, 194 SCRA 278). 18
Furthermore, the Office of the President properly ignored (in the sense that it did not find
worthy of consideration) the alleged supervening events, i.e., substantial improvements
on school equipment and facilities during the pendency of the case before said Office
because the improvements should have been undertaken starting 1986. Moreover, the
phase-out and closure orders were based not only on petitioner's deficiencies as a
maritime institute but also on its continued operation without the requisite authorization
from the DECS and acceptance of freshman students in blatant violation of the latter's
orders and/or persistent warnings not to do so. Verily, there are sufficient grounds to
uphold the phase-out and closure orders of the DECS which were issued conformably
with Sec. 28 of the Education Act of 1982 which provides:

Sec. 28. . . . . Punishable Violation. — . . . Operation of schools and educational programs

without authorization, and/or operation thereof in violation of the terms of recognition,
are hereby declared punishable violations subject to the penalties provided in this Act.

Secs. 68 and 69 of the same Act provide the penalties:

Sec. 68. Penalty Clause. — Any person upon conviction for an act in violation of Section
28, Chapter 3, Title III, shall be punished with a fine of not less than two thousand pesos
(P2,000.00) nor more than ten thousand pesos (P10,000.00) or imprisonment for a
maximum period of two (2) years, or both, in the discretion of the court.

If the act is committed by a school corporation, the school head together with the person
or persons responsible for the offense or violation shall be equally liable.

Sec. 69. Administrative Sanction. — The Minister (Secretary) of Education, Culture and
Sports may prescribe and impose such administrative sanction as he may deem
reasonable and appropriate in the implementing rules and regulations promulgated
pursuant to this Act for any of the following causes . . . . 5. Unauthorized operation of a
school, or course, or any component thereof . . . .

The corresponding rules implementing Secs. 68 and 69 read —

Sec. 1. Punishable Acts and Penalties. — The operation of a school, through the conduct
or offering of educational programs or courses of studies/training without prior
government authorization in the form of permit or recognition as provided for in Rule III,
PART III of these Rules, and/or in violation of any of the terms and conditions of the said
permit or recognition, have been declared punishable violations of the Act, subject to the
penalties provided therein.

Any person, therefore, upon conviction for an act constituting any of the foregoing
punishable violations, shall be punished with a fine of not less than Two Thousand Pesos
(P2,000.00) nor more than Ten Thousand Pesos (P10,000.00), or imprisonment for a
maximum period of two (2) years, or both, in the discretion of the Court: Provided,
however, that when the act is committed by a school corporation, the school head
together with the person or persons responsible for the violation or offense shall be
deemed equally liable.

Sec. 2. Administrative Sanction. — Without prejudice to the interest of students, teachers

and employees, and independently of the penalty imposed in Sec. 1 under this Rule, the
Minister may withdraw, suspend, revoke or cancel a school's authority to operate as an
educational institution or to conduct educational programs or courses of studies/training,
for any of the following causes, viz: . . . . e. Unauthorized operation of a school, or
program or course of studies or component thereof, or any violation of the prescribed
rules governing advertisements or announcements of educational institutions.

Substantial evidence has been defined to be such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. 19 A perusal of the questioned
resolutions of the Office of the President reveals that they are based on the records of the
case which constitute substantial evidence, proving distinctly not only petitioner's
consistent failure to meet the DECS' minimum standards for maritime institutes and
correct its deficiencies but also its continued operation and offering of maritime courses
despite the lack of permit.

Contrary to the claim of petitioner, the 10 November 1992 Resolution of the Office of the
President sufficiently disclosed the basis for its affirmance of the DECS' phase-out and
closure orders:

After a careful study, we are constrained to resolve that there exists no sufficient
justification to modify, alter or reverse the appealed order. We find no plausible reason to
disturb the action of the Secretary of Education, Culture and Sports, more so in light of
the conspicuous fact that PMMS has repeatedly failed to comply with the phase out order
since 1986. What is more, the grounds advanced by PMMS have already been passed
upon, and separately resolved by the office a quo. 20

Petitioner's persistent refusal to comply with the phase-out orders on the ground that the
same were not yet final and executory is untenable. As correctly held by the Office of the
President —

. . . . While said phase-out (orders) may not be final and executory, there was no reason
for PMMSI to offer maritime courses without, the requisite prior authority of the DECS.
PMMSI possessed no valid permit prior to the issuance of the phase-out. There was no
authority to speak of. 21

By reason of the special knowledge and expertise of administrative departments over

matters falling under their jurisdiction, they are in a better position to pass judgment
thereon and their findings of fact in that regard are generally accorded respect, if not
finality, by the courts. In the case at bench, it is not the function of this Court nor any
other court for that matter —
. . . to review the decisions and orders of the Secretary on the issue of whether or not an
educational institution meets the norms and standards required for permission to operate
and to continue operating as such. On this question, no Court has the power or
prerogative to substitute its opinion for that of the Secretary. Indeed, it is obviously not
expected that any Court would have the competence to do so.

The only authority reposed in the Courts on the matter is the determination of whether or
not the Secretary of Education, Culture and Sports has acted within the scope of powers
granted him by law and the Constitution. As long as it appears that he has done so, any
decision rendered by him should not and will not be subject to review and reversal by any
court.

Of course, if it should be made to appear to the Court that those powers were in a case
exercised so whimsically, capriciously, oppressively, despotically or arbitrarily as to call
for peremptory correction — or stated otherwise, that the Secretary had acted with grave
abuse of discretion, or had unlawfully neglected the performance of an act which the law
specifically enjoins as a duty, or excluded another from the use or enjoyment of a right or
office to which such other is entitled — it becomes the Court's duty to rectify such action
through the extraordinary remedies of certiorari, prohibition, or mandamus, whichever
may properly apply. Yet even in these extreme instances, where a Court finds that there
has been abuse of powers by the Secretary and consequently nullifies and/or forbids such
an abuse of power, or commands whatever is needful to keep its exercise within bounds,
the Court, absent any compelling reason to do otherwise, should still leave to the
Secretary the ultimate determination of the issue of the satisfaction of fulfillment by an
educational institution of the standards set down for its legitimate operation, as to which
it should not ordinarily substitute its own judgment for that of said office. 22

There being no grave abuse of discretion committed by respondents representing the

Office of the President in issuing the Resolutions of 10 November 1992 and 12 January
1993, respondent Court of Appeals did not err in sustaining the resolutions in question.

WHEREFORE , the petition is DENIED. The questioned Decision of the Court of

Appeals dated 22 July 1993, as well as its Resolution of 26 November 1993, is
AFFIRMED.

Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 94571 April 22, 1991

TEOFISTO T. GUINGONA, JR. and AQUILINO Q. PIMENTEL, JR., petitioners,

vs.
HON. GUILLERMO CARAGUE, in his capacity as Secretary, Budget &
Management, HON. ROZALINA S. CAJUCOM in her capacity as National
Treasurer and COMMISSION ON AUDIT, respondents.

Ramon A. Gonzales for petitioners.

GANCAYCO, J.:

This is a case of first impression whereby petitioners question the constitutionality of the
automatic appropriation for debt service in the 1990 budget.

As alleged in the petition, the facts are as follows:

The 1990 budget consists of P98.4 Billion in automatic appropriation (with P86.8 Billion
for debt service) and P155.3 Billion appropriated under Republic Act No. 6831, otherwise
known as the General Appropriations Act, or a total of P233.5 Billion, 1 while the
appropriations for the Department of Education, Culture and Sports amount to
P27,017,813,000.00.2

The said automatic appropriation for debt service is authorized by P.D. No. 81, entitled
"Amending Certain Provisions of Republic Act Numbered Four Thousand Eight Hundred
Sixty, as Amended (Re: Foreign Borrowing Act)," by P.D. No. 1177, entitled "Revising
the Budget Process in Order to Institutionalize the Budgetary Innovations of the New
Society," and by P.D. No. 1967, entitled "An Act Strenghthening the Guarantee and
Payment Positions of the Republic of the Philippines on Its Contingent Liabilities Arising
out of Relent and Guaranteed Loan by Appropriating Funds For The Purpose.

There can be no question that petitioners as Senators of the Republic of the Philippines
may bring this suit where a constitutional issue is raised. 3 Indeed, even a taxpayer has
personality to restrain unlawful expenditure of public funds.

The petitioner seek the declaration of the unconstitutionality of P.D. No. 81, Sections 31
of P.D. 1177, and P.D. No. 1967. The petition also seeks to restrain the disbursement for
debt service under the 1990 budget pursuant to said decrees.

Respondents contend that the petition involves a pure political question which is the
repeal or amendment of said laws addressed to the judgment, wisdom and patriotism of
the legislative body and not this Court.

In Gonzales,5 the main issue was the unconstitutionality of the presidential veto of certain
provision particularly Section 16 of the General Appropriations Act of 1990, R.A. No.
6831. This Court, in disposing of the issue, stated —

The political question doctrine neither interposes an obstacle to judicial determination of

the rival claims. The jurisdiction to delimit constitutional boundaries has been given to
this Court. It cannot abdicate that obligation mandated by the 1987 Constitution, although
said provision by no means does away with the applicability of the principle in
appropriate cases.

Sec. 1. The judicial power shad 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.

With the Senate maintaining that the President's veto is unconstitutional and that charge
being controverted, there is an actual case or justiciable controversy between the Upper
House of Congress and the executive department that may be taken cognizance of by this
Court.

The questions raised in the instant petition are —

I. IS THE APPROPRIATION OF P86 BILLION IN THE P233 BILLION 1990

BUDGET VIOLATIVE OF SECTION 5, ARTICLE XIV OF THE CONSTITUTION?
II. ARE PD No. 81, PD No. 1177 AND PD No. 1967 STILL OPERATIVE UNDER THE
CONSTITUTION?

III. ARE THEY VIOLATIVE OF SECTION 29(l), ARTICLE VI OF THE

CONSTITUTION?6

There is thus a justiciable controversy raised in the petition which this Court may
properly take cognizance of On the first issue, the petitioners aver —

According to Sec. 5, Art. XIV of the Constitution:

(5) The State shall assign the highest budgetary priority to education and ensure that
teaching will attract and retain its rightful share of the best available talents through
adequate remuneration and other means of job satisfaction and fulfillment.

The reason behind the said provision is stated, thus:

In explaining his proposed amendment, Mr. Ople stated that all the great and sincere piety
professed by every President and every Congress of the Philippines since the end of
World War II for the economic welfare of the public schoolteachers always ended up in
failure and this failure, he stated, had caused mass defection of the best and brightest
teachers to other careers, including menial jobs in overseas employment and concerted
actions by them to project their grievances, mainly over low pay and abject working
conditions.

He pointed to the high expectations generated by the February Revolution, especially

keen among public schoolteachers, which at present exacerbate these long frustrated
hopes.

Mr. Ople stated that despite the sincerity of all administrations that tried vainly to respond
to the needs of the teachers, the central problem that always defeated their pious
intentions was really the one budgetary priority in the sense that any proposed increase
for public schoolteachers had to be multiplied many times by the number of government
employees in general and their equitable claims to any pay standardization such that the
pay rate of teachers is hopelessly pegged to the rate of government workers in general.
This, he stated, foredoomed the prospect of a significant pay increase for teachers.

Mr. Ople pointed out that the recognition by the Constitution of the highest priority for
public schoolteachers, and by implication, for all teachers, would ensure that the
President and Congress would be strongly urged by a constitutional mandate to grant to
them such a level of remuneration and other incentives that would make teaching
competitive again and attractive to the best available talents in the nation.

Finally, Mr. Ople recalled that before World War II, teaching competed most successfully
against all other career choices for the best and the brightest of the younger generation. It
is for this reason, he stated, that his proposed amendment if approved, would ensure that
teaching would be restored to its lost glory as the career of choice for the most talented
and most public-spirited of the younger generation in the sense that it would become the
countervailing measure against the continued decline of teaching and the wholesale
desertion of this noble profession presently taking place. He further stated that this would
ensure that the future and the quality of the population would be asserted as a top
priority against many clamorous and importunate but less important claims of the
present. (Journal of the Constitutional Commission, Vol. II, p. 1172)

However, as against this constitutional intention, P86 Billion is appropriated for debt
service while only P27 Billion is appropriated for the Department of Education in the
1990 budget. It plain, therefore, that the said appropriation for debt services is
inconsistent with the Constitution, hence, viod (Art. 7, New Civil Code).7

While it is true that under Section 5(5), Article XIV of the Constitution Congress is
mandated to "assign the highest budgetary priority to education" in order to "insure that
teaching will attract and retain its rightful share of the best available talents through
adequate remuneration and other means of job satisfaction and fulfillment," it does not
thereby follow that the hands of Congress are so hamstrung as to deprive it the power to
respond to the imperatives of the national interest and for the attainment of other state
policies or objectives.

As aptly observed by respondents, since 1985, the budget for education has tripled to
upgrade and improve the facility of the public school system. The compensation of
teachers has been doubled. The amount of P29,740,611,000.00 8 set aside for the
Department of Education, Culture and Sports under the General Appropriations Act (R.A.
No. 6831), is the highest budgetary allocation among all department budgets. This is a
clear compliance with the aforesaid constitutional mandate according highest priority to
education.

Having faithfully complied therewith, Congress is certainly not without any power,
guided only by its good judgment, to provide an appropriation, that can reasonably
service our enormous debt, the greater portion of which was inherited from the previous
administration. It is not only a matter of honor and to protect the credit standing of the
country. More especially, the very survival of our economy is at stake. Thus, if in the
process Congress appropriated an amount for debt service bigger than the share allocated
to education, the Court finds and so holds that said appropriation cannot be thereby
assailed as unconstitutional.

Now to the second issue. The petitioners made the following observations:

To begin with, Rep. Act 4860 entitled "AN ACT AUTHORIZING THE PRESIDENT OF
THE PHILIPPINES TO OBTAIN SUCH FOREIGN LOANS AND CREDITS, OR TO
INCUR SUCH FOREIGN INDEBTEDNESS, AS MAY BE NECESSARY TO
FINANCE APPROVED ECONOMIC DEVELOPMENT PURPOSES OR PROJECTS,
AND TO GUARANTEE, IN BEHALF OF THE REPUBLIC OF THE PHILIPPINES,
FOREIGN LOANS OBTAINED OR BONDS ISSUED BY CORPORATIONS OWNED
OR CONTROLLED BY THE GOVERNMENT OF THE PHILIPPINES FOR
ECONOMIC DEVELOPMENT PURPOSES INCLUDING THOSE INCURRED FOR
PURPOSES OF RELENDING TO THE PRIVATE SECTOR, APPROPRIATING THE
NECESSARY FUNDS THEREFOR, AND FOR OTHER PURPOSES, provides:

Sec. 2. The total amount of loans, credits and indebtedness, excluding interests, which the
President of the Philippines is authorized to incur under this Act shall not exceed one
billion United States dollars or its equivalent in other foreign currencies at the exchange
rate prevailing at the time the loans, credits and indebtedness are incurred: Provided,
however, That the total loans, credits and indebtedness incurred under this Act shall not
exceed two hundred fifty million in the fiscal year of the approval of this Act, and two
hundred fifty million every fiscal year thereafter, all in United States dollars or its
equivalent in other currencies.

Sec. 5. It shall be the duty of the President, within thirty days after the opening of every
regular session, to report to the Congress the amount of loans, credits and indebtedness
contracted, as well as the guarantees extended, and the purposes and projects for which
the loans, credits and indebtedness were incurred, and the guarantees extended, as well as
such loans which may be reloaned to Filipino owned or controlled corporations and
similar purposes.

Sec. 6. The Congress shall appropriate the necessary amount out of any funds in the
National Treasury not otherwise appropriated, to cover the payment of the principal and
interest on such loans, credits or indebtedness as and when they shall become due.

However, after the declaration of martial law, President Marcos issued PD 81 amending
Section 6, thus:

Sec. 7. Section six of the same Act is hereby further amended to read as follows:

Sec. 6. Any provision of law to the contrary notwithstanding, and in order to enable the
Republic of the Philippines to pay the principal, interest, taxes and other normal banking
charges on the loans, credits or indebtedness, or on the bonds, debentures, securities or
other evidences of indebtedness sold in international markets incurred under the
authority of this Act, the proceeds of which are deemed appropriated for the projects, all
the revenue realized from the projects financed by such loans, credits or indebtedness, or
on the bonds, debentures, securities or other evidences of indebtedness, shall be turned
over in full, after deducting actual and necessary expenses for the operation and
maintenance of said projects, to the National Treasury by the government office, agency
or instrumentality, or government-owned or controlled corporation concerned, which is
hereby appropriated for the purpose as and when they shall become due. In case the
revenue realized is insufficient to cover the principal, interest and other charges, such
portion of the budgetary savings as may be necessary to cover the balance or deficiency
shall be set aside exclusively for the purpose by the government office, agency or
instrumentality, or government-owned or controlled corporation concerned: Provided,
That, if there still remains a deficiency, such amount necessary to cover the payment of
the principal and interest on such loans, credit or indebtedness as and when they shall
become due is hereby appropriated out of any funds in the national treasury not
otherwise appropriated: . . .

President Marcos also issued PD 1177, which provides:

Sec. 31. Automatic appropriations. –– All expenditures for (a) personnel retirement
premiums, government service insurance, and other similar fixed expenditures,
(b) principal and interest on public debt, (c) national government guarantees of
obligations which are drawn upon, are automatically appropriated; Provided, that no
obligations shall be incurred or payments made from funds thus automatically
appropriated except as issued in the form of regular budgetary allotments.

and PD 1967, which provides:

Sec. 1. There is hereby appropriated, out of any funds in the National Treasury not
otherwise appropriated, such amounts as may be necessary to effect payments on foreign
or domestic loans, or foreign or domestic loans whereon creditors make a call on the
direct and indirect guarantee of the Republic of the Philippines, obtained by:

a. The Republic of the Philippines the proceeds of which were relent to government-
owned or controlled corporations and/or government financial institutions;

b. government-owned or controlled corporations and/or government financial institutions

the proceeds of which were relent to public or private institutions;

c. government-owned or controlled corporations and/or financial institutions and

guaranteed by the Republic of the Philippines;

d. other public or private institutions and guaranteed by government-owned or controlled

corporations and/or government financial institutions.

Sec. 2. All repayments made by borrower institutions on the loans for whose account
advances were made by the National Treasury will revert to the General Fund.

Sec. 3. In the event that any borrower institution is unable to settle the advances made out
of the appropriation provided therein, the Treasurer of the Philippines shall make the
proper recommendation to the Minister of Finance on whether such advances shall be
treated as equity or subsidy of the National Government to the institution
concerned, which shall be considered in the budgetary program of the Government.

In the "Budget of Expenditures and Sources of Financing Fiscal Year 1990," which
accompanied her budget message to Congress, the President of the Philippines, Corazon
C. Aquino, stated:

Sources Appropriation
The P233.5 billion budget proposed for fiscal year 1990 will require P132.1 billion of
new programmed appropriations out of a total P155.3 billion in new legislative
authorization from Congress. The rest of the budget, totalling P101.4 billion, will be
sourced from existing appropriations: P98.4 billion from Automatic Appropriations and
P3.0 billion from Continuing Appropriations (Fig. 4).

And according to Figure 4, . . ., P86.8 billion out of the P98.4 Billion are programmed for
debt service. In other words, the President had, on her own, determined and set aside the
said amount of P98.4 Billion with the rest of the appropriations of P155.3 Billion to be
determined and fixed by Congress, which is now Rep. Act 6831.9

Petitioners argue that the said automatic appropriations under the aforesaid decrees of
then President Marcos became functus oficio when he was ousted in February, 1986; that
upon the expiration of the one-man legislature in the person of President Marcos, the
legislative power was restored to Congress on February 2, 1987 when the Constitution
was ratified by the people; that there is a need for a new legislation by Congress
providing for automatic appropriation, but Congress, up to the present, has not approved
any such law; and thus the said P86.8 Billion automatic appropriation in the 1990 budget
is an administrative act that rests on no law, and thus, it cannot be enforced.

Moreover, petitioners contend that assuming arguendo that P.D. No. 81, P.D. No. 1177
and P.D. No. 1967 did not expire with the ouster of President Marcos, after the adoption
of the 1987 Constitution, the said decrees are inoperative under Section 3, Article XVIII
which provides ––

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions,
and other executive issuances not inconsistent with this Constitution shall
remain operative until amended, repealed, or revoked." (Emphasis supplied.)

They then point out that since the said decrees are inconsistent with Section 24, Article VI
of the Constitution, i.e.,

Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments. (Emphasis
supplied.)

whereby bills have to be approved by the President, 10 then a law must be passed by
Congress to authorize said automatic appropriation. Further, petitioners state said decrees
violate Section 29(l) of Article VI of the Constitution which provides as follows ––

Sec. 29(l). No money shall be paid out of the Treasury except in pursuance of
an appropriation made by law.
They assert that there must be definiteness, certainty and exactness in an
appropriation,11 otherwise it is an undue delegation of legislative power to the President
who determines in advance the amount appropriated for the debt service.12

The Court is not persuaded.

Section 3, Article XVIII of the Constitution recognizes that

"All existing laws, decrees, executive orders, proclamations, letters of instructions and
other executive issuances not inconsistent with the Constitution shall remain operative
until amended, repealed or revoked."

This transitory provision of the Constitution has precisely been adopted by its framers to
preserve the social order so that legislation by the then President Marcos may be
recognized. Such laws are to remain in force and effect unless they are inconsistent with
the Constitution or, are otherwise amended, repealed or revoked.

An examination of the aforecited presidential decrees show the clear intent that the
amounts needed to cover the payment of the principal and interest on all foreign loans,
including those guaranteed by the national government, should be made available when
they shall become due precisely without the necessity of periodic enactments of separate
laws appropriating funds therefor, since both the periods and necessities are incapable of
determination in advance.

The automatic appropriation provides the flexibility for the effective execution of debt
management policies. Its political wisdom has been convincingly discussed by the
Solicitor General as he argues —

. . . First, for example, it enables the Government to take advantage of a favorable turn of
market conditions by redeeming high-interest securities and borrowing at lower rates, or
to shift from short-term to long-term instruments, or to enter into arrangements that could
lighten our outstanding debt burden debt-to-equity, debt to asset, debt-to-debt or other
such schemes. Second, the automatic appropriation obviates the serious difficulties in
debt servicing arising from any deviation from what has been previously programmed.
The annual debt service estimates, which are usually made one year in advance, are based
on a mathematical set or matrix or, in layman's parlance, "basket" of foreign exchange
and interest rate assumptions which may significantly differ from actual rates not even in
proportion to changes on the basis of the assumptions. Absent an automatic appropriation
clause, the Philippine Government has to await and depend upon Congressional action,
which by the time this comes, may no longer be responsive to the intended conditions
which in the meantime may have already drastically changed. In the meantime, also,
delayed payments and arrearages may have supervened, only to worsen our debt service-
to-total expenditure ratio in the budget due to penalties and/or demand for immediate
payment even before due dates.

Clearly, the claim that payment of the loans and indebtedness is conditioned upon the
continuance of the person of President Marcos and his legislative power goes against the
intent and purpose of the law. The purpose is foreseen to subsist with or without the
person of Marcos.13

The argument of petitioners that the said presidential decrees did not meet the
requirement and are therefore inconsistent with Sections 24 and 27 of Article VI of the
Constitution which requires, among others, that "all appropriations, . . . bills authorizing
increase of public debt" must be passed by Congress and approved by the President is
untenable. Certainly, the framers of the Constitution did not contemplate that existing
laws in the statute books including existing presidential decrees appropriating public
money are reduced to mere "bills" that must again go through the legislative million The
only reasonable interpretation of said provisions of the Constitution which refer to "bills"
is that they mean appropriation measures still to be passed by Congress. If the intention
of the framers thereof were otherwise they should have expressed their decision in a more
direct or express manner.

Well-known is the rule that repeal or amendment by implication is frowned upon. Equally
fundamental is the principle that construction of the Constitution and law is generally
applied prospectively and not retrospectively unless it is so clearly stated.

On the third issue that there is undue delegation of legislative power, in Edu vs.
Ericta,14 this Court had this to say ––

What cannot be delegated is the authority under the Constitution to make laws and to
alter and repeal them;the test is the completeness of the statute in all its terms and
provisions when it leaves the hands of the legislature. To determine whether or not there
is an undue delegation of legislative power, the inequity must be directed to the scope and
definiteness of the measure enacted. The legislature does not abdicate its function when it
describes what job must be done, who is to do it, and what is the scope of his authority.
For a complex economy, that may indeed be the only way in which legislative process
can go forward . . .

To avoid the taint of unlawful delegation there must be a standard, which implies at the
very least that the legislature itself determines matters of principle and lays down
fundamental policy . . .

The standard may be either express or implied . . . from the policy and purpose of the act
considered as whole . . .

In People vs. Vera,15 this Court said "the true distinction is between the delegation of
power to make the law, which necessarily involves discretion as to what the law shall be,
and conferring 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."

Ideally, the law must be complete in all its essential terms and conditions when it leaves
the legislature so that there will be nothing left for the delegate to do when it reaches him
except enforce it. If there are gaps in the law that will prevent its enforcement unless they
are first filled, the delegate will then have been given the opportunity to step in the shoes
of the legislature and exercise a discretion essentially legislative in order to repair the
omissions. This is invalid delegation.16

The Court finds that in this case the questioned laws are complete in all their essential
terms and conditions and sufficient standards are indicated therein.

The legislative intention in R.A. No. 4860, as amended, Section 31 of P.D. No. 1177 and
P.D. No. 1967 is that the amount needed should be automatically set aside in order to
enable the Republic of the Philippines to pay the principal, interest, taxes and other
normal banking charges on the loans, credits or indebtedness incurred as guaranteed by it
when they shall become due without the need to enact a separate law appropriating funds
therefor as the need arises. The purpose of these laws is to enable the government to
make prompt payment and/or advances for all loans to protect and maintain the credit
standing of the country.

Although the subject presidential decrees do not state specific amounts to be paid,
necessitated by the very nature of the problem being addressed, the amounts nevertheless
are made certain by the legislative parameters provided in the decrees. The Executive is
not of unlimited discretion as to the amounts to be disbursed for debt servicing. The
mandate is to pay only the principal, interest, taxes and other normal banking charges on
the loans, credits or indebtedness, or on the bonds, debentures or security or other
evidences of indebtedness sold in international markets incurred by virtue of the law, as
and when they shall become due. No uncertainty arises in executive implementation as
the limit will be the exact amounts as shown by the books of the Treasury.

The Government budgetary process has been graphically described to consist of four
major phases as aptly discussed by the Solicitor General:

The Government budgeting process consists of four major phases:

1. Budget preparation. The first step is essentially tasked upon the Executive Branch and
covers the estimation of government revenues, the determination of budgetary priorities
and activities within the constraints imposed by available revenues and by borrowing
limits, and the translation of desired priorities and activities into expenditure levels.

Budget preparation starts with the budget call issued by the Department of Budget and
Management. Each agency is required to submit agency budget estimates in line with the
requirements consistent with the general ceilings set by the Development Budget
Coordinating Council (DBCC).

With regard to debt servicing, the DBCC staff, based on the macro-economic projections
of interest rates (e.g. LIBOR rate) and estimated sources of domestic and foreign
financing, estimates debt service levels. Upon issuance of budget call, the Bureau of
Treasury computes for the interest and principal payments for the year for all direct
national government borrowings and other liabilities assumed by the same.

2. Legislative authorization. –– At this stage, Congress enters the picture and deliberates
or acts on the budget proposals of the President, and Congress in the exercise of its own
judgment and wisdom formulatesan appropriation act precisely following the process
established by the Constitution, which specifies that no money may be paid from the
Treasury except in accordance with an appropriation made by law.

Debt service is not included in the General Appropriation Act, since authorization
therefor already exists under RA No. 4860 and 245, as amended and PD 1967. Precisely
in the fight of this subsisting authorization as embodied in said Republic Acts and PD for
debt service, Congress does not concern itself with details for implementation by the
Executive, but largely with annual levels and approval thereof upon due deliberations as
part of the whole obligation program for the year. Upon such approval, Congress has
spoken and cannot be said to have delegated its wisdom to the Executive, on whose part
lies the implementation or execution of the legislative wisdom.

3. Budget Execution. Tasked on the Executive, the third phase of the budget process
covers the various operational aspects of budgeting. The establishment of obligation
authority ceilings, the evaluation of work and financial plans for individual activities, the
continuing review of government fiscal position, the regulation of funds releases, the
implementation of cash payment schedules, and other related activities comprise this
phase of the budget cycle.

Release from the debt service fired is triggered by a request of the Bureau of the Treasury
for allotments from the Department of Budget and Management, one quarter in advance
of payment schedule, to ensure prompt payments. The Bureau of Treasury, upon
receiving official billings from the creditors, remits payments to creditors through the
Central Bank or to the Sinking Fund established for government security issues (Annex
F).

4. Budget accountability. The fourth phase refers to the evaluation of actual performance
and initially approved work targets, obligations incurred, personnel hired and work
accomplished are compared with the targets set at the time the agency budgets were
approved.

There being no undue delegation of legislative power as clearly above shown, petitioners
insist nevertheless that subject presidential decrees constitute undue delegation of
legislative power to the executive on the alleged ground that the appropriations therein
are not exact, certain or definite, invoking in support therefor the Constitution of
Nebraska, the constitution under which the case of State v. Moore, 69 NW 974, cited by
petitioners, was decided. Unlike the Constitution of Nebraska, however, our Constitution
does not require a definite, certain, exact or "specific appropriation made by law." Section
29, Article VI of our 1987 Constitution omits any of these words and simply states:
Section 29(l). No money shall be paid out of the treasury except in pursuance of an
appropriation made by law.

More significantly, there is no provision in our Constitution that provides or prescribes

any particular form of words or religious recitals in which an authorization or
appropriation by Congress shall be made, except that it be "made by law," such as
precisely the authorization or appropriation under the questioned presidential decrees. In
other words, in terms of time horizons, an appropriation may be made impliedly (as by
past but subsisting legislations) as well as expressly for the current fiscal year (as by
enactment of laws by the present Congress), just as said appropriation may be made in
general as well as in specific terms. The Congressional authorization may be embodied in
annual laws, such as a general appropriations act or in special provisions of laws of
general or special application which appropriate public funds for specific public
purposes, such as the questioned decrees. An appropriation measure is sufficient if the
legislative intention clearly and certainly appears from the language employed (In re
Continuing Appropriations, 32 P. 272), whether in the past or in the present.17

Thus, in accordance with Section 22, Article VII of the 1987 Constitution, President
Corazon C. Aquino submitted to Congress the Budget of Expenditures and Sources of
Financing for the Fiscal Year 1990. The proposed 1990 expenditure program covering the
estimated obligation that will be incurred by the national government during the fiscal
year amounts to P233.5 Billion. Of the proposed budget, P86.8 is set aside for debt
servicing as follows:

1âwphi1
National Government Debt
Service Expenditures,
1990
(in million pesos)
Foreign
Domestic
RA 4860
RA 245, as Total
as amended,
amended
PD 1967
Interest
P36,861 P18,570 P55,431
Payments
Principal
16,310 15,077 31,387
Amortization
18

P53,171 P33,647 P86,818

Total
======= ======== =======
= =

as authorized under P.D. 1967 and R.A. 4860 and 245, as amended.
The Court, therefor, finds that R.A. No. 4860, as amended by P.D. No. 81, Section 31 of
P.D. 1177 and P.D. No. 1967 constitute lawful authorizations or appropriations, unless
they are repealed or otherwise amended by Congress. The Executive was thus merely
complying with the duty to implement the same.

There can be no question as to the patriotism and good motive of petitioners in filing this
petition. Unfortunately, the petition must fail on the constitutional and legal issues raised.
As to whether or not the country should honor its international debt, more especially the
enormous amount that had been incurred by the past administration, which appears to be
the ultimate objective of the petition, is not an issue that is presented or proposed to be
addressed by the Court. Indeed, it is more of a political decision for Congress and the
Executive to determine in the exercise of their wisdom and sound discretion.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
G.R. No. 120095 August 5, 1996

JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL,

INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then Secretary
of the Department of Labor and Employment, HON. JOSE BRILLANTES, in his
capacity as acting Secretary of the Department of Labor and Employment and
HON. FELICISIMO JOSON, in his capacity as Administrator of the Philippine
Overseas Employment Administration, respondents.

KAPUNAN, J.:p

The limits of government regulation under the State's police power are once again at the
vortex of the instant controversy. Assailed is the government's power to control
deployment of female entertainers to Japan by requiring an Artist Record Book (ARB) as
a precondition to the processing by the POEA of any contract for overseas employment.
By contending that the right to overseas employment is a property right within the
meaning of the Constitution, petitioners vigorously aver that deprivation thereof allegedly
through the onerous requirement of an ARB violates the due process clause and
constitutes an invalid exercise of the police power.

The factual antecedents are undisputed.

Following the much-publicized death of Maricris Sioson in 1991, former President

Corazon C. Aquino ordered a total ban against the deployment of performing artists to
Japan and other foreign destinations. The ban was, however, rescinded after leaders of the
overseas employment industry promised to extend full support for a program aimed at
removing kinks in the system of deployment. In its place, the government, through the
Secretary of Labor and Employment, subsequently issued Department Order No. 28,
creating the Entertainment Industry Advisory Council (EIAC), which was tasked with
issuing guidelines on the training, testing certification and deployment of performing
artists abroad.

Pursuant to the EIAC's recommendations,1 the Secretary of Labor, on January 6, 1994,

issued Department Order No. 3 establishing various procedures and requirements for
screening performing artists under a new system of training, testing, certification and
deployment of the former. Performing artists successfully hurdling the test, training and
certification requirement were to be issued an Artist's Record Book (ARB), a necessary
prerequisite to processing of any contract of employment by the POEA. Upon request of
the industry, implementation of the process, originally scheduled for April 1, 1994, was
moved to October 1, 1994.
Thereafter, the Department of Labor, following the EIAC's recommendation, issued a
series of orders fine-tuning and implementing the new system. Prominent among these
orders were the following issuances:

1. Department Order No. 3-A, providing for additional guidelines on the training, testing,
certification and deployment of performing artists.

2. Department Order No. 3-B, pertaining to the Artist Record Book (ARB) requirement,
which could be processed only after the artist could show proof of academic and skills
training and has passed the required tests.

3. Department Order No. 3-E, providing the minimum salary a performing artist ought to
received (not less than US$600.00 for those bound for Japan) and the authorized
deductions therefrom.

4. Department Order No. 3-F, providing for the guidelines on the issuance and use of the
ARB by returning performing artists who, unlike new artists, shall only undergo a Special
Orientation Program (shorter than the basic program) although they must pass the
academic test.

In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the
Philippines (FETMOP), on January 27, 1995 filed a class suit assailing these department
orders, principally contending that said orders 1) violated the constitutional right to
travel; 2) abridged existing contracts for employment; and 3) deprived individual artists
of their licenses without due process of law. FETMOP, likewise, averred that the issuance
of the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation of
the constitutional right... to life liberty and property." Said Federation consequently
prayed for the issuance of a writ of preliminary injunction against the aforestated orders.

On February 2, 1992, JMM Promotion and Management, Inc. Kary International, Inc.,
herein petitioners, filed a Motion for Intervention in said civil case, which was granted by
the trial court in an Order dated 15 February, 1995.

However, on February 21, 1995, the trial court issued an Order denying petitioners'
prayed for a writ of preliminary injunction and dismissed the complaint.

On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713
dismissed the same. Tracing the circumstances which led to the issuance of the ARB
requirement and the assailed Department Order, respondent court concluded that the
issuance constituted a valid exercise by the state of the police power.

We agree.

The latin maxim salus populi est surprema lex embodies the character of the entire
spectrum of public laws aimed at promoting the general welfare of the people under the
State's police power. As an inherent attribute of sovereignty which virtually "extends to
all public needs,"2 this "least limitable"3 of governmental powers grants a wide panoply of
instruments through which the state, as parens patriae gives effect to a host of its
regulatory powers.

Describing the nature and scope of the police power, Justice Malcolm, in the early case
of Rubi v. Provincial Board of Mindoro4 wrote:

"The police power of the State," one court has said... is a power coextensive with self-
protection, and is not inaptly termed "the law of overruling necessity." It may be said to
be that inherent and plenary power in the state which enables it to prohibit all things
hurtful to the comfort, safety and welfare of society." Carried onward by the current of
legislature, the judiciary rarely attempts to dam the onrushing power of legislative
discretion, provided the purposes of the law do not go beyond the great principles that
mean security for the public welfare or do not arbitrarily interfere with the right of the
individual.5

Thus, police power concerns government enactments which precisely interfere with
personal liberty or property in order to promote the general welfare or the common good.
As the assailed Department Order enjoys a presumed validity, it follows that the burden
rests upon petitioners to demonstrate that the said order, particularly, its ARB
requirement, does not enhance the public welfare or was exercised arbitrarily or
unreasonably.

A thorough review of the facts and circumstances leading to the issuance of the assailed
orders compels us to rule that the Artist Record Book requirement and the questioned
Department Order related to its issuance were issued by the Secretary of Labor pursuant
to a valid exercise of the police power.

In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing
the labor export of countries with mammoth populations such as India and China.
According to the National Statistics Office, this diaspora was augmented annually by
over 450,000 documented and clandestine or illegal (undocumented) workers who left the
country for various destinations abroad, lured by higher salaries, better work
opportunities and sometimes better living conditions.

Of the hundreds of thousands of workers who left the country for greener pastures in the
last few years, women composed slightly close to half of those deployed, constituting
47% between 1987-1991, exceeding this proportion (58%) by the end of 1991, 6 the year
former President Aquino instituted the ban on deployment of performing artists to Japan
and other countries as a result of the gruesome death of Filipino entertainer Maricris
Sioson.

It was during the same period that this Court took judicial notice not only of the trend, but
also of the fact that most of our women, a large number employed as domestic helpers
and entertainers, worked under exploitative conditions "marked by physical and personal
abuse."7 Even then, we noted that "[t]he sordid tales of maltreatment suffered by migrant
Filipina workers, even rape and various forms of torture, confirmed by testimonies of
returning workers" compelled "urgent government action."8

Pursuant to the alarming number of reports that a significant number of Filipina

performing artists ended up as prostitutes abroad (many of whom were beaten, drugged
and forced into prostitution), and following the deaths of number of these women, the
government began instituting measures aimed at deploying only those individuals who
met set standards which would qualify them as legitimate performing artists. In spite of
these measures, however, a number of our countrymen have nonetheless fallen victim to
unscrupulous recruiters, ending up as virtual slaves controlled by foreign crime
syndicates and forced into jobs other than those indicated in their employment contracts.
Worse, some of our women have been forced into prostitution.

Thus, after a number of inadequate and failed accreditation schemes, the Secretary of
Labor issued on August 16, 1993, D.O. No. 28, establishing the Entertainment Industry
Advisory Council (EIAC), the policy advisory body of DOLE on entertainment industry
matters.9 Acting on the recommendations of the said body, the Secretary of Labor, on
January 6, 1994, issued the assailed orders. These orders embodied EIAC's Resolution
No. 1, which called for guidelines on screening, testing and accrediting performing
overseas Filipino artists. Significantly, as the respondent court noted, petitioners were
duly represented in the EIAC,10which gave the recommendations on which the ARB and
other requirements were based.

Clearly, the welfare of Filipino performing artists, particularly the women was paramount
in the issuance of Department Order No. 3. Short of a total and absolute ban against the
deployment of performing artists to "high risk" destinations, a measure which would only
drive recruitment further underground, the new scheme at the very least rationalizes the
method of screening performing artists by requiring reasonable educational and artistic
skills from them and limits deployment to only those individuals adequately prepared for
the unpredictable demands of employment as artists abroad. It cannot be gainsaid that this
scheme at least lessens the room for exploitation by unscrupulous individuals and
agencies.

Moreover, here or abroad, selection of performing artists is usually accomplished by

auditions, where those deemed unfit are usually weeded out through a process which is
inherently subjective and vulnerable to bias and differences in taste. The ARB
requirement goes one step further, however, attempting to minimize the subjectivity of
the process by defining the minimum skills required from entertainers and performing
artists. As the Solicitor General observed, this should be easily met by experienced artists
possessing merely basic skills. The test are aimed at segregating real artists or performers
from those passing themselves off as such, eager to accept any available job and therefore
exposing themselves to possible exploitation.

As to the other provisions of Department Order No. 3 questioned by petitioners, we see

nothing wrong with the requirements for document and booking confirmation (D.O. 3-C),
a minimum salary scale (D.O. 3-E), or the requirement for registration of returning
performers. The requirement for a venue certificate or other documents evidencing the
place and nature or work allows the government closer monitoring of foreign employers
and helps keep our entertainers away from prostitution fronts and other worksites
associated with unsavory, immoral, illegal or exploitative practices. Parenthetically, none
of these issuances appear to us, by any stretch of the imagination, even remotely
unreasonable or arbitrary. They address a felt need of according greater protection for an
oft-exploited segment of our OCW's. They respond to the industry's demand for clearer
and more practicable rules and guidelines. Many of these provisions were fleshed out
following recommendations by, and after consultations with, the affected sectors and non-
government organizations. On the whole, they are aimed at enhancing the safety and
security of entertainers and artists bound for Japan and other destinations, without stifling
the industry's concerns for expansion and growth.

In any event, apart from the State's police power, the Constitution itself mandates
government to extend the fullest protection to our overseas workers. The basic
constitutional statement on labor, embodied in Section 18 of Article II of the Constitution
provides:

Sec. 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.

More emphatically, the social justice provisions on labor of the 1987 Constitution in its
first paragraph states:

The State shall afford full protection to labor, local and overseas, organized and
unorganized and promote full employment and equality of employment opportunities for
all.

Obviously, protection to labor does not indicate promotion of employment alone. Under
the welfare and social justice provisions of the Constitution, the promotion of full
employment, while desirable, cannot take a backseat to the government's constitutional
duty to provide mechanisms for the protection of our workforce, local or overseas. As this
Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon,11 in
reference to the recurring problems faced by our overseas workers:

What concerns the Constitution more paramountly is that such an employment be above
all, decent, just, and humane. It is bad enough that the country has to send its sons and
daughters to strange lands because it cannot satisfy their employment needs at home.
Under these circumstances, the Government is duty-adequate protection, personally and
economically, while away from home.

We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the
right of our performing workers to return to work abroad after having earlier qualified
under the old process, because, having previously been accredited, their accreditation
became a "property right," protected by the due process clause. We find this contention
untenable.
A profession, trade of calling is a property right within the meaning of our constitutional
guarantees. One cannot be deprived of the right to work and right to make a living
because these rights are property rights, the arbitrary and unwarranted deprivation of
which normally constitutes an actionable wrong.12

Nevertheless, no right is absolute, and the proper regulation of a profession, calling,

business or trade has always been upheld as a legitimate subject of a valid exercise of the
police power by the state particularly when their conduct affects either the execution of
legitimate governmental functions, the preservation of the State, the public health and
welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas,
it must of course be within the legitimate range of legislative action to define the mode
and manner in which every one may so use of his own property so as not to pose injury to
himself or others.13

In any case, where the liberty curtailed affects at most the rights of property, the
permissible scope of regulatory measures is certainly much
14
wider. To pretend that licensing or accreditation requirements violates the due process
clause is to ignore the settled practice, under the mantle of the police power, of regulating
entry to the practice of various trades or professions. Professionals leaving for abroad are
required to pass rigid written and practical exams before they are deemed fit to practice
their trade. Seamen are required to take tests determining their seamanship. Locally, the
Professional Regulation Commission has began to require previously licensed doctors
and other professionals to furnish documentary proof that they has either re-trained or had
undertaken continuing education courses as a requirement for renewal of their licenses. It
is not claimed that these requirements pose an unwarranted deprivation of a property right
under the due process clause. So long as professionals and other workers meet reasonable
regulatory standards no such deprivation exists.

Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause
of the Constitution to support their argument that the government cannot enact the
assailed regulatory measures because they abridge the freedom to contract. In Philippine
Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment
clause of the Constitution... must yield to the loftier purposes targeted by the
government."15 Equally important, into every contract is read provisions of existing law,
and always, a reservation of the police power for so long as the agreement deals with a
subject impressed with the public welfare.

A last point. Petitioners suggest that the singling out of entertainers and performing artists
under the assailed department orders constitutes class legislation which violates the equal
protection clause of the Constitution. We do not agree.

The equal protection clause is directed principally against undue favor and individual or
class privilege. It is not intended to prohibit legislation which is limited to the object to
which it is directed or by the territory in which it is to operate. It does not require absolute
equality, but merely that all persons be treated alike under like conditions both as to
privileges conferred and liabilities imposed.16 We have held, time and again, that the
equal protection clause of the Constitution does not forbid classification for so long as
such classification is based on real and substantial differences having a reasonable
relation to the subject of the particular legislation.17 If classification is germane to the
purpose of the law, concerns all members of the class, and applies equally to present and
future conditions, the classification does not violate the equal protection guarantee.

In the case at bar, the challenged Department Order clearly applies to all performing
artists and entertainers destined for jobs abroad. These orders, we stressed hereinfore,
further the Constitutional mandate requiring government to protect our workforce,
particularly those who may be prone to abuse and exploitation as they are beyond the
physical reach of government regulatory agencies. The tragic incidents must somehow
stop, but short of absolutely curtailing the right of these performers and entertainers to
work abroad, the assailed measures enable our government to assume a measure of
control.

WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition

is hereby DENIED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION
G.R. No. 122917 July 12, 1999

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID,

DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M.
CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M.
YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M.
TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA,
MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE
CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT
MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL
MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V. GRUELA,
BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA.
ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL
PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA.
JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY
BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and
TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND
TRUST COMPANY, respondents.

PANGANIBAN, J.:

The Magna Carta for Disabled Persons mandates that qualified disabled persons be
granted the same terms and conditions of employment as qualified able-bodied
employees. Once they have attained the status of regular workers, they should be
accorded all the benefits granted by law, notwithstanding written or verbal contracts to
the contrary. This treatments is rooted not merely on charity or accomodation, but on
justice for all.

The Case

Challenged in the Petition for Certiorari 1 before us is the June 20, 1995 Decision 2 of the
National Labor Relations Commission (NLRC), 3 which affirmed the August, 22 1994
ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiter's Decision disposed as
follows: 4

WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint

for lack of merit.

Also assailed is the August 4, 1995 Resolution 5 of the NLRC, which denied the Motion
for Reconsideration.

The Facts
The facts were summarized by the NLRC in this wise: 6

Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various
periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters
and Counters through a uniformly worded agreement called "Employment Contract for
Handicapped Workers". (pp. 68 & 69, Records) The full text of said agreement is quoted
below:

EMPLOYMENT CONTRACT FOR

HANDICAPPED WORKERS

This Contract, entered into by and between:

FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly
organized and existing under and by virtue of the laws of the Philippines, with business
address at FEBTC Building, Muralla, Intramuros, Manila, represented herein by its
Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred to as
the "BANK");

-and-

—————, ————— years old, of legal age, ————, and residing at (hereinafter
referred to as the ("EMPLOYEE").

WITNESSETH : That

WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need
to provide disabled and handicapped persons gainful employment and opportunities to
realize their potentials, uplift their socio-economic well being and welfare and make them
productive, self-reliant and useful citizens to enable them to fully integrate in the
mainstream of society;

WHEREAS, there are certain positions in the BANK which may be filled-up by disabled
and handicapped persons, particularly deaf-mutes, and the BANK ha[s] been approached
by some civic-minded citizens and authorized government agencies [regarding] the
possibility of hiring handicapped workers for these positions;

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were]

recommended for possible employment with the BANK;

NOW, THEREFORE, for and in consideration of the foregoing premises and in

compliance with Article 80 of the Labor Code of the Philippines as amended, the BANK
and the EMPLOYEE have entered into this Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees
to diligently and faithfully work with the BANK, as Money Sorter and Counter.

2. The EMPLOYEE shall perform among others, the following duties and
responsibilities:

i. Sort out bills according to color;

ii. Count each denomination per hundred, either manually or with the aid of a counting
machine;

iii. Wrap and label bills per hundred;

iv. Put the wrapped bills into bundles; and

v. Submit bundled bills to the bank teller for verification.

3. The EMPLOYEE shall undergo a training period of one (1) month, after which the
BANK shall determine whether or not he/she should be allowed to finish the remaining
term of this Contract.

4. The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day,

subject to adjustment in the sole judgment of the BANK, payable every 15th and end of
the month.1âwphi1.nêt

5. The regular work schedule of the EMPLOYEE shall be five (5) days per week, from
Mondays thru Fridays, at eight (8) hours a day. The EMPLOYEE may be required to
perform overtime work as circumstance may warrant, for which overtime work he/she
[shall] be paid an additional compensation of 125% of his daily rate if performed during
ordinary days and 130% if performed during Saturday or [a] rest day.

6. The EMPLOYEE shall likewise be entitled to the following benefits:

i. Proportionate 13th month pay based on his basic daily wage.

ii. Five (5) days incentive leave.

iii. SSS premium payment.

7. The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK
Rules and Regulations and Policies, and to conduct himself/herself in a manner expected
of all employees of the BANK.

8. The EMPLOYEE acknowledges the fact that he/she had been employed under a
special employment program of the BANK, for which reason the standard hiring
requirements of the BANK were not applied in his/her case. Consequently, the
EMPLOYEE acknowledges and accepts the fact that the terms and conditions of the
employment generally observed by the BANK with respect to the BANK's regular
employee are not applicable to the EMPLOYEE, and that therefore, the terms and
conditions of the EMPLOYEE's employment with the BANK shall be governed solely
and exclusively by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with the employment
of disabled and handicapped workers. More specifically, the EMPLOYEE hereby
acknowledges that the provisions of Book Six of the Labor Code of the Philippines as
amended, particularly on regulation of employment and separation pay are not applicable
to him/her.

9. The Employment Contract shall be for a period of six (6) months or from —— to ——
unless earlier terminated by the BANK for any just or reasonable cause. Any continuation
or extension of this Contract shall be in writing and therefore this Contract will
automatically expire at the end of its terms unless renewed in writing by the BANK.

IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ——
day of ———, ——— at Intramuros, Manila, Philippines.

In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in
1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their
employment[s] were renewed every six months such that by the time this case arose,
there were fifty-six (56) deaf-mutes who were employed by respondent under the said
employment agreement. The last one was Thelma Malindoy who was employed in 1992
and whose contract expired on July 1993.

xxx xxx xxx

Disclaiming that complainants were regular employees, respondent Far East Bank and
Trust Company maintained that complainants who are a special class of workers — the
hearing impaired employees were hired temporarily under [a] special employment
arrangement which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were hired due to "pakiusap"
which must be considered in the light of the context career and working environment
which is to maintain and strengthen a corps of professionals trained and qualified officers
and regular employees who are baccalaureate degree holders from excellent schools
which is an unbending policy in the hiring of regular employees; that in addition to this,
training continues so that the regular employee grows in the corporate ladder; that the
idea of hiring handicapped workers was acceptable to them only on a special arrangement
basis; that it was adopted the special program to help tide over a group of workers such as
deaf-mutes like the complainants who could do manual work for the respondent Bank;
that the task of counting and sorting of bills which was being performed by tellers could
be assigned to deaf-mutes that the counting and sorting of money are tellering works
which were always logically and naturally part and parcel of the tellers' normal functions;
that from the beginning there have been no separate items in the respondent Bank
plantilla for sortes or counters; that the tellers themselves already did the sorting and
 counting chore as a regular feature and integral part of their duties (p. 97, Records); that
through the "pakiusap" of Arturo Borjal, the tellers were relieved of this task of counting
and sorting bills in favor of deaf-mutes without creating new positions as there is no
position either in the respondent or in any other bank in the Philippines which deals with
purely counting and sorting of bills in banking operations.

Petitioners specified when each of them was hired and dimissed, viz: 7

NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed

1. MARITES BERNARDO Intramuros 12-Nov-90 17-Nov-93

2. ELVIRA GO DIAMANTE Intramuros 24-Jan-90 11-Jan-94

3. REBECCA E. DAVID Intramuros 16-Apr-90 23-Oct-93

4. DAVID P. PASCUAL Bel-Air 15-Oct-88 21-Nov-94

5. RAQUEL ESTILLER Intramuros 2-Jul-92 4-Jan-94

6. ALBERT HALLARE West 4-Jan-91 9-Jan-94

7. EDMUND M. CORTEZ Bel-Air 15-Jan-91 3-Dec-93

8. JOSELITO O. AGDON Intramuros 5-Nov-90 17-Nov-93

9. GEORGE P. LIGUTAN JR. Intramuros 6-Sep-89 19-Jan-94

10. CELSO M. YAZAR Intramuros 8-Feb-93 8-Aug-93

11. ALEX G. CORPUZ Intramuros 15-Feb-93 15-Aug-93

12. RONALD M. DELFIN Intramuros 22-Feb-93 22-Aug-93

13. ROWENA M. TABAQUERO Intramuros 22-Feb-93 22-Aug-93

14. CORAZON C. DELOS REYES Intramuros 8-Feb-93 8-Aug-93

15. ROBERT G. NOORA Intramuros 15-Feb-93 15-Aug-93

16. MILAGROS O. LEQUIGAN Intramuros 1-Feb-93 1-Aug-93

17. ADRIANA F. TATLONGHARI Intramuros 22-Jan-93 22-Jul-93

18. IKE CABUNDUCOS Intramuros 24-Feb-93 24-Aug-93

19. COCOY NOBELLO Intramuros 22-Feb-93 22-Aug-93

20. DORENDA CATIMBUHAN Intramuros 15-Feb-93 15-Aug-93

21. ROBERT MARCELO West 31 JUL 93 8 1-Aug-93

22. LILIBETH Q. MARMOLEJO West 15-Jun-90 21-Nov-93

23. JOSE E. SALES West 6-Aug-92 12-Oct-93

24. ISABEL MAMAUAG West 8-May-92 10-Nov-93

25. VIOLETA G. MONTES Intramuros 2-Feb-90 15-Jan-94

26. ALBINO TECSON Intramuros 7-Nov-91 10-Nov-93

27. MELODY B. GRUELA West 28-Oct-91 3-Nov-93

28. BERNADETH D. AGERO West 19-Dec-90 27-Dec-93

29. CYNTHIA DE VERA Bel-Air 26-Jun-90 3-Dec-93

30. LANI R. CORTEZ Bel-Air 15-Oct-88 10-Dec-93

31. MARIA ISABEL B.CONCEPCION West 6-Sep-90 6-Feb-94

32. DINDO VALERIO Intramuros 30-May-93 30-Nov-93

33. ZENAIDA MATA Intramuros 10-Feb-93 10-Aug-93

34. ARIEL DEL PILAR Intramuros 24-Feb-93 24-Aug-93

35. MARGARET CECILIA CANOZA Intramuros 27-Jul-90 4-Feb-94

36. THELMA SEBASTIAN Intramuros 12-Nov-90 17-Nov-93

37. MA. JEANETTE CERVANTES West 6-Jun-92 7-Dec-93

38. JEANNIE RAMIL Intramuros 23-Apr-90 12-Oct-93

39. ROZAIDA PASCUAL Bel-Air 20-Apr-89 29-Oct-93

40. PINKY BALOLOA West 3-Jun-91 2-Dec-93

41. ELIZABETH VENTURA West 12-Mar-90 FEB 94 [sic]

42. GRACE S. PARDO West 4-Apr-90 13-Mar-94

43. RICO TIMOSA Intramuros 28-Apr-93 28-Oct-93

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein
petitioners. Hence, this recourse to this Court. 9

The Ruling of the NLRC

In affirming the ruling of the labor arbiter that herein petitioners could not be deemed
regular employees under Article 280 of the Labor Code, as amended, Respondent
Commission ratiocinated as follows:

We agree that Art. 280 is not controlling herein. We give due credence to the conclusion
that complainants were hired as an accommodation to [the] recommendation of civic
oriented personalities whose employment[s] were covered by . . . Employment
Contract[s] with special provisions on duration of contract as specified under Art. 80.
Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the
law between the parties. 10

The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
"considering the prevailing circumstances/milieu of the case."

Issues

In their Memorandum, petitioners cite the following grounds in support of their cause:

I. The Honorable Commission committed grave abuse of discretion in holding that the
petitioners — money sorters and counters working in a bank — were not regular
employees.

II. The Honorable Commission committed grave abuse of discretion in holding that the
employment contracts signed and renewed by the petitioners — which provide for a
period of six (6) months — were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying the
provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription
against discrimination against disabled persons. 11

In the main, the Court will resolve whether petitioners have become regular employees.

This Court's Ruling

The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal
from employement was illegal.

Preliminary Matter:

Propriety of Certiorari

Respondent Far East Bank and Trust Company argues that a review of the findings of
facts of the NLRC is not allowed in a petition for certiorari. Specifically, it maintains that
the Court cannot pass upon the findings of public respondent that petitioners were not
regular employees.

True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular
employees, we shall not change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of discretion in applying
the law to the established facts, as above-quoted from the assailed Decision.

Main Issue

Are Petitioners Regular Employee?

Petitioners maintain that they should be considered regular employees, because their task
as money sorters and counters was necessary and desirable to the business of respondent
bank. They further allege that their contracts served merely to preclude the application of
Article 280 and to bar them from becoming regular employees.

Private respondent, on the other hand, submits that petitioners were hired only as "special
workers and should not in any way be considered as part of the regular complement of
the Bank." 12 Rather, they were "special" workers under Article 80 of the Labor Code.
Private respondent contends that it never solicited the services of petitioners, whose
employment was merely an "accommodation" in response to the requests of government
officials and civic-minded citizens. They were told from the start, "with the assistance of
government representatives," that they could not become regular employees because
there were no plantilla positions for "money sorters," whose task used to be performed by
tellers. Their contracts were renewed several times, not because of need "but merely for
humanitarian reasons." Respondent submits that "as of the present, the "special position"
that was created for the petitioners no longer exist[s] in private respondent [bank], after
the latter had decided not to renew anymore their special employment contracts."

At the outset, let it be known that this Court appreciates the nobility of private
respondent's effort to provide employment to physically impaired individuals and to make
them more productive members of society. However, we cannot allow it to elude the legal
consequences of that effort, simply because it now deems their employment irrelevant.
The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons,
indubitably show that the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court is duty-bound to
protect and uphold, not as a matter of compassion but as a consequence of law and
justice.

The uniform employment contracts of the petitioners stipulated that they shall be trained
for a period of one month, after which the employer shall determine whether or not they
should be allowed to finish the 6-month term of the contract. Furthermore, the employer
may terminate the contract at any time for a just and reasonable cause. Unless renewed in
writing by the employer, the contract shall automatically expire at the end of the
term.1âwphi1.nêt

According to private respondent, the employment contracts were prepared in accordance

with Article 80 of the Labor code, which provides;

Art. 80. Employment agreement. — Any employer who employs handicapped workers
shall enter into an employment agreement with them, which agreement shall include:

(a) The names and addresses of the handicapped workers to be employed;

(b) The rate to be paid the handicapped workers which shall be not less than seventy five
(75%) per cent of the applicable legal minimum wage;

(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his
duly authorized representatives.

The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for
Disabled Persons), 13 however, justify the application of Article 280 of the Labor Code.

Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988
to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of
others lead to the conclusion that their tasks were beneficial and necessary to the bank.
More important, these facts show that they were qualified to perform the responsibilities
of their positions. In other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a
qualified able-bodied person. Section 5 of the Magna Carta provides:

Sec. 5. Equal Opportunity for Employment. — No disabled person shall be denied access
to opportunities for suitable employment. A qualified disabled employee shall be subject
to the same terms and conditions of employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as a qualified able bodied person.

The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords them
the rights of qualified able-bodied persons, they are thus covered by Article 280 of the
Labor Code, which provides:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered as regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.

The test of whether an employee is regular was laid down in De Leon v. NLRC, 14 in
which this Court held:

The primary standard, therefore, of determining regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection can
be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least one year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensibility of that activity to the business.
Hence, the employment is considered regular, but only with respect to such activity, and
while such activity exist.

Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank. With the exception of sixteen of them, petitioners performed
these tasks for more than six months. Thus, the following twenty-seven petitioners should
be deemed regular employees: Marites Bernardo, Elvira Go Diamante, Rebecca E. David,
David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon,
George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G.
Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R.
Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura
and Grace S. Pardo.

As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the simple
expedient of extending to them probationary appointments, ad infinitum."15 The contract
signed by petitioners is akin to a probationary employment, during which the bank
determined the employees' fitness for the job. When the bank renewed the contract after
the lapse of the six-month probationary period, the employees thereby became regular
employees. 16 No employer is allowed to determine indefinitely the fitness of its
employees.

As regular employees, the twenty-seven petitioners are entitled to security of tenure; that
is, their services may be terminated only for a just or authorized cause. Because
respondent failed to show such cause, 17 these twenty-seven petitioners are deemed
illegally dismissed and therefore entitled to back wages and reinstatement without loss of
seniority rights and other privileges. 18 Considering the allegation of respondent that the
job of money sorting is no longer available because it has been assigned back to the
tellers to whom it originally belonged, 18 petitioners are hereby awarded separation pay in
lieu of reinstatement. 20

Because the other sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.

Applicability of the

Brent Ruling

Respondent bank, citing Brent School v. Zamora 21 in which the Court upheld the validity
of an employment contract with a fixed term, argues that the parties entered into the
contract on equal footing. It adds that the petitioners had in fact an advantage, because
they were backed by then DSWD Secretary Mita Pardo de Tavera and Representative
Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the
petitioners were disabled, and that the bank had to determine their fitness for the position.
Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier,
petitioners proved themselves to be qualified disabled persons who, under the Magna
Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners
are qualified for their positions. The validation of the limit imposed on their contracts,
imposed by reason of their disability, was a glaring instance of the very mischief sought
to be addressed by the new law.

Moreover, it must be emphasized that a contract of employment is impressed with public

interest. 22 Provisions of applicable statutes are deemed written into the contract, and the
"parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other." 23Clearly, the
agreement of the parties regarding the period of employment cannot prevail over the
provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must
be treated as qualified able-bodied employees.

Respondent's reason for terminating the employment of petitioners is instructive. Because

the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the
BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime
sorting and counting of money. Thus, it reasons that this task "could not be done by deaf
mutes because of their physical limitations as it is very risky for them to travel at
night." 24 We find no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot justify the termination of
their employment.

Other Grounds Cited by Respondent

Respondent argues that petitioners were merely "accommodated" employees. This fact
does not change the nature of their employment. As earlier noted, an employee is regular
because of the nature of work and the length of service, not because of the mode or even
the reason for hiring them.

Equally unavailing are private respondent's arguments that it did not go out of its way to
recruit petitioners, and that its plantilla did not contain their positions. In L. T. Datu
v. NLRC, 25 the Court held that "the determination of whether employment is casual or
regular does not depend on the will or word of the employer, and the procedure of hiring .
. . but on the nature of the activities performed by the employee, and to some extent, the
length of performance and its continued existence."

Private respondent argues that the petitioners were informed from the start that they could
not become regular employees. In fact, the bank adds, they agreed with the stipulation in
the contract regarding this point. Still, we are not persuaded. The well-settled rule is that
the character of employment is determined not by stipulations in the contract, but by the
nature of the work performed. 26 Otherwise, no employee can become regular by the
simple expedient of incorporating this condition in the contract of employment.

In this light, we iterate our ruling in Romares v. NLRC: 27

Art. 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely ruling out
all written and oral agreements inconsistent with the concept of regular employment
defined therein. Where an employee has been engaged to perform activities which are
usually necessary or desirable in the usual business of the employer, such employee is
deemed a regular employee and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.

xxx xxx xxx

At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant in "term employment" should not be
the activities that the employee is called upon to perform but the day certain agreed upon
the parties for the commencement and termination of their employment relationship. But
this Court went on to say that where from the circumstances it is apparent that the periods
have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy and morals.

In rendering this Decision, the Court emphasizes not only the constitutional bias in favor
of the working class, but also the concern of the State for the plight of the disabled. The
noble objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualified persons, disabled or
not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to
their work. The eloquent proof of this statement is the repeated renewal of their
employment contracts. Why then should they be dismissed, simply because they are
physically impaired? The Court believes, that, after showing their fitness for the work
assigned to them, they should be treated and granted the same rights like any other
regular employees.

In this light, we note the Office of the Solicitor General's prayer joining the petitioners'
cause. 28

WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20,
1995 Decision and the August 4, 1995 Resolution of the NLRC are REVERSED and SET
ASIDE. Respondent Far East Bank and Trust Company is hereby ORDERED to pay back
wages and separation pay to each of the following twenty-seven (27) petitioners, namely,
Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel
Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr.,
Liliberh Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino
Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma.
Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette
Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace
S. Pardo. The NLRC is hereby directed to compute the exact amount due each of said
employees, pursuant to existing laws and regulations, within fifteen days from the finality
of this Decision. No costs.1âwphi1.nêt

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 118295 May 2, 1997

WIGBERTO E. TAÑADA and ANNA DOMINIQUE COSETENG, as members of

the Philippine Senate and as taxpayers; GREGORIO ANDOLANA and JOKER
ARROYO as members of the House of Representatives and as taxpayers;
NICANOR P. PERLAS and HORACIO R. MORALES, both as taxpayers; CIVIL
LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM
ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT
INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION, INC.,
PHILIPPINE RURAL RECONSTRUCTION MOVEMENT, DEMOKRATIKONG
KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE
PEASANT INSTITUTE, in representation of various taxpayers and as non-
governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI,
HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI
GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA. MACAPAGAL-
ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEÑA, SANTANINA
RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE
WEBB, in their respective capacities as members of the Philippine Senate who
concurred in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his
capacity as Secretary of Budget and Management; CARIDAD VALDEHUESA, in
her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as
Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as
Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary of
Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs; and
TEOFISTO T. GUINGONA, in his capacity as Executive Secretary, respondents.

PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the
membership thereto of the vast majority of countries has revolutionized international
business and economic relations amongst states. It has irreversibly propelled the world
towards trade liberalization and economic globalization. Liberalization, globalization,
deregulation and privatization, the third-millennium buzz words, are ushering in a new
borderless world of business by sweeping away as mere historical relics the heretofore
traditional modes of promoting and protecting national economies like tariffs, export
subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls.
Finding market niches and becoming the best in specific industries in a market-driven and
export-oriented global scenario are replacing age-old "beggar-thy-neighbor" policies that
unilaterally protect weak and inefficient domestic producers of goods and services. In the
words of Peter Drucker, the well-known management guru, "Increased participation in
the world economy has become the key to domestic economic growth and prosperity."

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War,
plans for the establishment of three multilateral institutions — inspired by that grand
political body, the United Nations — were discussed at Dumbarton Oaks and Bretton
Woods. The first was the World Bank (WB) which was to address the rehabilitation and
reconstruction of war-ravaged and later developing countries; the second, the
International Monetary Fund (IMF) which was to deal with currency problems; and
the third, the International Trade Organization (ITO), which was to foster order and
predictability in world trade and to minimize unilateral protectionist policies that invite
challenge, even retaliation, from other states. However, for a variety of reasons, including
its non-ratification by the United States, the ITO, unlike the IMF and WB, never took off.
What remained was only GATT — the General Agreement on Tariffs and Trade. GATT
was a collection of treaties governing access to the economies of treaty adherents with no
institutionalized body administering the agreements or dependable system of dispute
settlement.

After half a century and several dizzying rounds of negotiations, principally the Kennedy
Round, the Tokyo Round and the Uruguay Round, the world finally gave birth to that
administering body — the World Trade Organization — with the signing of the "Final
Act" in Marrakesh, Morocco and the ratification of the WTO Agreement by its members.1

Like many other developing countries, the Philippines joined WTO as a founding
member with the goal, as articulated by President Fidel V. Ramos in two letters to the
Senate (infra), of improving "Philippine access to foreign markets, especially its major
trading partners, through the reduction of tariffs on its exports, particularly agricultural
and industrial products." The President also saw in the WTO the opening of "new
opportunities for the services sector . . . , (the reduction of) costs and uncertainty
associated with exporting . . . , and (the attraction of) more investments into the country."
Although the Chief Executive did not expressly mention it in his letter, the Philippines —
and this is of special interest to the legal profession — will benefit from the WTO system
of dispute settlement by judicial adjudication through the independent WTO settlement
bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal. Heretofore, trade
disputes were settled mainly through negotiations where solutions were arrived at
frequently on the basis of relative bargaining strengths, and where naturally, weak and
underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and
products of member-countries on the same footing as Filipinos and local products" and
(2) that the WTO "intrudes, limits and/or impairs" the constitutional powers of both
Congress and the Supreme Court, the instant petition before this Court assails the WTO
Agreement for violating the mandate of the 1987 Constitution to "develop a self-reliant
and independent national economy effectively controlled by Filipinos . . . (to) give
preference to qualified Filipinos (and to) promote the preferential use of Filipino labor,
domestic materials and locally produced goods."

Simply stated, does the Philippine Constitution prohibit Philippine participation in

worldwide trade liberalization and economic globalization? Does it proscribe Philippine
integration into a global economy that is liberalized, deregulated and privatized? These
are the main questions raised in this petition for certiorari, prohibition
and mandamus under Rule 65 of the Rules of Court praying (1) for the nullification, on
constitutional grounds, of the concurrence of the Philippine Senate in the ratification by
the President of the Philippines of the Agreement Establishing the World Trade
Organization (WTO Agreement, for brevity) and (2) for the prohibition of its
implementation and enforcement through the release and utilization of public funds, the
assignment of public officials and employees, as well as the use of government properties
and resources by respondent-heads of various executive offices concerned therewith. This
concurrence is embodied in Senate Resolution No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The Department of
Trade and Industry (Secretary Navarro, for brevity), representing the Government of the
Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the
Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).

By signing the Final Act,2 Secretary Navarro on behalf of the Republic of the Philippines,
agreed:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities, with a view to seeking approval of the Agreement in
accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August
11, 1994 from the President of the Philippines, 3 stating among others that "the Uruguay
Round Final Act is hereby submitted to the Senate for its concurrence pursuant to Section
21, Article VII of the Constitution."

On August 13, 1994, the members of the Philippine Senate received another letter from
the President of the Philippines4 likewise dated August 11, 1994, which stated among
others that "the Uruguay Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services are hereby submitted to the Senate for its
concurrence pursuant to Section 21, Article VII of the Constitution."

On December 9, 1994, the President of the Philippines certified the necessity of the
immediate adoption of P.S. 1083, a resolution entitled "Concurring in the Ratification of
the Agreement Establishing the World Trade Organization."5

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which
"Resolved, as it is hereby resolved, that the Senate concur, as it hereby concurs, in the
ratification by the President of the Philippines of the Agreement Establishing the World
Trade Organization."6 The text of the WTO Agreement is written on pages 137 et seq. of
Volume I of the 36-volume Uruguay Round of Multilateral Trade Negotiations and
includes various agreements and associated legal instruments (identified in the said
Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral
Trade Agreements, for brevity) as follows:

ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of he
General Agreement on Tariffs and Trade
1994
Agreement on Implementation of Article VII of the
General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating
Measures
Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual

Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing

the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed 7 the Instrument of
Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of
the Philippines, after having seen and considered the aforementioned Agreement
Establishing the World Trade Organization and the agreements and associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement which
are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby
ratify and confirm the same and every Article and Clause thereof.

To emphasize, the WTO Agreement ratified by the President of the Philippines is

composed of the Agreement Proper and "the associated legal instruments included in
Annexes one (1), two (2) and three (3) of that Agreement which are integral parts
thereof."

On the other hand, the Final Act signed by Secretary Navarro embodies not only the
WTO Agreement (and its integral annexes aforementioned) but also (1) the Ministerial
Declarations and Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,8 the Solicitor General describes these
two latter documents as follows:

The Ministerial Decisions and Declarations are twenty-five declarations and decisions on
a wide range of matters, such as measures in favor of least developed countries,
notification procedures, relationship of WTO with the International Monetary Fund
(IMF), and agreements on technical barriers to trade and on dispute settlement.

The Understanding on Commitments in Financial Services dwell on, among other things,
standstill or limitations and qualifications of commitments to existing non-conforming
measures, market access, national treatment, and definitions of non-resident supplier of
financial services, commercial presence and new financial service.

On December 29, 1994, the present petition was filed. After careful deliberation on
respondents' comment and petitioners' reply thereto, the Court resolved on December 12,
1995, to give due course to the petition, and the parties thereafter filed their respective
memoranda. The court also requested the Honorable Lilia R. Bautista, the Philippine
Ambassador to the United Nations stationed in Geneva, Switzerland, to submit a paper,
hereafter referred to as "Bautista Paper,"9 for brevity, (1) providing a historical
background of and (2) summarizing the said agreements.

During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in
controversy and (2) the transcript of proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties
signed prior to the Philippine adherence to the WTO Agreement, which derogate from
Philippine sovereignty and (2) copies of the multi-volume WTO Agreement and other
documents mentioned in the Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would consider the case
submitted for resolution. In a Compliance dated September 16, 1996, the Solicitor
General submitted a printed copy of the 36-volume Uruguay Round of Multilateral Trade
Negotiations, and in another Compliance dated October 24, 1996, he listed the various
"bilateral or multilateral treaties or international instruments involving derogation of
Philippine sovereignty." Petitioners, on the other hand, submitted their Compliance dated
January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as
follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the deliberations
and voting leading to the concurrence are estopped from impugning the validity of the
Agreement Establishing the World Trade Organization or of the validity of the
concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization
contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of
the 1987 Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization

unduly limit, restrict and impair Philippine sovereignty specifically the legislative power
which, under Sec. 2, Article VI, 1987 Philippine Constitution is "vested in the Congress
of the Philippines";

E. Whether provisions of the Agreement Establishing the World Trade Organization

interfere with the exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they voted for concurrence in the
ratification of the constitutionally-infirm Agreement Establishing the World Trade
Organization.

G. Whether the respondent members of the Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when they concurred only in the ratification of
the Agreement Establishing the World Trade Organization, and not with the Presidential
submission which included the Final Act, Ministerial Declaration and Decisions, and the
Understanding on Commitments in Financial Services.

On the other hand, the Solicitor General as counsel for respondents "synthesized the
several issues raised by petitioners into the following": 10
1. Whether or not the provisions of the "Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments included in Annexes
one (1), two (2) and three (3) of that agreement" cited by petitioners directly contravene
or undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and 12,
Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the
exercise of legislative power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial
power by this Honorable Court in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate "in the ratification by the President of the
Philippines of the Agreement establishing the World Trade Organization" implied
rejection of the treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the
Solicitor General has effectively ignored three, namely: (1) whether the petition presents
a political question or is otherwise not justiciable; (2) whether petitioner-members of the
Senate (Wigberto E. Tañada and Anna Dominique Coseteng) are estopped from joining
this suit; and (3) whether the respondent-members of the Senate acted in grave abuse of
discretion when they voted for concurrence in the ratification of the WTO Agreement.
The foregoing notwithstanding, this Court resolved to deal with these three issues thus:

(1) The "political question" issue — being very fundamental and vital, and being a matter
that probes into the very jurisdiction of this Court to hear and decide this case — was
deliberated upon by the Court and will thus be ruled upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively waived it by not pursuing it in any of their pleadings; in any
event, this issue, even if ruled in respondents' favor, will not cause the petition's dismissal
as there are petitioners other than the two senators, who are not vulnerable to the defense
of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators
will be taken up as an integral part of the disposition of the four issues raised by the
Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question
the locus standi of petitioners. Hence, they are also deemed to have waived the benefit of
such issue. They probably realized that grave constitutional issues, expenditures of public
funds and serious international commitments of the nation are involved here, and that
transcendental public interest requires that the substantive issues be met head on and
decided on the merits, rather than skirted or deflected by procedural matters. 11

To recapitulate, the issues that will be ruled upon shortly are:

(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY?
OTHERWISE STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION
OVER WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE

ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE
XII, OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT,

RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY
CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE

EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES
ON EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND
ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT
INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS,
AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?

The First Issue: Does the Court

Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the dispute. "The question thus
posed is judicial rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld." 12 Once a "controversy as to the application or
interpretation of a constitutional provision is raised before this Court (as in the instant
case), it becomes a legal issue which the Court is bound by constitutional mandate to
decide." 13

The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly
set out in the 1987 Constitution, 15 as follows:

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.

The foregoing text emphasizes the judicial department's duty and power to strike down
grave abuse of discretion on the part of any branch or instrumentality of government
including Congress. It is an innovation in our political law. 16As explained by former
Chief Justice Roberto Concepcion, 17 "the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty
to pass judgment on matters of this nature."

As this Court has repeatedly and firmly emphasized in many cases, 18 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.

As the petition alleges grave abuse of discretion and as there is no other plain, speedy or
adequate remedy in the ordinary course of law, we have no hesitation at all in holding that
this petition should be given due course and the vital questions raised therein ruled upon
under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are
appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify,
when proper, acts of legislative and executive officials. On this, we have no equivocation.

We should stress that, in deciding to take jurisdiction over this petition, this Court will not
review the wisdom of the decision of the President and the Senate in enlisting the country
into the WTO, or pass upon the merits of trade liberalization as a policy espoused by said
international body. Neither will it rule on the propriety of the government's economic
policy of reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other
import/trade barriers. Rather, it will only exercise its constitutional duty "to determine
whether or not there had been a grave abuse of discretion amounting to lack or excess of
jurisdiction" on the part of the Senate in ratifying the WTO Agreement and its three
annexes.

Second Issue: The WTO Agreement

and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.

Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution
mandating "economic nationalism" are violated by the so-called "parity provisions" and
"national treatment" clauses scattered in various parts not only of the WTO Agreement
and its annexes but also in the Ministerial Decisions and Declarations and in the
Understanding on Commitments in Financial Services.

Specifically, the "flagship" constitutional provisions referred to are Sec 19, Article II, and
Secs. 10 and 12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES
AND STATE POLICIES
 xxx xxx xxx

Sec. 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.

xxx xxx xxx

Article XII

NATIONAL ECONOMY AND PATRIMONY

xxx xxx xxx

Sec. 10. . . . The Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.

xxx xxx xxx

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials
and locally produced goods, and adopt measures that help make them competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following
WTO provisions quoted in their memorandum: 19

a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994, no Member shall
apply any TRIM that is inconsistent with the provisions of Article II or Article XI of
GATT 1994.

2. An illustrative list of TRIMS that are inconsistent with the obligations of general
elimination of quantitative restrictions provided for in paragraph I of Article XI of GATT
1994 is contained in the Annex to this Agreement." (Agreement on Trade-Related
Investment Measures, Vol. 27, Uruguay Round, Legal Instruments, p. 22121, emphasis
supplied).

The Annex referred to reads as follows:

ANNEX
 Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in
paragraph 4 of Article III of GATT 1994 include those which are mandatory or
enforceable under domestic law or under administrative rulings, or compliance with
which is necessary to obtain an advantage, and which require:

(a) the purchase or use by an enterprise of products of domestic origin or from any
domestic source, whether specified in terms of particular products, in terms of volume or
value of products, or in terms of proportion of volume or value of its local production; or

(b) that an enterprise's purchases or use of imported products be limited to an amount

related to the volume or value of local products that it exports.

2. TRIMS that are inconsistent with the obligations of general elimination of quantitative
restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which
are mandatory or enforceable under domestic laws or under administrative rulings, or
compliance with which is necessary to obtain an advantage, and which restrict:

(a) the importation by an enterprise of products used in or related to the local production
that it exports;

(b) the importation by an enterprise of products used in or related to its local production
by restricting its access to foreign exchange inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular products, in terms of
volume or value of products, or in terms of a preparation of volume or value of its local
production. (Annex to the Agreement on Trade-Related Investment Measures, Vol. 27,
Uruguay Round Legal Documents, p. 22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the territory of any
other contracting party shall be accorded treatment no less favorable than that accorded
to like products of national origin in respect of laws, regulations and requirements
affecting their internal sale, offering for sale, purchase, transportation, distribution or use,
the provisions of this paragraph shall not prevent the application of differential internal
transportation charges which are based exclusively on the economic operation of the
means of transport and not on the nationality of the product." (Article III, GATT 1947, as
amended by the Protocol Modifying Part II, and Article XXVI of GATT, 14 September
1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on Tariffs
and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p. 177, emphasis supplied).

(b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):
Each Member shall accord to the nationals of other Members treatment no less
favourable than that it accords to its own nationals with regard to the protection of
intellectual property. . . (par. 1 Article 3, Agreement on Trade-Related Aspect of
Intellectual Property rights, Vol. 31, Uruguay Round, Legal Instruments, p. 25432
(emphasis supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications
set out therein, each Member shall accord to services and service suppliers of any other
Member, in respect of all measures affecting the supply of services, treatment no less
favourable than it accords to its own like services and service suppliers.

2. A Member may meet the requirement of paragraph I by according to services and

service suppliers of any other Member, either formally suppliers of any other Member,
either formally identical treatment or formally different treatment to that it accords to its
own like services and service suppliers.

3. Formally identical or formally different treatment shall be considered to be less

favourable if it modifies the conditions of completion in favour of services or service
suppliers of the Member compared to like services or service suppliers of any other
Member. (Article XVII, General Agreement on Trade in Services, Vol. 28, Uruguay
Round Legal Instruments, p. 22610 emphasis supplied).

It is petitioners' position that the foregoing "national treatment" and "parity provisions" of
the WTO Agreement "place nationals and products of member countries on the same
footing as Filipinos and local products," in contravention of the "Filipino First" policy of
the Constitution. They allegedly render meaningless the phrase "effectively controlled by
Filipinos." The constitutional conflict becomes more manifest when viewed in the context
of the clear duty imposed on the Philippines as a WTO member to ensure the conformity
of its laws, regulations and administrative procedures with its obligations as provided in
the annexed agreements. 20 Petitioners further argue that these provisions contravene
constitutional limitations on the role exports play in national development and negate the
preferential treatment accorded to Filipino labor, domestic materials and locally produced
goods.

On the other hand, respondents through the Solicitor General counter (1) that such
Charter provisions are not self-executing and merely set out general policies; (2) that
these nationalistic portions of the Constitution invoked by petitioners should not be read
in isolation but should be related to other relevant provisions of Art. XII, particularly
Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do not conflict with
Constitution; and (4) that the WTO Agreement contains sufficient provisions to protect
developing countries like the Philippines from the harshness of sudden trade
liberalization.
We shall now discuss and rule on these arguments.

Declaration of Principles
Not Self-Executing

By its very title, Article II of the Constitution is a "declaration of principles and state
policies." The counterpart of this article in the 1935 Constitution 21 is called the "basic
political creed of the nation" by Dean Vicente Sinco. 22 These principles in Article II are
not intended to be self-executing principles ready for enforcement through the
courts. 23They are used by the judiciary as aids or as guides in the exercise of its power of
judicial review, and by the legislature in its enactment of laws. As held in the leading case
of Kilosbayan, Incorporated vs. Morato, 24 the principles and state policies enumerated in
Article II and some sections of Article XII are not "self-executing provisions, the
disregard of which can give rise to a cause of action in the courts. They do not embody
judicially enforceable constitutional rights but guidelines for legislation."

In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles need
legislative enactments to implement the, thus:

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12

(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to
state also that these are merely statements of principles and policies. As such, they are
basically not self-executing, meaning a law should be passed by Congress to clearly
define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing

principles ready for enforcement through the courts. They were rather directives
addressed to the executive and to the legislature. If the executive and the legislature failed
to heed the directives of the article, the available remedy was not judicial but political.
The electorate could express their displeasure with the failure of the executive and the
legislature through the language of the ballot. (Bernas, Vol. II, p. 2).

The reasons for denying a cause of action to an alleged infringement of board

constitutional principles are sourced from basic considerations of due process and the
lack of judicial authority to wade "into the uncharted ocean of social and economic policy
making." Mr. Justice Florentino P. Feliciano in his concurring opinion in Oposa
vs. Factoran, Jr., 26 explained these reasons as follows:

My suggestion is simply that petitioners must, before the trial court, show a more specific
legal right — a right cast in language of a significantly lower order of generality than
Article II (15) of the Constitution — that is or may be violated by the actions, or failures
to act, imputed to the public respondent by petitioners so that the trial court can validly
render judgment grating all or part of the relief prayed for. To my mind, the court should
be understood as simply saying that such a more specific legal right or rights may well
exist in our corpus of law, considering the general policy principles found in the
Constitution and the existence of the Philippine Environment Code, and that the trial
court should have given petitioners an effective opportunity so to demonstrate, instead of
aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of
action be a specific, operable legal right, rather than a constitutional or statutory policy,
for at least two (2) reasons. One is that unless the legal right claimed to have been
violated or disregarded is given specification in operational terms, defendants may well
be unable to defend themselves intelligently and effectively; in other words, there are due
process dimensions to this matter.

The second is a broader-gauge consideration — where a specific violation of law or

applicable regulation is not alleged or proved, petitioners can be expected to fall back on
the expanded conception of judicial power in the second paragraph of Section 1 of Article
VIII of the Constitution which reads:

Sec. 1. . . .

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. (Emphasis
supplied)

When substantive standards as general as "the right to a balanced and healthy ecology"
and "the right to health" are combined with remedial standards as broad ranging as "a
grave abuse of discretion amounting to lack or excess of jurisdiction," the result will be, it
is respectfully submitted, to propel courts into the uncharted ocean of social and
economic policy making. At least in respect of the vast area of environmental protection
and management, our courts have no claim to special technical competence and
experience and professional qualification. Where no specific, operable norms and
standards are shown to exist, then the policy making departments — the legislative and
executive departments — must be given a real and effective opportunity to fashion and
promulgate those norms and standards, and to implement them before the courts should
intervene.

Economic Nationalism Should Be Read with

Other Constitutional Mandates to Attain
Balanced Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general
principles relating to the national economy and patrimony, should be read and understood
in relation to the other sections in said article, especially Secs. 1 and 13 thereof which
read:
Sec. 1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all especially the underprivileged.

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

In the pursuit of these goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop. . . .

xxx xxx xxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes
all forms and arrangements of exchange on the basis of equality and reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national
economic development, as follows:

1. A more equitable distribution of opportunities, income and wealth;

2. A sustained increase in the amount of goods and services provided by the nation for the
benefit of the people; and

3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.

With these goals in context, the Constitution then ordains the ideals of economic
nationalism (1) by expressing preference in favor of qualified Filipinos "in the grant of
rights, privileges and concessions covering the national economy and patrimony" 27 and
in the use of "Filipino labor, domestic materials and locally-produced goods"; (2) by
mandating the State to "adopt measures that help make them competitive; 28 and (3) by
requiring the State to "develop a self-reliant and independent national economy
effectively controlled by Filipinos." 29 In similar language, the Constitution takes into
account the realities of the outside world as it requires the pursuit of "a trade policy that
serves the general welfare and utilizes all forms and arrangements of exchange on the
basis of equality ad reciprocity"; 30 and speaks of industries "which are competitive in
both domestic and foreign markets" as well as of the protection of "Filipino enterprises
against unfair foreign competition and trade practices."

It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance
System, et al., 31 this Court held that "Sec. 10, second par., Art. XII of the 1987
Constitution is a mandatory, positive command which is complete in itself and which
needs no further guidelines or implementing laws or rule for its enforcement. From its
very words the provision does not require any legislation to put it in operation. It is per
se judicially enforceable." However, as the constitutional provision itself states, it is
enforceable only in regard to "the grants of rights, privileges and concessions covering
national economy and patrimony" and not to every aspect of trade and commerce. It
refers to exceptions rather than the rule. The issue here is not whether this paragraph of
Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a rule, there
are enough balancing provisions in the Constitution to allow the Senate to ratify the
Philippine concurrence in the WTO Agreement. And we hold that there are.

All told, while the Constitution indeed mandates a bias in favor of Filipino goods,
services, labor and enterprises, at the same time, it recognizes the need for business
exchange with the rest of the world on the bases of equality and reciprocity and limits
protection of Filipino enterprises only against foreign competition and trade practices that
are unfair. 32 In other words, the Constitution did not intend to pursue an isolationist
policy. It did not shut out foreign investments, goods and services in the development of
the Philippine economy. While the Constitution does not encourage the unlimited entry of
foreign goods, services and investments into the country, it does not prohibit them either.
In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on
foreign competition that is unfair.

WTO Recognizes Need to

Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in
advantages to protect weak and developing economies, which comprise the vast majority
of its members. Unlike in the UN where major states have permanent seats and veto
powers in the Security Council, in the WTO, decisions are made on the basis of sovereign
equality, with each member's vote equal in weight to that of any other. There is no WTO
equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial

Conference and the General Council shall be taken by the majority of the votes cast,
except in cases of interpretation of the Agreement or waiver of the obligation of a
member which would require three fourths vote. Amendments would require two thirds
vote in general. Amendments to MFN provisions and the Amendments provision will
require assent of all members. Any member may withdraw from the Agreement upon the
expiration of six months from the date of notice of withdrawals. 33

Hence, poor countries can protect their common interests more effectively through the
WTO than through one-on-one negotiations with developed countries. Within the WTO,
developing countries can form powerful blocs to push their economic agenda more
decisively than outside the Organization. This is not merely a matter of practical alliances
but a negotiating strategy rooted in law. Thus, the basic principles underlying the WTO
Agreement recognize the need of developing countries like the Philippines to "share in
the growth in international trade commensurate with the needs of their economic
development." These basic principles are found in the preamble 34of the WTO Agreement
as follows:

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should be
conducted with a view to raising standards of living, ensuring full employment and a
large and steadily growing volume of real income and effective demand, and expanding
the production of and trade in goods and services, while allowing for the optimal use of
the world's resources in accordance with the objective of sustainable development,
seeking both to protect and preserve the environment and to enhance the means for doing
so in a manner consistent with their respective needs and concerns at different levels of
economic development,

Recognizing further that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure a share in
the growth in international trade commensurate with the needs of their economic
development,

Being desirous of contributing to these objectives by entering into reciprocal and

mutually advantageous arrangements directed to the substantial reduction of tariffs and
other barriers to trade and to the elimination of discriminatory treatment in international
trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral

trading system encompassing the General Agreement on Tariffs and Trade, the results of
past trade liberalization efforts, and all of the results of the Uruguay Round of
Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying this
multilateral trading system, . . . (emphasis supplied.)

Specific WTO Provisos

Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing
basic principles, the WTO Agreement grants developing countries a more lenient
treatment, giving their domestic industries some protection from the rush of foreign
competition. Thus, with respect to tariffs in general, preferential treatment is given to
developing countries in terms of the amount of tariff reduction and the period within
which the reduction is to be spread out. Specifically, GATT requires an average
tariff reduction rate of 36% for developed countries to be effected within a period of six
(6) years while developing countries — including the Philippines — are required to
effect an average tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic
support to agricultural products by 20% over six (6) years, as compared to only 13% for
developing countries to be effected within ten (10) years.

In regard to export subsidy for agricultural products, GATT requires developed countries
to reduce their budgetary outlays for export subsidy by 36% and export volumes
receiving export subsidy by 21% within a period of six (6) years. For developing
countries, however, the reduction rate is only two-thirds of that prescribed for developed
countries and a longer period of ten (10) years within which to effect such reduction.

Moreover, GATT itself has provided built-in protection from unfair foreign competition
and trade practices including anti-dumping measures, countervailing measures and
safeguards against import surges. Where local businesses are jeopardized by unfair
foreign competition, the Philippines can avail of these measures. There is hardly therefore
any basis for the statement that under the WTO, local industries and enterprises will all be
wiped out and that Filipinos will be deprived of control of the economy. Quite the
contrary, the weaker situations of developing nations like the Philippines have been taken
into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a bold decision to
steer the ship of state into the yet uncharted sea of economic liberalization. But such
decision cannot be set aside on the ground of grave abuse of discretion, simply because
we disagree with it or simply because we believe only in other economic policies. As
earlier stated, the Court in taking jurisdiction of this case will not pass upon the
advantages and disadvantages of trade liberalization as an economic policy. It will only
perform its constitutional duty of determining whether the Senate committed grave abuse
of discretion.

Constitution Does Not

Rule Out Foreign Competition

Furthermore, the constitutional policy of a "self-reliant and independent national

economy" 35 does not necessarily rule out the entry of foreign investments, goods and
services. It contemplates neither "economic seclusion" nor "mendicancy in the
international community." As explained by Constitutional Commissioner Bernardo
Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly

aware of overdependence on external assistance for even its most basic needs. It does not
mean autarky or economic seclusion; rather, it means avoiding mendicancy in the
international community. Independence refers to the freedom from undue foreign control
of the national economy, especially in such strategic industries as in the development of
natural resources and public utilities. 36

The WTO reliance on "most favored nation," "national treatment," and "trade without
discrimination" cannot be struck down as unconstitutional as in fact they are rules of
equality and reciprocity that apply to all WTO members. Aside from envisioning a trade
policy based on "equality and reciprocity," 37 the fundamental law encourages industries
that are "competitive in both domestic and foreign markets," thereby demonstrating a
clear policy against a sheltered domestic trade environment, but one in favor of the
gradual development of robust industries that can compete with the best in the foreign
markets. Indeed, Filipino managers and Filipino enterprises have shown capability and
tenacity to compete internationally. And given a free trade environment, Filipino
entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to
grow and to prosper against the best offered under a policy of laissez faire.

Constitution Favors Consumers,

Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or
enterprise, nor does it contain any specific pronouncement that Filipino companies should
be pampered with a total proscription of foreign competition. On the other hand,
respondents claim that WTO/GATT aims to make available to the Filipino consumer the
best goods and services obtainable anywhere in the world at the most reasonable prices.
Consequently, the question boils down to whether WTO/GATT will favor the general
welfare of the public at large.

Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to
reality?

Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will —
as promised by its promoters — expand the country's exports and generate more
employment?

Will it bring more prosperity, employment, purchasing power and quality products at the
most reasonable rates to the Filipino public?

The responses to these questions involve "judgment calls" by our policy makers, for
which they are answerable to our people during appropriate electoral exercises. Such
questions and the answers thereto are not subject to judicial pronouncements based on
grave abuse of discretion.

Constitution Designed to Meet

Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was
drafted and ratified in 1987. That does not mean however that the Charter is necessarily
flawed in the sense that its framers might not have anticipated the advent of a borderless
world of business. By the same token, the United Nations was not yet in existence when
the 1935 Constitution became effective. Did that necessarily mean that the then
Constitution might not have contemplated a diminution of the absoluteness of sovereignty
when the Philippines signed the UN Charter, thereby effectively surrendering part of its
control over its foreign relations to the decisions of various UN organs like the Security
Council?

It is not difficult to answer this question. Constitutions are designed to meet not only the
vagaries of contemporary events. They should be interpreted to cover even future and
unknown circumstances. It is to the credit of its drafters that a Constitution can withstand
the assaults of bigots and infidels but at the same time bend with the refreshing winds of
change necessitated by unfolding events. As one eminent political law writer and
respected jurist 38explains:

The Constitution must be quintessential rather than superficial, the root and not the
blossom, the base and frame-work only of the edifice that is yet to rise. It is but the core
of the dream that must take shape, not in a twinkling by mandate of our delegates, but
slowly "in the crucible of Filipino minds and hearts," where it will in time develop its
sinews and gradually gather its strength and finally achieve its substance. In fine, the
Constitution cannot, like the goddess Athena, rise full-grown from the brow of the
Constitutional Convention, nor can it conjure by mere fiat an instant Utopia. It must grow
with the society it seeks to re-structure and march apace with the progress of the race,
drawing from the vicissitudes of history the dynamism and vitality that will keep it, far
from becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the
nation.

Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its
laws, regulations and administrative procedures with its obligations as provided in the
annexed Agreements." 39 Petitioners maintain that this undertaking "unduly limits,
restricts and impairs Philippine sovereignty, specifically the legislative power which
under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress of
the Philippines. It is an assault on the sovereign powers of the Philippines because this
means that Congress could not pass legislation that will be good for our national interest
and general welfare if such legislation will not conform with the WTO Agreement, which
not only relates to the trade in goods . . . but also to the flow of investments and money . .
. as well as to a whole slew of agreements on socio-cultural matters . . . 40

More specifically, petitioners claim that said WTO proviso derogates from the power to
tax, which is lodged in the Congress. 41 And while the Constitution allows Congress to
authorize the President to fix tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts, such authority is subject to "specified limits and . . .
such limitations and restrictions" as Congress may provide, 42 as in fact it did under Sec.
401 of the Tariff and Customs Code.

Sovereignty Limited by
International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners stressed
their arguments on this issue. However, while sovereignty has traditionally been deemed
absolute and all-encompassing on the domestic level, it is however subject to restrictions
and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a
member of the family of nations. Unquestionably, the Constitution did not envision a
hermit-type isolation of the country from the rest of the world. In its Declaration of
Principles and State Policies, the Constitution "adopts the generally accepted principles of
international law as part of the law of the land, and adheres to the policy of peace,
equality, justice, freedom, cooperation and amity, with all nations." 43 By the doctrine of
incorporation, the country is bound by generally accepted principles of international law,
which are considered to be automatically part of our own laws. 44 One of the oldest and
most fundamental rules in international law is pacta sunt servanda — international
agreements must be performed in good faith. "A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties . . . A state which has
contracted valid international obligations is bound to make in its legislations such
modifications as may be necessary to ensure the fulfillment of the obligations
undertaken." 45

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty.
By their voluntary act, nations may surrender some aspects of their state power in
exchange for greater benefits granted by or derived from a convention or pact. After all,
states, like individuals, live with coequals, and in pursuit of mutually covenanted
objectives and benefits, they also commonly agree to limit the exercise of their otherwise
absolute rights. Thus, treaties have been used to record agreements between States
concerning such widely diverse matters as, for example, the lease of naval bases, the sale
or cession of territory, the termination of war, the regulation of conduct of hostilities, the
formation of alliances, the regulation of commercial relations, the settling of claims, the
laying down of rules governing conduct in peace and the establishment of international
organizations. 46 The sovereignty of a state therefore cannot in fact and in reality be
considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by
the very nature of membership in the family of nations and (2) limitations imposed by
treaty stipulations. As aptly put by John F. Kennedy, "Today, no nation can build its
destiny alone. The age of self-sufficient nationalism is over. The age of interdependence
is here." 47

UN Charter and Other Treaties

Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it
consented to restrict its sovereign rights under the "concept of sovereignty as auto-
limitation."47-A Under Article 2 of the UN Charter, "(a)ll members shall give the United
Nations every assistance in any action it takes in accordance with the present Charter, and
shall refrain from giving assistance to any state against which the United Nations is
taking preventive or enforcement action." Such assistance includes payment of its
corresponding share not merely in administrative expenses but also in expenditures for
the peace-keeping operations of the organization. In its advisory opinion of July 20, 1961,
the International Court of Justice held that money used by the United Nations Emergency
Force in the Middle East and in the Congo were "expenses of the United Nations" under
Article 17, paragraph 2, of the UN Charter. Hence, all its members must bear their
corresponding share in such expenses. In this sense, the Philippine Congress is restricted
in its power to appropriate. It is compelled to appropriate funds whether it agrees with
such peace-keeping expenses or not. So too, under Article 105 of the said Charter, the UN
and its representatives enjoy diplomatic privileges and immunities, thereby limiting again
the exercise of sovereignty of members within their own territory. Another example:
although "sovereign equality" and "domestic jurisdiction" of all members are set forth as
underlying principles in the UN Charter, such provisos are however subject to
enforcement measures decided by the Security Council for the maintenance of
international peace and security under Chapter VII of the Charter. A final example: under
Article 103, "(i)n the event of a conflict between the obligations of the Members of the
United Nations under the present Charter and their obligations under any other
international agreement, their obligation under the present charter shall prevail," thus
unquestionably denying the Philippines — as a member — the sovereign power to make
a choice as to which of conflicting obligations, if any, to honor.

Apart from the UN Treaty, the Philippines has entered into many other international pacts
— both bilateral and multilateral — that involve limitations on Philippine sovereignty.
These are enumerated by the Solicitor General in his Compliance dated October 24, 1996,
as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the Philippines
by, among others, the Federal Reserve Bank of the United States, the Export/Import Bank
of the United States, the Overseas Private Investment Corporation of the United States.
Likewise, in said convention, wages, salaries and similar remunerations paid by the
United States to its citizens for labor and personal services performed by them as
employees or officials of the United States are exempt from income tax by the
Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double
taxation.

(d) Bilateral convention with the French Republic for the avoidance of double taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt
from all customs duties, inspection fees and other duties or taxes aircrafts of South Korea
and the regular equipment, spare parts and supplies arriving with said aircrafts.

(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt
from customs duties, excise taxes, inspection fees and other similar duties, taxes or
charges fuel, lubricating oils, spare parts, regular equipment, stores on board Japanese
aircrafts while on Philippine soil.

(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian
air carriers the same privileges as those granted to Japanese and Korean air carriers under
separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the
Philippines exempted Israeli nationals from the requirement of obtaining transit or visitor
visas for a sojourn in the Philippines not exceeding 59 days.

(i) Bilateral agreement with France exempting French nationals from the requirement of
obtaining transit and visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that
premises of Special Missions in the Philippines are inviolable and its agents can not enter
said premises without consent of the Head of Mission concerned. Special Missions are
also exempted from customs duties, taxes and related charges.

(k) Multilateral convention on the Law of Treaties. In this convention, the Philippines
agreed to be governed by the Vienna Convention on the Law of Treaties.

(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of

the International Court of Justice. The International Court of Justice has jurisdiction in all
legal disputes concerning the interpretation of a treaty, any question of international law,
the existence of any fact which, if established, would constitute a breach "of international
obligation."

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its
sovereign powers of taxation, eminent domain and police power. The underlying
consideration in this partial surrender of sovereignty is the reciprocal commitment of the
other contracting states in granting the same privilege and immunities to the Philippines,
its officials and its citizens. The same reciprocity characterizes the Philippine
commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the

environment, the law of the sea, or trade, constrain domestic political sovereignty through
the assumption of external obligations. But unless anarchy in international relations is
preferred as an alternative, in most cases we accept that the benefits of the reciprocal
obligations involved outweigh the costs associated with any loss of political sovereignty.
(T)rade treaties that structure relations by reference to durable, well-defined substantive
norms and objective dispute resolution procedures reduce the risks of larger countries
exploiting raw economic power to bully smaller countries, by subjecting power relations
to some form of legal ordering. In addition, smaller countries typically stand to gain
disproportionately from trade liberalization. This is due to the simple fact that
liberalization will provide access to a larger set of potential new trading relationship than
in case of the larger country gaining enhanced success to the smaller country's market. 48

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be
waived without violating the Constitution, based on the rationale 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 . . . cooperation and amity with all nations."

Fourth Issue: The WTO Agreement and Judicial Power

Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic
Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) 49 intrudes on the power of the Supreme Court to promulgate rules concerning
pleading, practice and procedures. 50

To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate
its full text as follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of the
owner referred to in paragraph 1 (b) of Article 28, if the subject matter of a patent is a
process for obtaining a product, the judicial authorities shall have the authority to order
the defendant to prove that the process to obtain an identical product is different from the
patented process. Therefore, Members shall provide, in at least one of the following
circumstances, that any identical product when produced without the consent of the
patent owner shall, in the absence of proof to the contrary, be deemed to have been
obtained by the patented process:

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was made by the process
and the owner of the patent has been unable through reasonable efforts to determine the
process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1
shall be on the alleged infringer only if the condition referred to in subparagraph (a) is
fulfilled or only if the condition referred to in subparagraph (b) is fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in

protecting their manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (not the
words "in the absence of proof to the contrary") presumption that a product shown to be
identical to one produced with the use of a patented process shall be deemed to have been
obtained by the (illegal) use of the said patented process, (1) where such product obtained
by the patented product is new, or (2) where there is "substantial likelihood" that the
identical product was made with the use of the said patented process but the owner of the
patent could not determine the exact process used in obtaining such identical product.
Hence, the "burden of proof" contemplated by Article 34 should actually be understood
as the duty of the alleged patent infringer to overthrow such presumption. Such burden,
properly understood, actually refers to the "burden of evidence" (burden of going
forward) placed on the producer of the identical (or fake) product to show that his product
was produced without the use of the patented process.

The foregoing notwithstanding, the patent owner still has the "burden of proof" since,
regardless of the presumption provided under paragraph 1 of Article 34, such owner still
has to introduce evidence of the existence of the alleged identical product, the fact that it
is "identical" to the genuine one produced by the patented process and the fact of
"newness" of the genuine product or the fact of "substantial likelihood" that the identical
product was made by the patented process.

The foregoing should really present no problem in changing the rules of evidence as the
present law on the subject, Republic Act No. 165, as amended, otherwise known as the
Patent Law, provides a similar presumption in cases of infringement of patented design or
utility model, thus:

Sec. 60. Infringement. — Infringement of a design patent or of a patent for utility model
shall consist in unauthorized copying of the patented design or utility model for the
purpose of trade or industry in the article or product and in the making, using or selling of
the article or product copying the patented design or utility model. Identity or substantial
identity with the patented design or utility model shall constitute evidence of copying.
(emphasis supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable

presumption applies only if (1) the product obtained by the patented process in NEW or
(2) there is a substantial likelihood that the identical product was made by the process and
the process owner has not been able through reasonable effort to determine the process
used. Where either of these two provisos does not obtain, members shall be free to
determine the appropriate method of implementing the provisions of TRIPS within their
own internal systems and processes.

By and large, the arguments adduced in connection with our disposition of the third issue
— derogation of legislative power — will apply to this fourth issue also. Suffice it to say
that the reciprocity clause more than justifies such intrusion, if any actually exists.
Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due
process and the concept of adversarial dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents,
trademarks and copyrights, the adjustment in legislation and rules of procedure will not
be substantial. 52

Fifth Issue: Concurrence Only in the WTO Agreement and

Not in Other Documents Contained in the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes —
but not in the other documents referred to in the Final Act, namely the Ministerial
Declaration and Decisions and the Understanding on Commitments in Financial Services
— is defective and insufficient and thus constitutes abuse of discretion. They submit that
such concurrence in the WTO Agreement alone is flawed because it is in effect a
rejection of the Final Act, which in turn was the document signed by Secretary Navarro,
in representation of the Republic upon authority of the President. They contend that the
second letter of the President to the Senate 53 which enumerated what constitutes the Final
Act should have been the subject of concurrence of the Senate.

"A final act, sometimes called protocol de cloture, is an instrument which records the
winding up of the proceedings of a diplomatic conference and usually includes a
reproduction of the texts of treaties, conventions, recommendations and other acts agreed
upon and signed by the plenipotentiaries attending the conference." 54 It is not the treaty
itself. It is rather a summary of the proceedings of a protracted conference which may
have taken place over several years. The text of the "Final Act Embodying the Results of
the Uruguay Round of Multilateral Trade Negotiations" is contained in just one page 55 in
Vol. I of the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing
said Final Act, Secretary Navarro as representative of the Republic of the Philippines
undertook:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final
Act required from its signatories, namely, concurrence of the Senate in the WTO
Agreement.

The Ministerial Declarations and Decisions were deemed adopted without need for
ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT
which provides that representatives of the members can meet "to give effect to those
provisions of this Agreement which invoke joint action, and generally with a view to
facilitating the operation and furthering the objectives of this Agreement." 56

The Understanding on Commitments in Financial Services also approved in Marrakesh

does not apply to the Philippines. It applies only to those 27 Members which "have
indicated in their respective schedules of commitments on standstill, elimination of
monopoly, expansion of operation of existing financial service suppliers, temporary entry
of personnel, free transfer and processing of information, and national treatment with
respect to access to payment, clearing systems and refinancing available in the normal
course of business."57

On the other hand, the WTO Agreement itself expresses what multilateral agreements are
deemed included as its integral parts, 58 as follows:

Article II

Scope of the WTO

1. The WTO shall provide the common institutional frame-work for the conduct of trade
relations among its Members in matters to the agreements and associated legal
instruments included in the Annexes to this Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3,

(hereinafter referred to as "Multilateral Agreements") are integral parts of this Agreement,
binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter

referred to as "Plurilateral Trade Agreements") are also part of this Agreement for those
Members that have accepted them, and are binding on those Members. The Plurilateral
Trade Agreements do not create either obligation or rights for Members that have not
accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A

(hereinafter referred to as "GATT 1994") is legally distinct from the General Agreement
on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the
conclusion of the Second Session of the Preparatory Committee of the United Nations
Conference on Trade and Employment, as subsequently rectified, amended or modified
(hereinafter referred to as "GATT 1947").

It should be added that the Senate was well-aware of what it was concurring in as shown
by the members' deliberation on August 25, 1994. After reading the letter of President
Ramos dated August 11, 1994, 59 the senators
of the Republic minutely dissected what the Senate was concurring in, as follows: 60

THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in
the first day hearing of this Committee yesterday. Was the observation made by Senator
Tañada that what was submitted to the Senate was not the agreement on establishing the
World Trade Organization by the final act of the Uruguay Round which is not the same as
the agreement establishing the World Trade Organization? And on that basis, Senator
Tolentino raised a point of order which, however, he agreed to withdraw upon
understanding that his suggestion for an alternative solution at that time was acceptable.
That suggestion was to treat the proceedings of the Committee as being in the nature of
briefings for Senators until the question of the submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new . . . is he making a
new submission which improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no
misunderstanding, it was his intention to clarify all matters by giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Tañada and later on Senator Tolentino since they
were the ones that raised this question yesterday?

Senator Tañada, please.

SEN. TAÑADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is
being submitted to the Senate for ratification is not the Final Act of the Uruguay Round,
but rather the Agreement on the World Trade Organization as well as the Ministerial
Declarations and Decisions, and the Understanding and Commitments in Financial
Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAÑADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tañada. Can we hear from Senator Tolentino?
And after him Senator Neptali Gonzales and Senator Lina.

SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually
transmitted to us but I saw the draft of his earlier, and I think it now complies with the
provisions of the Constitution, and with the Final Act itself . The Constitution does not
require us to ratify the Final Act. It requires us to ratify the Agreement which is now
being submitted. The Final Act itself specifies what is going to be submitted to with the
governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as appropriate
the WTO Agreement for the consideration of the respective competent authorities with a
view to seeking approval of the Agreement in accordance with their procedures.

In other words, it is not the Final Act that was agreed to be submitted to the governments
for ratification or acceptance as whatever their constitutional procedures may provide
but it is the World Trade Organization Agreement. And if that is the one that is being
submitted now, I think it satisfies both the Constitution and the Final Act itself .

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of
record. And they had been adequately reflected in the journal of yesterday's session and I
don't see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make
any comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales
out of the abundance of question. Then the new submission is, I believe, stating the
obvious and therefore I have no further comment to make.

Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement,
petitioners are invoking this Court's constitutionally imposed duty "to determine whether
or not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction" on the part of the Senate in giving its concurrence therein via Senate
Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of
discretion may be issued by the Court under Rule 65 of the Rules of Court when it is
amply shown that petitioners have no other plain, speedy and adequate remedy in the
ordinary course of law.

By grave abuse of discretion is meant such capricious and whimsical exercise of

judgment as is equivalent to lack of jurisdiction. 61 Mere abuse of discretion is not
enough. It must be grave abuse of discretion as when the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so
patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law. 62 Failure on the part of
the petitioner to show grave abuse of discretion will result in the dismissal of the
petition. 63

In rendering this Decision, this Court never forgets that the Senate, whose act is under
review, is one of two sovereign houses of Congress and is thus entitled to great respect in
its actions. It is itself a constitutional body independent and coordinate, and thus its
actions are presumed regular and done in good faith. Unless convincing proof and
persuasive arguments are presented to overthrow such presumptions, this Court will
resolve every doubt in its favor. Using the foregoing well-accepted definition of grave
abuse of discretion and the presumption of regularity in the Senate's processes, this Court
cannot find any cogent reason to impute grave abuse of discretion to the Senate's exercise
of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of
the Constitution. 64

It is true, as alleged by petitioners, that broad constitutional principles require the State to
develop an independent national economy effectively controlled by Filipinos; and to
protect and/or prefer Filipino labor, products, domestic materials and locally produced
goods. But it is equally true that such principles — while serving as judicial and
legislative guides — are not in themselves sources of causes of action. Moreover, there
are other equally fundamental constitutional principles relied upon by the Senate which
mandate the pursuit of a "trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign markets,"
thereby justifying its acceptance of said treaty. So too, the alleged impairment of
sovereignty in the exercise of legislative and judicial powers is balanced by the adoption
of the generally accepted principles of international law as part of the law of the land and
the adherence of the Constitution to the policy of cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its
consent to the WTO Agreement thereby making it "a part of the law of the land" is a
legitimate exercise of its sovereign duty and power. We find no "patent and gross"
arbitrariness or despotism "by reason of passion or personal hostility" in such exercise. It
is not impossible to surmise that this Court, or at least some of its members, may even
agree with petitioners that it is more advantageous to the national interest to strike down
Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of
discretion to the Senate and to nullify its decision. To do so would constitute grave abuse
in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a
valid exercise of its authority. As to whether such exercise was wise, beneficial or viable
is outside the realm of judicial inquiry and review. That is a matter between the elected
policy makers and the people. As to whether the nation should join the worldwide march
toward trade liberalization and economic globalization is a matter that our people should
determine in electing their policy makers. After all, the WTO Agreement allows
withdrawal of membership, should this be the political desire of a member.

The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance 65 where "the East will become the dominant region of the world
economically, politically and culturally in the next century." He refers to the "free
market" espoused by WTO as the "catalyst" in this coming Asian ascendancy. There are
at present about 31 countries including China, Russia and Saudi Arabia negotiating for
membership in the WTO. Notwithstanding objections against possible limitations on
national sovereignty, the WTO remains as the only viable structure for multilateral
trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly
enriched with original membership, keenly aware of the advantages and disadvantages of
globalization with its on-line experience, and endowed with a vision of the future, the
Philippines now straddles the crossroads of an international strategy for economic
prosperity and stability in the new millennium. Let the people, through their duly
authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 110526 February 10, 1998

ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS, petitioner,

vs.
PHILIPPINE COCONUT AUTHORITY, respondent.

MENDOZA, J.:

At issue in this case is the validity of a resolution, dated March 24, 1993, of the
Philippine Coconut Authority in which it declares that it will no longer require those
wishing to engage in coconut processing to apply to it for a license or permit as a
condition for engaging in such business.

Petitioner Association of Philippine Coconut Desiccators (hereafter referred to as APCD)

brought this suit for certiorari and mandamus against respondent Philippine Coconut
Authority (PCA) to invalidate the latter's Board Resolution No. 018-93 and the
certificates of registration issued under it on the ground that the resolution in question is
beyond the power of the PCA to adopt, and to compel said administrative agency to
comply instead with the mandatory provisions of statutes regulating the desiccated
coconut industry, in particular, and the coconut industry, in general.

As disclosed by the parties' pleadings, the facts are as follows:

On November 5, 1992, seven desiccated coconut processing companies belonging to the

APCD brought suit in the Regional Trial Court, National Capital Judicial Region in
Makati, Metro Manila, to enjoin the PCA from issuing permits to certain applicants for
the establishment of new desiccated coconut processing plants. Petitioner alleged that the
issuance of licenses to the applicants would violate PCA's Administrative Order No. 02,
series of 1991, as the applicants were seeking permits to operate in areas considered
"congested" under the administrative order.1

On November 6, 1992, the trial court issued a temporary restraining order and, on
November 25, 1992, a writ of preliminary injunction, enjoining the PCA from processing
and issuing licenses to Primex Products, Inc., Coco Manila, Superstar (Candelaria) and
Superstar (Davao) upon the posting of a bond in the amount of P100,000.00.2
Subsequently and while the case was pending in the Regional Trial Court, the Governing
Board of the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the
withdrawal of the Philippine Coconut Authority from all regulation of the coconut
product processing industry. While it continues the registration of coconut product
processors, the registration would be limited to the "monitoring" of their volumes of
production and administration of quality standards. The full text of the resolution reads:

RESOLUTION NO. 018-93

POLICY DECLARATION DEREGULATING
THE ESTABLISHMENT OF NEW COCONUT
PROCESSING PLANTS

WHEREAS, it is the policy of the State to promote free enterprise unhampered by

protective regulations and unnecessary bureaucratic red tapes;

WHEREAS, the deregulation of certain sectors of the coconut industry, such as

marketing of coconut oils pursuant to Presidential Decree No. 1960, the lifting of export
and commodity clearances under Executive Order No. 1016, and relaxation of regulated
capacity for the desiccated coconut sector pursuant to Presidential Memorandum of
February 11, 1988, has become a centerpiece of the present dispensation;

WHEREAS, the issuance of permits or licenses prior to business operation is a form of

regulation which is not provided in the charter of nor included among the powers of the
PCA;

WHEREAS, the Governing Board of PCA has determined to follow and further support
the deregulation policy and effort of the government to promote free enterprise;

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that,

henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery,
coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar
coconut processing plant to apply with PCA and the latter shall no longer issue any form
of license or permit as condition prior to establishment or operation of such mills or
plants;

RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering the
aforementioned coconut product processors for the purpose of monitoring their volumes
of production, administration of quality standards with the corresponding service
fees/charges.

ADOPTED this 24th day of March 1993, at Quezon City.3

The PCA then proceeded to issue "certificates of registration" to those wishing to operate
desiccated coconut processing plants, prompting petitioner to appeal to the Office of the
President of the Philippines on April 26, 1993 not to approve the resolution in question.
Despite follow-up letters sent on May 25 and June 2, 1993, petitioner received no reply
from the Office of the President. The "certificates of registration" issued in the meantime
by the PCA has enabled a number of new coconut mills to operate. Hence this petition.

Petitioner alleges:

RESPONDENT PCA'S BOARD RESOLUTION NO. 018-93 IS NULL AND VOID

FOR BEING AN UNDUE EXERCISE OF LEGISLATIVE POWER BY AN
ADMINISTRATIVE BODY.

II

ASIDE FROM BEING ULTRA-VIRES, BOARD RESOLUTION NO. 018-93 IS

WITHOUT ANY BASIS, ARBITRARY, UNREASONABLE AND THEREFORE IN
VIOLATION OF SUBSTANTIVE DUE PROCESS OF LAW.

III

IN PASSING BOARD RESOLUTION NO. 018-93, RESPONDENT PCA VIOLATED

THE PROCEDURAL DUE PROCESS REQUIREMENT OF CONSULTATION
PROVIDED IN PRESIDENTIAL DECREE NO. 1644, EXECUTIVE ORDER NO. 826
AND PCA ADMINISTRATIVE ORDER NO. 002, SERIES OF 1991.

On the other hand, in addition to answering petitioner's arguments, respondent PCA

alleges that this petition should be denied on the ground that petitioner has a pending
appeal before the Office of the President. Respondent accuses petitioner of forum-
shopping in filing this petition and of failing to exhaust available administrative remedies
before coming to this Court. Respondent anchors its argument on the general rule that one
who brings an action under Rule 65 must show that one has no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law.

I.

The rule of requiring exhaustion of administrative remedies before a party may seek
judicial review, so strenuously urged by the Solicitor General on behalf of respondent,
has obviously no application here. The resolution in question was issued by the PCA in
the exercise of its rule-making or legislative power. However, only judicial review of
decisions of administrative agencies made in the exercise of their quasi-judicial function
is subject to the exhaustion doctrine. The exhaustion doctrine stands as a bar to an action
which is not yet complete4 and it is clear, in the case at bar, that after its promulgation
the resolution of the PCA abandoning regulation of the desiccated coconut industry
became effective. To be sure, the PCA is under the direct supervision of the
President of the Philippines but there is nothing in P.D. No. 232, P.D. No. 961, P.D.
No. 1468 and P.D. No. 1644 defining the powers and functions of the PCA which
requires rules and regulations issued by it to be approved by the President before
they become effective.

In any event, although the APCD has appealed the resolution in question to the
Office of the President, considering the fact that two months after they had sent
their first letter on April 26, 1993 they still had to hear from the President's office,
meanwhile respondent PCA was issuing certificates of registration indiscriminately
to new coconut millers, we hold that petitioner was justified in filing this case on
June 25, 1993.5 Indeed, after writing the Office of the President on April 26,
19936 petitioner sent inquiries to that office not once, but twice, on May 26,
19937 and on June 2, 1993,8 but petitioner did not receive any reply.

II.

We now turn to the merit of the present petition. The Philippine Coconut Authority
was originally created by P.D. 232 on June 30, 1973, to take over the powers and
functions of the Coconut Coordinating Council, the Philippine Coconut
Administration and the Philippine Coconut Research Institute. On June 11, 1978, by
P.D. No. 1468, it was made "an independent public corporation . . . directly
reporting to, and supervised by, the President of the Philippines," 9 and charged with
carrying out the State's policy "to promote the rapid integrated development and
growth of the coconut and other palm oil industry in all its aspects and to ensure
that the coconut farmers become direct participants in, and beneficiaries of, such
development and growth."10 through a regulatory scheme set up by law.11

Through this scheme, the government, on August 28, 1982, temporarily prohibited
the opening of new coconut processing plants and, four months later, phased out
some of the existing ones in view of overproduction in the coconut industry which
resulted in cut-throat competition, underselling and smuggling of poor quality
products and ultimately in the decline of the export performance of coconut-based
commodities. The establishment of new plants could be authorized only upon
determination by the PCA of the existence of certain economic conditions and the
approval of the President of the Philippines. Thus, Executive Order No. 826, dated
August 28, 1982, provided:

Sec. 1. Prohibition. — Except as herein provided, no government agency or

instrumentality shall hereafter authorize, approve or grant any permit or license for
the establishment or operation of new desiccated coconut processing plants,
including the importation of machinery or equipment for the purpose. In the event
of a need to establish a new plant, or expand the capacity, relocate or upgrade the
efficiencies of any existing desiccated plant, the Philippine Coconut Authority may,
upon proper determination of such need and evaluation of the condition relating to:

a. the existing market demand;

b. the production capacity prevailing in the country or locality;

c. the level and flow of raw materials; and

d. other circumstances which may affect the growth or viability of the industry
concerned,

authorize or grant the application for, the establishment or expansion of capacity,

relocation or upgrading of efficiencies of such desiccated coconut processing plant,
subject to the approval of the President.

On December 6, 1982, a phase-out of some of the existing plants was ordered by the
government after finding that "a mere freeze in the present capacity of existing
plants will not afford a viable solution to the problem considering that the total
available limited market is not adequate to support all the existing processing
plants, making it imperative to reduce the number of existing processing
plants."12 Accordingly, it was ordered:13

Sec. 1. The Philippine Coconut Authority is hereby ordered to take such action as
may be necessary to reduce the number of existing desiccated coconut processing
plants to a level which will insure the survival of the remaining plants. The
Authority is hereby directed to determine which of the existing processing plants
should be phased out and to enter into appropriate contracts with such plants for
the above purpose.

It was only on October 23, 1987 when the PCA adopted Resolution No. 058-87,
authorizing the establishment and operation of additional DCN plants, in view of
the increased demand for desiccated coconut products in the world's markets,
particularly in Germany, the Netherlands and Australia. Even then, the opening of
new plants was made subject to "such implementing guidelines to be set forth by the
Authority" and "subject to the final approval of the President."

The guidelines promulgated by the PCA, as embodied in Administrative Order No.

002, series of 1991, inter alia authorized the opening of new plants in "non-congested
areas only as declared by the PCA" and subject to compliance by applicants with
"all procedures and requirements for registration under Administrative Order No.
003, series of 1981 and this Order." In addition, as the opening of new plants was
premised on the increased global demand for desiccated coconut products, the new
entrants were required to submit sworn statements of the names and addresses of
prospective foreign buyers.

This form of "deregulation" was approved by President Aquino in her

memorandum, dated February 11, 1988, to the PCA. Affirming the regulatory
scheme, the President stated in her memorandum:

It appears that pursuant to Executive Order No. 826 providing measures for the
protection of the Desiccated Coconut Industry, the Philippine Coconut Authority
evaluated the conditions relating to: (a) the existing market demands; (b) the
production capacity prevailing in the country or locality; (c) the level and flow of
raw materials; and (d) other circumstances which may affect the growth or viability
of the industry concerned and that the result of such evaluation favored the
expansion of production and market of desiccated coconut products.

In view hereof and the favorable recommendation of the Secretary of Agriculture,

the deregulation of the Desiccated Coconut Industry as recommended in Resolution
No. 058-87 adopted by the PCA Governing Board on October 28, 1987 (sic) is hereby
approved.14

These measures — the restriction in 1982 on entry into the field, the reduction the
same year of the number of the existing coconut mills and then the lifting of the
restrictions in 1987 — were adopted within the framework of regulation as
established by law "to promote the rapid integrated development and growth of the
coconut and other palm oil industry in all its aspects and to ensure that the coconut
farmers become direct participants in, and beneficiaries of, such development and
growth." 15 Contrary to the assertion in the dissent, the power given to the
Philippine Coconut Authority — and before it to the Philippine Coconut
Administration — "to formulate and adopt a general program of development for
the coconut and other palm oils industry" 16 is not a roving commission to adopt any
program deemed necessary to promote the development of the coconut and other
palm oils industry, but one to be exercised in the context of this regulatory structure.

In plain disregard of this legislative purpose, the PCA adopted on March 24, 1993
the questioned resolution which allows not only the indiscriminate opening of new
coconut processing plants but the virtual dismantling of the regulatory
infrastructure whereby, forsaking controls theretofore placed in its keeping, the
PCA limits its function to the innocuous one of "monitoring" compliance by coconut
millers with quality standards and volumes of production. In effect, the PCA would
simply be compiling statistical data on these matters, but in case of violations of
standards there would be nothing much it would do. The field would be left without
an umpire who would retire to the bleachers to become a mere spectator. As the
PCA provided in its Resolution No. 018-93:

NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that,

henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery,
coconut desiccator, coconut product processor/factory, coconut fiber plant or any
similar coconut processing plant to apply with PCA and the latter shall no longer
issue any form of license or permit as condition prior to establishment or operation
of such mills or plants;

RESOLVED, FURTHER, that the PCA shall limit itself only to simply registering
the aforementioned coconut product processors for the purpose of monitoring their
volumes of production, administration of quality standards with the corresponding
service fees/charges.
The issue is not whether the PCA has the power to adopt this resolution to carry out
its mandate under the law "to promote the accelerated growth and development of
the coconut and other palm oil industry." 17 The issue rather is whether it can
renounce the power to regulate implicit in the law creating it for that is what the
resolution in question actually is.

Under Art. II, § 3(a) of the Revised Coconut Code (P.D. No. 1468), the role of the
PCA is "To formulate and adopt a general program of development for the coconut
and other palm oil industry in all its aspects." By limiting the purpose of
registration to merely "monitoring volumes of production [and] administration of
quality standards" of coconut processing plants, the PCA in effect abdicates its role
and leaves it almost completely to market forces how the coconut industry will
develop.

Art. II, § 3 of P.D. No. 1468 further requires the PCA:

(h) To regulate the marketing and the exportation of copra and its by-products by
establishing standards for domestic trade and export and, thereafter, to conduct an
inspection of all copra and its by-products proposed for export to determine if they
conform to the standards established;

Instead of determining the qualifications of market players and preventing the entry
into the field of those who are unfit, the PCA now relies entirely on competition —
with all its wastefulness and inefficiency — to do the weeding out, in its naive belief
in survival of the fittest. The result can very well be a repeat of 1982 when free
enterprise degenerated into a "free-for-all," resulting in cut-throat competition,
underselling, the production of inferior products and the like, which badly affected
the foreign trade performance of the coconut industry.

Indeed, by repudiating its role in the regulatory scheme, the PCA has put at risk
other statutory provisions, particularly those of P.D. No. 1644, to wit:

Sec. 1. The Philippine Coconut Authority shall have full power and authority to
regulate the marketing and export of copra, coconut oil and their by-products, in
furtherance of the steps being taken to rationalize the coconut oil milling industry.

Sec. 2. In the exercise of its powers under Section 1 hereof, the Philippine Coconut
Authority may initiate and implement such measures as may be necessary to attain
the rationalization of the coconut oil milling industry, including, but not limited to,
the following measures:

(a) Imposition of floor and/or ceiling prices for all exports of copra, coconut oil and
their by-products;

(b) Prescription of quality standards;

(c) Establishment of maximum quantities for particular periods and particular
markets;

(d) Inspection and survey of export shipments through an independent international

superintendent or surveyor.

In the exercise of its powers hereunder, the Philippine Coconut Authority shall
consult with, and be guided by, the recommendation of the coconut farmers,
through corporations owned or controlled by them through the Coconut Industry
Investment Fund and the private corporation authorized to be organized under
Letter of Instructions No. 926.

and the Revised Coconut Code (P.D. No. 1468), Art. II, § 3, to wit:

(m) Except in respect of entities owned or controlled by the Government or by the

coconut farmers under Sections 9 and 10, Article III hereof, the Authority shall have
full power and authority to regulate the production, distribution and utilization of
all subsidized coconut-based products, and to require the submission of such reports
or documents as may be deemed necessary by the Authority to ascertain whether the
levy payments and/or subsidy claims are due and correct and whether the
subsidized products are distributed among, and utilized by, the consumers
authorized by the Authority.

The dissent seems to be saying that in the same way that restrictions on entry into
the field were imposed in 1982 and then relaxed in 1987, they can be totally lifted
now without prejudice to reimposing them in the future should it become necessary
to do so. There is really no renunciation of the power to regulate, it is claimed.
Trimming down of PCA's function to registration is not an abdication of the power
to regulate but is regulation itself. But how can this be done when, under Resolution
No. 018-93, the PCA no longer requires a license as condition for the establishment
or operation of a plant? If a number of processing firms go to areas which are
already congested, the PCA cannot stop them from doing so. If there is
overproduction, the PCA cannot order a cut back in their production. This is
because the licensing system is the mechanism for regulation. Without it the PCA
will not be able to regulate coconut plants or mills.

In the first "whereas" clause of the questioned resolution as set out above, the PCA
invokes a policy of free enterprise that is "unhampered by protective regulations
and unnecessary bureaucratic red tape" as justification for abolishing the licensing
system. There can be no quarrel with the elimination of "unnecessary red tape."
That is within the power of the PCA to do and indeed it should eliminate red tape.
Its success in doing so will be applauded. But free enterprise does not call for
removal of "protective regulations."

Our Constitutions, beginning with the 1935 document, have repudiated laissez-
faire as an economic principle.18 Although the present Constitution enshrines free
enterprise as a policy,19 it nonetheless reserves to the government the power to
intervene whenever necessary to promote the general welfare. This is clear from the
following provisions of Art. XII of the Constitution which, so far as pertinent, state:

Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and

similar collective organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote distributive justice
and to intervene when the common good so demands.

Sec. 19. The State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be
allowed. (Emphasis added).

At all events, any change in policy must be made by the legislative department of the
government. The regulatory system has been set up by law. It is beyond the power of
an administrative agency to dismantle it. Indeed, petitioner charges the PCA of
seeking to render moot a case filed by some of its members questioning the grant of
licenses to certain parties by adopting the resolution in question. It is alleged that
members of petitioner complained to the court that the PCA had authorized the
establishment and operation of new plants in areas which were already crowded, in
violation of its Administrative Order No. 002, series of 1991. In response, the
Regional Trial Court issued a writ of preliminary injunction, enjoining the PCA
from issuing licenses to the private respondent in that case.

These allegations of petitioner have not been denied here. It would thus seem that
instead of defending its decision to allow new entrants into the field against
petitioner's claim that the PCA decision violated the guidelines in Administrative
Order No. 002, series of 1991, the PCA adopted the resolution in question to render
the case moot. In so doing, the PCA abdicated its function of regulation and left the
field to untrammeled competition that is likely to resurrect the evils of cut-throat
competition, underselling and overproduction which in 1982 required the temporary
closing of the field to new players in order to save the industry.

The PCA cannot rely on the memorandum of then President Aquino for authority to
adopt the resolution in question. As already stated, what President Aquino approved
in 1988 was the establishment and operation of new DCN plants subject to the
guidelines to be drawn by the PCA.20 In the first place, she could not have intended to
amend the several laws already mentioned, which set up the regulatory system, by a
mere memoranda to the PCA. In the second place, even if that had been her
intention, her act would be without effect considering that, when she issued the
memorandum in question on February 11, 1988, she was no longer vested with
legislative authority.21

WHEREFORE, the petition is GRANTED. PCA Resolution No. 018-93 and all
certificates of registration issued under it are hereby declared NULL and VOID for
having been issued in excess of the power of the Philippine Coconut Authority to
adopt or issue.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Puno, Kapunan, Francisco, Panganiban and
Martinez, JJ., concur.

Separate Opinions

ROMERO, J., dissenting;

The past decade, a distinct worldwide trend towards economic deregulation has
been evident. Both developed and developing countries have seriously considered,
and extensively adopted, various measures for this purpose. The Philippines has
been no exception.

To this end, the Philippine Coconut Authority (PCA) issued Board Resolution No.
018-93 (PCA-BR No 018-93) dated March 24, 1993, deregulating the coconut
processing plant industry.1 The Association of Philippine Desiccators (APCD) has
filed this instant petition for prohibition and mandamus under Rule 65 of the Rules
of Court seeking the annulment of said resolution.

APCD questions the validity of PCA-BR No. 018-93 for being violative of the
principle of non-delegability of legislative power. It contends that in issuing the
resolution deregulating the coconut industry, the PCA exercised legislative
discretion, which has not been delegated to it by Congress. It adds that when PCA
deregulated the coconut industry, it ran counter to the very laws 2 which mandated it
to regulate and rationalize the industry.

We see no merit in this contention. PCA's authority to issue PCA-BR No. 018-93 is
clearly provided in Section 3(a) of P.D. No. 232, reading as follows:

. . . To formulate and adopt a general program of development for the coconut and
other palm oil industry.

Similar grants of authority were made in subsequent amendatory laws.3

In this regard, we have ruled that legislative discretion, as to the substantive

contents of a law, cannot be delegated. What may be delegated is the discretion to
determine how the law is to be enforced, not what the law should be, a prerogative
of the legislature which it can neither abdicate nor surrender to the delegate. 4The
principle is based on the separation and allocation of powers among the three
departments of government.5

Thus, there are two accepted tests to determine whether or not there is a valid
delegation of legislative power, namely, the completeness test and the sufficient
standard test. Under the first test, the law must be complete in all its terms and
conditions when it leaves the legislature such that when it reaches the delegate, the
only thing he will have to do is enforce it. Under the sufficient standard test, there
must be adequate guidelines or limitations in the law to map out the boundaries of
the delegate's authority and prevent the delegation from running amiss.6

We have accepted as sufficient standards "interest of law and order," 7 "adequate

and efficient instruction," 8"public interest,"9 "justice and equity,"10 "public
convenience and welfare,"11 "simplicity, economy and efficiency,"12 "standardization
and regulation of medical education,"13 and "fair and equitable employment
practices."14 Consequently, the standard may be expressed or implied. In the former,
the non delegation objection is easily met. The standard though does not have to be
spelled out but need only be implied from the policy and purpose of the act
considered as a whole.15 It may also be found in other statutes on the same subject as
that of the challenged legislation.16

In no uncertain terms must it be stressed that the function of promulgating rules

and regulations may be legitimately exercised only for the purpose of carrying out
the provisions of a law. The power of administrative agencies is confined to
implementing the law or putting it into effect. Corollary to this guideline is that
administrative regulation cannot extend the law and amend a legislative
enactment.17

In the instant case, we believe that the PCA did not overstep the limits of its power
in issuing the assailed resolution. We need not belabor the point that one of the
economic goals of our country is the increased productivity of goods and services
provided by the nation for the benefit of the people, 18 since from a purely economic
standpoint, the increase in agricultural productivity is of fundamental importance. 19

Considering the responsibilities and powers assigned to the PCA, as well as its
underlying policy, namely, that "the economic well-being of a major part of the
population depends to a large extent on the viability of the industry and its
improvement in the areas of production, processing and marketing," the irresistible
conclusion is that PCA-BR No. 018-93 is a valid exercise of delegated legislation by
the PCA. Such resolution is in harmony with the objectives sought to be achieved by
the laws regarding the coconut industry, particularly "to promote accelerated
growth and development of the coconut and other palm oil industry," 20 and "rapid
integrated development and growth of the coconut and other palm oil
industry."21These are sufficient standards to guide the PCA. Thus, measures to
achieve these policies are better left to the administrative agencies tasked with
implementing them.

It must be stressed that with increasing global trade and business and major
upheavals in technology and communications, the time has come for administrative
policies and regulations to adapt to ever-changing business needs rather than to
accommodate traditional acts of the legislature.22 Even the 1987 Constitution was
designed to meet, not only contemporary events, but also future and unknown
circumstances.23

It is worth mentioning that the PCA, after conducting its studies, adopted the policy
of deregulation to further enhance the coconut industry competition, since any
continuation of the restrictive regulation in the industry would have detrimental
effects.24 This is in consonance with the constitutional mandate that the State must
"adopt measures that help make them (locally produced goods)
competitive."25 Undoubtedly, an "agency, in light of changing circumstances, is free
to alter interpretative and policy views reflected in regulations construing an
underlying statute, so long as any changed construction of the statute is consistent
with express congressional intent or embodies a permissible reading of the
statute."26

Furthermore, the Constitution is cognizant of the realities of global

interdependency, as it requires the pursuit of "a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchanges on the basis of
equality and reciprocity."27

In sum, the policy of deregulation must be determined by the circumstances

prevailing in a certain situation.28 As we have stressed in the past, this Court is only
concerned with the question of authority, not the wisdom of the measure involved
which falls within the province of the Legislature.

The ponencia presents the issue: whether it is within the power of the PCA to
renounce the power to regulate implicit in the law creating it (P.D. No. 232). (It is to
be pointed out that this issue was not included in the Assignment of Errors of
Petitioner).

Underlying this formulation is the assumption/admission that PCA has the power to
regulate the coconut industry, as in fact the power is bestowed upon it by its organic
act, P.D. No. 232, viz. "to promote the rapid integrated development and growth of
the coconut and other palm oils in industry in all its aspects and to ensure that the
coconut farmers become direct participants in, and beneficiaries of, such
development and growth." Its broad mandate is "to formulate and adopt a general
program of development for the coconut and other palm oils industry."

It avers that this "legislative scheme" was disregarded when the PCA adopted on
March 24, 1993 the assailed Resolution which is effect liberalized the registration
and licensing requirements for the granting of permits to operate new coconut
plants. But this was effected pursuant to the October 23, 1987 PCA Board
Resolution laying down the policy of deregulating the industry and authorizing the
creation of additional desiccated coconut plants.

As with any administrative agency established to promote the growth and

development of any industry, the PCA has considerable latitude to adopt policies
designed to accelerate the attainment of this objective and corollarily, to lay down
rules and regulations to implement the same. We can take judicial notice of the fact
that during its 25 years of existence, the PCA has achieved enough experience and
expertise to introduce measures which shall ensure the dominant role of the crop as
a major dollar-producing industry, including the manipulation of market forces to
our comparative advantage, certainly an area beyond the Court's ken.

Hence, guided by guidelines already laid down, it responded to regional

developments by:

(1) taking cognizance of the overproduction in the industry and curtailing the
expansion of coconut processing plants in 1982, within reasonable limits and with
safeguards (hence the issuance of Executive Order Nos. 826 on August 28, 1982 and
No. 854 on December 6, 1982);

(2) five years later, responding to the demand for desiccated coconut products in the
world market, liberalized its former policy by deregulating the industry and
authorizing the creation of additional desiccated coconut plants in 1987;

(3) complementing and supplementing (2), by easing registration and licensing

requirements in 1993.

It bears repeating that the above measures were not taken arbitrarily but in careful
compliance with guidelines incorporated in the Executive Orders and subject to the
favorable recommendation of the Secretary of Agriculture and the approval of the
President.

The crux of the ponencia is that, in the process of opening doors to foreign markets,
the PCA "limited itself to merely monitoring their volumes of production and
administration of quality standards, in effect abdicating its role and leaving it almost
totally to market forces to define how the industry will develop."

Actually, the relevant provisions in the disputed resolution reads:

Resolved further, that the PCA shall limit itself only to simply registering the
aforementioned coconut product processors for the purpose of monitoring their
volumes of production, administration of quality standards with the corresponding
service fees/charges.
For the sake of clarity and accuracy, it is to be stressed that the PCA did not limit
itself "merely to monitoring . . ." as the ponencia states, but to "registering the . . .
processors for the purpose of monitoring their volumes of production and
administration of quality standards. . . ."

In the actual words of the Resolution, the PCA recognizes its principal function of
registration so as to be able to monitor the production and administer quality
standards, both objectives of which are not merely nominal or minimal, but
substantial, even vital, aspects of the power to regulate. Put differently, there is no
renunciation of the power to regulate, for the regulation is essentially recognized and
accomplished through the registration function which enables the PCA to keep track
of the volume of production and the observance of quality standards by new
entrants into the industry. In sum, trimming down its functions to registration is not
an abdication of the power to regulate but is regulation itself.

If the PCA, in light of the crucial developments in the regional and domestic coconut
industry decides to open wide its doors, allow the free entry of other players and the
interplay of competitive forces to shape the configuration of the industry, who are
we to declare such policy as one characterized by "wastefulness and inefficiency . . .
based on its naive faith in survival of the fittest." Is not this a blatant incursion by
the Court into the economic arena which is better left to the administrative agency
precisely tasked to promote the growth of the industry, through the exercise of its
studied discretion? To be sure, those operators already in the field, such as the
petitioner members of the Association of Philippine Coconut Desiccators, are
expected to vigorously protest and work for the nullity of what they perceive as an
obnoxious, life threatening policy. But instead of opposing what the PCA views as a
timely, well-considered move, the healthy competition should spur them to
improving their product and elevating the standards they have imposed on
themselves.

If, in the course of its monitoring which is a piece of the regulatory function, the
PCA should detect a violation of its guidelines that would result in a lowering of the
quality of the product, or unfairness to other players, surely, it is not powerless to
impose sanctions, as categorically provided in P.D. 1469, P.D. 1644, Adm. Order No.
003, Series of 1981 and Adm. Order No. 002, Series of 1991. Any administrative
agency is empowered to establish its implementing rules, together with sanctions
guaranteed to ensure the observance of such rules, else it would be a mere
"toothless" entity.

The ponencia prognosticates, "The result can very well be a repeat of 1982 when
free enterprise degenerated into a 'free-for-all,' resulting in cutthroat competition,
underselling, the production of inferior products and the like, which badly affected
the foreign trade performance of our coconut industry." Are we not encroaching on
legislative domain in questioning the wisdom of the action taken by the PCA which
was accorded a broad mandate by the Congress? Moreover, let us bear in mind that
during those "abnormal times," forces other than merely economic, e.g. political,
dominated the economy effectively supporting, even favoring, destructive
capitalistic monopolies and, in the process suppressing healthy competition.

Not to forget, too, that we cannot close our eyes and ignore the world-wide trend
towards globalization in the economy, as in other fields, as in fact the Court
recognized this economic reality in its decision in the Oil Deregulation Case.

With the unrelenting march of globalization in our economy, the Philippines must
find its market niches and be able to adapt to these inevitable changes, for the Asia-
Pacific rim is bound to become a truly dynamic region in the economic, political and
cultural arenas in the coming millennium.

ACCORDINGLY, the petition should be DISMISSED.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 91649 May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES

MARANAN AND LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION
(PAGCOR), respondent.

H.B. Basco & Associates for petitioners.

Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.:

A TV ad proudly announces:

"The new PAGCOR — responding through responsible gaming."

But the petitioners think otherwise, that is why, they filed the instant petition seeking to
annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter — PD
1869, because it is allegedly contrary to morals, public policy and order, and because —

A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by

law. It waived the Manila City government's right to impose taxes and license fees, which
is recognized by law;

B. For the same reason stated in the immediately preceding paragraph, the law has
intruded into the local government's right to impose local taxes and license fees. This, in
contravention of the constitutionally enshrined principle of local autonomy;

C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR
— conducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;
D. It violates the avowed trend of the Cory government away from monopolistic and
crony economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p.
7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the
declared national policy of the "new restored democracy" and the people's will as
expressed in the 1987 Constitution. The decree is said to have a "gambling objective" and
therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII and
Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended Petition;
p. 21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers

(petitioner Basco being also the Chairman of the Committee on Laws of the City Council
of Manila), can question and seek the annulment of PD 1869 on the alleged grounds
mentioned above.

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue
of P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also
dated January 1, 1977 "to establish, operate and maintain gambling casinos on land or
water within the territorial jurisdiction of the Philippines." Its operation was originally
conducted in the well known floating casino "Philippine Tourist." The operation was
considered a success for it proved to be a potential source of revenue to fund
infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978
for PAGCOR to fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the
Government to regulate and centralize all games of chance authorized by existing
franchise or permitted by law, under the following declared policy —

Sec. 1. Declaration of Policy. — It is hereby declared to be the policy of the State to

centralize and integrate all games of chance not heretofore authorized by existing
franchises or permitted by law in order to attain the following objectives:

(a) To centralize and integrate the right and authority to operate and conduct games of
chance into one corporate entity to be controlled, administered and supervised by the
Government.

(b) To establish and operate clubs and casinos, for amusement and recreation, including
sports gaming pools, (basketball, football, lotteries, etc.) and such other forms of
amusement and recreation including games of chance, which may be allowed by law
within the territorial jurisdiction of the Philippines and which will: (1) generate sources of
additional revenue to fund infrastructure and socio-civic projects, such as flood control
programs, beautification, sewerage and sewage projects, Tulungan ng Bayan Centers,
Nutritional Programs, Population Control and such other essential public services; (2)
create recreation and integrated facilities which will expand and improve the country's
existing tourist attractions; and (3) minimize, if not totally eradicate, all the evils,
malpractices and corruptions that are normally prevalent on the conduct and operation of
gambling clubs and casinos without direct government involvement. (Section 1, P.D.
1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the
Philippines. Under its Charter's repealing clause, all laws, decrees, executive orders, rules
and regulations, inconsistent therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the
Bureau of Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned
P3.43 Billion, and directly remitted to the National Government a total of P2.5 Billion in
form of franchise tax, government's income share, the President's Social Fund and Host
Cities' share. In addition, PAGCOR sponsored other socio-cultural and charitable projects
on its own or in cooperation with various governmental agencies, and other private
associations and organizations. In its 3 1/2 years of operation under the present
administration, PAGCOR remitted to the government a total of P6.2 Billion. As of
December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos
nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-
Four (4,494) families.

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the
same is "null and void" for being "contrary to morals, public policy and public order,"
monopolistic and tends toward "crony economy", and is violative of the equal protection
clause and local autonomy as well as for running counter to the state policies enunciated
in Sections 11 (Personal Dignity and Human Rights), 12 (Family) and 13 (Role of Youth)
of Article II, Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values)
of Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most
deliberate consideration by the Court, involving as it does the exercise of what has been
described as "the highest and most delicate function which belongs to the judicial
department of the government." (State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146
SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and
coordinate branch of the government We need not be reminded of the time-honored
principle, deeply ingrained in our jurisprudence, that a statute is presumed to be valid.
Every presumption must be indulged in favor of its constitutionality. This is not to say
that We approach Our task with diffidence or timidity. Where it is clear that the
legislature or the executive for that matter, has over-stepped the limits of its authority
under the constitution, We should not hesitate to wield the axe and let it fall heavily, as
fall it must, on the offending statute (Lozano v. Martinez, supra).

In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr.
Justice Zaldivar underscored the —
. . . thoroughly established principle which must be followed in all cases where questions
of constitutionality as obtain in the instant cases are involved. All presumptions are
indulged in favor of constitutionality; one who attacks a statute alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may
work hardship does not render it unconstitutional; that if any reasonable basis may be
conceived which supports the statute, it will be upheld and the challenger must negate all
possible basis; that the courts are not concerned with the wisdom, justice, policy or
expediency of a statute and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. (Danner v. Hass, 194 N.W. 2nd534,
539; Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v.
Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30,
55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in
Citizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521,
540)

Of course, there is first, the procedural issue. The respondents are questioning the legal
personality of petitioners to file the instant petition.

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 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.
(Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)

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. 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, 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 "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 the exception in many other cases. (Association of Small
Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).

Having disposed of the procedural issue, We will now discuss the substantive issues
raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the
prohibition of gambling does not mean that the Government cannot regulate it in the
exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as
the "state authority to enact legislation that may interfere with personal liberty or property
in order to promote the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined,
it consists of (1) an imposition or restraint upon liberty or property, (2) in order to foster
the common good. It is not capable of an exact definition but has been, purposely, veiled
in general terms to underscore its all-comprehensive embrace. (Philippine Association of
Service Exporters, Inc. v. Drilon, 163 SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible response to
conditions and circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra)

It finds no specific Constitutional grant for the plain reason that it does not owe its origin
to the charter. Along with the taxing power and eminent domain, it is inborn in the very
fact of statehood and sovereignty. It is a fundamental attribute of government that has
enabled it to perform the most vital functions of governance. Marshall, to whom the
expression has been credited, refers to it succinctly as the plenary power of the state "to
govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The police power
of the State is a power co-extensive with self-protection and is most aptly termed the "law
of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It
is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National,
40 Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds
of change.

What was the reason behind the enactment of P.D. 1869?

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and
centralize thru an appropriate institution all games of chance authorized by existing
franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently
proved, regulating and centralizing gambling operations in one corporate entity — the
PAGCOR, was beneficial not just to the Government but to society in general. It is a
reliable source of much needed revenue for the cash strapped Government. It provided
funds for social impact projects and subjected gambling to "close scrutiny, regulation,
supervision and control of the Government" (4th Whereas Clause, PD 1869). With the
creation of PAGCOR and the direct intervention of the Government, the evil practices
and corruptions that go with gambling will be minimized if not totally eradicated. Public
welfare, then, lies at the bottom of the enactment of PD 1896.

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila
to impose taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the
principle of local autonomy. They must be referring to Section 13 par. (2) of P.D. 1869
which exempts PAGCOR, as the franchise holder from paying any "tax of any kind or
form, income or otherwise, as well as fees, charges or levies of whatever nature, whether
National or Local."

(2) Income and other taxes. — a) Franchise Holder: No tax of any kind or form, income
or otherwise as well as fees, charges or levies of whatever nature, whether National or
Local, shall be assessed and collected under this franchise from the Corporation; nor shall
any form or tax or charge attach in any way to the earnings of the Corporation, except a
franchise tax of five (5%) percent of the gross revenues or earnings derived by the
Corporation from its operations under this franchise. Such tax shall be due and payable
quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees
or assessments of any kind, nature or description, levied, established or collected by any
municipal, provincial or national government authority (Section 13 [2]).

Their contention stated hereinabove is without merit for the following reasons:

(a) The City of Manila, being a mere Municipal corporation has no inherent right to
impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil.
337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute
must plainly show an intent to confer that power or the municipality cannot assume it"
(Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield
to a legislative act which is superior having been passed upon by the state itself which has
the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1,
1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be
stressed that "municipal corporations are mere creatures of Congress" (Unson v. Lacson,
G.R. No. 7909, January 18, 1957) which has the power to "create and abolish municipal
corporations" due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67;
Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of control over
Local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can
grant the City of Manila the power to tax certain matters, it can also provide for
exemptions or even take back the power.

(c) The City of Manila's power to impose license fees on gambling, has long been
revoked. As early as 1975, the power of local governments to regulate gambling thru the
grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested
exclusively on the National Government, thus:

Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered
cities and other local governments to issue license, permit or other form of franchise to
operate, maintain and establish horse and dog race tracks, jai-alai and other forms of
gambling is hereby revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and
dog race tracks, jai-alai and other forms of gambling shall be issued by the national
government upon proper application and verification of the qualification of the applicant .
..

Therefore, only the National Government has the power to issue "licenses or permits" for
the operation of gambling. Necessarily, the power to demand or collect license fees which
is a consequence of the issuance of "licenses or permits" is no longer vested in the City of
Manila.

(d) Local governments have no power to tax instrumentalities of the National

Government. PAGCOR is a government owned or controlled corporation with an original
charter, PD 1869. All of its shares of stocks are owned by the National Government. In
addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises regulatory
powers thus:

Sec. 9. Regulatory Power. — The Corporation shall maintain a Registry of the affiliated
entities, and shall exercise all the powers, authority and the responsibilities vested in the
Securities and Exchange Commission over such affiliating entities mentioned under the
preceding section, including, but not limited to amendments of Articles of Incorporation
and By-Laws, changes in corporate term, structure, capitalization and other matters
concerning the operation of the affiliated entities, the provisions of the Corporation Code
of the Philippines to the contrary notwithstanding, except only with respect to original
incorporation.

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is
governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded
or subjected to control by a mere Local government.

The states have no power by taxation or otherwise, to retard, impede, burden or in any
manner control the operation of constitutional laws enacted by Congress to carry into
execution the powers vested in the federal government. (MC Culloch v. Marland, 4
Wheat 316, 4 L Ed. 579)

This doctrine emanates from the "supremacy" of the National Government over local
governments.

Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of
power on the part of the States to touch, in that way (taxation) at least, the
instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be
agreed that no state or political subdivision can regulate a federal instrumentality in such
a way as to prevent it from consummating its federal responsibilities, or even to seriously
burden it in the accomplishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p.
140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of
what local authorities may perceive to be undesirable activities or enterprise using the
power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc
Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of
the very entity which has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be
violated by P.D. 1869. This is a pointless argument. Article X of the 1987 Constitution
(on Local Autonomy) provides:

Sec. 5. Each local government unit shall have the power to create its own source of
revenue and to levy taxes, fees, and other charges subject to such guidelines and
limitation as the congress may provide, consistent with the basic policy on local
autonomy. Such taxes, fees and charges shall accrue exclusively to the local government.
(emphasis supplied)

The power of local government to "impose taxes and fees" is always subject to
"limitations" which Congress may provide by law. Since PD 1869 remains an "operative"
law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its
"exemption clause" remains as an exception to the exercise of the power of local
governments to impose taxes and fees. It cannot therefore be violative but rather is
consistent with the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means
"decentralization" (III Records of the 1987 Constitutional Commission, pp. 435-436, as
cited in Bernas, The Constitution of the Republic of the Philippines, Vol. II, First Ed.,
1988, p. 374). It does not make local governments sovereign within the state or an
"imperium in imperio."

Local Government has been described as a political subdivision of a nation or state which
is constituted by law and has substantial control of local affairs. In a unitary system of
government, such as the government under the Philippine Constitution, local
governments can only be an intra sovereign subdivision of one sovereign nation, it cannot
be an imperium in imperio. Local government in such a system can only mean a measure
of decentralization of the function of government. (emphasis supplied)

As to what state powers should be "decentralized" and what may be delegated to local
government units remains a matter of policy, which concerns wisdom. It is therefore a
political question. (Citizens Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 539).

What is settled is that the matter of regulating, taxing or otherwise dealing with gambling
is a State concern and hence, it is the sole prerogative of the State to retain it or delegate
it to local governments.
As gambling is usually an offense against the State, legislative grant or express charter
power is generally necessary to empower the local corporation to deal with the
subject. . . . In the absence of express grant of power to enact, ordinance provisions on
this subject which are inconsistent with the state laws are void. (Ligan v. Gadsden, Ala
App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You,
88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol.
3 Ibid, p. 548, emphasis supplied)

Petitioners next contend that P.D. 1869 violates the equal protection clause of the
Constitution, because "it legalized PAGCOR — conducted gambling, while most
gambling are outlawed together with prostitution, drug trafficking and other vices" (p.
82, Rollo).

We, likewise, find no valid ground to sustain this contention. The petitioners' posture
ignores the well-accepted meaning of the clause "equal protection of the laws." The
clause does not preclude classification of individuals who may be accorded different
treatment under the law as long as the classification is not unreasonable or arbitrary
(Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force on
all persons or things to be conformable to Article III, Section 1 of the Constitution (DECS
v. San Diego, G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classes
of individuals or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G.
2847). The Constitution does not require situations which are different in fact or opinion
to be treated in law as though they were the same (Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the
equal protection is not clearly explained in the petition. The mere fact that some gambling
activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by RA 983),
sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under
certain conditions, while others are prohibited, does not render the applicable laws, P.D.
1869 for one, unconstitutional.

If the law presumably hits the evil where it is most felt, it is not to be overthrown because
there are other instances to which it might have been applied. (Gomez v. Palomar, 25
SCRA 827)

The equal protection clause of the 14th Amendment does not mean that all occupations
called by the same name must be treated the same way; the state may do what it can to
prevent which is deemed as evil and stop short of those cases in which harm to the few
concerned is not less than the harm to the public that would insure if the rule laid down
were made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).

Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory
Government away from monopolies and crony economy and toward free enterprise and
privatization" suffice it to state that this is not a ground for this Court to nullify P.D. 1869.
If, indeed, PD 1869 runs counter to the government's policies then it is for the Executive
Department to recommend to Congress its repeal or amendment.

The judiciary does not settle policy issues. The Court can only declare what the law is
and not what the law should be.1âwphi1 Under our system of government, policy issues
are within the domain of the political branches of government and of the people
themselves as the repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA
256).

On the issue of "monopoly," however, the Constitution provides that:

Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires.
No combinations in restraint of trade or unfair competition shall be allowed. (Art. XII,
National Economy and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily
prohibited by the Constitution. The state must still decide whether public interest
demands that monopolies be regulated or prohibited. Again, this is a matter of policy for
the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12

(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to
state also that these are merely statements of principles and, policies. As such, they are
basically not self-executing, meaning a law should be passed by Congress to clearly
define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing

principles ready for enforcement through the courts. They were rather directives
addressed to the executive and the legislature. If the executive and the legislature failed to
heed the directives of the articles the available remedy was not judicial or political. The
electorate could express their displeasure with the failure of the executive and the
legislature through the language of the ballot. (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad,
47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v.
Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown that
there is a clear and unequivocal breach of the Constitution, not merely a doubtful and
equivocal one. In other words, the grounds for nullity must be clear and beyond
reasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare a
law, or parts thereof, unconstitutional must clearly establish the basis for such a
declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners
to challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed
to overcome the presumption. The dismissal of this petition is therefore, inevitable. But
as to whether P.D. 1869 remains a wise legislation considering the issues of "morality,
monopoly, trend to free enterprise, privatization as well as the state principles on social
justice, role of youth and educational values" being raised, is up for Congress to
determine.

As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 521 —

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case,
in its favor the presumption of validity and constitutionality which petitioners Valmonte
and the KMU have not overturned. Petitioners have not undertaken to identify the
provisions in the Constitution which they claim to have been violated by that statute. This
Court, however, is not compelled to speculate and to imagine how the assailed legislation
may possibly offend some provision of the Constitution. The Court notes, further, in this
respect that petitioners have in the main put in question the wisdom, justice and
expediency of the establishment of the OPSF, issues which are not properly addressed to
this Court and which this Court may not constitutionally pass upon. Those issues should
be addressed rather to the political departments of government: the President and the
Congress.

Parenthetically, We wish to state that gambling is generally immoral, and this is precisely
so when the gambling resorted to is excessive. This excessiveness necessarily depends
not only on the financial resources of the gambler and his family but also on his mental,
social, and spiritual outlook on life. However, the mere fact that some persons may have
lost their material fortunes, mental control, physical health, or even their lives does not
necessarily mean that the same are directly attributable to gambling. Gambling may have
been the antecedent, but certainly not necessarily the cause. For the same consequences
could have been preceded by an overdose of food, drink, exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 80391 February 28, 1989

SULTAN ALIMBUSAR P. LIMBONA, petitioner,

vs.
CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING,
ACMAD TOMAWIS, GERRY TOMAWIS, JESUS ORTIZ, ANTONIO DELA
FUENTE, DIEGO PALOMARES, JR., RAUL DAGALANGIT, and BIMBO
SINSUAT, respondents.

Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner petitioner.

Makabangkit B. Lanto for respondents.

SARMIENTO, J.:

The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The
antecedent facts are as follows:

1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a

member of the Sangguniang Pampook, Regional Autonomous Government, Region XII,
representing Lanao del Sur.

2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central Mindanao (Assembly for brevity).

3. Said Assembly is composed of eighteen (18) members. Two of said members,

respondents Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the
Commission on Elections their respective certificates of candidacy in the May 11, 1987
congressional elections for the district of Lanao del Sur but they later withdrew from the
aforesaid election and thereafter resumed again their positions as members of the
Assembly.

4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the

Committee on Muslim Affairs of the House of Representatives, invited Mr. Xavier Razul,
Pampook Speaker of Region XI, Zamboanga City and the petitioner in his capacity as
Speaker of the Assembly, Region XII, in a letter which reads:

The Committee on Muslim Affairs well undertake consultations and dialogues with local
government officials, civic, religious organizations and traditional leaders on the recent
and present political developments and other issues affecting Regions IX and XII.

The result of the conference, consultations and dialogues would hopefully chart the
autonomous governments of the two regions as envisioned and may prod the President to
constitute immediately the Regional Consultative Commission as mandated by the
Commission.

You are requested to invite some members of the Pampook Assembly of your respective
assembly on November 1 to 15, 1987, with venue at the Congress of the Philippines. Your
presence, unstinted support and cooperation is (sic) indispensable.
5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary
Johnny Alimbuyao of the Assembly to wire all Assemblymen that there shall be no
session in November as "our presence in the house committee hearing of Congress take
(sic) precedence over any pending business in batasang pampook ... ."

6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary

Alimbuyao sent to the members of the Assembly the following telegram:

TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM

RECEIVED FROM SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY
MATALAM CHAIRMAN OF THE HOUSE COMMITTEE ON MUSLIM AFFAIRS
REQUESTED ME TO ASSIST SAID COMMITTEE IN THE DISCUSSION OF THE
PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WERE ALL
ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR
PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE
PRECEDENCE OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF
MATALAM FOLLOWS UNQUOTE REGARDS.

7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice,

with the following assemblymen present:

1. Sali, Salic

2. Conding, Pilipinas (sic)

3. Dagalangit, Rakil

4. Dela Fuente, Antonio

5. Mangelen, Conte

6. Ortiz, Jesus

7. Palomares, Diego

8. Sinsuat, Bimbo

9. Tomawis, Acmad

10. Tomawis, Jerry

After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized to
preside in the session. On Motion to declare the seat of the Speaker vacant, all
Assemblymen in attendance voted in the affirmative, hence, the chair declared said seat
of the Speaker vacant. 8. On November 5, 1987, the session of the Assembly resumed
with the following Assemblymen present:
1. Mangelen Conte-Presiding Officer

2. Ali Salic

3. Ali Salindatu

4. Aratuc, Malik

5. Cajelo, Rene

6. Conding, Pilipinas (sic)

7. Dagalangit, Rakil

8. Dela Fuente, Antonio

9. Ortiz, Jesus

10 Palomares, Diego

11. Quijano, Jesus

12. Sinsuat, Bimbo

13. Tomawis, Acmad

14. Tomawis, Jerry

An excerpt from the debates and proceeding of said session reads:

HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the
presence of our colleagues who have come to attend the session today, I move to call the
names of the new comers in order for them to cast their votes on the previous motion to
declare the position of the Speaker vacant. But before doing so, I move also that the
designation of the Speaker Pro Tempore as the Presiding Officer and Mr. Johnny
Evangelists as Acting Secretary in the session last November 2, 1987 be reconfirmed in
today's session.

HON. SALIC ALI: I second the motions.

PRESIDING OFFICER: Any comment or objections on the two motions presented? Me

chair hears none and the said motions are approved. ...

Twelve (12) members voted in favor of the motion to declare the seat of the Speaker
vacant; one abstained and none voted against. 1
Accordingly, the petitioner prays for judgment as follows:

WHEREFORE, petitioner respectfully prays that-

(a) This Petition be given due course;

(b) Pending hearing, a restraining order or writ of preliminary injunction be issued

enjoining respondents from proceeding with their session to be held on November 5,
1987, and on any day thereafter;

(c) After hearing, judgment be rendered declaring the proceedings held by respondents of
their session on November 2, 1987 as null and void;

(d) Holding the election of petitioner as Speaker of said Legislative Assembly or Batasan
Pampook, Region XII held on March 12, 1987 valid and subsisting, and

(e) Making the injunction permanent.

Petitioner likewise prays for such other relief as may be just and equitable. 2

Pending further proceedings, this Court, on January 19, 1988, received a resolution filed
by the Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM
MEMBERSHIP OF THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION
XII," 3 on the grounds, among other things, that the petitioner "had caused to be prepared
and signed by him paying [sic] the salaries and emoluments of Odin Abdula, who was
considered resigned after filing his Certificate of Candidacy for Congressmen for the
First District of Maguindanao in the last May 11, elections. . . and nothing in the record
of the Assembly will show that any request for reinstatement by Abdula was ever made . .
." 4 and that "such action of Mr. Lim bona in paying Abdula his salaries and emoluments
without authority from the Assembly . . . constituted a usurpation of the power of the
Assembly," 5 that the petitioner "had recently caused withdrawal of so much amount of
cash from the Assembly resulting to the non-payment of the salaries and emoluments of
some Assembly [sic]," 6 and that he had "filed a case before the Supreme Court against
some members of the Assembly on question which should have been resolved within the
confines of the Assembly," 7 for which the respondents now submit that the petition had
become "moot and academic". 8

The first question, evidently, is whether or not the expulsion of the petitioner (pending
litigation) has made the case moot and academic.

We do not agree that the case has been rendered moot and academic by reason simply of
the expulsion resolution so issued. For, if the petitioner's expulsion was done purposely to
make this petition moot and academic, and to preempt the Court, it will not make it
academic.
On the ground of the immutable principle of due process alone, we hold that the
expulsion in question is of no force and effect. In the first place, there is no showing that
the Sanggunian had conducted an investigation, and whether or not the petitioner had
been heard in his defense, assuming that there was an investigation, or otherwise given
the opportunity to do so. On the other hand, what appears in the records is an admission
by the Assembly (at least, the respondents) that "since November, 1987 up to this writing,
the petitioner has not set foot at the Sangguniang Pampook." 9 "To be sure, the private
respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him to come
to Cotabato City," 10 but that was "so that their differences could be threshed out and
settled." 11Certainly, that avowed wanting or desire to thresh out and settle, no matter how
conciliatory it may be cannot be a substitute for the notice and hearing contemplated by
law.

While we have held that due process, as the term is known in administrative law, does not
absolutely require notice and that a party need only be given the opportunity to be
heard, 12 it does not appear herein that the petitioner had, to begin with, been made aware
that he had in fact stood charged of graft and corruption before his collegues. It cannot be
said therefore that he was accorded any opportunity to rebut their accusations. As it
stands, then, the charges now levelled amount to mere accusations that cannot warrant
expulsion.

In the second place, (the resolution) appears strongly to be a bare act of vendetta by the
other Assemblymen against the petitioner arising from what the former perceive to be
abduracy on the part of the latter. Indeed, it (the resolution) speaks of "a case [having
been filed] [by the petitioner] before the Supreme Court . . . on question which should
have been resolved within the confines of the Assemblyman act which some members
claimed unnecessarily and unduly assails their integrity and character as representative of
the people" 13 an act that cannot possibly justify expulsion. Access to judicial remedies is
guaranteed by the Constitution, 14 and, unless the recourse amounts to malicious
prosecution, no one may be punished for seeking redress in the courts.

We therefore order reinstatement, with the caution that should the past acts of the
petitioner indeed warrant his removal, the Assembly is enjoined, should it still be so
minded, to commence proper proceedings therefor in line with the most elementary
requirements of due process. And while it is within the discretion of the members of the
Sanggunian to punish their erring colleagues, their acts are nonetheless subject to the
moderating band of this Court in the event that such discretion is exercised with grave
abuse.

It is, to be sure, said that precisely because the Sangguniang Pampook(s) are
"autonomous," the courts may not rightfully intervene in their affairs, much less strike
down their acts. We come, therefore, to the second issue: Are the so-called autonomous
governments of Mindanao, as they are now constituted, subject to the jurisdiction of the
national courts? In other words, what is the extent of self-government given to the two
autonomous governments of Region IX and XII?
The autonomous governments of Mindanao were organized in Regions IX and XII by
Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other things, the
Decree established "internal autonomy" 16 in the two regions "[w]ithin the framework of
the national sovereignty and territorial integrity of the Republic of the Philippines and its
Constitution," 17 with legislative and executive machinery to exercise the powers and
responsibilities 18specified therein.

It requires the autonomous regional governments to "undertake all internal administrative

matters for the respective regions," 19 except to "act on matters which are within the
jurisdiction and competence of the National Government," 20 "which include, but are not
limited to, the following:

(1) National defense and security;

(2) Foreign relations;

(3) Foreign trade;

(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and
external borrowing,

(5) Disposition, exploration, development, exploitation or utilization of all natural

resources;

(6) Air and sea transport

(7) Postal matters and telecommunications;

(8) Customs and quarantine;

(9) Immigration and deportation;

(10) Citizenship and naturalization;

(11) National economic, social and educational planning; and

(12) General auditing. 21

In relation to the central government, it provides that "[t]he President shall have the
power of general supervision and control over the Autonomous Regions ..." 22

Now, autonomy is either decentralization of administration or decentralization of power.

There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of
government power and in the process to make local governments "more responsive and
accountable," 23 "and ensure their fullest development as self-reliant communities and
make them more effective partners in the pursuit of national development and social
progress." 24 At the same time, it relieves the central government of the burden of
managing local affairs and enables it to concentrate on national concerns. The President
exercises "general supervision" 25 over them, but only to "ensure that local affairs are
administered according to law." 26 He has no control over their acts in the sense that he
can substitute their judgments with his own. 27

Decentralization of power, on the other hand, involves an abdication of political power in

the favor of local governments units declare to be autonomous . In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to "self-immolation," since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency. 28

But the question of whether or not the grant of autonomy Muslim Mindanao under the
1987 Constitution involves, truly, an effort to decentralize power rather than mere
administration is a question foreign to this petition, since what is involved herein is a
local government unit constituted prior to the ratification of the present Constitution.
Hence, the Court will not resolve that controversy now, in this case, since no controversy
in fact exists. We will resolve it at the proper time and in the proper case.

Under the 1987 Constitution, local government units enjoy autonomy in these two senses,
thus:

Section 1. The territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities, and barangays. Here shall be autonomous regions in
Muslim Mindanao ,and the Cordilleras as hereinafter provided. 29

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30

xxx xxx xxx

See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the
Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing
common and distinctive historical and cultural heritage, economic and social structures,
and other relevant characteristics within the framework of this Constitution and the
national sovereignty as well as territorial integrity of the Republic of the Philippines. 31

An autonomous government that enjoys autonomy of the latter category [CONST. (1987),
art. X, sec. 15.] is subject alone to the decree of the organic act creating it and accepted
principles on the effects and limits of "autonomy." On the other hand, an autonomous
government of the former class is, as we noted, under the supervision of the national
government acting through the President (and the Department of Local Government). 32 If
the Sangguniang Pampook (of Region XII), then, is autonomous in the latter sense, its
acts are, debatably beyond the domain of this Court in perhaps the same way that
the internal acts, say, of the Congress of the Philippines are beyond our jurisdiction. But
if it is autonomous in the former category only, it comes unarguably under our
jurisdiction. An examination of the very Presidential Decree creating the autonomous
governments of Mindanao persuades us that they were never meant to exercise autonomy
in the second sense, that is, in which the central government commits an act of self-
immolation. Presidential Decree No. 1618, in the first place, mandates that "[t]he
President shall have the power of general supervision and control over Autonomous
Regions."33 In the second place, the Sangguniang Pampook, their legislative arm, is made
to discharge chiefly administrative services, thus:

SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise
local legislative powers over regional affairs within the framework of national
development plans, policies and goals, in the following areas:

(1) Organization of regional administrative system;

(2) Economic, social and cultural development of the Autonomous Region;

(3) Agricultural, commercial and industrial programs for the Autonomous Region;

(4) Infrastructure development for the Autonomous Region;

(5) Urban and rural planning for the Autonomous Region;

(6) Taxation and other revenue-raising measures as provided for in this Decree;

(7) Maintenance, operation and administration of schools established by the Autonomous

Region;

(8) Establishment, operation and maintenance of health, welfare and other social services,
programs and facilities;

(9) Preservation and development of customs, traditions, languages and culture

indigenous to the Autonomous Region; and

(10) Such other matters as may be authorized by law,including the enactment of such
measures as may be necessary for the promotion of the general welfare of the people in
the Autonomous Region.

The President shall exercise such powers as may be necessary to assure that enactment
and acts of the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in
compliance with this Decree, national legislation, policies, plans and programs.

The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa. 34
Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the
expulsion in question, with more reason can we review the petitioner's removal as
Speaker.

Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1)
the Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of
declaring the office of the Speaker vacant), did so in violation of the Rules of the
Sangguniang Pampook since the Assembly was then on recess; and (2) assuming that it
was valid, his ouster was ineffective nevertheless for lack of quorum.

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid.
It is true that under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not
be suspended or adjourned except by direction of the Sangguniang Pampook," 35 but it
provides likewise that "the Speaker may, on [sic] his discretion, declare a recess of "short
intervals." 36 Of course, there is disagreement between the protagonists as to whether or
not the recess called by the petitioner effective November 1 through 15, 1987 is the
"recess of short intervals" referred to; the petitioner says that it is while the respondents
insist that, to all intents and purposes, it was an adjournment and that "recess" as used by
their Rules only refers to "a recess when arguments get heated up so that protagonists in a
debate can talk things out informally and obviate dissenssion [sic] and disunity. 37 The
Court agrees with the respondents on this regard, since clearly, the Rules speak of "short
intervals." Secondly, the Court likewise agrees that the Speaker could not have validly
called a recess since the Assembly had yet to convene on November 1, the date session
opens under the same Rules. 38 Hence, there can be no recess to speak of that could
possibly interrupt any session. But while this opinion is in accord with the respondents'
own, we still invalidate the twin sessions in question, since at the time the petitioner
called the "recess," it was not a settled matter whether or not he could. do so. In the
second place, the invitation tendered by the Committee on Muslim Affairs of the House
of Representatives provided a plausible reason for the intermission sought. Thirdly,
assuming that a valid recess could not be called, it does not appear that the respondents
called his attention to this mistake. What appears is that instead, they opened the sessions
themselves behind his back in an apparent act of mutiny. Under the circumstances, we
find equity on his side. For this reason, we uphold the "recess" called on the ground of
good faith.

It does not appear to us, moreover, that the petitioner had resorted to the aforesaid
"recess" in order to forestall the Assembly from bringing about his ouster. This is not
apparent from the pleadings before us. We are convinced that the invitation was what
precipitated it.

In holding that the "recess" in question is valid, we are not to be taken as establishing a
precedent, since, as we said, a recess can not be validly declared without a session having
been first opened. In upholding the petitioner herein, we are not giving him a carte
blanche to order recesses in the future in violation of the Rules, or otherwise to prevent
the lawful meetings thereof.
Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself
pursuant to its lawful prerogatives. Certainly, it can do so at the proper time. In the event
that be petitioner should initiate obstructive moves, the Court is certain that it is armed
with enough coercive remedies to thwart them. 39

In view hereof, we find no need in dwelling on the issue of quorum.

WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang

Pampook, Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member,
Sangguniang Pampook, Region XII; and (2) REINSTATE him as Speaker thereof. No
costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

G.R. No. 92541 November 13, 1991

MA. CARMEN G. AQUINO-SARMIENTO, petitioner,

vs.
MANUEL L. MORATO (in his capacity as Chairman of the MTRCB) and the
MOVIE & TELEVISION REVIEW AND CLASSIFICATION BOARD, respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner.

Francisco Ma. Chanco for respondents.

BIDIN, J.:

At issue in this petition is the citizen's right of access to official records as guaranteed by
the constitution.

In February 1989, petitioner, herself a member of respondent Movie and Television

Review and Classification Board (MTRCB), wrote its records officer requesting that she
be allowed to examine the board's records pertaining to the voting slips accomplished by
the individual board members after a review of the movies and television productions. It
is on the basis of said slips that films are either banned, cut or classified accordingly.

Acting on the said request, the records officer informed petitioner that she has to secure
prior clearance from respondent Manuel Morato, as chairman of MTRCB, to gain access
to the records sought to be examined.

Petitioner's request was eventually denied by respondent Morato on the ground that
whenever the members of the board sit in judgment over a film, their decisions as
reflected in the individual voting slips partake the nature of conscience votes and as such,
are purely and completely private and personal. It is the submission of respondents that
the individual voting slips is the exclusive property of the member concerned and
anybody who wants access thereto must first secure his (the member's) consent,
otherwise, a request therefor may be legally denied.

Petitioner argues, on the other hand, that the records she wishes to examine are public in
character and other than providing for reasonable conditions regulating the manner and
hours of examination, respondents Morato and the classification board have no authority
to deny any citizen seeking examination of the board's records.

On February 27, 1989, respondent Morato called an executive meeting of the MTRCB to
discuss, among others, the issue raised by petitioner. In said meeting, seventeen (17)
members of the board voted to declare their individual voting records as classified
documents which rendered the same inaccessible to the public without clearance from the
chairman. Thereafter, respondent Morato denied petitioner's request to examine the
voting slips. However, it was only much later, i.e., on July 27, 1989, that respondent
Board issued Resolution No. 10-89 which declared as confidential, private and personal,
the decision of the reviewing committee and the voting slips of the members.

Petitioner brought the matter to the attention of the Executive Secretary, which in turn,
referred the same to respondent Morato for appropriate comment.

Another incident which gave rise to this petition occurred in a board meeting held on
June 22, 1989. In that meeting, respondent Morato told the board that he has ordered
some deletions on the movie "Mahirap ang Magmahal" notwithstanding the fact that said
movie was earlier approved for screening by the Board with classification "R-18 without
cuts". He explained that his power to unilaterally change the decision of the Review
Committee is authorized by virtue of MTRCB Resolution No. 88-1-25 (dated June
22,1988) which allows the chairman of the board "to downgrade a film (already)
reviewed especially those which are controversial."

Petitioner informed the Board, however, that respondent Morato possesses no authority to
unilaterally reverse a decision of the review committee under PD 1986 (Creating the
Movie and Television Review and Classification Board).

After the matter was referred by the Deputy Executive Secretary to the Justice Secretary,
the latter opined that PD 1896 does not vest respondent Morato any authority to
unilaterally reverse the decision of the review committee but declined to comment on the
constitutionality of Res. No. 10-89 on the ground that the resolution thereof is a judicial
prerogative (Rollo, pp. 38-42).

The Justice Secretary's opinion to the contrary notwithstanding, respondent Morato opted
to ignore it.

Hence, this petition anchored on the following:

A. MORATO AND THE MTRCB BY APPROVING AND ENFORCING

RESOLUTION NO. 10-89 ACTED WITH GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION BECAUSE THE SAME VIOLATES
ARTICLE III SECTION 7 OF THE 1987 CONSTITUTION.

B. MTRCB RESOLUTION NO. 88-1-25 HAS NO LEGAL BASIS AND

CONSTITUTES AN UNLAWFUL DELEGATION OF DISCRETIONARY POWERS.
C. MORATO AND THE MTRCB BY REFUSING TO ABIDE BY OPINION NO. 1
SERIES OF 1990 OF THE SECRETARY OF JUSTICE AND BY INSISTING ON THE
VALIDITY OF RESOLUTION NO. 88-1-25 ACTED CAPRICIOUSLY,
ARBITRARILY, IN BAD FAITH, IN EXCESS OF THEIR JURISDICTION, AND
WITH GRAVE ABUSE OF DISCRETION.

Petitioner therefore seeks the nullification of 1) MTRCB Resolution No. 88-1-25 which
allows the Chairman of the Board to unilaterally downgrade a film (already) reviewed
especially those which are controversial and 2) MTRCB RESOLUTION No. 10-89
(dated July 27, 1989) declaring as strictly confidential, private and personal a) the
decision of a reviewing committee which previously reviewed a certain film and b) the
individual voting slips of the members of the committee that reviewed the film.

Respondents argue at the outset that the instant petition should be dismissed outright for
having failed to comply with the doctrine of exhaustion of administrative remedies.

We disagree. The doctrine of exhaustion of administrate remedies simply provides that

before a party litigant is allowed resort to the courts, he is required to comply with all
administrative remedies available under the law (Rosales v. Court of Appeals, 165 SCRA
344 [1988]). The rationale behind this salutory principle is that for reasons of practical
considerations, comity and convenience, the courts of law will not entertain a case until
all the available administrative remedies provided by law have been resorted to and the
appropriate authorities have been given ample opportunity to act and to correct the errors
committed in the administrative level. If the error is rectified, judicial intervention would
then be unnecessary.

Nonetheless, the doctrine of exhaustion of administrative remedies is not absolute. The

applicability of the principle admits of certain exceptions, such as: 1) when no
administrative review is provided by law; 2) when the only question involved is one of
law (Valmonte v. Valmonte, 170 SCRA 256 [1989], citing Aguilar v. Valencia, 40 SCRA
210 [1971]; Malabanan v. Ramento, 129 SCRA 359 [1984]; Bagatsing v. Ramirez, 74
SCRA 306; Del Mar v. Philippine Veterans Administration, 51 SCRA 340 [1973]; Pascual
v. Provincial Board, 106 Phil. 466 [1959]; 3) where the party invoking the doctrine is
guilty of estoppel (Vda. de Tan v. Veterans' Backpay Commission [1969]; 4) where the
challenged administrative action is patently illegal, arbitrary and oppressive (Azur v.
Provincial Board, 27 SCRA 50 [1969]; National Development Co. v. Collector of
Customs of Manila, 9 SCRA 429 [1963]; 5) where there is unreasonable delay or official
inaction that would greatly prejudice the complainant (Gravador v. Mamigo, 20 SCRA
742 [1967]; Azuelo v. Arnaldo, 108 Phil. 293 [1960]; 6) where to exhaust administrative
review is impractical and unreasonable (Cipriano v. Marcelino, 43 SCRA 291); and 7)
where the rule of qualified political agency applies (Demaisip v. Court of Appeals, 106
Phil. 237 [1906]).

The issue raised in the instant petition is one of law, hence the doctrine of non-exhaustion
of administrative remedy relied upon by respondents is inapplicable and cannot be given
any effect. At any rate, records are replete with events pointing to the fact that petitioner
adhered to the administrative processes in the disposition of the assailed resolutions of
public respondents prior to filing the instant petition by, among others, writing the
Executive Secretary and bringing the matter to the attention of the Office of the President
(Rollo, pp. 145-147). Respondents' claim that petitioner failed to exhaust administrative
remedies must therefore fail.

Having disposed of the procedural objection raised by respondents, We now proceed to

resolve the issues raised by petitioner. In this regard, We find respondents' refusal to
allow petitioner to examine the records of respondent MTRCB, pertaining to the
decisions of the review committee as well as the individual voting slips of its members,
as violative of petitioner's constitutional right of access to public records. More
specifically, Sec. 7, Art. III of the Constitution provides that:

The right of the people to information on matters of public concern shall be

recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen, subject to such limitations as
may be provided by law. (emphasis supplied)

As We held in Legaspi v. Civil Service Commission (150 SCRA 530 [1987]), this
constitutional provision is self-executory and supplies "the rules by means of which the
right to information may be enjoyed (Cooley, A Treatise on Constitutional Limitations
167 [1927]) by guaranteeing the right and mandating the duty to afford access to sources
of information. Hence, the fundamental right therein recognized may be asserted by the
people upon the ratification of the constitution without need for any ancillary act of the
Legislature (Id. at 165). What may be provided for by the Legislature are reasonable
conditions and limitations upon the access to be afforded which must, of necessity, be
consistent with the declared State Policy of full public disclosure of all transactions
involving public interest (Constitution, Art. II, Sec. 28)." (See also Tañada v. Tuvera, 136
SCRA 27 [1985]; Valmonte v. Belmonte, Jr., 170 SCRA 256 [1989]).

Respondents contend, however, that what is rendered by the members of the board in
reviewing films and reflected in their individual voting slip is their individual vote of
conscience on the motion picture or television program and as such, makes the individual
voting slip purely private and personal; an exclusive property of the member concerned.

The term private has been defined as "belonging to or concerning, an individual person,
company, or interest"; whereas, public means "pertaining to, or belonging to, or affecting
a nation, state, or community at large" (People v. Powell, 274 NW 372 [1937]). May the
decisions of respondent Board and the individual members concerned, arrived at in an
official capacity, be considered private? Certainly not. As may be gleaned from the decree
(PD 1986) creating the respondent classification board, there is no doubt that its very
existence is public is character; it is an office created to serve public interest. It being the
case, respondents can lay no valid claim to privacy. The right to privacy belongs to the
individual acting in his private capacity and not to a governmental agency or officers
tasked with, and acting in, the discharge of public duties (See Valmonte v. Belmonte,
Jr., supra.) There can be no invasion of privacy in the case at bar since what is sought to
be divulged is a product of action undertaken in the course of performing official
functions. To declare otherwise would be to clothe every public official with an
impregnable mantle of protection against public scrutiny for their official acts.

Further, the decisions of the Board and the individual voting slips accomplished by the
members concerned are acts made pursuant to their official functions, and as such, are
neither personal nor private in nature but rather public in character. They are, therefore,
public records access to which is guaranteed to the citizenry by no less than the
fundamental law of the land. Being a public right, the exercise thereof cannot be made
contingent on the discretion, nay, whim and caprice, of the agency charged with the
custody of the official records sought to be examined. The constitutional recognition of
the citizen's right of access to official records cannot be made dependent upon the consent
of the members of the board concerned, otherwise, the said right would be rendered
nugatory. As stated by this Court in Subido v. Ozaeta (80 Phil. 383 [1948]):

Except, perhaps when it is clear that the purpose of the examinations is unlawful, or
sheer, idle curiosity, we do not believe it is the duty under the law of registration officers
to concern themselves with the motives, reasons, and objects of the person seeking access
to the records. It is not their prerogative to see that the information which the records
contain is not flaunted before public gaze, or that scandal is not made of it. If it be wrong
to publish the contents of the records, it is the legislature and not the officials having
custody thereof which is called upon to devise a remedy. (emphasis supplied)

It is significant to point out that this Court in the 1948 case of Subido v. Ozaeta,
supra, upheld the right to information based on the statutory right then provided in Sec.
56 of the Land Registration Act (Act 496, as amended). Consequently, We see no cogent
reason why said right, now constitutionalized, should be given less efficacy and primacy
than what the fundament law mandates.

The Court is not unaware of RA 6713 (Code of Conduct and Ethical Standards for Public
Officials and Employees) which provides, among others, certain exceptions as regards the
availability of official records or documents to the requesting public, e.g., closed door
Cabinet sessions and deliberations of this Court. Suffice it to state, however, that the
exceptions therein enumerated find no application in the case at bar. Petitioner request is
not concerned with the deliberations of respondent Board but with its documents or
records made after a decision or order has been rendered. Neither will the examination
involve disclosure of trade secrets or matters pertaining to national security which would
otherwise limit the right of access to official records (See Legaspi v. Civil Service
Commission, supra).

We are likewise not impressed with the proposition advanced by respondents that
respondent Morato is empowered by PD 1986 to unilaterally downgrade or upgrade a
film reviewed especially those which are controversial. The pertinent provisions of said
decree provides:
Sec 4. Decision. — The decision of the BOARD either approving or disapproving for
exhibition in the Philippines a motion picture, television program, still and other pictorial
advertisement submitted to it for examination and preview must be rendered within a
period of ten (10) days which shall be counted from the date of receipt by the BOARD of
an application for the purpose . . .

For each review session, the Chairman of the Board shall designate a sub-committee
composed of at least three BOARD members to undertake the work of review. Any
disapproval or deletion must be approved by a majority of the sub-committee members so
designated. After receipt of the written decision of the sub-committee, a motion for
reconsideration in writing may be made, upon which the Chairman of the Board shall
designate a sub-committee of five BOARD members to undertake a second review
session, whose decision on behalf of the Board shall be rendered through a majority of
the sub-committee members so designated and present at the second review session. This
second review session shall be presided over by the Chairman, or the Vice-Chairman. The
decision of the BOARD in the second review session shall be rendered within five (5)
days from the date of receipt of the motion for reconsideration.

Every decision of the BOARD disapproving a motion picture, television program or

publicity material for exhibition in the Philippines must be in writing, and shall state the
reasons or grounds for such disapproval. No film or motion picture intended for
exhibition at the moviehouses or theaters or on television shall be disapproved by reason
of its topic, theme or subject matter, but upon the merits of each picture or program
considered in its entirety.

The second decision of the BOARD shall be final, with the exception of a decision
disapproving or prohibiting a motion picture or television program in its entirety which
shall be appealable to the President of the Philippines, who may himself decide the
appeal, or be assisted either by an ad hoe committee he may create or by the Appeals
Committee herein created.

An Appeals Committee in the Office of the President of the Philippines is hereby created
composed of a Chairman and four (4) members to be appointed by the President of the
Philippines, which shall submit its recommendation to the President. The Office of the
Presidential Assistant for Legal Affairs shall serve as the Secretariat of the Appeals
Committee.

The decision of the President of the Philippines on any appealed matter shall be final.

Implementing Rules and Regulations

Sec 11. Review by Sub-Committee of Three. — a) A proper application having been filed,
the Chairman of the Board shall, as the exigencies of the service may permit, designate a
Sub-Committee of at least three Board Members who shall meet, with notice to the
applicant, within ten days from receipt of the completed application. The Sub-Committee
shall then preview the motion picture subject of the application.
b) Immediately after the preview, the applicant or his representative shall withdraw to
await the results of the deliberation of the Sub-Committee. After reaching a decision, the
Sub-Committee shall summon the applicant or his representative and inform him of its
decision giving him an opportunity either to request reconsideration or to offer certain
cuts or deletions in exchange for a better classification. The decision shall be in writing,
stating, in case of disapproval of the film or denial of the classification rating desired or
both, the reason or reasons for such disapproval or denial and the classification
considered by the Sub-Committee member dissenting from the majority opinion may
express his dissent in writing.

c) The decision including the dissenting opinion, if any, shall immediately be submitted
to the Chairman of the Board for transmission to the applicant.

Sec 12. Review by Sub-Committee of Five. — Within five days from receipt of a copy of
the decision of the Sub-Committee referred to in the preceding section, the applicant may
file a motion for reconsideration in writing of that decision. On receipt of the motion, the
Chairman of the Board shall designate a Sub-Committee of Five Board Members which
shall consider the motion and, within five days of receipt of such motion, conduct a
second preview of the film. The review shall, to the extent applicable, follow the same
procedure provided in the preceding section.

Sec 13. Reclassification. — An applicant desiring a change in the classification rating

given his film by either the Sub-Committee of Three? or Committee of Five mentioned in
the immediately preceeding two sections may re-edit such film and apply anew with the
Board for its review and reclassification.

Sec 14. Appeal. — The decision of the Committee of Five Board Members in the second
review shall be final, with the exception of a decision disapproving or prohibiting a
motion picture in its entirety which shall be appealable to the President of the Philippines
who may himself decide the appeal or refer it to the Appeals Committee in the Office of
the President for adjudication.

On the other hand, the powers and functions of the MTRCB Chairman are found in
Section 5 of the same decree as follows:

Sec. 5. Executive Officer. — The Chairman of the BOARD shall be the Chief Executive
Officer of the BOARD. He shall exercise the following functions, powers and duties:

(a) Execute, implement and enforce the decisions, orders, awards, rules and regulations
issued by the BOARD;

(b) Direct and supervise the operations and the internal affairs of the BOARD;

(c) Establish the internal organization and administrative procedures of the BOARD, and
recommend to the BOARD the appointment of the necessary administrative and
subordinate personnel; and
(d) Exercise such other powers and functions and perform such duties as are not
specifically lodged in the BOARD.

It is at once apparent from a reading of the above provisions of PD 1986 that respondent
Morato, as Chairman of the MTRCB, is not vested with any authority to reverse or
overrule by himself alone a decision rendered by a committee which conducted a review
of motion pictures or television programs.

The power to classify motion pictures into categories such as "General Patronage" or "For
Adults Only" is vested with the respondent Board itself and not with the Chairman
thereof (Sec. 3 [e], PD 1986). As Chief Executive Officer, respondent Morato's function
as Chairman of the Board calls for the implementation and execution, not modification or
reversal, of the decisions or orders of the latter (Sec. 5 [a], Ibid.). The power of
classification having been reposed by law exclusively with the respondent Board, it has
no choice but to exercise the same as mandated by law, i.e., as a collegial body, and not
transfer it elsewhere or discharge said power through the intervening mind of
another. Delegata potestas non potest delegari — a delegated power cannot be delegated.
And since the act of classification involves an exercise of the Board's discretionary power
with more reason the Board cannot, by way of the assailed resolution, delegate said
power for it is an established rule in administrative law that discretionary authority cannot
be a subject of delegation.

WHEREFORE, the instant petition is GRANTED. Resolution Nos. 10-89 and 88-1-25
issued by the respondent Board are hereby declared null and void.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 92024 November 9, 1990

CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), petitioner,

vs.
THE BOARD OF INVESTMENTS, THE DEPARTMENT OF TRADE AND
INDUSTRY, LUZON PETROCHEMICAL CORPORATION, and PILIPINAS
SHELL CORPORATION, respondents.

Abraham C. La Vina for petitioner.

Sycip, Salazar, Hernandez & Gatmaitan for Luzon Petrochemical Corporation.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for Pilipinas Shell Petroleum
Corporation.

GUTIERREZ, JR., J.:

This is a petition to annul and set aside the decision of the Board of Investments
(BOI)/Department of Trade and Industry (DTI) approving the transfer of the site of the
proposed petrochemical plant from Bataan to Batangas and the shift of feedstock for that
plant from naphtha only to naphtha and/or liquefied petroleum gas (LPG).

This petition is a sequel to the petition in G.R. No. 88637 entitled "Congressman Enrique
T. Garcia v. the Board of Investments", September 7, 1989, where this Court issued a
decision, ordering the BOI as follows:

WHEREFORE, the petition for certiorari is granted. The Board of Investments is

ordered: (1) to publish the amended application for registration of the Bataan
Petrochemical Corporation, (2) to allow the petitioner to have access to its records on the
original and amended applications for registration, as a petrochemical manufacturer, of
the respondent Bataan Petrochemical Corporation, excluding, however, privileged papers
containing its trade secrets and other business and financial information, and (3) to set for
hearing the petitioner's opposition to the amended application in order that he may
present at such hearing all the evidence in his possession in support of his opposition to
the transfer of the site of the BPC petrochemical plant to Batangas province. The hearing
shall not exceed a period of ten (10) days from the date fixed by the BOI, notice of which
should be served by personal service to the petitioner through counsel, at least three (3)
days in advance. The hearings may be held from day to day for a period of ten (10) days
without postponements. The petition for a writ of prohibition or preliminary injunction is
denied. No costs. (Rollo, pages 450-451)

However, acting on the petitioner's motion for partial reconsideration asking that we rule
on the import of P.D. Nos. 949 and 1803 and on the foreign investor's claim of right of
final choice of plant site, in the light of the provisions of the Constitution and the
Omnibus Investments Code of 1987, this Court on October 24, 1989, made the
observation that P.D. Nos. 949 and 1803 "do not provide that the Limay site should be the
only petrochemical zone in the country, nor prohibit the establishment of a petrochemical
plant elsewhere in the country, that the establishment of a petrochemical plant in
Batangas does not violate P.D. No. 949 and P.D. No. 1803.

Our resolution skirted the issue of whether the investor given the initial inducements and
other circumstances surrounding its first choice of plant site may change it simply
because it has the final choice on the matter. The Court merely ruled that the petitioner
appears to have lost interest in the case by his failure to appear at the hearing that was set
by the BOI after receipt of the decision, so he may be deemed to have waived the fruit of
the judgment. On this ground, the motion for partial reconsideration was denied.

A motion for reconsideration of said resolution was filed by the petitioner asking that we
resolve the basic issue of whether or not the foreign investor has the right of final choice
of plant site; that the non-attendance of the petitioner at the hearing was because the
decision was not yet final and executory; and that the petitioner had not therefor waived
the right to a hearing before the BOI.

In the Court's resolution dated January 17, 1990, we stated:

Does the investor have a "right of final choice" of plant site? Neither under the 1987
Constitution nor in the Omnibus Investments Code is there such a 'right of final choice.'
In the first place, the investor's choice is subject to processing and approval or
disapproval by the BOI (Art. 7, Chapter II, Omnibus Investments Code). By submitting
its application and amended application to the BOI for approval, the investor recognizes
the sovereign prerogative of our Government, through the BOI, to approve or disapprove
the same after determining whether its proposed project will be feasible, desirable and
beneficial to our country. By asking that his opposition to the LPC's amended application
be heard by the BOI, the petitioner likewise acknowledges that the BOI, not the investor,
has the last word or the "final choice" on the matter.

Secondly, as this case has shown, even a choice that had been approved by the BOI may
not be 'final', for supervening circumstances and changes in the conditions of a place may
dictate a corresponding change in the choice of plant site in order that the project will not
fail. After all, our country will benefit only when a project succeeds, not when it fails.
(Rollo, pp. 538-539)

Nevertheless, the motion for reconsideration of the petitioner was denied.

A minority composed of Justices Melencio-Herrera, Gancayco, Sarmiento and
this ponente voted to grant the motion for reconsideration stating that the hearing set by
the BOI was premature as the decision of the Court was not yet final and executory; that
as contended by the petitioner the Court must first rule on whether or not the investor has
the right of final choice of plant site for if the ruling is in the affirmative, the hearing
would be a useless exercise; that in the October 19, 1989 resolution, the Court while
upholding validity of the transfer of the plant site did not rule on the issue of who has the
final choice; that they agree with the observation of the majority that "the investor has no
final choice either under the 1987 Constitution or in the Omnibus Investments Code and
that it is the BOI who decides for the government" and that the plea of the petitioner
should be granted to give him the chance to show the justness of his claim and to enable
the BOI to give a second hard look at the matter.

Thus, the herein petition which relies on the ruling of the Court in the resolution of
January 17, 1990 in G.R. No. 88637 that the investor has no right of final choice under
the 1987 Constitution and the Omnibus Investments Code.

Under P.D. No. 1803 dated January 16, 1981, 576 hectares of the public domain located
in Lamao, Limay, Bataan were reserved for the Petrochemical Industrial Zone under the
administration, management, and ownership of the Philippine National Oil Company
(PNOC).

The Bataan Refining Corporation (BRC) is a wholly government owned corporation,

located at Bataan. It produces 60% of the national output of naphtha.

Taiwanese investors in a petrochemical project formed the Bataan Petrochemical

Corporation (BPC) and applied with BOI for registration as a new domestic producer of
petrochemicals. Its application specified Bataan as the plant site. One of the terms and
conditions for registration of the project was the use of "naphtha cracker" and "naphtha"
as feedstock or fuel for its petrochemical plant. The petrochemical plant was to be a joint
venture with PNOC. BPC was issued a certificate of registration on February 24, 1988 by
BOI.

BPC was given pioneer status and accorded fiscal and other incentives by BOI, like: (1)
exemption from taxes on raw materials, (2) repatriation of the entire proceeds of
liquidation investments in currency originally made and at the exchange rate obtaining at
the time of repatriation; and (3) remittance of earnings on investments. As additional
incentive, the House of Representatives approved a bill introduced by the petitioner
eliminating the 48% ad valoremtax on naphtha if and when it is used as raw materials in
the petrochemical plant. (G.R. No. 88637, September 7, 1989, pp. 2-3. Rollo, pp. 441-
442)

However, in February, 1989, A.T. Chong, chairman of USI Far East Corporation, the
major investor in BPC, personally delivered to Trade Secretary Jose Concepcion a letter
dated January 25, 1989 advising him of BPC's desire to amend the original registration
certification of its project by changing the job site from Limay, Bataan, to Batangas. The
reason adduced for the transfer was the insurgency and unstable labor situation, and the
presence in Batangas of a huge liquefied petroleum gas (LPG) depot owned by the
Philippine Shell Corporation.

The petitioner vigorously opposed the proposal and no less than President Aquino
expressed her preference that the plant be established in Bataan in a conference with the
Taiwanese investors, the Secretary of National Defense and The Chief of Staff of the
Armed Forces.

Despite speeches in the Senate and House opposing the Transfer of the project to
Batangas, BPC filed on April 11, 1989 its request for approval of the amendments. Its
application is as follows: "(l) increasing the investment amount from US $220 million to
US $320 million; (2) increasing the production capacity of its naphtha cracker,
polythylene plant and polypropylene plant; (3) changing the feedstock from naphtha only
to "naphtha and/or liquefied petroleum gas;" and (4) transferring the job site from Limay,
Bataan, to Batangas. (Annex B to Petition; Rollo, p. 25)

Notwithstanding opposition from any quarters and the request of the petitioner addressed
to Secretary Concepcion to be furnished a copy of the proposed amendment with its
attachments which was denied by the BOI on May 25, 1989, BOI approved the revision
of the registration of BPC's petrochemical project. (Petition, Annex F; Rollo, p. 32; See
pp. 4 to 6, Decision in G.R. No. 88637; supra.)

BOI Vice-Chairman Tomas I. Alcantara testifying before the Committee on Ways and
Means of the Senate asserted that:

The BOI has taken a public position preferring Bataan over Batangas as the site of the
petrochemical complex, as this would provide a better distribution of industries around
the Metro Manila area. ... In advocating the choice of Bataan as the project site for the
petrochemical complex, the BOI, however, made it clear, and I would like to repeat this
that the BOI made it clear in its view that the BOI or the government for that matter
could only recomend as to where the project should be located. The BOI recognizes and
respect the principle that the final chouce is still with the proponent who would in the
final analysis provide the funding or risk capital for the project. (Petition, P. 13; Annex D
to the petition)

This position has not been denied by BOI in its pleadings in G.R. No. 88637 and in the
present petition.

Section 1, Article VIII of the 1987 Constitution provides:

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 a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.

There is before us an actual controversy whether the petrochemical plant should remain
in Bataan or should be transferred to Batangas, and whether its feedstock originally of
naphtha only should be changed to naphtha and/or liquefied petroleum gas as the
approved amended application of the BPC, now Luzon Petrochemical Corporation
(LPC), shows. And in the light of the categorical admission of the BOI that it is the
investor who has the final choice of the site and the decision on the feedstock, whether or
not it constitutes a grave abuse of discretion for the BOI to yield to the wishes of the
investor, national interest notwithstanding.

We rule that the Court has a constitutional duty to step into this controversy and
determine the paramount issue. We grant the petition.

First, Bataan was the original choice as the plant site of the BOI to which the BPC
agreed. That is why it organized itself into a corporation bearing the name Bataan. There
is available 576 hectares of public land precisely reserved as the petrochemical zone in
Limay, Bataan under P.D. No. 1803. There is no need to buy expensive real estate for the
site unlike in the proposed transfer to Batangas. The site is the result of careful study long
before any covetous interests intruded into the choice. The site is ideal. It is not unduly
constricted and allows for expansion. The respondents have not shown nor reiterated that
the alleged peace and order situation in Bataan or unstable labor situation warrant a
transfer of the plant site to Batangas. Certainly, these were taken into account when the
firm named itself Bataan Petrochemical Corporation. Moreover, the evidence proves the
contrary.

Second, the BRC, a government owned Filipino corporation, located in Bataan produces
60% of the national output of naphtha which can be used as feedstock for the plant in
Bataan. It can provide the feedstock requirement of the plant. On the other hand, the
country is short of LPG and there is need to import the same for use of the plant in
Batangas. The local production thereof by Shell can hardly supply the needs of the
consumers for cooking purposes. Scarce dollars will be diverted, unnecessarily, from
vitally essential projects in order to feed the furnaces of the transferred petrochemical
plant.

Third, naphtha as feedstock has been exempted by law from the ad valorem tax by the
approval of Republic Act No. 6767 by President Aquino but excluding LPG from
exemption from ad valorem tax. The law was enacted specifically for the petrochemical
industry. The policy determination by both Congress and the President is clear. Neither
BOI nor a foreign investor should disregard or contravene expressed policy by shifting
the feedstock from naphtha to LPG.

Fourth, under Section 10, Article XII of the 1987 Constitution, it is the duty of the State
to "regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national goals and priorities." The development of
a self-reliant and independent national economy effectively controlled by Filipinos is
mandated in Section 19, Article II of the Constitution.

In Article 2 of the Omnibus Investments Code of 1987 "the sound development of the
national economy in consonance with the principles and objectives of economic
nationalism" is the set goal of government.

Fifth, with the admitted fact that the investor is raising the greater portion of the capital
for the project from local sources by way of loan which led to the so-called "petroscam
scandal", the capital requirements would be greatly minimized if LPC does not have to
buy the land for the project and its feedstock shall be limited to naphtha which is
certainly more economical, more readily available than LPG, and does not have to be
imported.

Sixth, if the plant site is maintained in Bataan, the PNOC shall be a partner in the venture
to the great benefit and advantage of the government which shall have a participation in
the management of the project instead of a firm which is a huge multinational
corporation.

In the light of all the clear advantages manifest in the plant's remaining in Bataan,
practically nothing is shown to justify the transfer to Batangas except a near-absolute
discretion given by BOI to investors not only to freely choose the site but to transfer it
from their own first choice for reasons which remain murky to say the least.

And this brings us to a prime consideration which the Court cannot rightly ignore.

Section 1, Article XII of the Constitution provides that:

xxx xxx xxx

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

xxx xxx xxx

Every provision of the Constitution on the national economy and patrimony is infused
with the spirit of national interest. The non-alienation of natural resources, the State's full
control over the development and utilization of our scarce resources, agreements with
foreigners being based on real contributions to the economic growth and general welfare
of the country and the regulation of foreign investments in accordance with national goals
and priorities are too explicit not to be noticed and understood.
A petrochemical industry is not an ordinary investment opportunity. It should not be
treated like a garment or embroidery firm, a shoe-making venture, or even an assembler
of cars or manufacturer of computer chips, where the BOI reasoning may be accorded
fuller faith and credit. The petrochemical industry is essential to the national interest. In
other ASEAN countries like Indonesia and Malaysia, the government superintends the
industry by controlling the upstream or cracker facility.

In this particular BPC venture, not only has the Government given unprecedented favors,
among them:

(1) For an initial authorized capital of only P20 million, the Central Bank gave an eligible
relending credit or relending facility worth US $50 million and a debt to swap
arrangement for US $30 million or a total accommodation of US $80 million which at
current exchange rates is around P2080 million.

(2) A major part of the company's capitalization shall not come from foreign sources but
from loans, initially a Pl Billion syndicated loan, to be given by both government banks
and a consortium of Philippine private banks or in common parlance, a case of
'guiniguisa sa sariling manteca.'

(3) Tax exemptions and privileges were given as part of its 'preferred pioneer status.'

(4) Loan applications of other Philippine firms will be crowded out of the Asian
Development Bank portfolio because of the petrochemical firm's massive loan request.
(Taken from the proceedings before the Senate Blue Ribbon Committee).

but through its regulatory agency, the BOI, it surrenders even the power to make a
company abide by its initial choice, a choice free from any suspicion of unscrupulous
machinations and a choice which is undoubtedly in the best interests of the Filipino
people.

The Court, therefore, holds and finds that the BOI committed a grave abuse of discretion
in approving the transfer of the petrochemical plant from Bataan to Batangas and
authorizing the change of feedstock from naphtha only to naphtha and/or LPG for the
main reason that the final say is in the investor all other circumstances to the contrary
notwithstanding. No cogent advantage to the government has been shown by this transfer.
This is a repudiation of the independent policy of the government expressed in numerous
laws and the Constitution to run its own affairs the way it deems best for the national
interest.

One can but remember the words of a great Filipino leader who in part said he would not
mind having a government run like hell by Filipinos than one subservient to foreign
dictation. In this case, it is not even a foreign government but an ordinary investor whom
the BOI allows to dictate what we shall do with our heritage.
WHEREFORE, the petition is hereby granted. The decision of the respondent Board of
Investments approving the amendment of the certificate of registration of the Luzon
Petrochemical Corporation on May 23, 1989 under its Resolution No. 193, Series of
1989, (Annex F to the Petition) is SET ASIDE as NULL and VOID. The original
certificate of registration of BPC' (now LPC) of February 24, 1988 with Bataan as the
plant site and naphtha as the feedstock is, therefore, ordered maintained.

SO ORDERED.