[G.R. No. 125532.

 July 10, 1998]

SECRETARY TEOFISTO GUINGONA, JR.; STATE PROSECUTORS JUDE ROMANO, LEAH ARMAMENTO, MANUEL
TORREVILLAS, JOAQUIN ESCOVAR, MENRADO CORPUS; the NATIONAL BUREAU OF INVESTIGATION;
and POTENCIANO ROQUE, petitioners, vs. COURT OF APPEALS and RODOLFO PINEDA, respondents.

DECISION
PANGANIBAN, J.:

This case is an offshoot of the investigation conducted by the government in the last quarter of 1995, which delved
into the alleged participation of national and local officials in juetengand other forms of illegal gambling. Although the
Court of Appeals upheld the admission into the Witness Protection Program of Potenciano A. Roque, who claimed
personal knowledge of such gambling activities, the secretary of justice nonetheless challenges the side opinion of the
appellate court that the testimony of the witness must, as a condition precedent to his admission into said Program, be
shown to be capable of substantial corroboration in its material points. The justice secretary claims that such
corroboration need not be demonstrated prior to or simultaneous with the witness admission into the Program, as long as
such requirement can be demonstrated when he actually testifies in court. However, inasmuch as Roque has already
been admitted into the Program and has actually finished testifying, the issue presented by petitioners has become
moot. Thus, any judgment that this Court may render on the instant petition would be merely an academic disquisition on
a hypothetical problem. Until it can be shown that an actual controversy exists, courts have no jurisdiction to render a
binding decision.

The Case

This is a petition for review on certiorari to partially set aside the June 28, 1996 Decision of the Court of Appeals,
[1]
 which disposed as follows:[2]

WHEREFORE, premises considered, the petition is hereby DISMISSED for want of merit, and the injunction issued
against respondent judges from hearing the criminal actions against petitioner is hereby LIFTED.

SO ORDERED.

The Court of Appeals upheld the justice secretarys denial on January 11, 1996 of private respondents Petition for
Reconsideration of Admittance of Potenciano A. Roque to the Witness Protection Program.
Although Respondent Court ruled in favor of the government, herein petitioners nonetheless assail the following
portion of the said Decision:

x x x From the explicit terms of the statute, it is at once apparent that the presence of such corroborative evidence is sine
qua non to a witness admission into the Program. Being in the nature of a condition precedent [to] his admission into the
Program, the existence of such corroborative evidence must be shown at the time his application for admission is being
evaluated.

The Antecedent Facts

Petitioners relate the antecedent facts of this case as follows: [3]

Sometime in the last quarter of 1995, the National Bureau of Investigation (NBI) conducted an investigation on the alleged
participation and involvement of national and local government officials in jueteng and other forms of illegal gambling.
The case was also the subject of a legislative inquiry/investigation by both the Senate and the House of Representatives.

In November 1995, one Potenciano Roque, claiming to be an eyewitness to the networking of xxx national and local
politicians and gambling lords, sought admission into the Governments Witness Protection, Security and Benefit
Program. Allegedly, he gained first-hand information in his capacity as Chairman of the Task Force Anti-Gambling (TFAG)
during the term of former President Corazon C. Aquino until his resignation in 1989. He also revealed that he and
members of his family were in danger of being liquidated, facing as he did the formidable world of corruption with a well-
entrenched hold on Philippine social, political and economic systems.

After a thorough evaluation of his qualifications, convinced of his compliance with the requirements of Republic Act No.
6981, otherwise known as the Witness Protection, Security and Benefit Act, the Department of Justice admitted Roque to
the program, providing him a monthly allowance, temporary shelter and personal and security protection during witness
duty.

On November 30, 1995, Roque executed a sworn statement before NBI Agents Sixto M. Burgos, Jr. and Nelson M.
Bartolome, alleging that during his stint as Chairman of the Task Force Anti-Gambling (TFAG), several gambling lords,
including private respondent Rodolfo Pineda, and certain politicians offered him money and other valuable considerations,
which he accepted, upon his agreement to cease conducting raids on their respective gambling operations (Annex B).

On the basis of Roques sworn statement, the sworn statement and supplemental affidavit of one Angelito H. Sanchez,
and the sworn statement of Gen. Lorenzo Mateo (Annexes C, D and E), then NBI Director Mariano M. Mison forwarded
the result of their investigation on the jueteng scam to the Department of Justice (DOJ), recommending the filing of the
following charges against Pineda and other persons x x x.

x x x x x x x x x

The DOJ Task Force on Illegal Gambling (composed of the petitioner-prosecutors), created by petitioner Secretary
Teofisto Guingona on November 24, 1995 (Annex F), conducted a preliminary investigation of the case and subpoenaed
all the respondents in I.S. No. 95-774, therein requiring them to submit their counter-affidavits by December 22, 1995.

On December 21, 1995, Roque executed a supplemental sworn statement relative to I.S. No. 95-774, clarifying some of
his statements in his first affidavit (Annex G). Consequently, the December 22, 1995 setting was cancelled and reset to
January 8, 1996 to give Pineda and other respondents time to refute the charges contained in the supplemental sworn
statement.

On January 5, 1996, Pineda filed a Petition for Reconsideration of Admittance of Potenciano A. Roque to the Witness
Protection Program, which was denied by petitioner Secretary in a letter-reply dated January 11, 1996 (Annexes H and
I). On January 23, 1996, Pineda filed a Petition for Certiorari, Prohibition and Mandamus with Application for Temporary
Restraining Order and Preliminary Injunction with the respondent Court of Appeals.

x x x x x x x x x

In the meantime, petitioner-prosecutors proceeded with their preliminary investigation, and on February 2, 1996, they
issued a resolution finding probable cause to charge private respondent Pineda with several offenses (Annex K). On
February 5, 1996, three (3) Informations for corruption of public officials were filed against him in the Manila and Pasig
City Trial Courts (Annexes L, M and N). He was subsequently arraigned on February 28, 1996 in the Regional Trial Court,
Branch 7 of the City of Manila presided by Judge Enrico Lanzanes, and on March 14, 1996 in the Regional Trial Court,
Branch 168, of Pasig City, presided by Judge Benjamin Pelayo.

On March 19, 1996, the Court of Appeals came up with a writ of preliminary injunction enjoining both trial courts from
hearing the criminal actions in the meantime.

The Ruling of the Court of Appeals

In its Decision, Respondent Court addressed mainly the issue of whether the secretary of justice acted in excess of
his jurisdiction (a) in admitting Petitioner Roque into the Program and (b) in excluding him from the Informations filed
against private respondent. Private respondent contended that Roques admission was illegal on two grounds: first, his
testimony could not be substantially corroborated in its material points; and second,  he appeared to be the most guilty or
at least more guilty than private respondent, insofar as the crimes charged in the Informations were concerned.
Respondent Court also ruled that RA 6981 contemplates two kinds of witnesses: (a) a witness who has perceived or
has knowledge of, or information on, the commission of a crime under Section 3; and (b) a particeps criminis or a
participant in the crime under Section 10.
Based on his sworn statements, Roque participated in the commission of the crimes imputed to private respondent
(corruption of public officials) by accepting bribe money. Necessarily, his admission to the Program fell under Section 10,
which requires that he should not appear to be the most guilty of the imputed crimes. Respondent Court found that private
respondent sought to bribe him several times to prevent him from conducting raids on private respondents gambling
operations. Such passive participation in the crimes did not make him more guilty than private respondent.
On the first issue, Respondent Court initially ruled that, by express provision of Sections 3 and 10, the requirement of
corroboration is a condition precedent to admission into the Program. A contrary interpretation would only sanction the
squandering of the various benefits of the Program on one who might later be adjudged disqualified from admission for
lack of evidence to corroborate his testimony.
However, in the same breath, Respondent Court upheld herein petitioners alternative position that substantial
corroboration was nevertheless actually provided by Angelito Sanchez and retired Gen. Lorenzo M. Mateos
testimonies. Hence, it disposed in favor of the government.
Subsequently, this petition was filed.[4]

The Issue

The lone issue raised by this petition is worded as follows:

Whether or not a witness testimony requires prior or simultaneous corroboration at the time he is admitted into the witness
protection, security and benefit program.[5]

As noted earlier, this petition is unusual and unique. Despite ruling in their favor, Respondent Court is assailed by
petitioners for opining that admission to the Program requires prior or simultaneous corroboration of the material points in
the witness testimony.
Respondent Court and private respondent are of the opinion that Sections 3 (b) & 10 (d) of RA 6981 expressly
require that corroboration must already exist at the time of the witness application as a prerequisite to admission into the
Program. RA 6981 pertinently provides:

Sec. 10. State Witness. Any person who has participated in the commission of a crime and desires to be a witness for the
State, can apply and, if qualified as determined in this Act and by the Department, shall be admitted into the Program
whenever the following are present:

x x x x x x x x x

(d) his testimony can be substantially corroborated on its material points;

x x x x x x x x x.
On the other hand, petitioners contend that said provisions merely require that the testimony of the state witness
seeking admission into the Program can be substantially corroborated or is capable of corroboration. So long as
corroboration can be obtained when he testifies in court, he satisfies the requirement that his testimony can
be substantially corroborated on its material points.

The Courts Ruling

The petition must fail, because the facts and the issue raised by petitioners do not warrant the exercise of judicial
power.
No Actual Controversy

Without going into the merits of the case, the Court finds the petition fundamentally defective. The Constitution
provides that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable.[6] According to Fr. Joaquin Bernas, a noted constitutionalist, courts are mandated
to settle disputes between real conflicting parties through the application of the law. [7] Judicial review, which is merely an
aspect of judicial power, demands the following: (1) there must be an actual case calling for the exercise of judicial power;
(2) the question must be ripe for adjudication; [8] and (3) the person challenging must have standing; that is, he has
personal and substantial interest in the case, such that he has sustained or will sustain direct injury. [9]
The first requisite is that there must be before a court an actual case calling for the exercise of judicial power. Courts
have no authority to pass upon issues through advisory opinions or to resolve hypothetical or feigned problems [10] or
friendly suits collusively arranged between parties without real adverse interests. [11] Courts do not sit to adjudicate mere
academic questions to satisfy scholarly interest, however intellectually challenging. [12] As a condition precedent to the
exercise of judicial power, an actual controversy between litigants must first exist. [13]
An actual case or controversy exists when there is a conflict of legal rights or an assertion of opposite legal claims,
which can be resolved on the basis of existing law and jurisprudence.A justiciable controversy is distinguished from a
hypothetical or abstract difference or dispute, in that the former involves a definite and concrete dispute touching on the
legal relations of parties having adverse legal interests. A justiciable controversy admits of specific relief through a decree
that is conclusive in character, whereas an opinion only advises what the law would be upon a hypothetical state of facts.
[14]

Thus, no actual controversy was found in Abbas vs. Commission on Elections [15]  regarding the provision in the
Organic Act, which mandates that should there be any conflict between national law and Islamic Law, the Shariah courts
should apply the former. In that case, the petitioner maintained that since the Islamic Law (Shariah) was derived from the
Koran, which makes it part of divine law, the Shariah may not be subjected to any man-made national law. This Court
dismissed petitioners argument because, as enshrined in the Constitution, judicial power includes the duty to settle actual
controversies involving rights which are legally demandable and enforceable. No actual controversy between real litigants
existed, because no conflicting claims involving the application of national law were presented. This being so, the
Supreme Court refused to rule on a merely perceived potential  conflict between the provisions of the Muslim Code and
those of the national law.
In contrast, the Court held in Sabello vs. Department of Education, Culture and Sports [16] that there was a justiciable
controversy where the issue involved was whether petitioner -- after he was given an absolute pardon -- merited
reappointment to the position he had held prior to his conviction, that of Elementary Principal I. The Court said that such
dispute was nothypothetical or abstract, for there was a definite and concrete controversy touching on the legal relations
of parties and admitting of specific relief through a court decree that was conclusive in character. That case did not call for
mere opinion or advice, but for affirmative relief.
Closely related to the requirement of an actual case, Bernas continues, is the second requirement that the question
is ripe for adjudication. A question is ripe for adjudication when the act being challenged has had a direct adverse effect
on the individual challenging it. Thus, in PACU vs. Secretary of Education,[17]  the Court declined to pass judgment on the
question of the validity of Section 3 of Act No. 2706, which provided that before a private school may be opened to the
public, it must first obtain a permit from the secretary of education, because all the petitioning schools had permits to
operate and were actually operating, and none of them claimed that the secretary had threatened to revoke their permit.
In Tan vs. Macapagal,[18] the Court said that Petitioner Gonzales had the good sense to wait until after the enactment
of the statute [Rep. Act No. 4913 (1967)] requiring the submission to the electorate of certain proposed amendments to
the Constitution [Resolution Nos. 1 and 3 of Congress as a constituent body (1967)] before he could file his suit. It was
only when this condition was met that the matter became ripe for adjudication; prior to that stage, the judiciary had to keep
its hands off.
The doctrine of separation of powers calls for each branch of government to be left alone to discharge its duties as it
sees fit. Being one such branch, the judiciary, Justice Laurel asserted, will neither direct nor restrain executive [or
legislative action] x x x.[19] The legislative and the executive branches are not allowed to seek its advice on what to do or
not to do; thus, judicial inquiry has to be postponed in the meantime.  Before a court may enter the picture, a prerequisite
is that something has been accomplished or performed by either branch. Then mayit pass on the validity of what has been
done but, then again, only when x x x properly challenged in an appropriate legal proceeding. [20]
In the case at bar, it is at once apparent that petitioners are not requesting that this Court reverse the ruling of the
appellate court and disallow the admission in evidence of Respondent Roques testimony, inasmuch as the assailed
Decision does not appear to be in conflict with any of their present claims. Petitioners filed this suit out of fear that the
assailed Decision would frustrate the purpose of said law, which is to encourage witnesses to come out and testify. But
their apprehension is neither justified nor exemplified by this particular case. A mere apprehension does not give rise to a
justiciable controversy.
After finding no grave abuse of discretion on the part of the government prosecutors, Respondent Court allowed the
admission of Roque into the Program. In fact, Roque had already testified in court against the private respondent. Thus,
the propriety of Roques admission into the Program is already a moot and academic issue that clearly does not warrant
judicial review.
Manifestly, this petition involves neither any right that was violated nor any claims that conflict. In fact, no affirmative
relief is being sought in this case. The Court concurs with the opinion of counsel for private respondent that this action is a
purely academic exercise, which has no relevance to the criminal cases against Respondent Pineda.  After the assailed
Decision had been rendered, trial in those cases proceeded in earnest, and Roque testified in all of them. Said counsel
filed his Memorandum only to satisfy his academic interest on how the State machinery will deal with witnesses who are
admittedly guilty of the crimes but are discharged to testify against their co-accused. [21]
Petitioners failed not only to present an actual controversy, but also to show a case ripe for adjudication. Hence, any
resolution that this Court might make in this case would constitute an attempt at abstraction that can only lead to barren
legal dialectics and sterile conclusions unrelated to actualities. [22]

An Executive Function

In the present petition, the government is in effect asking this Court to render an advisory opinion on what the
government prosecutors should do when, how and whom to grant or to deny admission into the Program.  To accede to it
is tantamount to an incursion into the functions of the executive department. From their arguments stated above, both
sides have obviously missed this crucial point, which is succinctly stated in Webb vs. De Leon:[23]

It is urged that they [the provisions of RA 6918] constitute xxx an intrusion into judicial prerogative for it is only the court
which has the power under the Rules on Criminal Procedure to discharge an accused as a state witness. The argument is
based on Section 9, Rule 119 which gives the court the prerogative to approve the discharge of an accused to be a state
witness. Petitioners argument lacks appeal for it lies on the faulty assumption that the decision whom to prosecute is a
judicial function, the sole prerogative of courts and beyond executive and legislative interference. In truth, the prosecution
of crimes appertains to the executive department of government whose principal power and responsibility is to see that
our laws are faithfully executed. A necessary component of this power to execute our laws is the right to prosecute their
violators. The right to prosecute vests the prosecutor with a wide range of discretionthe discretion of whether, what and
whom to charge, the exercise of which depends on a smorgasbord of factors which are best appreciated by
prosecutors. We thus hold that it is not constitutionally impermissible for Congress to enact R.A. 6981 vesting in the
Department of Justice the power to determine who can qualify as a witness in the program and who shall be granted
immunity from prosecution. Section 9 of Rule 119 does not support the proposition that the power to choose who shall be
a state witness is an inherent judicial prerogative. Under this provision, the court is given the power to discharge a state
witness only because it has already acquired jurisdiction over the crime and the accused.The discharge of an accused is
part of the exercise of jurisdiction but is not a recognition of an inherent judicial function. Moreover, the Rules of Court
have never been interpreted to be beyond change by legislation designed to improve the administration of our justice
system. [Emphasis ours]

Simply stated, the decision on whether to prosecute and whom to indict is executive in character. Only when an
information, charging two or more persons with a certain offense, has already been filed in court will  Rule 119, Section 9
of the Rules of Court, come into play, viz.:

SEC. 9. Discharge of one of several defendants to be witness for the prosecution.When two or more persons are charged
with the commission of a certain offense, the competent court, at any time before they have entered upon their defense,
may direct one or more of them to be discharged with the latters consent that he or they may be witnesses for the
government when in the judgment of the court:

(a) There is absolute necessity for the testimony of the defendant whose discharge is requested;

(b) There is no other direct evidence available for the proper prosecution of the offense committed, except the testimony
of said defendant;

(c) The testimony of said defendant can be substantially corroborated in its material points;
(d) Said defendant does not appear to be the most guilty;

(e) Said defendant has not at any time been convicted of any offense involving moral turpitude.

In the present case, Roque was not one of those accused in the Informations filed by the government prosecutors. Rule
119, Section 9, is therefore clearly not applicable.
A resort to the progenitors of RA 6981 will yield the same result. Although Presidential Decree 1731 and National
Emergency Memorandum Order No. 26 state only when immunity from suit attaches to a witness, they do not specify
who are qualified for admission into the Program. PD 1731, otherwise known as a law Providing for Rewards and
Incentives to Government Witnesses and Informants and for Other Purposes provides:

SEC. 4. Any such informants or witnesses who shall testify, or provide vital information, regarding the existence or activity
of a group involved in the commission of crimes against national security or public order, or of an organized/syndicated
crime or crime group, and/or the culpability of individual members thereof in accordance with this Decree shall, upon
recommendation of the state prosecutor, fiscal or military lawyer, as approved by the Secretary of National Defense or the
Secretary of Justice, as the case may be, be immune from criminal prosecution for his participation or involvement in any
such criminal activity which is the subject of the investigation or prosecution, in addition to the benefits under Sec. 2
hereof: Provided, that, immunity from criminal prosecution shall, in the case of a witness offering to testify, attach only
upon his actually testifying in court in accordance with his undertaking as accepted by the state prosecutor, fiscal, or
military lawyer: Provided, further, that the following conditions are complied with:

x x x x x x x x x

c. That such testimony or information can be substantially corroborated in its material points;

x x x x x x x x x.
The same tenor was adopted in National Emergency Memorandum Order No. 26 signed by former President
Corazon C. Aquino, Section 5(c) of which provides:

c. Immunity from Criminal Prosecution.This applies to the witness participation or involvement in the criminal case in
which his testimony is necessary and may be availed of only upon his actually testifying in court in accordance with his
undertaking, and provided that:

x x x x x x x x x

(3) Such testimony or information can be substantially corroborated in its material points;

x x x x x x x x x.
One may validly infer from the foregoing that the government prosecutor is afforded much leeway in choosing whom
to admit into the Program. Such inference is in harmony with the basic principle that this is an executive function.
RA 6981 is a much needed penal reform law that could help the government in curbing crime by providing an
antidote, as it were, to the usual reluctance of witnesses to testify. The Department of Justice has clearly explained the
rationale for said law:[24]

Witnesses, for fear of reprisal and economic dislocation, usually refuse to appear and testify in the
investigation/prosecution of criminal complaints/cases. Because of such refusal, criminal complaints/cases have been
dismissed for insufficiency and/or lack of evidence. For a more effective administration of criminal justice, there was a
necessity to pass a law protecting witnesses and granting them certain rights and benefits to ensure their appearance in
investigative bodies/courts.

This Court should then leave to the executive branch the decision on how best to administer the Witness Protection
Program. Unless an actual controversy arises, we should not jump the gun and unnecessarily intervene in this executive
function.

Closer Scrutiny of the Assailed Decision

 Finally, an accurate reading of the assailed Decision will further enlighten petitioners as to its true
message. Respondent Court did sustain Roques admission into the Program -- even as it held that the first contention of
petitioners was untenable -- based on the latters alternative argument that Roques testimony was sufficiently corroborated
by that of General Mateo.While Respondent Court insisted that corroboration must exist prior to or simultaneous with
Roques admission into the Program, it sanctioned subsequent compliance to cure this defect.The reason for this is found
in the penultimate paragraph of the Decision, in which Respondent Court categorically stated that it found no manifest
abuse of discretion in the petitioners action. There is no quarrel with this point. Until a more opportune occasion involving
a concrete violation of RA 6981 arises, the Court has no jurisdiction to rule on the issue raised by petitioners.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
Davide, Jr., (Chairman), Bellosillo, Vitug,  and Quisumbing, JJ., concur.

[1]
 Fifteenth Division, composed of JJ. Salome A. Montoya, chairperson; Godardo A. Jacinto, ponente; and Maximiano C.
Asuncion, member.
[2]
 Rollo,  p. 43.
[3]
 Petition, pp. 3-10; Rollo, pp. 14-21.
[4]
 This case was deemed submitted for decision after the receipt of private respondents Memorandum on October 28,
1997.
[5]
 Petition, p. 10; Rollo, p. 21.
[6]
 Article VIII, Section 1.
[7]
 Bernas, The Constitution of the Republic of the Philippines, Vol. II, 1988 ed., pp. 275-276.
[8]
 Philippine Association of Colleges and Universities vs. Secretary of Education, 97 Phil. 806, 810 (1955); and Tan vs.
Macapagal, 43 SCRA 678, 680-682, February 29, 1972.
[9]
 People vs. Vera, 65 Phil. 58, 89 (1937).
[10]
 Bernas, The Constitution, citing Muskrat vs. United States, 219 U.S. 346, 362 (1911).
[11]
 Ibid., citing Ashwander vs. Tennessee Valley Authority, 297 U.S. 288, 346 (1936).
[12]
 PACU vs. Secretary of Education, supra on footnote no. 6.
[13]
 Angara v. Electoral Commission, 63 Phil. 139, 158, July 15, 1936; Tan v. Macapagal, supra on footnote no. 7.
[14]
 Isagani A. Cruz, Philippine Political Law, 1995 ed., pp. 241-242.
[15]
 179 SCRA 287, 299-300, November 10, 1989, per Corts, J.
[16]
 180 SCRA 623, 626, December 26, 1989, per Gancayco, J.
[17]
 97 Phil. 806, 810 (1955).
[18]
 Supra on footnote no. 7, per Fernando, J.
[19]
 Planas vs. Gil, 67 Phil. 62, 73 (1939).
[20]
 Ibid.
[21]
 Respondents Memorandum, filed by Atty. Roberto A. Abad, pp. 2-3; Rollo, pp. 149-150.
[22]
 Angara vs. Electoral Commission, supra on footnote no. 11, per Laurel,  J.
[23]
 247 SCRA 652, August 23, 1995, per Puno, J., pp. 685-686.
[24]
 Primer on the Witness Protection Security and Benefit Act (R.A. No. 6981), p. 1.
Province of Batangas vs. RomuloG.R. No. 152774
May 27, 2004
FACTS:
With an objective to enhance the capabilities of LGUs in discharging their functions and services devolved to them
through the LGC, then President Estrada issued EO No. 48, commonly known as “Program for Devolution Adjustment and
Equalization.”Under Executive Secretary Ronaldo Zamora, the Oversight Committee passed Resolutions No. OCD-99-
005, OCD-99-006 and OCD-99-003 which were approved by Pres. Estrada on October 6, 1999.The Oversight Committee
formulated guidelines requiring LGUs to identify projects eligible for funding under the portion of Local Government
Service Equalization Fund (LGSEF) and submit the project proposals and other requirements to the DILG for appraisal
before the Committee serves notice to the DBM for the subsequent release of the corresponding funds.
The Governor of Batangas, Hon. Herminaldo Mandanas petitioned to declare unconstitutional and void certain provisos
contained in the General Appropriations Act (GAAs) of 1999, 2000, 2001, insofar as they uniformly earmarked for each
corresponding year the amount of P5 billion
for the Internal Revenue Allotment (IRA) for the LGSEF and imposed conditions for the release thereof.
ISSUE:
Whether or not the assailed provisos contained in the GAAs of 1999, 2000, and 2001, and the OCD resolutions infringe
the Constitution and the LGC of 1991?

HELD:
The petition is GRANTED. The assailed provisos in the General Appropriations Acts of 1999, 2000 and 2001, and the
assailed OCD Resolutions, are declared UNCONSTITUTIONAL
Province of Batangas Vs. Romulo
G.R. No. 152774.  May 27, 2004

Relevant Background:

It was a case filed by Hon. HERMILANDO I. MANDANAS, Governor of Batangas petition for certiorari, prohibition and
mandamus to declare as unconstitutional and void certain provisos contained in the General Appropriations Acts (GAA) of
1999, 2000 and 2001, insofar as they uniformly earmarked (allocated) for each corresponding year the amount of five
billion pesos (P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization
Fund (LGSEF) and imposed conditions for the release thereof.

It started in 1998 when then President Joseph Estrada issued Executive Order No. 48 entitled “ESTABLISHING A
PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION” to facilitate the process of enhancing the
capabilities of local government units in the discharge of the functions and services devolved to them pursuant to the
Local Government Code. Included in the EO No. 48 is the appointment of the Oversight Committee authorized to issue
the implementing rules and regulations governing the equitable allocation and distribution of said fund to the LGUs..

Subject of the case are the resolutions passed by the Oversight Committee (Chaired by the Executive Secretary Ronaldo
B. Zamora). These are the resolutions with numbers OCD-99-005, OCD-99-006, and OCD-99-003. Further, these OCDs
were approved by then Pres. Estrada on October 6, 1999. The guidelines along with these OCDs as formulated by the
Oversight Committee requires the LGUs to identify the projects eligible for funding under the portion of LGSEF and submit
the project proposals and other requirements to the DILG for appraisal before the Committee serves notice to the DBM for
the subsequent release of corresponding funds.

For the year 2000 and 2001, the same LGSEF of 1999 GAA were adopted due to failure of Congress to enact general
appropriation laws.

The standing point was when Gov. Mandanas received the LGSEF in the GAA of 1991.

The 5Billion LGESF for 2001 were as follows:

Modified Codal Formula P3.0Billion

Priority Projects P1.9 Billion

Capability Building FundP0.1 Billion, Total = P5Billion

Furthere, the P3.0Billion of the abovementioned LGESF shall be allocated according to the modified codal formula and be
released to the four levels of LGUs., ie., provinces, cities, municipalities and barangays as follos:

Provinces, 25% - P0.750Billion

Cities, 25% - 0.750

Municipalities, 35% - 1.050

Barangays, 15% - 0.450, Total = P3Billion

Resolved Further, the P1.9Billion earmarked for Priority Projects shall be distributed according to the following criteria:

1. For projects of the 4th, 5th, and 6th class LGUs, or

2. Projects in consonance with the President’s SONA
Upon Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual members of the Oversight
Committee seeking the reconsideration of Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo
urging her to disapprove said resolution as it violates the Constitution and the Local Government Code of 1991 but
otherwise, approved by Pres. Arroyo on January 25, 2002.

The Petitioner Points the Following Issues:

1. Unconstitutionality and void provisos in the GAAs of 1999, 2000, and 2001.

2. Unlawful and illegal imposition of conditions issued by the Oversight Committee requiring project proposals and
documentary requirements prior to the release of LGU’s ‘just share” in the IRA is an anathema to the principle of
local autonomy as embodied in the Constitution and the Local Government Code of 1991 (and that the possible
disapproval by the Committee of the project proposals of the LGUs is a diminution to then latter’s share in the
IRA).
The petitioner contends the following:

In issue No.1 & 3, the respondent theorized that Section 285 of the Local Government Code of 1991 which provides
for the percentage sharing of the IRA among the LGUs was not intended to be a fixed determination of share in the
national taxes as the Congress may enact other laws, including the aforementioned oppropriations law providing for a
different sharing formula. Section 285 merely intended to be the “default share” of the LGUs to do away with the need
to determine annually.

Further, the respondent avers that the petition has already been rendered as moot and academic as it no longer
presents a justifiable controversy because the IRAs of the years 1999, 2000 and 2001 have already been released
and therefore, nothing more to prohibit, aside from the fact that the petition should not have been filed with the
Supreme Court because this court is not a trier of facts, but, the lower courts of jurisdiction.

In issue No.2, the assailed resolutions issued by the Oversight Committee are not constitutionally infirm. The
respondents stands that Section 6 of Article X of the Constitution does not specify the “just share” of the LGUs shall
be determined solely by the Local Government Code of 1991 and that the phrase “to be determined by law” in the
same provision means that there exists no limitation on the power of Congress to determine what is the “just share” of
the LGUs in the national taxes. In effect, the Congress serves as the arbiter of what should be the “just share.”

Court’s Ruling:

The Court finds the petition to involve a significant legal issue. Issue No.1 is the crux of the instant controversy as
contained in the GAAs of 1999, 2000 and 2001 and the OCD resolutions infringe the Constitution and the Local
Government Code of 1991 and undoubtedly a legal question. However, the earmarking of the LGSEF, the promulgation
of the assailed OCD resolutions and the release of the LGSEF to the LGU following the requirements are not disputed.
Substantive issues stated above, in the course of the argument, although the supervening events as the IRA including the
LGSEF for 1999, 2000 and 2001 had already been released, still, there was a compelling reason to resolve the
substantive issue raised in the instant petition, whether intended or incidental, cannot prevent the Court from rendering a
decision if grave violation of the Constitution is proved even where the supervening events had made the cases moot in
order to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar and
public.

The court held that, “the state shall ensure the autonomy of local governments.” (Art. II Sec. 25 of the Constitution).
Consistent with the principle of local autonomy, the Constitution confines the President’s power over the LGUs to one of
general supervision and has no power to control

The Local Government Code of 1991 was enacted to flesh out the mandate of the Constitution. The State policy on local
autonomy is amplified in Section 2 thereof:

Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and political subdivisions
of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the
State shall provide for a more responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority, responsibilities, and
resources.

Guided by these precepts, the Court shall now determine whether the assailed provisos in the GAAs of 1999, 2000 and
2001, earmarking for each corresponding year the amount of five billion pesos of the IRA for the LGSEF and the OCD
resolutions promulgated pursuant thereto, transgress the Constitution and the Local Government Code of 1991.

To the Court’s mind, the entire process involving the distribution and release of the LGSEF is constitutionally
impermissible. The LGSEF is part of the IRA or “just share” of the LGUs in the national taxes. To subject its distribution
and release to the vagaries of the implementing rules and regulations, including the guidelines and mechanisms
unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by the assailed provisos in the GAAs
of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant violation of the
constitutional and statutory mandate that the “just share” of the LGUs “shall be automatically released to them.” The
LGUs are, thus, placed at the mercy of the Oversight Committee.

That the automatic release of the IRA was precisely intended to guarantee and promote local autonomy can be gleaned
from the discussion below between Messrs. Jose N. Nolledo and Regalado M. Maambong, then members of the 1986
Constitutional Commission.

Our national officials should not only comply with the constitutional provisions on local autonomy but should also
appreciate the spirit and liberty upon which these provisions are based.

WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations Acts of 1999, 2000 and
2001, and the assailed OCD Resolutions, are declared UNCONSTITUTIONAL.
 [G.R. No. 132795. March 10, 2004]

BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. FLORENTINO A. TUAZON, JR., MIGUEL
CANO, NONATA LIZARES, LOUISA LIZARES, CONGREGACION DE LAS HIJAS DE LA CARIDAD and
DAUGHTERS OF CHARITY,  respondents.

DECISION
AUSTRIA-MARTINEZ, J.:

On June 25, 1981, petitioner Banco Filipino Savings and Mortgage Bank filed a complaint [1] against Philippine
Underwriter Finance Corporation (Philfinance) and City Bank, N.A., before the then Court of First Instance of Rizal for
foreclosure of a real estate mortgage constituted in its favor by Philfinance in the latter part of 1970.  The trial court, now
Regional Trial Court of Makati, Branch 141, rendered judgment in favor of petitioner on February 6, 1985 which was
affirmed by the Court of Appeals and this Court.
Upon remand of the records to Branch 141, petitioner, on March 28, 1988, filed a motion for execution which it
granted on April 14, 1988. A foreclosure sale was thereafter set for November 21, 1988.[2] However, the scheduled
foreclosure sale was suspended by a temporary restraining order issued by the Regional Trial Court of Makati,  Branch
61 where mortgagor Philfinance filed Civil Case No. 88-2425. [3]
Another Notice of Sheriffs Sale was issued by Branch 141 on December 11, 1991 and a foreclosure sale was
scheduled for January 13, 1992. But this again was suspended by a temporary restraining order from the Court of
Appeals where Philfinance filed, on January 8, 1992, a petition for prohibition, injunction and annulment of
judgment. However, the petition was later dismissed by the Court of Appeals on August 22, 1992 declaring that the
execution of the judgment of the trial court was a matter of right of the prevailing party and that it was a ministerial duty on
the part of the court to issue the writ of execution to enforce its judgment. A subsequent petition for review filed by
Philfinance with the Supreme Court was also dismissed for having been filed manifestly for delay. [4]
Another foreclosure sale was scheduled for March 15, 1993. But this again did not push through because of the
motion filed by Philfinance for the cancellation of the Sheriffs sale and quashing of the writ of execution.  The motion was
later denied by Branch 141.
A fourth execution sale was scheduled for May 6, 1994 but Branch 66 of the RTC of Makati issued a temporary
restraining order in connection with Civil Case No. 94-1688 which was filed by Manuel Cano et al. [5] on April 27, 1994,
docketed as Civil Case No. 94-1688.[6] It is an action for damages with an application for the issuance of writ of preliminary
injunction, seeking to restrain the scheduled foreclosure sale. They claim that: on December 19, 1983, Philfinance was
placed under receivership; they are unpaid creditors of Philfinance; Banco Filipino, as their co-creditor, cannot obtain
advantage or preference over them by execution or any other means. [7]
On May 10, 1994, petitioner filed a motion to dismiss Civil Case No. 94-1688 on the ground that it failed to state a
cause of action.[8] On May 27, 1994, Branch 66 issued an order granting the writ of preliminary injunction without however
resolving the motion to dismiss. Petitioner filed a motion for reconsideration dated June 9, 1994 and an Ex-Parte Motion to
Resolve Motion to Dismiss dated August 11, 1994 which were both denied by said court on October 5, 1994.[9]
Petitioner filed its Answer to the Complaint, dated December 2, 1994 reiterating its affirmative defenses.[10]
On December 13, 1994, Civil Case No. 94-1688 was reraffled from Branch 66 to Branch 139.[11]
On December 21, 1994, petitioner filed a Motion to Set Affirmative Defenses for Preliminary Hearing which was
denied.[12] A subsequent motion for reconsideration filed by petitioner was also denied. [13]
Petitioner then went to the Court of Appeals, on a petition [14] under Rule 65 of the Rules of Court alleging that: (a) the
complaint of herein private respondents states no cause of action against it, hence, an ancillary and provisional remedy
such as a writ of preliminary injunction may not be enforced against it; (b) the pendency of a motion to dismiss was a
prejudicial question to the resolution of respondents application for a writ of preliminary injunction; (c) private respondents
have not shown any ground for the issuance of the writ of preliminary injunction; (d) Branch 66 of the Regional Trial Court
of Makati may not enjoin the processes of Branch 141, a co-equal branch of the court; (e) execution pursuant to a judicial
foreclosure of mortgaged property may be made independently of the receivership proceedings; and (f) the cases cited in
the questioned order are not applicable in the case at bar. [15]
On March 17, 1997, the Court of Appeals, rendered its decision [16] denying the petition for the following reasons:
While petitioner may have secured an enforceable judgment against Philfinance, such judgment cannot now be carried
out. This is one instance where the exception to the general rule comes to the fore.Ordinarily, the final and executory
judgment obtained by petitioner would have been entitled to enforcement through a writ of execution. But the dissolution
of Philfinance is an event subsequent thereto, which would render execution unjust. Philfinances creditors deserve to
share in the proceeds to be recovered from the allegedly remaining asset of the said dissolved corporation.

All things studiedly reviewed in proper perspective, We are of the irresistible conclusion that the respondent court did not
commit grave abuse of discretion in denying the motion to dismiss interposed below. [17]

A subsequent motion for reconsideration was also denied. [18]

Hence, the present petition filed before this Court, brought under Rule 45 of the Rules of Court seeking the reversal
of the said decision[19] and the resolution denying petitioners motion for reconsideration with a prayer that the decision of
the Court of Appeals be set aside and a new one rendered dismissing the complaint before the Regional Trial Court of
Makati in Civil Case No. 94-1688, or lifting or setting aside the writ of preliminary injunction issued therein. [20]
On March 29, 2000, the First Division of this Court issued a Resolution requiring both parties to submit their
respective memoranda.[21] Prior to submitting its memorandum, petitioner submitted a Manifestation and Motion dated July
17, 2000 stating that the property subject matter of its present petition had already been titled in its name through a sale
conducted by the City Government of Makati for realty tax delinquencies.  Thus it submits that the case might have been
rendered moot and academic for which a memorandum would be a redundancy.Nonetheless, petitioner expressed that
this Court may still decide the case to resolve the issues raised. [22]
Private respondents submitted their Memorandum dated July 24, 2000[23] while petitioner submitted its Memorandum
dated October 30, 2000.[24]
On November 17, 2003, the Court required private respondents to comment on the Manifestation and Motion of
petitioner. In respondents Comment, they claim that they and the Court were not notified by petitioner of the tax
delinquency sale; bad faith may be imputed upon petitioner as there ought to be an implied trust over the property in their
favor; private respondents deserve to share in the proceeds to be received from subject property of Philfinance which is
under receivership or liquidation; and praying that the case be resolved on the merits.
The Court is not persuaded. With the Manifestation and Motion of petitioner itself, its petition had become moot and
academic. An issue is said to have become moot and academic when it ceases to present a justiciable controversy so
that a declaration on the issue would be of no practical use or value. [25]
In Gancho-on vs. Sec. of Labor and Employment,[26] the Court pronounced:

It is a rule of universal application, almost, that courts of justice constituted to pass upon substantial rights will not
consider questions in which no actual interests are involved; they decline jurisdiction of moot cases. And where the issue
has become moot and academic[t]here is no actual substantial relief to which petitioners would be entitled and which
would be negated by the dismissal of the petition[27]

The prayer in the present petition was for the writ of preliminary injunction issued by Branch 66 of the Regional Trial
Court of Makati to be lifted so that the writ of execution may be enforced and the foreclosure of the real estate mortgage
constituted in petitioners favor may finally be undertaken. With the subsequent titling of the real property in the name of
petitioner, by virtue of an auction sale conducted by the City Government of Makati, the petition may be considered moot
and academic.
Considering that it is petitioner that filed herein petition for review on certiorari for the ultimate purpose of enforcing
the final and executory decision of the Regional Trial Court of Makati, Branch 141, in Civil Case No. 1494, and
considering that the subject property had been acquired by petitioner in view of the auction sale conducted by the City
Government of Makati for realty tax delinquencies, the issues raised in the petition had become moot and academic.
If there is any problem with the proceeds of the sale of the subject property insofar as Philfinance and its creditors
are concerned, the latter may raise and claim their respective rights to the proceeds of the sale in an appropriate case and
in the right forum, not in the present petition.
WHEREFORE, the petition is dismissed for having become moot and academic.
SO ORDERED.
Quisumbing, (Acting Chairman), Callejo, Sr.,  and Tinga, JJ.,  concur.
Puno, J., (Chairman),  on leave.
Brief Fact Summary. Jack Davis (P) was a wealthy candidate of the Democratic Party who sued the Federal Election
Committee, citing the law which raises the ceiling for campaign contributions for any political candidate whose rival has
spent a specified amount from  his own personal wealth as unconstitutional.

Synopsis of Rule of Law. The Millionaire’s Amendment to the 2002 law on campaign finance, which raises the ceiling for
campaign contributions for any candidate who is contesting against a rival financing his own campaign by his own wealth,
is a violation of the First Amendment.

Facts. Jack Davis (P) was a rich candidate for the Democratic Party who was standing for Congress from the 26th
Congressional District of New York. He filed against the constitutional standing of the Millionaire’s Amendment, as it was
called, an amendment to the Bipartisan Campaign Reform Act of 2002, which increases the permissible amount of
contributions for a candidate who is contesting against a rival who spends a certain specified amount from his own
personal wealth. He sued on the grounds that it was unconstitutional in that it violated the First Amendment as well as the
Equal Protection clause which may be read into the Fifth Amendment. The suit was dismissed on both grounds by the
district court.

Issue. Is the Millionaire’s Amendment, which allows a candidate to receive more campaign contributions if he is running
against a rival who spends a specified amount from his own funds on his own campaign, a violation of the freedom of
speech guaranteed by the First Amendment?

Held. (Alito, J.) Yes. The Millionaire’s Amendment to the 2002 campaign finance reform statute which raises the ceiling for
contributions for candidates contesting against a self-financed candidate is in violation of the First Amendment. The law in
question is discriminatory in not raising the contribution ceiling all around, but only for the candidate who is not using his
own wealth to finance his campaign, and then only under condition that the self-financing rival’s spending reaches a
specified limit. In such a case the choices of Davis are limited by the law. He can spend his own money to run his
campaign only if he is willing to let another candidate have an increased contribution limit; or he can spend less than he
really wants to and  thusbe compelled by the law to curb his speech. This law thus puts a significant restriction on his
freedom of speech. The government will have to show a compelling interest to be served which justifies this provision.
The interests here sought to be served are providing a level electoral playing field for all candidates irrespective of
personal wealth,  avoiding corruption, and reducing the harm done by the tight limits on campaign contributions, and these
are not substantial enough to justify such a high level of burden. Imposing different levels of contribution ceilings on
candidates contesting the same office is the opposite of the freedom protected by the First Amendment and the decision
of the lower court is reversed. The case is remanded.
 SECOND DIVISION

[ G.R. Nos. 103055-56, January 26, 2004 ]

ROYAL CARGO CORPORATION, PETITIONER, VS. CIVIL AERONAUTICS BOARD, RESPONDENT.

RESOLUTION

CALLEJO, SR., J.:

The petitioner Royal Cargo Corporation filed the instant petition for review on certiorari seeking to reverse and set aside
the Decision,[1]and the Resolution of the Court of Appeals in CA-G.R. SP No. 22673-74.  The appellate court affirmed the
resolutions of the Civil Aeronautics Board (respondent Board) directing the petitioner to transfer the top position of its
corporation to a Filipino national.

The petition stemmed from the following factual milieu:

The petitioner Royal Cargo Corporation is a stock corporation duly organized and existing under and by virtue of
Philippine laws, seventy percent (70%) of which is owned by Filipino citizens and thirty percent (30%) by foreigners.  The
President of the petitioner company is a foreigner who is married to a Filipina, while the company officers, including the
Chairman of the Board, the Executive Vice-President and all the Vice- Presidents are all Filipinos.

On February 25, 1977, the petitioner, then operating under the name Royal Air Cargo, Inc., was initially granted by the
respondent Board an indefinite authority to engage in international air freight forwarding.  On October 11, 1983, the
petitioner changed its corporate name to Royal Cargo Corporation.  Subsequently, it filed a petition with the respondent
Board requesting for a fixed duration of its authority.  By way of Civil Aeronautics Board Resolution No. 140(85) dated
April 12, 1985, the petitioner's permit was extended for a period of five years, or until April 11, 1990.

On the day that its permit to operate was to expire, or on April 11, 1990, the petitioner applied for a renewal thereof for
another five years.  In its petition, it alleged, inter alia, that its president, Michael K. Raeuber, was a German national. 
Acting thereon, the Air Carrier Accounts System and Field Audit Division of the respondent Board recommended the
granting of the petition, provided that the position of president was transferred within thirty days from notice thereof,
otherwise the permit would be cancelled, thus:

... [T]hat the Letter of Authority be renewed for another five (5) years, subject to the same terms and conditions stipulated
in the original permit, and provided that no alien should interfere in the management as executive officer or occupy top
position in the corporation.  However, in view of the position occupied by an alien as President, violative of constitutional
requirement, we recommend a penalty of P5,000.00 and another P5,000.00 for operating without permit and filing the
petition on the day the permit expired.  Likewise, the petitioner should be required to transfer the above-mentioned
position to a Filipino national, otherwise, said permit shall be revoked if not complied within a period of thirty (30) days. 
The immediate revocation of permit is not recommended in order not to dislocate the one hundred eleven (111)
employees now connected with the petitioner.[2]
Based on the foregoing recommendation and after due hearing conducted thereon, the respondent Board promulgated
Resolution No. 209(90), dated June 1, 1990, which reads:

After considering the report of the Staff, the Board RESOLVED, as it hereby resolves to IMPOSE upon Royal Cargo
Corporation a fine of P10,000.00, as a penalty for operating with expired permit, payable within ten (10) days from receipt
of a copy of this Resolution.

The Board Resolved further to direct Royal Cargo Corporation to transfer its top position to a Filipino national within thirty
(30) days from receipt of a copy of this Resolution, otherwise its authority will be revoked. [3]
The petitioner accordingly sought reconsideration of the above resolution, specifically the second paragraph thereof.  The
respondent Board, in Resolution No. 298(90) dated August 3, 1990, denied the motion, stating the following reasons:

1. That it is the policy of the Board to grant a permit to engage in international airfreight forwarding only to citizens of
the Philippines as defined in RA 776, as amended;

2. That there is no law which precludes the Board from adopting such a policy; and
 3. That the Board find[s] no valid reason to abandon such policy because foreign capital is not very necessary in the
business of airfreight forwarding.[4]

Aggrieved, the petitioner elevated the case to the Court of Appeals.  In the assailed Decision of September 30, 1991, the
appellate court ruled that as a public utility, the petitioner is covered by the restriction embodied in Section 11, Article XII
of the Constitution which provides in part that:

Section 11. ... The participation of foreign investors in the governing body of any public utility enterprise shall be limited to
their proportionate share in its capital, and all the executive and managing officers of such corporation or association must
be citizens of the Philippines.[5]
The CA, thus, held that the respondent Board did not err in ordering the petitioner to transfer its top position to a Filipino
national.  The CA also declared that the promulgation of Resolution Nos. 209(90) and 298(90) was well within the
prerogatives conferred upon the respondent Board by Sections 10(a) and (b) of Republic Act No. 776:

Sec. 10.  Powers and duties of the Board (A) Except as otherwise provided herein, the Board shall have the powers to
regulate the economic aspect of air transportation, and shall have the general supervision and regulation of, the
jurisdiction and control over air carriers, general sales agents, cargo sales agents, and airfreight forwarders as well as
their property, property rights, equipment, facilities, and franchise, insofar as may be necessary for the purpose of carrying
out the provisions of this Act.

(B) The Board may perform such acts, conduct such investigation, issue and amend orders, and make and amend such
general or special rules, regulations, and procedures as it shall deem necessary to carry out the provisions of this Act.
Consequently, the CA dismissed the petitioner's appeal for lack of merit. [6] The petitioner sought reconsideration of the
aforesaid decision but the CA, in the assailed Resolution of November 27, 1991, denied the petitioner's motion. [7]

Hence, the present recourse.  The petitioner alleges that the CA committed a reversible error in rendering the assailed
decision and resolution.

In the meantime, pending the resolution of the instant petition, the petitioner's authority to operate as an international
airfreight forwarder as applied for under the permit in question expired in 1995.   Hence, in a Resolution dated September
22, 2003, the Court directed the parties to manifest to the court within ten (10) days from notice why the case should not
be dismissed for being moot and academic.[8] The Office of the Solicitor General stated that it interposed no objection to
the dismissal of the petition on the ground as aforestated. [9] The petitioner, on the other hand, affirmed to this Court that
the respondent Board had already renewed the petitioner's authority to operate as an International Airfreight Forwarder for
a period of five (5) years up to April 12, 2005.[10]

Clearly, the instant petition has become moot and academic.  This is evident from the fact that the permit to operate as an
international airfreight forwarder the respondent Board sought to withhold from the petitioner for failing to meet the
constitutional Filipinization requirement had already lapsed in 1995.  Also, with the current renewal of the petitioner's
authority to operate, it is to be assumed that it has finally decided to comply with the citizenship requirement mandated by
the constitution for its line of business.  Under the circumstances, the dismissal of the case is clearly warranted as the
petitioner no longer has any legal interest in the present case.

It is a rule of universal application that courts of justice constituted to pass upon substantial rights will not consider
questions where no actual interests are involved; they decline jurisdiction of moot cases.  And where the issue has
become moot and academic, there is no justiciable controversy, so that a declaration thereon would be of no practical use
or value.  There is no actual substantial relief to which the petitioner would be entitled and which would be negated by the
dismissal of the petition.[11] Thus, the Court will refrain from expressing its opinion in a case where no practical relief may
be granted in view of a supervening event.

WHEREFORE, the petition is DENIED for being moot and academic.

SO ORDERED.

Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

Lacson Vs. Perez 

357 SCRA 756 G.R. No. 147780

May 10, 2001

Facts: President Macapagal-Arroyo declared a State of Rebellion (Proclamation No. 38) on May 1, 2001 as well as
General Order No. 1 ordering the AFP and the PNP to suppress the rebellion in the NCR. Warrantless arrests of several
alleged leaders and promoters of the “rebellion” were thereafter effected. Petitioner filed for prohibition, injunction,
mandamus and habeas corpus with an application for the issuance of temporary restraining order and/or writ of
preliminary injunction. Petitioners assail the declaration of Proc. No. 38 and the warrantless arrests allegedly effected by
virtue thereof. Petitioners furthermore pray that the appropriate court, wherein the information against them were filed,
would desist arraignment and trial until this instant petition is resolved. They also contend that they are allegedly faced
with impending warrantless arrests and unlawful restraint being that hold departure orders were issued against them.

Issue: Whether or Not Proclamation No. 38 is valid, along with the warrantless arrests and hold departure orders
allegedly effected by the same. 

Held: President Macapagal-Arroyo ordered the lifting of Proc. No. 38 on May 6, 2006, accordingly the instant petition has
been rendered moot and academic. Respondents have declared that the Justice Department and the police authorities
intend to obtain regular warrants of arrests from the courts for all acts committed prior to and until May 1, 2001. Under
Section 5, Rule 113 of the Rules of Court, authorities may only resort to warrantless arrests of persons suspected of
rebellion in suppressing the rebellion if the circumstances so warrant, thus the warrantless arrests are not based on Proc.
No. 38. Petitioner’s prayer for mandamus and prohibition is improper at this time because an individual warrantlessly
arrested has adequate remedies in law: Rule 112 of the Rules of Court, providing for preliminary investigation, Article 125
of the Revised Penal Code, providing for the period in which a warrantlessly arrested person must be delivered to the
proper judicial authorities, otherwise the officer responsible for such may be penalized for the delay of the same. If the
detention should have no legal ground, the arresting officer can be charged with arbitrary detention, not prejudicial to
claim of damages under Article 32 of the Civil Code. Petitioners were neither assailing the validity of the subject hold
departure orders, nor were they expressing any intention to leave the country in the near future. To declare the hold
departure orders null and void ab initio must be made in the proper proceedings initiated for that purpose. Petitioners’
prayer for relief regarding their alleged impending warrantless arrests is premature being that no complaints have been
filed against them for any crime, furthermore, the writ of habeas corpus is uncalled for since its purpose is to relieve
unlawful restraint which Petitioners are not subjected to. 

Petition is dismissed. Respondents, consistent and congruent with their undertaking earlier adverted to, together with their
agents, representatives, and all persons acting in their behalf, are hereby enjoined from arresting Petitioners without the
required judicial warrants for all acts committed in relation to or in connection with the May 1, 2001 siege of Malacañang.
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Facts: 

Estrada was elected President of the Republic of the Philippines in the May 1998 elections. He sought the presidency
again in the May 2010 elections. Pormento opposed Estrada’s candidacy and filed a petition for disqualification.
COMELEC (Division) denied his petition as well as his subsequent Motion for Reconsideration (En
Banc). Pormento then filed the present petition for certiorari before the Court. In the meantime, Estrada was able to
participate as a candidate for President in the May 10, 2010 elections where he garnered the second highest number of
votes.

Issue:

Is Estrada disqualified to run for presidency in the May 2010 elections in view of the prohibition in the Constitution which
states that: "[t]he President shall not be eligible for any reelection?

Held:

Private respondent was not elected President the second time he ran. Since the issue on the proper interpretation of the
phrase any reelection will be premised on a persons second (whether immediate or not) election as President, there is no
case or controversy to be resolved in this case. No live conflict of legal rights exists. There is in this case no definite,
concrete, real or substantial controversy that touches on the legal relations of parties having adverse legal interests. No
specific relief may conclusively be decreed upon by this Court in this case that will benefit any of the parties herein. As
such, one of the essential requisites for the exercise of the power of judicial review, the existence of an actual case or
controversy, is sorely lacking in this case.

As a rule, this Court may only adjudicate actual, ongoing controversies.The Court is not empowered to decide moot
questions or abstract propositions, or to declare principles or rules of law which cannot affect the result as to the thing in
issue in the case before it. In other words, when a case is moot, it becomes non-justiciable.

An action is considered moot when it no longer presents a justiciable controversy because the issues involved have
become academic or dead or when the matter in dispute has already been resolved and hence, one is not entitled to
judicial intervention unless the issue is likely to be raised again between the parties. There is nothing for the court to
resolve as the determination thereof has been overtaken by subsequent events.

Assuming an actual case or controversy existed prior to the proclamation of a President who has been duly elected in the
May 10, 2010 elections, the same is no longer true today. Following the results of that elections, private respondent was
not elected President for the second time. Thus, any discussion of his reelection will simply be hypothetical and
speculative. It will serve no useful or practical purpose. (Pormento vs. Estrada, G.R. No. 191988, August 31, 2010)
Enrile v Senate Electoral Tribunal
By clark vincent barcelon - April 27, 2014
Facts: On January 20, 1995, Sen. Aquilino Pimentel filed with the Senate Electoral Tribunal (SET) an election protest
against Sen. Juan Ponce Enrile and other senatorial candidates who won in the May 1995 senatorial elections.
On June 30, 1995, the petitioner, Sen. Enrile, filed his answer in counter-protest. Issues having joined, the SET required
the parties to submit the list of pilot precincts number not more than 25% of the total precints involved.
On Aug. 21, 1997, SET held a press conference at the Supreme Court Session Hall announcing the partial and tentative
results of the revision of ballots in the pilot precincts without resolving the protest. In the tabulation presented, the
petitioner’s name dropped to the 15th position in the senatorial race.
On September 24, 1997, petitioner filed a Motion to Set Aside Partial Results in Sen. Pimentel’s Protest and to Conduct
Another Appreciation of Ballots in the Presence of All Parties. Respondent and Sen. Coseteng filed separate comments
alleging petitioner’s motion is premature considering the SET has not resolved respondent’s election protest.
Nevertheless, the SET denied petitioner’s motion holding no sufficient basis to discard the partial tabulation. The SET also
denied petitioner’s motion for reconsideration.
A petition for Certiorari assailed for having been issued with grave abuse of discretion the resolution that denied
petitioner’s Motion to Annul/Set Aside Partial Results in Pimentel’s Protest and to conduct another Appreciation of Ballots
in the Presence of All Parties.

Issue: Whether or not there is still useful purpose that can serve in passing upon merits of said petition.

Held: The Court finds the petition becoming moot and academic. The tenure of the contested senatorial position subject
to respondent’s protest expired on June 30, 1998. The case became moot considering there is no more actual
controversy between the parties and has no useful purpose that can serve in passing upon any merit.
Where issues have become moot and academic, justiciable controversies are lost, thereby rendering the resolution of no
practical use or value.

The petition is dismissed.

Gonzales vs. Narvasa G.R. No. 140835, August 14, 2000
Sunday, January 25, 2009 Posted by Coffeeholic Writes 
Labels: Case Digests, Political Law
Facts: Petitioner Ramon Gonzales, in his capacity as a citizen and taxpayer, assails the constitutionality of the creation of
the Preparatory Commission on Constitutional Reform (PCCR) and of the positions of presidential consultants, advisers
and assistants.
The PCCR was created by Pres. Estrada by virtue of EO 43 in order to study and recommend proposed amendments
and/or revisions to the Constitution, and the manner of implementing them.

Issue: Whether or not the petitioner has legal standing to file the case

Held: In assailing the constitutionality of EO 43, petitioner asserts his interest as a citizen and taxpayer.
A citizen acquires standing only if he can establish that he has suffered some actual or threatened injury as a result of the
allegedly illegal conduct of the government; the injury is fairly traceable to the challenged action; and the injury is likely to
be addressed by a favorable action. Petitioner has not shown that he has sustained or in danger of sustaining any
personal injury attributable to the creation of the PCCR and of the positions of presidential consultants, advisers and
assistants. Neither does he claim that his rights or privileges have been or are in danger of being violated, nor that he
shall be subjected to any penalties or burdens as a result of the issues raised.

In his capacity as a taxpayer, a taxpayer is deemed to have the standing to raise a constitutional issue when it is
established that public funds have disbursed in alleged contravention of the law or the Constitution. Thus, payer’s action is
properly brought only when there is an exercise by Congress of its taxing or spending power. In the creation of PCCR, it is
apparent that there is no exercise by Congress of its taxing or spending power. The PCCR was created by the President
by virtue of EO 43 as amended by EO 70. The appropriations for the PCCR were authorized by the President, not by
Congress. The funds used for the PCCR were taken from funds intended for the Office of the President, in the exercise of
the Chief Executive’s power to transfer funds pursuant to Sec. 25(5) of Art. VI of the Constitution. As to the creation of the
positions of presidential consultants, advisers and assistants, the petitioner has not alleged the necessary facts so as to
enable the Court to determine if he possesses a taxpayer’s interest in this particular issue. 
Atlas Fertilizer vs Secretary of Department of Agrarian Reform GR No 93100 19 June 1997

11WEDNESDAYMAR 2015

POSTED BY RACHEL CHAN IN CASE DIGESTS, CONSTITUTIONAL LAW I

≈ LEAVE A COMMENT
Facts: Petitioner, Atlas Fertilizer engaged in the aquaculture industry utilizing fishponds and prawn farms.  Assailed
Sections 3 (b), 11, 13, 16 (d), 17 and 32 of R.A. 6657 (Comprehensive Agrarian Reform Law), as well as the
implementing guidelines and procedures contained in Administrative Order Nos. 8 and 10 Series of 1988 issued by public
respondent Secretary of the Department of Agrarian Reform as unconstitutional. They contend that R.A. 6657, by
including the raising of fish and aquaculture operations including fishponds and prawn ponds, treating them as in the
same class or classification as agriculture or farming violates the equal protection clause of the Constitution and therefore
void.
Issue: Whether or not RA 6657 is unconstitutional.
Decision: Petition dismissed. R.A. No. 7881 approved by Congress on 20 February 1995 expressly state that fishponds
and prawn farms are excluded from the coverage of CARL. In view of the foregoing, the question concerning the
constitutionality of the assailed provisions has become moot and academic with the passage of R.A. No. 7881.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 192302               June 4, 2014

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner, 

vs.
RAFAEL A. MANALO, GRACE M. OLIVA, and FREIDA Z. RIVERA-YAP, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 are the Decision2 dated May 21, 2009 and the Resolution3 dated May 17,
2010.ofthe Court of Appeals (CA) in CA-G.R. SP No. 102724 which nullified and set aside the Joint Order 4dated August 8,
2007 and the Order5 dated January 1 o; 2008 of the Regional Trial Court (RTC) of Manila, Branch 24 (Manila RTC) in Civil
Case Nos. 03-107325 and 03-107308, denying the separate Motions for Leave to Intervene and Admit Attached Answer-
in-Intervention filed by respondents Rafael A. Manalo, Grace M. Oliva, and Freida Z. Rivera-Yap (respondents).

The Facts

On July 18, 2003, petitioner Republic of the Philippines (Republic), represented in this case by the Anti-Money Laundering
Council (AMLC), filed a complaint for civil forfeiture, entitled "Republic v. R.A.B. Realty, Inc., et al.," 6docketed as Civil
Case No. 03-107308, before the Manila RTC.

Subsequently, or on July 21, 2003, it filed a second complaint for civil forfeiture, entitled "Republic v. Ariola, Jr., et
al.,"7 docketed as Civil Case No. 03-107325 (collectively, civil forfeiture cases), also before the same RTC. 8 In the said
civil forfeiture cases, the Republic sought the forfeiture in its favor of certain deposits and government securities
maintained in several bank accounts by the defendants therein, which were related to the unlawful activity of fraudulently
accepting investments from the public,9 in violation of the Securities Regulation Code10 as well as the Anti-Money
Laundering Act of 2001.11

On September 25 and 27, 2006, herein respondents filed separate Motions for Leave to Intervene and Admit Attached
Answer-in Intervention12 (separate motions for intervention), in the civil forfeiture cases, respectively, alleging, inter alia,
that they have a valid interest in the bank accounts subject thereof. In this relation, they asserted that in a separate
petition for involuntary insolvency proceedings, i.e., Spec. Proc. Case No. 03-026 filed before the RTC of Makati City,
Branch 204 (insolvency case), they were appointed as assignees of the properties of Spouses Saturnino and Rosario
Baladjay (Sps. Baladjay) (as well as their conduit companies) who were impleaded as defendants in the aforementioned
civil forfeiture cases.13

The Manila RTC Ruling

On August 8, 2007, the Manila RTC rendered a Joint Order 14 denying respondents’ separate motions for intervention,
citing Section 35 of the Rule of Procedure in Cases of Civil Forfeiture 15 (Civil Forfeiture Rules) which states:

Sec. 35.Notice to file claims.- Where the court has issued an order of forfeiture of the monetary instrument or property in a
civil forfeiture petition for any money laundering offense defined under Section 4 of Republic Act No. 9160, as amended,
any person who has not been impleaded nor intervened claiming an interest therein may apply, by verified petition, for a
declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or
property corresponding thereto. The verified petition shall be filed with the court which rendered the order of forfeiture
within fifteen days from the date of finality of the order of forfeiture, in default of which the said order shall be executory
and bar all other claims. (Emphasis supplied)

In view of the remedy stated in the foregoing provision, the Manila RTC thus ratiocinated that respondents "need not
unduly worry as they are amply protected in the event the funds subject of the instant case are ordered forfeited in favor of
the [Republic]."16
Dissatisfied, respondents moved for reconsideration, which was likewise denied by the Manila RTC in an Order 17dated
January 10, 2008, prompting them to elevate the case to the CA on certiorari. 18

The CA Ruling

In a Decision19 dated May 21, 2009, the CA granted respondents’ petition, ruling that the Manila RTC gravely abused its
discretion in denying respondents’ separate motions for intervention. It found that respondents were able to establish their
rights as assignees in the insolvency case filed by Sps. Baladjay. As such, they have a valid interest in the bank accounts
subject of the civil forfeiture cases.20 Moreover, a reading of Section 35 of the Civil Forfeiture Rules as above-cited
revealed that there is nothing therein that prohibits an interested party from intervening in the case before an order of
forfeiture is issued.21

Feeling aggrieved, the Republic moved for reconsideration which was, however, denied by the CA in a Resolution 22dated
May 17, 2010, hence, this petition.

The Issue Before the Court

The essential issue for the Court’s resolution is whether or not the CA erred in holding that the Manila RTC committed
grave abuse of discretion in issuing the Joint Order dated August 8, 2007 and the Order dated January 10, 2008 which
denied respondents’ separate motions for intervention in the civil forfeiture cases.

At this point, the Court duly notes that during the pendency of the instant petition, the Manila RTC rendered a Decision on
September 23, 2010 in Civil Case No. 03-107325, and, thereafter, a Decision dated February 11, 2011 and Amended
Decision dated May 9, 2011 in Civil Case No. 03-107308, all of which ordered the assets subject of the said cases
forfeited in favor of the government.23In view thereof, the Republic prayed that it be excused from filing the required
reply,24 which the Court granted in a Resolution25 dated June 3, 2013.1âwphi1

The Court’s Ruling

The petition must be dismissed for having become moot and academic.

A case or issue is considered moot and academic when it ceases to present a justiciable controversy by virtue of
supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or
use. In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which would be
negated by the dismissal of the petition. Courts generally decline jurisdiction over such case or dismiss it on the ground of
mootness,26 as a judgment in a case which presents a moot question can no longer be enforced. 27

In this case, the Manila RTC's rendition of the Decision dated September 23, 2010 in Civil Case No. 03-107325, as well
as the Decision dated February 11, 2011 and the Amended Decision dated May 9, 2011 in Civil Case No. 03-107308, by
virtue of which the assets subject of the said cases were all forfeited in favor of the government, are supervening events
which have effectively rendered the essential issue in this case moot and academic, that is, whether or not respondents
should have been allowed by the Manila RTC to intervene on the ground that they have a legal interest in the forfeited
assets. As the proceedings in the civil forfeiture cases from which the issue of intervention is merely an incident have
already been duly concluded, no substantial relief can be granted to the Republic by resolving the instant petition.
WHEREFORE, the petition is DISMISSED for being moot and academic.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:
DAVID VS MACAPAGAL - ARROYO
Posted by kaye lee on 2:48 PM
G.R. No. 171396, May 3 2006 [Legislative Department - Power to Declare War and Delegate Emergency
Power]

FACTS:
On February 24, 2006, President Arroyo issued PP No. 1017 declaring a state of emergency, thus:

NOW, THEREFORE, I, Gloria Macapagal-Arroyo, President of the Republic of the Philippines and Commander-
in-Chief of the Armed Forces of the Philippines, [calling-out power] by virtue of the powers vested upon me by Section 18,
Article 7 of the Philippine Constitution which states that: “The President. . . whenever it becomes necessary, . . . may
call out (the) armed forces to prevent or suppress. . .rebellion. . .,† and in my capacity as their Commander-in-Chief, do
hereby command the Armed Forces of the Philippines, to maintain law and order throughout the Philippines, prevent or
suppress all forms of lawless violence as well as any act of insurrection or rebellion ["take care" power] and to enforce
obedience to all the laws and to all decrees, orders and regulations promulgated by me personally or upon my direction;
and [power to take over] as provided in Section 17, Article 12 of the Constitution do hereby declare a State of National
Emergency.

On the same day, PGMA issued G.O. No. 5 implementing PP1017, directing the members of the AFP and PNP
"to immediately carry out the necessary and appropriate actions and measures to suppress and prevent acts of terrorism
and lawless violence."

David, et al. assailed PP 1017 on the grounds that (1) it encroaches on the emergency powers of Congress; (2) it
is a subterfuge to avoid the constitutional requirements for the imposition of martial law; and (3) it violates the
constitutional guarantees of freedom of the press, of speech and of assembly. They alleged “direct injury” resulting from
“illegal arrest” and “unlawful search” committed by police operatives  pursuant to PP 1017. 

During the hearing, the Solicitor General argued that the issuance of PP 1017 and GO 5 have factual basis, and
contended that the intent of the Constitution is to give full discretionary powers to the President in determining the
necessity of calling out the armed forces. The petitioners did not contend the facts stated b the Solicitor General.

ISSUE:
Whether or not the PP 1017  and G.O. No. 5 is constitutional.

RULING:

The operative portion of PP 1017 may be divided into three important provisions, thus:

First provision: “by virtue of the power vested upon me by Section 18, Artilce VII … do hereby command the
Armed Forces of the Philippines, to maintain law and order throughout the Philippines, prevent or suppress all forms of
lawless violence as well any act of insurrection or rebellion”
Second provision:   “and to enforce obedience to all the laws  and  to  all decrees, orders and regulations
promulgated by me personally or upon my direction;”
Third provision:  “as provided in Section 17, Article XII of the Constitution do hereby declare a State of National
Emergency.”

PP 1017 is partially constitutional insofar as provided by the first provision of the decree.
First Provision: Calling Out Power.
The only criterion for the exercise of the calling-out power is that “whenever it becomes necessary,” the
President may call the armed forces “to prevent or suppress lawless violence, invasion or rebellion.” (Integrated Bar
of the Philippines v. Zamora)
President Arroyo’s declaration of a “state of rebellion” was merely an act declaring a status or condition of public
moment or interest, a declaration allowed under Section 4, Chap 2, Bk II of the Revised Administration Code. Such
declaration, in the words of Sanlakas, is harmless, without legal significance, and deemed not written.  In these cases, PP
1017 is more than that.  In declaring a state of national emergency, President Arroyo did not only rely on Section 18,
Article VII of the Constitution, a provision calling on the AFP to prevent or suppress lawless violence, invasion or rebellion.
She also relied on Section 17, Article XII, a provision on the State’s extraordinary power to take over privately-owned
public utility and business affected with public interest.   Indeed, PP 1017 calls for the exercise of an awesome power.
Obviously, such Proclamation cannot be deemed harmless.
To clarify, PP 1017 is not a declaration of Martial Law.  It is merely an exercise of President Arroyo’s calling-
out power for the armed forces to assist her in preventing or suppressing lawless violence.
 Second Provision: The "Take Care" Power.
The second provision pertains to the power of the President to ensure that the laws be faithfully executed.  This is
based on Section 17, Article VII which reads: 
SEC. 17. The President shall have control of all the executive departments, bureaus, and offices.  He shall
ensure that the laws be faithfully executed.
This Court rules that the assailed PP 1017 is unconstitutional insofar as it grants President Arroyo the
authority to promulgate “decrees.” Legislative power is peculiarly within the province of the Legislature.  Section 1,
Article VI categorically states that “[t]he legislative power shall be vested in the Congress of the Philippines which
shall consist of a Senate and a House of Representatives.”  To be sure, neither Martial Law nor a state of rebellion nor
a state of emergency can justify President Arroyo’s exercise of legislative power by issuing decrees. 

Third Provision: The Power to Take Over

 Distinction must be drawn between the President’s authority to declare“a state of national emergency” and to
exercise emergency powers.  To the first, Section 18, Article VII grants the President such power, hence, no legitimate
constitutional objection can be raised.  But to the second, manifold constitutional issues arise.
Generally, Congress is the repository of emergency powers.  This is evident in the tenor of Section 23 (2), Article
VI authorizing it to delegate such powers to the President.  Certainly, a body cannot delegate a power not reposed upon it.
However, knowing that during grave emergencies, it may not be possible or practicable for Congress to meet and
exercise its powers, the Framers of our Constitution deemed it wise to allow Congress to grant emergency powers to the
President, subject to certain conditions, thus:
(1)   There must be a war or other emergency.
(2)   The delegation must be for a limited period only. 
(3)  The delegation must be subject to such restrictions as the Congress may prescribe.
(4)  The emergency powers must be exercised to carry out a national policy declared by Congress. 
         Section 17, Article XII must be understood as an aspect of the emergency powers clause.  The taking over
of private business affected with public interest is just another facet of the emergency powers generally reposed upon
Congress.  Thus, when Section 17 states that the “the State may, during the emergency and under reasonable terms
prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with
public interest,”  it refers to Congress, not the President.  Now, whether or not the President may exercise such power is
dependent on whether Congress may delegate it to him pursuant to a law prescribing the reasonable terms thereof.
Following our interpretation of Section 17, Article XII, invoked by President Arroyo in issuing PP 1017, this Court
rules that such Proclamation does not authorize her during the emergency to temporarily take over or direct the operation
of any privately owned public utility or business affected with public interest without authority from Congress. 
Let it be emphasized that while the President alone can declare a   state of national emergency, however, without
legislation, he has no power to take over privately-owned public utility or business affected with public interest. Nor can he
determine when such exceptional circumstances have ceased.  Likewise, without legislation, the President has no
power to point out the types of businesses affected with public interest that should be taken over.   In short, the President
has no absolute authority to exercise all the powers of the State under Section 17, Article VII in the absence of an
emergency powers act passed by Congress. 

As of G.O. No. 5, it is constitutional since it provides a standard by which the AFP and the PNP should
implement PP 1017, i.e. whatever is “necessary and appropriate actions and measures to suppress and prevent
acts of lawless violence.”  Considering that “acts of terrorism” have not yet been defined and made punishable by the
Legislature, such portion of G.O. No. 5 is declared unconstitutional.
Sanlakas vs. Exec Sec (2004)

Tinga, J.

FACTS: July 27, 2003-Oakwood mutiny -Pres GMA issued Proclamation no 47 declaring a "state of rebellion" & General
Order No. 4 directing AFP & PNP to supress the rebellion. -by evening, soldiers agreed to return to barracks. GMA,
however, did not immediately lift the declaration of a state of rebellion, only doing so on August 1, 2003 thru Proc NO.
435.

Petitioners:

1. Sanlakas & PM; standing as "petitioners committed to assert, defend, protect, uphold, and promote the rights, interests,
and welfare of the people, especially the poor and marginalized classes and sectors of Philippine society. Petitioners are
committed to defend and assert human rights, including political and civil rights, of the citizens freedom of speech and of
expression under Section 4, Article III of the 1987 Constitution, as a vehicle to publicly ventilate their grievances and
legitimate demands and to mobilize public opinion to support the same; assert that S18, Art7 of the Consti does not
require the declaration of state of rebellion to call out AFP;assert further that there exists no factual basis for the
declaration, mutiny having ceased.

2. SJS; standing as "Filipino citizens, taxpayers, law profs & bar reviewers"; assert that S18, Art7 of the Consti does not
require the declaration of the state of rebellion, declaration a "constitutional anomaly" that misleads because "overzealous
public officers, acting pursuant to such proclamation or general order, are liable to violate the constitutional right of private
citizens"; proclamation is a circumvention of the report requirement under the same S18, Art7, commanding the President
to submit a report to Congress within 48 hours from the proclamation of martial law; presidential issuances cannot be
construed as an exercise of emergency powers as Congress has not delegated any such power to the President

3. members of House; standing as citizens and as Members of the House of Representatives whose rights, powers and
functions were allegedly affected by the declaration of a state of rebellion; the declaration of a state of rebellion is a
"superfluity," and is actually an exercise of emergency powers, such exercise, it is contended, amounts to a usurpation of
the power of Congress granted by S23 (2), Art6 of the Constitution

4. Pimentel; standing as Senator; assails the subject presidential issuances as "an unwarranted, illegal and abusive
exercise of a martial law power that has no basis under the Constitution; petitioner fears that the declaration of a state of
rebellion "opens the door to the unconstitutional implementation of warrantless arrests" for the crime of rebellion

Respondents: SolGen; petitions have been rendered moot by the lifitng of the proclamation; questions standing of
petitioners

ISSUES:

1. whether or not petitioners have standing

2. whether or not case has been rendered moot by the lifting of the proclamation 3. whether or not the proclamation
calling the state of rebellion is proper

RULING: 1. NOT EVERY PETITIONER. only members of the House and Sen Pimentel have standing. Sanlakas & PM
have no standing by analogy with LDP in Lacson v Perez "… petitioner has not demonstrated any injury to itself which
would justify the resort to the Court. Petitioner is a juridical person not subject to arrest. Thus, it cannot claim to be
threatened by a warrantless arrest. Nor is it alleged that its leaders, members, and supporters are being threatened with
warrantless arrest and detention for the crime of rebellion." At best they seek for declaratory relief, which is not in the
original jurisdiction of SC. Even assuming that Sanlakas & PM are "people's organizations" in the language of Ss15-16,
Art13 of the Consti, they are still not endowed with standing for as in Kilosbayan v Morato "These provisions have not
changed the traditional rule that only real parties in interest or those with standing, as the case may be, may invoke the
judicial power. The jurisdiction of this Court, even in cases involving constitutional questions, is limited by the "case and
controversy" requirement of S5,Art8. This requirement lies at the very heart of the judicial function." SJS, though alleging
to be taxpayers, is not endowed with standing since "A taxpayer may bring suit where the act complained of directly
involves the illegal disbursement of public funds derived from taxation.No such illegal disbursement is alleged." Court has
ruled out the doctrine of "transcendental importance" regarding constitutional questions in this particular case. Only
members of Congress, who's (?) powers as provided in the Consti on giving the Pres emergency powers are allegedly
being impaired, can question the legality of the proclamation of the state of rebellion.

3. YES. As a rule, courts do not adjudicate moot cases, judicial power being limited to the determination of "actual
controversies." Nevertheless, courts will decide a question, otherwise moot, if it is "capable of repetition yet
evading review."19 The case at bar is one such case, since prior events (the May 1, 2001 incident when the Pres
also declared a state of rebellion) prove that it can be repeated. 3. YES. S18, Art 7 grants the President, as
Commander-in-Chief, a "sequence" of "graduated power[s]." From the most to the least benign, these are: the
calling out power, the power to suspend the privilege of the writ of habeas corpus, and the power to declare
martial law. In the exercise of the latter two powers, the Constitution requires the concurrence of two conditions,
namely, an actual invasion or rebellion, and that public safety requires the exercise of such power. However, as
we observed in Integrated Bar of the Philippines v. Zamora, "[t]hese conditions are not required in the exercise of
the calling out power. The only criterion is that 'whenever it becomes necessary,' the President may call the
armed forces 'to prevent or suppress lawless violence, invasion or rebellion.'"Nevertheless, it is equally true that
S18, Art7 does not expressly prohibit the President from declaring a state of rebellion. Note that the Constitution
vests the President not only with Commander-in-Chief powers but, first and foremost, with Executive powers. The
ponencia then traced the evolution of executive power in the US (Jackson and the South Carolina situation,
Lincoln and teh 'war powers', Cleveland in In re: Eugene Debs) in an effort to show that "the Commander-in-Chief
powers are broad enough as it is and become more so when taken together with the provision on executive power
and the presidential oath of office. Thus, the plenitude of the powers of the presidency equips the occupant with
the means to address exigencies or threats which undermine the very existence of government or the integrity of
the State." This, plus Marcos v Manglapus on residual powers, the Rev Admin Code S4, Ch2, Bk3 on the
executive power of the Pres to declare a certain status, argue towards the validity of the proclamation. However,
the Court maintains that the declaration is devoid of any legal significance for being superflous. Also, the mere
declaration of a state of rebellion cannot diminish or violate constitutionally protected rights. if a state of martial
law does not suspend the operation of the Constitution or automatically suspend the privilege of the writ of habeas
corpus,61 then it is with more reason that a simple declaration of a state of rebellion could not bring about these
conditions. Apprehensions that the military and police authorities may resort to warrantless arrests are likewise
unfounded. In Lacson vs. Perez, supra, majority of the Court held that "[i]n quelling or suppressing the rebellion,
the authorities may only resort to warrantless arrests of persons suspected of rebellion, as provided under Section
5, Rule 113 of the Rules of Court,63 if the circumstances so warrant. The warrantless arrest feared by petitioners
is, thus, not based on the declaration of a 'state of rebellion.'"64 In other words, a person may be subjected to a
warrantless arrest for the crime of rebellion whether or not the President has declared a state of rebellion, so long
as the requisites for a valid warrantless arrest are present. The argument that the declaration of a state of
rebellion amounts to a declaration of martial law and, therefore, is a circumvention of the report requirement, is a
leap of logic. There is no illustration that the President has attempted to exercise or has exercised martial law
powers. Finally, Nor by any stretch of the imagination can the declaration constitute an indirect exercise of
emergency powers, which exercise depends upon a grant of Congress pursuant to S23 (2), Art6 of the
Constitution. The petitions do not cite a specific instance where the President has attempted to or has exercised
powers beyond her powers as Chief Executive or as Commander-in-Chief. The President, in declaring a state of
rebellion and in calling out the armed forces, was merely exercising a wedding of her Chief Executive and
Commander-in-Chief powers. These are purely executive powers, vested on the President by S1 & 18, Art7, as
opposed to the delegated legislative powers contemplated by Section 23 (2), Article VI.

4. EN BANC
 [G.R. No. 108399. July 31, 1997]

RAFAEL M. ALUNAN III, in his capacity as Secretary of the Department of Interior and Local Government (DILG),
the BOARD OF ELECTION SUPERVISORS composed of Atty. RUBEN M. RAMIREZ, Atty. RAFAELITO
GARAYBLAS, and Atty. ENRIQUE C. ROA, GUILLERMINA RUSTIA, in her capacity as Director of the Barangay
Bureau, City Treasurer Atty. ANTONIO ACEBEDO, Budget Officer EUFEMIA DOMINGUEZ, all of the City
Government of Manila, petitioners, vs. ROBERT MIRASOL, NORMAN T. SANGUYA, ROBERT DE JOYA, ARNEL R.
LORENZO, MARY GRACE ARIAS, RAQUEL L. DOMINGUEZ, LOURDES ASENCIO, FERDINAND ROXAS, MA.
ALBERTINA RICAFORT,and BALAIS M. LOURICH, and the HONORABLE WILFREDO D. REYES,Presiding Judge
of the Regional Trial Court, Branch 36, Metro Manila, respondents.

5. D E C I S I O N
MENDOZA, J.:

This is a petition for review on certiorari of the decision dated January 19, 1993 of the Regional Trial Court of Manila
(Branch 36),[1] nullifying an order of the Department of Interior and Local Government (DILG), which in effect cancelled the
general elections for the Sangguniang Kabataan (SK) slated on December 4, 1992 in the City of Manila, on the ground
that the elections previously held on May 26, 1990 served the purpose of the first elections for the SK under the Local
Government Code of 1991 (R.A. No. 7160).
Section 423 of the Code provides for a SK in every barangay, to be composed of a chairman, seven (7) members, a
secretary, and a treasurer. Section 532(a) provides that the first elections for the SK shall be held thirty (30) days after the
next local elections. The Code took effect on January 1, 1992.
The first local elections under the Code were held on May 11, 1992. Accordingly, on August 27, 1992, the Commission on
Elections issued Resolution No. 2499, providing guidelines for the holding of the general elections for the SK on
September 30, 1992. The guidelines placed the SK elections under the direct control and supervision of the DILG, with
the technical assistance of the COMELEC.[2] After two postponements, the elections were finally scheduled on December
4, 1992.
Accordingly, registration in the six districts of Manila was conducted. A total of 152,363 youngsters, aged 15 to 21 years
old, registered, 15,749 of them filing certificates of candidacies.The City Council passed the necessary appropriations for
the elections.
On September 18, 1992, however, the DILG, through then Secretary Rafael M. Alunan III, issued a letter-resolution
exempting the City of Manila from holding elections for the SK on the ground that the elections previously held on May 26,
1990 were to be considered the first under the newly-enacted Local Government Code.  The DILG acted on a letter of
Joshue R. Santiago, acting president of the KB City Federation of Manila and a member of City Council of Manila, which
called attention to the fact that in the City of Manila elections for the Kabataang Barangay (the precursor of the
Sangguniang Kabataan) had previously been held on May 26, 1990. In its resolution, the DILG stated:

[A] close examination of . . . RA 7160 would readily reveal the intention of the legislature to exempt from the forthcoming
Sangguniang Kabataan elections those kabataang barangay chapters which may have conducted their elections within
the period of January 1, 1988 and January 1, 1992 under BP 337. Manifestly the term of office of those elected KB
officials have been correspondingly extended to coincide with the term of office of those who may be elected under RA
7160.

On November 27, 1992 private respondents, claiming to represent the 24,000 members of the Katipunan ng Kabataan,
filed a petition for certiorari and mandamus in the RTC of Manila to set aside the resolution of the DILG. They argued that
petitioner Secretary of Interior and Local Government had no power to amend the resolutions of the COMELEC calling for
general elections for SKs and that the DILG resolution in question denied them the equal protection of the laws.
On November 27, 1992, the trial court, through Executive Judge, now COMELEC Chairman, Bernardo P. Pardo, issued
an injunction, ordering petitioners to desist from implementing the order of the respondent Secretary dated September 18,
1992, . . . until further orders of the Court. On the same day, he ordered petitioners to perform the specified pre-election
activities in order to implement Resolution No. 2499 dated August 27, 1992 of the Commission on Elections providing for
the holding of a general election of the Sangguniang Kabataan on December 4, 1992 simultaneously in every barangay
throughout the country.
The case was subsequently reraffled to Branch 36 of the same court. On January 19, 1993, the new judge, Hon. Wilfredo
D. Reyes, rendered a decision, holding that (1) the DILG had no power to exempt the City of Manila from holding SK
elections on December 4, 1992 because under Art. IX, C, 2(1) of the Constitution the power to enforce and administer all
laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall is vested solely in
the COMELEC; (2) the COMELEC had already in effect determined that there had been no previous elections for KB by
calling for general elections for SK officers in every barangay without exception; and (3) the exemption of the City of
Manila was violative of the equal protection clause of the Constitution because, according to the DILGs records, in 5,000
barangays KB elections were held between January 1, 1988 and January 1, 1992 but only in the City of Manila, where
there were 897 barangays, was there no elections held on December 4, 1992.
Petitioners sought this review on certiorari. They insist that the City of Manila, having already conducted elections for the
KB on May 26, 1990, was exempted from holding elections on December 4, 1992.  In support of their contention, they cite
532(d) of the Local Government Code of 1991, which provides that:

All seats reserved for the pederasyon ng mga sangguniang kabataan in the different sanggunians shall be deemed vacant
until such time that the sangguniang kabataan chairmen shall have been elected and the respective pederasyon
presidents have been selected: Provided, That, elections for the kabataang barangay conducted under Batas Pambansa
Blg. 337 at any time between January 1, 1988 and January 1, 1992 shall be considered as the first elections provided for
in this Code. The term of office of the kabataang barangay officials elected within the said period shall be extended
correspondingly to coincide with the term of office of those elected under this Code. (emphasis added)

They maintain that the Secretary of the DILG had authority to determine whether the City of Manila came within the
exception clause of 532(d) so as to be exempt from holding the elections on December 4, 1992.
The preliminary question is whether the holding of the second elections on May 13, 1996 [3] rendered this case moot and
academic. There are two questions raised in this case. The first is whether the Secretary of Interior and Local Government
can exempt a local government unit from holding elections for SK officers on December 4, 1992 and the second is
whether the COMELEC can provide that the Department of Interior and Local Government shall have direct control and
supervision over the election of sangguniang kabataan with the technical assistance by the Commission on Elections.
We hold that this case is not moot and that it is in fact necessary to decide the issues raised by the parties.  For one thing,
doubt may be cast on the validity of the acts of those elected in the May 26, 1990 KB elections in Manila because this
Court enjoined the enforcement of the decision of the trial court and these officers continued in office until May 13,
1996. For another, this case comes within the rule that courts will decide a question otherwise moot and academic if it is
capable of repetition, yet evading review. [4] For the question whether the COMELEC can validly vest in the DILG the
control and supervision of SK elections is likely to arise in connection with every SK election and yet the question may not
be decided before the date of such elections.
In the Southern Pacific Terminal case, where the rule was first articulated, appellants were ordered by the Interstate
Commerce Commission to cease and desist from granting a shipper what the ICC perceived to be preferences and
advantages with respect to wharfage charges. The cease and desist order was for a period of about two years, from
September 1, 1908 (subsequently extended to November 15), but the U.S. Supreme Court had not been able to hand
down its decision by the time the cease and desist order expired. The case was decided only on February 20, 1911, more
than two years after the order had expired. Hence, it was contended that the case had thereby become moot and the
appeal should be dismissed. In rejecting this contention, the Court held:

The question involved in the orders of the Interstate Commerce Commission are usually continuing (as are manifestly
those in the case at bar), and these considerations ought not to be, as they might be, defeated, by short-term orders,
capable of repetition, yet evading review, and at one time the government, and at another time the carriers, have their
rights determined by the Commission without a chance of redress. [5]

In Roe v. Wade,[6] petitioner, a pregnant woman, brought suit in 1970 challenging anti-abortion statutes of Texas and
Georgia on the ground that she had a constitutional right to terminate her pregnancy at least within the first trimester. The
case was not decided until 1973 when she was no longer pregnant. But the U.S. Supreme Court refused to dismiss the
case as moot. It was explained: [W]hen, as here, pregnancy is a significant fact in the litigation, the normal 266-day
human gestation period is so short that the pregnancy will come to term before the usual appellate process is complete. If
that termination makes a case moot, pregnancy litigation seldom will survive. Our laws should not be that rigid. Pregnancy
provides a classic justification for a conclusion of nonmootness. It truly could be capable of repetition, yet evading review.
[7]
We thus reach the merits of the questions raised in this case. The first question is whether then DILG Secretary Rafael M.
Alunan III had authority to determine whether under 532(d) of the Local Government Code, the City of Manila was
required to hold its first elections for SK. As already stated, petitioners sustain the affirmative side of the proposition. On
the other hand, respondents argue that this is a power which Art.IX,C, 2(1) of the Constitution vests in the
COMELEC. Respondents further argue that, by mandating that elections for the SK be held on December 4, 1992 in
every barangay, the COMELEC in effect determined that there had been no elections for the KB previously held in the
City of Manila.
We find the petition to be meritorious.
First. As already stated, by 4 of Resolution No. 2499, the COMELEC placed the SK elections under the direct control and
supervision of the DILG. Contrary to respondents contention, this did not contravene Art. IX, C, 2(1) of the Constitution
which provides that the COMELEC shall have the power to enforce and administer all laws and regulations relative to the
conduct of an election, plebiscite, initiative, referendum, and recall. Elections for SK officers are not subject to the
supervision of the COMELEC in the same way that, as we have recently held, contests involving elections of SK officials
do not fall within the jurisdiction of the COMELEC. In Mercado v. Board of Election Supervisors,[8] it was contended that
COMELEC Resolution No. 2499 is null and void because: (a) it prescribes a separate set of rules for the election of
the SK Chairman different from and inconsistent with that set forth in the Omnibus Election Code, thereby
contravening Section 2, Article 1 of the said Code which explicitly provides that it shall govern all elections of public
officers; and, (b) it constitutes a total, absolute, and complete abdication by the COMELEC of its constitutionally
and statutorily mandated duty to enforce and administer all election laws as provided for in Section 2(1), Article IX-
C of the Constitution; Section 52, Article VIII of the Omnibus Election Code; and Section 2, Chapter 1, Subtitle C,
Title 1, Book V of the 1987 Administrative Code.[9]
Rejecting this contention, this Court, through Justice Davide, held:

Section 252 of the Omnibus Election Code and that portion of paragraph (2), Section 2, Article IX-C of the Constitution on
the COMELECs exclusive appellate jurisdiction over contests involving elective barangay officials refer to the elective
barangay officials under the pertinent laws in force at the time the Omnibus Election Code was enacted and upon the
ratification of the Constitution. That law was B.P. Blg. 337, otherwise known as the Local Government Code, and the
elective barangay officials referred to were the punong barangay and the six sangguniang bayan members. They were to
be elected by those qualified to exercise the right of suffrage. They are also the same officers referred to by the provisions
of the Omnibus Election Code of the Philippines on election of barangay officials. Metropolitan and municipal trial courts
had exclusive original jurisdiction over contests relating to their election. The decisions of these courts were appealable to
the Regional Trial Courts.

. .

In the light of the foregoing, it is indisputable that contests involving elections of SK (formerly KB) officials do not fall within
Section 252 of the Omnibus Election Code and paragraph 2, Section 2, Article IX-C of the Constitution and that no law in
effect prior to the ratification of the Constitution had made the SK chairman an elective barangay official. His being an ex-
officio member of the sangguniang barangay does not make him one for the law specifically provides who are its elective
members, viz., the punong barangay and the seven regular sangguniang barangay members who are elected at large by
those who are qualified to exercise the right of suffrage under Article V of the Constitution and who are duly registered
voters of the barangay.[10]

The choice of the DILG for the task in question was appropriate and was in line with the legislative policy evident in
several statutes. Thus, P.D. No. 684 (April 15, 1975), in creating Kabataang Barangays in every barangay throughout the
country, provided in 6 that the Secretary of Local Government and Community Development shall promulgate such rules
and regulations as may be deemed necessary to effectively implement the provisions of this Decree. Again, in 1985
Proclamation No. 2421 of the President of the Philippines, in calling for the general elections of the Kabataang Barangay
on July 13-14, 1985, tasked the then Ministry of Local Government, the Ministry of Education, Culture and Sports, and the
Commission on Elections to assist the Kabataang Barangay in the conduct of the elections.  On the other hand, in a
Memorandum Circular dated March 7, 1988, President Corazon C. Aquino directed the Secretary of Local Government to
issue the necessary rules and regulations for effecting the representation of the Kabataang Barangay, among other
sectors, in the legislative bodies of the local government units.
The role of the COMELEC in the 1992 elections for SK officers was by no means inconsequential.  DILG supervision was
to be exercised within the framework of detailed and comprehensive rules embodied in Resolution No. 2499 of the
COMELEC. What was left to the DILG to perform was the enforcement of the rules.
Second.  It is contended that, in its resolution in question, the COMELEC did not name the barangays which, because they
had conducted kabataang barangay elections between January 1, 1988 and January 1, 1992, were not included in the SK
elections to be held on December 4, 1992. That these barangays were precisely to be determined by the DILG is,
however, fairly inferable from the authority given to the DILG to supervise the conduct of the elections. Since 532(d)
provided for kabataang barangay officials whose term of office was extended beyond 1992, the authority to supervise the
conduct of elections in that year must necessarily be deemed to include the authority to determine which kabataang
barangay would not be included in the 1992 elections.

6. The authority granted was nothing more than the ascertainment of a fact, namely, whether between January 1,
1988 and January 1, 1992 elections had been held in a given kabataang barangay.  If elections had been
conducted, then no new elections had to be held on December 4, 1992 since by virtue of 532(d) the term of office
of the kabataang barangay officials so elected was extended correspondingly to coincide with the term of office of
those elected under [the Local Government Code of 1991]. In doing this, the Secretary of Interior and Local
Government was to act merely as the agent of the legislative department, to determine and declare the event
upon which its expressed will was to take effect. [11] There was no undue delegation of legislative power but only of
the discretion as to the execution of a law. That this is constitutionally permissible is the teaching of our cases. [12]
7. Third. Respondents claim, however, that the May 26, 1990 KB elections in Manila were void because (a) they
were called at the instance of then Mayor Gemiliano C. Lopez who did not have authority to do so and (b) it was
not held under COMELEC supervision.
8. The 1990 elections for the Kabataang Barangay were called by then Manila Mayor Gemiliano C. Lopez, Jr., who
in his Executive Order No. 21 dated April 25, 1990 stated:

9. WHEREAS, the Kabataang Barangay as an organization provided for under Batas Pambansa Bilang 337, has
been practically dormant since the advent of the present national administration;

10. WHEREAS, there is an urgent need to involve the youth in the affairs and undertakings of the government to
ensure the participation of all sectors of our population in the task of nation building;

11. WHEREAS, the last elections for the Kabataang Barangay officers were held in November 1985 yet, which is over
their three years term of office;

12. WHEREAS, most of the present crop of KB officers are way past the age limit provided for under the law;

13. . . . .
14. The elections were actually held on May 26, 1990 in the 897 barangays of Manila.  Later, on June 30, 1990, KB
City Federation elections were conducted.

15. It was precisely to foreclose any question regarding the validity of KB elections held in the aftermath of the EDSA
revolution and upon the effectivity of the new Local Government Code that the exception clause of 532(d) was
inserted. The proceedings of the Bicameral Conference Committee which drafted the Code show the following: [13]
16. CHAIRMAN DE PEDRO: Isa-cite na lang ko ano iyong title o chapter o section, ha!
17. HON. LINA: . . .
18. Page 436, lines 13 to 14 delete within eighteen months prior to December 31, 1990, and in lieu thereof, insert
from 1988 up to the effectivity of the Code. The rationale. . . .
19. CHAIRMAN DE PEDRO: How should it be read?
20. HON. LINA: It will read as follows: Provided however, that the Local Government Units which have
conducted elections for the Kabataang Barangay as provided for, in Batas Pambansa Bilang 337,up to the
effectivity. . . .
21. CHAIRMAN DE PEDRO: So, any deletion from the word within, ha, up to. . . .
22. HON. LINA: Remove the words, the phrase, within eighteen months prior to December 31, 1990, and insert
from 1988 up to the effectivity of this Code.
23. CHAIRMAN DE PEDRO: From?
24. HON. LINA: From 1988 up to the effectivity of this Code. Kasi meron nang mga election, eh, na ginawa,
eh. There are five thousand barangays, based on the record of the DILG, out of forty thousand, imagine that,
 na nag-conduct na ng election nila based on the KB Constitution and By-Laws, and theyre sitting already,
now if we do not recognize that, mag[ka]karoon sila ng question.
25. CHAIRMAN DE PEDRO: Accepted, Mr. Chairman.

26. Section 532(d) may thus be deemed to be a curative law. Curative laws, which in essence are retrospective in
effect, are enacted to validate acts done which otherwise would be invalid under existing laws, by considering
them as having complied with the existing laws. Such laws are recognized in this jurisdiction. [14]
27. Fourth. It is finally contended that the exemption of the barangays of the City of Manila from the requirement to
hold elections for SK officers on December 4, 1992 would deny the youth voters in those barangays of the equal
protection of laws. Respondents claim that only in the barangays in the City of Manila, which then numbered 897,
were elections for SK not held in 1992 on the ground that between January 1, 1988 and January 1, 1992 there
had already been SK elections held, when, according to petitioners own evidence, during that period, SK elections
had actually been conducted in 5,000 barangays.
28. Whether this claim is true cannot be ascertained from the records of this case. Merely showing that there were
5,000 barangays which similarly held KB elections between January 1, 1988 and January 1, 1992 does not prove
that despite that fact these same barangays were permitted to hold elections on December 4, 1992. For one thing,
according to the Manila Bulletin issue of November 18, 1992 (p. 9), 568 barangays in the Province of Bulacan did
not have SK elections on December 4, 1992 either, because they already had elections between January 1, 1988
and January 1, 1992. For another, even assuming that only barangays in Manila were not permitted to hold SK
elections on December 4, 1992 while the rest of the 5,000 barangays were allowed even if KB elections had
already been held there before, this fact does not give the youth voters in the 897 Manila barangays ground for
complaint because what the other barangays did was contrary to law. There is no discrimination here.

29. In People v. Vera[15]  this Court struck down the Probation Law because it permitted unequal application of its
benefits by making its applicability depend on the decision of provincial governments to appropriate or not to
appropriate funds for the salaries of probation officers, with the result that those not disposed to allow the benefits
of probations to be enjoyed by their inhabitants could simply omit to provide for the salaries of probation
officers. The difference between that case and the one at bar lies in the fact that what youth voters in the other
barangays might have been allowed was not a right which was denied to youth voters in Manila.  If those
barangays were not entitled to have SK elections on December 4, 1992 but nevertheless were allowed to have
such elections, that fact did not mean those in Manila should similarly have been allowed to conduct elections on
December 4, 1992 because the fact was that they already had their own, just two years before on May 26, 1990.
Respondents equal protection argument violates the dictum that one wrong does not make another wrong right.
30. WHEREFORE, the decision of the Regional Trial Court of Manila, Branch 36 is REVERSED and the case filed
against petitioner by private respondents is DISMISSED.
31. SO ORDERED.
32. Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Francisco, Hermosisima,
Jr.,  and Panganiban, JJ., concur.
33. Narvasa, C.J., and Torres, Jr., J.,  on leave.

\
FUNA VS DUQUE

The independence of the  Civil Service Commission (CSC) is explicitly mandated under Section 1 of  Article IX-A of the
1987 Constitution. Section 2, Article IX-A of the 1987 Constitution prohibits its Members, during their tenure, from holding
any other office or employment.

Facts: On January 11, 2010, then President Arroyo appointed Duque as Chairman of the CSC. The Commission on
Appointments confirmed Duque’s appointment on February 3, 2010. Pursuant to EO 864, Duque was designated as a
member of the Board of Directors or Trustees of the following government-owned or government- controlled corporations
(GOCCs): (a) GSIS; (b) PHILHEALTH;(c) ECC; and (d) HDMF.

Petitioner: Funa, in his capacity as taxpayer, concerned citizen and lawyer, filed the instant petition challenging the
constitutionality of EO 864, as well as Section 14, Chapter 3, Title I-A, Book V of Executive Order No. 292 (EO 292),
otherwise known as The Administrative Code of 1987, and the designation of Duque as a member of the Board of
Directors or Trustees of the GSIS, PHIC, ECC and HDMF for being clear violations of Section 1 and Section 2, Article IX-
A of the 1987 Constitution.

Petitioner asserts that these provisions violate the independence of the CSC, which was constitutionally created to be
protected from outside influences and political pressures due to the significance of its government functions.  Such
independence is violated by the fact that the CSC is not a part of the Executive  Branch of Government while the
concerned GOCCs are considered instrumentalities of the Executive Branch of the Government. In this situation, the
President may exercise his power of control over the CSC considering that the GOCCs in which Duque sits as Board
member are attached to the Executive Department.

It violates the prohibition imposed upon members of constitutional commissions from holding any other office or
employment. A conflict of interest may arise in the event that a Board decision of the GSIS, PHILHEALTH, ECC and
HDMF concerning personnel-related matters is elevated to the CSC considering that such GOCCs have original charters,
and their employees are governed by CSC laws, rules and regulations. 
 
Respondents: Respondents insist that EO 864 and Section 14, Chapter 3, Title I-A, Book V of EO 292, as well as
the charters of the GSIS, PHILHEALTH, ECC and HDMF, are consistent with each other. While the charters of these
GOCCs do not provide that CSC Chairman shall be a member of their respective governing Boards, there islikewise no
prohibition mentioned under said charters. EO 864, issued in conformity with Section 14, Chapter 3, Title I-A, Book V of
EO 292, could not have impliedly amended the charters of the GSIS, PHILHEALTH, ECC and HDMF because the former
relates to the law on the CSC while the latter involve the creation and incorporation of the respective GOCCs.  As their
subject matters differ from each other, the enactment of the subsequent law is not deemed to repeal or amend
the charters of the GOCCs, being considered prior laws.

Issue: Does the designation of Duque as member of the Board of Directors or Trustees of the GSIS, PHILHEALTH, ECC
and HDMF, in an ex officio capacity, impair the independence of the CSC and violate the constitutional prohibition against
the holding of dual or multiple offices for the Members of the Constitutional Commissions?

Held: The Court upholds the constitutionality of Section 14, Chapter 3, Title I-A, Book V of EO 292, but declares
unconstitutional EO 864 and the designation of Duque in an ex officio capacity as a member of the Board of Directors or
Trustees of the GSIS, PHILHEALTH, ECC and HDMF.

Section 1 and Section 2, Article IX-A of the 1987 Constitution, which provide: Section 1. The Constitutional Commissions,
which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on
Audit.

Section 2, Article IX-A of the Constitution certain inhibitions and disqualifications upon the Chairmen and members to
strengthen their integrity, to wit:
(a) Holding any other office or employment during their tenure;
(b) Engaging in the practice of any profession;
(c) Engaging in the active management or control of any business which in any way may be affected by the functions of
his office; and
(d) Being financially interested, directly or indirectly, in any contract with, or in any franchise or privilege granted by the
Government, any of its subdivisions, agencies or instrumentalities, including government-owned or – controlled
corporations or their subsidiaries. 
 
The issue herein involves the first disqualification abovementioned, which is the disqualification from holding any other
office or employment during Duque’s tenure as Chairman of the CSC. The Court finds it imperative to interpret this
disqualification in relation to Section 7, paragraph (2), Article IX-B of the Constitution Section 7, paragraph (2),Article IX-B
reads:

Section 7.
Unless otherwise allowed by law or the primary functions of his position, no appointive officialshall hold any other office or
employment in the Government or any subdivision, agency or instrumentality thereof, including government-owned or
controlled corporations or their subsidiaries.

Thus, while all other appointive officials in the civil service are allowed to hold other office or employment in the
government during their tenure when such is allowed by law or by the primary functions of their positions, members of the
Cabinet, their deputies and assistants may do so only when expressly authorized by the Constitution itself. In other words,
Section 7, Article IX-B is meant to lay down the general rule applicable to all elective and appointive public officials and
employees, while Section 13, Article VII is meant to be the exception applicable only to the President, the Vice-President,
Members of the Cabinet, their deputiesand assistants.

Since the evident purpose of the framers of the 1987 Constitution is to impose a stricter prohibition on the President, Vice-
President, members of the Cabinet, their deputies and assistants with respect to holding multiple offices or employment in
the government during their tenure, the exception to this prohibition must be read with equal severity. On its face, the
language of Section 13, Article VII is prohibitory so that it must be understood as intended to be a positive and
unequivocal negation of the privilege of holding multiple government officesor employment. 
 
Being an appointive public official who does not occupy a Cabinet position (i.e., President, the Vice-President, Members
of the Cabinet, their deputies and assistants), Duque was thus covered by the general rule enunciated under Section 7,
paragraph (2), Article IX-B. He can hold any other office or employment in the Government during his tenure if such
holding is allowed by law or by the primary functions of his position.

The Court also notes that Duque’s designation as member of the governing Boards of the GSIS, PHILHEALTH, ECC and
HDMF entitles him to receive per diem, a form of additional compensation that is disallowed by the concept of an ex officio
position by virtue of its clear contravention of the proscription set by Section 2, Article IX-A of the 1987 Constitution. This
situation goes against the principle behind an ex officio position, and must, therefore, be held unconstitutional.

Apart from violating the prohibition against holding multiple offices, Duque’s designation as member of the governing
Boards of the GSIS, PHILHEALTH, ECC and HDMF impairs the independence of the CSC. Under Section 17, Article VII
of the Constitution, the President exercises control over all government offices in the Executive Branch. An office that is
legally not under the control of the President is not part of the Executive Branch.

The Court holds that all official actions of Duque as a Director or Trustee of the GSIS, PHILHEAL TH, ECC and HDMF,
were presumed valid, binding and effective as if he was the officer legally appointed and qualified for the office. This
clarification is necessary in order to protect the sanctity and integrity of the dealings by the public with persons whose
ostensible authority emanates from the State. Duque's official actions covered by this clarification extend but are not
limited to the issuance of Board resolutions and memoranda approving appointments to positions in the concerned
GOCCs, promulgation of policies and guidelines on compensation and employee benefits, and adoption of programs to
carry out the corporate powers of the GSIS, PHILHEAL TH, ECC and HDMF.

Notes:

 Power of judicial review in cases otherwise rendered moot and academic by supervening events on the basis of
certain recognized exceptions, namely:

(1) there is a grave violation of the Constitution;

(2) the case involves a situation of exceptional character and is of paramount public interest;
(3) the constitutional issue raised requires the formulation of controlling principles to guide the Bench, the Bar and the
public; and
(4) the case is capable of repetition yet evading review.

 A de jure officer is one who is deemed, in all respects, legally appointed and qualified and whose term of office
has not expired.
 A de facto officer is one who derives his appointment from one having colorable authority to appoint, if the office
is an appointive office, and whose appointment is valid on its face. He may also be one who is in possession of an
office, and is discharging its duties under color of authority, by which is meant authority derived from an
appointment, however irregular or informal, so that the incumbent is not a mere volunteer. 

Consequently, the acts of the de facto officer are just as valid for all purposes as those of a de jure officer, in so far as the
public or third persons who are interested therein are concerned.

omeo Acop Vs Teofisto Guingona

G.R. No. 134855 July 2, 2002
Ponente: Austria-Martinez, J.
Facts:
On May 18, 1995, eleven (11) suspected members of the criminal group known as the Kuratong
Baleleng gang were killed along Commonwealth Avenue in Quezon City in an alleged shootout with the Anti-
Bank Robbery Intelligence Task Group of the Philippine National Police (PNP). SPO2 Eduardo delos Reyes, a
member of the Criminal Investigation Command (CIC) of the PNP and who was one of the officers assigned to
conduct an investigation on the incident, made a public disclosure of his findings that there was no shootout
and the eleven (11) suspected members of the gang were summarily executed. This was attested by SPO2
Corazon dela Cruz, also a member of the CIC.
The senate conducted hearings to determine the circumstances surrounding the subject incident and
SPO2 delos Reyes and SPO2 dela Cruz testified before the Senate hearings. On June 2, 1995, former Senator
Raul Roco, who was then the Chairman of the Senate Committee on Justice and Human Rights, recommended
that SPO2 delos Reyes and SPO2 dela Cruz be admitted to the government’s Witness Protection, Security and
Benefit Program. Accordingly, they were admitted into the said Program.
Herein petitioners, in their capacity as tax payers, but who are among the PNP officers implicated in
the alleged rubout, contend that under Sec. 3(d) for R.A. No. 6981, law enforcement officres, like SPO2 delos
Reyes and SPO2 dela Cruz, are disqualified from being admitted into the witness protection program even
though they may be testifying against other law enforcement officers. Petitioners pray that the decision of the
RTC be reversed and set aside and instead – “ a) An injunction be issued enjoining the Department of Justice
from continuing to provide the benefits accruing under the Witness Protection Program to respondents SPO2
delos Reyes and SPO2 dela Cruz; b) Order the immediate discharge of respondent SPO2 delos Reyes and
SPO2 dela Cruz from WPP and for the latter to be ordered to cease and desist from accepting benefits of the
WPP; and c) Order respondent officers to return whatever monetary benefits they have received from the
government as a consequence of their wrongful and illegal admission into the WPP”.
Issue: Whether the petition for judicial review should prosper.
Held:
In its comment, the Office of the Solicitor General (OSG) claims that the petition lacks merit and that
the same has been rendered moot and academic because the coverage of SPO2 delos Reyes and SPO2 dela
Cruz under the Program was already terminated on December 3, 1997 and August 23, 1998, respectively, as
evidenced by the letter of the Director of the Program addressed to OSG, dated February 10, 1999. In their
comment, private respondents SPO2 delos Reyes and SPO2 dela Cruz agree with OSG. Indeed, prayers a) and
b) above had been rendered moot and academic by reason of the release of SPO2 delos Reyes and SPO2 dela
Cruz from the coverage of the Program.
However, we find it necessary to resolve the merits of the principal issue raised for a proper
disposition of prayer c) for future guidance of both bench and bar as to the applications of Sec. 3(d) and 4 of
R.A. No. 6981. As we have ruled in Alunan III vs. Mirasol, 276 SCRA 501 (1997), and Viola vs Alunan III
277 SCRA409 (1997), “courts will decide a question otherwise moot and academic if it is capable of
repetition, yet evading review.
ARAULLO VS AQUINO

When President Benigno Aquino III took office, his administration noticed the sluggish growth of the economy. The World
Bank advised that the economy needed a stimulus plan. Budget Secretary Florencio “Butch” Abad then came up with a
program called the Disbursement Acceleration Program (DAP).
The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the Executive to realign
funds from slow moving projects to priority projects instead of waiting for next year’s appropriation. So what happens
under the DAP was that if a certain government project is being undertaken slowly by a certain executive agency, the
funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared as “savings” by the
Executive and said funds will then be reallotted to  other priority projects. The DAP program did work to stimulate the
economy as economic growth was in fact reported and portion of such growth was attributed to the DAP (as noted by the
Supreme Court).
Other sources of the DAP include the unprogrammed funds from the General Appropriations Act (GAA). Unprogrammed
funds are standby appropriations made by Congress in the GAA.
Meanwhile, in September 2013, Senator Jinggoy Estrada made an exposé claiming that he, and other Senators, received
Php50M from the President as an incentive for voting in favor of the impeachment of then Chief Justice Renato Corona.
Secretary Abad claimed that the money was taken from the DAP but was disbursed upon the request of the Senators.
This apparently opened a can of worms as it turns out that the DAP does not only realign funds within the Executive. It
turns out that some non-Executive projects were also funded; to name a few: Php1.5B for the CPLA (Cordillera People’s
Liberation Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the Quezon Province, P50-P100M
for certain Senators each, P10B for Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan, and several other concerned
citizens to file various petitions with the Supreme Court questioning the validity of the DAP. Among their contentions was:
DAP is unconstitutional because it violates the constitutional rule which provides that “no money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.”
Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation provisions
thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of Executive Order
292 (power of the President to suspend expenditures and authority to use savings, respectively).
Issues:
I. Whether or not the DAP violates the principle “no money shall be paid out of the Treasury except in pursuance of an
appropriation made by law” (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as impoundments by the executive.
III. Whether or not the DAP realignments/transfers are constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program by the Executive and
is not a fund nor is it an appropriation. It is a program for prioritizing government spending. As such, it did not violate the
Constitutional provision cited in Section 29(1), Art. VI of the Constitution. In DAP no additional funds were withdrawn from
the Treasury otherwise, an appropriation made by law would have been required. Funds, which were already appropriated
for by the GAA, were merely being realigned via the DAP.
II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the President’s power to refuse to
spend appropriations or to retain or deduct appropriations for whatever reason. Impoundment is actually prohibited by the
GAA unless there will be an unmanageable national government budget deficit (which did not happen).  Nevertheless,
there’s no impoundment in the case at bar because what’s involved in the DAP was the transfer of funds.
III. No, the transfers made through the DAP were unconstitutional. It is true that the President (and even the heads of the
other branches of the government) are allowed by the Constitution to make realignment of funds, however, such transfer
or realignment should only be made “within their respective offices”. Thus, no cross-border transfers/augmentations may
be allowed. But under the DAP, this was violated because funds appropriated by the GAA for the Executive were being
transferred to the Legislative and other non-Executive agencies.
Further, transfers “within their respective offices” also contemplate realignment of funds to an existing project in the GAA.
Under the DAP, even though some projects were within the Executive, these projects are non-existent insofar as the GAA
is concerned because no funds were appropriated to them in the GAA. Although some of these projects may be
legitimate, they are still non-existent under the GAA because they were not provided for by the GAA. As such, transfer to
such projects is unconstitutional and is without legal basis.
On the issue of what are “savings”
These DAP transfers are not “savings” contrary to what was being declared by the Executive. Under the definition of
“savings” in the GAA, savings only occur, among other instances, when there is an excess in the funding of a certain
project once it is completed, finally discontinued, or finally abandoned. The GAA does not refer to “savings” as funds
withdrawn from a slow moving project. Thus, since the statutory definition of savings was not complied with under the
DAP, there is no basis at all for the transfers.  Further, savings should only be declared at the end of the fiscal year. But
under the DAP, funds are already being withdrawn from certain projects in the middle of the year and then being declared
as “savings” by the Executive particularly by the DBM.
IV. No. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the law, such
funds may only be used if there is a certification from the National Treasurer to the effect that the revenue collections have
exceeded the revenue targets. In this case, no such certification was secured before unprogrammed funds were used.
V. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being declared as
unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped stimulate the economy. It has funded
numerous projects. If the Executive is ordered to reverse all actions under the DAP, then it may cause more harm than
good. The DAP effects can no longer be undone. The beneficiaries of the DAP cannot be asked to return what they
received especially so that they relied on the validity of the DAP. However, the Doctrine of Operative Fact may not be
applicable to the authors, implementers, and proponents of the DAP if it is so found in the appropriate tribunals (civil,
criminal, or administrative) that they have not acted in good faith.
 
OPLE VS TORRES

FACTS:This is a petition raised by Senator Blas Ople to invalidate the Administrative Order No. 308 or the Adoption of a
National Computerized Identification Reference System issued by President Fidel V. Ramos.

The petitioner contends that the implementation of the said A.O. will violate the rights of the citizens of privacy as
guaranteed by the Constitution.

ISSUE:

Whether or not A.O. No. 308 violates the right of privacy.

HELD:

Yes.

The right to privacy as such is accorded recognition independently of its identification with liberty; in itself, it is fully
deserving of constitutional protection.

The right of privacy is guaranteed in several provisions of the Constitution:

"Sections 3 (1), 1, 2, 6, 8 and 17 of the Bill of Rights

"Sec. 3. The privacy of communication and correspondence shall be inviolable except upon lawful order of the court, or
when public safety or order requires otherwise as prescribed by law."

"Sec. 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws."

"Sec. 2. 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 be inviolable, and no search warrant or warrant of arrest shall
issue except upon probable cause to be determined personally by the judge 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."

"Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law shall not be impaired except
upon lawful order of the court. Neither shall the right to travel be impaired except in the interest of national security, public
safety, or public health, as may be provided by law."

"Sec. 8. The right of the people, including those employed in the public and private sectors, to form unions, associations,
or societies for purposes not contrary to law shall not be abridged."

"Sec. 17. No person shall be compelled to be a witness against himself."

The right to privacy is a fundamental right guaranteed by the Constitution, hence, it is the burden of government to show
that A.O. No. 308 is justified by some compelling state interest and that it is narrowly drawn. A.O. No. 308 is predicated on
two considerations: (1) the need to provide our citizens and foreigners with the facility to conveniently transact business
with basic service and social security providers and other government instrumentalities and (2) the need to reduce, if not
totally eradicate, fraudulent transactions and misrepresentations by persons seeking basic services. It is debatable
whether these interests are compelling enough to warrant the issuance of A.O. No. 308.

But what is not arguable is the broadness, the vagueness, the overbreadth of A.O. No. 308 which if implemented will put
our people's right to privacy in clear and present danger. The possibilities of abuse and misuse of the PRN, biometrics
and computer technology are accentuated when we consider that the individual lacks control over what can be read or
placed on his ID, much less verify the correctness of the data encoded. They threaten the very abuses that the Bill of
Rights seeks to prevent.

The petition is granted and declared the Administrative Order No. 308 entitled "Adoption of a National Computerized
Identification Reference System" null and void for being unconstitutional.

Montesclaros vs COMELEC GR N 152295 09 July  2002

11WEDNESDAYMAR 2015

POSTED BY RACHEL CHAN IN CASE DIGESTS, CONSTITUTIONAL LAW I

≈ LEAVE A COMMENT
Facts: The Local Government Code of 1991 renamed the Kabataang Barangay to Sangguniang Kabataan and limited its
membership to youths “at least 15 but no more than 21 years of age.” On 18 February 2002, Antoniette  VC Montesclaros
demanded from COMELEC that SK elections be held as scheduled on 6 May 2002. COMELEC Chairman Alfredo
Benipayo wrote to the House of Representatives and the Senate on 20 February 2002 inquiring on the status of pending
bills on SK and Barangay elections and expressed support to postpone the SK election on November 2002. On 11 March
2002 the Bicameral Committee consolidated Senate Bill 2050 and House Bill 4456, resetting the SK election to 15 July
2002 and lowered the membership age to at least 15 but no more than 18 years of age. This was approved by the Senate
and House of Representative on 11 March and 13 March 2002 respectively and signed by the President on 19 March
2002. The petitioners filed prohibition and mandamus for temporary restraining order seeking the prevention of
postponement of the SK election and reduction of age requirement on 11 March 2002.
Issue: Whether or not the proposed bill is unconstitutional.
Decision: Petition dismissed for utter lack of merit. This petition presents no actual justiciable controversy. Petitioners do
not cite any provision of law that is alleged to be unconstitutional. Petitioner’s perayer to prevent Congress from enacting
into law a proposed bill does not present actual controversy. A proposed bill is not subject to judicial review because it is
not a law. A proposed bill creates no right and imposes no duty legally enforceable by the Court. Having no legal effect it
violates no constitutional right or duty. At the time petitioners filed this petition, RA No. 9164 was not yet enacted into law.
After its passage petitioners failed to assail any provision in RA No. 9164 that could be unconstitutional.
Mariano, Jr. vs. COMELEC G.R. No. 118577, March 7, 1995
Sunday, January 25, 2009 Posted by Coffeeholic Writes 
Labels: Case Digests, Political Law

Facts: Two petitions are filed assailing certain provisions of RA 7854, An Act Converting The Municipality of Makati Into a
Highly Urbanized City to be known as the City of Makati, as unconstitutional.

Section 52 of RA 7854 is said to be unconstitutional for it increased the legislative district of Makati only by special law in
violation of Art. VI, Sec. 5(4) requiring a general reapportionment law to be passed by Congress within 3 years following
the return of every census. Also, the addition of another legislative district in Makati is not in accord with Sec. 5(3), Art. VI
of the Constitution for as of the 1990 census, the population of Makati stands at only 450,000.

Issue: Whether or not the addition of another legislative district in Makati is unconstitutional 

Held: Reapportionment of legislative districts may be made through a special law, such as in the charter of a new city.
The Constitution clearly provides that Congress shall be composed of not more than 250 members, unless otherwise fixed
by law. As thus worded, the Constitution did not preclude Congress from increasing its membership by passing a law,
other than a general reapportionment law. This is exactly what was done by Congress in enacting RA 7854 and providing
for an increase in Makati’s legislative district. Moreover, to hold that reapportionment can only be made through a general
apportionment law, with a review of all the legislative districts allotted to each local government unit nationwide, would
create an inequitable situation where a new city or province created by Congress will be denied
legislative representation for an indeterminate period of time. The intolerable situations will deprive the people of a new
city or province a particle of their sovereignty.

Petitioner cannot insist that the addition of another legislative district in Makati is not in accord with Sec. 5(3), Art. VI of the
Constitution for as of the 1990 census, the population of Makati stands at only 450,000. Said section provides that a city
with a population of at least 250,000 shall have at least one representative. Even granting that the population of Makati as
of the 1990 census stood at 450,000, its legislative district may still be increased since it has met the
minimum population requirement of 250,000. Republic of the Philippines
 SUPREME COURT
Manila

EN BANC

G.R. No. 102940 November 6, 1992

ADELPHA FERNANDEZ, MARISSA DOMINGO, EUNICE OFRECIA, ROSELYN MENDOZA, ARLENE CABALLERO,
ALMIRA MIRANDA, and MARY CHRISTINE VALENTON, petitioners, 
vs.
HON. RUBEN TORRES, SECRETARY OF LABOR and EMPLOYMENT and JOSE SARMIENTO, ADMINISTRATOR,
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.

RESOLUTION

FELICIANO, J.:

Petitioners Adelpha Fernandez, Marissa Domingo, Eunice Ofrecia, Roselyn Mendoza, Arlene Caballero, Almira Miranda
and Mary Christine Valenton seek certiorari and prohibition to prohibit and restrain the Secretary of the Department of
Labor and Employment ("DOLE") and the Administrator of the Philippine Overseas Employment Administration ("POEA")
from enforcing and implementing Item No. 1 of DOLE Circular No. 01-91 dated 20 November 1991 entitled "Prescribing
Additional Requirements, Conditions and Procedures for the Deployment of Performing Artists."

Item No. 1 of the assailed DOLE Circular provides as follows:

1. No Filipino entertainer shall be deployed outside the Philippines except for legitimate performing artists
consisting of musicians, singers and members of dance troupes. In all cases, the performing artists must
have a track record of legitimate and reputable performance in the Philippines for at least one year. In no
case shall the performing artists be below 23 years old.

The Secretary of Labor and Employment may, for justifiable reasons, exempt performing artists from
coverage hereof.

The promulgation of DOLE Circular No. 01-91 was preceded by public agitation (as reflected in the print media) for a total
ban on deployment of Filipino entertainers abroad, in response to the growing number of documented reports and
complaints from entertainers and their relatives about the exploitative working conditions, harassment, forcible detention,
physical injuries, rape and even death suffered by female performing artists and entertainers abroad. Because a
comprehensive prohibition of such deployment would visit obviously adverse economic consequences upon the
entertainment industry, the First National Tripartite Conference for the Protection of Overseas Entertainers, attended by
representatives from the Government and from the management and labor sectors of the entertainment community, was
held last 18 November 1991. The Conference was convened to evaluate a Government proposal for a complete
interdiction of overseas deployment of Philippine entertainers and performing artists. During this Conference, some of the
problems facing Filipino entertainers (in particular, women entertainers) abroad were discussed openly: vulnerability to
operations of organized crime syndicate abroad; subjection to white slavery; harsh and substandard working conditions;
vulnerability to sexually transmitted diseases and unwanted pregnancies, and so forth. 1 At the end of the Conference, the
consensus among the management and labor representatives which emerged was that Government should adopt a policy
of selective (rather than comprehensive) prohibition of deployment abroad of Philippine entertainers, to avoid the adverse
effects which complete prohibition would impose on the country's manpower export program. The labor representative
recommended that the minimum age for performing artists seeking overseas deployment be raised from eighteen (18)
years to twenty-three (23) years. 2

In the present proceeding, petitioners allege themselves to be "qualified performing artists, mostly singers and dancers,"
of ages eighteen (18) to twenty-two (22) years. Through counsel, they challenge the constitutional validity of Item No. 1 of
DOLE Circular No. 01-91 and their arguments may be condensed in the following manner:

(1) that Item No. 1 of DOLE Circular No. 01-91 is violative of the equal of the protection clause and the
due process clause of the Constitution, and the state policy on protection of labor because Item No. 1 is
arbitrary, oppressive and discriminatory against performing artists of ages eighteen (18) to twenty-two
(22) who would otherwise be qualified for overseas employment; and

(2) that Item No. 1 of the mentioned DOLE Circular was promulgated by public respondent DOLE
Secretary and POEA Administrator without or in excess of their jurisdiction or with grave abuse of
discretion.

In actions involving constitutional issues, the firmly settled rule is that a constitutional question will not be heard and
resolved by the courts unless the following requirements of judicial inquiry are met:

(1) the existence of an actual case or controversy;

(2) the party raising the constitutional issue must have a personal and substantial interest in the resolution
thereof;

(3) the controversy must be raised at the earliest reasonable opportunity; and

(4) that the resolution of the constitutional issue must be indispensable for the final determination of the
controversy. 3

Appraising the present proceeding in terms of the foregoing requirements, the Solicitor General urges that the
Petition at bar does not present a justiciable controversy for having been filed prematurely:

. . . petitioners, who claim to be performing artists, had not previously applied with the Secretary of Labor
for exemption from the coverage of the Circular in line with the aforequoted provision. Said provision
connotes that the prohibition is not at all permanent or absolute. It admits of exception. . . . But to repeat,
there is no allegation in the petition that petitioners had previously sought exemption from the Secretary of
Labor, from the coverage of the Circular, before filing the instant petition. Obviously, the petition must fail
for prematurity. 4

The Court agrees with the Solicitor General. We note in the first place, that Item No. 1 of the challenged DOLE Circular
does not establish an absolute and comprehensive prohibition of deployment abroad of entertainers below twenty-three
(23) years of age. Item No. 1 itself provides that "the Secretary of Labor and Employment may, for justifiable reasons,
exempt from performing artists from coverage hereof." The discretionary authority here asserted by the DOLE Secretary
does not purport to be unlimited and arbitrary in nature. To the contrary, fairly explicit and precisely drawn grounds for
exempting particular performing artists from the coverage of Item No. 1 are set out in a set of "Administrative Guidelines
Implementing Department Circular No. 01-91." 5

In the second place, petitioners have failed to allege or have refrained from alleging, that they had previously applied to
public respondent officials for exemption from the minimum age restriction imposed by Item No. 1 of DOLE Circular No.
01-91. Necessarily, therefore, petitioners also do not allege that public respondent officials have arbitrarily denied their
applications for exemption from the minimum age requirement or from any other requirement establishment by Item No. 1.
Neither have petitioners alleged that public respondents have continually threatened to deny all and sundry applications
for exemption, so as to create a reasonable expectation that their applications would be immediately and arbitrarily
denied, should they in fact file them. Petitioners do assert that the exemption clause of DOLE Circular No. 01-91 is
"practically useless and [constitutes] empty verbiage." They have not, however, attempted to support this assertion.

The Court is not compelled to indulge in speculation that public respondent would deny any and all applications for
exemption from coverage of DOLE Circular No. 01-91. Two (2) important presumptions are here applicable. The first is
that administrative orders and regulations are entitled to the presumption of constitutionality. 6 The second is that official
duty has been or will be regularly performed. 7

In Philippine Association of Colleges and Universities v. Secretary of Education. 8 the petitioner universities and colleges
challenged a regulation requiring all private educational institutions to secure a permit to operate from the Department of
Education. The Court dismissed the Petition for being premature, after finding that the petitioners had in fact in their
possession permits to operate and that the petition was filed for speculative or academic purposes upon the supposition
that the petitioning institutions might be denied such permits, or have their permits withdrawn, at some future time. The
Court held:

Mere apprehension that the Secretary of Education might under the law withdraw the permit of one of
petitioners does not constitute a justiciable controversy. (Cf. Com. ex rel Watkins vs. Winchester
Waterworks (Ky.) 197 S.W. 2d. 771.)

An action, like this, is brought for a positive purpose, nay, to obtain actual and positive relief. (Salonga vs.
Warner Barnes, L-2245, January 1951). Courts do not sit to adjudicate mere academic questions to
satisfy scholarly interest therein, however intellectually solid the problem may be. This is specially true
where the issues "reach constitutional dimensions, for then there comes into play regard for the court's
duty to avoid decision of constitutional issues unless avoidance becomes evasion. (Rice vs. Sioux City,
U.S. Sup. Ct. Adv. Rep., May 23, 1955, Law Ed., Vol. 99, p. 511). 9 (Emphasis supplied).

To engage in judicial review, under the facts and circumstances here obtained, in advance of official efforts to apply the
provisions of the challenged circular, upon the supposition that petitioners' legal rights in the premises might be denied by
public respondent officials, is too close to rendering an advisory opinion in a hypothetical case — an undertaking clearly
beyond the jurisdiction of this Court. 10

We consider, therefore, that petitioners have failed to show the first requisite of a judicial inquiry,  i.e., the existance of
actual case or controversy. This failure renders unnecessary consideration of the other requisites of constitutional
litigation.

ACCORDINGLY, for lack of a justiciable controversy, the Court Resolved to DISMISS the Petition for Certiorari and
Prohibition. Costs against petitioners.

Padilla, Bidin, Regalado, Davide, Romero, Nocon, Bellosillo, Melo and Campos, Jr., JJ., concur.

Narvasa, C.J. and Medialdea, J., are on leave.

 
PHILIPPINE PRESS INSTITUTE VS. COMELEC [244 SCRA 272; G.R. No. 119694; 22 May 1995]
Saturday, January 31, 2009 Posted by Coffeeholic Writes 
Labels: Case Digests, Political Law

Facts: Respondent Comelec promulgated Resolution No. 2772 directing newspapers to provide free Comelec space of
not less than one-half page for the common use of political parties and candidates. The Comelec space shall be allocated
by the Commission, free of charge, among all candidates to enable them to make known their qualifications, their stand
on public Issue and their platforms of government. The Comelec space shall also be used by the Commission for
dissemination of vital election information.

Petitioner Philippine Press Institute, Inc. (PPI), a non-profit organization of newspaper and magazine publishers, asks the
Supreme Court to declare Comelec Resolution No. 2772 unconstitutional and void on the ground that it violates the
prohibition imposed by the Constitution upon the government against the taking of private property for public use without
just compensation. On behalf of the respondent Comelec, the Solicitor General claimed that the Resolution is a
permissible exercise of the power of supervision (police power) of the Comelec over the information operations of print
media enterprises during the election period to safeguard and ensure a fair, impartial and credible election.

Issue:

Whether or not Comelec Resolution No. 2772 is unconstitutional.

Held: The Supreme Court declared the Resolution as unconstitutional. It held that to compel print media companies to
donate “Comelec space” amounts to “taking” of private personal property without payment of the just compensation
required in expropriation cases. Moreover, the element of necessity for the taking has not been established by respondent
Comelec, considering that the newspapers were not unwilling to sell advertising space. The taking of private property for
public use is authorized by the constitution, but not without payment of just compensation. Also Resolution No. 2772 does
not constitute a valid exercise of the police power of the state. In the case at bench, there is no showing of existence of a
national emergency to take private property of newspaper or magazine publishers.

MACASIANO VS NHA

Facts: Petitioner seeks to have this Court declare as unconstitutional Sections 28 and 44 of Republic Act No. 7279,
otherwise known as the Urban Development and Housing Act of 1992. He predicates his locust standi on his being a
consultant of the Department of Public Works and Highways (DPWH) pursuant to a Contract of Consultancy on Operation
for Removal of Obstructions and Encroachments on Properties of Public Domain (executed immediately after
hisretirement on 2 January 1992 from the Philippine National Police) and his being a taxpayer. As tothe first, he alleges
that said Sections 28 and 44 "contain the seeds of a ripening controversy thatserve as drawback" to his "tasks and duties
regarding demolition of illegal structures"; because of the said sections, he "is unable to continue the demolition of illegal
structures which he assiduously and faithfully carried out in the past." 1 As a taxpayer, he alleges that "he has a
directinterest in seeing to it that public funds are properly and lawfully disbursed." 2On 14 May 1993, the Solicitor General
filed his Comment to the petition. He maintains that, the instant petition is devoid of merit for non-compliance with the
essential requisites for the exercise of judicial review in cases involving the constitutionality of a law. He contends that
there is no actual case or controversy with litigants asserting adverse legal rights or interests, that the petitioner merely
asks for an advisory opinion, that the petitioner is not the proper party to question the Act as he does not state that he has
property "being squatted upon" and that there is no showing that the question of constitutionality is the very lis mota
presented. He argues that Sections 28 and 44 of the Act are not constitutionality infirm.Issue: Whether or not Petitioner
has legal standingHeld: It is a rule firmly entrenched in our jurisprudence that the constitutionality of an act of the
legislature will not be determined by the courts unless that, question is properly raised and presented in appropriate cases
and is necessary to a determination of the case, i.e., the issue of constitutionality must be very lis mota presented. 8 To
reiterate, the essential requisites for a successful judicial inquiry into the constitutionality of a law are: (a) the existence of
an actual case or controversy involving a conflict of legal rights susceptible of judicial determination, (b) theconstitutional
question must be raised by a proper property, (c) the constitutional question must be raised at the opportunity, and (d) the
resolution of the constitutional question must be necessary to the decision of the case. 9 A proper party is one who has
sustained or is in danger of sustaining an immediate injury as a result of the acts or measures complained of.It is easily
discernible in the instant case that the first two (2) fundamental requisites are absent. There is no actual controversy.
Moreover, petitioner does not claim that, in either or both of the capacities in which he is filing the petition, he has been
actually prevented from performinghis duties as a consultant and exercising his rights as a property owner because of the
assertion by other parties of any benefit under the challenged sections of the said Act. Judicial review cannot be exercised
in vacuo. Judicial power is the "right to determine actual controversies arising between adverse litigants."Wherefore, for
lack of merit, the instant petition is DISMISSED with costs against the petitioner.SO ORDERED.

BOARD OF OPTOMETRY VS COLET

R No. 122241, July 30 1996

FACTS:

Republic Act No. 8050, entitled “An Act Regulating the Practice of Optometry Education, Integrating Optometrists, and for
Other Purposes,” otherwise known as the Revised Optometry Law of 1995, was approved into law on 7 June 1995.
On 31 July 1995, the private respondents filed with the Regional Trial Court (RTC) of Manila a petition for declaratory
relief and for prohibition and injunction, with a prayer for a temporary restraining order. Private respondents alleged in
their petition that:
There were surreptitious and unauthorized insertion and addition of provisions in the Reconciled Bill which were made
without the knowledge and conformity of the Senate panel;
R.A. No. 8050 derogates and violates the fundamental right of every Filipino to reasonable safeguards against deprivation
of life, liberty and property without due process of law;
R.A. No. 8050 derogates and violates the principle against undue delegation of legislative power;
R.A. No. 8050 suppresses truthful advertising concerning optical goods and services in violation of the guaranty of
freedom of speech and press; and
R.A. No. 8050 employs vague ambiguous terms in defining prohibitions and restrictions, hence, it falls within the ambit of
void-for-vagueness doctrine which safeguards the guaranty of due process of law.
When the petition (docketed as Civil Case No. 95-74770) was examined, it was found out that it merely listed the names
of the alleged presidents as well as their profession and home addresses of Optometry Practitioner Association of the
Philippines (OPAP); Cenevis Optometrist Association (COA); Association of Christian-Muslim Optometrist (ACMO); and
Southern Mindanao Optometrist Association of the Philippines (SMOAP). They failed to indicate the details as to the
juridical personality and addresses of these alleged associations, except for Acebedo Optical Co., Inc.
ISSUES:
Whether or not the private respondents have locus standi to question the constitutionality of R.A. No. 8050; and
Whether or not they have a valid cause of action for either declaratory relief or prohibition.
HELD:
1. Only natural and juridical persons or entities authorized by law may be parties in a civil action, and every action must be
prosecuted or defended in the name of the real party in interest. Under Article 44 of the Civil Code, an association is
considered a juridical person if the law grants it a personality separate and distinct from that of its members. By failing to
provide juridical details in their petition, they cannot therefore claim that they are juridical entities. Consequently, they are
deemed to be devoid of legal personality to bring an action.
Section 2, Rule 3 of the Rules of Court - a real party in interest is a party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit.
2. An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not
conjectural or anticipatory. It cannot be disputed that there is yet no actual case or controversy involving all or any of the
private respondents on one hand, and all or any of the petitioners on the other, with respect to rights or obligations under
R.A. No. 8050. This is plain because Civil Case No. 95-74770 is for declaratory relief.
The private respondents have not sufficiently established their locus standi to question the validity of R.A. No. 8050. The
conclusion then is inevitable that the respondent Judge acted with grave abuse of discretion when he issued a writ of
preliminary injunction restraining the implementation of R.A. No. 8050.
 ADVOCATES FOR TRUTH IN LENDING V. BSP [2013]

9:41 AM  advocates for truth in lending, digest, suspension of usury law.  1 comment

facts
"Advocates for Truth in Lending, Inc." (AFTIL) is a non-profit, non-stock corporation organized to engage in pro bono
concerns and activities relating to money lending issues. It was incorporated on July 9, 2010,and a month later, it filed this
petition, joined by its founder and president, Eduardo B. Olaguer, suing as a taxpayer and a citizen.
HISTORY OF CENTRAL BANK’S POWER TO FIX MAX INTEREST RATES
1.        R.A. No. 265, which created the Central Bank on June 15, 1948, empowered the CB-MB toset the maximum interest
rates which banks may charge for all types of loans and other credit operations.
2.        The Usury Law was amended by P.D.1684, giving the CB-MB authority to prescribe different maximum rates of
interest which may be imposed for a loan or renewal thereof or the forbearance of any money, goods or credits,
provided that the changes are effected gradually and announced in advance. Section 1-a of Act No. 2655 now reads:
3.        In its Resolution No. 2224 dated December 3, 1982, the CB-MB issued CB Circular No. 905, Series of 1982, effective
on January 1, 1983. It removed the ceilings on interest rates on loans or forbearance of any money, goods or credits:
Sec. 1.  The rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance
of any money, goods, or credits, regardless of maturity and whether secured or unsecured, that may be charged or
collected by  any person, whether natural or juridical, shall  not be subject to any ceiling prescribed under or
pursuant to the Usury Law, as amended.
4.        R.A. No. 7653 establishing the BSP replaced the CB:
Sec. 135. Repealing Clause. — Except as may be provided for in Sections 46 and 132 of this Act, Republic Act No. 265,
as amended, the provisions of any other law, special charters, rule or regulation issued pursuant to said Republic Act No.
265, as amended, or parts thereof, which may be inconsistent with the provisions of this Act are hereby repealed.
Presidential Decree No. 1792 is likewise repealed.
Note: R.A. 7653 – the law that created BSP to replace CB – Note: this law did not retain the same provision as that of
Section 109 in RA 265.
PETITIONER’S ARGUMENTS
          To justify their skipping the hierarchy of courts petitioners contend the transcendental importance of their Petition:
a)        CB-MB statutory or constitutional authority to prescribe the maximum rates of interest for all kinds of credit transactions
and forbearance of money, goods or credit beyond the limits prescribed in the Usury Law;
b)        If so, whether the CB-MB exceeded its authority when it issued CB Circular No. 905, which removed all interest
ceilings and thus suspended Act No. 2655 as regards usurious interest rates;
c)        Whether under R.A. No. 7653, the new BSP-MB may continue to enforce CB Circular No. 905.
          Petitioners contend that under Section 1-a of Act No. 2655, as amended by P.D. No. 1684, the CB-MB
was authorized only to prescribe or set the maximum rates of interest for a loan or renewal thereof or for the
forbearance of any money, goods or credits, and to change such rates whenever warranted by prevailing economic
and social conditions, the changes to be effected gradually and on scheduled dates; that  nothing in P.D. No. 1684
authorized the CB-MB to lift or suspend the limits of interest on all credit transactions, when it issued CB Circular
No. 905. They further insist that under Section 109 of R.A. No. 265, the authority of the CB-MB was clearly only to fix the
banks’ maximum rates of interest, but always within the limits prescribed by the Usury Law.
          CB Circular No. 905, which was promulgated without the benefit of any prior public hearing, is void because it violated
NCC 5 which provides that "Acts executed against the provisions of mandatory or prohibitory laws shall be void, except
when the law itself authorizes their validity."
          weeks after the issuance of CB Circular No. 905, the benchmark 91-day Treasury bills shot up to 40% PA, as a result.
The banks followed suit and re-priced their loans to rates which were even higher than those of the "Jobo" bills.
          CB Circular No. 905 is also unconstitutional in light of the Bill of Rights, which commands that "no person shall be
deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the
laws."
          R.A. No. 7653 did not re-enact a provision similar to Section 109 of RA 265, and therefore, in view of the  repealing
clause in Section 135 of R.A. No. 7653, the BSP-MB has been stripped of the power either to prescribe the
maximum rates of interest which banks may charge for different kinds of loans and credit transactions, or to
suspend Act No. 2655 and continue enforcing CB Circular No. 905.
Ruling
CB-MB merely suspended the effectivity of the Usury Law when it issued CB Circular No. 905.
In Medel v. CA, it was said that the circular did not repeal nor amend the Usury Law but simply suspended its effectivity;
that a Circular cannot repeal a low; that by virtue of CB the Usury Law has been rendered ineffective; that the Usury has
been legally non-existent in our jurisdiction and interest can now be charged as lender and borrow may agree upon.
Circular upheld the parties’ freedom of contract to agree freely on the rate of interest citing Art. 1306 under which the
contracting parties may establish such stipulations, clauses terms and conditions as they may deem convenient provided
they are not contrary to law, morals, good customs, public order or public policy.
BSP-MB has authority to enforce CB Circular No. 905.
RA 265 covered only banks while Section 1-a of the Usury Law, empowers the Monetary Board, BSP for that matter, to
prescribe the maximum rate or rates of interest for all loans or renewals thereof or the forbearance of any money, good or
credits …
The Usury Law is broader in scope than RA 265, now RA 7653, the later merely supplemented the former as it provided
regulation for loans by banks and other financial institutions. RA 7653 was not unequivocally repealed by RA 765.
CB Circular 905 is essentially based on Section 1-a of the Usury Law and the Usury Law being broader in scope than the
law that created the Central Bank was not deemed repealed when the law replacing CB with the Bangko Sentral was
enacted despite the non-reenactment in the BSP Law of a provision in the CB Law which the petitioners purports to be the
basis of Circular 905. Magulo ba? Hahaha. Basta the present set up is: The power of the BSP Monetary Board to
determine interest rates emanates from the Usury Law [which was further specified by Circular 905].
Granting that the CB had power to "suspend" the Usury Law, the new BSP-MB did not retain this power of its
predecessor, in view of Section 135 of R.A. No. 7653, which expressly repealed R.A. No. 265. The petitioners point out
that R.A. No. 7653 did not reenact a provision similar to Section 109 of R.A. No. 265.
A closer perusal shows that Section 109 of R.A. No. 265 covered only loans extended by banks, whereas under
Section 1-a of the Usury Law, as amended, the BSP-MB may prescribe the maximum rate or rates of interest for all loans
or renewals thereof or the forbearance of any money, goods or credits, including those for loans of low priority such as
consumer loans, as well as such loans made by pawnshops, finance companies and similar credit institutions. It even
authorizes the BSP-MB to prescribe different maximum rate or rates for different types of borrowings, including deposits
and deposit substitutes, or loans of financial intermediaries.
Act No. 2655, an earlier law, is much broader in scope, whereas R.A. No. 265, now R.A. No. 7653, merely
supplemented it as it concerns loans by banks and other financial institutions. Had R.A. No. 7653 been intended to
repeal Section 1-a of Act No. 2655, it would have so stated in unequivocal terms.
Moreover, the rule is settled that repeals by implication are not favored, because laws are presumed to be passed
with deliberation and full knowledge of all laws existing pertaining to the subject.An implied repeal is predicated
upon the condition that a substantial conflict or repugnancy is found between the new and prior laws. Thus, in the
absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable
inconsistency and repugnancy exists in the terms of the new and old laws. We find no such conflict between the
provisions of Act 2655 and R.A. No. 7653.
#generalia specialibus non derogant
The lifting of the ceilings for interest rates does not authorize stipulations charging excessive, unconscionable, and
iniquitous interest.
In Castro v. Tan, the Court held that the imposition of unconscionable interest is immoral and unjust. It is tantamount to a
repugnant spoliation and an iniquitous deprivation of property repulsive to the common sense of man.
They are struck down for being contrary to morals, if not against the law, therefore deemed inexistent and void ab initio.
However this nullity does not affect the lender’s right to recover the principal of the loan nor affect the other terms thereof.
PROCEDURAL MATTERS
The Petition is procedurally infirm.
The CB-MB was created to perform executive functions with respect to the establishment, operation or liquidation of
banking and credit institutions. It does not perform judicial or quasi-judicial functions. Certainly, the issuance of CB
Circular No. 905 was done in the exercise of an executive function. Certiorari will not lie in the instant case.
Petitioners have no locus standi to file the Petition
Locus standi is defined as "a right of appearance in a court of justice on a given question." In private suits, Section 2, Rule
3 of the 1997 Rules of Civil Procedure provides that "every action must be prosecuted or defended in the name of the real
party in interest," who is "the party who stands to be benefited or injured by the judgment in the suit or the party entitled to
the avails of the suit." Succinctly put, a party’s standing is based on his own right to the relief sought.
Even in public interest cases such as this petition, the Court has generally adopted the  "direct injury" test that the
person who impugns the validity of a statute must have "a personal and substantial interest in the case such that he
has sustained, or will sustain direct injury as a result." while petitioners assert a public right it is nonetheless required
of them to make out a sufficient interest in the vindication of the public order and the securing of relief.
Petitioners also do not claim that public funds were being misused in the enforcement of CB Circular No. 905 which would
have made the action a public one, "and justify relaxation of the requirement that an action must be prosecuted in the
name of the real party-in-interest."
The Petition raises no issues of transcendental importance.
In Prof. David v. Pres. Macapagal-Arroyo,the Court summarized the requirements before taxpayers, voters, concerned
citizens, and legislators can be accorded a standing to sue, viz:
(1) the cases involve constitutional issues;
(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax measure is unconstitutional;
(3) for voters, there must be a showing of obvious interest in the validity of the election law in question;
(4) for concerned citizens, there must be a showing that the issues raised are of transcendental importance which must be
settled early; and
(5) for legislators, there must be a claim that the official action complained of infringes upon their prerogatives as
legislators.
 In CREBA v. ERC, guidelines as determinants on whether a matter is of transcendental importance, namely:
1.        the character of the funds or other assets involved in the case;
2.        the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of the government; and
3.        the lack of any other party with a more direct and specific interest in the questions being raised.

Case Digest: Chamber of Real Estate and Builders v. Executive Secretary, et al.
G.R.No.160756 : March 9, 2010
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., Petitioner, v. THE HON. EXECUTIVE
SECRETARY ALBERTO ROMULO, THE HON. ACTING SECRETARY OF FINANCE JUANITA D. AMATONG, and THE
HON. COMMISSIONER OF INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondents.
CORONA, J.:
FACTS:
Petitioner is an association of real estate developers and builders in the Philippines.It impleaded former Executive
Secretary Alberto Romulo, then acting Secretary of Finance Juanita D. Amatong and then Commissioner of Internal
Revenue Guillermo Parayno, Jr. as respondents.
Petitioner assails the validity of the imposition of minimum corporate income tax (MCIT) on corporations and creditable
withholding tax (CWT) on sales of real properties classified as ordinary assets.
Section 27(E) of RA 8424 provides for MCIT on domestic corporations and is implemented by RR 9-98.Petitioner argues
that the MCIT violates the due process clause because it levies income tax even if there is no realized gain.
Petitioner also seeks to nullify Sections 2.57.2(J) (as amended by RR 6-2001) and 2.58.2 of RR 2-98, and Section 4(a)(ii)
and (c)(ii) of RR 7-2003, all of which prescribe the rules and procedures for the collection of CWT on the sale of real
properties categorized as ordinary assets.Petitioner contends that these revenue regulations are contrary to law for two
reasons:first, they ignore the different treatment by RA 8424 of ordinary assets and capital assets andsecond, respondent
Secretary of Finance has no authority to collect CWT, much less, to base the CWT on the gross selling price or fair
market value of the real properties classified as ordinary assets.
Petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause
because, like the MCIT, the government collects income tax even when the net income has not yet been determined.
They contravene the equal protection clause as well because the CWT is being levied upon real estate enterprises but not
on other business enterprises, more particularly those in the manufacturing sector.
ISSUES:Whether or not the imposition of the MCIT on domestic corporations is unconstitutional?
Whether or not the imposition of CWT on income from sales of real properties classified as ordinary assets under RRs 2-
98, 6-2001 and 7-2003, is unconstitutional?
Whether or not this Court should take cognizance of the present case?
HELD:The petition is dismissed.

POLITICAL LAW: constitutionality of MCIT

Petitioner claims that the MCIT under Section 27(E) of RA 8424 is unconstitutional because it is highly oppressive,
arbitrary and confiscatory which amounts to deprivation of property without due process of law.It explains that gross
income as defined under said provision only considers the cost of goods sold and other direct expenses; other major
expenditures, such as administrative and interest expenses which are equally necessary to produce gross income, were
not taken into account.[31]Thus, pegging the tax base of the MCIT to a corporations gross income is tantamount to a
confiscation of capital because gross income, unlike net income, is not realized gain. The Court disagress.
Taxes are the lifeblood of the government.Without taxes, the government can neither exist nor endure. The exercise of
taxing power derives its source from the very existence of the State whose social contract with its citizens obliges it to
promote public interest and the common good.
Taxation is an inherent attribute of sovereignty.It is a power that is purely legislative.Essentially, this means that in the
legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects)
and situs (place) of taxation.It has the authority to prescribe a certain tax at a specific rate for a particular public purpose
on persons or things within its jurisdiction.In other words, the legislature wields the power to define what tax shall be
imposed, why it should be imposed, how much tax shall be imposed, against whom (or what) it shall be imposed and
where it shall be imposed.
As a general rule, the power to tax is plenary and unlimited in its range, acknowledging in its very nature no limits, so that
the principal check against its abuse is to be found only in the responsibility of the legislature (which imposes the tax) to
its constituency who are to pay it.Nevertheless, it is circumscribed by constitutional limitations.At the same time, like any
other statute, tax legislation carries a presumption of constitutionality.
The constitutional safeguard of due process is embodied in the fiat [no] person shall be deprived of life, liberty or property
without due process of law.
Income means all the wealth which flows into the taxpayer other than a mere return on capital.Capital is a fund or property
existing at one distinct point in time while income denotes a flow of wealth during a definite period of time.Income is gain
derived and severed from capital. For income to be taxable, the following requisites must exist: (1) there must be gain; (2)
the gain must be realized or received and (3)the gain must not be excluded by law or treaty from taxation.
Certainly, an income tax is arbitrary and confiscatory if it taxes capital because capital is not income.In other words, it is
income, not capital, which is subject to income tax.However, the MCIT is not a tax on capital.
The MCIT is imposed on gross income which is arrived at by deducting the capital spent by a corporation in the sale of its
goods,i.e., the cost of goodsand other direct expenses from gross sales.Clearly, the capital is not being taxed.

Furthermore, the MCIT is not an additional tax imposition. It is imposedin lieuofthe normal net income tax, and only if the
normal income tax is suspiciously low.The MCIT merely approximates the amount of net income tax due from a
corporation, pegging the rate at a very much reduced 2% and uses as the base the corporations gross income.
The United States has a similar alternative minimum tax (AMT) system which is generally characterized by a lower tax
rate but a broader tax base.Since our income tax laws are of American origin, interpretations by American courts of our
parallel tax laws have persuasive effect on the interpretation of these laws.Although our MCIT is not exactly the same as
the AMT, the policy behind them and the procedure of their implementation are comparable. American courts have also
emphasized that Congress has the power to condition, limit or deny deductions from gross income in order to arrive at the
net that it chooses to tax.This is because deductions are a matter of legislative grace.
Absent any other valid objection, the assignment of gross income, instead of net income, as the tax base of the MCIT,
taken with the reduction of the tax rate from 32% to 2%, is not constitutionally objectionable.
Moreover, petitioner does not cite any actual, specific and concrete negative experiences of its members nor does it
present empirical data to show that the implementation of the MCIT resulted in the confiscation of their property.
In sum, petitioner failed to support, by any factual or legal basis, its allegation that the MCIT is arbitrary and
confiscatory.The Court cannot strike down a law as unconstitutional simply because of its yokes. Taxation is necessarily
burdensome because, by its nature, it adversely affects property rights. The party alleging the laws unconstitutionality has
the burden to demonstrate the supposed violations in understandable terms.
On the other hand, RR 9-98, in declaring that MCIT should be imposed whenever such corporation has zero or negative
taxable income, merely defines the coverage of Section 27(E).This means that even if a corporation incurs a net loss in its
business operations or reports zero income after deducting its expenses, it is still subject to an MCIT of 2% of its gross
income.This is consistent with the law which imposes the MCIT on gross income notwithstanding the amount of the net
income.But the law also states that the MCIT is to be paid only if it is greater than the normal net income.Obviously, it may
well be the case that the MCIT would be less than the net income of the corporation which posts a zero or negative
taxable income.
The withholding tax system is a procedure through which taxes (including income taxes) are collected. Under Section 57
of RA 8424, the types of income subject to withholding tax are divided into three categories: (a) withholding of final tax on
certain incomes; (b) withholding of creditable tax at source and (c) tax-free covenant bonds.
TAXATION LAW: authority of the secretary f finance
The Secretary of Finance is granted, under Section 244 of RA 8424, the authority to promulgate the necessary rules and
regulations for the effective enforcement of the provisions of the law.Such authority is subject to the limitation that the
rules and regulations must not override, but must remain consistent and in harmony with, the law they seek to apply and
implement. It is well-settled that an administrative agency cannot amend an act of Congress.

It has been recognized that the method of withholding tax at source is a procedure of collecting income tax which is
sanctioned by our tax laws.The withholding tax system was devised for three primary reasons: first, to provide the
taxpayer a convenient manner to meet his probable income tax liability; second, to ensure the collection of income tax
which can otherwise be lost or substantially reduced through failure to file the corresponding returns and third, to improve
the governments cash flow.This results in administrative savings, prompt and efficient collection of taxes, prevention of
delinquencies and reduction of governmental effort to collect taxes through more complicated means and remedies.
Respondent Secretary has the authority to require the withholding of a tax on items of income payable to any person,
national or juridical, residing in the Philippines.Such authority is derived from Section 57(B) of RA 8424
The questioned provisions of RR 2-98, as amended, are well within the authority given by Section 57(B) to the
Secretary,i.e., the graduated rate of 1.5%-5% is between the 1%-32% range; the withholding tax is imposed on the
income payable and the tax is creditable against the income tax liability of the taxpayer for the taxable year.
POLITICAL LAW: constitutionality of RR 2-98 as amended
Under RR 2-98, the tax base of the income tax from the sale of real property classified as ordinary assets remains to be
the entitys net income imposed under Section 24 (resident individuals) or Section 27 (domestic corporations) in relation to
Section 31 of RA 8424,i.e.gross income less allowable deductions.The CWT is to be deducted from the net income tax
payable by the taxpayer at the end of the taxable year.Precisely, Section 4(a)(ii) and (c)(ii) of RR 7-2003 reiterate that the
tax base for the sale of real property classified as ordinary assets remains to be the net taxable income
Accordingly, at the end of the year, the taxpayer/seller shall file its income tax return and credit the taxes withheld (by the
withholding agent/buyer) against its tax due.If the tax due is greater than the tax withheld, then the taxpayer shall pay the
difference.If, on the other hand, the tax due is less than the tax withheld, the taxpayer will be entitled to a refund or tax
credit.Undoubtedly, the taxpayer is taxed on its net income.
The use of the GSP/FMV as basis to determine the withholding taxes is evidently for purposes of practicality and
convenience.Obviously, the withholding agent/buyer who is obligated to withhold the tax does not know, nor is he privy to,
how much the taxpayer/seller will have as its net income at the end of the taxable year.Instead, said withholding agents
knowledge and privity are limited only to the particular transaction in which he is a party.In such a case, his basis can only
be the GSP or FMV as these are the only factors reasonably known or knowable by him in connection with the
performance of his duties as a withholding agent.
RR 2-98 imposes a graduated CWT on income based on the GSP or FMV of the real property categorized as ordinary
assets. On the other hand, Section 27(D)(5) of RA 8424 imposes a final tax and flat rate of 6% on the gain presumed to
be realized from the sale of a capital asset based on its GSP or FMV.This final tax is also withheld at source.
As previously stated, FWT is imposed on the sale of capital assets. On the other hand, CWT is imposed on the sale of
ordinary assets.The inherent and substantial differences between FWT and CWT disprove petitioners contention that
ordinary assets are being lumped together with, and treated similarly as, capital assets in contravention of the pertinent
provisions of RA 8424.
The fact that the tax is withheld at source does not automatically mean that it is treated exactly the same way as capital
gains.As aforementioned, the mechanics of the FWT are distinct from those of the CWT. The withholding agent/buyers act
of collecting the tax at the time of the transaction by withholding the tax due from the income payable is the essence of the
withholding tax method of tax collection.
Section 57(A) expressly states that final tax can be imposed on certain kinds of income and enumerates these as passive
income.
Passive income generated by the taxpayers assets. These assets can be in the form of real properties that return rental
income, shares of stock in a corporation that earn dividends or interest income received from savings.
On the other hand, Section 57(B) provides that the Secretary can require a CWT on income payable to natural or juridical
persons, residing in the Philippines.There is no requirement that this income be passive income.If that were the intent of
Congress, it could have easily said so.
Indeed, Section 57(A) and (B) are distinct.Section 57(A) refers to FWT while Section 57(B) pertains to CWT.The former
covers the kinds of passive income enumerated therein and the latter encompassesany income other than those listed in
57(A).Since the law itself makes distinctions, it is wrong to regard 57(A) and 57(B) in the same way.
To repeat, the assailed provisions of RR 2-98, as amended, do not modify or deviate from the text of Section 57(B).RR 2-
98 merely implements the law by specifying what income is subject to CWT.It has been held that, where a statute does
not require any particular procedure to be followed by an administrative agency, the agency may adopt any reasonable
method to carry out its functions.Similarly, considering that the law uses the general term income, the Secretary and CIR
may specify the kinds of income the rules will apply to based on what is feasible.In addition, administrative rules and
regulations ordinarily deserve to be given weight and respect by the courts in view of the rule-making authority given to
those who formulate them and their specific expertise in their respective fields.
POLITICAL LAW: no deprivation of due process
CWT is creditable against the tax due from the seller of the property at the end of the taxable year.The seller will be able
to claim a tax refund if its net income is less than the taxes withheld.Nothing is taken that is not due so there is no
confiscation of property repugnant to the constitutional guarantee of due process.More importantly, the due process
requirement applies to the power to tax. The CWT does not impose new taxes nor does it increase taxes.It relates entirely
to the method and time of payment.
The practical problems encountered in claiming a tax refund, as claimed by the petitioner, do not affect the
constitutionality and validity of the CWT as a method of collecting the tax. Petitioners lamentations will not support its
attack on the constitutionality of the CWT.Petitioners complaints are essentially matters of policy best addressed to the
executive and legislative branches of the government.Besides, the CWT is applied only on the amounts actually received
or receivable by the real estate entity.Sales on installment are taxed on a per-installment basis. Petitioners desire to utilize
for its operational and capital expenses money earmarked for the payment of taxes may be a practical business option but
it is not a fundamental right which can be demanded from the court or from the government.
POLITICAL LAW: no violation of equal protection clause
The equal protection clause under the Constitution means that no person or class of persons shall be deprived of the
same protection of laws which is enjoyed by other persons or other classes in the same place and in like
circumstances.Stated differently,all persons belonging to the same class shall be taxed alike.It follows that the guaranty of
the equal protection of the laws is not violated by legislation based on a reasonable classification.Classification, to be
valid, must (1) rest on substantial distinctions; (2) be germane to the purpose of the law; (3) not be limited to existing
conditions only and (4) apply equally to all members of the same class.
The taxing power has the authority to make reasonable classifications for purposes of taxation. Inequalities which result
from a singling out of one particular class for taxation, or exemption, infringe no constitutional limitation. The real estate
industry is, by itself, a class and can be validly treated differently from other business enterprises.
Petitioner, in insisting that its industry should be treated similarly as manufacturing enterprises, fails to realize that what
distinguishes the real estate business from other manufacturing enterprises, for purposes of the imposition of the CWT, is
not their production processes but the prices of their goods sold and the number of transactions involved. The income
from the sale of a real property is bigger and its frequency of transaction limited, making it less cumbersome for the
parties to comply with the withholding tax scheme.
On the other hand, each manufacturing enterprise may have tens of thousands of transactions with several thousand
customers every month involving both minimal and substantial amounts. To require the customers of manufacturing
enterprises, at present, to withhold the taxes on each of their transactions with their tens or hundreds of suppliers may
result in an inefficient and unmanageable system of taxation and may well defeat the purpose of the withholding tax
system.
REMEDIAL LAW: justiciable controversy
Courts will not assume jurisdiction over a constitutional question unless the following requisites are satisfied: (1) there
must be an actual case calling for the exercise of judicial review; (2) the question before the court must be ripe for
adjudication;(3)thepersonchallengingthevalidityofthe act must have standing to do so; (4) the question of constitutionality
must have been raised at the earliest opportunity and (5) the issue of constitutionality must be the verylis motaof the case.
An actual case or controversy involves a conflict of legal rights or an assertion of opposite legal claims which is
susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or dispute.On the other hand,
a question is considered ripe for adjudication when the act being challenged has a direct adverse effect on the individual
challenging it.

Contrary to respondents assertion, it no longer has to be waited until petitioners members have shut down their
operations as a result of the MCIT or CWT.The assailed provisions are already being implemented.
If the assailed provisions are indeed unconstitutional, there is no better time than the present to settle such question once
and for all.
Legal standing orlocus standiis a partys personal and substantial interest in a case such that it has sustained or will
sustain direct injury as a result of the governmental act being challenged.
In any event, this Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an
actual case, ripeness or legal standing when paramount public interest is involved.The questioned MCIT and CWT affect
not only petitioners but practically all domestic corporate taxpayers in our country. The transcendental importance of the
issues raised and their overreaching significance to society make it proper for the Court to take cognizance of this petition.
People vs Vera

undue delagation of power; equal protection of the law

Caption: PEOPLE VS VERA

G.R. No. L-45685 65 Phil 56 November 16, 1937

THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING CORPORATION, petitioners,

vs.

JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU UNJIENG, respondents.

Facts:

Mariano Cu Unjieng was convicted by the trial court in Manila. He filed for reconsideration and four motions for new trial
but all were denied. He then elevated to the Supreme Court and the Supreme Court remanded the appeal to the lower
court for a new trial. While awaiting new trial, he appealed for probation alleging that the he is innocent of the crime he
was convicted of. The Judge of the Manila CFI directed the appeal to the Insular Probation Office. The IPO denied the
application. However, Judge Vera upon another request by petitioner allowed the petition to be set for hearing. The City
Prosecutor countered alleging that Vera has no power to place Cu Unjieng under probation because it is in violation of
Sec. 11 Act No. 4221 which provides that the act of Legislature granting provincial boards the power to provide a system
of probation to convicted person. Nowhere in the law is stated that the law is applicable to a city like Manila because it is
only indicated therein that only provinces are covered. And even if Manila is covered by the law it is unconstitutional
because Sec 1 Art 3 of the Constitution provides equal protection of laws. The said law provides absolute discretion to
provincial boards and this also constitutes undue delegation of power. Further, the said probation law may be an
encroachment of the power of the executive to provide pardon because providing probation, in effect, is granting freedom,
as in pardon.
Issues:

Whether or not Act No. 4221 constituted an undue delegation of legislative power

Whether or not the said act denies the equal protection of the laws

Discussions:

An act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by which the
administrative officer or board may be guided in the exercise of the discretionary powers delegated to it. The probation Act
does not, by the force of any of its provisions, fix and impose upon the provincial boards any standard or guide in the
exercise of their discretionary power. What is granted, as mentioned by Justice Cardozo in the recent case of Schecter,
supra, is a “roving commission” which enables the provincial boards to exercise arbitrary discretion. By section 11 if the
Act, the legislature does not seemingly on its own authority extend the benefits of the Probation Act to the provinces but in
reality leaves the entire matter for the various provincial boards to determine.
The equal protection of laws is a pledge of the protection of equal laws. The classification of equal protection, to be
reasonable, must be based on substantial distinctions which make real differences; it must be germane to the purposes of
the law; it must not be limited to existing conditions only, and must apply equally to each member of the class.
Rulings:

The Court concludes that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative
authority to the provincial boards and is, for this reason, unconstitutional and void. There is no set standard provided by
Congress on how provincial boards must act in carrying out a system of probation. The provincial boards are given
absolute discretion which is violative of the constitution and the doctrine of the non delegation of power. Further, it is a
violation of equity so protected by the constitution. The challenged section of Act No. 4221 in section 11 which reads as
follows: This Act shall apply only in those provinces in which the respective provincial boards have provided for the salary
of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation officer shall be
appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office.

The provincial boards of the various provinces are to determine for themselves, whether the Probation Law shall apply to
their provinces or not at all. The applicability and application of the Probation Act are entirely placed in the hands of the
provincial boards. If the provincial board does not wish to have the Act applied in its province, all that it has to do is to
decline to appropriate the needed amount for the salary of a probation officer.

It is also contended that the Probation Act violates the provisions of our Bill of Rights which prohibits the denial to any
person of the equal protection of the laws. The resultant inequality may be said to flow from the unwarranted delegation of
legislative power, although perhaps this is not necessarily the result in every case. Adopting the example given by one of
the counsel for the petitioners in the course of his oral argument, one province may appropriate the necessary fund to
defray the salary of a probation officer, while another province may refuse or fail to do so. In such a case, the Probation
Act would be in operation in the former province but not in the latter. This means that a person otherwise coming within
the purview of the law would be liable to enjoy the benefits of probation in one province while another person similarly
situated in another province would be denied those same benefits. This is obnoxious discrimination. Contrariwise, it is
also possible for all the provincial boards to appropriate the necessary funds for the salaries of the probation officers in
their respective provinces, in which case no inequality would result for the obvious reason that probation would be in
operation in each and every province by the affirmative action of appropriation by all the provincial boards.
 Abaya vs. Ebdane Jr.
ABAYA vs. EBDANE, JR.
515 SCRA 720
GR No. 167919,  February 14, 2007
"A taxpayer need not be a party to the contract to challenge its validity."

FACTS: The petitioners, Plaridel M. Abaya who claims that he filed the instant petition as a taxpayer, former lawmaker,
and a Filipino citizen, and Plaridel C. Garcia likewise claiming that he filed the suit as a taxpayer, former military officer,
and a Filipino citizen, mainly seek to nullify a DPWH resolution which recommended the award to private respondent
China Road & Bridge Corporation of the contract for the implementation of the civil works known as Contract Package No.
I (CP I). They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and
private respondent China Road & Bridge Corporation pursuant to the said resolution.

ISSUE: Has petitioners the legal standing to file the instant case against the government?

HELD: Petitioners, as taxpayers, possess locus standi to file the present suit. Briefly stated, locus standi is a right of
appearance in a court of justice on a given question. More particularly, it is a party’s personal and substantial interest in a
case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged.  Locus
standi, however, is merely a matter of procedure and it has been recognized that in some cases, suits are not brought by
parties who have been personally injured by the operation of a law or any other government act but by concerned citizens,
taxpayers or voters who actually sue in the public interest. Consequently, the Court, in a catena of cases, has invariably
adopted a liberal stance on locus standi, including those cases involving taxpayers. 
The prevailing doctrine in taxpayer’s suits is to allow taxpayers to question contracts entered into by the national
government or government- owned or controlled corporations allegedly in contravention of law. A taxpayer is allowed to
sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper
purpose, or that there is a wastage of public funds through the enforcement of an invalid or unconstitutional law.
Significantly, a taxpayer need not be a party to the contract to challenge its validity.

Kilosbayan v. Guingona

Facts:

This is a special civil action for prohibition and injunction, with a prayer for a temporary restraining order and preliminary
injunction which seeks to prohibit and restrain the implementation of the Contract of Lease executed by the PCSO and the
Philippine Gaming Management Corporation in connection with the on-line lottery system, also know as lotto.

Petitioners strongly opposed the setting up of the on-line lottery system on the basis of serious moral and ethical
considerations. It submitted that said contract of lease violated Section 1 of R. A. No. 1169, as amended by B. P. Blg. 42.
Respondents contended, among others, that, the contract does not violate the Foreign Investment Act of 1991; that the
issues of wisdom, morality and propriety of acts of the executive department are beyond the ambit of judicial reviews; and
that the petitioners have no standing to maintain the instant suit.

ISSUES:

1. Whether or not petitioners have the legal standing to file the instant petition.

2. Whether or not the contract of lease is legal and valid.

RULING: As to the preliminary issue, the Court resolved to set aside the procedural technicality in view of the importance
of the issues raised. The Court adopted the liberal policy on locus standi to allow the ordinary taxpayers, members of
Congress, and even association of planters, and non-profit civic organizations to initiate and prosecute actions to question
the validity or constitutionality of laws, acts, decisions, or rulings of various government agencies or instrumentalities.

As to the substantive issue, the Court agrees with the petitioners whether the contract in question is one of lease or
whether the PGMC is merely an independent contractor should not be decided on the basis of the title or designation of
the contract but by the intent of the parties, which may be gathered from the provisions of the contract itself. Animus
homini est anima scripti. The intention of the party is the soul of the instrument.

Therefore the instant petition is granted and the challenged Contract of Lease is hereby declared contrary to law and
invalid.
PHILCONSA VS ENRIQUEZ
Posted by kaye lee on 9:14 AM
G.R. No. 113105 August 19 1994 [Article VI Section 25 - Appropriations]

FACTS:
Petitioners assailed the validity of RA 7663 or General Appropriations Act of 1994.
GAA contains a special provision that allows any members of the Congress the REalignment of Allocation for Operational
Expenses, provided that the total of said allocation is not exceeded.
Philconsa claims that only the Senate President and the Speaker of the House of Representatives are the ones
authorized under the Constitution to realign savings, not the individual members of Congress themselves.
President signed the law, but Vetoes certain provisions of the law and imposed certain provisional conditions: that the
AFP Chief of Staff is authorized to use savings to augment the pension funds under the Retirement and Separation
Benefits of the AFP.

ISSUE:
Whether or not RA 7663 is violative of Article VI, Section 25 (5) of 1987 Constitution.

RULING:
Yes. Only the Senate President and the Speaker of the House are allowed to approve the realignment.
Furthermore, two conditions must be met: 1) the funds to be realigned are actually savings, and 2) the transfer is for the
purpose of augmenting the items of expenditures to which said transfer to be made.

As to the certain condition given to the AFP Chief of Staff, it is violative of of Sections 25(5) and 29(1) of the Article VI of
the Constitution. The list of those who may be authorized to transfer funds is exclusive. the AFP Chief of Staff may not be
given authority.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 112399 July 14, 1995

REPRESENTATIVE AMADO S. BAGATSING, petitioner, 

vs.
COMMITTEE ON PRIVATIZATION, PHILIPPINE NATIONAL OIL COMPANY and THE HONORABLE EXECUTIVE
SECRETARY, respondents.

G.R. No. 115994 July 14, 1995

NEPTALI A. GONZALES, ERNESTO A. MACEDA, JOHN H. OSMEÑA, WIGBERTO E. TAÑADA, JOKER O.

ARROYO, AMADO D. BAGATSING, and RENE A.V. SAGUISAG, petitioners, 
vs.
DELFIN LAZARO, in his capacity as Chairman of the Philippine National Oil Company, MONICO JACOB, in his
capacity as President of PNOC, COMMITTEE ON PRIVATIZATION, PHILIPPINE NATIONAL OIL COMPANY,
PETRON CORPORATION, and ARAMCO OVERSEAS COMPANY B.V., respondents.

QUIASON, J.:

The petition for prohibition in G.R. No. 112399 sought: (1) to nullify the bidding conducted for the sale of a block of shares
constituting 40% of the capital stock (40% block) of Petron Corporation (PETRON) and the award made to Aramco
Overseas Company, B.V. (ARAMCO) as the highest bidder in the bidding conducted on December 15, 1993; and (2) to
stop the sale of said block of shares to ARAMCO. The Supplemental Petition in said case sought to annul the bidding of
the 40% block held on December 15, 1993 and to set aside the award given to ARAMCO (Rollo, pp. 94-99).

The petition for prohibition and certiorari in G.R. No. 115994 sought to annul the sale of the same block of Petron shares
subject of the petition in G.R. No. 112399.

The petition in G.R. No. 112399 asked for the issuance of a temporary restraining order to stop respondents from selling
the 40% block to a foreign buyer (Rollo, p. 15). The petition for a temporary restraining order was reiterated in a motion
filed subsequently (Rollo, pp. 107-108).

The petition in G.R. No. 115994 asked for the issuance of a temporary restraining order and a writ of preliminary
injunction to restrain and enjoin public respondents "from proceeding with the projected initial public offering on July 18,
1994 of the 20% of Petron" (Rollo, p. 33).

The Urgent Supplemental Petition in said case reiterated the prayer for the immediate issuance of a preliminary injunction
to enjoin the initial public offering of the Petron shares (Rollo, pp. 223-225).

Actions on the petitions and motions for the issuance of a temporary restraining order and a writ of preliminary injunction
were deferred.

The petition in G.R. No. 112399 was filed by Representative Amado S. Bagatsing while the petition in G.R. No. 115994
was filed by Senators Neptali A. Gonzales, Ernesto A. Maceda, John H. Osmeña and Wigberto E. Tañada,
Representatives Joker Arroyo and Amado D. Bagatsing and former Senator Rene A.V. Saguisag — all in their capacity as
members of Congress, taxpayers and concerned citizens, except in the case of Mr. Saguisag, who sued as a private law
practitioner, member of the Integrated Bar of the Philippines, taxpayer and concerned citizen.

Respondent Monico V. Jacob was impleaded in G.R. No. 115994 in his capacity as President of respondent Philippine
National Oil Company (PNOC). At the time of the filing of the petition, he had ceased to be the President of PNOC and a
member of its governing board. However, he is the Chairman of the Board of Directors and Chief Executive Officer of
PETRON, a respondent in both cases. He asked for the dismissal of the petition on the ground that having ceased to be
PNOC President, petitioners had no more cause of action against him. We deny the motion in view of the fact that the
petition questions his acts as President of PNOC.

In G.R. No. 115994, ARAMCO entered a limited appearance to question the jurisdiction over its person, alleging that it is
a foreign company organized under the laws of the Netherlands, that it is not doing nor licensed to do business in the
Philippines, and that it does not maintain an office or a business address in and has not appointed a resident agent for the
Philippines (Rollo, p. 240).

PETRON was originally registered with the Securities and Exchange Commission (SEC) in 1966 under the corporate
name "Esso Philippines, Inc." (ESSO) as a subsidiary of Esso Eastern, Inc. and Mobil Petroleum Company, Inc.

In 1973, at the height of the world-wide oil crisis brought about by the Middle East conflicts, the Philippine government
acquired ESSO through the PNOC. ESSO became a wholly-owned company of the government under the corporate
name PETRON and as a subsidiary of PNOC.

In acquiring PETRON, the government aimed to have a buffer against the vagaries of oil prices in the international market.
It was felt that PETRON can serve as a counterfoil against price manipulation that might go unchecked if all the oil
companies were foreign-owned. Indeed, PETRON helped alleviate the energy crises that visited the country from 1973 to
1974, 1979 to 1980, and 1990 to 1991.

PETRON owns the largest, most modern complex refinery in the Philippines with a nameplate capacity of 155,000 barrels
per stream day. It is also the country's biggest combined retail and wholesale market of refined petroleum products. In
1992, it garnered a 39.8% share of all domestic products sold, and at year end its assets totalled P24.4 billion. PETRON's
income as of September 1993 was P2.7 billion. It is listed as the No. 1 corporation in terms of assets and income in the
Philippines.

On December 8, 1986, President Corazon C. Aquino promulgated Proclamation No. 50 in the exercise of her legislative
power under the Freedom Constitution.

The Proclamation is entitled "Proclaiming and Launching a Program for the Expeditious Disposition and Privatization of
Certain Government Corporations and/or the Assets thereof, and Creating the Committee on Privatization and the Asset
Privatization Trust."

Implicit in the Proclamation is the need to raise revenue for the Government and the ideal of leaving business to the
private sector. The Government can then concentrate on the delivery of basic services and the performance of vital public
functions.

On December 2, 1991, President Fidel V. Ramos noted that "[t]he privatization program has proven successful and
beneficial to the economy in terms of expanding private economic activity, improving investment climate, broadening
ownership base and developing capital markets, and generating substantial revenues for priority government
expenditure," but "[t]here is still much potential for harnessing private initiative to undertake in behalf of government
certain activities which can be more effectively and efficiently undertaken by the private sector" (G.R. No. 112399, Rollo,
p. 31).

In its meeting held on September 9, 1992, the PNOC Board of Directors approved Specific Thrust No. 6 and moved "to
bring to the attention of the Administration the need to privatize Petron whether or not there will be deregulation [of the oil
industry]" (G.R. No. 112399, Rollo p. 67).

In a letter dated October 21, 1992, Secretary Ramon R. Del Rosario, as Chairman of the Committee on Privatization,
endorsed to President Ramos the proposal of PNOC to "privatize 65% of the stock of Petron, open to both foreign as well
as domestic investors." Secretary Del Rosario added: "The entry of foreign investors in this field is expected to result in
improved technology and know-how and will enable Petron to have access to international information network as well as
access to external markets and refining contracts" (G.R. No. 112399, Rollo, p. 72).
On January 4, 1993, a follow-up letter was sent by Secretary Del Rosario informing the President that: "The privatization
of Petron, recommended by both the management of Philippine National Oil Company (PNOC) and the Committee on
Privatization (COP), will send the right signals that may re-ignite investor interest in the Philippines for 1993" (G.R. No.
112399, Rollo, p. 73).

In a letted dated January 6, 1993, Secretary designate Delfin L. Lazaro of the Department of Energy, favorably endorsed
for approval the plan to sell up to 65% of the capital stock of PETRON. He also noted that the said plan was "consistent
with the Energy Sector Action Plan approved by the President and the Cabinet on November 27, 1992" (G.R. No.
112399, Rollo, p. 74).

On January 12, 1993, the Cabinet approved the privatization of PETRON as part of the Energy Sector Action Plan.

On March 25, 1993, the Government Corporate Monitoring and Coordinating Committee (GCMCC) recommended a
100% privatization of PETRON.

On March 31, 1993, the PNOC Board of Directors passed a resolution authorizing the company to negotiate and conclude
a contract with the consortium of Salomon Brothers of Hongkong Limited and PCI Capital Corporation for financial
advisory services to be rendered to PETRON.

On April 1, 1993, the GCMCC recommended to COP the privatization of only 65% of the capital stock of PETRON,
instead of the 100% privatization previously recommended.

On June 10, 1993, in a letter addressed to Secretary Ernesto C. Leung, the COP Chairman, President Ramos approved
the privatization of PETRON up to a maximum of 65% of its capital stock.

The Petron Privatization Working Committee (PWC) was thus formed. It finalized a privatization strategy with 40% of the
shares to be sold to a strategic partner and 20% to the general public through the initial public offering and employees
stock option plan.

The Commission on Audit (COA) was consulted as to the valuation methodologies and privatization process. The
privatization plan was also presented to the COP on July 23, 1993, and to the President on July 31, 1993 for their
approval.

On August 10, 1993, the President approved the 40% — 40% — 20% privatization strategy of PETRON. In the press
release on the presidential approval of the said privatization, the Office of the President commented:

For Petron, gaining a long-term strategic partner that will ensure stable crude oil supplies and/or advance
its technological and financial position will be a definite advantage. In addition, its partial privatization will
provide the flexibility and level playing field it needs to remain a major, and therefore influential player in
the oil industry. In 1992, Petron dominated the oil industry with a commanding 40% market share (G.R.
No. 112399, Rollo, p. 83).

The invitation to bid was published in several newspapers of general circulation, both local and foreign. The deadline for
the submission of proposals was set for December 15, 1993 at 5:00 P.M.

PETRON furnished the Office of the Solicitor General (OSG) with copies of the draft of the stock purchase agreement and
shareholders' agreement, with a request for the review of the same.

In a meeting of the Petron PWC held on December 15, 1993 at 12:00 noon, it decided that Westmont Holdings
(WESTMONT) was disqualified from participating in the bidding for its alleged failure to comply with the technical and
financial requirements for a strategic partner.

Salomon Brothers valued PETRON at US$600 million and the 40% block at US$240 million. For the entire Petron shares,
respondent Secretary Lazaro proposed a valuation of US$1.4 billion; Petron management, US$857 million; and Frances
Onate, a member of the Petron PWC, a valuation of US$743 million to US$1 billion.

Finally, the floor price bid for the 40% block was fixed at US$440 million.
The bids of Petroliam Nasional Berhad (PETRONAS), ARAMCO and WESTMONT were submitted while the floor price
was being discussed.

At about 6:15 P.M. and before the bids were opened, WESTMONT through its representative, Manuel Estrella, submitted
additional documents to prove its financial capability to carry out the purchase of the 40% block. The PNOC Board of
Directors adopted Resolution No. 865, S. 1993, rejecting the bid of WESTMONT for not having met the pre-qualification
criteria of financial capability, long-term crude supply availability, and technical and management expertise in the oil
business. It was further resolved that the bid submitted by WESTMONT would be returned unopened.

At 6:30 P.M., the other two bids were opened. The bid of ARAMCO was for US$502 million while the bid of PETRONAS
was for US$421 million. The PNOC Board of Directors then passed Resolution No. 866, S. 1993, declaring ARAMCO the
winning bidder.

On December 15, 1993, the OSG informed PETRON that the drafts of the stock purchase agreement and shareholders'
agreement contained no legally objectionable provisions and could be the basis for PETRON's negotiation with the
winning bidder.

On December 16, 1993, respondent Monico Jacob, in his capacity as President and Chief Executive Officer of PNOC,
endorsed to the COP the bid of ARAMCO for approval. The COP gave its approval on the same day. Also on the same
day, Manuel Estrella filed a complaint in behalf of WESTMONT with PNOC, questioning the award of the 40% block of
Petron shares to ARAMCO. The COP answered Estrella's letter on January 14, 1994, explaining why WESTMONT's bid
was returned unopened.

On February 3, 1994, PNOC and ARAMCO signed the Stock Purchase Agreement and on March 4, 1994, the two
companies signed the Shareholders' Agreement.

Public respondents submitted to the Securities and Exchange Commission (SEC) a proposed price for the initial public
offering of the 20% block set for July 18, 1994, the second phase of PETRON's privatization. PETRON proposed a price
of between P7.00 and P16.00 per share but the SEC approved a price of P9.00 per share.

II

PETRON questions the locus standi of petitioners to file the action (Rollo, pp. 479-484). Petitioners however, countered
that they filed the action in their capacity as members of Congress.

In Philippine Constitution Association v. Hon. Salvador Enriquez, G.R. No. 113105, August 19, 1994, we held that the
members of Congress have the legal standing to question the validity of acts of the Executive which injures them in their
person or the institution of Congress to which they belong. In the latter case, the acts cause derivative but nonetheless
substantial injury which can be questioned by members of Congress (Kennedy v. James, 412 F. Supp. 353 [1976]). In the
absence of a claim that the contract in question violated the rights of petitioners or impermissibly intruded into the domain
of the Legislature, petitioners have no legal standing to institute the instant action in their capacity as members of
Congress.

However, petitioners can bring the action in their capacity as taxpayers under the doctrine laid down in Kilosbayan, Inc. v.
Guingona, 232 SCRA 110 (1994). Under said ruling, taxpayers may question contracts entered into by the national
government or government-owned or controlled corporations alleged to be in contravention of the law. As long as the
ruling in Kilosbayan  on locus standi is not reversed, we have no choice but to follow it and uphold the legal standing of
petitioners as taxpayers to institute the present action.

III

A. Petitioners in G.R. Nos. 112399 and 115994 claim that the inclusion of PETRON in the privatization program
contravened the declared policy of the State to dispose of only non-performing assets of the government and government-
owned or controlled corporations which have been found unnecessary or inappropriate for the government sector to
maintain. They contend that PETRON is neither a non-performing asset nor is it unnecessary or inappropriate for the
government to maintain or operate (G.R. No. 112399, Rollo, pp. 3-4, 8-13; G.R. No. 115994, Rollo, pp. 14-17, 216-217).

To say that only non-performing assets should be the subject of privatization does not conform with the realities of
economic life. In the world of business and finance, it is difficult to sell a business in dire, financial distress. As
entrepreneur Don Eugenio Lopez used to advert to his younger executives: "Don't buy headaches. Don't even accept
them if they are offered to you on a silver platter." It is only in a fire sale that the government can expect to get rid of its
non-performing assets, more so if the sequencing pattern insisted by petitioners (initial public offering of 10% block to
small investors) is followed.

While Proclamation No. 50 mandates that non-performing assets should promptly be sold, it does not prohibit the disposal
of the other kinds of assets, whether performing, necessary or appropriate.

Section 1 of the Proclamation reads:

Statement of Policy. — It shall be the policy of the State to promote privatization through an orderly,
coordinated and efficient program for the prompt disposition of the large number of non-performing assets
of the government financial institutions, and certain government-owned or controlled corporations which
have been found unnecessary or inappropriate for the government sector to maintain.

The said provision classifies two types of assets: (1) Non-performing assets of government financial institutions; and (2)
Government-owned or controlled corporations which have been found unnecessary or inappropriate for the government
sector to maintain.

Under the Proclamation, it is the COP which is tasked with the duty of identifying and arranging the sale of government
assets. Section 5(1) of the Proclamation provides:

Powers and Functions. — The Committee shall have the following powers and functions:

(1) To identify to the President of the Philippines, and arrange for transfer to the National Government
and/or to the Trust and the subsequent divestment to the private sector of (a) such non-performing assets
as may be identified by the Committee, and approved by the President, for transfer from the government
banks for disposal by the Trust or the government banks, and (b) such government corporations, whether
parent or subsidiary, and/or such of their assets, as may have been recommended by the Committee for
disposition, and Provided, that no such identification, recommendation or approval shall be necessary
where a parent corporation decides on its own to divest of, in whole or in part, or liquidate a subsidiary
corporation organized under the Corporation Code; Provided further, that any such independent
disposition shall be undertaken with the prior approval of the Committee and in accordance with the
general disposition guidelines as the Committee may provide; Provided, finally, that in every case the sale
or disposition shall be approved by the Committee with respect to the buyer and price only; (Emphasis
supplied).

xxx xxx xxx

After a long study by PNOC, PETRON was found to be "inappropriate or unnecessary" for the government to maintain
because refining and marketing of petroleum is an aspect of the industry which is better left to the private sector. In
making such finding, PNOC was guided by Section 4(a) of Proclamation No. 50, which provides:

. . . (a) divesting to the private sector in the soonest possible time through the appropriate disposition
entities, those assets with viable productive potential as going concerns, taking into account where
appropriate the implications of such transfers on sectoral productive capacities and market limitation, . . . .
These objectives are to be pursued within the context of furthering the national economy through
strengthened and revitalized private enterprise system.

The decision of PNOC to privatize PETRON and the approval of the COP of such privatization, being made in accordance
with Proclamation No. 50, cannot be reviewed by this Court. Such acts are exercises of the executive function as to which
the Court will not pass judgment upon or inquire into their wisdom (Llamas v. Orbos, 202 SCRA 844 [1991]).

Such identification by the COP of the government corporations to be privatized was not even necessary in the case of
PETRON. Under Section 5(1) of Proclamation No. 50 ". . . [N]o such identification, recommendation or approval shall be
necessary where a parent corporation decides on its own to divest of, in whole or in part, or liquidate a subsidiary
corporation organized under the Corporation Code; . . . ."
The only participation of the COP in the sale of the Petron shares by PNOC, the parent corporation, was the approval of
the buyers and price. The last sentence of paragraph (1) of Section 5 provides:

. . . Provided, finally, that in every case the sale or disposition shall be approved by the Committee with
respect to the buyer and price only.

PNOC, in privatizing PETRON, was simply exercising its corporate power to dispose of all or a portion of its shares in a
subsidiary. PNOC was created under P.D. No. 334, as amended by P.D. No. 927, which empowers it to acquire shares of
the capital stock of any other corporation and to dispose of the same shares.

Besides, if only non-performing assets are intended to be sold, it would be unnecessary to provide in the Proclamation for
the rehabilitation of government corporations to make the same more attractive to investors and potential buyers.

Section 5 (5) of Proclamation No. 50 provides:

In its discretion, to approve or disapprove, subject to the availability of funds for such purpose, the
rehabilitation of assets pending disposition by the Trust or any other government agency authorized by
the Committee, or the Trust with the approval of the Committee, Provided that, the budget for each
rehabilitation project shall be likewise subject to prior approval by the Committee.

Nowhere in the Proclamation can one infer that it prohibits a partial privatization of vital, appropriate and performing
corporations owned by the government.

Proclamation No. 50 contained an Annex listing the corporations to be privatized and those to be retained. While
PETRON was mentioned among the corporations to be retained, Section 6 of the Proclamation directed a continuing
study on what corporations should be recommended for privatization.

It is markworthy that the said Annex did not indicate the percentage of shares that will be privatized or that will be
retained. It can be interpreted to mean that all the shares of the corporations in the list to be privatized may be sold, while
only some of the shares of the other corporations may be sold. It is also worthy of note that the list of corporations to be
retained added the phrase "As of 31 August 1992," meaning that any of the corporations mentioned therein may be
delisted after that date if a study would justify such action.

The government is not disposing of all of its shares in PETRON but is retaining a 40% block. Together with the widely-
held 20% of the private sector control of PETRON by the government is assured. With such equity in PETRON, the
government can also maintain a window to the oil industry and at the same time share in the profits of the company.

The privatization of PETRON could well be undertaken under laws other than Proclamation No. 50.

Of significance is Section 2(c) of R.A. No. 7181, which provides that:

Privatization of government assets classified as a strategic industry  by the National Economic and
Development Authority shall first be approved by the President of the Philippines (Emphasis supplied).

Section 6, the repealing clause of R.A. No. 7181, expressly repealed Sections 3 and 10 of Proclamation No. 50 and all
other laws, orders and rules and regulations which are inconsistent therewith.

The only requirement under R.A. No. 7181 in order to privatize a strategic industry like PETRON is the approval of the
President. In the case of PETRON's privatization, the President gave his approval not only once but twice.

PETRON's privatization is also in line with and is part of the Philippine Energy Program under R.A. No. 7638. Section 5(b)
of the law provides that the Philippine Energy Program shall include a policy direction towards the privatization of
government agencies related to energy.

Under P.D. No. 334, the law creating PNOC, said corporation is granted the authority "[t]o establish and maintain offices,
branches, agencies, subsidiaries, correspondents or other units anywhere as may be needed by the Company and
reorganize or abolish the same as it may deem proper."
B. Petitioners next question the regularity and validity of the bidding (G.R. No. 112399, Rollo, pp. 97-99; G.R. No.
115994, Rollo, pp. 17-24, 221). Petitioners in G.R. No. 115994 claim that the public bidding was tainted with haste and
arbitrariness and that there was a failed bidding because there was only one offeror (Rollo, pp. 17-24).

Taking the cudgels for WESTMONT, petitioners urge that said bidder was only given two days to conduct a review
PETRON's vast business operations in order to comply with the technical and financial requirements for pre-qualification.
Petitioners also complain that the pre-qualification and actual bidding were conducted on the same day, thus denying a
disqualified bidder an opportunity to protest or to appeal. They question the fixing of the floor price on the same day as the
public bidding and only after the bids had been submitted. Likewise, they say that the approval of the bid of ARAMCO by
the Assets Privatization Trust on the same day it is submitted is anomalous (G.R. No. 115994, Rollo, pp. 22-24).

On the claim that there was a failed bidding, petitioners contend that there were only three bidders. One of them,
PETRONAS, submitted a bid lower than the floor price while a second, failed to pre-qualify. Citing Section V-2-a of COA
Circular No. 89-296 dated January 27, 1989, they argue that where only one bidder qualifies, there is a failure of public
auction (G.R. No. 115994, Rollo, p. 22).

When a failure of bidding takes place is defined in Circular No. 89-296 of the Commission on Audit, which prescribes the
"Audit Guidelines on the Divestment or Disposal of Property and other Assets of the National Government Agencies and
Instrumentalities, Local Government Units and Government-Owned or Controlled Corporations and their Subsidiaries."

V. MODES OR DISPOSAL/DIVESTMENT:

xxx xxx xxx

2 Sale Thru Negotiation

For justifiable reasons and as demanded by the exigencies of the service, disposal thru negotiated sale
may be resorted to and undertaken by the proper committee or body in the agency or entity concerned
taking into consideration the following factors:

a. There was a failure of public auction. As envisioned in this Circular, there is a failure of public auction in
any of the following instances:

1 if there is only one offeror.

In this case, the offer or bid, if sealed, shall not be opened.

2 if all the offers/tenders are non-complying or unacceptable.

A tender is non-complying or unacceptable when it does not comply with the prescribed
legal, technical and financial requirement for pre-qualification.

Under said COA Circular, there is a failure of bidding when: 1) there is only one offeror; or (2) when all the offers are non-
complying or unacceptable.

In the case at bench, there were three offerors: SAUDI ARAMCO, PETRONAS and WESTMONT.

While two offerors were disqualified, PETRONAS for submitting a bid below the floor price and WESTMONT for technical
reasons, not all the offerors were disqualified. To constitute a failed bidding under the COA Circular, all the offerors must
be disqualified.

Petitioners urge that in effect there was only one bidder and that it can not be said that there was a competition on "an
equal footing" (G.R. No. 112399, Rollo, p. 122). But the COA Circular does not speak of accepted bids but of offerors,
without distinction as to whether they were disqualified.

The COA itself, the agency that adopted the rules on bidding procedure to be followed by government offices and
corporations, had upheld the validity and legality of the questioned bidding. The interpretation of an agency of its own
rules should be given more weight than the interpretation by that agency of the law it is merely tasked to administer.
The case of Danville Maritime, Inc. v. Commission on Audit, 175 SCRA 701 (1989), relied upon by petitioner, is
inappropriate. In said case, there was only one offeror in the bidding. The Court said: ". . . [I]f there is only one
participating bidder, the bidding is non-competitive and, hence, falls short of the requirement. There would, in fact, be no
bidding at all since, obviously, the lone participant cannot compete against himself."

C. According to petitioners, the law mandates the offer for sale of 10% of the Petron shares to small investors before a
sale of the 40% block of shares to ARAMCO can be made.

They theorize that the best way to determine the real market price of Petron shares was to first have a public offering as
required by R.A. No. 7181. The reverse procedure followed by private respondents, according to petitioners, gave
unwarranted benefits to private respondents because they bought the Petron shares at only P6.70 per share when the
shares fetched as high as P16.00 per share in the stock market (G.R. No. 115994, Rollo, pp. 24-27).

To bolster their theory, petitioners cite Section 2(d) of R.A. No. 7181, which provides:

A minimum of ten (10) percent of the sale of assets in corporation form shall first be offered to small local
investors including Filipino Overseas Workers and where practicable also in the sale of any physical
asset.

Petitioners also invoke the Implementing Guidelines promulgated to implement R.A. No. 7181, which provides:

In the sale of assets in corporate form, at least 10% of the total shares for privatization shall first be
offered to small local investors. Employees Stock Ownership Plans (ESOPS) and public offerings shall
count towards compliance with these provisions . . . (Sec. 3).

We agree with PETRON that the language of Section 2(d) of R.A. No. 7181 does not mandate any sequencing for the
disposition of shares in a government-owned corporation being privatized.

It is the unfortunate use of the word "first" in Section 2(d) of R.A. No. 7181 that threw petitioners off track and caused them
to misread the provision as one requiring a mandatory sequencing of the sale. As a wit once said, if a centipede would be
compelled to follow a prescribed sequencing of its steps, it could never move an inch.

A reasonable reading of the provision is that it merely gives a right of first refusal by the small investors vis-a-vis the 10%
block of shares. As far as the 10% block is concerned, the small investors shall have a first chance to subscribe thereto
whenever it is offered. The offer may be made before, after or simultaneous with the offer of the shares to strategic
partners or major investors depending on the prevailing condition of the market. Certainly, in an initial public offering, it is
good judgment and business sense that should prevail, rather than the rigid and inflexible rules of step one, step two, etc.

The Rules and Regulations issued by the COP to implement R.A. No. 7181 set aside 10% of the shares subject of the
privatization to be offered first to the small local investors, and made clear that as far as said 10% block is concerned, the
small investors shall have the first crack to buy the same. These Rules have been consistently applied in previous
privatizations, and they constitute a contemporaneous construction and interpretation of a law by the implementing,
administrative agency. Such construction is accorded great respect by the Court (Nestle Philippines, Inc. v. Court of
Appeals, 203 SCRA 504 [1991]).

What Congress clearly mandated in R.A. No. 7181 was that at least 10% of the shares of a privatized corporation must be
reserved and offered for sale to the general public. In the deliberation of the Congressional Committee on Government-
Owned and Controlled Corporations on December 18, 1991, the Committee spoke of having the 10% set aside without
impeding the privatization process.

Note that when the bidding of the 40% block of Petron shares had been announced, the 10% block for offering to the
small local investors had been identified, reserved and set aside. This is more than a substantial compliance with the
mandate of law.

There is great risk in first making an initial public offering of the 10% block before bidding out the 40% block to a strategic
partner. It may happen that the price of the shares offered initially to the public plunges below the offering price approved
by the SEC.
The sensitive market forces involved in initial public offerings render unrealistic any legislative mandate to follow a
sequencing in the sale of government-owned shares in the market. The legislators, practical men of affairs as they are,
were aware of the vagaries, variables and vicissitudes of the stock market when they enacted R.A. No. 7181. It is more
reasonable to read the said law as leaving to the COP and the government corporations concerned to determine the
sequencing of the sale to strategic investors and the general public. To require the offer of 10% to the general public
before the sale of a block to a strategic partner may delay or even impede the entire privatization program.

The clear policy behind Proclamation No. 50 is to give the COP and APT maximum flexibility in their operation to ensure
the most efficient implementation of the privatization program.

Under Section 5(3) of the Proclamation, full powers are given the COP to establish "mandatory as well as indicative
guidelines for . . . the disposition
of . . . assets." Under Section 12(2) thereof, the APT is given the "widest latitude of flexibility . . . particularly in the areas of
. . . disposition . . . ."

Petitioners can not rely on Opinion No. 126, Series of 1992 dated September 28, 1992. The query posed to the Secretary
of Justice in said opinion was the legality of the plan of National Development Corporation to pass on to the prospective
buyer of its shares in a local bank the responsibility of complying with the requirement prescribed in Section 2(d) of R.A.
No. 7181 that a minimum of 10% of the shares of a corporation "shall first be offered to small local investors . . . ." The
Secretary of Justice naturally opined that said proposal could not legally be done on the principal ground that the
"observance of this legal requirement is incumbent upon the disposition entity, which in this case is NDC, but as
contemplated, the sale to small investors shall be undertaken by the private buyer of the [local bank's] shares." The query
posed to the Secretary of Justice was not about the sequencing of the sale of the 10% block.

We can not see how the failure to dispose the 10% block to the general public before the sale of the 40% block to
ARAMCO gave the latter unwarranted benefits.

Actually ARAMCO paid a total of P14,671,985,306.00 for the acquisition of the Petron shares. This aggregate amount
represents in peso terms: (1) the US$502 million winning bid paid by ARAMCO to PNOC on March 4, 1994; and (2) the
additional amount of US$30,327,987.00 remitted on July 11, 1994, representing the "purchase price adjustment"
stipulated in the Stock Purchase Agreement. Consequently, ARAMCO's acquisition cost was P7.336 per share.

A fair comparison between the ARAMCO price and the IPO price should take into consideration the levels of financial,
legal and miscellaneous costs directly related to the ARAMCO purchase, including the consequent opportunity cost or
income to PNOC and the National Government, had the proceeds been invested in Philippine Treasury Bills from March 4
and July 11, respectively, to September 7, 1994. On this basis, the effective proceeds on the ARAMCO purchase amount
to P7.8559 per share, and not P6.70 as claimed by petitioners (G.R. No. 115994, Rollo, pp. 506-507). On the other hand,
the seller's expenses incurred in connection with the IPO, including taxes and other fees paid to the National Government,
reached a total of P833.081 million or P0.833 per share (G.R. No. 115944, Rollo, p. 507).

To make further a fair comparison between the two prices, the proceeds from the IPO should be net of PNOC's share in
PETRON's net income from March to August 1994, because in effect it was giving up this amount in favor of the IPO
investors. As projected, the total net income of PETRON from March to August 1994 is P1,870,500.00. Twenty percent of
this is P374,100.00 which translates to a per share reduction of P0.3741 from the IPO proceeds. This would further erode
the effective proceeds from the IPO sale to P7.7929 per share.

Finally, cash dividends of P2 billion and property dividends of P153 million, or a total of P2.153 billion was declared and
transferred to PNOC before the ARAMCO purchase was effected. Imputing such dividends would translate the effective
proceeds to PNOC from the ARAMCO sale to P8.2865 per share (P7.8559 plus P0.4306 [or 40% of P2.153 Billion]).
Using this figure, the IPO proceeds of P7.7929 per share is definitely lower than the ARAMCO proceeds of P8.2865.

Unlike the ordinary buyers of shares listed in the stock exchange, ARAMCO, as a strategic investor, had to spend for the
due diligence review of the business and records of PETRON.

Aside from this monetary considerations, PNOC derived the following value-added benefits:

1) PNOC is assured of an adequate supply of crude oil. The element of uncertainty on sources of crude oil supply is
reduced, if not eliminated, ARAMCO being the world's largest known producer and exporter of five different types of crude
oil.
2) PNOC's refinery can achieve optimum efficiency because of better crude slates.

3) ARAMCO has to hold on to the Petron shares for the next five years. Aside from its stabilizing effect on the market
price of Petron shares, this holding period will prevent ARAMCO from deriving any speculative gains. Unlike ARAMCO,
the buyers of the IPO can sell their shares any time without constraints.

4) ARAMCO's presence in PETRON has a tremendous, unquantifiable influence in investor's confidence in PETRON as a
publicly-listed company. This confidence could not be generated if PETRON's partner has a bad track record.

5) ARAMCO will assist PNOC in raising funds to finance the more than P12 billion in projected capital expenditures
required over the next four years to make PETRON competitive.

The pricing of shares of stock is a highly specialized field that is better left to the experts. It involves an inquiry into the
earning potential, dividend history, business risks, capital structure, management, asset values of the company; the
prevailing business climate; the political and economic conditions; and a myriad of other factors that bear on the valuation
of shares (Van Horne, Financial Management and Policy 652-653 [8th ed.]); Leffler and Farwell, The Stock Market 573-
575 [3rd ed.]).

D. Finally, petitioners contend that PETRON is a public utility, in which foreign ownership of its equity shall not exceed
40% thereof and the foreign participation in the governing body shall be limited to their proportionate share in its capital.
According to petitioners, ARAMCO is entitled only to a maximum of four seats in the ten-man board but was given five
seats (G.R. No. 112389, Rollo, pp. 30-64; G.R. No. 115994, Rollo, pp. 30-31, 202-212).

This issue hinges on whether the business of oil refining is a "public utility" within the purview of Section 11, Article XII of
the 1987 Constitution (adopted from Sec. 5, Art. XIV of the 1973 Constitution), which provides:

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized under the laws
of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such
franchise, certificate or authorization be exclusive in character for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires. The State shall
encourage equity participation in public utilities by the general public. The participation of foreign
investors in the governing body of any public utility enterprise shall be limited to their proportionate share
in its capital and all the executive and managing officers of such corporation or association must be
citizens of the Philippines (Emphasis supplied).

Implementing Section 8 of Article XIV of the 1935 Constitution, the progenitor of Section 5 of Article XIV of the 1973
Constitution, is Section 13(b) of the Public Service Act, which provides:

The term "public service" includes every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent,
occasional, or accidental and done for general business purposes, any common carrier, railroad, street
railway, . . . and other similar public services: . . . .

More pertinent is Section 7 of R.A. No. 387, the Petroleum Act of 1949, which provides:

Petroleum operation a public utility. — Everything relating to the exploration for and exploitation of
petroleum which may consist naturally or below the surface of the earth, and everything relating to the
manufacture, refining, storage, or transportation by special methods of petroleum, as provided for in this
Act, is hereby declared to be of public utility (Rollo, p. 519; Emphasis supplied).

A "public utility" under the Constitution and the Public Service Law is one organized "for hire or compensation" to serve
the public, which is given the right to demand its service. PETRON is not engaged in oil refining for hire and compensation
to process the oil of other parties.

Likewise, the activities considered as "public utility" under Section 7 of R.A. No. 387 refer only to petroleum which is
indigenous to the Philippines. Hence, the refining of petroleum products sourced from abroad as is done by Petron, is not
within the contemplation of the law.
We agree with the opinion of the Secretary of Justice that the refining of imported crude oil is not regulated by, nor is it
within the scope and purview of the Petroleum Act of 1949. He said:

Examination of our statute books fails to reveal any law or legal provision which, in explicit terms, either
permits or prohibits the establishment and operation of oil refineries that would refine only imported crude
oil (Opinion, No. 267, S. 1955).

WHEREFORE, the petitions are DISMISSED.

SO ORDERED.
 Biraogo v. Philippine Truth Commission
G.R. No. 192935 December 7, 2010
Mendoza, J.

Facts:

                President Benigni Simeon Aquino III signed Executive Order No. 1 establishing the Philippine Truth Commission
of 2010 (Truth Commission). Pertinent provisions of said executive order read:

EXECUTIVE ORDER NO. 1

CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the principle that a public
office is a public trust and mandates that public officers and employees, who are servants of the people, must at all times
be accountable to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and
justice, and lead modest lives;

WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious violation of this
mandate;

WHEREAS, corruption is an evil and scourge which seriously affects the political, economic, and social life of a nation; in
a very special way it inflicts untold misfortune and misery on the poor, the marginalized and underprivileged sector of
society;

WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the people’s trust and
confidence in the Government and its institutions;

WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large scale graft and
corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if
warranted, and to deter others from committing the evil, restore the people’s faith and confidence in the Government and
in their public servants;

WHEREAS, the President’s battlecry during his campaign for the Presidency in the last elections “kung walang corrupt,
walang mahirap” expresses a solemn pledge that if elected, he would end corruption and the evil it breeds;

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the
reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of
the offenders and secure justice for all;

WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised Administrative
Code of the Philippines, gives the President the continuing authority to reorganize the Office of the President.

NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by virtue of the
powers vested in me by law, do hereby order:

SECTION 1. Creation of a Commission. – There is hereby created thePHILIPPINE TRUTH COMMISSION, hereinafter

referred to as the“COMMISSION,” which shall primarily seek and find the truth on, and toward this end, investigate
reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the
people, committed by public officers and employees, their co-principals, accomplices and accessories from the private
sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be
taken thereon to ensure that the full measure of justice shall be served without fear or favor.

The Commission shall be composed of a Chairman and four (4) members who will act as an independent collegial body.

SECTION 2. Powers and Functions. – The Commission, which shall have all the powers of an investigative body under
Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding
investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration
and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman.

In particular, it shall:
a)       Identify and determine the reported cases of such graft and corruption which it will investigate;

b)      Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption which it has
chosen to investigate, and to this end require any agency, official or employee of the Executive Branch, including
government-owned or controlled corporations, to produce documents, books, records and other papers;

c)       Upon proper request or representation, obtain information and documents from the Senate and the House of
Representatives records of investigations conducted by committees thereof relating to matters or subjects being
investigated by the Commission;

d)      Upon proper request and representation, obtain information from the courts, including the Sandiganbayan and the Office
of the Court Administrator, information or documents in respect to corruption cases filed with the Sandiganbayan or the
regular courts, as the case may be;

e)       Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or affirmations as the
case may be;

f)        Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the ends of justice
be fully served, that such person who qualifies as a state witness under the Revised Rules of Court of the Philippines be
admitted for that purpose;

g)      Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by means of a
special or interim report and recommendation, all evidence on corruption of public officers and employees and their
private sector co-principals, accomplices or accessories, if any, when in the course of its investigation the Commission
finds that there is reasonable ground to believe that they are liable for graft and corruption under pertinent applicable laws;

h)      Call upon any government investigative or prosecutorial agency such as the Department of Justice or any of the
agencies under it, and the Presidential Anti-Graft Commission, for such assistance and cooperation as it may require in
the discharge of its functions and duties;

i)        Engage or contract the services of resource persons, professionals and other personnel determined by it as necessary
to carry out its mandate;

j)        Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and efficiently carry out the
objectives of this Executive Order and to ensure the orderly conduct of its investigations, proceedings and hearings,
including the presentation of evidence;

k)      Exercise such other acts incident to or are appropriate and necessary in connection with the objectives and purposes of
this Order.

SECTION 3. Staffing Requirements. – x x x.

SECTION 4. Detail of Employees. – x x x.

SECTION 5. Engagement of Experts. – x x x

SECTION 6. Conduct of Proceedings. – x x x.

SECTION 7. Right to Counsel of Witnesses/Resource Persons. – x x x.

SECTION 8. Protection of Witnesses/Resource Persons. – x x x.

SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. – Any government official or personnel who,
without lawful excuse, fails to appear upon subpoena issued by the Commission or who, appearing before the
Commission refuses to take oath or affirmation, give testimony or produce documents for inspection, when required, shall
be subject to administrative disciplinary action. Any private person who does the same may be dealt with in accordance
with law.

SECTION 10. Duty to Extend Assistance to the Commission. – x x x.

SECTION 11. Budget for the Commission. – The Office of the President shall provide the necessary funds for the
Commission to ensure that it can exercise its powers, execute its functions, and perform its duties and responsibilities as
effectively, efficiently, and expeditiously as possible.

SECTION 12. Office. – x x x.

SECTION 13. Furniture/Equipment. – x x x.

SECTION 14. Term of the Commission. – The Commission shall accomplish its mission on or before December 31,
2012.

SECTION 15. Publication of Final Report. – x x x.

SECTION 16. Transfer of Records and Facilities of the Commission. – x x x.

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to
expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances
of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a
supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is declared unconstitutional, the same shall not affect
the validity and effectivity of the other provisions hereof.

SECTION 19. Effectivity. – This Executive Order shall take effect immediately.

                The Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with
the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their
co-principals, accomplices and accessories during the previous administration, and thereafter to submit its finding and
recommendations to the President, Congress and the Ombudsman. Though it has been described as an “independent
collegial body,” it is essentially an entity within the Office of the President Proper and subject to his control.

To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9,
Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate,
resolve, settle, or render awards in disputes between contending parties. All it can do is gather, collect and assess
evidence of graft and corruption and make recommendations. It may have subpoena powers but it has no power to cite
people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if
probable cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot impose
criminal, civil or administrative penalties or sanctions.

Truth commissions have been described as bodies that share the following characteristics: (1) they examine
only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a
particular event; (3) they are temporary bodies that finish their work with the submission of a report containing
conclusions and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.
Commission’s members are usually empowered to conduct research, support victims, and propose policy
recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover
and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and
recommend institutional reforms. Thus, their main goals range from retribution to reconciliation.

Issue:

                whether or not the petitioners have the legal standing to file their respective petitions and question Executive
Order No. 1

Held:

                Yes. Petitioners-legislators’s petition primarily invokes usurpation of the power of the Congress as a body to
which they belong as members. This certainly justifies their resolve to take the cudgels for Congress as an institution and
present the complaints on the usurpation of their power and rights as members of the legislature before the Court.

To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office
confers a right to participate in the exercise of the powers of that institution.
 An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial
injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to
the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the
Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action which, to
their mind, infringes on their prerogatives as legislators.

                With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of the
PTC and the budget for its operations. It emphasizes that the funds to be used for the creation and operation of the
commission are to be taken from those funds already appropriated by Congress. Thus, the allocation and disbursement of
funds for the commission will not entail congressional action but will simply be an exercise of the President’s power over
contingent funds.

            As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of sustaining, any
personal and direct injury attributable to the implementation of Executive Order No. 1. Nowhere in his petition is an
assertion of a clear right that may justify his clamor for the Court to exercise judicial power and to wield the axe over
presidential issuances in defense of the Constitution.

                The Court, however, finds reason in Biraogo’s assertion that the petition covers matters of transcendental
importance to justify the exercise of jurisdiction by the Court. There are constitutional issues in the petition which deserve
the attention of this Court in view of their seriousness, novelty and weight as precedents. Where the issues are of
transcendental and paramount importance not only to the public but also to the Bench and the Bar, they should be
resolved for the guidance of all. The Court takes cognizance of the petition not due to overwhelming political undertones
that clothe the issue in the eyes of the public, but because the Court stands firm in its oath to perform its constitutional
duty to settle legal controversies with overreaching significance to society.

Issue:

                whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the powers of
Congress to create and to appropriate funds for public offices, agencies and commissions; Does the creation of the PTC
fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code?

Issue:

                Section 31 of the Revised Administrative Code contemplates “reorganization” as limited by the following
functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by
abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any
function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency
under the Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to reduction
of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. These point
to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The
creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the
question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced
supposition, even in the plainest meaning attributable to the term “restructure”– an “alteration of an existing structure.”
Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order
No. 1.

                The President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and
efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President. For
this purpose, he may transfer the functions of other Departments or Agencies to the Office of the
President. Reorganizationinvolves the reduction of personnel, consolidation of offices, or abolition thereof by reason of
economy or redundancy of functions. It takes place when there is an alteration of the existing structure of government
offices or units therein, including the lines of control, authority and responsibility between them.

                In the same vein, the creation of the PTC is not justified by the President’s power of control.  Control is
essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his
duties and to substitute the judgment of the former with that of the latter. Clearly, the power of control is entirely different
from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a
valid delegation from Congress, or his inherent duty to faithfully execute the laws.
                The creation of the PTC finds justification under Section 17, Article VII of the Constitution, imposing upon the
President the duty to ensure that the laws are faithfully executed. Section 17 reads:

Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that
the laws be faithfully executed.

                The President’s power to conduct investigations to aid him in ensuring the faithful execution of laws – in this
case, fundamental laws on public accountability and transparency – is inherent in the President’s powers as the Chief
Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not
explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.

                The powers of the President are not limited to those specific powers under the Constitution. One of the
recognized powers of the President granted pursuant to this constitutionally-mandated duty is the power to create ad hoc
committees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed.

                The purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the
President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the
execution and enforcement of the laws of the land. There being no changes in the government structure, the Court is not
inclined to declare such executive power as non-existent just because the direction of the political winds have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the
operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of
existing funds already appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of
Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the
commission because, in the words of the Solicitor General, whatever funds the Congress has provided for the Office of
the President will be the very source of the funds for the commission. Moreover, since the amount that would be allocated
to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding.

Issue:

                whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ

Held:

                The President’s power to conduct investigations to ensure that laws are faithfully executed is well recognized.
As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by
the officials and employees of his department. He has the authority to directly assume the functions of the executive
department.

                Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption
and to recommend the appropriate action. No quasi-judicial powers have been vested in the said body as it cannot
adjudicate rights of persons who come before it. Quasi-judicial powers involve the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by law
itself in enforcing and administering the same law. In simpler terms, judicial discretion is involved in the exercise of these
quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in
the case of administrative agencies.

                Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a
quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of a controversy is
not a judicial function. To be considered as such, the act of receiving evidence and arriving at factual conclusions in a
controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the
controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as
may be provided by law. Even respondents themselves admit that the commission is bereft of any quasi-judicial power.

Contrary to petitioners’ apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their
respective powers. If at all, the investigative function of the commission will complement those of the two offices. The
recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding
investigation. The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against
them, is certainly not a function given to the commission. The phrase, “when in the course of its investigation,” under
Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of
determining probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and
the Ombudsman.

At any rate, the Ombudsman’s power to investigate under R.A. No. 6770 is not exclusive but is shared with other
similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial
courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise
concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the
Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate
complaints against local elective officials.

                Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases
under Section 15 (1) of R.A. No. 6770, which states:

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or
employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary
jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over,
at any stage, from any investigatory agency of government, the investigation of such cases.

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary
investigation or the determination of the existence of probable cause. This is categorically out of the PTC’s sphere of
functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the
performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC
commits no act of usurpation of the Ombudsman’s primordial duties.

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the
Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to
investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded
conclusiveness. Its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ
have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not
deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations
of graft laws.

Issue:

                whether or not Executive Order No. 1 violates the equal protection clause

Held:

                Although the purpose of the Truth Commission falls within the investigative power of the President, the Court
finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal
protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution.

                Equal protection simply requires that all persons or things similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed. It requires public bodies and institutions to treat similarly situated individuals
in a similar manner. The purpose of the equal protection clause is to secure every person within a state’s jurisdiction
against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper
execution through the state’s duly constituted authorities. In other words, the concept of equal justice under the law
requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are
irrelevant to a legitimate governmental objective.

The equal protection clause is aimed at all official state actions, not just those of the legislature. Its inhibitions
cover all the departments of the government including the political and executive departments, and extend to all actions of
a state denying equal protection of the laws, through whatever agency or whatever guise is taken.

It, however, does not require the universal application of the laws to all persons or things without distinction. What
it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection
clause permits classification. Such classification, however, to be valid must pass the test ofreasonableness. The test has
four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law;
(3) It is not limited to existing conditions only; and (4) It applies equally to all members of the same class .
Superficial differences do not make for a valid classification.
 For a classification to meet the requirements of constitutionality, it must include or embrace all persons who
naturally belong to the class. The classification will be regarded as invalid if all the members of the class are not similarly
treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with
absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree.
Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated
equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is
substantially distinguishable from all others, does not justify the non-application of the law to him.

The classification must not be based on existing circumstances only, or so constituted as to preclude addition to
the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar
circumstances and conditions. It must not leave out or “underinclude” those that should otherwise fall into a certain
classification.

                The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the
other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with
one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of
inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification
should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the
law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This
Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or
rational basis and is not palpably arbitrary.

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal
protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth concerning
the reported cases of graft and corruption during the previous administration only. The intent to single out the previous
administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned
executive order. Specifically, these are:

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the
reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of
the offenders and secure justice for all;

SECTION 1. Creation of a Commission. – There is hereby created thePHILIPPINE TRUTH COMMISSION, hereinafter

referred to as the“COMMISSION,” which shall primarily seek and find the truth on, and toward this end, investigate
reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the
people, committed by public officers and employees, their co-principals, accomplices and accessories from the private
sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be
taken thereon to ensure that the full measure of justice shall be served without fear or favor.

SECTION 2. Powers and Functions. – The Commission, which shall have all the powers of an investigative body under
Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding
investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and
higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration
and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases
supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a
class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes
arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to
label the commission as a vehicle for vindictiveness and selective retribution.

The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said
administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They
are not inherent in, and do not inure solely to, the Arroyo administration.

Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of searching for the
truth, must not exclude the other past administrations. The PTC must, at least, have the authority to investigate all past
administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck down for being
unconstitutional.
BIRAOGO V. PHILIPPINE TRUTH COMMISSION 2010, G. R. No. 192935. December 7, 2010 (CASE DIGEST)
CONSTITUTIONAL LAW I CASE DIGEST

TOPIC: POWERS OF THE EXECUTIVE

LOUIS "BAROK" C. BIRAOGO, petitioner, v. THE PHILIPPINE TRUTH COMMISSION OF 2010, respondent.

G.R No. 192935. December 7, 2010

REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, RR., REP. SIMEON A. DATUMANONG, and REP.
ORLANDO B. FUA, SR., petitioner, v. EXECUTIVE SECRETARY AND MANAGEMENT SECRETARY FLORENCIO B.
ABAD, respondent.

G.R. No. 193036. December 7, 2010

MENDOZA, J.:

FACT:

E.O No. 1 establishing the Philippine Truth Commission (PTC) of 2010 was signed by President Aquino. The said PTC is
a mere branch formed under the Office of the President tasked to investigate reports of graft and corruption committed by
third-level public officers and employees, their co-principals, accomplices and accessories during the previous
administration and submit their findings and recommendations to the President, Congress and the Ombudsman.
However, PTC is not a quasi-judicial body, it cannot adjudicate, arbitrate, resolve, settle or render awards in disputes
between parties. Its job is to investigate, collect and asses evidences gathered and make  recommendations. It has
subpoena powers but it has no power to cite people in contempt or even arrest. It cannot determine for such facts if
probable cause exist as to warrant the filing of an information in our courts of law.

Petitioners contends the Constitutionality of the E.O. on the grounds that. 

 It violates separation of powers as it arrogates the power of Congress to create a public office and appropriate
funds for its operation;
 The provisions of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1
because the delegated authority of the President to structurally reorganize the Office of the President to achieve
economy, simplicity, and efficiency does not include the power to create an entirely new office was inexistent like the
Truth Commission;
 The E.O illegally amended the Constitution when it made the Truth Commission and vesting it the power
duplicating and even exceeding those of the Office of the Ombudsman and the DOJ.
 It violates the equal protection clause 
ISSUE:

WHETHER OR NOT the said E.O is unconstitutional.

RULING:

Yes, E.O No. 1 should be struck down as it is violative of the equal protection clause. The Chief Executive’s power to
create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the
Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials
and employees faithfully comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such
validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the
former used the offices and facilities of the latter in conducting the inquiry.

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 suit3 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.

Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Quiason, JJ., concur.

Narvasa, C.J., Puno and Vitug, JJ., took no part.

 
Oposa vs Factoran

Natural and Environmental Laws; Constitutional Law: Intergenerational Responsibility

GR No. 101083; July 30 1993

FACTS:

A taxpayer’s class suit was filed by minors Juan Antonio Oposa, et al., representing their generation and generations yet
unborn, and represented by their parents against Fulgencio Factoran Jr., Secretary of DENR. They prayed that judgment
be rendered ordering the defendant, his agents, representatives and other persons acting in his behalf to:

1. Cancel all existing Timber Licensing Agreements (TLA) in the country;

2. Cease and desist from receiving, accepting, processing, renewing, or appraising new TLAs;

and granting the plaintiffs “such other reliefs just and equitable under the premises.” They alleged that they have a clear
and constitutional right to a balanced and healthful ecology and are entitled to protection by the State in its capacity as
parens patriae. Furthermore, they claim that the act of the defendant in allowing TLA holders to cut and deforest the
remaining forests constitutes a misappropriation and/or impairment of the natural resources property he holds in trust for
the benefit of the plaintiff minors and succeeding generations.

The defendant filed a motion to dismiss the complaint on the following grounds:

1. Plaintiffs have no cause of action against him;

2. The issues raised by the plaintiffs is a political question which properly pertains to the legislative or executive
branches of the government.

ISSUE:

Do the petitioner-minors have a cause of action in filing a class suit to “prevent the misappropriation or impairment of
Philippine rainforests?”
 HELD:

Yes. Petitioner-minors assert that they represent their generation as well as generations to come. The Supreme Court
ruled that they can, for themselves, for others of their generation, and for the succeeding generation, file a class suit. Their
personality to sue in behalf of succeeding generations is based on the concept of intergenerational responsibility insofar
as the right to a balanced and healthful ecology is concerned. Such a right considers the “rhythm and harmony of nature”
which indispensably include, inter alia, the judicious disposition, utilization, management, renewal and conservation of the
country’s forest, mineral, land, waters, fisheries, wildlife, offshore areas and other natural resources to the end that their
exploration, development, and utilization be equitably accessible to the present as well as the future generations.

Needless 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 minor’s 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.

MOST REV. PEDRO ARIGO, et. al., Petitioners,

vs.

SCOTT H. SWIFT, et. al., Respondents.

G.R. No. 206510               September 16, 2014

 PONENTE: Villarama

TOPIC: Writ of kalikasan, UNCLOS, Immunity from suit

 FACTS:

                The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In December 2012, the US
Embassy in the Philippines requested diplomatic clearance for the said vessel “to enter and exit the territorial waters of
the Philippines and to arrive at the port of Subic Bay for the purpose of routine ship replenishment, maintenance, and
crew liberty.” On January 6, 2013, the ship left Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a brief
stop for fuel in Okinawa, Japan.

                On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in Makassar, Indonesia. On
January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on the northwest side of South Shoal of
the Tubbataha Reefs, about 80 miles east-southeast of Palawan. No one was injured in the incident, and there have been
no reports of leaking fuel or oil.

                Petitioners claim that the grounding, salvaging and post-salvaging operations of the USS Guardian cause and
continue to cause environmental damage of such magnitude as to affect the provinces of Palawan, Antique, Aklan,
Guimaras, Iloilo, Negros Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi, which events
violate their constitutional rights to a balanced and healthful ecology.

ISSUES:

1. Whether or not petitioners have legal standing.

2. Whether or not US respondents may be held liable for damages caused by USS Guardian.
3. Whether or not the waiver of immunity from suit under VFA applies in this case.
 HELD:

First issue: YES.

 Petitioners have legal standing

                Locus standi is “a right of appearance in a court of justice on a given question.” Specifically, it is “a party’s
personal and substantial interest in a case where he has sustained or will sustain direct injury as a result” of the act being
challenged, and “calls for more than just a generalized grievance.” However, the rule on standing is a procedural matter
which this Court has relaxed for non-traditional plaintiffs like ordinary citizens, taxpayers and legislators when the public
interest so requires, such as when the subject matter of the controversy is of transcendental importance, of overreaching
significance to society, or of paramount public interest.

                In the landmark case of Oposa v. Factoran, Jr., we recognized the “public right” of citizens to “a balanced and
healthful ecology which, for the first time in our constitutional history, is solemnly incorporated in the fundamental law.” We
declared that the right to a balanced and healthful ecology need not be written in the Constitution for it is assumed, like
other civil and polittcal rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of
transcendental importance with intergenerational implications. Such right carries with it the correlative duty to refrain from
impairing the environment.

                On the novel element in the class suit filed by the petitioners minors in Oposa, this Court ruled that not only do
ordinary citizens have legal standing to sue for the enforcement of environmental rights, they can do so in representation
of their own and future generations.

Second isse: YES.

                 The US respondents were sued in their official capacity as commanding officers of the US Navy who had
control and supervision over the USS Guardian and its crew. The alleged act or omission resulting in the unfortunate
grounding of the USS Guardian on the TRNP was committed while they were performing official military duties.
Considering that the satisfaction of a judgment against said officials will require remedial actions and appropriation of
funds by the US government, the suit is deemed to be one against the US itself. The principle of State immunity therefore
bars the exercise of jurisdiction by this Court over the persons of respondents Swift, Rice and Robling.

                During the deliberations, Senior Associate Justice Antonio T. Carpio took the position that the conduct of the US
in this case, when its warship entered a restricted area in violation of R.A. No. 10067 and caused damage to the TRNP
reef system, brings the matter within the ambit of Article 31 of the United Nations Convention on the Law of the Sea
(UNCLOS). He explained that while historically, warships enjoy sovereign immunity from suit as extensions of
their flag State, Art. 31 of the UNCLOS creates an exception to this rule in cases where they fail to comply with
the rules and regulations of the coastal State regarding passage through the latter’s internal waters and the
territorial sea.

                 In the case of warships, as pointed out by Justice Carpio, they continue to enjoy sovereign immunity
subject to the following exceptions:

Article 30: Non-compliance by warships with the laws and regulations of the coastal State

If any warship does not comply with the laws and regulations of the coastal State concerning passage through the
territorial sea and disregards any request for compliance therewith which is made to it, the coastal State may require it to
leave the territorial sea immediately.

Article 31: Responsibility of the flag State for damage caused by a warship or other government ship operated for non-
commercial purposes

The flag State shall bear international responsibility for any loss or damage to the coastal State resulting from the non-
compliance by a warship or other government ship operated for non-commercial purposes with the laws and regulations
of the coastal State concerning passage through the territorial sea or with the provisions of this Convention or other rules
of international law.

Article 32: Immunities of warships and other government ships operated for non-commercial purposes
                With such exceptions as are contained in subsection A and in articles 30 and 31, nothing in this Convention
affects the immunities of warships and other government ships operated for non-commercial purposes. A foreign
warship’s unauthorized entry into our internal waters with resulting damage to marine resources is one situation
in which the above provisions may apply.

But what if the offending warship is a non-party to the UNCLOS, as in this case, the US?

According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a matter of long-standing policy the
US considers itself bound by customary international rules on the “traditional uses of the oceans” as codified in UNCLOS.

Moreover, Justice Carpio emphasizes that “the US refusal to join the UNCLOS was centered on its disagreement with
UNCLOS” regime of deep seabed mining (Part XI) which considers the oceans and deep seabed commonly owned by
mankind,” pointing out that such “has nothing to do with its the US’ acceptance of customary international rules on
navigation.”

The Court also fully concurred with Justice Carpio’s view that non-membership in the UNCLOS does not mean that the
US will disregard the rights of the Philippines as a Coastal State over its internal waters and territorial sea. We thus expect
the US to bear “international responsibility” under Art. 31 in connection with the USS Guardian grounding which adversely
affected the Tubbataha reefs. Indeed, it is difficult to imagine that our long-time ally and trading partner, which has been
actively supporting the country’s efforts to preserve our vital marine resources, would shirk from its obligation to
compensate the damage caused by its warship while transiting our internal waters. Much less can we comprehend a
Government exercising leadership in international affairs, unwilling to comply with the UNCLOS directive for all nations to
cooperate in the global task to protect and preserve the marine environment as provided in Article 197 of UNCLOS

Article 197: Cooperation on a global or regional basis

States shall cooperate on a global basis and, as appropriate, on a regional basis, directly or through competent
international organizations, in formulating and elaborating international rules, standards and recommended practices and
procedures consistent with this Convention, for the protection and preservation of the marine environment, taking into
account characteristic regional features.

In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute. Although the said
treaty upholds the immunity of warships from the jurisdiction of Coastal States while navigating the latter’s
territorial sea, the flag States shall be required to leave the territorial sea immediately if they flout the laws and
regulations of the Coastal State, and they will be liable for damages caused by their warships or any other
government vessel operated for non-commercial purposes under Article 31.

Third issue: NO.

                The waiver of State immunity under the VF A pertains only to criminal jurisdiction and not to special civil actions
such as the present petition for issuance of a writ of Kalikasan. In fact, it can be inferred from Section 17, Rule 7 of the
Rules that a criminal case against a person charged with a violation of an environmental law is to be filed separately.

                The Court considered a view that a ruling on the application or non-application of criminal jurisdiction provisions
of the VFA to US personnel who may be found responsible for the grounding of the USS Guardian, would be premature
and beyond the province of a petition for a writ of Kalikasan.

                The Court also found  unnecessary at this point to determine whether such waiver of State immunity is indeed
absolute. In the same vein, we cannot grant damages which have resulted from the violation of environmental laws. The
Rules allows the recovery of damages, including the collection of administrative fines under R.A. No. 10067, in a separate
civil suit or that deemed instituted with the criminal action charging the same violation of an environmental law.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 206510               September 16, 2014

MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto Princesa D.D.; MOST REV. DEOGRACIAS S. INIGUEZ,
JR., Bishop-Emeritus of Caloocan, FRANCES Q. QUIMPO, CLEMENTE G. BAUTISTA, JR., Kalikasan-PNE, MARIA
CAROLINA P. ARAULLO, RENATO M. REYES, JR., Bagong Alyansang Makabayan, HON. NERI JAVIER
COLMENARES, Bayan Muna Partylist, ROLAND G. SIMBULAN, PH.D., Junk VF A Movement, TERESITA R.
PEREZ, PH.D., HON. RAYMOND V. PALATINO, Kabataan Party-list, PETER SJ. GONZALES, Pamalakaya,
GIOVANNI A. TAPANG, PH. D., Agham, ELMER C. LABOG, Kilusang Mayo Uno, JOAN MAY E. SALVADOR,
Gabriela, JOSE ENRIQUE A. AFRICA, THERESA A. CONCEPCION, MARY JOAN A. GUAN, NESTOR T. BAGUINON,
PH.D., A. EDSEL F. TUPAZ, Petitioners, 
vs.
SCOTT H. SWIFT in his capacity as Commander of the US. 7th Fleet, MARK A. RICE in his capacity as
Commanding Officer of the USS Guardian, PRESIDENT BENIGNO S. AQUINO III in his capacity as Commander-in-
Chief of the Armed Forces of the Philippines, HON. ALBERT F. DEL ROSARIO, Secretary, pepartment of Foreign
Affair.s, HON. PAQUITO OCHOA, JR., Executiv~.:Secretary, Office of the President, . HON. VOLTAIRE T. GAZMIN,
Secretary, Department of National Defense, HON. RAMON JESUS P. P AJE, Secretary, Department of
Environment and Natural Resoz!rces, VICE ADMIRAL JOSE LUIS M. ALANO, Philippine Navy Flag Officer in
Command, Armed Forces of the Philippines, ADMIRAL RODOLFO D. ISO RENA, Commandant, Philippine Coast
Guard, COMMODORE ENRICO EFREN EVANGELISTA, Philippine Coast Guard Palawan, MAJOR GEN. VIRGILIO
0. DOMINGO, Commandant of Armed Forces of the Philippines Command and LT. GEN. TERRY G. ROBLING, US
Marine Corps Forces. Pacific and Balikatan 2013 Exercise Co-Director, Respondents.

DECISION

VILLARAMA, JR, J.:

Before us is a petition for the issuance of a Writ of Kalikasan with prayer for the issuance of a Temporary Environmental
Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise known as the Rules of Procedure for
Environmental Cases (Rules), involving violations of environmental laws and regulations in relation to the grounding of the
US military ship USS Guardian over the Tubbataha Reefs.

Factual Background
The name "Tubbataha" came from the Samal (seafaring people of southern Philippines) language which means "long reef
exposed at low tide." Tubbataha is composed of two huge coral atolls - the north atoll and the south atoll - and the Jessie
Beazley Reef, a smaller coral structure about 20 kilometers north of the atolls. The reefs of Tubbataha and Jessie Beazley
are considered part of Cagayancillo, a remote island municipality of Palawan. 1

In 1988, Tubbataha was declared a National Marine Park by virtue of Proclamation No. 306 issued by President Corazon
C. Aquino on August 11, 1988. Located in the middle of Central Sulu Sea, 150 kilometers southeast of Puerto Princesa
City, Tubbataha lies at the heart of the Coral Triangle, the global center of marine biodiversity.

In 1993, Tubbataha was inscribed by the United Nations Educational Scientific and Cultural Organization (UNESCO) as a
World Heritage Site. It was recognized as one of the Philippines' oldest ecosystems, containing excellent examples of
pristine reefs and a high diversity of marine life. The 97,030-hectare protected marine park is also an important habitat for
internationally threatened and endangered marine species. UNESCO cited Tubbataha's outstanding universal value as an
important and significant natural habitat for in situ conservation of biological diversity; an example representing significant
on-going ecological and biological processes; and an area of exceptional natural beauty and aesthetic importance. 2

On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067, 3 otherwise known as the "Tubbataha Reefs Natural
Park (TRNP) Act of 2009" "to ensure the protection and conservation of the globally significant economic, biological,
sociocultural, educational and scientific values of the Tubbataha Reefs into perpetuity for the enjoyment of present and
future generations." Under the "no-take" policy, entry into the waters of TRNP is strictly regulated and many human
activities are prohibited and penalized or fined, including fishing, gathering, destroying and disturbing the resources within
the TRNP. The law likewise created the Tubbataha Protected Area Management Board (TPAMB) which shall be the sole
policy-making and permit-granting body of the TRNP.

The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In December 2012, the US Embassy
in the Philippines requested diplomatic clearance for the said vessel "to enter and exit the territorial waters of the
Philippines and to arrive at the port of Subic Bay for the purpose of routine ship replenishment, maintenance, and crew
liberty."4 On January 6, 2013, the ship left Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a brief stop for
fuel in Okinawa, Japan.1âwphi1

On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in Makassar, Indonesia. On January
17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on the northwest side of South Shoal of the
Tubbataha Reefs, about 80 miles east-southeast of Palawan. No cine was injured in the incident, and there have been no
reports of leaking fuel or oil.

On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift, expressed regret for the incident in a press
statement.5 Likewise, US Ambassador to the Philippines Harry K. Thomas, Jr., in a meeting at the Department of Foreign
Affairs (DFA) on February 4, "reiterated his regrets over the grounding incident and assured Foreign Affairs Secretazy
Albert F. del Rosario that the United States will provide appropriate compensation for damage to the reef caused by the
ship."6 By March 30, 2013, the US Navy-led salvage team had finished removing the last piece of the grounded ship from
the coral reef.

On April 1 7, 2013, the above-named petitioners on their behalf and in representation of their respective
sector/organization and others, including minors or generations yet unborn, filed the present petition agairtst Scott H. Swift
in his capacity as Commander of the US 7th Fleet, Mark A. Rice in his capacity as Commanding Officer of the USS
Guardian and Lt. Gen. Terry G. Robling, US Marine Corps Forces, Pacific and Balikatan 2013 Exercises Co-Director ("US
respondents"); President Benigno S. Aquino III in his capacity as Commander-in-Chief of the Armed Forces of the
Philippines (AFP), DF A Secretary Albert F. Del Rosario, Executive Secretary Paquito Ochoa, Jr., Secretary Voltaire T.
Gazmin (Department of National Defense), Secretary Jesus P. Paje (Department of Environment and Natural Resources),
Vice-Admiral Jose Luis M. Alano (Philippine Navy Flag Officer in Command, AFP), Admiral Rodolfo D. Isorena (Philippine
Coast Guard Commandant), Commodore Enrico Efren Evangelista (Philippine Coast Guard-Palawan), and Major General
Virgilio 0. Domingo (AFP Commandant), collectively the "Philippine respondents."

The Petition

Petitioners claim that the grounding, salvaging and post-salvaging operations of the USS Guardian cause and continue to
cause environmental damage of such magnitude as to affect the provinces of Palawan, Antique, Aklan, Guimaras, Iloilo,
Negros Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi, which events violate their
constitutional rights to a balanced and healthful ecology. They also seek a directive from this Court for the institution of
civil, administrative and criminal suits for acts committed in violation of environmental laws and regulations in connection
with the grounding incident.

Specifically, petitioners cite the following violations committed by US respondents under R.A. No. 10067: unauthorized
entry (Section 19); non-payment of conservation fees (Section 21 ); obstruction of law enforcement officer (Section 30);
damages to the reef (Section 20); and destroying and disturbing resources (Section 26[g]). Furthermore, petitioners assail
certain provisions of the Visiting Forces Agreement (VFA) which they want this Court to nullify for being unconstitutional.

The numerous reliefs sought in this case are set forth in the final prayer of the petition, to wit: WHEREFORE, in view of
the foregoing, Petitioners respectfully pray that the Honorable Court: 1. Immediately issue upon the filing of this petition a
Temporary Environmental Protection Order (TEPO) and/or a Writ of Kalikasan, which shall, in particular,

a. Order Respondents and any person acting on their behalf, to cease and desist all operations over the Guardian
grounding incident;

b. Initially demarcating the metes and bounds of the damaged area as well as an additional buffer zone;

c. Order Respondents to stop all port calls and war games under 'Balikatan' because of the absence of clear
guidelines, duties, and liability schemes for breaches of those duties, and require Respondents to assume
responsibility for prior and future environmental damage in general, and environmental damage under the Visiting
Forces Agreement in particular.

d. Temporarily define and describe allowable activities of ecotourism, diving, recreation, and limited commercial
activities by fisherfolk and indigenous communities near or around the TRNP but away from the damaged site and
an additional buffer zone;

2. After summary hearing, issue a Resolution extending the TEPO until further orders of the Court;

3. After due proceedings, render a Decision which shall include, without limitation:

a. Order Respondents Secretary of Foreign Affairs, following the dispositive portion of Nicolas v. Romulo, "to
forthwith negotiate with the United States representatives for the appropriate agreement on [environmental
guidelines and environmental accountability] under Philippine authorities as provided in Art. V[] of the VFA ... "

b. Direct Respondents and appropriate agencies to commence administrative, civil, and criminal proceedings
against erring officers and individuals to the full extent of the law, and to make such proceedings public;

c. Declare that Philippine authorities may exercise primary and exclusive criminal jurisdiction over erring U.S.
personnel under the circumstances of this case;

d. Require Respondents to pay just and reasonable compensation in the settlement of all meritorious claims for
damages caused to the Tubbataha Reef on terms and conditions no less severe than those applicable to other
States, and damages for personal injury or death, if such had been the case;

e. Direct Respondents to cooperate in providing for the attendance of witnesses and in the collection and
production of evidence, including seizure and delivery of objects connected with the offenses related to the
grounding of the Guardian;

f. Require the authorities of the Philippines and the United States to notify each other of the disposition of all
cases, wherever heard, related to the grounding of the Guardian;

g. Restrain Respondents from proceeding with any purported restoration, repair, salvage or post salvage plan or
plans, including cleanup plans covering the damaged area of the Tubbataha Reef absent a just settlement
approved by the Honorable Court;

h. Require Respondents to engage in stakeholder and LOU consultations in accordance with the Local
Government Code and R.A. 10067;
 i. Require Respondent US officials and their representatives to place a deposit to the TRNP Trust Fund defined
under Section 17 of RA 10067 as a bona .fide gesture towards full reparations;

j. Direct Respondents to undertake measures to rehabilitate the areas affected by the grounding of the Guardian
in light of Respondents' experience in the Port Royale grounding in 2009, among other similar grounding
incidents;

k. Require Respondents to regularly publish on a quarterly basis and in the name of transparency and
accountability such environmental damage assessment, valuation, and valuation methods, in all stages of
negotiation;

l. Convene a multisectoral technical working group to provide scientific and technical support to the TPAMB;

m. Order the Department of Foreign Affairs, Department of National Defense, and the Department of Environment
and Natural Resources to review the Visiting Forces Agreement and the Mutual Defense Treaty to consider
whether their provisions allow for the exercise of erga omnes rights to a balanced and healthful ecology and for
damages which follow from any violation of those rights;

n. Narrowly tailor the provisions of the Visiting Forces Agreement for purposes of protecting the damaged areas of
TRNP;

o. Declare the grant of immunity found in Article V ("Criminal Jurisdiction") and Article VI of the Visiting Forces
Agreement unconstitutional for violating equal protection and/or for violating the preemptory norm of
nondiscrimination incorporated as part of the law of the land under Section 2, Article II, of the Philippine
Constitution;

p. Allow for continuing discovery measures;

q. Supervise marine wildlife rehabilitation in the Tubbataha Reefs in all other respects; and

4. Provide just and equitable environmental rehabilitation measures and such other reliefs as are just and
equitable under the premises.7 (Underscoring supplied.)

Since only the Philippine respondents filed their comment 8 to the petition, petitioners also filed a motion for early
resolution and motion to proceed ex parte against the US respondents. 9

Respondents' Consolidated Comment

In their consolidated comment with opposition to the application for a TEPO and ocular inspection and production orders,
respondents assert that: ( 1) the grounds relied upon for the issuance of a TEPO or writ of Kalikasan have become fait
accompli as the salvage operations on the USS Guardian were already completed; (2) the petition is defective in form and
substance; (3) the petition improperly raises issues involving the VFA between the Republic of the Philippines and the
United States of America; and ( 4) the determination of the extent of responsibility of the US Government as regards the
damage to the Tubbataha Reefs rests exdusively with the executive branch.

The Court's Ruling

As a preliminary matter, there is no dispute on the legal standing of petitioners to file the present petition.

Locus standi is "a right of appearance in a court of justice on a given question." 10 Specifically, it is "a party's personal and
substantial interest in a case where he has sustained or will sustain direct injury as a result" of the act being challenged,
and "calls for more than just a generalized grievance."11 However, the rule on standing is a procedural matter which this
Court has relaxed for non-traditional plaintiffs like ordinary citizens, taxpayers and legislators when the public interest so
requires, such as when the subject matter of the controversy is of transcendental importance, of overreaching significance
to society, or of paramount public interest.12

In the landmark case of Oposa v. Factoran, Jr.,13 we recognized the "public right" of citizens to "a balanced and healthful
ecology which, for the first time in our constitutional history, is solemnly incorporated in the fundamental law." We declared
that the right to a balanced and healthful ecology need not be written in the Constitution for it is assumed, like other civil
and polittcal rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of
transcendental importance with intergenerational implications.1âwphi1 Such right carries with it the correlative duty to
refrain from impairing the environment.14

On the novel element in the class suit filed by the petitioners minors in Oposa, this Court ruled that not only do ordinary
citizens have legal standing to sue for the enforcement of environmental rights, they can do so in representation of their
own and future generations. Thus:

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. 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 a:: well as future
generations. Needless to say, every generation has a responsibility to the next to preserve that rhythm and harmony for
the full 1:njoyment 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.15 (Emphasis supplied.)

The liberalization of standing first enunciated in Oposa, insofar as it refers to minors and generations yet unborn, is now
enshrined in the Rules which allows the filing of a citizen suit in environmental cases. The provision on citizen suits in the
Rules "collapses the traditional rule on personal and direct interest, on the principle that humans are stewards of nature." 16

Having settled the issue of locus standi, we shall address the more fundamental question of whether this Court has
jurisdiction over the US respondents who did not submit any pleading or manifestation in this case.

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-suability of the State, 17is
expressly provided in Article XVI of the 1987 Constitution which states:

Section 3. The State may not be sued without its consent.

In United States of America v. Judge Guinto,18 we discussed the principle of state immunity from suit, as follows:

The rule that a state may not be sued without its consent, now · expressed in Article XVI, Section 3, of the 1987
Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our
land under Article II, Section 2. x x x.

Even without such affirmation, we would still be bound by the generally accepted principles of international law under the
doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed
incorporated in the law of every civilized state as a condition and consequence of its membership in the society of nations.
Upon its admission to such society, the state is automatically obligated to comply with these principles in its relations with
other states.

As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that
''there can be no legal right against the authority which makes the law on which the right depends." [Kawanakoa v.
Polybank, 205 U.S. 349] There are other practical reasons for the enforcement of the doctrine. In the case of the foreign
state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non
habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition
would, in the language of a celebrated case, "unduly vex the peace of nations." [De Haber v. Queen of Portugal, 17 Q. B.
171]

While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints
filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the
judgment against such officials will require the state itself to perform an affirmative act to satisfy the same,. such as the
appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the
state itself although it has not been formally impleaded. [Garcia v. Chief of Staff, 16 SCRA 120] In such a situation, the
state may move to dismiss the comp.taint on the ground that it has been filed without its consent. 19 (Emphasis supplied.)
Under the American Constitution, the doctrine is expressed in the Eleventh Amendment which reads:

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

In the case of Minucher v. Court of Appeals,20 we further expounded on the immunity of foreign states from the jurisdiction
of local courts, as follows:

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary international
law then closely identified with the personal immunity of a foreign sovereign from suit and, with the emergence of
democratic states, made to attach not just to the person of the head of state, or his representative, but also distinctly to
the state itself in its sovereign capacity. If the acts giving rise to a suit arc those of a foreign government done by its
foreign agent, although not necessarily a diplomatic personage, but acting in his official capacity, the complaint could be
barred by the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is believed
to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in
whose service he is, under the maxim -par in parem, non habet imperium -that all states are soverr~ign equals and cannot
assert jurisdiction over one another. The implication, in broad terms, is that if the judgment against an official would rec
1uire the state itself to perform an affirmative act to satisfy the award, such as the appropriation of the amount needed to
pay the damages decreed against him, the suit must be regarded as being against the state itself, although it has not
been formally impleaded.21 (Emphasis supplied.)

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an immunity from the
observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise
of territorial jurisdiction.22

In United States of America v. Judge Guinto,23 one of the consolidated cases therein involved a Filipino employed at Clark
Air Base who was arrested following a buy-bust operation conducted by two officers of the US Air Force, and was
eventually dismissed from his employment when he was charged in court for violation of R.A. No. 6425. In a complaint for
damages filed by the said employee against the military officers, the latter moved to dismiss the case on the ground that
the suit was against the US Government which had not given its consent. The RTC denied the motion but on a petition for
certiorari and prohibition filed before this Court, we reversed the RTC and dismissed the complaint. We held that
petitioners US military officers were acting in the exercise of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against him at his trial. It follows that for discharging their duties
as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given
its consent to be sued.

This traditional rule of State immunity which exempts a State from being sued in the courts of another State without the
former's consent or waiver has evolved into a restrictive doctrine which distinguishes sovereign and governmental acts
(Jure imperil") from private, commercial and proprietary acts (Jure gestionis). Under the restrictive rule of State immunity,
State immunity extends only to acts Jure imperii. The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. 24

In Shauf v. Court of Appeals,25 we discussed the limitations of the State immunity principle, thus:

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and
injurious to the rights of plaintiff. As was clearly set forth by JustiGe Zaldivar in Director of the Bureau of
Telecommunications, et al. vs. Aligaen, etc., et al. : "Inasmuch as the State authorizes only legal acts by its officers,
unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers
by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the
State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in
equity against a State officer or the director of a State department on the ground that, while claiming to act for the State,
he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the
State may not be sued without its consent." The rationale for this ruling is that the doctrine of state immunity cannot be
used as an instrument for perpetrating an injustice.

xxxx

The aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will not apply and may
not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen. The cloak
of protection afforded the officers and agents of the government is removed the moment they are sued in their individual
capacity. This situation usually arises where the public official acts without authority or in excess of the powers vested in
him. It is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever
damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority or
jurisdiction.26 (Emphasis supplied.) In this case, the US respondents were sued in their official capacity as commanding
officers of the US Navy who had control and supervision over the USS Guardian and its crew. The alleged act or omission
resulting in the unfortunate grounding of the USS Guardian on the TRNP was committed while they we:re performing
official military duties. Considering that the satisfaction of a judgment against said officials will require remedial actions
and appropriation of funds by the US government, the suit is deemed to be one against the US itself. The principle of
State immunity therefore bars the exercise of jurisdiction by this Court over the persons of respondents Swift, Rice and
Robling.

During the deliberations, Senior Associate Justice Antonio T. Carpio took the position that the conduct of the US in this
case, when its warship entered a restricted area in violation of R.A. No. 10067 and caused damage to the TRNP reef
system, brings the matter within the ambit of Article 31 of the United Nations Convention on the Law of the Sea
(UNCLOS). He explained that while historically, warships enjoy sovereign immunity from suit as extensions of their flag
State, Art. 31 of the UNCLOS creates an exception to this rule in cases where they fail to comply with the rules and
regulations of the coastal State regarding passage through the latter's internal waters and the territorial sea.

According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a matter of long-standing policy the
US considers itself bound by customary international rules on the "traditional uses of the oceans" as codified in UNCLOS,
as can be gleaned from previous declarations by former Presidents Reagan and Clinton, and the US judiciary in the case
of United States v. Royal Caribbean Cruise Lines, Ltd. 27

The international law of the sea is generally defined as "a body of treaty rules arid customary norms governing the uses of
the sea, the exploitation of its resources, and the exercise of jurisdiction over maritime regimes. It is a branch of public
international law, regulating the relations of states with respect to the uses of the oceans." 28 The UNCLOS is a multilateral
treaty which was opened for signature on December 10, 1982 at Montego Bay, Jamaica. It was ratified by the Philippines
in 1984 but came into force on November 16, 1994 upon the submission of the 60th ratification.

The UNCLOS is a product of international negotiation that seeks to balance State sovereignty (mare clausum) and the
principle of freedom of the high seas (mare liberum). 29 The freedom to use the world's marine waters is one of the oldest
customary principles of international law.30 The UNCLOS gives to the coastal State sovereign rights in varying degrees
over the different zones of the sea which are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4) exclusive
economic zone, and 5) the high seas. It also gives coastal States more or less jurisdiction over foreign vessels depending
on where the vessel is located.31

Insofar as the internal waters and territorial sea is concerned, the Coastal State exercises sovereignty, subject to the
UNCLOS and other rules of international law. Such sovereignty extends to the air space over the territorial sea as well as
to its bed and subsoil.32

In the case of warships,33 as pointed out by Justice Carpio, they continue to enjoy sovereign immunity subject to the
following exceptions:

Article 30
Non-compliance by warships with the laws and regulations of the coastal State

If any warship does not comply with the laws and regulations of the coastal State concerning passage through the
territorial sea and disregards any request for compliance therewith which is made to it, the coastal State may require it to
leave the territorial sea immediately.

Article 31
Responsibility of the flag State for damage caused by a warship

or other government ship operated for non-commercial purposes

The flag State shall bear international responsibility for any loss or damage to the coastal State resulting from the non-
compliance by a warship or other government ship operated for non-commercial purposes with the laws and regulations
of the coastal State concerning passage through the territorial sea or with the provisions of this Convention or other rules
of international law.
 Article 32
Immunities of warships and other government ships operated for non-commercial purposes

With such exceptions as are contained in subsection A and in articles 30 and 31, nothing in this Convention affects the
immunities of warships and other government ships operated for non-commercial purposes. (Emphasis supplied.) A
foreign warship's unauthorized entry into our internal waters with resulting damage to marine resources is one situation in
which the above provisions may apply. But what if the offending warship is a non-party to the UNCLOS, as in this case,
the US?

An overwhelming majority - over 80% -- of nation states are now members of UNCLOS, but despite this the US, the
world's leading maritime power, has not ratified it.

While the Reagan administration was instrumental in UNCLOS' negotiation and drafting, the U.S. delegation ultimately
voted against and refrained from signing it due to concerns over deep seabed mining technology transfer provisions
contained in Part XI. In a remarkable, multilateral effort to induce U.S. membership, the bulk of UNCLOS member states
cooperated over the succeeding decade to revise the objection.able provisions. The revisions satisfied the Clinton
administration, which signed the revised Part XI implementing agreement in 1994. In the fall of 1994, President Clinton
transmitted UNCLOS and the Part XI implementing agreement to the Senate requesting its advice and consent. Despite
consistent support from President Clinton, each of his successors, and an ideologically diverse array of stakeholders, the
Senate has since withheld the consent required for the President to internationally bind the United States to UNCLOS.

While UNCLOS cleared the Senate Foreign Relations Committee (SFRC) during the 108th and 110th Congresses, its
progress continues to be hamstrung by significant pockets of political ambivalence over U.S. participation in international
institutions. Most recently, 111 th Congress SFRC Chairman Senator John Kerry included "voting out" UNCLOS for full
Senate consideration among his highest priorities. This did not occur, and no Senate action has been taken on UNCLOS
by the 112th Congress.34

Justice Carpio invited our attention to the policy statement given by President Reagan on March 10, 1983 that the US will
"recognize the rights of the other , states in the waters off their coasts, as reflected in the convention [UNCLOS], so long
as the rights and freedom of the United States and others under international law are recognized by such coastal states",
and President Clinton's reiteration of the US policy "to act in a manner consistent with its [UNCLOS] provisions relating to
traditional uses of the oceans and to encourage other countries to do likewise." Since Article 31 relates to the "traditional
uses of the oceans," and "if under its policy, the US 'recognize[s] the rights of the other states in the waters off their
coasts,"' Justice Carpio postulates that "there is more reason to expect it to recognize the rights of other states in their
internal waters, such as the Sulu Sea in this case."

As to the non-ratification by the US, Justice Carpio emphasizes that "the US' refusal to join the UN CLOS was centered on
its disagreement with UN CLOS' regime of deep seabed mining (Part XI) which considers the oceans and deep seabed
commonly owned by mankind," pointing out that such "has nothing to do with its [the US'] acceptance of customary
international rules on navigation."

It may be mentioned that even the US Navy Judge Advocate General's Corps publicly endorses the ratification of the
UNCLOS, as shown by the following statement posted on its official website:

The Convention is in the national interest of the United States because it establishes stable maritime zones, including a
maximum outer limit for territorial seas; codifies innocent passage, transit passage, and archipelagic sea lanes passage
rights; works against "jurisdictiomtl creep" by preventing coastal nations from expanding their own maritime zones; and
reaffirms sovereign immunity of warships, auxiliaries anJ government aircraft.

xxxx

Economically, accession to the Convention would support our national interests by enhancing the ability of the US to
assert its sovereign rights over the resources of one of the largest continental shelves in the world. Further, it is the Law of
the Sea Convention that first established the concept of a maritime Exclusive Economic Zone out to 200 nautical miles,
and recognized the rights of coastal states to conserve and manage the natural resources in this Zone. 35

We fully concur with Justice Carpio's view that non-membership in the UNCLOS does not mean that the US will disregard
the rights of the Philippines as a Coastal State over its internal waters and territorial sea. We thus expect the US to bear
"international responsibility" under Art. 31 in connection with the USS Guardian grounding which adversely affected the
Tubbataha reefs. Indeed, it is difficult to imagine that our long-time ally and trading partner, which has been actively
supporting the country's efforts to preserve our vital marine resources, would shirk from its obligation to compensate the
damage caused by its warship while transiting our internal waters. Much less can we comprehend a Government
exercising leadership in international affairs, unwilling to comply with the UNCLOS directive for all nations to cooperate in
the global task to protect and preserve the marine environment as provided in Article 197, viz:

Article 197
Cooperation on a global or regional basis

States shall cooperate on a global basis and, as appropriate, on a regional basis, directly or through competent
international organizations, in formulating and elaborating international rules, standards and recommended practices and
procedures consistent with this Convention, for the protection and preservation of the marine environment, taking into
account characteristic regional features.

In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute. Although the said treaty
upholds the immunity of warships from the jurisdiction of Coastal States while navigating the.latter's territorial sea, the flag
States shall be required to leave the territorial '::;ea immediately if they flout the laws and regulations of the Coastal State,
and they will be liable for damages caused by their warships or any other government vessel operated for non-commercial
purposes under Article 31.

Petitioners argue that there is a waiver of immunity from suit found in the VFA. Likewise, they invoke federal statutes in
the US under which agencies of the US have statutorily waived their immunity to any action. Even under the common law
tort claims, petitioners asseverate that the US respondents are liable for negligence, trespass and nuisance.

We are not persuaded.

The VFA is an agreement which defines the treatment of United States troops and personnel visiting the Philippines to
promote "common security interests" between the US and the Philippines in the region. It provides for the guidelines to
govern such visits of military personnel, and further defines the rights of the United States and the Philippine government
in the matter of criminal jurisdiction, movement of vessel and aircraft, importation and exportation of equipment, materials
and supplies.36 The invocation of US federal tort laws and even common law is thus improper considering that it is the VF
A which governs disputes involving US military ships and crew navigating Philippine waters in pursuance of the objectives
of the agreement.

As it is, the waiver of State immunity under the VF A pertains only to criminal jurisdiction and not to special civil actions
such as the present petition for issuance of a writ of Kalikasan. In fact, it can be inferred from Section 17, Rule 7 of the
Rules that a criminal case against a person charged with a violation of an environmental law is to be filed separately:

SEC. 17. Institution of separate actions.-The filing of a petition for the issuance of the writ of kalikasan shall not preclude
the filing of separate civil, criminal or administrative actions.

In any case, it is our considered view that a ruling on the application or non-application of criminal jurisdiction provisions of
the VF A to US personnel who may be found responsible for the grounding of the USS Guardian, would be premature and
beyond the province of a petition for a writ of Kalikasan. We also find it unnecessary at this point to determine whether
such waiver of State immunity is indeed absolute. In the same vein, we cannot grant damages which have resulted from
the violation of environmental laws. The Rules allows the recovery of damages, including the collection of administrative
fines under R.A. No. 10067, in a separate civil suit or that deemed instituted with the criminal action charging the same
violation of an environmental law.37

Section 15, Rule 7 enumerates the reliefs which may be granted in a petition for issuance of a writ of Kalikasan, to wit:

SEC. 15. Judgment.-Within sixty (60) days from the time the petition is submitted for decision, the court shall render
judgment granting or denying the privilege of the writ of kalikasan.

The reliefs that may be granted under the writ are the following:

(a) Directing respondent to permanently cease and desist from committing acts or neglecting the performance of a
duty in violation of environmental laws resulting in environmental destruction or damage;
 (b) Directing the respondent public official, govemment agency, private person or entity to protect, preserve,
rehabilitate or restore the environment;

(c) Directing the respondent public official, government agency, private person or entity to monitor strict
compliance with the decision and orders of the court;

(d) Directing the respondent public official, government agency, or private person or entity to make periodic
reports on the execution of the final judgment; and

(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or to the
protection, preservation, rehabilitation or restoration of the environment, except the award of damages to
individual petitioners. (Emphasis supplied.)

We agree with respondents (Philippine officials) in asserting that this petition has become moot in the sense that the
salvage operation sought to be enjoined or restrained had already been accomplished when petitioners sought recourse
from this Court. But insofar as the directives to Philippine respondents to protect and rehabilitate the coral reef stn icture
and marine habitat adversely affected by the grounding incident are concerned, petitioners are entitled to these reliefs
notwithstanding the completion of the removal of the USS Guardian from the coral reef. However, we are mindful of the
fact that the US and Philippine governments both expressed readiness to negotiate and discuss the matter of
compensation for the damage caused by the USS Guardian. The US Embassy has also declared it is closely coordinating
with local scientists and experts in assessing the extent of the damage and appropriate methods of rehabilitation.

Exploring avenues for settlement of environmental cases is not proscribed by the Rules. As can be gleaned from the
following provisions, mediation and settlement are available for the consideration of the parties, and which dispute
resolution methods are encouraged by the court, to wit:

RULE3

xxxx

SEC. 3. Referral to mediation.-At the start of the pre-trial conference, the court shall inquire from the parties if they have
settled the dispute; otherwise, the court shall immediately refer the parties or their counsel, if authorized by their clients, to
the Philippine Mediation Center (PMC) unit for purposes of mediation. If not available, the court shall refer the case to the
clerk of court or legal researcher for mediation.

Mediation must be conducted within a non-extendible period of thirty (30) days from receipt of notice of referral to
mediation.

The mediation report must be submitted within ten (10) days from the expiration of the 30-day period.

SEC. 4. Preliminary conference.-If mediation fails, the court will schedule the continuance of the pre-trial. Before the
scheduled date of continuance, the court may refer the case to the branch clerk of court for a preliminary conference for
the following purposes:

(a) To assist the parties in reaching a settlement;

xxxx

SEC. 5. Pre-trial conference; consent decree.-The judge shall put the parties and their counsels under oath, and they
shall remain under oath in all pre-trial conferences.

The judge shall exert best efforts to persuade the parties to arrive at a settlement of the dispute. The judge may issue a
consent decree approving the agreement between the parties in accordance with law, morals, public order and public
policy to protect the right of the people to a balanced and healthful ecology.

xxxx
SEC. 10. Efforts to settle.- The court shall endeavor to make the parties to agree to compromise or settle in accordance
with law at any stage of the proceedings before rendition of judgment. (Underscoring supplied.)

The Court takes judicial notice of a similar incident in 2009 when a guided-missile cruiser, the USS Port Royal, ran
aground about half a mile off the Honolulu Airport Reef Runway and remained stuck for four days. After spending $6.5
million restoring the coral reef, the US government was reported to have paid the State of Hawaii $8.5 million in
settlement over coral reef damage caused by the grounding. 38

To underscore that the US government is prepared to pay appropriate compensation for the damage caused by the USS
Guardian grounding, the US Embassy in the Philippines has announced the formation of a US interdisciplinary scientific
team which will "initiate discussions with the Government of the Philippines to review coral reef rehabilitation options in
Tubbataha, based on assessments by Philippine-based marine scientists." The US team intends to "help assess damage
and remediation options, in coordination with the Tubbataha Management Office, appropriate Philippine government
entities, non-governmental organizations, and scientific experts from Philippine universities." 39

A rehabilitation or restoration program to be implemented at the cost of the violator is also a major relief that may be
obtained under a judgment rendered in a citizens' suit under the Rules, viz:

RULES

SECTION 1. Reliefs in a citizen suit.-If warranted, the court may grant to the plaintiff proper reliefs which shall include the
protection, preservation or rehabilitation of the environment and the payment of attorney's fees, costs of suit and other
litigation expenses. It may also require the violator to submit a program of rehabilitation or restoration of the environment,
the costs of which shall be borne by the violator, or to contribute to a special trust fund for that purpose subject to the
control of the court.1âwphi1

In the light of the foregoing, the Court defers to the Executive Branch on the matter of compensation and rehabilitation
measures through diplomatic channels. Resolution of these issues impinges on our relations with another State in the
context of common security interests under the VFA. It is settled that "[t]he conduct of the foreign relations of our
government is committed by the Constitution to the executive and legislative-"the political" --departments of the
government, and the propriety of what may be done in the exercise of this political power is not subject to judicial inquiry
or decision."40

On the other hand, we cannot grant the additional reliefs prayed for in the petition to order a review of the VFA and to
nullify certain immunity provisions thereof.

As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora, 41 the VFA was duly concurred in by the
Philippine Senate and has been recognized as a treaty by the United States as attested and certified by the duly
authorized representative of the United States government. The VF A being a valid and binding agreement, the parties
are required as a matter of international law to abide by its terms and provisions. 42 The present petition under the Rules is
not the proper remedy to assail the constitutionality of its provisions. WHEREFORE, the petition for the issuance of the
privilege of the Writ of Kalikasan is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:
CHAVEZ VS GONZALES

MARCH 30, 2013 ~ VBDIAZ

FRANCISCO CHAVEZ

vs.

RAUL M. GONZALES, in his capacity as the Secretary of the Department of Justice; and NTC

G.R. No. 168338, February 15, 2008

FACTS: Sometime before 6 June 2005, the radio station dzMM aired the Garci Tapes where the parties to the
conversation discussed “rigging” the results of the 2004 elections to favor President Arroyo. On 6 June 2005, Presidential
spokesperson Bunye held a press conference in Malacañang Palace, where he played before the presidential press corps
two compact disc recordings of conversations between a woman and a man. Bunye identified the woman in both
recordings as President Arroyo but claimed that the contents of the second compact disc had been “spliced” to make it
appear that President Arroyo was talking to Garcillano.

However, on 9 June 2005, Bunye backtracked and stated that the woman’s voice in the compact discs was not President
Arroyo’s after all.3 Meanwhile, other individuals went public, claiming possession of the genuine copy of the Garci Tapes.
Respondent Gonzalez ordered the NBI to investigate media organizations which aired the Garci Tapes for possible
violation of Republic Act No. 4200 or the Anti-Wiretapping Law.

On 11 June 2005, the NTC issued a press release warning radio and television stations that airing the Garci Tapes is a ”
cause for the suspension, revocation and/or cancellation of the licenses or authorizations” issued to them. On 14 June
2005, NTC officers met with officers of the broadcasters group KBP, to dispel fears of censorship. The NTC and KBP
issued a joint press statement expressing commitment to press freedom

On 21 June 2005, petitioner Francisco I. Chavez (petitioner), as citizen, filed this petition to nullify the “acts, issuances,
and orders” of the NTC and respondent Gonzalez (respondents) on the following grounds: (1) respondents’ conduct
violated freedom of expression and the right of the people to information on matters of public concern under Section 7,
Article III of the Constitution, and (2) the NTC acted ultra vires when it warned radio and television stations against airing
the Garci Tapes.

ISSUE: The principal issue for resolution is whether the NTC warning embodied in the press release of 11 June 2005
constitutes an impermissible prior restraint on freedom of expression.

1. Standing to File Petition

Petitioner has standing to file this petition. When the issue involves freedom of expression, as in the present case, any
citizen has the right to bring suit to question the constitutionality of a government action in violation of freedom of
expression, whether or not the government action is directed at such citizen. Freedom of expression, being fundamental
to the preservation of a free, open and democratic society, is of transcendental importance that must be defended by
every patriotic citizen at the earliest opportunity.

2. Overview of Freedom of Expression, Prior Restraint and Subsequent Punishment

Freedom of expression is the foundation of a free, open and democratic society. Freedom of expression is an
indispensable condition8 to the exercise of almost all other civil and political rights. Freedom of expression allows citizens
to expose and check abuses of public officials. Freedom of expression allows citizens to make informed choices of
candidates for public office.

Section 4, Article III of the Constitution prohibits the enactment of any law curtailing freedom of expression:

No law shall be passed abridging the freedom of speech, of expression, or the press, or the right of the people peaceably
to assemble and petition the government for redress of grievances.

Thus, the rule is that expression is not subject to any prior restraint or censorship because the Constitution commands
that freedom of expression shall not be abridged. Over time, however, courts have carved out narrow and well defined
exceptions to this rule out of necessity.

The exceptions, when expression may be subject to prior restraint, apply in this jurisdiction to only four categories of
expression, namely:

pornography,

false or misleading advertisement,

advocacy of imminent lawless action, and

danger to national security.

All other expression is not subject to prior restraint.

Expression not subject to prior restraint is protected expression or high-value expression. Any content-based prior
restraint on protected expression is unconstitutional without exception. A protected expression means what it says – it is
absolutely protected from censorship. Thus, there can be no prior restraint on public debates on the amendment or repeal
of existing laws, on the ratification of treaties, on the imposition of new tax measures, or on proposed amendments to the
Constitution.

If the prior restraint is not aimed at the message or idea of the expression, it is content-neutral even if it burdens
expression. A content-neutral restraint is a restraint which regulates the time, place or manner of the expression in public
places without any restraint on the content of the expression. Courts will subject content-neutral restraints to intermediate
scrutiny. An example of a content-neutral restraint is a permit specifying the date, time and route of a rally passing through
busy public streets. A content-neutral prior restraint on protected expression which does not touch on the content of the
expression enjoys the presumption of validity and is thus enforceable subject to appeal to the courts.

Expression that may be subject to prior restraint is unprotected expression or low-value expression. By definition, prior
restraint on unprotected expression is content-based since the restraint is imposed because of the content itself. In this
jurisdiction, there are currently only four categories of unprotected expression that may be subject to prior restraint. This
Court recognized false or misleading advertisement as unprotected expression only in October 2007.

Only unprotected expression may be subject to prior restraint. However, any such prior restraint on unprotected
expression must hurdle a high barrier. First, such prior restraint is presumed unconstitutional. Second, the government
bears a heavy burden of proving the constitutionality of the prior restraint.
Prior restraint is a more severe restriction on freedom of expression than subsequent punishment. Although subsequent
punishment also deters expression, still the ideas are disseminated to the public. Prior restraint prevents even the
dissemination of ideas to the public.

While there can be no prior restraint on protected expression, such expression may be subject to subsequent
punishment,27 either civilly or criminally. Similarly, if the unprotected expression does not warrant prior restraint, the same
expression may still be subject to subsequent punishment, civilly or criminally. Libel falls under this class of unprotected
expression.

However, if the expression cannot be subject to the lesser restriction of subsequent punishment, logically it cannot also be
subject to the more severe restriction of prior restraint. Thus, since profane language or “hate speech” against a religious
minority is not subject to subsequent punishment in this jurisdiction, such expression cannot be subject to prior restraint.

If the unprotected expression warrants prior restraint, necessarily the same expression is subject to subsequent
punishment. There must be a law punishing criminally the unprotected expression before prior restraint on such
expression can be justified.

The prevailing test in this jurisdiction to determine the constitutionality of government action imposing prior restraint on
three categories of unprotected expression – pornography,31 advocacy of imminent lawless action, and danger to
national security – is the clear and present danger test.32 The expression restrained must present a clear and present
danger of bringing about a substantive evil that the State has a right and duty to prevent, and such danger must be grave
and imminent.

Prior restraint on unprotected expression takes many forms – it may be a law, administrative regulation, or impermissible
pressures like threats of revoking licenses or withholding of benefits.34 The impermissible pressures need not be
embodied in a government agency regulation, but may emanate from policies, advisories or conduct of officials of
government agencies.

3. Government Action in the Present Case

The government action in the present case is a warning by the NTC that the airing or broadcasting of the Garci Tapes by
radio and television stations is a “cause for the suspension, revocation and/or cancellation of the licenses or
authorizations” issued to radio and television stations. The NTC warning, embodied in a press release, relies on two
grounds. First, the airing of the Garci Tapes “is a continuing violation of the Anti-Wiretapping Law and the conditions of the
Provisional Authority and/or Certificate of Authority issued to radio and TV stations.” Second, the Garci Tapes have not
been authenticated, and subsequent investigation may establish that the tapes contain false information or willful
misrepresentation.

The NTC does not claim that the public airing of the Garci Tapes constitutes unprotected expression that may be subject
to prior restraint. The NTC does not specify what substantive evil the State seeks to prevent in imposing prior restraint on
the airing of the Garci Tapes. The NTC does not claim that the public airing of the Garci Tapes constitutes a clear and
present danger of a substantive evil, of grave and imminent character, that the State has a right and duty to prevent.

The NTC did not conduct any hearing in reaching its conclusion that the airing of the Garci Tapes constitutes a continuing
violation of the Anti-Wiretapping Law. There is also the issue of whether a wireless cellular phone conversation is covered
by the Anti-Wiretapping Law.

Clearly, the NTC has no factual or legal basis in claiming that the airing of the Garci Tapes constitutes a violation of the
Anti-Wiretapping Law. The radio and television stations were not even given an opportunity to be heard by the NTC. The
NTC did not observe basic due process as mandated in Ang Tibay v. Court of Industrial Relations.

The NTC concedes that the Garci Tapes have not been authenticated as accurate or truthful. The NTC also concedes
that only “after a prosecution or appropriate investigation” can it be established that the Garci Tapes constitute “false
information and/or willful misrepresentation.” Clearly, the NTC admits that it does not even know if the Garci Tapes
contain false information or willful misrepresentation.

4. Nature of Prior Restraint in the Present Case

The NTC action restraining the airing of the Garci Tapes is a content-based prior restraint because it is directed at the
message of the Garci Tapes. The NTC’s claim that the Garci Tapes might contain “false information and/or willful
misrepresentation,” and thus should not be publicly aired, is an admission that the restraint is content-based.

5. Nature of Expression in the Present Case

The public airing of the Garci Tapes is a protected expression because it does not fall under any of the four existing
categories of unprotected expression recognized in this jurisdiction. The airing of the Garci Tapes is essentially a political
expression because it exposes that a presidential candidate had allegedly improper conversations with a COMELEC
Commissioner right after the close of voting in the last presidential elections.

Obviously, the content of the Garci Tapes affects gravely the sanctity of the ballot. Public discussion on the sanctity of the
ballot is indisputably a protected expression that cannot be subject to prior restraint. In any event, public discussion on all
political issues should always remain uninhibited, robust and wide open.

The rule, which recognizes no exception, is that there can be no content-based prior restraint on protected expression. On
this ground alone, the NTC press release is unconstitutional. Of course, if the courts determine that the subject matter of a
wiretapping, illegal or not, endangers the security of the State, the public airing of the tape becomes unprotected
expression that may be subject to prior restraint. However, there is no claim here by respondents that the subject matter
of the Garci Tapes involves national security and publicly airing the tapes would endanger the security of the State.

The airing of the Garci Tapes does not violate the right to privacy because the content of the Garci Tapes is a matter of
important public concern. The Constitution guarantees the people’s right to information on matters of public concern. The
remedy of any person aggrieved by the public airing of the Garci Tapes is to file a complaint for violation of the Anti-
Wiretapping Law after the commission of the crime. Subsequent punishment, absent a lawful defense, is the remedy
available in case of violation of the Anti-Wiretapping Law.

While there can be no prior restraint on protected expression, there can be subsequent punishment for protected
expression under libel, tort or other laws. In the present case, the NTC action seeks prior restraint on the airing of the
Garci Tapes, not punishment of personnel of radio and television stations for actual violation of the Anti-Wiretapping Law.

6. Only the Courts May Impose Content-Based Prior Restraint

The NTC has no power to impose content-based prior restraint on expression. The charter of the NTC does not vest NTC
with any content-based censorship power over radio and television stations.

In the present case, the airing of the Garci Tapes is a protected expression that can never be subject to prior restraint.
However, even assuming for the sake of argument that the airing of the Garci Tapes constitutes unprotected expression,
only the courts have the power to adjudicate on the factual and legal issue of whether the airing of the Garci Tapes
presents a clear and present danger of bringing about a substantive evil that the State has a right and duty to prevent, so
as to justify the prior restraint.

Any order imposing prior restraint on unprotected expression requires prior adjudication by the courts on whether the prior
restraint is constitutional. This is a necessary consequence from the presumption of invalidity of any prior restraint on
unprotected expression.

7. Government Failed to Overcome Presumption of Invalidity

Respondents did not invoke any compelling State interest to impose prior restraint on the public airing of the Garci Tapes.
The respondents claim that they merely “fairly warned” radio and television stations to observe the Anti-Wiretapping Law
and pertinent NTC circulars on program standards. Respondents have not explained how and why the observance by
radio and television stations of the Anti-Wiretapping Law and pertinent NTC circulars constitutes a compelling State
interest justifying prior restraint on the public airing of the Garci Tapes.

Violation of the Anti-Wiretapping Law, like the violation of any criminal statute, can always be subject to criminal
prosecution after the violation is committed. Respondents have not explained how the violation of the Anti-Wiretapping
Law, or of the pertinent NTC circulars, can incite imminent lawless behavior or endanger the security of the State.

8. The NTC Warning is a Classic Form of Prior Restraint

The NTC press release threatening to suspend or cancel the airwave permits of radio and television stations constitutes
impermissible pressure amounting to prior restraint on protected expression. Whether the threat is made in an order,
regulation, advisory or press release, the chilling effect is the same: the threat freezes radio and television stations into
deafening silence. Radio and television stations that have invested substantial sums in capital equipment and market
development suddenly face suspension or cancellation of their permits. The NTC threat is thus real and potent.

9. Conclusion

In sum, the NTC press release constitutes an unconstitutional prior restraint on protected expression. There can be no
content-based prior restraint on protected expression. This rule has no exception.

Senate of the Philippines vs Executive Secretary Ermita

In 2005, scandals involving anomalous transactions about the North Rail Project as well as the Garci tapes surfaced. This
prompted the Senate to conduct a public hearing to investigate the said anomalies particularly the alleged overpricing in
the NRP. The investigating Senate committee issued invitations to certain department heads and military officials to speak
before the committee as resource persons. Ermita submitted that he and some of the department heads cannot attend the
said hearing due to pressing matters that need immediate attention. AFP Chief of Staff Senga likewise sent a similar
letter. Drilon, the senate president, excepted the said requests for they were sent belatedly and arrangements were
already made and scheduled. Subsequently, GMA issued EO 464 which took effect immediately.

EO 464 basically prohibited Department heads, Senior officials of executive departments who in the judgment of the
department heads are covered by the executive privilege; Generals and flag officers of the Armed Forces of the
Philippines and such other officers who in the judgment of the Chief of Staff are covered by the executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other officers who in the
judgment of the Chief of the PNP are covered by the executive privilege; Senior national security officials who in the
judgment of the National Security Adviser are covered by the executive privilege; and Such other officers as may be
determined by the President, from appearing in such hearings conducted by Congress without first securing the
president’s approval.

The department heads and the military officers who were invited by the Senate committee then invoked EO 464 to except
themselves. Despite EO 464, the scheduled hearing proceeded with only 2 military personnel attending. For defying
President Arroyo’s order barring military personnel from testifying before legislative inquiries without her approval, Brig.
Gen. Gudani and Col. Balutan were relieved from their military posts and were made to face court martial proceedings.
EO 464’s constitutionality was assailed for it is alleged that it infringes on the rights and duties of Congress to conduct
investigation in aid of legislation and conduct oversight functions in the implementation of laws.

ISSUE: Whether or not EO 464 is constitutional.

HELD: The SC ruled that EO 464 is constitutional in part. To determine the validity of the provisions of EO 464, the SC
sought to distinguish Section 21 from Section 22 of Art 6 of the 1987 Constitution. The Congress’ power of inquiry is
expressly recognized in Section 21 of Article VI of the Constitution. Although there is no provision in the Constitution
expressly investing either House of Congress with power to make investigations and exact testimony to the end that it
may exercise its legislative functions advisedly and effectively, such power is so far incidental to the legislative function as
to be implied.  In other words, the power of inquiry – with process to enforce it – is an essential and appropriate auxiliary
to the legislative function.  A legislative body cannot legislate wisely or effectively in the absence of information respecting
the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess
the requisite information – which is not infrequently true – recourse must be had to others who do possess it.

Section 22 on the other hand provides for the Question Hour. The Question Hour is closely related with the legislative
power, and it is precisely as a complement to or a supplement of the Legislative Inquiry.  The appearance of the members
of Cabinet would be very, very essential not only in the application of check and balance but also, in effect, in aid of
legislation. Section 22 refers only to Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of
legislation, under which anybody for that matter, may be summoned and if he refuses, he can be held in contempt of the
House. A distinction was thus made between inquiries in aid of legislation and the question hour.   While attendance was
meant to be discretionary in the question hour, it was compulsory in inquiries in aid of legislation. Sections 21 and 22,
therefore, while closely related and complementary to each other, should not be considered as pertaining to the same
power of Congress.  One specifically relates to the power to conduct inquiries in aid of legislation, the aim of which is to
elicit information that may be used for legislation, while the other pertains to the power to conduct a question hour, the
objective of which is to obtain information in pursuit of Congress’ oversight function.  Ultimately, the power of Congress to
compel the appearance of executive officials under Section 21 and the lack of it under Section 22 find their basis in the
principle of separation of powers.

While the executive branch is a co-equal branch of the legislature, it cannot frustrate the power of Congress to legislate by
refusing to comply with its demands for information.  When Congress exercises its power of inquiry, the only way for
department heads to exempt themselves therefrom is by a valid claim of privilege.  They are not exempt by the mere fact
that they are department heads.  Only one executive official may be exempted from this power — the President on whom
executive power is vested, hence, beyond the reach of Congress except through the power of impeachment.    It is based
on her being the highest official of the executive branch, and the due respect accorded to a co-equal branch of
government which is sanctioned by a long-standing custom.   The requirement then to secure presidential consent under
Section 1, limited as it is only to appearances in the question hour, is valid on its face.   For under Section 22, Article VI of
the Constitution, the appearance of department heads in the question hour is discretionary on their part. Section 1 cannot,
however, be applied to appearances of department heads in inquiries in aid of legislation.  Congress is not bound in such
instances to respect the refusal of the department head to appear in such inquiry, unless a valid claim of privilege is
subsequently made, either by the President herself or by the Executive Secretary.

When Congress merely seeks to be informed on how department heads are implementing the statutes which it has
issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such
department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in keeping
with the separation of powers, states that Congress may only request their appearance. Nonetheless, when the inquiry in
which Congress requires their appearance is ‘in aid of legislation’ under Section 21, the appearance is mandatory for the
same reasons stated in Arnault.
Akbayan vs Aquino – July 16 2008

FACTS:

Petition for mandamus and prohibition was filed by the petitioners, as congresspersons, citizens and taxpayers,
requesting respondents to submit to them the full text of the Japan-Philippines Economic Partnership Agreement
(JPEPA).

Petitioner emphasize that the refusal of the government to disclose the said agreement violates there right to information
on matters of public concern and of public interest. That the non-disclosure of the same documents undermines their right
to effective and reasonable participation in all levels of social, political and economic decision making.

Respondent herein invoke executive privilege. They relied on the ground that the matter sought involves a diplomatic
negotiation then in progress, thus constituting an exception to the right to information and the policy of full disclosure of
matters that are of public concern like the JPEPA. That diplomatic negotiation are covered by the doctrine of executive
privilege.

Issue:

Whether or not the petition has been entirely rendered moot and academic because of the subsequent event that
occurred?

Whether the information sought by the petitioners are of public concern and are still covered by the doctrine of executive
priviege?

Held:

On the first issue, the Supreme Court ruled that t]he principal relief petitioners are praying for is the disclosure of the
contents of the JPEPA prior to its finalization between the two States parties,” public disclosure of the text of the JPEPA
after its signing by the President, during the pendency of the present petition, has been largely rendered moot and
academic.

The text of the JPEPA having then been made accessible to the public, the petition has become moot and academic to
the extent that it seeks the disclosure of the “full text” thereof.

The petition is not entirely moot, however, because petitioners seek to obtain, not merely the text of the JPEPA, but also
the Philippine and Japanese offers in the course of the negotiations.

Moving on to the second issue, The Supreme Court Ruled that Diplomatic negotiations, therefore, are recognized as
privileged in this jurisdiction, the JPEPA negotiations constituting no exception. It bears emphasis, however, that such
privilege is only presumptive. For as Senate v. Ermita holds, recognizing a type of information as privileged does not
mean that it will be considered privileged in all instances. Only after a consideration of the context in which the claim is
made may it be determined if there is a public interest that calls for the disclosure of the desired information, strong
enough to overcome its traditionally privileged status.

The court adopted also the doctrine in PMPF v. Manglapus, Wherein petitioners were seeking information from the
President’s representatives on the state of the then on-going negotiations of the RP-US Military Bases Agreement. The
Court denied the petition, stressing that “secrecy of negotiations with foreign countries is not violative of the constitutional
provisions of freedom of speech or of the press nor of the freedom of access to information.

SPECIAL SECOND DIVISION

 
COMMISSION ON HUMAN RIGHTS EMPLOYEES   G.R. No. 155336
ASSOCIATION (CHREA) Represented by its  
President, MARCIAL A. SANCHEZ, JR., Present:
Petitioner,  
  PUNO,
  Chairman,
- versus - AUSTRIA-MARTINEZ,
  CALLEJO, SR.,
  TINGA, and
COMMISSION ON HUMAN RIGHTS, CHICO-NAZARIO, JJ.
Respondent.  
  Promulgated:
 
July 21, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 
 
R E S O L U T I ON
 
 
CHICO-NAZARIO, J.:
 
On 25 November 2004, the Court promulgated its Decision [1] in the above-entitled case, ruling in favor of the petitioner. The
dispositive portion reads as follows:
 
WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 and
its Resolution dated 11 September 2002 are hereby REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service
Commission-National Capital Region is REINSTATED. The Commission on Human Rights Resolution No. A98-047 dated 04 September
1998, Resolution No. A98-055 dated 19 October 1998 and Resolution No. A98-062 dated 17 November 1998 without the approval of
the Department of Budget and Management are disallowed. No pronouncement as to costs.[2]
 
 
A Motion for Reconsideration[3] was consequently filed by the respondent to which petitioner filed an Opposition. [4]
 
In its Motion, respondent prays in the main that this Court reconsiders its ruling that respondent is not among the constitutional
bodies clothed with fiscal autonomy.
 
To recall, the facts[5] of the case are as follows:
 
On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the General Appropriations Act of 1998. It
provided for Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy. The last portion of Article XXXIII
covers the appropriations of the CHR. These special provisions state:
 
1.      Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective
appropriations as authorized in this Act, the Constitutional Commissions and Offices enjoying fiscal autonomy are authorized to
formulate and implement the organizational structures of their respective offices, to fix and determine the salaries, allowances, and
other benefits of their personnel, and whenever public interest so requires, make adjustments in their personal services itemization
including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and
employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation
pay in accordance with existing laws, which shall be payable from any unexpended balance of, or savings in the appropriations of
their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances
and other benefits authorized under compensation standardization laws.
 
2.      Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby authorized to use savings in
their respective appropriations for: (a) printing and/or publication of decisions, resolutions, and training information materials; (b)
repair, maintenance and improvement of central and regional offices, facilities and equipment; (c) purchase of books, journals,
periodicals and equipment; (d) necessary expenses for the employment of temporary, contractual and casual employees; (e)
payment of extraordinary and miscellaneous expenses, commutable representation and transportation allowances, and fringe
benefits for their officials and employees as may be authorized by law; and  (f) other official purposes, subject to accounting and
auditing rules and regulations. (Emphasis supplied)
 
On the strength of this special provisions, the Commission on Human Rights [or CHR], through its then Chairperson Aurora P.
Navarette-Recia and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras, Vicente P. Sibulo, and Jorge R. Coquia,
promulgated Resolution No. A98-047 on 04 September 1998, adopting an upgrading and reclassification scheme among selected
positions in the Commission, to wit:
 
WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special provisions applicable to all Constitutional
Offices enjoying Fiscal Autonomy, particularly on organizational structures and authorizes the same to formulate and implement the
organizational structures of their respective offices to fix and determine the salaries, allowances and other benefits of their
respective personnel and whenever public interest so requires, make adjustments in the personnel services itemization including,
but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and
employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation
pay in accordance with existing laws, which shall be payable from any unexpanded balance of, or savings in the appropriations of
their respective offices;
 
WHEREAS, the Commission on Human Rights is a member of the Constitutional Fiscal Autonomy Group (CFAG) and on July 24, 1998,
CFAG passed an approved Joint Resolution No. 49 adopting internal rules implementing the special provisions heretoforth
mentioned;
 
NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and authorizes the upgrading and augmentation
of the commensurate amount generated from savings under Personal Services to support the implementation of this resolution
effective Calendar Year 1998;
 
Let the Human Resources Development Division (HRDD) prepare the necessary Notice of Salary Adjustment and other appropriate
documents to implement this resolution; x x x (Emphasis supplied).
 
Annexed to said resolution is the proposed creation of ten additional plantilla positions, namely: one Director IV position, with Salary
Grade 28 for the Caraga Regional Office, four Security Officer II with Salary Grade 15, and five Process Servers, with Salary Grade 5
under the Office of the Commissioners.
 
On 19 October 1998, CHR issued Resolution No. A98-055 providing for the upgrading  or raising of salary grade of the following
positions in the Commission:
 
xxxx
 
To support the implementation of such scheme, the CHR, in the same resolution, authorized the augmentation of a commensurate
amount generated from savings under Personnel Services.
 
By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR collapsed the vacant positions in the body to provide
additional source of funding for said staffing modification. Among the positions collapsed were: one Attorney III, four Attorney IV,
one Chemist III, three Special Investigator I, one Clerk III, and one accounting Clerk II.
 
The CHR forwarded said staffing modification and upgrading scheme to the Department of Budget and Management [DBM] with a
request for its approval, but the DBM secretary Benjamin Diokno denied the request on the following justification:
 
. . . Based on the evaluations made the request was not favorably considered as it effectively involved the elevation of the field units
from divisions to services.
 
The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26 to Director IV, SG-28. This would
elevate the field units to a bureau or regional office, a level even higher than the one previously denied.
 
The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in the Central Office in effect would elevate
the services to Office and change the context from support to substantive without actual change in functions.
 
In the absence of a specific provision of law which may be used as a legal basis to elevate the level of divisions to a bureau or
regional office, and the services to offices, we reiterate our previous stand denying the upgrading of the twelve (12) positions of
Attorney VI, SG-26 to Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3) Director III, SG-27 to
Director IV, SG-28 in the Central Office.
 
As represented, President Ramos then issued a Memorandum to the DBM Secretary dated 10 December 1997, directing the latter to
increase the number of Plantilla positions in the CHR both Central and Regional Offices to implement the Philippine Decade Plan on
Human Rights Education, the Philippine Human Rights Plan and Barangay Rights Actions Center in accordance with existing
laws. (Emphasis in the original)
 
Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY 1998, no organizational unit or changes
in key positions shall be authorized unless provided by law or directed by the President, thus, the creation of a Finance Management
Office and a Public Affairs Office cannot be given favorable recommendation.
 
Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the Compensation Standardization Law, the Department
of Budget and Management is directed to establish and administer a unified compensation and position classification system in the
government. The Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated January 30, 1996,
that this Department has the sole power and discretion to administer the compensation and position classification system of the
National Government.
 
Being a member of the fiscal autonomy group does not vest the agency with the authority to reclassify, upgrade, and create
positions without approval of the DBM. While the members of the Group are authorized to formulate and implement the
organizational structures of their respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification and Compensation System established
under RA 6758 more popularly known as the Compensation Standardization Law.  We therefore reiterate our previous stand on the
matter. (Emphasis supplied)
 
In light of the DBMs disapproval of the proposed personnel modification scheme, the CSC-National Capital Region Office, through a
memorandum dated 29 March 1999 recommended to the CSC-Central Office that the subject appointments be rejected owing to
the DBMs disapproval of the plantilla reclassification.
 
Meanwhile, the officers of petitioner Commission on Human Rights Employees Association [CHREA], in representation of the rank
and file employees of the CHR, requested the CSC-Central office to affirm the recommendation of the CSC-Regional Office. CHREA
stood its ground in saying that the DBM is the only agency with appropriate authority mandated by law to evaluate and approve
matters of reclassification and upgrading, as well as creation of positions.
 
The CSC-Central Office denied CHREAs request in a Resolution dated 16 December 1999, and reversed the recommendation of the
CSC-Regional Office that the upgrading scheme be censured. The decretal portion of which reads:
 
WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George Q. Dumlao [and], Corazon A. Santos-Tiu,
is hereby denied.
 
CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same on 09 June 2000.
 
Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA elevated the matter to the Court of
Appeals. The Court of Appeals affirmed the pronouncement of the CSC-Central Office and upheld the validity of the upgrading,
retitling, and reclassification scheme in the CHR on the justification that such action is within the ambit of CHRs fiscal
autonomy.The fallo of the Court of Appeals decision provides:
 
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the questioned Civil Service Commission Resolution
No. 99-2800 dated December 16, 1999 as well as No. 001354 dated June 9, 2000, are hereby AFFIRMED. No cost.
 
 
Unfazed, the petitioner elevated its case to this Court and successfully obtained the favorable action in its Decision dated 25
November 2004. In its Motion for Reconsideration of the said Decision, the respondent defined the assignment of errors [6] for
resolution, namely:
 
I. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT GRAVELY AND SERIOUSLY ERRED WHEN IT
RULED THAT THERE IS NO LEGAL BASIS TO SUPPORT THE CONTENTION THAT THE CHR ENJOYS FISCAL AUTONOMY.
 
II. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN STATING THAT THE SPECIAL
PROVISION OF THE REP. ACT. (SIC) NO. 8522 DID NOT SPECIFICALLY MENTION CHR AS AMONG THOSE OFFICES TO WHICH THE
SPECIAL PROVISION TO FORMULATE AND IMPLEMENT ORGANIZATIONAL STRUCTURES APPLY, BUT MERELY STATES ITS COVERAGE
TO INCLUDE CONSTITUTIONAL COMMISSIONS AND OFFICES ENJOYING FISCAL AUTONOMY;
 
III. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED WHEN IT RULED THAT THE CHR
ALTHOUGH ADMITTEDLY A CONSTITUTIONAL CREATION IS NONETHELESS NOT INCLUDED IN THE GENUS OF THE OFFICES ACCORDED
FISCAL AUTONOMY BY CONSTITUTIONAL OR LEGISLATIVE FIAT.
 
IV. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN DECIDING TO REINSTATE THE
RULING DATED 29 MARCH 1999 OF THE CIVIL SERVICE COMMISSION NATIONAL CAPITAL REGION;
 
V. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN DECIDING TO DISALLOW THE
COMMISSION ON HUMAN RIGHTS RESOLUTION NO. A98-047 DATED SEPTEMBER 04, 1998, RESOLUTION NO. A98-055 DATED 19
OCTOBER 1998 AND RESOLUTION NO. A98-062 DATED 17 NOVEMBER 1998 WITHOUT THE APPROVAL OF THE DEPARTMENT OF
BUDGET AND MANAGEMENT.
 
 
Although this Court may have been persuaded to take a second look at this case and partly modify the assailed Decision, such
modification shall not materially affect the dispositive portion thereof.
 
As already settled in the assailed Decision of this Court, the creation of respondent may be constitutionally mandated, but it is not, in
the strict sense, a constitutional commission. Article IX of the 1987 Constitution, plainly entitled Constitutional Commissions,
identifies only the Civil Service Commission, the Commission on Elections, and the Commission on Audit. The mandate for the
creation of the respondent is found in Section 17 of Article XIII of the 1987 Constitution on Human Rights, which reads that
 
Sec. 17. (1) There is hereby created an independent office called the Commission on Human Rights.
 
 
Thus, the respondent cannot invoke provisions under Article IX of the 1987 Constitution on constitutional commissions for its
benefit. It must be able to present constitutional and/or statutory basis particularly pertaining to it to support its claim of fiscal
autonomy.
 
The 1987 Constitution expressly and unambiguously grants fiscal autonomy only to the Judiciary, the constitutional commissions,
and the Office of the Ombudsman.
 
The 1987 Constitution recognizes the fiscal autonomy of the Judiciary in Article VIII, Section 3, reproduced below
 
Sec. 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the legislature below the
amount appropriated for the previous year and, after approval, shall be automatically and regularly released.
 
 
Constitutional commissions are granted fiscal autonomy by the 1987 Constitution in Article IX, Part A, Section 5, a provision applied
in common to all constitutional commissions, to wit
 
Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically and regularly
released.
 
The Office of the Ombudsman enjoys fiscal autonomy by virtue of Article XI, Section 14, of the 1987 Constitution, which provides
that
 
Sec. 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual appropriations shall be automatically and
regularly released.
 
 
Each of the afore-quoted provisions consists of two sentences stating that: (1) The government entity shall enjoy fiscal autonomy;
and (2) its approved annual appropriation shall be automatically and regularly released. The respondent anchors its claim to fiscal
autonomy on the fourth paragraph of Article XIII, Section 17, according to which
 
Sec. 17. x x x
 
xxxx
 
(4) The approved annual appropriations of the Commission shall be automatically and regularly released.
 
 
As compared to the previously quoted Article VIII, Section 3; Article IX, Part A, Section 5; and Article XI, Section 14 of the 1987
Constitution on the Judiciary, the constitutional commissions, and the Office of the Ombudsman, respectively, Article XIII, Section
17(4) on the Commission of Human Rights (CHR) evidently does not contain the first sentence on the express grant of fiscal
autonomy, and reproduces only the second sentence on the automatic and regular release of its approved annual
appropriations.Question now arises as to the significance of such a difference in the way the said provisions are worded.
 
To settle this ambiguity, a perusal of the records of the Constitutional Commission (ConCom) is enlightening.
 
During the drafting of Article XIII, Section 17(4), of the 1987 Constitution, the ConCom members had the following discussion [7]
 
MR. BENGZON. I have another paragraph, Madam President. This could be a separate section or another paragraph depending on
what the committee desires and what the Committee on Style would wish: THE COMMISSION SHALL ENJOY FISCAL AUTONOMY. THE
APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY RELEASED. It will align this
Human Rights Commission with other commissions that we have created in the Constitution in order to further insure the
independence of the Human Rights Commission.
 
MR. DAVIDE. Madam President.
 
THE PRESIDENT. Commissioner Davide is recognized.
 
MR. DAVIDE. I introduced that particular amendment yesterday, but there was a proposed modification presented by Commissioner
Maambong to delete the first sentence. I am in favor of the modification presented earlier. So, may I propose that the particular
amendment should not carry the first sentence, only the second sentence which reads: THE APPROVED ANNUAL APPROPRIATIONS
OF THE COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY RELEASED.
 
MR. BENGZON. Why do we want to delete the sentence which says THE COMMISSION SHALL ENJOY FISCAL AUTONOMY?
 
MR. DAVIDE. That would be a surplusage because the autonomy actually intended is the automatic release of these appropriations.
 
MR. BENGZON. If that is the case, then maybe we should also delete such sentence in the other articles that we have approved. I will
just leave it up to the Committee on Style, as long as it is in the record that that is the sense of the Commission, Madam President.
 
THE PRESIDENT. What does the committee say on this point?
 
MR. SARMIENTO. Accepted, Madam President. We leave it to the Committee on Style, so long as the intent is there.
 
MR. BENGZON. In other words, what we are really saying is that if the Committee on Style feels that it would be more elegant and it
is a surplusage to include the first sentence, then so be it as long as it is recorded in the Journal that it is the sense of the
Commission that the Human Rights Commission will enjoy fiscal autonomy.
 
MR. GUINGONA. Madam President.
 
MR. MONSOD. Madam President.
 
THE PRESIDENT. Commissioner Guingona is recognized.
 
MR. GUINGONA. May I respectfully invite the attention of the honorable Commissioners that there are two committees that are
tasked with the same work and, therefore, reference can be made not only to the Committee on Style but also to the Sponsorship
Committee.
 
Thank you, Madam President.
 
MR. MONSOD. Madam President.
 
THE PRESIDENT. Commissioner Monsod is recognized.
 
MR. MONSOD. Maybe we should just say that the minimum condition that the committee agrees to is: THE APPROVED ANNUAL
APPROPRIATIONS OF THE COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY RELEASED. That is a minimum condition and
we just allow the committees to add the first sentence if they wish. But with the second sentence, the sense is already there.
 
MR. BENGZON. No problem, Madam President.
 
THE PRESIDENT. This was taken up yesterday.
 
MR. BENGZON. But it was deferred, I understand, Madam President. So if we approve this now, then it will be firmly included.
 
THE PRESIDENT. So, will the Commissioner please read it now as it is?
 
MR. BENGZON. I will read the amendment as accepted. THE APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE
AUTOMATICALLY AND REGULARLY RELEASED.
 
THE PRESIDENT. Is there any objection to this proposed amendment which has been accepted by the committee?
 
MR. PADILLA. Madam President.
 
THE PRESIDENT. Commissioner Padilla is recognized.
 
MR. PADILLA. The wording reminds me of the provisions under the judiciary and the constitutional commissions. Is the intention to
elevate the position of this proposed commission which is only investigative and recommendatory to the high dignity of a
constitutional commission, as well as the independence of the judiciary, by making a positive statement in the Constitution that its
appropriation shall be released automatically and so forth? It seems that we are complicating and also reiterating several provisions
that would make our Constitution not only too long but too complicated. I wonder if that is the purpose because even other bodies
with semi-judicial functions do not enjoy such kind of constitutional guarantee. It is just an inquiry.
 
MR. BENGZON. It is not so much the fact that we want to elevate this into a constitutional commission as it is more of an insurance
that the independence of the Human Rights Commission, even though it is not considered as a constitutional commission as
contemplated and as compared to the Civil Service Commission, the COMELEC and COA, is maintained. And this is as elegant as the
other sentences. So, we submit the same to the body.
 
MR. SARMIENTO. The proposed amendment has been accepted by the committee, but we have this objection from Commissioner
Padilla. So, may we throw the issue to the body?
 
MR. GUINGONA. Madam President, just for clarification. Does the amendment of the honorable Commissioner Bengzon refer only to
the release? I was thinking that although I am very, very strongly in favor of this commission and would give it one of the top
priorities, there are other top priorities that we may want to address ourselves to. For example, in the Committee on Human
Resources, we would like to give top priority to education; therefore, if this does not refer only to an automatic and regular release
but would refer to the matter of priorities in the preparation of the budget, then I am afraid that we might already be curtailing too
much the discretion on the part of both the legislature and the executive to determine the priorities that should be given at a given
time.
 
MR. BENGZON. Madam President, the sentence means what it says and it is clear.
 
THE PRESIDENT. Will the Commissioner please read.
 
MR. BENGZON. It only refers to the release which should be automatic and regular.
 
THE PRESIDENT. Please state it again so that we will be clarified before we take a vote.
 
MR. GUINGONA. Thank you, Madam President.
 
MR. BENGZON. It will read: THE APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE AUTOMATICALLY AND
REGULARLY RELEASED.
 
VOTING
 
THE PRESIDENT. As many as are in favor of this particular section, please raise their hand. (Several Members raised their hand.)
 
As many as are against, please raise their hand. (Few Members raised their hand.)
 
As many as are abstaining, please raise their hand. (Two Members raised their hand.)
 
The results show 26 votes in favor, 4 against and 2 abstentions; the amendment is approved. (Emphases supplied.)
 
 
The respondent relies on the statement of then Constitutional Commissioner Hilario G. Davide, Jr. that the first sentence on the
express grant of fiscal autonomy to the respondent was deleted from Article XIII, Section 17(4) of the 1987 Constitution because it
was a surplusage. Respondent posits that the second sentence, directing the automatic and regular release of its approved annual
appropriations, has the same essence as the express grant of fiscal autonomy, thus rendering the first sentence redundant and
unnecessary.
 
This Court, however, believes otherwise. The statement of then Constitutional Commissioner Davide should be read in full. Referring
to the deletion of the first sentence on the express grant of fiscal autonomy, he explained that the first sentence would be a
surplusage because the autonomy actually intended is the automatic release of these appropriations.[8] (Emphasis supplied.)
 
Even in the latter discussion between Constitutional Commissioners Jose F.S. Bengzon, Jr. and Serafin V.C. Guingona, wherein
Constitutional Commissioner Guingona asked for clarification whether respondent shall also be extended priorities in the
preparation of the national budget, Constitutional Commissioner Bengzon replied that x x x the sentence means what it says and it is
clear,[9] and that [i]t only refers to the release which should be automatic and regular. [10]
 
Therefore, after reviewing the deliberations of the ConCom on Article XIII, Section 17(4), of the 1987 Constitution, in its entirety, not
just bits and pieces thereof, this Court is convinced that the ConCom had intended to grant to the respondent the privilege of having
its approved annual appropriations automatically and regularly released, but nothing more. While it may be conceded that the
automatic and regular release of approved annual appropriations is an aspect of fiscal autonomy, it is just one of many others.
 
This Court has already defined the scope and extent of fiscal autonomy in the case of Bengzon v. Drilon,[11] as follows
 
As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service Commission, the Commission on
Audit, the Commission on Elections, and the Office of the Ombudsman contemplates a guarantee of full flexibility to allocate and
utilize their resources with the wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess
and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans of the
government and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the discharge of
their functions.
 
Fiscal autonomy means freedom from outside control. x x x
 
 
The foregoing excerpt sufficiently elucidates that the grant of fiscal autonomy is more extensive than the mere automatic and
regular release of approved annual appropriations of the government entity. It is also worth stressing herein that in Bengzon v.
Drilon, this Court, ruling En Banc, only recognized the fiscal autonomy of the Judiciary; the constitutional commissions, namely, the
Civil Service Commission, the Commission on Audit, and the Commission on Elections; and the Office of the
Ombudsman. Respondent is conspicuously left out of the enumeration.
 
Moreover, the ConCom had the following deliberations [12] on the meaning of the fiscal autonomy extended to the constitutional
commissions in what is to become later Article IX, Part A, Section 5, of the 1987 Constitution
 
THE PRESIDING OFFICER (Mr. Treas). Commissioner de Castro is recognized.
 
MR. DE CASTRO: Thank you.
This morning, I asked the proponent of this resolution what is included in the term fiscal autonomy. The answer I got is that it is for
the automatic release of the budget. I propose that the sentence The Commissions shall enjoy fiscal autonomy be deleted but the
second sentence shall remain. The reason is that it is already redundant. Fiscal autonomy means the automatic release of
appropriations.
 
MR. MONSOD. Mr. Presiding Officer, may we answer the honorable Commissioner.
I think the answer of the Chairman of our Committee this morning was that it would involve the automatic and regular release of the
funds once approved.  In addition, we are suggesting that fiscal autonomy include the nonimposition of any other procedures, for
example, a preaudit system in the commissions or bodies that enjoy fiscal autonomy.  So, actually, the definition of fiscal autonomy
would be a bit broader than just the automatic release.
 
MR. DE CASTRO. Does the Commissioner mean that these commissions will not be subjected to preaudit?
 
MR. MONSOD. Our proposal actually in the provisions on the Commission on Audit is that they be subjected to comprehensive
postaudit procedures and where their internal control system is inadequate, in the opinion of the Commission on Audit, then the
commission may also take such measures as are necessary to correct the inadequacies which might include special preaudit systems.
 
THE PRESIDING OFFICER (Mr. Treas). The Chair understands, therefore, that the proposed amendment of Commissioner de Castro is
not acceptable to the Committee?
 
MR. DE CASTRO. Not yet, Mr. Presiding Officer, because we are still on the answer to me this morning, which stated the record will
bear me out that fiscal autonomy means the automatic release of appropriations. It means the automatic release and nothing
more. We were in the same Committee and when we asked the COA about this, they insisted that there must be preaudit. If fiscal
autonomy means that there will be no preaudit, I do not know what will happen to this.
 
THE PRESIDING OFFICER (Mr. Treas). So, what is the stand of the Committee insofar as the proposed amendment of Commissioner
de Castro is concerned?
 
MR. DE CASTRO. May I just say one sentence, Mr. Presiding Officer? If the Committees stand is that fiscal autonomy means the
automatic release of the appropriations, then I say that the first sentence The Commissions shall enjoy fiscal autonomy -- should be
deleted because it is a repetition of the second sentence.
Thank you.
 
MR. MONSOD.  Mr. Presiding Officer, the position of the Committee is that fiscal autonomy may include other things than just the
automatic and regular release of the funds.
 
THE PRESIDING OFFICER (Mr. Treas). With that explanation, what is the pleasure of Commissioner de Castro? Does he insist on his
amendment?
 
MR. DE CASTRO. Is the Chairman changing his answer from this mornings question? If he does, I will ask some more questions about
fiscal autonomy.
 
MR. MONSOD. Mr. Presiding Officer, I think at the beginning of this exchange, we already told the honorable Commissioner that the
Chairman of the Committee had not meant to make it an all-inclusive definition. And if he was misled into thinking of another
meaning, we apologize for it. But our position is that fiscal autonomy would include other rights than just merely automatic and
regular disbursement.
 
MR. DE CASTRO. Does it include exception from preaudit?
 
MR. MONSOD. Yes, it would include the imposition of certain preaudit requirements for release, because if the preaudit
requirements are inserted into the process of release, it would defeat the objective of automatic and regular release.
 
 
Based on the preceding exchange, it can be derived that the first sentence of Article IX, Part A, Section 5, of the 1987 Constitution,
expressly granting fiscal autonomy to constitutional commissions, does not have the same meaning as the second sentence,
directing the automatic and regular release of their approved annual appropriations, hence, the resistance of Constitutional
Commissioner Christian S. Monsod to the suggested amendment of Constitutional Commissioner Crispino M. De Castro to just
delete the first sentence.
 
In addition, the Constitutional Fiscal Autonomy Group (CFAG), to which respondent avers membership, defined the term fiscal
autonomy in its Joint Resolution No. 49, dated 24 July 1998, as follows
 
IV. Definition of Terms:
 
1.      Fiscal Autonomy shall mean independence or freedom regarding financial matters from outside control and is characterized by
self direction or self determination.  It does not mean mere automatic and regular release of approved appropriations to agencies
vested with such power in a very real sense, the fiscal autonomy contemplated in the constitution is enjoyed even before and, with
more reasons, after the release of the appropriations. Fiscal autonomy encompasses, among others, budget preparation and
implementation, flexibility in fund utilization of approved appropriations, use of savings and disposition of receipts. x x x (Emphasis
supplied.)
 
 
While the assailed Decision and the present Resolution may render the status of respondents membership in CFAG uncertain, the
then Chairperson of respondent, Aurora P. Navarrete-Recina, duly signed CFAG Joint Resolution No. 49, and respondent should be
held bound by the definition of fiscal autonomy therein. CFAG Joint Resolution No. 49 categorically declares that fiscal autonomy
means more than just the automatic and regular release of approved appropriation, and also encompasses, among other things: (1)
budget preparation and implementation; (2) flexibility in fund utilization of approved appropriations; and (3) use of savings and
disposition of receipts. Having agreed to such a definition of fiscal autonomy, respondent has done a complete turn-about herein
and is now contradicting itself by arguing that the automatic and regular release of its approved annual appropriations is already
tantamount to fiscal autonomy.
 
Consequently, this Court concludes that the 1987 Constitution extends to respondent a certain degree of fiscal autonomy through
the privilege of having its approved annual appropriations released automatically and regularly. However, it withholds from
respondent fiscal autonomy, in its broad or extensive sense, as granted to the Judiciary, constitutional commissions, and the Office
of the Ombudsman. Operative herein is the rule of statutory construction, expressio unius est exclusio alterius, wherein the express
mention of one person, thing, or consequence implies the exclusion of all others. [13] The rule proceeds from the premise that the
legislature (or in this case, the ConCom) would not have made specific enumerations in a statute (or the Constitution) had the
intention not been to restrict its meaning and to confine its terms to those expressly mentioned. [14]
 
The provisions of Executive Order No. 292, otherwise known as the Administrative Code of 1987, on the fiscal autonomy of
constitutional commissions, the Office of the Ombudsman, and the respondent, merely follow the phraseology used in the
corresponding provisions of the 1987 Constitution, thus
 
Book II, Chapter 5, Section 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The approved annual
appropriations shall be automatically and regularly released.
 
Book V, Title II, Subtitle B, Section 4. Fiscal Autonomy. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved
annual appropriations shall be automatically and regularly released.
 
Book V, Title II, Subtitle A, Section 6. Annual Appropriations.  The approved annual appropriations of the Commission on Human
Rights shall be automatically and regularly released.
 
While the Administrative Code of 1987 has no reference to the fiscal autonomy of the Judiciary, it does have provisions on the fiscal
autonomy of the constitutional commissions and the Office of the Ombudsman. It is very interesting to note that while Book II,
Chapter 5, Section 26 (on constitutional commissions) and Book V, Title 2, Subtitle B, Section 4 (on the Office of the Ombudsman) of
the Code are entitled Fiscal Autonomy, Book V, Title 2, Subtitle A, Section 6 (on respondent) bears the title Annual
Appropriations.Further, the provisions on the constitutional commissions and the Office of the Ombudsman in the Administrative
Code of 1987, just like in the 1987 Constitution, are composed of two sentences: (1) The government entity shall enjoy fiscal
autonomy; and (2) Its approved annual appropriation shall be automatically and regularly released. The provision on respondent in
the same Code is limited only to the second sentence.
 
Respondent asserts that it is granted fiscal autonomy by Book VI, Chapter 1, Section 1, paragraph 9, of the Administrative Code of
1987, which reads
 
SEC. 1. Constitutional Policies on the Budget.
 
xxxx
 
(9) Fiscal autonomy shall be enjoyed by the Judiciary, Constitutional Commissions, Office of the Ombudsman, Local Government and
Commission on Human Rights.
 
 
As its title suggests, the afore-cited provision is supposed to merely re-state the policies on budget as declared by the 1987
Constitution and, therefore, cannot grant or extend to the respondent a privilege not found in the 1987 Constitution. Book VI of the
Administrative Code of 1987, under which the said provision is found, pertains to National Government Budgeting. Respondent may
have been included in the enumeration of fiscally autonomous government entities because it does enjoy an aspect of fiscal
autonomy, that of the automatic and regular release of its approved annual appropriations from the national budget. The general
declaration of fiscal autonomy of the respondent in Section 1, paragraph 9, of Book V of the Administrative Code of 1987 on National
Government Budgeting, must be qualified and limited by Section 6 of Book V, Title II, Subtitle A of the same Code specifically
pertaining to respondent. It should be borne in mind that the general rule is that a word, phrase or provision should not be
construed in isolation, but must be interpreted in relation to other provisions of the law. [15]
 
To reiterate, under the Constitution, as well as the Administrative Code of 1987, respondent enjoys fiscal autonomy only to the
extent that its approved annual appropriations shall be automatically and regularly released, but nothing more.
 
On the main issue of whether or not the approval by the Department of Budget and Management (DBM) is a condition precedent to
the enactment of an upgrading, reclassification, creation and collapsing of plantilla positions in the CHR, this Court staunchly holds
that as prescinding from the legal and jurisprudential yardsticks discussed in length in the assailed Decision, the imprimatur of the
DBM must first be sought prior to implementation of any reclassification or upgrading of positions in government.
 
Regardless of whether or not respondent enjoys fiscal autonomy, this Court shares the stance of the DBM that the grant of fiscal
autonomy notwithstanding, all government offices must, all the same, kowtow to the Salary Standardization Law. This Court is of the
same mind with the DBM[16] on its standpoint, thus
 
Being a member of the fiscal autonomy group does not vest the agency with the authority to reclassify, upgrade, and create
positions without approval of the DBM. While the members of the Group are authorized to formulate and implement the
organizational structures of their respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification and Compensation System established
under RA 6758 more popularly known as the Compensation Standardization Law. x x x (Emphasis supplied).
To drive home this point, in the special provision covering the Judiciary as quoted above, the Judiciary was not vested with the
power to formulate and implement organizational structures beyond the salary rates, allowances and other benefits under the
compensation standardization laws. Stated differently, although the Judiciary is allowed to reorganize, any such reorganization must,
nevertheless, be in strict adherence to the Salary Standardization Law. Ergo, any reorganization therein must be with the conformity
of the DBM inasmuch as it is the government arm tasked by law to implement the Salary Standardization Law.
 
In Republic Act No. 9227, or An Act Granting Additional Compensation in the Form of Special Allowances for Justices, Judges and All
Other Positions in the Judiciary with the Equivalent Rank of Justices of the Court of Appeals and Judges of the Regional Trial Court,
and for Other Purposes, the grant of Special Allowances to members of the Judiciary did not operate to exempt members thereof
from the Salary Standardization Law. In Section 7 of Republic Act No. 9227, the Supreme Court and the DBM were specifically tasked
to issue the necessary guidelines for the proper implementation of this Act in respect to funds coming from the National Treasury.
[17]
 Resultantly, the Supreme Court and the DBM issued Joint Circular No. 2004-1 on 13 January 2004 which provided guidelines on
the funding source for the grant of this special allowance. Thus, although Administrative Order No. 137, issued by President Gloria
Macapagal-Arroyo on 27 December 2005, extended to the Chairman and Commissioners or Members of the CHR the same benefits
and privileges enjoyed by members of constitutional commissions and the Judiciary in the matter of rationalized rate of allowances
and liberalized computation of retirement benefits and accumulated leave credits, it still does not exempt respondent from the
Salary Standardization Law.
 
If the Judiciary, a co-equal branch of government, which was expressly granted by the Constitution with fiscal autonomy, is required
to conform to the Salary Standardization Law and is subject to the scrutiny of the DBM, sagaciously, the respondent cannot be
deemed to enjoy a better position than the Judiciary. The respondent must, likewise, toe the line.
 
This Court shall no longer belabor the point it has already delved upon in length in its Decision that Congress has delegated to the
DBM the power to administer the Salary Standardization Law, which power is part of the system of checks and balances or system of
restraints in the Philippine government. This Court, thus, reiterates the point that the DBMs exercise of such authority is not in itself
an arrogation inasmuch as it is pursuant to the 1987 Constitution, the paramount law of the land; the Salary Standardization Law;
and the Administrative Code of 1987.
 
In line with its role to breathe life into the policy behind the Salary Standardization Law of providing equal pay for substantially equal
work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the
positions, the DBM, in the case under review, made a determination, after a thorough evaluation, that the reclassification and
upgrading scheme proposed by the respondent lacks legal rationalization.
 
The DBM expounded that Section 78 of the General Provisions of the General Appropriations Act (GAA), FY 1998, which the
respondent heavily relies upon to justify its reclassification scheme, explicitly provides that no organizational unit or changes in key
positions shall be authorized unless provided by law or directed by the President. Here, the DBM discerned that there is no law
authorizing the creation of a Finance Management Office and a Public Affairs Office in the CHR. Anent respondents proposal to
upgrade twelve (12) positions of Attorney VI, SG-28 to Director IV, SG-28, and three (3) positions of Director III, SG-27 to Director IV,
SG-28, in its Central Office, the DBM denied the same as this would change the context from support to substantive without actual
change in functions.
 
This view of the DBM, as the laws designated body to implement and administer a unified compensation system, is beyond cavil. The
interpretation of an administrative government agency, which is tasked to implement a statute, is accorded great respect and
ordinarily controls the construction of the courts. In Energy Regulatory Board v. Court of Appeals,[18] the Court echoed the basic rule
that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the
regulation of activities coming under the special technical knowledge and training of such agencies.
 
To be sure, considering his expertise on matters affecting the nations coffers, the Secretary of the DBM, as the Presidents alter ego,
knows from where he speaks inasmuch as he has the front seat view of the adverse effects of an unwarranted upgrading or creation
of positions in the CHR in particular and in the entire government in general.
As the final thrust, given this Courts previous pronouncement in the present Resolution that the fiscal autonomy granted to the
respondent by the 1987 Constitution and the Administrative Code of 1987 shall be limited only to the automatic and regular release
of its approved annual appropriations, respondent is precluded from invoking the Special Provisions Applicable to All Constitutional
Offices Enjoying Fiscal Autonomy in the 1998 GAA. The said Special Provisions read
 
Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy
1. Organization Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective
appropriations as authorized in this Act, the Constitutional Commissions and Offices enjoying fiscal autonomy are authorized to
formulate and implement the organizational structures of their respective offices, to fix and determine the salaries, allowances, and
other benefits of their personnel, and whenever public interest so requires, make adjustments in the personal services itemization
including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That the officers
and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and
separation pay in accordance with existing laws, which shall be payable from any unexpended balance of, or savings in the
appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary
rates, allowances and other benefits authorized under compensation standardization laws.
2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby authorized to use savings in their
respective appropriations for; (a) printing and/or publication of decisions, resolutions, and training information materials; (b) repair,
maintenance and improvement of central and regional offices, facilities and equipment; (c) purchase of books, journals, periodicals
and equipment; (d) necessary expenses for the employment or temporary, contractual and casual employees; (e) payment of
extraordinary and miscellaneous expenses, commutable representation and transportation allowances, and fringe benefits for their
officials and employees as may be authorized by law; and (f) other official purposes, subject to accounting and auditing rules and
regulations.
 
It is unequivocal that the afore-quoted Special Provisions of the 1998 GAA refer to the broad and extensive concept of fiscal
autonomy. They already go beyond ensuring the automatic and regular release of the approved annual appropriations, but already
enumerate the ways by which the named government entities can use their appropriations to effect changes in their organizational
structure and their savings for certain official purposes. Even assuming arguendo that the said Special Provisions are applicable to
respondent, it should be noted that the last sentence in paragraph 1 qualifies the power of a fiscally autonomous government entity
to formulate and implement changes in its organizational structure so that, x x x the implementation hereof shall be in accordance
with salary rates, allowances and other benefits authorized under compensation standardization laws. And, as exhaustively
expounded in the assailed Decision and the herein Resolution, only the DBM has the authority and the technical expertise to
determine compliance by respondent to the provisions of the Salary Standardization Law.
 
WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The assailed Decision of this Court dated 25 November 2004 is
hereby MODIFIED, declaring the respondent CHR as a constitutional body enjoying limited fiscal autonomy, in the sense that it is
entitled to the automatic and regular release of its approved annual appropriations; nonetheless, it is still required to conform to the
Salary Standardization Law. Accordingly, its entire reclassification scheme remains subject to the approval of the DBM. No
pronouncement as to costs.
 
SO ORDERED.
 
 
 
MINITA V. CHICO-NAZARIO
  Associate Justice

 
AGAN VS PIATCO EN BANC
Posted by kaye lee on 3:33 PM

G.R. No. 155001.  May 5, 2003 En Banc [Non-legislative power of Congress; Police Power; Delegation of emergency
powers]

FACTS:

On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/MIAA for the
development of NAIA International Passenger Terminal III (NAIA IPT III).

DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for the implementation of the project and
submitted with its endorsement proposal to the NEDA, which approved the project.

On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive
or comparative proposals on AEDC’s unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended.  

On September 20, 1996, the consortium composed of People’s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air
and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium)
submitted their competitive proposal to the PBAC.  PBAC awarded the project to Paircargo Consortium. Because of that,
it was incorporated into Philippine International Airport Terminals Co., Inc.

AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its objections as regards the
prequalification of PIATCO.

On July 12, 1997, the Government and PIATCO signed the “Concession Agreement for the Build-Operate-and-Transfer
Arrangement of the NAIA Passenger Terminal III” (1997 Concession Agreement).  The Government granted PIATCO the
franchise to operate and maintain the said terminal during the concession period and to collect the fees, rentals and other
charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement.  The Agreement
provided that the concession period shall be for twenty-five (25) years commencing from the in-service date, and may be
renewed at the option of the Government for a period not exceeding twenty-five (25) years.  At the end of the concession
period, PIATCO shall transfer the development facility to MIAA.

Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing
concession contracts with various service providers to offer international airline airport services, such as in-flight catering,
passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing,
and other services, to several international airlines at the NAIA.

On September 17, 2002, the workers of the international airline service providers, claiming that they would lose their job
upon the implementation of the questioned agreements, filed a petition for prohibition. Several employees of MIAA
likewise filed a petition assailing the legality of the various agreements.

During the pendency of the cases, PGMA, on her speech, stated that she will not “honor (PIATCO) contracts which the
Executive Branch’s legal offices have concluded (as) null and void.”

ISSUE:
Whether or not the State can temporarily take over a business affected with public interest.

RULING:

Yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on temporary
government takeover and obligate the government to pay “reasonable cost for the use of the Terminal and/or
Terminal Complex.”

Article XII, Section 17 of the 1987 Constitution provides:

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency
and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public
utility or business affected with public interest.

The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police
power, to temporarily take over the operation of any business affected with public interest. The duration of the emergency
itself is the determining factor as to how long the temporary takeover by the government would last. The temporary
takeover by the government extends only to the operation of the business and not to the ownership thereof. As such
the government is not required to compensate the private entity-owner of the said business as there is no
transfer of ownership, whether permanent or temporary. The private entity-owner affected by the temporary takeover
cannot, likewise, claim just compensation for the use of the said business and its properties as the temporary takeover by
the government is in exercise of its police power and not of its power of eminent domain.

Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the
government to “temporarily take over or direct the operation of any privately owned public utility or business affected with
public interest.” It is the welfare and interest of the public which is the paramount consideration in determining whether or
not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is exercising its
police power. Police power is the “most essential, insistent, and illimitable of powers.” Its exercise therefore must not be
unreasonably hampered nor its exercise be a source of obligation by the government in the absence of damage due to
arbitrariness of its exercise. Thus, requiring the government to pay reasonable compensation for the reasonable use of
the property pursuant to the operation of the business contravenes the Constitution.

Del Mar v. PAGCOR Facts: · PAGCOR requested for legal advice from the Secretary of Justice as to whether or not it is
authorized by its Charter to operate and manage jai-alai frontons (courts) in the country. · The Secretary of Justice
opined that the authority of PAGCOR to operate and maintain games of chance or gambling extends to jai-alai which is a
form of sport or game played for bets and that the Charter of PAGCOR amounts to a legislative franchise for the purpose.
· Petitioner Raoul B. Del Mar initially filed a Petition for Prohibition (GR 138298) to prevent PAGCOR from managing
and/or operating the jai-alai or Basque pelota games, by itself of in agreement with Belle Corporation, on the ground that
the controverted act is patently illegal and devoid of any basis either from the Constitution or PAGCOR⠀™s own Charter.
· PAGCOR later entered into an agreement with Belle Jai Alai Corporation, wherein Belle will make available to
PAGCOR the required facilities, as well as provide the needed funding for jai-alai operations with no financial outlay from
PAGCOR, while PAGCOR handles the actual management and operation of jai-alai. · Petitioner Del Mar filed a
Supplemental Petition for Certiorari questioning the validity of the agreement on the ground that PAGCOR is without
jurisdiction, legislative franchise, authority or power to enter into such Agreement for the opening, establishment,
operation, control and management of jai-alai games. · Petitioners Federico S. Sandoval II and Michael T. Defensor filed
a Petition for Injunction (GR 138982) to enjoin PAGCOR from operating or managing said jai-alai games. · In this case,
a Petition in Intervention was filed by Juan Miguel Zubiri alleging that the operatin by PAGCOR of jai-alai is illegal
because it is not included in the scope of PAGCOR⠀™s franchise which covers only games of chance. Procedural Issue:
· Does the Court have jurisdiction to take original cognizance of a petition for injunction because it is not one of those
actions specifically mentioned in Sec. 1, Rule 57? Substantive Issue: · Does PAGCOR have the authorization to
manage or otherwise operate jai-alai games? Ruling on Procedural Issue: · YES. It is axiomatic that what determines the
nature of an action and hence, the jurisdiction of the court, are the allegations of the pleading and the character of the
relief sought. · A cursory perusal of the petition in GR 138982 will show that it is actually one for Prohibition. · Even
assuming arguendo, that it is an action for injunction, this Court has the discretionary power to take cognizance of the
petition at bar if compelling reasons, or the nature and importance of the issues raised, warrant the immediate exercise of
its jurisdiction. · Rules of procedure are but tools designed to facilitate the attainment of justice such that when its rigid
applications tends to frustrate rather than promote substantial justice, this Court has the duty to suspend their operation.
Ruling on Substantive Issue: · NO. A historical study of the creation, growth and development of PAGCOR will really
show that it was never given a legislative franchise to operate jai-alai. · Section 1 of PD 1067-B provides the nature and
term of PAGCOR’s franchise to maintain gambling casinos (not a franchise to operate jai-alai); · Section 2 of the
same decree spells out of the scope of the PAGCOR franchise to maintain gambling casinos (not a franchise to operate
jai-alai); · PD 1399, amending PD 1067-A and PD 1067-B did not have any amendments that changed the nature and
scope of the PAGCOR franchise to maintain gambling casinos. · EO No. 169, issued by President Corazon Aquino,
revoked the franchise of the Philippines Jai-Alai and Amusement Corporation controlled by the Romualdezes to operate
jai-alai in Manila. PAGCOR’s franchise to operate gambling casinos was not revoked; but neither was it given a
franchise to operate jai-alai. · It is abundantly clear from the aforequoted laws, executive orders and decrees that the
legislative practice is that a franchise to operate jai-alai is granted solely for that purpose and the terms and conditions of
the grant are unequivocably defined by the grantor. Such express grant and its conditionalities protective of the public
interest are evidently wanting in PD 1869, the present Charter of PAGCOR. · In fine, PD 1869 does not have the
standard marks of a law granting a franchise to operate jai-alai as those found under PD 810 or EO 135. PD 1869 deals
with details pertinent alone to the operation of gambling casinos. · The short point is that PD 1869 does not have the
usual provisions with regards to jai-alai. · Legislative franchise to operate jai-alai is imbued with public interest and
involves an exercise of police power. The familiar rule is that laws which grant the right to exercise a part of the police
power of the state are to be construed strictly and any doubt must be resolved against the grant. · A statute which
legalizes a gambling activity or business should be strictly construed and every reasonable doubt must be resolved to limit
the powers and rights claimed under its authority. · In addition, PAGCOR⠀™s franchise was not granted by a real
Congress where the passage of the law requires a more rigorous process; it was enacted in the exercise of the legislative
power of President Marcos. It is self-evident that there is a need to be extra cautious in treating this alleged grant of a
franchise as a grant by the legislature, as a grant by the representatives of our people, for plainly it is not.
JAWORSKI vs. PAGCOR

JAWORSKI vs. PAGCOR

G.R. No. 144463 - January 14, 2004

FACTS:

The Philippine Amusement and Gaming Corporation (PAGCOR) is a government owned and controlled corporation
existing under PD No. 1869 issued on July 11, 1983 by then President Ferdinand Marcos.

On March 31, 1998, PAGCOR’s board of directors approved an instrument denominated as “Grant of Authority and
Agreement for the Operation of Sports Betting and Internet Gaming,” which granted Sports and Games and Entertainment
Corporation (SAGE) the authority to operate and maintain Sports Betting station in PAGCOR’s casino locations, and
Internet Gaming facilities to service local and international bettors, provided that to the satisfaction of PAGCOR,
appropriate safeguards and procedures are established to ensure the integrity and fairness of the games. On September
1, 1998, PAGCOR, represented by its Chairperson, Alicia LI. Reyes, and SAGE, represented by its Chairman of the
Board, Henry Sy, Jr., and its President, Antonio D. Lacdao, executed the above-named document. Pursuant to the
authority granted by PAGCOR, SAGE commended its operations by conducting gambling on the Internet on a trial-run
basis, making pre-paid cards and redemption of winnings available at various Bingo Bonanza outlets.

Petitioner Senator Robert Jaworski, in his capacity as member of the Senate and Chairman of the Senate Committee on
Games, Amusement and Sports, filed the instant petition, praying that the grant of authority by PAGCOR in favor of SAGE
be nullified. He maintains that PAGCOR committed grave abuse of discretion amounting to lack or excess of jurisdiction
when it authorized SAGE to operate gambling on the internet. He contends that PAGCOR is not authorized under its
legislative franchise, PD No. 1869, to operate gambling on the internet for the simple reason that the said decree could
not have possibly contemplated internet gambling since at the time of its enactment on July 11, 1983 the internet was yet
inexistent and gambling activities were confined exclusively to real-space. Further, he argues that the internet, being an
international network of computers, necessarily transcends the territorial jurisdiction of the Philippines, and the grant to
SAGE of authority to operate internet gambling contravenes the limitation of PAGCOR’s franchise, under Section 14 of
PD No. 1869 which provides: “Place. – The Corporation [i.e., PAGCOR] shall conduct gambling activities or games of
chance on land or water within the territorial jurisdiction of the Republic of the Philippines. x x x.”

Moreover, according to petitioner, internet gambling does not fall under any of the categories of the authorized gambling
activities enumerated under Section 10 of PD No. 1869 which grants PAGCOR the “right, privilege and authority to
operate and maintain gambling casinos, clubs, and other recreation or amusement places, sports gaming pools, within the
territorial jurisdiction of the Republic of the Philippines.” He contends that internet gambling could not have been included
within the commonly accepted definition of “gambling casinos,” “clubs” or “other recreation or amusement places” as
these terms refer to a physical structure in real-space where people who intend to bet or gamble go and play games of
chance authorized by law.

ISSUE:Whether or not PAGCOR is allowed to contract any of its franchise to another entity such as SAGE.

RULING:No.A legislative franchise is a special privilege granted by the state to corporations. It is a privilege of public
concern which cannot be exercised at will and pleasure, but should be reserved for public control and administration,
either by the government directly, or by public agents, under such conditions and regulations as the government may
impose on them in the interest of the public. It is Congress that prescribes the conditions on which the grant of the
franchise may be made. Thus the manner of granting the franchise, to whom it may be granted, the mode of conducting
the business, the charter and the quality of the service to be rendered and the duty of the grantee to the public in
exercising the franchise are almost always defined in clear and unequivocal language.

While PAGCOR is allowed under its charter to enter into operator’s and/or management contracts, it is not allowed under
the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as
SAGE. PAGCOR cannot delegate its power in view of the legal principle of delegata potestas delegare non potest,
inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so. In Lim v. Pacquing, the
Court clarified that “since ADC has no franchise from Congress to operate the jai-alai, it may not so operate even if it has
a license or permit from the City Mayor to operate the jai-alai in the City of Manila.” By the same token, SAGE has to
obtain a separate legislative franchise and not “ride on” PAGCOR’s franchise if it were to legally operate on-line Internet
gambling.

KMU v. GARCIA

239 SCRA 386

FACTS:

The Department of Transportation and Communication (DOTC) and the Land Transportation Franchising and Regulatory
Board (LTFRB) released memoranda allowing provincial bus operators to charge passengers rates within 15% above and
below the official LTFRB rate for a period of one year. Provincial Bus Operators Association of the Philippines applied for
fare rate increase. This was opposed by the Philippine Consumer Foundation, Inc. and Perla Bautista as they were
exorbitant and unreasonable.

ISSUE:

Whether or not the provincial bus operators have authority to reduce and increase fare rates based on the order of the
LTFRB

HELD:

The Legislature delegated to the defunct Public Service Commission the power of fixing rates of public services and the
LTFRB is likewise vested with the same. Such delegation is permitted in order to adapt to the increasing complexity of
modern life. The authority given by the LTFRB to the provincial bus operators to set a fare range is illegal and invalid as it
is tantamount to an undue delegation of legislative authority. Potestas delegata non delegari protest. What has been
delegated cannot be delegated. A further delegation of power would constitute a negation of the duty in violation of the
trust reposed in the delegate mandated to discharge it directly. The policy of allowing the provincial bus operators to
change their fares would lead to a chaotic situation and would leave the riding public at the mercy of transport operators.