G.R. No.

155336 November 25, 2004

COMMISSION ON HUMAN RIGHTS EMPLOYEES ASSOCIATION
(CHREA), petitioner VS
COMMISSION ON HUMAN RIGHTS (CHR), respondent
Ponente: Chico-Nazario, J.:

FACTS:

September 4, 1998 CHR promulgated Resolution No. A98-047

adopting an upgrading and reclassification scheme among
selected positions in the commission and ordering its Human
Resources Department Division to prepare the necessary
Notice of Salary Adjustment and other appropriate documents
to implement the resolution

October 19, 1998 CHR issued Resolution No. A98-055

providing for the upgrading and raising of salary grades of
certain positions in the commission. According to the same
resolution, savings under Personnel Services would be used to
support the implementation of the scheme.

November 17, 1998 CHR issued Resolution No. A98-062

collapsing vacant positions in the body to provide additional
source of funding for said staffing modification.
The CHR forwarded said staffing modification and upgrading
scheme to the DBM with a request for its approval, but the
then DBM Secretary Benjamin Diokno denied the request with
the justifications that

The upgrading scheme involved elevating the level of

divisions to a bureau or regional office, and elevating services
to offices
Section 78 of the General Provisions of the GAA of 1998 says
that no organizational unit or changes in key positions shall be
authorized unless provided by law or directed by the
president, and there is no existing law which the CHR can use
as a legal basis for their proposed scheme.
Section 2 of R.A. No. 6758 known as the Compensation
Standardization Law, provides that the DBM is directed to
establish and administer a unified compensation and position
classification system in the government. And the Supreme
Court ruled in Victorina Cruz vs Court of Appeals G.R. No.
119155 that the DBM has the sole power and discretion to
administer the compensation and position classification
system of the National Government.
Though the CHR may be a member of the CFAG
(Constitutional Fiscal Autonomy Group), it is not vested with
the authority to reclassify, upgrade and create positions
without the approval of the DBM. The members of the CFAG
may formulate and implement organizational structures but
these must be within the parameters of the Unified Position
Classification and Compensation System established under
R.A. 6758.
In light of the DMBs disapproval, the CSC-NCR Office
recommended to the CSC-Central Office that the subject
appointments be rejected. The petitioner CHREA also
requested the CSC-Central Office to affirm the
recommendation.
However, the CSC-Central Office denied the petitioners
request in a resolution dated December 19, 1999 and reversed
the recommendation of the CSC- NCR. CHREA filed a motion
for reconsideration with the CSC-Central Office but this was
denied. CHREA, therefore, elevated the case to the Court of
Appeals. When the court of Appeals affirmed the resolution of
the CSC-Central Office and upheld the validity of the
upgrading scheme, CHREA filed a petition in the Supreme
Court.

In this petition, CHREA contends that the Court of Appeals and

CSC-Central Office erred in approving of the CHRs alleged
authority to upgrade, classify and create positions when the
DBMs approval is indispensable for such scheme. CHREA also
contends that the Court of Appeals erred when it held that,
according to the constitution, the CHR enjoys Fiscal Autonomy.

In their answer, the respondent questioned the locus standi of

the CHREA considering that it is not a recognized bona fide
organization of its employees and that its president, Marcial
Sanchez has no authority to sue the CHR. Respondent also
contends that it has the authority to implement the scheme it
proposed even without the approval of the DBM because it
enjoys fiscal autonomy.

ISSUES:

Whether or not the petitioner has a locus standi on the case.

Whether or not the approval of the DBM is a condition
precedent to the enactment of an upgrading, reclassification,
creation and collapsing of plantillas in the CHR.

HELD:

Petitioner which consists of rank and file employees of

respondent CHR is in imminent danger of sustaining injury as a
result of the proposed scheme. Only a select few in the upper
level positions in the Commission will benefit from the said
scheme, which when found valid will eat up a big portion of
the Commissions savings that can otherwise be allocated to
Personnel Services, from which the benefits of the employees
are derived. The personality of the CHREA was also recognized
by CSC when it took cognizance of the petitioners request to
affirm the recommendations from the CSC-NCR Office.
The court held that without the approval of the DBM, the
resolutions issued by the CHR are disallowed.
Wherefore the petition was granted, the decision of the Court
of Appeals was reversed and set aside, and the ruling of the
CSC-NCR reinstated.

RATIO:

RA 6758 provides that the DBM shall establish and administer

a unified Compensation and Position Classification System.
The coverage of this authority includes all positions in the
government, government-owned and controlled corporations
and government financial institutions. Government refers to
the Executive, Legislative, and the Judicial Branch and even
the Constitutional Commissions that supposedly have fiscal
autonomy.

Jurisprudence also supports this power granted to the DBM.

PRA vs Jesusito L. Bunag, Victorino Cruz vs Court of Appeals,
Intia Jr., vs COA

On the mistaken premise that CHR belongs to the species of

constitutional commissions, the Constitution and Chapter 5
sections 24 and 26 Book II of the Administrative code mention
only 3 constitutional commissions, the CSC, the COMLEC and
the COA. In fact, the CHR is considered as Other Bodies. Its
being member of the CFAG does not grant it fiscal autonomy
because fiscal autonomy can only be granted by the
Constituion.
Even assuming en arguendo that the CHR enjoys fiscal
autonomy, all government offices must, all the same kowtow
to the Salary Standardization Law, for which its administration
has been given by Congress to the DBM.

Manila Prince Hotel v. GSIS Digested

Manila Prince Hotel v. GSIS GR 122156, 3 February 1997
WHETHER OR NOT THE COSNTITUTIONAL PROVISIONS ARE
SELF-EXECUTING

FACTS:

The Government Service Insurance System (GSIS), pursuant to

the privatization program of the Philippine Government under
Proclamation 50 dated 8 December 1986, decided to sell
through public bidding 30% to 51% of the issued and
outstanding shares of the Manila Hotel (MHC). In a close
bidding held on 18 September 1995 only two bidders
participated: Manila Prince Hotel Corporation, a Filipino
corporation, which offered to buy 51% of the MHC or
15,300,000 shares at P41.58 per share, and Renong Berhad, a
Malaysian firm, with ITT-Sheraton as its hotel operator, which
bid for the same number of shares at P44.00 per share, or
P2.42 more than the bid of petitioner. Pending the declaration
of Renong Berhard as the winning bidder/strategic partner and
the execution of the necessary contracts, the Manila Prince
Hotel matched the bid price of P44.00 per share tendered by
Renong Berhad in a letter to GSIS dated 28 September 1995.
Manila Prince Hotel sent a managers check to the GSIS in a
subsequent letter, but which GSIS refused to accept. On 17
October 1995, perhaps apprehensive that GSIS has
disregarded the tender of the matching bid and that the sale
of 51% of the MHC may be hastened by GSIS and
consummated with Renong Berhad, Manila Prince Hotel came
to the Court on prohibition and mandamus.
ISSUE:

Whether or not the provisions of the Constitution,

particularly Article XII Section 10, are self-executing.

RULING:

A provision which lays down a general principle, such as those

found in Article II of the 1987 Constitution, is usually not self-
executing. But a provision which is complete in itself and
becomes operative without the aid of supplementary or
enabling legislation, or that which supplies sufficient rule by
means of which the right it grants may be enjoyed or
protected, is self-executing. Thus a constitutional provision is
self-executing if the nature and extent of the right conferred
and the liability imposed are fixed by the constitution itself, so
that they can be determined by an examination and
construction of its terms, and there is no language indicating
that the subject is referred to the legislature for action. In self-
executing constitutional provisions, the legislature may still
enact legislation to facilitate the exercise of powers directly
granted by the constitution, further the operation of such a
provision, prescribe a practice to be used for its enforcement,
provide a convenient remedy for the protection of the rights
secured or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty
for the violation of a self-executing constitutional provision
does not render such a provision ineffective in the absence of
such legislation. The omission from a constitution of any
express provision for a remedy for enforcing a right or liability
is not necessarily an indication that it was not intended to be
self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on
the subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and
make it more available. Subsequent legislation however does
not necessarily mean that the subject constitutional provision
is not, by itself, fully enforceable. As against constitutions of
the past, modern constitutions have been generally drafted
upon a different principle and have often become in effect
extensive codes of laws intended to operate directly upon the
people in a manner similar to that of statutory enactments,
and the function of constitutional conventions has evolved into
one more like that of a legislative body. Hence, unless it is
expressly provided that a legislative act is necessary to
enforce a constitutional mandate, the presumption now is that
all provisions of the constitution are self-executing. If the
constitutional provisions are treated as requiring legislation
instead of self-executing, the legislature would have the power
to ignore and practically nullify the mandate of the
fundamental law. In fine, Section 10, second paragraph, Art. XII
of the 1987 Constitution is a mandatory, positive command
which is complete in itself and which needs no further
guidelines or implementing laws or rules for its enforcement.
From its very words the provision does not require any
legislation to put it in operation.
Lambino Vs. Comelec Case Digest
Lambino Vs. Comelec
G.R. No. 174153
Oct. 25 2006

Facts: Petitioners (Lambino group) commenced gathering

signatures for an initiative petition to change the 1987
constitution, they filed a petition with the COMELEC to hold a
plebiscite that will ratify their initiative petition under RA 6735.
Lambino group alleged that the petition had the support of 6M
individuals fulfilling what was provided by art 17 of the
constitution. Their petition changes the 1987 constitution by
modifying sections 1-7 of Art 6 and sections 1-4 of Art 7 and
by adding Art 18. the proposed changes will shift the present
bicameral- presidential form of government to unicameral-
parliamentary. COMELEC denied the petition due to lack of
enabling law governing initiative petitions and invoked the
Santiago Vs. Comelec ruling that RA 6735 is inadequate to
implement the initiative petitions.

Issue:

Whether or Not the Lambino Groups initiative petition

complies with Section 2, Article XVII of the Constitution on
amendments to the Constitution through a peoples initiative.

Whether or Not this Court should revisit its ruling in Santiago

declaring RA 6735 incomplete, inadequate or wanting in
essential terms and conditions to implement the initiative
clause on proposals to amend the Constitution.

Whether or Not the COMELEC committed grave abuse of

discretion in denying due course to the Lambino Groups
petition.
Held: According to the SC the Lambino group failed to comply
with the basic requirements for conducting a peoples
initiative. The Court held that the COMELEC did not grave
abuse of discretion on dismissing the Lambino petition.

1. The Initiative Petition Does Not Comply with Section 2,

Article XVII of the Constitution on Direct Proposal by the People

The petitioners failed to show the court that the initiative

signer must be informed at the time of the signing of the
nature and effect, failure to do so is deceptive and
misleading which renders the initiative void.

2. The Initiative Violates Section 2, Article XVII of the

Constitution Disallowing Revision through Initiatives

The framers of the constitution intended a clear distinction

between amendment and revision, it is intended that the
third mode of stated in sec 2 art 17 of the constitution may
propose only amendments to the constitution. Merging of the
legislative and the executive is a radical change, therefore a
constitutes a revision.

3. A Revisit of Santiago v. COMELEC is Not Necessary

Even assuming that RA 6735 is valid, it will not change the
result because the present petition violated Sec 2 Art 17 to be
a valid initiative, must first comply with the constitution before
complying with RA 6735

Petition is dismissed.
Kilosbayan, Inc. v Guingona, Corona GR No. 113375 May 5,
1994

Section 1. The judicial power shall be vested in one Supreme

Court and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or
instrumentality of the Government.cralaw

Davide, Jr., J:

FACTS:
(1) Petitioners contend that denial by the Office of the
President of its protest and the statement of
Assistant Executive Secretary Renato Corona that "only a court
injunction can stop Malacaang," and the imminent
implementation of the Contract of Lease in February 1994, KI
LOSBAYAN, with its co-petitioners, filed on 28 January 1994
this petition.
In support of the petition, the petitioners claim that:
. . . X X THE OFFICE OF THE PRESI DENT, ACTING THROUGH
RESPONDENTS EXECUTIVE SECRETARY AND/OR ASSISTANT
EXECUTIVE SECRETARY FOR LEGAL AFFAIRS, AND THE PCSO
GRAVELY ABUSE[D] THEI R DI SCRETI ON AND/OR FUN CTI ONS
TANTAMOUN T TO LACK OF JURISDI CTI ON AND/OR AUTHORI
TY IN RESPECTIVELY:
(A) APPROVING THE AWARD OF THE CONTRACT TO, AND
(B) ENTERING INTO THE SO-CALLED "CONTRACT OF LEASE"
WITH, RESPONDENT PGMC FOR THE INSTALLATION,
ESTABLISHMENT AND OPERATI ON OF THE ON-LINE LOTTERY
AND TELECOMMUNICATION SYSTEMS REQUIRED AND/OR
AUTHORIZED UNDER THE SAID CONTRACT, CONSI DERING
THAT:
a) Under Section 1 of the Charter of the PCSO, the PCSO is
prohibited from holding and conducting
lotteries "in collaboration, association or joint venture with any
person, association, company or entity";
b) Under Act No. 3846 and established jurisprudence, a
Congressional franchise is required before
Any person may be allowed to establish and operate said
telecommunications system;
c) Under Section 11, Article XII of the Constitution, a less than
60% Filipino-owned and/or controlled corporation, like the
PGMC, is disqualified from operating a public service, like the
said telecommunications system; and
d) Respondent PGMC is not authorized by its charter and under
the Foreign Investment Act (R.A. No. 7042)to install, establish
and operate the on-line lot to and telecommunications
systems.
(2) Public respondents Executive Secretary Teofisto Guingona, J
r., Assistant Executive Secretary Renato Corona, and the PCSO
maintain that the contract of lease in question does not violate
Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, and
that the petitioner's interpretation of the phrase "in
collaboration, association or joint venture" in Section 1 is
"much too narrow, strained and utterly devoid of logic" for it
"ignores the reality that PCSO, as a corporate entity, is vested
with the basic and essential prerogative to enter into all kinds
of transactions or contracts as may be necessary for the
attainment of itspurposes and objectives."

ISSUE:
(a) the locus standi of the petitioners, and
(b) the legality and validity of the Contract of Lease in the light
of Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42,
which prohibits the PCSO from holding and conducting
lotteries "in collaboration, association or joint venture with any
person, association, company or entity, whether domestic or
foreign."

HELD:
WHEREFORE, the instant petition is hereby GRANTED and the
challenged Contract of Lease executed on 17 December 1993
by respondent Philippine Charity Sweepstakes Office (PCSO)
and respondent Philippine Gaming Management Corporation
(PGMC)is hereby DECLARED contrary to law and invalid.
RATIO:
No interpretation of the said provision to relax or circumvent
the prohibition can be allowed since the privilege to hold or
conduct charity sweepstakes races, lotteries, or other similar
activities is a franchise granted by the legislature to the PCSO.
It is a settled rule that "in all grants by the government to
individuals or corporations of rights, privileges and franchises,
the words are to be taken most strongly against the
grantee .... [o]ne who claims a franchise or privilege in
derogation of the common rights of the public must prove his
title thereto by a grant which is clearly and definitely
expressed, and he cannot enlarge it by equivocal or doubtful
provisions or by probable inferences. Whatever is not
unequivocally granted is withheld. Nothing passes by mere
implication.

SANIDAD vs. COMELEC

(G.R. No. L-44640, October 12, 1976)
Facts:
On 2 September 1976, President Ferdinand E. Marcos issued
Presidential Decree 991
calling for a national referendum on 16 October 1976 for the
Citizens Assemblies ("barangays") toresolve, among other
things, the issues of martial law, the interim assembly, its
replacement, thepowers of such replacement, the period of its
existence, the length of the period for the exercise bythe
President of his present powers.20 days after or on 22
September 1976, the President issued another related decree,
Presidential Decree 1031
, amending the previous Presidential Decree 991, by declaring
the provisions of Presidential Decree 229 providing for the
manner of voting and canvass of votes in "barangays"(Citizens
Assemblies) applicable to the national referendum-plebiscite of
16 October 1976. Quiterelevantly, Presidential Decree 1031
repealed inter alia, Section 4, of Presidential Decree 991.On
the same date of 22 September 1976, the President issued
Presidential Decree 1033,
stating thequestions to he submitted to the people in the
referendum-plebiscite on 16 October 1976. TheDecree recites
in its "whereas" clauses that the people's continued opposition
to the convening of the interim National Assembly evinces
their desire to have such body abolished and replaced thru
aconstitutional amendment, providing for a new interim
legislative body, which will be submitteddirectly to the people
in the referendum-plebiscite of October 16.The Commission on
Elections was vested with the exclusive supervision and
control of the October 1976 National Referendum-Plebiscite.
On 27 September 1976, Pablo C. Sanidad and Pablito
V.Sanidad, father and son, commenced L-44640 for Prohibition
with Preliminary Injunction seeking toenjoin the Commission
on Elections from holding and conducting the Referendum
Plebiscite onOctober 16; to declare without force and effect
Presidential Decree Nos. 991 and 1033, insofar asthey propose
amendments to the Constitution, as well as Presidential
Decree 1031, insofar as itdirects the Commission on Elections
to supervise, control, hold, and conduct the Referendum-
Plebiscite scheduled on 16 October 1976. They contend that
under the 1935 and 1973 Constitutionsthere is no grant to the
incumbent President to exercise the constituent power to
proposeamendments to the new Constitution.As a
consequence, the Referendum-Plebiscite on October 16 has no
constitutional or legal basis.On 30 September 1976, another
action for Prohibition with Preliminary Injunction, docketed as
L-44684, was instituted by Vicente M. Guzman, a delegate to
the 1971 Constitutional Convention,asserting that the power
to propose amendments to, or revision of the Constitution
during thetransition period is expressly conferred on the
interim National Assembly under action 16, ArticleXVII of the
Constitution. Still another petition for Prohibition with
Preliminary Injunction was filed on 5October 1976 by Raul M.
Gonzales, his son Raul Jr., and Alfredo Salapantan, docketed as
L-44714,

to restrain the implementation of Presidential Decrees relative

to the forthcoming Referendum-Plebiscite of October 16.
Issue:
Whether the President may call upon a referendum for the
amendment of the Constitution.
Held:
Section 1 of Article XVI of the 1973 Constitution on
Amendments ordains that "(1) Anyamendment to, or revision
of, this Constitution may be proposed by the National
Assembly upon avote of three-fourths of all its Members, or by
a constitutional convention. (2) The National Assemblymay, by
a vote of two-thirds of all its Members, call a constitutional
convention or, by a majority voteof all its Members, submit the
question of calling such a convention to the electorate in an
election."Section 2 thereof provides that "Any amendment to,
or revision of, this Constitution shall be validwhen ratified by a
majority of the votes cast in a plebiscite which shall be held
not later than threemonths a after the approval of such
amendment or revision." In the present period of transition,
theinterim National Assembly instituted in the Transitory
Provisions is conferred with that amendingpower. Section 15 of
the Transitory Provisions reads "The interim National
Assembly, upon specialcall by the interim Prime Minister, may,
by a majority vote of all its Members, propose amendmentsto
this Constitution. Such amendments shall take effect when
ratified in accordance with ArticleSixteen hereof." There are,
therefore, two periods contemplated in the constitutional life
of thenation, i.e., period of normalcy and period of transition.
In times of normalcy, the amending processmay be initiated
by the proposals of the (1) regular National Assembly upon a
vote of three-fourths of all its members; or (2) by a
Constitutional Convention called by a vote of two-thirds of all
theMembers of the National Assembly. However the calling of
a Constitutional Convention may besubmitted to the electorate
in an election voted upon by a majority vote of all the
members of theNational Assembly. In times of transition,
amendments may be proposed by a majority vote of all
theMembers of the interim National Assembly upon special call
by the interim Prime Minister. The Courtin Aquino v. COMELEC,
had already settled that the incumbent President is vested
with thatprerogative of discretion as to when he shall initially
convene the interim National Assembly. TheConstitutional
Convention intended to leave to the President the
determination of the time when heshall initially convene the
interim National Assembly, consistent with the prevailing
conditions of peace and order in the country. When the
Delegates to the Constitutional Convention voted on
theTransitory Provisions, they were aware of the fact that
under the same, the incumbent President wasgiven the
discretion as to when he could convene the interim National
Assembly. The President'sdecision to defer the convening of
the interim National Assembly soon found support from the
peoplethemselves. In the plebiscite of January 10-15, 1973, at
which the ratification of the 1973Constitution was submitted,
the people voted against the convening of the interim
NationalAssembly. In the referendum of 24 July 1973, the
Citizens Assemblies ("bagangays") reiterated their sovereign
will to withhold the convening of the interim National
Assembly. Again, in the referendumof 27 February 1975, the
proposed question of whether the interim National Assembly
shall beinitially convened was eliminated, because some of the
members of Congress and delegates of theConstitutional
Convention, who were deemed automatically members of the
interim National
Assembly, were against its inclusion since in that referendum
of January, 1973 the people hadalready resolved against it. In
sensu striciore, when the legislative arm of the state
undertakes theproposals of amendment to a Constitution, that
body is not in the usual function of lawmaking. It isnot
legislating when engaged in the amending process. Rather, it
is exercising a peculiar power bestowed upon it by the
fundamental charter itself. In the Philippines, that power is
provided for inArticle XVI of the 1973 Constitution (for the
regular National Assembly) or in Section 15 of theTransitory
Provisions (for the interim National Assembly). While ordinarily
it is the business of thelegislating body to legislate for the
nation by virtue of constitutional conferment, amending of
theConstitution is not legislative in character. In political
science a distinction is made betweenconstitutional content of
an organic character and that of a legislative character. The
distinction,however, is one of policy, not of law. Such being the
case, approval of the President of any proposedamendment is
a misnomer. The prerogative of the President to approve or
disapprove applies onlyto the ordinary cases of legislation. The
President has nothing to do with proposition or adoption of
amendments to the Constitution.
LAMP VS. SEC OF BUDGET AND MANAGEMENT
For consideration of the Court is an original action for certiorari
assailing the constitutionality and legality of the
implementation of the Priority Development Assistance Fund
(PDAF) as provided for in Republic Act (R.A.) 9206 or the
General Appropriations Act for 2004 (GAA of 2004). Petitioner
Lawyers Against Monopoly and Poverty (LAMP), a group of
lawyers who have banded together with a mission of
dismantling all forms of political, economic or social monopoly
in the country,[1] also sought the issuance of a writ of
preliminary injunction or temporary restraining order to enjoin
respondent Secretary of the Department of Budget and
Management (DBM) from making, and, thereafter, releasing
budgetary allocations to individual members of Congress as
pork barrel funds out of PDAF. LAMP likewise aimed to stop the
National Treasurer and the Commission on Audit (COA) from
enforcing the questioned provision.
On September 14, 2004, the Court required respondents,
including the President of the Senate and the Speaker of the
House of Representatives, to comment on the petition. On
April 7, 2005, petitioner filed a Reply thereto.[2] On April 26,
2005, both parties were required to submit their respective
memoranda.
The GAA of 2004 contains the following provision subject of
this petition:

PRIORITY DEVELOPMENT ASSISTANCE FUND

For fund requirements of priority development programs and
projects, as indicated hereunder 8,327,000,000.00

Xxxxx

Special Provision

1. Use and Release of the Fund. The amount herein

appropriated shall be used to fund priority programs and
projects or to fund the required counterpart for foreign-
assisted programs and projects: PROVIDED, That such amount
shall be released directly to the implementing agency or Local
Government Unit concerned: PROVIDED, FURTHER, That the
allocations authorized herein may be realigned to any expense
class, if deemed necessary: PROVIDED FURTHERMORE, That a
maximum of ten percent (10%) of the authorized allocations
by district may be used for procurement of rice and other
basic commodities which shall be purchased from the National
Food Authority.

Petitioners Position

According to LAMP, the above provision is silent and,

therefore, prohibits an automatic or direct allocation of lump
sums to individual senators and congressmen for the funding
of projects. It does not empower individual Members of
Congress to propose, select and identify programs and
projects to be funded out of PDAF. In previous GAAs, said
allocation and identification of projects were the main features
of the pork barrel system technically known as Countrywide
Development Fund (CDF). Nothing of the sort is now seen in
the present law (R.A. No. 9206 of CY 2004).[3] In its
memorandum, LAMP insists that [t]he silence in the law of
direct or even indirect participation by members of Congress
betrays a deliberate intent on the part of the Executive and
the Congress to scrap and do away with the pork barrel
system.[4] In other words, [t]he omission of the PDAF provision
to specify sums as allocations to individual Members of
Congress is a casus omissus signifying an omission
intentionally made by Congress that this Court is forbidden to
supply.[5] Hence, LAMP is of the conclusion that the pork
barrel has become legally defunct under the present state of
GAA 2004.[6]

LAMP further decries the supposed flaws in the

implementation of the provision, namely: 1) the DBM illegally
made and directly released budgetary allocations out of PDAF
in favor of individual Members of Congress; and 2) the latter
do not possess the power to propose, select and identify which
projects are to be actually funded by PDAF.

For LAMP, this situation runs afoul against the principle of

separation of powers because in receiving and, thereafter,
spending funds for their chosen projects, the Members of
Congress in effect intrude into an executive function. In other
words, they cannot directly spend the funds, the appropriation
for which was made by them. In their individual capacities, the
Members of Congress cannot virtually tell or dictate upon the
Executive Department how to spend taxpayers money.[7]
Further, the authority to propose and select projects does not
pertain to legislation. It is, in fact, a non-legislative function
devoid of constitutional sanction,[8] and, therefore,
impermissible and must be considered nothing less than
malfeasance. The proposal and identification of the projects do
not involve the making of laws or the repeal and amendment
thereof, which is the only function given to the Congress by
the Constitution. Verily, the power of appropriation granted to
Congress as a collegial body, does not include the power of
the Members thereof to individually propose, select and
identify which projects are to be actually implemented and
funded - a function which essentially and exclusively pertains
to the Executive Department.[9] By allowing the Members of
Congress to receive direct allotment from the fund, to propose
and identify projects to be funded and to perform the actual
spending of the fund, the implementation of the PDAF
provision becomes legally infirm and constitutionally
repugnant.
Respondents Position

For their part, the respondents[10] contend that the petition

miserably lacks legal and factual grounds. Although they admit
that PDAF traced its roots to CDF,[11] they argue that the
former should not be equated with pork barrel, which has
gained a derogatory meaning referring to government projects
affording political opportunism.[12] In the petition, no proof of
this was offered. It cannot be gainsaid then that the petition
cannot stand on inconclusive media reports, assumptions and
conjectures alone. Without probative value, media reports
cited by the petitioner deserve scant consideration especially
the accusation that corrupt legislators have allegedly proposed
cuts or slashes from their pork barrel. Hence, the Court should
decline the petitioners plea to take judicial notice of the
supposed iniquity of PDAF because there is no concrete proof
that PDAF, in the guise of pork barrel, is a source of dirty
money for unscrupulous lawmakers and other officials who
tend to misuse their allocations. These facts have no attributes
of sufficient notoriety or general recognition accepted by the
public without qualification, to be subjected to judicial notice.
This applies, a fortiori, to the claim that Members of Congress
are beneficiaries of commissions (kickbacks) taken out of the
PDAF allocations and releases and preferred by favored
contractors representing from 20% to 50% of the approved
budget for a particular project. [13] Suffice it to say, the
perceptions of LAMP on the implementation of PDAF must not
be based on mere speculations circulated in the news media
preaching the evils of pork barrel. Failing to present even an
iota of proof that the DBM Secretary has been releasing lump
sums from PDAF directly or indirectly to individual Members of
Congress, the petition falls short of its cause.

Likewise admitting that CDF and PDAF are appropriations for

substantially similar, if not the same, beneficial purposes, [14]
the respondents invoke Philconsa v. Enriquez,[15] where CDF
was described as an imaginative and innovative process or
mechanism of implementing priority programs/projects
specified in the law. In Philconsa, the Court upheld the
authority of individual Members of Congress to propose and
identify priority projects because this was merely
recommendatory in nature. In said case, it was also recognized
that individual members of Congress far more than the
President and their congressional colleagues were likely to be
knowledgeable about the needs of their respective
constituents and the priority to be given each project.

The Issues

The respondents urge the Court to dismiss the petition for its
failure to establish factual and legal basis to support its claims,
thereby lacking an essential requisite of judicial reviewan
actual case or controversy.

The Courts Ruling

To the Court, the case boils down to these issues: 1) whether

or not the mandatory requisites for the exercise of judicial
review are met in this case; and 2) whether or not the
implementation of PDAF by the Members of Congress is
unconstitutional and illegal.

Like almost all powers conferred by the Constitution, the

power of judicial review is subject to limitations, to wit: (1)
there must be an actual case or controversy calling for the
exercise of judicial power; (2) the person challenging the act
must have the standing to question the validity of the subject
act or issuance; otherwise stated, he must have a personal
and substantial interest in the case such that he has
sustained, or will sustain, direct injury as a result of its
enforcement; (3) the question of constitutionality must be
raised at the earliest opportunity; and (4) the issue of
constitutionality must be the very lis mota of the case.[16]

An aspect of the case-or-controversy requirement is the

requisite of ripeness. In the United States, courts are centrally
concerned with whether a case involves uncertain contingent
future events that may not occur as anticipated, or indeed
may not occur at all. Another concern is the evaluation of the
twofold aspect of ripeness: first, the fitness of the issues for
judicial decision; and second, the hardship to the parties
entailed by withholding court consideration. In our jurisdiction,
the issue of ripeness is generally treated in terms of actual
injury to the plaintiff. Hence, a question is ripe for adjudication
when the act being challenged has had a direct adverse effect
on the individual challenging it.[17]

In this case, the petitioner contested the implementation of an

alleged unconstitutional statute, as citizens and taxpayers.
According to LAMP, the practice of direct allocation and release
of funds to the Members of Congress and the authority given
to them to propose and select projects is the core of the laws
flawed execution resulting in a serious constitutional
transgression involving the expenditure of public funds.
Undeniably, as taxpayers, LAMP would somehow be adversely
affected by this. A finding of unconstitutionality would
necessarily be tantamount to a misapplication of public funds
which, in turn, cause injury or hardship to taxpayers. This
affords ripeness to the present controversy.

Further, the allegations in the petition do not aim to obtain

sheer legal opinion in the nature of advice concerning
legislative or executive action. The possibility of constitutional
violations in the implementation of PDAF surely involves the
interplay of legal rights susceptible of judicial resolution. For
LAMP, this is the right to recover public funds possibly
misapplied by no less than the Members of Congress. Hence,
without prejudice to other recourse against erring public
officials, allegations of illegal expenditure of public funds
reflect a concrete injury that may have been committed by
other branches of government before the court intervenes.
The possibility that this injury was indeed committed cannot
be discounted. The petition complains of illegal disbursement
of public funds derived from taxation and this is sufficient
reason to say that there indeed exists a definite, concrete, real
or substantial controversy before the Court.

Anent locus standi, the rule is 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
sustained, direct injury as a result of its enforcement.[18] The
gist of the question of standing is whether a party alleges such
a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions.[19] In
public suits, the plaintiff, representing the general public,
asserts a public right in assailing an allegedly illegal official
action. The plaintiff may be a person who is affected no
differently from any other person, and could be suing as a
stranger, or as a citizen or taxpayer.[20] Thus, taxpayers have
been 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 public funds are wasted
through the enforcement of an invalid or unconstitutional law.
[21] Of greater import than the damage caused by the illegal
expenditure of public funds is the mortal wound inflicted upon
the fundamental law by the enforcement of an invalid statute.
[22]
Here, the sufficient interest preventing the illegal expenditure
of money raised by taxation required in taxpayers suits is
established. Thus, in the claim that PDAF funds have been
illegally disbursed and wasted through the enforcement of an
invalid or unconstitutional law, LAMP should be allowed to sue.
The case of Pascual v. Secretary of Public Works[23] is
authority in support of the petitioner:

In the determination of the degree of interest essential to give

the requisite standing to attack the constitutionality of a
statute, the general rule is that not only persons individually
affected, but also taxpayers have sufficient interest in
preventing the illegal expenditures of moneys raised by
taxation and may therefore question the constitutionality of
statutes requiring expenditure of public moneys. [11 Am. Jur.
761, Emphasis supplied.]
Lastly, the Court is of the view that the petition poses issues
impressed with paramount public interest. The ramification of
issues involving the unconstitutional spending of PDAF
deserves the consideration of the Court, warranting the
assumption of jurisdiction over the petition.

Now, on the substantive issue.

The powers of government are generally divided into three

branches: the Legislative, the Executive and the Judiciary. Each
branch is supreme within its own sphere being independent
from one another and it is this supremacy which enables the
courts to determine whether a law is constitutional or
unconstitutional.[24] The Judiciary is the final arbiter on the
question of whether or not a branch of government or any of
its officials has acted without jurisdiction or in excess of
jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only
a judicial power but a duty to pass judgment on matters of this
nature.[25]

With these long-established precepts in mind, the Court now

goes to the crucial question: In allowing the direct allocation
and release of PDAF funds to the Members of Congress based
on their own list of proposed projects, did the implementation
of the PDAF provision under the GAA of 2004 violate the
Constitution or the laws?

The Court rules in the negative.

In determining whether or not a statute is unconstitutional, the

Court does not lose sight of the presumption of validity
accorded to statutory acts of Congress. In Farias v. The
Executive Secretary,[26] the Court held that:

Every statute is presumed valid. The presumption is that the

legislature intended to enact a valid, sensible and just law and
one which operates no further than may be necessary to
effectuate the specific purpose of the law. Every presumption
should be indulged in favor of the constitutionality and the
burden of proof is on the party alleging that there is a clear
and unequivocal breach of the Constitution.
To justify the nullification of the law or its implementation,
there must be a clear and unequivocal, not a doubtful, breach
of the Constitution. In case of doubt in the sufficiency of proof
establishing unconstitutionality, the Court must sustain
legislation because to invalidate [a law] based on x x x
baseless supposition is an affront to the wisdom not only of
the legislature that passed it but also of the executive which
approved it.[27] This presumption of constitutionality can be
overcome only by the clearest showing that there was indeed
an infraction of the Constitution, and only when such a
conclusion is reached by the required majority may the Court
pronounce, in the discharge of the duty it cannot escape, that
the challenged act must be struck down.[28]

The petition is miserably wanting in this regard. LAMP would

have the Court declare the unconstitutionality of the PDAFs
enforcement based on the absence of express provision in the
GAA allocating PDAF funds to the Members of Congress and
the latters encroachment on executive power in proposing and
selecting projects to be funded by PDAF. Regrettably, these
allegations lack substantiation. No convincing proof was
presented showing that, indeed, there were direct releases of
funds to the Members of Congress, who actually spend them
according to their sole discretion. Not even a documentation of
the disbursement of funds by the DBM in favor of the Members
of Congress was presented by the petitioner to convince the
Court to probe into the truth of their claims. Devoid of any
pertinent evidentiary support that illegal misuse of PDAF in the
form of kickbacks has become a common exercise of
unscrupulous Members of Congress, the Court cannot indulge
the petitioners request for rejection of a law which is outwardly
legal and capable of lawful enforcement. In a case like this, the
Courts hands are tied in deference to the presumption of
constitutionality lest the Court commits unpardonable judicial
legislation. The Court is not endowed with the power of
clairvoyance to divine from scanty allegations in pleadings
where justice and truth lie.[29] Again, newspaper or electronic
reports showing the appalling effects of PDAF cannot be
appreciated by the Court, not because of any issue as to their
truth, accuracy, or impartiality, but for the simple reason that
facts must be established in accordance with the rules of
evidence.[30]

Hence, absent a clear showing that an offense to the principle

of separation of powers was committed, much less tolerated
by both the Legislative and Executive, the Court is constrained
to hold that a lawful and regular government budgeting and
appropriation process ensued during the enactment and all
throughout the implementation of the GAA of 2004. The
process was explained in this wise, in Guingona v. Carague:
[31]

1. Budget preparation. The first step is essentially tasked upon

the Executive Branch and covers the estimation of
government revenues, the determination of budgetary
priorities and activities within the constraints imposed by
available revenues and by borrowing limits, and the translation
of desired priorities and activities into expenditure levels.
Budget preparation starts with the budget call issued by the
Department of Budget and Management. Each agency is
required to submit agency budget estimates in line with the
requirements consistent with the general ceilings set by the
Development Budget Coordinating Council (DBCC).
With regard to debt servicing, the DBCC staff, based on the
macro-economic projections of interest rates (e.g. LIBOR rate)
and estimated sources of domestic and foreign financing,
estimates debt service levels. Upon issuance of budget call,
the Bureau of Treasury computes for the interest and principal
payments for the year for all direct national government
borrowings and other liabilities assumed by the same.
2. Legislative authorization. At this stage, Congress enters the
picture and deliberates or acts on the budget proposals of the
President, and Congress in the exercise of its own judgment
and wisdom formulates an appropriation act precisely
following the process established by the Constitution, which
specifies that no money may be paid from the Treasury except
in accordance with an appropriation made by law.
xxx
3. Budget Execution. Tasked on the Executive, the third phase
of the budget process covers the various operational aspects
of budgeting. The establishment of obligation authority
ceilings, the evaluation of work and financial plans for
individual activities, the continuing review of government
fiscal position, the regulation of funds releases, the
implementation of cash payment schedules, and other related
activities comprise this phase of the budget cycle.
4. Budget accountability. The fourth phase refers to the
evaluation of actual performance and initially approved work
targets, obligations incurred, personnel hired and work
accomplished are compared with the targets set at the time
the agency budgets were approved.

Under the Constitution, the power of appropriation is vested in

the Legislature, subject to the requirement that appropriation
bills originate exclusively in the House of Representatives with
the option of the Senate to propose or concur with
amendments.[32] While the budgetary process commences
from the proposal submitted by the President to Congress, it is
the latter which concludes the exercise by crafting an
appropriation act it may deem beneficial to the nation, based
on its own judgment, wisdom and purposes. Like any other
piece of legislation, the appropriation act may then be
susceptible to objection from the branch tasked to implement
it, by way of a Presidential veto. Thereafter, budget execution
comes under the domain of the Executive branch which deals
with the operational aspects of the cycle including the
allocation and release of funds earmarked for various projects.
Simply put, from the regulation of fund releases, the
implementation of payment schedules and up to the actual
spending of the funds specified in the law, the Executive takes
the wheel. The DBM lays down the guidelines for the
disbursement of the fund. The Members of Congress are then
requested by the President to recommend projects and
programs which may be funded from the PDAF. The list
submitted by the Members of Congress is endorsed by the
Speaker of the House of Representatives to the DBM, which
reviews and determines whether such list of projects
submitted are consistent with the guidelines and the priorities
set by the Executive.[33] This demonstrates the power given
to the President to execute appropriation laws and therefore,
to exercise the spending per se of the budget.
As applied to this case, the petition is seriously wanting in
establishing that individual Members of Congress receive and
thereafter spend funds out of PDAF. Although the possibility of
this unscrupulous practice cannot be entirely discounted,
surmises and conjectures are not sufficient bases for the Court
to strike down the practice for being offensive to the
Constitution. Moreover, the authority granted the Members of
Congress to propose and select projects was already upheld in
Philconsa. This remains as valid case law. The Court sees no
need to review or reverse the standing pronouncements in the
said case. So long as there is no showing of a direct
participation of legislators in the actual spending of the
budget, the constitutional boundaries between the Executive
and the Legislative in the budgetary process remain intact.

While the Court is not unaware of the yoke caused by graft

and corruption, the evils propagated by a piece of valid
legislation cannot be used as a tool to overstep constitutional
limits and arbitrarily annul acts of Congress. Again, all
presumptions are indulged in favor of constitutionality; one
who attacks a statute, alleging unconstitutionality must prove
its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the
statute, it will be upheld, and the challenger must negate all
possible bases; that the courts are not concerned with the
wisdom, justice, policy, or expediency of a statute; and that a
liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted.[34]

There can be no question as to the patriotism and good motive

of the petitioner in filing this petition. Unfortunately, the
petition must fail based on the foregoing reasons.

WHEREFORE, the petition is DISMISSED without

pronouncement as to costs.
DEFENSOR-SANTIAGO vs. COMELEC(G.R. No. 127325 - March
19, 1997)Facts:
Private respondent Atty. Jesus Delfin, president of Peoples
Initiative for Reforms,Modernization and Action (PIRMA), filed
with COMELEC a petition to amend the constitution to liftthe
term limits of elective officials, through Peoples Initiative. He
based this petition on Article XVII,Sec. 2 of the 1987
Constitution, which provides for the right of the people to
exercise the power todirectly propose amendments to the
Constitution. Subsequently the COMELEC issued an order
directing the publication of the petition and of the notice of
hearing and thereafter set the case for hearing. At the hearing,
Senator Roco, the IBP, Demokrasya-Ipagtanggol ang
Konstitusyon, PublicInterest Law Center, and Laban ng
Demokratikong Pilipino appeared as intervenors-
oppositors.Senator Roco filed a motion to dismiss the Delfin
petition on the ground that one which is cognizableby the
COMELEC. The petitioners herein Senator Santiago, Alexander
Padilla, and Isabel Ongpinfiled this civil action for prohibition
under Rule 65 of the Rules of Court against COMELEC and
theDelfin petition rising the several arguments, such as the
following: (1) The constitutional provision onpeoples initiative
to amend the constitution can only be implemented by law to
be passed byCongress. No such law has been passed; (2) The
peoples initiative is limited to amendments to theConstitution,
not to revision thereof. Lifting of the term limits constitutes a
revision, therefore it isoutside the power of peoples initiative.
The Supreme Court granted the Motions for Intervention.
Issues:
(1) Whether or not Sec. 2, Art. XVII of the 1987 Constitution is
a self-executing provision.(2) Whether or not COMELEC
Resolution No. 2300 regarding the conduct of initiative
onamendments to the Constitution is valid, considering the
absence in the law of specific provisions onthe conduct of such
initiative.(3) Whether the lifting of term limits of elective
officials would constitute a revision or anamendment of the
Constitution.
Held:
Sec. 2, Art XVII of the Constitution is not self executory, thus,
without implementinglegislation the same cannot operate.
Although the Constitution has recognized or granted the
right,the people cannot exercise it if Congress does not
provide for its implementation.The portion of COMELEC
Resolution No. 2300 which prescribes rules and regulations on
theconduct of initiative on amendments to the Constitution, is
void. It has been an established rule thatwhat has been
delegated, cannot be delegated (potestas delegata non
delegari potest). Thedelegation of the power to the COMELEC
being invalid, the latter cannot validly promulgate rulesand
regulations to implement the exercise of the right to peoples
initiative.The lifting of the term limits was held to be that of a
revision, as it would affect other provisions of the Constitution
such as the synchronization of elections, the constitutional
guaranteeof equal access to opportunities for public service,
and prohibiting political dynasties. A revisioncannot be done
by initiative. However, considering the Courts decision in the
above Issue, the issueof whether or not the petition is a
revision or amendment has become academic.

Salonga vs Cruz Pano

G.R. No. L-59524
FACTS:The petitioner invokes the constitutionally protected
right to life and liberty guaranteed by the dueprocess clause,
alleging that no prima facie case has been established to
warrant the filing of aninformation for subversion against him.
Petitioner asks this Court to prohibit and prevent
therespondents from using the iron arm of the law to harass,
oppress, and persecute him, a member of thedemocratic
opposition in the Philippines.Jovito Salonga was charged with
the violation of the Revised Anti-Subversion Act after he
wasimplicated, along with other 39 accused, by Victor Lovely
in the series of bombings in Metro Manila. Hewas tagged by
Lovely in his testimony as the leader of subversive
organizations for two reasons (1)because his house was used
as a contact point; and (2) because of his remarks during the
party of RaulDaza in Los Angeles. He allegedly opined about
the likelihood of a violent struggle in the Philippinesif reforms
are not instituted immediately by then President Marcos.When
arrested, he was not informed of the nature of the charges
against him. Neither was counselallowed to talk to him until
this Court intervened through the issuance of an order
directing that hislawyers be permitted to visit him. Only after
four months of detention was the petitioner informed forthe
first time of the nature of the charges against him. After the
preliminary investigation, the petitionermoved to dismiss the
complaint but the same was denied. Subsequently, the
respondent judge issued aresolution ordering the filing of an
information after finding that a prima facie case had been
establishedagainst the forty persons accused.Hence, this
petition questioning the resolution of the judge.
HELD:After a painstaking review of the records, this Court finds
the evidence offered by the prosecutionutterly insufficient to
establish a prima facie case against the petitioner. We grant
the petition.The respondents call for adherence to the
consistent rule that the denial of a motion to quash or
todismiss, being interlocutory in character, cannot be
questioned by certiorari; that since the question of dismissal
will again be considered by the court when it decides the case,
the movant has a plain, speedyand adequate remedy in the
ordinary course of law; and that public interest dictates that
criminalprosecutions should not be enjoined.The SC held that
infinitely more important than conventional adherence to
general rules of criminalprocedure is respect for the citizen's
right to be free not only from arbitrary arrest and punishment
butalso from unwarranted and vexatious prosecution. The
integrity of a democratic society is corrupted if aperson is
carelessly included in the trial of around forty persons when on
the very face of the record noevidence linking him to the
alleged conspiracy exists.

Taada v. Angara G.R. No. 118295 | May 2, 1997

Petitioners: Wigberto Tanada, et al.
Respondents: Edgardo Angara, et al.

Summary: Petitioners assail the constitutionality of the

Philippines acceding to the World Trade Organization for being
violative of provisions which are supposed to give preference
to Filipino workers and economy and on the ground that it
infringes legislative and judicial power. The WTO, through it
provisions on most favored nation and national treatment,
require that nationals and other member countries are placed
in the same footing in terms of products and services.
However, the Court brushed off these contentions and ruled
that the WTO is constitutional. Sections 10 and 12 of Article XII
(National Economy and Patrimony) should be read in relation
to Sections 1 and 13 (promoting the general welfare). Also,
Section 10 is self-executing only to rights, privileges, and
concessions covering national economy and patrimony but
not every aspect of trade and commerce. There are balancing
provisions in the Constitution allowing the Senate to ratify the
WTO agreement. Also, the Constitution doesnt rule out foreign
competition. States waive certain amount of sovereignty when
entering into treaties.

Facts:
This case questions the constitutionality of the Philippines
being part of the World Trade Organization, particularly when
President Fidel Ramos signed the Instrument of Ratification
and the Senate concurring in the said treaty.
Following World War 2, global financial leaders held a
conference in Bretton Woods to discuss global economy. This
led to the establishment of three great institutions:
International Bank for Reconstruction and Development (World
Bank), International Monetary Fund and International Trade
Organization.
However, the ITO failed to materialized. Instead, there was the
General Agreement on Trades and Tariffs. It was on the
Uruguay Round of the GATT that the WTO was then
established.
The WTO is an institution regulating trade among nations,
including the reduction of tariff and barriers.
Petitioners filed a case assailing the WTO Agreement for
violating the mandate of the 1987 Constitution to develop a
self-reliant and independent national economy effectively
controlled by Filipinos, to give preference to qualified Filipinos
and to promote the preferential use of Filipino labor, domestic
materials and locally produced goods.
It is petitioners position that the national treatment and
parity provisions of the WTO Agreement place nationals
and products of member countries on the same footing as
Filipinos and local products, in contravention of the Filipino
First policy of the Constitution. They allegedly render
meaningless the phrase effectively controlled by Filipinos.

Issue 1: Does the petition present a justiciable controversy?

YES!
In seeking to nullify the Senates act as being unconstitutional,
the petition no doubt raises a justiciable controversy. It
becomes not only the right but in fact the duty of the judiciary
to settle the dispute

Issue 2: Do the provisions of the WTO Agreement contravene

Section 19, Article II and Section 10 & 12, Artilce XII of the
1987 Constitution? NO!

Petitioners Contentions:
Petitioners argue that the letter, spirit and intent of the
Constitution mandating economic nationalism are violated
by the so-called parity provisions and national treatment
clauses scattered in parts of WTO Agreement
This is in view of the most-favored nation clause (MFN) of the
TRIMS (trade-related investment measures), TRIPS (Trade
Related aspects of intellectual property rights), Trade in
Services, and par. 4 of Article III of GATT 1994.
shall be accorded treatment no less favorable than that
accorded to like products of national origin
Sec. 19, Art II:The State shall develop a self-reliant and
independent national economy effectively controlled by
Filipinos.
Sec. 10, Art XII: Congress shall enact measures that will
encourage the formation and operation of enterprises whose
capital is wholly owned by Filipinos. In the grant of rights,
privileges, and concessions covering the national economy
and patrimony, the State shall give preference to qualified
Filipinos.
Sec. 12, Art XII: The State shall promote the preferential use
of Filipino labor, domestic materials and locally produced
goods, and adopt measures that help make them
competitive.

Ruling:
These provisions are not self-executing
Merely guides in the exercise of judicial review and in making
laws.
Secs. 10 and 12 of Article XII should be read and understood in
relation to the other sections in said article, especially Sec. 1
and 13:
A more equitable distribution of opportunities, income and
wealth;
A sustained increase in the amount of goods and services
An expanding productivity as the key to raising the quality of
life
The issue here is not whether this paragraph of Sec. 10 of Art.
XII is self-executing or not. Rather, the issue is whether, as a
rule, there are enough balancing provisions in the Constitution
to allow the Senate to ratify the Philippine concurrence in the
WTO Agreement. And we hold that there are.
WTO Recognizes Need to Protect Weak Economies
Unlike in the UN where major states have permanent seats
and veto powers in the Security Council, in the WTO, decisions
are made on the basis of sovereign equality, with each
members vote equal in weight.
Specific WTO Provisos Protect Developing Countries
Tariff reduction developed countries must reduce at rate of
36% in 6 years, developing 24% in 10 years
Domestic subsidy developed countries must reduce 20%
over six (6) years, developing countries at 13% in 10 years
Export subsidy developed countries, 36% in 6 years;
developing countries, 3/4ths of 36% in 10 years
Constitution Does Not Rule Out Foreign Competition
Encourages industries that are competitive in both domestic
and foreign markets
The Court will not pass upon the advantages and
disadvantages of trade liberalization as an economic policy. It
will only perform its constitutional duty of determining whether
the Senate committed grave abuse of discretion

Issue 3: Does the text of the WTO and its Annexes limit,
restrict or impair the exercise of legislative power by
Congress? NO!
A portion of sovereignty may be waived without violating the
Constitution.
While sovereignty has traditionally been deemed absolute and
all-encompassing on the domestic level, it is however subject
to restrictions and limitations voluntarily agreed to by the
Philippines, expressly or impliedly, as a member of the family
of nations.
The sovereignty of a state therefore cannot in fact and in
reality be considered absolute. Certain restrictions enter into
the picture: limitations imposed by the nature of membership
in the family of nations & limitations imposed by treaty
stipulations.
PROF. RANDOLF S. DAVID et al., - versus - GLORIA MACAPAGAL-
ARROYO et al., G.R. No. 171396 DIGEST
Prof. Randolf S. David, et al., Vs. Gloria Macapagal-Aroyo et al.,
G.R. No. 171396

Facts : On February 24, 2006, as the nation celebrated the

20th Anniversary of Edsa People Power I, President Arroyo
issued PP 1017 declaring a state of national emergency, she
cited that over the past three months, element in the political
opposition have conspired with authoritarians of the extreme
left represented by the NDF-CPP-NPA and the extreme, right,
represented by military adventurist the historical enemies of
the democratic Philippine State who are now in a tactical
alliance and engaged in a concerted systematic conspiracy,
over a broad front, to bring down the duly constituted
Government elected in May 2004, On the same day, The
President issued G.O. No. 5 implementing PP 1017. By the
virtue of power vested upon the President by the Constitution
and Commander in chief of the Republic of the Philippines, and
pursuant to Proclamation No. 1017 dated February 24, 2006,
the president call upon the Armed Forces of the Philippines
and the Philippine National Police, to prevent and suppress
acts of terrorism and lawless violence in the country.

The Office of the President announced the cancellation of all

programs and activities related to the 20th anniversary
celebration of edsa people power 1; and revoked the permits
to hold rallies issued earlier by the local governments. Justice
Secretary Raul Gonzales stated that political rallies, which to
the Presidents mind were organized for purpose of
destabilization, are cancelled. Presidential Chief of Staff
Michael Defensor announced that warrantless arrest and take-
over of facilities, including media, can already be
implemented.

Undeterred by the announcements that rallies and public

protest would not be allowed, members of Kilusang Mayo Uno
and National Federation of Labor Unions, marched from
various parts of Metro Manila with the intention of converging
at the EDSA shrine. Those who where already near EDSA were
violently dispersed by huge cluster of anti-riot police. The
same police action was used against the protesters marching
forward to Cubao, Quezon City and the corner of Santolan
street and EDSA. That same evening, hundreds of riot police
broke up an EDSA celebration rally held along Ayala Avenue
and Paseo de Roxas street in Makaty City.

During the dispersal of the rallyist along EDSA, police arrested

without warrant petitioner Randolf S. David, a Proffesor of the
University of the Philippines and newspaper columnist. Also
arrested was his companion, Ronald Llamas, president of
party-list Akbayan.

At around 12:20 in the early morning of February 25, 2006,

operatives of the Criminal Investigation and Detection Group
of the PNP, on the basis of PP 1017 and G.O. No. 5, raided the
Daily Tribune Offices in Manila. The raiding team confiscated
news stories by reporters, documents, pictures, and mock-ups
of the Saturday issue.

A few minutes later after the search and seizure at the Daily
Tribune. The police surrounded the premises of another pro-
opposition paper, Malaya and its sister publication, tabloid
Abante.

Also, on February 25, 2006, the police arrested Congressman

Crispin Beltran, representing the Anakpawis party and
Chairman of Kilusang Mayo Uno, while leaving his farmhouse
in Bulacan. The police showed a warrant for his arrest gated
1985. Beltrans lawyer explained that the warrant, which
stemmed form a case of inciting to rebellion filed during the
Marcos regime, had long been quashed. When members of
petitioner KMU went to Camp Crame to visit beltran, they were
told they could not be admitted because PP 1017 and G.O.
No.5. Bayan Muna Representative Satur Ocampo eluded arrest
when the police went after him during a public forum at the
Sulo Hotel in Quezon City. Retired Major General Ramon
Montao, former head of the Philippine Constabulary, were
arrested while with his wife and golfmates at the Orchard Golf
and Country Club in Dasmarias, Cavite. Attempts were made
to arrest Bayan Muna Represenatative Satur Ocampo, Teodoro
Casio, Anakpawis Representative Rafael Mariano, Gabriela
Representative Liza Maza, Bayan Muna Representative Jose
Virador was arrested at a PAL ticket Office in Davao City, Later,
he was turned to the custody of the House of Representative
where the Batasan % decided to stay indefinitely.

March 3, 2006, exactly one week after the declaration of a

state of national emergency and after all these petitions had
been filed, the president lifted PP 1017, and issued
Proclamation No. 1021.

Issue: Whether the issuance of PP 1017 is Constitutional,

Whether the provision of PP 1017 commanding the AFP to
enforce laws not related to lawless violence, as well as decrees
promulgated by the President, and provision declaring national
emergency under section 17, article VII of the Constitution is
Constitutional. Whether G.O. No. 5 is Constitutional Whether
the dispersal and warrantless arrest, the warrantless search
are Constitutional.
Held: PP 1017 is constitutional insofar as it constitute a call by
the President for the AFP to prevent or suppress Lawless
violence. The proclamation is sustained by section 18, article
VII of the constitution. However, PP 1017s extraneous
provisions giving the President express or implied power to
issue decrees to direct AFP to enforce obedience to all laws
even those not related to lawless violence as decrees
promulgated by the President; and to impose standards on
media or any form of prior restraint on the press, are ultra
vires and unconstitutional. The Court also rules that under
section 17, article XII of the constitution, the President, in the
absence of a legislation, cannot take over privately-owned
public utility and private business affected with public interest.

In the same element, the court finds G.O. No. 5 valid It is an

Order issued by the President acting as Commander in Chief
addressed to subalterns in the AFP to carry out provisions of
PP 1017. Significantly, it also provides valid standard that the
military and the police should take necessary and appropriate
actions and measure to suppress and prevent acts of lawless
violence. But the word acts of terrorism found in G.O. No. 5
have not been denounced generally in media, no law has been
enacted to guide the military, and eventually the courts, to
determine the limits of the AFPs authority in carrying out this
portion of G.O. No. 5.

On the basis of the relevant and uncontested facts narrated

earlier, it is also pristine clear trhat the warrantless arrest of
petitioners Randolf S. David and Ronald Llamas; the dispersal
of rallies and warrantless arrest of the KMU and NAFLU-KMU
members; the imposition of standard on media or any prior
restraint on the press; and the warrantless search of the
tribune offices and whimsical seizure of some article for
publication and other materials, are not authorized by the
Constitution, the law and jurisprudence. Not even by the valid
provisions of PP 1017 and G.O. No. 5

Wherefore, The Petitions are partly granted. The court rules

that PP 1017 is Constitutional insofar as it constitute a call by
the President Gloria Macapagal-Arroyo on the AFP to prevent
or suppress lawless violence. However, the provisions of PP
1017 commanding the AFP to enforce laws not related to
lawless violence, as well as decrees promulgated by the
President, are declared unconstitutional. In addition, the
provision in PP 1017 declaring national emergency under
section 17, article VII of the Constitution is constitutional, but
such declaration does not authorize the President to take over
privately-owned public utility or business affected with public
interest without prior legislation.

G.O. No. 5 is Constitutional since it provides a standard which

the AFP and the PNP should implement PP 1017, 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
legislature, such portion of G.O. No. 5 is declared
Unconstitutional.
The warrantless arrest of Randolf S. David and Ronal Llamas;
the dispersal and warrantless arrest of KMU and NAFLU-KMU
members during their rallies, in absence of proof that these
petitioners were committing acts constituting lawless violence,
invasion or rebellion and violating BP 880; the imposition of
standards on media or any form of prior restraint on press, as
well as the warrantless search of the tribune offices and
whimsical seizure of its articles for publication and other
materials, are declared Unconstitutional.

No cost.

So Ordered.
Philip Sigfrid Fortun v. Gloria Macapagal-Arroyo, et al., G.R. No.
190293, March 20, 2012 (and other consolidated cases)

DECISION
(En Banc)

ABAD, J.:

I. THE FACTS
On November 23, 2009, heavily armed men believed led by
the ruling Ampatuan family of Maguindanao gunned down and
buried under shoveled dirt 57 innocent civilians. In response
to this carnage, President Arroyo issued on November 24,
2009 PP 1946 declaring a state of emergency in Maguindanao,
Sultan Kudarat, and Cotabato City.

On December 4, 2009, President Arroyo issued PP 1959

declaring martial law and suspending the privilege of the writ
of habeas corpus in Maguindanao except for identified areas of
the Moro Islamic Liberation Front. On December 6, 2009,
President Arroyo submitted her report to Congress. On
December 9, 2009, Congress convened in joint session to
review the validity of the Presidents action. But two days
later, or on December 12, 2009, before Congress could act,
the President issued PP 1963, lifting martial law and restoring
the privilege of the writ of habeas corpus.

II. THE ISSUES

Did the issuance of PP 1963, lifting martial law and restoring

the [privilege of the] writ in Maguindanao, render the issues
moot and academic?

III. THE RULING

[The Court DISMISSED the consolidated petitions on the
ground that they have become MOOT and ACADEMIC.]

YES, the issuance of PP 1963, lifting martial law and restoring

the [privilege of the] writ in Maguindanao, rendered the issues
moot and academic

Prudence and respect for the co-equal departments of the

government dictate that the Court should be cautious in
entertaining actions that assail the constitutionality of the acts
of the Executive or the Legislative department. The issue of
constitutionality, said the Court in Biraogo v. Philippine Truth
Commission of 2010, must be the very issue of the case, that
the resolution of such issue is unavoidable.

The issue of the constitutionality of Proclamation 1959 is not

unavoidable for two reasons:

One. President Arroyo withdrew her proclamation of martial

law and suspension of the privilege of the writ of habeas
corpus before the joint houses of Congress could fulfill their
automatic duty to review and validate or invalidate the same.
xxx.

xxx xxx
xxx
[U]nder the 1987 Constitution the President and the Congress
act in tandem in exercising the power to proclaim martial law
or suspend the privilege of the writ of habeas corpus. They
exercise the power, not only sequentially, but in a sense jointly
since, after the President has initiated the proclamation or the
suspension, only the Congress can maintain the same based
on its own evaluation of the situation on the ground, a power
that the President does not have.

Consequently, although the Constitution reserves to the

Supreme Court the power to review the sufficiency of the
factual basis of the proclamation or suspension in a proper
suit, it is implicit that the Court must allow Congress to
exercise its own review powers, which is automatic rather than
initiated. Only when Congress defaults in its express duty to
defend the Constitution through such review should the
Supreme Court step in as its final rampart. The constitutional
validity of the Presidents proclamation of martial law or
suspension of the writ of habeas corpus is first a political
question in the hands of Congress before it becomes a
justiciable one in the hands of the Court.

xxx xxx xxx

Here, President Arroyo withdrew Proclamation 1959 before the

joint houses of Congress, which had in fact convened, could
act on the same. Consequently, the petitions in these cases
have become moot and the Court has nothing to review. The
lifting of martial law and restoration of the privilege of the writ
of habeas corpus in Maguindanao was a supervening event
that obliterated any justiciable controversy.

Two. Since President Arroyo withdrew her proclamation of

martial law and suspension of the privilege of the writ of
habeas corpus in just eight days, they have not been
meaningfully implemented. The military did not take over the
operation and control of local government units in
Maguindanao. The President did not issue any law or decree
affecting Maguindanao that should ordinarily be enacted by
Congress. No indiscriminate mass arrest had been reported.
Those who were arrested during the period were either
released or promptly charged in court. Indeed, no petition for
habeas corpus had been filed with the Court respecting arrests
made in those eight days. The point is that the President
intended by her action to address an uprising in a relatively
small and sparsely populated province. In her judgment, the
rebellion was localized and swiftly disintegrated in the face of
a determined and amply armed government presence.

xxx xxx xxx

xxx. In a real sense, the proclamation and the suspension

never took off. The Congress itself adjourned without touching
the matter, it having become moot and academic.
As it is to be observed in the BP itself, BP 880 has provisions
which defines therequisites of a peaceful assembly, maximum
tolerance of the police forces andpermit to rally (see definition
of terms and Declaration of policy). On the matterregarding
the claim of illegality of power delegation without clear
standards, themayor being the local government head
concerned, has the right to issue or notthe permits. As stated
in Section 6 of BP 880: (a) It shall be the duty of the mayoror
any official acting in his behalf to issue or grant a permit
unless there is clearand convincing evidence that the public
assembly will create a clear and presentdanger to public order,
public safety, public convenience, public morals or
publichealth. The preceding and succeeding sections provide
for the requisites of thepeaceful assembly stated in the Article
4 of the Bill of rights. As to the matterregarding ruthless
dispersals, police assistance as observed in Section 10 to 11of
the same law is observed for the interest of those exercising
their right toassemble peacefully. BP 880 gives that no
assembly shall be dispersed, unlessthere is impending
violence which could lead to property destruction, harm
toothers and the likes. As to the claim of the groups of the
unconstitutionality of BP880, the law itself provides acts which,
if violated by the assembly regardless ofpermission, are
deemed to be a disruption of the common good, which is
thegreatest and the object of supreme importance over the
right of the assembly. Asstated in the U.S vs. Apurado case
which has similar concerns: "It is rather to beexpected that
more or less disorder will mark the public assembly of the
peopleto protest against grievances whether real or
imaginary, because on suchoccasions feeling is always
wrought to a high pitch of excitement, and
thegreater, the grievance and the more intense the feeling,
the less perfect, as arule will be the disciplinary control
of the leaders over their irresponsiblefollowers. Also, as
Primicias case contains: The right to freedom of speech, andto
peacefully assemble and petition the government for redress
of grievances,are fundamental personal rights of the people
recognized and guaranteed by theconstitutions of democratic
countries. But it is a settled principle growing out ofthe nature
of well-ordered civil societies that the exercise of those rights
is notabsolute for it may be so regulated that it shall not be
injurious to the equal

enjoyment of others having equal rights, nor injurious

to the rights of thecommunity or society.If one is to read
fully the contents or provisions of the BP 880, it is not a law
indicatingtotal ban of assemblies; but rather it exists to
regulate the time, place, and manner ofconducting the
assembly. B.P. No. 880 cannot be condemned as
unconstitutional; itdoes not hold back or unduly confine
freedoms; it merely controls the use of publicplaces as to the
time, place and manner of assemblies. Much of the population
have thenotion that maximum tolerance is a sinister move, but
"maximum tolerance" is for thebenefit of rallyists, not the
government. The delegation to the mayors of the power
toissue rally "permits" is valid because it is subject to the
constitutionally-sound "clear andpresent danger" standard as
stated in Section 10.Therefore:As the court finally decides that
the Secretary of the Interior and Local Governments,are
DIRECTED to take all necessary steps for the immediate
compliance with Section15 of Batas Pambansa No. 880
through the establishment or designation of at least
onesuitable freedom park or plaza in every city and
municipality of the country to avoidmisunderstandings of
permit-related issues.All in all, the petitions are DISMISSED in
all other respects, and the constitutionality ofBatas Pambansa
No. 880 is SUSTAINED.
G.R. No. 196231 September 4, 2012
EMILIO A. GONZALES III, vs.OFFICE OF THE PRESIDENT OF THE
PHILIPPINES, acting through and represented by EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR
x-----------------------x
G.R. No. 196232
WENDELL BARRERAS-SULIT, Petitioner, vs. OFFICE OF THE
PRESIDENT.
PERLAS-BERNABE, J.:

These two petitions have been because they raise a common

thread of issues relating to the President's exercise of the
power to remove from office herein petitioners who claim the
protective cloak of independence of the constitutionally-
created office to which they belong - the Office of the
Ombudsman.

The cases, G.R. No. 196231 and G.R. No. 196232 primarily
seeks to declare as unconstitutional Section 8(2) of Republic
Act (R.A.) No. 6770, otherwise known as the Ombudsman Act
of 1989, which gives the President the power to dismiss a
Deputy Ombudsman of the Office of the Ombudsman.
FACTS: G.R. No. 196231: A formal charge for Grave Misconduct
(robbery, grave threats, robbery extortion and physical
injuries) was filed before PNP-NCR against Manila Police
District Senior Inspector (P/S Insp.) Rolando Mendoza and four
others. Private complainant, Christian M. Kalaw, before the
Office of the City Prosecutor, filed a similar charge. While said
cases were still pending, the Office of the Regional Director of
the National Police Commission (NPC) turned over, upon the
request of petitioner Gonzales III, all relevant documents and
evidence in relation to said case to the Office of the Deputy
Ombudsman for appropriate administrative adjudication.
Subsequently a case for Grave Misconduct was lodged against
P/S Insp. Rolando Mendoza and his fellow police officers in the
Office of the Ombudsman. Meanwhile, the case filed before the
Office of the city Prosecutor was dismissed upon a finding that
the material allegations made by the complainant had not
been substantiated "by any evidence at all to warrant the
indictment of respondents of the offenses charged." Similarly,
the Internal Affairs Service of the PNP issued a Resolution
recommending the dismissal without prejudice of the
administrative case against the same police officers, for failure
of the complainant to appear in three (3) consecutive hearings
despite due notice. However, upon the recommendation of
petitioner Gonzales III, a Decision finding P/S Insp. Rolando
Mendoza and his fellow police officers guilty of Grave
Misconduct was approved by the Ombudsman. Mendoza and
his colleagues filed for a motion for reconsideration which was
forwarded to Ombudsman Gutierrez for final approval, in
whose office it remained pending for final review and action
when P/S Insp. Mendoza hijacked a bus-load of foreign tourists
on that fateful day of August 23, 2010 in a desperate attempt
to have himself reinstated in the police service.
In the aftermath of the hostage-taking incident, which ended
in the tragic murder of eight HongKong Chinese nationals, the
injury of seven others and the death of P/S Insp. Rolando
Mendoza, a public outcry against the blundering of
government officials prompted the creation of the Incident
Investigation and Review Committee (IIRC). It was tasked to
determine accountability for the incident through the conduct
of public hearings and executive sessions. The IIRC found
Deputy Ombudsman Gonzales committed serious and
inexcusable negligence and gross violation of their own rules
of procedure by allowing Mendoza's motion for reconsideration
to languish for more than nine (9) months without any
justification, in violation of the Ombudsman prescribed rules to
resolve motions for reconsideration in administrative
disciplinary cases within five (5) days from submission. The
inaction is gross, considering there is no opposition thereto.
The prolonged inaction precipitated the desperate resort to
hostage-taking. Petitioner was dismissed from service. Hence
the petition.
G.R. No. 196232: Acting Deputy Special Prosecutor of the
Office of the Ombudsman charged Major General Carlos F.
Garcia, his wife Clarita D. Garcia, their sons Ian Carl Garcia,
Juan Paulo Garcia and Timothy Mark Garcia and several
unknown persons with Plunder and Money Laundering before
the Sandiganbayan. The Sandiganbayan denied Major General
Garcia's urgent petition for bail holding that strong prosecution
evidence militated against the grant of bail. However, the
government, represented by petitioner, Special Prosecutor
Barreras-Sulit and sought the Sandiganbayan's approval of a
Plea Bargaining Agreement ("PLEBARA") entered into with the
accused. The Sandiganbayan issued a Resolution finding the
change of plea warranted and the PLEBARA compliant with
jurisprudential guidelines.
Outraged by the backroom deal that could allow Major General
Garcia to get off the hook with nothing but a slap on the hand
notwithstanding the prosecution's apparently strong evidence
of his culpability for serious public offenses, the House of
Representatives' Committee on Justice conducted public
hearings on the PLEBARA. At the conclusion of these public
hearings, the Committee on Justice passed and adopted
Committee Resolution No. 3, recommending to the President
the dismissal of petitioner Barreras-Sulit from the service and
the filing of appropriate charges against her Deputies and
Assistants before the appropriate government office for having
committed acts and/or omissions tantamount to culpable
violations of the Constitution and betrayal of public trust,
which are violations under the Anti-Graft and Corrupt Practices
Act and grounds for removal from office under the
Ombudsman Act. Hence the petition.
ISSUE: Whether the Office of the President has jurisdiction to
exercise administrative disciplinary power over a Deputy
Ombudsman and a Special Prosecutor who belong to the
constitutionally-created Office of the Ombudsman.

HELD: YES. The Ombudsman's administrativedisciplinary

power over a DeputyOmbudsman and Special Prosecutor is not
exclusive. While the Ombudsman's authority to discipline
administratively is extensive and covers all government
officials, whether appointive or elective, with the exception
only of those officials removable by impeachment such
authority is by no means exclusive. Petitioners cannot insist
that they should be solely and directly subject to the
disciplinary authority of the Ombudsman. For, while Section 21
of R.A. 6770 declares the Ombudsman's disciplinary authority
over all government officials, Section 8(2), on the other hand,
grants the President express power of removal over a Deputy
Ombudsman and a Special Prosecutor. A harmonious
construction of these two apparently conflicting provisions in
R.A. No. 6770 leads to the inevitable conclusion that Congress
had intended the Ombudsman and the President to exercise
concurrent disciplinary jurisdiction over petitioners as Deputy
Ombudsman and Special Prosecutor, respectively. Indubitably,
the manifest intent of Congress in enacting both provisions -
Section 8(2) and Section 21 - in the same Organic Act was to
provide for an external authority, through the person of the
President, that would exercise the power of administrative
discipline over the Deputy Ombudsman and Special Prosecutor
without in the least diminishing the constitutional and plenary
authority of the Ombudsman over all government officials and
employees. Such legislative design is simply a measure of
"check and balance" intended to address the lawmakers' real
and valid concern that the Ombudsman and his Deputy may
try to protect one another from administrative liabilities.
By granting express statutorypower to the President to remove
a Deputy Ombudsman and aSpecial Prosecutor, Congress
merely filled an obvious gap inthe law. While the removal of
the Ombudsman himself is also expressly provided for in the
Constitution, which is by impeachment under Section 2 of the
same Article, there is, however, no constitutional provision
similarly dealing with the removal from office of a Deputy
Ombudsman, or a Special Prosecutor, for that matter. By
enacting Section 8(2) of R.A. 6770, Congress simply filled a
gap in the law without running afoul of any provision in the
Constitution or existing statutes. In fact, the Constitution itself,
under Section 2, authorizes Congress to provide for the
removal of all other public officers, including the Deputy
Ombudsman and Special Prosecutor, who are not subject to
impeachment.
The Power of the President toRemove a Deputy Ombudsman
and a Special Prosecutor isImplied from his Power toAppoint. In
giving the President the power to remove a Deputy
Ombudsman and Special Prosecutor, Congress simply laid
down in express terms an authority that is already implied
from the President's constitutional authority to appoint the
aforesaid officials in the Office of the Ombudsman. The
integrity and effectiveness of the Deputy Ombudsman for the
MOLEO as a military watchdog looking into abuses and
irregularities that affect the general morale and
professionalism in the military is certainly of primordial
importance in relation to the President's own role as
Commander-in-Chief of the Armed Forces. It would not be
incongruous for Congress, therefore, to grant the President
concurrent disciplinary authority over the Deputy Ombudsman
for the military and other law enforcement offices.
Granting the President the Powerto Remove a Deputy
Ombudsmandoes not Diminish theIndependence of the Office
of theOmbudsman. he claim that Section 8(2) of R.A. No. 6770
granting the President the power to remove a Deputy
Ombudsman from office totally frustrates, if not resultantly
negates the independence of the Office of the Ombudsman is
tenuous. The independence which the Office of the
Ombudsman is vested with was intended to free it from
political considerations in pursuing its constitutional mandate
to be a protector of the people. What the Constitution secures
for the Office of the Ombudsman is, essentially, political
independence. This means nothing more than that "the terms
of office, the salary, the appointments and discipline of all
persons under the office" are "reasonably insulated from the
whims of politicians."
Petitioner Gonzales may not beremoved from office where the
questioned acts, falling short ofconstitutional standards, do
notconstitute betrayal of public trust. Petitioner's act of
directing the PNP-IAS to endorse P/S Insp. Mendoza's case to
the Ombudsman without citing any reason therefor cannot, by
itself, be considered a manifestation of his undue interest in
the case that would amount to wrongful or unlawful conduct.
After all, taking cognizance of cases upon the request of
concerned agencies or private parties is part and parcel of the
constitutional mandate of the Office of the Ombudsman to be
the "champion of the people." The factual circumstances that
the case was turned over to the Office of the Ombudsman
upon petitioner's request; that administrative liability was
pronounced against P/S Insp. Mendoza even without the
private complainant verifying the truth of his statements; that
the decision was immediately implemented; or that the motion
for reconsideration thereof remained pending for more than
nine months cannot be simply taken as evidence of
petitioner's undue interest in the case considering the lack of
evidence of any personal grudge, social ties or business
affiliation with any of the parties to the case that could have
impelled him to act as he did. There was likewise no evidence
at all of any bribery that took place, or of any corrupt intention
or questionable motivation. The OP's pronouncement of
administrative accountability against petitioner and the
imposition upon him of the corresponding penalty of dismissal
must be reversed and set aside, as the findings of neglect of
duty or misconduct in office do not amount to a betrayal of
public trust. Hence, the President, while he may be vested with
authority, cannot order the removal of petitioner as Deputy
Ombudsman, there being no intentional wrongdoing of the
grave and serious kind amounting to a betrayal of public trust.
The Office of the President is vestedwith statutory authority to
proceedadministratively against petitionerBarreras-Sulit to
determine theexistence of any of the grounds forher removal
from office as providedfor under the Constitution and the
Ombudsman Act.
WHEREFORE, in G.R. No. 196231, the decision of the Office of
the President in OP Case No. 10-J-460 is REVERSED and SET
ASIDE. Petitioner Emilio A. Gonzales III is ordered REINSTATED
with payment of backwages corresponding to the period of
suspension effective immediately, even as the Office of the
Ombudsman is directed to proceed with the investigation in
connection with the above case against petitioner. In G.R. No.
196232, We AFFIRM the continuation of OP-DC Case No. 11-B-
003 against Special Prosecutor Wendell Barreras-Sulit for
alleged acts and omissions tantamount to culpable violation of
the Constitution and a betrayal of public trust, in accordance
with Section 8(2) of the Ombudsman Act of 1989.
The challenge to the constitutionality of Section 8(2) of the
Ombudsman Act is hereby DENIED.
Maria Carolina Araullo vs Benigno Aquino III
olitical Law Constitutional Law Separation of Powers Fund
Realignment Constitutionality of the Disbursement
Acceleration Program
Power of the Purse Executive Impoundment

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 years 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 expos 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 Peoples
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 Presidents 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, theres no impoundment in the case at bar
because whats 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.

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform

Council (PARC), et al., G.R. No. 171101, July 5, 2011
DECISION
VELASCO, JR., J.:
I. THE FACTS
In 1958, the Spanish owners of Compaia General de Tabacos
de Filipinas (Tabacalera) sold Hacienda Luisita and the Central
Azucarera de Tarlac, the sugar mill of the hacienda, to the
Tarlac Development Corporation (Tadeco), then owned and
controlled by the Jose Cojuangco Sr. Group. The Central Bank
of the Philippines assisted Tadeco in obtaining a dollar loan
from a US bank. Also, the GSIS extended a PhP5.911 million
loan in favor of Tadeco to pay the peso price component of the
sale, with the condition that the lots comprising the Hacienda
Luisita be subdivided by the applicant-corporation and sold at
cost to the tenants, should there be any, and whenever
conditions should exist warranting such action under the
provisions of the Land Tenure Act. Tadeco however did not
comply with this condition.

On May 7, 1980, the martial law administration filed a suit

before the Manila RTC against Tadeco, et al., for them to
surrender Hacienda Luisita to the then Ministry of Agrarian
Reform (MAR) so that the land can be distributed to farmers at
cost. Responding, Tadeco alleged that Hacienda Luisita does
not have tenants, besides which sugar lands of which the
hacienda consisted are not covered by existing agrarian
reform legislations(PD 27-rice and corn). The Manila RTC
rendered judgment ordering Tadeco to surrender Hacienda
Luisita to the MAR. Therefrom, Tadeco appealed to the CA.
On March 17, 1988, during the administration of President
Corazon Cojuangco Aquino, the Office of the Solicitor General
moved to withdraw the governments case against Tadeco, et
al. The CA dismissed the case, subject to the PARCs approval
of Tadecos proposed stock distribution plan (SDP) in favor of
its farmworkers. [Under EO 229 (Sec10) and later RA
6657(Sec31), Tadeco had the option of availing stock
distribution as an alternative modality to actual land transfer
to the farmworkers.] On August 23, 1988, Tadeco organized a
spin-off corporation, herein petitioner HLI, as vehicle to
facilitate stock acquisition by the farmworkers. For this
purpose, Tadeco conveyed to HLI the agricultural land portion
(4,915.75 hectares) and other farm-related properties of
Hacienda Luisita in exchange for HLI shares of stock.

On May 9, 1989, some 93% of the then farmworker-

beneficiaries (FWBs) complement of Hacienda Luisita signified
in a referendum their acceptance of the proposed HLIs Stock
Distribution Option Plan (SODP). On May 11, 1989, the SDOA
was formally entered into by Tadeco, HLI, and the 5,848
qualified FWBs. This attested to by then DAR Secretary Philip
Juico. The SDOA embodied the basis and mechanics of HLIs
SDP, which was eventually approved by the PARC after a
follow-up referendum conducted by the DAR on October 14,
1989, in which 5,117 FWBs, out of 5,315 who participated,
opted to receive shares in HLI.
As may be gleaned from the SDOA, included as part of the
distribution plan are: (a) production-sharing equivalent to
three percent (3%) of gross sales from the production of the
agricultural land payable to the FWBs in cash dividends or
incentive bonus; and (b) distribution of free homelots of not
more than 240 square meters each to family-beneficiaries. The
production-sharing, as the SDP indicated, is payable
"irrespective of whether [HLI] makes money or not," implying
that the benefits do not partake the nature of dividends, as the
term is ordinarily understood under corporation law. (5,117 out
of 5315 = shares; 132 = land distribution)

Prior to approval, DAR Secretary Miriam Defensor-Santiago

proposed that the SDP be revised, along the following lines:
1. That over the implementation period of the [SDP],
[Tadeco]/HLI shall ensure that there will be no dilution in the
shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against
the dilution of the percentage shareholdings of the [FWBs],
i.e., that the 33% shareholdings of the [FWBs] will be
maintained at any given time
November 21, 1989 - the PARC, under then Sec. Defensor-
Santiago, issued Resolution No. 89-12-2, approving the SDP of
Tadeco/HLI.

From 1989 to 2005, HLI claimed to have extended the

following benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages
and fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the
gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the
sale of 500 hectares of converted agricultural land of Hacienda
Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the
sale of 80 hectares at 80 million pesos (P80,000,000) for the
SCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death
benefits and no interest bearing salary/educational loans and
rice sugar accounts.
Two separate groups subsequently contested this claim of HLI.
(the petitions/protets)

CONVERSION PROPER
On August 15, 1995, HLI applied for the conversion of 500
hectares of land of the hacienda from agricultural to industrial
use, pursuant to Sec. 65 of RA 6657. The DAR approved the
application on August 14, 1996, subject to payment of three
percent (3%) of the gross selling price to the FWBs and to HLIs
continued compliance with its undertakings under the SDP,
among other conditions.
On December 13, 1996, HLI, in exchange for subscription of
12,000,000 shares of stocks of Centennary Holdings, Inc.
(Centennary), ceded 300 hectares of the converted area to the
latter. Subsequently, Centennary sold the entire 300 hectares
for PhP750 million to Luisita Industrial Park Corporation
(LIPCO), which used it in developing an industrial complex.
From this area was carved out 2 parcels(180 has and 4 has),
for which 2 separate titles were issued in the name of LIPCO.
Later, LIPCO transferred these 2 parcels to the Rizal
Commercial Banking Corporation (RCBC) in payment of
LIPCOs PhP431,695,732.10 loan obligations to RCBC(dacion
en pago). LIPCOs titles were cancelled and new ones were
issued to RCBC.
The other 200 has was transferred to Luisita Realty
Corporation (LRC) in two separate transactions in 1997 and
1998, both uniformly involving 100 hectares for PhP 250
million each.
Apart from the 500 hectares, another 80.51 hectares were
later detached from Hacienda Luisita and acquired by the
government as part of the Subic-Clark-Tarlac Expressway
(SCTEX) complex. Thus, 4,335.75 hectares remained of the
original 4,915 hectares Tadeco ceded to HLI.

Such, was the state of things when two separate petitions

reached the DAR in the latter part of 2003. The first was filed
by the Supervisory Group of HLI (Supervisory Group), praying
for a renegotiation of the SDOA, or, in the alternative, its
revocation. The second petition, praying for the revocation and
nullification of the SDOA and the distribution of the lands in
the hacienda, was filed by Alyansa ng mga Manggagawang
Bukid ng Hacienda Luisita (AMBALA). The DAR then
constituted a Special Task Force (STF) to attend to issues
relating to the SDP of HLI. After investigation and evaluation,
the STF found that HLI has not complied with its obligations
under RA 6657 despite the implementation of the SDP, AND
RECOMMENDED. On December 22, 2005, the PARC issued the
assailed Resolution No. 2005-32-01, recalling/revoking the
SDO plan of Tadeco/HLI. It further resolved that the subject
lands be forthwith placed under the compulsory coverage or
mandated land acquisition scheme of the CARP.

From the foregoing resolution, HLI sought reconsideration. Its

motion notwithstanding, HLI also filed a petition before the
Supreme Court in light of what it considers as the DARs hasty
placing of Hacienda Luisita under CARP even before PARC
could rule or even read the motion for reconsideration. PARC
would eventually deny HLIs motion for
reconsideration via Resolution No. 2006-34-01 dated May 3,
2006.

II. THE ISSUES

(1) Does the PARC possess jurisdiction to recall or revoke HLIs
SDP?
(2) [Issue raised by intervenor FARM (group of farmworkers)]
Is Sec. 31 of RA 6657, which allows stock transfer in lieu of
outright land transfer, unconstitutional?
(3) Is the revocation of the HLIs SDP valid? [Did PARC gravely
abuse its discretion in revoking the subject SDP and placing
the hacienda under CARPs compulsory acquisition and
distribution scheme?]
(4) Should those portions of the converted land within
Hacienda Luisita that RCBC and LIPCO acquired by purchase
be excluded from the coverage of the assailed PARC
resolution? [Did the PARC gravely abuse its discretion when it
included LIPCOs and RCBCs respective properties that once
formed part of Hacienda Luisita under the CARP compulsory
acquisition scheme via the assailed Notice of Coverage?]

III. THE RULING

HLI: PARC has no authority to revoke the SDP; it has the power
to disapprove, but not to recall its previous approval of the
SDP. It is the court which has jurisdiction and authority to order
the revocation or rescission of the PARC-approved SDP
(1) YES, the PARC has jurisdiction to revoke HLIs SDP
under the doctrine of necessary implication.

Under Sec. 31 of RA 6657, as implemented by DAO 10, the

authority to approve the plan for stock distribution of the
corporate landowner belongs to PARC. Contrary to petitioner
HLIs posture, PARC also has the power to revoke the
SDP which it previously approved. It may be, as urged, that RA
6657 or other executive issuances on agrarian reform do not
explicitly vest the PARC with the power to revoke/recall
an approved SDP. Such power or authority, however, is
deemed possessed by PARC under the principle of necessary
implication, a basic postulate that what is implied in a statute
is as much a part of it as that which is expressed.
Following the doctrine of necessary implication, it may be
stated that the conferment of express power to approve a plan
for stock distribution of the agricultural land of corporate
owners necessarily includes the power to revoke or recall the
approval of the plan. To deny PARC such revocatory power
would reduce it into a toothless agency of CARP, because the
very same agency tasked to ensure compliance by the
corporate landowner with the approved SDP would be without
authority to impose sanctions for non-compliance with it.

HLI: the parties to the SDOA should now look to the

Corporation Code, instead of to RA 6657, in determining their
rights, obligations and remedies. The Code should be the
applicable law on the disposition of the agricultural land of HLI.
SC: NO! the rights, obligations and remedies of the parties to
the SDOA embodying the SDP are primarily governed by RA
6657. It should abundantly be made clear that HLI was
precisely created in order to comply with RA 6657, which the
OSG aptly described as the "mother law" of the SDOA and the
SDP. It is, thus, paradoxical for HLI to shield itself from the
coverage of CARP by invoking exclusive applicability of the
Corporation Code under the guise of being a corporate entity.
(2) NO, Sec. 31 of RA 6657 is not unconstitutional.
[The Court actually refused to pass upon the constitutional
question because it was not raised at the earliest opportunity
and because the resolution thereof is not the lis mota of the
case. Moreover, the issue has been rendered moot and
academic since SDO is no longer one of the modes of
acquisition under RA 9700.]

While there is indeed an actual case or controversy, intervenor

FARM, composed of a small minority of 27 farmers, has yet to
explain its failure to challenge the constitutionality of Sec. 31
of RA 6657 as early as November 21, 1989 when PARC
approved the SDP of Hacienda Luisita or at least within a
reasonable time thereafter, and why its members received
benefits from the SDP without so much of a protest. It was only
on December 4, 2003 or 14 years after approval of the SDP
that said plan and approving resolution were sought to be
revoked, but not, to stress, by FARM or any of its members, but
by petitioner AMBALA. Furthermore, the AMBALA petition did
NOT question the constitutionality of Sec. 31 of RA 6657, but
concentrated on the purported flaws and gaps in the
subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not
question the constitutionality of the provision. On the other
hand, FARM, whose 27 members formerly belonged to
AMBALA, raised the constitutionality of Sec. 31 only on May 3,
2007 when it filed its Supplemental Comment with the Court.
Thus, it took FARM some eighteen (18) years from November
21, 1989 before it challenged the constitutionality of Sec. 31 of
RA 6657 which is quite too late in the day. The FARM members
slept on their rights and even accepted benefits from the SDP
with nary a complaint on the alleged unconstitutionality of
Sec. 31 upon which the benefits were derived. The Court
cannot now be goaded into resolving a constitutional issue
that FARM failed to assail after the lapse of a long period of
time and the occurrence of numerous events and activities
which resulted from the application of an alleged
unconstitutional legal provision.

The last but the most important requisite that the

constitutional issue must be the very lis mota of the case does
not likewise obtain. The lis mota aspect is not present, the
constitutional issue tendered not being critical to the
resolution of the case. If some other grounds exist by which
judgment can be made without touching the constitutionality
of a law, such recourse is favored.

The lis mota in this case, proceeding from the basic positions
originally taken by AMBALA (to which the FARM members
previously belonged) and the Supervisory Group, is the alleged
non-compliance by HLI with the conditions of the SDP to
support a plea for its revocation. And before the Court, the lis
mota is whether or not PARC acted in grave abuse of discretion
when it ordered the recall of the SDP for such non-compliance
and the fact that the SDP, as couched and implemented,
offends certain constitutional and statutory provisions. To be
sure, any of these key issues may be resolved without
plunging into the constitutionality of Sec. 31 of RA 6657.
Moreover, looking deeply into the underlying petitions of
AMBALA, et al., it is not the said section per se that is invalid,
but rather it is the alleged application of the said provision in
the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA
9700, amending Sec. 7 of RA 6657, has all but superseded
Sec. 31 of RA 6657 vis--vis the stock distribution component
of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700
provides: [T]hat after June 30, 2009, the modes of acquisition
shall be limited to voluntary offer to sell and compulsory
acquisition. Thus, for all intents and purposes, the stock
distribution scheme under Sec. 31 of RA 6657 is no longer an
available option under existing law. The question of whether or
not it is unconstitutional should be a moot issue.

(3) YES, the revocation of the HLIs SDP valid. [NO, the PARC
did NOT gravely abuse its discretion in revoking the subject
SDP and placing the hacienda under CARPs compulsory
acquisition and distribution scheme.]

The revocation of the approval of the SDP is valid: (1) the

mechanics and timelines of HLIs stock distribution violate DAO
10 because the minimum individual allocation of each original
FWB of 18,804.32 shares was diluted as a result of the use of
man days and the hiring of additional farmworkers; (2) the
30-year timeframe for HLI-to-FWBs stock transfer is contrary to
what Sec. 11 of DAO 10 prescribes.

In our review and analysis of par. 3 of the SDOA on the

mechanics and timelines of stock distribution, We find that
it violates two (2) provisions of DAO 10. Par. 3 of the SDOA
states:
3. At the end of each fiscal year, for a period of 30 years, the
SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC]
the acquisition and distribution to the THIRD PARTY [FWBs] on
the basis of number of days worked and at no cost to them of
one-thirtieth (1/30) of 118,391,976.85 shares of the capital
stock of the SECOND PARTY that are presently owned and held
by the FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired
and distributed to the THIRD PARTY.

[I]t is clear as day that the original 6,296 FWBs, who were
qualified beneficiaries at the time of the approval of the SDP,
suffered from watering down of shares. As determined earlier,
each original FWB is entitled to 18,804.32 HLI shares. The
original FWBs got less than the guaranteed 18,804.32 HLI
shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on man days or
number of days worked by the FWB in a years time. As
explained by HLI, a beneficiary needs to work for at least 37
days in a fiscal year before he or she becomes entitled to HLI
shares. If it falls below 37 days, the FWB, unfortunately, does
not get any share at year end. The number of HLI shares
distributed varies depending on the number of days the FWBs
were allowed to work in one year. Worse, HLI hired
farmworkers in addition to the original 6,296 FWBs, such that,
as indicated in the Compliance dated August 2, 2010
submitted by HLI to the Court, the total number of
farmworkers of HLI as of said date stood at 10,502. All these
farmworkers, which include the original 6,296 FWBs, were
given shares out of the 118,931,976.85 HLI shares
representing the 33.296% of the total outstanding capital
stock of HLI. Clearly, the minimum individual allocation of
each original FWB of 18,804.32 shares was diluted as a result
of the use of man days and the hiring of additional
farmworkers.

Going into another but related matter, par. 3 of the SDOA

expressly providing for a 30-year timeframe for HLI-to-FWBs
stock transfer is an arrangement contrary to what Sec. 11 of
DAO 10 prescribes. Said Sec. 11 provides for the
implementation of the approved stock distribution plan within
three (3) months from receipt by the corporate landowner of
the approval of the plan by PARC. In fact, based on the said
provision, the transfer of the shares of stock in the names of
the qualified FWBs should be recorded in the stock and
transfer books and must be submitted to the SEC within sixty
(60) days from implementation.

To the Court, there is a purpose, which is at once discernible as

it is practical, for the three-month threshold. Remove this
timeline and the corporate landowner can veritably evade
compliance with agrarian reform by simply deferring to absurd
limits the implementation of the stock distribution scheme. the
reason underpinning the 30-year accommodation does not
apply to corporate landowners in distributing shares of stock
to the qualified beneficiaries, as the shares may be issued in a
much shorter period of time.
Taking into account the above discussion, the revocation of the
SDP by PARC should be upheld [because of violations of] DAO
10. It bears stressing that under Sec. 49 of RA 6657, the PARC
and the DAR have the power to issue rules and regulations,
substantive or procedural. Being a product of such rule-making
power, DAO 10 has the force and effect of law and must be
duly complied with. The PARC is, therefore, correct in revoking
the SDP. Consequently, the PARC Resolution No. 89-12-2 dated
November 21, l989 approving the HLIs SDP is nullified and
voided.

(4) YES, those portions of the converted land within Hacienda

Luisita that RCBC and LIPCO acquired by purchase should be
excluded from the coverage of the assailed PARC resolution.

[T]here are two (2) requirements before one may be

considered a purchaser in good faith, namely: (1) that the
purchaser buys the property of another without notice that
some other person has a right to or interest in such property;
and (2) that the purchaser pays a full and fair price for the
property at the time of such purchase or before he or she has
notice of the claim of another.

It can rightfully be said that both LIPCO and RCBC are

purchasers in good faith for value entitled to the benefits
arising from such status.
First, at the time LIPCO purchased the entire three hundred
(300) hectares of industrial land, there was no notice of any
supposed defect in the title of its transferor, Centennary, or
that any other person has a right to or interest in such
property. In fact, at the time LIPCO acquired said parcels of
land, only the following annotations appeared on the TCT in
the name of Centennary: the Secretarys Certificate in favor of
Teresita Lopa, the Secretarys Certificate in favor of Shintaro
Murai, and the conversion of the property from agricultural to
industrial and residential use.
The same is true with respect to RCBC. At the time it acquired
portions of Hacienda Luisita, only the following general
annotations appeared on the TCTs of LIPCO: the Deed of
Restrictions, limiting its use solely as an industrial estate; the
Secretarys Certificate in favor of Koji Komai and Kyosuke Hori;
and the Real Estate Mortgage in favor of RCBC to guarantee
the payment of PhP 300 million.

To be sure, intervenor RCBC and LIPCO knew that the lots they
bought were subjected to CARP coverage by means of a stock
distribution plan, as the DAR conversion order was annotated
at the back of the titles of the lots they acquired. However,
they are of the honest belief that the subject lots were validly
converted to commercial or industrial purposes and for which
said lots were taken out of the CARP coverage subject of PARC
Resolution No. 89-12-2 and, hence, can be legally and validly
acquired by them. After all, Sec. 65 of RA 6657 explicitly
allows conversion and disposition of agricultural lands
previously covered by CARP land acquisition after the lapse of
five (5) years from its award when the land ceases to be
economically feasible and sound for agricultural purposes or
the locality has become urbanized and the land will have a
greater economic value for residential, commercial or
industrial purposes. Moreover, DAR notified all the affected
parties, more particularly the FWBs, and gave them the
opportunity to comment or oppose the proposed
conversion. DAR, after going through the necessary
processes, granted the conversion of 500 hectares of Hacienda
Luisita pursuant to its primary jurisdiction under Sec. 50 of RA
6657 to determine and adjudicate agrarian reform matters and
its original exclusive jurisdiction over all matters involving the
implementation of agrarian reform. The DAR conversion order
became final and executory after none of the FWBs interposed
an appeal to the CA. In this factual setting, RCBC and LIPCO
purchased the lots in question on their honest and well-
founded belief that the previous registered owners could
legally sell and convey the lots though these were previously
subject of CARP coverage. Ergo, RCBC and LIPCO acted in
good faith in acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of
Hacienda Luisita for value. Undeniably, LIPCO acquired 300
hectares of land from Centennary for the amount of PhP750
million pursuant to a Deed of Sale dated July 30, 1998. On the
other hand, in a Deed of Absolute Assignment dated
November 25, 2004, LIPCO conveyed portions of Hacienda
Luisita in favor of RCBC by way of dacion en pago to pay for a
loan of PhP431,695,732.10.
In relying upon the above-mentioned approvals, proclamation
and conversion order, both RCBC and LIPCO cannot be
considered at fault for believing that certain portions of
Hacienda Luisita are industrial/commercial lands and are, thus,
outside the ambit of CARP. The PARC, and consequently DAR,
gravely abused its discretion when it placed LIPCOs and
RCBCs property which once formed part of Hacienda Luisita
under the CARP compulsory acquisition scheme via the
assailed Notice of Coverage.

[The Court went on to apply the operative fact doctrine to

determine what should be done in the aftermath of its
disposition of the above-enumerated issues:
While We affirm the revocation of the SDP on Hacienda Luisita
subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01,
the Court cannot close its eyes to certain operative facts
that had occurred in the interim. Pertinently, the operative
fact doctrine realizes that, in declaring a law or executive
action null and void, or, by extension, no longer without force
and effect, undue harshness and resulting unfairness must be
avoided. This is as it should realistically be, since rights might
have accrued in favor of natural or juridical persons and
obligations justly incurred in the meantime. The actual
existence of a statute or executive act is, prior to such a
determination, an operative fact and may have consequences
which cannot justly be ignored; the past cannot always be
erased by a new judicial declaration.
While the assailed PARC resolutions effectively nullifying the
Hacienda Luisita SDP are upheld, the revocation must, by
application of the operative fact principle, give way to the right
of the original 6,296 qualified FWBs to choose whether they
want to remain as HLI stockholders or not. The Court cannot
turn a blind eye to the fact that in 1989, 93% of the FWBs
agreed to the SDOA (or the MOA), which became the basis of
the SDP approved by PARC per its Resolution No. 89-12-2
dated November 21, 1989. From 1989 to 2005, the FWBs were
said to have received from HLI salaries and cash benefits,
hospital and medical benefits, 240-square meter homelots, 3%
of the gross produce from agricultural lands, and 3% of the
proceeds of the sale of the 500-hectare converted land and
the 80.51-hectare lot sold to SCTEX. HLI shares totaling
118,391,976.85 were distributed as of April 22, 2005. On
August 6, 20l0, HLI and private respondents submitted a
Compromise Agreement, in which HLI gave the FWBs the
option of acquiring a piece of agricultural land or remain as HLI
stockholders, and as a matter of fact, most FWBs indicated
their choice of remaining as stockholders. These facts and
circumstances tend to indicate that some, if not all, of the
FWBs may actually desire to continue as HLI shareholders. A
matter best left to their own discretion.]

The dissents in the July 5, 2011 decision

The dissents of the minority justices were on the other fine
points of the decision.
Chief Justice Corona dissented insofar as the majority refused
to declare Sec. 31 of RA 6657 unconstitutional. The provision
grants to corporate landowners the option to give qualified
FWBs the right to own capital stock of the corporation in lieu of
actual land distribution. The Chief Justice was of the view that
by allowing the distribution of capital stock, and not land, as
compliance with agrarian reform, Sec. 31 of RA 6657
contravenes Sec. 4, Article XIII of the Constitution, which, he
argued, requires that the law implementing the agrarian
reform program should employ [actual] land
redistribution mechanism. Under Sec. 31 of RA 6657, he noted,
the corporate landowner remains to be the owner of the
agricultural land. Qualified beneficiaries are given ownership
only of shares of stock, not [of] the lands they till. He
concluded that since an unconstitutional provision cannot be
the basis of a constitutional act, the SDP of petitioner HLI
based on Section 31 of RA 6657 is also unconstitutional.
Justice Mendoza fully concurred with Chief Justice Coronas
position that Sec. 31 of RA 6657 is unconstitutional. He
however agreed with the majority that the FWBs be given the
option to remain as shareholders of HLI. He also joined Justice
Brions proposal that that the reckoning date for purposes of
just compensation should be May 11, 1989, when the SDOA
was executed by Tadeco, HLI and the FWBs. Finally, he averred
that considering that more than 10 years have elapsed
from May 11, 1989, the qualified FWBs, who can validly
dispose of their due shares, may do so, in favor of LBP or other
qualified beneficiaries. The 10-year period need not be
counted from the issuance of the Emancipation Title (EP) or
Certificate of Land Ownership Award CLOA) because, under the
SDOA, shares, not land, were to be awarded and distributed.
Justice Brions dissent centered on the consequences of the
revocation of HLIs SDP/SDOA. He argued that that the
operative fact doctrine only applies in considering the effects
of a declaration of unconstitutionality of a statute or a rule
issued by the Executive Department that is accorded the
status of a statute. The SDOA/SDP is neither a statute nor an
executive issuance but a contract between the FWBs and the
landowners; hence, the operative fact doctrine is not
applicable. A contract stands on a different plane than a
statute or an executive issuance. When a contract is contrary
to law, it is deemed void ab initio. It produces no legal effects
whatsoever. Thus, Justice Brion questioned the option given by
the majority to the FWBs to remain as stockholders in an
almost-bankrupt corporation like HLI. He argued that the
nullity of HLIs SDP/SDOA goes into its very existence, and the
parties to it must generally revert to their respective situations
prior to its execution. Restitution, he said, is therefore in order.
With the SDP being void, the FWBs should return everything
they are proven to have received pursuant to the terms of the
SDOA/SDP. Justice Brion then proposed that all aspects of the
implementation of the mandatory CARP coverage be
determined by the DAR by starting with a clean slate from
[May 11,] 1989, the point in time when the compulsory CARP
coverage should start, and proceeding to adjust the relations
of the parties with due regard to the events that intervened
[thereafter]. He also held that the time of the taking (when the
computation of just compensation shall be reckoned) shall be
May 11, 1989, when the SDOA was executed by Tadeco, HLI
and the FWBs.
Justice Sereno dissented with respect to how the majority
modified the questioned PARC Resolutions (i.e., no immediate
land distribution, give first the original qualified FWBs the
option to either remain as stockholders of HLI or choose actual
land distribution) and the applicability of the operative fact
doctrine. She would instead order the DAR to forthwith
determine the area of Hacienda Luisita that must be covered
by the compulsory coverage and monitor the land distribution
to the qualified FWBs.
Erroneous interpretation of the Courts decision
The High Tribunal actually voted unanimously (11-0) to
DISMISS/DENY the petition of HLI and to AFFIRM the PARC
resolutions. This is contrary to media reports that the Court
voted 6-4 to dismiss the HLI petition. The five (not four)
minority justices (Chief Justice Corona, and Justices Brion,
Villarama, Mendoza, and Sereno) only partially dissented from
the decision of the majority of six (Justice Velasco Jr.,
Leonardo-De Castro, Bersamin, Del Castillo, Abad, and Perez).
Justice Antonio Carpio took no part in the deliberations and in
the voting, while Justice Diosdado Peralta was on official leave.
The 14th and 15th seats in the Court were earlier vacated by
the retirements of Justices Eduardo Antonio Nachura (June 13,
2011) and Conchita Carpio-Morales (June 19, 2011).
Another misinterpretation came from no less than the
Supreme Court administrator and spokesperson, Atty. Midas
Marquez. In a press conference called after the promulgation
of the Courts decision, Marquez initially used the term
referendum in explaining the High Courts ruling. This
created confusion among the parties and the interested public
since a referendum implies that the FWBs will have to vote
on a common mode by which to pursue their claims over
Hacienda Luisita. The decision was thus met with cries of
condemnation by the misinformed farmers and the various
peoples organizations and militant groups supportive of their
cause.
Marquez would later correct himself in a subsequent press
briefing. But since by then the parties had already filed their
respective motions for reconsideration, he called upon
everyone to just wait for the final resolution of the motion[s],
which is forthcoming anyway. The resolution of the
consolidated motions for reconsideration came relatively early
on November 22, 2011, or less than five months from the
promulgation of the decision.

G.R. No. 171101 November 22, 2011

Motion for Clarification and Partial Reconsideration dated July

21, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI);
it is not proper to distribute the proceeds of the conversion
sale to the FWBs the proceeds of the sale belong to the
corporation for having sold its asset, and the distribution
would be considered dissolution of HLI
the actual taking is NOT November 21, 1989, but should be
reckoned from finality of the Decision of this Court, or at the
very least, the reckoning period may be tacked to January 2,
2006, the date when the Notice of Coverage was issued by the
DAR
Motion for Partial Reconsideration dated July 20, 2011 filed by
PARC and DAR
Doctrine of Operative fact does not apply because no law was
declared void.
Motion for Reconsideration dated July 19, 2011 filed by
AMBALA
RA 6657 is unconstitutional
"operative fact doctrine" does not apply. the option given to
the farmers to remain as stockholders of HLI is equivalent to
an option for HLI to retain land in direct violation of the CARL,
the SDP having been revoked. It should not apply if it would
result to inequity
CA erred in holding that improving the economic status of
FWBs is not among the legal obligations of HLI under the SDP
and an imperative imposition by RA 6657 and DAO 10
CA erred in holding that LIPCO and RCBC were purchasers for
value
Motion for Reconsideration dated July 21, 2011 filed by
respondent-intervenor Farmworkers Agrarian Reform
Movement, Inc. (FARM);
same with AMBALA
issue of constitutionality is the lis mota of the case which must
be decided upon
Motion for Reconsideration dated July 21, 2011 filed by private
respondents Noel Mallari, Julio Suniga, Supervisory Group of
Hacienda Luisita, Inc. (Supervisory Group) and Windsor Andaya
(collectively referred to as "Mallari, et al."); and
Motion for Reconsideration dated July 22, 2011 filed by private
respondents Rene Galang and
ISSUES:
(1) applicability of the operative fact doctrine;
(2) constitutionality of Sec. 31 of RA 6657 or the
Comprehensive Agrarian Reform Law of 1988;
(3) coverage of compulsory acquisition;
(4) just compensation;
(5) sale to third parties;
(6) the violations of HLI; and
(7) control over agricultural lands (revocation of SDP)

OPERATIVE FACT DOCTRINE (not much related)

Bearing in mind that PARC Resolution No. 89-12-2 an
executive actwas declared invalid in the instant case, the
operative fact doctrine is clearly applicable.
it should be recognized that SC, in its July 5, 2011 Decision,
affirmed the revocation of Resolution No. 89-12-2 and ruled for
the compulsory coverage of the agricultural lands of Hacienda
Luisita in view of HLIs violation of the SDP and DAO 10. By
applying the doctrine, this Court merely gave the qualified
FWBs the option to remain as stockholders of HLI and ruled
that they will retain the homelots and other benefits which
they received from HLI by virtue of the SDP.
The application of the doctrine is favorable to the FWBs
because not only were the FWBs allowed to retain the benefits
and homelots they received under the stock distribution
scheme, they were also given the option to choose for
themselves whether they want to remain as stockholders of
HLI or not.

CONSTITUTIONALITY
(Upheld previous ruling)
FARM is, therefore, remiss in belatedly questioning the
constitutionality of Sec. 31 of RA 6657. The second
requirement that the constitutional question should be raised
at the earliest possible opportunity is clearly wanting.
The last but the most important requisite that the
constitutional issue must be the very lis mota of the case does
not likewise obtain. The lis mota aspect is not present, the
constitutional issue tendered not being critical to the
resolution of the case.

COVERAGE OF COMPULSORY ACQUISITION

FARM argues that this Court ignored certain material facts
when it limited the maximum area to be covered to 4,915.75
hectares, whereas the area that should, at the least, be
covered is 6,443 hectares, which is the agricultural land
allegedly covered by RA 6657 and previously held by Tarlac
Development Corporation (Tadeco).
We cannot subscribe to this view. Since what is put in issue
before the Court is the propriety of the revocation of the SDP,
which only involves 4,915.75 has. of agricultural land and not
6,443 has., then We are constrained to rule only as regards the
4,915.75 has. of agricultural land.
DAR, however, contends that the declaration of the area to be
awarded to each FWB is too restrictive. It stresses that in
agricultural landholdings like Hacienda Luisita, there are roads,
irrigation canals, and other portions of the land that are
considered commonly-owned by farmworkers, and this may
necessarily result in the decrease of the area size that may be
awarded per FWB. DAR also argues that the July 5, 2011
Decision does not give it any leeway in adjusting the area that
may be awarded per FWB in case the number of actual
qualified FWBs decreases.
The argument is meritorious. In order to ensure the proper
distribution of the agricultural lands of Hacienda Luisita per
qualified FWB, and considering that matters involving strictly
the administrative implementation and enforcement of
agrarian reform laws are within the jurisdiction of the DAR, it is
the latter which shall determine the area with which each
qualified FWB will be awarded.

500 HECTARES
RCBC and LIPCO knew that the lots they bought were
subjected to CARP coverage by means of a stock distribution
plan, as the DAR conversion order was annotated at the back
of the titles of the lots they acquired. However, they are of the
honest belief that the subject lots were validly converted to
commercial or industrial purposes and for which said lots were
taken out of the CARP coverage subject of PARC Resolution No.
89-12-2 and, hence, can be legally and validly acquired by
them.

PROCEEDS OF SALE
Considering that the 500-hectare converted land, as well as
the 80.51-hectare SCTEX lot, should have been included in the
compulsory coverage were it not for their conversion and valid
transfers, then it is only but proper that the price received for
the sale of these lots should be given to the qualified FWBs. In
effect, the proceeds from the sale shall take the place of the
lots.

JUST COMPENSATION - TAKING

In Our July 5, 2011 Decision, We stated that "HLI shall be paid
just compensation for the remaining agricultural land that will
be transferred to DAR for land distribution to the FWBs." We
also ruled that the date of the "taking" is November 21, 1989,
when PARC approved HLIs SDP per PARC Resolution No. 89-12-
2.
Mallari, et al. argued that the valuation of the land cannot be
based on November 21, 1989. Instead, they aver that the date
of "taking" for valuation purposes is a factual issue best left to
the determination of the trial courts.
AMBALA alleged that HLI should no longer be paid just
compensation for the agricultural land that will be distributed
to the FWBs, since the RTC already rendered a decision
ordering "the Cojuangcos to transfer the control of Hacienda
Luisita to the Ministry of Agrarian Reform, which will distribute
the land to small farmers after compensating the landowners
P3.988 million." In the event, however, that this Court will rule
that HLI is indeed entitled to compensation, AMBALA
contended that it should be pegged at forty thousand pesos
(PhP 40,000) per hectare, since this was the same value that
Tadeco declared in 1989 to make sure that the farmers will not
own the majority of its stocks.
SC: the date of "taking" is November 21, 1989, the date when
PARC approved HLIs SDP in view of the fact that this is the
time that the FWBs were considered to own and possess the
agricultural lands in Hacienda Luisita. To be precise, these
lands became subject of the agrarian reform coverage through
the stock distribution scheme only upon the approval of the
SDP, that is, November 21, 1989. Thus, such approval is akin
to a notice of coverage ordinarily issued under compulsory
acquisition. Further, any doubt should be resolved in favor of
the FWBs.

SALE TO THIRD PARTIES

There is a view that since the agricultural lands in Hacienda
Luisita were placed under CARP coverage through the SDOA
scheme on May 11, 1989, then the 10-year period prohibition
on the transfer of awarded lands under RA 6657 lapsed on May
10, 1999, and, consequently, the qualified FWBs should
already be allowed to sell these lands with respect to their
land interests to third parties, including HLI, regardless of
whether they have fully paid for the lands or not.

The proposition is erroneous. If the land has not yet been fully
paid by the beneficiary, the right to the land may be
transferred or conveyed, with prior approval of the DAR, to any
heir of the beneficiary or to any other beneficiary who, as a
condition for such transfer or conveyance, shall cultivate the
land himself. Failing compliance herewith, the land shall be
transferred to the LBP which shall give due notice of the
availability of the land in the manner specified in the
immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the amounts
the latter has already paid, together with the value of
improvements he has made on the land.
Without a doubt, under RA 6657 and DAO 1, the awarded lands
may only be transferred or conveyed after ten (10) years from
the issuance and registration of the emancipation patent (EP)
or certificate of land ownership award (CLOA). Considering that
the EPs or CLOAs have not yet been issued to the qualified
FWBs in the instant case, the 10-year prohibitive period has
not even started. Significantly, the reckoning point is the
issuance of the EP or CLOA, and not the placing of the
agricultural lands under CARP coverage.
if We maintain the position that the qualified FWBs should be
immediately allowed the option to sell or convey the
agricultural lands in Hacienda Luisita, then all efforts at
agrarian reform would be rendered nugatory by this Court,
since, at the end of the day, these lands will just be
transferred to persons not entitled to land distribution under
CARP.

CONTROL OVER AGRICULTURAL LANDS

SC realized that the FWBs will never have control over these
agricultural lands for as long as they remain as stockholders of
HLI.
bearing in mind that with the revocation of the approval of the
SDP, HLI will no longer be operating under SDP and will only be
treated as an ordinary private corporation; the FWBs who
remain as stockholders of HLI will be treated as ordinary
stockholders and will no longer be under the protective mantle
of RA 6657.
In addition to the foregoing, in view of the operative fact
doctrine, all the benefits and homelots80 received by all the
FWBs shall be respected with no obligation to refund or return
them, since, as We have mentioned in our July 5, 2011
Decision, "the benefits x x x were received by the FWBs as
farmhands in the agricultural enterprise of HLI and other fringe
benefits were granted to them pursuant to the existing
collective bargaining agreement with Tadeco."
One last point, the HLI land shall be distributed only to the
6,296 original FWBs. The remaining 4,206 FWBs are not
entitled to any portion of the HLI land, because the rights to
said land were vested only in the 6,296 original FWBs pursuant
to Sec. 22 of RA 6657. With these, PARC/DARs, AMBALAs, and
FARMs Motions GRANTED.
The order giving option to the FWBs to choose whether or not
to stay as shareholders was thereby recalled.

G.R. No. 171101 April 24, 2012

Before the Court are the Motion to Clarify and Reconsider
Resolution of November 22, 2011 dated December 16, 2011
filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion
for Reconsideration/Clarification dated December 9, 2011 filed
by private respondents Noel Mallari, Julio Suniga, Supervisory
Group of Hacienda Luisita, Inc. and Windsor Andaya
(collectively referred to as "Mallari, et al.").
Basically, the issues raised by HLI and Mallari, et al. boil down
to the following: (1) determination of the date of "taking"; (2)
propriety of the revocation of the option on the part of the
original FWBs to remain as stockholders of HLI; (3) propriety of
distributing to the qualified FWBs the proceeds from the sale
of the converted land and of the 80.51-hectare Subic-Clark-
Tarlac Expressway (SCTEX ) land; and (4) just compensation
for the homelots given to the FWBs.

PAYMENT OF JUST COMPENSATION

HLI contends that since the SDP is a modality which the
agrarian reform law gives the landowner as alternative to
compulsory coverage, then the FWBs cannot be considered as
owners and possessors of the agricultural lands of Hacienda
Luisita at the time the SDP was approved by PARC. It further
claims that the approval of the SDP is not akin to a Notice of
Coverage in compulsory coverage situations because stock
distribution option and compulsory acquisition are two (2)
different modalities with independent and separate rules and
mechanisms. Concomitantly, HLI maintains that the Notice of
Coverage issued on January 2, 2006 may, at the very least, be
considered as the date of "taking" as this was the only time
that the agricultural lands of Hacienda Luisita were placed
under compulsory acquisition in view of its failure to perform
certain obligations under the SDP.
UPHELD PREVIOUS DECISION: taking was effected on
November 21, 1989
What is notable, however, is that the divestment by Tadeco of
the agricultural lands of Hacienda Luisita and the giving of the
shares of stock for free is nothing but an enticement or
incentive for the FWBs to agree with the stock distribution
option scheme and not further push for land distribution. And
the stubborn fact is that the "man days" scheme of HLI
impelled the FWBs to work in the hacienda in exchange for
such shares of stock.
When the agricultural lands of Hacienda Luisita were
transferred by Tadeco to HLI in order to comply with CARP
through the stock distribution option scheme, sealed with the
imprimatur of PARC under PARC Resolution No. 89-12-2 dated
November 21, 1989, Tadeco was consequently dispossessed of
the afore-mentioned attributes of ownership. Notably, Tadeco
and HLI are two different entities with separate and distinct
legal personalities. Ownership by one cannot be considered as
ownership by the other.
Corollarily, it is the official act by the government, that is, the
PARCs approval of the SDP, which should be considered as the
reckoning point for the "taking" of the agricultural lands of
Hacienda Luisita. Although the transfer of ownership over the
agricultural lands was made prior to the SDPs approval, it is
this Courts consistent view that these lands officially became
subject of the agrarian reform coverage through the stock
distribution scheme only upon the approval of the SDP. And as
We have mentioned in Our November 22, 2011 Resolution,
such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition.

FWBS ENTITLED TO PROCEEDS OF SALE

HLI reiterates its claim over the proceeds of the sales of the
500 hectares and 80.51 hectares of the land as corporate
owner and argues that the return of said proceeds to the FWBs
is unfair and violative of the Corporation Code.
This claim is bereft of merit.
UPHELD PREVIOUS RULING - were it not for the approval of the
SDP by PARC, these large parcels of land would have been
distributed and ownership transferred to the FWBs, subject to
payment of just compensation, given that, as of 1989, the
subject 4,915 hectares of Hacienda Luisita were already
covered by CARP.

HOMELOTS
In the present recourse, HLI also harps on the fact that since
the homelots given to the FWBs do not form part of the
4,915.75 hectares covered by the SDP, then the value of these
homelots should, with the revocation of the SDP, be paid to
Tadeco as the landowner.
We disagree. As We have explained in Our July 5, 2011
Decision, the distribution of homelots is required under RA
6657 only for corporations or business associations owning or
operating farms which opted for land distribution. This is
provided under Sec. 30 of RA 6657.
Since none of the provisions made reference to corporations
which opted for stock distribution under Sec. 31 of RA 6657,
then it is apparent that said corporations are not obliged to
provide for homelots. Nonetheless, HLI undertook to
"subdivide and allocate for free and without charge among the
qualified family-beneficiaries x x x residential or homelots of
not more than 240 sq. m. each, with each family beneficiary
being assured of receiving and owning a homelot in the barrio
or barangay where it actually resides." In fact, HLI was able to
distribute homelots to some if not all of the FWBs.
Thus, in our November 22, 2011 Resolution, We declared that
the homelots already received by the FWBs shall be respected
with no obligation to refund or to return them. However, since
the SDP was already revoked with finality, the Court directs
the government through the DAR to pay HLI the just
compensation for said homelots in consonance with Sec. 4,
Article XIII of the 1987 Constitution that the taking of land for
use in the agrarian reform program is "subject to the payment
of just compensation."

To recapitulate, the Court voted on the following issues in this

manner:
In determining the date of "taking," the Court voted 8-6 to
maintain the ruling fixing November 21, 1989 as the date of
"taking," the value of the affected lands to be determined by
the LBP and the DAR;
On the propriety of the revocation of the option of the FWBs to
remain as HLI stockholders, the Court, by unanimous vote,
agreed to reiterate its ruling in its November 22, 2011
Resolution that the option granted to the FWBs stays revoked;
On the propriety of returning to the FWBs the proceeds of the
sale of the 500-hectare converted land and of the 80.51-
hectare SCTEX land, the Court unanimously voted to maintain
its ruling to order the payment of the proceeds of the sale of
the said land to the FWBs less the 3% share, taxes and
expenses specified in the fallo of the November 22, 2011
Resolution;
On the payment of just compensation for the homelots to HLI,
the Court, by unanimous vote, resolved to amend its July 5,
2011 Decision and November 22, 2011 Resolution by ordering
the government, through the DAR, to pay to HLI the just
compensation for the homelots thus distributed to the FWBS.
the government, through DAR, is ordered to pay Hacienda
Luisita, Inc. the just compensation for the 240-square meter
homelots distributed to the FWBs.