PHILIPPINE ASSOCIATION OF COLLEGES AND UNIVERSITIES, ETC.
, petitioner, When a law has been long treated as constitutional and important rights have
vs.
SECRETARY OF EDUCATION and the BOARD OF TEXTBOOKS, respondents.
Manuel C. Briones, Vicente G. Sinco, Manuel V. Gallego and Enrique M. Fernando for
petitioner.
Office of the Solicitor General Pompeyo Diaz and Assistant Solicitor General Francisco Carreon
for respondents.
BENGZON, J.:
The petitioning colleges and universities request that Act No. 2706 as amended by Act No.
3075 and Commonwealth Act No. 180 be declared unconstitutional, because: A. They deprive
owners of schools and colleges as well as teachers and parents of liberty and property
without due process of law; B. They deprive parents of their natural rights and duty to rear
their children for civic efficiency; and C. Their provisions conferring on the Secretary of
Education unlimited power and discretion to prescribe rules and standards constitute an
unlawful delegation of legislative power.
A printed memorandum explaining their position in extenso is attached to the record.
The Government's legal representative submitted a mimeographed memorandum
contending that, (1) the matter constitutes no justiciable controversy exhibiting unavoidable
necessity of deciding the constitutional questions; (2) petitioners are in estoppel to challenge
the validity of the said acts; and (3) the Acts are constitutionally valid.
Petitioners submitted a lengthy reply to the above arguments.
Act No. 2706 approved in 1917 is entitled, "An Act making the inspection and recognition of
private schools and colleges obligatory for the Secretary of Public Instruction." Under its
provisions, the Department of Education has, for the past 37 years, supervised and regulated
all private schools in this country apparently without audible protest, nay, with the general
acquiescence of the general public and the parties concerned.
It should be understandable, then, that this Court should be doubly reluctant to consider
petitioner's demand for avoidance of the law aforesaid, specially where, as respondents
assert, petitioners suffered no wrongnor allege anyfrom the enforcement of the
criticized statute.
It must be evident to any one that the power to declare a legislative enactment
void is one which the judge, conscious of the fallability of the human judgment, will
shrink from exercising in any case where he can conscientiously and with due
regard to duty and official oath decline the responsibility. (Cooley Constitutional
Limitations, 8th Ed., Vol. I, p. 332.)
become dependent thereon, the Court may refuse to consider an attack on its
validity. (C. J. S. 16, p. 204.)
As a general rule, the constitutionality of a statute will be passed on only if, and to
the extent that, it is directly and necessarily involved in a justiciable controversy
and is essential to the protection of the rights of the parties concerned. (16 C. J. S.,
p. 207.)
In support of their first proposition petitioners contend that the right of a citizen to own and
operate a school is guaranteed by the Constitution, and any law requiring previous
governmental approval or permit before such person could exercise said right, amounts to
censorship of previous restraint, a practice abhorent to our system of law and government.
Petitioners obviously refer to section 3 of Act No. 2706 as amended which provides that
before a private school may be opened to the public it must first obtain a permit from the
Secretary of Education. The Solicitor General on the other hand points out that none of the
petitioners has cause to present this issue, because all of them have permits to operate and
are actually operating by virtue of their permits.1 And they do not assert that the respondent
Secretary of Education has threatened to revoke their permits. They have suffered no wrong
under the terms of lawand, naturally need no relief in the form they now seek to obtain.
It is an established principle that to entitle a private individual immediately in
danger of sustaining a direct injury as the result of that action and it is not
sufficient that he has merely a general to invoke the judicial power to determine
the validity of executive or legislative action he must show that he has sustained or
is interest common to all members of the public. (Ex parte Levitt, 302 U. S. 633 82
L. Ed. 493.)
Courts will not pass upon the constitutionality of a law upon the complaint of one
who fails to show that he is injured by its operation. (Tyler vs. Judges, 179 U. S. 405;
Hendrick vs. Maryland, 235 U. S. 610; Coffman vs. Breeze Corp., 323 U. S. 316-325.)
The power of courts to declare a law unconstitutional arises only when the
interests of litigant require the use of that judicial authority for their protection
against actual interference, a hypothetical threat being insufficient. (United Public
Works vs. Mitchell, 330 U .S. 75; 91 L. Ed. 754.)
Bona fide suit.Judicial power is limited to the decision of actual cases and
controversies. The authority to pass on the validity of statutes is incidental to the
decision of such cases where conflicting claims under the Constitution and under a
legislative act assailed as contrary to the Constitution are raised. It is legitimate
only in the last resort, and as necessity in the determination of real, earnest, and
vital controversy between litigants. (Taada and Fernando, Constitution of the
Philippines, p. 1138.)
Mere apprehension that the Secretary of Education might under the law withdraw the
permit of one of petitioners does not constitute a justiciable controversy. (Cf. Com. ex
rel Watkins vs. Winchester Waterworks (Ky.) 197 S. W. 2d. 771.)
And action, like this, is brought for a positive purpose, nay, to obtain actual and positive
relief. (Salonga vs. Warner Barnes, L-2245, January, 1951.) Courts do not sit to adjudicate
mere academic questions to satisfy scholarly interest therein, however intellectually solid the
problem may be. This is specially true where the issues "reach constitutional dimensions, for
then there comes into play regard for the court's duty to avoid decision of constitutional
issues unless avoidance becomes evasion." (Rice vs. Sioux City, U. S. Sup. Ct. Adv. Rep., May
23, 1995, Law Ed., Vol. 99, p. 511.)
The above notwithstanding, in view of the several decisions of the United States Supreme
Court quoted by petitioners, apparently outlawing censorship of the kind objected to by
them, we have decided to look into the matter, lest they may allege we refuse to act even in
the face of clear violation of fundamental personal rights of liberty and property.
Petitioners complain that before opening a school the owner must secure a permit from the
Secretary of Education. Such requirement was not originally included in Act No. 2706. It was
introduced by Commonwealth Act No. 180 approved in 1936. Why?
In March 1924 the Philippine Legislature approved Act No. 3162 creating a Board of
Educational Survey to make a study and survey of education in the Philippines and of all
educational institutions, facilities and agencies thereof. A Board chairmaned by Dr. Paul
Munroe, Columbia University, assisted by a staff of carefully selected technical members
performed the task, made a five-month thorough and impartial examination of the local
educational system, and submitted a report with recommendations, printed as a book of 671
pages. The following paragraphs are taken from such report:
PRIVATE-ADVENTURE SCHOOLS
There is no law or regulation in the Philippine Islands today to prevent a person,
however disqualified by ignorance, greed, or even immoral character, from
opening a school to teach the young. It it true that in order to post over the door
"Recognized by the Government," a private adventure school must first be
inspected by the proper Government official, but a refusal to grant such
recognition does not by any means result in such a school ceasing to exist. As a
matter of fact, there are more such unrecognized private schools than of the
recognized variety. How many, no one knows, as the Division of Private Schools
keeps records only of the recognized type.
Conclusion.An unprejudiced consideration of the fact presented under the
caption Private Adventure Schools leads but to one conclusion, viz.: the great
majority of them from primary grade to university are money-making devices for
the profit of those who organize and administer them. The people whose children
and youth attend them are not getting what they pay for. It is obvious that the
system constitutes a great evil. That it should be permitted to exist with almost no
supervision is indefensible. The suggestion has been made with the reference to
the private institutions of university grade that some board of control be organized
under legislative control to supervise their administration. The Commission
believes that the recommendations it offers at the end of this chapter are more
likely to bring about the needed reforms.
Recommendations.The Commission recommends that legislation be enacted to
prohibit the opening of any school by an individual or organization without the
permission of the Secretary of Public Instruction. That before granting such
permission the Secretary assure himself that such school measures up to proper
standards in the following respects, and that the continued existence of the school
be dependent upon its continuing to conform to these conditions:
(1) The location and construction of the buildings, the lighting and ventilation of
the rooms, the nature of the lavatories, closets, water supply, school furniture and
apparatus, and methods of cleaning shall be such as to insure hygienic conditions
for both pupils and teachers.
(2) The library and laboratory facilities shall be adequate to the needs of instruction
in the subjects taught.
(3) The classes shall not show an excessive number of pupils per teacher. The
Commission recommends 40 as a maximum.
(4) The teachers shall meet qualifications equal to those of teachers in the public
schools of the same grade.
xxx xxx xxx
In view of these findings and recommendations, can there be any doubt that the
Government in the exercise of its police power to correct "a great evil" could validly establish
the "previous permit" system objected to by petitioners? This is what differentiates our law
from the other statutes declared invalid in other jurisdictions. And if any doubt still exists,
recourse may now be had to the provision of our Constitution that "All educational
institutions shall be under the supervision and subject to regulation by the State." (Art. XIV,
sec. 5.) The power to regulate establishments or business occupations implies the power to
require a permit or license. (53 C. J. S. 4.)
What goes for the "previous permit" naturally goes for the power to revoke such permit on
account of violation of rules or regulations of the Department.
II. This brings us to the petitioners' third proposition that the questioned statutes "conferring
on the Secretary of Education unlimited power and discretion to prescribe rules and
standards constitute an unlawful delegation of legislative power."
This attack is specifically aimed at section 1 of Act No. 2706 which, as amended, provides:
 It shall be the duty of the Secretary of Public Instruction to maintain a general
standard of efficiency in all private schools and colleges of the Philippines so that
the same shall furnish adequate instruction to the public, in accordance with the
class and grade of instruction given in them, and for this purpose said Secretary or
his duly authorized representative shall have authority to advise, inspect, and
regulate said schools and colleges in order to determine the efficiency of
instruction given in the same,
"Nowhere in this Act" petitioners argue "can one find any description, either general or
specific, of what constitutes a 'general standard of efficiency.' Nowhere in this Act is there
any indication of any basis or condition to ascertain what is 'adequate instruction to the
public.' Nowhere in this Act is there any statement of conditions, acts, or factors, which the
Secretary of Education must take into account to determine the 'efficiency of instruction.'"
The attack on this score is also extended to section 6 which provides:
The Department of Education shall from time to time prepare and publish in
pamphlet form the minimum standards required of primary, intermediate, and
high schools, and colleges granting the degrees of Bachelor of Arts, Bachelor of
Science, or any other academic degree. It shall also from time to time prepare and
publish in pamphlet form the minimum standards required of law, medical, dental,
pharmaceutical, engineering, agricultural and other medical or vocational schools
or colleges giving instruction of a technical, vocational or professional character.
Petitioners reason out, "this section leaves everything to the uncontrolled discretion of the
Secretary of Education or his department. The Secretary of Education is given the power to
fix the standard. In plain language, the statute turns over to the Secretary of Education the
exclusive authority of the legislature to formulate standard. . . .."
It is quite clear the two sections empower and require the Secretary of Education to
prescribe rules fixing minimum standards of adequate and efficient instruction to be
observed by all such private schools and colleges as may be permitted to operate. The
petitioners contend that as the legislature has not fixed the standards, "the provision is
extremely vague, indefinite and uncertain"and for that reason constitutionality
objectionable. The best answer is that despite such alleged vagueness the Secretary of
Education has fixed standards to ensure adequate and efficient instruction, as shown by the
memoranda fixing or revising curricula, the school calendars, entrance and final
examinations, admission and accreditation of students etc.; and the system of private
education has, in general, been satisfactorily in operation for 37 years. Which only shows
that the Legislature did and could, validly rely upon the educational experience and training
of those in charge of the Department of Education to ascertain and formulate minimum
requirements of adequate instruction as the basis of government recognition of any private
school.
At any rate, petitioners do not show how these standards have injured any of them or
interfered with their operation. Wherefore, no reason exists for them to assail the validity of
the power nor the exercise of the power by the Secretary of Education.
True, the petitioners assert that, the Secretary has issued rules and regulations "whimsical
and capricious" and that such discretionary power has produced arrogant inspectors who
"bully heads and teachers of private schools." Nevertheless, their remedy is to challenge
those regulations specifically, and/or to ring those inspectors to book, in proper
administrative or judicial proceedingsnot to invalidate the law. For it needs no argument,
to show that abuse by the officials entrusted with the execution of a statute does not per
se demonstrate the unconstitutionality of such statute.
Anyway, we find the defendants' position to be sufficiently sustained by the decision
in Alegra vs. Collector of Customs, 53 Phil., 394 upon holding the statute that authorized the
Director of Agriculture to "designate standards for the commercial grades of abaca, maguey
and sisal" against vigorous attacks on the ground of invalid delegation of legislative power.
Indeed "adequate and efficient instruction" should be considered sufficient, in the same way
as "public welfare" "necessary in the interest of law and order" "public interest" and "justice
and equity and substantial merits of the case" have been held sufficient as legislative
standards justifying delegation of authority to regulate. (See Taada and Fernando,
Constitution of the Philippines, p. 793, citing Philippine cases.)
On this phase of the litigation we conclude that there has been no undue delegation of
legislative power.
In this connection, and to support their position that the law and the Secretary of Education
have transcended the governmental power of supervision and regulation, the petitioners
appended a list of circulars and memoranda issued by the said Department. However they
failed to indicate which of such official documents was constitutionally objectionable for
being "capricious," or pain "nuisance"; and it is one of our decisional practices that unless a
constitutional point is specifically raised, insisted upon and adequately argued, the court will
not consider it. (Santiago vs. Far Eastern, 73 Phil., 408.)
We are told that such list will give an idea of how the statute has placed in the hands of the
Secretary of Education complete control of the various activities of private schools, and why
the statute should be struck down as unconstitutional. It is clear in our opinion that the
statute does not in express terms give the Secretary complete control. It gives him powers to
inspect private schools, to regulate their activities, to give them official permits to operate
under certain conditions, and to revoke such permits for cause. This does not amount
to complete control. If any of such Department circulars or memoranda issued by the
Secretary go beyond the bounds of regulation and seeks to establish complete control, it
would surely be invalid. Conceivably some of them are of this nature, but besides not having
before us the text of such circulars, the petitioners have omitted to specify. In any event with
the recent approval of Republic Act No. 1124 creating the National Board of Education,
opportunity for administrative correction of the supposed anomalies or encroachments is
amply afforded herein petitioners. A more expeditious and perhaps more technically
competent forum exists, wherein to discuss the necessity, convenience or relevancy of the
measures criticized by them. (See also Republic Act No. 176.)
If however the statutes in question actually give the Secretary control over private schools,
the question arises whether the power of supervision and regulation granted to the State by
section 5 Article XIV was meant to include control of private educational institutions. It is
enough to point out that local educators and writers think the Constitution provides for
control of Education by the State. (See Tolentino, Government of the Philippine Constitution,
Vol. II, p. 615; Benitez, Philippine Social Life and Progress, p. 335.)
The Constitution (it) "provides for state control of all educational institutions" even as it
enumerates certain fundamental objectives of all education to wit, the development of
moral character, personal discipline, civic conscience and vocational efficiency, and
instruction in the duties of citizenship. (Malcolm & Laurel, Philippine Constitutional Law,
1936.)
The Solicitor General cities many authorities to show that the power to regulate means
power to control, and quotes from the proceedings of the Constitutional Convention to
prove that State control of private education was intended by the organic law. It is significant
to note that the Constitution grants power to supervise and to regulate. Which may mean
greater power than mere regulation.
III. Another grievance of petitionersprobably the most significantis the assessment of 1
per cent levied on gross receipts of all private schools for additional Government expenses in
connection with their supervision and regulation. The statute is section 11-A of Act No. 2706
as amended by Republic Act No. 74 which reads as follows:
SEC. 11-A. The total annual expense of the Office of Private Education shall be met
by the regular amount appropriated in the annual Appropriation Act: Provided,
however, That for additional expenses in the supervision and regulation of private
schools, colleges and universities and in the purchase of textbook to be sold to
student of said schools, colleges and universities and President of the Philippines
may authorize the Secretary of Instruction to levy an equitable assessment from
each private educational institution equivalent to one percent of the total amount
accruing from tuition and other fees: . . . and non-payment of the assessment
herein provided by any private school, college or university shall be sufficient cause
for the cancellation by the Secretary of Instruction of the permit for recognition
granted to it.
Petitioners maintain that this is a tax on the exercise of a constitutional rightthe right to
open a school, the liberty to teach etc. They claim this is unconstitutional, in the same way
that taxes on the privilege of selling religious literature or of publishing a newspaperboth
constitutional privilegeshave been held, in the United States, to be invalid as taxes on the
exercise of a constitutional right.
The Solicitor General on the other hand argues that insofar as petitioners' action attempts to
restrain the further collection of the assessment, courts have no jurisdiction to restrain the
collection of taxes by injunction, and in so far as they seek to recover fees already paid the
suit, it is one against the State without its consent. Anyway he concludes, the action involving
"the legality of any tax impost or assessment" falls within the original jurisdiction of Courts of
First Instance.
There are good grounds in support of Government's position. If this levy of 1 per cent is truly
a mere feeand not a taxto finance the cost of the Department's duty and power to
regulate and supervise private schools, the exaction may be upheld; but such point involves
investigation and examination of relevant data, which should best be carried out in the lower
courts. If on the other hand it is a tax, petitioners' issue would still be within the original
jurisdiction of the Courts of First Instance.
The last grievance of petitioners relates to the validity of Republic Act No. 139 which in its
section 1 provides:
The textbooks to be used in the private schools recognized or authorized by the
government shall be submitted to the Board (Board of Textbooks) which shall have
the power to prohibit the use of any of said textbooks which it may find to be
against the law or to offend the dignity and honor of the government and people of
the Philippines, or which it may find to be against the general policies of the
government, or which it may deem pedagogically unsuitable.
This power of the Board, petitioners aver, is censorship in "its baldest form". They cite two U.
S. cases (Miss. and Minnesota) outlawing statutes that impose previous restraints upon
publication of newspapers, or curtail the right of individuals to disseminate teachings critical
of government institutions or policies.
Herein lies another important issue submitted in the cause. The question is really whether
the law may be enacted in the exercise of the State's constitutional power (Art. XIV, sec. 5) to
supervise and regulate private schools. If that power amounts to control of private schools,
as some think it is, maybe the law is valid. In this connection we do not share the belief that
section 5 has added new power to what the State inherently possesses by virtue of the police
power. An express power is necessarily more extensive than a mere implied power. For
instance, if there is conflict between an express individual right and the express power to
control private education it cannot off-hand be said that the latter must yield to the former
conflict of two express powers. But if the power to control education ismerely implied from
the police power, it is feasible to uphold the express individual right, as was probably the
situation in the two decisions brought to our attention, of Mississippi and Minnesota, states
where constitutional control of private schools is not expressly produced.
However, as herein previously noted, no justiciable controversy has been presented to us.
We are not informed that the Board on Textbooks has prohibited this or that text, or that the
petitioners refused or intend to refuse to submit some textbooks, and are in danger of losing
substantial privileges or rights for so refusing.
The average lawyer who reads the above quoted section of Republic Act 139 will fail to
perceive anything objectionable. Why should not the State prohibit the use of textbooks that
are illegal, or offensive to the Filipinos or adverse to governmental policies or educationally
improper? What's the power of regulation and supervision for? But those trained to the
investigation of constitutional issues are likely to apprehend the danger to civil liberties, of
possible educational dictatorship or thought control, as petitioners' counsel foresee with
obvious alarm. Much depends, however, upon the execution and implementation of the
statute. Not that constitutionality depends necessarily upon the law's effects. But if the
Board on Textbooks in its actuations strictly adheres to the letter of the section and wisely
steers a middle course between the Scylla of "dictatorship" and the Charybdis of "thought
control", no cause for complaint will arise and no occasion for judicial review will develop.
Anyway, and again, petitioners now have a more expeditious remedy thru an administrative
appeal to the National Board of Education created by Republic Act 1124.

Of course it is necessary to assure herein petitioners, that when and if, the dangers they
apprehend materialize and judicial intervention is suitably invoked, after all administrative
remedies are exhausted, the courts will not shrink from their duty to delimit constitutional
boundaries and protect individual liberties.

IV. For all the foregoing considerations, reserving to the petitioners the right to institute in
the proper court, and at the proper time, such actions as may call for decision of the issue
herein presented by them, this petition for prohibition will be denied. So ordered.

Paras, C. J., Padilla, Montemayor, Reyes, A., and Jugo, JJ., concur
G.R. No. 118577 March 7, 1995
JUANITO MARIANO, JR. et al., petitioners,
vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON. JEJOMAR BINAY,
THE MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN OF MAKATI, respondents.
G.R. No. 118627 March 7, 1995
JOHN R. OSMEA, petitioner,
vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON. JEJOMAR BINAY,
MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN OF MAKATI, respondents.
PUNO, J.:
At bench are two (2) petitions assailing certain provisions of Republic Act No. 7854 as
unconstitutional. R.A. No. 7854 as unconstitutional. R.A. No. 7854 is entitled, "An Act
Converting the Municipality of Makati Into a Highly Urbanized City to be known as the City of
Makati."1
G.R. No. 118577 involves a petition for prohibition and declaratory relief. It was filed by
petitioners Juanito Mariano, Jr., Ligaya S. Bautista, Teresita Tibay, Camilo Santos, Frankie
Cruz, Ricardo Pascual, Teresita Abang, Valentina Pitalvero, Rufino Caldoza, Florante Alba, and
Perfecto Alba. Of the petitioners, only Mariano, Jr., is a resident of Makati. The others are
residents of Ibayo Ususan, Taguig, Metro Manila. Suing as taxpayers, they assail as
unconstitutional sections 2, 51, and 52 of R.A. No. 7854 on the following grounds:
1. Section 2 of R.A. No. 7854 did not properly identify the land area or
territorial jurisdiction of Makati by metes and bounds, with technical
descriptions, in violation of Section 10, Article X of the Constitution, in
relation to Sections 7 and 450 of the Local Government Code;
2. Section 51 of R.A. No. 7854 attempts to alter or restart the "three
consecutive term" limit for local elective officials, in violation of Section 8,
Article X and Section 7, Article VI of the Constitution.
3. Section 52 of R.A. No. 7854 is unconstitutional for:
(a) it increased the legislative district of Makati only
by special law (the Charter in violation of the
constitutional provision requiring a general
reapportionment law to be passed by Congress within
three (3) years following the return of every census;
(b) the increase in legislative district was not
expressed in the title of the bill; and
(c) the addition of another legislative district in
Makati is not in accord with Section 5 (3), Article VI of
the Constitution for as of the latest survey (1990
census), the population of Makati stands at only
450,000.
G.R. No. 118627 was filed by the petitioner John H. Osmea as senator, taxpayer, and
concerned citizen. Petitioner assails section 52 of R.A. No. 7854 as unconstitutional on the
same grounds as aforestated.
We find no merit in the petitions.
I
Section 2, Article I of R.A. No. 7854 delineated the land areas of the proposed city of Makati,
thus:
Sec. 2. The City of Makati. The Municipality of Makati shall be
converted into a highly urbanized city to be known as the City of Makati,
hereinafter referred to as the City, which shall comprise the present
territory of the Municipality of Makati in Metropolitan Manila Area over
which it has jurisdiction bounded on the northeast by Pasig River and
beyond by the City of Mandaluyong and the Municipality of Pasig; on the
southeast by the municipalities of Pateros and Taguig; on the southwest
by the City of Pasay and the Municipality of Taguig; and, on the
northwest, by the City of Manila.
The foregoing provision shall be without prejudice to the resolution by the
appropriate agency or forum of existing boundary disputes or cases
involving questions of territorial jurisdiction between the City of Makati
and the adjoining local government units. (Emphasis supplied)
In G.R. No. 118577, petitioners claim that this delineation violates sections 7 and 450 of the
Local Government Code which require that the area of a local government unit should be
made by metes and bounds with technical descriptions.2
The importance of drawing with precise strokes the territorial boundaries of a local unit of
government cannot be overemphasized. The boundaries must be clear for they define the
limits of the territorial jurisdiction of a local government unit. It can legitimately exercise
powers of government only within the limits, its acts are ultra vires. Needless to state, any
uncertainty in the boundaries of local government units will sow costly conflicts in the
exercise of governmental powers which ultimately will prejudice the people's welfare. This is
the evil sought to avoided by the Local Government Code in requiring that the land area of a
local government unit must be spelled out in metes and bounds, with technical descriptions.
Given the facts of the cases at bench, we cannot perceive how this evil can be brought about
by the description made in section 2 of R.A. No. 7854, Petitioners have not demonstrated
that the delineation of the land area of the proposed City of Makati will cause confusion as to
its boundaries. We note that said delineation did not change even by an inch the land area
previously covered by Makati as a municipality. Section 2 did not add, subtract, divide, or
multiply the established land area of Makati. In language that cannot be any clearer, section
2 stated that, the city's land area "shall comprise the present territory of the municipality."
The deliberations of Congress will reveal that there is a legitimate reason why the land area
of the proposed City of Makati was not defined by metes and bounds, with technical
descriptions. At the time of the consideration of R.A. No. 7854, the territorial dispute
between the municipalities of Makati and Taguig over Fort Bonifacio was under court
litigation. Out of a becoming sense of respect to co-equal department of government,
legislators felt that the dispute should be left to the courts to decide. They did not want to
foreclose the dispute by making a legislative finding of fact which could decide the issue. This
would have ensued if they defined the land area of the proposed city by its exact metes and
bounds, with technical descriptions.3 We take judicial notice of the fact that Congress has
also refrained from using the metes and bounds description of land areas of other local
government units with unsettled boundary disputes.4
We hold that the existence of a boundary dispute does not per se present an insurmountable
difficulty which will prevent Congress from defining with reasonable certitude the territorial
jurisdiction of a local government unit. In the cases at bench, Congress maintained the
existing boundaries of the proposed City of Makati but as an act of fairness, made them
subject to the ultimate resolution by the courts. Considering these peculiar circumstances,
we are not prepared to hold that section 2 of R.A. No. 7854 is unconstitutional. We sustain
the submission of the Solicitor General in this regard, viz.:
Going now to Sections 7 and 450 of the Local Government Code, it is
beyond cavil that the requirement stated therein, viz.: "the territorial
jurisdiction of newly created or converted cities should be described by
meted and bounds, with technical descriptions" was made in order to
provide a means by which the area of said cities may be reasonably
ascertained. In other words, the requirement on metes and bounds was
meant merely as tool in the establishment of local government units. It is
not an end in itself. Ergo, so long as the territorial jurisdiction of a city
may be reasonably ascertained, i.e., by referring to common boundaries
with neighboring municipalities, as in this case, then, it may be concluded
that the legislative intent behind the law has been sufficiently served.
Certainly, Congress did not intends that laws creating new cities must
contain therein detailed technical descriptions similar to those appearing
in Torrens titles, as petitioners seem to imply. To require such description
in the law as a condition sine qua non for its validity would be to defeat
the very purpose which the Local Government Code to seeks to serve.
The manifest intent of the Code is to empower local government units
and to give them their rightful due. It seeks to make local governments
more responsive to the needs of their constituents while at the same
time serving as a vital cog in national development. To invalidate R.A. No.
7854 on the mere ground that no cadastral type of description was used
in the law would serve the letter but defeat the spirit of the Code. It then
becomes a case of the master serving the slave, instead of the other way
around. This could not be the intendment of the law.
Too well settled is the rule that laws must be enforced when ascertained,
although it may not be consistent with the strict letter of the statute.
Courts will not follow the letter of the statute when to do so would
depart from the true intent of the legislature or would otherwise yield
conclusions inconsistent with the general purpose of the act. (Torres v.
Limjap, 56 Phil., 141; Taada v. Cuenco, 103 Phil. 1051; Hidalgo v.
Hidalgo, 33 SCRA 1105). Legislation is an active instrument of
government, which, for purposes of interpretation, means that laws have
ends to achieve, and statutes should be so construed as not to defeat but
to carry out such ends and purposes (Bocolbo v. Estanislao, 72 SCRA 520).
The same rule must indubitably apply to the case at bar.
II
Petitioners in G.R. No. 118577 also assail the constitutionality of section 51, Article X of R.A.
No. 7854. Section 51 states:
Sec. 51. Officials of the City of Makati. The represent elective officials
of the Municipality of Makati shall continue as the officials of the City of
Makati and shall exercise their powers and functions until such time that
a new election is held and the duly elected officials shall have already
qualified and assume their offices: Provided, The new city will acquire a
new corporate existence. The appointive officials and employees of the
City shall likewise continues exercising their functions and duties and
they shall be automatically absorbed by the city government of the City
of Makati.
They contend that this section collides with section 8, Article X and section 7, Article VI of the
Constitution which provide:
Sec. 8. The term of office of elective local officials, except barangay
officials, which shall be determined by law, shall be three years and no
such official shall serve for more than three consecutive terms. Voluntary
renunciation of the office for any length of time shall not be considered
as an interruption in the continuity of his service for the full term for
which he was elected.
 xxx xxx xxx
Sec. 7. The Members of the House of Representatives shall be elected for
a term of three years which shall begin, unless otherwise provided by
law, at noon on the thirtieth day of June next following their election.
No Member of the House of Representatives shall serve for more than
three consecutive terms. Voluntary renunciation of the office for any
length of time shall not be considered as an interruption in the continuity
of his service for the full term for which he was elected.
Petitioners stress that under these provisions, elective local officials, including Members of
the House of Representative, have a term of three (3) years and are prohibited from serving
for more than three (3) consecutive terms. They argue that by providing that the new city
shall acquire a new corporate existence, section 51 of R.A. No. 7854 restarts the term of the
present municipal elective officials of Makati and disregards the terms previously served by
them. In particular, petitioners point that section 51 favors the incumbent Makati Mayor,
respondent Jejomar Binay, who has already served for two (2) consecutive terms. They
further argue that should Mayor Binay decide to run and eventually win as city mayor in the
coming elections, he can still run for the same position in 1998 and seek another three-year
consecutive term since his previous three-year consecutive term as municipal mayor would
not be counted. Thus, petitioners conclude that said section 51 has been conveniently
crafted to suit the political ambitions of respondent Mayor Binay.
We cannot entertain this challenge to the constitutionality of section 51. The requirements
before a litigant can challenge the constitutionality of a law are well delineated. They are: 1)
there must be an actual case or controversy; (2) the question of constitutionality must be
raised by the proper party; (3) the constitutional question must be raised at the earliest
possible opportunity; and (4) the decision on the constitutional question must be necessary
to the determination of the case itself.5
Petitioners have far from complied with these requirements. The petition is premised on the
occurrence of many contingent events, i.e., that Mayor Binay will run again in this coming
mayoralty elections; that he would be re-elected in said elections; and that he would seek re-
election for the same position in the 1998 elections. Considering that these contingencies
may or may not happen, petitioners merely pose a hypothetical issue which has yet to ripen
to an actual case or controversy. Petitioners who are residents of Taguig (except Mariano)
are not also the proper parties to raise this abstract issue. Worse, they hoist this futuristic
issue in a petition for declaratory relief over which this Court has no jurisdiction.
III
Finally, petitioners in the two (2) cases at bench assail the constitutionality of section 52,
Article X of R.A. No. 7854. Section 52 of the Charter provides:
Sec. 52. Legislative Districts. Upon its conversion into a highly-
urbanized city, Makati shall thereafter have at least two (2) legislative
districts that shall initially correspond to the two (2) existing districts
created under Section 3(a) of Republic Act. No. 7166 as implemented by
the Commission on Elections to commence at the next national elections
to be held after the effectivity of this Act. Henceforth, barangays
Magallanes, Dasmarias and Forbes shall be with the first district, in lieu
of Barangay Guadalupe-Viejo which shall form part of the second district.
(emphasis supplied)
They contend. that the addition of another legislative district in Makati is unconstitutional
for: (1) reapportionment6cannot made by a special law, (2) the addition of a legislative
district is not expressed in the title of the bill7 and (3) Makati's population, as per the 1990
census, stands at only four hundred fifty thousand (450,000).
These issues have been laid to rest in the recent case of Tobias v. Abalos.8 In said case, we
ruled that reapportionment of legislative districts may be made through a special law, such
as in the charter of a new city. The Constitution9 clearly provides that Congress shall be
composed of not more than two hundred fifty (250) members, unless otherwise fixed by law.
As thus worded, the Constitution did not preclude Congress from increasing its membership
by passing a law, other than a general reapportionment of the law. This is its exactly what
was done by Congress in enacting R.A. No. 7854 and providing for an increase in Makati's
legislative district. Moreover, to hold that reapportionment can only be made through a
general apportionment law, with a review of all the legislative districts allotted to each local
government unit nationwide, would create an inequitable situation where a new city or
province created by Congress will be denied legislative representation for an indeterminate
period of time. 10 The intolerable situations will deprive the people of a new city or province
a particle of their sovereignty. 11 Sovereignty cannot admit of any kind of subtraction. It is
indivisible. It must be forever whole or it is not sovereignty.
Petitioners cannot insist that the addition of another legislative district in Makati is not in
accord with section 5(3), Article VI 12 of the Constitution for as of the latest survey (1990
census), the population of Makati stands at only four hundred fifty thousand
(450,000). 13 Said section provides, inter alia, that a city with a population of at least two
hundred fifty thousand (250,000) shall have at least one representative. Even granting that
the population of Makati as of the 1990 census stood at four hundred fifty thousand
(450,000), its legislative district may still be increased since it has met the minimum
population requirement of two hundred fifty thousand (250,000). In fact, section 3 of the
Ordinance appended to the Constitution provides that a city whose population has increased
to more than two hundred fifty thousand (250,000) shall be entitled to at least one
congressional representative. 14
Finally, we do not find merit in petitioners' contention that the creation of an additional
legislative district in Makati should have been expressly stated in the title of the bill. In the
same case of Tobias v. Abalos, op cit., we reiterated the policy of the Court favoring a liberal
construction of the "one title-one subject" rule so as not to impede legislation. To be sure,
with Constitution does not command that the title of a law should exactly mirror, fully index,
or completely catalogue all its details. Hence, we ruled that "it should be sufficient
compliance if the title expresses the general subject and all the provisions are germane to
such general subject."

WHEREFORE, the petitions are hereby DISMISSED for lack of merit No costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Vitug,
Kapunan, Mendoza and Francisco, JJ., concur
ANTONIETTE V.C. MONTESCLAROS, MARICEL CARANZO, JOSEPHINE ATANGAN, RONALD
ATANGAN and CLARIZA DECENA, and OTHER YOUTH OF THE LAND SIMILARLY
SITUATED, petitioners, vs. COMMISSION ON ELECTIONS, DEPARTMENT OF
INTERIOR AND LOCAL GOVERNMENT, DEPARTMENT OF BUDGET AND
MANAGEMENT, EXECUTIVE SECRETARY of the OFFICE OF THE PRESIDENT,
SENATOR FRANKLIN DRILON in his capacity as Senate President and SENATOR
AQUILINO PIMENTEL in his capacity as Minority Leader of the Senate of the
Philippines, CONGRESSMAN JOSE DE VENECIA in his capacity as Speaker,
CONGRESSMAN AGUSTO L. SYJOCO in his capacity as Chairman of the Committee
on Suffrage and Electoral Reforms, and CONGRESSMAN EMILIO C. MACIAS II in his
capacity as Chairman of the Committee on Local Government of the House of
Representatives, THE PRESIDENT OF THE PAMBANSANG KATIPUNAN NG MGA
SANGGUNIANG KABATAAN, AND ALL THEIR AGENTS AND
REPRESENTATIVES, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for certiorari, prohibition and mandamus with prayer for a
temporary restraining order or preliminary injunction. The petition seeks to prevent the
postponement of the Sangguniang Kabataan (SK for brevity) elections originally scheduled last
May 6, 2002. The petition also seeks to prevent the reduction of the age requirement for
membership in the SK.
Petitioners, who are all 20 years old, filed this petition as a taxpayers and class suit, on
their own behalf and on behalf of other youths similarly situated. Petitioners claim that they
are in danger of being disqualified to vote and be voted for in the SK elections should the SK
elections on May 6, 2002 be postponed to a later date. Under the Local Government Code of
1991 (R.A. No. 7160), membership in the SK is limited to youths at least 15 but not more than
21 years old.
Petitioners allege that public respondents connived, confederated and conspired to
postpone the May 6, 2002 SK elections and to lower the membership age in the SK to at least
15 but less than 18 years of age. Petitioners assail the alleged conspiracy because youths at
least 18 but not more than 21 years old will be summarily and unduly dismembered, unfairly
discriminated, unnecessarily disenfranchised, unjustly disassociated and obnoxiously
disqualified from the SK organization.[1]
Thus, petitioners pray for the issuance of a temporary restraining order or preliminary
injunction -
a) To prevent, annul or declare unconstitutional any law, decree, Comelec
resolution/directive and other respondents issuances, orders and actions and the like in
postponing the May 6, 2002 SK elections.
b) To command the respondents to continue the May 6, 2002 SK elections set by the present
law and in accordance with Comelec Resolutions No. 4713 and 4714 and to expedite the
funding of the SK elections.
c) In the alternative, if the SK elections will be postponed for whatever reason, there must be
a definite date for said elections, for example, July 15, 2002, and the present SK membership,
except those incumbent SK officers who were elected on May 6, 1996, shall be allowed to
run for any SK elective position even if they are more than 21 years old.
d) To direct the incumbent SK officers who are presently representing the SK in every
sanggunian and the NYC to vacate their post after the barangay elections.[2]
The Facts
The SK is a youth organization originally established by Presidential Decree No. 684 as
the Kabataang Barangay (KB for brevity). The KB was composed of all barangay residents who
were less than 18 years old, without specifying the minimum age. The KB was organized to
provide its members with the opportunity to express their views and opinions on issues of
transcendental importance.[3]
The Local Government Code of 1991 renamed the KB to SK and limited SK membership
to those youths at least 15 but not more than 21 years of age. [4] The SK remains as a youth
organization in every barangay tasked to initiate programs to enhance the social, political,
economic, cultural, intellectual, moral, spiritual, and physical development of the youth.[5] The
SK in every barangay is composed of a chairperson and seven members, all elected by
the Katipunan ng Kabataan. The Katipunan ng Kabataan in every barangay is composed of all
citizens actually residing in the barangay for at least six months and who meet the membership
age requirement.
The first SK elections took place on December 4, 1992. RA No. 7808 reset the SK elections
to the first Monday of May of 1996 and every three years thereafter. RA No. 7808 mandated
the Comelec to supervise the conduct of the SK elections under rules the Comelec shall
promulgate. Accordingly, the Comelec on December 4, 2001 issued Resolution Nos.
4713[6] and 4714[7] to govern the SK elections on May 6, 2002.
On February 18, 2002, petitioner Antoniette V.C. Montesclaros (Montesclaros for
brevity) sent a letter[8] to the Comelec, demanding that the SK elections be held as scheduled
on May 6, 2002. Montesclaros also urged the Comelec to respond to her letter within 10 days
upon receipt of the letter, otherwise, she will seek judicial relief.
On February 20, 2002, Alfredo L. Benipayo (Chairman Benipayo for brevity), then
Comelec Chairman, wrote identical letters to the Speaker of the House[9] and the Senate
President[10] about the status of pending bills on the SK and Barangay elections. In his letters,
the Comelec Chairman intimated that it was operationally very difficult to hold both elections
simultaneously in May 2002. Instead, the Comelec Chairman expressed support for the bill of
Senator Franklin Drilon that proposed to hold the Barangay elections in May 2002 and
postpone the SK elections to November 2002.
 Ten days lapsed without the Comelec responding to the letter of
Montesclaros. Subsequently, petitioners received a copy of Comelec En Banc Resolution No.
4763[11] dated February 5, 2002 recommending to Congress the postponement of the SK
elections to November 2002 but holding the Barangay elections in May 2002 as scheduled.[12]
On March 6, 2002, the Senate and the House of Representatives passed their respective
bills postponing the SK elections. On March 11, 2002, the Bicameral Conference Committee
(Bicameral Committee for brevity) of the Senate and the House came out with a
Report[13] recommending approval of the reconciled bill consolidating Senate Bill No.
2050[14] and House Bill No. 4456.[15] The Bicameral Committees consolidated bill reset the SK
and Barangay elections to July 15, 2002 and lowered the membership age in the SK to at least
15 but not more than 18 years of age.
On March 11, 2002, petitioners filed the instant petition.
On March 11, 2002, the Senate approved the Bicameral Committees consolidated bill
and on March 13, 2002, the House of Representatives approved the same. The President
signed the approved bill into law on March 19, 2002.
The Issues
Petitioners[16] raise the following grounds in support of their petition:
I.
RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS
CONSTITUTED (SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN THEY INTENDED TO POSTPONE THE SK ELECTIONS.
II.
RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS
CONSTITUTED (SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN THEY INTENDED TO DISCRIMINATE, DISENFRANCHISE, SINGLE OUT
AND DISMEMBER THE SK MEMBERS WHO ARE 18 BUT NOT LESS[17] (SIC) THAN 21 YEARS OLD
COMPOSED OF ABOUT 7 MILLION YOUTH.
III.
RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS
CONSTITUTED (SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN THEY WILLFULLY FAILED TO FUND THE SK ELECTION PURPORTEDLY
TO POSTPONE THE SAME IN ORDER TO IMPLEMENT THEIR ILLEGAL SCHEME AND
MACHINATION IN SPITE OF THE FACT THAT THERE ARE AVAILABLE FUNDS FOR THE PURPOSE.
IV.
THE INCUMBENT SK OFFICERS WANTED TO PERPETUALLY SIT ON THEIR RESPECTIVE OFFICES
CONTRARY TO THE ENVISION (SIC) OF THE CREATION OF THE SK ORGANIZATION, HENCE, IN
VIOLATION OF LAW AND CONSTITUTION.[18]
The Courts Ruling
The petition is bereft of merit.
At the outset, the Court takes judicial notice of the following events that have transpired
since petitioners filed this petition:
1. The May 6, 2002 SK elections and May 13, 2002 Barangay elections were not
held as scheduled.
2. Congress enacted RA No. 9164[19] which provides that voters and candidates for
the SK elections must be at least 15 but less than 18 years of age on the day of
the election.[20] RA No. 9164 also provides that there shall be a synchronized
SK and Barangay elections on July 15, 2002.
3. The Comelec promulgated Resolution No. 4846, the rules and regulations for
the conduct of the July 15, 2002 synchronized SK and Barangay elections.
Petitioners, who all claim to be 20 years old, argue that the postponement of the May 6,
2002 SK elections disenfranchises them, preventing them from voting and being voted for in
the SK elections. Petitioners theory is that if the SK elections were postponed to a date later
than May 6, 2002, the postponement would disqualify from SK membership youths who will
turn 21 years old between May 6, 2002 and the date of the new SK elections. Petitioners claim
that a reduction in the SK membership age to 15 but less than 18 years of age from the then
membership age of 15 but not more than 21 years of age would disqualify about seven million
youths. The public respondents failure to hold the elections on May 6, 2002 would prejudice
petitioners and other youths similarly situated.
Thus, petitioners instituted this petition to: (1) compel public respondents to hold the SK
elections on May 6, 2002 and should it be postponed, the SK elections should be held not later
than July 15, 2002; (2) prevent public respondents from passing laws and issuing resolutions
and orders that would lower the membership age in the SK; and (3) compel public respondents
to allow petitioners and those who have turned more than 21 years old on May 6, 2002 to
participate in any re-scheduled SK elections.
The Courts power of judicial review may be exercised in constitutional cases only if all
the following requisites are complied with, namely: (1) the existence of an actual and
appropriate case or controversy; (2) a personal and substantial interest of the party raising the
constitutional question; (3) the exercise of judicial review is pleaded at the earliest
opportunity; and (4) the constitutional question is the lis mota of the case.[21]
In the instant case, there is no actual controversy requiring the exercise of the power of
judicial review. While seeking to prevent a postponement of the May 6, 2002 SK elections,
petitioners are nevertheless amenable to a resetting of the SK elections to any date not later
than July 15, 2002. RA No. 9164 has reset the SK elections to July 15, 2002, a date acceptable
to petitioners. With respect to the date of the SK elections, there is therefore no actual
controversy requiring judicial intervention.
Petitioners prayer to prevent Congress from enacting into law a proposed bill lowering
the membership age in the SK does not present an actual justiciable controversy. A proposed
bill is not subject to judicial review because it is not a law. A proposed bill creates no right and
imposes no duty legally enforceable by the Court. A proposed bill, having no legal effect,
violates no constitutional right or duty. The Court has no power to declare a proposed bill
constitutional or unconstitutional because that would be in the nature of rendering an advisory
opinion on a proposed act of Congress. The power of judicial review cannot be
exercised in vacuo.[22] The second paragraph of Section 1, Article VIII of the Constitution states
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government. (Emphasis supplied)
Thus, there can be no justiciable controversy involving the constitutionality of a proposed
bill. The Court can exercise its power of judicial review only after a law is enacted, not before.
Under the separation of powers, the Court cannot restrain Congress from passing any
law, or from setting into motion the legislative mill according to its internal rules. Thus, the
following acts of Congress in the exercise of its legislative powers are not subject to judicial
restraint: the filing of bills by members of Congress, the approval of bills by each chamber of
Congress, the reconciliation by the Bicameral Committee of approved bills, and the eventual
approval into law of the reconciled bills by each chamber of Congress.Absent a clear violation
of specific constitutional limitations or of constitutional rights of private parties, the Court
cannot exercise its power of judicial review over the internal processes or procedures of
Congress.[23]
The Court has also no power to dictate to Congress the object or subject of bills that
Congress should enact into law. The judicial power to review the constitutionality of laws does
not include the power to prescribe to Congress what laws to enact. The Court has no power to
compel Congress by mandamus to enact a law allowing petitioners, regardless of their age, to
vote and be voted for in the July 15, 2002 SK elections. To do so would destroy the delicate
system of checks and balances finely crafted by the Constitution for the three co-equal,
coordinate and independent branches of government.
Under RA No. 9164, Congress merely restored the age requirement in PD No. 684, the
original charter of the SK, which fixed the maximum age for membership in the SK to youths
less than 18 years old. Petitioners do not have a vested right to the permanence of the age
requirement under Section 424 of the Local Government Code of 1991. Every law passed by
Congress is always subject to amendment or repeal by Congress. The Court cannot restrain
Congress from amending or repealing laws, for the power to make laws includes the power to
change the laws.[24]
The Court cannot also direct the Comelec to allow over-aged voters to vote or be voted
for in an election that is limited under RA No. 9164 to youths at least 15 but less than 18 years
old. A law is needed to allow all those who have turned more than 21 years old on or after May
6, 2002 to participate in the July 15, 2002 SK elections. Youths from 18 to 21 years old as of
May 6, 2002 are also no longer SK members, and cannot participate in the July 15, 2002 SK
elections. Congress will have to decide whether to enact an amendatory law. Petitioners
remedy is legislation, not judicial intervention.
Petitioners have no personal and substantial interest in maintaining this suit. A party
must show that he has been, or is about to be denied some personal right or privilege to which
he is lawfully entitled.[25] A party must also show that he has a real interest in the suit. By real
interest is meant a present substantial interest, as distinguished from a mere expectancy or
future, contingent, subordinate, or inconsequential interest.[26]
In the instant case, petitioners seek to enforce a right originally conferred by law on
those who were at least 15 but not more than 21 years old. Now, with the passage of RA No.
9164, this right is limited to those who on the date of the SK elections are at least 15 but less
than 18 years old. The new law restricts membership in the SK to this specific age group. Not
falling within this classification, petitioners have ceased to be members of the SK and are no
longer qualified to participate in the July 15, 2002 SK elections.Plainly, petitioners no longer
have a personal and substantial interest in the SK elections.
This petition does not raise any constitutional issue. At the time petitioners filed this
petition, RA No. 9164, which reset the SK elections and reduced the age requirement for SK
membership, was not yet enacted into law. After the passage of RA No. 9164, petitioners failed
to assail any provision in RA No. 9164 that could be unconstitutional. To grant petitioners
prayer to be allowed to vote and be voted for in the July 15, 2002 SK elections necessitates
assailing the constitutionality of RA No. 9164. This, petitioners have not done. The Court will
not strike down a law unless its constitutionality is properly raised in an appropriate action and
adequately argued.[27]
The only semblance of a constitutional issue, albeit erroneous, that petitioners raise is
their claim that SK membership is a property right within the meaning of the
Constitution.[28] Since certain public offices are reserved for SK officers, petitioners also claim
a constitutionally protected opportunity to occupy these public offices. In petitioners own
words, they and others similarly situated stand to lose their opportunity to work in the
government positions reserved for SK members or officers.[29] Under the Local Government
Code of 1991, the president of the federation of SK organizations in a municipality, city or
province is an ex-officio member of the municipal council, city council or provincial board,
respectively.[30] The chairperson of the SK in the barangay is an ex-officio member of the
Sangguniang Barangay.[31] The president of the national federation of SK organizations is an ex-
officio member of the National Youth Commission, with rank of a Department Assistant
Secretary.[32]
Congress exercises the power to prescribe the qualifications for SK membership. One
who is no longer qualified because of an amendment in the law cannot complain of being
deprived of a proprietary right to SK membership. Only those who qualify as SK members can
contest, based on a statutory right, any act disqualifying them from SK membership or from
voting in the SK elections. SK membership is not a property right protected by the Constitution
because it is a mere statutory right conferred by law. Congress may amend at any time the law
to change or even withdraw the statutory right.
A public office is not a property right. As the Constitution expressly states, a [P]ublic
office is a public trust.[33] No one has a vested right to any public office, much less a vested
right to an expectancy of holding a public office. In Cornejo v. Gabriel,[34] decided in 1920, the
Court already ruled:
Again, for this petition to come under the due process of law prohibition, it would be
necessary to consider an office a property. It is, however, well settled x x x that a public
office is not property within the sense of the constitutional guaranties of due process of
law, but is a public trust or agency. x x x The basic idea of the government x x x is that of a
popular representative government, the officers being mere agents and not rulers of the
people, one where no one man or set of men has a proprietary or contractual right to an
office, but where every officer accepts office pursuant to the provisions of the law and holds
the office as a trust for the people he represents. (Emphasis supplied)
Petitioners, who apparently desire to hold public office, should realize from the very start
that no one has a proprietary right to public office. While the law makes an SK officer an ex-
officio member of a local government legislative council, the law does not confer on petitioners
a proprietary right or even a proprietary expectancy to sit in local legislative councils. The
constitutional principle of a public office as a public trust precludes any proprietary claim to
public office. Even the State policy directing equal access to opportunities for public
service[35] cannot bestow on petitioners a proprietary right to SK membership or a proprietary
expectancy to ex-officio public offices.
Moreover, while the State policy is to encourage the youths involvement in public
affairs,[36] this policy refers to those who belong to the class of people defined as the
youth.Congress has the power to define who are the youth qualified to join the SK, which itself
is a creation of Congress. Those who do not qualify because they are past the age group
defined as the youth cannot insist on being part of the youth. In government service, once an
employee reaches mandatory retirement age, he cannot invoke any property right to cling to
his office. In the same manner, since petitioners are now past the maximum age for
membership in the SK, they cannot invoke any property right to cling to their SK membership.
The petition must also fail because no grave abuse of discretion attended the
postponement of the SK elections. RA No. 9164 is now the law that prescribes the
qualifications of candidates and voters for the SK elections. This law also fixes the date of the
SK elections. Petitioners are not even assailing the constitutionality of RA No. 9164. RA No.
9164 enjoys the presumption of constitutionality and will apply to the July 15, 2002 SK
elections.
Petitioners have not shown that the Comelec acted illegally or with grave abuse of
discretion in recommending to Congress the postponement of the SK elections. The very
evidence relied upon by petitioners contradict their allegation of illegality. The evidence
consist of the following: (1) Comelec en banc Resolution No. 4763 dated February 5, 2002 that
recommended the postponement of the SK elections to 2003; (2) the letter of then Comelec
Chairman Benipayo addressed to the Speaker of the House of Representatives and the
President of the Senate; and (3) the Conference Committee Report consolidating Senate Bill
No. 2050 and House Bill No. 4456.
The Comelec exercised its power and duty to enforce and administer all laws and
regulations relative to the conduct of an election, plebiscite, initiative, referendum and
recall[37] and to recommend to Congress effective measures to minimize election
spending.[38] The Comelecs acts enjoy the presumption of regularity in the performance of
official duties.[39] These acts cannot constitute proof, as claimed by petitioners, that there
exists a connivance and conspiracy (among) respondents in contravention of the present law.
As the Court held in Pangkat Laguna v. Comelec,[40] the Comelec, as the government agency
tasked with the enforcement and administration of elections laws, is entitled to the
presumption of regularity of official acts with respect to the elections.
The 1987 Constitution imposes upon the Comelec the duty of enforcing and
administering all laws and regulations relative to the conduct of elections. Petitioners failed to
prove that the Comelec committed grave abuse of discretion in recommending to Congress
the postponement of the May 6, 2002 SK elections. The evidence cited by petitioners even
establish that the Comelec has demonstrated an earnest effort to address the practical
problems in holding the SK elections on May 6, 2002. The presumption remains that the
decision of the Comelec to recommend to Congress the postponement of the elections was
made in good faith in the regular course of its official duties.
Grave abuse of discretion is such capricious and whimsical exercise of judgment that is
patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform
a duty enjoined by law.[41] Public respondents having acted strictly pursuant to their
constitutional powers and duties, we find no grave abuse of discretion in their assailed acts.
Petitioners contend that the postponement of the SK elections would allow the
incumbent SK officers to perpetuate themselves in power, depriving other youths of the
opportunity to serve in elective SK positions. This argument deserves scant
consideration. While RA No. 9164 contains a hold-over provision, incumbent SK officials can
remain in office only until their successors have been elected or qualified. On July 15, 2002,
when the SK elections are held, the hold-over period expires and all incumbent SK officials
automatically cease to hold their SK offices and their ex-officio public offices.
In sum, petitioners have no personal and substantial interest in maintaining this suit. This
petition presents no actual justiciable controversy. Petitioners do not cite any provision of law
that is alleged to be unconstitutional. Lastly, we find no grave abuse of discretion on the part
of public respondents.
WHEREFORE, the petition is DISMISSED for utter lack of merit.
ATLAS FERTILIZER CORPORATION, petitioner, vs. THE HONORABLE SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, respondent.[G.R. No. 97855. June 19, 1997]
PHILIPPINE FEDERATION OF FISHFARM PRODUCERS, INC., petitioner, vs. THE HONORABLE
SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondent.
RESOLUTION
ROMERO, J.:
Before this Court are consolidated petitions questioning the constitutionality of some
portions of Republic Act No. 6657 otherwise known as the Comprehensive Agrarian Reform
Law.[1]
Petitioners Atlas Fertilizer Corporation,[2] Philippine Federation of Fishfarm Producers,
Inc. and petitioner-in-intervention Archies Fishpond, Inc. and Arsenio Al. Acuna [3] are engaged
in the aquaculture industry utilizing fishponds and prawn farms. They assail Sections 3 (b), 11,
13, 16 (d), 17 and 32 of R.A. 6657, as well as the implementing guidelines and procedures
contained in Administrative Order Nos. 8 and 10 Series of 1988 issued by public respondent
Secretary of the Department of Agrarian Reform as unconstitutional.
Petitioners claim that the questioned provisions of CARL violate the Constitution in the
following manner:
1. Sections 3 (b), 11, 13, 16 (d), 17 and 32 of CARL extend agrarian reform to aquaculture
lands even as Section 4, Article XIII of the constitution limits agrarian reform only to
agriculture lands.
2. The questioned provisions similarly treat of aquaculture lands and agriculture lands when
they are differently situated, and differently treat aquaculture lands and other industrial
lands, when they are similarly situated in violation of the constitutional guarantee of the
equal protection of the laws.
3. The questioned provisions distort employment benefits and burdens in favor of
aquaculture employees and against other industrial workers even as Section 1 and 3, Article
XIII of the Constitution mandate the State to promote equality in economic and employment
opportunities.
4. The questioned provisions deprive petitioner of its government-induced investments in
aquaculture even as Sections 2 and 3, Article XIII of the Constitution mandate the State to
respect the freedom of enterprise and the right of enterprises to reasonable returns on
investments and to expansion and growth.
The constitutionality of the above-mentioned provisions has been ruled upon in the case
of Luz Farms, Inc. v. Secretary of Agrarian Reform[4] regarding the inclusion of land devoted to
the raising of livestock, poultry and swine in its coverage.
The issue now before this Court is the constitutionality of the same above-mentioned
provisions insofar as they include in its coverage lands devoted to the aquaculture industry,
particularly fishponds and prawn farms.
In their first argument, petitioners contend that in the case
of Luz Farms, Inc. v. Secretary of Agrarian Reform,[5] this Court has already ruled impliedly that
lands devoted to fishing are not agriculture lands. In aquaculture, fishponds and prawn farms,
the use of land is only incidental to and not the principal factor in productivity and, hence, as
held in Luz Farms, they too should be excluded from R.A. 6657 just as lands devoted to
livestock, swine, and poultry have been excluded for the same reason. They also argue that
they are entitled to the full benefit of Luz Farms to the effect that only five percent of the total
investment in aquaculture activities, fishponds, and prawn farms, is in the form of land, and
therefore, cannot be classified as agricultural activity. Further, that in fishponds and prawn
farms, there are no farmers, nor farm workers, who till lands, and no agrarian unrest, and
therefore, the constitutionally intended beneficiaries under Section 4, Art. XIII, 1987
Constitution do not exist in aquaculture.
In their second argument, they contend that R.A. 6657, by including in its coverage, the
raising of fish and aquaculture operations including fishponds and prawn ponds, treating them
as in the same class or classification as agriculture or farming violates the equal protection
clause of the Constitution and is, therefore, void. Further, the Constitutional Commission
debates show that the intent of the constitutional framers is to exclude industrial lands, to
which category lands devoted to aquaculture, fishponds, and fish farms belong.
Petitioners also claim that Administrative Order Nos. 8 and 10 issued by the Secretary of
the Department of Agrarian Reform are, likewise, unconstitutional, as held in Luz Farms, and
are therefore void as they implement the assailed provisions of CARL.
The provisions of CARL being assailed as unconstitutional are as follows:
(a) Section 3(b) which includes the raising of fish in the definition of Agricultural, Agricultural
Enterprise or Agricultural Activity. (Underscoring Supplied)
(b) Section 11 which defines commercial farms as private agricultural lands devoted
to fishponds and prawn ponds x x x. (Underscoring Supplied)
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16 (d) and 17 which vest on the Department of Agrarian reform the authority to
summarily determine the just compensation to be paid for lands covered by the
comprehensive Agrarian reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13-
x x x (W)hereby three percent (3%) of the gross sales from the production of such lands are
distributed within sixty (60) days at the end of the fiscal year as compensation to regular and
other farmworkers in such lands over and above the compensation they currently receive:
Provided, That these individuals or entities realize gross sales in excess of five million pesos
per annum unless the DAR, upon proper application, determines a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten percent (10%) of
the net profit after tax shall be distributed to said regular and other farmworkers within
ninety (90) days of the end of the fiscal year. x x x
While the Court will not hesitate to declare a law or an act void when confronted
squarely with constitutional issues, neither will it preempt the Legislative and the Executive
branches of the government in correcting or clarifying, by means of amendment, said law or
act. On February 20, 1995, Republic Act No. 7881[6] was approved by Congress. Provisions of
said Act pertinent to the assailed provisions of CARL are the following:
Section 1. Section 3, Paragraph (b) of Republic Act No. 6657 is hereby amended to read as
follows:
Sec. 3. Definitions. -- For the purpose of this Act, unless the context indicates otherwise:
(b) Agriculture, Agricultural Enterprise or Agricultural Activity means the cultivation of the
soil, planting of crops, growing of fruit trees, including the harvesting of such farm products
and other farm activities and practices performed by a farmer in conjunction with such
farming operations done by persons whether natural or juridical.
Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:
Sec. 10. Exemptions and Exclusions.--
xxx xxx xxx
b) Private lands actually, directly and exclusively used for prawn farms and fishponds shall be
exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have
not been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian
reform beneficiaries under the Comprehensive Agrarian Reform Program.
In cases where the fishponds or prawn farms have been subjected to the Comprehensive
Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of
compulsory acquisition, a simple and absolute majority of the actual regular workers or
tenants must consent to the exemption within one (1) year from the effectivity of this Act.
When the workers or tenants do not agree to this exemption, the fishponds or prawn farms
shall be distributed collectively to the worker-beneficiaries or tenants who shall form a
cooperative or association to manage the same.
In cases where the fishponds or prawn farms have not been subjected to the Comprehensive
Agrarian Reform Law, the consent of the farm workers shall no longer be necessary,
however, the provision of Section 32-A hereof on incentives shall apply.
xxx xxx xxx
Sec. 3. Section 11, paragraph 1 is hereby amended to read as follows:
Sec. 11. Commercial Farming.-- Commercial Farms, which are private agricultural lands
devoted to salt beds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee
and rubber plantations, shall be subject to immediate compulsory acquisition and
distribution after ten (10) years from the effectivity of this Act. In the case of new farms, the
ten-year period shall begin from the first year of commercial production and operation, as
determined by the DAR. During the ten-year period, the Government shall initiate steps
necessary to acquire these lands, upon payment of just compensation for the land and the
improvements thereon, preferably in favor of organized cooperatives or associations, which
shall thereafter manage the said lands for the workers-beneficiaries.
Sec. 4. There shall be incorporated after Section 32 of Republic Act No. 6657 a section to read
as follows:
Sec. 32-A. Incentives.-- Individuals or entities owning or operating fishponds and prawn farms
are hereby mandated to execute within six (6) months from the effectivity of this Act, an
incentive plan with their regular fishpond or prawn farm workers organization, if any,
whereby seven point five percent (7.5%) of their net profit before tax from the operation of
the fishpond or prawn farms are distributed within sixty (60) days at the end of the fiscal year
as compensation to regular and other pond workers in such ponds over and above the
compensation they currently receive.
In order to safeguard the right of the regular fishpond or prawn farm workers under the
incentive plan, the books of the fishpond or prawn owners shall be subject to periodic audit
or inspection by certified public accountants chosen by the workers.
The foregoing provisions shall not apply to agricultural lands subsequently converted to
fishponds or prawn farms provided the size of the land converted does not exceed the
retention limit of the landowner.
The above-mentioned provisions of R.A. No. 7881 expressly state that fishponds and
prawn farms are excluded from the coverage of CARL. In view of the foregoing, the question
concerning the constitutionality of the assailed provisions has become moot and academic
with the passage of R.A. No. 7881.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Melo, Puno, Vitug, Mendoza, Hermosisima, Jr.,
Panganiban, and Torres, Jr., JJ., concur.
Padilla, Bellosillo, Kapunan, and Francisco, JJ., on leave.
G.R. No. 147780 May 10, 2001 Aggrieved by the warrantless arrests, and the declaration of a "state of rebellion," which
allegedly gave a semblance of legality to the arrests, the following four related petitions were
PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners, filed before the Court
vs.
SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT. (1) G. R. No. 147780 for prohibition, injunction, mandamus, and habeas corpus (with an
REYNALDO BERROYA, respondents. urgent application for the issuance of temporary restraining order and/or writ of preliminary
injunction) filed by Panfilio M. Lacson, Michael Ray B. Aquino, and Cezar O. Mancao; (2) G. R.
---------------------------------------- No. 147781 for mandamus and/or review of the factual basis for the suspension of the
privilege of the writ of habeas corpus, with prayer for the suspension of the privilege of the
writ of habeas corpus, with prayer for a temporary restraining order filed by Miriam
G.R. No. 147781 May 10, 2001
Defensor-Santiago; (3) G. R. No. 147799 for prohibition and injunction with prayer for a writ
of preliminary injunction and/or restraining order filed by Ronaldo A. Lumbao; and (4) G. R.
MIRIAM DEFENSOR-SANTIAGO, petitioner, No. 147810 for certiorari and prohibition filed by the political party Laban ng Demokratikong
vs. Pilipino.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.
All the foregoing petitions assail the declaration of a state of rebellion by President Gloria
---------------------------------------- Macapagal-Arroyo and the warrantless arrests allegedly effected by virtue thereof, as having
no basis both in fact and in law. Significantly, on May 6, 2001, President Macapagal-Arroyo
G.R. No. 147799 May 10, 2001 ordered the lifting of the declaration of a "state of rebellion" in Metro Manila. Accordingly,
the instant petitions have been rendered moot and academic. As to petitioners' claim that
RONALDO A. LUMBAO, petitioner, the proclamation of a "state of rebellion" is being used by the authorities to justify
vs. warrantless arrests, the Secretary of Justice denies that it has issued a particular order to
SECRETARY HERNANDO PEREZ, GENERAL DIOMEDIO VILLANUEVA, P/DIRECTOR LEANDRO arrest specific persons in connection with the "rebellion." He states that what is extant are
MENDOZA, and P/SR. SUPT. REYNALDO BERROYA, respondents. general instructions to law enforcement officers and military agencies to implement
Proclamation No. 38. Indeed, as stated in respondents' Joint Comments:

----------------------------------------
G.R. No. 147810 May 10, 2001
THE LABAN NG DEMOKRATIKONG PILIPINO, petitioner,
vs.
THE DEPARTMENT OF JUSTICE, SECRETARY HERNANDO PEREZ, THE ARMED FORCES OF THE
PHILIPPINES, GENERAL DIOMEDIO VILLANUEVA, THE PHILIPPINE NATIONAL POLICE, and
DIRECTOR GENERAL LEANDRO MENDOZA, respondents.
RESOLUTION
MELO, J.:
On May 1, 2001, President Macapagal-Arroyo, faced by an "angry and violent mob armed
with explosives, firearms, bladed weapons, clubs, stones and other deadly weapons"
assaulting and attempting to break into Malacaang, issued Proclamation No. 38 declaring
that there was a state of rebellion in the National Capital Region. She likewise issued General
Order No. 1 directing the Armed Forces of the Philippines and the Philippine National Police
to suppress the rebellion in the National Capital Region. Warrantless arrests of several
alleged leaders and promoters of the "rebellion" were thereafter effected.
[I]t is already the declared intention of the Justice Department and police
authorities to obtain regular warrants of arrests from the courts for all acts
committed prior to and until May 1, 2001 which means that preliminary
investigations will henceforth be conducted.
(Comment, G.R. No. 147780, p. 28; G.R. No. 147781, p. 18; G.R. No.
147799, p. 16; G.R. No. 147810, p. 24)
With this declaration, petitioners' apprehensions as to warrantless arrests should be laid to
rest.
In quelling or suppressing the rebellion, the authorities may only resort to warrantless arrests
of persons suspected of rebellion, as provided under Section 5, Rule 113 of the Rules of
Court, if the circumstances so warrant. The warrantless arrest feared by petitioners is, thus,
not based on the declaration of a "state of rebellion."
Moreover, petitioners' contention in G. R. No. 147780 (Lacson Petition), 147781 (Defensor-
Santiago Petition), and 147799 (Lumbao Petition) that they are under imminent danger of
being arrested without warrant do not justify their resort to the extraordinary remedies
of mandamus and prohibition, since an individual subjected to warrantless arrest is not
without adequate remedies in the ordinary course of law. Such an individual may ask for a
preliminary investigation under Rule 112 of the Rules of Court, where he may adduce
evidence in his defense, or he may submit himself to inquest proceedings to determine
whether or not he should remain under custody and correspondingly be charged in court.
Further, a person subject of a warrantless arrest must be delivered to the proper judicial
authorities within the periods provided in Article 125 of the Revised Penal Code, otherwise
the arresting officer could be held liable for delay in the delivery of detained persons. Should
the detention be without legal ground, the person arrested can charge the arresting officer
with arbitrary detention. All this is without prejudice to his filing an action for damages
against the arresting officer under Article 32 of the Civil Code. Verily, petitioners have a
surfeit of other remedies which they can avail themselves of, thereby making the prayer for
prohibition and mandamus improper at this time (Section 2 and 3, Rule 65, Rules of
Court).1wphi1.nt
Aside from the foregoing reasons, several considerations likewise inevitably call for the
dismissal of the petitions at bar.
G.R. No. 147780
In connection with their alleged impending warrantless arrest, petitioners Lacson, Aquino,
and mancao pray that the "appropriate court before whom the informations against
petitioners are filed be directed to desist from arraigning and proceeding with the trial of the
case, until the instant petition is finally resolved." This relief is clearly premature considering
that as of this date, no complaints or charges have been filed against any of the petitioners
for any crime. And in the event that the same are later filed, this Court cannot enjoin criminal
prosecution conducted in accordance with the Rules of Court, for by that time any arrest
would have been in pursuant of a duly issued warrant.
As regards petitioners' prayer that the hold departure orders issued against them be
declared null and void ab initio, it is to be noted that petitioners are not directly assailing the
validity of the subject hold departure orders in their petition. They are not even expressing
intention to leave the country in the near future. The prayer to set aside the same must be
made in proper proceedings initiated for that purpose.
Anent petitioners' allegations ex abundante ad cautelam in support of their application for
the issuance of a writ of habeas corpus, it is manifest that the writ is not called for since its
purpose is to relieve petitioners from unlawful restraint (Ngaya-an v. Balweg, 200 SCRA 149
[1991]), a matter which remains speculative up to this very day.
G.R. No. 147781
The petition herein is denominated by petitioner Defensor-Santiago as one for mandamus. It
is basic in matters relating to petitions for mandamus that the legal right of the petitioner to
the performance of a particular act which is sought to be compelled must be clear and
complete. Mandamus will not issue unless the right to relief is clear at the time of the award
(Palileo v. Ruiz Castro, 85 Phil. 272). Up to the present time, petitioner Defensor Santiago has
not shown that she is in imminent danger of being arrested without a warrant. In point of
fact, the authorities have categorically stated that petitioner will not be arrested without a
warrant.
G.R. No. 147799
Petitioner Lumbao, leader of the People's Movement against Poverty (PMAP), for his part,
argues that the declaration of a "state of rebellion" is violative of the doctrine of separation
of powers, being an encroachment on the domain of the judiciary which has the
constitutional prerogative to "determine or interpret" what took place on May 1, 2001, and
that the declaration of a state of rebellion cannot be an exception to the general rule on the
allocation of the governmental powers.
We disagree. To be sure, Section 18, Article VII of the Constitution expressly provides that
"[t]he President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or suppress
lawless violence, invasion or rebellion" Thus, we held in Integrated Bar of the Philippines v.
Hon. Zamora, (G.R. No. 141284, August 15, 2000):
x x x The factual necessity of calling out the armed forces is not easily quantifiable
and cannot be objectively established since matters considered for satisfying the
same is a combination of several factors which are not always accessible to the
courts. Besides the absence of textual standards that the court may use to judge
necessity, information necessary to arrive at such judgment might also prove
unmanageable for the courts. Certain pertinent information might be difficult to
verify, or wholly unavailable to the courts. In many instances, the evidence upon
which the President might decide that there is a need to call out the armed forces
may be of a nature not constituting technical proof.
On the other hand, the President as Commander-in-Chief has a vast intelligence
network to gather information, some of which may be classified as highly
confidential or affecting the security of the state. In the exercise of the power to
call, on-the-spot decisions may be imperatively necessary in emergency situations
to avert great loss of human lives and mass destruction of property. x x x
(at pp.22-23)
The Court, in a proper case, may look into the sufficiency of the factual basis of the exercise
of this power. However, this is no longer feasible at this time, Proclamation No. 38 having
been lifted.
G.R. No. 147810
Petitioner Laban ng Demokratikong Pilipino is not a real party-in-interest. The rule requires
that a party must show a personal stake in the outcome of the case or an injury to himself
that can be redressed by a favorable decision so as to warrant an invocation of the court's
jurisdiction and to justify the exercise of the court's remedial powers in his behalf (KMU
Labor Center v. Garcia, Jr., 239 SCRA 386 [1994]). Here, petitioner has not demonstrated any G.R. No. 147780 May 10, 2001
injury to itself which would justify resort to the Court. Petitioner is a juridical person not
subject to arrest. Thus, it cannot claim to be threatened by a warrantless arrest. Nor is it PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,
alleged that its leaders, members, and supporters are being threatened with warrantless vs.
arrest and detention for the crime of rebellion. Every action must be brought in the name of SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
the party whose legal right has been invaded or infringed, or whose legal right is under REYNALDO BERROYA, respondents.
imminent threat of invasion or infringement.
----------------------------------------
At best, the instant petition may be considered as an action for declaratory relief, petitioner
claiming that its right to freedom of expression and freedom of assembly is affected by the
G.R. No. 147781 May 10, 2001
declaration of a "state of rebellion" and that said proclamation is invalid for being contrary to
the Constitution.
MIRIAM DEFENSOR-SANTIAGO, petitioner,
vs.
However, to consider the petition as one for declaratory relief affords little comfort to
ANGELO REYES, Secretary of National Defense, ET AL., respondents.
petitioner, this Court not having jurisdiction in the first instance over such a petition. Section
5[1], Article VIII of the Constitution limits the original jurisdiction of the Court to cases
affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, SEPARATE OPINION
prohibition, mandamus, quo warranto, and habeas corpus.
VITUG, J.:
WHEREFORE, premises considered, the petitions are hereby DISMISSED. However, in G.R. No.
147780, 147781, and 147799, respondents, consistent and congruent with their undertaking I concur insofar as the resolution enjoins any continued warrantless arrests for acts related
earlier adverted to, together with their agents, representatives, and all persons acting for to, or connected with, the May 1st incident but respectfully dissent from the order of
and in their behalf, are hereby enjoined from arresting petitioners therein without the dismissal of the petitions for being said to be moot and academic. The petitions have raised
required judicial warrant for all acts committed in relation to or in connection with the may important constitutional issues that, in my view, must likewise be fully addressed.
1, 2001 siege of Malacaang.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Mendoza, Panganiban, Gonzaga-Reyes, JJ., concur.

Vitug, separate opinion. G.R. No. 147780 May 10, 2001

Kapunan, dissenting opinion. PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,
vs.
Pardo, join the dissent of J. Kapunan. SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
REYNALDO BERROYA, respondents.

Sandoval-Gutierrez, dissenting opinion.

----------------------------------------
Quisumbing, Buena, Ynares-Santiago, De Leon, Jr., on leave.
G.R. No. 147781 May 10, 2001

MIRIAM DEFENSOR-SANTIAGO, petitioner,

vs.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.

----------------------------------------
G.R. No. 147799 May 10, 2001
RONALDO A. LUMBAO, petitioner,
vs.
SECRETARY HERNANDO PEREZ, GENERAL DIOMEDIO VILLANUEVA, P/DIRECTOR LEANDRO
MENDOZA, and P/SR. SUPT. REYNALDO BERROYA, respondents.
----------------------------------------
G.R. No. 147810 May 10, 2001
THE LABAN NG DEMOKRATIKONG PILIPINO, petitioner,
vs.
THE DEPARTMENT OF JUSTICE, SECRETARY HERNANDO PEREZ, THE ARMED FORCES OF THE
PHILIPPINES, GENERAL DIOMEDIO VILLANUEVA, THE PHILIPPINE NATIONAL POLICE, and
DIRECTOR GENERAL LEANDRO MENDOZA, respondents.
DISSENTING OPINION
KAPUNAN, J.:
The right against unreasonable searches and seizure has been characterized as belonging "in
the catalog of indispensable freedoms."
Among deprivation of rights, none is so effective in cowing a population, crushing
the spirit of the individual and putting terror in every heart. Uncontrolled search
and seizure is one of the first and most effective weapons in the arsenal of every
arbitrary government. And one need only briefly to have dwelt and worked among
a people know that the human personality deteriorates and dignity and self-
reliance disappear where homes, persons and possessions are subject at any hour
to unheralded search and seizure by the police.1
Invoking the right against unreasonable searches and seizures, petitioners Panfilo Lacson,
Michael Ray Aquino and Cezar O. Mancao II now seek a temporary restraining order and/or
injunction from the Court against their impending warrantless arrests upon order of the
Secretary of Justice.2 Petitioner Laban ng Demokratikong Pilipino (LDP), likewise, seeks to
enjoin the arrests of its senatorial candidates, namely, Senator Juan Ponce-Enrile, Senator
Miriam Defensor-Santiago, Senator Gregorio B. Honasan and General Panfilo
Lacson.3 Separate petitioners were also filed by Senator Juan Ponce Enrile.4 Former
Ambassador Ernesto M. Maceda,5 Senator Miriam Defensor-Santiago,6Senator Gregorio B.
Honasan,7 and the Integrated Bar of the Philippines (IBP).8
Briefly, the order for the arrests of these political opposition leaders and police officers stems
from the following facts:
On April 25, 2001, former President Joseph Estrada was arrested upon the warrant issued by
the Sandiganbayan in connection with the criminal case for plunder filed against him. Several
hundreds of policemen were deployed to effect his arrest. At the time, a number of Mr.
Estrada's supporters, who were then holding camp outside his residence in Greenhills
Subdivision, sought to prevent his arrest. A skirmish ensued between them and the police.
The police had to employ batons and water hoses to control the rock-throwing pro-Estrada
rallyists and allow the sheriffs to serve the warrant. Mr. Estrada and his son and co-accused,
Mayor Jinggoy Estrada, were then brought to Camp Crame where, with full media coverage,
their fingerprints were obtained and their mug shots taken.
Later that day, and on the succeeding days, a huge gathered at the EDSA Shrine to show its
support for the deposed President. Senators Enrile, Santiago, Honasan, opposition senatorial
candidates including petitioner Lacson, as well as other political personalities, spoke before
the crowd during these rallies.
In the meantime, on April 28, 2001, Mr. Estrada and his son were brought to the Veterans
memorial Medical Center for a medical check-up. It was announced that from there, they
would be transferred to Fort Sto. Domingo in Sta. Rosa, Laguna.
In the early morning of May 1, 2001, the crowd at EDSA decided to march to Malacaang
Palace. The Armed Forces of the Philippines (AFP) was called to reinforce the Philippine
National Police (PNP) to guard the premises of the presidential residence. The marchers were
able to penetrate the barricades put up by the police at various points leading to Mendiola
and were able to reach Gate 7 of Malacaan. As they were being dispersed with warning
shots, tear gas and water canons, the rallyists hurled stones at the police authorities. A melee
erupted. Scores of people, including some policemen, were hurt.
At noon of the same day, after the crowd in Mendiola had been dispersed, President Gloria
Macapagal-Arroyo issued Proclamation No. 38 declaring a "state of rebellion" in Metro
Manila:
Presidential Proclamation No. 38
DECLARING STATE OF REBELLION IN THE NATIONAL CAPITAL REGION
WHEREAS, the angry and violent mob, armed with explosives, firearms, bladed
weapons, clubs, stones and other deadly weapons, in great part coming from the
mass gathering at the EDSA Shrine, and other armed groups, having been agitated
and incited and, acting upon the instigation and under the command and direction
of known and unknown leaders, have and continue to assault and attempt to break
into Malacaang with the avowed purpose of overthrowing the duly constituted
Government and forcibly seize power, and have and continue to rise publicly,
shown open hostility, and take up arms against the duly constituted Government
for the purpose of removing from the allegiance to the Government certain bodies
of the Armed Forces of the Philippines and the Philippine National Police, and to
deprive the President of the Republic of the Philippines, wholly and partially, of her
powers and prerogatives which constitute the continuing crime of rebellion
punishable under Article 134 of the Revised Penal Code;
WHEREAS, armed groups recruited by known and unknown leaders, conspirators,
and plotters have continue (sic) to rise publicly by the use of arms to overthrow the
duly constituted Government and seize political power;
WHEREAS, under Article VII, Section 18 of the Constitution, whenever necessary,
the President as the Commander-in-Chief of all armed forces of the Philippines,
may call out such armed forces to suppress the rebellion;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested
in me by law hereby recognize and confirm the existence of an actual and on-going
rebellion compelling me to declare a state of rebellion;
In view of the foregoing, I am issuing General Order NO. 1 in accordance with
Section 18, Article VII of the Constitution calling upon the Armed Forces of the
Philippines and the Philippine National police to suppress and quell the rebellion.
City of Manila, May 1, 2001.
The President likewise issued General Order No. 1 which reads:
GENERAL ORDER NO. 1
DIRECTING THE ARMED FORCES OF THE PHILIPPIENS AND THE PHILIPPINE
NATIONAL POLICE TO SUPPRESS THE REBELLION IN THE NATIONAL CAPITAL
REGION
WHEREAS, the angry and violent mob, armed with explosives, firearms, bladed
weapons, clubs, stones and other deadly weapons, in great part coming from the
mass gathering at the EDSA Shrine, and other armed groups, having been agitated
and incited and, acting upon the instigation and under the command and direction
of known and unknown leaders, have and continue to assault and attempt to break
into Malacaang with the avowed purpose of overthrowing the duly constituted
Government and forcibly seize political power, and have and continue to rise
publicly, show open hostility, and take up arms against the duly constituted
Government certain bodies of the Armed Forces of the Philippines and the
Philippine National Police, and to deprive the President of the Republic of the
Philippines, wholly and partially, of her powers and prerogatives which constitute
the continuing crime of rebellion punishable under Article 134 of the Revised Penal
Code;
WHEREAS, armed groups recruited by known and unknown leaders, conspirators,
and plotters have continue (sic) to rise publicly by the use of arms to overthrow the
duly constituted Government and seize political power;
WHEREAS, under Article VII, Section 18 of the Constitution, whenever necessary,
the President as the Commander-in-Chief of all armed forces of the Philippines,
may call out such armed forces to suppress the rebellion;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested
in me under the Constitution as President of the Republic of the Philippines and
Commander-in-Chief of all armed forces of the Philippines and pursuant to
Proclamation No. 38, dated May 1, 2001, do hereby call upon the Armed Forces of
the Philippines and the Philippine national police to suppress and quell the
rebellion.
I hereby direct the Chief of Staff of the Armed Forces of the Philippines and the
Chief of the Philippine National Police and the officers and men of the Armed
Forces of the Philippines and the Philippine National Police to immediately carry
out the necessary and appropriate actions and measures to suppress and quell the
rebellion with due regard to constitutional rights.
City of Manila, May 1, 2001.
Pursuant to the proclamation, several key leaders of the opposition were ordered arrested.
Senator Enrile was arrested without warrant in his residence at around 4:00 in the afternoon.
Likewise arrested without warrant the following day was former Ambassador Ernesto
Maceda. Senator Honasan and Gen. Lacson were also ordered arrested but the authorities
have so far failed to apprehend them. Ambassador Maceda was temporarily released upon
recognizance while Senator Ponce Enrile was ordered released by the Court on cash bond.
The basic issue raised by the consolidated petitions is whether the arrest or impending arrest
without warrant, pursuant to a declaration of "state of rebellion" by the President of the
above-mentioned persons and unnamed other persons similarly situated suspected of having
committed rebellion is illegal, being unquestionably a deprivation of liberty and violative of
the Bill of Rights under the Constitution.
The declaration of a "state of rebellion" is supposedly based on Section 18, Article VII of the
Constitution which reads:
The President shall be the Commander-in-Chief of all armed forces of the
Philippines and whenever it becomes necessary, he may call out such armed forces
to prevent or suppress lawless violence, invasion or rebellion. In case of invasion or
rebellion, when the public safety requires it, he may, for a period not exceeding
sixty days, suspend the privilege of the writ of habeas corpus or place the
Philippines or any part thereof under martial law. Within forty-eight hours from the
proclamation of martial law or the suspension of the writ of habeas corpus, the
President shall submit a report in person or in writing to the Congress. The
Congress, voting jointly, by a vote of at least a majority of all its Members in regular
or special session, may revoke such proclamation or suspension, which revocation
shall not be set aside by the President. Upon the initiative of the President, the
Congress may, in the same manner, extend such proclamation or suspension for a
 period to be determined by the Congress if the invasion or rebellion shall persist
and public safety requires it.
The Congress, if not in session, shall, within twenty-four hours following such
proclamation or suspension, convene in accordance with its rules without need of a
call.
The Supreme Court may review, in an appropriate proceeding filed by any citizen,
the sufficiency of the factual basis of the proclamation of martial law or the
suspension of the privilege of the writ or the extension thereof, and must
promulgate its decision thereon within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor
supplant the functioning of the civil courts or legislative assemblies, nor authorize
the conferment of jurisdiction on military courts and agencies over civilians where
civil courts are able to function, nor automatically suspend the privilege of the writ.
The suspension of the privilege of the writ shall apply only to persons judicially
charged for rebellion or offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or
detained shall be judicially charged within three days, otherwise he shall be
released.
Section 18 grants the President, as Commander-in-Chief, the power to call out the armed
forces in cases of (1) lawless violence, (2) rebellion and (3) invasion.9 In the latter two cases,
i.e., rebellion or invasion, the President may, when public safety requires, also (a) suspend
the privilege of the writ of habeas corpus, or (b) place the Philippines or any part thereof
under martial law. However, in the exercise of this calling out power as Commander-in-Chief
of the armed forces, the Constitution does not require the President to make a declaration of
a "state of rebellion" (or, for that matter, of lawless violence or invasion). The term "state of
rebellion" has no legal significance. It is vague and amorphous and does not give the
President more power than what the Constitution says, i. e, whenever it becomes necessary,
he may call out such armed forces to prevent or suppress lawless violence, invasion or
rebellion. As Justice Mendoza observed during the hearing of this case, such a declaration is
"legal surplusage." But whatever the term means, it cannot diminish or violate
constitutionally-protected rights, such as the right to due process,10 the rights to free speech
and peaceful assembly to petition the government for redress of grievances,11and the right
against unreasonable searches and seizures,12 among others.
In Integrated Bar of the Philippines vs. Zamora, et al.,13 the Court held that:
x x x [T]he distinction (between the calling out power, on one hand, and the power
to suspend the privilege of the write of habeas corpus and to declare martial law,
on the other hand) places the calling out power in a different category from the
power to declare martial law and the power to suspend the privilege of the writ
of habeas corpus, otherwise, the framers of the Constitution would have simply
lumped together the three powers and provided for their revocation and review
without any qualification. Expressio unius est exclusio alterius.
xxx
The reason for the difference in the treatment of the aforementioned powers
highlights the intent to grant the President the widest leeway and broadest
discretion in using the "calling out" power because it is considered as the lesser and
more benign power compared to the power to suspend the privilege of the writ
of habeas corpus and the power to impose martial law, both of which involve the
curtailment and suppression of certain basic civil rights and individual freedoms,
and thus necessitating affirmation by Congress and, in appropriate cases, review by
this Court.
On the other hand, if the motive behind the declaration of a "state of rebellion" is to arrest
persons without warrant and detain them without bail and, thus, skirt the Constitutional
safeguards for the citizens' civil liberties, the so-called "state of rebellion" partakes the
nature of martial law without declaring on its face, yet, if it is applied and administered by
public authority with an evil eye so as to practically make it unjust and oppressive, it is within
the prohibition of the Constitution.14 In an ironic sense, a "state of rebellion" declared as a
subterfuge to effect warrantless arrest and detention for an unbailable offense places a
heavier burden on the people's civil liberties than the suspension of the privilege of the writ
of habeas corpus the declaration of martial law because in the latter case, built-in safeguards
are automatically set on motion: (1) The period for martial law or suspension is limited to a
period not exceeding sixty day; (2) The President is mandated to submit a report to Congress
within forty-eight hours from the proclamation or suspension; (3) The proclamation or
suspension is subject to review by Congress, which may revoke such proclamation or
suspension. If Congress is not in session, it shall convene in 24 hours without need for call;
and (4) The sufficiency of the factual basis thereof or its extension is subject to review by the
Supreme Court in an appropriate proceeding.15
No right is more fundamental than the right to life and liberty. Without these rights, all other
individual rights may not exist. Thus, the very first section in our Constitution's Bill of Rights,
Article III, reads:
SECTION 1. No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws.
And to assure the fullest protection of the right, more especially against government
impairment, Section 2 thereof provides:
SEC. 2. The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he
 may produce, and particularly describing the place to be searched and the persons
or things to be seized.
Indeed, there is nothing in Section 18 which authorizes the President or any person acting
under her direction to make unwarranted arrests. The existence of "lawless violence,
invasion or rebellion" only authorizes the President to call out the "armed forces to prevent
or suppress lawless violence, invasion or rebellion."
Not even the suspension of the privilege of the writ of habeas corpus or the declaration of
martial law authorizes the President to order the arrest of any person. The only significant
consequence of the suspension of the writ of habeas corpus is to divest the courts of the
power to issue the writ whereby the detention of the person is put in issue. It does not by
itself authorize the President to order the arrest of a person. And even then, the Constitution
in Section 18, Article VII makes the following qualifications:
The suspension of the privilege of the writ shall apply only to persons judicially
charged for rebellion or offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or
detained shall be judicially charged within three days, otherwise he shall be
released.
In the instant case, the President did not suspend the writ of habeas corpus. Nor did she
declare martial law. A declaration of a "state of rebellion," at most, only gives notice to the
nation that it exists, and that the armed forces may be called to prevent or suppress it, as in
fact she did. Such declaration does not justify any deviation from the Constitutional
proscription against unreasonable searches and seizures.
As a general rule, an arrest may be made only upon a warrant issued by a court. In very
circumscribed instances, however, the Rules of Court allow warrantless arrests. Section 5,
Rule 113 provides:
SEC. 5. Arrest without warrant; when lawful. A police officer or a private person
may, without a warrant, arrest a person:
(a) When, in his presence, the person to be arrested has committed, is actually
committing, or is attempting to commit an offense;
(b) When an offense has just been committed and he has probable cause to believe
based on personal knowledge of facts or circumstances that the person to be
arrested has committed it; and
xxx
In cases falling under paragraphs (a) and (b) above, the person arrested without a
warrant shall be forthwith delivered to the nearest police station or jail and shall be
proceeded against in accordance with section 7 of Rule 112.
It must be noted that the above are exceptions to the constitutional norm enshrined in the
Bill of Rights that a person may only be arrested on the strength of a warrant of arrest issued
by a "judge" after determining "personally" the existence of "probable cause" after
examination under oath or affirmation of the complainant and the witnesses he may
produce. Its requirements should, therefore, be scrupulously met:
The right of a person to be secure against any unreasonable seizure of his body and
any deprivation of his liberty is a most basic and fundamental one. The statute or
rule which allows exceptions to the requirement of warrants of arrests is strictly
construed. Any exception must clearly fall within the situations when securing a
warrant would be absurd or is manifestly unnecessary as provided by the Rule. We
cannot liberally construe the rule on arrests without warrant or extend its
application beyond the cases specifically provided by law. To do so would infringe
upon personal liberty and set back a basic right so often violated and so deserving
of full protection.16
A warrantless arrest may be justified only if the police officer had facts and circumstances
before him which, had they been before a judge, would constitute adequate basis for a
finding of probable cause of the commission of an offense and that the person arrested is
probably guilty of committing the offense. That is why the Rules of Criminal Procedure
require that when arrested, the person "arrested has committed, is actually committing, or is
attempting to commit an offense" in the presence of the arresting officer. Or if it be a case of
an offense which had "just been committed," that the police officer making the arrest "has
personal knowledge of facts or circumstances that the person to be arrested has committed
it."
Petitioners were arrested or sought to be arrested without warrant for acts of rebellion
ostensibly under Section 5 of Rule 113. Respondents' theory is based on Umil vs.
Ramos,17 where this Court held:
The crimes of rebellion, subversion, conspiracy or proposal to commit such crimes,
and crimes or offenses committed in furtherance thereof or in connection
therewith constitute direct assault against the State and are in the nature
of continuing crimes.18
Following this theory, it is argued that under Section 5(a), a person who "has committed, is
actually committing, or is attempting to commit" rebellion and may be arrested without a
warrant at any time so long as the rebellion persists.
Reliance on Umil is misplaced. The warrantless arrests therein, although effected a day or
days after the commission of the violent acts of petitioners therein, were upheld by the Court
because at the time of their respective arrests, they were members of organizations such as
the Communist Party of the Philippines, the New Peoples Army and the National United
Front Commission, then outlawed groups under the Anti-Subversion Act. Their mere
membership in said illegal organizations amounted to committing the offense of
subversion19 which justified their arrests without warrants.
In contrast, it has not been alleged that the persons to be arrested for their alleged
participation in the "rebellion" on May 1, 2001 are members of an outlawed organization
intending to overthrow the government. Therefore, to justify a warrantless arrest under
Section 5(a), there must be a showing that the persons arrested or to be arrested has
committed, is actually committing or is attempting to commit the offense of rebellion.20 In
other words, there must be an overt act constitutive of rebellion taking place in the presence
of the arresting officer. In United States vs. Samonte,21 the term" in his [the arresting
officer's] presence" was defined thus:
An offense is said to be committed in the presence or within the view of an
arresting officer or private citizen when such officer or person sees the offense,
even though at a distance, or hears the disturbance created thereby and proceeds
at once to the scene thereof; or the offense is continuing, or has not been
consummated, at the time the arrest is made.22
This requirement was not complied with particularly in the arrest of Senator Enrile. In the
Court's Resolution of May 5, 2001 in the petition for habeas corpus filed by Senator Enrile,
the Court noted that the sworn statements of the policemen who purportedly arrested him
were hearsay.23 Senator Enrile was arrested two (2) days after he delivered allegedly
seditious speeches. Consequently, his arrest without warrant cannot be justified under
Section 5(b) which states that an arrest without a warrant is lawful when made after an
offense has just been committed and the arresting officer or private person has probable
cause to believe based on personal knowledge of facts and circumstances that the person
arrested has committed the offense.
At this point, it must be stressed that apart from being inapplicable to the cases at
bar, Umil is not without any strong dissents. It merely re-affirmed Garcia-Padilla vs. Enrile,24 a
case decided during the Marcos martial law regime.25 It cannot apply when the country is
supposed to be under the regime of freedom and democracy. The separate opinions of the
following Justices in the motion for reconsideration of said case26 are apropos:
FERNAN C.J., concurring and dissenting:
Secondly, warrantless arrests may not be allowed if the arresting officers are not
sure what particular provision of law had been violated by the person arrested.
True it is that law enforcement agents and even prosecutors are not all adept at
the law. However, erroneous perception, not to mention ineptitude among their
ranks, especially if it would result in the violation of any right of a person, may not
be tolerated. That the arrested person has the "right to insist during the pre-trial or
trial on the merits" (Resolution, p. 18) that he was exercising a right which the
arresting officer considered as contrary to law, is beside the point. No person
should be subjected to the ordeal of a trial just because the law enforcers wrongly
perceived his action.27(Underscoring supplied)
GUTIERREZ, JR., J., concurring and dissenting opinion
Insofar as G.R. NO. 81567 is concerned, I joint the other dissenting Justices in their
observations regarding "continuing offenses." To base warrantless arrests on the
doctrine of continuing offense is to give a license for the illegal detention of
persons on pure suspicion. Rebellion, insurrection, or sedition are political offenses
where the line between overt acts and simple advocacy or adherence to a belief is
extremely thin. If a court has convicted an accused of rebellion and he is found
roaming around, he may be arrested. But until a person is proved guilty, I fail to see
how anybody can jump to a personal conclusion that the suspect is indeed a rebel
and must be picked up on sight whenever seen. The grant of authority in the
majority opinion is too broad. If warrantless searches are to be validated, it should
be Congress and not this Court which should draw strict and narrow standards.
Otherwise, the non-rebels who are critical, noisy, or obnoxious will be
indiscriminately lumped up with those actually taking up arms against the
Government.
The belief of law enforcement authorities, no matter how well-grounded on past
events, that the petitioner would probably shoot other policemen whom he may
meet does not validate warrantless arrests. I cannot understand why the
authorities preferred to bide their time, await the petitioner's surfacing from
underground, and ounce on him with no legal authority instead of securing
warrants of arrest for his apprehension.28(Underscoring supplied)
CRUZ, J., concurring and dissenting:
I submit that the affirmation by this Court of the Garcia-Padilla decision to justify
the illegal arrests made in the cases before us is a step back to that shameful past
when individual rights were wantonly and systematically violated by the Marcos
dictatorship. It seem some of us have short memories of that repressive regime,
but I for one am not one to forget so soon. As the ultimate defender of the
Constitution, this Court should not gloss over the abuses of those who, out of
mistaken zeal, would violate individual liberty in the dubious name of national
security. Whatever their ideology and even if it be hostile to ours, the petitioners
are entitled to the protection of the Bill of Rights, no more and no less than any
other person in this country. That is what democracy is all about.29 (Underscoring
supplied)
FELICIANO, J., concurring and dissenting:
12. My final submission, is that, the doctrine of "continuing crimes," which has its
own legitimate function to serve in our criminal law jurisprudence, cannot be
invoked for weakening and dissolving the constitutional guarantee against
warrantless arrest. Where no overt acts comprising all or some of the elements of
the offense charged are shown to have been committed by the person arrested
without warrant, the "continuing crime" doctrine should not be used to dress up
the pretense that a crime, begun or committed elsewhere, continued to be
committed by the person arrested in the presence of the arresting officer. The
capacity for mischief of such a utilization of the "continuing crimes" doctrine, is
infinitely increased where the crime charged does not consist of unambiguous
criminal acts with a definite beginning and end in time and space (such as the
killing or wounding of a person or kidnapping and illegal detention or arson) but
rather or such problematic offenses as membership in or affiliation with or
becoming a member of, a subversive association or organization. For in such cases,
the overt constitutive acts may be morally neutral in themselves, and the
unlawfulness of the acts a function of the aims or objectives of the organization
involved. Note, for instance, the following acts which constitute prima facie
evidence of "membership in any subversive association:"
a) Allowing himself to be listed as a member in any book or any of the lists, records,
correspondence, or any other document of the organization;
b) Subjecting himself to the discipline of such or association or organization in any
form whatsoever;
c) Giving financial contribution to such association or organization in dues,
assessments, loans or in any other forms;
xxx
f) Conferring with officers or other members of such association or organization in
furtherance of any plan or enterprise thereof;
xxx
g) Preparing documents, pamphlets, leaflets, books, or any other type of publication
to promote the objectives and purposes of such association or organization;
xxx
k) Participating in any way in the activities, planning action, objectives, or purposes
of such association or organization.
It may well be, as the majority implies, that the constitutional rule against
warrantless arrests and seizures makes the law enforcement work of police
agencies more difficult to carry out. It is not our Court's function, however, and the
Bill of Rights was not designed, to make life easy for police forces but rather to
protect the liberties of private individuals. Our police forces must simply learn to
live with the requirements of the Bill of Rights, to enforce the law by modalities
which themselves comply with the fundamental law. Otherwise they are very likely
to destroy, whether through sheer ineptness or excess of zeal, the very freedoms
which make our policy worth protecting and saving.30 (Underscoring supplied)
It is observed that a sufficient period has lapsed between the fateful day of May 1, 2001 up
to the present. If respondents have ample evidence against petitioners, then they should
forthwith file the necessary criminal complaints in order that the regular procedure can be
followed and the warrants of arrest issued by the courts in the normal course. When
practicable, resort to the warrant process is always to be preferred because "it interposes an
orderly procedure involving 'judicial impartiality' whereby a neutral and detached magistrate
can make informed and deliberate determinations on the issue of probable cause."31
The neutrality, detachment and independence that judges are supposed to possess is
precisely the reason the framers of the 1987 Constitution have reposed upon them alone the
power to issue warrants of arrest. To vest the same to a branch of government, which is also
charged with prosecutorial powers, would make such branch the accused's adversary and
accuser, his judge and jury.32
A declaration of a state of rebellion does not relieve the State of its burden of proving
probable cause. The declaration does not constitute a substitute for proof. It does not in any
way bind the courts, which must still judge for itself the existence of probable cause. Under
Section 18, Article VII, the determination of the existence of a state of rebellion for purposes
of proclaiming martial law or the suspension of the privilege of the writ of habeas corpusrests
for which the President is granted ample, though not absolute, discretion. Under Section 2,
Article III, the determination of probable cause is a purely legal question of which courts are
the final arbiters.
Justice Secretary Hernando Perez is reported to have announced that the lifting of the "state
of rebellion" on May 7, 2001 does not stop the police from making warrantless arrests.33 If
this is so, the pernicious effects of the declaration on the people's civil liberties have not
abated despite the lifting thereof. No one exactly knows who are in the list or who prepared
the list of those to be arrested for alleged complicity in the "continuing" crime of "rebellion"
defined as such by executive fiat. The list of the perceived leaders, financiers and supporters
of the "rebellion" to be arrested and incarcerated could expand depending on the
appreciation of the police. The coverage and duration of effectivity of the orders of arrest are
thus so open-ended and limitless as to place in constant and continuing peril the people's Bill
of Rights. It is of no small significance that four of he petitioners are opposition candidates
for the Senate. Their campaign activities have been to a large extent immobilized. If the
arrests and orders of arrest against them are illegal, then their Constitutional right to seek
public office, as well as the right of he people to choose their officials, is violated.
In view of the transcendental importance and urgency of the issues raised in these cases
affecting as they do the basic liberties of the citizens enshrined in our Constitution, it
behooves us to rule thereon now, instead of relegating the cases to trial courts which
unavoidably may come up with conflicting dispositions, the same to reach this Court
inevitably for final ruling. As we aptly pronounced in Salonga vs. Cruz Pao:34
The Court also has the duty to formulate guiding and controlling constitutional
principles, precepts, doctrines, or rules. It has the symbolic function of educating
bench and bar on the extent of protection given by constitutional guarantees.
Petitioners look up in urgent supplication to the Court, considered the last bulwark of
democracy, for relief. If we do not act promptly, justly and fearlessly, to whom will they turn
to?

WHEREFORE, I vote as follows:

(1) Give DUE COURSE to and GRANT the petitions;

(2) Declare as NULL and VOID the orders of arrest issued against petitioners;

(3) Issue a WRIT OF INJUNCTION enjoining respondents, their agents and all other
persons acting for and in their behalf from effecting warrantless arrests against
petitioners and all other persons similarly situated on the basis of Proclamation No.
38 and General Order No. 1 of the President.

SO ORDERED.
 [G.R. No. 159085. February 3, 2004]
SANLAKAS, represented by REP. J.V. Bautista, and PARTIDO NG MANGGAGAWA,
represented by REP. RENATO MAGTUBO petitioners, vs. EXECUTIVE SECRETARY
SECRETARY ANGELO REYES, GENERAL NARCISO ABAYA, DIR. GEN. HERMOGENES
EBDANE, respondents.
[G.R. No. 159103. February 3, 2004]
SOCIAL JUSTICE SOCIETY (SJS) OFFICERS/MEMBERS namely, SAMSON S. ALCANTARA, ED
VINCENT S. ALBANO, RENE B. GOROSPE, EDWIN R. SANDOVAL and RODOLFO D.
MAPILE, petitioners, vs. HON. EXECUTIVE SECRETARY ALBERTO G. ROMULO, HON.
SECRETARY OF JUSTICE SIMEON DATUMANONG, HON. SECRETARY OF NATIONAL
DEFENSE ANGELO REYES, and HON. SECRETARY JOSE LINA, JR., respondents.
[G.R. No. 159185. February 3, 2004]
REP. ROLEX T. SUPLICO, REP. CARLOS M. PADILLA, REP. CELSO L. LOBREGAT, REP. HUSSIN U.
AMIN, REP. ABRAHAM KAHLIL B. MITRA, REP. EMMYLOU J. TALINO-SANTOS, and
REP. GEORGILU R. YUMUL-HERMIDA, petitioners, vs. PRESIDENT GLORIA
MACAPAGAL-ARROYO; and EXECUTIVE SECRETARY ALBERTO G.
ROMULO, respondents.
[G.R. No. 159196. February 3, 2004]
AQUILINO Q. PIMENTEL, JR. as a Member of the Senate, petitioner, vs. SECRETARY ALBERTO
ROMULO, AS EXECUTIVE SECRETARY; SECRETARY ANGELO REYES, AS SECRETARY
OF NATIONAL DEFENSE; GENERAL NARCISO ABAYA, AS CHIEF OF STAFF OF THE
ARMED FORCES; SECRETARY JOSE LINA, et al., respondents.
DECISION
TINGA, J.:
They came in the middle of the night. Armed with high-powered ammunitions and
explosives, some three hundred junior officers and enlisted men of the Armed Forces of the
Philippines (AFP) stormed into the Oakwood Premiere apartments in Makati City in the wee
hours of July 27, 2003. Bewailing the corruption in the AFP, the soldiers demanded, among
other things, the resignation of the President, the Secretary of Defense and the Chief of the
Philippine National Police (PNP).[1]
In the wake of the Oakwood occupation, the President issued later in the day
Proclamation No. 427 and General Order No. 4, both declaring a state of rebellion and calling
out the Armed Forces to suppress the rebellion. Proclamation No. 427 reads in full:
PROCLAMATION NO. 427
DECLARING A STATE OF REBELLION
WHEREAS, certain elements of the Armed Forces of the Philippines, armed with high-
powered firearms and explosives, acting upon the instigation and command and direction of
known and unknown leaders, have seized a building in Makati City, put bombs in the area,
publicly declared withdrawal of support for, and took arms against the duly constituted
Government, and continue to rise publicly and show open hostility, for the purpose of
removing allegiance to the Government certain bodies of the Armed Forces of the Philippines
and the Philippine National Police, and depriving the President of the Republic of the
Philippines, wholly or partially, of her powers and prerogatives which constitute the crime of
rebellion punishable under Article 134 of the Revised Penal Code, as amended;
WHEREAS, these misguided elements of the Armed Forces of the Philippines are being
supported, abetted and aided by known and unknown leaders, conspirators and plotters in
the government service and outside the government;
WHEREAS, under Section 18, Article VII of the present Constitution, whenever it becomes
necessary, the President, as the Commander-in-Chief of the Armed Forces of the Philippines,
may call out such Armed Forces to suppress the rebellion;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me by
law, hereby confirm the existence of an actual and on-going rebellion, compelling me to
declare a state of rebellion.
In view of the foregoing, I am issuing General Order No. 4 in accordance with Section 18,
Article VII of the Constitution, calling out the Armed Forces of the Philippines and the
Philippine National Police to immediately carry out the necessary actions and measures to
suppress and quell the rebellion with due regard to constitutional rights.
General Order No. 4 is similarly worded:
GENERAL ORDER NO. 4
DIRECTING THE ARMED FORCES OF THE PHILIPPINES AND THE PHILIPPINE NATIONAL POLICE
TO SUPPRESS REBELLION
WHEREAS, certain elements of the Armed Forces of the Philippines, armed with high-
powered firearms and explosives, acting upon the instigation and command and direction of
known and unknown leaders, have seized a building in Makati City, put bombs in the area,
publicly declared withdrawal of support for, and took arms against the duly constituted
Government, and continue to rise publicly and show open hostility, for the purpose of
removing allegiance to the Government certain bodies of the Armed Forces of the Philippines
and the Philippine National Police, and depriving the President of the Republic of the
Philippines, wholly or partially, of her powers and prerogatives which constitute the crime of
rebellion punishable under Article 134 et seq. of the Revised Penal Code, as amended;
WHEREAS, these misguided elements of the Armed Forces of the Philippines are being
supported, abetted and aided by known and unknown leaders, conspirators and plotters in
the government service and outside the government;
WHEREAS, under Section 18, Article VII of the present Constitution, whenever it becomes
necessary, the President, as the Commander-in-Chief of all Armed Forces of the Philippines,
may call out such Armed Forces to suppress the rebellion;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me by
the Constitution as President of the Republic of the Philippines and Commander-in-Chief of
all the armed forces of the Philippines and pursuant to Proclamation No. 427 dated July 27,
2003, do hereby call upon the Armed Forces of the Philippines and the Philippine National
Police to suppress and quell the rebellion.
I hereby direct the Chief of the Armed Forces of the Philippines and the Chief of the
Philippine National Police and the officers and men of the Armed Forces of the Philippines
and the Philippine National Police to immediately carry out the necessary and appropriate
actions and measures to suppress and quell the rebellion with due regard to constitutional
rights.
By the evening of July 27, 2003, the Oakwood occupation had ended. After hours-long
negotiations, the soldiers agreed to return to barracks. The President, however, did not
immediately lift the declaration of a state of rebellion and did so only on August 1, 2003,
through Proclamation No. 435:
DECLARING THAT THE STATE OF REBELLION HAS CEASED TO EXIST
WHEREAS, by virtue of Proclamation No. 427 dated July 27, 2003, a state of rebellion was
declared;
WHEREAS, by virtue of General Order No. 4 dated July 27, 2003, which was issued on the
basis of Proclamation No. 427 dated July 27, 2003, and pursuant to Article VII, Section 18 of
the Constitution, the Armed Forces of the Philippines and the Philippine National Police were
directed to suppress and quell the rebellion;
WHEREAS, the Armed Forces of the Philippines and the Philippine National Police have
effectively suppressed and quelled the rebellion.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of
the powers vested in me by law, hereby declare that the state of rebellion has ceased to
exist.
In the interim, several petitions were filed before this Court challenging the validity of
Proclamation No. 427 and General Order No. 4.
In G.R. No. 159085 (Sanlakas and PM v. Executive Secretary, et al.),[2] party-list
organizations Sanlakas and Partido ng Manggagawa (PM), contend that Section 18, Article VII
of the Constitution does not require the declaration of a state of rebellion to call out the armed
forces.[3] They further submit that, because of the cessation of the Oakwood occupation, there
exists no sufficient factual basis for the proclamation by the President of a state of rebellion
for an indefinite period.[4]
Petitioners in G.R. No. 159103 (SJS Officers/Members v. Hon. Executive Secretary, et al.)
are officers/members of the Social Justice Society (SJS), Filipino citizens, taxpayers, law
professors and bar reviewers.[5] Like Sanlakas and PM, they claim that Section 18, Article VII of
the Constitution does not authorize the declaration of a state of rebellion.[6] They contend that
the declaration is a constitutional anomaly that confuses, confounds and misleads because
[o]verzealous public officers, acting pursuant to such proclamation or general order, are liable
to violate the constitutional right of private citizens.[7] Petitioners also submit that the
proclamation is a circumvention of the report requirement under the same Section 18, Article
VII, commanding the President to submit a report to Congress within 48 hours from the
proclamation of martial law.[8] Finally, they contend that the presidential issuances cannot be
construed as an exercise of emergency powers as Congress has not delegated any such power
to the President.[9]
In G.R. No. 159185 (Rep. Suplico et al. v. President Macapagal-Arroyo and Executive
Secretary Romulo), petitioners brought suit as citizens and as Members of the House of
Representatives whose rights, powers and functions were allegedly affected by the declaration
of a state of rebellion.[10] Petitioners do not challenge the power of the President to call out
the Armed Forces.[11] They argue, however, that the declaration of a state of rebellion is a
superfluity, and is actually an exercise of emergency powers.[12] Such exercise, it is contended,
amounts to a usurpation of the power of Congress granted by Section 23 (2), Article VI of the
Constitution.[13]
In G.R. No. 159196 (Pimentel v. Romulo, et al.), petitioner Senator assails the subject
presidential issuances as an unwarranted, illegal and abusive exercise of a martial law power
that has no basis under the Constitution.[14] In the main, petitioner fears that the declaration
of a state of rebellion opens the door to the unconstitutional implementation of warrantless
arrests for the crime of rebellion.[15]
 Required to comment, the Solicitor General argues that the petitions have been
rendered moot by the lifting of the declaration.[16] In addition, the Solicitor General questions
the standing of the petitioners to bring suit.[17]
The Court agrees with the Solicitor General that the issuance of Proclamation No. 435,
declaring that the state of rebellion has ceased to exist, has rendered the case moot.As a rule,
courts do not adjudicate moot cases, judicial power being limited to the determination
of actual controversies.[18] Nevertheless, courts will decide a question, otherwise moot, if it is
capable of repetition yet evading review.[19] The case at bar is one such case.
Once before, the President on May 1, 2001 declared a state of rebellion and called upon
the AFP and the PNP to suppress the rebellion through Proclamation No. 38 and General Order
No. 1. On that occasion, an angry and violent mob armed with explosives, firearms, bladed
weapons, clubs, stones and other deadly weapons assaulted and attempted to break into
Malacaang.[20] Petitions were filed before this Court assailing the validity of the Presidents
declaration. Five days after such declaration, however, the President lifted the same. The
mootness of the petitions in Lacson v. Perez and accompanying cases[21] precluded this Court
from addressing the constitutionality of the declaration.
To prevent similar questions from reemerging, we seize this opportunity to finally lay to
rest the validity of the declaration of a state of rebellion in the exercise of the Presidents calling
out power, the mootness of the petitions notwithstanding.
Only petitioners Rep. Suplico et al. and Sen. Pimentel, as Members of Congress, have
standing to challenge the subject issuances. In Philippine Constitution Association v.
Enriquez, [22] this Court recognized that:
To the extent the powers of Congress are impaired, so is the power of each member thereof,
since his office confers a right to participate in the exercise of the powers of that institution.
An act of the Executive which injures the institution of Congress causes a derivative but
nonetheless substantial injury, which can be questioned by a member of Congress. In such a
case, any member of Congress can have a resort to the courts.
Petitioner Members of Congress claim that the declaration of a state of rebellion by the
President is tantamount to an exercise of Congress emergency powers, thus impairing the
lawmakers legislative powers. Petitioners also maintain that the declaration is a subterfuge to
avoid congressional scrutiny into the Presidents exercise of martial law powers.
Petitioners Sanlakas and PM, and SJS Officers/Members, have no legal standing or locus
standi to bring suit. Legal standing or locus standi has been defined as a personal and
substantial interest in the case such that the party has sustained or will sustain direct injury as
a result of the governmental act that is being challenged. The gist of the question of standing
is whether a party alleges such personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions.[23]
Petitioners Sanlakas and PM assert that:
2. As a basic principle of the organizations and as an important plank in their programs,
petitioners are committed to assert, defend, protect, uphold, and promote the rights,
interests, and welfare of the people, especially the poor and marginalized classes and sectors
of Philippine society. Petitioners are committed to defend and assert human rights, including
political and civil rights, of the citizens.
3. Members of the petitioner organizations resort to mass actions and mobilizations in the
exercise of their Constitutional rights to peaceably assemble and their freedom of speech
and of expression under Section 4, Article III of the 1987 Constitution, as a vehicle to publicly
ventilate their grievances and legitimate demands and to mobilize public opinion to support
the same.[24] [Emphasis in the original.]
Petitioner party-list organizations claim no better right than the Laban ng Demokratikong
Pilipino, whose standing this Court rejected in Lacson v. Perez:
petitioner has not demonstrated any injury to itself which would justify the resort to the
Court. Petitioner is a juridical person not subject to arrest. Thus, it cannot claim to be
threatened by a warrantless arrest. Nor is it alleged that its leaders, members, and
supporters are being threatened with warrantless arrest and detention for the crime of
rebellion. Every action must be brought in the name of the party whose legal rights has been
invaded or infringed, or whose legal right is under imminent threat of invasion or
infringement.
At best, the instant petition may be considered as an action for declaratory relief, petitioner
claiming that it[]s right to freedom of expression and freedom of assembly is affected by the
declaration of a state of rebellion and that said proclamation is invalid for being contrary to
the Constitution.
However, to consider the petition as one for declaratory relief affords little comfort to
petitioner, this Court not having jurisdiction in the first instance over such a petition. Section
5 [1], Article VIII of the Constitution limits the original jurisdiction of the court to cases
affecting ambassadors, other public ministers and consuls, and over petitions for certiorari,
prohibition, mandamus, quo warranto, and habeas corpus.[25]
Even assuming that petitioners are peoples organizations, this status would not vest
them with the requisite personality to question the validity of the presidential issuances, as
this Court made clear in Kilosbayan v. Morato: [26]
The Constitution provides that the State shall respect the role of independent peoples
organizations to enable the people to pursue and protect, within the democratic framework,
their legitimate and collective interests and aspirations through peaceful and lawful means,
that their right to effective and reasonable participation at all levels of social, political, and
economic decision-making shall not be abridged. (Art. XIII, 15-16)
These provisions have not changed the traditional rule that only real parties in
interest or those with standing, as the case may be, may invoke the judicial power. The
jurisdiction of this Court, even in cases involving constitutional questions, is limited by the
case and controversy requirement of Art. VIII, 5. This requirement lies at the very heart of the
judicial function. It is what differentiates decisionmaking in the courts from decisionmaking
in the political departments of the government and bars the bringing of suits by just any
party.[27]
That petitioner SJS officers/members are taxpayers and citizens does not necessarily
endow them with standing. A taxpayer may bring suit where the act complained of directly
involves the illegal disbursement of public funds derived from taxation.[28] No such illegal
disbursement is alleged.
On the other hand, a citizen will be allowed to raise a constitutional question only when
he can show that he has personally suffered some actual or threatened injury as a result of the
allegedly illegal conduct of the government; the injury is fairly traceable to the challenged
action; and the injury is likely to be redressed by a favorable action.[29] Again, no such injury is
alleged in this case.
Even granting these petitioners have standing on the ground that the issues they raise
are of transcendental importance, the petitions must fail.
It is true that for the purpose of exercising the calling out power the Constitution does
not require the President to make a declaration of a state of rebellion. Section 18, Article VII
provides:
Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines
and whenever it becomes necessary, he may call out such armed forces to prevent or
suppress lawless violence, invasion or rebellion. In case of invasion or rebellion, when the
public safety requires it, he may, for a period not exceeding sixty days, suspend the privilege
of the writ of habeas corpus or place the Philippines or any part thereof under martial
law. Within forty-eight hours from the proclamation of martial law or the suspension of the
writ of habeas corpus, the President shall submit a report in person or in writing to the
Congress. The Congress, voting jointly, by a vote of at least a majority of all its Members in
regular or special session, may revoke such proclamation or suspension, which revocation
shall not be set aside by the President. Upon the initiative of the President, the Congress
may, in the same manner, extend such proclamation or suspension for a period to be
determined by the Congress, if the invasion or rebellion shall persist and public safety
requires it.
The Congress, if not in session, shall, within twenty-four hours following such proclamation
or suspension, convene in accordance with its rules without need of a call.
The Supreme Court may review, in an appropriate proceeding filed by any citizen, the
sufficiency of the factual basis for the proclamation of martial law or the suspension of the
privilege of the writ of habeas corpus or the extension thereof, and must promulgate its
decision thereon within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of the
jurisdiction on military courts and agencies over civilians where civil courts are able to
function, nor automatically suspend the privilege of the writ.
The suspension of the privilege of the writ shall apply only to persons judicially charged for
rebellion or offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or detained shall
be judicially charged within three days, otherwise he shall be released. [Emphasis supplied.]
The above provision grants the President, as Commander-in-Chief, a sequence of
graduated power[s].[30] From the most to the least benign, these are: the calling out power,
the power to suspend the privilege of the writ of habeas corpus, and the power to declare
martial law. In the exercise of the latter two powers, the Constitution requires the concurrence
of two conditions, namely, an actual invasion or rebellion, and that public safety requires the
exercise of such power.[31] However, as we observed in Integrated Bar of the Philippines v.
Zamora,[32] [t]hese conditions are not required in the exercise of the calling out power. The
only criterion is that whenever it becomes necessary, the President may call the armed forces
to prevent or suppress lawless violence, invasion or rebellion.
Nevertheless, it is equally true that Section 18, Article VII does not expressly prohibit the
President from declaring a state of rebellion. Note that the Constitution vests the President
not only with Commander-in-Chief powers but, first and foremost, with Executive powers.
Section 1, Article VII of the 1987 Philippine Constitution states: The executive power shall
be vested in the President. As if by exposition, Section 17 of the same Article provides: He shall
ensure that the laws be faithfully executed. The provisions trace their history to the
Constitution of the United States.
The specific provisions of the U.S. Constitution granting the U.S. President executive and
commander-in-chief powers have remained in their original simple form since the Philadelphia
Constitution of 1776, Article II of which states in part:
Section 1. 1. The Executive Power shall be vested in a President of the United States of
America . . . .
....
Section 2. 1. The President shall be Commander in Chief of the Army and Navy of the United
States. . . .
....
Section 3. he shall take care that the laws be faithfully executed. [Article II Executive Power]
Recalling in historical vignettes the use by the U.S. President of the above-quoted
provisions, as juxtaposed against the corresponding action of the U.S. Supreme Court, is
instructive. Clad with the prerogatives of the office and endowed with sovereign powers,
which are drawn chiefly from the Executive Power and Commander-in-Chief provisions, as well
as the presidential oath of office, the President serves as Chief of State or Chief of Government,
Commander-in-Chief, Chief of Foreign Relations and Chief of Public Opinion.[33]
First to find definitive new piers for the authority of the Chief of State, as the protector
of the people, was President Andrew Jackson. Coming to office by virtue of a political
revolution, Jackson, as President not only kept faith with the people by driving the patricians
from power. Old Hickory, as he was fondly called, was the first President to champion the
indissolubility of the Union by defeating South Carolinas nullification effort.[34]
The Federal Tariff Acts of 1828 and 1832 that Congress enacted did not pacify the
hotspurs from South Carolina. Its State Legislature ordered an election for a convention, whose
members quickly passed an Ordinance of Nullification. The Ordinance declared the Tariff Acts
unconstitutional, prohibited South Carolina citizens from obeying them after a certain date in
1833, and threatened secession if the Federal Government sought to oppose the tariff
laws. The Legislature then implemented the Ordinance with bristling punitive laws aimed at
any who sought to pay or collect customs duties.[35]
Jackson bided his time. His task of enforcement would not be easy. Technically, the
President might send troops into a State only if the Governor called for help to suppress an
insurrection, which would not occur in the instance. The President could also send troops to
see to it that the laws enacted by Congress were faithfully executed. But these laws were
aimed at individual citizens, and provided no enforcement machinery against violation by a
State. Jackson prepared to ask Congress for a force bill.[36]
In a letter to a friend, the President gave the essence of his position. He wrote: . . . when
a faction in a State attempts to nullify a constitutional law of Congress, or to destroy the Union,
the balance of the people composing this Union have a perfect right to coerce them to
obedience. Then in a Proclamation he issued on December 10, 1832, he called upon South
Carolinians to realize that there could be no peaceable interference with the execution of the
laws, and dared them, disunion by armed force is treason. Are you ready to incur its guilt? [37]
The Proclamation frightened nullifiers, non-nullifiers and tight-rope walkers. Soon, State
Legislatures began to adopt resolutions of agreement, and the President announced that the
national voice from Maine on the north to Louisiana on the south had declared nullification
and accession confined to contempt and infamy.[38]
No other President entered office faced with problems so formidable, and enfeebled by
personal and political handicaps so daunting, as Abraham Lincoln.
Lincoln believed the Presidents power broad and that of Congress explicit and restricted,
and sought some source of executive power not failed by misuse or wrecked by sabotage. He
seized upon the Presidents designation by the Constitution as Commander-in-Chief, coupled it
to the executive power provision and joined them as the war power which authorized him to
do many things beyond the competence of Congress.[39]
Lincoln embraced the Jackson concept of the Presidents independent power and duty
under his oath directly to represent and protect the people. In his Message of July 4, 1861,
Lincoln declared that the Executive found the duty of employing the war power in defense of
the government forced upon him. He could not but perform the duty or surrender the
existence of the Government . . . . This concept began as a transition device, to be validated by
Congress when it assembled. In less than two-years, it grew into an independent power under
which he felt authorized to suspend the privilege of the writ of habeas corpus, issue the
Emancipation Proclamation, and restore reoccupied States. [40]
Lincolns Proclamation of April 15, 1861, called for 75,000 troops. Their first service,
according to the proclamation, would be to recapture forts, places and property, taking care
to avoid any devastation, any destruction of or interference with property, or any disturbance
of peaceful citizens.[41]
Early in 1863, the U.S. Supreme Court approved President Lincolns report to use the war
powers without the benefit of Congress. The decision was handed in the celebrated Prize
Cases[42] which involved suits attacking the Presidents right to legally institute a
blockade. Although his Proclamation was subsequently validated by Congress, the claimants
contended that under international law, a blockade could be instituted only as a measure of
war under the sovereign power of the State. Since under the Constitution only Congress is
exclusively empowered to declare war, it is only that body that could impose a blockade and
all prizes seized before the legislative declaration were illegal. By a 5 to 4 vote, the Supreme
Court upheld Lincolns right to act as he had.[43]
In the course of time, the U.S. Presidents power to call out armed forces and suspend
the privilege of the writ of habeas corpus without prior legislative approval, in case of invasion,
insurrection, or rebellion came to be recognized and accepted. The United States introduced
the expanded presidential powers in the Philippines through the Philippine Bill of 1902.[44] The
use of the power was put to judicial test and this Court held that the case raised a political
question and said that it is beyond its province to inquire into the exercise of the
power.[45] Later, the grant of the power was incorporated in the 1935 Constitution.[46]
Elected in 1884, Grover Cleveland took his ascent to the presidency to mean that it made
him the trustee of all the people. Guided by the maxim that Public office is a public trust, which
he practiced during his incumbency, Cleveland sent federal troops to Illinois to quell striking
railway workers who defied a court injunction. The injunction banned all picketing and
distribution of handbills. For leading the strikes and violating the injunction, Debs, who was
the union president, was convicted of contempt of court. Brought to the Supreme Court, the
principal issue was by what authority of the Constitution or statute had the President to send
troops without the request of the Governor of the State.[47]
In In Re: Eugene Debs, et al,[48] the Supreme Court upheld the contempt conviction. It
ruled that it is not the governments province to mix in merely individual present controversies.
Still, so it went on, whenever wrongs complained of are such as affect the public at large, and
are in respect of matters which by the Constitution are entrusted to the care of the Nation and
concerning which the Nation owes the duty to all citizens of securing to them their common
rights, then the mere fact that the Government has no pecuniary interest in the controversy is
not sufficient to exclude it from the Courts, or prevent it from taking measures therein to fully
discharge those constitutional duties.[49] Thus, Clevelands course had the Courts attest.
Taking off from President Cleveland, President Theodore Roosevelt launched what
political scientists dub the stewardship theory. Calling himself the steward of the people, he
felt that the executive power was limited only by the specific restrictions and prohibitions
appearing in the Constitution, or impleaded by Congress under its constitutional powers.[50]
 The most far-reaching extension of presidential power T.R. ever undertook to employ
was his plan to occupy and operate Pennsylvanias coal mines under his authority as
Commander-in-Chief. In the issue, he found means other than force to end the 1902 hard-coal
strike, but he had made detailed plans to use his power as Commander-in-Chief to wrest the
mines from the stubborn operators, so that coal production would begin again. [51]
Eventually, the power of the State to intervene in and even take over the operation of
vital utilities in the public interest was accepted. In the Philippines, this led to the incorporation
of Section 6,[52] Article XIII of the 1935 Constitution, which was later carried over with
modifications in Section 7,[53] Article XIV of the 1973 Constitution, and thereafter in Section
18,[54] Article XII of the 1987 Constitution.
The lesson to be learned from the U.S. constitutional history is that the Commander-in-
Chief powers are broad enough as it is and become more so when taken together with the
provision on executive power and the presidential oath of office. Thus, the plenitude of the
powers of the presidency equips the occupant with the means to address exigencies or threats
which undermine the very existence of government or the integrity of the State.
In The Philippine Presidency A Study of Executive Power, the late Mme. Justice Irene R.
Cortes, proposed that the Philippine President was vested with residual power and that this is
even greater than that of the U.S. President. She attributed this distinction to the unitary and
highly centralized nature of the Philippine government. She noted that, There is no
counterpart of the several states of the American union which have reserved powers under
the United States constitution. Elaborating on the constitutional basis for her argument, she
wrote:
. The [1935] Philippine [C]onstitution establishes the three departments of the government
in this manner: The legislative power shall be vested in a Congress of the Philippines which
shall consist of a Senate and a House of Representatives. The executive power shall be vested
in a President of the Philippines. The judicial powers shall be vested in one Supreme Court
and in such inferior courts as may be provided by law. These provisions not only establish a
separation of powers by actual division but also confer plenary legislative, executive, and
judicial powers. For as the Supreme Court of the Philippines pointed out in Ocampo v.
Cabangis, a grant of legislative power means a grant of all the legislative power; and a grant
of the judicial power means a grant of all the judicial power which may be exercised under
the government. If this is true of the legislative power which is exercised by two chambers
with a combined membership [at that time] of more than 120 and of the judicial power
which is vested in a hierarchy of courts, it can equally if not more appropriately apply to the
executive power which is vested in one official the president. He personifies the executive
branch. There is a unity in the executive branch absent from the two other branches of
government. The president is not the chief of many executives. He is the executive.His
direction of the executive branch can be more immediate and direct than the United States
president because he is given by express provision of the constitution control over all
executive departments, bureaus and offices.[55]
The esteemed Justice conducted her study against the backdrop of the 1935
Constitution, the framers of which, early on, arrived at a general opinion in favor of a strong
Executive in the Philippines.[56] Since then, reeling from the aftermath of martial law, our most
recent Charter has restricted the Presidents powers as Commander-in-Chief. The same,
however, cannot be said of the Presidents powers as Chief Executive.
In her ponencia in Marcos v. Manglapus, Justice Cortes put her thesis into
jurisprudence. There, the Court, by a slim 8-7 margin, upheld the Presidents power to forbid
the return of her exiled predecessor. The rationale for the majoritys ruling rested on the
Presidents
unstated residual powers which are implied from the grant of executive power and which are
necessary for her to comply with her duties under the Constitution. The powers of the
President are not limited to what are expressly enumerated in the article on the Executive
Department and in scattered provisions of the Constitution. This is so, notwithstanding the
avowed intent of the members of the Constitutional Commission of 1986 to limit the powers
of the President as a reaction to the abuses under the regime of Mr. Marcos, for the result
was a limitation of specific powers of the President, particularly those relating to the
commander-in-chief clause, but not a diminution of the general grant of executive
power.[57] [Underscoring supplied. Italics in the original.]
Thus, the Presidents authority to declare a state of rebellion springs in the main from her
powers as chief executive and, at the same time, draws strength from her Commander-in-Chief
powers. Indeed, as the Solicitor General accurately points out, statutory authority for such a
declaration may be found in Section 4, Chapter 2 (Ordinance Power), Book III (Office of the
President) of the Revised Administrative Code of 1987, which states:
SEC. 4. Proclamations. Acts of the President fixing a date or declaring a status or condition of
public moment or interest, upon the existence of which the operation of a specific law or
regulation is made to depend, shall be promulgated in proclamations which shall have the
force of an executive order. [Emphasis supplied.]
The foregoing discussion notwithstanding, in calling out the armed forces, a declaration
of a state of rebellion is an utter superfluity.[58] At most, it only gives notice to the nation that
such a state exists and that the armed forces may be called to prevent or suppress
it.[59] Perhaps the declaration may wreak emotional effects upon the perceived enemies of the
State, even on the entire nation. But this Courts mandate is to probe only into the legal
consequences of the declaration. This Court finds that such a declaration is devoid of any legal
significance. For all legal intents, the declaration is deemed not written.
Should there be any confusion generated by the issuance of Proclamation No. 427 and
General Order No. 4, we clarify that, as the dissenters in Lacson correctly pointed out, the mere
declaration of a state of rebellion cannot diminish or violate constitutionally protected
rights.[60] Indeed, if a state of martial law does not suspend the operation of the Constitution
or automatically suspend the privilege of the writ of habeas corpus,[61] then it is with more
reason that a simple declaration of a state of rebellion could not bring about these
conditions.[62] At any rate, the presidential issuances themselves call for the suppression of the
rebellion with due regard to constitutional rights.
For the same reasons, apprehensions that the military and police authorities may resort
to warrantless arrests are likewise unfounded. In Lacson vs. Perez, supra, majority of the Court
held that [i]n quelling or suppressing the rebellion, the authorities may only resort to
warrantless arrests of persons suspected of rebellion, as provided under Section 5, Rule 113 of
the Rules of Court,[63] if the circumstances so warrant. The warrantless arrest feared by
petitioners is, thus, not based on the declaration of a state of rebellion. [64] In other words, a
person may be subjected to a warrantless arrest for the crime of rebellion whether or not the
President has declared a state of rebellion, so long as the requisites for a valid warrantless
arrest are present.

It is not disputed that the President has full discretionary power to call out the armed
forces and to determine the necessity for the exercise of such power. While the Court may
examine whether the power was exercised within constitutional limits or in a manner
constituting grave abuse of discretion, none of the petitioners here have, by way of proof,
supported their assertion that the President acted without factual basis.[65]

The argument that the declaration of a state of rebellion amounts to a declaration of

martial law and, therefore, is a circumvention of the report requirement, is a leap of
logic.There is no indication that military tribunals have replaced civil courts in the theater of
war or that military authorities have taken over the functions of civil government. There is no
allegation of curtailment of civil or political rights. There is no indication that the President has
exercised judicial and legislative powers. In short, there is no illustration that the President has
attempted to exercise or has exercised martial law powers.

Nor by any stretch of the imagination can the declaration constitute an indirect exercise
of emergency powers, which exercise depends upon a grant of Congress pursuant to Section
23 (2), Article VI of the Constitution:

Sec. 23. (1) .

(2) In times of war or other national emergency, the Congress may, by law, authorize the
President, for a limited period and subject to such restrictions as it may prescribe, to exercise
powers necessary and proper to carry out a declared national policy. Unless sooner
withdrawn by resolution of the Congress, such powers shall cease upon the next
adjournment thereof.

The petitions do not cite a specific instance where the President has attempted to or has
exercised powers beyond her powers as Chief Executive or as Commander-in-Chief.The
President, in declaring a state of rebellion and in calling out the armed forces, was merely
exercising a wedding of her Chief Executive and Commander-in-Chief powers.These are purely
executive powers, vested on the President by Sections 1 and 18, Article VII, as opposed to
the delegated legislative powers contemplated by Section 23 (2), Article VI.

WHEREFORE, the petitions are hereby DISMISSED.

 AQUILINO Q. PIMENTEL, JR., G.R. No. 164978
EDGARDO J. ANGARA, Meanwhile, President Arroyo issued appointments[2] to respondents as acting
JUAN PONCE ENRILE, Present: secretaries of their respective departments.
LUISA P. EJERCITO-ESTRADA, Davide, Jr., C.J.,
JINGGOY E. ESTRADA, Puno, Appointee Department Date of Appointment
PANFILO M. LACSON, Panganiban, Arthur C. Yap Agriculture 15 August 2004
ALFREDO S. LIM, Quisumbing, Alberto G. Romulo Foreign Affairs 23 August 2004
JAMBY A.S. MADRIGAL, and Ynares-Santiago,
Raul M. Gonzalez Justice 23 August 2004
SERGIO R. OSMEA III, Sandoval-Gutierrez,
Florencio B. Abad Education 23 August 2004
Petitioners, Carpio,
Austria-Martinez, Avelino J. Cruz, Jr. National Defense 23 August 2004
- versus - Corona, Rene C. Villa Agrarian Reform 23 August 2004
Carpio Morales, Joseph H. Durano Tourism 23 August 2004
EXEC. SECRETARY EDUARDO Callejo, Sr., Michael T. Defensor Environment and Natural Resources 23 August 2004
R. ERMITA, FLORENCIO B. ABAD, Azcuna,
AVELINO J. CRUZ, JR., Tinga, The appointment papers are uniformly worded as follows:
MICHAEL T. DEFENSOR, Chico-Nazario, and
JOSEPH H. DURANO, Garcia, JJ.
RAUL M. GONZALEZ, Sir:
ALBERTO G. ROMULO,
RENE C. VILLA, and Promulgated: Pursuant to the provisions of existing laws, you are hereby
ARTHUR C. YAP, appointed ACTING SECRETARY, DEPARTMENT OF (appropriate
Respondents. October 13, 2005 department) vice (name of person replaced).
x-----------------------------------------------------x
By virtue hereof, you may qualify and enter upon the
DECISION performance of the duties and functions of the office, furnishing this Office
and the Civil Service Commission with copies of your Oath of Office.
CARPIO, J.:
(signed)
Gloria Arroyo

The Case

This is a petition for certiorari and prohibition[1] with a prayer for the issuance of a
writ of preliminary injunction to declare unconstitutional the appointments issued by
President Gloria Macapagal-Arroyo (President Arroyo) through Executive Secretary Eduardo R.
Ermita (Secretary Ermita) to Florencio B. Abad, Avelino J. Cruz, Jr., Michael T. Defensor, Joseph
H. Durano, Raul M. Gonzalez, Alberto G. Romulo, Rene C. Villa, and Arthur C. Yap (respondents)
as acting secretaries of their respective departments. The petition also seeks to prohibit
respondents from performing the duties of department secretaries.
Respondents took their oath of office and assumed duties as acting secretaries.
On 8 September 2004, Aquilino Q. Pimentel, Jr. (Senator Pimentel), Edgardo J. Angara (Senator
Angara), Juan Ponce Enrile (Senator Enrile), Luisa P. Ejercito-Estrada (Senator Ejercito-Estrada),
Jinggoy E. Estrada (Senator Estrada), Panfilo M. Lacson (Senator Lacson), Alfredo S. Lim
(Senator Lim), Jamby A.S. Madrigal (Senator Madrigal), and Sergio R. Osmea, III (Senator
Osmea) (petitioners) filed the present petition as Senators of the Republic of the Philippines.

Congress adjourned on 22 September 2004. On 23 September 2004, President

Antecedent Facts
The Senate and the House of Representatives (Congress) commenced their regular
session on 26 July 2004. The Commission on Appointments, composed of Senators and
Representatives, was constituted on 25 August 2004.
Arroyo issued ad interim appointments[3] to respondents as secretaries of the departments to
which they were previously appointed in an acting capacity. The appointment papers are
uniformly worded as follows:
Sir:
 Pursuant to the provisions of existing laws, you are hereby
appointed SECRETARY [AD INTERIM], DEPARTMENT OF (appropriate
department).
By virtue hereof, you may qualify and enter upon the
performance of the duties and functions of the office, furnishing this Office
and the Civil Service Commission with copies of your oath of office.
(signed)
Gloria Arroyo
Issue
The petition questions the constitutionality of President Arroyos appointment of
respondents as acting secretaries without the consent of the Commission on Appointments
while Congress is in session.
The Courts Ruling
The petition has no merit.
Preliminary Matters
On the Mootness of the Petition
The Solicitor General argues that the petition is moot because President Arroyo had extended
to respondents ad interim appointments on 23 September 2004 immediately after the recess
of Congress.
As a rule, the writ of prohibition will not lie to enjoin acts already done. [4] However,
as an exception to the rule on mootness, courts will decide a question otherwise moot if it is
capable of repetition yet evading review.[5]
In the present case, the mootness of the petition does not bar its resolution. The question of
the constitutionality of the Presidents appointment of department secretaries in an acting
capacity while Congress is in session will arise in every such appointment.
On the Nature of the Power to Appoint
The power to appoint is essentially executive in nature, and the legislature may not interfere
with the exercise of this executive power except in those instances when the Constitution
expressly allows it to interfere.[6] Limitations on the executive power to appoint are construed
strictly against the legislature.[7] The scope of the legislatures interference in the executives
power to appoint is limited to the power to prescribe the qualifications to an appointive office.
Congress cannot appoint a person to an office in the guise of prescribing qualifications to that
office. Neither may Congress impose on the President the duty to appoint any particular
person to an office.[8]
However, even if the Commission on Appointments is composed of members of Congress, the
exercise of its powers is executive and not legislative. The Commission on Appointments does
not legislate when it exercises its power to give or withhold consent to presidential
appointments. Thus:
xxx The Commission on Appointments is a creature of the Constitution.
Although its membership is confined to members of Congress, said
Commission is independent of Congress. The powers of the Commission
do not come from Congress, but emanate directly from the Constitution.
Hence, it is not an agent of Congress. In fact, the functions of the
Commissioner are purely executive in nature. xxx[9]
On Petitioners Standing
The Solicitor General states that the present petition is a quo warranto proceeding because,
with the exception of Secretary Ermita, petitioners effectively seek to oust respondents for
unlawfully exercising the powers of department secretaries. The Solicitor General further
states that petitioners may not claim standing as Senators because no power of the
Commission on Appointments has been infringed upon or violated by the President. xxx If at
all, the Commission on Appointments as a body (rather than individual members of the
Congress) may possess standing in this case.[10]
Petitioners, on the other hand, state that the Court can exercise its certiorari jurisdiction over
unconstitutional acts of the President.[11] Petitioners further contend that they possess
standing because President Arroyos appointment of department secretaries in an acting
capacity while Congress is in session impairs the powers of Congress. Petitioners cite Sanlakas
v. Executive Secretary[12] as basis, thus:
To the extent that the powers of Congress are impaired, so is the
power of each member thereof, since his office confers a right to
participate in the exercise of the powers of that institution.
An act of the Executive which injures the institution of Congress
causes a derivative but nonetheless substantial injury, which can be
 questioned by a member of Congress. In such a case, any member of
Congress can have a resort to the courts.
Considering the independence of the Commission on Appointments from Congress, it is error
for petitioners to claim standing in the present case as members of Congress. President
Arroyos issuance of acting appointments while Congress is in session impairs no power of
Congress. Among the petitioners, only the following are members of the Commission on
Appointments of the 13th Congress: Senator Enrile as Minority Floor Leader, Senator Lacson as
Assistant Minority Floor Leader, and Senator Angara, Senator Ejercito-Estrada, and Senator
Osmea as members.
Thus, on the impairment of the prerogatives of members of the Commission on
Appointments, only Senators Enrile, Lacson, Angara, Ejercito-Estrada, and Osmea have
standing in the present petition. This is in contrast to Senators Pimentel, Estrada, Lim, and
Madrigal, who, though vigilant in protecting their perceived prerogatives as members of
Congress, possess no standing in the present petition.
The Constitutionality of President Arroyos Issuance
of Appointments to Respondents as Acting Secretaries
Petitioners contend that President Arroyo should not have appointed respondents
as acting secretaries because in case of a vacancy in the Office of a Secretary, it is only an
Undersecretary who can be designated as Acting Secretary.[13] Petitioners base their argument
on Section 10, Chapter 2, Book IV of Executive Order No. 292 (EO 292), [14] which enumerates
the powers and duties of the undersecretary. Paragraph 5 of Section 10 reads:
SEC. 10. Powers and Duties of the Undersecretary. - The
Undersecretary shall:
xxx
(5) Temporarily discharge the duties of the Secretary in the
latters absence or inability to discharge his duties for any cause or in case
of vacancy of the said office, unless otherwise provided by law. Where
there are more than one Undersecretary, the Secretary shall allocate the
foregoing powers and duties among them. The President shall likewise
make the temporary designation of Acting Secretary from among them;
and
xxx
Petitioners further assert that while Congress is in session, there can be no appointments,
whether regular or acting, to a vacant position of an office needing confirmation by the
Commission on Appointments, without first having obtained its consent.[15]
In sharp contrast, respondents maintain that the President can issue appointments in an acting
capacity to department secretaries without the consent of the Commission on Appointments
even while Congress is in session. Respondents point to Section 16, Article VII of the 1987
Constitution. Section 16 reads:
SEC. 16. The President shall nominate and, with the consent of
the Commission on Appointments, appoint the heads of the executive
departments, ambassadors, other public ministers and consuls, or officers
of the armed forces from the rank of colonel or naval captain, and other
officers whose appointments are vested in him in this Constitution. He
shall also appoint all other officers of the Government whose
appointments are not otherwise provided for by law, and those whom he
may be authorized by law to appoint. The Congress may, by law, vest the
appointment of other officers lower in rank in the President alone, in the
courts, or in the heads of departments, agencies, commissions, or boards.
The President shall have the power to make appointments
during the recess of the Congress, whether voluntary or compulsory, but
such appointments shall be effective only until disapproval by the
Commission on Appointments or until the next adjournment of the
Congress.
Respondents also rely on EO 292, which devotes a chapter to the Presidents power
of appointment. Sections 16 and 17, Chapter 5, Title I, Book III of EO 292 read:
SEC. 16. Power of Appointment. The President shall exercise the
power to appoint such officials as provided for in the Constitution and
laws.
SEC. 17. Power to Issue Temporary Designation. (1) The
President may temporarily designate an officer already in the
government service or any other competent person to perform the
functions of an office in the executive branch, appointment to which is
vested in him by law, when: (a) the officer regularly appointed to the
office is unable to perform his duties by reason of illness, absence or any
other cause; or (b) there exists a vacancy[.]
(2) The person designated shall receive the compensation
attached to the position, unless he is already in the government service in
which case he shall receive only such additional compensation as, with his
existing salary, shall not exceed the salary authorized by law for the
position filled. The compensation hereby authorized shall be paid out of
the funds appropriated for the office or agency concerned.
 (3) In no case shall a temporary designation exceed one (1) incorporated this safeguard to prevent abuses, like the use of acting appointments as a way to
year. (Emphasis supplied) circumvent confirmation by the Commission on Appointments.

In distinguishing ad interim appointments from appointments in an acting capacity,

Petitioners and respondents maintain two diametrically opposed lines of thought. Petitioners
assert that the President cannot issue appointments in an acting capacity to department
secretaries while Congress is in session because the law does not give the President such
power. In contrast, respondents insist that the President can issue such appointments because
no law prohibits such appointments.
The essence of an appointment in an acting capacity is its temporary nature. It is a stop-gap
measure intended to fill an office for a limited time until the appointment of a permanent
occupant to the office.[16] In case of vacancy in an office occupied by an alter ego of the
President, such as the office of a department secretary, the President must necessarily appoint
an alter ego of her choice as acting secretary before the permanent appointee of her choice
could assume office.
Congress, through a law, cannot impose on the President the obligation to appoint
automatically the undersecretary as her temporary alter ego. An alter ego, whether temporary
or permanent, holds a position of great trust and confidence. Congress, in the guise of
prescribing qualifications to an office, cannot impose on the President who her alter
ego should be.
a noted textbook writer on constitutional law has observed:
Ad-interim appointments must be distinguished from
appointments in an acting capacity. Both of them are effective upon
acceptance. But ad-interim appointments are extended only during a
recess of Congress, whereas acting appointments may be extended any
time there is a vacancy. Moreover ad-interim appointments are submitted
to the Commission on Appointments for confirmation or rejection; acting
appointments are not submitted to the Commission on Appointments.
Acting appointments are a way of temporarily filling important offices but,
if abused, they can also be a way of circumventing the need for
confirmation by the Commission on Appointments.[18]
However, we find no abuse in the present case. The absence of abuse is readily apparent from
President Arroyos issuance of ad interim appointments to respondents immediately upon the
recess of Congress, way before the lapse of one year.
WHEREFORE, we DISMISS the present petition for certiorari and prohibition.

The office of a department secretary may become vacant while Congress is in

session. Since a department secretary is the alter ego of the President, the acting appointee to
the office must necessarily have the Presidents confidence. Thus, by the very nature of the
office of a department secretary, the President must appoint in an acting capacity a person of
her choice even while Congress is in session. That person may or may not be the permanent
appointee, but practical reasons may make it expedient that the acting appointee will also be
the permanent appointee.

The law expressly allows the President to make such acting appointment. Section 17,
Chapter 5, Title I, Book III of EO 292 states that [t]he President may temporarily designate an
officer already in the government service or any other competent person to perform the
functions of an office in the executive branch. Thus, the President may even appoint in an
acting capacity a person not yet in the government service, as long as the President deems
that person competent.

Petitioners assert that Section 17 does not apply to appointments vested in the President by
the Constitution, because it only applies to appointments vested in the President by law.
Petitioners forget that Congress is not the only source of law. Law refers to the Constitution,
statutes or acts of Congress, municipal ordinances, implementing rules issued pursuant to law,
and judicial decisions.[17]

Finally, petitioners claim that the issuance of appointments in an acting capacity is susceptible
to abuse. Petitioners fail to consider that acting appointments cannot exceed one year as
expressly provided in Section 17(3), Chapter 5, Title I, Book III of EO 292. The law has
G.R. No. 96541 August 24, 1993
DEAN JOSE JOYA, CARMEN GUERRERO NAKPIL, ARMIDA SIGUION REYNA, PROF. RICARTE
M. PURUGANAN, IRMA POTENCIANO, ADRIAN CRISTOBAL, INGRID SANTAMARIA,
CORAZON FIEL, AMBASSADOR E. AGUILAR CRUZ, FLORENCIO R. JACELA, JR., MAURO
MALANG, FEDERICO AGUILAR ALCUAZ, LUCRECIA R. URTULA, SUSANO GONZALES, STEVE
SANTOS, EPHRAIM SAMSON, SOLER SANTOS, ANG KIU KOK, KERIMA POLOTAN, LUCRECIA
KASILAG, LIGAYA DAVID PEREZ, VIRGILIO ALMARIO, LIWAYWAY A. ARCEO, CHARITO
PLANAS, HELENA BENITEZ, ANNA MARIA L. HARPER, ROSALINDA OROSA, SUSAN CALO
MEDINA, PATRICIA RUIZ, BONNIE RUIZ, NELSON NAVARRO, MANDY NAVASERO, ROMEO
SALVADOR, JOSEPHINE DARANG, and PAZ VETO PLANAS, petitioners,
vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), CATALINO MACARAIG, JR.,
in his official capacity, and/or the Executive Secretary, and CHAIRMAN MATEO A.T.
CAPARAS, respondents.
M.M. Lazaro & Associates for petitioners.
The Solicitor General for respondents.
BELLOSILLO, J.:
All thirty-five (35) petitioners in this Special Civil Action for Prohibition and Mandamus with
Prayer for Preliminary Injunction and/or Restraining Order seek to enjoin the Presidential
Commission on Good Government (PCGG) from proceeding with the auction sale scheduled
on 11 January 1991 by Christie's of New York of the Old Masters Paintings and 18th and 19th
century silverware seized from Malacaang and the Metropolitan Museum of Manila and
placed in the custody of the Central Bank.
The antecedents: On 9 August 1990, Mateo A.T. Caparas, then Chairman of PCGG, wrote
then President Corazon C. Aquino, requesting her for authority to sign the proposed
Consignment Agreement between the Republic of the Philippines through PCGG and Christie,
Manson and Woods International, Inc. (Christie's of New York, or CHRISTIE'S) concerning the
scheduled sale on 11 January 1991 of eighty-two (82) Old Masters Paintings and antique
silverware seized from Malacaang and the Metropolitan Museum of Manila alleged to be
part of the ill-gotten wealth of the late President Marcos, his relatives and cronies.
On 14 August 1990, then President Aquino, through former Executive Secretary Catalino
Macaraig, Jr., authorized Chairman Caparas to sign the Consignment Agreement allowing
Christie's of New York to auction off the subject art pieces for and in behalf of the Republic of
the Philippines.
On 15 August 1990, PCGG, through Chairman Caparas, representing the Government of the
Republic of the Philippines, signed the Consignment Agreement with Christie's of New York.
According to the agreement, PCGG shall consign to CHRISTIE'S for sale at public auction the
eighty-two (82) Old Masters Paintings then found at the Metropolitan Museum of Manila as
well as the silverware contained in seventy-one (71) cartons in the custody of the Central
Bank of the Philippines, and such other property as may subsequently be identified by PCGG
and accepted by CHRISTIE'S to be subject to the provisions of the agreement.1
On 26 October 1990, the Commission on Audit (COA) through then Chairman Eufemio C.
Domingo submitted to President Aquino the audit findings and observations of COA on the
Consignment Agreement of 15 August 1990 to the effect that: (a) the authority of former
PCGG Chairman Caparas to enter into the Consignment Agreement was of doubtful legality;
(b) the contract was highly disadvantageous to the government; (c) PCGG had a poor track
record in asset disposal by auction in the U.S.; and, (d) the assets subject of auction were
historical relics and had cultural significance, hence, their disposal was prohibited by law. 2
On 15 November 1990, PCGG through its new Chairman David M. Castro, wrote President
Aquino defending the Consignment Agreement and refuting the allegations of COA Chairman
Domingo.3 On the same date, Director of National Museum Gabriel S. Casal issued a
certification that the items subject of the Consignment Agreement did not fall within the
classification of protected cultural properties and did not specifically qualify as part of the
Filipino cultural heritage.4 Hence, this petition originally filed on 7 January 1991 by Dean Jose
Joya, Carmen Guerrero Nakpil, Armida Siguion Reyna, Prof. Ricarte M. Puruganan, Irma
Potenciano, Adrian Cristobal, Ingrid Santamaria, Corazon Fiel, Ambassador E. Aguilar Cruz,
Florencio R. Jacela, Jr., Mauro Malang, Federico Aguilar Alcuaz, Lucrecia R. Urtula, Susano
Gonzales, Steve Santos, Ephraim Samson, Soler Santos, Ang Kiu Kok, Kerima Polotan, Lucrecia
Kasilag, Ligaya David Perez, Virgilio Almario and Liwayway A. Arceo.
After the oral arguments of the parties on 9 January 1991, we issued immediately our
resolution denying the application for preliminary injunction to restrain the scheduled sale of
the artworks on the ground that petitioners had not presented a clear legal right to a
restraining order and that proper parties had not been impleaded.
On 11 January 1991, the sale at public auction proceeded as scheduled and the proceeds of
$13,302,604.86 were turned over to the Bureau of Treasury.5
On 5 February 1991, on motion of petitioners, the following were joined as additional
petitioners: Charito Planas, Helena Benitez, Ana Maria L. Harper, Rosalinda Orosa, Susan
Carlo Medina, Patricia Ruiz, Bonnie Ruiz, Nelson Navarro, Mandy Navasero, Romeo Salvador,
Josephine Darang and Paz Veto Planas.
On the other hand, Catalino Macaraig, Jr., in his capacity as former Executive Secretary, the
incumbent Executive Secretary, and Chairman Mateo A.T. Caparas were impleaded as
additional respondents.
Petitioners raise the following issues: (a) whether petitioners have legal standing to file the
instant petition; (b) whether the Old Masters Paintings and antique silverware are embraced
in the phrase "cultural treasure of the nation" which is under the protection of the state
pursuant to the 1987 Constitution and/or "cultural properties" contemplated under R.A.
4846, otherwise known as "The Cultural Properties Preservation and Protection Act;" (c)
whether the paintings and silverware are properties of public dominion on which can be
disposed of through the joint concurrence of the President and Congress;
(d) whether respondent, PCGG has the jurisdiction and authority to enter into an agreement
with Christie's of New York for the sale of the artworks; (e) whether, PCGG has complied with
the due process clause and other statutory requirements for the exportation and sale of the
subject items; and, (f) whether the petition has become moot and academic, and if so,
whether the above issues warrant resolution from this Court.
The issues being interrelated, they will be discussed jointly hereunder. However, before
proceeding, we wish to emphasize that we admire and commend petitioners' zealous
concern to keep and preserve within the country great works of art by well-known old
masters. Indeed, the value of art cannot be gainsaid. For, by serving as a creative medium
through which man can express his innermost thoughts and unbridled emotions while, at the
same time, reflecting his deep-seated ideals, art has become a true expression of beauty, joy,
and life itself. Such artistic creations give us insights into the artists' cultural heritage the
historic past of the nation and the era to which they belong in their triumphant, glorious,
as well as troubled and turbulent years. It must be for this reason that the framers of the
1987 Constitution mandated in Art. XIV, Sec. 14, that is the solemn duty of the state to
"foster the preservation, enrichment, and dynamic evolution of a Filipino national culture
based on the principle of unity in diversity in a climate of free artistic and intellectual
expression." And, in urging this Court to grant their petition, petitioners invoke this policy of
the state on the protection of the arts.
But, the altruistic and noble purpose of the petition notwithstanding, there is that basic legal
question which must first be resolved: whether the instant petition complies with the legal
requisites for this Court to exercise its power of judicial review over this case.
The rule is settled that no question involving the constitutionality or validity of a law or
governmental act may be heard and decided by the court unless there is compliance with the
legal requisites for judicial inquiry, namely: that the question must be raised by the proper
party; that there must be an actual case or controversy; that the question must be raised at
the earliest possible opportunity; and, that the decision on the constitutional or legal
question must be necessary to the determination of the case itself.6 But the most important
are the first two (2) requisites.
On the first requisite, we have held that one having no right or interest to protect cannot
invoke the jurisdiction of the court as party-plaintiff in an
action.7 This is premised on Sec. 2, Rule 3, of the Rules of Court which provides that every
action must be prosecuted and defended in the name of the real party-in-interest, and that
all persons having interest in the subject of the action and in obtaining the relief demanded
shall be joined as plaintiffs. The Court will exercise its power of judicial review only if the case
is brought before it by a party who has the legal standing to raise the constitutional or legal
question. "Legal standing" means a personal and substantial interest in the case such that the
party has sustained or will sustain direct injury as a result of the governmental act that is
being challenged. The term "interest" is material interest, an interest in issue and to be
affected by the decree, as distinguished from mere interest in the question involved, or a
mere incidental interest.8 Moreover, the interest of the party plaintiff must be personal and
not one based on a desire to vindicate the constitutional right of some third and related
party. 9
There are certain instances however when this Court has allowed exceptions to the rule on
legal standing, as when a citizen brings a case for mandamus to procure the enforcement of a
public duty for the fulfillment of a public right recognized by the Constitution, 10 and when a
taxpayer questions the validity of a governmental act authorizing the disbursement of public
funds. 11
Petitioners claim that as Filipino citizens, taxpayers and artists deeply concerned with the
preservation and protection of the country's artistic wealth, they have the legal personality
to restrain respondents Executive Secretary and PCGG from acting contrary to their public
duty to conserve the artistic creations as mandated by the 1987 Constitution, particularly Art.
XIV, Secs. 14 to 18, on Arts and Culture, and R.A. 4846 known as "The Cultural Properties
Preservation and Protection Act," governing the preservation and disposition of national and
important cultural properties. Petitioners also anchor their case on the premise that the
paintings and silverware are public properties collectively owned by them and by the people
in general to view and enjoy as great works of art. They allege that with the unauthorized act
of PCGG in selling the art pieces, petitioners have been deprived of their right to public
property without due process of law in violation of the Constitution. 12
Petitioners' arguments are devoid of merit. They lack basis in fact and in law. They
themselves allege that the paintings were donated by private persons from different parts of
the world to the Metropolitan Museum of Manila Foundation, which is a non-profit and non-
stock corporations established to promote non-Philippine arts. The foundation's chairman
was former First Lady Imelda R. Marcos, while its president was Bienvenido R. Tantoco. On
this basis, the ownership of these paintings legally belongs to the foundation or corporation
or the members thereof, although the public has been given the opportunity to view and
appreciate these paintings when they were placed on exhibit.
Similarly, as alleged in the petition, the pieces of antique silverware were given to the
Marcos couple as gifts from friends and dignitaries from foreign countries on their silver
wedding and anniversary, an occasion personal to them. When the Marcos administration
was toppled by the revolutionary government, these paintings and silverware were taken
from Malacaang and the Metropolitan Museum of Manila and transferred to the Central
Bank Museum. The confiscation of these properties by the Aquino administration however
should not be understood to mean that the ownership of these paintings has automatically
passed on the government without complying with constitutional and statutory
requirements of due process and just compensation. If these properties were already
acquired by the government, any constitutional or statutory defect in their acquisition and
their subsequent disposition must be raised only by the proper parties the true owners
thereof whose authority to recover emanates from their proprietary rights which are
protected by statutes and the Constitution. Having failed to show that they are the legal
owners of the artworks or that the valued pieces have become publicly owned, petitioners
do not possess any clear legal right whatsoever to question their alleged unauthorized
disposition.
Further, although this action is also one of mandamus filed by concerned citizens, it does not
fulfill the criteria for a mandamus suit. In Legaspi v. Civil Service Commission, 13 this Court laid
down the rule that a writ of mandamus may be issued to a citizen only when the public right
to be enforced and the concomitant duty of the state are unequivocably set forth in the
Constitution. In the case at bar, petitioners are not after the fulfillment of a positive duty
required of respondent officials under the 1987 Constitution. What they seek is the enjoining
of an official act because it is constitutionally infirmed. Moreover, petitioners' claim for the
continued enjoyment and appreciation by the public of the artworks is at most a privilege
and is unenforceable as a constitutional right in this action for mandamus.
Neither can this petition be allowed as a taxpayer's suit. Not every action filed by a taxpayer
can qualify to challenge the legality of official acts done by the government. A taxpayer's suit
can prosper only if the governmental acts being questioned involve disbursement of public
funds upon the theory that the expenditure of public funds by an officer of the state for the
purpose of administering an unconstitutional act constitutes a misapplication of such funds,
which may be enjoined at the request of a taxpayer. 14 Obviously, petitioners are not
challenging any expenditure involving public funds but the disposition of what they allege to
be public properties. It is worthy to note that petitioners admit that the paintings and
antique silverware were acquired from private sources and not with public money.
Anent the second requisite of actual controversy, petitioners argue that this case should be
resolved by this Court as an exception to the rule on moot and academic cases; that although
the sale of the paintings and silver has long been consummated and the possibility of
retrieving the treasure trove is nil, yet the novelty and importance of the issues raised by the
petition deserve this Court's attention. They submit that the resolution by the Court of the
issues in this case will establish future guiding principles and doctrines on the preservation of
the nation's priceless artistic and cultural possessions for the benefit of the public as a
whole. 15
For a court to exercise its power of adjudication, there must be an actual case of controversy
one which involves a conflict of legal rights, an assertion of opposite legal claims
susceptible of judicial resolution; the case must not be moot or academic or based on extra-
legal or other similar considerations not cognizable by a court of justice. 16 A case becomes
moot and academic when its purpose has become stale, 17 such as the case before us. Since
the purpose of this petition for prohibition is to enjoin respondent public officials from
holding the auction sale of the artworks on a particular date 11 January 1991 which is
long past, the issues raised in the petition have become moot and academic.
At this point, however, we need to emphasize that this Court has the discretion to take
cognizance of a suit which does not satisfy the requirements of an actual case or legal
standing when paramount public interest is involved. 18We find however that there is no
such justification in the petition at bar to warrant the relaxation of the rule.
Section 2 of R.A. 4846, as amended by P.D. 374, declares it to be the policy of the state to
preserve and protect the important cultural properties and national cultural treasures of the
nation and to safeguard their intrinsic value. As to what kind of artistic and cultural
properties are considered by the State as involving public interest which should therefore be
protected, the answer can be gleaned from reading of the reasons behind the enactment of
R.A. 4846:
WHEREAS, the National Museum has the difficult task, under existing
laws and regulations, of preserving and protecting the cultural properties
of the nation;
WHEREAS, inumerable sites all over the country have since been
excavated for cultural relics, which have passed on to private hands,
representing priceless cultural treasure that properly belongs to the
Filipino people as their heritage;
WHEREAS, it is perhaps impossible now to find an area in the Philippines,
whether government or private property, which has not been disturbed
by commercially-minded diggers and collectors, literally destroying part
of our historic past;
WHEREAS, because of this the Philippines has been charged as incapable
of preserving and protecting her cultural legacies;
WHEREAS, the commercialization of Philippine relics from the contact
period, the Neolithic Age, and the Paleolithic Age, has reached a point
perilously placing beyond reach of savants the study and reconstruction
of Philippine prehistory; and
WHEREAS, it is believed that more stringent regulation on movement and
a limited form of registration of important cultural properties and of
designated national cultural treasures is necessary, and that regardless of
the item, any cultural property exported or sold locally must be
registered with the National Museum to control the deplorable situation
regarding our national cultural properties and to implement the Cultural
Properties Law (emphasis supplied).
Clearly, the cultural properties of the nation which shall be under the protection of the state
are classified as the "important cultural properties" and the "national cultural treasures."
"Important cultural properties" are cultural properties which have been singled out from
among the innumerable cultural properties as having exceptional historical cultural
significance to the Philippines but are not sufficiently outstanding to merit the classification
of national cultural treasures. 19 On the other hand, a "national cultural treasures" is a unique
object found locally, possessing outstanding historical, cultural, artistic and/or scientific value
which is highly significant and important to this country and nation. 20 This Court takes note
of the certification issued by the Director of the Museum that the Italian paintings and
silverware subject of this petition do not constitute protected cultural properties and are not
among those listed in the Cultural Properties Register of the National Museum.
We agree with the certification of the Director of the Museum. Under the law, it is the
Director of the Museum who is authorized to undertake the inventory, registration,
designation or classification, with the aid of competent experts, of important cultural
properties and national cultural treasures. 21 Findings of administrative officials and agencies
who have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but at times even finality if such findings are supported
by substantial evidence and are controlling on the reviewing authorities because of their
acknowledged expertise in the fields of specialization to which they are assigned. 22

In view of the foregoing, this Court finds no compelling reason to grant the petition.
Petitioners have failed to show that respondents Executive Secretary and PCGG exercised
their functions with grave abuse of discretion or in excess of their jurisdiction.

WHEREFORE, for lack of merit, the petition for prohibition and mandamus is DISMISSED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero,
Nocon, Melo, Quiason, Puno and Vitug, JJ., concur.
 [G.R. No. 155001. May 5, 2003]
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL
ANTONIO B. BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V.
DOMALAON, CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO,
BIENVENIDO C. HILARIO, MIASCOR WORKERS UNION - NATIONAL LABOR UNION
(MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M.
MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS
CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES
AIRPORT SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION,
MIASCOR AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS
CORPORATION, petitioners-in-intervention,
[G.R. No. 155547. May 5, 2003]
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners,
vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, and SECRETARY SIMEON A. DATUMANONG,
in his capacity as Head of the Department of Public Works and
Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA,
PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and
BENASING O. MACARANBON, respondents-intervenors,
[G.R. No. 155661. May 5, 2003]
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN,
LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD SCHLOBOM,
ANGELITO SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA
PALIPARAN NG PILIPINAS (SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY,
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, respondents.
DECISION
PUNO, J.:
Petitioners and petitioners-in-intervention filed the instant petitions for prohibition
under Rule 65 of the Revised Rules of Court seeking to prohibit the Manila International Airport
Authority (MIAA) and the Department of Transportation and Communications (DOTC) and its
Secretary from implementing the following agreements executed by the Philippine
Government through the DOTC and the MIAA and the Philippine International Air Terminals
Co., Inc. (PIATCO): (1) the Concession Agreement signed on July 12, 1997, (2) the Amended and
Restated Concession Agreement dated November 26, 1999, (3) the First Supplement to the
Amended and Restated Concession Agreement dated August 27, 1999, (4) the Second
Supplement to the Amended and Restated Concession Agreement dated September 4, 2000,
and (5) the Third Supplement to the Amended and Restated Concession Agreement dated June
22, 2001 (collectively, the PIATCO Contracts).
The facts are as follows:
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a
comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether
the present airport can cope with the traffic development up to the year 2010. The study
consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future
requirements, proposed master plans and development plans; and second, presentation of the
preliminary design of the passenger terminal building. The ADP submitted a Draft Final Report
to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun,
Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V.
Ramos to explore the possibility of investing in the construction and operation of a new
international airport terminal. To signify their commitment to pursue the project, they formed
the Asias Emerging Dragon Corp. (AEDC) which was registered with the Securities and
Exchange Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through
the DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT
III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA
7718 (BOT Law).[1]
On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the
Prequalification Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III
project.
 On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to
the National Economic and Development Authority (NEDA). A revised proposal, however, was
forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA
Investment Coordinating Council (NEDA ICC) Technical Board favorably endorsed the project
to the ICC Cabinet Committee which approved the same, subject to certain conditions, on
January 19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which
approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers
of an invitation for competitive or comparative proposals on AEDCs unsolicited proposal, in
accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to
submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first
envelope should contain the Prequalification Documents, the second envelope the Technical
Proposal, and the third envelope the Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid
Documents and the submission of the comparative bid proposals. Interested firms were
permitted to obtain the Request for Proposal Documents beginning June 28, 1996, upon
submission of a written application and payment of a non-refundable fee ofP50,000.00
(US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must
have adequate capability to sustain the financing requirement for the detailed engineering,
design, construction, operation, and maintenance phases of the project. The proponent would
be evaluated based on its ability to provide a minimum amount of equity to the project, and
its capacity to secure external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid
conference on July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid
Documents. The following amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its
financial proposal an additional percentage of gross revenue share of the Government, as
follows:
i. First 5 years 5.0%
ii. Next 10 years 7.5%
iii. Next 10 years 10.0%
b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price
challenge. Proponent may offer an Annual Guaranteed Payment which need not be of equal
amount, but payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing requirement
for the detailed engineering, design, construction, and/or operation and maintenance phases
of the project as the case may be. For purposes of pre-qualification, this capability shall be
measured in terms of:
i. Proof of the availability of the project proponent and/or the consortium to provide the
minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent and/or the
members of the consortium are banking with them, that the project proponent and/or the
members are of good financial standing, and have adequate resources.
d. The basis for the prequalification shall be the proponents compliance with the minimum
technical and financial requirements provided in the Bid Documents and the IRR of the BOT
Law. The minimum amount of equity shall be 30% of the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponents proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications
were made. Upon the request of prospective bidder Peoples Air Cargo & Warehousing Co., Inc
(Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules
and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by
the challengers would be revealed to AEDC, and that the challengers technical and financial
proposals would remain confidential. The PBAC also clarified that the list of revenue sources
contained in Annex 4.2a of the Bid Documents was merely indicative and that other revenue
sources may be included by the proponent, subject to approval by DOTC/MIAA. Furthermore,
the PBAC clarified that only those fees and charges denominated as Public Utility Fees would
be subject to regulation, and those charges which would be actually deemed Public Utility Fees
could still be revised, depending on the outcome of PBACs query on the matter with the
Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled Answers to the Queries
of PAIRCARGO as Per Letter Dated September 3 and 10, 1996. Paircargos queries and the
PBACs responses were as follows:
1. It is difficult for Paircargo and Associates to meet the required minimum equity
requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the
capitalization of each member company is so structured to meet the requirements and needs
of their current respective business undertaking/activities. In order to comply with this equity
requirement, Paircargo is requesting PBAC to just allow each member of (sic) corporation of
the Joint Venture to just execute an agreement that embodies a commitment to infuse the
required capital in case the project is awarded to the Joint Venture instead of increasing each
corporations current authorized capital stock just for prequalification purposes.
In prequalification, the agency is interested in ones financial capability at the time of
prequalification, not future or potential capability.
A commitment to put up equity once awarded the project is not enough to establish that
present financial capability. However, total financial capability of all member companies of
the Consortium, to be established by submitting the respective companies audited financial
statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions for the extension of a
Performance Security to the joint venture in the event that the Concessions Agreement (sic) is
awarded to them. However, Paircargo is being required to submit a copy of the draft
concession as one of the documentary requirements. Therefore, Paircargo is requesting that
theyd (sic) be furnished copy of the approved negotiated agreement between the PBAC and
the AEDC at the soonest possible time.
A copy of the draft Concession Agreement is included in the Bid Documents. Any material
changes would be made known to prospective challengers through bid bulletins. However, a
final version will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the Bid
Documents (Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the
same with the required Bid Security.
On September 20, 1996, the consortium composed of Peoples Air Cargo and
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank
Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive
proposal to the PBAC. On September 23, 1996, the PBAC opened the first envelope containing
the prequalification documents of the Paircargo Consortium. On the following day, September
24, 1996, the PBAC prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards
the Paircargo Consortium, which include:
a. The lack of corporate approvals and financial capability of PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount
that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine
requirement in the operation of a public utility.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the
issues raised by the latter, and that based on the documents submitted by Paircargo and the
established prequalification criteria, the PBAC had found that the challenger, Paircargo, had
prequalified to undertake the project. The Secretary of the DOTC approved the finding of the
PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo
Consortium which contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to
Paircargos financial capability, in view of the restrictions imposed by Section 21-B of the
General Banking Act and Sections 1380 and 1381 of the Manual Regulations for Banks and
Other Financial Intermediaries. On October 7, 1996, AEDC again manifested its objections and
requested that it be furnished with excerpts of the PBAC meeting and the accompanying
technical evaluation report where each of the issues they raised were addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the
Paircargo Consortium containing their respective financial proposals. Both proponents offered
to build the NAIA Passenger Terminal III for at least $350 million at no cost to the government
and to pay the government: 5% share in gross revenues for the first five years of operation,
7.5% share in gross revenues for the next ten years of operation, and 10% share in gross
revenues for the last ten years of operation, in accordance with the Bid Documents. However,
in addition to the foregoing, AEDC offered to pay the government a total of P135 million as
guaranteed payment for 27 years while Paircargo Consortium offered to pay the government
a total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal
submitted by the Paircargo Consortium, and gave AEDC 30 working days or until November
28, 1996 within which to match the said bid, otherwise, the project would be awarded to
Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary
Amado Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding
AEDCs failure to match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International
Airport Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and
reiterated its objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass
approval of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for
Declaration of Nullity of the Proceedings, Mandamus and Injunction against the Secretary of
the DOTC, the Chairman of the PBAC, the voting members of the PBAC and Pantaleon D.
Alvarez, in his capacity as Chairman of the PBAC Technical Committee.
On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval,
on a no-objection basis, of the BOT agreement between the DOTC and PIATCO. As the ad
referendum gathered only four (4) of the required six (6) signatures, the NEDA merely noted
the agreement.
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.
 On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and
PIATCO, through its President, Henry T. Go, signed the Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III (1997 Concession Agreement). The Government granted PIATCO the franchise to
operate and maintain the said terminal during the concession period and to collect the fees,
rentals and other charges in accordance with the rates or schedules stipulated in the 1997
Concession Agreement. The Agreement provided that the concession period shall be for
twenty-five (25) years commencing from the in-service date, and may be renewed at the
option of the Government for a period not exceeding twenty-five (25) years. At the end of the
concession period, PIATCO shall transfer the development facility to MIAA.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated
Concession Agreement (ARCA). Among the provisions of the 1997 Concession Agreement that
were amended by the ARCA were: Sec. 1.11 pertaining to the definition of certificate of
completion; Sec. 2.05 pertaining to the Special Obligations of GRP; Sec. 3.02 (a) dealing with
the exclusivity of the franchise given to the Concessionaire; Sec. 4.04 concerning the
assignment by Concessionaire of its interest in the Development Facility; Sec. 5.08 (c) dealing
with the proceeds of Concessionaires insurance; Sec. 5.10 with respect to the temporary take-
over of operations by GRP; Sec. 5.16 pertaining to the taxes, duties and other imposts that may
be levied on the Concessionaire; Sec. 6.03 as regards the periodic adjustment of public utility
fees and charges; the entire Article VIII concerning the provisions on the termination of the
contract; and Sec. 10.02 providing for the venue of the arbitration proceedings in case a
dispute or controversy arises between the parties to the agreement.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The
First Supplement was signed on August 27, 1999; the Second Supplement on September 4,
2000; and the Third Supplement on June 22, 2001 (collectively, Supplements).
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining Revenues or
Gross Revenues; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide
sufficient funds for the upkeep, maintenance, repair and/or replacement of all airport facilities
and equipment which are owned or operated by MIAA; and further providing additional special
obligations on the part of GRP aside from those already enumerated in Sec. 2.05 of the
ARCA. The First Supplement also provided a stipulation as regards the construction of a surface
road to connect NAIA Terminal II and Terminal III in lieu of the proposed access tunnel crossing
Runway 13/31; the swapping of obligations between GRP and PIATCO regarding the
improvement of Sales Road; and the changes in the timetable. It also amended Sec. 6.01 (c) of
the ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the ARCA by inserting an
introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the Payments of
Percentage Share in Gross Revenues.
The Second Supplement to the ARCA contained provisions concerning the clearing,
removal, demolition or disposal of subterranean structures uncovered or discovered at the site
of the construction of the terminal by the Concessionaire. It defined the scope of works; it
provided for the procedure for the demolition of the said structures and the consideration for
the same which the GRP shall pay PIATCO; it provided for time extensions, incremental and
consequential costs and losses consequent to the existence of such structures; and it provided
for some additional obligations on the part of PIATCO as regards the said structures.
Finally, the Third Supplement provided for the obligations of the Concessionaire as
regards the construction of the surface road connecting Terminals II and III.
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA
Terminals I and II, had existing concession contracts with various service providers to offer
international airline airport services, such as in-flight catering, passenger handling, ramp and
ground support, aircraft maintenance and provisions, cargo handling and warehousing, and
other services, to several international airlines at the NAIA. Some of these service providers
are the Miascor Group, DNATA-Wings Aviation Systems Corp., and the MacroAsia
Group. Miascor, DNATA and MacroAsia, together with Philippine Airlines (PAL), are the
dominant players in the industry with an aggregate market share of 70%.
On September 17, 2002, the workers of the international airline service providers,
claiming that they stand to lose their employment upon the implementation of the questioned
agreements, filed before this Court a petition for prohibition to enjoin the enforcement of said
agreements.[2]
On October 15, 2002, the service providers, joining the cause of the petitioning workers,
filed a motion for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino
Jaraula filed a similar petition with this Court.[3]
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing
the legality of the various agreements.[4]
On December 11, 2002. another group of Congressmen, Hon. Jacinto V. Paras, Rafael P.
Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr.,
Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as
Respondents-Intervenors. They filed their Comment-In-Intervention defending the validity of
the assailed agreements and praying for the dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo,
on November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang
Palace, stated that she will not honor (PIATCO) contracts which the Executive Branchs legal
offices have concluded (as) null and void.[5]
Respondent PIATCO filed its Comments to the present petitions on November 7 and 27,
2002. The Office of the Solicitor General and the Office of the Government Corporate Counsel
filed their respective Comments in behalf of the public respondents.
On December 10, 2002, the Court heard the case on oral argument. After the oral
argument, the Court then resolved in open court to require the parties to file simultaneously
their respective Memoranda in amplification of the issues heard in the oral arguments within
30 days and to explore the possibility of arbitration or mediation as provided in the challenged
contracts.
In their consolidated Memorandum, the Office of the Solicitor General and the Office of
the Government Corporate Counsel prayed that the present petitions be given due course and
that judgment be rendered declaring the 1997 Concession Agreement, the ARCA and the
Supplements thereto void for being contrary to the Constitution, the BOT Law and its
Implementing Rules and Regulations.
 On March 6, 2003, respondent PIATCO informed the Court that on March 4, 2003 PIATCO
commenced arbitration proceedings before the International Chamber of Commerce,
International Court of Arbitration (ICC) by filing a Request for Arbitration with the Secretariat
of the ICC against the Government of the Republic of the Philippines acting through the DOTC
and MIAA.
In the present cases, the Court is again faced with the task of resolving complicated
issues made difficult by their intersecting legal and economic implications. The Court is aware
of the far reaching fall out effects of the ruling which it makes today. For more than a century
and whenever the exigencies of the times demand it, this Court has never shirked from its
solemn duty to dispense justice and resolve actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction.[6] To be sure, this Court will not
begin to do otherwise today.
We shall first dispose of the procedural issues raised by respondent PIATCO which they
allege will bar the resolution of the instant controversy.
Petitioners Legal Standing to File
the present Petitions
a. G.R. Nos. 155001 and 155661
In G.R. No. 155001 individual petitioners are employees of various service
providers[7] having separate concession contracts with MIAA and continuing service
agreements with various international airlines to provide in-flight catering, passenger
handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and
warehousing and other services. Also included as petitioners are labor unions MIASCOR
Workers Union-National Labor Union and Philippine Airlines Employees Association. These
petitioners filed the instant action for prohibition as taxpayers and as parties whose rights and
interests stand to be violated by the implementation of the PIATCO Contracts.
Petitioners-Intervenors in the same case are all corporations organized and existing
under Philippine laws engaged in the business of providing in-flight catering, passenger
handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and
warehousing and other services to several international airlines at the Ninoy Aquino
International Airport. Petitioners-Intervenors allege that as tax-paying international airline and
airport-related service operators, each one of them stands to be irreparably injured by the
implementation of the PIATCO Contracts. Each of the petitioners-intervenors have separate
and subsisting concession agreements with MIAA and with various international airlines which
they allege are being interfered with and violated by respondent PIATCO.
In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang
Manggagawa sa Paliparan ng Pilipinas - a legitimate labor union and accredited as the sole and
exclusive bargaining agent of all the employees in MIAA. Petitioners anchor their petition for
prohibition on the nullity of the contracts entered into by the Government and PIATCO
regarding the build-operate-and-transfer of the NAIA IPT III. They filed the petition as
taxpayers and persons who have a legitimate interest to protect in the implementation of the
PIATCO Contracts.
Petitioners in both cases raise the argument that the PIATCO Contracts contain
stipulations which directly contravene numerous provisions of the Constitution, specific
provisions of the BOT Law and its Implementing Rules and Regulations, and public policy.
Petitioners contend that the DOTC and the MIAA, by entering into said contracts, have
committed grave abuse of discretion amounting to lack or excess of jurisdiction which can be
remedied only by a writ of prohibition, there being no plain, speedy or adequate remedy in
the ordinary course of law.
In particular, petitioners assail the provisions in the 1997 Concession Agreement and the
ARCA which grant PIATCO the exclusive right to operate a commercial international passenger
terminal within the Island of Luzon, except those international airports already existing at the
time of the execution of the agreement. The contracts further provide that upon the
commencement of operations at the NAIA IPT III, the Government shall cause the closure of
Ninoy Aquino International Airport Passenger Terminals I and II as international passenger
terminals. With respect to existing concession agreements between MIAA and international
airport service providers regarding certain services or operations, the 1997 Concession
Agreement and the ARCA uniformly provide that such services or operations will not be carried
over to the NAIA IPT III and PIATCO is under no obligation to permit such carry over except
through a separate agreement duly entered into with PIATCO.[8]
With respect to the petitioning service providers and their employees, upon the
commencement of operations of the NAIA IPT III, they allege that they will be effectively barred
from providing international airline airport services at the NAIA Terminals I and II as all
international airlines and passengers will be diverted to the NAIA IPT III. The petitioning service
providers will thus be compelled to contract with PIATCO alone for such services, with no
assurance that subsisting contracts with MIAA and other international airlines will be
respected. Petitioning service providers stress that despite the very competitive market, the
substantial capital investments required and the high rate of fees, they entered into their
respective contracts with the MIAA with the understanding that the said contracts will be in
force for the stipulated period, and thereafter, renewed so as to allow each of the petitioning
service providers to recoup their investments and obtain a reasonable return thereon.
Petitioning employees of various service providers at the NAIA Terminals I and II and of
MIAA on the other hand allege that with the closure of the NAIA Terminals I and II as
international passenger terminals under the PIATCO Contracts, they stand to lose
employment.
The question on legal standing is whether such parties have alleged 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.[9] Accordingly, it has been held that the interest of a person assailing
the constitutionality of a statute must be direct and personal. He must be able to show, not
only that the law or any government act is invalid, but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and not merely that he
suffers thereby in some indefinite way. It must appear that the person complaining has been
or is about to be denied some right or privilege to which he is lawfully entitled or that he is
about to be subjected to some burdens or penalties by reason of the statute or act complained
of.[10]
 We hold that petitioners have the requisite standing. In the above-mentioned cases,
petitioners have a direct and substantial interest to protect by reason of the implementation
of the PIATCO Contracts. They stand to lose their source of livelihood, a property right which
is zealously protected by the Constitution. Moreover, subsisting concession agreements
between MIAA and petitioners-intervenors and service contracts between international
airlines and petitioners-intervenors stand to be nullified or terminated by the operation of the
NAIA IPT III under the PIATCO Contracts. The financial prejudice brought about by the PIATCO
Contracts on petitioners and petitioners-intervenors in these cases are legitimate interests
sufficient to confer on them the requisite standing to file the instant petitions.
b. G.R. No. 155547
In G.R. No. 155547, petitioners filed the petition for prohibition as members of the House
of Representatives, citizens and taxpayers. They allege that as members of the House of
Representatives, they are especially interested in the PIATCO Contracts, because the contracts
compel the Government and/or the House of Representatives to appropriate funds necessary
to comply with the provisions therein.[11] They cite provisions of the PIATCO Contracts which
require disbursement of unappropriated amounts in compliance with the contractual
obligations of the Government. They allege that the Government obligations in the PIATCO
Contracts which compel government expenditure without appropriation is a curtailment of
their prerogatives as legislators, contrary to the mandate of the Constitution that [n]o money
shall be paid out of the treasury except in pursuance of an appropriation made by law.[12]
Standing is a peculiar concept in constitutional law because in some cases, suits are not
brought by parties who have been personally injured by the operation of a law or any other
government act but by concerned citizens, taxpayers or voters who actually sue in the public
interest. Although we are not unmindful of the cases of Imus Electric Co. v. Municipality of
Imus[13] and Gonzales v. Raquiza[14] wherein this Court held that appropriation must be made
only on amounts immediately demandable, public interest demands that we take a more
liberal view in determining whether the petitioners suing as legislators, taxpayers and
citizens have locus standi to file the instant petition. In Kilosbayan, Inc. v. Guingona,[15] this
Court held [i]n line with the liberal policy of this Court on locus standi, ordinary taxpayers,
members of Congress, and even association of planters, and non-profit civic organizations
were allowed to initiate and prosecute actions before this Court to question the
constitutionality or validity of laws, acts, decisions, rulings, or orders of various government
agencies or instrumentalities.[16] Further, insofar as taxpayers' suits are concerned . . . (this
Court) is not devoid of discretion as to whether or not it should be entertained. [17] As such . .
. even if, strictly speaking, they [the petitioners] are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional questions raised. [18] In
view of the serious legal questions involved and their impact on public interest, we resolve to
grant standing to the petitioners.
Other Procedural Matters
Respondent PIATCO further alleges that this Court is without jurisdiction to review the
instant cases as factual issues are involved which this Court is ill-equipped to resolve.
Moreover, PIATCO alleges that submission of this controversy to this Court at the first instance
is a violation of the rule on hierarchy of courts. They contend that trial courts have concurrent
jurisdiction with this Court with respect to a special civil action for prohibition and hence,
following the rule on hierarchy of courts, resort must first be had before the trial courts.
After a thorough study and careful evaluation of the issues involved, this Court is of the
view that the crux of the instant controversy involves significant legal questions. The facts
necessary to resolve these legal questions are well established and, hence, need not be
determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction
over the cases at bar. The said rule may be relaxed when the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling circumstances
justify availment of a remedy within and calling for the exercise of this Courts primary
jurisdiction.[19]
It is easy to discern that exceptional circumstances exist in the cases at bar that call for
the relaxation of the rule. Both petitioners and respondents agree that these cases are
of transcendental importance as they involve the construction and operation of the countrys
premier international airport. Moreover, the crucial issues submitted for resolution are of first
impression and they entail the proper legal interpretation of key provisions of the Constitution,
the BOT Law and its Implementing Rules and Regulations. Thus, considering the nature of the
controversy before the Court, procedural bars may be lowered to give way for the speedy
disposition of the instant cases.
Legal Effect of the Commencement
of Arbitration Proceedings by
PIATCO
There is one more procedural obstacle which must be overcome. The Court is aware that
arbitration proceedings pursuant to Section 10.02 of the ARCA have been filed at the instance
of respondent PIATCO. Again, we hold that the arbitration step taken by PIATCO will not oust
this Court of its jurisdiction over the cases at bar.
In Del Monte Corporation-USA v. Court of Appeals,[20] even after finding that the
arbitration clause in the Distributorship Agreement in question is valid and the dispute
between the parties is arbitrable, this Court affirmed the trial courts decision denying
petitioners Motion to Suspend Proceedings pursuant to the arbitration clause under the
contract. In so ruling, this Court held that as contracts produce legal effect between the parties,
their assigns and heirs, only the parties to the Distributorship Agreement are bound by its
terms, including the arbitration clause stipulated therein. This Court ruled that arbitration
proceedings could be called for but only with respect to the parties to the contract in question.
Considering that there are parties to the case who are neither parties to the Distributorship
Agreement nor heirs or assigns of the parties thereto, this Court, citing its previous ruling
in Salas, Jr. v. Laperal Realty Corporation,[21] held that to tolerate the splitting of
proceedings by allowing arbitration as to some of the parties on the one hand and trial for the
others on the other hand would, in effect, result in multiplicity of suits, duplicitous procedure
and unnecessary delay.[22] Thus, we ruled that the interest of justice would best be served if
the trial court hears and adjudicates the case in a single and complete proceeding.
It is established that petitioners in the present cases who have presented legitimate
interests in the resolution of the controversy are not parties to the PIATCO Contracts.
Accordingly, they cannot be bound by the arbitration clause provided for in the ARCA and
hence, cannot be compelled to submit to arbitration proceedings. A speedy and decisive
resolution of all the critical issues in the present controversy, including those raised by
petitioners, cannot be made before an arbitral tribunal. The object of arbitration is precisely
to allow an expeditious determination of a dispute. This objective would not be met if this
Court were to allow the parties to settle the cases by arbitration as there are certain issues
involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped
to resolve.
Now, to the merits of the instant controversy.
I
Is PIATCO a qualified bidder?
Public respondents argue that the Paircargo Consortium, PIATCOs predecessor, was not
a duly pre-qualified bidder on the unsolicited proposal submitted by AEDC as the Paircargo
Consortium failed to meet the financial capability required under the BOT Law and the Bid
Documents. They allege that in computing the ability of the Paircargo Consortium to meet the
minimum equity requirements for the project, the entire net worth of Security Bank, a
member of the consortium, should not be considered.
PIATCO relies, on the other hand, on the strength of the Memorandum dated October
14, 1996 issued by the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo
Consortium is found to have a combined net worth of P3,900,000,000.00, sufficient to meet
the equity requirements of the project. The said Memorandum was in response to a letter
from Mr. Antonio Henson of AEDC to President Fidel V. Ramos questioning the financial
capability of the Paircargo Consortium on the ground that it does not have the financial
resources to put up the required minimum equity of P2,700,000,000.00. This contention is
based on the restriction under R.A. No. 337, as amended or the General Banking Act that a
commercial bank cannot invest in any single enterprise in an amount more than 15% of its net
worth. In the said Memorandum, Undersecretary Cal opined:
The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial
capability will be evaluated based on total financial capability of all the member companies
of the [Paircargo] Consortium. In this connection, the Challenger was found to have a
combined net worth of P3,926,421,242.00 that could support a project costing
approximately P13 Billion.
It is not a requirement that the net worth must be unrestricted. To impose that as a
requirement now will be nothing less than unfair.
The financial statement or the net worth is not the sole basis in establishing financial
capability. As stated in Bid Bulletin No. 3, financial capability may also be established by
testimonial letters issued by reputable banks. The Challenger has complied with this
requirement.
To recap, net worth reflected in the Financial Statement should not be taken as the amount
of the money to be used to answer the required thirty percent (30%) equity of the challenger
but rather to be used in establishing if there is enough basis to believe that the challenger
can comply with the required 30% equity. In fact, proof of sufficient equity is required as one
of the conditions for award of contract (Section 12.1 IRR of the BOT Law) but not for pre-
qualification (Section 5.4 of the same document).[23]
Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract
shall be awarded to the bidder who, having satisfied the minimum financial, technical,
organizational and legal standards required by the law, has submitted the lowest bid and most
favorable terms of the project.[24] Further, the 1994 Implementing Rules and Regulations of
the BOT Law provide:
Section 5.4 Pre-qualification Requirements.
.
c. Financial Capability: The project proponent must have adequate capability to sustain the
financing requirements for the detailed engineering design, construction and/or operation
and maintenance phases of the project, as the case may be. For purposes of pre-
qualification, this capability shall be measured in terms of (i) proof of the ability of the
project proponent and/or the consortium to provide a minimum amount of equity to the
project, and (ii) a letter testimonial from reputable banks attesting that the project
proponent and/or members of the consortium are banking with them, that they are in
good financial standing, and that they have adequate resources. The government
agency/LGU concerned shall determine on a project-to-project basis and before pre-
qualification, the minimum amount of equity needed. (emphasis supplied)
Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August 16, 1996
amending the financial capability requirements for pre-qualification of the project proponent
as follows:
6. Basis of Pre-qualification
The basis for the pre-qualification shall be on the compliance of the proponent to the
minimum technical and financial requirements provided in the Bid Documents and in the IRR
of the BOT Law, R.A. No. 6957, as amended by R.A. 7718.
The minimum amount of equity to which the proponents financial capability will be based
shall be thirty percent (30%) of the project cost instead of the twenty percent (20%)
specified in Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-
to-equity ratio of 70:30 in Section 2.01a of the draft concession agreement. The debt portion
of the project financing should not exceed 70% of the actual project cost.
Accordingly, based on the above provisions of law, the Paircargo Consortium or any
challenger to the unsolicited proposal of AEDC has to show that it possesses the
requisite financial capability to undertake the project in the minimum amount of 30% of the
project cost through (i) proof of the ability to provide a minimum amount of equity to the
project, and (ii) a letter testimonial from reputable banks attesting that the project proponent
or members of the consortium are banking with them, that they are in good financial standing,
and that they have adequate resources.
As the minimum project cost was estimated to be US$350,000,000.00 or
roughly P9,183,650,000.00,[25] the Paircargo Consortium had to show to the satisfaction of the
PBAC that it had the ability to provide the minimum equity for the project in the amount of at
least P2,755,095,000.00.
Paircargos Audited Financial Statements as of 1993 and 1994 indicated that it had a net
worth of P2,783,592.00 and P3,123,515.00 respectively.[26] PAGS Audited Financial
Statements as of 1995 indicate that it has approximately P26,735,700.00 to invest as its equity
for the project.[27] Security Banks Audited Financial Statements as of 1995 show that it has a
net worth equivalent to its capital funds in the amount of P3,523,504,377.00.[28]
We agree with public respondents that with respect to Security Bank, the entire
amount of its net worth could not be invested in a single undertaking or enterprise, whether
allied or non-allied in accordance with the provisions of R.A. No. 337, as amended or the
General Banking Act:
Sec. 21-B. The provisions in this or in any other Act to the contrary notwithstanding, the
Monetary Board, whenever it shall deem appropriate and necessary to further national
development objectives or support national priority projects, may authorize a commercial
bank, a bank authorized to provide commercial banking services, as well as a government-
owned and controlled bank, to operate under an expanded commercial banking authority
and by virtue thereof exercise, in addition to powers authorized for commercial banks, the
powers of anInvestment House as provided in Presidential Decree No. 129, invest in the
equity of a non-allied undertaking, or own a majority or all of the equity in a financial
intermediary other than a commercial bank or a bank authorized to provide commercial
banking services: Provided, That (a) the total investment in equities shall not exceed fifty
percent (50%) of the net worth of the bank; (b) the equity investment in any one enterprise
whether allied or non-allied shall not exceed fifteen percent (15%) of the net worth of the
bank; (c) the equity investment of the bank, or of its wholly or majority-owned subsidiary, in
a single non-allied undertaking shall not exceed thirty-five percent (35%) of the total equity
in the enterprise nor shall it exceed thirty-five percent (35%) of the voting stock in
that enterprise; and (d) the equity investment in other banks shall be deducted from the
investing bank's net worth for purposes of computing the prescribed ratio of net worth
to risk assets.
.
Further, the 1993 Manual of Regulations for Banks provides:
SECTION X383. Other Limitations and Restrictions. The following limitations and restrictions
shall also apply regarding equity investments of banks.
a. In any single enterprise. The equity investments of banks in any single enterprise shall not
exceed at any time fifteen percent (15%) of the net worth of the investing bank as defined in
Sec. X106 and Subsec. X121.5.
Thus, the maximum amount that Security Bank could validly invest in the Paircargo
Consortium is only P528,525,656.55, representing 15% of its entire net worth. The total net
worth therefore of the Paircargo Consortium, after considering the maximum amounts that
may be validly invested by each of its members is P558,384,871.55 or only 6.08% of the
project cost,[29] an amount substantially less than the prescribed minimum equity investment
required for the project in the amount of P2,755,095,000.00 or 30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the earliest
opportunity, the ability of the bidder to undertake the project. Thus, with respect to the
bidders financial capacity at the pre-qualification stage, the law requires the government
agency to examine and determine the ability of the bidder to fund the entire cost of the
project by considering the maximum amounts that each bidder may invest in the project at
the time of pre-qualification.
The PBAC has determined that any prospective bidder for the construction, operation
and maintenance of the NAIA IPT III project should prove that it has the ability to provide equity
in the minimum amount of 30% of the project cost, in accordance with the 70:30 debt-to-
equity ratio prescribed in the Bid Documents. Thus, in the case of Paircargo Consortium, the
PBAC should determine the maximum amounts that each member of the consortium may
commit for the construction, operation and maintenance of the NAIA IPT III project at the time
of pre-qualification. With respect to Security Bank, the maximum amount which may be
invested by it would only be 15% of its net worth in view of the restrictions imposed by the
General Banking Act. Disregarding the investment ceilings provided by applicable law would
not result in a proper evaluation of whether or not a bidder is pre-qualified to undertake the
project as for all intents and purposes, such ceiling or legal restriction determines the true
maximum amount which a bidder may invest in the project.
Further, the determination of whether or not a bidder is pre-qualified to undertake the
project requires an evaluation of the financial capacity of the said bidder at the time the bid is
submitted based on the required documents presented by the bidder. The PBAC should not
be allowed to speculate on the future financial ability of the bidder to undertake the project
on the basis of documents submitted. This would open doors to abuse and defeat the very
purpose of a public bidding. This is especially true in the case at bar which involves the
investment of billions of pesos by the project proponent. The relevant government authority
is duty-bound to ensure that the awardee of the contract possesses the minimum required
financial capability to complete the project. To allow the PBAC to estimate the bidders future
financial capability would not secure the viability and integrity of the project. A restrictive and
conservative application of the rules and procedures of public bidding is necessary not only to
protect the impartiality and regularity of the proceedings but also to ensure the financial and
technical reliability of the project. It has been held that:
The basic rule in public bidding is that bids should be evaluated based on the required
documents submitted before and not after the opening of bids. Otherwise, the foundation of
a fair and competitive public bidding would be defeated. Strict observance of the rules,
regulations, and guidelines of the bidding process is the only safeguard to a fair, honest
and competitive public bidding.[30]
Thus, if the maximum amount of equity that a bidder may invest in the project at the
time the bids are submitted falls short of the minimum amounts required to be put up by the
bidder, said bidder should be properly disqualified. Considering that at the pre-qualification
stage, the maximum amounts which the Paircargo Consortium may invest in the project fell
short of the minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium
was not a qualified bidder. Thus the award of the contract by the PBAC to the Paircargo
Consortium, a disqualified bidder, is null and void.
While it would be proper at this juncture to end the resolution of the instant controversy,
as the legal effects of the disqualification of respondent PIATCOs predecessor would come into
play and necessarily result in the nullity of all the subsequent contracts entered by it in
pursuance of the project, the Court feels that it is necessary to discuss in full the pressing issues
of the present controversy for a complete resolution thereof.
II
Is the 1997 Concession Agreement valid?
Petitioners and public respondents contend that the 1997 Concession Agreement is
invalid as it contains provisions that substantially depart from the draft Concession Agreement
included in the Bid Documents. They maintain that a substantial departure from the draft
Concession Agreement is a violation of public policy and renders the 1997 Concession
Agreement null and void.
PIATCO maintains, however, that the Concession Agreement attached to the Bid
Documents is intended to be a draft, i.e., subject to change, alteration or modification, and
that this intention was clear to all participants, including AEDC, and DOTC/MIAA. It argued
further that said intention is expressed in Part C (6) of Bid Bulletin No. 3 issued by the PBAC
which states:
6. Amendments to the Draft Concessions Agreement
Amendments to the Draft Concessions Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponents proposal.
By its very nature, public bidding aims to protect the public interest by giving the public
the best possible advantages through open competition. Thus:
Competition must be legitimate, fair and honest. In the field of government contract law,
competition requires, not only `bidding upon a common standard, a common basis, upon the
same thing, the same subject matter, the same undertaking,' but also that it be legitimate,
fair and honest; and not designed to injure or defraud the government.[31]
An essential element of a publicly bidded contract is that all bidders must be on equal
footing. Not simply in terms of application of the procedural rules and regulations imposed by
the relevant government agency, but more importantly, on the contract bidded upon. Each
bidder must be able to bid on the same thing. The rationale is obvious. If the winning bidder
is allowed to later include or modify certain provisions in the contract awarded such that the
contract is altered in any material respect, then the essence of fair competition in the public
bidding is destroyed. A public bidding would indeed be a farce if after the contract is awarded,
the winning bidder may modify the contract and include provisions which are favorable to it
that were not previously made available to the other bidders. Thus:
It is inherent in public biddings that there shall be a fair competition among the bidders. The
specifications in such biddings provide the common ground or basis for the bidders. The
specifications should, accordingly, operate equally or indiscriminately upon all bidders.[32]
The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota:
The law is well settled that where, as in this case, municipal authorities can only let a
contract for public work to the lowest responsible bidder, the proposals and specifications
therefore must be so framed as to permit free and full competition. Nor can they enter into
a contract with the best bidder containing substantial provisions beneficial to him, not
included or contemplated in the terms and specifications upon which the bids were
invited.[33]
In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument that the
draft concession agreement is subject to amendment, the pertinent portion of which was
quoted above, the PBAC also clarified that [s]aid amendments shall only cover items that
would not materially affect the preparation of the proponents proposal.
While we concede that a winning bidder is not precluded from modifying or amending
certain provisions of the contract bidded upon, such changes must not constitute substantial
or material amendments that would alter the basic parameters of the contract and would
constitute a denial to the other bidders of the opportunity to bid on the same terms. Hence,
the determination of whether or not a modification or amendment of a contract bidded out
constitutes a substantial amendment rests on whether the contract, when taken as a whole,
would contain substantially different terms and conditions that would have the effect of
altering the technical and/or financial proposals previously submitted by other bidders. The
alterations and modifications in the contract executed between the government and the
winning bidder must be such as to render such executed contract to be an entirely different
contract from the one that was bidded upon.
In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,[34] this Court quoted
with approval the ruling of the trial court that an amendment to a contract awarded through
public bidding, when such subsequent amendment was made without a new public bidding, is
null and void:
The Court agrees with the contention of counsel for the plaintiffs that the due execution of a
contract after public bidding is a limitation upon the right of the contracting parties to alter
or amend it without another public bidding, for otherwise what would a public bidding be
good for if after the execution of a contract after public bidding, the contracting parties
may alter or amend the contract, or even cancel it, at their will? Public biddings are held for
the protection of the public, and to give the public the best possible advantages by means of
open competition between the bidders. He who bids or offers the best terms is awarded the
contract subject of the bid, and it is obvious that such protection and best possible
advantages to the public will disappear if the parties to a contract executed after public
bidding may alter or amend it without another previous public bidding.[35]
 Hence, the question that comes to fore is this: is the 1997 Concession Agreement the
same agreement that was offered for public bidding, i.e., the draft Concession Agreement
attached to the Bid Documents? A close comparison of the draft Concession Agreement
attached to the Bid Documents and the 1997 Concession Agreement reveals that the
documents differ in at least two material respects:
a. Modification on the Public
Utility Revenues and Non-Public
Utility Revenues that may be
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft Concession
Agreement and the 1997 Concession Agreement may be classified into three distinct
categories: (1) fees which are subject to periodic adjustment of once every two years in
accordance with a prescribed parametric formula and adjustments are made effective only
upon written approval by MIAA; (2) fees other than those included in the first category which
maybe adjusted by PIATCO whenever it deems necessary without need for consent of
DOTC/MIAA; and (3) new fees and charges that may be imposed by PIATCO which have not
been previously imposed or collected at the Ninoy Aquino International Airport Passenger
Terminal I, pursuant to Administrative Order No. 1, Series of 1993, as amended. The glaring
distinctions between the draft Concession Agreement and the 1997 Concession Agreement lie
in the types of fees included in each category and the extent of the supervision and regulation
which MIAA is allowed to exercise in relation thereto.
For fees under the first category, i.e., those which are subject to periodic adjustment in
accordance with a prescribed parametric formula and effective only upon written approval by
MIAA, the draft Concession Agreement includes the following:[36]
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) groundhandling fees;
(4) rentals and airline offices;
(5) check-in counter rentals; and
(6) porterage fees.
Under the 1997 Concession Agreement, fees which are subject to adjustment and
effective upon MIAA approval are classified as Public Utility Revenues and include: [37]
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) check-in counter fees; and
(4) Terminal Fees.
The implication of the reduced number of fees that are subject to MIAA approval is best
appreciated in relation to fees included in the second category identified above. Under
the 1997 Concession Agreement, fees which PIATCO may adjust whenever it deems necessary
without need for consent of DOTC/MIAA are Non-Public Utility Revenues and is defined as all
other income not classified as Public Utility Revenues derived from operations of the Terminal
and the Terminal Complex.[38] Thus, under the 1997 Concession Agreement, groundhandling
fees, rentals from airline offices and porterage fees are no longer subject to MIAA regulation.
Further, under Section 6.03 of the draft Concession Agreement, MIAA reserves the right
to regulate (1) lobby and vehicular parking fees and (2) other new fees and charges that may
be imposed by PIATCO. Such regulation may be made by periodic adjustment and is effective
only upon written approval of MIAA. The full text of said provision is quoted below:
Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking
fees, aircraft tacking fees, groundhandling fees, rentals and airline offices, check-in-counter
rentals and porterage fees shall be allowed only once every two years and in accordance with
the Parametric Formula attached hereto as Annex F. Provided that adjustments shall be
made effective only after the written express approval of the MIAA. Provided, further, that
such approval of the MIAA, shall be contingent only on the conformity of the adjustments
with the above said parametric formula. The first adjustment shall be made prior to the In-
Service Date of the Terminal.
The MIAA reserves the right to regulate under the foregoing terms and conditions the
lobby and vehicular parking fees and other new fees and charges as contemplated in
paragraph 2 of Section 6.01 if in its judgment the users of the airport shall be deprived of a
free option for the services they cover.[39]
On the other hand, the equivalent provision under the 1997 Concession
Agreement reads:
Section 6.03 Periodic Adjustment in Fees and Charges.
.
(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-
Public Utility Revenues in order to ensure that End Users are not unreasonably deprived of
services. While the vehicular parking fee, porterage fee and greeter/well wisher fee
constitute Non-Public Utility Revenues of Concessionaire, GRP may intervene and require
Concessionaire to explain and justify the fee it may set from time to time, if in the
reasonable opinion of GRP the said fees have become exorbitant resulting in the
unreasonable deprivation of End Users of such services.[40]
Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee,
(2) porterage fee and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO
to explain and justify the fees set by PIATCO. In the draft Concession Agreement, vehicular
parking fee is subject to MIAA regulation and approval under the second paragraph of Section
6.03 thereof while porterage fee is covered by the first paragraph of the same provision. There
is an obvious relaxation of the extent of control and regulation by MIAA with respect to the
particular fees that may be charged by PIATCO.
Moreover, with respect to the third category of fees that may be imposed and collected
by PIATCO, i.e., new fees and charges that may be imposed by PIATCO which have not been
previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal
I, under Section 6.03 of the draft Concession Agreement MIAA has reserved the right to
regulate the same under the same conditions that MIAA may regulate fees under the first
category, i.e., periodic adjustment of once every two years in accordance with a prescribed
parametric formula and effective only upon written approval by MIAA. However, under
the 1997 Concession Agreement, adjustment of fees under the third category is not subject to
MIAA regulation.
With respect to terminal fees that may be charged by PIATCO,[41]
as shown earlier, this
was included within the category of Public Utility Revenues under the 1997 Concession
Agreement. This classification is significant because under the 1997 Concession Agreement,
Public Utility Revenues are subject to an Interim Adjustment of fees upon the occurrence of
certain extraordinary events specified in the agreement.[42] However, under the draft
Concession Agreement, terminal fees are not included in the types of fees that may be subject
to Interim Adjustment.[43]
Finally, under the 1997 Concession Agreement, Public Utility Revenues, except terminal
fees, are denominated in US Dollars[44] while payments to the Government are in Philippine
Pesos. In the draft Concession Agreement, no such stipulation was included. By stipulating
that Public Utility Revenues will be paid to PIATCO in US Dollars while payments by PIATCO to
the Government are in Philippine currency under the 1997 Concession Agreement, PIATCO is
able to enjoy the benefits of depreciations of the Philippine Peso, while being effectively
insulated from the detrimental effects of exchange rate fluctuations.
When taken as a whole, the changes under the 1997 Concession Agreement with respect
to reduction in the types of fees that are subject to MIAA regulation and the relaxation of such
regulation with respect to other fees are significant amendments that substantially distinguish
the draft Concession Agreement from the 1997 Concession Agreement. The 1997 Concession
Agreement, in this respect, clearly gives PIATCO more favorable terms than what was
available to other bidders at the time the contract was bidded out. It is not very difficult to
see that the changes in the 1997 Concession Agreement translate to direct and concrete
financial advantages for PIATCO which were not available at the time the contract was offered
for bidding. It cannot be denied that under the 1997 Concession Agreement only Public Utility
Revenues are subject to MIAA regulation. Adjustments of all other fees imposed and
collected by PIATCO are entirely within its control. Moreover, with respect to terminal fees,
under the 1997 Concession Agreement, the same is further subject to Interim Adjustments not
previously stipulated in the draft Concession Agreement. Finally, the change in the currency
stipulated for Public Utility Revenues under the 1997 Concession Agreement, except terminal
fees, gives PIATCO an added benefit which was not available at the time of bidding.
b. Assumption by the
Government of the liabilities of
PIATCO in the event of the latters
default thereof
Under the draft Concession Agreement, default by PIATCO of any of its obligations to
creditors who have provided, loaned or advanced funds for the NAIA IPT III project does not
result in the assumption by the Government of these liabilities. In fact, nowhere in the said
contract does default of PIATCOs loans figure in the agreement. Such default does not directly
result in any concomitant right or obligation in favor of the Government.
However, the 1997 Concession Agreement provides:
Section 4.04 Assignment.
.
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and
the default has resulted in the acceleration of the payment due date of the Attendant
Liability prior to its stated date of maturity, the Unpaid Creditors and Concessionaire shall
immediately inform GRP in writing of such default. GRP shall, within one hundred eighty
(180) Days from receipt of the joint written notice of the Unpaid Creditors and
Concessionaire, either (i) take over the Development Facility and assume the Attendant
Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be substituted as concessionaire
and operator of the Development Facility in accordance with the terms and conditions
hereof, or designate a qualified operator acceptable to GRP to operate the Development
Facility, likewise under the terms and conditions of this Agreement; Provided that if at the
end of the 180-day period GRP shall not have served the Unpaid Creditors and
Concessionaire written notice of its choice, GRP shall be deemed to have elected to take over
the Development Facility with the concomitant assumption of Attendant Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as
concessionaire, the latter shall form and organize a concession company qualified to take
over the operation of the Development Facility. If the concession company should elect to
designate an operator for the Development Facility, the concession company shall in good
faith identify and designate a qualified operator acceptable to GRP within one hundred
eighty (180) days from receipt of GRPs written notice. If the concession company, acting in
good faith and with due diligence, is unable to designate a qualified operator within the
aforesaid period, then GRP shall at the end of the 180-day period take over the Development
Facility and assume Attendant Liabilities.
The term Attendant Liabilities under the 1997 Concession Agreement is defined as:
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated
fees, charges, surcharges, indemnities, reimbursements and other related expenses, and
further including amounts owed by Concessionaire to its suppliers, contractors and sub-
contractors.
 Under the above quoted portions of Section 4.04 in relation to the definition of
Attendant Liabilities, default by PIATCO of its loans used to finance the NAIA IPT III project
triggers the occurrence of certain events that leads to the assumption by the Government of
the liability for the loans. Only in one instance may the Government escape the assumption
of PIATCOs liabilities, i.e., when the Government so elects and allows a qualified operator to
take over as Concessionaire. However, this circumstance is dependent on the existence and
availability of a qualified operator who is willing to take over the rights and obligations of
PIATCO under the contract, a circumstance that is not entirely within the control of the
Government.
Without going into the validity of this provision at this juncture, suffice it to state that
Section 4.04 of the 1997 Concession Agreement may be considered a form of security for the
loans PIATCO has obtained to finance the project, an option that was not made available in the
draft Concession Agreement. Section 4.04 is an important amendment to the 1997 Concession
Agreement because it grants PIATCO a financial advantage or benefit which was not
previously made available during the bidding process. This financial advantage is a significant
modification that translates to better terms and conditions for PIATCO.
PIATCO, however, argues that the parties to the bidding procedure acknowledge that
the draft Concession Agreement is subject to amendment because the Bid Documents permit
financing or borrowing. They claim that it was the lenders who proposed the amendments to
the draft Concession Agreement which resulted in the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT Law to
allow the project proponent or the winning bidder to obtain financing for the project,
especially in this case which involves the construction, operation and maintenance of the NAIA
IPT III. Expectedly, compliance by the project proponent of its undertakings therein would
involve a substantial amount of investment. It is therefore inevitable for the awardee of the
contract to seek alternate sources of funds to support the project. Be that as it may, this Court
maintains that amendments to the contract bidded upon should always conform to the general
policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its
very nature and characteristic, competitive public bidding aims to protect the public interest
by giving the public the best possible advantages through open competition.[45] It has been
held that the three principles in public bidding are (1) the offer to the public; (2) opportunity
for competition; and (3) a basis for the exact comparison of bids. A regulation of the matter
which excludes any of these factors destroys the distinctive character of the system and
thwarts the purpose of its adoption.[46]These are the basic parameters which every awardee
of a contract bidded out must conform to, requirements of financing and borrowing
notwithstanding. Thus, upon a concrete showing that, as in this case, the contract signed by
the government and the contract-awardee is an entirely different contract from the contract
bidded, courts should not hesitate to strike down said contract in its entirety for violation of
public policy on public bidding. A strict adherence on the principles, rules and regulations on
public bidding must be sustained if only to preserve the integrity and the faith of the general
public on the procedure.
Public bidding is a standard practice for procuring government contracts for public
service and for furnishing supplies and other materials. It aims to secure for the government
the lowest possible price under the most favorable terms and conditions, to curtail favoritism
in the award of government contracts and avoid suspicion of anomalies and it places all bidders
in equal footing.[47] Any government action which permits any substantial variance between
the conditions under which the bids are invited and the contract executed after the award
thereof is a grave abuse of discretion amounting to lack or excess of jurisdiction which
warrants proper judicial action.
In view of the above discussion, the fact that the foregoing substantial amendments
were made on the 1997 Concession Agreement renders the same null and void for
being contrary to public policy. These amendments convert the 1997 Concession Agreement
to an entirely different agreement from the contract bidded out or the draft Concession
Agreement. It is not difficult to see that the amendments on (1) the types of fees or charges
that are subject to MIAA regulation or control and the extent thereof and (2) the assumption
by the Government, under certain conditions, of the liabilities of PIATCO directly
translates concrete financial advantages to PIATCO that were previously not available during
the bidding process. These amendments cannot be taken as merely supplements to or
implementing provisions of those already existing in the draft Concession Agreement. The
amendments discussed above present new terms and conditions which provide financial
benefit to PIATCO which may have altered the technical and financial parameters of other
bidders had they known that such terms were available.
III
Direct Government Guarantee
Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997 Concession
Agreement provides:
Section 4.04 Assignment
.
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and
the default resulted in the acceleration of the payment due date of the Attendant Liability
prior to its stated date of maturity, the Unpaid Creditors and Concessionaire shall
immediately inform GRP in writing of such default. GRP shall within one hundred eighty (180)
days from receipt of the joint written notice of the Unpaid Creditors and Concessionaire,
either (i) take over the Development Facility and assume the Attendant Liabilities, or (ii)
allow the Unpaid Creditors, if qualified to be substituted as concessionaire and operator of
the Development facility in accordance with the terms and conditions hereof, or designate a
qualified operator acceptable to GRP to operate the Development Facility, likewise under the
terms and conditions of this Agreement; Provided, that if at the end of the 180-day period
GRP shall not have served the Unpaid Creditors and Concessionaire written notice of its
choice, GRP shall be deemed to have elected to take over the Development Facility with
the concomitant assumption of Attendant Liabilities.
(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire,
the latter shall form and organize a concession company qualified to takeover the operation
of the Development Facility. If the concession company should elect to designate an operator
for the Development Facility, the concession company shall in good faith identify and
designate a qualified operator acceptable to GRP within one hundred eighty (180) days from
receipt of GRPs written notice. If the concession company, acting in good faith and with due
diligence, is unable to designate a qualified operator within the aforesaid period, then
GRP shall at the end of the 180-day period take over the Development Facility and assume
Attendant Liabilities.
.
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated
fees, charges, surcharges, indemnities, reimbursements and other related expenses, and
further including amounts owed by Concessionaire to its suppliers, contractors and sub-
contractors.[48]
It is clear from the above-quoted provisions that Government, in the event that PIATCO
defaults in its loan obligations, is obligated to pay all amounts recorded and from time to time
outstanding from the books of PIATCO which the latter owes to its creditors.[49] These amounts
include all interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses.[50] This obligation of the Government to pay
PIATCOs creditors upon PIATCOs default would arise if the Government opts to take over NAIA
IPT III. It should be noted, however, that even if the Government chooses the second option,
which is to allow PIATCOs unpaid creditors operate NAIA IPT III, the Government is still at a risk
of being liable to PIATCOs creditors should the latter be unable to designate a qualified
operator within the prescribed period.[51] In effect, whatever option the Government chooses
to take in the event of PIATCOs failure to fulfill its loan obligations, the Government is still
at a risk of assuming PIATCOs outstanding loans. This is due to the fact that the Government
would only be free from assuming PIATCOs debts if the unpaid creditors would be able to
designate a qualified operator within the period provided for in the contract. Thus, the
Governments assumption of liability is virtually out of its control. The Government under the
circumstances provided for in the 1997 Concession Agreement is at the mercy of the existence,
availability and willingness of a qualified operator. The above contractual provisions constitute
a direct government guarantee which is prohibited by law.
One of the main impetus for the enactment of the BOT Law is the lack of government
funds to construct the infrastructure and development projects necessary for economic
growth and development. This is why private sector resources are being tapped in order to
finance these projects. The BOT law allows the private sector to participate, and is in fact
encouraged to do so by way of incentives, such as minimizing the unstable flow of
returns,[52] provided that the government would not have to unnecessarily expend scarcely
available funds for the project itself. As such, direct guarantee, subsidy and equity by the
government in these projects are strictly prohibited.[53] This is but logical for if the
government would in the end still be at a risk of paying the debts incurred by the private
entity in the BOT projects, then the purpose of the law is subverted.
Section 2(n) of the BOT Law defines direct guarantee as follows:
(n) Direct government guarantee An agreement whereby the government or any of its
agencies or local government units assume responsibility for the repayment of debt directly
incurred by the project proponent in implementing the project in case of a loan default.
Clearly by providing that the Government assumes the attendant liabilities, which
consists of PIATCOs unpaid debts, the 1997 Concession Agreement provided for a direct
government guarantee for the debts incurred by PIATCO in the implementation of the NAIA
IPT III project. It is of no moment that the relevant sections are subsumed under the title of
assignment. The provisions providing for direct government guarantee which is prohibited by
law is clear from the terms thereof.
The fact that the ARCA superseded the 1997 Concession Agreement did not cure this
fatal defect. Article IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA
provides:
Section 4.04 Security
.
(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter
into direct agreement with the Senior Lenders, or with an agent of such Senior Lenders
(which agreement shall be subject to the approval of the Bangko Sentral ng Pilipinas), in such
form as may be reasonably acceptable to both GRP and Senior Lenders, with regard, inter
alia, to the following parameters:
.
(iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to the
Senior Lenders, and as a result thereof the Senior Lenders have become entitled to
accelerate the Senior Loans, the Senior Lenders shall have the right to notify GRP of the
same, and without prejudice to any other rights of the Senior Lenders or any Senior Lenders
agent may have (including without limitation under security interests granted in favor of the
Senior Lenders), to either in good faith identify and designate a nominee which is qualified
under sub-clause (viii)(y) below to operate the Development Facility [NAIA Terminal 3] or
transfer the Concessionaires [PIATCO] rights and obligations under this Agreement to a
transferee which is qualified under sub-clause (viii) below;
.
(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to
designate a nominee or effect a transfer in terms and conditions satisfactory to the Senior
Lenders within one hundred eighty (180) days after giving GRP notice as referred to
respectively in (iv) or (v) above, then GRP and the Senior Lenders shall endeavor in good faith
to enter into any other arrangement relating to the Development Facility [NAIA Terminal 3]
(other than a turnover of the Development Facility [NAIA Terminal 3] to GRP) within the
following one hundred eighty (180) days. If no agreement relating to the Development
Facility [NAIA Terminal 3] is arrived at by GRP and the Senior Lenders within the said 180-day
period, then at the end thereof the Development Facility [NAIA Terminal 3] shall be
transferred by the Concessionaire [PIATCO] to GRP or its designee and GRP shall make a
termination payment to Concessionaire [PIATCO] equal to the Appraised Value (as
hereinafter defined) of the Development Facility [NAIA Terminal 3] or the sum of the
Attendant Liabilities, if greater. Notwithstanding Section 8.01(c) hereof, this Agreement shall
be deemed terminated upon the transfer of the Development Facility [NAIA Terminal 3] to
GRP pursuant hereto;
. Government would not be liable for PIATCOs debt is for a qualified nominee or transferee to
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from
time to time owed or which may become owing by Concessionaire [PIATCO] to Senior
Lenders or any other persons or entities who have provided, loaned, or advanced funds
or provided financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal
3], including, without limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees, charges and expenses of
any agents or trustees of such persons or entities), whether payable at maturity, by
acceleration or otherwise, and further including amounts owed by Concessionaire [PIATCO]
to its professional consultants and advisers, suppliers, contractors and sub-contractors.[54]
It is clear from the foregoing contractual provisions that in the event that PIATCO fails to
fulfill its loan obligations to its Senior Lenders, the Government is obligated to directly
negotiate and enter into an agreement relating to NAIA IPT III with the Senior Lenders, should
the latter fail to appoint a qualified nominee or transferee who will take the place of PIATCO. If
the Senior Lenders and the Government are unable to enter into an agreement after the
prescribed period, the Government must then pay PIATCO, upon transfer of NAIA IPT III to the
Government, termination payment equal to the appraised value of the project or the value of
the attendant liabilities whichever is greater. Attendant liabilities as defined in the ARCA
includes all amounts owed or thereafter may be owed by PIATCO not only to the Senior
Lenders with whom PIATCO has defaulted in its loan obligations but to all other persons who
may have loaned, advanced funds or provided any other type of financial facilities to PIATCO
for NAIA IPT III. The amount of PIATCOs debt that the Government would have to pay as a
result of PIATCOs default in its loan obligations -- in case no qualified nominee or transferee is
appointed by the Senior Lenders and no other agreement relating to NAIA IPT III has been
reached between the Government and the Senior Lenders -- includes, but is not limited to, all
principal, interest, associated fees, charges, reimbursements, and other related expenses . . .
whether payable at maturity, by acceleration or otherwise.[55]
It is clear from the foregoing that the ARCA provides for a direct guarantee by the
government to pay PIATCOs loans not only to its Senior Lenders but all other entities who
provided PIATCO funds or services upon PIATCOs default in its loan obligation with its Senior
Lenders. The fact that the Governments obligation to pay PIATCOs lenders for the latters
obligation would only arise after the Senior Lenders fail to appoint a qualified nominee or
transferee does not detract from the fact that, should the conditions as stated in the contract
occur, the ARCA still obligates the Government to pay any and all amounts owed by PIATCO to
its lenders in connection with NAIA IPT III.Worse, the conditions that would make the
Government liable for PIATCOs debts is triggered by PIATCOs own default of its loan
obligations to its Senior Lenders to which loan contracts the Government was never a party
to. The Government was not even given an option as to what course of action it should take in
case PIATCO defaulted in the payment of its senior loans. The Government, upon PIATCOs
default, would be merely notified by the Senior Lenders of the same and it is the Senior Lenders
who are authorized to appoint a qualified nominee or transferee. Should the Senior Lenders
fail to make such an appointment, the Government is then automatically obligated to directly
deal and negotiate with the Senior Lenders regarding NAIA IPT III. The only way the
be appointed in place of PIATCO to continue the construction, operation and maintenance of
NAIA IPT III. This pre-condition, however, will not take the contract out of the ambit of a direct
guarantee by the government as the existence, availability and willingness of a qualified
nominee or transferee is totally out of the governments control. As such the Government is
virtually at the mercy of PIATCO (that it would not default on its loan obligations to its Senior
Lenders), the Senior Lenders (that they would appoint a qualified nominee or transferee or
agree to some other arrangement with the Government) and the existence of a qualified
nominee or transferee who is able and willing to take the place of PIATCO in NAIA IPT III.
The proscription against government guarantee in any form is one of the policy
considerations behind the BOT Law. Clearly, in the present case, the ARCA obligates the
Government to pay for all loans, advances and obligations arising out of financial facilities
extended to PIATCO for the implementation of the NAIA IPT III project should PIATCO default
in its loan obligations to its Senior Lenders and the latter fails to appoint a qualified nominee
or transferee. This in effect would make the Government liable for PIATCOs loans should the
conditions as set forth in the ARCA arise. This is a form of direct government guarantee.
The BOT Law and its implementing rules provide that in order for an unsolicited proposal
for a BOT project may be accepted, the following conditions must first be met: (1) the project
involves a new concept in technology and/or is not part of the list of priority projects, (2) no
direct government guarantee, subsidy or equity is required, and (3) the government agency
or local government unit has invited by publication other interested parties to a public bidding
and conducted the same.[56] The failure to meet any of the above conditions will result in the
denial of the proposal. It is further provided that the presence of direct government guarantee,
subsidy or equity will necessarily disqualify a proposal from being treated and accepted as an
unsolicited proposal.[57] The BOT Law clearly and strictly prohibits direct government
guarantee, subsidy and equity in unsolicited proposals that the mere inclusion of a provision
to that effect is fatal and is sufficient to deny the proposal. It stands to reason therefore that
if a proposal can be denied by reason of the existence of direct government guarantee, then
its inclusion in the contract executed after the said proposal has been accepted is likewise
sufficient to invalidate the contract itself.A prohibited provision, the inclusion of which would
result in the denial of a proposal cannot, and should not, be allowed to later on be inserted in
the contract resulting from the said proposal. The basic rules of justice and fair play alone
militate against such an occurrence and must not, therefore, be countenanced particularly in
this instance where the government is exposed to the risk of shouldering hundreds of million
of dollars in debt.
This Court has long and consistently adhered to the legal maxim that those that cannot
be done directly cannot be done indirectly.[58] To declare the PIATCO contracts valid despite
the clear statutory prohibition against a direct government guarantee would not only make
a mockery of what the BOT Law seeks to prevent -- which is to expose the government to
the risk of incurring a monetary obligation resulting from a contract of loan between the
project proponent and its lenders and to which the Government is not a party to -- but would
also render the BOT Law useless for what it seeks to achieve - to make use of the resources
of the private sector in the financing, operation and maintenance of infrastructure and
development projects[59] which are necessary for national growth and development but
which the government, unfortunately, could ill-afford to finance at this point in time.
IV
Temporary takeover of business affected with public interest
Article XII, Section 17 of the 1987 Constitution provides:
Section 17. In times of national emergency, when the public interest so requires, the State
may, during the emergency and under reasonable terms prescribed by it, temporarily take
over or direct the operation of any privately owned public utility or business affected with
public interest.
The above provision pertains to the right of the State in times of national emergency,
and in the exercise of its police power, to temporarily take over the operation of any business
affected with public interest. In the 1986 Constitutional Commission, the term national
emergency was defined to include threat from external aggression, calamities or national
disasters, but not strikes unless it is of such proportion that would paralyze government
service.[60] The duration of the emergency itself is the determining factor as to how long the
temporary takeover by the government would last.[61] The temporary takeover by the
government extends only to the operation of the business and not to the ownership
thereof. As such the government is not required to compensate the private entity-owner of
the said business as there is no transfer of ownership, whether permanent or temporary. The
private entity-owner affected by the temporary takeover cannot, likewise, claim just
compensation for the use of the said business and its properties as the temporary takeover by
the government is in exercise of its police power and not of its power of eminent domain.
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:
Section 5.10 Temporary Take-over of operations by GRP.
.
(c) In the event the development Facility or any part thereof and/or the operations of
Concessionaire or any part thereof, become the subject matter of or be included in any
notice, notification, or declaration concerning or relating to acquisition, seizure or
appropriation by GRP in times of war or national emergency, GRP shall, by written notice to
Concessionaire, immediately take over the operations of the Terminal and/or the Terminal
Complex. During such take over by GRP, the Concession Period shall be suspended; provided,
that upon termination of war, hostilities or national emergency, the operations shall be
returned to Concessionaire, at which time, the Concession period shall commence to run
again. Concessionaire shall be entitled to reasonable compensation for the duration of the
temporary take over by GRP, which compensation shall take into account the reasonable
cost for the use of the Terminal and/or Terminal Complex, (which is in the amount at least
equal to the debt service requirements of Concessionaire, if the temporary take over should
occur at the time when Concessionaire is still servicing debts owed to project lenders), any
loss or damage to the Development Facility, and other consequential damages. If the parties
cannot agree on the reasonable compensation of Concessionaire, or on the liability of GRP as
aforesaid, the matter shall be resolved in accordance with Section 10.01 [Arbitration]. Any
amount determined to be payable by GRP to Concessionaire shall be offset from the amount
next payable by Concessionaire to GRP.[62]
PIATCO cannot, by mere contractual stipulation, contravene the Constitutional
provision on temporary government takeover and obligate the government to pay
reasonable cost for the use of the Terminal and/or Terminal Complex. [63] Article XII, section
17 of the 1987 Constitution envisions a situation wherein the exigencies of the times
necessitate the government to temporarily take over or direct the operation of any privately
owned public utility or business affected with public interest. It is the welfare and interest of
the public which is the paramount consideration in determining whether or not to temporarily
take over a particular business. Clearly, the State in effecting the temporary takeover is
exercising its police power. Police power is the most essential, insistent, and illimitable of
powers.[64] Its exercise therefore must not be unreasonably hampered nor its exercise be a
source of obligation by the government in the absence of damage due to arbitrariness of its
exercise.[65] Thus, requiring the government to pay reasonable compensation for the
reasonable use of the property pursuant to the operation of the business contravenes the
Constitution.
V
Regulation of Monopolies
A monopoly is a privilege or peculiar advantage vested in one or more persons or
companies, consisting in the exclusive right (or power) to carry on a particular business or
trade, manufacture a particular article, or control the sale of a particular commodity. [66] The
1987 Constitution strictly regulates monopolies, whether private or public, and even provides
for their prohibition if public interest so requires. Article XII, Section 19 of the 1987
Constitution states:
Sec. 19. The state shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be allowed.
Clearly, monopolies are not per se prohibited by the Constitution but may be permitted
to exist to aid the government in carrying on an enterprise or to aid in the performance of
various services and functions in the interest of the public.[67] Nonetheless, a determination
must first be made as to whether public interest requires a monopoly. As monopolies are
subject to abuses that can inflict severe prejudice to the public, they are subject to a higher
level of State regulation than an ordinary business undertaking.
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is
granted the exclusive right to operate a commercial international passenger terminal within
the Island of Luzon at the NAIA IPT III.[68] This is with the exception of already existing
international airports in Luzon such as those located in the Subic Bay Freeport Special
Economic Zone (SBFSEZ), Clark Special Economic Zone (CSEZ) and in Laoag City. [69] As such,
upon commencement of PIATCOs operation of NAIA IPT III, Terminals 1 and 2 of NAIA would
cease to function as international passenger terminals. This, however, does not prevent MIAA
to use Terminals 1 and 2 as domestic passenger terminals or in any other manner as it may
deem appropriate except those activities that would compete with NAIA IPT III in the latters
operation as an international passenger terminal. [70] The right granted to PIATCO
to exclusively operate NAIA IPT III would be for a period of twenty-five (25) years from the In-
Service Date[71] and renewable for another twenty-five (25) years at the option of the
government.[72] Both the 1997 Concession Agreement and the ARCA further provide that, in
view of the exclusive right granted to PIATCO, the concession contracts of the service
providers currently servicing Terminals 1 and 2 would no longer be renewed and those
concession contracts whose expiration are subsequent to the In-Service Date would cease
to be effective on the said date.[73]
The operation of an international passenger airport terminal is no doubt an undertaking
imbued with public interest. In entering into a BuildOperate-and-Transfer contract for the
construction, operation and maintenance of NAIA IPT III, the government has determined that
public interest would be served better if private sector resources were used in its construction
and an exclusive right to operate be granted to the private entity undertaking the said project,
in this case PIATCO. Nonetheless, the privilege given to PIATCO is subject to reasonable
regulation and supervision by the Government through the MIAA, which is the government
agency authorized to operate the NAIA complex, as well as DOTC, the department to which
MIAA is attached.[74]
This is in accord with the Constitutional mandate that a monopoly which is not
prohibited must be regulated.[75] While it is the declared policy of the BOT Law to encourage
private sector participation by providing a climate of minimum government regulations,[76] the
same does not mean that Government must completely surrender its sovereign power to
protect public interest in the operation of a public utility as a monopoly. The operation of said
public utility can not be done in an arbitrary manner to the detriment of the public which it
seeks to serve. The right granted to the public utility may be exclusive but the exercise of the
right cannot run riot. Thus, while PIATCO may be authorized to exclusively operate NAIA IPT III
as an international passenger terminal, the Government, through the MIAA, has the right and
the duty to ensure that it is done in accord with public interest. PIATCOs right to operate NAIA
IPT III cannot also violate the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
3.01 Concession Period
(e) GRP confirms that certain concession agreements relative to certain services and
operations currently being undertaken at the Ninoy Aquino International Airport passenger
Terminal I have a validity period extending beyond the In-Service Date. GRP through
DOTC/MIAA, confirms that these services and operations shall not be carried over to the
Terminal and the Concessionaire is under no legal obligation to permit such carry-
over except through a separate agreement duly entered into with Concessionaire. In the
event Concessionaire becomes involved in any litigation initiated by any such concessionaire
or operator, GRP undertakes and hereby holds Concessionaire free and harmless on full
indemnity basis from and against any loss and/or any liability resulting from any such
litigation, including the cost of litigation and the reasonable fees paid or payable to
Concessionaires counsel of choice, all such amounts shall be fully deductible by way of an
offset from any amount which the Concessionaire is bound to pay GRP under this
Agreement.
During the oral arguments on December 10, 2002, the counsel for the petitioners-in-
intervention for G.R. No. 155001 stated that there are two service providers whose contracts
are still existing and whose validity extends beyond the In-Service Date. One contract remains
valid until 2008 and the other until 2010.[77]
We hold that while the service providers presently operating at NAIA Terminal 1 do not
have an absolute right for the renewal or the extension of their respective contracts, those
contracts whose duration extends beyond NAIA IPT IIIs In-Service-Date should not be unduly
prejudiced. These contracts must be respected not just by the parties thereto but also by third
parties. PIATCO cannot, by law and certainly not by contract, render a valid and binding
contract nugatory. PIATCO, by the mere expedient of claiming an exclusive right to operate,
cannot require the Government to break its contractual obligations to the service providers. In
contrast to the arrastre and stevedoring service providers in the case of Anglo-Fil Trading
Corporation v. Lazaro[78] whose contracts consist of temporary hold-over permits, the affected
service providers in the cases at bar, have a valid and binding contract with the Government,
through MIAA, whose period of effectivity, as well as the other terms and conditions thereof,
cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The
provisions of the 1997 Concession Agreement and the ARCA did not strip government, thru
the MIAA, of its right to supervise the operation of the whole NAIA complex, including NAIA
IPT III. As the primary government agency tasked with the job,[79] it is MIAAs responsibility to
ensure that whoever by contract is given the right to operate NAIA IPT III will do so within the
bounds of the law and with due regard to the rights of third parties and above all, the interest
of the public.
VI
CONCLUSION
In sum, this Court rules that in view of the absence of the requisite financial capacity of
the Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the
contract for the construction, operation and maintenance of the NAIA IPT III is null and void.
Further, considering that the 1997 Concession Agreement contains material and substantial
amendments, which amendments had the effect of converting the 1997 Concession
Agreement into an entirely different agreement from the contract bidded upon, the 1997
Concession Agreement is similarly null and void for being contrary to public policy. The
provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession
Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a
direct government guarantee expressly prohibited by, among others, the BOT Law and its
Implementing Rules and Regulations are also null and void. The Supplements, being accessory
contracts to the ARCA, are likewise null and void.
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession
Agreement and the Supplements thereto are set aside for being null and void.
SO ORDERED.
COMMISSION ON HUMAN RIGHTS EMPLOYEES ASSOCIATION (CHREA) Represented by its
President, MARCIAL A. SANCHEZ, JR., petitioner, vs. COMMISSION ON HUMAN
RIGHTS, respondent.
DECISION
CHICO-NAZARIO, J.:
Can the Commission on Human Rights lawfully implement an upgrading and
reclassification of personnel positions without the prior approval of the Department of Budget
and Management?
Before this Court is a petition for review filed by petitioner Commission on Human Rights
Employees Association (CHREA) challenging the Decision[1] dated 29 November 2001 of the
Court of Appeals in CA-G.R. SP No. 59678 affirming the Resolutions[2] dated 16 December 1999
and 09 June 2000 of the Civil Service Commission (CSC), which sustained the validity of the
upgrading and reclassification of certain personnel positions in the Commission on Human
Rights (CHR) despite the disapproval thereof by the Department of Budget and Management
(DBM). Also assailed is the resolution dated 11 September 2002 of the Court of Appeals
denying the motion for reconsideration filed by petitioner.
The antecedent facts which spawned the present controversy are as follows:
On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the
General Appropriations Act of 1998. It provided for Special Provisions Applicable to All
Constitutional Offices Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the
appropriations of the CHR. These special provisions state:
1. Organizational Structure. Any provision of law to the contrary notwithstanding and within
the limits of their respective appropriations as authorized in this Act, the Constitutional
Commissions and Offices enjoying fiscal autonomy are authorized to formulate and
implement the organizational structures of their respective offices, to fix and determine the
salaries, allowances, and other benefits of their personnel, and whenever public interest so
requires, make adjustments in their personal services itemization including, but not limited to,
the transfer of item or creation of new positions in their respective offices: PROVIDED, That
officers and employees whose positions are affected by such reorganization or adjustments
shall be granted retirement gratuities and separation pay in accordance with existing laws,
which shall be payable from any unexpended balance of, or savings in the appropriations of
their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in
accordance with salary rates, allowances and other benefits authorized under compensation
standardization laws.
2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are
hereby authorized to use savings in their respective appropriations for: (a) printing and/or
publication of decisions, resolutions, and training information materials; (b) repair,
maintenance and improvement of central and regional offices, facilities and equipment; (c)
purchase of books, journals, periodicals and equipment; (d) necessary expenses for the
employment of temporary, contractual and casual employees; (e) payment of extraordinary
and miscellaneous expenses, commutable representation and transportation
allowances, and fringe benefits for their officials and employees as may be authorized by law;
and (f) other official purposes, subject to accounting and auditing rules and
regulations. (Emphases supplied)
On the strength of these special provisions, the CHR, through its then Chairperson Aurora
P. Navarette-Recia and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras,
Vicente P. Sibulo, and Jorge R. Coquia, promulgated Resolution No. A98-047 on 04 September
1998, adopting an upgrading and reclassification scheme among selected positions in the
Commission, to wit:
WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special
provisions applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on
organizational structures and authorizes the same to formulate and implement the
organizational structures of their respective offices to fix and determine the salaries,
allowances and other benefits of their personnel and whenever public interest so requires,
make adjustments in the personnel services itemization including, but not limited to, the
transfer of item or creation of new positions in their respective offices: PROVIDED, That
officers and employees whose positions are affected by such reorganization or adjustments
shall be granted retirement gratuities and separation pay in accordance with existing laws,
which shall be payable from any unexpanded balance of, or savings in the appropriations of
their respective offices;
WHEREAS, the Commission on Human Rights is a member of the Constitutional Fiscal
Autonomy Group (CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution
No. 49 adopting internal rules implementing the special provisions heretoforth mentioned;
NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and
authorizes the upgrading and augmentation of the commensurate amount generated from
savings under Personal Services to support the implementation of this resolution effective
Calendar Year 1998;
Let the Human Resources Development Division (HRDD) prepare the necessary Notice of
Salary Adjustment and other appropriate documents to implement this resolution; . . .
.[3] (Emphasis supplied)
Annexed to said resolution is the proposed creation of ten additional plantilla positions,
namely: one Director IV position, with Salary Grade 28 for the Caraga Regional Office, four
Security Officer II with Salary Grade 15, and five Process Servers, with Salary Grade 5 under the
Office of the Commissioners. [4]
On 19 October 1998, CHR issued Resolution No. A98-055[5] providing for the
upgrading or raising of salary grades of the following positions in the Commission:
Position Salary Grade
Number Total Salary
of Requirements
Positions Title
 From To From To ------------------
12 Attorney VI (In Director IV 26 28 P229,104.00
the Regional Total 3 P 85,548.00[7]
Field Offices)
4 Director III 27 28 38,928.00
Director IV
To support the implementation of such scheme, the CHR, in the same resolution,
1 24 28 36,744.00 authorized the augmentation of a commensurate amount generated from savings under
Financial & Director IV Personnel Services.
Management
Officer II By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR collapsed the
vacant positions in the body to provide additional source of funding for said staffing
1 18 24 51,756.00 modification. Among the positions collapsed were: one Attorney III, four Attorney IV, one
Budget Officer Budget
Chemist III, three Special Investigator I, one Clerk III, and one Accounting Clerk II.[8]
III Officer IV
The CHR forwarded said staffing modification and upgrading scheme to the DBM with a
1 18 24 51,756.00 request for its approval, but the then DBM secretary Benjamin Diokno denied the request on
Accountant III Chief
Accountant the following justification:

1 18 24 51,756.00 Based on the evaluations made the request was not favorably considered as it effectively
Cashier III Cashier V
involved the elevation of the field units from divisions to services.
1 24 28 36,744.00[6]
Information Director IV
The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26
Officer V
to Director IV, SG-28. This would elevate the field units to a bureau or regional office, a level
even higher than the one previously denied.
It, likewise, provided for the creation and upgrading of the following positions:
The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in
A. Creation the Central Office in effect would elevate the services to Office and change the context from
support to substantive without actual change in functions.
Position Title Salary Grade Total Salary
Number of Requirements In the absence of a specific provision of law which may be used as a legal basis to elevate the
Positions level of divisions to a bureau or regional office, and the services to offices, we reiterate our
previous stand denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to
4 15 684,780.00
Security Officer II Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3)
(Coterminous) Director III, SG-27 to Director IV, SG-28 in the Central Office.

As represented, President Ramos then issued a Memorandum to the DBM Secretary dated
B. Upgrading 10 December 1997, directing the latter to increase the number of Plantilla positions in the
CHR both Central and Regional Offices to implement the Philippine Decade Plan on Human
Number of Position Title Salary Grade Total Salary Rights Education, the Philippine Human Rights Plan and Barangay Rights Actions Center in
Positions Requirements accordance with existing laws. (Emphasis in the original)
From To From To
1 Attorney V Director IV 25 28 P28,092.00 Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY
2 Security 11 15 57,456.00 1998, no organizational unit or changes in key positions shall be authorized unless provided
Officer I Security by law or directed by the President, thus, the creation of a Finance Management Office and a
Officer II Public Affairs Office cannot be given favorable recommendation.
Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the
Compensation Standardization Law, the Department of Budget and Management is directed
to establish and administer a unified compensation and position classification system in the
government. The Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R.
No. 119155, dated January 30, 1996, that this Department has the sole power and discretion
to administer the compensation and position classification system of the National
Government.
Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification
and Compensation System established under RA 6758 more popularly known as the
Compensation Standardization Law. We therefore reiterate our previous stand on the
matter.[9] (Emphases supplied)
In light of the DBMs disapproval of the proposed personnel modification scheme, the
CSC-National Capital Region Office, through a memorandum dated 29 March 1999,
recommended to the CSC-Central Office that the subject appointments be rejected owing to
the DBMs disapproval of the plantilla reclassification.
Meanwhile, the officers of petitioner CHREA, in representation of the rank and file
employees of the CHR, requested the CSC-Central Office to affirm the recommendation of the
CSC-Regional Office. CHREA stood its ground in saying that the DBM is the only agency with
appropriate authority mandated by law to evaluate and approve matters of reclassification
and upgrading, as well as creation of positions.
The CSC-Central Office denied CHREAs request in a Resolution dated 16 December 1999,
and reversed the recommendation of the CSC-Regional Office that the upgrading scheme be
censured. The decretal portion of which reads:
WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George
Q. Dumlao [and], Corazon A. Santos-Tiu, is hereby denied.[10]
CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same
on 09 June 2000.
Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA
elevated the matter to the Court of Appeals. The Court of Appeals affirmed the
pronouncement of the CSC-Central Office and upheld the validity of the upgrading, retitling,
and reclassification scheme in the CHR on the justification that such action is within the ambit
of CHRs fiscal autonomy. The fallo of the Court of Appeals decision provides:
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the
questioned Civil Service Commission Resolution No. 99-2800 dated December 16, 1999 as
well as No. 001354 dated June 9, 2000, are hereby AFFIRMED. No cost.[11]
Unperturbed, petitioner filed this petition in this Court contending that:
A.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987
CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.
B.
THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF THE
COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL
APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING IN SHARP CONFLICT
WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.
C.
THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY OF
THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS THAT
OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN STATING THAT THE COMMISSION ON
HUMAN RIGHTS ENJOYS FISCAL AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT
THIS FISCAL AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN COLLAPSING, UPGRADING
AND RECLASSIFICATION OF POSITIONS THEREIN.[12]
The central question we must answer in order to resolve this case is: Can the Commission
on Human Rights validly implement an upgrading, reclassification, creation, and collapsing
of plantilla positions in the Commission without the prior approval of the Department of
Budget and Management?
Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both
erred in sanctioning the CHRs alleged blanket authority to upgrade, reclassify, and create
positions inasmuch as the approval of the DBM relative to such scheme is still indispensable.
Petitioner bewails that the CSC and the Court of Appeals erroneously assumed that CHR enjoys
fiscal autonomy insofar as financial matters are concerned, particularly with regard to the
upgrading and reclassification of positions therein.
Respondent CHR sharply retorts that petitioner has no locus standi considering that
there exists no official written record in the Commission recognizing petitioner as a bona
fide organization of its employees nor is there anything in the records to show that its
president, Marcial A. Sanchez, Jr., has the authority to sue the CHR. The CHR contends that it
has the authority to cause the upgrading, reclassification, plantilla creation, and collapsing
scheme sans the approval of the DBM because it enjoys fiscal autonomy.
After a thorough consideration of the arguments of both parties and an assiduous
scrutiny of the records in the case at bar, it is the Courts opinion that the present petition is
imbued with merit.
On petitioners personality to bring this suit, we held in a multitude of cases that a proper
party is one who has sustained or is in immediate danger of sustaining an injury as a result of
the act complained of.[13] Here, petitioner, which consists of rank and file employees of
respondent CHR, protests that the upgrading and collapsing of positions benefited only a select
few in the upper level positions in the Commission resulting to the demoralization of the rank
and file employees. This sufficiently meets the injury test. Indeed, the CHRs upgrading scheme,
if found to be valid, potentially entails eating up the Commissions savings or that portion of its
budgetary pie otherwise allocated for Personnel Services, from which the benefits of the
employees, including those in the rank and file, are derived.
Further, the personality of petitioner to file this case was recognized by the CSC when it
took cognizance of the CHREAs request to affirm the recommendation of the CSC-National
Capital Region Office. CHREAs personality to bring the suit was a non-issue in the Court of
Appeals when it passed upon the merits of this case. Thus, neither should our hands be tied
by this technical concern. Indeed, it is settled jurisprudence that an issue that was neither
raised in the complaint nor in the court below cannot be raised for the first time on appeal, as
to do so would be offensive to the basic rules of fair play, justice, and due process.[14]
We now delve into the main issue of whether or not the approval by the DBM is a
condition precedent to the enactment of an upgrading, reclassification, creation and collapsing
of plantilla positions in the CHR.
Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised
Compensation and Position Classification System in the Government and For Other Purposes,
or the Salary Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4
thereof that it is the DBM that shall establish and administer a unified Compensation and
Position Classification System. Thus:
SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal
pay for substantially equal work and to base differences in pay upon substantive differences
in duties and responsibilities, and qualification requirements of the positions. In determining
rates of pay, due regard shall be given to, among others, prevailing rates in the private sector
for comparable work. For this purpose, the Department of Budget and Management (DBM) is
hereby directed to establish and administer a unified Compensation and Position
Classification System, hereinafter referred to as the System as provided for in Presidential
Decree No. 985, as amended, that shall be applied for all government entities, as mandated
by the Constitution. (Emphasis supplied.)
SEC. 4. Coverage. The Compensation and Position Classification System herein provided shall
apply to all positions, appointive or elective, on full or part-time basis, now existing or
hereafter created in the government, including government-owned or controlled corporations
and government financial institutions.
The term government refers to the Executive, the Legislative and the Judicial Branches and
the Constitutional Commissions and shall include all, but shall not be limited to,
departments, bureaus, offices, boards, commissions, courts, tribunals, councils, authorities,
administrations, centers, institutes, state colleges and universities, local government units,
and the armed forces. The term government-owned or controlled corporations and financial
institutions shall include all corporations and financial institutions owned or controlled by the
National Government, whether such corporations and financial institutions perform
governmental or proprietary functions. (Emphasis supplied.)
The disputation of the Court of Appeals that the CHR is exempt from the long arm of the
Salary Standardization Law is flawed considering that the coverage thereof, as defined above,
encompasses the entire gamut of government offices, sans qualification.
This power to administer is not purely ministerial in character as erroneously held by the
Court of Appeals. The word to administer means to control or regulate in behalf of others; to
direct or superintend the execution, application or conduct of; and to manage or conduct public
affairs, as to administer the government of the state.[15]
The regulatory power of the DBM on matters of compensation is encrypted not only in
law, but in jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v.
Jesusito L. Buag,[16] this Court, speaking through Mr. Justice Reynato Puno, ruled that
compensation, allowances, and other benefits received by PRA officials and employees
without the requisite approval or authority of the DBM are unauthorized and irregular. In the
words of the Court
Despite the power granted to the Board of Directors of PRA to establish and fix a
compensation and benefits scheme for its employees, the same is subject to the review of
the Department of Budget and Management. However, in view of the express powers
granted to PRA under its charter, the extent of the review authority of the Department of
Budget and Management is limited. As stated in Intia, the task of the Department of Budget
and Management is simply to review the compensation and benefits plan of the government
agency or entity concerned and determine if the same complies with the prescribed policies
and guidelines issued in this regard. The role of the Department of Budget and Management
is supervisorial in nature, its main duty being to ascertain that the proposed compensation,
benefits and other incentives to be given to PRA officials and employees adhere to the
policies and guidelines issued in accordance with applicable laws.
In Victorina Cruz v. Court of Appeals,[17] we held that the DBM has the sole power and
discretion to administer the compensation and position classification system of the national
government.
In Intia, Jr. v. Commission on Audit,[18] the Court held that although the charter[19] of the
Philippine Postal Corporation (PPC) grants it the power to fix the compensation and benefits
of its employees and exempts PPC from the coverage of the rules and regulations of the
Compensation and Position Classification Office, by virtue of Section 6 of P.D. No. 1597, the
compensation system established by the PPC is, nonetheless, subject to the review of the DBM.
This Court intoned:
It should be emphasized that the review by the DBM of any PPC resolution affecting the
compensation structure of its personnel should not be interpreted to mean that the DBM can
dictate upon the PPC Board of Directors and deprive the latter of its discretion on the matter.
Rather, the DBMs function is merely to ensure that the action taken by the Board of Directors
complies with the requirements of the law, specifically, that PPCs compensation system
conforms as closely as possible with that provided for under R.A. No. 6758. (Emphasis
supplied.)
As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the
DBM must first be sought prior to implementation of any reclassification or upgrading of
positions in government. This is consonant to the mandate of the DBM under the Revised
Administrative Code of 1987, Section 3, Chapter 1, Title XVII, to wit:
SEC. 3. Powers and Functions. The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation,
execution and control of the National Budget, preparation and maintenance of accounting
systems essential to the budgetary process, achievement of more economy and efficiency in
the management of government operations, administration of compensation and position
classification systems, assessment of organizational effectiveness and review and evaluation
of legislative proposals having budgetary or organizational implications. (Emphasis supplied.)
Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading,
reclassification, and creation of additional plantilla positions in the CHR based on its finding
that such scheme lacks legal justification.
Notably, the CHR itself recognizes the authority of the DBM to deny or approve
the proposed reclassification of positions as evidenced by its three letters to the DBM
requesting approval thereof. As such, it is now estopped from now claiming that the nod of
approval it has previously sought from the DBM is a superfluity.
The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office
that the CHR is a constitutional commission, and as such enjoys fiscal autonomy.[20]
Palpably, the Court of Appeals Decision was based on the mistaken premise that the CHR
belongs to the species of constitutional commissions. But, Article IX of the Constitution states
in no uncertain terms that only the CSC, the Commission on Elections, and the Commission on
Audit shall be tagged as Constitutional Commissions with the appurtenant right to fiscal
autonomy. Thus:
Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit.
Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations
shall be automatically and regularly released.
Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book
II on Distribution of Powers of Government, the constitutional commissions shall include only
the Civil Service Commission, the Commission on Elections, and the Commission on Audit,
which are granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29
thereof, is silent on the grant of similar powers to the other bodies including the CHR. Thus:
SEC. 24. Constitutional Commissions. The Constitutional Commissions, which shall be
independent, are the Civil Service Commission, the Commission on Elections, and the
Commission on Audit.
SEC. 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The
approved annual appropriations shall be automatically and regularly released.
SEC. 29. Other Bodies. There shall be in accordance with the Constitution, an Office of the
Ombudsman, a Commission on Human Rights, and independent central monetary authority,
and a national police commission. Likewise, as provided in the Constitution, Congress may
establish an independent economic and planning agency. (Emphasis ours.)
From the 1987 Constitution and the Administrative Code, it is abundantly clear that the
CHR is not among the class of Constitutional Commissions. As expressed in the oft-repeated
maxim expressio unius est exclusio alterius, the express mention of one person, thing, act or
consequence excludes all others. Stated otherwise, expressium facit cessare tacitum what is
expressed puts an end to what is implied.[21]
Nor is there any legal basis to support the contention that the CHR enjoys fiscal
autonomy. In essence, fiscal autonomy entails freedom from outside control and limitations,
other than those provided by law. It is the freedom to allocate and utilize funds granted by
law, in accordance with law, and pursuant to the wisdom and dispatch its needs may require
from time to time.[22] In Blaquera v. Alcala and Bengzon v. Drilon,[23] it is understood that it is
only the Judiciary, the Civil Service Commission, the Commission on Audit, the Commission on
Elections, and the Office of the Ombudsman, which enjoy fiscal autonomy. Thus,
in Bengzon,[24] we explained:
As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil
Service Commission, the Commission on Audit, the Commission on Elections, and the Office
of the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their
resources with the wisdom and dispatch that their needs require. It recognizes the power
and authority to levy, assess and collect fees, fix rates of compensation not exceeding the
highest rates authorized by law for compensation and pay plans of the government and
allocate and disburse such sums as may be provided by law or prescribed by them in the
course of the discharge of their functions.
...
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The
imposition of restrictions and constraints on the manner the independent constitutional
offices allocate and utilize the funds appropriated for their operations is anathema to fiscal
autonomy and violative not only of the express mandate of the Constitution but especially as
regards the Supreme Court, of the independence and separation of powers upon which the
entire fabric of our constitutional system is based. In the interest of comity and cooperation,
the Supreme Court, [the] Constitutional Commissions, and the Ombudsman have so far
limited their objections to constant reminders. We now agree with the petitioners that this
grant of autonomy should cease to be a meaningless provision. (Emphasis supplied.)
Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal
Autonomy Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a
constitutional grant, not a tag obtainable by membership.
We note with interest that the special provision under Rep. Act No. 8522, while cited
under the heading of the CHR, did not specifically mention CHR as among those offices to
which the special provision to formulate and implement organizational structures apply, but
merely states its coverage to include Constitutional Commissions and Offices enjoying fiscal
autonomy. In contrast, the Special Provision Applicable to the Judiciary under Article XXVIII of
the General Appropriations Act of 1998 specifically mentions that such special provision
applies to the judiciary and had categorically authorized the Chief Justice of the Supreme Court
to formulate and implement the organizational structure of the Judiciary, to wit:
1. Organizational Structure. Any provision of law to the contrary notwithstanding and within
the limits of their respective appropriations authorized in this Act, the Chief Justice of the
Supreme Court is authorized to formulate and implement organizational structure of the
Judiciary, to fix and determine the salaries, allowances, and other benefits of their personnel,
and whenever public interest so requires, make adjustments in the personal services
itemization including, but not limited to, the transfer of item or creation of new positions in
the Judiciary; PROVIDED, That officers and employees whose positions are affected by such
reorganization or adjustments shall be granted retirement gratuities and separation pay in
accordance with existing law, which shall be payable from any unexpended balance of, or
savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the
implementation hereof shall be in accordance with salary rates, allowances and other
benefits authorized under compensation standardization laws. (Emphasis supplied.)
All told, the CHR, although admittedly a constitutional creation is, nonetheless, not
included in the genus of offices accorded fiscal autonomy by constitutional or legislative fiat.
Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of
the DBM that the grant of fiscal autonomy notwithstanding, all government offices must, all
the same, kowtow to the Salary Standardization Law. We are of the same mind with the DBM
on its standpoint, thus-
Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification
and Compensation System established under RA 6758 more popularly known as the
Compensation Standardization Law.[25](Emphasis supplied.)
The most lucid argument against the stand of respondent, however, is the provision of
Rep. Act No. 8522 that the implementation hereof shall be in accordance with salary rates,
allowances and other benefits authorized under compensation standardization laws.[26]
Indeed, the law upon which respondent heavily anchors its case upon has expressly
provided that any form of adjustment in the organizational structure must be within the
parameters of the Salary Standardization Law.
The Salary Standardization Law has gained impetus in addressing one of the basic causes
of discontent of many civil servants.[27] For this purpose, Congress has delegated to the DBM
the power to administer the Salary Standardization Law and to ensure that the spirit behind it
is observed. This power is part of the system of checks and balances or system of restraints in
our government. The DBMs exercise of such authority is not in itself an arrogation inasmuch
as it is pursuant to the paramount law of the land, the Salary Standardization Law and the
Administrative Code.
In line with its role to breathe life into the policy behind the Salary Standardization Law
of providing equal pay for substantially equal work and to base differences in pay upon
substantive differences in duties and responsibilities, and qualification requirements of the
positions, the DBM, in the case under review, made a determination, after a thorough
evaluation, that the reclassification and upgrading scheme proposed by the CHR lacks legal
rationalization.
The DBM expounded that Section 78 of the general provisions of the General
Appropriations Act FY 1998, which the CHR heavily relies upon to justify its reclassification
scheme, explicitly provides that no organizational unit or changes in key positions shall be
authorized unless provided by law or directed by the President. Here, the DBM discerned that
there is no law authorizing the creation of a Finance Management Office and a Public Affairs
Office in the CHR. Anent CHRs proposal to upgrade twelve positions of Attorney VI, SG-26 to
Director IV, SG-28, and four positions of Director III, SG-27 to Director IV, SG-28, in the Central
Office, the DBM denied the same as this would change the context from support to substantive
without actual change in functions.
This view of the DBM, as the laws designated body to implement and administer a unified
compensation system, is beyond cavil. The interpretation of an administrative government
agency, which is tasked to implement a statute is accorded great respect and ordinarily
controls the construction of the courts. In Energy Regulatory Board v. Court of Appeals,[28] we
echoed the basic rule that the courts will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of activities coming
under the special technical knowledge and training of such agencies.
To be sure, considering his expertise on matters affecting the nations coffers, the
Secretary of the DBM, as the Presidents alter ego, knows from where he speaks inasmuch as
he has the front seat view of the adverse effects of an unwarranted upgrading or creation of
positions in the CHR in particular and in the entire government in general.
WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the
Court of Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are
hereby REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service
Commision-National Capital Region is REINSTATED. The Commission on Human Rights
Resolution No. A98-047 dated 04 September 1998, Resolution No. A98-055 dated 19 October
1998 and Resolution No. A98-062 dated 17 November 1998 without the approval of the
Department of Budget and Management are disallowed. No pronouncement as to costs.
SO ORDERED.
Puno, Acting C.J., Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
COMMISSION ON HUMAN RIGHTS EMPLOYEES ASSOCIATION (CHREA) Represented by its
President, MARCIAL A. SANCHEZ, JR., petitioner, vs. COMMISSION ON HUMAN
RIGHTS, respondent.
DECISION
CHICO-NAZARIO, J.:
Can the Commission on Human Rights lawfully implement an upgrading and
reclassification of personnel positions without the prior approval of the Department of Budget
and Management?
Before this Court is a petition for review filed by petitioner Commission on Human Rights
Employees Association (CHREA) challenging the Decision[1] dated 29 November 2001 of the
Court of Appeals in CA-G.R. SP No. 59678 affirming the Resolutions[2] dated 16 December 1999
and 09 June 2000 of the Civil Service Commission (CSC), which sustained the validity of the
upgrading and reclassification of certain personnel positions in the Commission on Human
Rights (CHR) despite the disapproval thereof by the Department of Budget and Management
(DBM). Also assailed is the resolution dated 11 September 2002 of the Court of Appeals
denying the motion for reconsideration filed by petitioner.
The antecedent facts which spawned the present controversy are as follows:
On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the
General Appropriations Act of 1998. It provided for Special Provisions Applicable to All
Constitutional Offices Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the
appropriations of the CHR. These special provisions state:
1. Organizational Structure. Any provision of law to the contrary notwithstanding and within
the limits of their respective appropriations as authorized in this Act, the Constitutional
Commissions and Offices enjoying fiscal autonomy are authorized to formulate and
implement the organizational structures of their respective offices, to fix and determine the
salaries, allowances, and other benefits of their personnel, and whenever public interest so
requires, make adjustments in their personal services itemization including, but not limited to,
the transfer of item or creation of new positions in their respective offices: PROVIDED, That
officers and employees whose positions are affected by such reorganization or adjustments
shall be granted retirement gratuities and separation pay in accordance with existing laws,
which shall be payable from any unexpended balance of, or savings in the appropriations of
their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in
accordance with salary rates, allowances and other benefits authorized under compensation
standardization laws.
2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are
hereby authorized to use savings in their respective appropriations for: (a) printing and/or
publication of decisions, resolutions, and training information materials; (b) repair,
maintenance and improvement of central and regional offices, facilities and equipment; (c)
purchase of books, journals, periodicals and equipment; (d) necessary expenses for the
employment of temporary, contractual and casual employees; (e) payment of extraordinary
and miscellaneous expenses, commutable representation and transportation
allowances, and fringe benefits for their officials and employees as may be authorized by law;
and (f) other official purposes, subject to accounting and auditing rules and
regulations. (Emphases supplied)
On the strength of these special provisions, the CHR, through its then Chairperson Aurora
P. Navarette-Recia and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras,
Vicente P. Sibulo, and Jorge R. Coquia, promulgated Resolution No. A98-047 on 04 September
1998, adopting an upgrading and reclassification scheme among selected positions in the
Commission, to wit:
WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special
provisions applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on
organizational structures and authorizes the same to formulate and implement the
organizational structures of their respective offices to fix and determine the salaries,
allowances and other benefits of their personnel and whenever public interest so requires,
make adjustments in the personnel services itemization including, but not limited to, the
transfer of item or creation of new positions in their respective offices: PROVIDED, That
officers and employees whose positions are affected by such reorganization or adjustments
shall be granted retirement gratuities and separation pay in accordance with existing laws,
which shall be payable from any unexpanded balance of, or savings in the appropriations of
their respective offices;
WHEREAS, the Commission on Human Rights is a member of the Constitutional Fiscal
Autonomy Group (CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution
No. 49 adopting internal rules implementing the special provisions heretoforth mentioned;
NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and
authorizes the upgrading and augmentation of the commensurate amount generated from
savings under Personal Services to support the implementation of this resolution effective
Calendar Year 1998;
Let the Human Resources Development Division (HRDD) prepare the necessary Notice of
Salary Adjustment and other appropriate documents to implement this resolution; . . .
.[3] (Emphasis supplied)
Annexed to said resolution is the proposed creation of ten additional plantilla positions,
namely: one Director IV position, with Salary Grade 28 for the Caraga Regional Office, four
Security Officer II with Salary Grade 15, and five Process Servers, with Salary Grade 5 under the
Office of the Commissioners. [4]
On 19 October 1998, CHR issued Resolution No. A98-055[5] providing for the
upgrading or raising of salary grades of the following positions in the Commission:
Position Salary Grade
Number of Total
Positions
Title
From To From To
 12 Attorney VI (In the Director IV 26 28 P229,104.00
Total 3 P
Regional Field
Offices)
4 Director III 27 28 38,928.00 To support the implementation of such scheme, the CHR, in the same resolution,
Director IV authorized the augmentation of a commensurate amount generated from savings under
Personnel Services.
1 24 28 36,744.00
Financial & Director IV
By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR collapsed the
Management
vacant positions in the body to provide additional source of funding for said staffing
Officer II
modification. Among the positions collapsed were: one Attorney III, four Attorney IV, one
1 18 24 Chemist III, three Special Investigator I, one Clerk III, and one Accounting Clerk II.[8]
51,756.00
Budget Officer III Budget Officer
IV 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 on
1 18 24 51,756.00
the following justification:
Accountant III Chief
Accountant
Based on the evaluations made the request was not favorably considered as it effectively
1 18 24 involved the elevation of the field units from divisions to services.
51,756.00
Cashier III Cashier V

1 24 28 The present
36,744.00 [6] proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26
Information Director IV to Director IV, SG-28. This would elevate the field units to a bureau or regional office, a level
Officer V even higher than the one previously denied.

It, likewise, provided for the creation and upgrading of the following positions: The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in
the Central Office in effect would elevate the services to Office and change the context from
A. Creation support to substantive without actual change in functions.

Position Title Salary Grade Total Salary In the absence of a specific provision of law which may be used as a legal basis to elevate the
Number of Requirements level of divisions to a bureau or regional office, and the services to offices, we reiterate our
Positions previous stand denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to
Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3)
4 15 684,780.00 Director III, SG-27 to Director IV, SG-28 in the Central Office.
Security Officer II
(Coterminous)
As represented, President Ramos then issued a Memorandum to the DBM Secretary dated
10 December 1997, directing the latter to increase the number of Plantilla positions in the
B. Upgrading CHR both Central and Regional Offices to implement the Philippine Decade Plan on Human
Rights Education, the Philippine Human Rights Plan and Barangay Rights Actions Center in
accordance with existing laws. (Emphasis in the original)
Number of Position Title Salary Grade Total Salary
Positions Requirements
From To From To Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY
1 Attorney V Director IV 25 28 1998, no organizational unit or changes in key positions shall be authorized unless provided
P28,092.00
by law or directed by the President, thus, the creation of a Finance Management Office and a
2 Security Officer I 11 15 57,456.00
Security Officer Public Affairs Office cannot be given favorable recommendation.
II
Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the
------------------
Compensation Standardization Law, the Department of Budget and Management is directed
to establish and administer a unified compensation and position classification system in the
government. The Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R.
No. 119155, dated January 30, 1996, that this Department has the sole power and discretion
to administer the compensation and position classification system of the National
Government.
Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification
and Compensation System established under RA 6758 more popularly known as the
Compensation Standardization Law. We therefore reiterate our previous stand on the
matter.[9] (Emphases supplied)
In light of the DBMs disapproval of the proposed personnel modification scheme, the
CSC-National Capital Region Office, through a memorandum dated 29 March 1999,
recommended to the CSC-Central Office that the subject appointments be rejected owing to
the DBMs disapproval of the plantilla reclassification.
Meanwhile, the officers of petitioner CHREA, in representation of the rank and file
employees of the CHR, requested the CSC-Central Office to affirm the recommendation of the
CSC-Regional Office. CHREA stood its ground in saying that the DBM is the only agency with
appropriate authority mandated by law to evaluate and approve matters of reclassification
and upgrading, as well as creation of positions.
The CSC-Central Office denied CHREAs request in a Resolution dated 16 December 1999,
and reversed the recommendation of the CSC-Regional Office that the upgrading scheme be
censured. The decretal portion of which reads:
WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George
Q. Dumlao [and], Corazon A. Santos-Tiu, is hereby denied.[10]
CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same
on 09 June 2000.
Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA
elevated the matter to the Court of Appeals. The Court of Appeals affirmed the
pronouncement of the CSC-Central Office and upheld the validity of the upgrading, retitling,
and reclassification scheme in the CHR on the justification that such action is within the ambit
of CHRs fiscal autonomy. The fallo of the Court of Appeals decision provides:
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the
questioned Civil Service Commission Resolution No. 99-2800 dated December 16, 1999 as
well as No. 001354 dated June 9, 2000, are hereby AFFIRMED. No cost.[11]
Unperturbed, petitioner filed this petition in this Court contending that:
A.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987
CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.
B.
THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF THE
COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL
APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING IN SHARP CONFLICT
WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.
C.
THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY OF
THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS THAT
OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN STATING THAT THE COMMISSION ON
HUMAN RIGHTS ENJOYS FISCAL AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT
THIS FISCAL AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN COLLAPSING, UPGRADING
AND RECLASSIFICATION OF POSITIONS THEREIN.[12]
The central question we must answer in order to resolve this case is: Can the Commission
on Human Rights validly implement an upgrading, reclassification, creation, and collapsing
of plantilla positions in the Commission without the prior approval of the Department of
Budget and Management?
Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both
erred in sanctioning the CHRs alleged blanket authority to upgrade, reclassify, and create
positions inasmuch as the approval of the DBM relative to such scheme is still indispensable.
Petitioner bewails that the CSC and the Court of Appeals erroneously assumed that CHR enjoys
fiscal autonomy insofar as financial matters are concerned, particularly with regard to the
upgrading and reclassification of positions therein.
Respondent CHR sharply retorts that petitioner has no locus standi considering that
there exists no official written record in the Commission recognizing petitioner as a bona
fide organization of its employees nor is there anything in the records to show that its
president, Marcial A. Sanchez, Jr., has the authority to sue the CHR. The CHR contends that it
has the authority to cause the upgrading, reclassification, plantilla creation, and collapsing
scheme sans the approval of the DBM because it enjoys fiscal autonomy.
After a thorough consideration of the arguments of both parties and an assiduous
scrutiny of the records in the case at bar, it is the Courts opinion that the present petition is
imbued with merit.
On petitioners personality to bring this suit, we held in a multitude of cases that a proper
party is one who has sustained or is in immediate danger of sustaining an injury as a result of
the act complained of.[13] Here, petitioner, which consists of rank and file employees of
respondent CHR, protests that the upgrading and collapsing of positions benefited only a select
few in the upper level positions in the Commission resulting to the demoralization of the rank
and file employees. This sufficiently meets the injury test. Indeed, the CHRs upgrading scheme,
if found to be valid, potentially entails eating up the Commissions savings or that portion of its
budgetary pie otherwise allocated for Personnel Services, from which the benefits of the
employees, including those in the rank and file, are derived.
Further, the personality of petitioner to file this case was recognized by the CSC when it
took cognizance of the CHREAs request to affirm the recommendation of the CSC-National
Capital Region Office. CHREAs personality to bring the suit was a non-issue in the Court of
Appeals when it passed upon the merits of this case. Thus, neither should our hands be tied
by this technical concern. Indeed, it is settled jurisprudence that an issue that was neither
raised in the complaint nor in the court below cannot be raised for the first time on appeal, as
to do so would be offensive to the basic rules of fair play, justice, and due process.[14]
We now delve into the main issue of whether or not the approval by the DBM is a
condition precedent to the enactment of an upgrading, reclassification, creation and collapsing
of plantilla positions in the CHR.
Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised
Compensation and Position Classification System in the Government and For Other Purposes,
or the Salary Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4
thereof that it is the DBM that shall establish and administer a unified Compensation and
Position Classification System. Thus:
SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal
pay for substantially equal work and to base differences in pay upon substantive differences
in duties and responsibilities, and qualification requirements of the positions. In determining
rates of pay, due regard shall be given to, among others, prevailing rates in the private sector
for comparable work. For this purpose, the Department of Budget and Management (DBM) is
hereby directed to establish and administer a unified Compensation and Position
Classification System, hereinafter referred to as the System as provided for in Presidential
Decree No. 985, as amended, that shall be applied for all government entities, as mandated
by the Constitution. (Emphasis supplied.)
SEC. 4. Coverage. The Compensation and Position Classification System herein provided shall
apply to all positions, appointive or elective, on full or part-time basis, now existing or
hereafter created in the government, including government-owned or controlled corporations
and government financial institutions.
The term government refers to the Executive, the Legislative and the Judicial Branches and
the Constitutional Commissions and shall include all, but shall not be limited to,
departments, bureaus, offices, boards, commissions, courts, tribunals, councils, authorities,
administrations, centers, institutes, state colleges and universities, local government units,
and the armed forces. The term government-owned or controlled corporations and financial
institutions shall include all corporations and financial institutions owned or controlled by the
National Government, whether such corporations and financial institutions perform
governmental or proprietary functions. (Emphasis supplied.)
The disputation of the Court of Appeals that the CHR is exempt from the long arm of the
Salary Standardization Law is flawed considering that the coverage thereof, as defined above,
encompasses the entire gamut of government offices, sans qualification.
This power to administer is not purely ministerial in character as erroneously held by the
Court of Appeals. The word to administer means to control or regulate in behalf of others; to
direct or superintend the execution, application or conduct of; and to manage or conduct public
affairs, as to administer the government of the state.[15]
The regulatory power of the DBM on matters of compensation is encrypted not only in
law, but in jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v.
Jesusito L. Buag,[16] this Court, speaking through Mr. Justice Reynato Puno, ruled that
compensation, allowances, and other benefits received by PRA officials and employees
without the requisite approval or authority of the DBM are unauthorized and irregular. In the
words of the Court
Despite the power granted to the Board of Directors of PRA to establish and fix a
compensation and benefits scheme for its employees, the same is subject to the review of
the Department of Budget and Management. However, in view of the express powers
granted to PRA under its charter, the extent of the review authority of the Department of
Budget and Management is limited. As stated in Intia, the task of the Department of Budget
and Management is simply to review the compensation and benefits plan of the government
agency or entity concerned and determine if the same complies with the prescribed policies
and guidelines issued in this regard. The role of the Department of Budget and Management
is supervisorial in nature, its main duty being to ascertain that the proposed compensation,
benefits and other incentives to be given to PRA officials and employees adhere to the
policies and guidelines issued in accordance with applicable laws.
In Victorina Cruz v. Court of Appeals,[17] we held that the DBM has the sole power and
discretion to administer the compensation and position classification system of the national
government.
In Intia, Jr. v. Commission on Audit,[18] the Court held that although the charter[19] of the
Philippine Postal Corporation (PPC) grants it the power to fix the compensation and benefits
of its employees and exempts PPC from the coverage of the rules and regulations of the
Compensation and Position Classification Office, by virtue of Section 6 of P.D. No. 1597, the
compensation system established by the PPC is, nonetheless, subject to the review of the DBM.
This Court intoned:
It should be emphasized that the review by the DBM of any PPC resolution affecting the
compensation structure of its personnel should not be interpreted to mean that the DBM can
dictate upon the PPC Board of Directors and deprive the latter of its discretion on the matter.
Rather, the DBMs function is merely to ensure that the action taken by the Board of Directors
complies with the requirements of the law, specifically, that PPCs compensation system
conforms as closely as possible with that provided for under R.A. No. 6758. (Emphasis
supplied.)
As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the
DBM must first be sought prior to implementation of any reclassification or upgrading of
positions in government. This is consonant to the mandate of the DBM under the Revised
Administrative Code of 1987, Section 3, Chapter 1, Title XVII, to wit:
SEC. 3. Powers and Functions. The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation,
execution and control of the National Budget, preparation and maintenance of accounting
systems essential to the budgetary process, achievement of more economy and efficiency in
the management of government operations, administration of compensation and position
classification systems, assessment of organizational effectiveness and review and evaluation
of legislative proposals having budgetary or organizational implications. (Emphasis supplied.)
Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading,
reclassification, and creation of additional plantilla positions in the CHR based on its finding
that such scheme lacks legal justification.
Notably, the CHR itself recognizes the authority of the DBM to deny or approve
the proposed reclassification of positions as evidenced by its three letters to the DBM
requesting approval thereof. As such, it is now estopped from now claiming that the nod of
approval it has previously sought from the DBM is a superfluity.
The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office
that the CHR is a constitutional commission, and as such enjoys fiscal autonomy.[20]
Palpably, the Court of Appeals Decision was based on the mistaken premise that the CHR
belongs to the species of constitutional commissions. But, Article IX of the Constitution states
in no uncertain terms that only the CSC, the Commission on Elections, and the Commission on
Audit shall be tagged as Constitutional Commissions with the appurtenant right to fiscal
autonomy. Thus:
Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit.
Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations
shall be automatically and regularly released.
Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book
II on Distribution of Powers of Government, the constitutional commissions shall include only
the Civil Service Commission, the Commission on Elections, and the Commission on Audit,
which are granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29
thereof, is silent on the grant of similar powers to the other bodies including the CHR. Thus:
SEC. 24. Constitutional Commissions. The Constitutional Commissions, which shall be
independent, are the Civil Service Commission, the Commission on Elections, and the
Commission on Audit.
SEC. 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The
approved annual appropriations shall be automatically and regularly released.
SEC. 29. Other Bodies. There shall be in accordance with the Constitution, an Office of the
Ombudsman, a Commission on Human Rights, and independent central monetary authority,
and a national police commission. Likewise, as provided in the Constitution, Congress may
establish an independent economic and planning agency. (Emphasis ours.)
From the 1987 Constitution and the Administrative Code, it is abundantly clear that the
CHR is not among the class of Constitutional Commissions. As expressed in the oft-repeated
maxim expressio unius est exclusio alterius, the express mention of one person, thing, act or
consequence excludes all others. Stated otherwise, expressium facit cessare tacitum what is
expressed puts an end to what is implied.[21]
Nor is there any legal basis to support the contention that the CHR enjoys fiscal
autonomy. In essence, fiscal autonomy entails freedom from outside control and limitations,
other than those provided by law. It is the freedom to allocate and utilize funds granted by
law, in accordance with law, and pursuant to the wisdom and dispatch its needs may require
from time to time.[22] In Blaquera v. Alcala and Bengzon v. Drilon,[23] it is understood that it is
only the Judiciary, the Civil Service Commission, the Commission on Audit, the Commission on
Elections, and the Office of the Ombudsman, which enjoy fiscal autonomy. Thus,
in Bengzon,[24] we explained:
As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil
Service Commission, the Commission on Audit, the Commission on Elections, and the Office
of the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their
resources with the wisdom and dispatch that their needs require. It recognizes the power
and authority to levy, assess and collect fees, fix rates of compensation not exceeding the
highest rates authorized by law for compensation and pay plans of the government and
allocate and disburse such sums as may be provided by law or prescribed by them in the
course of the discharge of their functions.
...
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The
imposition of restrictions and constraints on the manner the independent constitutional
offices allocate and utilize the funds appropriated for their operations is anathema to fiscal
autonomy and violative not only of the express mandate of the Constitution but especially as
regards the Supreme Court, of the independence and separation of powers upon which the
entire fabric of our constitutional system is based. In the interest of comity and cooperation,
the Supreme Court, [the] Constitutional Commissions, and the Ombudsman have so far
limited their objections to constant reminders. We now agree with the petitioners that this
grant of autonomy should cease to be a meaningless provision. (Emphasis supplied.)
Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal
Autonomy Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a
constitutional grant, not a tag obtainable by membership.
We note with interest that the special provision under Rep. Act No. 8522, while cited
under the heading of the CHR, did not specifically mention CHR as among those offices to
which the special provision to formulate and implement organizational structures apply, but
merely states its coverage to include Constitutional Commissions and Offices enjoying fiscal
autonomy. In contrast, the Special Provision Applicable to the Judiciary under Article XXVIII of
the General Appropriations Act of 1998 specifically mentions that such special provision
applies to the judiciary and had categorically authorized the Chief Justice of the Supreme Court
to formulate and implement the organizational structure of the Judiciary, to wit:
1. Organizational Structure. Any provision of law to the contrary notwithstanding and within
the limits of their respective appropriations authorized in this Act, the Chief Justice of the
Supreme Court is authorized to formulate and implement organizational structure of the
Judiciary, to fix and determine the salaries, allowances, and other benefits of their personnel,
and whenever public interest so requires, make adjustments in the personal services
itemization including, but not limited to, the transfer of item or creation of new positions in
the Judiciary; PROVIDED, That officers and employees whose positions are affected by such
reorganization or adjustments shall be granted retirement gratuities and separation pay in
accordance with existing law, which shall be payable from any unexpended balance of, or
savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the
implementation hereof shall be in accordance with salary rates, allowances and other
benefits authorized under compensation standardization laws. (Emphasis supplied.)
All told, the CHR, although admittedly a constitutional creation is, nonetheless, not
included in the genus of offices accorded fiscal autonomy by constitutional or legislative fiat.
Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of
the DBM that the grant of fiscal autonomy notwithstanding, all government offices must, all
the same, kowtow to the Salary Standardization Law. We are of the same mind with the DBM
on its standpoint, thus-
Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification
and Compensation System established under RA 6758 more popularly known as the
Compensation Standardization Law.[25](Emphasis supplied.)
The most lucid argument against the stand of respondent, however, is the provision of
Rep. Act No. 8522 that the implementation hereof shall be in accordance with salary rates,
allowances and other benefits authorized under compensation standardization laws.[26]
Indeed, the law upon which respondent heavily anchors its case upon has expressly
provided that any form of adjustment in the organizational structure must be within the
parameters of the Salary Standardization Law.
The Salary Standardization Law has gained impetus in addressing one of the basic causes
of discontent of many civil servants.[27] For this purpose, Congress has delegated to the DBM
the power to administer the Salary Standardization Law and to ensure that the spirit behind it
is observed. This power is part of the system of checks and balances or system of restraints in
our government. The DBMs exercise of such authority is not in itself an arrogation inasmuch
as it is pursuant to the paramount law of the land, the Salary Standardization Law and the
Administrative Code.
In line with its role to breathe life into the policy behind the Salary Standardization Law
of providing equal pay for substantially equal work and to base differences in pay upon
substantive differences in duties and responsibilities, and qualification requirements of the
positions, the DBM, in the case under review, made a determination, after a thorough
evaluation, that the reclassification and upgrading scheme proposed by the CHR lacks legal
rationalization.
The DBM expounded that Section 78 of the general provisions of the General
Appropriations Act FY 1998, which the CHR heavily relies upon to justify its reclassification
scheme, explicitly provides that no organizational unit or changes in key positions shall be
authorized unless provided by law or directed by the President. Here, the DBM discerned that
there is no law authorizing the creation of a Finance Management Office and a Public Affairs
Office in the CHR. Anent CHRs proposal to upgrade twelve positions of Attorney VI, SG-26 to
Director IV, SG-28, and four positions of Director III, SG-27 to Director IV, SG-28, in the Central
Office, the DBM denied the same as this would change the context from support to substantive
without actual change in functions.
This view of the DBM, as the laws designated body to implement and administer a unified
compensation system, is beyond cavil. The interpretation of an administrative government
agency, which is tasked to implement a statute is accorded great respect and ordinarily
controls the construction of the courts. In Energy Regulatory Board v. Court of Appeals,[28] we
echoed the basic rule that the courts will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of activities coming
under the special technical knowledge and training of such agencies.
To be sure, considering his expertise on matters affecting the nations coffers, the
Secretary of the DBM, as the Presidents alter ego, knows from where he speaks inasmuch as
he has the front seat view of the adverse effects of an unwarranted upgrading or creation of
positions in the CHR in particular and in the entire government in general.
WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the
Court of Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are
hereby REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service
Commision-National Capital Region is REINSTATED. The Commission on Human Rights
Resolution No. A98-047 dated 04 September 1998, Resolution No. A98-055 dated 19 October
1998 and Resolution No. A98-062 dated 17 November 1998 without the approval of the
Department of Budget and Management are disallowed. No pronouncement as to costs.
SO ORDERED.
Puno, Acting C.J., Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
G.R. No. L-63915 April 24, 1985
LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and
FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.
ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right recognized in
Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to
be valid and enforceable must be published in the Official Gazette or otherwise effectively
promulgated, petitioners seek a writ of mandamus to compel respondent public officials to
publish, and/or cause the publication in the Official Gazette of various presidential decrees,
letters of instructions, general orders, proclamations, executive orders, letter of
implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184,
197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359,
360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504,
521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793,
800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085,
1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808,
1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141,
150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209,
211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-
269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-
315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-
397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576,
587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-
713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-
1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-
1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-
1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-
1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754,
1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-
1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-
1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889,
1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-
2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492,
494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-
553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-
677, 679-703, 705-707, 712-786, 788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59,
76, 80-81, 92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433,
436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on
the ground that petitioners have no legal personality or standing to bring the instant petition.
The view is submitted that in the absence of any showing that petitioners are personally and
directly affected or prejudiced by the alleged non-publication of the presidential issuances in
question 2 said petitioners are without the requisite legal personality to institute this
mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section
3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board
or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use a rd enjoyment of a right or
office to which such other is entitled, and there is no other plain, speedy
and adequate remedy in the ordinary course of law, the person aggrieved
thereby may file a verified petition in the proper court alleging the facts
with certainty and praying that judgment be rendered commanding the
defendant, immediately or at some other specified time, to do the act
required to be done to Protect the rights of the petitioner, and to pay the
damages sustained by the petitioner by reason of the wrongful acts of
the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a
public right and its object is to compel the performance of a public duty, they need not show
any specific interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs.
Governor General, 3 this Court held that while the general rule is that "a writ of mandamus
would be granted to a private individual only in those cases where he has some private or
particular interest to be subserved, or some particular right to be protected, independent of
that which he holds with the public at large," and "it is for the public officers exclusively to
apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e.,
469]," nevertheless, "when the question is one of public right and the object of the
mandamus is to procure the enforcement of a public duty, the people are regarded as the
real party in interest and the relator at whose instigation the proceedings are instituted need
not show that he has any legal or special interest in the result, it being sufficient to show that
he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal
Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a
proper party to the mandamus proceedings brought to compel the Governor General to call
a special election for the position of municipal president in the town of Silay, Negros
Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the
proposition that the relator is a proper party to proceedings of this
character when a public right is sought to be enforced. If the general rule
in America were otherwise, we think that it would not be applicable to
the case at bar for the reason 'that it is always dangerous to apply a
general rule to a particular case without keeping in mind the reason for
the rule, because, if under the particular circumstances the reason for the
rule does not exist, the rule itself is not applicable and reliance upon the
rule may well lead to error'
No reason exists in the case at bar for applying the general rule insisted
upon by counsel for the respondent. The circumstances which surround
this case are different from those in the United States, inasmuch as if the
relator is not a proper party to these proceedings no other person could
be, as we have seen that it is not the duty of the law officer of the
Government to appear and represent the people in cases of this
character.
The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to be
enforced by petitioners herein is a public right recognized by no less than the fundamental
law of the land. If petitioners were not allowed to institute this proceeding, it would indeed
be difficult to conceive of any other person to initiate the same, considering that the Solicitor
General, the government officer generally empowered to represent the people, has entered
his appearance for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own
effectivity dates. It is thus submitted that since the presidential issuances in question contain
special provisions as to the date they are to take effect, publication in the Official Gazette is
not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil
Code:
Art. 2. Laws shall take effect after fifteen days following the completion
of their publication in the Official Gazette, unless it is otherwise provided,
...
The interpretation given by respondent is in accord with this Court's construction of said
article. In a long line of decisions,4 this Court has ruled that publication in the Official Gazette
is necessary in those cases where the legislation itself does not provide for its effectivity
date-for then the date of publication is material for determining its date of effectivity, which
is the fifteenth day following its publication-but not when the law itself provides for the date
when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity
of laws with the fact of publication. Considered in the light of other statutes applicable to the
issue at hand, the conclusion is easily reached that said Article 2 does not preclude the
requirement of publication in the Official Gazette, even if the law itself provides for the date
of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important
legisiative acts and resolutions of a public nature of the, Congress of the
Philippines; [2] all executive and administrative orders and
proclamations, except such as have no general applicability; [3] decisions
or abstracts of decisions of the Supreme Court and the Court of Appeals
as may be deemed by said courts of sufficient importance to be so
published; [4] such documents or classes of documents as may be
required so to be published by law; and [5] such documents or classes of
documents as the President of the Philippines shall determine from time
to time to have general applicability and legal effect, or which he may
authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate notice
of the various laws which are to regulate their actions and conduct as citizens. Without such
notice and publication, there would be no basis for the application of the maxim "ignorantia
legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen
for the transgression of a law of which he had no notice whatsoever, not even a constructive
one.
Perhaps at no time since the establishment of the Philippine Republic has the publication of
laws taken so vital significance that at this time when the people have bestowed upon the
President a power heretofore enjoyed solely by the legislature. While the people are kept
abreast by the mass media of the debates and deliberations in the Batasan Pambansaand
for the diligent ones, ready access to the legislative recordsno such publicity accompanies
the law-making process of the President. Thus, without publication, the people have no
means of knowing what presidential decrees have actually been promulgated, much less a
definite way of informing themselves of the specific contents and texts of such decrees. As
the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden
tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas
de conformidad con las mismas por el Gobierno en uso de su potestad.5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published
in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials
an imperative duty. That duty must be enforced if the Constitutional right of the people to be
informed on matters of public concern is to be given substance and reality. The law itself
makes a list of what should be published in the Official Gazette. Such listing, to our mind,
leaves respondents with no discretion whatsoever as to what must be included or excluded
from such publication.
The publication of all presidential issuances "of a public nature" or "of general applicability"
is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or
penalties for their violation or otherwise impose a burden or. the people, such as tax and
revenue measures, fall within this category. Other presidential issuances which apply only to
particular persons or class of persons such as administrative and executive orders need not
be published on the assumption that they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of
general applicability" is a requirement of due process. It is a rule of law that before a person
may be bound by law, he must first be officially and specifically informed of its contents. As
Justice Claudio Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which
all form part of the law of the land, the requirement of due process and
the Rule of Law demand that the Official Gazette as the official
government repository promulgate and publish the texts of all such
decrees, orders and instructions so that the people may know where to
obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have
not been published, shall have no force and effect. Some members of the Court, quite
apprehensive about the possible unsettling effect this decision might have on acts done in
reliance of the validity of those presidential decrees which were published only during the
pendency of this petition, have put the question as to whether the Court's declaration of
invalidity apply to P.D.s which had been enforced or implemented prior to their publication.
The answer is all too familiar. In similar situations in the past this Court had taken the
pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank 8 to
wit:
The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence
affording no basis for the challenged decree. Norton v. Shelby County,
118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It
is quite clear, however, that such broad statements as to the effect of a
determination of unconstitutionality must be taken with qualifications.
The actual existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects-with respect to particular conduct, private
and official. Questions of rights claimed to have become vested, of status,
of prior determinations deemed to have finality and acted upon
accordingly, of public policy in the light of the nature both of the statute
and of its previous application, demand examination. These questions are
among the most difficult of those which have engaged the attention of
courts, state and federal and it is manifest from numerous decisions that
an all-inclusive statement of a principle of absolute retroactive invalidity
cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of
a party under the Moratorium Law, albeit said right had accrued in his favor before said law
was declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication
in the Official Gazette is "an operative fact which may have consequences which cannot be
justly ignored. The past cannot always be erased by a new judicial declaration ... that an all-
inclusive statement of a principle of absolute retroactive invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the
presidential decrees sought by petitioners to be published in the Official Gazette, only
Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have
not been so published. 10 Neither the subject matters nor the texts of these PDs can be
ascertained since no copies thereof are available. But whatever their subject matter may be,
it is undisputed that none of these unpublished PDs has ever been implemented or enforced
by the government. In Pesigan vs. Angeles, 11 the Court, through Justice Ramon Aquino, ruled
that "publication is necessary to apprise the public of the contents of [penal] regulations and
make the said penalties binding on the persons affected thereby. " The cogency of this
holding is apparently recognized by respondent officials considering the manifestation in
their comment that "the government, as a matter of policy, refrains from prosecuting
violations of criminal laws until the same shall have been published in the Official Gazette or
in some other publication, even though some criminal laws provide that they shall take effect
immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so published,
they shall have no binding force and effect.
SO ORDERED.
Relova, J., concurs.
Aquino, J., took no part.
Concepcion, Jr., J., is on leave.
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION,respondents.
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction
and a temporary restraining order. The petition seeks to compel the Public Estates Authority
(PEA for brevity) to disclose all facts on PEAs then on-going renegotiations with Amari Coastal
Bay and Development Corporation (AMARI for brevity) to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such
reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways,
signed a contract with the Construction and Development Corporation of the Philippines (CDCP
for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also
included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated
itself to carry out all the works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No.
1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including foreshore and
submerged areas, and to develop, improve, acquire, x x x lease and sell any and all kinds of
lands.[1] On the same date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the lands reclaimed in the foreshore and offshore of the Manila
Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to
amend its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall be funded and
owned by PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated
December 29, 1981, which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP
as may be agreed upon by the parties, to be paid according to progress of works on a unit
price/lump sum basis for items of work to be agreed upon, subject to price escalation,
retention and other terms and conditions provided for in Presidential Decree No. 1594.All
the financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer
in favor of PEA, all of the rights, title, interest and participation of CDCP in and to all the areas
of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been
sold, transferred or otherwise disposed of by CDCP as of said date, which areas consist of
approximately Ninety-Nine Thousand Four Hundred Seventy Three (99,473) square meters in
the Financial Center Area covered by land pledge No. 5 and approximately Three Million
Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters
of reclaimed areas at varying elevations above Mean Low Water Level located outside the
Financial Center Area and the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517,
granting and transferring to PEA the parcels of land so reclaimed under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine
hundred fifteen thousand eight hundred ninety four (1,915,894) square meters. Subsequently,
on April 9, 1988, the Register of Deeds of the Municipality of Paraaque issued Transfer
Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three
reclaimed islands known as the Freedom Islands located at the southern portion of the Manila-
Cavite Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million
Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters
or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with
AMARI, a private corporation, to develop the Freedom Islands. The JVA also required the
reclamation of an additional 250 hectares of submerged areas surrounding these islands to
complete the configuration in the Master Development Plan of the Southern Reclamation
Project-MCCRRP. PEA and AMARI entered into the JVA through negotiation without public
bidding.[4] On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245,
confirmed the JVA. [5] On June 8, 1995, then President Fidel V. Ramos, through then Executive
Secretary Ruben Torres, approved the JVA.[6]
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege
speech in the Senate and denounced the JVA as the grandmother of all scams. As a result, the
Senate Committee on Government Corporations and Public Enterprises, and the Committee
on Accountability of Public Officers and Investigations, conducted a joint investigation. The
Senate Committees reported the results of their investigation in Senate Committee Report No.
560 dated September 16, 1997.[7] Among the conclusions of their report are: (1) the reclaimed
lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate these
lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA
itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative
Order No. 365 creating a Legal Task Force to conduct a study on the legality of the JVA in view
of Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary
of Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government Corporate
Counsel.[10] The Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that
there were on-going renegotiations between PEA and AMARI under an order issued by then
President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA
Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel
of PEA.
 On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition
with Application for the Issuance of a Temporary Restraining Order and Preliminary
Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the
petition for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the
case before the proper court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer, filed
the instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary
Injunction and Temporary Restraining Order. Petitioner contends the government stands to
lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that
PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section 28, Article II,
and Section 7, Article III, of the 1987 Constitution on the right of the people to information on
matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain
as a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations. Finally, petitioner asserts that he
seeks to enjoin the loss of billions of pesos in properties of the State that are of public
dominion.
After several motions for extension of time,[13] PEA and AMARI filed their Comments on
October 19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998,
petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated
PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case
for hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated
May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and
required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement
(Amended JVA, for brevity). On May 28, 1999, the Office of the President under the
administration of then President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now
prays that on constitutional and statutory grounds the renegotiated contract be declared null
and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT
FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO
BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of the on-going
negotiations for a new agreement. The petition also prays that the Court enjoin PEA from
privately entering into, perfecting and/or executing any new agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI furnished
petitioner on June 21, 1999 a copy of the signed Amended JVA containing the terms and
conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioners prayer for a
public disclosure of the renegotiations. Likewise, petitioners prayer to enjoin the signing of the
Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA on
March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May
28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply
fast-tracking the signing and approval of the Amended JVA before the Court could act on the
issue. Presidential approval does not resolve the constitutional issue or remove it from the
ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the
President cannot operate to moot the petition and divest the Court of its jurisdiction.PEA and
AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the
Amended JVA on constitutional grounds necessarily includes preventing its implementation if
in the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioners
principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of
the Constitution, which prohibits the government from alienating lands of the public domain
to private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of
the Court to enjoin its implementation, and if already implemented, to annul the effects of
such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and submerged areas of
Manila Bay to a single private corporation. It now becomes more compelling for the Court to
resolve the issue to insure the government itself does not violate a provision of the
Constitution intended to safeguard the national patrimony. Supervening events, whether
intended or accidental, cannot prevent the Court from rendering a decision if there is a grave
violation of the Constitution. In the instant case, if the Amended JVA runs counter to the
Constitution, the Court can still prevent the transfer of title and ownership of alienable lands
of the public domain in the name of AMARI. Even in cases where supervening events had made
the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised
to formulate controlling principles to guide the bench, bar, and the public.[17]
Also, the instant petition is a case of first impression. All previous decisions of the Court
involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,[18] covered agricultural lands sold to private corporations which acquired the
lands from private parties. The transferors of the private corporations claimed or could claim
the right to judicial confirmation of their imperfect titles [19] under Title II of Commonwealth
Act. 141 (CA No. 141 for brevity). In the instant case, AMARI seeks to acquire from PEA, a public
corporation, reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the
purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because the
lands covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial
confirmation of imperfect title requires open, continuous, exclusive and notorious occupation
of agricultural lands of the public domain for at least thirty years since June 12, 1945 or
earlier. Besides, the deadline for filing applications for judicial confirmation of imperfect title
expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title and ownership
to portions of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to
AMARI the latters seventy percent proportionate share in the reclaimed areas as the
reclamation progresses. The Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly
from the Court. The principle of hierarchy of courts applies generally to cases involving factual
questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues.
The instant case, however, raises constitutional issues of transcendental importance to the
public.[22] The Court can resolve this case without determining any factual issue related to the
case. Also, the instant case is a petition for mandamus which falls under
the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We
resolve to exercise primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose
publicly certain information without first asking PEA the needed information. PEA claims
petitioners direct resort to the Court violates the principle of exhaustion of administrative
remedies. It also violates the rule that mandamus may issue only if there is no other plain,
speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted the
petition for mandamus even if the petitioners there did not initially demand from the Office
of the President the publication of the presidential decrees. PEA points out that in Taada, the
Executive Department had an affirmative statutory duty under Article 2 of the Civil
Code[24] and Section 1 of Commonwealth Act No. 638[25] to publish the presidential decrees.
There was, therefore, no need for the petitioners in Taada to make an initial demand from the
Office of the President. In the instant case, PEA claims it has no affirmative statutory duty to
disclose publicly information about its renegotiation of the JVA.Thus, PEA asserts that the
Court must apply the principle of exhaustion of administrative remedies to the instant case in
view of the failure of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,[26]2 the disposition of
government lands to private parties requires public bidding. PEA was under a positive legal
duty to disclose to the public the terms and conditions for the sale of its lands.The law
obligated PEA to make this public disclosure even without demand from petitioner or from
anyone. PEA failed to make this public disclosure because the original JVA, like the Amended
JVA, was the result of a negotiated contract, not of a public bidding. Considering that PEA had
an affirmative statutory duty to make the public disclosure, and was even in breach of this
legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or
constitutional question.[27] The principal issue in the instant case is the capacity of AMARI to
acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of lands
of the public domain to private corporations. We rule that the principle of exhaustion of
administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to
enforce his constitutional right to information without a showing that PEA refused to perform
an affirmative duty imposed on PEA by the Constitution. PEA also claims that petitioner has
not shown that he will suffer any concrete injury because of the signing or implementation of
the Amended JVA. Thus, there is no actual controversy requiring the exercise of the power of
judicial review.
 The petitioner has standing to bring this taxpayers suit because the petition seeks to
compel PEA to comply with its constitutional duties. There are two constitutional issues
involved here. First is the right of citizens to information on matters of public concern. Second
is the application of a constitutional provision intended to insure the equitable distribution of
alienable lands of the public domain among Filipino citizens. The thrust of the first issue is to
compel PEA to disclose publicly information on the sale of government lands worth billions of
pesos, information which the Constitution and statutory law mandate PEA to disclose. The
thrust of the second issue is to prevent PEA from alienating hundreds of hectares of alienable
lands of the public domain in violation of the Constitution, compelling PEA to comply with a
constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the
public. In Chavez v. PCGG,[28] the Court upheld the right of a citizen to bring a taxpayers suit
on matters of transcendental importance to the public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of transcendental importance to the public. He asserts that ordinary
taxpayers have a right to initiate and prosecute actions questioning the validity of acts or
orders of government agencies or instrumentalities, if the issues raised are of paramount
public interest, and if they immediately affect the social, economic and moral well being of
the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest,
when the proceeding involves the assertion of a public right, such as in this case. He invokes
several decisions of this Court which have set aside the procedural matter of locus standi,
when the subject of the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the
object of mandamus is to obtain the enforcement of a public duty, the people are regarded
as the real parties in interest; and because it is sufficient that petitioner is a citizen and as
such is interested in the execution of the laws, he need not show that he has any legal or
special interest in the result of the action. In the aforesaid case, the petitioners sought to
enforce their right to be informed on matters of public concern, a right then recognized in
Section 6, Article IV of the 1973 Constitution, in connection with the rule that laws in order to
be valid and enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the right
they sought to be enforced is a public right recognized by no less than the fundamental law
of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a
mandamus proceeding involves the assertion of a public right, the requirement of personal
interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have
been involved under the questioned contract for the development, management and
operation of the Manila International Container Terminal, public interest [was] definitely
involved considering the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial consideration involved. We
concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and
access to official records, documents and papers a right guaranteed under Section 7, Article
III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because
of the satisfaction of the two basic requisites laid down by decisional law to sustain
petitioner's legal standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino
citizen, we rule that the petition at bar should be allowed.
We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources -
matters of transcendental public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on
on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to information on
matters of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the
peoples right to information on matters of public concern. This State policy is expressed in
Section 28, Article II of the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
(Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making
and in the operations of the government, as well as provide the people sufficient information
to exercise effectively other constitutional rights. These twin provisions are essential to the
exercise of freedom of expression. If the government does not disclose its official acts,
transactions and decisions to citizens, whatever citizens say, even if expressed without any
restraint, will be speculative and amount to nothing. These twin provisions are also essential
to hold public officials at all times x x x accountable to the people,[29] for unless citizens have
the proper information, they cannot hold public officials accountable for anything. Armed with
the right information, citizens can participate in public discussions leading to the formulation
of government policies and their effective implementation. An informed citizenry is essential
to the existence and proper functioning of any democracy. As explained by the Court
in Valmonte v. Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State
that the channels for free political discussion be maintained to the end that the government
may perceive and be responsive to the peoples will. Yet, this open dialogue can be effective
only to the extent that the citizenry is informed and thus able to formulate its will
intelligently. Only when the participants in the discussion are aware of the issues and have
access to information relating thereto can such bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations the right to
information is limited to definite propositions of the government. PEA maintains the right does
not include access to intra-agency or inter-agency recommendations or communications
during the stage when common assertions are still in the process of being formulated or are in
the exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage
or before the closing of the transaction. To support its contention, AMARI cites the following
discussion in the 1986 Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it can cover both
steps leading to a contract and already a consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of
the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the
right. Requiring government officials to reveal their deliberations at the pre-decisional stage
will degrade the quality of decision-making in government agencies. Government officials will
hesitate to express their real sentiments during deliberations if there is immediate public
dissemination of their discussions, putting them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to
disclose publicly, and information the constitutional right to information requires PEA to
release to the public. Before the consummation of the contract, PEA must, on its own and
without demand from anyone, disclose to the public matters relating to the disposition of its
property. These include the size, location, technical description and nature of the property
being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the
minimum price and similar information. PEA must prepare all these data and disclose them to
the public at the start of the disposition process, long before the consummation of the
contract, because the Government Auditing Code requires public bidding. If PEA fails to make
this disclosure, any citizen can demand from PEA this information at any time during the
bidding process.
Information, however, on on-going evaluation or review of bids or proposals being
undertaken by the bidding or review committee is not immediately accessible under the right
to information. While the evaluation or review is still on-going, there are no official acts,
transactions, or decisions on the bids or proposals. However, once the committee makes
its official recommendation, there arises a definite proposition on the part of the
government. From this moment, the publics right to information attaches, and any citizen can
access all the non-proprietary information leading to such definite proposition. In Chavez v.
PCGG,[33] the Court ruled as follows:
Considering the intent of the framers of the Constitution, we believe that it is incumbent
upon the PCGG and its officers, as well as other government representatives, to disclose
sufficient public information on any proposed settlement they have decided to take up with
the ostensible owners and holders of ill-gotten wealth. Such information, though, must
pertain to definite propositions of the government, not necessarily to intra-agency or inter-
agency recommendations or communications during the stage when common assertions are
still in the process of being formulated or are in the exploratory stage. There is need, of
course, to observe the same restrictions on disclosure of information in general, as discussed
earlier such as on matters involving national security, diplomatic or foreign relations,
intelligence and other classified information. (Emphasis supplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information contemplates inclusion of negotiations
leading to the consummation of the transaction. Certainly, a consummated contract is not a
requirement for the exercise of the right to information. Otherwise, the people can never
exercise the right if no contract is consummated, and if one is consummated, it may be too
late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until the contract,
which may be grossly disadvantageous to the government or even illegal, becomes a fait
accompli. This negates the State policy of full transparency on matters of public concern, a
situation which the framers of the Constitution could not have intended. Such a requirement
will prevent the citizenry from participating in the public discussion of any proposed contract,
effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an
emasculation of a constitutional right, nor a retreat by the State of its avowed policy of full
disclosure of all its transactions involving public interest.
 The right covers three categories of information which are matters of public concern,
namely: (1) official records; (2) documents and papers pertaining to official acts, transactions
and decisions; and (3) government research data used in formulating policies. The first
category refers to any document that is part of the public records in the custody of government
agencies or officials. The second category refers to documents and papers recording,
evidencing, establishing, confirming, supporting, justifying or explaining official acts,
transactions or decisions of government agencies or officials. The third category refers to
research data, whether raw, collated or processed, owned by the government and used in
formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes
evaluation reports, recommendations, legal and expert opinions, minutes of meetings, terms
of reference and other documents attached to such reports or minutes, all relating to the
JVA. However, the right to information does not compel PEA to prepare lists, abstracts,
summaries and the like relating to the renegotiation of the JVA.[34] The right only affords access
to records, documents and papers, which means the opportunity to inspect and copy
them. One who exercises the right must copy the records, documents and papers at his
expense. The exercise of the right is also subject to reasonable regulations to protect the
integrity of the public records and to minimize disruption to government operations, like rules
specifying when and how to conduct the inspection and copying.[35]
The right to information, however, does not extend to matters recognized as privileged
information under the separation of powers.[36] The right does not also apply to information
on military and diplomatic secrets, information affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused,
which courts have long recognized as confidential.[37] The right may also be subject to other
limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover Presidential
conversations, correspondences, or discussions during closed-door Cabinet meetings which,
like internal deliberations of the Supreme Court and other collegiate courts, or executive
sessions of either house of Congress,[38] are recognized as confidential. This kind of information
cannot be pried open by a co-equal branch of government. A frank exchange of exploratory
ideas and assessments, free from the glare of publicity and pressure by interested parties, is
essential to protect the independence of decision-making of those tasked to exercise
Presidential, Legislative and Judicial power.[39] This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official
information on on-going negotiations before a final contract. The information, however, must
constitute definite propositions by the government and should not cover recognized
exceptions like privileged information, military and diplomatic secrets and similar matters
affecting national security and public order.[40] Congress has also prescribed other limitations
on the right to information in several legislations.[41]
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the
Regalian doctrine which holds that the State owns all lands and waters of the public
domain. Upon the Spanish conquest of the Philippines, ownership of all lands, territories and
possessions in the Philippines passed to the Spanish Crown.[42] The King, as the sovereign ruler
and representative of the people, acquired and owned all lands and territories in the
Philippines except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting,
however, the State, in lieu of the King, as the owner of all lands and waters of the public
domain. The Regalian doctrine is the foundation of the time-honored principle of land
ownership that all lands that were not acquired from the Government, either by purchase or
by grant, belong to the public domain.[43] Article 339 of the Civil Code of 1889, which is now
Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership
and disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine
Commission enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed
lands of the government to corporations and individuals. Later, on November 29, 1919, the
Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the lease,
but not the sale, of reclaimed lands of the government to corporations and individuals. On
November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as
the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this day as the general
law governing the classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters
within the maritime zone of the Spanish territory belonged to the public domain for public
use.[44] The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5,
which provided as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or
by the provinces, pueblos or private persons, with proper permission, shall become the
property of the party constructing such works, unless otherwise provided by the terms of the
grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party
undertaking the reclamation, provided the government issued the necessary permit and did
not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
Art. 339. Property of public dominion is
 1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character;
2. That belonging exclusively to the State which, without being of general public
use, is employed in some public service, or in the development of the national
wealth, such as walls, fortresses, and other works for the defense of the
territory, and mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the public. In contrast,
property devoted to public service referred to property used for some specific public service
and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also
to property not so used but employed to develop the national wealth. This class of property
constituted property of public dominion although employed for some economic or commercial
activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public
dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State.
This provision, however, was not self-executing. The legislature, or the executive department
pursuant to law, must declare the property no longer needed for public use or territorial
defense before the government could lease or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the
lease of reclaimed and foreshore lands. The salient provisions of this law were as follows:
Section 1. The control and disposition of the foreshore as defined in existing law, and
the title to all Government or public lands made or reclaimed by the Governmentby
dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the
Government without prejudice to vested rights and without prejudice to rights conceded to
the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or
reclaimed by the Government by dredging or filling or otherwise to be divided into lots or
blocks, with the necessary streets and alleyways located thereon, and shall cause plats and
plans of such surveys to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the
public that such parts of the lands so made or reclaimed as are not needed for public
purposes will be leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General may by
executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed
by the government. The Act also vested in the government control and disposition of
foreshore lands. Private parties could lease lands reclaimed by the government only if these
lands were no longer needed for public purpose. Act No. 1654 mandated public bidding in the
lease of government reclaimed lands. Act No. 1654 made government reclaimed lands sui
generis in that unlike other public lands which the government could sell to private parties,
these reclaimed lands were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of
1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea under
Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties with
government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land
Act.[46] The salient provisions of Act No. 2874, on reclaimed lands, were as follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture
and Natural Resources, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public
lands, the Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land,
shall be classified as suitable for residential purposes or for commercial, industrial, or other
productive purposes other than agricultural purposes, and shall be open to disposition or
concession, shall be disposed of under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed
of to private parties by lease only and not otherwise, as soon as the Governor-General,
upon recommendation by the Secretary of Agriculture and Natural Resources, shall declare
that the same are not necessary for the public service and are open to disposition under this
chapter. The lands included in class (d) may be disposed of by sale or lease under the
provisions of this Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the public
domain into x x x alienable or disposable[47] lands. Section 7 of the Act empowered the
Governor-General to declare what lands are open to disposition or concession. Section 8 of
the Act limited alienable or disposable lands only to those lands which have been officially
delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title[48] shall be
classified as government reclaimed, foreshore and marshy lands, as well as other lands. All
these lands, however, must be suitable for residential, commercial, industrial or other
productive non-agricultural purposes. These provisions vested upon the Governor-General
the power to classify inalienable lands of the public domain into disposable lands of the public
domain. These provisions also empowered the Governor-General to classify further such
disposable lands of the public domain into government reclaimed, foreshore or marshy lands
of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public
domain classified as government reclaimed, foreshore and marshy lands shall be disposed of
to private parties by lease only and not otherwise. The Governor-General, before allowing the
lease of these lands to private parties, must formally declare that the lands were not necessary
for the public service. Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public domain, a policy first
enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands
remained sui generis, as the only alienable or disposable lands of the public domain that the
government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and
marshy public lands for non-agricultural purposes retain their inherent potential as areas for
public service. This is the reason the government prohibited the sale, and only allowed the
lease, of these lands to private parties. The State always reserved these lands for some future
public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore
and marshy lands into other non-agricultural lands under Section 56 (d). Lands falling under
Section 56 (d) were the only lands for non-agricultural purposes the government could sell to
private parties. Thus, under Act No. 2874, the government could not sell government
reclaimed, foreshore and marshy lands to private parties, unless the legislature passed a law
allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant
to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private
parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino
people. The 1935 Constitution, in adopting the Regalian doctrine, declared in Section 1, Article
XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for the
exploitation, development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for another twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and limit of
the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public
agricultural lands, which were the only natural resources the State could alienate. Thus,
foreshore lands, considered part of the States natural resources, became inalienable by
constitutional fiat, available only for lease for 25 years, renewable for another 25 years.The
government could alienate foreshore lands only after these lands were reclaimed and
classified as alienable agricultural lands of the public domain. Government reclaimed and
marshy lands of the public domain, being neither timber nor mineral lands, fell under the
classification of public agricultural lands.[50] However, government reclaimed and marshy
lands, although subject to classification as disposable public agricultural lands, could only be
leased and not sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed
and marshy lands of the public domain was only a statutory prohibition and the legislature
could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals
and corporations from acquiring government reclaimed and marshy lands of the public domain
that were classified as agricultural lands under existing public land laws. Section 2, Article XIII
of the 1935 Constitution provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold public
agricultural lands in excess of one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one hundred and forty hectares, or by
lease in excess of one thousand and twenty-four hectares, or by homestead in excess of
twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may
be leased to an individual, private corporation, or association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of
Act No. 2874 to open for sale to private parties government reclaimed and marshy lands of the
public domain. On the contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government reclaimed and marshy lands
of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141,
also known as the Public Land Act, which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public domain
into alienable or disposable[52] lands of the public domain, which prior to such classification are
inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the
President to declare what lands are open to disposition or concession. Section 8 of CA No. 141
states that the government can declare open for disposition or concession only lands that are
officially delimited and classified. Sections 6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another,[53] for
the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable
public lands, the President, upon recommendation by the Secretary of Agriculture and
Commerce, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited and classified and, when practicable, surveyed, and which have not
been reserved for public or quasi-public uses, nor appropriated by the Government, nor in
any manner become private property, nor those on which a private right authorized and
recognized by this Act or any other valid law may be claimed, or which, having been reserved
or appropriated, have ceased to be so. x x x.
Thus, before the government could alienate or dispose of lands of the public domain, the
President must first officially classify these lands as alienable or disposable, and then declare
them open to disposition or concession. There must be no law reserving these lands for public
or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy
lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral
land, is intended to be used for residential purposes or for commercial, industrial, or other
productive purposes other than agricultural, and is open to disposition or concession, shall
be disposed of under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may
be, to any person, corporation, or association authorized to purchase or lease public lands
for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed
of to private parties by lease only and not otherwise, as soon as the President, upon
recommendation by the Secretary of Agriculture, shall declare that the same are not
necessary for the public service and are open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution,
Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore and
marshy disposable lands of the public domain. All these lands are intended for residential,
commercial, industrial or other non-agricultural purposes. As before, Section 61 allowed only
the lease of such lands to private parties. The government could sell to private parties only
lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes
not classified as government reclaimed, foreshore and marshy disposable lands of the public
domain. Foreshore lands, however, became inalienable under the 1935 Constitution which
only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain
intended for residential, commercial, industrial or other productive purposes other than
agricultural shall be disposed of under the provisions of this chapter and not otherwise. Under
Section 10 of CA No. 141, the term disposition includes lease of the land. Any disposition of
government reclaimed, foreshore and marshy disposable lands for non-agricultural purposes
must comply with Chapter IX, Title III of CA No. 141,[54] unless a subsequent law amended or
repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v.
Court of Appeals,[55] Justice Reynato S. Puno summarized succinctly the law on this matter, as
follows:
Foreshore lands are lands of public dominion intended for public use. So too are lands
reclaimed by the government by dredging, filling, or other means. Act 1654 mandated that
the control and disposition of the foreshore and lands under water remained in the national
government. Said law allowed only the leasing of reclaimed land. The Public Land Acts of
1919 and 1936 also declared that the foreshore and lands reclaimed by the government were
to be disposed of to private parties by lease only and not otherwise. Before leasing, however,
the Governor-General, upon recommendation of the Secretary of Agriculture and Natural
Resources, had first to determine that the land reclaimed was not necessary for the public
service. This requisite must have been met before the land could be disposed of. But even
then, the foreshore and lands under water were not to be alienated and sold to private
parties. The disposition of the reclaimed land was only by lease. The land remained
property of the State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141 has
remained in effect at present.
The State policy prohibiting the sale to private parties of government reclaimed,
foreshore and marshy alienable lands of the public domain, first implemented in 1907 was thus
reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale
of foreshore lands, however, became a constitutional edict under the 1935 Constitution.
Foreshore lands became inalienable as natural resources of the State, unless reclaimed by the
government and classified as agricultural lands of the public domain, in which case they would
fall under the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy
disposable lands of the public domain continued to be only leased and not sold to private
parties.[56] These lands remained sui generis, as the only alienable or disposable lands of the
public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for the legislature
to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify
government reclaimed and marshy lands into other non-agricultural lands under Section 59
(d). Lands classified under Section 59 (d) are the only alienable or disposable lands for non-
agricultural purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before
lands under Section 59 that the government previously transferred to government units or
entities could be sold to private parties. Section 60 of CA No. 141 declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for
which such sale or lease is requested, and shall not exceed one hundred and forty-four
hectares: Provided, however, That this limitation shall not apply to grants, donations, or
transfers made to a province, municipality or branch or subdivision of the Government for
the purposes deemed by said entities conducive to the public interest; but the land so
granted, donated, or transferred to a province, municipality or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of in a manner
affecting its title, except when authorized by Congress: x x x. (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative
authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted
government units and entities from the maximum area of public lands that could be acquired
from the State. These government units and entities should not just turn around and sell these
lands to private parties in violation of constitutional or statutory limitations.Otherwise, the
transfer of lands for non-agricultural purposes to government units and entities could be used
to circumvent constitutional limitations on ownership of alienable or disposable lands of the
public domain. In the same manner, such transfers could also be used to evade the statutory
prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the public
domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on
these lands.[57]
In case of sale or lease of disposable lands of the public domain falling under Section 59
of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141
provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now
the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of
such authority, the Director of Lands shall give notice by public advertisement in the same
manner as in the case of leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to
the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of
alienable or disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the
Spanish Law of Waters of 1866. Private parties could still reclaim portions of the sea with
government permission. However, the reclaimed land could become private land only if
classified as alienable agricultural land of the public domain open to disposition under CA No.
141. The 1935 Constitution prohibited the alienation of all natural resources except public
agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public
dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state
that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are intended
for some public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public
service, shall form part of the patrimonial property of the State.
Again, the government must formally declare that the property of public dominion is no
longer needed for public use or public service, before the same could be classified as
patrimonial property of the State.[59] In the case of government reclaimed and marshy lands of
the public domain, the declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public
dominion those properties of the State which, without being for public use, are intended for
public service or the development of the national wealth. Thus, government reclaimed and
marshy lands of the State, even if not employed for public use or public service, if developed
to enhance the national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the
Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the
Philippines belong to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural resources shall not be
alienated, and no license, concession, or lease for the exploration, development,
exploitation, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more than twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases, beneficial use may be the measure and the
limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of agricultural, industrial or commercial, residential, and resettlement lands of the
public domain. In contrast, the 1935 Constitution barred the alienation of all natural resources
except public agricultural lands. However, the term public agricultural lands in the 1935
Constitution encompassed industrial, commercial, residential and resettlement lands of the
public domain.[60] If the land of public domain were neither timber nor mineral land, it would
fall under the classification of agricultural land of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of all natural resources except agricultural
lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to
individuals who were citizens of the Philippines. Private corporations, even if wholly owned by
Philippine citizens, were no longer allowed to acquire alienable lands of the public domain
unlike in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of land
of the public domain which may be developed, held or acquired by, or leased to, any
qualified individual, corporation, or association, and the conditions therefor. No private
corporation or association may hold alienable lands of the public domain except by
lease not to exceed one thousand hectares in area nor may any citizen hold such lands by
lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in
excess of twenty-four hectares. No private corporation or association may hold by lease,
concession, license or permit, timber or forest lands and other timber or forest resources in
excess of one hundred thousand hectares. However, such area may be increased by the
Batasang Pambansa upon recommendation of the National Economic and Development
Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the
public domain only through lease. Only individuals could now acquire alienable lands of the
public domain, and private corporations became absolutely barred from acquiring any kind
of alienable land of the public domain. The constitutional ban extended to all kinds of
alienable lands of the public domain, while the statutory ban under CA No. 141 applied only to
government reclaimed, foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No.
1084 creating PEA, a wholly government owned and controlled corporation with a special
charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging,
filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease
and sell any and all kinds of lands, buildings, estates and other forms of real
property, owned, managed, controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient,
economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment
of the purposes and objectives herein specified. (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public
domain. Foreshore areas are those covered and uncovered by the ebb and flow of the
tide.[61] Submerged areas are those permanently under water regardless of the ebb and flow
of the tide.[62] Foreshore and submerged areas indisputably belong to the public domain[63] and
are inalienable unless reclaimed, classified as alienable lands open to disposition, and further
declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands
of the public domain did not apply to PEA since it was then, and until today, a fully owned
government corporation. The constitutional ban applied then, as it still applies now, only to
private corporations and associations. PD No. 1084 expressly empowers PEA tohold lands of
the public domain even in excess of the area permitted to private corporations by
statute. Thus, PEA can hold title to private lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the
public domain, there must be legislative authority empowering PEA to sell these lands.This
legislative authority is necessary in view of Section 60 of CA No.141, which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or
branch or subdivision of the Government shall not be alienated, encumbered or otherwise
disposed of in a manner affecting its title, except when authorized by Congress; x x x.
(Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore
and submerged alienable lands of the public domain. Nevertheless, any legislative authority
granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to
the constitutional ban on private corporations from acquiring alienable lands of the public
domain. Hence, such legislative authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the
Regalian doctrine. The 1987 Constitution declares that all natural resources are owned by the
State, and except for alienable agricultural lands of the public domain, natural resources
cannot be alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development, and utilization
of natural resources shall be under the full control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral
lands, and national parks. Agricultural lands of the public domain may be further classified by
law according to the uses which they may be devoted. Alienable lands of the public domain
shall be limited to agricultural lands. Private corporations or associations may not hold
such alienable lands of the public domain except by lease, for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and not to exceed one
thousand hectares in area. Citizens of the Philippines may lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or
grant.
Taking into account the requirements of conservation, ecology, and development, and
subject to the requirements of agrarian reform, the Congress shall determine, by law, the
size of lands of the public domain which may be acquired, developed, held, or leased and the
conditions therefor. (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public domain. Like the
1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands
of the public domain only through lease. As in the 1935 and 1973 Constitutions, the general
law governing the lease to private corporations of reclaimed, foreshore and marshy alienable
lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except
through lease, alienable lands of the public domain is not well understood. During the
deliberations of the 1986 Constitutional Commission, the commissioners probed the rationale
behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public
domain except by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced
in the 1973 Constitution. In effect, it prohibits private corporations from acquiring alienable
public lands. But it has not been very clear in jurisprudence what the reason for this is. In
some of the cases decided in 1982 and 1983, it was indicated that the purpose of this is to
prevent large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where
the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel
stood because the Supreme Court said it would be in violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban in this
way:
Indeed, one purpose of the constitutional prohibition against purchases of public agricultural
lands by private corporations is to equitably diffuse land ownership or to encourage owner-
cultivatorship and the economic family-size farm and to prevent a recurrence of cases like
the instant case. Huge landholdings by corporations or private persons had spawned social
unrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution could
have simply limited the size of alienable lands of the public domain that corporations could
acquire. The Constitution could have followed the limitations on individuals, who could acquire
not more than 24 hectares of alienable lands of the public domain under the 1973 Constitution,
and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land
in the name of a corporation would be more effective in preventing the break-up of
farmlands. If the farmland is registered in the name of a corporation, upon the death of the
owner, his heirs would inherit shares in the corporation instead of subdivided parcels of the
farmland. This would prevent the continuing break-up of farmlands into smaller and smaller
plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on
individuals from acquiring more than the allowed area of alienable lands of the public
domain. Without the constitutional ban, individuals who already acquired the maximum area
of alienable lands of the public domain could easily set up corporations to acquire more
alienable public lands. An individual could own as many corporations as his means would allow
him. An individual could even hide his ownership of a corporation by putting his nominees as
stockholders of the corporation. The corporation is a convenient vehicle to circumvent the
constitutional limitation on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer
ownership of only a limited area of alienable land of the public domain to a qualified
individual.This constitutional intent is safeguarded by the provision prohibiting corporations
from acquiring alienable lands of the public domain, since the vehicle to circumvent the
constitutional intent is removed. The available alienable public lands are gradually decreasing
in the face of an ever-growing population. The most effective way to insure faithful adherence
to this constitutional intent is to grant or sell alienable lands of the public domain only to
individuals. This, it would seem, is the practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists
of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio
Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less
to regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the Freedom Islands and
further reclamation of about 250 hectares x x x, plus an option granted to AMARI to
subsequently reclaim another 350 hectares x x x.[66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84
hectares of the 750-hectare reclamation project have been reclaimed, and the rest of the
592.15 hectares are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for
PEAs actual cost in partially reclaiming the Freedom Islands. AMARI will also complete, at its
own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the
reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI
and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net
usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARIs share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides
that
x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or
conveyance of the title pertaining to AMARIs Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery
of the proper certificates of title covering AMARIs Land Share in the name of AMARI, x x x;
provided, that if more than seventy percent (70%) of the titled area at any given time
pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles
pertaining to AMARI, until such time when a corresponding proportionate area of additional
land pertaining to PEA has been titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint
venture PEAs statutory authority, rights and privileges to reclaim foreshore and submerged
areas in Manila Bay. Section 3.2.a of the Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right, authority and privilege to undertake
the Project in accordance with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and
its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under
the Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay
in view of Sections 2 and 3, Article XII of the 1987 Constitution which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands of the public
domain except by lease, x x x.(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila
Bay are alienable or disposable lands of the public domain. In its Memorandum,[67]PEA admits
that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable
and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other
means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative Order
No. 365 admitted in its Report and Recommendation to then President Fidel V.
Ramos, [R]eclaimed lands are classified as alienable and disposable lands of the public
domain.[69] The Legal Task Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights
of ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of
which PEA, as owner, may validly convey the same to any qualified person without violating
the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land, except
by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to reclaimed lands whose
ownership has passed on to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas
of Manila Bay are part of the lands of the public domain, waters x x x and other natural
resources and consequently owned by the State. As such, foreshore and submerged areas shall
not be alienated, unless they are classified as agricultural lands of the public domain. The mere
reclamation of these areas by PEA does not convert these inalienable natural resources of the
State into alienable or disposable lands of the public domain. There must be a law or
presidential proclamation officially classifying these reclaimed lands as alienable or disposable
and open to disposition or concession. Moreover, these reclaimed lands cannot be classified
as alienable or disposable if the law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to
disposition or concession which have been officially delimited and classified.[72] The President
has the authority to classify inalienable lands of the public domain into alienable or disposable
lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the
Executive Department attempted to sell the Roppongi property in Tokyo, Japan, which was
acquired by the Philippine Government for use as the Chancery of the Philippine
Embassy. Although the Chancery had transferred to another location thirteen years earlier, the
Court still ruled that, under Article 422[74] of the Civil Code, a property of public dominion
retains such character until formally declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only
if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]. A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335
[1960]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents
for lands reclaimed by PEA from the foreshore or submerged areas of Manila Bay.On January
19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA
for the 157.84 hectares comprising the partially reclaimed Freedom Islands. Subsequently, on
April 9, 1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309,
7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the
issuance of certificates of title corresponding to land patents. To this day, these certificates of
title are still in the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the Freedom
Islands as alienable or disposable lands of the public domain. PD No. 1085 and President
Aquinos issuance of a land patent also constitute a declaration that the Freedom Islands are
no longer needed for public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already
reclaimed the Freedom Islands although subsequently there were partial erosions on some
areas. The government had also completed the necessary surveys on these islands. Thus, the
Freedom Islands were no longer part of Manila Bay but part of the land mass.Section 3, Article
XII of the 1987 Constitution classifies lands of the public domain into agricultural, forest or
timber, mineral lands, and national parks. Being neither timber, mineral, nor national park
lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural
lands of the public domain. Under the 1987 Constitution, agricultural lands of the public
domain are the only natural resources that the State may alienate to qualified private
parties. All other natural resources, such as the seas or bays, are waters x x x owned by the
State forming part of the public domain, and are inalienable pursuant to Section 2, Article XII
of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation, reclaimed the islands under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of
1866, argues that if the ownership of reclaimed lands may be given to the party constructing
the works, then it cannot be said that reclaimed lands are lands of the public domain which
the State may not alienate.[75] Article 5 of the Spanish Law of Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or
by the provinces, pueblos or private persons, with proper permission, shall become the
property of the party constructing such works, unless otherwise provided by the terms of the
grant of authority. (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from
the sea only with proper permission from the State. Private parties could own the reclaimed
land only if not otherwise provided by the terms of the grant of authority. This clearly meant
that no one could reclaim from the sea without permission from the State because the sea is
property of public dominion. It also meant that the State could grant or withhold ownership of
the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged
to the State. Thus, a private person reclaiming from the sea without permission from the State
could not acquire ownership of the reclaimed land which would remain property of public
dominion like the sea it replaced.[76] Article 5 of the Spanish Law of Waters of 1866 adopted
the time-honored principle of land ownership that all lands that were not acquired from the
government, either by purchase or by grant, belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws subsequently
enacted on the disposition of public lands. In particular, CA No. 141 requires that lands of the
public domain must first be classified as alienable or disposable before the government can
alienate them. These lands must not be reserved for public or quasi-public
purposes.[78] Moreover, the contract between CDCP and the government was
executed after the effectivity of the 1973 Constitution which barred private corporations from
acquiring any kind of alienable land of the public domain. This contract could not have
converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power
to reclaim lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of areas under
water, whether foreshore or inland, shall be limited to the National Government or any
person authorized by it under a proper contract. (Emphasis supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of
areas under water could now be undertaken only by the National Government or by a person
contracted by the National Government. Private parties may reclaim from the sea only under
a contract with the National Government, and no longer by grant or permission as provided in
Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Governments implementing arm to undertake all reclamation projects of the government,
which shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity. Under such contract, a private party receives compensation for reclamation
services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of
portions of the reclaimed land, subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. The reclaimed land can be used as payment in
kind only if the reclaimed land is first classified as alienable or disposable land open to
disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15
hectares which are still submerged and forming part of Manila Bay. There is no legislative or
Presidential act classifying these submerged areas as alienable or disposable lands of the
public domain open to disposition. These submerged areas are not covered by any patent or
certificate of title. There can be no dispute that these submerged areas form part of the public
domain, and in their present state are inalienable and outside the commerce of man. Until
reclaimed from the sea, these submerged areas are, under the Constitution, waters x x x
owned by the State, forming part of the public domain and consequently inalienable. Only
when actually reclaimed from the sea can these submerged areas be classified as public
agricultural lands, which under the Constitution are the only natural resources that the State
may alienate. Once reclaimed and transformed into public agricultural lands, the government
may then officially classify these lands as alienable or disposable lands open to
disposition. Thereafter, the government may declare these lands no longer needed for public
service. Only then can these reclaimed lands be considered alienable or disposable lands of
the public domain and within the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its charter to
undertake public services that require the use of lands of the public domain. Under Section 5
of PD No. 1084, the functions of PEA include the following: [T]o own or operate railroads,
tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate
such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate
such storm drains as may be necessary. PEA is empowered to issue rules and regulations as
may be necessary for the proper use by private parties of any or all of the highways, roads,
utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their
use. Thus, part of the reclaimed foreshore and submerged lands held by the PEA would actually
be needed for public use or service since many of the functions imposed on PEA by its charter
constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and on
behalf of the National Government. The same section also states that [A]ll reclamation projects
shall be approved by the President upon recommendation of the PEA, and shall be undertaken
by the PEA or through a proper contract executed by it with any person or entity; x x x. Thus,
under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary
implementing agency of the National Government to reclaim foreshore and submerged lands
of the public domain. EO No. 525 recognized PEA as the government entity to undertake the
reclamation of lands and ensure their maximum utilization in promoting public welfare and
interests.[79] Since large portions of these reclaimed lands would obviously be needed for
public service, there must be a formal declaration segregating reclaimed lands no longer
needed for public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or
be owned by the PEA, could not automatically operate to classify inalienable lands into
alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore and
submerged lands of the public domain would automatically become alienable once reclaimed
by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No.
525, vests in the Department of Environment and Natural Resources (DENR for brevity) the
following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands,
mineral resources and, in the process of exercising such control, impose appropriate taxes,
fees, charges, rentals and any such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits,
concessions, lease agreements and such other privileges concerning the development,
exploration and utilization of the countrys marine, freshwater, and brackish water and over
all aquatic resources of the country and shall continue to oversee, supervise and police our
natural resources; cancel or cause to cancel such privileges upon failure, non-compliance or
violations of any regulation, order, and for all other causes which are in furtherance of the
conservation of natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the
public domain and serve as the sole agency responsible for classification, sub-classification,
surveying and titling of lands in consultation with appropriate agencies.[80] (Emphasis
supplied)
As manager, conservator and overseer of the natural resources of the State, DENR
exercises supervision and control over alienable and disposable public lands. DENR also
exercises exclusive jurisdiction on the management and disposition of all lands of the public
domain. Thus, DENR decides whether areas under water, like foreshore or submerged areas
of Manila Bay, should be reclaimed or not. This means that PEA needs authorization from
DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the
country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public
domain. Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable
under Sections 6[81] and 7[82] of CA No. 141. Once DENR decides that the reclaimed lands should
be so classified, it then recommends to the President the issuance of a proclamation classifying
the lands as alienable or disposable lands of the public domain open to disposition. We note
that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under
water, while PEA is vested with the power to undertake the physical reclamation of areas
under water, whether directly or through private contractors. DENR is also empowered to
classify lands of the public domain into alienable or disposable lands subject to the approval
of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed
alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas
does not make the reclaimed lands alienable or disposable lands of the public domain, much
less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands
of the public domain to PEA does not make the lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and
open to disposition and a declaration that these lands are not needed for public service, lands
reclaimed by PEA remain inalienable lands of the public domain. Only such an official
classification and formal declaration can convert reclaimed lands into alienable or disposable
lands of the public domain, open to disposition under the Constitution, Title I and Title III [83] of
CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public
Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a
branch or subdivision of the government shall not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title, except when authorized by Congress: x x
x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative Code of
1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following: x x x.
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -
It is not for the President to convey real property of the government on his or her own sole
will. Any such conveyance must be authorized and approved by a law enacted by the
Congress. It requires executive and legislative concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority
allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the Construction and Development Corporation
of the Philippines dated November 20, 1973 and/or any other contract or reclamation
covering the same area is hereby transferred, conveyed and assigned to the ownership and
administration of the Public Estates Authority established pursuant to PD No.
1084; Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and
respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations
of the Republic of the Philippines (Department of Public Highways) arising from, or incident
to, the aforesaid contract between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall
issue in favor of the Republic of the Philippines the corresponding shares of stock in said
entity with an issued value of said shares of stock (which) shall be deemed fully paid and non-
assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority
shall execute such contracts or agreements, including appropriate agreements with the
Construction and Development Corporation of the Philippines, as may be necessary to
implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor
of the Public Estates Authority without prejudice to the subsequent transfer to the
contractor or his assignees of such portion or portions of the land reclaimed or to be
reclaimed as provided for in the above-mentioned contract. On the basis of such patents,
the Land Registration Commission shall issue the corresponding certificate of title.
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that
-
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be
responsible for its administration, development, utilization or disposition in accordance with
the provisions of Presidential Decree No. 1084. Any and all income that the PEA may derive
from the sale, lease or use of reclaimed lands shall be used in accordance with the provisions
of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands. PD No. 1085 merely transferred ownership and administration of lands
reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA shall
belong to or be owned by PEA. EO No. 525 expressly states that PEA should dispose of its
reclaimed lands in accordance with the provisions of Presidential Decree No. 1084, the charter
of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire, administer,
deal in, subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed,
controlled and/or operated by the government. [87] (Emphasis supplied) There is, therefore,
legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands
of the public domain. PEA may sell to private parties its patrimonial properties in accordance
with the PEA charter free from constitutional limitations. The constitutional ban on private
corporations from acquiring alienable lands of the public domain does not apply to the sale of
PEAs patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory prohibition
against such sales and the constitutional ban does not apply to individuals. PEA, however,
cannot sell any of its alienable or disposable lands of the public domain to private corporations
since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain barred from
acquiring any kind of alienable land of the public domain, including government reclaimed
lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be
transferred by PEA to the contractor or his assignees (Emphasis supplied) would not apply to
private corporations but only to individuals because of the constitutional ban. Otherwise, the
provisions of PD No. 1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
 Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open
to disposition, and further declared no longer needed for public service, PEA would have to
conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of
Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting
PEA from holding a public auction.[88] Special Patent No. 3517 expressly states that the patent
is issued by authority of the Constitution and PD No. 1084, supplemented by Commonwealth
Act No. 141, as amended. This is an acknowledgment that the provisions of CA No. 141 apply
to the disposition of reclaimed alienable lands of the public domain unless otherwise provided
by law. Executive Order No. 654,[89] which authorizes PEA to determine the kind and manner
of payment for the transfer of its assets and properties, does not exempt PEA from the
requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of
payment, whether in kind and in installment, but does not authorize PEA to dispense with
public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property through
public bidding. Section 79 of PD No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause, or is no
longer needed, it shall, upon application of the officer accountable therefor, be inspected by
the head of the agency or his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsaleable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar body in the
presence of the auditor concerned or other authorized representative of the
Commission, after advertising by printed notice in the Official Gazette, or for not less than
three consecutive days in any newspaper of general circulation, or where the value of the
property does not warrant the expense of publication, by notices posted for a like period in
at least three public places in the locality where the property is to be sold. In the event that
the public auction fails, the property may be sold at a private sale at such price as may be
fixed by the same committee or body concerned and approved by the Commission.
It is only when the public auction fails that a negotiated sale is allowed, in which case the
Commission on Audit must approve the selling price.[90] The Commission on Audit implements
Section 79 of the Government Auditing Code through Circular No. 89-296[91] dated January 27,
1989. This circular emphasizes that government assets must be disposed of only through
public auction, and a negotiated sale can be resorted to only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs reclaimed
foreshore and submerged alienable lands of the public domain. Private corporations are
barred from bidding at the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10,
1991. PEA imposed a condition that the winning bidder should reclaim another 250 hectares
of submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of
the additional reclaimed areas in favor of the winning bidder.[92] No one, however, submitted
a bid. On December 23, 1994, the Government Corporate Counsel advised PEA it could sell the
Freedom Islands through negotiation, without need of another public bidding, because of the
failure of the public bidding on December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands
and the additional 250 hectares still to be reclaimed, it also granted an option to AMARI to
reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the
reclamation area to 750 hectares.[94] The failure of public bidding on December 10, 1991,
involving only 407.84 hectares,[95] is not a valid justification for a negotiated sale of 750
hectares, almost double the area publicly auctioned. Besides, the failure of public bidding
happened on December 10, 1991, more than three years before the signing of the original JVA
on April 25, 1995. The economic situation in the country had greatly improved during the
intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute
and clear: Private corporations or associations may not hold such alienable lands of the public
domain except by lease, x x x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA
and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the
constitutional ban. Section 6 of RA No. 6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of
any infrastructure projects undertaken through the build-operate-and-transfer arrangement
or any of its variations pursuant to the provisions of this Act, the project proponent x x x may
likewise be repaid in the form of a share in the revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed
land, subject to the constitutional requirements with respect to the ownership of the land: x
x x. (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government
BOT project, cannot acquire reclaimed alienable lands of the public domain in view of the
constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI,
authorizes local governments in land reclamation projects to pay the contractor or developer
in kind consisting of a percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may
consist of the grant of a portion or percentage of the reclaimed land or the industrial estate
constructed.
Although Section 302 of the Local Government Code does not contain a proviso similar to that
of the BOT Law, the constitutional restrictions on land ownership automatically apply even
though not expressly mentioned in the Local Government Code.
 Thus, under either the BOT Law or the Local Government Code, the contractor or
developer, if a corporate entity, can only be paid with leaseholds on portions of the reclaimed
land. If the contractor or developer is an individual, portions of the reclaimed land, not
exceeding 12 hectares[96] of non-agricultural lands, may be conveyed to him in ownership in
view of the legislative authority allowing such conveyance. This is the only way these
provisions of the BOT Law and the Local Government Code can avoid a direct collision with
Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to
public respondent PEA transformed such lands of the public domain to private lands. This
theory is echoed by AMARI which maintains that the issuance of the special patent leading to
the eventual issuance of title takes the subject land away from the land of public domain and
converts the property into patrimonial or private property. In short, PEA and AMARI contend
that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles,
the 157.84 hectares comprising the Freedom Islands have become private lands of PEA. In
support of their theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was
issued, the land ceased to be part of the public domain and became private
property over which the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate
of title based on a public land patent, the land covered thereby automatically
comes under the operation of Republic Act 496 subject to all the safeguards
provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
While the Director of Lands has the power to review homestead patents, he
may do so only so long as the land remains part of the public domain and
continues to be under his exclusive control; but once the patent is registered
and a certificate of title is issued, the land ceases to be part of the public
domain and becomes private property over which the Director of Lands has
neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and
free patents were issued covering the same in favor of the private
respondents, the said lots ceased to be part of the public domain and,
therefore, the Director of Lands lost jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally
effected a land grant to the Mindanao Medical Center, Bureau of Medical
Services, Department of Health, of the whole lot, validly sufficient for initial
registration under the Land Registration Act. Such land grant is constitutive of
a fee simple title or absolute title in favor of petitioner Mindanao Medical
Center. Thus, Section 122 of the Act, which governs the registration of grants
or patents involving public lands, provides that Whenever public lands in the
Philippine Islands belonging to the Government of the United States or to the
Government of the Philippines are alienated, granted or conveyed to persons
or to public or private corporations, the same shall be brought forthwith under
the operation of this Act (Land Registration Act, Act 496) and shall become
registered lands.
The first four cases cited involve petitions to cancel the land patents and the
corresponding certificates of titles issued to private parties. These four cases uniformly hold
that the Director of Lands has no jurisdiction over private lands or that upon issuance of the
certificate of title the land automatically comes under the Torrens System. The fifth case cited
involves the registration under the Torrens System of a 12.8-hectare public land granted by
the National Government to Mindanao Medical Center, a government unit under the
Department of Health. The National Government transferred the 12.8-hectare public land to
serve as the site for the hospital buildings and other facilities of Mindanao Medical Center,
which performed a public service. The Court affirmed the registration of the 12.8-hectare
public land in the name of Mindanao Medical Center under Section 122 of Act No. 496. This
fifth case is an example of a public land being registered under Act No. 496 without the land
losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name
of PEA, a wholly government owned corporation performing public as well as proprietary
functions. No patent or certificate of title has been issued to any private party. No one is asking
the Director of Lands to cancel PEAs patent or certificates of title. In fact, the thrust of the
instant petition is that PEAs certificates of title should remain with PEA, and the land covered
by these certificates, being alienable lands of the public domain, should not be sold to a private
corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant
private or public ownership of the land. Registration is not a mode of acquiring ownership but
is merely evidence of ownership previously conferred by any of the recognized modes of
acquiring ownership. Registration does not give the registrant a better right than what the
registrant had prior to the registration.[102] The registration of lands of the public domain under
the Torrens system, by itself, cannot convert public lands into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of
title the alienable land of the public domain automatically becomes private land cannot apply
to government units and entities like PEA. The transfer of the Freedom Islands to PEA was
made subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517
issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in
conformity with the provisions of Presidential Decree No. 1084, supplemented by
Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto the
Public Estates Authority the aforesaid tracts of land containing a total area of one million
nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters; the
technical description of which are hereto attached and made an integral part
hereof.(Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered
by PD No. 1084. Section 60 of CA No. 141 prohibits, except when authorized by Congress, the
sale of alienable lands of the public domain that are transferred to government units or
entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien
affecting title of the registered land even if not annotated on the certificate of
title.[104] Alienable lands of the public domain held by government entities under Section 60 of
CA No. 141 remain public lands because they cannot be alienated or encumbered unless
Congress passes a law authorizing their disposition. Congress, however, cannot authorize the
sale to private corporations of reclaimed alienable lands of the public domain because of the
constitutional ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA
No. 141 does not automatically convert alienable lands of the public domain into private or
patrimonial lands. The alienable lands of the public domain must be transferred to qualified
private parties, or to government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands. Otherwise, the constitutional ban will become
illusory if Congress can declare lands of the public domain as private or patrimonial lands in
the hands of a government agency tasked to dispose of public lands. This will allow private
corporations to acquire directly from government agencies limitless areas of lands which, prior
to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus, EO No.
525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be
undertaken in various parts of the country which need to be evaluated for consistency with
national programs;
Whereas, there is a need to give further institutional support to the Governments declared
policy to provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited
to the National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which
shall ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to
reorganize the national government including the transfer, abolition, or merger of functions
and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do
hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National
Government. All reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the President.
xxx.
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the
government agency charged with leasing or selling reclaimed lands of the public domain. The
reclaimed lands being leased or sold by PEA are not private lands, in the same manner that
DENR, when it disposes of other alienable lands, does not dispose of private lands but alienable
lands of the public domain. Only when qualified private parties acquire these lands will the
lands become private lands. In the hands of the government agency tasked and authorized
to dispose of alienable of disposable lands of the public domain, these lands are still public,
not private lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the public
domain as well as any and all kinds of lands. PEA can hold both lands of the public domain and
private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom
Islands are transferred to PEA and issued land patents or certificates of title in PEAs name does
not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as
private lands will sanction a gross violation of the constitutional ban on private corporations
from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as
PEA has now done under the Amended JVA, and transfer several hundreds of hectares of these
reclaimed and still to be reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII
of the 1987 Constitution which was intended to diffuse equitably the ownership of alienable
lands of the public domain among Filipinos, now numbering over 80 million strong.
 This scheme, if allowed, can even be applied to alienable agricultural lands of the public
domain since PEA can acquire x x x any and all kinds of lands. This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares of alienable lands of the
public domain under the guise that in the hands of PEA these lands are private lands. This will
result in corporations amassing huge landholdings never before seen in this country - creating
the very evil that the constitutional ban was designed to prevent. This will completely reverse
the clear direction of constitutional development in this country. The 1935 Constitution
allowed private corporations to acquire not more than 1,024 hectares of public lands. [105] The
1973 Constitution prohibited private corporations from acquiring any kind of public land, and
the 1987 Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496
or PD No. 1529, automatically become private lands is contrary to existing laws.Several laws
authorize lands of the public domain to be registered under the Torrens System or Act No. 496,
now PD No. 1529, without losing their character as public lands.Section 122 of Act No. 496,
and Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government
of the Philippine Islands are alienated, granted, or conveyed to persons or the public or
private corporations, the same shall be brought forthwith under the operation of this Act
and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith under the
operation of this Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No.
1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a province,
municipality, or branch or subdivision of the Government, as provided in Section 60 of CA No.
141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such
registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the
land shall not be alienated, encumbered or otherwise disposed of in a manner affecting its
title, except when authorized by Congress. This provision refers to government reclaimed,
foreshore and marshy lands of the public domain that have been titled but still cannot be
alienated or encumbered unless expressly authorized by Congress. The need for legislative
authority prevents the registered land of the public domain from becoming private land that
can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain
may be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of
the agency or instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf
may be titled in the name of a government corporation regulating port operations in the
country. Private property purchased by the National Government for expansion of an airport
may also be titled in the name of the government agency tasked to administer the
airport. Private property donated to a municipality for use as a town plaza or public school site
may likewise be titled in the name of the municipality.[106] All these properties become
properties of the public domain, and if already registered under Act No. 496 or PD No. 1529,
remain registered land. There is no requirement or provision in any existing law for the de-
registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain
become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the National Government new
certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is
expropriated or taken by eminent domain, the National Government, province, city or
municipality, or any other agency or instrumentality exercising such right shall file for
registration in the proper Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular property or interest expropriated, the
number of the certificate of title, and the nature of the public use. A memorandum of the
right or interest taken shall be made on each certificate of title by the Register of Deeds, and
where the fee simple is taken, a new certificate shall be issued in favor of the National
Government, province, city, municipality, or any other agency or instrumentality exercising
such right for the land so taken. The legal expenses incident to the memorandum of
registration or issuance of a new certificate of title shall be for the account of the authority
taking the land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private
or patrimonial lands. Lands of the public domain may also be registered pursuant to existing
laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom
Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of
AMARI, the Amended JVA is not a sale but a joint venture with a stipulation for reimbursement
of the original cost incurred by PEA for the earlier reclamation and construction works
performed by the CDCP under its 1973 contract with the Republic. Whether the Amended JVA
is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to cause the
issuance and delivery of the certificates of title conveying AMARIs Land Share in the name of
AMARI.[107]
 This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which can classify the reclaimed lands as alienable or disposable, and further declare
provides that private corporations shall not hold such alienable lands of the public domain them no longer needed for public service. Still, the transfer of such reclaimed
except by lease. The transfer of title and ownership to AMARI clearly means that AMARI will alienable lands of the public domain to AMARI will be void in view of Section
hold the reclaimed lands other than by lease. The transfer of title and ownership is a 3, Article XII of the 1987 Constitution which prohibits private corporations
disposition of the reclaimed lands, a transaction considered a sale or alienation under CA No. from acquiring any kind of alienable land of the public domain.
141,[108] the Government Auditing Code,[109] and Section 3, Article XII of the 1987 Constitution.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged Constitution. Under Article 1409[112] of the Civil Code, contracts whose object or purpose is
areas form part of the public domain and are inalienable. Lands reclaimed from foreshore and contrary to law, or whose object is outside the commerce of men, are inexistent and void from
submerged areas also form part of the public domain and are also inalienable, unless the beginning. The Court must perform its duty to defend and uphold the Constitution, and
converted pursuant to law into alienable or disposable lands of the public domain. Historically, therefore declares the Amended JVA null and void ab initio.
lands reclaimed by the government are sui generis, not available for sale to private parties
unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for
public use or public service. Alienable lands of the public domain, increasingly becoming scarce
natural resources, are to be distributed equitably among our ever-growing population. To Seventh issue: whether the Court is the proper forum to raise the issue of whether the
insure such equitable distribution, the 1973 and 1987 Constitutions have barred private Amended JVA is grossly disadvantageous to the government.
corporations from acquiring any kind of alienable land of the public domain. Those who
attempt to dispose of inalienable natural resources of the State, or seek to circumvent the
constitutional ban on alienation of lands of the public domain to private corporations, do so at Considering that the Amended JVA is null and void ab initio, there is no necessity to rule
on this last issue. Besides, the Court is not a trier of facts, and this last issue involves a
their own risk.
determination of factual matters.
We can now summarize our conclusions as follows:
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now Bay Development Corporation are PERMANENTLY ENJOINED from implementing the Amended
covered by certificates of title in the name of PEA, are alienable lands of the Joint Venture Agreement which is hereby declared NULL and VOID ab initio.
public domain. PEA may lease these lands to private corporations but may not
SO ORDERED.
sell or transfer ownership of these lands to private corporations. PEA may only
sell these lands to Philippine citizens, subject to the ownership limitations in Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing,
the 1987 Constitution and existing laws. Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, and Corona, JJ., concur.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable
natural resources of the public domain until classified as alienable or
disposable lands open to disposition and declared no longer needed for public
service. The government can make such classification and declaration only
after PEA has reclaimed these submerged areas. Only then can these lands
qualify as agricultural lands of the public domain, which are the only natural
resources the government can alienate. In their present state, the 592.15
hectares of submerged areas are inalienable and outside the commerce of
man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation,

ownership of 77.34 hectares[110] of the Freedom Islands, such transfer is void
for being contrary to Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of alienable land of the
public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares[111] of still submerged areas of Manila Bay, such transfer is void for
being contrary to Section 2, Article XII of the 1987 Constitution which prohibits
the alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government
G.R. No. 115381 December 23, 1994
KILUSANG MAYO UNO LABOR CENTER, petitioner,
vs.
HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY
BOARD, and the PROVINCIAL BUS OPERATORS ASSOCIATION OF THE
PHILIPPINES, respondents.
Potenciano A. Flores for petitioner.
Robert Anthony C. Sison, Cesar B. Brillantes and Jose Z. Galsim for private respondent.
Jose F. Miravite for movants.
KAPUNAN, J.:
Public utilities are privately owned and operated businesses whose service are essential to
the general public. They are enterprises which specially cater to the needs of the public and
conduce to their comfort and convenience. As such, public utility services are impressed with
public interest and concern. The same is true with respect to the business of common carrier
which holds such a peculiar relation to the public interest that there is superinduced upon it
the right of public regulation when private properties are affected with public interest,
hence, they cease to be juris privati only. When, therefore, one devotes his property to a use
in which the public has an interest, he, in effect grants to the public an interest in that use,
and must submit to the control by the public for the common good, to the extent of the
interest he has thus created.1
An abdication of the licensing and regulatory government agencies of their functions as the
instant petition seeks to show, is indeed lamentable. Not only is it an unsound administrative
policy but it is inimical to public trust and public interest as well.
The instant petition for certiorari assails the constitutionality and validity of certain
memoranda, circulars and/or orders of the Department of Transportation and
Communications (DOTC) and the Land Transportation Franchising and Regulatory Board
LTFRB)2 which, among others, (a) authorize provincial bus and jeepney operators to increase
or decrease the prescribed transportation fares without application therefor with the LTFRB
and without hearing and approval thereof by said agency in violation of Sec. 16(c) of
Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, and in
derogation of LTFRB's duty to fix and determine just and reasonable fares by delegating that
function to bus operators, and (b) establish a presumption of public need in favor of
applicants for certificates of public convenience (CPC) and place on the oppositor the burden
of proving that there is no need for the proposed service, in patent violation not only of Sec.
16(c) of CA 146, as amended, but also of Sec. 20(a) of the same Act mandating that fares
should be "just and reasonable." It is, likewise, violative of the Rules of Court which places
upon each party the burden to prove his own affirmative allegations.3 The offending
provisions contained in the questioned issuances pointed out by petitioner, have resulted in
the introduction into our highways and thoroughfares thousands of old and smoke-belching
buses, many of which are right-hand driven, and have exposed our consumers to the burden
of spiraling costs of public transportation without hearing and due process.
The following memoranda, circulars and/or orders are sought to be nullified by the instant
petition, viz: (a) DOTC Memorandum Order 90-395, dated June 26, 1990 relative to the
implementation of a fare range scheme for provincial bus services in the country; (b) DOTC
Department Order No.
92-587, dated March 30, 1992, defining the policy framework on the regulation of transport
services; (c) DOTC Memorandum dated October 8, 1992, laying down rules and procedures
to implement Department Order No. 92-587; (d) LTFRB Memorandum Circular No. 92-009,
providing implementing guidelines on the DOTC Department Order No. 92-587; and (e)
LTFRB Order dated March 24, 1994 in Case No. 94-3112.
The relevant antecedents are as follows:
On June 26, 1990; then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No.
90-395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators
to charge passengers rates within a range of 15% above and 15% below the LTFRB official
rate for a period of one (1) year. The text of the memorandum order reads in full:
One of the policy reforms and measures that is in line with the thrusts
and the priorities set out in the Medium-Term Philippine Development
Plan (MTPDP) 1987 1992) is the liberalization of regulations in the
transport sector. Along this line, the Government intends to move away
gradually from regulatory policies and make progress towards greater
reliance on free market forces.
Based on several surveys and observations, bus companies are already
charging passenger rates above and below the official fare declared by
LTFRB on many provincial routes. It is in this context that some form of
liberalization on public transport fares is to be tested on a pilot basis.
In view thereof, the LTFRB is hereby directed to immediately publicize a
fare range scheme for all provincial bus routes in country (except those
operating within Metro Manila). Transport Operators shall be allowed to
charge passengers within a range of fifteen percent (15%) above and
fifteen percent (15%) below the LTFRB official rate for a period of one
year.
Guidelines and procedures for the said scheme shall be prepared by
LTFRB in coordination with the DOTC Planning Service.
 The implementation of the said fare range scheme shall start on 6 August
1990.
For compliance. (Emphasis ours.)
Finding the implementation of the fare range scheme "not legally feasible," Remedios A.S.
Fernando submitted the following memorandum to Oscar M. Orbos on July 24, 1990, to wit:
With reference to DOTC Memorandum Order No. 90-395 dated 26 June
1990 which the LTFRB received on 19 July 1990, directing the Board "to
immediately publicize a fare range scheme for all provincial bus routes in
the country (except those operating within Metro Manila)" that will allow
operators "to charge passengers within a range of fifteen percent (15%)
above and fifteen percent (15%) below the LTFRB official rate for a period
of one year" the undersigned is respectfully adverting the Secretary's
attention to the following for his consideration:
1. Section 16(c) of the Public Service Act prescribes
the following for the fixing and determination of rates
(a) the rates to be approved should be proposed
by public service operators; (b) there should be a
publication and notice to concerned or affected
parties in the territory affected; (c) a public hearing
should be held for the fixing of the rates; hence,
implementation of the proposed fare range scheme
on August 6 without complying with the
requirements of the Public Service Act may not be
legally feasible.
2. To allow bus operators in the country to charge
fares fifteen (15%) above the present LTFRB fares in
the wake of the devastation, death and suffering
caused by the July 16 earthquake will not be socially
warranted and will be politically unsound; most likely
public criticism against the DOTC and the LTFRB will
be triggered by the untimely motu
propioimplementation of the proposal by the mere
expedient of publicizing the fare range scheme
without calling a public hearing, which scheme many
as early as during the Secretary's predecessor know
through newspaper reports and columnists'
comments to be Asian Development Bank and World
Bank inspired.
3. More than inducing a reduction in bus fares by
fifteen percent (15%) the implementation of the
proposal will instead trigger an upward adjustment in
bus fares by fifteen percent (15%) at a time when
hundreds of thousands of people in Central and
Northern Luzon, particularly in Central Pangasinan, La
Union, Baguio City, Nueva Ecija, and the Cagayan
Valley are suffering from the devastation and havoc
caused by the recent earthquake.
4. In lieu of the said proposal, the DOTC with its
agencies involved in public transportation can
consider measures and reforms in the industry that
will be socially uplifting, especially for the people in
the areas devastated by the recent earthquake.
In view of the foregoing considerations, the undersigned respectfully
suggests that the implementation of the proposed fare range scheme this
year be further studied and evaluated.
On December 5, 1990, private respondent Provincial Bus Operators Association of the
Philippines, Inc. (PBOAP) filed an application for fare rate increase. An across-the-board
increase of eight and a half centavos (P0.085) per kilometer for all types of provincial buses
with a minimum-maximum fare range of fifteen (15%) percent over and below the proposed
basic per kilometer fare rate, with the said minimum-maximum fare range applying only to
ordinary, first class and premium class buses and a fifty-centavo (P0.50) minimum per
kilometer fare for aircon buses, was sought.
On December 6, 1990, private respondent PBOAP reduced its applied proposed fare to an
across-the-board increase of six and a half (P0.065) centavos per kilometer for ordinary
buses. The decrease was due to the drop in the expected price of diesel.
The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C.
Bautista alleging that the proposed rates were exorbitant and unreasonable and that the
application contained no allegation on the rate of return of the proposed increase in rates.
On December 14, 1990, public respondent LTFRB rendered a decision granting the fare rate
increase in accordance with the following schedule of fares on a straight computation
method, viz:
AUTHORIZED FARES
LUZON
MIN. OF 5 KMS. SUCCEEDING KM.
REGULAR P1.50 P0.37
STUDENT P1.15 P0.28
VISAYAS/MINDANAO
 REGULAR P1.60 P0.375
STUDENT P1.20 P0.285
FIRST CLASS (PER KM.)
LUZON P0.385
VISAYAS/
MINDANAO P0.395
PREMIERE CLASS (PER KM.)
LUZON P0.395
VISAYAS/
MINDANAO P0.405
AIRCON (PER KM.) P0.415.4
On March 30, 1992, then Secretary of the Department of Transportation and
Communications Pete Nicomedes Prado issued Department Order No.
92-587 defining the policy framework on the regulation of transport services. The full text of
the said order is reproduced below in view of the importance of the provisions contained
therein:
WHEREAS, Executive Order No. 125 as amended, designates the
Department of Transportation and Communications (DOTC) as the
primary policy, planning, regulating and implementing agency on
transportation;
WHEREAS, to achieve the objective of a viable, efficient, and dependable
transportation system, the transportation regulatory agencies under or
attached to the DOTC have to harmonize their decisions and adopt a
common philosophy and direction;
WHEREAS, the government proposes to build on the successful
liberalization measures pursued over the last five years and bring the
transport sector nearer to a balanced longer term regulatory framework;
NOW, THEREFORE, pursuant to the powers granted by laws to the DOTC,
the following policies and principles in the economic regulation of land,
air, and water transportation services are hereby adopted:
1. Entry into and exit out of the industry. Following the Constitutional
dictum against monopoly, no franchise holder shall be permitted to
maintain a monopoly on any route. A minimum of two franchise holders
shall be permitted to operate on any route.
The requirements to grant a certificate to operate, or certificate of public
convenience, shall be: proof of Filipino citizenship, financial capability,
public need, and sufficient insurance cover to protect the riding public.
In determining public need, the presumption of need for a service shall be
deemed in favor of the applicant. The burden of proving that there is no
need for a proposed service shall be with the oppositor(s).
In the interest of providing efficient public transport services, the use of
the "prior operator" and the "priority of filing" rules shall be
discontinued. The route measured capacity test or other similar tests of
demand for vehicle/vessel fleet on any route shall be used only as a guide
in weighing the merits of each franchise application and not as a limit to
the services offered.
Where there are limitations in facilities, such as congested road space in
urban areas, or at airports and ports, the use of demand management
measures in conformity with market principles may be considered.
The right of an operator to leave the industry is recognized as a business
decision, subject only to the filing of appropriate notice and following a
phase-out period, to inform the public and to minimize disruption of
services.
2. Rate and Fare Setting. Freight rates shall be freed gradually from
government controls. Passenger fares shall also be deregulated, except
for the lowest class of passenger service (normally third class passenger
transport) for which the government will fix indicative or reference fares.
Operators of particular services may fix their own fares within a range
15% above and below the indicative or reference rate.
Where there is lack of effective competition for services, or on specific
routes, or for the transport of particular commodities, maximum
mandatory freight rates or passenger fares shall be set temporarily by the
government pending actions to increase the level of competition.
For unserved or single operator routes, the government shall contract
such services in the most advantageous terms to the public and the
government, following public bids for the services. The advisability of
bidding out the services or using other kinds of incentives on such routes
shall be studied by the government.
3. Special Incentives and Financing for Fleet Acquisition. As a matter of
policy, the government shall not engage in special financing and incentive
programs, including direct subsidies for fleet acquisition and expansion.
Only when the market situation warrants government intervention shall
programs of this type be considered. Existing programs shall be phased
out gradually.
 The Land Transportation Franchising and Regulatory Board, the Civil
Aeronautics Board, the Maritime Industry Authority are hereby directed
to submit to the Office of the Secretary, within forty-five (45) days of this
Order, the detailed rules and procedures for the Implementation of the
policies herein set forth. In the formulation of such rules, the concerned
agencies shall be guided by the most recent studies on the subjects, such
as the Provincial Road Passenger Transport Study, the Civil Aviation
Master Plan, the Presidential Task Force on the Inter-island Shipping
Industry, and the Inter-island Liner Shipping Rate Rationalization Study.
For the compliance of all concerned. (Emphasis ours)
On October 8, 1992, public respondent Secretary of the Department of Transportation and
Communications Jesus B. Garcia, Jr. issued a memorandum to the Acting Chairman of the
LTFRB suggesting swift action on the adoption of rules and procedures to implement above-
quoted Department Order No. 92-587 that laid down deregulation and other liberalization
policies for the transport sector. Attached to the said memorandum was a revised draft of
the required rules and procedures covering (i) Entry Into and Exit Out of the Industry and (ii)
Rate and Fare Setting, with comments and suggestions from the World Bank incorporated
therein. Likewise, resplendent from the said memorandum is the statement of the DOTC
Secretary that the adoption of the rules and procedures is a pre-requisite to the approval of
the Economic Integration Loan from the World Bank.5
On February 17, 1993, the LTFRB issued Memorandum Circular
No. 92-009 promulgating the guidelines for the implementation of DOTC Department Order
No. 92-587. The Circular provides, among others, the following challenged portions:
xxx xxx xxx
IV. Policy Guidelines on the Issuance of Certificate of Public Convenience.
The issuance of a Certificate of Public Convenience is determined by
public need. The presumption of public need for a service shall be deemed
in favor of the applicant, while burden of proving that there is no need for
the proposed service shall be the oppositor'(s).
xxx xxx xxx
V. Rate and Fare Setting
The control in pricing shall be liberalized to introduce price competition
complementary with the quality of service, subject to prior notice and
public hearing. Fares shall not be provisionally authorized without public
hearing.
A. On the General Structure of Rates
1. The existing authorized fare range system of plus or minus 15 per cent
for provincial buses and jeepneys shall be widened to 20% and -25% limit
in 1994 with the authorized fare to be replaced by an indicative or
reference rate as the basis for the expanded fare range.
2. Fare systems for aircon buses are liberalized to cover first class and
premier services.
xxx xxx xxx
(Emphasis ours).
Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation
policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of
the prescribed fare without first having filed a petition for the purpose and without the
benefit of a public hearing, announced a fare increase of twenty (20%) percent of the existing
fares. Said increased fares were to be made effective on March 16, 1994.
On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward
adjustment of bus fares.
On March 24, 1994, the LTFRB issued one of the assailed orders dismissing the petition for
lack of merit. The dispositive portion reads:
PREMISES CONSIDERED, this Board after considering the arguments of
the parties, hereby DISMISSES FOR LACK OF MERIT the petition filed in
the above-entitled case. This petition in this case was resolved with
dispatch at the request of petitioner to enable it to immediately avail of
the legal remedies or options it is entitled under existing laws.
SO ORDERED.6
Hence, the instant petition for certiorari with an urgent prayer for issuance of a temporary
restraining order.
The Court, on June 20, 1994, issued a temporary restraining order enjoining, prohibiting and
preventing respondents from implementing the bus fare rate increase as well as the
questioned orders and memorandum circulars. This meant that provincial bus fares were
rolled back to the levels duly authorized by the LTFRB prior to March 16, 1994. A moratorium
was likewise enforced on the issuance of franchises for the operation of buses, jeepneys, and
taxicabs.
Petitioner KMU anchors its claim on two (2) grounds. First, the authority given by respondent
LTFRB to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent,
later increased to plus twenty (20%) and minus twenty-five (-25%) percent, over and above
the existing authorized fare without having to file a petition for the purpose, is
unconstitutional, invalid and illegal. Second, the establishment of a presumption of public
need in favor of an applicant for a proposed transport service without having to prove public
necessity, is illegal for being violative of the Public Service Act and the Rules of Court.
In its Comment, private respondent PBOAP, while not actually touching upon the issues
raised by the petitioner, questions the wisdom and the manner by which the instant petition
was filed. It asserts that the petitioner has no legal standing to sue or has no real interest in
the case at bench and in obtaining the reliefs prayed for.
In their Comment filed by the Office of the Solicitor General, public respondents DOTC
Secretary Jesus B. Garcia, Jr. and the LTFRB asseverate that the petitioner does not have the
standing to maintain the instant suit. They further claim that it is within DOTC and LTFRB's
authority to set a fare range scheme and establish a presumption of public need in
applications for certificates of public convenience.
We find the instant petition impressed with merit.
At the outset, the threshold issue of locus standi must be struck. Petitioner KMU has the
standing to sue.
The requirement of locus standi inheres from the definition of judicial power. Section 1 of
Article VIII of the Constitution provides:
xxx xxx xxx
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.
In Lamb v. Phipps,7 we ruled that judicial power is the power to hear and decide causes
pending between parties who have the right to sue in the courts of law and equity. Corollary
to this provision is the principle of locus standi of a party litigant. One who is directly affected
by and whose interest is immediate and substantial in the controversy has the standing to
sue. The rule therefore requires that a party must show a personal stake in the outcome of
the case or an injury to himself that can be redressed by a favorable decision so as to warrant
an invocation of the court's jurisdiction and to justify the exercise of the court's remedial
powers in his behalf.8
In the case at bench, petitioner, whose members had suffered and continue to suffer grave
and irreparable injury and damage from the implementation of the questioned memoranda,
circulars and/or orders, has shown that it has a clear legal right that was violated and
continues to be violated with the enforcement of the challenged memoranda, circulars
and/or orders. KMU members, who avail of the use of buses, trains and jeepneys everyday,
are directly affected by the burdensome cost of arbitrary increase in passenger fares. They
are part of the millions of commuters who comprise the riding public. Certainly, their rights
must be protected, not neglected nor ignored.
Assuming arguendo that petitioner is not possessed of the standing to sue, this court is ready
to brush aside this barren procedural infirmity and recognize the legal standing of the
petitioner in view of the transcendental importance of the issues raised. And this act of
liberality is not without judicial precedent. As early as the Emergency Powers Cases, this
Court had exercised its discretion and waived the requirement of proper party. In the recent
case of Kilosbayan, Inc., et al. v. Teofisto Guingona, Jr., et al.,9 we ruled in the same lines and
enumerated some of the cases where the same policy was adopted, viz:
. . . A party's standing before this Court is a procedural technicality which
it may, in the exercise of its discretion, set aside in view of the
importance of the issues raised. In the landmark Emergency Powers
Cases, [G.R. No. L-2044 (Araneta v. Dinglasan); G.R. No. L-2756 (Araneta
v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas); G.R. No.
L-3055 (Guerrero v. Commissioner of Customs); and G.R. No. L-3056
(Barredo v. Commission on Elections), 84 Phil. 368 (1949)], this Court
brushed aside this technicality because "the transcendental importance
to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure.
(Avelino vs. Cuenco, G.R. No. L-2621)." Insofar as taxpayers' suits are
concerned, this Court had declared that it "is not devoid of discretion as
to whether or not it should be entertained," (Tan v. Macapagal, 43 SCRA
677, 680 [1972]) or that it "enjoys an open discretion to entertain the
same or not." [Sanidad v. COMELEC, 73 SCRA 333 (1976)].
xxx xxx xxx
In line with the liberal policy of this Court on locus standi, ordinary
taxpayers, members of Congress, and even association of planters, and
non-profit civic organizations were allowed to initiate and prosecute
actions before this court to question the constitutionality or validity of
laws, acts, decisions, rulings, or orders of various government agencies or
instrumentalities. Among such cases were those assailing the
constitutionality of (a) R.A. No. 3836 insofar as it allows retirement
gratuity and commutation of vacation and sick leave to Senators and
Representatives and to elective officials of both Houses of Congress
(Philippine Constitution Association, Inc. v. Gimenez, 15 SCRA 479
[1965]); (b) Executive Order No. 284, issued by President Corazon C.
Aquino on 25 July 1987, which allowed members of the cabinet, their
undersecretaries, and assistant secretaries to hold other government
offices or positions (Civil Liberties Union v. Executive Secretary, 194 SCRA
317 [1991]); (c) the automatic appropriation for debt service in the
General Appropriations Act (Guingona v. Carague, 196 SCRA 221 [1991];
(d) R.A. No. 7056 on the holding of desynchronized elections (Osmea v.
Commission on Elections, 199 SCRA 750 [1991]); (e) P.D. No. 1869 (the
charter of the Philippine Amusement and Gaming Corporation) on the
ground that it is contrary to morals, public policy, and order (Basco v.
Philippine Amusement and Gaming Corp., 197 SCRA 52 [1991]); and (f)
R.A. No. 6975, establishing the Philippine National Police. (Carpio v.
Executive Secretary, 206 SCRA 290 [1992]).
Other cases where we have followed a liberal policy regarding locus
standi include those attacking the validity or legality of (a) an order
allowing the importation of rice in the light of the prohibition imposed by
R.A. No. 3452 (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano,
13 SCRA 377 [1965]; (b) P.D. Nos. 991 and 1033 insofar as they proposed
amendments to the Constitution and P.D. No. 1031 insofar as it directed
the COMELEC to supervise, control, hold, and conduct the referendum-
plebiscite on 16 October 1976 (Sanidad v. Commission on
Elections, supra); (c) the bidding for the sale of the 3,179 square meters
of land at Roppongi, Minato-ku, Tokyo, Japan (Laurel v. Garcia, 187 SCRA
797 [1990]); (d) the approval without hearing by the Board of
Investments of the amended application of the Bataan Petrochemical
Corporation to transfer the site of its plant from Bataan to Batangas and
the validity of such transfer and the shift of feedstock from naphtha only
to naphtha and/or liquefied petroleum gas (Garcia v. Board of
Investments, 177 SCRA 374 [1989]; Garcia v. Board of Investments, 191
SCRA 288 [1990]); (e) the decisions, orders, rulings, and resolutions of the
Executive Secretary, Secretary of Finance, Commissioner of Internal
Revenue, Commissioner of Customs, and the Fiscal Incentives Review
Board exempting the National Power Corporation from indirect tax and
duties (Maceda v. Macaraig, 197 SCRA 771 [1991]); (f) the orders of the
Energy Regulatory Board of 5 and 6 December 1990 on the ground that
the hearings conducted on the second provisional increase in oil prices
did not allow the petitioner substantial cross-examination; (Maceda v.
Energy Regulatory Board, 199 SCRA 454 [1991]); (g) Executive Order No.
478 which levied a special duty of P0.95 per liter of imported oil products
(Garcia v. Executive Secretary, 211 SCRA 219 [1992]); (h) resolutions of
the Commission on Elections concerning the apportionment, by district,
of the number of elective members of Sanggunians (De Guia vs.
Commission on Elections, 208 SCRA 420 [1992]); and (i) memorandum
orders issued by a Mayor affecting the Chief of Police of Pasay City (Pasay
Law and Conscience Union, Inc. v. Cuneta, 101 SCRA 662 [1980]).
In the 1975 case of Aquino v. Commission on Elections (62 SCRA 275
[1975]), this Court, despite its unequivocal ruling that the petitioners
therein had no personality to file the petition, resolved nevertheless to
pass upon the issues raised because of the far-reaching implications of
the petition. We did no less in De Guia v. COMELEC (Supra) where,
although we declared that De Guia "does not appear to have locus standi,
a standing in law, a personal or substantial interest," we brushed aside
the procedural infirmity "considering the importance of the issue
involved, concerning as it does the political exercise of qualified voters
affected by the apportionment, and petitioner alleging abuse of
discretion and violation of the Constitution by respondent."
Now on the merits of the case.
On the fare range scheme.
Section 16(c) of the Public Service Act, as amended, reads:
Sec. 16. Proceedings of the Commission, upon notice and hearing. The
Commission shall have power, upon proper notice and hearing in
accordance with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving provisions to the
contrary:
xxx xxx xxx
(c) To fix and determine individual or joint rates, tolls, charges,
classifications, or schedules thereof, as well as commutation, mileage
kilometrage, and other special rates which shall be imposed, observed,
and followed thereafter by any public service: Provided, That the
Commission may, in its discretion, approve rates proposed by public
services provisionally and without necessity of any hearing; but it shall
call a hearing thereon within thirty days thereafter, upon publication and
notice to the concerns operating in the territory affected: Provided,
further, That in case the public service equipment of an operator is used
principally or secondarily for the promotion of a private business, the net
profits of said private business shall be considered in relation with the
public service of such operator for the purpose of fixing the rates.
(Emphasis ours).
xxx xxx xxx
Under the foregoing provision, the Legislature delegated to the defunct Public
Service Commission the power of fixing the rates of public services. Respondent
LTFRB, the existing regulatory body today, is likewise vested with the same under
Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said executive
order authorizes LTFRB "to determine, prescribe, approve and periodically review
and adjust, reasonable fares, rates and other related charges, relative to the
operation of public land transportation services provided by motorized vehicles."
Such delegation of legislative power to an administrative agency is permitted in order to
adapt to the increasing complexity of modern life. As subjects for governmental regulation
multiply, so does the difficulty of administering the laws. Hence, specialization even in
legislation has become necessary. Given the task of determining sensitive and delicate
matters as
route-fixing and rate-making for the transport sector, the responsible regulatory body is
entrusted with the power of subordinate legislation. With this authority, an administrative
body and in this case, the LTFRB, may implement broad policies laid down in a statute by
"filling in" the details which the Legislature may neither have time or competence to provide.
However, nowhere under the aforesaid provisions of law are the regulatory bodies, the PSC
and LTFRB alike, authorized to delegate that power to a common carrier, a transport
operator, or other public service.
In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a
fare range over and above the authorized existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative authority. Potestas delegata non delegari
potest. What has been delegated cannot be delegated. This doctrine is based on the ethical
principle that such a delegated power constitutes not only a right but a duty to be performed
by the delegate through the instrumentality of his own judgment and not through the
intervening mind of another.10 A further delegation of such power would indeed constitute a
negation of the duty in violation of the trust reposed in the delegate mandated to discharge
it directly.11 The policy of allowing the provincial bus operators to change and increase their
fares at will would result not only to a chaotic situation but to an anarchic state of affairs.
This would leave the riding public at the mercy of transport operators who may increase
fares every hour, every day, every month or every year, whenever it pleases them or
whenever they deem it "necessary" to do so. In Panay Autobus Co. v. Philippine Railway
Co.,12 where respondent Philippine Railway Co. was granted by the Public Service
Commission the authority to change its freight rates at will, this Court categorically declared
that:
In our opinion, the Public Service Commission was not authorized by law
to delegate to the Philippine Railway Co. the power of altering its freight
rates whenever it should find it necessary to do so in order to meet the
competition of road trucks and autobuses, or to change its freight rates at
will, or to regard its present rates as maximum rates, and to fix lower
rates whenever in the opinion of the Philippine Railway Co. it would be to
its advantage to do so.
The mere recital of the language of the application of the Philippine
Railway Co. is enough to show that it is untenable. The Legislature has
delegated to the Public Service Commission the power of fixing the rates
of public services, but it has not authorized the Public Service Commission
to delegate that power to a common carrier or other public service. The
rates of public services like the Philippine Railway Co. have been
approved or fixed by the Public Service Commission, and any change in
such rates must be authorized or approved by the Public Service
Commission after they have been shown to be just and reasonable. The
public service may, of course, propose new rates, as the Philippine
Railway Co. did in case No. 31827, but it cannot lawfully make said new
rates effective without the approval of the Public Service Commission,
and the Public Service Commission itself cannot authorize a public service
to enforce new rates without the prior approval of said rates by the
commission. The commission must approve new rates when they are
submitted to it, if the evidence shows them to be just and reasonable,
otherwise it must disapprove them. Clearly, the commission cannot
determine in advance whether or not the new rates of the Philippine
Railway Co. will be just and reasonable, because it does not know what
those rates will be.
In the present case the Philippine Railway Co. in effect asked for
permission to change its freight rates at will. It may change them every
day or every hour, whenever it deems it necessary to do so in order to
meet competition or whenever in its opinion it would be to its advantage.
Such a procedure would create a most unsatisfactory state of affairs and
largely defeat the purposes of the public service law.13(Emphasis ours).
One veritable consequence of the deregulation of transport fares is a compounded fare. If
transport operators will be authorized to impose and collect an additional amount equivalent
to 20% over and above the authorized fare over a period of time, this will unduly prejudice a
commuter who will be made to pay a fare that has been computed in a manner similar to
those of compounded bank interest rates.
Picture this situation. On December 14, 1990, the LTFRB authorized provincial bus operators
to collect a thirty-seven (P0.37) centavo per kilometer fare for ordinary buses. At the same
time, they were allowed to impose and collect a fare range of plus or minus 15% over the
authorized rate. Thus P0.37 centavo per kilometer authorized fare plus P0.05 centavos
(which is 15% of P0.37 centavos) is equivalent to P0.42 centavos, the allowed rate in 1990.
Supposing the LTFRB grants another five (P0.05) centavo increase per kilometer in 1994,
then, the base or reference for computation would have to be P0.47 centavos (which is P0.42
+ P0.05 centavos). If bus operators will exercise their authority to impose an additional 20%
over and above the authorized fare, then the fare to be collected shall amount to P0.56 (that
is, P0.47 authorized LTFRB rate plus 20% of P0.47 which is P0.29). In effect, commuters will
be continuously subjected, not only to a double fare adjustment but to a compounding fare
as well. On their part, transport operators shall enjoy a bigger chunk of the pie. Aside from
fare increase applied for, they can still collect an additional amount by virtue of the
authorized fare range. Mathematically, the situation translates into the following:
Year** LTFRB authorized Fare Range Fare to be
rate*** collected per
kilometer
1990 P0.37 15% (P0.05) P0.42
1994 P0.42 + 0.05 = 0.47 20% (P0.09) P0.56
1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73
2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94
Moreover, rate making or rate fixing is not an easy task. It is a delicate and sensitive
government function that requires dexterity of judgment and sound discretion with the
settled goal of arriving at a just and reasonable rate acceptable to both the public utility and
the public. Several factors, in fact, have to be taken into consideration before a balance could
be achieved. A rate should not be confiscatory as would place an operator in a situation
where he will continue to operate at a loss. Hence, the rate should enable public utilities to
generate revenues sufficient to cover operational costs and provide reasonable return on the
investments. On the other hand, a rate which is too high becomes discriminatory. It is
contrary to public interest. A rate, therefore, must be reasonable and fair and must
be affordable to the end user who will utilize the services.
Given the complexity of the nature of the function of rate-fixing and its far-reaching effects
on millions of commuters, government must not relinquish this important function in favor
of those who would benefit and profit from the industry. Neither should the requisite notice
and hearing be done away with. The people, represented by reputable oppositors, deserve to
be given full opportunity to be heard in their opposition to any fare increase.
The present administrative procedure, 14 to our mind, already mirrors an orderly and
satisfactory arrangement for all parties involved. To do away with such a procedure and
allow just one party, an interested party at that, to determine what the rate should be, will
undermine the right of the other parties to due process. The purpose of a hearing is precisely
to determine what a just and reasonable rate is.15 Discarding such procedural and
constitutional right is certainly inimical to our fundamental law and to public interest.
On the presumption of public need.
A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the
operation of land transportation services for public use as required by law. Pursuant to
Section 16(a) of the Public Service Act, as amended, the following requirements must be met
before a CPC may be granted, to wit: (i) the applicant must be a citizen of the Philippines, or
a corporation or co-partnership, association or joint-stock company constituted and
organized under the laws of the Philippines, at least 60 per centum of its stock or paid-up
capital must belong entirely to citizens of the Philippines; (ii) the applicant must be financially
capable of undertaking the proposed service and meeting the responsibilities incident to its
operation; and (iii) the applicant must prove that the operation of the public service proposed
and the authorization to do business will promote the public interest in a proper and suitable
manner. It is understood that there must be proper notice and hearing before the PSC can
exercise its power to issue a CPC.
While adopting in toto the foregoing requisites for the issuance of a CPC, LTFRB
Memorandum Circular No. 92-009, Part IV, provides for yet incongruous and contradictory
policy guideline on the issuance of a CPC. The guidelines states:
The issuance of a Certificate of Public Convenience is determined by
public need. The presumption of public need for a service shall be deemed
in favor of the applicant, while the burden of proving that there is no need
for the proposed service shall be the oppositor's. (Emphasis ours).
The above-quoted provision is entirely incompatible and inconsistent with Section 16(c)(iii) of
the Public Service Act which requires that before a CPC will be issued, the applicant must
prove by proper notice and hearing that the operation of the public service proposed will
promote public interest in a proper and suitable manner. On the contrary, the policy
guideline states that the presumption of public need for a public service shall be deemed in
favor of the applicant. In case of conflict between a statute and an administrative order, the
former must prevail.
By its terms, public convenience or necessity generally means something fitting or suited to
the public need.16 As one of the basic requirements for the grant of a CPC, public
convenience and necessity exists when the proposed facility or service meets a reasonable
want of the public and supply a need which the existing facilities do not adequately supply.
The existence or
non-existence of public convenience and necessity is therefore a question of fact that must
be established by evidence, real and/or testimonial; empirical data; statistics and such other
means necessary, in a public hearing conducted for that purpose. The object and purpose of
such procedure, among other things, is to look out for, and protect, the interests of both the
public and the existing transport operators.
Verily, the power of a regulatory body to issue a CPC is founded on the condition that after
full-dress hearing and investigation, it shall find, as a fact, that the proposed operation is for
the convenience of the public.17 Basic convenience is the primary consideration for which a
CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators
in subject routes must be given an opportunity to offer proof and oppose the application.
Therefore, an applicant must, at all times, be required to prove his capacity and capability to
furnish the service which he has undertaken to
render. 18 And all this will be possible only if a public hearing were conducted for that
purpose.
Otherwise stated, the establishment of public need in favor of an applicant reverses well-
settled and institutionalized judicial, quasi-judicial and administrative procedures. It allows
the party who initiates the proceedings to prove, by mere application, his affirmative
allegations. Moreover, the offending provisions of the LTFRB memorandum circular in
question would in effect amend the Rules of Court by adding another disputable
presumption in the enumeration of 37 presumptions under Rule 131, Section 5 of the Rules
of Court. Such usurpation of this Court's authority cannot be countenanced as only this Court
is mandated by law to promulgate rules concerning pleading, practice and procedure. 19
Deregulation, while it may be ideal in certain situations, may not be ideal at all in our country
given the present circumstances. Advocacy of liberalized franchising and regulatory process is
tantamount to an abdication by the government of its inherent right to exercise police
power, that is, the right of government to regulate public utilities for protection of the public
and the utilities themselves.
While we recognize the authority of the DOTC and the LTFRB to issue administrative orders
to regulate the transport sector, we find that they committed grave abuse of discretion in
issuing DOTC Department Order
No. 92-587 defining the policy framework on the regulation of transport services and LTFRB
Memorandum Circular No. 92-009 promulgating the implementing guidelines on DOTC
Department Order No. 92-587, the said administrative issuances being amendatory and
violative of the Public Service Act and the Rules of Court. Consequently, we rule that the
twenty (20%) per centum fare increase imposed by respondent PBOAP on March 16, 1994
without the benefit of a petition and a public hearing is null and void and of no force and
effect. No grave abuse of discretion however was committed in the issuance of DOTC
Memorandum Order No. 90-395 and DOTC Memorandum dated October 8, 1992, the same
being merely internal communications between administrative officers.

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the
challenged administrative issuances and orders, namely: DOTC Department Order No. 92-
587, LTFRB Memorandum Circular
No. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby
DECLARED contrary to law and invalid insofar as they affect provisions therein (a) delegating
to provincial bus and jeepney operators the authority to increase or decrease the duly
prescribed transportation fares; and (b) creating a presumption of public need for a service in
favor of the applicant for a certificate of public convenience and placing the burden of
proving that there is no need for the proposed service to the oppositor.

The Temporary Restraining Order issued on June 20, 1994 is hereby MADE PERMANENT
insofar as it enjoined the bus fare rate increase granted under the provisions of the
aforementioned administrative circulars, memoranda and/or orders declared invalid.

No pronouncement as to costs.

SO ORDERED.

Padilla, Davide, Jr., Bellosillo and Quiason, JJ., concur.

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

To determine whether there is a violation of the Posse Comitatus Act in the use of
military personnel, the US courts[63] apply the following standards, to wit:
Were Army or Air Force personnel used by the civilian law enforcement officers at Wounded
Knee in such a manner that the military personnel subjected the citizens to the exercise of
military power which was regulatory, proscriptive, or compulsory[64] George Washington Law
Review, pp. 404-433 (1986), which discusses the four divergent standards for assessing
acceptable involvement of military personnel in civil law enforcement. See likewise
HONORED IN THE BREECH: PRESIDENTIAL AUTHORITY TO EXECUTE THE LAWS WITH
MILITARY FORCE, 83 Yale Law Journal, pp. 130-152, 1973. 64 in nature, either presently or
prospectively?
xxx
When this concept is transplanted into the present legal context, we take it to mean
that military involvement, even when not expressly authorized by the Constitution or a
statute, does not violate the Posse Comitatus Act unless it actually regulates, forbids or
compels some conduct on the part of those claiming relief. A mere threat of some future
injury would be insufficient. (emphasis supplied)
One last point. Since the institution of the joint visibility patrol in January, 2000, not a
single citizen has complained that his political or civil rights have been violated as a result of
the deployment of the Marines. It was precisely to safeguard peace, tranquility and the civil
liberties of the people that the joint visibility patrol was conceived. Freedom and democracy
will be in full bloom only when people feel secure in their homes and in the streets, not when
the shadows of violence and anarchy constantly lurk in their midst.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Melo, Purisima, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De
Leon, Jr., JJ., concur.
Bellosillo, J., on official leave.
Puno, J., see separate opinion.
Vitug, J., see separate opinion.
Mendoza, J., see concurring and dissenting opinion.
Panganiban, J., in the result.
Quisumbing, J., joins the opinion of J. Mendoza.

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

3. The designation of tasks in Annex A[65] does not constitute the exercise of regulatory,
proscriptive, or compulsory military power. First, the soldiers do not control or direct
the operation. This is evident from Nos. 6,[66] 8(k)[67] and 9(a)[68] of Annex A. These
soldiers, second, also have no power to prohibit or condemn. In No. 9(d)[69] of Annex A,
all arrested persons are brought to the nearest police stations for proper
disposition. And last, these soldiers apply no coercive force. The materials or
equipment issued to them, as shown in No. 8(c)[70] of Annex A, are all low impact and
defensive in character.The conclusion is that there being no exercise of regulatory,
proscriptive or compulsory military power, the deployment of a handful of Philippine
Marines constitutes no impermissible use of military power for civilian law
enforcement.[71]

It appears that the present petition is anchored on fear that once the armed forces are
deployed, the military will gain ascendancy, and thus place in peril our cherished liberties. Such
apprehensions, however, are unfounded. The power to call the armed forces is just that -
calling out the armed forces. Unless, petitioner IBP can show, which it has not, that in the
deployment of the Marines, the President has violated the fundamental law, exceeded his
authority or jeopardized the civil liberties of the people, this Court is not inclined to overrule
THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF LABOR AND
EMPLOYMENT, AND THE SECRETARY OF FOREIGN AFFAIRS, OWWA
ADMINISTRATOR, and POEA ADMINISTRATOR, petitioners, vs. THE HON. COURT
OF APPEALS and ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER (ARCO-
PHIL.), INC., representing its members: Worldcare Services Internationale, Inc.,
Steadfast International Recruitment Corporation, Dragon International Manpower
Services Corporation, Verdant Manpower Mobilization Corporation, Brent
Overseas Personnel, Inc., ARL Manpower Services, Inc., Dahlzhen International
Services, Inc., Interworld Placement Center, Inc., Lakas Tao Contract Services, Ltd.
Co., and SSC Multiservices, respondents.
DECISION
CALLEJO, SR., J.:
In this petition for review on certiorari, the Executive Secretary of the President of the
Philippines, the Secretary of Justice, the Secretary of Foreign Affairs, the Secretary of Labor
and Employment, the POEA Administrator and the OWWA Administrator, through the Office
of the Solicitor General, assail the Decision[1] of the Court of Appeals in CA-G.R. SP No. 38815
affirming the Order[2] of the Regional Trial Court of Quezon City dated August 21, 1995 in Civil
Case No. Q-95-24401, granting the plea of the petitioners therein for a writ of preliminary
injunction and of the writ of preliminary injunction issued by the trial court on August 24, 1995.
The Antecedents
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos
Act of 1995, took effect on July 15, 1995. The Omnibus Rules and Regulations Implementing
the Migrant Workers and Overseas Filipino Act of 1995 was, thereafter, published in the April
7, 1996 issue of the Manila Bulletin. However, even before the law took effect, the Asian
Recruitment Council Philippine Chapter, Inc. (ARCO-Phil.) filed, on July 17, 1995, a petition for
declaratory relief under Rule 63 of the Rules of Court with the Regional Trial Court of Quezon
City to declare as unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j), (l)
and (m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of the law, with a plea for the
issuance of a temporary restraining order and/or writ of preliminary injunction enjoining the
respondents therein from enforcing the assailed provisions of the law.
In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was self-
executory and that no implementing rules were needed. It prayed that the court issue a
temporary restraining order to enjoin the enforcement of Section 6, paragraphs (a) to (m) on
illegal recruitment, Section 7 on penalties for illegal recruitment, and Section 9 on venue of
criminal actions for illegal recruitments, viz:
Viewed in the light of the foregoing discussions, there appears to be urgent an imperative
need for this Honorable Court to maintain the status quo by enjoining the implementation or
effectivity of the questioned provisions of RA 8042, by way of a restraining order otherwise,
the member recruitment agencies of the petitioner will suffer grave or irreparable damage or
injury. With the effectivity of RA 8042, a great majority of the duly licensed recruitment
agencies have stopped or suspended their operations for fear of being prosecuted under the
provisions of a law that are unjust and unconstitutional. This Honorable Court may take
judicial notice of the fact that processing of deployment papers of overseas workers for the
past weeks have come to a standstill at the POEA and this has affected thousands of workers
everyday just because of the enactment of RA 8042. Indeed, this has far reaching effects not
only to survival of the overseas manpower supply industry and the active participating
recruitment agencies, the countrys economy which has survived mainly due to the dollar
remittances of the overseas workers but more importantly, to the poor and the needy who
are in dire need of income-generating jobs which can only be obtained from abroad. The loss
or injury that the recruitment agencies will suffer will then be immeasurable and
irreparable. As of now, even foreign employers have already reduced their manpower
requirements from the Philippines due to their knowledge that RA 8042 prejudiced and
adversely affected the local recruitment agencies.[3]
On August 1, 1995, the trial court issued a temporary restraining order effective for a
period of only twenty (20) days therefrom.
After the petitioners filed their comment on the petition, the ARCO-Phil. filed an
amended petition, the amendments consisting in the inclusion in the caption thereof eleven
(11) other corporations which it alleged were its members and which it represented in the suit,
and a plea for a temporary restraining order enjoining the respondents from enforcing Section
6 subsection (i), Section 6 subsection (k) and paragraphs 15 and 16 thereof, Section 8, Section
10, paragraphs 1 and 2, and Sections 11 and 40 of Rep. Act No. 8042.
The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to (m),
Section 7(a) to (b), and Section 10 paragraphs (1) and (2), quoted as follows:
(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL MIGRANT WORKERS IS
THE POSSESSION OF SKILLS. PURSUANT TO THIS AND AS SOON AS PRACTICABLE, THE
GOVERNMENT SHALL DEPLOY AND/OR ALLOW THE DEPLOYMENT ONLY OF SKILLED FILIPINO
WORKERS.[4]
Sec. 2 subsection (i, 2nd par.)
Nonetheless, the deployment of Filipino overseas workers, whether land-based or sea-based,
by local service contractors and manning agents employing them shall be encourages
(sic). Appropriate incentives may be extended to them.
II. ILLEGAL RECRUITMENT
SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged. It shall, likewise, include the following acts, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make
a worker pay any amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his employment in
order to offer him another unless the transfer is designed to liberate a worker from
oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ any worker who
has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment
or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies, remittance
of foreign exchange earnings, separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof
by the parties up to and including the period of the expiration of the same without the
approval of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an officer or
member of the Board of any corporation engaged in travel agency or to be engaged directly
or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor Code and
its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as determined by the Department of Labor
and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the deployment
does not actually take place without the workers fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or direction
of their business shall be liable.
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of
not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of
not less than two hundred thousand pesos (P200,000.00) nor more than five hundred
thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally
recruited is less than eighteen (18) years of age or committed by a non-licensee or non-
holder of authority.
Sec. 8.
Prohibition on Officials and Employees. It shall be unlawful for any official or employee of the
Department of Labor and Employment, the Philippine Overseas Employment Administration
(POEA), or the Overseas Workers Welfare Administration (OWWA), or the Department of
Foreign Affairs, or other government agencies involved in the implementation of this Act, or
their relatives within the fourth civil degree of consanguinity or affinity, to engage, directly or
indirectly, in the business of recruiting migrant workers as defined in this Act. The penalties
provided in the immediate preceding paragraph shall be imposed upon them. (underscoring
supplied)
Sec. 10, pars. 1 & 2.
Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as provided by law, shall
be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.
SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. The preliminary
investigations of cases under this Act shall be terminated within a period of thirty (30)
calendar days from the date of their filing. Where the preliminary investigation is conducted
by a prosecution officer and a prima facie case is established, the corresponding information
shall be filed in court within twenty-four (24) hours from the termination of the
investigation. If the preliminary investigation is conducted by a judge and a prima facie case
is found to exist, the corresponding information shall be filed by the proper prosecution
officer within forty-eight (48) hours from the date of receipt of the records of the case.
The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate
Section 1, Article III of the Constitution.[5] According to the respondent, Section 6(g) and (i)
discriminated against unskilled workers and their families and, as such, violated the equal
protection clause, as well as Article II, Section 12[6] and Article XV, Sections 1[7] and 3(3) of the
Constitution.[8] As the law encouraged the deployment of skilled Filipino workers, only
overseas skilled workers are granted rights. The respondent stressed that unskilled workers
also have the right to seek employment abroad. According to the respondent, the right of
unskilled workers to due process is violated because they are prevented from finding
employment and earning a living abroad. It cannot be argued that skilled workers are immune
from abuses by employers, while unskilled workers are merely prone to such abuses. It was
pointed out that both skilled and unskilled workers are subjected to abuses by foreign
employers. Furthermore, the prohibition of the deployment of unskilled workers abroad
would only encourage fly-by-night illegal recruiters.
According to the respondent, the grant of incentives to service contractors and manning
agencies to the exclusion of all other licensed and authorized recruiters is an invalid
classification. Licensed and authorized recruiters are thus deprived of their right to property
and due process and to the equality of the person. It is understandable for the law to prohibit
illegal recruiters, but to discriminate against licensed and registered recruiters is
unconstitutional.
The respondent, likewise, alleged that Section 6, subsections (a) to (m) is
unconstitutional because licensed and authorized recruitment agencies are placed on equal
footing with illegal recruiters. It contended that while the Labor Code distinguished between
recruiters who are holders of licenses and non-holders thereof in the imposition of penalties,
Rep. Act No. 8042 does not make any distinction. The penalties in Section 7(a) and (b) being
based on an invalid classification are, therefore, repugnant to the equal protection clause,
besides being excessive; hence, such penalties are violative of Section 19(1), Article III of the
Constitution.[9] It was also pointed out that the penalty for officers/officials/employees of
recruitment agencies who are found guilty of economic sabotage or large-scale illegal
recruitment under Rep. Act No. 8042 is life imprisonment.Since recruitment agencies usually
operate with a manpower of more than three persons, such agencies are forced to shut down,
lest their officers and/or employees be charged with large scale illegal recruitment or
economic sabotage and sentenced to life imprisonment. Thus, the penalty imposed by law,
being disproportionate to the prohibited acts, discourages the business of licensed and
registered recruitment agencies.
The respondent also posited that Section 6(m) and paragraphs (15) and (16), Sections 8,
9 and 10, paragraph 2 of the law violate Section 22, Article III of the
Constitution[10]prohibiting ex-post facto laws and bills of attainder. This is because the
provisions presume that a licensed and registered recruitment agency is guilty of illegal
recruitment involving economic sabotage, upon a finding that it committed any of the
prohibited acts under the law. Furthermore, officials, employees and their relatives are
presumed guilty of illegal recruitment involving economic sabotage upon such finding that
they committed any of the said prohibited acts.
The respondent further argued that the 90-day period in Section 10, paragraph (1) within
which a labor arbiter should decide a money claim is relatively short, and could deprive
licensed and registered recruiters of their right to due process. The period within which the
summons and the complaint would be served on foreign employees and, thereafter, the filing
of the answer to the complaint would take more than 90 days. This would thereby shift on
local licensed and authorized recruiters the burden of proving the defense of foreign
employers. Furthermore, the respondent asserted, Section 10, paragraph 2 of the law, which
provides for the joint and several liability of the officers and employees, is a bill of attainder
and a violation of the right of the said corporate officers and employees to due
process. Considering that such corporate officers and employees act with prior approval of the
board of directors of such corporation, they should not be liable, jointly and severally, for such
corporate acts.
The respondent asserted that the following provisions of the law are unconstitutional:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined herein shall be
filed with the Regional Trial Court of the province or city where the offense was committed
or where the offended party actually resides at the time of the commission of the
offense: Provided, That the court where the criminal action is first filed shall acquire
jurisdiction to the exclusion of other courts: Provided, however, That the aforestated
provisions shall also apply to those criminal actions that have already been filed in court at
the time of the effectivity of this Act.
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.
Sec. 40.
The departments and agencies charged with carrying out the provisions of this Act shall,
within ninety (90) days after the effectiviy of this Act, formulate the necessary rules and
regulations for its effective implementation.
According to the respondent, the said provisions violate Section 5(5), Article VIII of the
Constitution[11] because they impair the power of the Supreme Court to promulgate rules of
procedure.
In their answer to the petition, the petitioners alleged, inter alia, that (a) the respondent
has no cause of action for a declaratory relief; (b) the petition was premature as the rules
implementing Rep. Act No. 8042 not having been released as yet; (c) the assailed provisions
do not violate any provisions of the Constitution; and, (d) the law was approved by Congress
in the exercise of the police power of the State. In opposition to the respondents plea for
injunctive relief, the petitioners averred that:
As earlier shown, the amended petition for declaratory relief is devoid of merit for failure of
petitioner to demonstrate convincingly that the assailed law is unconstitutional, apart from
the defect and impropriety of the petition. One who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond reasonable doubt (Caleon v. Agus
Development Corporation, 207 SCRA 748). All reasonable doubts should be resolved in favor
of the constitutionality of a statute (People v. Vera, 65 Phil. 56). This presumption of
constitutionality is based on the doctrine of separation of powers which enjoin upon each
department a becoming respect for the acts of the other departments (Garcia vs. Executive
Secretary, 204 SCRA 516 [1991]). Necessarily, the ancillary remedy of a temporary restraining
order and/or a writ of preliminary injunction prayed for must fall. Besides, an act of
legislature approved by the executive is presumed to be within constitutional bounds
(National Press Club v. Commission on Elections, 207 SCRA 1).[12]
After the respective counsels of the parties were heard on oral arguments, the trial court
issued on August 21, 1995, an order granting the petitioners plea for a writ of preliminary
injunction upon a bond of P50,000. The petitioner posted the requisite bond and on August
24, 1995, the trial court issued a writ of preliminary injunction enjoining the enforcement of
the following provisions of Rep. Act No. 8042 pending the termination of the proceedings:
Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m), and pars. 15 &
16; Section 7, subsections (a) & (b); Section 8; Section 9; Section 10; pars. 1 & 2; Section 11;
and Section 40 of Republic Act No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995. [13]
The petitioners filed a petition for certiorari with the Court of Appeals assailing the order
and the writ of preliminary injunction issued by the trial court on the following grounds:
1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its member-
agencies to be protected by the injunctive relief and/or violation of said rights by the
enforcement of the assailed sections of R.A. 8042;
2. Respondent Judge fixed a P50,000 injunction bond which is grossly inadequate to answer
for the damage which petitioner-officials may sustain, should respondent ARCO-PHIL. be
finally adjudged as not being entitled thereto.[14]
The petitioners asserted that the respondent is not the real party-in-interest as
petitioner in the trial court. It is inconceivable how the respondent, a non-stock and non-profit
corporation, could sustain direct injury as a result of the enforcement of the law. They argued
that if, at all, any damage would result in the implementation of the law, it is the licensed and
registered recruitment agencies and/or the unskilled Filipino migrant workers discriminated
against who would sustain the said injury or damage, not the respondent.The respondent, as
petitioner in the trial court, was burdened to adduce preponderant evidence of such
irreparable injury, but failed to do so. The petitioners further insisted that the petition a
quo was premature since the rules and regulations implementing the law had yet to be
promulgated when such petition was filed. Finally, the petitioners averred that the respondent
failed to establish the requisites for the issuance of a writ of preliminary injunction against the
enforcement of the law and the rules and regulations issued implementing the same.
On December 5, 1997, the appellate court came out with a four-page decision dismissing
the petition and affirming the assailed order and writ of preliminary injunction issued by the
trial court. The appellate court, likewise, denied the petitioners motion for reconsideration of
the said decision.
The petitioners now come to this Court in a petition for review on certiorari on the
following grounds:
1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its
member-agencies to be protected by the injunctive relief and/or violation of said rights by
the enforcement of the assailed sections of R.A. 8042;
2. The P50,000 injunction bond fixed by the court a quo and sustained by the Court of
Appeals is grossly inadequate to answer for the damage which petitioners-officials may
sustain, should private respondent ARCO-PHIL. be finally adjudged as not being entitled
thereto.[15]
On February 16, 1998, this Court issued a temporary restraining order enjoining the
respondents from enforcing the assailed order and writ of preliminary injunction.
The Issues
The core issue in this case is whether or not the trial court committed grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the assailed order and the writ
of preliminary injunction on a bond of only P50,000 and whether or not the appellate court
erred in affirming the trial courts order and the writ of preliminary injunction issued by it.
The petitioners contend that the respondent has no locus standi. It is a non-stock, non-
profit organization; hence, not the real party-in-interest as petitioner in the action.Although
the respondent filed the petition in the Regional Trial Court in behalf of licensed and registered
recruitment agencies, it failed to adduce in evidence a certified copy of its Articles of
Incorporation and the resolutions of the said members authorizing it to represent the said
agencies in the proceedings. Neither is the suit of the respondent a class suit so as to vest in it
a personality to assail Rep. Act No. 8042; the respondent is service-oriented while the
recruitment agencies it purports to represent are profit-oriented. The petitioners assert that
the law is presumed constitutional and, as such, the respondent was burdened to make a case
strong enough to overcome such presumption and establish a clear right to injunctive relief.
The petitioners bewail the P50,000 bond fixed by the trial court for the issuance of a writ
of preliminary injunction and affirmed by the appellate court. They assert that the amount is
grossly inadequate to answer for any damages that the general public may suffer by reason of
the non-enforcement of the assailed provisions of the law. The trial court committed a grave
abuse of its discretion in granting the respondents plea for injunctive relief, and the appellate
court erred in affirming the order and the writ of preliminary injunction issued by the trial
court.
The respondent, for its part, asserts that it has duly established its locus standi and its
right to injunctive relief as gleaned from its pleadings and the appendages thereto.Under
Section 5, Rule 58 of the Rules of Court, it was incumbent on the petitioners, as respondents
in the RTC, to show cause why no injunction should issue. It avers that the injunction bond
posted by the respondent was more than adequate to answer for any injury or damage the
petitioners may suffer, if any, by reason of the writ of preliminary injunction issued by the
RTC. In any event, the assailed provisions of Rep. Act No. 8042 exposed its members to the
immediate and irreparable damage of being deprived of their right to a livelihood without due
process, a property right protected under the Constitution.
The respondent contends that the commendable purpose of the law to eradicate illegal
recruiters should not be done at the expense and to the prejudice of licensed and authorized
recruitment agencies. The writ of preliminary injunction was necessitated by the great number
of duly licensed recruitment agencies that had stopped or suspended their business operations
for fear that their officers and employees would be indicted and prosecuted under the assailed
oppressive penal provisions of the law, and meted excessive penalties. The respondent,
likewise, urges that the Court should take judicial notice that the processing of deployment
papers of overseas workers have come to a virtual standstill at the POEA.
The Courts Ruling
The petition is meritorious.
The Respondent Has Locus Standi
To File the Petition in the RTC in
Representation of the Eleven
Licensed and Registered
Recruitment Agencies Impleaded
in the Amended Petition
The modern view is that an association has standing to complain of injuries to its
members. This view fuses the legal identity of an association with that of its members. [16] An
association has standing to file suit for its workers despite its lack of direct interest if its
members are affected by the action. An organization has standing to assert the concerns of its
constituents.[17]
In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on
Elections,[18] we held that standing jus tertii would be recognized only if it can be shown that
the party suing has some substantial relation to the third party, or that the right of the third
party would be diluted unless the party in court is allowed to espouse the third partys
constitutional claims.
In this case, the respondent filed the petition for declaratory relief under Rule 64 of the
Rules of Court for and in behalf of its eleven (11) licensed and registered recruitment agencies
which are its members, and which approved separate resolutions expressly authorizing the
respondent to file the said suit for and in their behalf. We note that, under its Articles of
Incorporation, the respondent was organized for the purposes inter alia of promoting and
supporting the growth and development of the manpower recruitment industry, both in the
local and international levels; providing, creating and exploring employment opportunities for
the exclusive benefit of its general membership; enhancing and promoting the general welfare
and protection of Filipino workers; and, to act as the representative of any individual,
company, entity or association on matters related to the manpower recruitment industry, and
to perform other acts and activities necessary to accomplish the purposes embodied
therein. The respondent is, thus, the appropriate party to assert the rights of its members,
because it and its members are in every practical sense identical. The respondent asserts that
the assailed provisions violate the constitutional rights of its members and the officers and
employees thereof. The respondent is but the medium through which its individual members
seek to make more effective the expression of their voices and the redress of their
grievances.[19]
However, the respondent has no locus standi to file the petition for and in behalf of
unskilled workers. We note that it even failed to implead any unskilled workers in its
petition. Furthermore, in failing to implead, as parties-petitioners, the eleven licensed and
registered recruitment agencies it claimed to represent, the respondent failed to comply with
Section 2 of Rule 63[20] of the Rules of Court. Nevertheless, since the eleven licensed and
registered recruitment agencies for which the respondent filed the suit are specifically named
in the petition, the amended petition is deemed amended to avoid multiplicity of suits. [21]
The Assailed Order and Writ of
Preliminary Injunction Is Mooted
By Case Law
The respondent justified its plea for injunctive relief on the allegation in its amended
petition that its members are exposed to the immediate and irreparable danger of being
deprived of their right to a livelihood and other constitutional rights without due process, on
its claim that a great number of duly licensed recruitment agencies have stopped or suspended
their operations for fear that (a) their officers and employees would be prosecuted under the
unjust and unconstitutional penal provisions of Rep. Act No. 8042 and meted equally unjust
and excessive penalties, including life imprisonment, for illegal recruitment and large scale
illegal recruitment without regard to whether the recruitment agencies involved are licensed
and/or authorized; and, (b) if the members of the respondent, which are licensed and
authorized, decide to continue with their businesses, they face the stigma and the curse of
being labeled illegal recruiters. In granting the respondents plea for a writ of preliminary
injunction, the trial court held, without stating the factual and legal basis therefor, that the
enforcement of Rep. Act No. 8042, pendente lite, would cause grave and irreparable injury to
the respondent until the case is decided on its merits.
We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the Court
had, in a catena of cases, applied the penal provisions in Section 6, including paragraph (m)
thereof, and the last two paragraphs therein defining large scale illegal recruitment committed
by officers and/or employees of recruitment agencies by themselves and in connivance with
private individuals, and imposed the penalties provided in Section 7 thereof, including the
penalty of life imprisonment.[22] The Informations therein were filed after preliminary
investigations as provided for in Section 11 of Rep. Act No. 8042 and in venues as provided for
in Section 9 of the said act. In People v. Chowdury,[23] we held that illegal recruitment is a crime
of economic sabotage and must be enforced.
In People v. Diaz,[24] we held that Rep. Act No. 8042 is but an amendment of the Labor
Code of the Philippines and is not an ex-post facto law because it is not applied
retroactively. In JMM Promotion and Management, Inc. v. Court of Appeals,[25] the issue of the
extent of the police power of the State to regulate a business, profession or calling vis--vis the
equal protection clause and the non-impairment clause of the Constitution were raised and
we held, thus:
A profession, trade or calling is a property right within the meaning of our constitutional
guarantees. One cannot be deprived of the right to work and the right to make a living
because these rights are property rights, the arbitrary and unwarranted deprivation of which
normally constitutes an actionable wrong.
Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business
or trade has always been upheld as a legitimate subject of a valid exercise of the police
power by the state particularly when their conduct affects either the execution of legitimate
governmental functions, the preservation of the State, the public health and welfare and
public morals. According to the maxim, sic utere tuo ut alienum non laedas, it must of course
be within the legitimate range of legislative action to define the mode and manner in which
every one may so use his own property so as not to pose injury to himself or others.
In any case, where the liberty curtailed affects at most the rights of property, the permissible
scope of regulatory measures is certainly much wider. To pretend that licensing or
accreditation requirements violates the due process clause is to ignore the settled practice,
under the mantle of the police power, of regulating entry to the practice of various trades or
professions. Professionals leaving for abroad are required to pass rigid written and practical
exams before they are deemed fit to practice their trade. Seamen are required to take tests
determining their seamanship. Locally, the Professional Regulation Commission has begun to
require previously licensed doctors and other professionals to furnish documentary proof
that they had either re-trained or had undertaken continuing education courses as a
requirement for renewal of their licenses. It is not claimed that these requirements pose an
unwarranted deprivation of a property right under the due process clause. So long as
professionals and other workers meet reasonable regulatory standards no such deprivation
exists.
Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of
the Constitution to support their argument that the government cannot enact the assailed
regulatory measures because they abridge the freedom to contract. In Philippine Association
of Service Exporters, Inc. vs. Drilon, we held that [t]he non-impairment clause of the
Constitution must yield to the loftier purposes targeted by the government. Equally
important, into every contract is read provisions of existing law, and always, a reservation of
the police power for so long as the agreement deals with a subject impressed with the public
welfare.
A last point. Petitioners suggest that the singling out of entertainers and performing artists
under the assailed department orders constitutes class legislation which violates the equal
protection clause of the Constitution. We do not agree.
The equal protection clause is directed principally against undue favor and individual or class
privilege. It is not intended to prohibit legislation which is limited to the object to which it is
directed or by the territory in which it is to operate. It does not require absolute equality, but
merely that all persons be treated alike under like conditions both as to privileges conferred
and liabilities imposed. We have held, time and again, that the equal protection clause of the
Constitution does not forbid classification for so long as such classification is based on real
and substantial differences having a reasonable relation to the subject of the particular
legislation. If classification is germane to the purpose of the law, concerns all members of the
class, and applies equally to present and future conditions, the classification does not violate
the equal protection guarantee.[26]
The validity of Section 6 of R.A. No. 8042 which provides that employees of recruitment
agencies may be criminally liable for illegal recruitment has been upheld in People v.
Chowdury:[27]
As stated in the first sentence of Section 6 of RA 8042, the persons who may be held liable
for illegal recruitment are the principals, accomplices and accessories. An employee of a
company or corporation engaged in illegal recruitment may be held liable as principal,
together with his employer, if it is shown that he actively and consciously participated in
illegal recruitment. It has been held that the existence of the corporate entity does not shield
from prosecution the corporate agent who knowingly and intentionally causes the
corporation to commit a crime. The corporation obviously acts, and can act, only by and
through its human agents, and it is their conduct which the law must deter. The employee or
agent of a corporation engaged in unlawful business naturally aids and abets in the carrying
on of such business and will be prosecuted as principal if, with knowledge of the business, its
purpose and effect, he consciously contributes his efforts to its conduct and promotion,
however slight his contribution may be. [28]
By its rulings, the Court thereby affirmed the validity of the assailed penal and procedural
provisions of Rep. Act No. 8042, including the imposable penalties therefor. Until the Court, by
final judgment, declares that the said provisions are unconstitutional, the enforcement of the
said provisions cannot be enjoined.
The RTC Committed Grave Abuse
of Its Discretion Amounting to
Excess or Lack of Jurisdiction in
Issuing the Assailed Order and the
Writ of Preliminary Injunction
The matter of whether to issue a writ of preliminary injunction or not is addressed to the
sound discretion of the trial court. However, if the court commits grave abuse of its discretion
in issuing the said writ amounting to excess or lack of jurisdiction, the same may be nullified
via a writ of certiorari and prohibition.
In Social Security Commission v. Judge Bayona,[29] we ruled that a law is presumed
constitutional until otherwise declared by judicial interpretation. The suspension of the
operation of the law is a matter of extreme delicacy because it is an interference with the
official acts not only of the duly elected representatives of the people but also of the highest
magistrate of the land.
In Younger v. Harris, Jr.,[30] the Supreme Court of the United States emphasized, thus:
Federal injunctions against state criminal statutes, either in their entirety or with respect to
their separate and distinct prohibitions, are not to be granted as a matter of course, even if
such statutes are unconstitutional. No citizen or member of the community is immune from
prosecution, in good faith, for his alleged criminal acts. The imminence of such a prosecution
even though alleged to be unauthorized and, hence, unlawful is not alone ground for relief in
equity which exerts its extraordinary powers only to prevent irreparable injury to the plaintiff
who seeks its aid. 752 Beal v. Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61 S.Ct. 418,
420, 85 L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:
It does not appear from the record that petitioners have been threatened with any injury
other than that incidental to every criminal proceeding brought lawfully and in good
faith 319 U.S., at 164, 63 S.Ct., at 881.[31]
The possible unconstitutionality of a statute, on its face, does not of itself justify an
injunction against good faith attempts to enforce it, unless there is a showing of bad faith,
harassment, or any other unusual circumstance that would call for equitable relief.[32] The on
its face invalidation of statutes has been described as manifestly strong medicine, to be
employed sparingly and only as a last resort, and is generally disfavored.[33]
To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed to
be unconstitutional, the party must establish that it will suffer irreparable harm in the absence
of injunctive relief and must demonstrate that it is likely to succeed on the merits, or that there
are sufficiently serious questions going to the merits and the balance of hardships tips decidedly
in its favor.[34] The higher standard reflects judicial deference toward legislation or regulations
developed through presumptively reasoned democratic processes. Moreover, an injunction
will alter, rather than maintain, the status quo, or will provide the movant with substantially
all the relief sought and that relief cannot be undone even if the defendant prevails at a trial
on the merits.[35] Considering that injunction is an exercise of equitable relief and authority, in
assessing whether to issue a preliminary injunction, the courts must sensitively assess all the
equities of the situation, including the public interest.[36] In litigations between governmental
and private parties, courts go much further both to give and withhold relief in furtherance of
public interest than they are accustomed to go when only private interests are
involved.[37] Before the plaintiff may be entitled to injunction against future enforcement, he
is burdened to show some substantial hardship.[38]
The fear or chilling effect of the assailed penal provisions of the law on the members of
the respondent does not by itself justify prohibiting the State from enforcing them against
those whom the State believes in good faith to be punishable under the laws:
Just as the incidental chilling effect of such statutes does not automatically render them
unconstitutional, so the chilling effect that admittedly can result from the very existence of
certain laws on the statute books does not in itself justify prohibiting the State from carrying
out the important and necessary task of enforcing these laws against socially harmful
conduct that the State believes in good faith to be punishable under its laws and the
Constitution.[39]
It must be borne in mind that subject to constitutional limitations, Congress is
empowered to define what acts or omissions shall constitute a crime and to prescribe
punishments therefor.[40] The power is inherent in Congress and is part of the sovereign power
of the State to maintain peace and order. Whatever views may be entertained regarding the
severity of punishment, whether one believes in its efficiency or its futility, these are peculiarly
questions of legislative policy.[41] The comparative gravity of crimes and whether their
consequences are more or less injurious are matters for the State and Congress itself to
determine.[42] Specification of penalties involves questions of legislative policy.[43]
Due process prohibits criminal stability from shifting the burden of proof to the accused,
punishing wholly passive conduct, defining crimes in vague or overbroad language and failing
to grant fair warning of illegal conduct.[44] Class legislation is such legislation which denies
rights to one which are accorded to others, or inflicts upon one individual a more severe
penalty than is imposed upon another in like case offending. [45] Bills of attainder are legislative
acts which inflict punishment on individuals or members of a particular group without a judicial
trial. Essential to a bill of attainder are a specification of certain individuals or a group of
individuals, the imposition of a punishment, penal or otherwise, and the lack of judicial trial.[46]
 Penalizing unlicensed and licensed recruitment agencies and their officers and
employees and their relatives employed in government agencies charged with the
enforcement of the law for illegal recruitment and imposing life imprisonment for those who
commit large scale illegal recruitment is not offensive to the Constitution. The accused may be
convicted of illegal recruitment and large scale illegal recruitment only if, after trial, the
prosecution is able to prove all the elements of the crime charged.[47]
The possibility that the officers and employees of the recruitment agencies, which are
members of the respondent, and their relatives who are employed in the government agencies
charged in the enforcement of the law, would be indicted for illegal recruitment and, if
convicted sentenced to life imprisonment for large scale illegal recruitment, absent proof of
irreparable injury, is not sufficient on which to base the issuance of a writ of preliminary
injunction to suspend the enforcement of the penal provisions of Rep. Act No. 8042 and avert
any indictments under the law.[48] The normal course of criminal prosecutions cannot be
blocked on the basis of allegations which amount to speculations about the future.[49]
There is no allegation in the amended petition or evidence adduced by the respondent
that the officers and/or employees of its members had been threatened with any indictments
for violations of the penal provisions of Rep. Act No. 8042. Neither is there any allegation
therein that any of its members and/or their officers and employees committed any of the acts
enumerated in Section 6(a) to (m) of the law for which they could be indicted. Neither did the
respondent adduce any evidence in the RTC that any or all of its members or a great number
of other duly licensed and registered recruitment agencies had to stop their business
operations because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042. The
respondent merely speculated and surmised that licensed and registered recruitment agencies
would close shop and stop business operations because of the assailed penal provisions of the
law. A writ of preliminary injunction to enjoin the enforcement of penal laws cannot be based
on such conjectures or speculations.The Court cannot take judicial notice that the processing
of deployment papers of overseas workers have come to a virtual standstill at the POEA
because of the assailed provisions of Rep. Act No. 8042. The respondent must adduce evidence
to prove its allegation, and the petitioners accorded a chance to adduce controverting
evidence.
illegal recruitment under the Labor Code and provided stiffer penalties thereto, especially
those that constitute economic sabotage, i.e., Illegal Recruitment in Large Scale and Illegal
Recruitment Committed by a Syndicate.[51]
By issuing the writ of preliminary injunction against the petitioners sans any evidence,
the trial court frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed
them to continue victimizing hapless and innocent people desiring to obtain employment
abroad as overseas workers, and blocked the attainment of the salutary policies[52] embedded
in Rep. Act No. 8042. It bears stressing that overseas workers, land-based and sea-based, had
been remitting to the Philippines billions of dollars which over the years had propped the
economy.
In issuing the writ of preliminary injunction, the trial court considered paramount the
interests of the eleven licensed and registered recruitment agencies represented by the
respondent, and capriciously overturned the presumption of the constitutionality of the
assailed provisions on the barefaced claim of the respondent that the assailed provisions of
Rep. Act No. 8042 are unconstitutional. The trial court committed a grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the assailed order and writ of
preliminary injunction. It is for this reason that the Court issued a temporary restraining order
enjoining the enforcement of the writ of preliminary injunction issued by the trial court.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the
appellate court is REVERSED AND SET ASIDE. The Order of the Regional Trial Court dated
August 21, 1995 in Civil Case No. Q-95-24401 and the Writ of Preliminary Injunction issued by
it in the said case on August 24, 1995 are NULLIFIED. No costs.
SO ORDERED.
Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.
Puno, (Chairman), J., on official leave.

The respondent even failed to adduce any evidence to prove irreparable injury because
of the enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that,
because of time constraints, its members would have to defend foreign employees in cases
before the Labor Arbiter is based on speculations. Even if true, such inconvenience or difficulty
is hardly irreparable injury.

The trial court even ignored the public interest involved in suspending the enforcement
of Rep. Act No. 8042 vis--vis the eleven licensed and registered recruitment agencies
represented by the respondent. In People v. Gamboa,[50] we emphasized the primary aim of
Rep. Act No. 8042:

Preliminarily, the proliferation of illegal job recruiters and syndicates preying on innocent
people anxious to obtain employment abroad is one of the primary considerations that led to
the enactment of The Migrant Workers and Overseas Filipinos Act of 1995. Aimed at
affording greater protection to overseas Filipino workers, it is a significant improvement on
existing laws in the recruitment and placement of workers for overseas
employment. Otherwise known as the Magna Carta of OFWs, it broadened the concept of

G.R. No. 113375 May 5, 1994
KILOSBAYAN, INCORPORATED, JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA,
EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO,
JOSE ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V.
VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, SEN. FREDDIE WEBB, SEN. WIGBERTO
TAADA, and REP. JOKER P. ARROYO, petitioners,
vs.
TEOFISTO GUINGONA, JR., in his capacity as Executive Secretary, Office of the President;
RENATO CORONA, in his capacity as Assistant Executive Secretary and Chairman of the
Presidential review Committee on the Lotto, Office of the President; PHILIPPINE CHARITY
SWEEPSTAKES OFFICE; and PHILIPPINE GAMING MANAGEMENT CORPORATION,
respondents.
Jovito R. Salonga, Fernando Santiago, Emilio C. Capulong, Jr. and Felipe L. Gozon for
petitioners.
Renato L. Cayetano and Eleazar B. Reyes for PGMC.
Gamaliel G. Bongco, Oscar Karaan and Jedideoh Sincero for intervenors.
DAVIDE, JR., J.:
This is a special civil action for prohibition and injunction, with a prayer for a temporary
restraining order and preliminary injunction, which seeks to prohibit and restrain the
implementation of the "Contract of Lease" executed by the Philippine Charity Sweepstakes
Office (PCSO) and the Philippine Gaming Management Corporation (PGMC) in connection
with the on- line lottery system, also known as "lotto."
Petitioner Kilosbayan, Incorporated (KILOSBAYAN) avers that it is a non-stock domestic
corporation composed of civic-spirited citizens, pastors, priests, nuns, and lay leaders who
are committed to the cause of truth, justice, and national renewal. The rest of the
petitioners, except Senators Freddie Webb and Wigberto Taada and Representative Joker P.
Arroyo, are suing in their capacities as members of the Board of Trustees of KILOSBAYAN and
as taxpayers and concerned citizens. Senators Webb and Taada and Representative Arroyo
are suing in their capacities as members of Congress and as taxpayers and concerned citizens
of the Philippines.
The pleadings of the parties disclose the factual antecedents which triggered off the filing of
this petition.
Pursuant to Section 1 of the charter of the PCSO (R.A. No. 1169, as amended by B.P. Blg. 42)
which grants it the authority to hold and conduct "charity sweepstakes races, lotteries and
other similar activities," the PCSO decided to establish an on- line lottery system for the
purpose of increasing its revenue base and diversifying its sources of funds. Sometime before
March 1993, after learning that the PCSO was interested in operating an on-line lottery
system, the Berjaya Group Berhad, "a multinational company and one of the ten largest
public companies in Malaysia," long "engaged in, among others, successful lottery operations
in Asia, running both Lotto and Digit games, thru its subsidiary, Sports Toto Malaysia," with
its "affiliate, the International Totalizator Systems, Inc., . . . an American public company
engaged in the international sale or provision of computer systems, softwares, terminals,
training and other technical services to the gaming industry," "became interested to offer its
services and resources to PCSO." As an initial step, Berjaya Group Berhad (through its
individual nominees) organized with some Filipino investors in March 1993 a Philippine
corporation known as the Philippine Gaming Management Corporation (PGMC), which "was
intended to be the medium through which the technical and management services required
for the project would be offered and delivered to PCSO." 1
Before August 1993, the PCSO formally issued a Request for Proposal (RFP) for the Lease
Contract of an on-line lottery system for the PCSO. 2 Relevant provisions of the RFP are the
following:
1. EXECUTIVE SUMMARY
xxx xxx xxx
1.2. PCSO is seeking a suitable contractor which shall build, at its own
expense, all the facilities ('Facilities') needed to operate and maintain a
nationwide on-line lottery system. PCSO shall lease the Facilities for a
fixed percentage ofquarterly gross receipts. All receipts from ticket sales
shall be turned over directly to PCSO. All capital, operating expenses and
expansion expenses and risks shall be for the exclusive account of the
Lessor.
xxx xxx xxx
1.4. The lease shall be for a period not exceeding fifteen (15) years.
1.5. The Lessor is expected to submit a comprehensive nationwide lottery
development plan ("Development Plan") which will include the game, the
marketing of the games, and the logistics to introduce the games to all
the cities and municipalities of the country within five (5) years.
xxx xxx xxx
1.7. The Lessor shall be selected based on its technical expertise,
hardware and software capability, maintenance support, and financial
resources. The Development Plan shall have a substantial bearing on the
choice of the Lessor. The Lessor shall be a domestic corporation, with at
least sixty percent (60%) of its shares owned by Filipino shareholders.
xxx xxx xxx
The Office of the President, the National Disaster Control Coordinating
Council, the Philippine National Police, and the National Bureau of
Investigation shall be authorized to use the nationwide
telecommunications system of the Facilities Free of Charge.
1.8. Upon expiration of the lease, the Facilities shall be owned by PCSO
without any additional consideration. 3
xxx xxx xxx
2.2. OBJECTIVES
The objectives of PCSO in leasing the Facilities from a private entity are as
follows:
xxx xxx xxx
2.2.2. Enable PCSO to operate a nationwide on-line Lottery system at no
expense or risk to the government.
xxx xxx xxx
2.4. DUTIES AND RESPONSIBILITIES OF THE LESSOR
xxx xxx xxx
2.4.2. THE LESSOR
The Proponent is expected to furnish and maintain the Facilities,
including the personnel needed to operate the computers, the
communications network and sales offices under a build-lease basis. The
printing of tickets shall be undertaken under the supervision and control
of PCSO. The Facilities shall enable PCSO to computerize the entire
gaming system.
The Proponent is expected to formulate and design consumer-oriented
Master Games Plan suited to the marketplace, especially geared to
Filipino gaming habits and preferences. In addition, the Master Games
Plan is expected to include a Product Plan for each game and explain how
each will be introduced into the market. This will be an integral part of
the Development Plan which PCSO will require from the Proponent.
xxx xxx xxx
The Proponent is expected to provide upgrades to modernize the entire
gaming system over the life ofthe lease contract.
The Proponent is expected to provide technology transfer to PCSO
technical personnel. 4
7. GENERAL GUIDELINES FOR PROPONENTS
xxx xxx xxx
Finally, the Proponent must be able to stand the acid test of proving that
it is an entity able to take on the role of responsible maintainer of the on-
line lottery system, and able to achieve PSCO's goal of formalizing an on-
line lottery system to achieve its mandated objective. 5
xxx xxx xxx
16. DEFINITION OF TERMS
Facilities: All capital equipment, computers, terminals, software,
nationwide telecommunication network, ticket sales offices, furnishings,
and fixtures; printing costs; cost of salaries and wages; advertising and
promotion expenses; maintenance costs; expansion and replacement
costs; security and insurance, and all other related expenses needed to
operate nationwide on-line lottery system.6
Considering the above citizenship requirement, the PGMC claims that the Berjaya Group
"undertook to reduce its equity stakes in PGMC to 40%," by selling 35% out of the original
75% foreign stockholdings to local investors.
On 15 August 1993, PGMC submitted its bid to the PCSO.7
The bids were evaluated by the Special Pre-Qualification Bids and Awards Committee
(SPBAC) for the on-line lottery and its Bid Report was thereafter submitted to the Office of
the President. 8 The submission was preceded by complaints by the Committee's
Chairperson, Dr. Mita Pardo de Tavera. 9
On 21 October 1993, the Office of the President announced that it had given the respondent
PGMC the go-signal to operate the country's on-line lottery system and that the
corresponding implementing contract would be submitted not later than 8 November 1993
"for final clearance and approval by the Chief Executive." 10 This announcement was
published in the Manila Standard, Philippine Daily Inquirer, and the Manila Times on 29
October 1993. 11
On 4 November 1993, KILOSBAYAN sent an open letter to Presidential Fidel V. Ramos
strongly opposing the setting up to the on-line lottery system on the basis of serious moral
and ethical considerations. 12
At the meeting of the Committee on Games and Amusements of the Senate on 12 November
1993, KILOSBAYAN reiterated its vigorous opposition to the on-line lottery on account of its
immorality and illegality. 13
On 19 November 1993, the media reported that despite the opposition, "Malacaang will
push through with the operation of an on-line lottery system nationwide" and that it is
actually the respondent PCSO which will operate the lottery while the winning corporate
bidders are merely "lessors." 14
On 1 December 1993, KILOSBAYAN requested copies of all documents pertaining to the
lottery award from Executive Secretary Teofisto Guingona, Jr. In his answer of 17 December
1993, the Executive Secretary informed KILOSBAYAN that the requested documents would
be duly transmitted before the end of the month. 15. However, on that same date, an
agreement denominated as "Contract of Lease" was finally executed by respondent PCSO
and respondent PGMC. 16 The President, per the press statement issued by the Office of the
President, approved it on 20 December 1993.17
In view of their materiality and relevance, we quote the following salient provisions of the
Contract of Lease:
1. DEFINITIONS
The following words and terms shall have the following respective
meanings:
1.1 Rental Fee Amount to be paid by PCSO to the LESSOR as
compensation for the fulfillment of the obligations of the LESSOR under
this Contract, including, but not limited to the lease of the Facilities.
xxx xxx xxx
1.3 Facilities All capital equipment, computers, terminals, software
(including source codes for the On-Line Lottery application software for
the terminals, telecommunications and central systems), technology,
intellectual property rights, telecommunications network, and furnishings
and fixtures.
1.4 Maintenance and Other Costs All costs and expenses relating to
printing, manpower, salaries and wages, advertising and promotion,
maintenance, expansion and replacement, security and insurance, and all
other related expenses needed to operate an On-Line Lottery System,
which shall be for the account of the LESSOR. All expenses relating to the
setting-up, operation and maintenance of ticket sales offices of dealers
and retailers shall be borne by PCSO's dealers and retailers.
1.5 Development Plan The detailed plan of all games, the marketing
thereof, number of players, value of winnings and the logistics required
to introduce the games, including the Master Games Plan as approved by
PCSO, attached hereto as Annex "A", modified as necessary by the
provisions of this Contract.
xxx xxx xxx
1.8 Escrow Deposit The proposal deposit in the sum of Three Hundred
Million Pesos (P300,000,000.00) submitted by the LESSOR to PCSO
pursuant to the requirements of the Request for Proposals.
2. SUBJECT MATTER OF THE LEASE
The LESSOR shall build, furnish and maintain at its own expense and risk
the Facilities for the On-Line Lottery System of PCSO in the Territory on
an exclusive basis. The LESSOR shall bear all Maintenance and Other
Costs as defined herein.
xxx xxx xxx
3. RENTAL FEE
For and in consideration of the performance by the LESSOR of its
obligations herein, PCSO shall pay LESSOR a fixed Rental Fee equal to four
point nine percent (4.9%) of gross receipts from ticket sales, payable net
of taxes required by law to be withheld, on a semi-monthly basis.
Goodwill, franchise and similar fees shall belong to PCSO.
4. LEASE PERIOD
The period of the lease shall commence ninety (90) days from the date of
effectivity of this Contract and shall run for a period of eight (8) years
thereafter, unless sooner terminated in accordance with this Contract.
5. RIGHTS AND OBLIGATIONS OF PCSO AS OPERATOR OF THE ON-LINE will bear all other Maintenance and Other Costs, except as provided in
LOTTERY SYSTEM Section 1.4.

PCSO shall be the sole and individual operator of the On-Line Lottery 5.9 PCSO shall assist the LESSOR in the following:
System. Consequently:
5.9.1 Work permits for the LESSOR's staff;
5.1 PCSO shall have sole responsibility to decide whether to implement,
fully or partially, the Master Games Plan of the LESSOR. PCSO shall have 5.9.2 Approvals for importation of the Facilities;
the sole responsibility to determine the time for introducing new games
to the market. The Master Games Plan included in Annex "A" hereof is
5.9.3 Approvals and consents for the On-Line Lottery
hereby approved by PCSO.
System; and

5.2 PCSO shall have control over revenues and receipts of whatever
5.9.4 Business and premises licenses for all offices of
nature from the On-Line Lottery System. After paying the Rental Fee to
the LESSOR and licenses for the telecommunications
the LESSOR, PCSO shall have exclusive responsibility to determine the
network.
Revenue Allocation Plan; Provided, that the same shall be consistent with
the requirement of R.A. No. 1169, as amended, which fixes a prize fund
of fifty five percent (55%) on the average. 5.10 In the event that PCSO shall pre-terminate this Contract or suspend
the operation of the On-Line Lottery System, in breach of this Contract
and through no fault of the LESSOR, PCSO shall promptly, and in any
5.3 PCSO shall have exclusive control over the printing of tickets,
event not later than sixty (60) days, reimburse the LESSOR the amount of
including but not limited to the design, text, and contents thereof.
its total investment cost associated with the On-Line Lottery System,
including but not limited to the cost of the Facilities, and further
5.4 PCSO shall have sole responsibility over the appointment of dealers or compensate the LESSOR for loss of expected net profit after tax,
retailers throughout the country. PCSO shall appoint the dealers and computed over the unexpired term of the lease.
retailers in a timely manner with due regard to the implementation
timetable of the On-Line Lottery System. Nothing herein shall preclude
6. DUTIES AND RESPONSIBILITIES OF THE LESSOR
the LESSOR from recommending dealers or retailers for appointment by
PCSO, which shall act on said recommendation within forty-eight (48)
hours. The LESSOR is one of not more than three (3) lessors of similar facilities
for the nationwide On-Line Lottery System of PCSO. It is understood that
the rights of the LESSOR are primarily those of a lessor of the Facilities,
5.5 PCSO shall designate the necessary personnel to monitor and audit
and consequently, all rights involving the business aspects of the use of
the daily performance of the On-Line Lottery System. For this purpose,
the Facilities are within the jurisdiction of PCSO. During the term of the
PCSO designees shall be given, free of charge, suitable and adequate
lease, the LESSOR shall.
space, furniture and fixtures, in all offices of the LESSOR, including but
not limited to its headquarters, alternate site, regional and area offices.
6.1 Maintain and preserve its corporate existence, rights and privileges,
and conduct its business in an orderly, efficient, and customary manner.
5.6 PCSO shall have the responsibility to resolve, and exclusive
jurisdiction over, all matters involving the operation of the On-Line
Lottery System not otherwise provided in this Contract. 6.2 Maintain insurance coverage with insurers acceptable to PCSO on all
Facilities.
5.7 PCSO shall promulgate procedural and coordinating rules governing
all activities relating to the On-Line Lottery System. 6.3 Comply with all laws, statues, rules and regulations, orders and
directives, obligations and duties by which it is legally bound.
5.8 PCSO will be responsible for the payment of prize monies,
commissions to agents and dealers, and taxes and levies (if any)
chargeable to the operator of the On-Line Lottery System. The LESSOR
6.4 Duly pay and discharge all taxes, assessments and government
charges now and hereafter imposed of whatever nature that may be
legally levied upon it.
6.5 Keep all the Facilities in fail safe condition and, if necessary, upgrade,
replace and improve the Facilities from time to time as new technology
develops, in order to make the On-Line Lottery System more cost-
effective and/or competitive, and as may be required by PCSO shall not
impose such requirements unreasonably nor arbitrarily.
6.6 Provide PCSO with management terminals which will allow real-time
monitoring of the On-Line Lottery System.
6.7 Upon effectivity of this Contract, commence the training of PCSO and
other local personnel and the transfer of technology and expertise, such
that at the end of the term of this Contract, PCSO will be able to
effectively take-over the Facilities and efficiently operate the On-Line
Lottery System.
6.8 Undertake a positive advertising and promotions campaign for both
institutional and product lines without engaging in negative advertising
against other lessors.
6.9 Bear all expenses and risks relating to the Facilities including, but not
limited to, Maintenance and Other Costs and:
xxx xxx xxx
6.10 Bear all risks if the revenues from ticket sales, on an annualized
basis, are insufficient to pay the entire prize money.
6.11 Be, and is hereby, authorized to collect and retain for its own
account, a security deposit from dealers and retailers, in an amount
determined with the approval of PCSO, in respect of equipment supplied
by the LESSOR. PCSO's approval shall not be unreasonably withheld.
xxx xxx xxx
6.12 Comply with procedural and coordinating rules issued by PCSO.
7. REPRESENTATIONS AND WARRANTIES
The LESSOR represents and warrants that:
7.1 The LESSOR is corporation duly organized and existing under the laws
of the Republic of the Philippines, at least sixty percent (60%) of the
outstanding capital stock of which is owned by Filipino shareholders. The
minimum required Filipino equity participation shall not be impaired
through voluntary or involuntary transfer, disposition, or sale of shares of
stock by the present stockholders.
7.2 The LESSOR and its Affiliates have the full corporate and legal power
and authority to own and operate their properties and to carry on their
business in the place where such properties are now or may be
conducted. . . .
7.3 The LESSOR has or has access to all the financing and funding
requirements to promptly and effectively carry out the terms of this
Contract. . . .
7.4 The LESSOR has or has access to all the managerial and technical
expertise to promptly and effectively carry out the terms of this Contract.
...
xxx xxx xxx
10. TELECOMMUNICATIONS NETWORK
The LESSOR shall establish a telecommunications network that will
connect all municipalities and cities in the Territory in accordance with, at
the LESSOR's option, either of the LESSOR's proposals (or a combinations
of both such proposals) attached hereto as Annex "B," and under the
following PCSO schedule:
xxx xxx xxx
PCSO may, at its option, require the LESSOR to establish the
telecommunications network in accordance with the above Timetable in
provinces where the LESSOR has not yet installed terminals. Provided,
that such provinces have existing nodes. Once a municipality or city is
serviced by land lines of a licensed public telephone company, and such
lines are connected to Metro Manila, then the obligation of the LESSOR
to connect such municipality or city through a telecommunications
network shall cease with respect to such municipality or city. The voice
facility will cover the four offices of the Office of the President, National
Disaster Control Coordinating Council, Philippine National Police and the
National Bureau of Investigation, and each city and municipality in the
Territory except Metro Manila, and those cities and municipalities which
have easy telephone access from these four offices. Voice calls from the
four offices shall be transmitted via radio or VSAT to the remote
municipalities which will be connected to this voice facility through wired
network or by radio. The facility shall be designed to handle four private
conversations at any one time.
xxx xxx xxx
13. STOCK DISPERSAL PLAN
Within two (2) years from the effectivity of this Contract, the LESSOR
shall cause itself to be listed in the local stock exchange and offer at least
twenty five percent (25%) of its equity to the public.
14. NON-COMPETITION
The LESSOR shall not, directly or indirectly, undertake any activity or
business in competition with or adverse to the On-Line Lottery System of
PCSO unless it obtains the latter's prior written consent thereto.
15. HOLD HARMLESS CLAUSE
15.1 The LESSOR shall at all times protect and defend, at its cost and
expense, PCSO from and against any and all liabilities and claims for
damages and/or suits for or by reason of any deaths of, or any injury or
injuries to any person or persons, or damages to property of any kind
whatsoever, caused by the LESSOR, its subcontractors, its authorized
agents or employees, from any cause or causes whatsoever.
15.2 The LESSOR hereby covenants and agrees to indemnify and hold
PCSO harmless from all liabilities, charges, expenses (including
reasonable counsel fees) and costs on account of or by reason of any
such death or deaths, injury or injuries, liabilities, claims, suits or losses
caused by the LESSOR's fault or negligence.
15.3 The LESSOR shall at all times protect and defend, at its own cost and
expense, its title to the facilities and PCSO's interest therein from and
against any and all claims for the duration of the Contract until transfer to
PCSO of ownership of the serviceable Facilities.
16. SECURITY
16.1 To ensure faithful compliance by the LESSOR with the terms of the
Contract, the LESSOR shall secure a Performance Bond from a reputable
insurance company or companies acceptable to PCSO.
16.2 The Performance Bond shall be in the initial amount of Three
Hundred Million Pesos (P300,000,000.00), to its U.S. dollar equivalent,
and shall be renewed to cover the duration of the Contract. However, the
Performance Bond shall be reduced proportionately to the percentage of
unencumbered terminals installed; Provided, that the Performance Bond
shall in no case be less than One Hundred Fifty Million Pesos
(P150,000,000.00).
16.3 The LESSOR may at its option maintain its Escrow Deposit as the
Performance Bond. . . .
17. PENALTIES
17.1 Except as may be provided in Section 17.2, should the LESSOR fail to
take remedial measures within seven (7) days, and rectify the breach
within thirty (30) days, from written notice by PCSO of any wilfull or
grossly negligent violation of the material terms and conditions of this
Contract, all unencumbered Facilities shall automatically become the
property of PCSO without consideration and without need for further
notice or demand by PCSO. The Performance Bond shall likewise be
forfeited in favor of PCSO.
17.2 Should the LESSOR fail to comply with the terms of the Timetables
provided in Section 9 and 10, it shall be subject to an initial Penalty of
Twenty Thousand Pesos (P20,000.00), per city or municipality per every
month of delay; Provided, that the Penalty shall increase, every ninety
(90) days, by the amount of Twenty Thousand Pesos (P20,000.00) per city
or municipality per month, whilst shall failure to comply persists. The
penalty shall be deducted by PCSO from the rental fee.
xxx xxx xxx
20. OWNERSHIP OF THE FACILITIES
After expiration of the term of the lease as provided in Section 4, the
Facilities directly required for the On-Line Lottery System mentioned in
Section 1.3 shall automatically belong in full ownership to PCSO without
any further consideration other than the Rental Fees already paid during
the effectivity of the lease.
21. TERMINATION OF THE LEASE
PCSO may terminate this Contract for any breach of the material
provisions of this Contract, including the following:
 21.1 The LESSOR is insolvent or bankrupt or unable to pay its debts, stops
or suspends or threatens to stop or suspend payment of all or a material
part of its debts, or proposes or makes a general assignment or an
arrangement or compositions with or for the benefit of its creditors; or
21.2 An order is made or an effective resolution passed for the winding
up or dissolution of the LESSOR or when it ceases or threatens to cease to
carry on all or a material part of its operations or business; or
21.3 Any material statement, representation or warranty made or
furnished by the LESSOR proved to be materially false or misleading;
said termination to take effect upon receipt of
written notice of termination by the LESSOR and
failure to take remedial action within seven (7) days
and cure or remedy the same within thirty (30) days
from notice.
Any suspension, cancellation or termination of this
Contract shall not relieve the LESSOR of any liability
that may have already accrued hereunder.
xxx xxx xxx
Considering the 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,
KILOSBAYAN, 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 PRESIDENT, ACTING
THROUGH RESPONDENTS EXECUTIVE SECRETARY
AND/OR ASSISTANT EXECUTIVE SECRETARY FOR
LEGAL AFFAIRS, AND THE PCSO GRAVELY ABUSE[D]
THEIR DISCRETION AND/OR FUNCTIONS
TANTAMOUNT TO LACK OF JURISDICTION AND/OR
AUTHORITY 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 OPERATION OF THE ON-LINE
LOTTERY AND TELECOMMUNICATION SYSTEMS
REQUIRED AND/OR AUTHORIZED UNDER THE SAID
CONTRACT, CONSIDERING 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 lotto and telecommunications systems.18
Petitioners submit that the PCSO cannot validly enter into the assailed Contract of Lease with
the PGMC because it is an arrangement wherein the PCSO would hold and conduct the on-
line lottery system in "collaboration" or "association" with the PGMC, in violation of Section
1(B) of R.A. No. 1169, as amended by B.P. Blg. 42, which prohibits the PCSO from holding and
conducting charity sweepstakes races, lotteries, and other similar activities "in collaboration,
association or joint venture with any person, association, company or entity, foreign or
domestic." Even granting arguendo that a lease of facilities is not within the contemplation of
"collaboration" or "association," an analysis, however, of the Contract of Lease clearly shows
that there is a "collaboration, association, or joint venture between respondents PCSO and
PGMC in the holding of the On-Line Lottery System," and that there are terms and conditions
of the Contract "showing that respondent PGMC is the actual lotto operator and not
respondent PCSO."19
The petitioners also point out that paragraph 10 of the Contract of Lease requires or
authorizes PGMC to establish a telecommunications network that will connect all the
municipalities and cities in the territory. However, PGMC cannot do that because it has no
franchise from Congress to construct, install, establish, or operate the network pursuant to
Section 1 of Act No. 3846, as amended. Moreover, PGMC is a 75% foreign-owned or
controlled corporation and cannot, therefore, be granted a franchise for that purpose
because of Section 11, Article XII of the 1987 Constitution. Furthermore, since "the
subscribed foreign capital" of the PGMC "comes to about 75%, as shown by paragraph EIGHT
of its Articles of Incorporation," it cannot lawfully enter into the contract in question because
all forms of gambling and lottery is one of them are included in the so-called foreign
investments negative list under the Foreign Investments Act (R.A. No. 7042) where only up to
40% foreign capital is allowed. 20
Finally, the petitioners insist that the Articles of Incorporation of PGMC do not authorize it to
establish and operate an on-line lottery and telecommunications systems.21
Accordingly, the petitioners pray that we issue a temporary restraining order and a writ of
preliminary injunction commanding the respondents or any person acting in their places or
upon their instructions to cease and desist from implementing the challenged Contract of
Lease and, after hearing the merits of the petition, that we render judgment declaring the
Contract of Lease void and without effect and making the injunction permanent. 22
We required the respondents to comment on the petition.
In its Comment filed on 1 March 1994, private respondent PGMC asserts that "(1) [it] is
merely an independent contractor for a piece of work, (i.e., the building and maintenance of
a lottery system to be used by PCSO in the operation of its lottery franchise); and (2) as such
independent contractor, PGMC is not a co-operator of the lottery franchise with PCSO, nor is
PCSO sharing its franchise, 'in collaboration, association or joint venture' with PGMC as
such statutory limitation is viewed from the context, intent, and spirit of Republic Act 1169,
as amended by Batas Pambansa 42." It further claims that as an independent contractor for a
piece of work, it is neither engaged in "gambling" nor in "public service" relative to the
telecommunications network, which the petitioners even consider as an "indispensable
requirement" of an on-line lottery system. Finally, it states that the execution and
implementation of the contract does not violate the Constitution and the laws; that the issue
on the "morality" of the lottery franchise granted to the PCSO is political and not judicial or
legal, which should be ventilated in another forum; and that the "petitioners do not appear
to have the legal standing or real interest in the subject contract and in obtaining the reliefs
sought." 23
In their Comment filed by the Office of the Solicitor General, public respondents Executive
Secretary Teofisto Guingona, Jr., 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 its purposes and objectives." What the PCSO charter
"seeks to prohibit is that arrangement akin to a "joint venture" or partnership where there is
"community of interest in the business, sharing of profits and losses, and a mutual right of
control," a characteristic which does not obtain in a contract of lease." With respect to the
challenged Contract of Lease, the "role of PGMC is limited to that of a lessor of the facilities"
for the on-line lottery system; in "strict technical and legal sense," said contract "can be
categorized as a contract for a piece of work as defined in Articles 1467, 1713 and 1644 of
the Civil Code."
They further claim that the establishment of the telecommunications system stipulated in
the Contract of Lease does not require a congressional franchise because PGMC will not
operate a public utility; moreover, PGMC's "establishment of a telecommunications system is
not intended to establish a telecommunications business," and it has been held that where
the facilities are operated "not for business purposes but for its own use," a legislative
franchise is not required before a certificate of public convenience can be granted. 24 Even
granting arguendo that PGMC is a public utility, pursuant to Albano S.
Reyes, 25 "it can establish a telecommunications system even without a legislative franchise
because not every public utility is required to secure a legislative franchise before it could
establish, maintain, and operate the service"; and, in any case, "PGMC's establishment of the
telecommunications system stipulated in its contract of lease with PCSO falls within the
exceptions under Section 1 of Act No. 3846 where a legislative franchise is not necessary for
the establishment of radio stations."
They also argue that the contract does not violate the Foreign Investment Act of 1991; that
the Articles of Incorporation of PGMC authorize it to enter into the Contract of Lease; and
that the issues of "wisdom, morality and propriety of acts of the executive department are
beyond the ambit of judicial review."
Finally, the public respondents allege that the petitioners have no standing to maintain the
instant suit, citing our resolution in Valmonte vs. Philippine Charity Sweepstakes Office. 26
Several parties filed motions to intervene as petitioners in this case, 27 but only the motion of
Senators Alberto Romulo, Arturo Tolentino, Francisco Tatad, Gloria Macapagal-Arroyo,
Vicente Sotto III, John Osmea, Ramon Revilla, and Jose Lina 28 was granted, and the
respondents were required to comment on their petition in intervention, which the public
respondents and PGMC did.
In the meantime, the petitioners filed with the Securities and Exchange Commission on 29
March 1994 a petition against PGMC for the nullification of the latter's General Information
Sheets. That case, however, has no bearing in this petition.
On 11 April 1994, we heard the parties in oral arguments. Thereafter, we resolved to
consider the matter submitted for resolution and pending resolution of the major issues in
this case, to issue a temporary restraining order commanding the respondents or any person
acting in their place or upon their instructions to cease and desist from implementing the
challenged Contract of Lease.
In the deliberation on this case on 26 April 1994, we resolved to consider only these issues:
(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." On the first
issue, seven Justices voted to sustain the locus standi of the petitioners, while six voted not
to. On the second issue, the seven Justices were of the opinion that the Contract of Lease
violates the exception to Section 1(B) of R.A. No. 1169, as amended by B.P. Blg. 42, and is,
therefore, invalid and contrary to law. The six Justices stated that they wished to express no
opinion thereon in view of their stand on the first issue. The Chief Justice took no part
because one of the Directors of the PCSO is his brother-in-law.
This case was then assigned to this ponente for the writing of the opinion of the Court.
The preliminary issue on the locus standi of the petitioners should, indeed, be resolved in
their favor. A party's standing before this Court is a procedural technicality which it may, in
the exercise of its discretion, set aside in view of the importance of the issues raised. In the
landmark Emergency Powers Cases, 29 this Court brushed aside this technicality because "the
transcendental importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of procedure. (Avelino vs.
Cuenco, G.R. No. L-2821)." Insofar as taxpayers' suits are concerned, this Court had declared
that it "is not devoid of discretion as to whether or not it should be entertained," 30 or that it
"enjoys an open discretion to entertain the same or not." 31 In De La Llana vs. Alba, 32 this
Court declared:
1. The argument as to the lack of standing of petitioners is easily
resolved. As far as Judge de la Llana is concerned, he certainly falls within
the principle set forth in Justice Laurel's opinion in People vs. Vera [65
Phil. 56 (1937)]. Thus: "The unchallenged 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 sustain, direct
injury as a result of its enforcement [Ibid, 89]. The other petitioners as
members of the bar and officers of the court cannot be considered as
devoid of "any personal and substantial interest" on the matter. There is
relevance to this excerpt from a separate opinion in Aquino, Jr. v.
Commission on Elections [L-40004, January 31, 1975, 62 SCRA 275]: "Then
there is the attack on the standing of petitioners, as vindicating at most
what they consider a public right and not protecting their rights as
individuals. This is to conjure the specter of the public right dogma as an
inhibition to parties intent on keeping public officials staying on the path
of constitutionalism. As was so well put by Jaffe; "The protection of
private rights is an essential constituent of public interest and,
conversely, without a well-ordered state there could be no enforcement
of private rights. Private and public interests are, both in a substantive
and procedural sense, aspects of the totality of the legal order."
Moreover, petitioners have convincingly shown that in their capacity as
taxpayers, their standing to sue has been amply demonstrated. There
would be a retreat from the liberal approach followed in Pascual v.
Secretary of Public Works, foreshadowed by the very decision of People v.
Vera where the doctrine was first fully discussed, if we act differently
now. I do not think we are prepared to take that step. Respondents,
however, would hard back to the American Supreme Court doctrine
in Mellon v. Frothingham, with their claim that what petitioners possess
"is an interest which is shared in common by other people and is
comparatively so minute and indeterminate as to afford any basis and
assurance that the judicial process can act on it." That is to speak in the
language of a bygone era, even in the United States. For as Chief Justice
Warren clearly pointed out in the later case of Flast v. Cohen, the barrier
thus set up if not breached has definitely been lowered.
In Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan, 33 reiterated
in Basco vs. Philippine Amusements and Gaming Corporation,34 this Court stated:
Objections to taxpayers' suits for lack of sufficient personality standing or
interest are, however, in the main procedural matters. Considering the
importance to the public of the cases at bar, and in keeping with the
Court's duty, under the 1987 Constitution, to determine whether or not
the other branches of government have kept themselves within the limits
of the Constitution and the laws and that they have not abused the
discretion given to them, this Court has brushed aside technicalities of
procedure and has taken cognizance of these petitions.
and in Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian
Reform,35 it declared:
With particular regard to the requirement of proper party as applied in
the cases before us, we hold that the same is satisfied by the petitioners
and intervenors because each of them has sustained or is in danger of
sustaining an immediate injury as a result of the acts or measures
complained of. [Ex ParteLevitt, 303 US 633]. And even if, strictly speaking,
they are not covered by the definition, it is still within the wide discretion
of the Court to waive the requirement and so remove the impediment to
its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and taxpayers
were allowed to question the constitutionality of several executive orders
issued by President Quirino although they were invoking only an indirect
and general interest shared in common with the public. The Court
dismissed the objective that they were not proper parties and ruled that
the transcendental importance to the public of these cases demands that
they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure. We have since then applied this exception in
many other cases. (Emphasis supplied)
In Daza vs. Singson, 36 this Court once more said:
. . . For another, we have early as in the Emergency Powers Cases that
where serious constitutional questions are involved, "the transcendental
importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of
procedure." The same policy has since then been consistently followed by
the Court, as in Gonzales vs. Commission on Elections [21 SCRA 774] . . .
The Federal Supreme Court of the United States of America has also expressed its
discretionary power to liberalize the rule on locus standi. In United States vs. Federal Power
Commission and Virginia Rea Association vs. Federal Power Commission,37 it held:
We hold that petitioners have standing. Differences of view, however,
preclude a single opinion of the Court as to both petitioners. It would not
further clarification of this complicated specialty of federal jurisdiction,
 the solution of whose problems is in any event more or less determined
by the specific circumstances of individual situations, to set out the
divergent grounds in support of standing in these cases.
In line with the liberal policy of this Court on locus standi, ordinary taxpayers, members of
Congress, and even association of planters, and non-profit civic organizations were allowed
to initiate and prosecute actions before this Court to question the constitutionality or validity
of laws, acts, decisions, rulings, or orders of various government agencies or
instrumentalities. Among such cases were those assailing the constitutionality of (a) R.A. No.
3836 insofar as it allows retirement gratuity and commutation of vacation and sick leave to
Senators and Representatives and to elective officials of both Houses of Congress;38 (b)
Executive Order No. 284, issued by President Corazon C. Aquino on 25 July 1987, which
allowed members of the cabinet, their undersecretaries, and assistant secretaries to hold
other government offices or positions; 39 (c) the automatic appropriation for debt service in
the General Appropriations Act; 40 (d) R.A. No. 7056 on the holding of desynchronized
elections; 41 (d) R.A. No. 1869 (the charter of the Philippine Amusement and Gaming
Corporation) on the ground that it is contrary to morals, public policy, and order; 42 and (f)
R.A. No. 6975, establishing the Philippine National
Police. 43
Other cases where we have followed a liberal policy regarding locus standi include those
attacking the validity or legality of (a) an order allowing the importation of rice in the light of
the prohibition imposed by R.A. No. 3452; 44 (b) P.D. Nos. 991 and 1033 insofar as they
proposed amendments to the Constitution and P.D. No. 1031 insofar as it directed the
COMELEC to supervise, control, hold, and conduct the referendum-plebiscite on 16 October
1976; 45(c) the bidding for the sale of the 3,179 square meters of land at Roppongi, Minato-
ku, Tokyo, Japan; 46 (d) the approval without hearing by the Board of Investments of the
amended application of the Bataan Petrochemical Corporation to transfer the site of its plant
from Bataan to Batangas and the validity of such transfer and the shift of feedstock from
naphtha only to naphtha and/or liquefied petroleum gas; 47 (e) the decisions, orders, rulings,
and resolutions of the Executive Secretary, Secretary of Finance, Commissioner of Internal
Revenue, Commissioner of Customs, and the Fiscal Incentives Review Board exempting the
National Power Corporation from indirect tax and duties; 48 (f) the orders of the Energy
Regulatory Board of 5 and 6 December 1990 on the ground that the hearings conducted on
the second provisional increase in oil prices did not allow the petitioner substantial cross-
examination; 49 (g) Executive Order No. 478 which levied a special duty of P0.95 per liter or
P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products; 50 (h)
resolutions of the Commission on Elections concerning the apportionment, by district, of the
number of elective members of Sanggunians; 51 and (i) memorandum orders issued by a
Mayor affecting the Chief of Police of Pasay City.52
In the 1975 case of Aquino vs. Commission on Elections, 53 this Court, despite its unequivocal
ruling that the petitioners therein had no personality to file the petition, resolved
nevertheless to pass upon the issues raised because of the far-reaching implications of the
petition. We did no less in De Guia vs. COMELEC 54 where, although we declared that De Guia
"does not appear to have locus standi, a standing in law, a personal or substantial interest,"
we brushed aside the procedural infirmity "considering the importance of the issue involved,
concerning as it does the political exercise of qualified voters affected by the apportionment,
and petitioner alleging abuse of discretion and violation of the Constitution by respondent."
We find the instant petition to be of transcendental importance to the public. The issues it
raised are of paramount public interest and of a category even higher than those involved in
many of the aforecited cases. The ramifications of such issues immeasurably affect the social,
economic, and moral well-being of the people even in the remotest barangays of the country
and the counter-productive and retrogressive effects of the envisioned on-line lottery system
are as staggering as the billions in pesos it is expected to raise. The legal standing then of the
petitioners deserves recognition and, in the exercise of its sound discretion, this Court hereby
brushes aside the procedural barrier which the respondents tried to take advantage of.
And now on the substantive issue.
Section 1 of R.A. No. 1169, as amending by B.P. Blg. 42, 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." Section 1 provides:
Sec. 1. The Philippine Charity Sweepstakes Office. The Philippine
Charity Sweepstakes Office, hereinafter designated the Office, shall be
the principal government agency for raising and providing for funds for
health programs, medical assistance and services and charities of
national character, and as such shall have the general powers conferred
in section thirteen of Act Numbered One thousand four hundred fifty-
nine, as amended, and shall have the authority:
A. To hold and conduct charity sweepstakes races,
lotteries and other similar activities, in such
frequency and manner, as shall be determined, and
subject to such rules and regulations as shall be
promulgated by the Board of Directors.
B. Subject to the approval of the Minister of Human
Settlements, to engage in health and welfare-related
investments, programs, projects and activities which
may be profit-oriented, by itself or in collaboration,
association or joint venture with any person,
association, company or entity, whether domestic or
foreign, except for the activities mentioned in the
preceding paragraph (A), for the purpose of providing
for permanent and continuing sources of funds for
health programs, including the expansion of existing
ones, medical assistance and services, and/or
charitable grants: Provided, That such investment will
not compete with the private sector in areas where
investments are adequate as may be determined by
 the National Economic and Development Authority. May I introduce an amendment to
(emphasis supplied) the committee amendment? The
amendment would be to insert
The language of the section is indisputably clear that with respect to its franchise or privilege after "foreign" in the amendment
"to hold and conduct charity sweepstakes races, lotteries and other similar activities," the just read the following: EXCEPT
PCSO cannot exercise it "in collaboration, association or joint venture" with any other party. FOR THE ACTIVITY IN LETTER (A)
This is the unequivocal meaning and import of the phrase "except for the activities ABOVE.
mentioned in the preceding paragraph (A)," namely, "charity sweepstakes races, lotteries and
other similar activities." When it is joint venture or in
collaboration with any entity such
B.P. Blg. 42 originated from Parliamentary Bill No. 622, which was covered by Committee collaboration or joint venture
Report No. 103 as reported out by the Committee on Socio-Economic Planning and must not include activity activity
Development of the Interim Batasang Pambansa. The original text of paragraph B, Section 1 letter (a) which is the holding and
of Parliamentary Bill No. 622 reads as follows: conducting of sweepstakes races,
lotteries and other similar acts.
To engage in any and all investments and related profit-oriented projects
or programs and activities by itself or in collaboration, association or joint MR. ZAMORA.
venture with any person, association, company or entity, whether
domestic or foreign, for the main purpose of raising funds for health and We accept the amendment, Mr. Speaker.
medical assistance and services and charitable grants. 55
MR. DAVIDE.
During the period of committee amendments, the Committee on Socio-Economic Planning
and Development, through Assemblyman Ronaldo B. Zamora, introduced an amendment by Thank you, Mr. Speaker.
substitution to the said paragraph B such that, as amended, it should read as follows:
THE SPEAKER.
Subject to the approval of the Minister of Human Settlements, to engage
in health-oriented investments, programs, projects and activities which
Is there any objection to the
may be profit- oriented, by itself or in collaboration, association, or joint
amendment? (Silence) The
venture with any person, association, company or entity, whether
amendment, as amended, is
domestic or foreign, for the purpose of providing for permanent and
approved. 57
continuing sources of funds for health programs, including the expansion
of existing ones, medical assistance and services and/or charitable
grants. 56 Further amendments to paragraph B were introduced and approved. When Assemblyman
Zamora read the final text of paragraph B as further amended, the earlier approved
amendment of Assemblyman Davide became "EXCEPT FOR THE ACTIVITIES MENTIONED IN
Before the motion of Assemblyman Zamora for the approval of the amendment could be
PARAGRAPH (A)"; and by virtue of the amendment introduced by Assemblyman Emmanuel
acted upon, Assemblyman Davide introduced an amendment to the amendment:
Pelaez, the word PRECEDING was inserted before PARAGRAPH. Assemblyman Pelaez
introduced other amendments. Thereafter, the new paragraph B was approved. 58
MR. DAVIDE.
This is now paragraph B, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42.
Mr. Speaker.
No interpretation of the said provision to relax or circumvent the prohibition can be allowed
THE SPEAKER. 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
The gentleman from Cebu is recognized. 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
MR. DAVIDE. 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." 59
In short then, by the exception explicitly made in paragraph B, Section 1 of its charter, the
PCSO cannot share its franchise with another by way of collaboration, association or joint
venture. Neither can it assign, transfer, or lease such franchise. It has been said that "the
rights and privileges conferred under a franchise may, without doubt, be assigned or
transferred when the grant is to the grantee and assigns, or is authorized by statute. On the
other hand, the right of transfer or assignment may be restricted by statute or the
constitution, or be made subject to the approval of the grantor or a governmental agency,
such as a public utilities commission, exception that an existing right of assignment cannot be
impaired by subsequent legislation." 60
It may also be pointed out that the franchise granted to the PCSO to hold and conduct
lotteries allows it to hold and conduct a species of gambling. It is settled that "a statute which
authorizes the carrying on of a gambling activity or business should be strictly construed and
every reasonable doubt so resolved as to limit the powers and rights claimed under its
authority." 61
Does the challenged Contract of Lease violate or contravene the exception in 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" another?
We agree with the petitioners that it does, notwithstanding its denomination or designation
as a (Contract of Lease). We are neither convinced nor moved or fazed by the insistence and
forceful arguments of the PGMC that it does not because in reality it is only an independent
contractor for a piece of work, i.e., the building and maintenance of a lottery system to be
used by the PCSO in the operation of its lottery franchise. Whether the contract in question is
one of lease or whether the PGMC is merely an independent contractor should not be
decided on the basis of the title or designation of the contract but by the intent of the
parties, which may be gathered from the provisions of the contract itself. Animus hominis est
anima scripti. The intention of the party is the soul of the instrument. In order to give life or
effect to an instrument, it is essential to look to the intention of the individual who executed
it. 62 And, pursuant to Article 1371 of the Civil Code, "to determine the intention of the
contracting parties, their contemporaneous and subsequent acts shall be principally
considered." To put it more bluntly, no one should be deceived by the title or designation of
a contract.
A careful analysis and evaluation of the provisions of the contract and a consideration of the
contemporaneous acts of the PCSO and PGMC indubitably disclose that the contract is not in
reality a contract of lease under which the PGMC is merely an independent contractor for a
piece of work, but one where the statutorily proscribed collaboration or association, in the
least, or joint venture, at the most, exists between the contracting parties. Collaboration is
defined as the acts of working together in a joint project. 63 Association means the act of a
number of persons in uniting together for some special purpose or business. 64 Joint
venture is defined as an association of persons or companies jointly undertaking some
commercial enterprise; generally all contribute assets and share risks. It requires a
community of interest in the performance of the subject matter, a right to direct and govern
the policy in connection therewith, and duty, which may be altered by agreement to share
both in profit and
losses.65
The contemporaneous acts of the PCSO and the PGMC reveal that the PCSO had neither
funds of its own nor the expertise to operate and manage an on-line lottery system, and that
although it wished to have the system, it would have it "at no expense or risks to the
government." Because of these serious constraints and unwillingness to bear expenses and
assume risks, the PCSO was candid enough to state in its RFP that it is seeking for "a suitable
contractor which shall build, at its own expense, all the facilities needed to operate and
maintain" the system; exclusively bear "all capital, operating expenses and expansion
expenses and risks"; and submit "a comprehensive nationwide lottery development plan . . .
which will include the game, the marketing of the games, and the logistics to introduce the
game to all the cities and municipalities of the country within five (5) years"; and that the
operation of the on-line lottery system should be "at no expense or risk to the government"
meaning itself, since it is a government-owned and controlled agency.
The facilities referred to means "all capital equipment, computers, terminals, software,
nationwide telecommunications network, ticket sales offices, furnishings and fixtures,
printing costs, costs of salaries and wages, advertising and promotions expenses,
maintenance costs, expansion and replacement costs, security and insurance, and all other
related expenses needed to operate a nationwide on-line lottery system."
In short, the only contribution the PCSO would have is its franchise or authority to operate
the on-line lottery system; with the rest, including the risks of the business, being borne by
the proponent or bidder. It could be for this reason that it warned that "the proponent must
be able to stand to the acid test of proving that it is an entity able to take on the role of
responsible maintainer of the on-line lottery system." The PCSO, however, makes it clear in its
RFP that the proponent can propose a period of the contract which shall not exceed fifteen
years, during which time it is assured of a "rental" which shall not exceed 12% of gross
receipts. As admitted by the PGMC, upon learning of the PCSO's decision, the Berjaya Group
Berhad, with its affiliates, wanted to offer its services and resources to the PCSO. Forthwith, it
organized the PGMC as "a medium through which the technical and management services
required for the project would be offered and delivered to PCSO." 66
Undoubtedly, then, the Berjaya Group Berhad knew all along that in connection with an on-
line lottery system, the PCSO had nothing but its franchise, which it solemnly guaranteed it
had in the General Information of the RFP. 67Howsoever viewed then, from the very
inception, the PCSO and the PGMC mutually understood that any arrangement between
them would necessarily leave to the PGMC the technical, operations, and
managementaspects of the on-line lottery system while the PCSO would, primarily, provide
the franchise. The words Gaming andManagement in the corporate name of respondent
Philippine Gaming Management Corporation could not have been conceived just for
euphemistic purposes. Of course, the RFP cannot substitute for the Contract of Lease which
was subsequently executed by the PCSO and the PGMC. Nevertheless, the Contract of Lease
incorporates their intention and understanding.
The so-called Contract of Lease is not, therefore, what it purports to be. Its denomination as
such is a crafty device, carefully conceived, to provide a built-in defense in the event that the
agreement is questioned as violative of the exception in Section 1 (B) of the PCSO's charter.
The acuity or skill of its draftsmen to accomplish that purpose easily manifests itself in the
Contract of Lease. It is outstanding for its careful and meticulous drafting designed to give an
immediate impression that it is a contract of lease. Yet, woven therein are provisions which
negate its title and betray the true intention of the parties to be in or to have a joint
venture for a period of eight years in the operation and maintenance of the on-line lottery
system.
Consistent with the above observations on the RFP, the PCSO has only its franchise to offer,
while the PGMC represents and warrants that it has access to all managerial and technical
expertise to promptly and effectively carry out the terms of the contract. And, for a period of
eight years, the PGMC is under obligation to keep all the Facilitiesin safe condition and if
necessary, upgrade, replace, and improve them from time to time as new technology
develops to make the on-line lottery system more cost-effective and competitive; exclusively
bear all costs and expenses relating to the printing, manpower, salaries and wages,
advertising and promotion, maintenance, expansion and replacement, security and
insurance, and all other related expenses needed to operate the on-line lottery system;
undertake a positive advertising and promotions campaign for both institutional and product
lines without engaging in negative advertising against other lessors; bear the salaries and
related costs of skilled and qualified personnel for administrative and technical operations;
comply with procedural and coordinating rulesissued by the PCSO; and to train PCSO and
other local personnel and to effect the transfer of technology and other expertise, such that
at the end of the term of the contract, the PCSO will be able to effectively take over the
Facilities and efficiently operate the on-line lottery system. The latter simply means that,
indeed, the managers, technicians or employees who shall operate the on-line lottery system
are not managers, technicians or employees of the PCSO, but of the PGMC and that it is only
after the expiration of the contract that the PCSO will operate the system. After eight years,
the PCSO would automatically become the owner of the Facilities without any other further
consideration.
For these reasons, too, the PGMC has the initial prerogative to prepare the detailed plan of
all games and the marketing thereof, and determine the number of players, value of
winnings, and the logistics required to introduce the games, including the Master Games
Plan. Of course, the PCSO has the reserved authority to disapprove them. 68 And, while the
PCSO has the sole responsibility over the appointment of dealers and retailers throughout
the country, the PGMC may, nevertheless, recommend for appointment dealers and retailers
which shall be acted upon by the PCSO within forty-eight hours and collect and retain, for its
own account, a security deposit from dealers and retailers in respect of equipment supplied
by it.
This joint venture is further established by the following:
(a) Rent is defined in the lease contract as the amount to be paid to the PGMC as
compensation for the fulfillment of its obligations under the contract, including, but not
limited to the lease of the Facilities. However, this rent is not actually a fixed amount.
Although it is stated to be 4.9% of gross receipts from ticket sales, payable net of taxes
required by law to be withheld, it may be drastically reduced or, in extreme cases, nothing
may be due or demandable at all because the PGMC binds itself to "bear all risks if the
revenue from the ticket sales, on an annualized basis, are insufficient to pay the entire prize
money." This risk-bearing provision is unusual in a lessor-lessee relationship, but inherent in
a joint venture.
(b) In the event of pre-termination of the contract by the PCSO, or its suspension of
operation of the on-line lottery system in breach of the contract and through no fault of the
PGMC, the PCSO binds itself "to promptly, and in any event not later than sixty (60) days,
reimburse the Lessor the amount of its total investment cost associated with the On-Line
Lottery System, including but not limited to the cost of the Facilities, and further compensate
the LESSOR for loss of expected net profit after tax, computed over the unexpired term of
the lease." If the contract were indeed one of lease, the payment of the expected profits or
rentals for the unexpired portion of the term of the contract would be enough.
(c) The PGMC cannot "directly or indirectly undertake any activity or business in competition
with or adverse to the On-Line Lottery System of PCSO unless it obtains the latter's prior
written consent." If the PGMC is engaged in the business of leasing equipment and
technology for an on-line lottery system, we fail to see any acceptable reason why it should
allow a restriction on the pursuit of such business.
(d) The PGMC shall provide the PCSO the audited Annual Report sent to its stockholders, and
within two years from the effectivity of the contract, cause itself to be listed in the local stock
exchange and offer at least 25% of its equity to the public. If the PGMC is merely a lessor, this
imposition is unreasonable and whimsical, and could only be tied up to the fact that the
PGMC will actually operate and manage the system; hence, increasing public participation in
the corporation would enhance public interest.
(e) The PGMC shall put up an Escrow Deposit of P300,000,000.00 pursuant to the
requirements of the RFP, which it may, at its option, maintain as its initial performance bond
required to ensure its faithful compliance with the terms of the contract.
(f) The PCSO shall designate the necessary personnel to monitor and audit the daily
performance of the on-line lottery system; and promulgate procedural and coordinating
rules governing all activities relating to the on-line lottery system. The first further confirms
that it is the PGMC which will operate the system and the PCSO may, for the protection of its
interest, monitor and audit the daily performance of the system. The second admits
the coordinating and cooperative powers and functions of the parties.
(g) The PCSO may validly terminate the contract if the PGMC becomes insolvent or bankrupt
or is unable to pay its debts, or if it stops or suspends or threatens to stop or suspend
payment of all or a material part of its debts.
All of the foregoing unmistakably confirm the indispensable role of the PGMC in the pursuit,
operation, conduct, and management of the On-Line Lottery System. They exhibit and
demonstrate the parties' indivisible community of interest in the conception, birth and
growth of the on-line lottery, and, above all, in its profits, with each having a right in the
formulation and implementation of policies related to the business and sharing, as well, in
the losses with the PGMC bearing the greatest burden because of its assumption of
expenses and risks, and the PCSO the least, because of its confessed unwillingness to bear
expenses and risks. In a manner of speaking, each is wed to the other for better or for worse.
In the final analysis, however, in the light of the PCSO's RFP and the above highlighted
provisions, as well as the "Hold Harmless Clause" of the Contract of Lease, it is even safe to
conclude that the actual lessor in this case is the PCSO and the subject matter thereof is its
franchise to hold and conduct lotteries since it is, in reality, the PGMC which operates and
manages the on-line lottery system for a period of eight years.

We thus declare that the challenged Contract of Lease violates the exception provided for in
paragraph B, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, and is, therefore, invalid
for being contrary to law. This conclusion renders unnecessary further discussion on the
other issues raised by the petitioners.

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.

The Temporary Restraining Order issued on 11 April 1994 is hereby MADE PERMANENT.

No pronouncement as to costs.

SO ORDERED.

Regalado, Romero and Bellosillo, JJ., concur.

Narvasa, C.J., took no part

 They were not able to detect previously downloaded results at various
canvassing or consolidation levels and to prevent these from being
inputted again

They were unable to print the statutorily required audit trails of the
count/canvass at different levels without any loss of data

Because of the foregoing violations of law and the glaring grave abuse of discretion
committed by Comelec, the Court has no choice but to exercise its solemn constitutional
duty[3] to void the assailed Resolution and the subject Contract. The illegal, imprudent and
hasty actions of the Commission have not only desecrated legal and jurisprudential norms, but
have also cast serious doubts upon the poll bodys ability and capacity to conduct automated
elections. Truly, the pith and soul of democracy -- credible, orderly, and peaceful elections --
has been put in jeopardy by the illegal and gravely abusive acts of Comelec.

INFORMATION TECHNOLOGY FOUNDATION OF THE PHILIPPINES, MA. CORAZON M. AKOL, MIGUEL

UY, EDUARDO H. LOPEZ, AUGUSTO C. LAGMAN, REX C. DRILON, MIGUEL HILADO, LEY
The Case
SALCEDO, and MANUEL ALCUAZ JR., petitioners, vs. COMMISSION ON
ELECTIONS; COMELEC CHAIRMAN BENJAMIN ABALOS SR.; COMELEC BIDDING and
AWARD COMMITTEE CHAIRMAN EDUARDO D. MEJOS and MEMBERS GIDEON DE GUZMAN,
Before us is a Petition[4] under Rule 65 of the Rules of Court, seeking (1) to declare null
JOSE F. BALBUENA, LAMBERTO P. LLAMAS, and BARTOLOME SINOCRUZ JR.; MEGA PACIFIC
and void Resolution No. 6074 of the Commission on Elections (Comelec), which awarded Phase
eSOLUTIONS, INC.; and MEGA PACIFIC CONSORTIUM, respondents.
II of the Modernization Project of the Commission to Mega Pacific Consortium (MPC); (2) to
enjoin the implementation of any further contract that may have been entered into by
DECISION Comelec either with Mega Pacific Consortium and/or Mega Pacific eSolutions, Inc. (MPEI); and
(3) to compel Comelec to conduct a re-bidding of the project.
PANGANIBAN, J.:

There is grave abuse of discretion (1) when an act is done contrary to the Constitution,
the law or jurisprudence;[1] or (2) when it is executed whimsically, capriciously or arbitrarily The Facts
out of malice, ill will or personal bias.[2] In the present case, the Commission on Elections
approved the assailed Resolution and awarded the subject Contract not only in clear violation
of law and jurisprudence, but also in reckless disregard of its own bidding rules and The following facts are not disputed. They were culled from official documents, the
procedure. For the automation of the counting and canvassing of the ballots in the 2004 parties pleadings, as well as from admissions during the Oral Argument on October 7, 2003.
elections, Comelec awarded the Contract to Mega Pacific Consortium an entity that had not
On June 7, 1995, Congress passed Republic Act 8046,[5] which authorized Comelec to
participated in the bidding. Despite this grant, the poll body signed the actual automation
conduct a nationwide demonstration of a computerized election system and allowed the poll
Contract with Mega Pacific eSolutions, Inc., a company that joined the bidding but had not met
body to pilot-test the system in the March 1996 elections in the Autonomous Region in Muslim
the eligibility requirements.
Mindanao (ARMM).
Comelec awarded this billion-peso undertaking with inexplicable haste, without
On December 22, 1997, Congress enacted Republic Act 8436[6] authorizing Comelec to
adequately checking and observing mandatory financial, technical and legal requirements. It
use an automated election system (AES) for the process of voting, counting votes and
also accepted the proferred computer hardware and software even if, at the time of the award,
canvassing/consolidating the results of the national and local elections. It also mandated the
they had undeniably failed to pass eight critical requirements designed to safeguard the
poll body to acquire automated counting machines (ACMs), computer equipment, devices and
integrity of elections, especially the following three items:
materials; and to adopt new electoral forms and printing materials.

They failed to achieve the accuracy rating criteria of 99.9995 percent Initially intending to implement the automation during the May 11, 1998 presidential
set-up by the Comelec itself elections, Comelec -- in its Resolution No. 2985 dated February 9, 1998[7] -- eventually decided
against full national implementation and limited the automation to the Autonomous Region in
Muslim Mindanao (ARMM). However, due to the failure of the machines to read correctly
some automated ballots in one town, the poll body later ordered their manual count for the
entire Province of Sulu.[8]
In the May 2001 elections, the counting and canvassing of votes for both national and
local positions were also done manually, as no additional ACMs had been acquired for that
electoral exercise allegedly because of time constraints.
On October 29, 2002, Comelec adopted in its Resolution 02-0170 a modernization
program for the 2004 elections. It resolved to conduct biddings for the three (3) phases of its
Automated Election System; namely, Phase I - Voter Registration and Validation System; Phase
II - Automated Counting and Canvassing System; and Phase III - Electronic Transmission.
On January 24, 2003, President Gloria Macapagal-Arroyo issued Executive Order No. 172,
which allocated the sum of P2.5 billion to fund the AES for the May 10, 2004 elections. Upon
the request of Comelec, she authorized the release of an additional P500 million.
On January 28, 2003, the Commission issued an Invitation to Apply for Eligibility and to
Bid, which we quote as follows:
INVITATION TO APPLY FOR ELIGIBILITY AND TO BID
The Commission on Elections (COMELEC), pursuant to the mandate of Republic Act Nos. 8189
and 8436, invites interested offerors, vendors, suppliers or lessors to apply for eligibility and
to bid for the procurement by purchase, lease, lease with option to purchase, or otherwise,
supplies, equipment, materials and services needed for a comprehensive Automated Election
System, consisting of three (3) phases: (a) registration/verification of voters, (b) automated
counting and consolidation of votes, and (c) electronic transmission of election results, with
an approved budget of TWO BILLION FIVE HUNDRED MILLION (Php2,500,000,000) Pesos.
Only bids from the following entities shall be entertained:
a. Duly licensed Filipino citizens/proprietorships;
b. Partnerships duly organized under the laws of the Philippines and of which at
least sixty percent (60%) of the interest belongs to citizens of the
Philippines;
c. Corporations duly organized under the laws of the Philippines, and of which at
least sixty percent (60%) of the outstanding capital stock belongs to
citizens of the Philippines;
d. Manufacturers, suppliers and/or distributors forming themselves into a joint
venture, i.e., a group of two (2) or more manufacturers, suppliers and/or
distributors that intend to be jointly and severally responsible or liable for
a particular contract, provided that Filipino ownership thereof shall be at
least sixty percent (60%); and
e. Cooperatives duly registered with the Cooperatives Development Authority.
Bid documents for the three (3) phases may be obtained starting 10 February 2003, during
office hours from the Bids and Awards Committee (BAC) Secretariat/Office of Commissioner
Resurreccion Z. Borra, 7th Floor, Palacio del Governador, Intramuros, Manila, upon payment
at the Cash Division, Commission on Elections, in cash or cashiers check, payable to the
Commission on Elections, of a non-refundable amount of FIFTEEN THOUSAND PESOS
(Php15,000.00) for each phase. For this purpose, interested offerors, vendors, suppliers or
lessors have the option to participate in any or all of the three (3) phases of the
comprehensive Automated Election System.
A Pre-Bid Conference is scheduled on 13 February 2003, at 9:00 a.m. at the Session Hall,
Commission on Elections, Postigo Street, Intramuros, Manila. Should there be questions on
the bid documents, bidders are required to submit their queries in writing to the BAC
Secretariat prior to the scheduled Pre-Bid Conference.
Deadline for submission to the BAC of applications for eligibility and bid envelopes for the
supply of the comprehensive Automated Election System shall be at the Session Hall,
Commission on Elections, Postigo Street, Intramuros, Manila on 28 February 2003 at 9:00
a.m.
The COMELEC reserves the right to review the qualifications of the bidders after the bidding
and before the contract is executed. Should such review uncover any misrepresentation
made in the eligibility statements, or any changes in the situation of the bidder to materially
downgrade the substance of such statements, the COMELEC shall disqualify the bidder upon
due notice without any obligation whatsoever for any expenses or losses that may be
incurred by it in the preparation of its bid.[9]
On February 11, 2003, Comelec issued Resolution No. 5929 clarifying certain eligibility
criteria for bidders and the schedule of activities for the project bidding, as follows:
1.) Open to Filipino and foreign corporation duly registered and licensed to do
business and is actually doing business in the Philippines, subject to Sec.
43 of RA 9184 (An Act providing In the Modernization Standardization
and Regulation of the Procurement Activities of the Government and for
other purposes etc.)
2.) Track Record:
a) For counting machines should have been used in at least one (1) political
exercise with no less than Twenty Million Voters;
b) For verification of voters the reference site of an existing data base
installation using Automated Fingerprint Identification System (AFIS)
with at least Twenty Million.
3.) Ten percent (10%) equity requirement shall be based on the total project cost;
and
 4.) Performance bond shall be twenty percent (20%) of the bid offer.
RESOLVED moreover, that:
1) A. Due to the decision that the eligibility requirements and the rest of the Bid
documents shall be released at the same time, and the memorandum of
Comm. Resurreccion Z. Borra dated February 7, 2003, the documents to
be released on Friday, February 14, 2003 at 2:00 oclock p.m. shall be the
eligibility criteria, Terms of Reference (TOR) and other pertinent
documents;
B. Pre-Bid conference shall be on February 18, 2003; and
C. Deadline for the submission and receipt of the Bids shall be on March 5,
2003.
2) The aforementioned documents will be available at the following offices:
a) Voters Validation: Office of Comm. Javier
b) Automated Counting Machines: Office of Comm. Borra
c) Electronic Transmission: Office of Comm. Tancangco[10]
On February 17, 2003, the poll body released the Request for Proposal (RFP) to procure
the election automation machines. The Bids and Awards Committee (BAC) of Comelec
convened a pre-bid conference on February 18, 2003 and gave prospective bidders until March
10, 2003 to submit their respective bids.
Among others, the RFP provided that bids from manufacturers, suppliers and/or
distributors forming themselves into a joint venture may be entertained, provided that the
Philippine ownership thereof shall be at least 60 percent. Joint venture is defined in the RFP as
a group of two or more manufacturers, suppliers and/or distributors that intend to be jointly
and severally responsible or liable for a particular contract.[11]
Basically, the public bidding was to be conducted under a two-envelope/two stage
system. The bidders first envelope or the Eligibility Envelope should establish the bidders
eligibility to bid and its qualifications to perform the acts if accepted. On the other hand, the
second envelope would be the Bid Envelope itself. The RFP outlines the bidding procedures as
follows:
25. Determination of Eligibility of Prospective Bidders
25.1 The eligibility envelopes of prospective Bidders shall be opened first to
determine their eligibility. In case any of the requirements specified in Clause 20
is missing from the first bid envelope, the BAC shall declare said prospective
Bidder as ineligible to bid. Bid envelopes of ineligible Bidders shall be
immediately returned unopened.
25.2 The eligibility of prospective Bidders shall be determined using simple
pass/fail criteria and shall be determined as either eligible or ineligible. If the
prospective Bidder is rated passed for all the legal, technical and financial
requirements, he shall be considered eligible. If the prospective Bidder is rated
failed in any of the requirements, he shall be considered ineligible.
26. Bid Examination/Evaluation
26.1 The BAC will examine the Bids to determine whether they are complete,
whether any computational errors have been made, whether required securities
have been furnished, whether the documents have been properly signed, and
whether the Bids are generally in order.
26.2 The BAC shall check the submitted documents of each Bidder against the
required documents enumerated under Clause 20, to ascertain if they are all
present in the Second bid envelope (Technical Envelope). In case one (1) or more
of the required documents is missing, the BAC shall rate the Bid concerned as
failed and immediately return to the Bidder its Third bid envelope (Financial
Envelope) unopened. Otherwise, the BAC shall rate the first bid envelope as
passed.
26.3 The BAC shall immediately open the Financial Envelopes of the Bidders
whose Technical Envelopes were passed or rated on or above the passing
score. Only Bids that are determined to contain all the bid requirements for both
components shall be rated passed and shall immediately be considered for
evaluation and comparison.
26.4 In the opening and examination of the Financial Envelope, the BAC shall
announce and tabulate the Total Bid Price as calculated. Arithmetical errors will
be rectified on the following basis: If there is a discrepancy between words and
figures, the amount in words will prevail. If there is a discrepancy between the
unit price and the total price that is obtained by multiplying the unit price and
the quantity, the unit price shall prevail and the total price shall be corrected
accordingly. If there is a discrepancy between the Total Bid Price and the sum of
the total prices, the sum of the total prices prevail and the Total Bid Price shall
be corrected accordingly.
26.5 Financial Proposals which do not clearly state the Total Bid Price shall be
rejected. Also, Total Bid Price as calculated that exceeds the approved budget for
the contract shall also be rejected.
27. Comparison of Bids
27.1 The bid price shall be deemed to embrace all costs, charges and fees
associated with carrying out all the elements of the proposed Contract, including
but not limited to, license fees, freight charges and taxes.
 27.2 The BAC shall establish the calculated prices of all Bids rated passed and
rank the same in ascending order.
xxxxxxxxx
29. Postqualification
29.1 The BAC will determine to its satisfaction whether the Bidder selected as
having submitted the lowest calculated bid is qualified to satisfactorily perform
the Contract.
29.2 The determination will take into account the Bidders financial, technical and
production capabilities/resources. It will be based upon an examination of the
documentary evidence of the Bidders qualification submitted by the Bidder as
well as such other information as the BAC deems necessary and appropriate.
29.3 A bid determined as not substantially responsive will be rejected by the BAC
and may not subsequently be made responsive by the Bidder by correction of
the non-conformity.
29.4 The BAC may waive any informality or non-conformity or irregularity in a bid
which does not constitute a material deviation, provided such waiver does not
prejudice or affect the relative ranking of any Bidder.
29.5 Should the BAC find that the Bidder complies with the legal, financial and
technical requirements, it shall make an affirmative determination which shall be
a prerequisite for award of the Contract to the Bidder. Otherwise, it will make a
negative determination which will result in rejection of the Bidders bid, in which
event the BAC will proceed to the next lowest calculated bid to make a similar
determination of that Bidders capabilities to perform satisfactorily.[12]
Out of the 57 bidders,[13] the BAC found MPC and the Total Information Management
Corporation (TIMC) eligible. For technical evaluation, they were referred to the BACs Technical
Working Group (TWG) and the Department of Science and Technology (DOST).
In its Report on the Evaluation of the Technical Proposals on Phase II, DOST said that
both MPC and TIMC had obtained a number of failed marks in the technical
evaluation.Notwithstanding these failures, Comelec en banc, on April 15, 2003, promulgated
Resolution No. 6074 awarding the project to MPC. The Commission publicized this Resolution
and the award of the project to MPC on May 16, 2003.
On May 29, 2003, five individuals and entities (including the herein Petitioners
Information Technology Foundation of the Philippines, represented by its president, Alfredo
M. Torres; and Ma. Corazon Akol) wrote a letter[14] to Comelec Chairman Benjamin Abalos
Sr. They protested the award of the Contract to Respondent MPC due to glaring irregularities
in the manner in which the bidding process had been conducted. Citing therein the
noncompliance with eligibility as well as technical and procedural requirements (many of
which have been discussed at length in the Petition), they sought a re-bidding.
In a letter-reply dated June 6, 2003,[15] the Comelec chairman -- speaking through Atty.
Jaime Paz, his head executive assistant -- rejected the protest and declared that the award
would stand up to the strictest scrutiny.
Hence, the present Petition.[16]
The Issues
In their Memorandum, petitioners raise the following issues for our consideration:
1. The COMELEC awarded and contracted with a non-eligible entity; x x x
2. Private respondents failed to pass the Technical Test as required in the RFP.
Notwithstanding, such failure was ignored. In effect, the COMELEC
changed the rules after the bidding in effect changing the nature of the
contract bidded upon.
3. Petitioners have locus standi.
4. Instant Petition is not premature. Direct resort to the Supreme Court is
justified.[17]
In the main, the substantive issue is whether the Commission on Elections, the agency
vested with the exclusive constitutional mandate to oversee elections, gravely abused its
discretion when, in the exercise of its administrative functions, it awarded to MPC the contract
for the second phase of the comprehensive Automated Election System.
Before discussing the validity of the award to MPC, however, we deem it proper to first
pass upon the procedural issues: the legal standing of petitioners and the alleged prematurity
of the Petition.
This Courts Ruling
The Petition is meritorious.
First Procedural Issue:
Locus Standi of Petitioners
 Respondents chorus that petitioners do not possess locus standi, inasmuch as they are
not challenging the validity or constitutionality of RA 8436. Moreover, petitioners supposedly
admitted during the Oral Argument that no law had been violated by the award of the
Contract. Furthermore, they allegedly have no actual and material interest in the Contract and,
hence, do not stand to be injured or prejudiced on account of the award.
On the other hand, petitioners -- suing in their capacities as taxpayers, registered voters
and concerned citizens -- respond that the issues central to this case are of transcendental
importance and of national interest. Allegedly, Comelecs flawed bidding and questionable
award of the Contract to an unqualified entity would impact directly on the success or the
failure of the electoral process. Thus, any taint on the sanctity of the ballot as the expression
of the will of the people would inevitably affect their faith in the democratic system of
government. Petitioners further argue that the award of any contract for automation involves
disbursement of public funds in gargantuan amounts; therefore, public interest requires that
the laws governing the transaction must be followed strictly.
We agree with petitioners. Our nations political and economic future virtually hangs in
the balance, pending the outcome of the 2004 elections. Hence, there can be no serious doubt
that the subject matter of this case is a matter of public concern and imbued with public
interest;[18] in other words, it is of paramount public interest[19] and transcendental
importance.[20] This fact alone would justify relaxing the rule on legal standing, following the
liberal policy of this Court whenever a case involves an issue of overarching significance to our
society.[21] Petitioners legal standing should therefore be recognized and upheld.
Moreover, this Court has held that taxpayers are allowed to sue when there is a claim of
illegal disbursement of public funds,[22] or if public money is being deflected to any improper
purpose;[23] or when petitioners seek to restrain respondent from wasting public funds
through the enforcement of an invalid or unconstitutional law.[24] In the instant case, individual
petitioners, suing as taxpayers, assert a material interest in seeing to it that public funds are
properly and lawfully used. In the Petition, they claim that the bidding was defective, the
winning bidder not a qualified entity, and the award of the Contract contrary to law and
regulation. Accordingly, they seek to restrain respondents from implementing the Contract
and, necessarily, from making any unwarranted expenditure of public funds pursuant
thereto. Thus, we hold that petitioners possess locus standi.
Second Procedural Issue:
Alleged Prematurity Due to Non-Exhaustion
of Administrative Remedies
Respondents claim that petitioners acted prematurely, since they had not first utilized
the protest mechanism available to them under RA 9184, the Government Procurement
Reform Act, for the settlement of disputes pertaining to procurement contracts.
Section 55 of RA 9184 states that protests against decisions of the Bidding and Awards
Committee in all stages of procurement may be lodged with the head of the procuring entity
by filing a verified position paper and paying a protest fee. Section 57 of the same law
mandates that in no case shall any such protest stay or delay the bidding process, but it must
first be resolved before any award is made.
On the other hand, Section 58 provides that court action may be resorted to only after
the protests contemplated by the statute shall have been completed. Cases filed in violation
of this process are to be dismissed for lack of jurisdiction. Regional trial courts shall have
jurisdiction over final decisions of the head of the procuring entity, and court actions shall be
instituted pursuant to Rule 65 of the 1997 Rules of Civil Procedure.
Respondents assert that throughout the bidding process, petitioners never questioned
the BAC Report finding MPC eligible to bid and recommending the award of the Contract to it
(MPC). According to respondents, the Report should have been appealed to the Comelec en
banc, pursuant to the aforementioned sections of RA 9184. In the absence of such appeal, the
determination and recommendation of the BAC had become final.
The Court is not persuaded.
Respondent Comelec came out with its en banc Resolution No. 6074 dated April 15,
2003, awarding the project to Respondent MPC even before the BAC managed to issue its
written report and recommendation on April 21, 2003. Thus, how could petitioners have
appealed the BACs recommendation or report to the head of the procuring entity (the
chairman of Comelec), when the Comelec en banc had already approved the award of the
contract to MPC even before petitioners learned of the BAC recommendation?
It is claimed[25] by Comelec that during its April 15, 2003 session, it received and
approved the verbal report and recommendation of the BAC for the award of the Contract to
MPC, and that the BAC subsequently re-affirmed its verbal report and recommendation by
submitting it in writing on April 21, 2003. Respondents insist that the law does not require that
the BAC Report be in writing before Comelec can act thereon; therefore, there is allegedly
nothing irregular about the Report as well as the en banc Resolution.
However, it is obvious that petitioners could have appealed the BACs report and
recommendation to the head of the procuring entity (the Comelec chair) only upon
their discovery thereof, which at the very earliest would have been on April 21, 2003, when
the BAC actually put its report in writing and finally released it. Even then, what would have
been the use of protesting/appealing the report to the Comelec chair, when by that time the
Commission en banc (including the chairman himself) had already approved the BAC Report
and awarded the Contract to MPC?
And even assuming arguendo that petitioners had somehow gotten wind of the verbal
BAC report on April 15, 2003 (immediately after the en banc session), at that point the
Commission en banc had already given its approval to the BAC Report along with the award to
MPC. To put it bluntly, the Comelec en banc itself made it legally impossible for petitioners to
avail themselves of the administrative remedy that the Commission is so impiously harping
on. There is no doubt that they had not been accorded the opportunity to avail themselves of
the process provided under Section 55 of RA 9184, according to which a protest against a
decision of the BAC may be filed with the head of the procuring entity. Nemo tenetur ad
impossible,[26] to borrow private respondents favorite Latin excuse. [27]
Some Observations on the Such letter-protest is sufficient compliance with the requirement to exhaust
BAC Report to the Comelec administrative remedies particularly because it hews closely to the procedure outlined in
Section 55 of RA 9184.

We shall return to this issue of alleged prematurity shortly, but at this interstice, we And even without that May 29, 2003 letter-protest, the Court still holds that petitioners
would just want to put forward a few observations regarding the BAC Report and the Comelec need not exhaust administrative remedies in the light of Paat v. Court of
en bancs approval thereof. Appeals.[29]Paat enumerates the instances when the rule on exhaustion of administrative
remedies may be disregarded, as follows:
First, Comelec contends that there was nothing unusual about the fact that the Report
submitted by the BAC came only after the former had already awarded the Contract, because (1) when there is a violation of due process,
the latter had been asked to render its report and recommendation orally during the
Commissions en banc session on April 15, 2003. Accordingly, Comelec supposedly acted upon
(2) when the issue involved is purely a legal question,
such oral recommendation and approved the award to MPC on the same day, following which
the recommendation was subsequently reduced into writing on April 21, 2003. While not
entirely outside the realm of the possible, this interesting and unique spiel does not speak well (3) when the administrative action is patently illegal amounting to lack or excess
of the process that Comelec supposedly went through in making a critical decision with respect of jurisdiction,
to a multi-billion-peso contract.
(4) when there is estoppel on the part of the administrative agency concerned,
We can imagine that anyone else standing in the shoes of the Honorable Commissioners
would have been extremely conscious of the overarching need for utter transparency. They
would have scrupulously avoided the slightest hint of impropriety, preferring to maintain an (5) when there is irreparable injury,
exacting regularity in the performance of their duties, instead of trying to break a speed record
in the award of multi-billion-peso contracts. After all, between April 15 and April 21 were a (6) when the respondent is a department secretary whose acts as an alter ego of
mere six (6) days. Could Comelec not have waited out six more days for the written report of the President bears the implied and assumed approval of the latter,
the BAC, instead of rushing pell-mell into the arms of MPC? Certainly, respondents never cared
to explain the nature of the Commissions dire need to act immediately without awaiting the (7) when to require exhaustion of administrative remedies would be
formal, written BAC Report. unreasonable,
In short, the Court finds it difficult to reconcile the uncommon dispatch with which
Comelec acted to approve the multi-billion-peso deal, with its claim of having been impelled (8) when it would amount to a nullification of a claim,
by only the purest and most noble of motives.
(9) when the subject matter is a private land in land case proceedings,
At any rate, as will be discussed later on, several other factors combine to
lend negative credence to Comelecs tale.
(10) when the rule does not provide a plain, speedy and adequate remedy, and
Second, without necessarily ascribing any premature malice or premeditation on the part
of the Comelec officials involved, it should nevertheless be conceded that this cart-before-the-
(11) when there are circumstances indicating the urgency of judicial
horse maneuver (awarding of the Contract ahead of the BACs written report) would definitely
intervention.[30]
serve as a clever and effective way of averting and frustrating any impending protest under
Section 55.
The present controversy precisely falls within the exceptions listed as Nos. 7, 10 and
Having made the foregoing observations, we now go back to the question of exhausting 11: (7) when to require exhaustion of administrative remedies would be unreasonable; (10)
administrative remedies. Respondents may not have realized it, but the letter addressed to when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are
Chairman Benjamin Abalos Sr. dated May 29, 2003[28] serves to eliminate the prematurity issue circumstances indicating the urgency of judicial intervention. As already stated, Comelec itself
as it was an actual written protest against the decision of the poll body to award the made the exhaustion of administrative remedies legally impossible or, at the very least,
Contract. The letter was signed by/for, inter alia, two of herein petitioners: the Information unreasonable.
Technology Foundation of the Philippines, represented by its president, Alfredo M. Torres; and
Ma. Corazon Akol. In any event, the peculiar circumstances surrounding the unconventional rendition of
the BAC Report and the precipitate awarding of the Contract by the Comelec en banc -- plus
the fact that it was racing to have its Contract with MPC implemented in time for the elections
in May 2004 (barely four months away) -- have combined to bring about the urgent need for
judicial intervention, thus prompting this Court to dispense with the procedural exhaustion of
administrative remedies in this case.
Main Substantive Issue:
Validity of the Award to MPC
We come now to the meat of the controversy. Petitioners contend that the award
is invalid, since Comelec gravely abused its discretion when it did the following:
1. Awarded the Contract to MPC though it did not even participate in the bidding
2. Allowed MPEI to participate in the bidding despite its failure to meet the mandatory
eligibility requirements
3. Issued its Resolution of April 15, 2003 awarding the Contract to MPC despite the
issuance by the BAC of its Report, which formed the basis of the assailed Resolution, only on
April 21, 2003[31]
4. Awarded the Contract, notwithstanding the fact that during the bidding process, there
were violations of the mandatory requirements of RA 8436 as well as those set forth in
Comelecs own Request for Proposal on the automated election system
5. Refused to declare a failed bidding and to conduct a re-bidding despite the failure of
the bidders to pass the technical tests conducted by the Department of Science and
Technology
6. Failed to follow strictly the provisions of RA 8436 in the conduct of the bidding for the
automated counting machines
After reviewing the slew of pleadings as well as the matters raised during the Oral
Argument, the Court deems it sufficient to focus discussion on the following major areas of
concern that impinge on the issue of grave abuse of discretion:
A. Matters pertaining to the identity, existence and eligibility of MPC as a bidder
B. Failure of the automated counting machines (ACMs) to pass the DOST technical tests
C. Remedial measures and re-testings undertaken by Comelec and DOST after the award, and
their effect on the present controversy
A.
Failure to Establish the Identity,
Existence and Eligibility of the
Alleged Consortium as a Bidder
On the question of the identity and the existence of the real bidder, respondents insist
that, contrary to petitioners allegations, the bidder was not Mega Pacific eSolutions, Inc.
(MPEI), which was incorporated only on February 27, 2003, or 11 days prior to the bidding
itself. Rather, the bidder was Mega Pacific Consortium (MPC), of which MPEI was but a part. As
proof thereof, they point to the March 7, 2003 letter of intent to bid, signed by the president
of MPEI allegedly for and on behalf of MPC. They also call attention to the official receipt issued
to MPC, acknowledging payment for the bidding documents, as proof that it was the
consortium that participated in the bidding process.
We do not agree. The March 7, 2003 letter, signed by only one signatory -- Willy U. Yu,
President, Mega Pacific eSolutions, Inc., (Lead Company/ Proponent) For: Mega Pacific
Consortium -- and without any further proof, does not by itself prove the existence of the
consortium. It does not show that MPEI or its president have been duly pre-authorized by the
other members of the putative consortium to represent them, to bid on their collective behalf
and, more important, to commit them jointly and severally to the bid undertakings. The letter
is purely self-serving and uncorroborated.
Neither does an official receipt issued to MPC, acknowledging payment for the bidding
documents, constitute proof that it was the purported consortium that participated in the
bidding. Such receipts are issued by cashiers without any legally sufficient inquiry as to the real
identity or existence of the supposed payor.
To assure itself properly of the due existence (as well as eligibility and qualification) of
the putative consortium, Comelecs BAC should have examined the bidding documents
submitted on behalf of MPC. They would have easily discovered the following fatal flaws.
Two-Envelope,
Two-Stage System
As stated earlier in our factual presentation, the public bidding system designed by
Comelec under its RFP (Request for Proposal for the Automation of the 2004 Election)
mandated the use of a two-envelope, two-stage system. A bidders first envelope (Eligibility
Envelope) was meant to establish its eligibility to bid and its qualifications and capacity to
perform the contract if its bid was accepted, while the second envelope would be the Bid
Envelope itself.
The Eligibility Envelope was to contain legal documents such as articles of incorporation,
business registrations, licenses and permits, mayors permit, VAT certification, and so
forth; technical documents containing documentary evidence to establish the track record of
the bidder and its technical and production capabilities to perform the contract; and financial
documents, including audited financial statements for the last three years, to establish the
bidders financial capacity.
In the case of a consortium or joint venture desirous of participating in the bidding, it
goes without saying that the Eligibility Envelope would necessarily have to include a copy of
the joint venture agreement, the consortium agreement or memorandum of agreement -- or
a business plan or some other instrument of similar import -- establishing the due existence,
composition and scope of such aggrupation. Otherwise, how would Comelec know who it was
dealing with, and whether these parties are qualified and capable of delivering the products
and services being offered for bidding?[32]
In the instant case, no such instrument was submitted to Comelec during the bidding
process. This fact can be conclusively ascertained by scrutinizing the two-inch thick Eligibility
Requirements file submitted by Comelec last October 9, 2003, in partial compliance with this
Courts instructions given during the Oral Argument. This file purports to replicate the eligibility
documents originally submitted to Comelec by MPEI allegedly on behalf of MPC, in connection
with the bidding conducted in March 2003. Included in the file are the incorporation papers
and financial statements of the members of the supposed consortium and certain certificates,
licenses and permits issued to them.
However, there is no sign whatsoever of any joint venture agreement, consortium
agreement, memorandum of agreement, or business plan executed among the members of the
purported consortium.
The only logical conclusion is that no such agreement was ever submitted to the Comelec
for its consideration, as part of the bidding process.
It thus follows that, prior the award of the Contract, there was no documentary or other
basis for Comelec to conclude that a consortium had actually been formed amongst MPEI, SK
C&C and WeSolv, along with Election.com and ePLDT.[33] Neither was there anything to
indicate the exact relationships between and among these firms; their diverse roles,
undertakings and prestations, if any, relative to the prosecution of the project, the extent of
their respective investments (if any) in the supposed consortium or in the project; and the
precise nature and extent of their respective liabilities with respect to the contract being
offered for bidding. And apart from the self-serving letter of March 7, 2003, there was not even
any indication that MPEI was the lead company duly authorized to act on behalf of the others.
So, it necessarily follows that, during the bidding process, Comelec had no basis at all for
determining that the alleged consortium really existed and was eligible and qualified; and that
the arrangements among the members were satisfactory and sufficient to ensure delivery on
the Contract and to protect the governments interest.
Notwithstanding such deficiencies, Comelec still deemed the consortium eligible to
participate in the bidding, proceeded to open its Second Envelope, and eventually awarded
the bid to it, even though -- per the Comelecs own RFP -- the BAC should have declared the
MPC ineligible to bid and returned the Second (Bid) Envelope unopened.
Inasmuch as Comelec should not have considered MPEI et al. as comprising a consortium
or joint venture, it should not have allowed them to avail themselves of the provision in Section
5.4 (b) (i) of the IRR for RA 6957 (the Build-Operate-Transfer Law), as amended by RA 7718. This
provision states in part that a joint venture/consortium proponent shall be evaluated based
on the individual or collective experience of the member-firms of the joint venture or
consortium and of the contractor(s) that it has engaged for the project. Parenthetically,
respondents have uniformly argued that the said IRR of RA 6957, as amended, have suppletory
application to the instant case.
Hence, had the proponent MPEI been evaluated based solely on its own experience,
financial and operational track record or lack thereof, it would surely not have qualified and
would have been immediately considered ineligible to bid, as respondents readily admit.
At any rate, it is clear that Comelec gravely abused its discretion in arbitrarily failing to
observe its own rules, policies and guidelines with respect to the bidding process, thereby
negating a fair, honest and competitive bidding.
Commissioners Not
Aware of Consortium
In this regard, the Court is beguiled by the statements of Commissioner Florentino
Tuason Jr., given in open court during the Oral Argument last October 7, 2003. The good
commissioner affirmed that he was aware, of his own personal knowledge, that there had
indeed been a written agreement among the consortium members,[34] although it was an
internal matter among them,[35] and of the fact that it would be presented by counsel for
private respondent.[36]
However, under questioning by Chief Justice Hilario G. Davide Jr. and Justice Jose C.
Vitug, Commissioner Tuason in effect admitted that, while he was the commissioner-in-charge
of Comelecs Legal Department, he had never seen, even up to that late date, the agreement
he spoke of.[37] Under further questioning, he was likewise unable to provide any information
regarding the amounts invested into the project by several members of the claimed
consortium.[38] A short while later, he admitted that the Commission had not taken a look at
the agreement (if any).[39]
He tried to justify his position by claiming that he was not a member of the BAC. Neither
was he the commissioner-in-charge of the Phase II Modernization project (the automated
election system); but that, in any case, the BAC and the Phase II Modernization Project Team
did look into the aspect of the composition of the consortium.
It seems to the Court, though, that even if the BAC or the Phase II Team had taken charge
of evaluating the eligibility, qualifications and credentials of the consortium-bidder, still, in all
probability, the former would have referred the task to Commissioner Tuason, head of
Comelecs Legal Department. That task was the appreciation and evaluation of the legal effects
and consequences of the terms, conditions, stipulations and covenants contained in any joint
venture agreement, consortium agreement or a similar document -- assuming of course that
any of these was available at the time. The fact that Commissioner Tuason was barely aware
of the situation bespeaks the complete absence of such document, or the utter failure or
neglect of the Comelec to examine it -- assuming it was available at all -- at the time the award
was made on April 15, 2003.
In any event, the Court notes for the record that Commissioner Tuason basically
contradicted his statements in open court about there being one written agreement among all
the consortium members, when he subsequently referred[40] to the four (4) Memoranda of
Agreement (MOAs) executed by them.[41]
At this juncture, one might ask: What, then, if there are four MOAs instead of one or
none at all? Isnt it enough that there are these corporations coming together to carry out the
automation project? Isnt it true, as respondent aver, that nowhere in the RFP issued by
Comelec is it required that the members of the joint venture execute a single written
agreement to prove the existence of a joint venture. Indeed, the intention to be jointly and
severally liable may be evidenced not only by a single joint venture agreement, but also by
supplementary documents executed by the parties signifying such intention. What then is the
big deal?
The problem is not that there are four agreements instead of only one. The problem is
that Comelec never bothered to check. It never based its decision on documents or other proof
that would concretely establish the existence of the claimed consortium or joint venture or
agglomeration. It relied merely on the self-serving representation in an uncorroborated letter
signed by only one individual, claiming that his company represented a consortium of several
different corporations. It concluded forthwith that a consortium indeed existed, composed of
such and such members, and thereafter declared that the entity was eligible to bid.
True, copies of financial statements and incorporation papers of the alleged consortium
members were submitted. But these papers did not establish the existence of a consortium,
as they could have been provided by the companies concerned for purposes other than to
prove that they were part of a consortium or joint venture. For instance, the papers may have
been intended to show that those companies were each qualified to be a sub-contractor (and
nothing more) in a major project. Those documents did not by themselves support the
assumption that a consortium or joint venture existed among the companies.
In brief, despite the absence of competent proof as to the existence and eligibility of the
alleged consortium (MPC), its capacity to deliver on the Contract, and the members joint and
several liability therefor, Comelec nevertheless assumed that such consortium existed and was
eligible. It then went ahead and considered the bid of MPC, to which the Contract was
eventually awarded, in gross violation of the formers own bidding rules and procedures
contained in its RFP. Therein lies Comelecs grave abuse of discretion.
Sufficiency of the
Four Agreements
Instead of one multilateral agreement executed by, and effective and binding on, all the
five consortium members -- as earlier claimed by Commissioner Tuason in open court -- it turns
out that what was actually executed were four (4) separate and distinct bilateral
Agreements.[42] Obviously, Comelec was furnished copies of these Agreements only after the
bidding process had been terminated, as these were not included in the Eligibility
Documents. These Agreements are as follows:
A Memorandum of Agreement between MPEI and SK C&C
A Memorandum of Agreement between MPEI and WeSolv
A Teaming Agreement between MPEI and Election.com Ltd.
A Teaming Agreement between MPEI and ePLDT.
In sum, each of the four different and separate bilateral Agreements is valid and binding
only between MPEI and the other contracting party, leaving the other consortium members
total strangers thereto. Under this setup, MPEI dealt separately with each of the members,
and the latter (WeSolv, SK C&C, Election.com, and ePLDT) in turn had nothing to do with one
another, each dealing only with MPEI.
Respondents assert that these four Agreements were sufficient for the purpose of
enabling the corporations to still qualify (even at that late stage) as a consortium or joint
venture, since the first two Agreements had allegedly set forth the joint and several
undertakings among the parties, whereas the latter two clarified the parties respective roles
with regard to the Project, with MPEI being the independent contractor and Election.com and
ePLDT the subcontractors.
Additionally, the use of the phrase particular contract in the Comelecs Request for
Proposal (RFP), in connection with the joint and several liabilities of companies in a joint
venture, is taken by them to mean that all the members of the joint venture need not be
solidarily liable for the entire project or joint venture, because it is sufficient that the lead
company and the member in charge of a particular contract or aspect of the joint venture
agree to be solidarily liable.
At this point, it must be stressed most vigorously that the submission of the four bilateral
Agreements to Comelec after the end of the bidding process did nothing to eliminate the grave
abuse of discretion it had already committed on April 15, 2003.
Deficiencies Have
Not Been Cured
In any event, it is also claimed that the automation Contract awarded by Comelec
incorporates all documents executed by the consortium members, even if these documents
are not referred to therein. The basis of this assertion appears to be the passages from Section
1.4 of the Contract, which is reproduced as follows:
All Contract Documents shall form part of the Contract even if they or any one of them is not
referred to or mentioned in the Contract as forming a part thereof. Each of the Contract
Documents shall be mutually complementary and explanatory of each other such that what
is noted in one although not shown in the other shall be considered contained in all, and
what is required by any one shall be as binding as if required by all, unless one item is a
correction of the other.
The intent of the Contract Documents is the proper, satisfactory and timely execution and
completion of the Project, in accordance with the Contract Documents. Consequently, all
items necessary for the proper and timely execution and completion of the Project shall be
deemed included in the Contract.
Thus, it is argued that whatever perceived deficiencies there were in the supplementary
contracts -- those entered into by MPEI and the other members of the consortium as regards
their joint and several undertakings -- have been cured. Better still, such deficiencies have
supposedly been prevented from arising as a result of the above-quoted provisions, from
which it can be immediately established that each of the members of MPC assumes the same
joint and several liability as the other members.
The foregoing argument is unpersuasive. First, the contract being referred to, entitled
The Automated Counting and Canvassing Project Contract, is between Comelec and MPEI, not
the alleged consortium, MPC. To repeat, it is MPEI -- not MPC -- that is a party to the
Contract. Nowhere in that Contract is there any mention of a consortium or joint venture, of
members thereof, much less of joint and several liability. Supposedly executed sometime in
May 2003,[43] the Contract bears a notarization date of June 30, 2003, and contains the
signature of Willy U. Yu signing as president of MPEI (not for and on behalf of MPC), along with
that of the Comelec chair. It provides in Section 3.2 that MPEI (not MPC) is to supply the
Equipment and perform the Services under the Contract, in accordance with the appendices
thereof; nothing whatsoever is said about any consortium or joint venture or partnership.
Second, the portions of Section 1.4 of the Contract reproduced above do not have the
effect of curing (much less preventing) deficiencies in the bilateral agreements entered into by
MPEI with the other members of the consortium, with respect to their joint and several
liabilities. The term Contract Documents, as used in the quoted passages of Section 1.4, has a
well-defined meaning and actually refers only to the following documents:
The Contract itself along with its appendices
The Request for Proposal (also known as Terms of Reference) issued by the
Comelec, including the Tender Inquiries and Bid Bulletins
The Tender Proposal submitted by MPEI
In other words, the term Contract Documents cannot be understood as referring to or
including the MOAs and the Teaming Agreements entered into by MPEI with SK C&C, WeSolv,
Election.com and ePLDT. This much is very clear and admits of no debate. The attempt to use
the provisions of Section 1.4 to shore up the MOAs and the Teaming Agreements is simply
unwarranted.
Third and last, we fail to see how respondents can arrive at the conclusion that, from the
above-quoted provisions, it can be immediately established that each of the members of MPC
assumes the same joint and several liability as the other members. Earlier, respondents
claimed exactly the opposite -- that the two MOAs (between MPEI and SK C&C, and between
MPEI and WeSolv) had set forth the joint and several undertakings among the parties; whereas
the two Teaming Agreements clarified the parties respective roles with regard to the Project,
with MPEI being the independent contractor and Election.com and ePLDT the subcontractors.
Obviously, given the differences in their relationships, their respective liabilities cannot
be the same. Precisely, the very clear terms and stipulations contained in the MOAs and the
Teaming Agreements -- entered into by MPEI with SK C&C, WeSolv, Election.com and ePLDT -
- negate the idea that these members are on a par with one another and are, as such, assuming
the same joint and several liability.
Moreover, respondents have earlier seized upon the use of the term particular contract
in the Comelecs Request for Proposal (RFP), in order to argue that all the members of the joint
venture did not need to be solidarily liable for the entire project or joint venture. It was
sufficient that the lead company and the member in charge of a particular contract or aspect
of the joint venture would agree to be solidarily liable. The glaring lack of consistency leaves
us at a loss. Are respondents trying to establish the same joint and solidary liability among all
the members or not?
Enforcement of
Liabilities Problematic
Next, it is also maintained that the automation Contract between Comelec and the
MPEI confirms the solidary undertaking of the lead company and the consortium member
concerned for each particular Contract, inasmuch as the position of MPEI and anyone else
performing the services contemplated under the Contract is described therein as that of an
independent contractor.
The Court does not see, however, how this conclusion was arrived at. In the first place,
the contractual provision being relied upon by respondents is Article 14, Independent
Contractors, which states: Nothing contained herein shall be construed as establishing or
creating between the COMELEC and MEGA the relationship of employee and employer or
principal and agent, it being understood that the position of MEGA and of anyone performing
the Services contemplated under this Contract, is that of an independent contractor.
Obviously, the intent behind the provision was simply to avoid the creation of an
employer-employee or a principal-agent relationship and the complications that it would
produce. Hence, the Article states that the role or position of MPEI, or anyone else performing
on its behalf, is that of an independent contractor. It is obvious to the Court that respondents
are stretching matters too far when they claim that, because of this provision, the Contract in
effect confirms the solidary undertaking of the lead company and the consortium member
concerned for the particular phase of the project. This assertion is an absolute non sequitur.
Enforcement of Liabilities
Under the Civil Code Not Possible
In any event, it is claimed that Comelec may still enforce the liability of the consortium
members under the Civil Code provisions on partnership, reasoning that MPEI et
al. represented themselves as partners and members of MPC for purposes of bidding for the
Project. They are, therefore, liable to the Comelec to the extent that the latter relied upon such
representation. Their liability as partners is solidary with respect to everything chargeable to
the partnership under certain conditions.
The Court has two points to make with respect to this argument. First, it must be recalled
that SK C&C, WeSolv, Election.com and ePLDT never represented themselves as partners and
members of MPC, whether for purposes of bidding or for something else. It was
MPEI alone that represented them to be members of a consortium it supposedly
headed. Thus, its acts may not necessarily be held against the other members.
Second, this argument of the OSG in its Memorandum [44] might possibly apply in the
absence of a joint venture agreement or some other writing that discloses the relationship of
the members with one another. But precisely, this case does not deal with a situation in which
there is nothing in writing to serve as reference, leaving Comelec to rely on mere
representations and therefore justifying a falling back on the rules on partnership. For, again,
the terms and stipulations of the MOAs entered into by MPEI with SK C&C and WeSolv, as well
as the Teaming Agreements of MPEI with Election.com and ePLDT (copies of which have been
furnished the Comelec) are very clear with respect to the extent and the limitations of the
firms respective liabilities.
In the case of WeSolv and SK C&C, their MOAs state that their liabilities, while joint and
several with MPEI, are limited only to the particular areas of work wherein their services are
engaged or their products utilized. As for Election.com and ePLDT, their separate Teaming
Agreements specifically ascribe to them the role of subcontractor vis--vis MPEI as contractor
and, based on the terms of their particular agreements, neither Election.com nor ePLDT is, with
MPEI, jointly and severally liable to Comelec.[45] It follows then that in the instant case, there is
no justification for anyone, much less Comelec, to resort to the rules on partnership and
partners liabilities.
Eligibility of a Consortium
Based on the Collective
Qualifications of Its Members
Respondents declare that, for purposes of assessing the eligibility of the bidder, the
members of MPC should be evaluated on a collective basis. Therefore, they contend, the
failure of MPEI to submit financial statements (on account of its recent incorporation) should
not by itself disqualify MPC, since the other members of the consortium could meet the criteria
set out in the RFP.
Thus, according to respondents, the collective nature of the undertaking of the members
of MPC, their contribution of assets and sharing of risks, and the community of their interest
in the performance of the Contract lead to these reasonable conclusions: (1) that
their collective qualifications should be the basis for evaluating their eligibility; (2) that the
sheer enormity of the project renders it improbable to expect any single entity to be able to
comply with all the eligibility requirements and undertake the project by itself; and (3) that, as
argued by the OSG, the RFP allows bids from manufacturers, suppliers and/or distributors that
have formed themselves into a joint venture, in recognition of the virtual impossibility of a
single entitys ability to respond to the Invitation to Bid.
Additionally, argues the Comelec, the Implementing Rules and Regulations of RA 6957
(the Build-Operate-Transfer Law) as amended by RA 7718 would be applicable, as proponents
of BOT projects usually form joint ventures or consortiums. Under the IRR, a joint
venture/consortium proponent shall be evaluated based on the individual or the collective
experience of the member-firms of the joint venture/consortium and of the contractors the
proponent has engaged for the project.
Unfortunately, this argument seems to assume that the collective nature of the
undertaking of the members of MPC, their contribution of assets and sharing of risks, and the
community of their interest in the performance of the Contract entitle MPC to be treated as a
joint venture or consortium; and to be evaluated accordingly on the basis of the members
collective qualifications when, in fact, the evidence before the Court suggest otherwise.
This Court in Kilosbayan v. Guingona[46] defined joint venture as an association of
persons or companies jointly undertaking some commercial enterprise; generally, all
contribute assets and share risks. It requires a community of interest in the performance of
the subject matter, a right to direct and govern the policy in connection therewith, and [a]
duty, which may be altered by agreement to share both in profit and losses.
Going back to the instant case, it should be recalled that the automation Contract with
Comelec was not executed by the consortium MPC -- or by MPEI for and on behalf of MPC --
but by MPEI, period. The said Contract contains no mention whatsoever of any consortium or
members thereof. This fact alone seems to contradict all the suppositions about a joint
undertaking that would normally apply to a joint venture or consortium: that it is a commercial
enterprise involving a community of interest, a sharing of risks, profits and losses, and so on.
Now let us consider the four bilateral Agreements, starting with the Memorandum of
Agreement between MPEI and WeSolv Open Computing, Inc., dated March 5, 2003. The body
of the MOA consists of just seven (7) short paragraphs that would easily fit in one page. It reads
as follows:
1. The parties agree to cooperate in successfully implementing the Project in the substance
and form as may be most beneficial to both parties and other subcontractors involved in the
Project.
2. Mega Pacific shall be responsible for any contract negotiations and signing with the
COMELEC and, subject to the latters approval, agrees to give WeSolv an opportunity to be
present at meetings with the COMELEC concerning WeSolvs portion of the Project.
3. WeSolv shall be jointly and severally liable with Mega Pacific only for the particular
products and/or services supplied by the former for the Project.
4. Each party shall bear its own costs and expenses relative to this agreement unless
otherwise agreed upon by the parties.
5. The parties undertake to do all acts and such other things incidental to, necessary or
desirable or the attainment of the objectives and purposes of this Agreement.
6. In the event that the parties fail to agree on the terms and conditions of the supply of the
products and services including but not limited to the scope of the products and services to
be supplied and payment terms, WeSolv shall cease to be bound by its obligations stated in
the aforementioned paragraphs.
7. Any dispute arising from this Agreement shall be settled amicably by the parties whenever
possible. Should the parties be unable to do so, the parties hereby agree to settle their
dispute through arbitration in accordance with the existing laws of the Republic of the
Philippines. (Underscoring supplied.)
 Even shorter is the Memorandum of Agreement between MPEI and SK C&C Co. Ltd.,
dated March 9, 2003, the body of which consists of only six (6) paragraphs, which we quote:
1. All parties agree to cooperate in achieving the Consortiums objective of successfully
implementing the Project in the substance and form as may be most beneficial to the
Consortium members and in accordance w/ the demand of the RFP.
2. Mega Pacific shall have full powers and authority to represent the Consortium with the
Comelec, and to enter and sign, for and in behalf of its members any and all agreement/s
which maybe required in the implementation of the Project.
3. Each of the individual members of the Consortium shall be jointly and severally liable with
the Lead Firm for the particular products and/or services supplied by such individual member
for the project, in accordance with their respective undertaking or sphere of responsibility.
4. Each party shall bear its own costs and expenses relative to this agreement unless
otherwise agreed upon by the parties.
5. The parties undertake to do all acts and such other things incidental to, necessary or
desirable for the attainment of the objectives and purposes of this Agreement.
6. Any dispute arising from this Agreement shall be settled amicably by the parties whenever
possible. Should the parties be unable to do so, the parties hereby agree to settle their
dispute through arbitration in accordance with the existing laws of the Republic of the
Philippines. (Underscoring supplied.)
It will be noted that the two Agreements quoted above are very similar in
wording. Neither of them contains any specifics or details as to the exact nature and scope of
the parties respective undertakings, performances and deliverables under the Agreement with
respect to the automation project. Likewise, the two Agreements are quite bereft of pesos-
and-centavos data as to the amount of investments each party contributes, its respective share
in the revenues and/or profit from the Contract with Comelec, and so forth -- all of which are
normal for agreements of this nature. Yet, according to public and private respondents, the
participation of MPEI, WeSolv and SK C&C comprises fully 90 percent of the entire undertaking
with respect to the election automation project, which is worth about P1.3 billion.
As for Election.com and ePLDT, the separate Teaming Agreements they entered into with
MPEI for the remaining 10 percent of the entire project undertaking are ironically much longer
and more detailed than the MOAs discussed earlier. Although specifically ascribing to them
the role of subcontractor vis--vis MPEI as contractor, these Agreements are, however,
completely devoid of any pricing data or payment terms. Even the appended Schedules
supposedly containing prices of goods and services are shorn of any price data. Again, as
mentioned earlier, based on the terms of their particular Agreements, neither Election.com
nor ePLDT -- with MPEI -- is jointly and severally liable to Comelec.
It is difficult to imagine how these bare Agreements -- especially the first two -- could be
implemented in practice; and how a dispute between the parties or a claim by Comelec against
them, for instance, could be resolved without lengthy and debilitating litigations. Absent any
clear-cut statement as to the exact nature and scope of the parties respective undertakings,
commitments, deliverables and covenants, one party or another can easily dodge its obligation
and deny or contest its liability under the Agreement; or claim that it is the other party that
should have delivered but failed to.
Likewise, in the absence of definite indicators as to the amount of investments to be
contributed by each party, disbursements for expenses, the parties respective shares in the
profits and the like, it seems to the Court that this situation could readily give rise to all kinds
of misunderstandings and disagreements over money matters.
Under such a scenario, it will be extremely difficult for Comelec to enforce the supposed
joint and several liabilities of the members of the consortium. The Court is not even
mentioning the possibility of a situation arising from a failure of WeSolv and MPEI to agree on
the scope, the terms and the conditions for the supply of the products and services under the
Agreement. In that situation, by virtue of paragraph 6 of its MOA, WeSolv would perforce
cease to be bound by its obligations -- including its joint and solidary liability with MPEI under
the MOA -- and could forthwith disengage from the project. Effectively, WeSolv could at any
time unilaterally exit from its MOA with MPEI by simply failing to agree. Where would that
outcome leave MPEI and Comelec?
To the Court, this strange and beguiling arrangement of MPEI with the other companies
does not qualify them to be treated as a consortium or joint venture, at least of the type that
government agencies like the Comelec should be dealing with. With more reason is it unable
to agree to the proposal to evaluate the members of MPC on a collective basis.
In any event, the MPC members claim to be a joint venture/consortium; and respondents
have consistently been arguing that the IRR for RA 6957, as amended, should be applied to the
instant case in order to allow a collective evaluation of consortium members. Surprisingly,
considering these facts, respondents have not deemed it necessary for MPC members to
comply with Section 5.4 (a) (iii) of the IRR for RA 6957 as amended.
According to the aforementioned provision, if the project proponent is a joint venture or
consortium, the members or participants thereof are required to submit a sworn statement
that, if awarded the contract, they shall bind themselves to be jointly, severally and solidarily
liable for the project proponents obligations thereunder. This provision was supposed to mirror
Section 5 of RA 6957, as amended, which states: In all cases, a consortium that participates in
a bid must present proof that the members of the consortium have bound themselves jointly
and severally to assume responsibility for any project. The withdrawal of any member of the
consortium prior to the implementation of the project could be a ground for the cancellation of
the contract.
The Court has certainly not seen any joint and several undertaking by the MPC members
that even approximates the tenor of that which is described above. We fail to see why
respondents should invoke the IRR if it is for their benefit, but refuse to comply with it
otherwise.
B.
DOST Technical Tests Flunked by the
 Automated Counting Machines minutes after outage, power
surge or abnormal electrical
occurrences?
Let us now move to the second subtopic, which deals with the substantive issue: the 5. Machine reads two-sided
ACMs failure to pass the tests of the Department of Science and Technology (DOST). ballots in one pass?
After respondent consortium and the other bidder, TIM, had submitted their respective Note: This
bids on March 10, 2003, the Comelecs BAC -- through its Technical Working Group (TWG) and particular
the DOST -- evaluated their technical proposals. Requirements that were highly technical in requirement
nature and that required the use of certain equipment in the evaluation process were referred needs
to the DOST for testing. The Department reported thus: further
verification
6. Machine can detect
previously counted ballots
TEST RESULTS MATRIX[47] and prevent previously
[Technical Evaluation of Automated Counting Machine] counted ballots from being
counted more than once?
KEY REQUIREMENTS MEGA-PACIFIC TOTAL 7. Stores results of counted
CONSORTIUM INFORMATION votes by precinct in external
MANAGEMENT (removable) storage device? Note: This
[QUESTIONS]
particular
YES NO YES NO requirement
1. Does the machine have an needs
accuracy rating of at least further
99.995 percent verification
8. Data stored in external
At COLD environmental media is encrypted?

condition Note: This
particular
At NORMAL requirement
environmental conditions needs
further
verification
At HARSH environmental
conditions 9. Physical key or similar
device allows, limits, or
restricts operation of the
2. Accurately records and machine?
reports the date and time of 10. CPU speed is at least
the start and end of counting 400mHz?
of ballots per precinct? Note: This
3. Prints election returns particular
without any loss of date requirement
during generation of such needs
reports? further
4. Uninterruptible back-up verification
power system, that will 11. Port to allow use of dot-
engage immediately to allow matrix printers?
operation of at least 10
12. Generates printouts of the on the removable data
election returns in a format storage device?
specified by the COMELEC? 16. Does the City/Municipal
Canvassing System
Generates printouts consolidate results from all Note: This Note: This

precincts within it using the particular particular
encrypted soft copy of the requirement requirement
In format specified by
data generated by the needs further needs
COMELEC
counting machine and verification further
transmitted through an verification
electronic transmission
media?
17. Does the system output a
Zero City/Municipal Canvass
Report, which is printed on Note: This
13. Prints election returns election day prior to the
without any loss of data particular
conduct of the actual canvass requirement
during generation of such operation, that shows that all
report? needs
totals for all the votes for all further
14. Generates an audit trail of the the candidates and other
counting machine, both hard verification
information, are indeed zero
copy and soft copy? or null?
18. Does the system consolidate
results from all precincts in
the city/municipality using Note: This
Hard copy the data storage device particular
coming from the counting requirement
machine? needs
further
verification
Soft copy
19. Is the machine 100%
accurate?
Note: This
particular
Note: This requirement
particular needs
requirement further
needs verification
further 20. Is the Program able to detect
verification previously downloaded
15. Does the City/Municipal precinct results and prevent Note: This
Canvassing System these from being inputted particular
consolidate results from all Note: This again into the System? requirement
precincts within it using the particular needs
encrypted soft copy of the requirement further
data generated by the needs verification
counting machine and stored further
verification
21. The System is able to print 25. Is the Program able to detect
the specified reports and the previously downloaded
audit trail without any loss of precinct results and prevent Note: This
data during generation of the these from being inputted particular
above-mentioned reports? again into the System? requirement
needs
Prints specified reports further
verification
Audit Trail

26. The System is able to print
the specified reports and the
audit trail without any loss of
data during generation of the

abovementioned reports?

Note: This
Prints specified reports
particular
requirement
needs Audit Trail
further
verification

22. Can the result of the
city/municipal consolidation
be stored in a data storage
Note: This
device? particular
requirement Note: This
needs particular
further requirement
verification needs
23. Does the system consolidate further
results from all precincts in verification
the provincial/district/ Note: This
national using the data particular
storage device from different requirement
levels of consolidation? needs
further
verification
24. Is the system 100% accurate?

Note: This 27. Can the results of the

particular provincial/district/national
requirement consolidation be stored in a Note: This
needs data storage device? particular
further requirement
verification needs
further
verification
 According to respondents, it was only after the TWG and the DOST had conducted their
separate tests and submitted their respective reports that the BAC, on the basis of these
reports formulated its comments/recommendations on the bids of the consortium and TIM.
The BAC, in its Report dated April 21, 2003, recommended that the Phase II project
involving the acquisition of automated counting machines be awarded to MPEI. It said:
After incisive analysis of the technical reports of the DOST and the Technical Working Group
for Phase II Automated Counting Machine, the BAC considers adaptability to advances in
modern technology to ensure an effective and efficient method, as well as the security and
integrity of the system.
The results of the evaluation conducted by the TWG and that of the DOST (14 April 2003
report), would show the apparent advantage of Mega-Pacific over the other competitor, TIM.
The BAC further noted that both Mega-Pacific and TIM obtained some failed marks in the
technical evaluation. In general, the failed marks of Total Information Management as
enumerated above affect the counting machine itself which are material in nature,
constituting non-compliance to the RFP. On the other hand, the failed marks of Mega-Pacific
are mere formalities on certain documentary requirements which the BAC may waive as
clearly indicated in the Invitation to Bid.
In the DOST test, TIM obtained 12 failed marks and mostly attributed to the counting
machine itself as stated earlier. These are requirements of the RFP and therefore the BAC
cannot disregard the same.
Mega-Pacific failed in 8 items however these are mostly on the software which can be
corrected by reprogramming the software and therefore can be readily corrected.
The BAC verbally inquired from DOST on the status of the retest of the counting machines of
the TIM and was informed that the report will be forthcoming after the holy week. The BAC
was informed that the retest is on a different parameters theyre being two different
machines being tested. One purposely to test if previously read ballots will be read again and
the other for the other features such as two sided ballots.
The said machine and the software therefore may not be considered the same machine and
program as submitted in the Technical proposal and therefore may be considered an
enhancement of the original proposal.
Advance information relayed to the BAC as of 1:40 PM of 15 April 2003 by Executive Director
Ronaldo T. Viloria of DOST is that the result of the test in the two counting machines of TIM
contains substantial errors that may lead to the failure of these machines based on the
specific items of the RFP that DOST has to certify.
OPENING OF FINANCIAL BIDS
The BAC on 15 April 2003, after notifying the concerned bidders opened the financial bids in
their presence and the results were as follows:
Mega-Pacific:
Option 1 Outright purchase: Bid Price of Php1,248,949,088.00
Option 2 Lease option:
70% Down payment of cost of hardware or Php642,755,757.07
Remainder payable over 50 months or a total of Php642,755,757.07
Discount rate of 15% p.a. or 1.2532% per month.
Total Number of Automated Counting Machine 1,769 ACMs (Nationwide)
TIM:
Total Bid Price Php1,297,860,560.00
Total Number of Automated Counting Machine 2,272 ACMs (Mindanao and NCR
only)
Premises considered, it appears that the bid of Mega Pacific is the lowest calculated
responsive bid, and therefore, the Bids and Awards Committee (BAC) recommends that the
Phase II project re Automated Counting Machine be awarded to Mega Pacific eSolutions,
Inc.[48]
The BAC, however, also stated on page 4 of its Report: Based on the 14 April 2003 report
(Table 6) of the DOST, it appears that both Mega-Pacific and TIM (Total Information
Management Corporation) failed to meet some of the requirements. Below is a comparative
presentation of the requirements wherein Mega-Pacific or TIM or both of them failed: x x
x. What followed was a list of key requirements, referring to technical requirements, and an
indication of which of the two bidders had failed to meet them.
Failure to Meet the
Required Accuracy Rating
The first of the key requirements was that the counting machines were to have
an accuracy rating of at least 99.9995 percent. The BAC Report indicates that both Mega
Pacific and TIM failed to meet this standard.
The key requirement of accuracy rating happens to be part and parcel of the Comelecs
Request for Proposal (RFP). The RFP, on page 26, even states that the ballot counting machines
and ballot counting software must have an accuracy rating of 99.9995% (not merely
99.995%) or better as certified by a reliable independent testing agency.
 When questioned on this matter during the Oral Argument, Commissioner Borra tried to
wash his hands by claiming that the required accuracy rating of 99.9995 percent had been set
by a private sector group in tandem with Comelec. He added that the Commission had merely
adopted the accuracy rating as part of the groups recommended bid requirements, which it
had not bothered to amend even after being advised by DOST that such standard was
unachievable. This excuse, however, does not in any way lessen Comelecs responsibility to
adhere to its own published bidding rules, as well as to see to it that the consortium indeed
meets the accuracy standard. Whichever accuracy rating is the right standard -- whether
99.995 or 99.9995 percent -- the fact remains that the machines of the so-called consortium
failed to even reach the lesser of the two. On this basis alone, it ought to have been disqualified
and its bid rejected outright.
At this point, the Court stresses that the essence of public bidding is violated by the
practice of requiring very high standards or unrealistic specifications that cannot be met -- like
the 99.9995 percent accuracy rating in this case -- only to water them down after the bid has
been award. Such scheme, which discourages the entry of prospective bona fidebidders, is in
fact a sure indication of fraud in the bidding, designed to eliminate fair competition. Certainly,
if no bidder meets the mandatory requirements, standards or specifications, then no award
should be made and a failed bidding declared.
Failure of Software to Detect
Previously Downloaded Data
Furthermore, on page 6 of the BAC Report, it appears that the consortium as well as TIM
failed to meet another key requirement -- for the counting machines software program to
be able to detect previously downloaded precinct results and to prevent these from being
entered again into the counting machine. This same deficiency on the part of both bidders
reappears on page 7 of the BAC Report, as a result of the recurrence of their failure to meet
the said key requirement.
That the ability to detect previously downloaded data at different canvassing or
consolidation levels is deemed of utmost importance can be seen from the fact that it is
repeated three times in the RFP. On page 30 thereof, we find the requirement that
the city/municipal canvassing system software must be able to detect previously downloaded
precinct results and prevent these from being inputted again into the system. Again, on page
32 of the RFP, we read that the provincial/district canvassing system software must be able to
detect previously downloaded city/municipal results and prevent these from being inputted
again into the system. And once more, on page 35 of the RFP, we find the requirement that
the national canvassing system software must be able to detect previously downloaded
provincial/district results and prevent these from being inputted again into the system.
Once again, though, Comelec chose to ignore this crucial deficiency, which should have
been a cause for the gravest concern. Come May 2004, unscrupulous persons may take
advantage of and exploit such deficiency by repeatedly downloading and feeding into the
computers results favorable to a particular candidate or candidates. We are thus confronted
with the grim prospect of election fraud on a massive scale by means of just a few key
strokes. The marvels and woes of the electronic age!
Inability to Print
the Audit Trail
But that grim prospect is not all. The BAC Report, on pages 6 and 7, indicate that the
ACMs of both bidders were unable to print the audit trail without any loss of data. In the case
of MPC, the audit trail system was not yet incorporated into its ACMs.
This particular deficiency is significant, not only to this bidding but to the cause of free
and credible elections. The purpose of requiring audit trails is to enable Comelec to trace and
verify the identities of the ACM operators responsible for data entry and downloading, as well
as the times when the various data were downloaded into the canvassing system, in order to
forestall fraud and to identify the perpetrators.
Thus, the RFP on page 27 states that the ballot counting machines and ballot counting
software must print an audit trail of all machine operations for documentation and verification
purposes. Furthermore, the audit trail must be stored on the internal storage device and be
available on demand for future printing and verifying. On pages 30-31, the RFP also requires
that the city/municipal canvassing system software be able to print an audit trail of the
canvassing operations, including therein such data as the date and time the canvassing
program was started, the log-in of the authorized users (the identity of the machine operators),
the date and time the canvass data were downloaded into the canvassing system, and so on
and so forth. On page 33 of the RFP, we find the same audit trail requirement with respect to
the provincial/district canvassing system software; and again on pages 35-36 thereof, the
same audit trail requirement with respect to the national canvassing system software.
That this requirement for printing audit trails is not to be lightly brushed aside by the
BAC or Comelec itself as a mere formality or technicality can be readily gleaned from the
provisions of Section 7 of RA 8436, which authorizes the Commission to use an automated
system for elections.
The said provision which respondents have quoted several times, provides that ACMs
are to possess certain features divided into two classes: those that the statute itself
considers mandatory and other features or capabilities that the law deems optional. Among
those considered mandatory are provisions for audit trails! Section 7 reads as follows: The
System shall contain the following features: (a) use of appropriate ballots; (b) stand-alone
machine which can count votes and an automated system which can consolidate the results
immediately; (c) with provisions for audit trails; (d) minimum human intervention; and (e)
adequate safeguard/security measures. (Italics and emphases supplied.)
In brief, respondents cannot deny that the provision requiring audit trails is indeed
mandatory, considering the wording of Section 7 of RA 8436. Neither can Respondent Comelec
deny that it has relied on the BAC Report, which indicates that the machines or the software
was deficient in that respect. And yet, the Commission simply disregarded this shortcoming
and awarded the Contract to private respondent, thereby violating the very law it was
supposed to implement.
C.
Inadequacy of Post Facto
 Remedial Measures
Respondents argue that the deficiencies relating to the detection of previously
downloaded data, as well as provisions for audit trails, are mere shortcomings or minor
deficiencies in software or programming, which can be rectified. Perhaps Comelec simply
relied upon the BAC Report, which states on page 8 thereof that Mega Pacific failed in 8
items[;] however these are mostly on the software which can be corrected by re-programming
x x x and therefore can be readily corrected.
The undersigned ponentes questions, some of which were addressed to Commissioner
Borra during the Oral Argument, remain unanswered to this day. First of all, who made the
determination that the eight fail marks of Mega Pacific were on account of the software -- was
it DOST or TWG? How can we be sure these failures were not the results of machine
defects? How was it determined that the software could actually be re-programmed and
thereby rectified? D i d a q ua l ifi e d t ec h n ic al e xp e rt r e ad an d an a lyz e t h e s our ce
c ode [ 4 9 ] for the programs and conclude that these could be saved and remedied? (Such
determination cannot be done by any other means save by the examination and analysis of
the source code.)
Who was this qualified technical expert? When did he carry out the study? Did he
prepare a written report on his findings? Or did the Comelec just make a wild guess? It does
not follow that all defects in software programs can be rectified, and the programs saved. In
the information technology sector, it is common knowledge that there are many badly written
programs, with significant programming errors written into them; hence it does not make
economic sense to try to correct the programs; instead, programmers simply abandon them
and just start from scratch. Theres no telling if any of these programs is unrectifiable, unless a
qualified programmer reads the source code.
And if indeed a qualified expert reviewed the source code, did he also determine how
much work would be needed to rectify the programs? And how much time and money would
be spent for that effort? Who would carry out the work? After the rectification process, who
would ascertain and how would it be ascertained that the programs have indeed been properly
rectified, and that they would work properly thereafter? And of course, the most important
question to ask: could the rectification be done in time for the elections in 2004?
Clearly, none of the respondents bothered to think the matter through. Comelec simply
took the word of the BAC as gospel truth, without even bothering to inquire from DOST
whether it was true that the deficiencies noted could possibly be remedied by re-programming
the software. Apparently, Comelec did not care about the software, but focused only on
purchasing the machines.
What really adds to the Courts dismay is the admission made by Commissioner Borra
during the Oral Argument that the software currently being used by Comelec was merely the
demo version, inasmuch as the final version that would actually be used in the elections was
still being developed and had not yet been finalized.
It is not clear when the final version of the software would be ready for testing and
deployment. It seems to the Court that Comelec is just keeping its fingers crossed and hoping
the final product would work. Is there a Plan B in case it does not? Who knows? But all these
software programs are part and parcel of the bidding and the Contract awarded to the
Consortium. Why is it that the machines are already being brought in and paid for, when there
is as yet no way of knowing if the final version of the software would be able to run them
properly, as well as canvass and consolidate the results in the manner required?
The counting machines, as well as the canvassing system, will never work
properly without the correct software programs. There is an old adage that is still valid to this
day: Garbage in, garbage out. No matter how powerful, advanced and sophisticated the
computers and the servers are, if the software being utilized is defective or has been
compromised, the results will be no better than garbage. And to think that what is at stake
here is the 2004 national elections -- the very basis of our democratic life.
Correction of Defects?
To their Memorandum, public respondents proudly appended 19 Certifications issued
by DOST declaring that some 285 counting machines had been tested and had passed the
acceptance testing conducted by the Department on October 8-18, 2003. Among those tested
were some machines that had failed previous tests, but had undergone adjustments and thus
passed re-testing.
Unfortunately, the Certifications from DOST fail to divulge in what manner and by what
standards or criteria the condition, performance and/or readiness of the machines were re-
evaluated and re-appraised and thereafter given the passing mark. Apart from that fact, the
remedial efforts of respondents were, not surprisingly, apparently focused again on the
machines -- the hardware. Nothing was said or done about the software -- the deficiencies as
to detection and prevention of downloading and entering previously downloaded data, as well
as the capability to print an audit trail. No matter how many times the machines were tested
and re-tested, if nothing was done about the programming defects and deficiencies, the same
danger of massive electoral fraud remains. As anyone who has a modicum of knowledge of
computers would say, Thats elementary!
And only last December 5, 2003, an Inq7.net news report quoted the Comelec chair as
saying that the new automated poll system would be used nationwide in May 2004, even as
the software for the system remained unfinished. It also reported that a certain Titus Manuel
of the Philippine Computer Society, which was helping Comelec test the hardware and
software, said that the software for the counting still had to be submitted on December 15,
while the software for the canvassing was due in early January.
Even as Comelec continues making payments for the ACMs, we keep asking ourselves:
who is going to ensure that the software would be tested and would work properly?
At any rate, the re-testing of the machines and/or the 100 percent testing of all machines
(testing of every single unit) would not serve to eradicate the grave abuse of discretion already
committed by Comelec when it awarded the Contract on April 15, 2003, despite the obvious
and admitted flaws in the bidding process, the failure of the winning bidder to qualify, and the
inability of the ACMs and the intended software to meet the bid requirements and rules.
Comelecs Latest
Assurances Are
Unpersuasive
Even the latest pleadings filed by Comelec do not serve to allay our apprehensions. They
merely affirm and compound the serious violations of law and gravely abusive acts it has
committed. Let us examine them.
The Resolution issued by this Court on December 9, 2003 required respondents to inform
it as to the number of ACMs delivered and paid for, as well as the total payment made to date
for the purchase thereof. They were likewise instructed to submit a certification from the DOST
attesting to the number of ACMs tested, the number found to be defective; and whether the
reprogrammed software has been tested and found to have complied with the requirements
under Republic Act No. 8436.[50]
In its Partial Compliance and Manifestation dated December 29, 2003, Comelec informed
the Court that 1,991 ACMs had already been delivered to the Commission as of that date. It
further certified that it had already paid the supplier the sum of P849,167,697.41, which
corresponded to 1,973 ACM units that had passed the acceptance testing procedures
conducted by the MIRDC-DOST[51] and which had therefore been accepted by the poll body.
In the same submission, for the very first time, Comelec also disclosed to the Court the
following:
The Automated Counting and Canvassing Project involves not only the manufacturing of the
ACM hardware but also the development of three (3) types of software, which are intended
for use in the following:
1. Evaluation of Technical Bids
2. Testing and Acceptance Procedures
3. Election Day Use.
Purchase of the First Type of
Software Without Evaluation
In other words, the first type of software was to be developed solely for the purpose of
enabling the evaluation of the bidders technical bid. Comelec explained thus: In addition to the
presentation of the ACM hardware, the bidders were required to develop a base software
program that will enable the ACM to function properly. Since the software program utilized
during the evaluation of bids is not the actual software program to be employed on election
day, there being two (2) other types of software program that will still have to be developed
and thoroughly tested prior to actual election day use, defects in the base software that can be
readily corrected by reprogramming are considered minor in nature, and may therefore be
waived.
In short, Comelec claims that it evaluated the bids and made the decision to award the
Contract to the winning bidder partly on the basis of the operation of the ACMs running a base
software. That software was therefore nothing but a sample or demo software, which would
not be the actual one that would be used on election day. Keeping in mind that the Contract
involves the acquisition of not just the ACMs or the hardware, but also the software that would
run them, it is now even clearer that the Contract was awarded without Comelec having seen,
much less evaluated, the final product -- the software that would finally be utilized come
election day. (Not even the near-final product, for that matter).
What then was the point of conducting the bidding, when the software that was the
subject of the Contract was still to be created and could conceivably undergo innumerable
changes before being considered as being in final form? And that is not all!
No Explanation for Lapses
in the Second Type of Software
The second phase, allegedly involving the second type of software, is simply
denominated Testing and Acceptance Procedures. As best as we can construe, Comelec is
claiming that this second type of software is also to be developed and delivered by the supplier
in connection with the testing and acceptance phase of the acquisition process.The previous
pleadings, though -- including the DOST reports submitted to this Court -- have not heretofore
mentioned any statement, allegation or representation to the effect that a particular set of
software was to be developed and/or delivered by the supplier in connection with the testing
and acceptance of delivered ACMs.
What the records do show is that the imported ACMs were subjected to the testing and
acceptance process conducted by the DOST. Since the initial batch delivered included a high
percentage of machines that had failed the tests, Comelec asked the DOST to conduct a 100
percent testing; that is, to test every single one of the ACMs delivered. Among the machines
tested on October 8 to 18, 2003, were some units that had failed previous tests but had
subsequently been re-tested and had passed. To repeat, however, until now, there has never
been any mention of a second set or type of software pertaining to the testing and acceptance
process.
In any event, apart from making that misplaced and uncorroborated claim, Comelec in
the same submission also professes (in response to the concerns expressed by this Court)
that the reprogrammed software has been tested and found to have complied with the
requirements of RA 8436. It reasoned thus: Since the software program is an inherent element
in the automated counting system, the certification issued by the MIRDC-DOST that one
thousand nine hundred seventy-three (1,973) units passed the acceptance test procedures is
an official recognition by the MIRDC-DOST that the software component of the automated
election system, which has been reprogrammed to comply with the provisions of Republic Act
No. 8436 as prescribed in the Ad Hoc Technical Evaluation Committees ACM Testing and
Acceptance Manual, has passed the MIRDC-DOST tests.
 The facts do not support this sweeping statement of Comelec. A scrutiny of the MIRDC- How Comelec came to believe that such reprogramming had been undertaken is
DOST letter dated December 15, 2003,[52] which it relied upon, does not justify its grand unclear. In any event, the Commission is not forthright and candid with the factual details. If
conclusion. For claritys sake, we quote in full the letter-certification, as follows: reprogramming has been done, who performed it and when? What exactly did the process
involve? How can we be assured that it was properly performed? Since the facts attendant to
15 December 2003 the alleged reprogramming are still shrouded in mystery, the Court cannot give any weight to
HON. RESURRECCION Z. BORRA Comelecs bare allegations.
Commissioner-in-Charge The fact that a total of 1,973 of the machines has ultimately passed the MIRDC-DOST
Phase II, Modernization Project tests does not by itself serve as an endorsement of the soundness of the software program,
Commission on Elections much less as a proof that it has been reprogrammed. In the first place, nothing on record shows
Intramuros, Manila that the tests and re-tests conducted on the machines were intended to address the serious
deficiencies noted earlier. As a matter of fact, the MIRDC-DOST letter does not even indicate
Attention: Atty. Jose M. Tolentino, Jr. what kinds of tests or re-tests were conducted, their exact nature and scope, and the specific
Project Director objectives thereof.[53] The absence of relevant supporting documents, combined with the utter
vagueness of the letter, certainly fails to inspire belief or to justify the expansive confidence
Dear Commissioner Borra: displayed by Comelec. In any event, it goes without saying that remedial measures such as the
alleged reprogramming cannot in any way mitigate the grave abuse of discretion already
committed as early as April 15, 2003.
We are pleased to submit 11 DOST Test Certifications representing 11 lots and covering 158
units of automated counting machines (ACMs) that we have tested from 02-12 December
2003.
Rationale of Public Bidding Negated
To date, we have tested all the 1,991 units of ACMs, broken down as follow: (sic) by the Third Type of Software

1st batch - 30 units 4th batch - 438 units

2nd batch - 288 units 5th batch - 438 units
3rd batch - 414 units 6th batch - 383 units
It should be noted that a total of 18 units have failed the test. Out of these 18 units, only one
(1) unit has failed the retest.
Thank you and we hope you will find everything in order.
Very truly yours,
ROLANDO T. VILORIA, CESO III
Executive Director cum
Chairman, DOST-Technical Evaluation Committee
Even a cursory glance at the foregoing letter shows that it is completely bereft of
anything that would remotely support Comelecs contention that the software component of
the automated election system x x x has been reprogrammed to comply with RA 8436, and has
passed the MIRDC-DOST tests. There is no mention at all of any software reprogramming. If
the MIRDC-DOST had indeed undertaken the supposed reprogramming and the process turned
out to be successful, that agency would have proudly trumpeted its singular achievement.
Respondent Comelec tries to assuage this Courts anxiety in these words: The
reprogrammed software that has already passed the requirements of Republic Act No. 8436
during the MIRDC-DOST testing and acceptance procedures will require further customization
since the following additional elements, among other things, will have to be considered before
the final software can be used on election day: 1. Final Certified List of Candidates x x x 2.
Project of Precincts x x x 3. Official Ballot Design and Security Features x x x 4. Encryption,
digital certificates and digital signatures x x x. The certified list of candidates for national
elective positions will be finalized on or before 23 January 2004 while the final list of projects
of precincts will be prepared also on the same date. Once all the above elements are
incorporated in the software program, the Test Certification Group created by the Ad Hoc
Technical Evaluation Committee will conduct meticulous testing of the final software before
the same can be used on election day. In addition to the testing to be conducted by said Test
Certification Group, the Comelec will conduct mock elections in selected areas nationwide not
only for purposes of public information but also to further test the final election day
program. Public respondent Comelec, therefore, requests that it be given up to 16 February
2004 to comply with this requirement.
The foregoing passage shows the imprudent approach adopted by Comelec in the
bidding and acquisition process. The Commission says that before the software can be utilized
on election day, it will require customization through addition of data -- like the list of
candidates, project of precincts, and so on. And inasmuch as such data will become available
only in January 2004 anyway, there is therefore no perceived need on Comelecs part to rush
the supplier into producing the final (or near-final) version of the software before that time. In
any case, Comelec argues that the software needed for the electoral exercise can be
continuously developed, tested, adjusted and perfected, practically all the way up to election
day, at the same time that the Commission is undertaking all the other distinct and diverse
activities pertinent to the elections.
Given such a frame of mind, it is no wonder that Comelec paid little attention to the
counting and canvassing software during the entire bidding process, which took place in
February-March 2003. Granted that the software was defective, could not detect and prevent
the re-use of previously downloaded data or produce the audit trail -- aside from its other
shortcomings -- nevertheless, all those deficiencies could still be corrected down the road. At
any rate, the software used for bidding purposes would not be the same one that will be used
on election day, so why pay any attention to its defects? Or to the Comelecs own bidding rules
for that matter?
Clearly, such jumbled ratiocinations completely negate the rationale underlying the
bidding process mandated by law.
At the very outset, the Court has explained that Comelec flagrantly violated the public
policy on public biddings (1) by allowing MPC/MPEI to participate in the bidding even though
it was not qualified to do so; and (2) by eventually awarding the Contract to MPC/MPEI. Now,
with the latest explanation given by Comelec, it is clear that the Commission further
desecrated the law on public bidding by permitting the winning bidder to change and alter the
subject of the Contract (the software), in effect allowing a substantive amendment without
public bidding.
This stance is contrary to settled jurisprudence requiring the strict application of
pertinent rules, regulations and guidelines for public bidding for the purpose of placing each
bidder, actual or potential, on the same footing. The essence of public bidding is, after all, an
opportunity for fair competition, and a fair basis for the precise comparison of bids. In common
parlance, public bidding aims to level the playing field. That means each bidder must bid under
the same conditions; and be subject to the same guidelines, requirements and limitations, so
that the best offer or lowest bid may be determined, all other things being equal.
Thus, it is contrary to the very concept of public bidding to permit a variance between
the conditions under which bids are invited and those under which proposals are submitted
and approved; or, as in this case, the conditions under which the bid is won and those under
which the awarded Contract will be complied with. The substantive amendment of the
contract bidded out, without any public bidding -- after the bidding process had been
concluded -- is violative of the public policy on public biddings, as well as the spirit and intent
of RA 8436. The whole point in going through the public bidding exercise was completely
lost. The very rationale of public bidding was totally subverted by the Commission.
From another perspective, the Comelec approach also fails to make sense. Granted that,
before election day, the software would still have to be customized to each precinct,
municipality, city, district, and so on, there still was nothing at all to prevent Comelec from
requiring prospective suppliers/bidders to produce, at the very start of the bidding process, the
next-to-final versions of the software (the best software the suppliers had) -- pre-tested and
ready to be customized to the final list of candidates and project of precincts, among others,
and ready to be deployed thereafter. The satisfaction of such requirement would probably
have provided far better bases for evaluation and selection, as between suppliers, than the so-
called demo software.
Respondents contend that the bidding suppliers counting machines were previously
used in at least one political exercise with no less than 20 million voters. If so, it stands to
reason that the software used in that past electoral exercise would probably still be available
and, in all likelihood, could have been adopted for use in this instance. Paying for machines
and software of that category (already tried and proven in actual elections and ready to be
adopted for use) would definitely make more sense than paying the same hundreds of millions
of pesos for demo software and empty promises of usable programs in the future.
But there is still another gut-level reason why the approach taken by Comelec is
reprehensible. It rides on the perilous assumption that nothing would go wrong; and that,
come election day, the Commission and the supplier would have developed, adjusted and re-
programmed the software to the point where the automated system could function as
envisioned. But what if such optimistic projection does not materialize? What if, despite all
their herculean efforts, the software now being hurriedly developed and tested for the
automated system performs dismally and inaccurately or, worse, is hacked and/or
manipulated?[54] What then will we do with all the machines and defective software already
paid for in the amount of P849 million of our tax money? Even more important, what will
happen to our country in case of failure of the automation?
The Court cannot grant the plea of Comelec that it be given until February 16, 2004 to
be able to submit a certification relative to the additional elements of the software that will
be customized, because for us to do so would unnecessarily delay the resolution of this case
and would just give the poll body an unwarranted excuse to postpone the 2004 elections. On
the other hand, because such certification will not cure the gravely abusive actions complained
of by petitioners, it will be utterly useless.
Is this Court being overly pessimistic and perhaps even engaging in
speculation? Hardly. Rather, the Court holds that Comelec should not have gambled on the
unrealistic optimism that the suppliers software development efforts would turn out well. The
Commission should have adopted a much more prudent and judicious approach to ensure the
delivery of tried and tested software, and readied alternative courses of action in case of
failure. Considering that the nations future is at stake here, it should have done no less.
Epilogue
Once again, the Court finds itself at the crossroads of our nations history. At stake in this
controversy is not just the business of a computer supplier, or a questionable proclamation by
Comelec of one or more public officials. Neither is it about whether this country should switch
from the manual to the automated system of counting and canvassing votes. At its core is the
ability and capacity of the Commission on Elections to perform properly, legally and prudently
its legal mandate to implement the transition from manual to automated elections.
Unfortunately, Comelec has failed to measure up to this historic task. As stated at the
start of this Decision, Comelec has not merely gravely abused its discretion in awarding the
Contract for the automation of the counting and canvassing of the ballots. It has also put at
grave risk the holding of credible and peaceful elections by shoddily accepting electronic
hardware and software that admittedly failed to pass legally mandated technical
requirements. Inadequate as they are, the remedies it proffers post facto do not cure the grave Davide, Jr., C.J., Vitug, and Ynares-Santiago, JJ., see separate opinion.
abuse of discretion it already committed (1) on April 15, 2003, when it illegally made the Puno, J., concur, and also joins the opinion of J. Ynares-Santiago.
award; and (2) sometime in May 2003 when it executed the Contract for the purchase of Quisumbing, J., in the result.
defective machines and non-existent software from a non-eligible bidder. Sandoval-Gutierrez, J., see concurring opinion.
Corona, and Azcuna, JJ., joins the dissent of J. Tinga.
For these reasons, the Court finds it totally unacceptable and unconscionable to place its Tinga, J., pls. see dissenting opinion.
imprimatur on this void and illegal transaction that seriously endangers the breakdown of our
electoral system. For this Court to cop-out and to close its eyes to these illegal transactions,
while convenient, would be to abandon its constitutional duty of safeguarding public interest.

As a necessary consequence of such nullity and illegality, the purchase of the machines
and all appurtenances thereto including the still-to-be-produced (or in Comelecs words, to be
reprogrammed) software, as well as all the payments made therefor, have no basis whatsoever
in law. The public funds expended pursuant to the void Resolution and Contract must
therefore be recovered from the payees and/or from the persons who made possible the
illegal disbursements, without prejudice to possible criminal prosecutions against them.

Furthermore, Comelec and its officials concerned must bear full responsibility for the
failed bidding and award, and held accountable for the electoral mess wrought by their grave
abuse of discretion in the performance of their functions. The State, of course, is not bound by
the mistakes and illegalities of its agents and servants.

True, our country needs to transcend our slow, manual and archaic electoral process. But
before it can do so, it must first have a diligent and competent electoral agency that can
properly and prudently implement a well-conceived automated election system.

At bottom, before the country can hope to have a speedy and fraud-free automated
election, it must first be able to procure the proper computerized hardware and software
legally, based on a transparent and valid system of public bidding. As in any democratic system,
the ultimate goal of automating elections must be achieved by a legal, valid and above-
board process of acquiring the necessary tools and skills therefor. Though the Philippines
needs an automated electoral process, it cannot accept just any system shoved into its bosom
through improper and illegal methods. As the saying goes, the end never justifies the
means. Penumbral contracting will not produce enlightened results.

WHEREFORE, the Petition is GRANTED. The Court hereby

declares NULL and VOID Comelec Resolution No. 6074 awarding the contract for Phase II of
the CAES to Mega Pacific Consortium (MPC). Also declared null and void is the subject Contract
executed between Comelec and Mega Pacific eSolutions (MPEI). [55] Comelec is
further ORDEREDto refrain from implementing any other contract or agreement entered into
with regard to this project.

Let a copy of this Decision be furnished the Office of the Ombudsman which shall
determine the criminal liability, if any, of the public officials (and conspiring private individuals,
if any) involved in the subject Resolution and Contract. Let the Office of the Solicitor General
also take measures to protect the government and vindicate public interest from the ill effects
of the illegal disbursements of public funds made by reason of the void Resolution and
Contract.

SO ORDERED.

Carpio, Austria-Martinez, Carpio-Morales, and Callejo, Sr., JJ., concur.

 Following Senator Guingonas confirmation, the Senate on 8 February 2001 passed
Resolution No. 84 (Resolution No. 84) certifying to the existence of a vacancy in the Senate.
Resolution No. 84 called on COMELEC to fill the vacancy through a special election to be held
simultaneously with the regular elections on 14 May 2001. Twelve Senators, with a 6-year term
each, were due to be elected in that election. [1] Resolution No. 84 further provided that the
Senatorial candidate garnering the 13th highest number of votes shall serve only for the
unexpired term of former Senator Teofisto T. Guingona, Jr., which ends on 30 June 2004. [2]

On 5 June 2001, after COMELEC had canvassed the election results from all the provinces
but one (Lanao del Norte), COMELEC issued Resolution No. 01-005 provisionally proclaiming
13 candidates as the elected Senators. Resolution No. 01-005 also provided that the first
twelve (12) Senators shall serve for a term of six (6) years and the thirteenth (13th) Senator shall
serve the unexpired term of three (3) years of Senator Teofisto T. Guingona, Jr. who was
appointed Vice-President.[3] Respondents Ralph Recto (Recto) and Gregorio Honasan
(Honasan) ranked 12th and 13th, respectively, in Resolution No. 01-005.

On 20 June 2001, petitioners Arturo Tolentino and Arturo Mojica (petitioners), as voters
[G.R. No. 148334. January 21, 2004] and taxpayers, filed the instant petition for prohibition, impleading only COMELEC as
respondent. Petitioners sought to enjoin COMELEC from proclaiming with finality the
candidate for Senator receiving the 13th highest number of votes as the winner in the special
election for a single three-year term seat. Accordingly, petitioners prayed for the nullification
ARTURO M. TOLENTINO and ARTURO C. MOJICA, petitioners, vs. COMMISSION ON of Resolution No. 01-005 in so far as it makes a proclamation to such effect.
ELECTIONS, SENATOR RALPH G. RECTO and SENATOR GREGORIO B.
Petitioners contend that COMELEC issued Resolution No. 01-005 without jurisdiction
HONASAN, respondents.
because: (1) it failed to notify the electorate of the position to be filled in the special election
as required under Section 2 of Republic Act No. 6645 (R.A. No. 6645);[4] (2) it failed to require
DECISION senatorial candidates to indicate in their certificates of candidacy whether they seek election
under the special or regular elections as allegedly required under Section 73 of Batas
CARPIO, J.:
Pambansa Blg. 881;[5] and, consequently, (3) it failed to specify
in theVoters Information Sheet the candidates seeking election under the special or regular
senatorial elections as purportedly required under Section 4, paragraph 4 of Republic Act No.
The Case 6646 (R.A. No. 6646).[6] Petitioners add that because of these omissions, COMELEC canvassed
all the votes cast for the senatorial candidates in the 14 May 2001 elections without distinction
such that there were no two separate Senate elections held simultaneously but just a single
This is a petition for prohibition to set aside Resolution No. NBC 01-005 dated 5 June election for thirteen seats, irrespective of term.[7]
2001 (Resolution No. 01-005) and Resolution No. NBC 01-006 dated 20 July 2001 (Resolution
Stated otherwise, petitioners claim that if held simultaneously, a special and a regular
No. 01-006) of respondent Commission on Elections (COMELEC). Resolution No. 01-005
election must be distinguished in the documentation as well as in the canvassing of their
proclaimed the 13 candidates elected as Senators in the 14 May 2001 elections while
results. To support their claim, petitioners cite the special elections simultaneously held with
Resolution No. 01-006 declared official and final the ranking of the 13 Senators proclaimed in
the regular elections of 13 November 1951 and 8 November 1955 to fill the seats vacated by
Resolution No. 01-005.
Senators Fernando Lopez and Carlos P. Garcia, respectively, who became Vice-Presidents
during their tenures in the Senate.[8] Petitioners point out that in those elections, COMELEC
separately canvassed the votes cast for the senatorial candidates running under the regular
The Facts elections from the votes cast for the candidates running under the special elections. COMELEC
also separately proclaimed the winners in each of those elections.[9]

Petitioners sought the issuance of a temporary restraining order during the pendency of
Shortly after her succession to the Presidency in January 2001, President Gloria
their petition.
Macapagal-Arroyo nominated then Senator Teofisto T. Guingona, Jr. (Senator Guingona) as
Vice-President. Congress confirmed the nomination of Senator Guingona who took his oath as Without issuing any restraining order, we required COMELEC to Comment on the
Vice-President on 9 February 2001. petition.
 On 20 July 2001, after COMELEC had canvassed the results from all the provinces, it
issued Resolution No. 01-006 declaring official and final the ranking of the 13 Senators
proclaimed in Resolution No. 01-005. The 13 Senators took their oaths of office on 23 July
2001.
In view of the issuance of Resolution No. 01-006, the Court required petitioners to file
an amended petition impleading Recto and Honasan as additional respondents. Petitioners
accordingly filed an amended petition in which they reiterated the contentions raised in their
original petition and, in addition, sought the nullification of Resolution No. 01-006.
In their Comments, COMELEC, Honasan, and Recto all claim that a special election to fill
the seat vacated by Senator Guingona was validly held on 14 May 2001. COMELEC and
Honasan further raise preliminary issues on the mootness of the petition and on petitioners
standing to litigate. Honasan also claims that the petition, which seeks the nullity of his
proclamation as Senator, is actually a quo warranto petition and the Court should dismiss the
same for lack of jurisdiction. For his part, Recto, as the 12th ranking Senator, contends he is not
a proper party to this case because the petition only involves the validity of the proclamation
of the 13th placer in the 14 May 2001 senatorial elections.
The Issues
The following are the issues presented for resolution:
(1) Procedurally
(a) whether the petition is in fact a petition for quo warranto over which the Senate Electoral
Tribunal is the sole judge;
(b) whether the petition is moot; and
(c) whether petitioners have standing to litigate.
(2) On the merits, whether a special election to fill a vacant three-year term Senate seat
was validly held on 14 May 2001.
The Ruling of the Court
The petition has no merit.
On the Preliminary Matters
The Nature of the Petition and the Courts Jurisdiction
A quo warranto proceeding is, among others, one to determine the right of a public
officer in the exercise of his office and to oust him from its enjoyment if his claim is not well-
founded.[10] Under Section 17, Article VI of the Constitution, the Senate Electoral Tribunal is
the sole judge of all contests relating to the qualifications of the members of the Senate.
A perusal of the allegations contained in the instant petition shows, however, that what
petitioners are questioning is the validity of the special election on 14 May 2001 in which
Honasan was elected. Petitioners various prayers are, namely: (1) a declaration that no special
election was held simultaneously with the general elections on 14 May 2001; (2) to enjoin
COMELEC from declaring anyone as having won in the special election; and (3) to annul
Resolution Nos. 01-005 and 01-006 in so far as these Resolutions proclaim Honasan as the
winner in the special election. Petitioners anchor their prayers on COMELECs alleged failure to
comply with certain requirements pertaining to the conduct of that special election. Clearly
then, the petition does not seek to determine Honasans right in the exercise of his office as
Senator. Petitioners prayer for the annulment of Honasans proclamation and, ultimately,
election is merely incidental to petitioners cause of action. Consequently, the Court can
properly exercise jurisdiction over the instant petition.
On the Mootness of the Petition
COMELEC contends that its proclamation on 5 June 2001 of the 13 Senators and its
subsequent confirmation on 20 July 2001 of the ranking of the 13 Senators render the instant
petition to set aside Resolutions Nos. 01-005 and 01-006 moot and academic.
Admittedly, the office of the writ of prohibition is to command a tribunal or board to
desist from committing an act threatened to be done without jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction.[11] Consequently, the writ will not lie
to enjoin acts already done.[12] However, as an exception to the rule on mootness, courts will
decide a question otherwise moot if it is capable of repetition yet evading review. [13] Thus,
in Alunan III v. Mirasol,[14] we took cognizance of a petition to set aside an order canceling the
general elections for the Sangguniang Kabataan (SK) on 4 December 1992 despite that at the
time the petition was filed, the SK election had already taken place. We noted in Alunan that
since the question of the validity of the order sought to be annulled is likely to arise in every
SK elections and yet the question may not be decided before the date of such elections, the
mootness of the petition is no bar to its resolution. This observation squarely applies to the
instant case. The question of the validity of a special election to fill a vacancy in the Senate in
relation to COMELECs failure to comply with requirements on the conduct of such special
election is likely to arise in every such election. Such question, however, may not be decided
before the date of the election.
On Petitioners Standing
 Honasan questions petitioners standing to bring the instant petition as taxpayers and
voters because petitioners do not claim that COMELEC illegally disbursed public funds. Neither
do petitioners claim that they sustained personal injury because of the issuance of Resolution
Nos. 01-005 and 01-006.
Legal standing or locus standi refers to a personal and substantial interest in a case such
that the party has sustained or will sustain direct injury because of the challenged
governmental act.[15] The requirement of standing, which necessarily sharpens the
presentation of issues,[16] relates to the constitutional mandate that this Court settle only
actual cases or controversies.[17] Thus, generally, a party will be allowed to litigate only when
(1) he can show that he has personally suffered some actual or threatened injury because of
the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the
challenged action; and (3) the injury is likely to be redressed by a favorable action.[18]
Applied strictly, the doctrine of standing to litigate will indeed bar the instant petition.
In questioning, in their capacity as voters, the validity of the special election on 14 May 2001,
petitioners assert a harm classified as a generalized grievance. This generalized grievance is
shared in substantially equal measure by a large class of voters, if not all the voters, who voted
in that election.[19] Neither have petitioners alleged, in their capacity as taxpayers, that the
Court should give due course to the petition because in the special election held on 14 May
2001 tax money [was] x x x extracted and spent in violation of specific constitutional
protections against abuses of legislative power or that there [was] misapplication of such funds
by COMELEC or that public money [was] deflected to any improper purpose.[20]
On the other hand, we have relaxed the requirement on standing and exercised our
discretion to give due course to voters suits involving the right of suffrage.[21] Also, in the recent
case of Integrated Bar of the Philippines v. Zamora,[22] we gave the same liberal treatment to
a petition filed by the Integrated Bar of the Philippines (IBP). The IBP questioned the validity
of a Presidential directive deploying elements of the Philippine National Police and the
Philippine Marines in Metro Manila to conduct patrols even though the IBP presented too
general an interest. We held:
[T]he IBP primarily anchors its standing on its alleged responsibility to uphold the rule of law
and the Constitution. Apart from this declaration, however, the IBP asserts no other basis in
support of its locus standi. The mere invocation by the IBP of its duty to preserve the rule of
law and nothing more, while undoubtedly true, is not sufficient to clothe it with standing in
this case. This is too general an interest which is shared by other groups and the whole
citizenry x x x.
Having stated the foregoing, this Court has the discretion to take cognizance of a suit which
does not satisfy the requirement of legal standing when paramount interest is involved. In
not a few cases, the court has adopted a liberal attitude on the locus standi of a petitioner
where the petitioner is able to craft an issue of transcendental significance to the
people. Thus, when the issues raised are of paramount importance to the public, the Court
may brush aside technicalities of procedure. In this case, a reading of the petition shows that
the IBP has advanced constitutional issues which deserve the attention of this Court in view
of their seriousness, novelty and weight as precedents. Moreover, because peace and order
are under constant threat and lawless violence occurs in increasing tempo, undoubtedly
aggravated by the Mindanao insurgency problem, the legal controversy raised in the petition
almost certainly will not go away. It will stare us in the face again. It, therefore, behooves the
Court to relax the rules on standing and to resolve the issue now, rather than
later.[23] (Emphasis supplied)
We accord the same treatment to petitioners in the instant case in their capacity as
voters since they raise important issues involving their right of suffrage, considering that the
issue raised in this petition is likely to arise again.
Whether a Special Election for a Single, Three-Year Term
Senatorial Seat was Validly Held on 14 May 2001
Under Section 9, Article VI of the Constitution, a special election may be called to fill any
vacancy in the Senate and the House of Representatives in the manner prescribed by law, thus:
In case of vacancy in the Senate or in the House of Representatives, a special election may be
called to fill such vacancy in the manner prescribed by law, but the Senator or Member of the
House of Representatives thus elected shall serve only for the unexpired term. (Emphasis
supplied)
To implement this provision of the Constitution, Congress passed R.A. No. 6645, which
provides in pertinent parts:
SECTION 1. In case a vacancy arises in the Senate at least eighteen (18) months or in the
House of Representatives at least one (1) year before the next regular election for Members
of Congress, the Commission on Elections, upon receipt of a resolution of the Senate or the
House of Representatives, as the case may be, certifying to the existence of such vacancy and
calling for a special election, shall hold a special election to fill such vacancy. If Congress is in
recess, an official communication on the existence of the vacancy and call for a special
election by the President of the Senate or by the Speaker of the House of Representatives, as
the case may be, shall be sufficient for such purpose. The Senator or Member of the House of
Representatives thus elected shall serve only for the unexpired term.
SECTION 2. The Commission on Elections shall fix the date of the special election, which shall
not be earlier than forty-five (45) days nor later than ninety (90) days from the date of such
resolution or communication, stating among other things the office or offices to be voted
for: Provided, however, That if within the said period a general election is scheduled to be
held, the special election shall be held simultaneously with such general election. (Emphasis
supplied)
Section 4 of Republic Act No. 7166 subsequently amended Section 2 of R.A. No. 6645, as
follows:
Postponement, Failure of Election and Special Elections. x x x In case a permanent vacancy
shall occur in the Senate or House of Representatives at least one (1) year before the
expiration of the term, the Commission shall call and hold a special election to fill the vacancy
not earlier than sixty (60) days nor longer than ninety (90) days after the occurrence of the
vacancy. However, in case of such vacancy in the Senate, the special election shall be held
simultaneously with the next succeeding regular election. (Emphasis supplied)
Thus, in case a vacancy arises in Congress at least one year before the expiration of the
term, Section 2 of R.A. No. 6645, as amended, requires COMELEC: (1) to call a special election
by fixing the date of the special election, which shall not be earlier than sixty (60) days nor later
than ninety (90) after the occurrence of the vacancy but in case of a vacancy in the Senate, the
special election shall be held simultaneously with the next succeeding regular election; and (2)
to give notice to the voters of, among other things, the office or offices to be voted for.
Did COMELEC, in conducting the special senatorial election simultaneously with the 14
May 2001 regular elections, comply with the requirements in Section 2 of R.A. No. 6645?
A survey of COMELECs resolutions relating to the conduct of the 14 May 2001 elections
reveals that they contain nothing which would amount to a compliance, either strict or
substantial, with the requirements in Section 2 of R.A. No. 6645, as amended. Thus, nowhere
in its resolutions[24] or even in its press releases[25] did COMELEC state that it would hold a
special election for a single three-year term Senate seat simultaneously with the regular
elections on 14 May 2001. Nor did COMELEC give formal notice that it would proclaim as
winner the senatorial candidate receiving the 13th highest number of votes in the special
election.
The controversy thus turns on whether COMELECs failure, assuming it did fail, to comply
with the requirements in Section 2 of R.A. No. 6645, as amended, invalidated the conduct of
the special senatorial election on 14 May 2001 and accordingly rendered Honasans
proclamation as the winner in that special election void. More precisely, the question is
whether the special election is invalid for lack of a call for such election and for lack of notice
as to the office to be filled and the manner by which the winner in the special election is to be
determined. For reasons stated below, the Court answers in the negative.
COMELECs Failure to Give Notice
of the Time of the Special Election Did Not
Negate the Calling of such Election
The calling of an election, that is, the giving notice of the time and place of its occurrence,
whether made by the legislature directly or by the body with the duty to give such call, is
indispensable to the elections validity.[26] In a general election, where the law fixes the date of
the election, the election is valid without any call by the body charged to administer the
election.[27]
In a special election to fill a vacancy, the rule is that a statute that expressly provides that
an election to fill a vacancy shall be held at the next general elections fixes the date at which
the special election is to be held and operates as the call for that election. Consequently, an
election held at the time thus prescribed is not invalidated by the fact that the body charged
by law with the duty of calling the election failed to do so.[28] This is because the right and duty
to hold the election emanate from the statute and not from any call for the election by some
authority[29] and the law thus charges voters with knowledge of the time and place of the
election.[30]
Conversely, where the law does not fix the time and place for holding a special election
but empowers some authority to fix the time and place after the happening of a condition
precedent, the statutory provision on the giving of notice is considered mandatory, and failure
to do so will render the election a nullity.[31]
In the instant case, Section 2 of R.A. No. 6645 itself provides that in case of vacancy in
the Senate, the special election to fill such vacancy shall be held simultaneously with the next
succeeding regular election. Accordingly, the special election to fill the vacancy in the Senate
arising from Senator Guingonas appointment as Vice-President in February 2001 could not be
held at any other time but must be held simultaneously with the next succeeding regular
elections on 14 May 2001. The law charges the voters with knowledge of this statutory notice
and COMELECs failure to give the additional notice did not negate the calling of such special
election, much less invalidate it.
Our conclusion might be different had the present case involved a special election to fill
a vacancy in the House of Representatives. In such a case, the holding of the special election is
subject to a condition precedent, that is, the vacancy should take place at least one year before
the expiration of the term. The time of the election is left to the discretion of COMELEC subject
only to the limitation that it holds the special election within the range of time provided in
Section 2 of R.A. No. 6645, as amended. This makes mandatory the requirement in Section 2
of R.A. No. 6645, as amended, for COMELEC to call x x x a special election x x x not earlier than
60 days nor longer than 90 days after the occurrence of the vacancy and give notice of the
office to be filled. The COMELECs failure to so call and give notice will nullify any attempt to
hold a special election to fill the vacancy. Indeed, it will be well-nigh impossible for the voters
in the congressional district involved to know the time and place of the special election and
the office to be filled unless the COMELEC so notifies them.
No Proof that COMELECs
Failure to Give Notice of the Office
to be Filled and the Manner of
Determining the Winner in the Special
Election Misled Voters
The test in determining the validity of a special election in relation to the failure to give
notice of the special election is whether the want of notice has resulted in misleading a
sufficient number of voters as would change the result of the special election. If the lack of
official notice misled a substantial number of voters who wrongly believed that there was no
special election to fill a vacancy, a choice by a small percentage of voters would be void.[32]
The required notice to the voters in the 14 May 2001 special senatorial election covers
two matters. First, that COMELEC will hold a special election to fill a vacant single three-year
term Senate seat simultaneously with the regular elections scheduled on the same
date. Second, that COMELEC will proclaim as winner the senatorial candidate receiving the
13th highest number of votes in the special election. Petitioners have neither claimed nor
proved that COMELECs failure to give this required notice misled a sufficient number of voters
as would change the result of the special senatorial election or led them to believe that there
was no such special election.
Instead, what petitioners did is conclude that since COMELEC failed to give such notice,
no special election took place. This bare assertion carries no value. Section 2 of R.A. No. 6645,
as amended, charged those who voted in the elections of 14 May 2001 with the knowledge
that the vacancy in the Senate arising from Senator Guingonas appointment as Vice-President
in February 2001 was to be filled in the next succeeding regular election of 14 May 2001.
Similarly, the absence of formal notice from COMELEC does not preclude the possibility that
the voters had actual notice of the special election, the office to be voted in that election, and
the manner by which COMELEC would determine the winner. Such actual notice could come
from many sources, such as media reports of the enactment of R.A. No. 6645 and election
propaganda during the campaign.[33]
More than 10 million voters cast their votes in favor of Honasan, the party who stands
most prejudiced by the instant petition. We simply cannot disenfranchise those who voted for
Honasan, in the absence of proof that COMELECs omission prejudiced voters in the exercise of
their right of suffrage so as to negate the holding of the special election.Indeed, this Court is
loathe to annul elections and will only do so when it is impossible to distinguish what votes are
lawful and what are unlawful, or to arrive at any certain result whatever, or that the great body
of the voters have been prevented by violence, intimidation, and threats from exercising their
franchise.[34]
Otherwise, the consistent rule has been to respect the electorates will and let the results
of the election stand, despite irregularities that may have attended the conduct of the
elections.[35] This is but to acknowledge the purpose and role of elections in a democratic
society such as ours, which is:
to give the voters a direct participation in the affairs of their government, either in
determining who shall be their public officials or in deciding some question of public interest;
and for that purpose all of the legal voters should be permitted, unhampered and
unmolested, to cast their ballot. When that is done and no frauds have been committed, the
ballots should be counted and the election should not be declared null. Innocent voters should
not be deprived of their participation in the affairs of their government for mere irregularities
on the part of the election officers, for which they are in no way responsible. A different rule
would make the manner and method of performing a public duty of greater importance than
the duty itself.[36] (Emphasis in the original)
Separate Documentation and Canvassing
not Required under Section 2 of R.A. No. 6645,
Neither is there basis in petitioners claim that the manner by which COMELEC conducted
the special senatorial election on 14 May 2001 is a nullity because COMELEC failed to
document separately the candidates and to canvass separately the votes cast for the special
election. No such requirements exist in our election laws. What is mandatory under Section 2
of R.A. No. 6645 is that COMELEC fix the date of the election, if necessary, and state, among
others, the office or offices to be voted for. Similarly, petitioners reliance on Section 73 of B.P.
Blg. 881 on the filing of certificates of candidacy, and on Section 4(4) of R.A. No. 6646 on the
printing of election returns and tally sheets, to support their claim is misplaced. These
provisions govern elections in general and in no way require separate documentation of
candidates or separate canvass of votes in a jointly held regular and special elections.
Significantly, the method adopted by COMELEC in conducting the special election on 14
May 2001 merely implemented the procedure specified by the Senate in Resolution No.
84. Initially, the original draft of Resolution No. 84 as introduced by Senator Francisco Tatad
(Senator Tatad) made no mention of the manner by which the seat vacated by former Senator
Guingona would be filled. However, upon the suggestion of Senator Raul Roco (Senator Roco),
the Senate agreed to amend Resolution No. 84 by providing, as it now appears, that the
senatorial candidate garnering the thirteenth (13th) highest number of votes shall serve only
for the unexpired term of former Senator Teofisto T. Guingona, Jr. Senator Roco introduced
the amendment to spare COMELEC and the candidates needless expenditures and the voters
further inconvenience, thus:
S[ENATOR] T[ATAD]. Mr. President, I move that we now consider Proposed Senate
Resolution No. 934 [later converted to Resolution No. 84].
T[HE] P[RESIDENT]. Is there any objection? [Silence] There being none, the motion is
approved.
Consideration of Proposed Senate Resolution No. 934 is now in order. With the permission of
the Body, the Secretary will read only the title and text of the resolution.
T[HE] S[ECRETARY]. Proposed Senate Resolution No. 934 entitled
RESOLUTION CERTIFYING TO THE EXISTENCE OF A VACANCY IN THE SENATE AND CALLING
ON THE COMMISSION ON ELECTIONS (COMELEC) TO FILL UP SUCH VACANCY THROUGH
ELECTION TO BE HELD SIMULTANEOUSLY WITH THE REGULAR ELECTION ON MAY 14, 2001
AND THE SENATOR THUS ELECTED TO SERVE ONLY FOR THE UNEXPIRED TERM
WHEREAS, the Honorable Teofisto T. Guingona, Jr. was elected Senator of the Philippines in
1998 for a term which will expire on June 30, 2004;
WHEREAS, on February 6, 2001, Her Excellency President Gloria Macapagal Arroyo
nominated Senator Guingona as Vice-President of the Philippines;
WHEREAS, the nomination of Senator Guingona has been confirmed by a majority vote of all
the members of both House of Congress, voting separately;
WHEREAS, Senator Guingona will take his Oath of Office as Vice-President of
the Philippines on February 9, 2001;
WHEREAS, Republic Act No. 7166 provides that the election for twelve (12) Senators, all S[ENATOR] T[ATAD]. Mr. President, in this resolution, we are leaving the mechanics to the
elective Members of the House of Representatives, and all elective provincial city and Commission on Elections. But personally, I would like to suggest that probably, the candidate
municipal officials shall be held on the second Monday and every three years thereafter; obtaining the 13th largest number of votes be declared as elected to fill up the unexpired
Now, therefore, be it term of Senator Guingona.

RESOLVED by the Senate, as it is hereby resolved, to certify, as it hereby certifies, the S[ENATOR] O[SMEA] (J). Is there a law that would allow the Comelec to conduct such an
existence of a vacancy in the Senate and calling the Commission on Elections (COMELEC) to election? Is it not the case that the vacancy is for a specific office? I am really at a loss. I am
fill up such vacancy through election to be held simultaneously with the regular election on rising here because I think it is something that we should consider. I do not know if we can
May 14, 2001 and the Senator thus elected to serve only for the unexpired term. No, this is not a Concurrent Resolution.

Adopted, S[ENATOR] T[ATAD]. May we solicit the legal wisdom of the Senate President.

(Sgd.) FRANCISCO S. TATAD T[HE] P[RESIDENT]. May I share this information that under Republic Act No. 6645, what is
Senator needed is a resolution of this Chamber calling attention to the need for the holding of a
special election to fill up the vacancy created, in this particular case, by the appointment of
S[ENATOR] T[ATAD]. Mr. President, I move for the adoption of this resolution. our colleague, Senator Guingona, as Vice President.

S[ENATOR] O[SMEA] (J). Mr. President. It can be managed in the Commission on Elections so that a slot for the particular candidate
to fill up would be that reserved for Mr. Guingonas unexpired term. In other words, it can be
arranged in such a manner.
T[HE] P[RESIDENT]. Sen. John H. Osmea is recognized.

xxxx
S[ENATOR] O[SMEA] (J). Thank you, Mr. President. Will the distinguished Majority Leader,
Chairman of the Committee on Rules, author of this resolution, yield for a few questions?
S[ENATOR] R[OCO]. Mr. President.
S[ENATOR] T[ATAD]. With trepidation, Mr. President. [Laughter]
T[HE] P[RESIDENT]. Sen. Raul S. Roco is recognized.
S[ENATOR] O[SMEA] (J). What a way of flattery. [Laughter]
S[ENATOR] R[OCO]. May we suggest, subject to a one-minute caucus, wordings to the effect
that in the simultaneous elections, the 13th placer be therefore deemed to be the special
Mr. President, I think I recall that sometime in 1951 or 1953, there was a special election for
election for this purpose. So we just nominate 13 and it is good for our colleagues. It is better
a vacant seat in the Senate. As a matter of fact, the one who was elected in that special
for the candidates. It is also less expensive because the ballot will be printed and there will
election was then Congressman, later Senator Feli[s]berto Verano.
be less disfranchisement.

In that election, Mr. President, the candidates contested the seat. In other words, the
T[HE] P[RESIDENT]. That is right.
electorate had to cast a vote for a ninth senator because at that time there were only eight
to elect a member or rather, a candidate to that particular seat.
S[ENATOR] R[OCO]. If we can just deem it therefore under this resolution to be such a special
election, maybe, we satisfy the requirement of the law.
Then I remember, Mr. President, that when we ran after the EDSA revolution, twice there
were 24 candidates and the first 12 were elected to a six-year term and the next 12 were
elected to a three-year term. T[HE] P[RESIDENT]. Yes. In other words, this shall be a guidance for the Comelec.

My question therefore is, how is this going to be done in this election? Is the candidate with S[ENATOR] R[OCO]. Yes.
the 13th largest number of votes going to be the one to take a three-year term? Or is there
going to be an election for a position of senator for the unexpired term of Sen. Teofisto T[HE] P[RESIDENT]. to implement.
Guingona?
S[ENATOR] R[OCO]. Yes. The Comelec will not have the flexibility.
T[HE] P[RESIDENT]. That is right.
S[ENATOR] R[OCO]. We will already consider the 13th placer of the forthcoming elections that
will be held simultaneously as a special election under this law as we understand it.
T[HE] P[RESIDENT]. Yes. That will be a good compromise, Senator Roco.
S[ENATOR] R[OCO]. Yes. So if the sponsor can introduce that later, maybe it will be better,
Mr. President.
T[HE] P[RESIDENT]. What does the sponsor say?
S[ENATOR] T[ATAD]. Mr. President, that is a most satisfactory proposal because I do not
believe that there will be anyone running specifically
T[HE] P[RESIDENT]. Correct.
S[ENATOR] T[ATAD]. to fill up this position for three years and campaigning nationwide.
T[HE] P[RESIDENT]. Actually, I think what is going to happen is the 13th candidate will be
running with specific groups.
S[ENATOR] T[ATAD]. Yes. Whoever gets No. 13.
T[HE] P[RESIDENT]. I think we can specifically define that as the intent of this resolution.
S[ENATOR] T[ATAD]. Subject to style, we accept that amendment and if there will be no
other amendment, I move for the adoption of this resolution.
xxxx
ADOPTION OF S. RES. NO. 934
If there are no other proposed amendments, I move that we adopt this resolution.
T[HE] P[RESIDENT]. There is a motion to adopt this resolution. Is there any
objection? [Silence] There being none, the motion is approved.[37]
Evidently, COMELEC, in the exercise of its discretion to use means and methods to
conduct the special election within the confines of R.A. No. 6645, merely chose to adopt the
Senates proposal, as embodied in Resolution No. 84. This Court has consistently acknowledged
and affirmed COMELECs wide latitude of discretion in adopting means to carry out its mandate
of ensuring free, orderly, and honest elections subject only to the limitation that the means so
adopted are not illegal or do not constitute grave abuse of discretion.[38] COMELECs decision
to abandon the means it employed in the 13 November 1951 and 8 November 1955 special
elections and adopt the method embodied in Resolution No. 84 is but a legitimate exercise of
its discretion. Conversely, this Court will not interfere should COMELEC, in subsequent special
senatorial elections, choose to revert to the means it followed in the 13 November 1951 and
8 November 1955 elections. That COMELEC adopts means that are novel or even disagreeable
is no reason to adjudge it liable for grave abuse of discretion. As we have earlier noted:
The Commission on Elections is a constitutional body. It is intended to play a distinct and
important part in our scheme of government. In the discharge of its functions, it should not
be hampered with restrictions that would be fully warranted in the case of a less responsible
organization. The Commission may err, so may this Court also. It should be allowed
considerable latitude in devising means and methods that will insure the accomplishment of
the great objective for which it was created free, orderly and honest elections. We may not
agree fully with its choice of means, but unless these are clearly illegal or constitute gross
abuse of discretion, this court should not interfere. [39]
A Word to COMELEC
The calling of a special election, if necessary, and the giving of notice to the electorate of
necessary information regarding a special election, are central to an informed exercise of the
right of suffrage. While the circumstances attendant to the present case have led us to
conclude that COMELECs failure to so call and give notice did not invalidate the special
senatorial election held on 14 May 2001, COMELEC should not take chances in future
elections. We remind COMELEC to comply strictly with all the requirements under applicable
laws relative to the conduct of regular elections in general and special elections in particular.
WHEREFORE, we DISMISS the petition for lack of merit.
SO ORDERED.
Panganiban, Quisumbing, Sandoval-Gutierrez, Austria-Martinez, Corona, Carpio-
Morales, Callejo, Sr., and Azcuna, JJ., concur.
Davide, Jr., C.J., joins Mr. Justice Puno in his dissent.
Puno, J., please see dissenting opinion.
Vitug, J., joins the dissent.
Ynares-Santiago, J., joins J. Punos dissent.
Tinga, J., joins Justice Punos dissent.

G.R. No. 127685 July 23, 1998
BLAS F. OPLE, petitioner,
vs.
RUBEN D. TORRES, ALEXANDER AGUIRRE, HECTOR VILLANUEVA, CIELITO HABITO, ROBERT
BARBERS, CARMENCITA REODICA, CESAR SARINO, RENATO VALENCIA, TOMAS P. AFRICA,
HEAD OF THE NATIONAL COMPUTER CENTER and CHAIRMAN OF THE COMMISSION ON
AUDIT, respondents.
PUNO, J.:
The petition at bar is a commendable effort on the part of Senator Blas F. Ople to prevent the
shrinking of the right to privacy, which the revered Mr. Justice Brandeis considered as "the
most comprehensive of rights and the right most valued by civilized men." 1 Petitioner Ople
prays that we invalidate Administrative Order No. 308 entitled "Adoption of a National
Computerized Identification Reference System" on two important constitutional grounds, viz:
one, it is a usurpation of the power of Congress to legislate, and two, it impermissibly
intrudes on our citizenry's protected zone of privacy. We grant the petition for the rights
sought to be vindicated by the petitioner need stronger barriers against further erosion.
A.O. No. 308 was issued by President Fidel V. Ramos On December 12, 1996 and reads as
follows:
ADOPTION OF A NATIONAL COMPUTERIZED
IDENTIFICATION REFERENCE SYSTEM
WHEREAS, there is a need to provide Filipino citizens and foreign
residents with the facility to conveniently transact business with basic
service and social security providers and other government
instrumentalities;
WHEREAS, this will require a computerized system to properly and
efficiently identify persons seeking basic services on social security and
reduce, if not totally eradicate fraudulent transactions and
misrepresentations;
WHEREAS, a concerted and collaborative effort among the various basic
services and social security providing agencies and other government
intrumentalities is required to achieve such a system;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby direct
the following:
Sec. 1. Establishment of a National Compoterized Identification Reference
System. A decentralized Identification Reference System among the key
basic services and social security providers is hereby established.
Sec. 2. Inter-Agency Coordinating Committee. An Inter-Agency
Coordinating Committee (IACC) to draw-up the implementing guidelines
and oversee the implementation of the System is hereby created, chaired
by the Executive Secretary, with the following as members:
Head, Presidential Management Staff
Secretary, National Economic Development Authority
Secretary, Department of the Interior and Local Government
Secretary, Department of Health
Administrator, Government Service Insurance System,
Administrator, Social Security System,
Administrator, National Statistics Office
Managing Director, National Computer Center.
Sec. 3. Secretariat. The National Computer Center (NCC) is hereby
designated as secretariat to the IACC and as such shall provide
administrative and technical support to the IACC.
 Sec. 4. Linkage Among Agencies. The Population Reference Number
(PRN) generated by the NSO shall serve as the common reference
number to establish a linkage among concerned agencies. The IACC
Secretariat shall coordinate with the different Social Security and Services
Agencies to establish the standards in the use of Biometrics Technology
and in computer application designs of their respective systems.
USURPATION OF THE EXCLUSIVE RIGHT OF CONGRESS TO APPROPRIATE
PUBLIC FUNDS FOR EXPENDITURE.
C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE
GROUNDWORK FOR A SYSTEM WHICH WILL VIOLATE THE BILL OF RIGHTS
ENSHRINED IN THE CONSTITUTION. 2

Sec. 5. Conduct of Information Dissemination Campaign. The Office of the Respondents counter-argue:
Press Secretary, in coordination with the National Statistics Office, the
GSIS and SSS as lead agencies and other concerned agencies shall
A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS WOULD
undertake a massive tri-media information dissemination campaign to
WARRANT A JUDICIAL REVIEW;
educate and raise public awareness on the importance and use of the
PRN and the Social Security Identification Reference.
B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE EXECUTIVE AND
ADMINISTRATIVE POWERS OF THE PRESIDENT WITHOUT ENCROACHING
Sec. 6. Funding. The funds necessary for the implementation of the
ON THE LEGISLATIVE POWERS OF CONGRESS;
system shall be sourced from the respective budgets of the concerned
agencies.
C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION OF THE
IDENTIFICATION REFERENCE SYSTEM MAY BE SOURCED FROM THE
Sec. 7. Submission of Regular Reports. The NSO, GSIS and SSS shall submit
BUDGETS OF THE CONCERNED AGENCIES;
regular reports to the Office of the President through the IACC, on the
status of implementation of this undertaking.
D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUAL'S INTEREST IN
PRIVACY. 3
Sec. 8. Effectivity. This Administrative Order shall take effect immediately.

We now resolve.
DONE in the City of Manila, this 12th day of December in the year of Our
Lord, Nineteen Hundred and Ninety-Six.
I
(SGD.) FIDEL V. RAMOS
As is usual in constitutional litigation, respondents raise the threshold issues relating to the
standing to sue of the petitioner and the justiciability of the case at bar. More specifically,
A.O. No. 308 was published in four newspapers of general circulation on January 22, 1997
respondents aver that petitioner has no legal interest to uphold and that the implementing
and January 23, 1997. On January 24, 1997, petitioner filed the instant petition against
rules of A.O. No. 308 have yet to be promulgated.
respondents, then Executive Secretary Ruben Torres and the heads of the government
agencies, who as members of the Inter-Agency Coordinating Committee, are charged with
the implementation of A.O. No. 308. On April 8, 1997, we issued a temporary restraining These submissions do not deserve our sympathetic ear. Petitioner Ople is a distinguished
order enjoining its implementation. member of our Senate. As a Senator, petitioner is possessed of the requisite standing to
bring suit raising the issue that the issuance of A.O. No. 308 is a usurpation of legislative
power. 4 As taxpayer and member of the Government Service Insurance System (GSIS),
Petitioner contends:
petitioner can also impugn the legality of the misalignment of public funds and the misuse of
GSIS funds to implement A.O. No. 308. 5
A. THE ESTABLISNMENT OF A NATIONAL COMPUTERIZED IDENTIFICATION
REFERENCE SYSTEM REQUIRES A LEGISLATIVE ACT. THE ISSUANCE OF
The ripeness for adjudication of the Petition at bar is not affected by the fact that the
A.O. NO. 308 BY THE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES IS,
implementing rules of A.O. No. 308 have yet to be promulgated. Petitioner Ople assails A.O.
THEREFORE, AN UNCONSTITUTIONAL USURPATION OF THE LEGISLATIVE
No. 308 as invalid per se and as infirmed on its face. His action is not premature for the rules
POWERS OF THE CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.
yet to be promulgated cannot cure its fatal defects. Moreover, the respondents themselves
have started the implementation of A.O. No. 308 without waiting for the rules. As early as
B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR THE January 19, 1997, respondent Social Security System (SSS) caused the publication of a notice
IMPLEMENTATION OF A.O. NO. 308 IS AN UNCONSTITUTIONAL to bid for the manufacture of the National Identification (ID) card. 6 Respondent Executive
Secretary Torres has publicly announced that representatives from the GSIS and the SSS have
completed the guidelines for the national identification system. 7 All signals from the
respondents show their unswerving will to implement A.O. No. 308 and we need not wait for
the formality of the rules to pass judgment on its constitutionality. In this light, the dissenters
insistence that we tighten the rule on standing is not a commendable stance as its result
would be to throttle an important constitutional principle and a fundamental right.
II
We now come to the core issues. Petitioner claims that A.O. No. 308 is not a mere
administrative order but a law and hence, beyond the power of the President to issue. He
alleges that A.O. No. 308 establishes a system of identification that is all-encompassing in
scope, affects the life and liberty of every Filipino citizen and foreign resident, and more
particularly, violates their right to privacy.
Petitioner's sedulous concern for the Executive not to trespass on the lawmaking domain of
Congress is understandable. The blurring of the demarcation line between the power of the
Legislature to make laws and the power of the Executive to execute laws will disturb their
delicate balance of power and cannot be allowed. Hence, the exercise by one branch of
government of power belonging to another will be given a stricter scrutiny by this Court.
The line that delineates Legislative and Executive power is not indistinct. Legislative power is
"the authority, under the Constitution, to make laws, and to alter and repeal them." 8 The
Constitution, as the will of the people in their original, sovereign and unlimited capacity, has
vested this power in the Congress of the Philippines. 9 The grant of legislative power to
Congress is broad, general and comprehensive. 10 The legislative body possesses plenary
power for all purposes of civil government. 11 Any power, deemed to be legislative by usage
and tradition, is necessarily possessed by Congress, unless the Constitution has lodged it
elsewhere. 12 In fine, except as limited by the Constitution, either expressly or impliedly,
legislative power embraces all subjects and extends to matters of general concern or
common interest. 13
While Congress is vested with the power to enact laws, the President executes the
laws. 14 The executive power is vested in the Presidents. 15 It is generally defined as the
power to enforce and administer the laws. 16 It is the power of carrying the laws into practical
operation and enforcing their due observance. 17
As head of the Executive Department, the President is the Chief Executive. He represents the
government as a whole and sees to it that all laws are enforced by the officials and
employees of his department. 18 He has control over the executive department, bureaus and
offices. This means that he has the authority to assume directly the functions of the
executive department, bureau and office or interfere with the discretion of its
officials.19 Corollary to the power of control, the President also has the duty of supervising
the enforcement of laws for the maintenance of general peace and public order. Thus, he is
granted administrative power over bureaus and offices under his control to enable him to
discharge his duties effectively. 20
Administrative power is concerned with the work of applying policies and enforcing orders as
determined by proper governmental organs. 21 It enables the President to fix a uniform
standard of administrative efficiency and check the official conduct of his agents. 22 To this
end, he can issue administrative orders, rules and regulations.
Prescinding from these precepts, we hold that A.O. No. 308 involves a subject that is not
appropriate to be covered by an administrative order. An administrative order is:
Sec. 3. Administrative Orders. Acts of the President which relate to
particular aspects of governmental operation in pursuance of his duties
as administrative head shall be promulgated in administrative orders. 23
An administrative order is an ordinance issued by the President which relates to
specific aspects in the administrative operation of government. It must be in
harmony with the law and should be for the sole purpose of implementing the law
and carrying out the legislative policy. 24 We reject the argument that A.O. No. 308
implements the legislative policy of the Administrative Code of 1987. The Code is a
general law and "incorporates in a unified document the major structural,
functional and procedural principles of governance." 25 and "embodies changes in
administrative structure and procedures designed to serve the
people." 26 The Code is divided into seven (7) Books: Book I deals with Sovereignty
and General Administration, Book II with the Distribution of Powers of the three
branches of Government, Book III on the Office of the President, Book IV on the
Executive Branch, Book V on Constitutional Commissions, Book VI on National
Government Budgeting, and Book VII on Administrative Procedure. These Books
contain provisions on the organization, powers and general administration of the
executive, legislative and judicial branches of government, the organization and
administration of departments, bureaus and offices under the executive branch,
the organization and functions of the Constitutional Commissions and other
constitutional bodies, the rules on the national government budget, as well as
guideline for the exercise by administrative agencies of quasi-legislative and quasi-
judicial powers. The Code covers both the internal administration of
government, i.e, internal organization, personnel and recruitment, supervision and
discipline, and the effects of the functions performed by administrative officials on
private individuals or parties outside government. 27
It cannot be simplistically argued that A.O. No. 308 merely implements the Administrative
Code of 1987. It establishes for the first time a National Computerized Identification
Reference System. Such a System requires a delicate adjustment of various contending state
policies the primacy of national security, the extent of privacy interest against dossier-
gathering by government, the choice of policies, etc. Indeed, the dissent of Mr. Justice
Mendoza states that the A.O. No. 308 involves the all-important freedom of thought. As said
administrative order redefines the parameters of some basic rights of our citizenry vis-a-
vis the State as well as the line that separates the administrative power of the President to
make rules and the legislative power of Congress, it ought to be evident that it deals with a
subject that should be covered by law.
Nor is it correct to argue as the dissenters do that A.D. No. 308 is not a law because it confers
no right, imposes no duty, affords no proctection, and creates no office. Under A.O. No. 308,
a citizen cannot transact business with government agencies delivering basic services to the
people without the contemplated identification card. No citizen will refuse to get this
identification card for no one can avoid dealing with government. It is thus clear as daylight
that without the ID, a citizen will have difficulty exercising his rights and enjoying his
privileges. Given this reality, the contention that A.O. No. 308 gives no right and imposes no
duty cannot stand.
Again, with due respect, the dissenting opinions unduly expand the limits of administrative
legislation and consequently erodes the plenary power of Congress to make laws. This is
contrary to the established approach defining the traditional limits of administrative
legislation. As well stated by Fisher: ". . . Many regulations however, bear directly on the
public. It is here that administrative legislation must he restricted in its scope and application.
Regulations are not supposed to be a substitute for the general policy-making that Congress
enacts in the form of a public law. Although administrative regulations are entitled to
respect, the authority to prescribe rules and regulations is not an independent source of
power to make laws." 28
III
Assuming, arguendo, that A.O. No. 308 need not be the subject of a law, still it cannot pass
constitutional muster as an administrative legislation because facially it violates the right to
privacy. The essence of privacy is the "right to be let alone." 29 In the 1965 case of Griswold v.
Connecticut, 30 the United States Supreme Court gave more substance to the right of privacy
when it ruled that the right has a constitutional foundation. It held that there is a right of
privacy which can be found within the penumbras of the First, Third, Fourth, Fifth and Ninth
Amendments, 31 viz:
Specific guarantees in the Bill of Rights have penumbras formed by
emanations from these guarantees that help give them life and substance
. . . various guarantees create zones of privacy. The right of association
contained in the penumbra of the First Amendment is one, as we have
seen. The Third Amendment in its prohibition against the quartering of
soldiers "in any house" in time of peace without the consent of the
owner is another facet of that privacy. The Fourth Amendment explicitly
affirms the ''right of the people to be secure in their persons, houses and
effects, against unreasonable searches and seizures." The Fifth
Amendment in its Self-Incrimination Clause enables the citizen to create a
zone of privacy which government may not force him to surrender to his
detriment. The Ninth Amendment provides: "The enumeration in the
Constitution, of certain rights, shall not be construed to deny or
disparage others retained by the people."
In the 1968 case of Morfe v. Mutuc, 32 we adopted the Griswold ruling that there is
a constitutional right to privacy. Speaking thru Mr. Justice, later Chief Justice,
Enrique Fernando, we held:
xxx xxx xxx
The Griswold case invalidated a Connecticut statute which made the use
of contraceptives a criminal offence on the ground of its amounting to an
unconstitutional invasion of the right of privacy of married persons;
rightfully it stressed "a relationship lying within the zone of privacy
created by several fundamental constitutional guarantees." It has wider
implications though. The constitutional right to privacy has come into its
own.
So it is likewise in our jurisdiction. The right to privacy as such is accorded
recognition independently of its identification with liberty; in itself, it is
fully deserving of constitutional protection. The language of Prof.
Emerson is particularly apt: "The concept of limited government has
always included the idea that governmental powers stop short of certain
intrusions into the personal life of the citizen. This is indeed one of the
basic distinctions between absolute and limited government. Ultimate
and pervasive control of the individual, in all aspects of his life, is the
hallmark of the absolute state. In contrast, a system of limited
government safeguards a private sector, which belongs to the individual,
firmly distinguishing it from the public sector, which the state can control.
Protection of this private sector protection, in other words, of the
dignity and integrity of the individual has become increasingly
important as modern society has developed. All the forces of a
technological age industrialization, urbanization, and organization
operate to narrow the area of privacy and facilitate intrusion into it. In
modern terms, the capacity to maintain and support this enclave of
private life marks the difference between a democratic and a totalitarian
society."
Indeed, if we extend our judicial gaze we will find that the right of privacy is recognized and
enshrined in several provisions of our Constitution. 33 It is expressly recognized in section 3
(1) of the Bill of Rights:
Sec. 3. (1) The privacy of communication and correspondence shall be
inviolable except upon lawful order of the court, or when public safety or
order requires otherwise as prescribed by law.
Other facets of the right to privacy are protectad in various provisions of the Bill of
Rights, viz: 34
Sec. 1. No person shall be deprived of life, liberty, or property without
due process of law, nor shall any person be denied the equal protection
of the laws.
Sec. 2. The right of the people to be secure in their persons, houses
papers, and effects against unreasonable searches and seizures of
 whatever nature and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon probable cause to be
determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things
to be seized.
xxx xxx xxx
Sec. 6. The liberty of abode and of changing the same within the limits
prescribed by law shall not be impaired except upon lawful order of the
court. Neither shall the right to travel be impaired except in the interest
of national security, public safety, or public health as may be provided by
law.
xxx xxx xxx
Sec. 8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
Sec. 17. No person shall be compelled to be a witness against himself.
Zones of privacy are likewise recognized and protected in our laws. The Civil Code provides
that "[e]very person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons" and punishes as actionable torts several acts by a person of
meddling and prying into the privacy of another. 35 It also holds a public officer or employee
or any private individual liable for damages for any violation of the rights and liberties of
another person, 36 and recognizes the privacy of letters and other private
communications. 37 The Revised Penal Code makes a crime the violation of secrets by an
officer, 38the revelation of trade and industrial secrets, 39 and trespass to dwelling. 40 Invasion
of privacy is an offense in special laws like the Anti-Wiretapping Law, 41 the Secrecy of Bank
Deposits Act 42 and the Intellectual Property Code. 43 The Rules of Court on privileged
communication likewise recognize the privacy of certain information. 44
Unlike the dissenters, we prescind from the premise that the right to privacy is a
fundamental right guaranteed by the Constitution, hence, it is the burden of government to
show that A.O. No. 308 is justified by some compelling state interest and that it is narrowly
drawn. A.O. No. 308 is predicated on two considerations: (1) the need to provides our
citizens and foreigners with the facility to conveniently transact business with basic service
and social security providers and other government instrumentalities and (2) the need to
reduce, if not totally eradicate, fraudulent transactions and misrepresentations by persons
seeking basic services. It is debatable whether these interests are compelling enough to
warrant the issuance of A.O. No. 308. But what is not arguable is the broadness, the
vagueness, the overbreadth of A.O. No. 308 which if implemented will put our people's right
to privacy in clear and present danger.
The heart of A.O. No. 308 lies in its Section 4 which provides for a Population Reference
Number (PRN) as a "common reference number to establish a linkage among concerned
agencies" through the use of "Biometrics Technology" and "computer application designs."
Biometry or biometrics is "the science of the applicatin of statistical methods to biological
facts; a mathematical analysis of biological data." 45 The term "biometrics" has evolved into a
broad category of technologies which provide precise confirmation of an individual's identity
through the use of the individual's own physiological and behavioral characteristics. 46 A
physiological characteristic is a relatively stable physical characteristic such as a fingerprint,
retinal scan, hand geometry or facial features. A behavioral characteristic is influenced by the
individual's personality and includes voice print, signature and keystroke. 47 Most biometric
idenfication systems use a card or personal identificatin number (PIN) for initial
identification. The biometric measurement is used to verify that the individual holding the
card or entering the PIN is the legitimate owner of the card or PIN. 48
A most common form of biological encoding is finger-scanning where technology scans a
fingertip and turns the unique pattern therein into an individual number which is called a
biocrypt. The biocrypt is stored in computer data banks 49 and becomes a means of
identifying an individual using a service. This technology requires one's fingertip to be
scanned every time service or access is provided. 50 Another method is the retinal scan.
Retinal scan technology employs optical technology to map the capillary pattern of the retina
of the eye. This technology produces a unique print similar to a finger print. 51 Another
biometric method is known as the "artificial nose." This device chemically analyzes the
unique combination of substances excreted from the skin of people. 52 The latest on the list
of biometric achievements is the thermogram. Scientists have found that by taking pictures
of a face using infra-red cameras, a unique heat distribution pattern is seen. The different
densities of bone, skin, fat and blood vessels all contribute to the individual's personal "heat
signature." 53
In the last few decades, technology has progressed at a galloping rate. Some science fictions
are now science facts. Today, biometrics is no longer limited to the use of fingerprint to
identify an individual. It is a new science that uses various technologies in encoding any and
all biological characteristics of an individual for identification. It is noteworthy that A.O. No.
308 does not state what specific biological characteristics and what particular biometrics
technology shall be used to identify people who will seek its coverage. Considering the
banquest of options available to the implementors of A.O. No. 308, the fear that it threatens
the right to privacy of our people is not groundless.
A.O. No. 308 should also raise our antennas for a further look will show that it does not state
whether encoding of data is limited to biological information alone for identification
purposes. In fact, the Solicitor General claims that the adoption of the Identification
Reference System will contribute to the "generation of population data for development
planning." 54 This is an admission that the PRN will not be used solely for identification but
the generation of other data with remote relation to the avowed purposes of A.O. No. 308.
Clearly, the indefiniteness of A.O. No. 308 can give the government the roving authority to
store and retrieve information for a purpose other than the identification of the individual
through his PRN.
The potential for misuse of the data to be gathered under A.O. No. 308 cannot be
undarplayed as the dissenters do. Pursuant to said administrative order, an individual must
present his PRN everytime he deals with a government agency to avail of basic services and
security. His transactions with the government agency will necessarily be recorded
whether it be in the computer or in the documentary file of the agency. The individual's file
may include his transactions for loan availments, income tax returns, statement of assets and
liabilities, reimbursements for medication, hospitalization, etc. The more frequent the use of
the PRN, the better the chance of building a huge formidable informatin base through the
electronic linkage of the files. 55 The data may be gathered for gainful and useful government
purposes; but the existence of this vast reservoir of personal information constitutes a covert
invitation to misuse, a temptation that may be too great for some of our authorities to
resist. 56
We can even grant, arguendo, that the computer data file will be limited to the name,
address and other basic personal infomation about the individual. 57 Even that hospitable
assumption will not save A.O. No. 308 from constitutional infirmity for again said order does
not tell us in clear and categorical terms how these information gathered shall he handled. It
does not provide who shall control and access the data, under what circumstances and for
what purpose. These factors are essential to safeguard the privacy and guaranty the integrity
of the information. 58 Well to note, the computer linkage gives other government agencies
access to the information. Yet, there are no controls to guard against leakage of information.
When the access code of the control programs of the particular computer system is broken,
an intruder, without fear of sanction or penalty, can make use of the data for whatever
purpose, or worse, manipulate the data stored within the system. 59
It is plain and we hold that A.O. No. 308 falls short of assuring that personal information
which will be gathered about our people will only be processed for unequivocally specified
purposes. 60 The lack of proper safeguards in this regard of A.O. No. 308 may interfere with
the individual's liberty of abode and travel by enabling authorities to track down his
movement; it may also enable unscrupulous persons to access confidential information and
circumvent the right against self-incrimination; it may pave the way for "fishing expeditions"
by government authorities and evade the right against unreasonable searches and
seizures. 61 The possibilities of abuse and misuse of the PRN, biometrics and computer
technology are accentuated when we consider that the individual lacks control over what can
be read or placed on his ID, much less verify the correctness of the data encoded. 62 They
threaten the very abuses that the Bill of Rights seeks to prevent. 63
The ability of sophisticated data center to generate a comprehensive cradle-to-grave dossier
on an individual and transmit it over a national network is one of the most graphic threats of
the computer revolution. 64 The computer is capable of producing a comprehensive dossier
on individuals out of information given at different times and for varied purposes. 65 It can
continue adding to the stored data and keeping the information up to date. Retrieval of
stored date is simple. When information of a privileged character finds its way into the
computer, it can be extracted together with other data on the subject. 66Once extracted, the
information is putty in the hands of any person. The end of privacy begins.
Though A.O. No. 308 is undoubtedly not narrowly drawn, the dissenting opinions would
dismiss its danger to the right to privacy as speculative and hypothetical. Again, we cannot
countenance such a laidback posture. The Court will not be true to its role as the ultimate
guardian of the people's liberty if it would not immediately smother the sparks that endanger
their rights but would rather wait for the fire that could consume them.
We reject the argument of the Solicitor General that an individual has a reasonable
expectation of privacy with regard to the Natioal ID and the use of biometrics technology as
it stands on quicksand. The reasonableness of a person's expectation of privacy depends on a
two-part test: (1) whether by his conduct, the individual has exhibited an expectation of
privacy; and (2) whether this expectation is one that society recognizes as reasonable. 67 The
factual circumstances of the case determines the reasonableness of the
expectation. 68 However, other factors, such as customs, physical surroundings and practices
of a particular activity, may serve to create or diminish this expectation. 69 The use of
biometrics and computer technology in A.O. No. 308 does not assure the individual of a
reasonable expectation of privacy. 70 As technology advances, the level of reasonably
expected privacy decreases. 71 The measure of protection granted by the reasonable
expectation diminishes as relevant technology becomes more widely accepted. 72 The
security of the computer data file depends not only on the physical inaccessibility of the file
but also on the advances in hardware and software computer technology. A.O. No. 308 is so
widely drawn that a minimum standard for a reasonable expectation of privacy, regardless of
technology used, cannot be inferred from its provisions.
The rules and regulations to be by the IACC cannot remedy this fatal defect. Rules and
regulations merely implement the policy of the law or order. On its face, A.O. No. gives the
IACC virtually infettered discretion to determine the metes and bounds of the ID System.
Nor do your present laws prvide adequate safeguards for a reasonable expectation of
privacy. Commonwealth Act. No. 591 penalizes the disclosure by any person of data
furnished by the individual to the NSO with imprisonment and fine. 73 Republic Act. No. 1161
prohibits public disclosure of SSS employment records and reports. 74 These laws, however,
apply to records and data with the NSO and the SSS. It is not clear whether they may be
applied to data with the other government agencies forming part of the National ID System.
The need to clarify the penal aspect of A.O. No. 308 is another reason why its enactment
should be given to Congress.
Next, the Solicitor General urges us to validate A.O. No. 308's abridgment of the right of
privacy by using the rational relationship test. 75 He stressed that the purposes of A.O. No.
308 are: (1) to streamline and speed up the implementation of basic government services, (2)
eradicate fraud by avoiding duplication of services, and (3) generate population data for
development planning. He cocludes that these purposes justify the incursions into the right
to privacy for the means are rationally related to the end. 76
We are not impressed by the argument. In Morfe v. Mutuc, 77 we upheld the constitutionality
of R.A. 3019, the Anti-Graft and Corrupt Practices Act, as a valid police power measure. We
declared that the law, in compelling a public officer to make an annual report disclosing his
assets and liabilities, his sources of income and expenses, did not infringe on the individual's
right to privacy. The law was enacted to promote morality in public administration by
curtailing and minimizing the opportunities for official corruption and maintaining a standard
of honesty in the public service. 78
The same circumstances do not obtain in the case at bar. For one, R.A. 3019 is a statute, not
an administrative order. Secondly, R.A. 3019 itself is sufficiently detailed. The law is clear on
what practices were prohibited and penalized, and it was narrowly drawn to avoid abuses. IN
the case at bar, A.O. No. 308 may have been impelled by a worthy purpose, but, it cannot
pass constitutional scrutiny for it is not narrowly drawn. And we now hod that when the
integrity of a fundamental right is at stake, this court will give the challenged law,
administrative order, rule or regulation a stricter scrutiny. It will not do for the authorities to
invoke the presumption of regularity in the performance of official duties. Nor is it enough
for the authorities to prove that their act is not irrational for a basic right can be diminished,
if not defeated, even when the government does not act irrationally. They must satisfactorily
show the presence of compelling state interests and that the law, rule or regulation is
narrowly drawn to preclude abuses. This approach is demanded by the 1987 Constitution
whose entire matrix is designed to protect human rights and to prevent authoritarianism. In
case of doubt, the least we can do is to lean towards the stance that will not put in danger
the rights protected by the Constitutions.
The case of Whalen v. Roe 79 cited by the Solicitor General is also off-line. In Whalen, the
United States Supreme Court was presented with the question of whether the State of New
York could keep a centralized computer record of the names and addresses of all persons
who obtained certain drugs pursuant to a doctor's prescription. The New York State
Controlled Substance Act of 1972 required physicians to identify parties obtaining
prescription drugs enumerated in the statute, i.e., drugs with a recognized medical use but
with a potential for abuse, so that the names and addresses of the patients can be recorded
in a centralized computer file of the State Department of Health. The plaintiffs, who were
patients and doctors, claimed that some people might decline necessary medication because
of their fear that the computerized data may be readily available and open to public
disclosure; and that once disclosed, it may stigmatize them as drug addicts. 80 The plaintiffs
alleged that the statute invaded a constitutionally protected zone of privacy, i.e., the
individual interest in avoiding disclosure of personal matters, and the interest in
independence in making certain kinds of important decisions. The U.S. Supreme Court held
that while an individual's interest in avoiding disclosuer of personal matter is an aspect of the
right to privacy, the statute did not pose a grievous threat to establish a constitutional
violation. The Court found that the statute was necessary to aid in the enforcement of laws
designed to minimize the misuse of dangerous drugs. The patient-identification requirement
was a product of an orderly and rational legislative decision made upon recommmendation
by a specially appointed commission which held extensive hearings on the matter. Moreover,
the statute was narrowly drawn and contained numerous safeguards against indiscriminate
disclosure. The statute laid down the procedure and requirements for the gathering, storage
and retrieval of the informatin. It ebumerated who were authorized to access the data. It
also prohibited public disclosure of the data by imposing penalties for its violation. In view of
these safeguards, the infringement of the patients' right to privacy was justified by a valid
exercise of police power. As we discussed above, A.O. No. 308 lacks these vital safeguards.
Even while we strike down A.O. No. 308, we spell out in neon that the Court is not per
se agains the use of computers to accumulate, store, process, retvieve and transmit data to
improve our bureaucracy. Computers work wonders to achieve the efficiency which both
government and private industry seek. Many information system in different countries make
use of the computer to facilitate important social objective, such as better law enforcement,
faster delivery of public services, more efficient management of credit and insurance
programs, improvement of telecommunications and streamlining of financial
activities. 81 Used wisely, data stored in the computer could help good administration by
making accurate and comprehensive information for those who have to frame policy and
make key decisions. 82 The benefits of the computer has revolutionized information
technology. It developed the internet, 83 introduced the concept of cyberspace 84 and the
information superhighway where the individual, armed only with his personal computer, may
surf and search all kinds and classes of information from libraries and databases connected
to the net.
In no uncertain terms, we also underscore that the right to privacy does not bar all incursions
into individual privacy. The right is not intended to stifle scientific and technological
advancements that enhance public service and the common good. It merely requires that the
law be narrowly focused 85 and a compelling interest justify such intrusions. 86 Intrusions into
the right must be accompanied by proper safeguards and well-defined standards to prevent
unconstitutional invasions. We reiterate that any law or order that invades individual privacy
will be subjected by this Court to strict scrutiny. The reason for this stance was laid down
in Morfe v. Mutuc, to wit:
The concept of limited government has always included the idea that
governmental powers stop short of certain intrusions into the personal
life of the citizen. This is indeed one of the basic disctinctions between
absolute and limited government. Ultimate and pervasive control of the
individual, in all aspects of his life, is the hallmark of the absolute state. In
contrast, a system of limited government safeguards a private sector,
which belongs to the individual, firmly distinguishing it from the public
sector, which the state can control. Protection of this private sector
protection, in other words, of the dignity and integrity of the individual
has become increasingly important as modern society has developed. All
the forces of a technological age industrialization, urbanization, and
organization operate to narrow the area of privacy and facilitate
intrusion into it. In modern terms, the capacity to maintain and support
this enclave of private life marks the difference between a democratic
and a totalitarian society. 87
IV
The right to privacy is one of the most threatened rights of man living in a mass society. The
threats emanate from various sources governments, journalists, employers, social
scientists, etc. 88 In th case at bar, the threat comes from the executive branch of
government which by issuing A.O. No. 308 pressures the people to surrender their privacy by
giving information about themselves on the pretext that it will facilitate delivery of basic
services. Given the record-keeping power of the computer, only the indifferent fail to
perceive the danger that A.O. No. 308 gives the government the power to compile a
devastating dossier against unsuspecting citizens. It is timely to take note of the well-worded
warning of Kalvin, Jr., "the disturbing result could be that everyone will live burdened by an
unerasable record of his past and his limitations. In a way, the threat is that because of its
record-keeping, the society will have lost its benign capacity to forget." 89 Oblivious to this
counsel, the dissents still say we should not be too quick in labelling the right to privacy as a
fundamental right. We close with the statement that the right to privacy was not engraved in
our Constitution for flattery.

IN VIEW WHEREOF, the petition is granted and Adminisrative Order No. 308 entitled
"Adoption of a National Computerized Identification Reference System" declared null and
void for being unconstitutional.

SO ORDERED.

Bellosillo and Martinez, JJ., concur.

Narvasa, C.J., I join Justices Kapunan and Mendoza in their dissents.

Regalado, J., In the result.

Davide, Jr., In the result and I join Mr. Justice Panganiban in his separate opinion.

Romero, J., Please see separate opinion.

Melo, J., I join the dissents of Justices Kapunan and Mendoza.

Vitug, J., See separate opinion.

Kapunan, J., See dissenting opinion.

Mendoza, J., Please see dissenting opinion.

Panganiban, J., Please see Separate Opinion.

Quisumbing, J., I join in dissenting opinion of JJ. Mendoza and Kapunan.

Purisima, J., I join in Justice Mendoza's dissenting.


THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING
CORPORATION,petitioners,
vs.
JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU
UNJIENG, respondents.
Office of the Solicitor General Tuason and City Fiscal Diaz for the Government.
De Witt, Perkins and Ponce Enrile for the Hongkong and Shanghai Banking Corporation.
Vicente J. Francisco, Feria and La O, Orense and Belmonte, and Gibbs and McDonough for
respondent Cu Unjieng.
No appearance for respondent Judge.
LAUREL, J.:
This is an original action instituted in this court on August 19, 1937, for the issuance of the
writ of certiorari and of prohibition to the Court of First Instance of Manila so that this court
may review the actuations of the aforesaid Court of First Instance in criminal case No. 42649
entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", more
particularly the application of the defendant Mariano Cu Unjieng therein for probation under
the provisions of Act No. 4221, and thereafter prohibit the said Court of First Instance from
taking any further action or entertaining further the aforementioned application for
probation, to the end that the defendant Mariano Cu Unjieng may be forthwith committed
to prison in accordance with the final judgment of conviction rendered by this court in said
case (G. R. No. 41200). 1
Petitioners herein, the People of the Philippine and the Hongkong and Shanghai Banking
Corporation, are respectively the plaintiff and the offended party, and the respondent herein
Mariano Cu Unjieng is one of the defendants, in the criminal case entitled "The People of the
Philippine Islands vs. Mariano Cu Unjieng, et al.", criminal case No. 42649 of the Court of First
Instance of Manila and G.R. No. 41200 of this court. Respondent herein, Hon. Jose O. Vera, is
the Judge ad interim of the seventh branch of the Court of First Instance of Manila, who
heard the application of the defendant Mariano Cu Unjieng for probation in the aforesaid
criminal case.
The information in the aforesaid criminal case was filed with the Court of First Instance of
Manila on October 15, 1931, petitioner herein Hongkong and Shanghai Banking Corporation
intervening in the case as private prosecutor. After a protracted trial unparalleled in the
annals of Philippine jurisprudence both in the length of time spent by the court as well as in
the volume in the testimony and the bulk of the exhibits presented, the Court of First
Instance of Manila, on January 8, 1934, rendered a judgment of conviction sentencing the
defendant Mariano Cu Unjieng to indeterminate penalty ranging from four years and two
months of prision correccional to eight years of prision mayor, to pay the costs and with
reservation of civil action to the offended party, the Hongkong and Shanghai Banking
Corporation. Upon appeal, the court, on March 26, 1935, modified the sentence to an
indeterminate penalty of from five years and six months of prision correccional to seven
years, six months and twenty-seven days of prision mayor, but affirmed the judgment in all
other respects. Mariano Cu Unjieng filed a motion for reconsideration and four successive
motions for new trial which were denied on December 17, 1935, and final judgment was
accordingly entered on December 18, 1935. The defendant thereupon sought to have the
case elevated on certiorari to the Supreme Court of the United States but the latter denied
the petition for certiorari in November, 1936. This court, on November 24,
1936, denied the petition subsequently filed by the defendant for leave to file a second
alternative motion for reconsideration or new trial and thereafter remanded the case to the
court of origin for execution of the judgment.
The instant proceedings have to do with the application for probation filed by the herein
respondent Mariano Cu Unjieng on November 27, 1936, before the trial court, under
the provisions of Act No. 4221 of the defunct Philippine Legislature. Herein respondent
Mariano Cu Unjieng states in his petition, inter alia, that he is innocent of the crime of which
he was convicted, that he has no criminal record and that he would observe good conduct in
the future. The Court of First Instance of Manila, Judge Pedro Tuason presiding, referred the
application for probation of the Insular Probation Office which recommended denial of the
same June 18, 1937. Thereafter, the Court of First Instance of Manila, seventh branch, Judge
Jose O. Vera presiding, set the petition for hearing on April 5, 1937.
On April 2, 1937, the Fiscal of the City of Manila filed an opposition to the granting of
probation to the herein respondent Mariano Cu Unjieng. The private prosecution also filed
an opposition on April 5, 1937, alleging, among other things, that Act No. 4221, assuming
that it has not been repealed by section 2 of Article XV of the Constitution, is nevertheless
violative of section 1, subsection (1), Article III of the Constitution guaranteeing equal
protection of the laws for the reason that its applicability is not uniform throughout the
Islands and because section 11 of the said Act endows the provincial boards with the power
to make said law effective or otherwise in their respective or otherwise in their respective
provinces. The private prosecution also filed a supplementary opposition on April 19, 1937,
elaborating on the alleged unconstitutionality on Act No. 4221, as an undue delegation of
legislative power to the provincial boards of several provinces (sec. 1, Art. VI, Constitution).
The City Fiscal concurred in the opposition of the private prosecution except with respect to
the questions raised concerning the constitutionality of Act No. 4221.
On June 28, 1937, herein respondent Judge Jose O. Vera promulgated a resolution with a
finding that "las pruebas no han establecido de unamanera concluyente la culpabilidad del
peticionario y que todos los hechos probados no son inconsistentes o incongrentes con su
inocencia" and concludes that the herein respondent Mariano Cu Unjieng "es inocente por
duda racional" of the crime of which he stands convicted by this court in G.R. No. 41200, but
denying the latter's petition for probation for the reason that:
 . . . Si este Juzgado concediera la poblacion solicitada por las circunstancias y la
historia social que se han expuesto en el cuerpo de esta resolucion, que hacen al
peticionario acreedor de la misma, una parte de la opinion publica, atizada por los
recelos y las suspicacias, podria levantarse indignada contra un sistema de
probacion que permite atisbar en los procedimientos ordinarios de una causa
criminal perturbando la quietud y la eficacia de las decisiones ya recaidas al traer a
la superficie conclusiones enteramente differentes, en menoscabo del interes
publico que demanda el respeto de las leyes y del veredicto judicial.
On July 3, 1937, counsel for the herein respondent Mariano Cu Unjieng filed an exception to
the resolution denying probation and a notice of intention to file a motion for
reconsideration. An alternative motion for reconsideration or new trial was filed by counsel
on July 13, 1937. This was supplemented by an additional motion for reconsideration
submitted on July 14, 1937. The aforesaid motions were set for hearing on July 31, 1937, but
said hearing was postponed at the petition of counsel for the respondent Mariano Cu
Unjieng because a motion for leave to intervene in the case as amici curiae signed by thirty-
three (thirty-four) attorneys had just been filed with the trial court. Attorney Eulalio Chaves
whose signature appears in the aforesaid motion subsequently filed a petition for leave to
withdraw his appearance as amicus curiae on the ground that the motion for leave to
intervene as amici curiae was circulated at a banquet given by counsel for Mariano Cu
Unjieng on the evening of July 30, 1937, and that he signed the same "without mature
deliberation and purely as a matter of courtesy to the person who invited me (him)."
On August 6, 1937, the Fiscal of the City of Manila filed a motion with the trial court for the
issuance of an order of execution of the judgment of this court in said case and forthwith to
commit the herein respondent Mariano Cu Unjieng to jail in obedience to said judgment.
On August 7, 1937, the private prosecution filed its opposition to the motion for leave to
intervene as amici curiae aforementioned, asking that a date be set for a hearing of the same
and that, at all events, said motion should be denied with respect to certain attorneys signing
the same who were members of the legal staff of the several counsel for Mariano Cu
Unjieng. On August 10, 1937, herein respondent Judge Jose O. Vera issued an order requiring
all parties including the movants for intervention as amici curiae to appear before the court
on August 14, 1937. On the last-mentioned date, the Fiscal of the City of Manila moved for
the hearing of his motion for execution of judgment in preference to the motion for leave to
intervene as amici curiae but, upon objection of counsel for Mariano Cu Unjieng, he moved
for the postponement of the hearing of both motions. The respondent judge thereupon set
the hearing of the motion for execution on August 21, 1937, but proceeded to consider the
motion for leave to intervene as amici curiae as in order. Evidence as to the circumstances
under which said motion for leave to intervene as amici curiae was signed and submitted to
court was to have been heard on August 19, 1937. But at this juncture, herein petitioners
came to this court on extraordinary legal process to put an end to what they alleged was an
interminable proceeding in the Court of First Instance of Manila which fostered "the
campaign of the defendant Mariano Cu Unjieng for delay in the execution of the sentence
imposed by this Honorable Court on him, exposing the courts to criticism and ridicule
because of the apparent inability of the judicial machinery to make effective a final judgment
of this court imposed on the defendant Mariano Cu Unjieng."
The scheduled hearing before the trial court was accordingly suspended upon the issuance of
a temporary restraining order by this court on August 21, 1937.
To support their petition for the issuance of the extraordinary writs of certiorari and
prohibition, herein petitioners allege that the respondent judge has acted without
jurisdiction or in excess of his jurisdiction:
I. Because said respondent judge lacks the power to place respondent Mariano Cu Unjieng
under probation for the following reason:
(1) Under section 11 of Act No. 4221, the said of the Philippine
Legislature is made to apply only to the provinces of the Philippines; it
nowhere states that it is to be made applicable to chartered cities like the
City of Manila.
(2) While section 37 of the Administrative Code contains a proviso to the
effect that in the absence of a special provision, the term "province" may
be construed to include the City of Manila for the purpose of giving effect
to laws of general application, it is also true that Act No. 4221 is not a law
of general application because it is made to apply only to those provinces
in which the respective provincial boards shall have provided for the
salary of a probation officer.
(3) Even if the City of Manila were considered to be a province, still, Act
No. 4221 would not be applicable to it because it has provided for the
salary of a probation officer as required by section 11 thereof; it being
immaterial that there is an Insular Probation Officer willing to act for the
City of Manila, said Probation Officer provided for in section 10 of Act No.
4221 being different and distinct from the Probation Officer provided for
in section 11 of the same Act.
II. Because even if the respondent judge originally had jurisdiction to entertain the
application for probation of the respondent Mariano Cu Unjieng, he nevertheless acted
without jurisdiction or in excess thereof in continuing to entertain the motion for
reconsideration and by failing to commit Mariano Cu Unjieng to prison after he had
promulgated his resolution of June 28, 1937, denying Mariano Cu Unjieng's application for
probation, for the reason that:
(1) His jurisdiction and power in probation proceedings is limited by Act
No. 4221 to the granting or denying of applications for probation.
(2) After he had issued the order denying Mariano Cu Unjieng's petition
for probation on June 28, 1937, it became final and executory at the
moment of its rendition.
(3) No right on appeal exists in such cases.
 (4) The respondent judge lacks the power to grant a rehearing of said
order or to modify or change the same.
III. Because the respondent judge made a finding that Mariano Cu Unjieng is innocent of the
crime for which he was convicted by final judgment of this court, which finding is not only
presumptuous but without foundation in fact and in law, and is furthermore in contempt of
this court and a violation of the respondent's oath of office as ad interim judge of first
instance.
IV. Because the respondent judge has violated and continues to violate his duty, which
became imperative when he issued his order of June 28, 1937, denying the application for
probation, to commit his co-respondent to jail.
Petitioners also avers that they have no other plain, speedy and adequate remedy in the
ordinary course of law.
In a supplementary petition filed on September 9, 1937, the petitioner Hongkong and
Shanghai Banking Corporation further contends that Act No. 4221 of the Philippine
Legislature providing for a system of probation for persons eighteen years of age or over who
are convicted of crime, is unconstitutional because it is violative of section 1, subsection (1),
Article III, of the Constitution of the Philippines guaranteeing equal protection of the laws
because it confers upon the provincial board of its province the absolute discretion to make
said law operative or otherwise in their respective provinces, because it constitutes an
unlawful and improper delegation to the provincial boards of the several provinces of the
legislative power lodged by the Jones Law (section 8) in the Philippine Legislature and by the
Constitution (section 1, Art. VI) in the National Assembly; and for the further reason that it
gives the provincial boards, in contravention of the Constitution (section 2, Art. VIII) and the
Jones Law (section 28), the authority to enlarge the powers of the Court of First Instance of
different provinces without uniformity. In another supplementary petition dated September
14, 1937, the Fiscal of the City of Manila, in behalf of one of the petitioners, the People of the
Philippine Islands, concurs for the first time with the issues raised by other petitioner
regarding the constitutionality of Act No. 4221, and on the oral argument held on October 6,
1937, further elaborated on the theory that probation is a form of reprieve and therefore
Act. No. 4221 is an encroachment on the exclusive power of the Chief Executive to grant
pardons and reprieves. On October 7, 1937, the City Fiscal filed two memorandums in which
he contended that Act No. 4221 not only encroaches upon the pardoning power to the
executive, but also constitute an unwarranted delegation of legislative power and a denial of
the equal protection of the laws. On October 9, 1937, two memorandums, signed jointly by
the City Fiscal and the Solicitor-General, acting in behalf of the People of the Philippine
Islands, and by counsel for the petitioner, the Hongkong and Shanghai Banking Corporation,
one sustaining the power of the state to impugn the validity of its own laws and the other
contending that Act No. 4221 constitutes an unwarranted delegation of legislative power,
were presented. Another joint memorandum was filed by the same persons on the same
day, October 9, 1937, alleging that Act No. 4221 is unconstitutional because it denies the
equal protection of the laws and constitutes an unlawful delegation of legislative power and,
further, that the whole Act is void: that the Commonwealth is not estopped from questioning
the validity of its laws; that the private prosecution may intervene in probation proceedings
and may attack the probation law as unconstitutional; and that this court may pass upon the
constitutional question in prohibition proceedings.
Respondents in their answer dated August 31, 1937, as well as in their oral argument and
memorandums, challenge each and every one of the foregoing proposition raised by the
petitioners.
As special defenses, respondents allege:
(1) That the present petition does not state facts sufficient in law to
warrant the issuance of the writ of certiorari or of prohibition.
(2) That the aforesaid petition is premature because the remedy sought
by the petitioners is the very same remedy prayed for by them before the
trial court and was still pending resolution before the trial court when the
present petition was filed with this court.
(3) That the petitioners having themselves raised the question as to the
execution of judgment before the trial court, said trial court has acquired
exclusive jurisdiction to resolve the same under the theory that its
resolution denying probation is unappealable.
(4) That upon the hypothesis that this court has concurrent jurisdiction
with the Court of First Instance to decide the question as to whether or
not the execution will lie, this court nevertheless cannot exercise said
jurisdiction while the Court of First Instance has assumed jurisdiction over
the same upon motion of herein petitioners themselves.
(5) That upon the procedure followed by the herein petitioners in seeking
to deprive the trial court of its jurisdiction over the case and elevate the
proceedings to this court, should not be tolerated because it impairs the
authority and dignity of the trial court which court while sitting in the
probation cases is "a court of limited jurisdiction but of great dignity."
(6) That under the supposition that this court has jurisdiction to resolve
the question submitted to and pending resolution by the trial court, the
present action would not lie because the resolution of the trial court
denying probation is appealable; for although the Probation Law does not
specifically provide that an applicant for probation may appeal from a
resolution of the Court of First Instance denying probation, still it is a
general rule in this jurisdiction that a final order, resolution or decision of
an inferior court is appealable to the superior court.
(7) That the resolution of the trial court denying probation of herein
respondent Mariano Cu Unjieng being appealable, the same had not
become final and executory for the reason that the said respondent had
 filed an alternative motion for reconsideration and new trial within the
requisite period of fifteen days, which motion the trial court was able to
resolve in view of the restraining order improvidently and erroneously
issued by this court.lawphi1.net
(8) That the Fiscal of the City of Manila had by implication admitted that
the resolution of the trial court denying probation is not final and
unappealable when he presented his answer to the motion for
reconsideration and agreed to the postponement of the hearing of the
said motion.
(9) That under the supposition that the order of the trial court denying
probation is not appealable, it is incumbent upon the accused to file an
action for the issuance of the writ of certiorari with mandamus, it
appearing that the trial court, although it believed that the accused was
entitled to probation, nevertheless denied probation for fear of criticism
because the accused is a rich man; and that, before a petition
for certiorari grounded on an irregular exercise of jurisdiction by the trial
court could lie, it is incumbent upon the petitioner to file a motion for
reconsideration specifying the error committed so that the trial court
could have an opportunity to correct or cure the same.
(10) That on hypothesis that the resolution of this court is not appealable,
the trial court retains its jurisdiction within a reasonable time to correct
or modify it in accordance with law and justice; that this power to alter or
modify an order or resolution is inherent in the courts and may be
exercise either motu proprio or upon petition of the proper party, the
petition in the latter case taking the form of a motion for reconsideration.
(11) That on the hypothesis that the resolution of the trial court is
appealable as respondent allege, said court cannot order execution of the
same while it is on appeal, for then the appeal would not be availing
because the doors of probation will be closed from the moment the
accused commences to serve his sentence (Act No. 4221, sec. 1; U.S. vs.
Cook, 19 Fed. [2d], 827).
In their memorandums filed on October 23, 1937, counsel for the respondents maintain that
Act No. 4221 is constitutional because, contrary to the allegations of the petitioners, it does
not constitute an undue delegation of legislative power, does not infringe the equal
protection clause of the Constitution, and does not encroach upon the pardoning power of
the Executive. In an additional memorandum filed on the same date, counsel for the
respondents reiterate the view that section 11 of Act No. 4221 is free from constitutional
objections and contend, in addition, that the private prosecution may not intervene in
probation proceedings, much less question the validity of Act No. 4221; that both the City
Fiscal and the Solicitor-General are estopped from questioning the validity of the Act; that
the validity of Act cannot be attacked for the first time before this court; that probation in
unavailable; and that, in any event, section 11 of the Act No. 4221 is separable from the rest
of the Act. The last memorandum for the respondent Mariano Cu Unjieng was denied for
having been filed out of time but was admitted by resolution of this court and filed anew
on November 5, 1937. This memorandum elaborates on some of the points raised by
the respondents and refutes those brought up by the petitioners.
In the scrutiny of the pleadings and examination of the various aspects of the present case,
we noted that the court below, in passing upon the merits of the application of the
respondent Mariano Cu Unjieng and in denying said application assumed the task not only of
considering the merits of the application, but of passing upon the culpability of the applicant,
notwithstanding the final pronouncement of guilt by this court. (G.R. No. 41200.) Probation
implies guilt be final judgment. While a probation case may look into the circumstances
attending the commission of the offense, this does not authorize it to reverse the findings
and conclusive of this court, either directly or indirectly, especially wherefrom its own
admission reliance was merely had on the printed briefs, averments, and pleadings of the
parties. As already observed by this court in Shioji vs. Harvey ([1922], 43 Phil., 333, 337), and
reiterated in subsequent cases, "if each and every Court of First Instance could enjoy the
privilege of overruling decisions of the Supreme Court, there would be no end to litigation,
and judicial chaos would result." A becoming modesty of inferior courts demands conscious
realization of the position that they occupy in the interrelation and operation of the
intergrated judicial system of the nation.
After threshing carefully the multifarious issues raised by both counsel for the petitioners
and the respondents, this court prefers to cut the Gordian knot and take up at once the two
fundamental questions presented, namely, (1) whether or not the constitutionality of Act No.
4221 has been properly raised in these proceedings; and (2) in the affirmative, whether or
not said Act is constitutional. Considerations of these issues will involve a discussion of
certain incidental questions raised by the parties.
To arrive at a correct conclusion on the first question, resort to certain guiding principles is
necessary. It is a well-settled rule that the constitutionality of an act of the legislature will not
be determined by the courts unless that question is properly raised and presented
inappropriate cases and is necessary to a determination of the case; i.e., the issue of
constitutionality must be the very lis mota presented. (McGirr vs. Hamilton and Abreu
[1915], 30 Phil., 563, 568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.)
The question of the constitutionality of an act of the legislature is frequently raised in
ordinary actions. Nevertheless, resort may be made to extraordinary legal remedies,
particularly where the remedies in the ordinary course of law even if available, are not plain,
speedy and adequate. Thus, in Cu Unjieng vs. Patstone ([1922]), 42 Phil., 818), this court held
that the question of the constitutionality of a statute may be raised by the petitioner
in mandamus proceedings (see, also, 12 C. J., p. 783); and in Government of the Philippine
Islands vs. Springer ([1927], 50 Phil., 259 [affirmed in Springer vs. Government of the
Philippine Islands (1928), 277 U. S., 189; 72 Law. ed., 845]), this court declared an act of the
legislature unconstitutional in an action of quo warranto brought in the name of the
Government of the Philippines. It has also been held that the constitutionality of a statute
may be questioned in habeas corpus proceedings (12 C. J., p. 783; Bailey on Habeas Corpus,
Vol. I, pp. 97, 117), although there are authorities to the contrary; on an application for
injunction to restrain action under the challenged statute (mandatory, see Cruz vs.
Youngberg [1931], 56 Phil., 234); and even on an application for preliminary injunction where
the determination of the constitutional question is necessary to a decision of the case. (12 C.
J., p. 783.) The same may be said as regards prohibition and certiorari.(Yu Cong Eng vs.
Trinidad [1925], 47 Phil., 385; [1926], 271 U. S., 500; 70 Law. ed., 1059; Bell vs. First Judicial
District Court [1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6 Ann. Cas., 982; 1 L. R. A.
[N. S], 843, and cases cited). The case of Yu Cong Eng vs. Trinidad, supra, decided by this
court twelve years ago was, like the present one, an original action for certiorari and
prohibition. The constitutionality of Act No. 2972, popularly known as the Chinese
Bookkeeping Law, was there challenged by the petitioners, and the constitutional issue was
not met squarely by the respondent in a demurrer. A point was raised "relating to the
propriety of the constitutional question being decided in original proceedings in prohibition."
This court decided to take up the constitutional question and, with two justices dissenting,
held that Act No. 2972 was constitutional. The case was elevated on writ of certiorari to the
Supreme Court of the United States which reversed the judgment of this court and held that
the Act was invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the question of jurisdiction,
however, the Federal Supreme Court, though its Chief Justice, said:
By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine
supreme court is granted concurrent jurisdiction in prohibition with courts of first
instance over inferior tribunals or persons, and original jurisdiction over courts of
first instance, when such courts are exercising functions without or in excess of
their jurisdiction. It has been held by that court that the question of the validity of
the criminal statute must usually be raised by a defendant in the trial court and be
carried regularly in review to the Supreme Court. (Cadwallader-Gibson Lumber Co.
vs. Del Rosario, 26 Phil., 192). But in this case where a new act seriously affected
numerous persons and extensive property rights, and was likely to cause a
multiplicity of actions, the Supreme Court exercised its discretion to bring the issue
to the act's validity promptly before it and decide in the interest of the orderly
administration of justice. The court relied by analogy upon the cases of Ex
parte Young (209 U. S., 123;52 Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup. Ct. Rep.,
441; 14 Ann. Ca., 764; Traux vs. Raich, 239 U. S., 33; 60 Law. ed., 131; L. R. A.
1916D, 545; 36 Sup. Ct. Rep., 7; Ann. Cas., 1917B, 283; and Wilson vs. New, 243 U.
S., 332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37 Sup. Ct. Rep., 298; Ann. Cas.
1918A, 1024). Although objection to the jurisdiction was raise by demurrer to the
petition, this is now disclaimed on behalf of the respondents, and both parties ask
a decision on the merits. In view of the broad powers in prohibition granted to that
court under the Island Code, we acquiesce in the desire of the parties.
The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior
jurisdiction and directed to an inferior court, for the purpose of preventing the inferior
tribunal from usurping a jurisdiction with which it is not legally vested. (High, Extraordinary
Legal Remedies, p. 705.) The general rule, although there is a conflict in the cases, is that the
merit of prohibition will not lie whether the inferior court has jurisdiction independent of the
statute the constitutionality of which is questioned, because in such cases the interior court
having jurisdiction may itself determine the constitutionality of the statute, and its decision
may be subject to review, and consequently the complainant in such cases ordinarily has
adequate remedy by appeal without resort to the writ of prohibition. But where the inferior
court or tribunal derives its jurisdiction exclusively from an unconstitutional statute, it may be
prevented by the writ of prohibition from enforcing that statute. (50 C. J., 670; Ex parte Round
tree [1874, 51 Ala., 42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish [1912], 109
Me., 384; 84 A., 799; Pennington vs. Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903], 54
W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837], 5 Dana, 19; 30 Am. Dec., 669.)
Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from
Act No. 4221 which prescribes in detailed manner the procedure for granting probation to
accused persons after their conviction has become final and before they have served their
sentence. It is true that at common law the authority of the courts to suspend temporarily
the execution of the sentence is recognized and, according to a number of state courts,
including those of Massachusetts, Michigan, New York, and Ohio, the power is inherent in
the courts (Commonwealth vs. Dowdican's Bail [1874], 115 Mass., 133; People vs. Stickel
[1909], 156 Mich., 557; 121 N. W., 497; People ex rel. Forsyth vs. Court of Session [1894], 141
N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616). But, in the leading case of Ex
parte United States ([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A., 1917E, 1178; 37 Sup. Ct.
Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United States expressed the
opinion that under the common law the power of the court was limited to temporary
suspension, and brushed aside the contention as to inherent judicial power saying, through
Chief Justice White:
Indisputably under our constitutional system the right to try offenses against the
criminal laws and upon conviction to impose the punishment provided by law is
judicial, and it is equally to be conceded that, in exerting the powers vested in them
on such subject, courts inherently possess ample right to exercise reasonable, that
is, judicial, discretion to enable them to wisely exert their authority. But these
concessions afford no ground for the contention as to power here made, since it
must rest upon the proposition that the power to enforce begets inherently a
discretion to permanently refuse to do so. And the effect of the proposition urged
upon the distribution of powers made by the Constitution will become apparent
when it is observed that indisputable also is it that the authority to define and fix
the punishment for crime is legislative and includes the right in advance to bring
within judicial discretion, for the purpose of executing the statute, elements of
consideration which would be otherwise beyond the scope of judicial authority,
and that the right to relieve from the punishment, fixed by law and ascertained
according to the methods by it provided belongs to the executive department.
Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs.
Judge of First Instance of Cavite (29 Phil., 265), decided by this court in 1915, also reached
the conclusion that the power to suspend the execution of sentences pronounced in criminal
cases is not inherent in the judicial function. "All are agreed", he said, "that in the absence of
statutory authority, it does not lie within the power of the courts to grant such suspensions."
(at p. 278.) Both petitioner and respondents are correct, therefore, when they argue that a
Court of First Instance sitting in probation proceedings is a court of limited jurisdiction. Its
jurisdiction in such proceedings is conferred exclusively by Act No. 4221 of the Philippine
Legislature.
It is, of course, true that the constitutionality of a statute will not be considered on
application for prohibition where the question has not been properly brought to the
attention of the court by objection of some kind (Hill vs. Tarver [1901], 130 Ala., 592; 30 S.,
499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120; 168 S. W., 746). In the case at bar, it is
unquestionable that the constitutional issue has been squarely presented not only before
this court by the petitioners but also before the trial court by the private prosecution. The
respondent, Hon. Jose O Vera, however, acting as judge of the court below, declined to pass
upon the question on the ground that the private prosecutor, not being a party whose rights
are affected by the statute, may not raise said question. The respondent judge cited Cooley
on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760 and 762), and McGlue
vs. Essex County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as authority for the proposition
that a court will not consider any attack made on the constitutionality of a statute by one
who has no interest in defeating it because his rights are not affected by its operation. The
respondent judge further stated that it may not motu proprio take up the constitutional
question and, agreeing with Cooley that "the power to declare a legislative enactment void is
one which the judge, conscious of the fallibility of the human judgment, will shrink from
exercising in any case where he can conscientiously and with due regard to duty and official
oath decline the responsibility" (Constitutional Limitations, 8th ed., Vol. I, p. 332), proceeded
on the assumption that Act No. 4221 is constitutional. While therefore, the court a
quo admits that the constitutional question was raised before it, it refused to consider the
question solely because it was not raised by a proper party. Respondents herein reiterates
this view. The argument is advanced that the private prosecution has no personality to
appear in the hearing of the application for probation of defendant Mariano Cu Unjieng in
criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of
constitutionality was not properly raised in the lower court. Although, as a general rule, only
those who are parties to a suit may question the constitutionality of a statute involved in a
judicial decision, it has been held that since the decree pronounced by a court without
jurisdiction is void, where the jurisdiction of the court depends on the validity of the statute
in question, the issue of the constitutionality will be considered on its being brought to the
attention of the court by persons interested in the effect to be given the statute.(12 C. J., sec.
184, p. 766.) And, even if we were to concede that the issue was not properly raised in the
court below by the proper party, it does not follow that the issue may not be here raised in
an original action of certiorari and prohibitions. It is true that, as a general rule, the question
of constitutionality must be raised at the earliest opportunity, so that if not raised by the
pleadings, ordinarily it may not be raised at the trial, and if not raised in the trial court, it will
not considered on appeal. (12 C. J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del
Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions.
Courts, in the exercise of sounds discretion, may determine the time when a question
affecting the constitutionality of a statute should be presented. (In re Woolsey [1884], 95 N.
Y., 135, 144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is
said that the question may be raised for the first time at any stage of the proceedings, either
in the trial court or on appeal. (12 C. J., p. 786.) Even in civil cases, it has been held that it is
the duty of a court to pass on the constitutional question, though raised for the first time on
appeal, if it appears that a determination of the question is necessary to a decision of the
case. (McCabe's Adm'x vs. Maysville & B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892;
Lohmeyer vs. St. Louis Cordage Co. [1908], 214 Mo., 685; 113 S. W. 1108; Carmody vs. St.
Louis Transit Co., [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a
constitutional question will be considered by an appellate court at any time, where it
involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.)
As to the power of this court to consider the constitutional question raised for the first time
before this court in these proceedings, we turn again and point with emphasis to the case
of Yu Cong Eng vs. Trinidad, supra. And on the hypotheses that the Hongkong & Shanghai
Banking Corporation, represented by the private prosecution, is not the proper party to raise
the constitutional question here a point we do not now have to decide we are of the
opinion that the People of the Philippines, represented by the Solicitor-General and the Fiscal
of the City of Manila, is such a proper party in the present proceedings. The unchallenged
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. It goes without saying that if Act No. 4221 really violates the
constitution, the People of the Philippines, in whose name the present action is brought, has
a substantial interest in having it set aside. Of grater 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. Hence, the well-settled rule that the state can
challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer
([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928],
277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional
in an action instituted in behalf of the Government of the Philippines. In Attorney General vs.
Perkins ([1889], 73 Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of Michigan,
through its Attorney General, instituted quo warranto proceedings to test the right of the
respondents to renew a mining corporation, alleging that the statute under which the
respondents base their right was unconstitutional because it impaired the obligation of
contracts. The capacity of the chief law officer of the state to question the constitutionality of
the statute was though, as a general rule, only those who are parties to a suit may question
the constitutionality of a statute involved in a judicial decision, it has been held that since the
decree pronounced by a court without jurisdiction in void, where the jurisdiction of the court
depends on the validity of the statute in question, the issue of constitutionality will be
considered on its being brought to the attention of the court by persons interested in the
effect to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede that
the issue was not properly raised in the court below by the proper party, it does not follow
that the issue may not be here raised in an original action of certiorari and prohibition. It is
true that, as a general rule, the question of constitutionality must be raised at the earliest
opportunity, so that if not raised by the pleadings, ordinarily it may not be raised a the trial,
and if not raised in the trial court, it will not be considered on appeal. (12 C.J., p. 786. See,
also, Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must
state that the general rule admits of exceptions. Courts, in the exercise of sound discretion,
may determine the time when a question affecting the constitutionality of a statute should
be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.) Thus, in criminal cases, although
there is a very sharp conflict of authorities, it is said that the question may be raised for the
first time at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p.
786.) Even in civil cases, it has been held that it is the duty of a court to pass on the
constitutional question, though raised for first time on appeal, if it appears that a
determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs.
Maysville & B. S. R. Co. [1910], 136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis, Cordage
Co. [1908], 214 Mo. 685; 113 S. W., 1108; Carmody vs. St. Louis Transit Co. [1905], 188 Mo.,
572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by
an appellate court at any time, where it involves the jurisdiction of the court below (State vs.
Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the
constitutional question raised for the first time before this court in these proceedings, we
turn again and point with emphasis to the case of Yu Cong Eng. vs. Trinidad, supra. And on
the hypothesis that the Hongkong & Shanghai Banking Corporation, represented by the
private prosecution, is not the proper party to raise the constitutional question here a Kan., 518 [57 Pac., 118])." (State vs. Lawrence, 80 Kan., 707;
point we do not now have to decide we are of the opinion that the People of the 103 Pac., 839.)
Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such a
proper party in the present proceedings. The unchallenged rule is that the person who Where the constitutionality of a statute is in doubt the state's law officer, its
impugns the validity of a statute must have a personal and substantial interest in the case Attorney-General, or county attorney, may exercise his bet judgment as to what
such that he has sustained, or will sustain, direct injury as a result of its enforcement. It goes sort of action he will bring to have the matter determined, either by quo warranto
without saying that if Act No. 4221 really violates the Constitution, the People of the to challenge its validity (State vs. Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A.,
Philippines, in whose name the present action is brought, has a substantial interest in having 662), by mandamus to compel obedience to its terms (State vs. Dolley, 82 Kan.,
it set aside. Of greater import than the damage caused by the illegal expenditure of public 533; 108 Pac., 846), or by injunction to restrain proceedings under its questionable
funds is the mortal wound inflicted upon the fundamental law by the enforcement of an provisions (State ex rel. vs. City of Neodesha, 3 Kan. App., 319; 45 Pac., 122).
invalid statute. Hence, the well-settled rule that the state can challenge the validity of its own
laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in
Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917],
Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845),
197 S. W., 1006; State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181
this court declared an act of the legislature unconstitutional in an action instituted in behalf
La., 597; 160 S., 91; State vs. Board of County Comr's [1934], 39 Pac. [2d], 286; First Const.
of the Government of the Philippines. In Attorney General vs. Perkings([1889], 73 Mich., 303,
Co. of Brooklyn vs. State [1917], 211 N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187 Ind.,
311, 312; 41 N.W., 426, 428, 429), the State of Michigan, through its Attorney General,
339; 119 N.E., 417; State vs. Watkins [1933], 176 La., 837; 147 S., 8, 10, 11). In the case last
instituted quo warranto proceedings to test the right of the respondents to renew a mining
cited, the Supreme Court of Luisiana said:
corporation, alleging that the statute under which the respondents base their right was
unconstitutional because it impaired the obligation of contracts. The capacity of the chief law
officer of the state to question the constitutionality of the statute was itself questioned. Said It is contended by counsel for Herbert Watkins that a district attorney, being
the Supreme Court of Michigan, through Champlin, J.: charged with the duty of enforcing the laws, has no right to plead that a law is
unconstitutional. In support of the argument three decisions are cited, viz.: State ex
rel. Hall, District Attorney, vs. Judge of Tenth Judicial District (33 La. Ann., 1222);
. . . The idea seems to be that the people are estopped from questioning the
State ex rel. Nicholls, Governor vs. Shakespeare, Mayor of New Orleans (41 Ann.,
validity of a law enacted by their representatives; that to an accusation by the
156; 6 So., 592); and State ex rel., Banking Co., etc. vs. Heard, Auditor (47 La. Ann.,
people of Michigan of usurpation their government, a statute enacted by the
1679; 18 So., 746; 47 L. R. A., 512). These decisions do not forbid a district attorney
people of Michigan is an adequate answer. The last proposition is true, but, if the
to plead that a statute is unconstitutional if he finds if in conflict with one which it
statute relied on in justification is unconstitutional, it is statute only in form, and
is his duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the
lacks the force of law, and is of no more saving effect to justify action under it than
ruling was the judge should not, merely because he believed a certain statute to be
if it had never been enacted. The constitution is the supreme law, and to its
unconstitutional forbid the district attorney to file a bill of information charging a
behests the courts, the legislature, and the people must bow . . . The legislature
person with a violation of the statute. In other words, a judge should not judicially
and the respondents are not the only parties in interest upon such constitutional
declare a statute unconstitutional until the question of constitutionality is tendered
questions. As was remarked by Mr. Justice Story, in speaking of an acquiescence by
for decision, and unless it must be decided in order to determine the right of a
a party affected by an unconstitutional act of the legislature: "The people have a
party litigant. State ex rel. Nicholls, Governor, etc., is authority for the proposition
deep and vested interest in maintaining all the constitutional limitations upon the
merely that an officer on whom a statute imposes the duty of enforcing its
exercise of legislative powers." (Allen vs. Mckeen, 1 Sum., 314.)
provisions cannot avoid the duty upon the ground that he considers the statute
unconstitutional, and hence in enforcing the statute he is immune from
In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was responsibility if the statute be unconstitutional. State ex rel. Banking Co., etc., is
brought by the Attorney-General of Kansas to test the constitutionality of a statute of the authority for the proposition merely that executive officers, e.g., the state auditor
state. In disposing of the question whether or not the state may bring the action, the and state treasurer, should not decline to perform ministerial duties imposed upon
Supreme Court of Kansas said: them by a statute, on the ground that they believe the statute is unconstitutional.

. . . the state is a proper party indeed, the proper party to bring this action.
The state is always interested where the integrity of its Constitution or statutes is
involved.
"It has an interest in seeing that the will of the Legislature is not
disregarded, and need not, as an individual plaintiff must, show
grounds of fearing more specific injury. (State vs. Kansas City 60
It is the duty of a district attorney to enforce the criminal laws of the state, and,
above all, to support the Constitution of the state. If, in the performance of his duty
he finds two statutes in conflict with each other, or one which repeals another, and
if, in his judgment, one of the two statutes is unconstitutional, it is his duty to
enforce the other; and, in order to do so, he is compelled to submit to the court, by
way of a plea, that one of the statutes is unconstitutional. If it were not so, the
 power of the Legislature would be free from constitutional limitations in the
enactment of criminal laws.
The respondents do not seem to doubt seriously the correctness of the general proposition
that the state may impugn the validity of its laws. They have not cited any authority running
clearly in the opposite direction. In fact, they appear to have proceeded on the assumption
that the rule as stated is sound but that it has no application in the present case, nor may it
be invoked by the City Fiscal in behalf of the People of the Philippines, one of the petitioners
herein, the principal reasons being that the validity before this court, that the City Fiscal is
estopped from attacking the validity of the Act and, not authorized challenge the validity of
the Act in its application outside said city. (Additional memorandum of respondents, October
23, 1937, pp. 8,. 10, 17 and 23.)
The mere fact that the Probation Act has been repeatedly relied upon the past and all that
time has not been attacked as unconstitutional by the Fiscal of Manila but, on the contrary,
has been impliedly regarded by him as constitutional, is no reason for considering the People
of the Philippines estopped from nor assailing its validity. For courts will pass upon a
constitutional questions only when presented before it in bona fide cases for determination,
and the fact that the question has not been raised before is not a valid reason for refusing to
allow it to be raised later. The fiscal and all others are justified in relying upon the statute and
treating it as valid until it is held void by the courts in proper cases.
It remains to consider whether the determination of the constitutionality of Act No. 4221 is
necessary to the resolution of the instant case. For, ". . . while the court will meet the
question with firmness, where its decision is indispensable, it is the part of wisdom, and just
respect for the legislature, renders it proper, to waive it, if the case in which it arises, can be
decided on other points." (Ex parte Randolph [1833], 20 F. Cas. No. 11, 558; 2 Brock., 447.
Vide, also Hoover vs. wood [1857], 9 Ind., 286, 287.) It has been held that the determination
of a constitutional question is necessary whenever it is essential to the decision of the case
(12 C. J., p. 782, citing Long Sault Dev. Co. vs. Kennedy [1913], 158 App. Div., 398; 143 N. Y.
Supp., 454 [aff. 212 N.Y., 1: 105 N. E., 849; Ann. Cas. 1915D, 56; and app dism 242 U.S., 272];
Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan vs. Doddridge, 22 Gratt [63 Va.], 458;
Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129 N. W., 605), as where the right
of a party is founded solely on a statute the validity of which is attacked. (12 C.J., p. 782,
citing Central Glass Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972; Cheney vs. Beverly,
188 Mass., 81; 74 N.E., 306). There is no doubt that the respondent Cu Unjieng draws his
privilege to probation solely from Act No. 4221 now being assailed.
Apart from the foregoing considerations, that court will also take cognizance of the fact that
the Probation Act is a new addition to our statute books and its validity has never before
been passed upon by the courts; that may persons accused and convicted of crime in the City
of Manila have applied for probation; that some of them are already on probation; that more
people will likely take advantage of the Probation Act in the future; and that the respondent
Mariano Cu Unjieng has been at large for a period of about four years since his first
conviction. All wait the decision of this court on the constitutional question. Considering,
therefore, the importance which the instant case has assumed and to prevent multiplicity of
suits, strong reasons of public policy demand that the constitutionality of Act No. 4221 be
now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U.S., 500; 70 Law.
ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207 N.Y., 533; 101 N.E., 442,
444; Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327; 133 N.W., 209, 211; 37
L.R.A. [N.S.] 489; Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil., 304.) In Yu Cong Eng
vs. Trinidad, supra, an analogous situation confronted us. We said: "Inasmuch as the property
and personal rights of nearly twelve thousand merchants are affected by these proceedings,
and inasmuch as Act No. 2972 is a new law not yet interpreted by the courts, in the interest
of the public welfare and for the advancement of public policy, we have determined to
overrule the defense of want of jurisdiction in order that we may decide the main issue. We
have here an extraordinary situation which calls for a relaxation of the general rule." Our
ruling on this point was sustained by the Supreme Court of the United States. A more binding
authority in support of the view we have taken can not be found.
We have reached the conclusion that the question of the constitutionality of Act No. 4221
has been properly raised. Now for the main inquiry: Is the Act unconstitutional?
Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the
Constitution. This court, by clear implication from the provisions of section 2, subsection 1,
and section 10, of Article VIII of the Constitution, may declare an act of the national
legislature invalid because in conflict with the fundamental lay. It will not shirk from its sworn
duty to enforce the Constitution. And, in clear cases, it will not hesitate to give effect to the
supreme law by setting aside a statute in conflict therewith. This is of the essence of judicial
duty.
This court is not unmindful of the fundamental criteria in cases of this nature that all
reasonable doubts should be resolved in favor of the constitutionality of a statute. An act of
the legislature approved by the executive, is presumed to be within constitutional
limitations. The responsibility of upholding the Constitution rests not on the courts alone but
on the legislature as well. "The question of the validity of every statute is first determined by
the legislative department of the government itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10;
Case vs. Board of Health and Heiser [1913], 24 Phil., 250, 276; U.S. vs. Joson [1913], 26 Phil.,
1.) And a statute finally comes before the courts sustained by the sanction of the executive.
The members of the Legislature and the Chief Executive have taken an oath to support the
Constitution and it must be presumed that they have been true to this oath and that in
enacting and sanctioning a particular law they did not intend to violate the Constitution. The
courts cannot but cautiously exercise its power to overturn the solemn declarations of two of
the three grand departments of the governments. (6 R.C.L., p. 101.) Then, there is that
peculiar political philosophy which bids the judiciary to reflect the wisdom of the people as
expressed through an elective Legislature and an elective Chief Executive. It follows,
therefore, that the courts will not set aside a law as violative of the Constitution except in a
clear case. This is a proposition too plain to require a citation of authorities.
One of the counsel for respondents, in the course of his impassioned argument, called
attention to the fact that the President of the Philippines had already expressed his opinion
against the constitutionality of the Probation Act, adverting that as to the Executive the
resolution of this question was a foregone conclusion. Counsel, however, reiterated his
confidence in the integrity and independence of this court. We take notice of the fact that
the President in his message dated September 1, 1937, recommended to the National
Assembly the immediate repeal of the Probation Act (No. 4221); that this message resulted
in the approval of Bill No. 2417 of the Nationality Assembly repealing the probation Act,
subject to certain conditions therein mentioned; but that said bill was vetoed by the
President on September 13, 1937, much against his wish, "to have stricken out from the
statute books of the Commonwealth a law . . . unfair and very likely unconstitutional." It is
sufficient to observe in this connection that, in vetoing the bill referred to, the President
exercised his constitutional prerogative. He may express the reasons which he may deem
proper for taking such a step, but his reasons are not binding upon us in the determination of
actual controversies submitted for our determination. Whether or not the Executive should
express or in any manner insinuate his opinion on a matter encompassed within his broad
constitutional power of veto but which happens to be at the same time pending
determination in this court is a question of propriety for him exclusively to decide or
determine. Whatever opinion is expressed by him under these circumstances, however,
cannot sway our judgment on way or another and prevent us from taking what in our
opinion is the proper course of action to take in a given case. It if is ever necessary for us to
make any vehement affirmance during this formative period of our political history, it is that
we are independent of the Executive no less than of the Legislative department of our
government independent in the performance of our functions, undeterred by any
consideration, free from politics, indifferent to popularity, and unafraid of criticism in the
accomplishment of our sworn duty as we see it and as we understand it.
The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said
Act encroaches upon the pardoning power of the Executive; (2) that its constitutes an undue
delegation of legislative power and (3) that it denies the equal protection of the laws.
1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law,
in force at the time of the approval of Act No. 4221, otherwise known as the Probation Act,
vests in the Governor-General of the Philippines "the exclusive power to grant pardons and
reprieves and remit fines and forfeitures". This power is now vested in the President of the
Philippines. (Art. VII, sec. 11, subsec. 6.) The provisions of the Jones Law and the Constitution
differ in some respects. The adjective "exclusive" found in the Jones Law has been omitted
from the Constitution. Under the Jones Law, as at common law, pardon could be granted any
time after the commission of the offense, either before or after conviction (Vide Constitution
of the United States, Art. II, sec. 2; In re Lontok [1922], 43 Phil., 293). The Governor-General
of the Philippines was thus empowered, like the President of the United States, to pardon a
person before the facts of the case were fully brought to light. The framers of our
Constitution thought this undesirable and, following most of the state constitutions,
provided that the pardoning power can only be exercised "after conviction". So, too, under
the new Constitution, the pardoning power does not extend to "cases of impeachment". This
is also the rule generally followed in the United States (Vide Constitution of the United
States, Art. II, sec. 2). The rule in England is different. There, a royal pardon can not be
pleaded in bar of an impeachment; "but," says Blackstone, "after the impeachment has been
solemnly heard and determined, it is not understood that the king's royal grace is further
restrained or abridged." (Vide, Ex parte Wells [1856], 18 How., 307; 15 Law. ed., 421; Com.
vs. Lockwood [1872], 109 Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio St.,
457; 23 am. Rep., 762.) The reason for the distinction is obvious. In England, Judgment on
impeachment is not confined to mere "removal from office and disqualification to hold and
enjoy any office of honor, trust, or profit under the Government" (Art. IX, sec. 4, Constitution
of the Philippines) but extends to the whole punishment attached by law to the offense
committed. The House of Lords, on a conviction may, by its sentence, inflict capital
punishment, perpetual banishment, perpetual banishment, fine or imprisonment, depending
upon the gravity of the offense committed, together with removal from office and incapacity
to hold office. (Com. vs. Lockwood, supra.) Our Constitution also makes specific mention of
"commutation" and of the power of the executive to impose, in the pardons he may grant,
such conditions, restrictions and limitations as he may deem proper. Amnesty may be
granted by the President under the Constitution but only with the concurrence of the
National Assembly. We need not dwell at length on the significance of these fundamental
changes. It is sufficient for our purposes to state that the pardoning power has remained
essentially the same. The question is: Has the pardoning power of the Chief Executive under
the Jones Law been impaired by the Probation Act?
As already stated, the Jones Law vests the pardoning power exclusively in the Chief
Executive. The exercise of the power may not, therefore, be vested in anyone else.
". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor
fettered by any legislative restrictions, nor can like power be given by the legislature to any
other officer or authority. The coordinate departments of government have nothing to do
with the pardoning power, since no person properly belonging to one of the departments
can exercise any powers appertaining to either of the others except in cases expressly
provided for by the constitution." (20 R.C.L., pp., , and cases cited.) " . . . where the pardoning
power is conferred on the executive without express or implied limitations, the grant is
exclusive, and the legislature can neither exercise such power itself nor delegate it
elsewhere, nor interfere with or control the proper exercise thereof, . . ." (12 C.J., pp. 838,
839, and cases cited.) If Act No. 4221, then, confers any pardoning power upon the courts it
is for that reason unconstitutional and void. But does it?
In the famous Killitts decision involving an embezzlement case, the Supreme Court of the
United States ruled in 1916 that an order indefinitely suspending sentenced was void. (Ex
parte United States [1916], 242 U.S., 27; 61 Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct.
Rep., 72; Ann. Cas. 1917B, 355.) Chief Justice White, after an exhaustive review of the
authorities, expressed the opinion of the court that under the common law the power of the
court was limited to temporary suspension and that the right to suspend sentenced
absolutely and permanently was vested in the executive branch of the government and not
in the judiciary. But, the right of Congress to establish probation by statute was conceded.
Said the court through its Chief Justice: ". . . and so far as the future is concerned, that is, the
causing of the imposition of penalties as fixed to be subject, by probation legislation or such
other means as the legislative mind may devise, to such judicial discretion as may be
adequate to enable courts to meet by the exercise of an enlarged but wise discretion the
infinite variations which may be presented to them for judgment, recourse must be had
Congress whose legislative power on the subject is in the very nature of things adequately
complete." (Quoted in Riggs vs. United States [1926], 14 F. [2d], 5, 6.) This decision led the
National Probation Association and others to agitate for the enactment by Congress of a
federal probation law. Such action was finally taken on March 4, 1925 (chap. 521, 43 Stat. L.
159, U.S.C. title 18, sec. 724). This was followed by an appropriation to defray the salaries
and expenses of a certain number of probation officers chosen by civil service. (Johnson,
Probation for Juveniles and Adults, p. 14.)
In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309),
the Supreme Court of the United States, through Chief Justice Taft, held that when a person
sentenced to imprisonment by a district court has begun to serve his sentence, that court has
no power under the Probation Act of March 4, 1925 to grant him probation even though the
term at which sentence was imposed had not yet expired. In this case of Murray, the
constitutionality of the probation Act was not considered but was assumed. The court traced
the history of the Act and quoted from the report of the Committee on the Judiciary of the
United States House of Representatives (Report No. 1377, 68th Congress, 2 Session) the
following statement:
Prior to the so-called Killitts case, rendered in December, 1916, the district courts
exercised a form of probation either, by suspending sentence or by placing the
defendants under state probation officers or volunteers. In this case, however (Ex
parte United States, 242 U.S., 27; 61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup. Ct.
Rep., 72 Ann. Cas. 1917B, 355), the Supreme Court denied the right of the district
courts to suspend sentenced. In the same opinion the court pointed out the
necessity for action by Congress if the courts were to exercise probation powers in
the future . . .
Since this decision was rendered, two attempts have been made to enact probation
legislation. In 1917, a bill was favorably reported by the Judiciary Committee and
passed the House. In 1920, the judiciary Committee again favorably reported a
probation bill to the House, but it was never reached for definite action.
If this bill is enacted into law, it will bring the policy of the Federal government with
reference to its treatment of those convicted of violations of its criminal laws in
harmony with that of the states of the Union. At the present time every state has a
probation law, and in all but twelve states the law applies both to adult and
juvenile offenders. (see, also, Johnson, Probation for Juveniles and Adults [1928],
Chap. I.)
The constitutionality of the federal probation law has been sustained by inferior federal
courts. In Riggs vs. United States supra, the Circuit Court of Appeals of the Fourth Circuit said:
Since the passage of the Probation Act of March 4, 1925, the questions under
consideration have been reviewed by the Circuit Court of Appeals of the Ninth
Circuit (7 F. [2d], 590), and the constitutionality of the act fully sustained, and the
same held in no manner to encroach upon the pardoning power of the President.
This case will be found to contain an able and comprehensive review of the law
applicable here. It arose under the act we have to consider, and to it and the
authorities cited therein special reference is made (Nix vs. James, 7 F. [2d], 590,
594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit
(Kriebel vs. U.S., 10 F. [2d], 762), likewise construing the Probation Act.
We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal
language, pointed to Congress as possessing the requisite power to enact probation laws,
that a federal probation law as actually enacted in 1925, and that the constitutionality of the
Act has been assumed by the Supreme Court of the United States in 1928 and consistently
sustained by the inferior federal courts in a number of earlier cases.
We are fully convinced that the Philippine Legislature, like the Congress of the United States,
may legally enact a probation law under its broad power to fix the punishment of any and all
penal offenses. This conclusion is supported by other authorities. In Ex parte Bates ([1915],
20 N. M., 542; L.R.A. 1916A, 1285; 151 Pac., 698, the court said: "It is clearly within the
province of the Legislature to denominate and define all classes of crime, and to prescribe for
each a minimum and maximum punishment." And in State vs. Abbott ([1910], 87 S.C., 466; 33
L.R.A. [N. S.], 112; 70 S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The legislative power to
set punishment for crime is very broad, and in the exercise of this power the general
assembly may confer on trial judges, if it sees fit, the largest discretion as to the sentence to
be imposed, as to the beginning and end of the punishment and whether it should be certain
or indeterminate or conditional." (Quoted in State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69.)
Indeed, the Philippine Legislature has defined all crimes and fixed the penalties for their
violation. Invariably, the legislature has demonstrated the desire to vest in the courts
particularly the trial courts large discretion in imposing the penalties which the law
prescribes in particular cases. It is believed that justice can best be served by vesting this
power in the courts, they being in a position to best determine the penalties which an
individual convict, peculiarly circumstanced, should suffer. Thus, while courts are not allowed
to refrain from imposing a sentence merely because, taking into consideration the degree of
malice and the injury caused by the offense, the penalty provided by law is clearly excessive,
the courts being allowed in such case to submit to the Chief Executive, through the
Department of Justice, such statement as it may deem proper (see art. 5, Revised Penal
Code), in cases where both mitigating and aggravating circumstances are attendant in the
commission of a crime and the law provides for a penalty composed of two indivisible
penalties, the courts may allow such circumstances to offset one another in consideration of
their number and importance, and to apply the penalty according to the result of such
compensation. (Art. 63, rule 4, Revised Penal Code; U.S. vs. Reguera and Asuategui [1921], 41
Phil., 506.) Again, article 64, paragraph 7, of the Revised Penal Code empowers the courts to
determine, within the limits of each periods, in case the penalty prescribed by law contains
three periods, the extent of the evil produced by the crime. In the imposition of fines, the
courts are allowed to fix any amount within the limits established by law, considering not
only the mitigating and aggravating circumstances, but more particularly the wealth or
means of the culprit. (Art. 66, Revised Penal Code.) Article 68, paragraph 1, of the same Code
provides that "a discretionary penalty shall be imposed" upon a person under fifteen but
over nine years of age, who has not acted without discernment, but always lower by two
degrees at least than that prescribed by law for the crime which he has committed. Article 69
of the same Code provides that in case of "incomplete self-defense", i.e., when the crime
committed is not wholly excusable by reason of the lack of some of the conditions required
to justify the same or to exempt from criminal liability in the several cases mentioned in
article 11 and 12 of the Code, "the courts shall impose the penalty in the period which may
be deemed proper, in view of the number and nature of the conditions of exemption present
or lacking." And, in case the commission of what are known as "impossible" crimes, "the
court, having in mind the social danger and the degree of criminality shown by the offender,"
shall impose upon him either arresto mayor or a fine ranging from 200 to 500 pesos. (Art. 59,
Revised Penal Code.)
Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is
deducted form the entire term of imprisonment, except in certain cases expressly mentioned
(art. 29); the death penalty is not imposed when the guilty person is more than seventy years
of age, or where upon appeal or revision of the case by the Supreme Court, all the members
thereof are not unanimous in their voting as to the propriety of the imposition of the death
penalty (art. 47, see also, sec. 133, Revised Administrative Code, as amended by
Commonwealth Act No. 3); the death sentence is not to be inflicted upon a woman within
the three years next following the date of the sentence or while she is pregnant, or upon any
person over seventy years of age (art. 83); and when a convict shall become insane or an
imbecile after final sentence has been pronounced, or while he is serving his sentenced, the
execution of said sentence shall be suspended with regard to the personal penalty during the
period of such insanity or imbecility (art. 79).
But the desire of the legislature to relax what might result in the undue harshness of the
penal laws is more clearly demonstrated in various other enactments, including the
probation Act. There is the Indeterminate Sentence Law enacted in 1933 as Act No. 4103 and
subsequently amended by Act No. 4225, establishing a system of parole (secs. 5 to 100 and
granting the courts large discretion in imposing the penalties of the law. Section 1 of the law
as amended provides; "hereafter, in imposing a prison sentence for an offenses punished by
the Revised Penal Code, or its amendments, the court shall sentence the accused to an
indeterminate sentence the maximum term of which shall be that which, in view of the
attending circumstances, could be properly imposed under the rules of the said Code, and to
a minimum which shall be within the range of the penalty next lower to that prescribed by
the Code for the offense; and if the offense is punished by any other law, the court shall
sentence the accused to an indeterminate sentence, the maximum term of which shall not
exceed the maximum fixed by said law and the minimum shall not be less than the minimum
term prescribed by the same." Certain classes of convicts are, by section 2 of the law,
excluded from the operation thereof. The Legislature has also enacted the Juvenile
Delinquency Law (Act No. 3203) which was subsequently amended by Act No. 3559. Section
7 of the original Act and section 1 of the amendatory Act have become article 80 of the
Revised Penal Code, amended by Act No. 4117 of the Philippine Legislature and recently
reamended by Commonwealth Act No. 99 of the National Assembly. In this Act is again
manifested the intention of the legislature to "humanize" the penal laws. It allows, in effect,
the modification in particular cases of the penalties prescribed by law by permitting the
suspension of the execution of the judgment in the discretion of the trial court, after due
hearing and after investigation of the particular circumstances of the offenses, the criminal
record, if any, of the convict, and his social history. The Legislature has in reality decreed that
in certain cases no punishment at all shall be suffered by the convict as long as the conditions
of probation are faithfully observed. It this be so, then, it cannot be said that the Probation
Act comes in conflict with the power of the Chief Executive to grant pardons and reprieves,
because, to use the language of the Supreme Court of New Mexico, "the element of
punishment or the penalty for the commission of a wrong, while to be declared by the courts
as a judicial function under and within the limits of law as announced by legislative acts,
concerns solely the procedure and conduct of criminal causes, with which the executive can
have nothing to do." (Ex parteBates, supra.) In Williams vs. State ([1926], 162 Ga., 327; 133
S.E., 843), the court upheld the constitutionality of the Georgia probation statute against the
contention that it attempted to delegate to the courts the pardoning power lodged by the
constitution in the governor alone is vested with the power to pardon after final sentence
has been imposed by the courts, the power of the courts to imposed any penalty which may
be from time to time prescribed by law and in such manner as may be defined cannot be
questioned."
We realize, of course, the conflict which the American cases disclose. Some cases hold it
unlawful for the legislature to vest in the courts the power to suspend the operation of a
sentenced, by probation or otherwise, as to do so would encroach upon the pardoning
power of the executive. (In re Webb [1895], 89 Wis., 354; 27 L.R.A., 356; 46 Am. St. Rep., 846;
62 N.W., 177; 9 Am. Crim., Rep., 702; State ex rel. Summerfield vs. Moran [1919], 43 Nev.,
150; 182 Pac., 927; Ex parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19
L.R.A. [N.S.], 1041; 132 Am. St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903], 202 Ill, 287;
67 N.E., 23; 63 L.R.A., 82; 95 Am. St. Rep., 230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep.,
615; 41 L. R. A. [N. S.], 1144; 150 S. W., 162; Ex parte Shelor [1910], 33 Nev., 361;111 Pac.,
291; Neal vs. State [1898], 104 Ga., 509; 42 L. R. A., 190; 69 Am. St. Rep., 175; 30 S. E. 858;
State ex rel. Payne vs. Anderson [1921], 43 S. D., 630; 181 N. W., 839; People vs. Brown, 54
Mich., 15; 19 N. W., 571; States vs. Dalton [1903], 109 Tenn., 544; 72 S. W., 456.)
Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer
vs. Snook [1926; D. C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d],
5; Murphy vs. States [1926], 171 Ark., 620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini
[1912], 18 Cal. App., 166; 122 Pac., 831; Re Nachnaber [1928], 89 Cal. App., 530; 265 Pac.,
392; Ex parte De Voe [1931], 114 Cal. App., 730; 300 Pac., 874; People vs. Patrick [1897], 118
Cal., 332; 50 Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168 Pac., 1171; Belden vs.
Hugo [1914], 88 Conn., 50; 91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133
S. E., 843; People vs. Heise [1913], 257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135
Ind., 534; 35 N. E., 179; 23 L. R. A., 859; St. Hillarie, Petitioner [1906], 101 Me., 522; 64 Atl.,
882; People vs. Stickle [1909], 156 Mich., 557; 121 N. W., 497; State vs. Fjolander [1914], 125
Minn., 529; State ex rel. Bottomnly vs. District Court [1925], 73 Mont., 541; 237 Pac., 525;
State vs. Everitt [1913], 164 N. C., 399; 79 S. E., 274; 47 L. R. A. [N. S.], 848; State ex rel.
Buckley vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State vs. Osborne [1911], 79 N. J. Eq.,
430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M., 542; L. R. A., 1916 A. 1285; 151 Pac., 698;
People vs. ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; 23 L. R. A., 856; 36 N. E.,
386; 15 Am. Crim. Rep., 675; People ex rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106 N. Y.
Supp., 928; People vs. Goodrich [1914], 149 N. Y. Supp., 406; Moore vs. Thorn [1935], 245
App. Div., 180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38; L. R. A., 1915C, 1169; 149 N.
W., 568; Ex parte Eaton [1925], 29 Okla., Crim. Rep., 275; 233 P., 781; State vs. Teal [1918],
108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112; 70 S. E.,
6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods vs. State [1814], 130
Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs.
State [1913],70 Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim.
Rep., 548; 165 S. W., 573; King vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare
vs. State [1932], 122 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex.
Crim. Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt., 197; 136 A., 24; Richardson vs.
Com. [1921], 131 Va., 802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash., 287; 118 Pac.,
42; State ex rel. Tingstand vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393;
396.) We elect to follow this long catena of authorities holding that the courts may be legally
authorized by the legislature to suspend sentence by the establishment of a system of
probation however characterized. State ex rel. Tingstand vs. Starwich ([1922], 119 Wash.,
561; 206 Pac., 29; 26 A. L. R., 393), deserved particular mention. In that case, a statute
enacted in 1921 which provided for the suspension of the execution of a sentence until
otherwise ordered by the court, and required that the convicted person be placed under the
charge of a parole or peace officer during the term of such suspension, on such terms as the
court may determine, was held constitutional and as not giving the court a power in violation
of the constitutional provision vesting the pardoning power in the chief executive of the
state. (Vide, also, Re Giannini [1912], 18 Cal App., 166; 122 Pac., 831.)
Probation and pardon are not coterminous; nor are they the same. They are actually district
and different from each other, both in origin and in nature. In People ex rel. Forsyth vs. Court
of Sessions ([1894], 141 N. Y., 288, 294; 36 N. E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep.,
675), the Court of Appeals of New York said:
. . . The power to suspend sentence and the power to grant reprieves and pardons,
as understood when the constitution was adopted, are totally distinct and different
in their nature. The former was always a part of the judicial power; the latter was
always a part of the executive power. The suspension of the sentence simply
postpones the judgment of the court temporarily or indefinitely, but the conviction
and liability following it, and the civil disabilities, remain and become operative
when judgment is rendered. A pardon reaches both the punishment prescribed for
the offense and the guilt of the offender. It releases the punishment, and blots out
of existence the guilt, so that in the eye of the law, the offender is as innocent as if
he had never committed the offense. It removes the penalties and disabilities, and
restores him to all his civil rights. It makes him, as it were, a new man, and gives
him a new credit and capacity. (Ex parte Garland, 71 U. S., 4 Wall., 333; 18 Law. ed.,
366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U. S.,
149; 24 Law. ed., 442.)
The framers of the federal and the state constitutions were perfectly familiar with
the principles governing the power to grant pardons, and it was conferred by these
instruments upon the executive with full knowledge of the law upon the subject,
and the words of the constitution were used to express the authority formerly
exercised by the English crown, or by its representatives in the colonies. (Ex
parte Wells, 59 U. S., 18 How., 307; 15 Law. ed., 421.) As this power was
understood, it did not comprehend any part of the judicial functions to suspend
sentence, and it was never intended that the authority to grant reprieves and
pardons should abrogate, or in any degree restrict, the exercise of that power in
regard to its own judgments, that criminal courts has so long maintained. The two
powers, so distinct and different in their nature and character, were still left
separate and distinct, the one to be exercised by the executive, and the other by
the judicial department. We therefore conclude that a statute which, in terms,
authorizes courts of criminal jurisdiction to suspend sentence in certain cases after
conviction, a power inherent in such courts at common law, which was
understood when the constitution was adopted to be an ordinary judicial function,
and which, ever since its adoption, has been exercised of legislative power under
the constitution. It does not encroach, in any just sense, upon the powers of the
executive, as they have been understood and practiced from the earliest times.
(Quoted with approval in Directors of Prisons vs. Judge of First Instance of Cavite
[1915], 29 Phil., 265, Carson, J., concurring, at pp. 294, 295.)
In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally
and completely exonerated. He is not exempt from the entire punishment which the law
inflicts. Under the Probation Act, the probationer's case is not terminated by the mere fact
that he is placed on probation. Section 4 of the Act provides that the probation may be
definitely terminated and the probationer finally discharged from supervision only after the
period of probation shall have been terminated and the probation officer shall have
submitted a report, and the court shall have found that the probationer has complied with
the conditions of probation. The probationer, then, during the period of probation, remains
in legal custody subject to the control of the probation officer and of the court; and, he
may be rearrested upon the non-fulfillment of the conditions of probation and, when
rearrested, may be committed to prison to serve the sentence originally imposed upon him.
(Secs. 2, 3, 5 and 6, Act No. 4221.)
The probation described in the act is not pardon. It is not complete liberty, and may
be far from it. It is really a new mode of punishment, to be applied by the judge in a
proper case, in substitution of the imprisonment and find prescribed by the
criminal laws. For this reason its application is as purely a judicial act as any other
sentence carrying out the law deemed applicable to the offense. The executive act
of pardon, on the contrary, is against the criminal law, which binds and directs the
judges, or rather is outside of and above it. There is thus no conflict with the
pardoning power, and no possible unconstitutionality of the Probation Act for this
cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.)
Probation should also be distinguished from reprieve and from commutation of the
sentence. Snodgrass vs. State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S.
W., 162), is relied upon most strongly by the petitioners as authority in support of their
contention that the power to grant pardons and reprieves, having been vested exclusively
upon the Chief Executive by the Jones Law, may not be conferred by the legislature upon the
courts by means of probation law authorizing the indefinite judicial suspension of sentence.
We have examined that case and found that although the Court of Criminal Appeals of Texas
held that the probation statute of the state in terms conferred on the district courts the
power to grant pardons to persons convicted of crime, it also distinguished between
suspensions sentence on the one hand, and reprieve and commutation of sentence on the
other. Said the court, through Harper, J.:
That the power to suspend the sentence does not conflict with the power of the
Governor to grant reprieves is settled by the decisions of the various courts; it
being held that the distinction between a "reprieve" and a suspension of sentence
is that a reprieve postpones the execution of the sentence to a day certain,
whereas a suspension is for an indefinite time. (Carnal vs. People, 1 Parker, Cr. R.,
262; In re Buchanan, 146 N. Y., 264; 40 N. E., 883), and cases cited in 7 Words &
Phrases, pp. 6115, 6116. This law cannot be hold in conflict with the power
confiding in the Governor to grant commutations of punishment, for a
commutations is not but to change the punishment assessed to a less punishment.
In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the
Supreme Court of Montana had under consideration the validity of the adult probation law
of the state enacted in 1913, now found in sections 12078-12086, Revised Codes of 1921.
The court held the law valid as not impinging upon the pardoning power of the executive. In
a unanimous decision penned by Justice Holloway, the court said:
. . . . the term "pardon", "commutation", and "respite" each had a well understood
meaning at the time our Constitution was adopted, and no one of them was
intended to comprehend the suspension of the execution of the judgment as that
phrase is employed in sections 12078-12086. A "pardon" is an act of grace,
proceeding from the power intrusted with the execution of the laws which
exempts the individual on whom it is bestowed from the punishment the law
inflicts for a crime he has committed (United States vs. Wilson, 7 Pet., 150; 8 Law.
ed., 640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a
forgiveness of the offense (Cook vs. Middlesex County, 26 N. J. Law, 326; Ex
parte Powell, 73 Ala., 517; 49 Am. Rep., 71). "Commutation" is a remission of a part
of the punishment; a substitution of a less penalty for the one originally imposed
(Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs. Chamberlain, 107
Mich., 381; 65 N. W., 235). A "reprieve" or "respite" is the withholding of the
sentence for an interval of time (4 Blackstone's Commentaries, 394), a
postponement of execution (Carnal vs. People, 1 Parker, Cr. R. [N. Y.], 272), a
temporary suspension of execution (Butler vs. State, 97 Ind., 373).
Few adjudicated cases are to be found in which the validity of a statute similar to
our section 12078 has been determined; but the same objections have been urged
against parole statutes which vest the power to parole in persons other than those
to whom the power of pardon is granted, and these statutes have been upheld
quite uniformly, as a reference to the numerous cases cited in the notes to Woods
vs. State (130 Tenn., 100; 169 S. W.,558, reported in L. R. A., 1915F, 531), will
disclose. (See, also, 20 R. C. L., 524.)
We conclude that the Probation Act does not conflict with the pardoning power of the
Executive. The pardoning power, in respect to those serving their probationary sentences,
remains as full and complete as if the Probation Law had never been enacted. The President
may yet pardon the probationer and thus place it beyond the power of the court to order his
rearrest and imprisonment. (Riggs vs. United States [1926],
14 F. [2d], 5, 7.)
2. But while the Probation Law does not encroach upon the pardoning power of the executive
and is not for that reason void, does section 11 thereof constitute, as contended, an undue
delegation of legislative power?
Under the constitutional system, the powers of government are distributed among three
coordinate and substantially independent organs: the legislative, the executive and the
judicial. Each of these departments of the government derives its authority from the
Constitution which, in turn, is the highest expression of popular will. Each has exclusive
cognizance of the matters within its jurisdiction, and is supreme within its own sphere.
The power to make laws the legislative power is vested in a bicameral Legislature by
the Jones Law (sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI,
sec. 1, Constitution of the Philippines). The Philippine Legislature or the National Assembly
may not escape its duties and responsibilities by delegating that power to any other body or
authority. Any attempt to abdicate the power is unconstitutional and void, on the principle
that potestas delegata non delegare potest. This principle is said to have originated with the
glossators, was introduced into English law through a misreading of Bracton, there developed
as a principle of agency, was established by Lord Coke in the English public law in decisions
forbidding the delegation of judicial power, and found its way into America as an enlightened
principle of free government. It has since become an accepted corollary of the principle of
separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The classic statement of the
rule is that of Locke, namely: "The legislative neither must nor can transfer the power of
making laws to anybody else, or place it anywhere but where the people have." (Locke on
Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted
language: "One of the settled maxims in constitutional law is, that the power conferred upon
the legislature to make laws cannot be delegated by that department to any other body or
authority. Where the sovereign power of the state has located the authority, there it must
remain; and by the constitutional agency alone the laws must be made until the Constitution
itself is charged. The power to whose judgment, wisdom, and patriotism this high prerogative
has been intrusted cannot relieve itself of the responsibilities by choosing other agencies
upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and
patriotism of any other body for those to which alone the people have seen fit to confide this
sovereign trust." (Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with
approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This court posits the doctrine "on the
ethical principle that such a delegated power constitutes not only a right but a duty to be
performed by the delegate by the instrumentality of his own judgment acting immediately
upon the matter of legislation and not through the intervening mind of another. (U. S. vs.
Barrias, supra, at p. 330.)
The rule, however, which forbids the delegation of legislative power is not absolute and
inflexible. It admits of exceptions. An exceptions sanctioned by immemorial practice permits
the central legislative body to delegate legislative powers to local authorities. (Rubi vs.
Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39 Phil., 102;
Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State
vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that
local affairs shall be managed by local authorities, and general affairs by the central
authorities; and hence while the rule is also fundamental that the power to make laws
cannot be delegated, the creation of the municipalities exercising local self government has
never been held to trench upon that rule. Such legislation is not regarded as a transfer of
general legislative power, but rather as the grant of the authority to prescribed local
regulations, according to immemorial practice, subject of course to the interposition of the
superior in cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same
principle, Congress is powered to delegate legislative power to such agencies in the
territories of the United States as it may select. A territory stands in the same relation to
Congress as a municipality or city to the state government. (United States vs. Heinszen
[1907], 206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs.
United States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.)
Courts have also sustained the delegation of legislative power to the people at large. Some
authorities maintain that this may not be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing
People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442; Ann. Cas., 1914C, 616). However,
the question of whether or not a state has ceased to be republican in form because of its
adoption of the initiative and referendum has been held not to be a judicial but a political
question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32
Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked upon with
favor by certain progressive courts, the sting of the decisions of the more conservative courts
has been pretty well drawn. (Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488;
23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L.
R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also, legislative
power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of
the Constitution of the Philippines provides that "The National Assembly may by law
authorize the President, subject to such limitations and restrictions as it may impose, to fix
within specified limits, tariff rates, import or export quotas, and tonnage and wharfage
dues." And section 16 of the same article of the Constitution provides that "In times of war or
other national emergency, the National Assembly may by law authorize the President, for a
limited period and subject to such restrictions as it may prescribed, to promulgate rules and
regulations to carry out a declared national policy." It is beyond the scope of this decision to
determine whether or not, in the absence of the foregoing constitutional provisions, the
President could be authorized to exercise the powers thereby vested in him. Upon the other
hand, whatever doubt may have existed has been removed by the Constitution itself.
The case before us does not fall under any of the exceptions hereinabove mentioned.
The challenged section of Act No. 4221 in section 11 which reads as follows:
This Act shall apply only in those provinces in which the respective provincial boards
have provided for the salary of a probation officer at rates not lower than those
now provided for provincial fiscals. Said probation officer shall be appointed by the
Secretary of Justice and shall be subject to the direction of the Probation Office.
(Emphasis ours.)
In testing whether a statute constitute an undue delegation of legislative power or not, it is
usual to inquire whether the statute was complete in all its terms and provisions when it left
the hands of the legislature so that nothing was left to the judgment of any other appointee
or delegate of the legislature. (6 R. C. L., p. 165.) In the United States vs. Ang Tang Ho ([1922],
43 Phil., 1), this court adhered to the foregoing rule when it held an act of the legislature void
in so far as it undertook to authorize the Governor-General, in his discretion, to issue a
proclamation fixing the price of rice and to make the sale of it in violation of the
proclamation a crime. (See and cf. Compaia General de Tabacos vs. Board of Public Utility
Commissioners [1916], 34 Phil., 136.) The general rule, however, is limited by another rule
that to a certain extent matters of detail may be left to be filled in by rules and regulations to
be adopted or promulgated by executive officers and administrative boards. (6 R. C. L., pp.
177-179.)
For the purpose of Probation Act, the provincial boards may be regarded as administrative
bodies endowed with power to determine when the Act should take effect in their respective
provinces. They are the agents or delegates of the legislature in this respect. The rules
governing delegation of legislative power to administrative and executive officers are
applicable or are at least indicative of the rule which should be here adopted. An
examination of a variety of cases on delegation of power to administrative bodies will show
that the ratio decidendi is at variance but, it can be broadly asserted that the rationale
revolves around the presence or absence of a standard or rule of action or the sufficiency
thereof in the statute, to aid the delegate in exercising the granted discretion. In some
cases, it is held that the standard is sufficient; in others that is insufficient; and in still others
that it is entirely lacking. As a rule, an act of the legislature is incomplete and hence invalid if
it does not lay down any rule or definite standard by which the administrative officer or
board may be guided in the exercise of the discretionary powers delegated to it.
(See Schecter vs. United States [1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837;
97 A.L.R., 947; People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107
A.L.R., 1500 and cases cited. See also R. C. L., title "Constitutional Law", sec 174.) In the case
at bar, what rules are to guide the provincial boards in the exercise of their discretionary
power to determine whether or not the Probation Act shall apply in their respective
provinces? What standards are fixed by the Act? We do not find any and none has been
pointed to us by the respondents. The probation Act does not, by the force of any of its
provisions, fix and impose upon the provincial boards any standard or guide in the exercise of
their discretionary power. What is granted, if we may use the language of Justice Cardozo in
the recent case of Schecter, supra, is a "roving commission" which enables the provincial
boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not
seemingly on its own authority extend the benefits of the Probation Act to the provinces but
in reality leaves the entire matter for the various provincial boards to determine. In other
words, the provincial boards of the various provinces are to determine for themselves,
whether the Probation Law shall apply to their provinces or not at all. The applicability and
application of the Probation Act are entirely placed in the hands of the provincial boards. If
the provincial board does not wish to have the Act applied in its province, all that it has to do
is to decline to appropriate the needed amount for the salary of a probation officer. The plain
language of the Act is not susceptible of any other interpretation. This, to our minds, is a
virtual surrender of legislative power to the provincial boards.
"The true distinction", says Judge Ranney, "is between the delegation of power to make the
law, which necessarily involves a discretion as to what it shall be, and conferring an authority
or discretion as to its execution, to be exercised under and in pursuance of the law. The first
cannot be done; to the latter no valid objection can be made." (Cincinnati, W. & Z. R. Co. vs.
Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory
Construction, sec 68.) To the same effect are the decision of this court in Municipality of
Cardona vs. Municipality of Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of
Mindoro ([1919],39 Phil., 660) and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of
these cases, this court sustained the validity of the law conferring upon the Governor-
General authority to adjust provincial and municipal boundaries. In the second case, this
court held it lawful for the legislature to direct non-Christian inhabitants to take up their
habitation on unoccupied lands to be selected by the provincial governor and approved by
the provincial board. In the third case, it was held proper for the legislature to vest in the
Governor-General authority to suspend or not, at his discretion, the prohibition of the
importation of the foreign cattle, such prohibition to be raised "if the conditions of the
country make this advisable or if deceased among foreign cattle has ceased to be a menace
to the agriculture and livestock of the lands."
It should be observed that in the case at bar we are not concerned with the simple
transference of details of execution or the promulgation by executive or administrative
officials of rules and regulations to carry into effect the provisions of a law. If we were,
recurrence to our own decisions would be sufficient. (U. S. vs. Barrias [1908], 11 Phil., 327;
U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil., 394;
Cebu Autobus Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi
vs. Provincial Board of Mindoro [1919], 39 Phil., 660.)
It is connected, however, that a legislative act may be made to the effect as law after it
leaves the hands of the legislature. It is true that laws may be made effective on certain
contingencies, as by proclamation of the executive or the adoption by the people of a
particular community (6 R. C. L., 116, 170-172; Cooley, Constitutional Limitations, 8th ed.,
Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme
Court of the United State ruled that the legislature may delegate a power not legislative
which it may itself rightfully exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92
Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The power to ascertain facts is such a power which
may be delegated. There is nothing essentially legislative in ascertaining the existence of
facts or conditions as the basis of the taking into effect of a law. That is a mental process
common to all branches of the government. (Dowling vs. Lancashire Ins. Co., supra; In
re Village of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs.
Fries [1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct.,
495; 36 Law. ed., 294.) Notwithstanding the apparent tendency, however, to relax the rule
prohibiting delegation of legislative authority on account of the complexity arising from social
and economic forces at work in this modern industrial age (Pfiffner, Public Administration
[1936] ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4,
pp. 569-579; Beard, "Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol.
CLXI, pp. 147, 152), the orthodox pronouncement of Judge Cooley in his work on
Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the Constitution
of the United States in the following language speaking of declaration of legislative power
to administrative agencies: "The principle which permits the legislature to provide that the
administrative agent may determine when the circumstances are such as require the
application of a law is defended upon the ground that at the time this authority is granted,
the rule of public policy, which is the essence of the legislative act, is determined by the
legislature. In other words, the legislature, as it its duty to do, determines that, under given
circumstances, certain executive or administrative action is to be taken, and that, under
other circumstances, different of no action at all is to be taken. What is thus left to the
administrative official is not the legislative determination of what public policy demands, but
simply the ascertainment of what the facts of the case require to be done according to the
terms of the law by which he is governed." (Willoughby on the Constitution of the United
States, 2nd ed., Vol. II, p. 1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup.
Ct. Rep., 228; 27 Law. ed., 971, 974), it was said: "The efficiency of an Act as a declaration of
legislative will must, of course, come from Congress, but the ascertainment of the
contingency upon which the Act shall take effect may be left to such agencies as it may
designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr
[1859], 13 Cal., 343, 258.) The legislature, then may provide that a contingencies leaving to
some other person or body the power to determine when the specified contingencies has
arisen. But, in the case at bar, the legislature has not made the operation of the Prohibition
Act contingent upon specified facts or conditions to be ascertained by the provincial board. It
leaves, as we have already said, the entire operation or non-operation of the law upon the
provincial board. the discretion vested is arbitrary because it is absolute and unlimited. A
provincial board need not investigate conditions or find any fact, or await the happening of
any specified contingency. It is bound by no rule, limited by no principle of expendiency
announced by the legislature. It may take into consideration certain facts or conditions; and,
again, it may not. It may have any purpose or no purpose at all. It need not give any reason
whatsoever for refusing or failing to appropriate any funds for the salary of a probation
officer. This is a matter which rest entirely at its pleasure. The fact that at some future time
we cannot say when the provincial boards may appropriate funds for the salaries of
probation officers and thus put the law into operation in the various provinces will not save
the statute. The time of its taking into effect, we reiterate, would yet be based solely upon
the will of the provincial boards and not upon the happening of a certain specified
contingency, or upon the ascertainment of certain facts or conditions by a person or body
other than legislature itself.
The various provincial boards are, in practical effect, endowed with the power of suspending
the operation of the Probation Law in their respective provinces. In some jurisdiction,
constitutions provided that laws may be suspended only by the legislature or by its authority.
Thus, section 28, article I of the Constitution of Texas provides that "No power of suspending
laws in this state shall be exercised except by the legislature"; and section 26, article I of the
Constitution of Indiana provides "That the operation of the laws shall never be suspended,
except by authority of the General Assembly." Yet, even provisions of this sort do not confer
absolute power of suspension upon the legislature. While it may be undoubted that the
legislature may suspend a law, or the execution or operation of a law, a law may not be
suspended as to certain individuals only, leaving the law to be enjoyed by others. The
suspension must be general, and cannot be made for individual cases or for particular
localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was said:
By the twentieth article of the declaration of rights in the constitution of this
commonwealth, it is declared that the power of suspending the laws, or the
execution of the laws, ought never to be exercised but by the legislature, or by
authority derived from it, to be exercised in such particular cases only as the
legislature shall expressly provide for. Many of the articles in that declaration of
rights were adopted from the Magna Charta of England, and from the bill of rights
passed in the reign of William and Mary. The bill of rights contains an enumeration
of the oppressive acts of James II, tending to subvert and extirpate the protestant
religion, and the laws and liberties of the kingdom; and the first of them is the
assuming and exercising a power of dispensing with and suspending the laws, and
the execution of the laws without consent of parliament. The first article in the
claim or declaration of rights contained in the statute is, that the exercise of such
power, by legal authority without consent of parliament, is illegal. In the tenth
section of the same statute it is further declared and enacted, that "No
dispensation by non obstante of or to any statute, or part thereof, should be
allowed; but the same should be held void and of no effect, except a dispensation
be allowed of in such statute." There is an implied reservation of authority in the
 parliament to exercise the power here mentioned; because, according to the
theory of the English Constitution, "that absolute despotic power, which must in all
governments reside somewhere," is intrusted to the parliament: 1 Bl. Com., 160.
The principles of our government are widely different in this particular. Here the
sovereign and absolute power resides in the people; and the legislature can only
exercise what is delegated to them according to the constitution. It is obvious that
the exercise of the power in question would be equally oppressive to the subject,
and subversive of his right to protection, "according to standing laws," whether
exercised by one man or by a number of men. It cannot be supposed that the
people when adopting this general principle from the English bill of rights and
inserting it in our constitution, intended to bestow by implication on the general
court one of the most odious and oppressive prerogatives of the ancient kings of
England. It is manifestly contrary to the first principles of civil liberty and natural
justice, and to the spirit of our constitution and laws, that any one citizen should
enjoy privileges and advantages which are denied to all others under like
circumstances; or that ant one should be subject to losses, damages, suits, or
actions from which all others under like circumstances are exempted.
To illustrate the principle: A section of a statute relative to dogs made the owner of any dog
liable to the owner of domestic animals wounded by it for the damages without proving a
knowledge of it vicious disposition. By a provision of the act, power was given to the board of
supervisors to determine whether or not during the current year their county should be
governed by the provisions of the act of which that section constituted a part. It was held
that the legislature could not confer that power. The court observed that it could no more
confer such a power than to authorize the board of supervisors of a county to abolish in such
county the days of grace on commercial paper, or to suspend the statute of limitations.
(Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in Missouri was held void for
the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.) In that case a
general statute formulating a road system contained a provision that "if the county court of
any county should be of opinion that the provisions of the act should not be enforced, they
might, in their discretion, suspend the operation of the same for any specified length of time,
and thereupon the act should become inoperative in such county for the period specified in
such order; and thereupon order the roads to be opened and kept in good repair, under the
laws theretofore in force." Said the court: ". . . this act, by its own provisions, repeals the
inconsistent provisions of a former act, and yet it is left to the county court to say which act
shall be enforce in their county. The act does not submit the question to the county court as
an original question, to be decided by that tribunal, whether the act shall commence its
operation within the county; but it became by its own terms a law in every county not
excepted by name in the act. It did not, then, require the county court to do any act in order
to give it effect. But being the law in the county, and having by its provisions superseded and
abrogated the inconsistent provisions of previous laws, the county court is . . . empowered,
to suspend this act and revive the repealed provisions of the former act. When the question
is before the county court for that tribunal to determine which law shall be in force, it is urge
before us that the power then to be exercised by the court is strictly legislative power, which
under our constitution, cannot be delegated to that tribunal or to any other body of men in
the state. In the present case, the question is not presented in the abstract; for the county
court of Saline county, after the act had been for several months in force in that county, did
by order suspend its operation; and during that suspension the offense was committed
which is the subject of the present indictment . . . ." (See Mitchell vs. State [1901], 134 Ala.,
392; 32 S., 687.)
True, the legislature may enact laws for a particular locality different from those applicable to
other localities and, while recognizing the force of the principle hereinabove expressed,
courts in may jurisdiction have sustained the constitutionality of the submission of option
laws to the vote of the people. (6 R.C.L., p. 171.) But option laws thus sustained treat of
subjects purely local in character which should receive different treatment in different
localities placed under different circumstances. "They relate to subjects which, like the
retailing of intoxicating drinks, or the running at large of cattle in the highways, may be
differently regarded in different localities, and they are sustained on what seems to us the
impregnable ground, that the subject, though not embraced within the ordinary powers of
municipalities to make by-laws and ordinances, is nevertheless within the class of public
regulations, in respect to which it is proper that the local judgment should control." (Cooley
on Constitutional Limitations, 5th ed., p. 148.) So that, while we do not deny the right of local
self-government and the propriety of leaving matters of purely local concern in the hands of
local authorities or for the people of small communities to pass upon, we believe that in
matters of general of general legislation like that which treats of criminals in general, and as
regards the general subject of probation, discretion may not be vested in a manner so
unqualified and absolute as provided in Act No. 4221. True, the statute does not expressly
state that the provincial boards may suspend the operation of the Probation Act in particular
provinces but, considering that, in being vested with the authority to appropriate or not the
necessary funds for the salaries of probation officers, they thereby are given absolute
discretion to determine whether or not the law should take effect or operate in their
respective provinces, the provincial boards are in reality empowered by the legislature to
suspend the operation of the Probation Act in particular provinces, the Act to be held in
abeyance until the provincial boards should decide otherwise by appropriating the necessary
funds. The validity of a law is not tested by what has been done but by what may be done
under its provisions. (Walter E. Olsen & Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12
C. J., p. 786.)
It in conceded that a great deal of latitude should be granted to the legislature not only in the
expression of what may be termed legislative policy but in the elaboration and execution
thereof. "Without this power, legislation would become oppressive and yet imbecile."
(People vs. Reynolds, 5 Gilman, 1.) It has been said that popular government lives because of
the inexhaustible reservoir of power behind it. It is unquestionable that the mass of powers
of government is vested in the representatives of the people and that these representatives
are no further restrained under our system than by the express language of the instrument
imposing the restraint, or by particular provisions which by clear intendment, have that
effect. (Angara vs. Electoral Commission [1936], 35 Off. Ga., 23; Schneckenburger vs. Moran
[1936], 35 Off. Gaz., 1317.) But, it should be borne in mind that a constitution is both a grant
and a limitation of power and one of these time-honored limitations is that, subject to
certain exceptions, legislative power shall not be delegated.
We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful
delegation of legislative authority to the provincial boards and is, for this reason,
unconstitutional and void.
3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which
prohibits the denial to any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1.
Constitution of the Philippines.)
This basic individual right sheltered by the Constitution is a restraint on all the tree grand
departments of our government and on the subordinate instrumentalities and subdivision
thereof, and on many constitutional power, like the police power, taxation and eminent
domain. The equal protection of laws, sententiously observes the Supreme Court of the
United States, "is a pledge of the protection of equal laws." (Yick Wo vs. Hopkins [1886], 118
U. S., 356; 30 Law. ed., 220; 6 Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S., 510;
39 Sup. Ct. Rep., 357; 63 Law. ed., 735.) Of course, what may be regarded as a denial of the
equal protection of the laws in a question not always easily determined. No rule that will
cover every case can be formulated. (Connolly vs. Union Sewer Pipe Co. [1902], 184, U. S.,
540; 22 Sup. Ct., Rep., 431; 46 Law. ed., 679.) Class legislation discriminating against some
and favoring others in prohibited. But classification on a reasonable basis, and nor made
arbitrarily or capriciously, is permitted. (Finely vs. California [1911], 222 U. S., 28; 56 Law. ed.,
75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150; 41 Law. ed., 666;
17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) The classification,
however, to be reasonable must be based on substantial distinctions which make real
differences; it must be germane to the purposes of the law; it must not be limited to existing
conditions only, and must apply equally to each member of the class. (Borgnis vs. Falk. Co.
[1911], 147 Wis., 327, 353; 133 N. W., 209; 3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489; State vs.
Cooley, 56 Minn., 540; 530-552; 58 N. W., 150; Lindsley vs. Natural Carbonic Gas Co.[1911],
220 U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C, 160; Lake
Shore & M. S. R. Co. vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374;
Southern Ry. Co. vs. Greene [1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17
Ann. Cas., 1247; Truax vs. Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.)
In the case at bar, however, the resultant inequality may be said to flow from the
unwarranted delegation of legislative power, although perhaps this is not necessarily the
result in every case. Adopting the example given by one of the counsel for the petitioners in
the course of his oral argument, one province may appropriate the necessary fund to defray
the salary of a probation officer, while another province may refuse or fail to do so. In such a
case, the Probation Act would be in operation in the former province but not in the latter.
This means that a person otherwise coming within the purview of the law would be liable to
enjoy the benefits of probation in one province while another person similarly situated in
another province would be denied those same benefits. This is obnoxious discrimination.
Contrariwise, it is also possible for all the provincial boards to appropriate the necessary
funds for the salaries of the probation officers in their respective provinces, in which case no
inequality would result for the obvious reason that probation would be in operation in each
and every province by the affirmative action of appropriation by all the provincial boards. On
that hypothesis, every person coming within the purview of the Probation Act would be
entitled to avail of the benefits of the Act. Neither will there be any resulting inequality if no
province, through its provincial board, should appropriate any amount for the salary of the
probation officer which is the situation now and, also, if we accept the contention that,
for the purpose of the Probation Act, the City of Manila should be considered as a province
and that the municipal board of said city has not made any appropriation for the salary of the
probation officer. These different situations suggested show, indeed, that while inequality
may result in the application of the law and in the conferment of the benefits therein
provided, inequality is not in all cases the necessary result. But whatever may be the case, it
is clear that in section 11 of the Probation Act creates a situation in which discrimination and
inequality are permitted or allowed. There are, to be sure, abundant authorities requiring
actual denial of the equal protection of the law before court should assume the task of
setting aside a law vulnerable on that score, but premises and circumstances considered, we
are of the opinion that section 11 of Act No. 4221 permits of the denial of the equal
protection of the law and is on that account bad. We see no difference between a law which
permits of such denial. A law may appear to be fair on its face and impartial in appearance,
yet, if it permits of unjust and illegal discrimination, it is within the constitutional
prohibitions. (By analogy, Chy Lung vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550;
Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law. ed., 543; Ex parte Virginia [1880], 100 U.
S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881], 103 U. S., 370; 26 Law. ed., 567; Soon
Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs. Hopkins [1886],118 U.
S., 356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218; 18 Sup. Ct. Rep., 583;
42 Law. ed., 1012; Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law.
ed., Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S., 450; 38 Sup. Ct. Rep., 495; 62 Law.
ed., 1154.) In other words, statutes may be adjudged unconstitutional because of their effect
in operation (General Oil Co. vs. Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52 Law.
ed., 754; State vs. Clement Nat. Bank [1911], 84 Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22).
If the law has the effect of denying the equal protection of the law it is unconstitutional. (6 R.
C. L. p. 372; Civil Rights Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835; Yick Wo vs.
Hopkins, supra; State vs. Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs.
Dering, 84 Wis., 585; 54 N. W., 1104; 36 A. S. R., 948; 19 L. R. A., 858.) Under section 11 of
the Probation Act, not only may said Act be in force in one or several provinces and not be in
force in other provinces, but one province may appropriate for the salary of the probation
officer of a given year and have probation during that year and thereafter decline to
make further appropriation, and have no probation is subsequent years. While this situation
goes rather to the abuse of discretion which delegation implies, it is here indicated to show
that the Probation Act sanctions a situation which is intolerable in a government of laws, and
to prove how easy it is, under the Act, to make the guaranty of the equality clause but "a
rope of sand". (Brewer, J. Gulf C. & S. F. Ry. Co. vs. Ellis [1897], 165 U. S., 150 154; 41 Law.
ed., 666; 17 Sup. Ct. Rep., 255.)lawph!1.net
Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United
States ([1914], 234 U. S., 91; 58 Law. ed., 1231). In that case, the Supreme Court of the
United States affirmed the decision of this court (18 Phil., 1) by declining to uphold the
contention that there was a denial of the equal protection of the laws because, as held in
Missouri vs. Lewis (Bowman vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed., 991), the
guaranty of the equality clause does not require territorial uniformity. It should be observed,
however, that this case concerns the right to preliminary investigations in criminal cases
originally granted by General Orders No. 58. No question of legislative authority was involved
and the alleged denial of the equal protection of the laws was the result of the subsequent
enactment of Act No. 612, amending the charter of the City of Manila (Act No. 813) and
providing in section 2 thereof that "in cases triable only in the court of first instance of the
City of Manila, the defendant . . . shall not be entitled as of right to a preliminary examination
in any case where the prosecuting attorney, after a due investigation of the facts . . . shall
have presented an information against him in proper form . . . ." Upon the other hand, an
analysis of the arguments and the decision indicates that the investigation by the prosecuting
attorney although not in the form had in the provinces was considered a reasonable
substitute for the City of Manila, considering the peculiar conditions of the city as found and
taken into account by the legislature itself.
Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a
situation where the constitution of Missouri permits appeals to the Supreme Court of the
state from final judgments of any circuit court, except those in certain counties for which
counties the constitution establishes a separate court of appeals called St. Louis Court of
Appeals. The provision complained of, then, is found in the constitution itself and it is the
constitution that makes the apportionment of territorial jurisdiction.
We are of the opinion that section 11 of the Probation Act is unconstitutional and void
because it is also repugnant to equal-protection clause of our Constitution.
Section 11 of the Probation Act being unconstitutional and void for the reasons already
stated, the next inquiry is whether or not the entire Act should be avoided.
In seeking the legislative intent, the presumption is against any mutilation of a
statute, and the courts will resort to elimination only where an unconstitutional
provision is interjected into a statute otherwise valid, and is so independent and
separable that its removal will leave the constitutional features and purposes of
the act substantially unaffected by the process. (Riccio vs. Hoboken, 69 N. J. Law.,
649, 662; 63 L. R. A., 485; 55 Atl., 1109, quoted in Williams vs. Standard Oil Co.
[1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct. Rep., 115; 60 A. L. R.,
596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court stated the well-
established rule concerning partial invalidity of statutes in the following language:
. . . where part of the a statute is void, as repugnant to the Organic Law, while
another part is valid, the valid portion, if separable from the valid, may stand and
be enforced. But in order to do this, the valid portion must be in so far independent
of the invalid portion that it is fair to presume that the Legislative would have
enacted it by itself if they had supposed that they could not constitutionally enact
the other. (Mutual Loan Co. vs. Martell, 200 Mass., 482; 86 N. E., 916; 128 A. S. R.,
446; Supervisors of Holmes Co. vs. Black Creek Drainage District, 99 Miss., 739; 55
Sou., 963.) Enough must remain to make a complete, intelligible, and valid statute,
which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E.,
798.) The void provisions must be eliminated without causing results affecting the
main purpose of the Act, in a manner contrary to the intention of the Legislature.
(State vs. A. C. L. R., Co., 56 Fla., 617, 642; 47 Sou., 969; Harper vs. Galloway, 58
Fla., 255; 51 Sou., 226; 26 L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe Co.,
184 U. S., 540, 565; People vs. Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R.
A., N. S., 1135; State vs. Cognevich, 124 La., 414; 50 Sou., 439.) The language used
in the invalid part of a statute can have no legal force or efficacy for any purpose
whatever, and what remains must express the legislative will, independently of the
void part, since the court has no power to legislate. (State vs. Junkin, 85 Neb., 1;
122 N. W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S., vs. Rodriguez [1918], 38
Phil., 759; Pollock vs. Farmers' Loan and Trust Co. [1895], 158 U. S., 601, 635; 39
Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6 R.C.L., 121.)
It is contended that even if section 11, which makes the Probation Act applicable only in
those provinces in which the respective provincial boards provided for the salaries of
probation officers were inoperative on constitutional grounds, the remainder of the Act
would still be valid and may be enforced. We should be inclined to accept the suggestions
but for the fact that said section is, in our opinion, is inseparably linked with the other
portions of the Act that with the elimination of the section what would be left is the bare
idealism of the system, devoid of any practical benefit to a large number of people who may
be deserving of the intended beneficial result of that system. The clear policy of the law, as
may be gleaned from a careful examination of the whole context, is to make the application
of the system dependent entirely upon the affirmative action of the different provincial
boards through appropriation of the salaries for probation officers at rates not lower than
those provided for provincial fiscals. Without such action on the part of the various boards,
no probation officers would be appointed by the Secretary of Justice to act in the provinces.
The Philippines is divided or subdivided into provinces and it needs no argument to show
that if not one of the provinces and this is the actual situation now appropriate the
necessary fund for the salary of a probation officer, probation under Act No. 4221 would be
illusory. There can be no probation without a probation officer. Neither can there be a
probation officer without the probation system.
Section 2 of the Acts provides that the probation officer shall supervise and visit the
probationer. Every probation officer is given, as to the person placed in probation under his
care, the powers of the police officer. It is the duty of the probation officer to see that the
conditions which are imposed by the court upon the probationer under his care are complied
with. Among those conditions, the following are enumerated in section 3 of the Act:
That the probationer (a) shall indulge in no injurious or vicious habits;
(b) Shall avoid places or persons of disreputable or harmful character;
(c) Shall report to the probation officer as directed by the court or probation
officers;
(d) Shall permit the probation officer to visit him at reasonable times at his place of
abode or elsewhere;
(e) Shall truthfully answer any reasonable inquiries on the part of the probation
officer concerning his conduct or condition; "(f) Shall endeavor to be employed
regularly; "(g) Shall remain or reside within a specified place or locality;
(f) Shall make reparation or restitution to the aggrieved parties for actual damages
or losses caused by his offense;
(g) Shall comply with such orders as the court may from time to time make; and
 (h) Shall refrain from violating any law, statute, ordinance, or any by-law or
regulation, promulgated in accordance with law.
The court is required to notify the probation officer in writing of the period and terms of
probation. Under section 4, it is only after the period of probation, the submission of a report
of the probation officer and appropriate finding of the court that the probationer has
complied with the conditions of probation that probation may be definitely terminated and
the probationer finally discharged from supervision. Under section 5, if the court finds that
there is non-compliance with said conditions, as reported by the probation officer, it may
issue a warrant for the arrest of the probationer and said probationer may be committed
with or without bail. Upon arraignment and after an opportunity to be heard, the court may
revoke, continue or modify the probation, and if revoked, the court shall order the execution
of the sentence originally imposed. Section 6 prescribes the duties of probation officers: "It
shall be the duty of every probation officer to furnish to all persons placed on probation
under his supervision a statement of the period and conditions of their probation, and to
instruct them concerning the same; to keep informed concerning their conduct and
condition; to aid and encourage them by friendly advice and admonition, and by such other
measures, not inconsistent with the conditions imposed by court as may seem most suitable,
to bring about improvement in their conduct and condition; to report in writing to the court
having jurisdiction over said probationers at least once every two months concerning their
conduct and condition; to keep records of their work; make such report as are necessary for
the information of the Secretary of Justice and as the latter may require; and to perform such
other duties as are consistent with the functions of the probation officer and as the court or
judge may direct. The probation officers provided for in this Act may act as parole officers for
any penal or reformatory institution for adults when so requested by the authorities thereof,
and, when designated by the Secretary of Justice shall act as parole officer of persons
released on parole under Act Number Forty-one Hundred and Three, without additional
compensation."
It is argued, however, that even without section 11 probation officers maybe appointed in
the provinces under section 10 of Act which provides as follows:
There is hereby created in the Department of Justice and subject to its supervision
and control, a Probation Office under the direction of a Chief Probation Officer to
be appointed by the Governor-General with the advise and consent of the Senate
who shall receive a salary of four eight hundred pesos per annum. To carry out this
Act there is hereby appropriated out of any funds in the Insular Treasury not
otherwise appropriated, the sum of fifty thousand pesos to be disbursed by the
Secretary of Justice, who is hereby authorized to appoint probation officers and the
administrative personnel of the probation officer under civil service regulations
from among those who possess the qualifications, training and experience
prescribed by the Bureau of Civil Service, and shall fix the compensation of such
probation officers and administrative personnel until such positions shall have
been included in the Appropriation Act.
But the probation officers and the administrative personnel referred to in the foregoing
section are clearly not those probation officers required to be appointed for the provinces
under section 11. It may be said, reddendo singula singulis, that the probation officers
referred to in section 10 above-quoted are to act as such, not in the various provinces, but in
the central office known as the Probation Office established in the Department of Justice,
under the supervision of the Chief Probation Officer. When the law provides that "the
probation officer" shall investigate and make reports to the court (secs. 1 and 4); that "the
probation officer" shall supervise and visit the probationer (sec. 2; sec. 6, par. d); that the
probationer shall report to the "probationer officer" (sec. 3, par. c.), shall allow "the
probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any reasonable
inquiries on the part of "the probation officer" concerning his conduct or condition (sec. 3,
par. 4); that the court shall notify "the probation officer" in writing of the period and terms of
probation (sec. 3, last par.), it means the probation officer who is in charge of a particular
probationer in a particular province. It never could have been intention of the legislature, for
instance, to require the probationer in Batanes, to report to a probationer officer in the City
of Manila, or to require a probation officer in Manila to visit the probationer in the said
province of Batanes, to place him under his care, to supervise his conduct, to instruct him
concerning the conditions of his probation or to perform such other functions as are assigned
to him by law.
That under section 10 the Secretary of Justice may appoint as many probation officers as
there are provinces or groups of provinces is, of course possible. But this would be arguing on
what the law may be or should be and not on what the law is. Between is and ought there is
a far cry. The wisdom and propriety of legislation is not for us to pass upon. We may think a
law better otherwise than it is. But much as has been said regarding progressive
interpretation and judicial legislation we decline to amend the law. We are not permitted to
read into the law matters and provisions which are not there. Not for any purpose not
even to save a statute from the doom of invalidity.
Upon the other hand, the clear intention and policy of the law is not to make the Insular
Government defray the salaries of probation officers in the provinces but to make the
provinces defray them should they desire to have the Probation Act apply thereto. The sum
of P50,000, appropriated "to carry out the purposes of this Act", is to be applied, among
other things, for the salaries of probation officers in the central office at Manila. These
probation officers are to receive such compensations as the Secretary of Justice may fix "until
such positions shall have been included in the Appropriation Act". It was the intention of the
legislature to empower the Secretary of Justice to fix the salaries of the probation officers in
the provinces or later on to include said salaries in an appropriation act. Considering, further,
that the sum of P50,000 appropriated in section 10 is to cover, among other things, the
salaries of the administrative personnel of the Probation Office, what would be left of the
amount can hardly be said to be sufficient to pay even nominal salaries to probation officers
in the provinces. We take judicial notice of the fact that there are 48 provinces in the
Philippines and we do not think it is seriously contended that, with the fifty thousand pesos
appropriated for the central office, there can be in each province, as intended, a probation
officer with a salary not lower than that of a provincial fiscal. If this a correct, the contention
that without section 11 of Act No. 4221 said act is complete is an impracticable thing under
the remainder of the Act, unless it is conceded that in our case there can be a system of
probation in the provinces without probation officers.
Probation as a development of a modern penology is a commendable system. Probation laws
have been enacted, here and in other countries, to permit what modern criminologist call the
"individualization of the punishment", the adjustment of the penalty to the character of the Avancea, C.J., Imperial, Diaz and Concepcion, JJ., concur.
criminal and the circumstances of his particular case. It provides a period of grace in order to Villa-real and Abad Santos, JJ., concur in the result.
aid in the rehabilitation of a penitent offender. It is believed that, in any cases, convicts may
be reformed and their development into hardened criminals aborted. It, therefore, takes
advantage of an opportunity for reformation and avoids imprisonment so long as the
convicts gives promise of reform. (United States vs. Murray [1925], 275 U. S., 347 357, 358;
72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep., 146; Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The
Welfare of society is its chief end and aim. The benefit to the individual convict is merely
incidental. But while we believe that probation is commendable as a system and its
implantation into the Philippines should be welcomed, we are forced by our inescapable duty
to set the law aside because of the repugnancy to our fundamental law.

In arriving at this conclusion, we have endeavored to consider the different aspects

presented by able counsel for both parties, as well in their memorandums as in their oral
argument. We have examined the cases brought to our attention, and others we have been
able to reach in the short time at our command for the study and deliberation of this case. In
the examination of the cases and in then analysis of the legal principles involved we have
inclined to adopt the line of action which in our opinion, is supported better reasoned
authorities and is more conducive to the general welfare. (Smith, Bell & Co. vs. Natividad
[1919], 40 Phil., 136.) Realizing the conflict of authorities, we have declined to be bound by
certain adjudicated cases brought to our attention, except where the point or principle is
settled directly or by clear implication by the more authoritative pronouncements of the
Supreme Court of the United States. This line of approach is justified because:

(a) The constitutional relations between the Federal and the State governments of
the United States and the dual character of the American Government is a situation
which does not obtain in the Philippines;

(b) The situation of s state of the American Union of the District of Columbia with
reference to the Federal Government of the United States is not the situation of
the province with respect to the Insular Government (Art. I, sec. 8 cl. 17 and 10th
Amendment, Constitution of the United States; Sims vs. Rives, 84 Fed. [2d], 871),

(c) The distinct federal and the state judicial organizations of the United States do
not embrace the integrated judicial system of the Philippines (Schneckenburger vs.
Moran [1936], 35 Off. Gaz., p. 1317);

(d) "General propositions do not decide concrete cases" (Justice Holmes in Lochner
vs. New York [1904], 198 U. S., 45, 76; 49 Law. ed., 937, 949) and, "to keep pace
with . . . new developments of times and circumstances" (Chief Justice Waite in
Pensacola Tel. Co. vs. Western Union Tel. Co. [1899], 96 U. S., 1, 9; 24 Law. ed., 708;
Yale Law Journal, Vol. XXIX, No. 2, Dec. 1919, 141, 142), fundamental principles
should be interpreted having in view existing local conditions and environment.

Act No. 4221 is hereby declared unconstitutional and void and the writ of prohibition is,
accordingly, granted. Without any pronouncement regarding costs. So ordered.