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The plaintiffs in this case are all minors duly represented and joined by their
parents. The first complaint was filed as a taxpayer's class suit at
the Branch 66 (Makati, Metro Manila), of the Regional Trial Court, National
capital Judicial Region against defendant (respondent) Secretary
of the Department of Environment and Natural Reasources (DENR). Plaintiffs
alleged that they are entitled to the full benefit, use and
enjoyment of the natural resource treasure that is the country's virgin tropical
forests. They further asseverate that they represent their
generation as well as generations yet unborn and asserted that continued
deforestation have caused a distortion and disturbance of the
ecological balance and have resulted in a host of environmental tragedies.
Plaintiffs prayed that judgement be rendered ordering the respondent, his agents,
representatives and other persons acting in his behalf to
cancel all existing Timber License Agreement (TLA) in the country and to cease
and desist from receiving, accepting, processing, renewing or
approving new TLAs.
Defendant, on the other hand, filed a motion to dismiss on the ground that the
complaint had no cause of action against him and that it raises
a political question.
The RTC Judge sustained the motion to dismiss, further ruling that granting of
the relief prayed for would result in the impairment of
contracts which is prohibited by the Constitution.
Plaintiffs (petitioners) thus filed the instant special civil action for certiorari and
asked the court to rescind and set aside the dismissal order on
the ground that the respondent RTC Judge gravely abused his discretion in
dismissing the action.
(1) Whether or not the plaintiffs have a cause of action.
(2) Whether or not the complaint raises a political issue.
(3) Whether or not the srcinal prayer of the plaintiffs result in the impairment of
First Issue: Cause of Action.
Respondents aver that the petitioners failed to allege in their complaint a specific
legal right violated by the respondent Secretary for which
any relief is provided by law. The Court did not agree with this. The complaint
focuses on one fundamental legal right -- the right to a
balanced and healthful ecology which is incorporated in Section 16 Article II of
the Constitution. The said right carries with it the duty to
refrain from impairing the environment and implies, among many other things,
the judicious management and conservation of the country's
forests. Section 4 of E.O. 192 expressly mandates the DENR to be the primary
government agency responsible for the governing and
supervising the exploration, utilization, development and conservation of the
country's natural resources. The policy declaration of E.O. 192 is
also substantially re-stated in Title XIV Book IV of the Administrative Code of
1987. Both E.O. 192 and Administrative Code of 1987 have set
the objectives which will serve as the bases for policy formation, and have
defined the powers and functions of the DENR. Thus, right of the
petitioners (and all those they represent) to a balanced and healthful ecology is
as clear as DENR's duty to protect and advance the said right.
A denial or violation of that right by the other who has the correlative duty or
obligation to respect or protect or respect the same gives rise to
a cause of action. Petitioners maintain that the granting of the TLA, which they
claim was done with grave abuse of discretion, violated their
right to a balance and healthful ecology. Hence, the full protection thereof
requires that no further TLAs should be renewed or granted.
After careful examination of the petitioners' complaint, the Court finds it to be
adequate enough to show, prima facie, the claimed violation of
their rights.
Second Issue: Political Issue.
Second paragraph, Section 1 of Article VIII of the constitution provides for the
expanded jurisdiction vested upon the Supreme Court. It
allows the Court to rule upon even on the wisdom of the decision of the
Executive and Legislature and to declare their acts as invalid for lack
or excess of jurisdiction because it is tainted with grave abuse of discretion.
Third Issue: Violation of the non-impairment clause.
The Court held that the Timber License Agreement is an instrument by which the
state regulates the utilization and disposition of forest
resources to the end that public welfare is promoted. It is not a contract within the
purview of the due process clause thus, the nonimpairment
clause cannot be invoked. It can be validly withdraw whenever dictated by public
interest or public welfare as in this case. The
granting of license does not create irrevocable rights, neither i s it property or
property rights.
Moreover, the constitutional guaranty of non-impairment of obligations of contract
is limit by the exercise by the police power of the State, in
the interest of public health, safety, moral and general welfare. In short, the non-
impairment clause must yield to the police power of the State.
The instant petition, being impressed with merit, is hereby GRANTED and the
RTC decision is SET ASIDE.
The need to address environmental pollution, as a cause of climate change, has
of late gained the attention of the international community. Media have
finally trained their sights on the ill effects of pollution, the destruction of forests
and other critical habitats, oil spills, and the unabated improper disposal of
garbage. And rightly so, for the magnitude of environmental destruction is now on
a scale few ever foresaw and the wound no longer simply heals by itself.
But amidst hard evidence and clear signs of a climate crisis that need bold
action, the voice of cynicism, naysay ers, and procrastinators can still be heard.
This case turns on government agencies and their officers who, by the nature of
their respective offices or by direct statuto ry command, are tasked to protect
and preserve, at the first instance, our internal waters, rivers, shores, and seas
polluted by human activities. To most of these agencies and their official
complement, the pollution menace does not seem to carry the high national
priority it deserves, if their track records are to be the norm. Their cavalier
attitude towards solving, if not mitigating, the environmental pollution problem, is
a sad commentary on bureaucratic efficiency and commitment.
At the core of the case is the Manila Bay, a place with a proud historic past, once
brimming with marine life and, for so many decades in the past, a spot for
different contact recreation activities, but now a dirty and slowly dying expanse
mainly because of the abject official indifference of people and institutions
that could have otherwise made a difference.
On January 29, 1999, respondents Concerned Residents of Manila Bay filed a
complaint before the Regio nal Trial Court (RTC) in Imus, Cavite
against several government agencies, for the cleanup, rehabilitation, and
protection of the Manila Bay.
The complaint alleged that the water quality of the Manila Bay had fallen way
below the allowable standards set by law, specifically
Presidential Decree No. (PD) 1152 or the Philippine Environment Code.
In their individual causes of action, respondents alleged that the continued
neglect of petitioners in abating the pollution of the Manila Bay
constitutes a violation of, among others:
(1) Respondents constitutional right to life, health, and a balanced ecology;
(2) The Environment Code (PD 1152);
(3) The Pollution Control Law (PD 984);
(4) The Water Code (PD 1067);
(5) The Sanitation Code (PD 856);
(6) The Illegal Disposal of Wastes Decree (PD 825);
(7) The Marine Pollution Law (PD 979);
(8) Executive Order No. 192;
(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);
(10) Civil Code provisions on nuisance and human relations;
(11) The Trust Doctrine and the Principle of Guardianship; and
(12) International Law
Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to
clean the Manila Bay and submit to the RTC a concerted
concrete plan of action for the purpose.
a) Whether or not pertinent provisions of the Environment Code (PD 1152) relate
only to the cleaning of specific pollution incidents and do
not cover cleaning in general.
b) Whether or not the cleaning of the Manila Bay is not a ministerial act which
can be compelled by mandamus.
Regional Trial Courts Order to Clean Up and Rehabilitate Manila Bay
On September 13, 2002, the RTC rendered a Decision in favor of respondents.
Finding merit in the complaint, the Court ordered defendantgovernment
agencies, jointly and solidarily, to clean up and rehabilitate Manila Bay and
restore its waters to SB classi fication to make it fit for
swimming, skin-diving and other forms of contact recreation.
To attain this, defendant-agencies, with defendant DENR as the lead agency, are
directed, within six (6) months from receipt hereof, to act and
perform their respective duties by devising a consolidated, coordinated and
concerted scheme of action for the rehabilitation and restoration
of the bay.
In particular:
Defendant MWSS is directed to install, operate and maintain adequate
[sewerage] treatment facilities in strategic places under its jurisdiction
and increase their capacities.
Defendant LWUA, to see to it that the water districts under its wings, provide,
construct and operate sewage facilities for the proper disposal
of waste.
Defendant DENR, which is the lead agency i n cleaning up Manila Bay, to install,
o perate and maintain waste facilities to rid the bay of toxic
and hazardous substances.
Defendant PPA, to prevent and also to treat the discharge not only of ship-
generated wastes but also of other solid and liquid wastes from
docking vessels that contribute to the pollution of the bay.
Defendant MMDA, to establish, operate and maintain an adeq uate and
appropriate sanitary landfill and/or adequate solid waste and liquid
disposal as well as other alternative garbage disposal system such as re-use or
recycling of wastes.
Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to
revitalize the marine life in Manila Bay and restock i ts waters with
indigenous fish and other aquatic animals.
Defendant DBM, to provide and set aside an adequate budget solely for the
purpose of cleaning up and rehabilitation of Manila Bay.
Defendant DPWH, to remove and demolish structures and other nuisances that
obstruct the free flow of waters to t he bay. These nuisances
discharge solid and liquid wastes which eventually end up in Manila Bay. As the
construction and engineering arm of the government,
DPWH is ordered to actively participate in removing debris, such as carcass of
sunken vessels, and other non-biodegradable garbage in the
Defendant DOH, to closely supervise and monitor the operations of septic and
sludge companies and require them to have proper facilities
for the treatment and disposal of fecal sludge and sewage coming from septic
Defendant DECS, to inculcate in the minds and hearts of the people through
education the importance of preserving and protecting the
Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all
costs the Manila Bay from all form s of illegal fishing.
The Court of Appeals Sustained the RTCs Decision
The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before
the Court of Appeals (CA) individual Notices of Appeal. On
the other hand, the DENR, Department of Public Works and Highways (DPWH),
Metropolitan Manila Development Authority (MMDA),
Philippine Coast Guard (PCG), Philippine National Police (PNP) Maritime Group,
and five other executive departments and agencies filed
directly with this Court a petition for review under Rule 45.
In the light of the ongoing environmental degradation, the Court wishes to
emphasize the extreme necessity for all concerned executive
departments and agencies to immediately act and discharge their respective
official duties and obligations. Indeed, time is of the essence;
hence, there is a need to set timetables for the performance and completion of
the tasks, some of them as defined for them by law and the
nature of their respective offices and mandates.
The importance of the Manila Bay as a sea resource, playground, and as a
historical landmark cannot be over-emphasized. It is not yet too late
in the day to restore the Manila Bay to its former splendor and bring back the
plants and sea life that once thrived in its blue waters. But the
tasks ahead, daunting as they may be, could only be accomplished if those
mandated, with the help and cooperation of all civic-minded
individuals, would put their minds to these tasks and take responsibility. This
means that the State, through petitioners, has to take the lead in
the preservation and protection of the Manila Bay.
So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a
balanced and healthful ecology need not even be written in the
Constitution for it is assumed, like other civil and political rights guaranteed in the
Bill of Rights, to exist from the inception of mankind and it
is an issue of transcendental importance with intergenerational implications.
Even assuming the absence of a categorical legal provision
specifically prodding petitioners to clean up the bay, they and the men and
women representing them cannot escape their obligation to future
generations of Filipinos to keep the waters of the Manila Bay clean and clear as
humanly as possible. Anything less would be a betrayal of the
trust reposed in them.
By a Decision of September 28, 2005, the CA denied petitioners appeal and
affirmed the Decision of the RTC in toto, stressing that the trial
courts decision did not require petitioners to do tasks outside of their usual basic
functions under existing laws.
Taada, et al., v. Angara, et al., G.R. No. 118295, May 2, 1997
(En Banc)
Petitioners Senators Taada, et al. questioned the constitutionality of the
concurrence by the Philippine Senate of the Presidents
ratification of the international Agreement establishing the World Trade
Organization (WTO). They argued that the WTO Agreement violates
the mandate of the 1987 Constitution to develop a self-reliant and independent
national economy effectively controlled by Filipinos . . . (to)
give preference to qualified Filipinos (and to) promote the preferential use of
Filipino labor, domestic materials and locally produced goods.
Further, they contended that the national treatment and parity provisions of
the WTO Agreement place nationals and products of
member countries on the same footing as Filipinos and local products, in
contravention of the Filipino First policy of our Constitution, and
render meaningless the phrase effectively controlled by Filipinos.
Does the 1987 Constitution prohibit our country from participating in worldwide
trade liberalization and economic globalization
and from integrating into a global economy that is liberalized, deregulated and
[The Court DISMISSED the petition. It sustained the concurrence of the
Philippine Senate of the Presidents ratification of the Agreement
establishing the WTO.]
NO, the 1987 Constitution DOES NOT prohibit our country from participating in
worldwide trade liberalization and economic
globalization and from integrating into a global economy that is liberalized,
deregulated and privatized.
There are enough balancing provisions in the Constitution to allow the Senate to
ratify the Philippine concurrence in the WTO
[W]hile the Constitution indeed mandates a bias in favor of Filipino goods,
services, labor and enterprises, at the same time, it
recognizes the need for business exchange with the rest of the world on the
bases of equality and reciprocity and limits protection of Filipino
enterprises only against foreign competition and trade practices that are unfair. In
other words, the Constitution did not intend to pursue an
isolationist policy. It did not shut out foreign investments, goods and services in
the development of the Philippine economy. While the
Constitution does not encourage the unlimited entry of foreign goods, services
and investments into the country, it does not prohibit them
either.In fact, it allows an exchange on the basis of equality and reciprocity,
frowning only on foreign competition that is unfair .
xxx xxx xxx
[T]he constitutional policy of a self-reliant and independent national economy
does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither economic seclusion
nor mendicancy in the international community. As
explained by Constitutional Commissioner Bernardo Villegas, sponsor of this
constitutional policy:
Economic self-reliance is a primary objective of a developing country that is
keenly aware of overdependence on external assistance for even its
most basic needs. It does not mean autarky or economic seclusion; rather, it
means avoiding mendicancy in the international community.
Independence refers to the freedom from undue foreign control of the national
economy, especially in such strategic industries as in the
development of natural resources and public utilities.
The WTO reliance on most favored nation, national treatment, and trade
without discrimination cannot be struck down as
unconstitutional as in fact they are rules of equality and reciprocity that apply to
all WTO members. Aside from envisioning a trade policy
based on equality and reciprocity, the fundamental law encourages industries
that are competitive in both domestic and foreign markets,
thereby demonstrating a clear policy against a sheltered domestic trade
environment, but one in favor of the gradual development of robust
industries that can compete with the best in the foreign markets. Indeed, Filipino
managers and Filipino enterprises have shown capability
and tenacity to compete internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong have
demonstrated the Filipino capacity to grow and to prosper against the best
offered under a policy oflaissez faire.
xxx xxx xxx
It is true, as alleged by petitioners, that broad constitutional principles require the
State to develop an independent national
economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced
goods. But it is equally true that such principles while serving as judicial and
legislative guides are not in themselves sources of causes
of action. Moreover, there are other equally fundamental constitutional principles
relied upon by the Senate which mandate the pursuit of a
trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity and
the promotion of industries which are competitive in both domestic and foreign
markets, thereby justifying its acceptance of said treaty. So
too, the alleged impairment of sovereignty in the exercise of legislative and
judicial powers is balanced by the adoption of the generally
accepted principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and
amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly
gave its consent to the WTO Agreement thereby
making it a part of the law of the land is a legitimate exercise of its sovereign
duty and power. We find no patent and gross arbitrariness
or despotism by reason of passion or personal hostility in such exercise. It is
not impossible to surmise that this Court,or at least some of its
members, may even agree with petitioners that it is more advantageous to the
national interest to strike down Senate Resolution No. 97. But
that is not a legal reason to attribute grave abuse of discretion to the Senate and
to nullify its decision. To do so would constitute grave abuse in
the exercise of our own judicial power and duty. Ineludibly, what the Senate did
was a valid exercise of its authority. As to whether such
exercise was wise, beneficial or viable is outside the realm of judicial inquiry and
review. That is a matter between the elected policy makers
and the people. As to whether the nation should join the worldwide march toward
trade liberalization and economic globalization is a matter
that our people should determine in electing their policy makers. After all, the
WTO Agreement allows withdrawal of membership, should
this be the political desire of a member.
Manila Prince Hotel v. G SIS, G.R. No. 122156, February 3, 1997
(En Banc)
Pursuant to the privatization program of the Philippine Government, the GSIS
sold in public auction its stake in Manila Hotel
Corporation (MHC). Only 2 bidders participated: petitioner Manila Prince Hotel
Corporation, a Filipino corporation, which offered to buy
51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad,
a Malaysian firm, with ITT -Sheraton as its hotel o perator, which
bid for the same number of shares at P44.00 per share, or P2.42 more than the
bid of petitioner.
Petitioner filed a petition before the Supreme Court to compel the GSIS to allow it
to match the bid of Renong Berhad. It invoked
the Filipino First Policy enshrined in 10, paragraph 2, Article XII of the 1987
Constitution, which provides that in the grant of rights, privileges,
and concessions covering the national economy and patrimony, the State shall
give preference to qualified Filipinos.
1. Whether 10, paragraph 2, Article XII of the 1987 Constitution is a self-
executing provision and does not need implementing legislation to carry
it into effect;
2. Assuming 10, paragraph 2, Article XII is self-executing, whether the
controlling shares of the Manila Hotel Corporation form part of our
patrimony as a nation;
3. Whether GSIS is included in the term State, hence, mandated toimplement
10, paragraph 2, Article XII of the Constitution; and
4. Assuming GSIS is part of the State, whether it should give preference to the
petitioner, a Filipino corporation, over Renong Berhad, a foreign
corporation, in the sale of the controlling shares of the Manila Hotel Corporation.
[The Court, voting 11-4, DISMISSED the petition.]
1. YES, 10, paragraph 2, Article XII of the 1987 Constitution is a self-executing
provision and does not need implementing
legislation to carry it into effect.
Sec. 10, second par., of Art XII is couched in such a way as not to make it
appear that it is non-self-executing but simply for purposes
of style. But, certainly, the legislature is not precluded from enacting further laws
to enforce the constitutional provision so long as the
contemplated statute squares with the Constitution. Minor details may be left to
the legislature without impairing the self-executing nature of
constitutional provisions.
xxx xxx xxx
Respondents . . . argue that the non-self-executing nature of Sec. 10, second
par., of Art. XII is implied from the tenor of the first and
third paragraphs of the same section which undoubtedly are not self-executing.
The argument is flawed. If the first and third paragraphs are
not self-executing because Congress is still to enact measures to encourage the
formation and operation of enterprises fully owned by
Filipinos, as in the first paragraph, and the State still needs legislation to regulate
and exercise authority over foreign investments within its
national jurisdiction, as in the third paragraph, thena fortiori, by the same logic,
the second paragraph can only be self-executing as it does not
by its language require any legislation in order to give preference to qualified
Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony. A constitutional provision may be
self-executing in one part and non-self-executing in
xxx. Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory,
positive command which is complete in itself and which
needs no further guidelines or implementing laws or rules for its enforcement.
From its very words the provision does not require any
legislation to put it in operation. It is per se judicially enforceable. When our
Constitution mandates that [i]n the grant of rights, privileges, and
concessions covering national economy and patrimony, the State shall give
preference to qualified Filipinos, it means just that - qualified Filipinos shall
be preferred. And when our Constitution declares that a right exists in certain
specified circumstances an action may be maintained to enforce
such right notwithstanding the absence of any legislation on the subject;
consequently, if there is no statute especially enacted to enforce such
constitutional right, such right enforces itself by its own inherent potency and
puissance, and from which all legislations must take their
bearings. Where there is a right there is a remedy.Ubi jus ibi remedium.
2. YES, the controlling shares of the Manila Hotel Corporation form part of our
patrimony as a nation.
In its plain and ordinary meaning, the term patrimony pertains to heritage. When
the Constitution speaks ofnational patrimony, it
refers not only to the natural resources of the Philippines, as the Constitution
could have very well used the termnatural resources, but also to
the cultural heritage of the Filipinos.
xxx xxx xxx
For more than eight (8) decades Manila Hotel has bore mute witness to the
triumphs and failures, loves and frustrations of the
Filipinos; its existence is impressed with public interest; its own historicity
associated with our struggle for sovereignty, independence and
nationhood. Verily, Manila Hotel has become part of our national economy and
patrimony. For sure, 51% of the equity of the MHC comes
within the purview of the constitutional shelter for it comprises the majority and
controlling stock, so that anyone who acquires or owns the
51% will have actual control and management of the hotel. In this instance, 51%
of the MHC cannot be disassociated from t he hotel and the
land on which the hotel edifice stands. Consequently, we cannot sustain
respondents claim that the Filipino First Policy provision is not
applicable since what is being sold is only 51% of the outstanding shares of the
corporation, not the Hotel building nor the land upon which the building
3. YES, GSIS is included in the term State, hence, it is mandated to implement
10, paragraph 2, Article XII of the Constitution.
It is undisputed that the sale of 51% of the MHC could only be carried out with
the prior approval of the State acting through
respondent Committee on Privatization. [T]his fact alone makes the sale of the
assets of respondents GSIS and MHC a state action. In
constitutional jurisprudence, the acts of persons distinct from the government are
considered state action covered by the Constitution (1)
when the activity it engages in is a public function; (2) when the government
is so significantly involved with the private actor as to make the
government responsible for his action; and, (3) when the government has
approved or authorized the actio n. It is evident that the act of
respondent GSIS in selling 51% of its share in respondent MHC comes under the
second and third categories of state action. Without doubt
therefore the transaction, although entered into by respondent GSIS, is in fact a
transaction of the State and therefore subject to the
constitutional command.
When the Constitution addresses the State it refers not only to the people but
also to the government as elements of the State. After
all, government is composed of three (3) divisions of power - legislative,
executive and judicial. Accordingly, a constitutional mandate
directed to the State i s correspondingly directed to the t hree (3) branches of
government. It is undeniable that in this case the subject
constitutional injunction is addressed among others to the Executive Department
and respondent GSIS, a government instrumentality
deriving its authority from the State.
4. YES, GSIS should give preference to the petitioner in the sale of the
controlling shares of the Manila Hotel Corporation.
It should be stressed that while the Malaysian firm offered the higher bid it is not
yet the winning bidder. The bidding rules
expressly provide that the highest bidder shall only be declared the winning
bidder after it has negotiated and executed the necessary
contracts, and se cured the requisite approvals. Since theFilipino First Policyp
rovision of the Constitution bestows preference
on qualified Filipinost he mere tending of the highest bid is not an assurance that
the highest bidder will be declared the winning
bidder. Resultantly, respondents are not bound to make the award yet, nor are
they under obligation to enter into one with the highest
bidder. For in choosing the awardee respondents are mandated to abide by the
di ctates of the 1987 Constitution the provisions of which are
presumed to be known to all the bidders and other interested parties.
xxx xxx xxx
Paragraph V. J. 1 of the bidding rules provides that[i]f for any reason the Highest
Bidder cannot be awarded the Block of Shares, GSIS may
offer this to other Qualified Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest bid in terms of
price per share. Certainly, the constitutional mandate itself isreason enough not
to award the block of shares immediately to the foreign bidder
notwithstanding its submission of a higher, or even the highest, bid. In fact, we
cannot conceive of astronger reason than the constitutional
injunction itself.
In the instant case, where a foreign firm submits the highest bid in a public
bidding concerning the grant of rights, privileges and
concessions covering the national economy and patrimony, thereby exceeding
the bid of a Filipino, there is no question that the Filipino will
have to be allowed to match the bid of the foreign entity. And if the Filipino
matches the bid of a foreign firm the award should go to the
Filipino. It must be so if we are to give life and meaning to theFilipino First Policy
provision of the 1987 Constitution. For, while this may
neither be expressly stated nor contemplated in the bidding rules, the
constitutional fiat is omnipresent to be simply disregarded. To ignore it
would be to sanction a perilous skirting of the basic law.
La Bugal Blaan Tribal Association Inc., et al. V. Victor O. Ramos, Secretary
Department of Environment and Natural Resources; Horacio
Ramos, Director, Mines and Geosciences Bureau (MGB-DENR); Ruben Torres,
Executive Secretary; and WMC (Philippines) Inc.
G.R. No. 127882, 01 December 2004, En Banc (Panganiban, J.)
A verba legis scrutiny of Section 2 Article XII of the Constitution discloses not
even a hint of a desire to prohibit foreign involvement
in the management or operation of mining activities, or to eradicate service
contracts. Such moves would necessarily imply an underlying
drastic shift in fundamental economic and developmental policies of the State.
That change requires a much more definite and irrefutable
basis than mere omission of the words service contract from the new
In a decision dated January 27, 2004, the Supreme Court declared
unconstitutional RA 7942 or the Philippine Mining Act of 1995, its
implementing rules (DENR Department Administrative Order 96-40) and the
Financial and Technical Assistance Agreement (FTAA) entered
into by the government and Western Mining Corp. Philippines, an Australian
corporation. The Court said RA 7942 or the Philippine Mining
Act of 1995 and its implementing rules are unconstitutional for allowing service
contracts now prohibited by the 1987 Charter. The Court
said FTAA is a service contract that grants control or beneficial ownership over
the nations mineral resources to foreign contractors, leaving
the State with nothing but bare title thereto. It was also on this ground that the
Court struck down as constitutionally infirm the FTAA
between the government and WMCP.
1. Whether or not the case has been rendered moot by the sale of WMC shares
in WMCP to Sagittarius (60% of Sagittarius equity si
owned by Filipinos and/or Filipino-owned corporations while 40% is owned by
Indophil Resources NL, an Australian company)
and by the subsequent transfer and registration of the FTAA from WMCP to
2. Whether or not the phrase Agreements Involving Either Technical or
Financial Assistance contained in paragraph 4 of Section 2 of
Article XII of the Constitution was properly interpreted
The Philippine Mining Act, its rules and the FTAA entered into by the
Government and private respondents are valid.
First Issue:
The record shows that WMC had already sold its shareholdings in WMCP to
Sagittarius Mines, a 60% Filipino-owned corporation.
This acquisition, no longer makes it possible for the Court to declare the FTAA
The crux of this issue of mootness is the fact that WMCP, at the time it entered
into the FTAA, happened to be wholly owned by
WMC Resources International Pty., (WMC), which in turn was a wholly owned
subsidiary of Western Mining Corporation Holdings Ltd., a
publicly listed major Australian mining and exploration company. The contention
that an FTAA could be entered into by the government
only with a foreign corporation, never with a Filipino enterprise is completely
outlandish. The nationalistic
provisions of the Constitution are all anchored on the protection of Filipino
interests, that what the Constitution grants to foreigners should be
equally available to Filipinos.
The claim that the FTAA was intended to apply solely to a foreign corporation,
citing Section 12, which provides for the
international commercial arbitration under the auspices of the International
Chamber of Commerce, after local remedies are exhausted. This
provision, however, does not necessarily imply that the WMCP FTAA cannot be
transferred to and assumed by a Filipino corporation like
Sagittarius, in which even the said provision should simply be disregarded as a
Section 40 of RA 7942 (the Mining Law) allegedly requires the Presidents
approval of a transfer, requiring the suspicious sale of
shares from WMC to Sagittarius the need to be litigated in a separate case. A re-
reading of the said provision, however, leads to a different
conclusion. Section 40 expressly applies to the assignment or transfer of the
FTAA, not to the sale and transfer of shares of stock in WMCP.
The controversy should be resolved notwithstanding its mootness to determine
once and for all the constitutionality of RA 7942, its
implementing rules and other future FTAAs which may be the subject of other
similar suits. Such a ruling should remove the cloud of
uncertainty that has discouraged investments into the Philippine mining industry.
The exceptional character of the situation and the paramount public interest
involved, as well as the necessity for a ruli ng to put an
end to the uncertainties plaguing the mining industry and the affected
communities as a result of doubts cast upon the constitutionality and
validity of the Mining Act, the subject FTAA and future FTAAs, and the need to
avert a multiplicity of suits makes it necessary to resolve the
The entry of the Chamber of Mines of the Philippines (CMP) as a respondent
bars objections arising from the standing or legal
interest of the srcinal parties. Moreover, the entry of CMP the local industry
association of mining companies likewise puts into focus the
real issue in this case, which is whether paragraph 4 of Section 2 of Article XII of
the Constitution is contravened by RA 7942 and DAO 96-40,
not whether it was violated by specific acts implementing RA 7942 and DAO 96-
40. When an act of the legislative department is seriously
alleged to have infringed the Constitution, settling the controversy becomes the
duty of this Court. By the mere enactment of the questioned
law or the approval of the challenged action, the dispute is said to have ripened
into a judicial controversy even without any other overt act.
Second Issue:
The Proper Interpretation of the Constitutional Phrase Agreements Involving
Either Technical or Financial Assistance
The application of familiar principles of statutory construction in the scrutiny of
Section 2 Article XII does not reveal any intention
to proscribe foreign involvement in the management or operation of mining
activities or to eliminate service contracts. Section 2 Article XII
contains no express prohibition to this effect. Had the framers intended to prohibit
direct participation of alien corporation in the exploration
of the countrys natural resources, they would employed clearly restrictive
language barring foreign corporation from directyl engaging in the
exploration of the countrys natural resources.
Foreign corporations may indeed participate in the exploitation, development and
use of Philippine natural resources but subject to
the full control and supervision of the State. RA 7942, its implementing rules
(DAO 96-40) and the FTAA entered into by then Government
and WMCP grant the Government full control and supervision over all aspects o f
planned exploration, development and utilization activities.
Sections 7.8 and 7.9 of the FTAA however are objectionable and void for being
contrary to public policy. Section 7.8 permits the sum
spent by government for the benefit of the contractor to be deductible from the
States share in the net mining revenues since it constitutes
unjust enrichment on the part of the contractor at the governments expense.
Section 7.9, meanwhile, deprives the Government of its share in
the net mining revenues in the event the foreign stockholders of a foreign mining
company sell 60% or more of their equity to a Filipino
citizen or corporation.
Thus, with the exception of Sections 7.8 and 7.9 of the subject FTAA, the FTAA,
RA 7942 and DAO 96-40 are declared constitutional.
The Meaning of Agreements Involving Either Technical or Financial
A constitutional provision specifically allowing foreign-owned corporation to
render financial or technical assistance in respect of
mining or any other commercial activity was clearly unnecessary; the provision
meant to refer to more than mere financial or technical
The framers of the Constitution, during its deliberation regarding foreign
investment in and management of an enterprise for largescale
exploration, development and utilization of minerals spoke about service
contracts as the concept was understood in the 1973
Constitution. It is obvious from their discussions that they did not intend to ban or
eradicate service contracts. Instead, they were intent on
crafting provisions to put in place safeguards that would eliminate the abuses
prevalent during the martial law regime. They were going to
permit service contracts with foreign corporations as contractors but with safety
measures to prevent abuses as an exception to the general
norm established in the first paragraph of Section2 of Article XII, which reserves
or limits to Filipino citizens and corporations that are at least
60 percent owned by such citizens the exploration, development and utilization of
mineral or petroleum resources. This was prompted by the
perceived insufficiency of Filipino capital and the felt need for foreign expertise in
the EDU of mineral resources.
The drafters, by specifying such agreements involving assistance, necessarily
gave implied assent to everything that these
agreements entailed or that could reasonably be deemed necessary to make
them tenable and effective including management authority
with respect to the day-to-day operations of the enterprise, and measures for the
protection of the interests of the foreign corporation, at least
to the extent that they are consistent with Philippine sovereignty over natural
resources, the constitutional requirement of State control, and
beneficial ownership of natural resources remains vested in the State.
It is clear that agreements involving either technical or financial assistance
referred to in paragraph 4 are in fact service contracts,
but such new service contracts are between foreign corporations acting as
contractors on the one hand, and on the other hand government as
principal or owner )of the works), whereby the foreign contractor provides the
capital, technology and technical know-how, and managerial
expertise in the creation and operation of the large-scale mining/extractive
enterprise, and government through its agencies (DENR, MGB)
actively exercises full control and supervision over the entire enterprise.
Such service contracts may be entered into only with respect to mineral oils. The
grant of such service is safeguards, among them: (1) that the service contract be
crafted in accordance with a general law setting standard osru bujencitf otrom s
conditions and requirements; (2) the President be the signatory for the
government; and (3) the President report the executed agreement to
Congress within thirty days.
Ultimate Test: Full State Control
The primacy of the principle of the States sovereign ownership of all mineral
resources, and its full control and supervision over all
aspects of exploration, development and utilization of natural resources must be
upheld. But full control and supervision c annot be taken
literally to mean that the State controls and supervises everything down to the
minutest details, and makes all required actions, as this would
render impossible the legitimate exercise by the contractor of a reasonable
degree of management prerogative and authority, indispensable to
the proper functioning of the mining enterprise. Also, the government need not
micro -manage the mining operations and day-to-day affairs of
the enterprise in order to be considered as exercising full control and supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree
of control sufficient to enable the Stateto direct,
restrain, regulate and govern the affairs of the extractive enterprises. Control by
the State may be on a macro level, through the establishment
of policies, guidelines, regulations, industry standards and similar measures that
would enable the government to regulate the conduct of
affairs in various enterprises, and restrain activities deemed not desirable or
beneficial, with the end in view is ensuring that these enterprises
contribute to the economic development and general welfare of the country,
conserve the environment, and uplift the well-being of the
affected local communities. Such a degree of control would be compatible with
permitting the foreign contractor sufficient and reasonable
management authority over the enterprise it has invested in, to ensure efficient
and profitable operation.
The States full control and supervision over mining operations are ensured
through the different provisions in RA 7942. The
government agencies concerned are empowered to approve or disapprove -
hence, in s position to influence, directs, and change - the
various work programs and corresponding minimum expenditure commitments
for each of the exploration, development and utilization
phases of the enterprise. Once they have been approved, the contractors
compliance with its commitments therein will be monitored. Figures
for mineral production and sales are regularly monitored and subjected to
government review, to ensure that the products and by-products
are disposed of at the best prices possible; copies of sales agreements have to
be submitted to and registered with MGB.
The contractor is mandated to open its books of accounts and records for
scrutiny, to enable the State to determine if the
government share has been fully paid. The State may likewise compel
compliance by the contractor with mandatory requirements on mine
safety, health and environmental protection, and the use of anti-pollution
technology and facilities. The contractor is also obligated to assist
the development of the mining community, and pay royalties to the indigenous
peoples concerned. And violation of any of FTAAs terms and
conditions, and/or noncompliance with statutes or regulations, may be penalized
by cancellation of the FTAA. Such sanction is significant to
a contractor who may have yet to recover the tens or hundreds of millions of
dollars sunk into a mining project.
Overall, the State definitely has a pivotal say in the operation of the individual
enterprises, and can set directions and objectives,
detect deviations and non-compliance by the contractor; and enforce compliance
and impose sanctions should the occasion arise. Hence, RA
7942 and DAO 96-40 vest in government more than a sufficient degree of control
and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a
foreign contractor to apply for and hold an
exploration permit. During the exploration phase, the permit grantee (and
prospective contractor) is spending and investing heavily in
exploration activities without yet being able to extract minerals and generate
revenues. The exploration permit issued under Section 3 (aq), 20
and 23 of RA7942, which allows exploration but not extraction, serves to protect
the intere sts and rights of the exploration permit grantee (and
would-be contractor), foreign or local. Otherwise, the exploration works already
conducted, and expenditures already made, may end up only
benefiting claim-jumpers. Thus, Section 3 (aq) of RA 7942 is not unconstitutional.

The provisions of the WMCP FTAA, far from constituting a surrender of control
and a grant of beneficial ownership of mineral
resources to the contractor in question, vest the State with control and
supervision over practically all aspects of the operations of the FTAA
contractor, including the charging of pre-operating and operating expenses, and
the disposition of mineral products.
There is likewise no relinquishment of control on account of specific provisions of
the WMCP FTAA. Clause 8.2 provides a
mechanism to prevent the mining operations from grinding to a complete halt as
a result of possible delays of more than 60 days in the
governments processing and approval of submitted work programs and budgets.
Clause 8.3 seeks to provide a temporary, stop-gap solution
in case a disagreement between the State and the contractor (over the proposed
work program or budget submitted by the contractor) should
result in a deadlock or impasse, to avoid unreasonably long delays in the
performance of the works.
Clause 8.5, which allows the contractor to make changes to approve work
programs and budgets without the prior approval of the
DENR secretary, subject to certain limitations with respect to the variance/s,
merely provides the contractor a certain amount of flexibility to
meet unexpected situations, while guaranteeing that the approved work
programs and budgets are not abandoned altogether. And if the
secretary disagrees with the actions taken by the contractor in this instance, he
may also resort to cancellation/termination of the FTAA as the
ultimate sanction.
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of
the contract area to be relinquished. The State is not
in a position to substitute its judgment for that of the contractor, who knows
exactly which portions of the contract area do not contain
minerals in commercial quantities and should be relinquished. Also, since the
annual occupation fees paid to the government are based on the
total hectarage of the contract area, net of the areas relinquished, the
contractors self-interest will assure proper and efficient relinquishment.
Clause 10.2 (e) of the WMCP FTAA does not mean that the contractor can
compel the government to use its power of eminent
domain. It contemplates a situation in which the contractor is a foreign-owned
corporations, hence, not qualified to own land. The contractor
identifies the surface areas needed for it to construct the infrastructure for mining
operations, and the State then acquires the surface rights on
behalf of the former. The provision does not call for the exercise of the power of
eminent domain (or determination of just compensation); it
seeks to avoid a violation of the anti-dummy law.
Clause 10.2 (l) of the WMCP FTAA giving the contractor the right to mortgage
and encumber the mineral products extracted may
have been a result of conditions imposed by the creditor-banks to secure the
loan obligations of WMCP. Banks lend also upon the security of
encumbrances on goods produced which can be easily sold and converted into
cash and applied to the repayment of loans. Thus, Clause
10.2(l) is not something out of the ordinary. Neither it is objectionable, because
even though the contractor is allowed to mortgage or
encumber the mineral end-products themselves, the contractor is not thereby
relieved of its obligation to pay the government its basic and
additional shares in the net mining revenue. The contractors ability to mortgage
the minerals does not negate the States rgiht to receive its
share of net mining revenues.
Clause 10.2(k) which gives the contractor authority to change its equity
structure at any time, that WMCP, which was then 100
percent foreign-owned, could permit Filipino equity ownership. Moreover, what is
important is that the contractor, regardless of its
ownership, is always in a position to render the services required under the
FTAA, under the direction and control of the government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if
required by banks and other financial institutions as
part of the conditions for new lendings. There is nothing objectionable here,
since Clause 10.4(e) also provides that such financing arrangements should in
no event reduce the contractors obligations or the
governments right under the FTAA. Clause 10.4(i) provides that government
shall favourably consider any request for amendments of this
agreement necessary for the contractor to successfully obtain the financing.
There is no renunciation of control, as the proviso does not say
that government shall automatically grant any such request. Also, it is up to the
contractor to prove the need for the requested changes. The
government always has the final say on whether to approve or disapprove such
The FTAA provisions do not reduce or abdicate State control.
No Surrender of Financial Benefits
The second paragraph of Section 81 of RA7942 has been denounced for
allegedly limiting the States share in FTAAs with foreign
contractors to just taxes, fees, and duties, and depriving the State of a share i n
the after-tax income o f the enterprise. However, the inclusion of
the phrase among other things in the second paragraph of Section81 clearly
and unmistakably reveals the le gislative intentto have the State
collect more than just usual taxes, duties and fees.
Thus, DAO 99-56, the Guidelines Establishing the Fiscal Regime of Financial
or Technical Assistance Agreements spells out the
financial benefits government will receive from an FTAA, as consisting of not only
a basic government share, comprised of all direct taxes,
fees and royalties, as well as other payments made by the contractor during the
term of the FTAA, but also an additional government share,
being a share in the earnings or cash flows of the mining enterprise, so as to
achieve a fifty-fifty sharing of net benefits from mining between
the government and the contractor.
The basic government share and the additional government share do not yet
take into account the indirect taxes and other financial
contributions of mining projects, which are real and actual benefits enjoyed by
the Filipino people; if these are taken into account, total
government share increases to 60 percent or higher (as much as 77 percent, and
89 percent in one instance) of the net present value of total
benefits from the project.
The third or last paragraph of Section 81 of RA7942 is slammed for deferring the
payment of the government share in FTAAs until
after the contractor shall have recovered its pre-operating expenses, exploration
and development expenditures. Allegedly, the collection of
the States share is rendered uncertain, as there is no time limit in RA 7942 for
this grace period or recovery period. But although RA7942 did
not limit the grace period, the concerned agencies (DENR and MGB) in
formulating the 1995 and 1996 Implementing Rules and Regulation
provided that the period of recovery, reckoned from the date of commercial
operation, shall be for a period not exceeding five years, or until
the date of actual recovery, whichever comes earlier.
Since RA 7942 allegedly does not require government approval for the pre-
operating, exploration and development expenses of the foreign
contractors, it is feared that such expenses could be bloated to wipe out mining
revenues anticipated for 10 years, with the result that the
States share is zero for the first 10 years. The argument is based on incorrect
information. Under Section 23 of RA 7942, the applicant for
exploration permit is required to submit a proposed work program for exploration,
containing a yearly budget of proposed expenditures,
which the State passes upon and either approves or rejects; if approved, the
same will subsequently be recorded as pre-operating expenses
that the contractor will have to recoup over the grace period.
The Government is able to know ahead of time the amounts of pre-operating and
other expenses to be recovered, and the
approximate period of time needed therefore because under Section 24, when an
exploration permittee files with the MGB a declaration of mining project feasibility,
it must submit a work program for development, with
corresponding budget, for approval by the Bureau, before government may grant
an FTAA or MPSA or other mineral agreements. The
government has the opportunity to approve or reject the proposed work program
and budgeted expenditures for development works, which
will become the pre-operating and development costs that will have to be
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign
contractor, the State must receive at least 60 percent
of the after-tax income from the exploitation of its mineral resources, and that
such share is the equivalent of the constitutional requirement
that at least 60 percent of the capital, and hence 60 percent of the income, of
mining companies should remain in Filipino hands. Even if the
State is entitled to a 60 percent share from other mineral agreements (CPA, JVA
and MPSA), that would not create a parallel or analogous
situation for FTAAs. .
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable
to all situations, regardless of circumstances. The
terms and conditions of petroleum FTAAs cannot serve as standards for mineral
mining FTAAs, because the technical and operational
requirements, cost structures and investment needs of off-shore petroleum
exploration and drilling companies do not have the remotest
resemblance to those of on-shore mining companies. To avoid compromising the
States full control and supervision over the exploitation of
mineral resources, there must be no attempt to impose a minimum 60 percent
rule. It is sufficient that the State has the power and means,
should it so decide, to get a 60 percent share (or greater); and it is not necessary
that the State does so in every case.
Invalid Provisions of the WMCP FTAA
Section 7.9 of the WMCP FTAA clearly renders illusory the States 60 percent
share of WMCPs revenues. Under Section 7.9, should
WMCPs foreign stockholders (who srcinally owned 100 percent of the equity)
sell 60 percent or more of their equity to a Filipino citizen or
corporation, the State loses its right to receive its share in net mining revenues
under Section 7.7, without any offsetting compensation to the
State. And what is given to the State in Section 7.7 is by mere tolerance of
WMCPs foreign stockholders, who can at any time cut off the
governments entire share by simply selling 60 percent of WMCPs equity to a
Philippine citizen or corporation.
In fact, the sale by WMCPs foreign stockholder on January 23, 2001 of the entire
outstanding equity in WMCP to Sagittarius Mines,
Inc., a domestic corporation at least 60 percent Filipino owned, can be deemed
to have automatically triggered the operation of Secti on 7.9 and
removed the States right to receive its 60 percent share. Section 7.9 of the
WMCP FTAA has effectively given away the States share without
anything in exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign
stockholders in WMCP, because by the mere act of
divestment the local and foreign stockholders get a windfall, as their share in
the net mining revenues of WMCP is automatically increased,
without having to pay anything for it.
Being grossly disadvantageous to government and detrimental to the Filipino
people, as well as violative of public policy, Section
7.9 must therefore be stricken off as invalid. The FTAA in question does not
involve mere contractual rights but, being impressed as it is with
public interest, the contractual provisions and stipulations must yield to the
common good and the national interest. Since the offending
provision is very much separable from the rest of the FTAA, the deletion of
Section 7.9 can be done without affecting or requiring the
invalidation of the entire WMCP FTAA itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums
spent by government for the benefit of the
contractor to be deductible from the States sharein net mining revenues,
it results in benefiting the contractor twice over. This constitutes unjust
enrichment on the part of the contractor, at the expense
of government. For being grossly disadvantageous and prejudicial to government
and contrary to public policy, Section 7.8(e)
must also be declared without effect. It may likewise be stricken off without
affecting the rest of the FTAA.
Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964,
with only his widow as compulsory heir. His will
was admitted to probate by the Court of First Instance of Manila, Branch X, on
July 27, 1965. Maria Luisa Palacios was appointed
administratrix of the estate.
On June 23, 1966, the administratrix submitted a project of partition as follows:
the property of the deceased is to be d ivided into
two parts. One part shall go to the widow en plenodominio in satisfaction of
her legitime; the other part or free portion shall
go to Jorge and Roberto Ramirez en nudapropriedad. Furthermore, one third
(1/3) of the free portion is charged with the
widows usufruct and the remaining two-third (2/3) with a usufruct in favor of
-APPEAL for the partitioning of testate estate of Jose Eugenio Ramirez (a Filipino
national, died in Spain on December 11, 1964)
among principal beneficiaries:
Marcelle Demoron de Ramirez
-French who lives in Paris
-received (as spouse) and usufructuary rights over 1/3 of the free portion
Roberto and Jorge Ramirez
-two grandnephews
-lives in Malate
-received the (free portion)
Wanda de Wrobleski
-Austrian who lives in Spain
-received usufructuary rights of 2/3 of the free portion
-vulgar substitution in favor of Juan Pablo Jankowski and Horacio Ramirez
-Maria Luisa Palacios -administratix
-Jorge and Roberto Ramirez opposed because
a. vulgar substitution in favor of Wanda wrt widows usufruct and in favor of Juan
Pablo Jankowski and Horacio Ramirez, wrt
to Wandas usufruct is INVALID because first heirs (Marcelle and Wanda)
survived the testator
b. fideicommissary substitutions are INVALID because first heirs not related to
the second heirs or substitutes within the first
degree as provided in Art 863 CC
c. grant of usufruct of real property in favor of an alien, Wanda, violated Art XIII
Sec 5
d. proposed partition of the testators interest in the Santa Cruz Building between
widow and appellants violates testators
express will to give this property to them
-LC: approved partition
WON the partition is valid insofar as
a. widows legitime
b. substitutions
c. usufruct of Wanda
a. YES, appellants do not question because Marcelle is the widow[1]and over
which he could impose no burden,
encumbrance, condition or substitution of any kind whatsoever[2]
-the proposed creation by the admininstratix in favor of the testators widow of a
usufruct over 1/3 of the free portion of the
testators estate cannot be made where it will run counter to the testators
express will. The Court erred for Marcelle who is
entitled to of the estate enpleno dominio as her legitime and which is more
than what she is given under the will is not
entitled to have any additional share in the estate. To give Marcelle more than
her legitime will run counter to the testators
intention for as stated above his disposition even impaired her le gitime and
tended to favor Wanda.
b. Vulgar substitutions are valid because dying before t he testator is not the only
case where a vulgar substitution can be made.
Also, according to Art 859 CC, cases also include refusal or incapacity to accept
inheritance therefore it is VALID.
BUT fideicommissary substitutions are VOID because Juan Pablo Jankowski and
Horace Ramirez are not related to Wande and
according to Art 863 CC, it validates a fideicommissary substitution provided that
such substitution does not go beyond one
degreefrom the heir srcinally instituted. Another is that there i s no absolute duty
imposed on Wanda to transmit the
usufructuary to the substitutes and in fact the apellee agrees that the testator
contradicts the establishment of the
fideicommissary substitution when he permits the properties be subject to
usufruct to be sold upon mutual agreement ofthe
usufructuaries and naked owners.
c. YES, usufruct of Wanda is VALID
-Art XIII[3]Sec 5 (1935): Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned
except toindividuals, corporations, or associations qualified to acquire or hold
land of the public domain in the Philippines.[4]
The lower court upheld the usufruct thinking that the Constitution covers not only
succession by operation of law but also
testamentary succession BUT SC is of the opinion that this provision does not
apply to testamentary succession for otherwise the
prohibition will be for naught and meaningless. Any alien would circumvent the
prohibition by paying money to a Philippine
landowner in exchange for a devise of a piece of land BUT an alien may be
bestowed USUFRUCTUARY RIGHTS over a parcel
of land in the Philippines. Therefore, the usufruct in favor of Wanda, although a
real right, is upheld because it doe s not vest title
to the land in the usufructuary (Wanda) and it is thevesting of title to land in favor
of aliens which is proscribed by the Constitution.
Decision: Marcelle (as legitime), Jorge and Roberto Ramirez (free portion) in
naked ownership and the usufruct to Wanda de
Wrobleski with simple substitution in favor of Juan Pablo Jankowski and Horace
This is a petition to nullify the sale of shares of stock of Philippine
Telecommunications Investment Corporation
(PTIC) by the government of the Republic of the Philippines, acting through the
Inter-Agency Privatization Council (IPC), to
Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of First Pacific Company
Limited (First Pacific), a Hong Kong-based
investment management and holding company and a shareholder of the
Philippine Long Distance Telephone Company (PLDT).
The petitioner questioned the sale on the ground that it also involved an indirect
sale of 12 million shares (or about 6.3
percent of the outstanding common shares) of PLDT owned by PTIC to First
Pacific. With the this sale, First Pacifics common
shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby
increasing the total common shareholdings of
foreigners in PLDT to about 81.47%. This, according to the petitioner, violates
Section 11, Article XII of the 1987 Philippine
Constitution which limits foreign ownership of the capital of a public utility to not
more than 40%, thus:
Section 11. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at
least sixty per centum of whose capital is owned by such citizen; snor shall such
franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither shall any
such franchise or right be granted except under
the condition that it shall be subject to amendment, alteration, or repeal by the
Congress when the common good so requires.
The State shall encourage equity participation in public utilities by the general
public. The participation of foreign investors in
the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the
executive and managing officers of such corporation or association must be
citizens of the Philippines. (Emphasis supplied)
Does the term capital in Section 11, Article XII of the Constitution refer to the
total common shares only, or to the
total outstanding capital stock (combined total of common and non-voting
preferred shares) of PLDT, a public utility?
[The Court partly granted the petition and held that the term capital in Section
11, Article XII of the Constitution refers only to
shares of stock entitled to vote in the election of directors of a public utility, i.e., to
the total common shares in PLDT.]
Considering that common shares have voting rights which translate to control, as
opposed to preferred shares which
usually have no voting rights, the term capital in Section 11, Article XII of the
Constitution refers only to common shares.
However, if the preferred shares also have the right to vote in the election of
directors, then the term capital shall include such
preferred shares because the right to participate in the control or management of
the co rporation is exercised through the right to
vote in the election of directors. In short, the term capital in Section 11, Article
XII of the Constitution refers only to shares
of stock that can vote in the election of director s.
To construe broadly the term capital as the total outstanding capital stock,
including both common and nonvoting
preferred shares, grossly contravenes the intent and letter of the Constitution that
the State shall develop a self-reliant
and independent national economyeffectively controlled by Filipinos. A broad
definition unjustifiably disregards who owns the
all-important voting stock, which necessarily equates to control of the public
Holders of PLDT preferred shares are explicitly denied of the right to vote in the
election of directors. PLDTs Articles
of Incorporation expressly state that the holders of Serial Preferred Stock shall
not be entitled to vote at any meeting of the
stockholders for the election of directors or for any other purposoer otherwise
participate in any action taken by the
corporation or its stockholders, or to receive notice of any meeting of
stockholders. On the other hand, holders of common
shares are granted the exclusive right to vote in the election of directors. PLDTs
Articles of Incorporation state that each holder
of Common Capital Stock shall have one vote in respect of each share of such
stock held by him on all matters voted upon by the
stockholders, and the holders of Common Capital Stock shall have the exclusive
right to vote for the election of directors and
for all other purposes.
It must be stressed, and respondents do not dispute, that foreigners hold a
majority of the common shares of PLDT. In
fact, based on PLDTs 2010 General Information Sheet (GIS), which is a
document required to be submitted annually to the
Securities and Exchange Commission, foreigners hold 120,046,690 common
shares of PLDT whereas Filipinos hold only
66,750,622 common shares. In other words, foreigners hold 64.27% of the total
number of PLDTs common shares, while
Filipinos hold only 35.73%. Since holding a majority of the common shares
equates to control, it is clear that foreigners exercise
control over PLDT. Such amount of control unmistakably exceeds the allowable
40 percent limit on foreign ownership of public
utilities expressly mandated in Section 11, Article XII of the Constitution.
As shown in PLDTs 2010 GIS, as submitted to the SEC, the par value of PLDT
common shares is P5.00 per share,
whereas the par value of preferred shares is P10.00 per share. In other words,
preferred shares have twice the par value of
common shares but cannot elect directors and have only 1/70 of the dividends of
common shares. Moreover, 99.44% of the
preferred shares are owned by Filipinos while foreigners own only a minuscule
0.56% of the preferred shares. Worse, preferred
shares constitute 77.85% of the authorized capital stock of PLDT while common
shares constitute only 22.15%. This undeniably
shows that beneficial interest in PLDT is not with the non-voting preferred shares
but with the common shares, blatantly
violating the constitutional requirement of 60 percent Filipino control and Filipino
beneficial ownership in a public utility.
In short, Filipinos hold less than 60 percent of the voting stock, and earn less
than 60 percent of the dividends, of
PLDT. This directly contravenes the express command in Section 11, Article XII
of the Constitution that [n]o franchise,
certificate, or any other form of authorization for the operation of a public utility
shall be granted except to x x x corporations x x
x organized under the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens x x x.
To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which
class of shares exercises the sole right to
vote in the election of directors, and thus exercise control over PLDT; (2)
Filipinos own only 35.73% of PLDTs common shares,
constituting a minority of the voting stock, and thus do not exercise control over
PLDT; (3) preferred shares, 99.44% owned by
Filipinos, have no voting rights; (4) preferred shares earn only 1/70 of the
dividends that common shares earn; (5) preferred
shares have twice the par value of common shares; and (6) preferred shares
constitute 77.85% of the authorized capital stock of
PLDT and common shares only 22.15%. This kind of ownership and control of a
public utility is a mockery of the Constitution.
[Thus, the Respondent Chairperson of the Securities and Exchange Commission
was DIRECTED by the Court to
apply the foregoing definition of the term capital in determining the extent of
allowable foreign ownership in respondent
Philippine Long Distance Telephone Company, and if there is a violation of
Section 11, Article XII of the Constitution, to im pose
the appropriate sanctions under the law.]
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government
through the DOTC/MIAA for the
development of NAIA International Passenger Terminal III (NAIA IPT III).
DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for
the implementation of the project and submitted
with its endorsement proposal to the NEDA, which approved the project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily
newspapers of an invitation for competitive or
comparative proposals on AEDCs unsolicited proposal, in accordance with Sec.
4-A of RA 6957, as amended.
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. PBAC awarded the project to Paircargo
Consortium. Because of that, it was incorporated
into Philippine International Airport Terminals Co., Inc.
AEDC subsequently protested the alleged undue preference given to PIATCO
and reiterated its objections as regards the
prequalification of PIATCO.
On July 12, 1997, the Government and PIATCO signed the Concession
Agreement for the Build-Operate-and-Transfer
Arrangement of the NAIA Passenger Terminal III (1997 Concession
Agreement). The Government granted PIATCO the
franchise to operate and maintain the said terminal during the concession period
and to collect the fees, rentals and other
charges in accordance with the rates or schedules stipulated in the 1997
Concession Agreement. The Agreement provided that
the concession period shall be for twenty-five (25) years commencing from the
in-service date, and may be renewed at the option
of the Government for a period not exceeding twenty-five (25) years. At the end
of the concession period, PIATCO shall transfer
the development facility to MIAA.
Meanwhile, the MIAA which is charged with the maintenance and operation of
the NAIA Terminals I and II, had existing
concession contracts with various service providers to offer international airline
airport services, such as in-flight catering,
passenger handling, ramp and ground support, aircraft maintenance and
provisions, cargo handling and warehousing, and
other services, to several international airlines at the NAIA.
On September 17, 2002, the workers of the international airline service providers,
claiming that they would lose their job upon
the implementation of the questioned agreements, filed a petition for prohibition.
Several employees of MIAA likewise filed a
petition assailing the legality of the various agreements.
During the pendency of the cases, PGMA, on her speech, stated that she will not
honor (PIATCO) contracts which the
Executive Branchs legal offices have concluded (as) null andvoid.
Whether or not the State can temporarily take over a business affected with
public interest.
Yes. PIATCO cannot, by mere contractual stipulation, contravene the
Constitutional provision on temporary government
takeover and obligate the government to payreasonable cost for the use of the
Terminal and/or TerminalComplex.
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
The above provision pertains to the right of the State in times of national
emergency, and in the exercise of its police power, to
temporarily take over the operation of any business affected with public interest.
The duration of the emergency itself is the
determining factor as to how long the temporary takeover by the government
would last. The temporary takeover by the
government extends only to the operation of the business and not to the
ownership thereof. As such thegovernment is not
required to compensate the private entity-owner of the said business as there is
no transfer of ownersh, wiphether permanent
or temporary. The private entity-owner affected by the temporary takeover
cannot, likewise, claim just compensation for the use
of the said business and its properties as the temporary takeover by the
government is in exercise of its police power and not of
its power of eminent domain.
Article XII, section 17 of the 1987 Constitution envisions a situation wherein the
exigencies of the times necessitate the
government to temporarily take over or direct the operation of any privately
owned public utility or business affected with
public interest. It is the welfare and interest of the public which is the paramount
consideration in determining whether or not
to temporarily take over a particular business. Clearly, the State in effecting the
temporary takeover is exercising its police
power. Police power is the most essential, insistent, and illimitable of powers.
Its exercise therefore must not be unreasonably
hampered nor its exercise be a source of obligation by the government in the
absence of damage due to arbitrariness of its
exercise. Thus, requiring the government to pay reasonable compensation for
the reasonable use of the property pursuant to the
operation of the business contravenes the Constitution.
Eastern Samar Governor Ruperto Ambil and Provincial warden Alexandrino
Apelado were found guilty before the
Sandiganbayan for violating Section 3(e) of Republic Act No. 3019 otherwise
known as the Anti-Graft and Corrupt Practices Act
after Governor Ambil, conspiring with Apelado, ordered the release of then
criminally-charged and detained mayor Francisco
Adalim and had the latter transferred from the provincial jail to the thegovernors
1.)Whether or not the Sandiganbayan had jurisdiction over a suit where one of
the 2 accused has a Salary Grade classified to be
cognizable before the lower courts.
2.)Whether or not the transfer of the detainee, who was a mayor, by the governor
was a violation in contemplation of Sec3(e) of
RA 3019 in relation to sec2(b) of the same act.
The Sandiganbayan had jurisdiction over the suit where one of the 2 accused
held a position with a classification of Salary Grade
27. Only when none of the numerous accused occupies a position with a salary
grade27 or higher can exclusive jurisdiction
befall in the lower courts. Sandiganbayan has jurisdiction over Ambil as
provincial governor and so as with Apelado for being a
co-principal in the perpetration of the offense although he had a salary grade of
The power of control and supervision granted to by the Local Government Code
and Administrative Code of 1917 does not
include nor permit the usurpation of power duly vested before the courts. Facts
showed that transfer by Ambil o f Adalim was
attended by evident bias and badfaith. Section 3(e) still applies to the case at
hand even if the act was not one relative to the
granting of licenses and concessions. The provision was meant to i nclude
officers with such duty to the list already
enumerated therein and not necessarily to provide exclusivity. Furthermore, the
fact that Andalim, as the reciepient of the
benefit, was a public officer, did not preclude application. The act employs the
phraseprivate party, which is more
comprehensive in scope to mean either a private person or a public officer acting
in a private capacity to protect his personal
Thus the verdict by the SAndiganbayan, finding the accused guilty of violating RA
3019 was proper.
Municipal Corporation Creation of LGUs by Autonomous Regions (ARMM)
Population Requirement
The Province of Maguindanao is part of ARMM. Cotabato City is part of the
province of Maguindanao but it is not part or
ARMM because Cotabato City voted against its inclusion in a plebiscite held in
1989. Maguindanao has two legislative districts.
The 1st legislative district comprises of Cotabato City and 8 other municipalities.
A law (RA 9054) was passed amending ARMMs Organic Act and vesting it with
power to create provinces, municipalities, cities
and barangays. Pursuant to this law, the ARMM Regional Assembly created
Shariff Kabunsuan (Muslim Mindanao Autonomy
Act 201) which comprised of the municipalities of the 1stdistrict of Maguindanao
with the exception of Cotabato City.
For the purposes of the 2007 elections, COMELEC initially stated that the
1stdistrict is now only made of Cotabato City (because
of MMA 201). But it later amended this stating that status quo should be retained
however just for the purposes of the elections,
the first district should be called Shariff Kabunsuan with Cotabato City this is
also while awaiting a decisive declaration from
Congress as to Cotabatos status as a le gislative district (or part of any).
Sema was a congressional candidate for the legislative district of S. Kabunsuan
with Cotabato (1st district). Later, Sema was
contending that Cotabato City should be a separate legislative district and that
votes therefrom should be excluded in the voting
(probably because her rival Dilangalen was from there and D was winning in
fact he won). She contended that under the
Constitution, upon creation of a province (S. Kabunsuan), that province
automatically gains legislative representation and since
S. Kabunsuan excludes Cotabato City so in effect Cotabato is being deprived
of a representative in the HOR.
COMELEC maintained that the legislative district is still there and that regardless
of S. Kabunsuan being created, the legislative
district is not affected and so is its representation.
ISSUE: Whether or not RA 9054 is unconstitutional. Whether or not ARMM can
create validly LGUs.
HELD: RA 9054 is unconstitutional. The creation of local government units is
governed by Section 10, Article X of the
Constitution, which provides:
Sec. 10. No province, city, municipality, or barangay may be created, divided,
merged, abolished or its boundary substantially altered except
in accordance with the criteria established in the local government code and
subject to approval by a majority of the votes cast in a plebiscite
in the political units directly affected.
Thus, the creation of any of the four local government units province, city,
municipality or barangay must comply with three
conditions. First, the creation of a local government unit must follow the criteria
fixed in the Local Government Code. Second,
such creation must not conflict with any provision of the Constitution. Third, there
must be a plebiscite in the political units
There is neither an express prohibition nor an express grant of authority in the
Constitution for Congress to delegate to regional
or local legislative bodies the power to create local government units. However,
under its plenary legislative powers, Congress
can delegate to local l egislative bodies the power to create local government
units, subject to reasonable standards and prov ided
no conflict arises with any provision of the Constitution. In fact, Congress has
delegated to provincial boards, and city and
municipal councils, the power to create barangays within their jurisdiction, subject
to compliance with the criteria established in
the Local Government Code, and the plebiscite requirement in Section 10, Article
X of the Constitution. Hence, ARMM cannot
validly create Shariff Kabunsuan province.
Note that in order to create a city there must be at least a population of at least
250k, and that a province, once created, should
have at least one representative in the HOR. Note further that in order to have a
legislative district, there must at least be 250k
(population) in said district. Cotabato City did not meet the population
requirement so Semas contention is untenable. On the
other hand, ARMM cannot validly create the province of S. Kabunsuan without
first creating a legislative district. But this can
never be legally possible because the creation of legislative districts is vested
solely in Congress. At most, what ARMM can
create are barangays not cities and provinces.
League of Cities of the Philippines (LCP), et al. vs. Commission on Elections, et
al. G.R. No. 176951, G.R.
No. 177499 & G.R. No. 178056; 24 August 2010
Facts: The 11th Congress enacted into law 33 bills converting 33 municipalities
into cities. However, it did not act on bills
converting 24 other municipalities into cities. Subsequently, the 12th Congress
enacted Republic Act No. 9009 (RA 9009), which
took effect on 20 June 2001, amending Section 450 of the Local Government
Code by increasing the annual income requirement
for conversion of a municipality into a city from P20million to P100million.
Thereafter, 16 municipalities filed their individual
cityhood bills. The 16 cityhood bills contained a common provision exempting all
the 16 municipalities from the P100million
income requirement of RA 9009. The cityhood bills were approved by the House
of Representatives and the into law without the Presidents signature. Said
Cityhood Laws directed the Commission on Elections (C OSeMnaEtLeE, aCn) dt
ola hposeldd
plebiscites to determine whether the voters in each municipality approved of the
c onversion. Petitioners sought to declare the 16
Cityhood Laws unconstitutional for violation of Section 10, Article X of the
Constitutionand the equal protection clause,
lamenting that the wholesale conversion of municipalities into cities would reduce
the share of existing cities in the Internal
Revenue Allotment (IRA).
On 18 November 2008, the Supreme Court En Banc, by a majority vote, declared
the 16 Cityhood Laws to be in violation of
Section 10, Article X of the 1987 Constitution, which provides that no city shall be
created except in accordance with the criteria
established in the local government code. The Supreme Court held that since
respondent municipalities did not meet the
P100million income requirement under Section 450 of the Local Government
Code, as amended by RA 9009, the Cityhood Laws
converting said municipalities into cities were unconstitutional. The Supreme
Court also declared the 16 Cityhood Laws to be in
violation of the equal protection clause since there was no valid classification
between those entitled and those not entitled to
exemption from the P100million income requirement: (1) there was no substantial
distinction between municipalities
with pending cityhood bills in the 11th Congress when RA 9009 was enacted and
municipalities that

did not have such pending bills; (2) the classification criterion mere pendency of
a cityhood bill in
the 11th Congress was not germane to the purpose of the law, which was to
prevent fiscally nonviable
municipalities from converting into cities; (3) the pendency of a cityhood bill in
the 11th
Congress limited the exemption to a specific condition existing at the time of
passage of RA 9009 a condition that would never
happen again, violating the requirement that a valid classification must not be
limited to existing conditions only; and (4)
lsiimmiitlianrgly t hsiet ueaxteemd;p mtiounn iocniplya ltioti etsh we 1it6h r tehsep
osanmdeen int mcoumnei caisp athlieti e1s6 vreioslpaotendd ethnet
mreuqnuiicreipmaelintite tsh caotu tlhde n colat scsoifnicvaetrito inn tmo ucsitti
easp.ply to all
On 31 March 2009, the Supreme Court En Banc , also by a majority vote, denied
the respondent municipalities first motion for
reconsideration. On 28 April 2009, the Supreme Court En Banc, by a split vote,
denied the respondent municipalities second
motion for reconsideration. The 18 November 2008 Decision became final and
executory and was recorded in the Book of Entries
of Judgments on 21 May 2009.
However, on 21 December 2009, the Supreme Court En Banc reversed the 18
November 2008 Decision and upheld the
constitutionality of the Cityhood Laws. The Court reasoned that:
(1) When Section 10, Article X of the 1987 Constitution speaks of the local
government code, the reference cannot be to any
specific statute or codification of laws, let alone the Local Government
Code (LGC) of 1991. It would be noted that at the time of the adoption of the
1987 Constitution, Batas Pambansa Blg. (BP) 337,
the then LGC, was still in effect. Had the framers of the 1987 Constitution
intended to isolate the embodiment of the criteria only
in the LGC, they would have referred to BP 337. Also, they would not have
provided for the enactment by Congress of a new
LGC, as they did in Section 3, Article X of the Constitution. Accordingly, the
criteria for creation of cities need not be embodied
in the LGC. Congress can impose such criteria in a consolidated set of laws or a
single-subject enactment or through amendatory
laws. The passage of amendatory laws, such as RA 9009, was no different from
the enactment of the cityhood laws specifically
exempting a particular political subdivision from the criteria earlier mentioned.
Congress, in enacting the exempting laws,
effectively decreased the already codified i ndicators.
(2) Deliberations on RA 9009, particularly the floor exchange between Senators
Aquilino Pimentel and Franklin Drilon, indicated
the following complementary legislative intentions: (a) the then pending cityhood
bills would be outside the pale of the
proposed P100million minimum income requirement; and (b) RA 9009 would not
have any retroactive effect insofar as the
pending cityhood bills were concerned. That said deliberations were undertaken
in the 11th and/or 12th Congress (or before the
cityhood laws were passed during the 13th Congress) and Congress was not a
continuing legislative body, was immaterial.
Debates, deliberations, and proceedings of Congress and the steps taken in the
enactment of the law, in this case the cityhood
laws in relation to RA 9009 or vice versa, were part of its legislative history and
may be consulted, if appropriate, as aids in the
interpretation of the law.
(3) Petitioners could not plausibly invoke the equal protection clause because no
deprivation of property resulted by the
enactment of the Cityhood Laws. It was presumptuous on the part of petitioner
LCP member-cities to already stake a claim on
the IRA, as if it were their property, as the IRA was yet to be allocated.
Furthermore, the equal protection clause does not
preclude reasonable classification which (a) rests on substantial distinctions; (b)
is germane to the purpose of the law; (c) is not
be limited to existing conditions only; and (d) applies equally to all members of
the same class. All of these requisites had been
met by the subject Cityhood Laws: (a) Respondent municipalities were
substantially different from other municipalities desirous
to be cities. They had pending cityhood bills before the passage of RA 9009, and
years before the enactment of the amendatory
RA 9009, respondent municipalities had already met the income criterion exacted
for cityhood under the LGC o f 1991. However,
due to extraneous circumstances (the impeachment of then President Estrada,
the related jueteng scandal investigations
conducted before, and the EDSA events that followed the aborted impeachment),
the bills for their conversion remained unacted
upon by Congress. To impose on them the much higher income requirement
after what they had gone through would appear to
be unfair; (b) the exemption of respondent municipalities from the P100million
income requirement was meant to reduce the
inequality, occasioned by the passage of the amendatory RA 9009, between
respondent municipalities and the 33 other
municipalities whose cityhood bills were enacted during the 11th Congress; and
(c) the uniform exemption clause would apply to
municipalities that had pending cityhood bills before the passage of RA 9009 and
were compliant with then Sec. 450 of the LGC
of 1991, which prescribed an income requirement of P20 million.
(4) The existence of the cities consequent to the approval of the Cityhood Laws
in the plebiscites held in the affected
municipalities is now an operative fact. New cities appear to have been
organized and are functioning accordingly, with new
sets of officials and employees. Pursuant to the operative fact doctrine,
the constitutionality of the Cityhood Laws in question
should be upheld.
Petitioners moved for reconsideration (ad cautelam) and for the annulment of 21
December 2009 Decision. Some petitioners-inintervention
also moved for reconsideration(ad cautelam).
Issues: Whether or not the 16 Cityhood Laws violated Section 10, Article X of the
1987 Constitution and the equal protection
Held: The 16 Cityhood Laws are unconstitutional.
(1) Section 10, Article X of the Constitution is clear the creation of local
government units must follow the criteria established
in the Local Government Code and not in any other law. There is only one Local
Government Code. The Constitution requires
Congress to stipulate in the Local Government Code all the criteria necessary for
the creation of a city, including the conversion
of a municipality into a city. Congress cannot write such criteria in any other law,
like the C ityhood Laws. The clear intent o f the
Constitution is to insure that the creation of cities and other political units follows
the same uniform, non-discriminatory
criteria found solely in the Loca lGovernment Code.
From the moment RA 9009 took effect (on 30 June 2001), the LGC required that
any municipality desiring to become a city must
satisfy the P100million income requirement. Section 450 of the LGC, as
amended by RA 9009, does not contain any exemption
from this income requirement, even for municipalities with pending cityhood bills
in Congress when RA 9009 was passed. The
uniform exemption clause in the Cityhood Laws, therefore, violated Section 10,
Article X of the Constitution.
To be valid, such exemption must be written in the Local Government Code and
not in any other law, including the
Cityhood Laws.
RA 9009 is not a law different from the Local Government Code. RA 9009, by
amending Section
450 of the Local Government Code, embodies the new and prevailing Section
450 of the Local Government CodSein. ce the
law is clear, plain and unambiguous that any municipality desiring to convert into
a city must meet the increased income
requirement, there is no reason to go beyond the letter of the law. Moreover,
where the law does not make an exemption, the
Court should not create one.
(2) Under the operative fact doctrine, the law is recognized as unconstitutional
but the effects of the unconstitutional law, prior
to its declaration of nullity, may be left undisturbed as a matter of equity and fair
play. In fact, the invocation of the operative
fact doctrine is an admission that the law i s unconstitutional.
Respondent municipalities theory that the implementation of the Cityhood Laws,
which resulted in 16 municipalities
functioning as new cities with new sets of officials and employees, operated to
contitutionalize the unconstitutional Cityhood
Laws, was a misapplication of the operative fact doctrine and would set a gravely
dangerous precedent. This view would open
the floodgates to the wanton enactment of unconstitutional laws and a mad rush
for their immediate implementation before the
Court could declare them unconstitutional.
The operative fact doctrine never validates or constitutionalizes an
unconstitutional lawUn. der the operative fact doctrine,
the unconstitutional law remains unconstitutional, but the effects of the
unconstitutional law, prior to its judicial declaration of
nullity, may be left undisturbed as a matter of equity and fair play. Accordingly,
the 16 Cityhood Laws remain unconstitutional
because they violate Section 10, Article X of the Constitution. However, the
effects of the implementation of the
Cityhood Laws prior to the declaration of their nullity, such as the payment of
salaries and supplies by the new cities or their issuance of
licenses or execution of contracts, may be recognized as valid and effective, as a
matter of equity and fair play, to innocent people who may have
relied on the presumed validity of the Cityhood Laws prior to the Courts
declaration of their unconstitutionality.
(3) There is no substantial distinction between municipalities with pending
cityhood bills in the 11th Congress and municipalities that did not have
pending bills. The pendency of a cityhood bill in the
11th Congress does not affect or determine the level of income of a municipality.
In short, the classification criterion mdeernec yp eonf a
cityhood bill in the 11th Congress is not rationally related to the purpose of the
law which is to prevent fiscal-lvyi anbolne municipalities
from converting into cities. Moreover, the pendency of a cityhood bill in the 11th
Congress, as a criterion, limits the exemption to a specific
condition existing at the time of passage of RA 9009.That specific condition will
never happen again. This violates the requirement tha tv alid
classification must not be limited to existing conditions onlyF.urthermore, limiting
the exemption only to the 16 municipalities violates the
requirement that the classification must apply to all similarly situated;
municipalities with the same income as the 16 respondent municipalities
cannot convert into cities, while the 16 respondent municipalities can.
* Re: the split or tie-vote on the second motion fo r reconsideration of the 18
November 2008 Decision.
The dissenting opinion stated that a deadlocked vote of six is not a majority
and a non-majority does not constitute a rule with precedential
However, Section 7, Rule 56 of the Rules of Court provides that when, in
appealed cases, the court en banc is equally divided in opinion, or the
necessary majority cannot be had, the judgment or order appealed from shall
stand affirmed and on all incidental matters, the petition or motion
shall be denied.
The 6-6 tie-vote by the Court en banc on the second motion for reconsideration
necessarily resulted in the denial of the second motion for
reconsideration. Since the Court was evenly divided, there could be no reversal
of the 18 November 2008 Decision ,for a tie-vote cannot result in any
court order or directive. The tie-vote plainly signifies that there is no majority to
overturn the prior 18 November 2008 Decision and 31 March 2009
Resolution denying reconsideration, and thus the second motion for
reconsideration must be denied. Hence, the 18 November 2008 judgment and
the 31 March 2009 resolution stand in full force. These prior majority actions of
the Courten banc can only be overruled by a new majority vote, not
a tie-vote because a tie-vote cannot overrule a prior affirmative action.
The 18 November 2008 Decision, declaring the 16 Cityhood Laws
unconstitutional, was reinstat ed.
Autonomous Region; plebiscite requirement. Section 18, Article X of the
Constitution provides that the creation of the autonomous region shall be
effective when approved by majority of the votes cast by the constituent units in a
plebiscite called for the purpose. The Supreme Court
interpreted this to mean that only amendments to, or revisions of, the Organic Act
constitutionally-essential to the creation of autonomous regions
i.e ., those aspects specifically mentioned in the Constitution which Congress
must provide for in the Organic Act require ratification through a
plebiscite. While it agrees with the petitioners underlying premise that
sovereignty ultimately resides with the people, it disagrees that this legal
reality necessitates compliance with the plebiscite requirement for
allamendments to RA No. 9054. For if we were to go by the petitioners
interpretation of Section 18, Article X of the Constitution that all amendments to
the Organic Act have to undergo the plebiscite requirement before
becoming effective, this would lead to impractical and illogical results
hampering the ARMMs progress by impeding Congress from enacting
laws that timely address problems as they arise in the region, as well as weighing
down the ARMM government with the costs that unavoidably
follow the holding of a plebiscite. Also, Sec. 3 of R.A. No. 10153 cannot be seen
as changing the basic structure of the ARMM regional government.
On the contrary, this provision clearly preserves the basic structure of the ARMM
regional government when it recognizes the offices of the ARMM
regional government and directs the OICs who shall temporarily assume these
offices to perform the functions pertaining to the said
offices. Datu Michael Abas Kida, etc., et al. vs. Senate of the Phil., etc., et
al./Basari D. Mapupuno vs. Sixto Brillantes, etc., et al./Rep. Edcel C. Lagman vs.
Paquito N. Ochoa, Jr., etc., et al./Almarin Centi Tillah, et al. vs. The Commission
on Elections, etc., et al./Atty. Romulo B. Macalintal vs. Commission on
Elections, et al./Luis Barok Biraogo, G.R. No. 196271, February 28, 2012