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[G.R. No. 155001.

May 5, 2003]
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL ANTONIO B.
BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, CONRADO G.
DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR
WORKERS UNION - NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION (PALEA), petitioners, vs. PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his
capacity as Head of the Department of Transportation and Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS CORPORATION,
MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION,
MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT MAINTENANCE
CORPORATION, and MIASCOR LOGISTICS CORPORATION, petitioners-in-intervention,

[G.R. No. 155547. May 5, 2003]


SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners,
vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head
of the Department of Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of Public Works and
Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA, PROSPERO
C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O.
MACARANBON, respondents-intervenors,

[G.R. No. 155661. May 5, 2003]


CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN, LEONARDO
DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO SANTOS, MA.
LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS
(SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the
Department of Transportation and Communications, respondents.

DECISION
PUNO, J.:

Petitioners and petitioners-in-intervention filed the instant petitions for prohibition under Rule 65
of the Revised Rules of Court seeking to prohibit the Manila International Airport Authority (MIAA) and
the Department of Transportation and Communications (DOTC) and its Secretary from implementing the
following agreements executed by the Philippine Government through the DOTC and the MIAA and the
Philippine International Air Terminals Co., Inc. (PIATCO): (1) the Concession Agreement signed on July 12,
1997, (2) the Amended and Restated Concession Agreement dated November 26, 1999, (3) the First
Supplement to the Amended and Restated Concession Agreement dated August 27, 1999, (4) the Second
Supplement to the Amended and Restated Concession Agreement dated September 4, 2000, and (5) the
Third Supplement to the Amended and Restated Concession Agreement dated June 22, 2001
(collectively, the PIATCO Contracts)
The facts are as follows:
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a
comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the
present airport can cope with the traffic development up to the year 2010. The study consisted of two
parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed master
plans and development plans; and second, presentation of the preliminary design of the passenger
terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry Sy,
Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to explore the
possibility of investing in the construction and operation of a new international airport terminal. To
signify their commitment to pursue the project, they formed the Asias Emerging Dragon Corp. (AEDC)
which was registered with the Securities and Exchange Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a
build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law). [1]
On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification
Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the
National Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by
the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating
Council (NEDA ICC) Technical Board favorably endorsed the project to the ICC Cabinet Committee which
approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the NEDA
passed Board Resolution No. 2 which approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an
invitation for competitive or comparative proposals on AEDCs unsolicited proposal, in accordance with
Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3) sealed
envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain the
Prequalification Documents, the second envelope the Technical Proposal, and the third envelope the
Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents
and the submission of the comparative bid proposals. Interested firms were permitted to obtain the
Request for Proposal Documents beginning June 28, 1996, upon submission of a written application and
payment of a non-refundable fee of P50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must have
adequate capability to sustain the financing requirement for the detailed engineering, design,
construction, operation, and maintenance phases of the project. The proponent would be evaluated
based on its ability to provide a minimum amount of equity to the project, and its capacity to secure
external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on
July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The
following amendments were made on the Bid Documents:

a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial proposal
an additional percentage of gross revenue share of the Government, as follows:

i. First 5 years 5.0%

ii. Next 10 years 7.5%

iii. Next 10 years 10.0%

b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price
challenge. Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but
payment of which shall start upon site possession.

c. The project proponent must have adequate capability to sustain the financing requirement for the
detailed engineering, design, construction, and/or operation and maintenance phases of the project as
the case may be. For purposes of pre-qualification, this capability shall be measured in terms of:

i. Proof of the availability of the project proponent and/or the consortium to provide the minimum
amount of equity for the project; and

ii. a letter testimonial from reputable banks attesting that the project proponent and/or the members of
the consortium are banking with them, that the project proponent and/or the members are of good
financial standing, and have adequate resources.

d. The basis for the prequalification shall be the proponents compliance with the minimum technical and
financial requirements provided in the Bid Documents and the IRR of the BOT Law. The minimum
amount of equity shall be 30% of the Project Cost.

e. Amendments to the draft Concession Agreement shall be issued from time to time. Said amendments
shall only cover items that would not materially affect the preparation of the proponents proposal.

On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were
made. Upon the request of prospective bidder Peoples Air Cargo & Warehousing Co., Inc (Paircargo), the
PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT
Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be revealed to
AEDC, and that the challengers technical and financial proposals would remain confidential. The PBAC
also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents was merely
indicative and that other revenue sources may be included by the proponent, subject to approval by
DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated as Public
Utility Fees would be subject to regulation, and those charges which would be actually deemed Public
Utility Fees could still be revised, depending on the outcome of PBACs query on the matter with the
Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled Answers to the Queries of
PAIRCARGO as Per Letter Dated September 3 and 10, 1996. Paircargos queries and the PBACs responses
were as follows:

1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as
prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each member
company is so structured to meet the requirements and needs of their current respective business
undertaking/activities. In order to comply with this equity requirement, Paircargo is requesting PBAC to
just allow each member of (sic) corporation of the Joint Venture to just execute an agreement that
embodies a commitment to infuse the required capital in case the project is awarded to the Joint Venture
instead of increasing each corporations current authorized capital stock just for prequalification
purposes.

In prequalification, the agency is interested in ones financial capability at the time of prequalification,
not future or potential capability.

A commitment to put up equity once awarded the project is not enough to establish that present
financial capability. However, total financial capability of all member companies of the Consortium, to be
established by submitting the respective companies audited financial statements, shall be acceptable.

2. At present, Paircargo is negotiating with banks and other institutions for the extension of a
Performance Security to the joint venture in the event that the Concessions Agreement (sic) is awarded
to them. However, Paircargo is being required to submit a copy of the draft concession as one of the
documentary requirements. Therefore, Paircargo is requesting that theyd (sic) be furnished copy of the
approved negotiated agreement between the PBAC and the AEDC at the soonest possible time.

A copy of the draft Concession Agreement is included in the Bid Documents. Any material changes
would be made known to prospective challengers through bid bulletins. However, a final version will be
issued before the award of contract.

The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the required
Bid Security.
On September 20, 1996, the consortium composed of Peoples Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23,
1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo
Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the
Paircargo Consortium, which include:

a. The lack of corporate approvals and financial capability of PAIRCARGO;

b. The lack of corporate approvals and financial capability of PAGS;


c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount that
Security Bank could legally invest in the project;

d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification
purposes; and

e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in the
operation of a public utility.

The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised
by the latter, and that based on the documents submitted by Paircargo and the established
prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to
undertake the project. The Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium
which contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargos financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections
1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC
meeting and the accompanying technical evaluation report where each of the issues they raised were
addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost to the government and to pay the
government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross
revenues for the next ten years of operation, and 10% share in gross revenues for the last ten years of
operation, in accordance with the Bid Documents. However, in addition to the foregoing, AEDC offered
to pay the government a total of P135 million as guaranteed payment for 27 years while Paircargo
Consortium offered to pay the government a total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to
match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDCs failure to
match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport
Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of
the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of
Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman of
the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the
PBAC Technical Committee.
On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval, on a no-
objection basis, of the BOT agreement between the DOTC and PIATCO. As the ad referendum gathered
only four (4) of the required six (6) signatures, the NEDA merely noted the agreement.
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.
On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO,
through its President, Henry T. Go, signed the Concession Agreement for the Build-Operate-and-Transfer
Arrangement of the Ninoy Aquino International Airport Passenger Terminal III (1997 Concession
Agreement). The Government granted PIATCO the franchise to operate and maintain the said terminal
during the concession period and to collect the fees, rentals and other charges in accordance with the
rates or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the
concession period shall be for twenty-five (25) years commencing from the in-service date, and may be
renewed at the option of the Government for a period not exceeding twenty-five (25) years. At the end
of the concession period, PIATCO shall transfer the development facility to MIAA.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession
Agreement (ARCA). Among the provisions of the 1997 Concession Agreement that were amended by the
ARCA were: Sec. 1.11 pertaining to the definition of certificate of completion; Sec. 2.05 pertaining to the
Special Obligations of GRP; Sec. 3.02 (a) dealing with the exclusivity of the franchise given to the
Concessionaire; Sec. 4.04 concerning the assignment by Concessionaire of its interest in the
Development Facility; Sec. 5.08 (c) dealing with the proceeds of Concessionaires insurance; Sec. 5.10
with respect to the temporary take-over of operations by GRP; Sec. 5.16 pertaining to the taxes, duties
and other imposts that may be levied on the Concessionaire; Sec. 6.03 as regards the periodic
adjustment of public utility fees and charges; the entire Article VIII concerning the provisions on the
termination of the contract; and Sec. 10.02 providing for the venue of the arbitration proceedings in case
a dispute or controversy arises between the parties to the agreement.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the
Third Supplement on June 22, 2001 (collectively, Supplements).
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining Revenues or Gross
Revenues; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide sufficient funds for the
upkeep, maintenance, repair and/or replacement of all airport facilities and equipment which are owned
or operated by MIAA; and further providing additional special obligations on the part of GRP aside from
those already enumerated in Sec. 2.05 of the ARCA. The First Supplement also provided a stipulation as
regards the construction of a surface road to connect NAIA Terminal II and Terminal III in lieu of the
proposed access tunnel crossing Runway 13/31; the swapping of obligations between GRP and PIATCO
regarding the improvement of Sales Road; and the changes in the timetable. It also amended Sec. 6.01
(c) of the ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the ARCA by inserting an
introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the Payments of Percentage Share
in Gross Revenues.
The Second Supplement to the ARCA contained provisions concerning the clearing, removal,
demolition or disposal of subterranean structures uncovered or discovered at the site of the
construction of the terminal by the Concessionaire. It defined the scope of works; it provided for the
procedure for the demolition of the said structures and the consideration for the same which the GRP
shall pay PIATCO; it provided for time extensions, incremental and consequential costs and losses
consequent to the existence of such structures; and it provided for some additional obligations on the
part of PIATCO as regards the said structures.
Finally, the Third Supplement provided for the obligations of the Concessionaire as regards the
construction of the surface road connecting Terminals II and III.
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I
and II, had existing concession contracts with various service providers to offer international airline
airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft
maintenance and provisions, cargo handling and warehousing, and other services, to several
international airlines at the NAIA. Some of these service providers are the Miascor Group, DNATA-Wings
Aviation Systems Corp., and the MacroAsia Group. Miascor, DNATA and MacroAsia, together with
Philippine Airlines (PAL), are the dominant players in the industry with an aggregate market share of
70%.
On September 17, 2002, the workers of the international airline service providers, claiming that
they stand to lose their employment upon the implementation of the questioned agreements, filed
before this Court a petition for prohibition to enjoin the enforcement of said agreements. [2]
On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a
motion for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed
a similar petition with this Court.[3]
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality
of the various agreements.[4]
On December 11, 2002. another group of Congressmen, Hon. Jacinto V. Paras, Rafael P. Nantes,
Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon
and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors. They filed
their Comment-In-Intervention defending the validity of the assailed agreements and praying for the
dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on
November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated
that she will not honor (PIATCO) contracts which the Executive Branchs legal offices have concluded (as)
null and void.[5]
Respondent PIATCO filed its Comments to the present petitions on November 7 and 27, 2002. The
Office of the Solicitor General and the Office of the Government Corporate Counsel filed their respective
Comments in behalf of the public respondents.
On December 10, 2002, the Court heard the case on oral argument. After the oral argument, the
Court then resolved in open court to require the parties to file simultaneously their respective
Memoranda in amplification of the issues heard in the oral arguments within 30 days and to explore the
possibility of arbitration or mediation as provided in the challenged contracts.
In their consolidated Memorandum, the Office of the Solicitor General and the Office of the
Government Corporate Counsel prayed that the present petitions be given due course and that
judgment be rendered declaring the 1997 Concession Agreement, the ARCA and the Supplements
thereto void for being contrary to the Constitution, the BOT Law and its Implementing Rules and
Regulations.
On March 6, 2003, respondent PIATCO informed the Court that on March 4, 2003 PIATCO
commenced arbitration proceedings before the International Chamber of Commerce, International Court
of Arbitration (ICC) by filing a Request for Arbitration with the Secretariat of the ICC against the
Government of the Republic of the Philippines acting through the DOTC and MIAA.
In the present cases, the Court is again faced with the task of resolving complicated issues made
difficult by their intersecting legal and economic implications. The Court is aware of the far reaching fall
out effects of the ruling which it makes today. For more than a century and whenever the exigencies of
the times demand it, this Court has never shirked from its solemn duty to dispense justice and resolve
actual controversies involving rights which are legally demandable and enforceable, and to determine
whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction. [6] To
be sure, this Court will not begin to do otherwise today.
We shall first dispose of the procedural issues raised by respondent PIATCO which they allege will
bar the resolution of the instant controversy.
Petitioners Legal Standing to File
the present Petitions
a. G.R. Nos. 155001 and 155661
In G.R. No. 155001 individual petitioners are employees of various service providers [7] having
separate concession contracts with MIAA and continuing service agreements with various international
airlinesto provide in-flight catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing and other services. Also included as petitioners are
labor unions MIASCOR Workers Union-National Labor Union and Philippine Airlines Employees
Association. These petitioners filed the instant action for prohibition as taxpayers and as parties whose
rights and interests stand to be violated by the implementation of the PIATCO Contracts.
Petitioners-Intervenors in the same case are all corporations organized and existing under Philippine
laws engaged in the business of providing in-flight catering, passenger handling, ramp and ground
support, aircraft maintenance and provisions, cargo handling and warehousing and other services to
several international airlines at the Ninoy Aquino International Airport. Petitioners-Intervenors allege
that as tax-paying international airline and airport-related service operators, each one of them stands to
be irreparably injured by the implementation of the PIATCO Contracts. Each of the petitioners-
intervenors have separate and subsisting concession agreements with MIAA and with various
international airlines which they allege are being interfered with and violated by respondent PIATCO.
In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang Manggagawa sa
Paliparan ng Pilipinas - a legitimate labor union and accredited as the sole and exclusive bargaining agent
of all the employees in MIAA. Petitioners anchor their petition for prohibition on the nullity of the
contracts entered into by the Government and PIATCO regarding the build-operate-and-transfer of the
NAIA IPT III. They filed the petition as taxpayers and persons who have a legitimate interest to protect in
the implementation of the PIATCO Contracts.
Petitioners in both cases raise the argument that the PIATCO Contracts contain stipulations which
directly contravene numerous provisions of the Constitution, specific provisions of the BOT Law and its
Implementing Rules and Regulations, and public policy. Petitioners contend that the DOTC and the MIAA,
by entering into said contracts, have committed grave abuse of discretion amounting to lack or excess of
jurisdiction which can be remedied only by a writ of prohibition, there being no plain, speedy or
adequate remedy in the ordinary course of law.
In particular, petitioners assail the provisions in the 1997 Concession Agreement and the ARCA
which grant PIATCO the exclusive right to operate a commercial international passenger terminal within
the Island of Luzon, except those international airports already existing at the time of the execution of
the agreement. The contracts further provide that upon the commencement of operations at the NAIA
IPT III, the Government shall cause the closure of Ninoy Aquino International Airport Passenger
Terminals I and II as international passenger terminals. With respect to existing concession agreements
between MIAA and international airport service providers regarding certain services or operations, the
1997 Concession Agreement and the ARCA uniformly provide that such services or operations will not be
carried over to the NAIA IPT III and PIATCO is under no obligation to permit such carry over except
through a separate agreement duly entered into with PIATCO. [8]
With respect to the petitioning service providers and their employees, upon the commencement of
operations of the NAIA IPT III, they allege that they will be effectively barred from providing international
airline airport services at the NAIA Terminals I and II as all international airlines and passengers will be
diverted to the NAIA IPT III. The petitioning service providers will thus be compelled to contract with
PIATCO alone for such services, with no assurance that subsisting contracts with MIAA and other
international airlines will be respected. Petitioning service providers stress that despite the very
competitive market, the substantial capital investments required and the high rate of fees, they entered
into their respective contracts with the MIAA with the understanding that the said contracts will be in
force for the stipulated period, and thereafter, renewed so as to allow each of the petitioning service
providers to recoup their investments and obtain a reasonable return thereon.
Petitioning employees of various service providers at the NAIA Terminals I and II and of MIAA on the
other hand allege that with the closure of the NAIA Terminals I and II as international passenger
terminals under the PIATCO Contracts, they stand to lose employment.
The question on legal standing is whether such parties have alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional questions.
[9]
Accordingly, it has been held that the interest of a person assailing the constitutionality of a statute
must be direct and personal. He must be able to show, not only that the law or any government act is
invalid, but also that he sustained or is in imminent danger of sustaining some direct injury as a result of
its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the
person complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act
complained of.[10]
We hold that petitioners have the requisite standing. In the above-mentioned cases, petitioners
have a direct and substantial interest to protect by reason of the implementation of the PIATCO
Contracts. They stand to lose their source of livelihood, a property right which is zealously protected by
the Constitution. Moreover, subsisting concession agreements between MIAA and petitioners-
intervenors and service contracts between international airlines and petitioners-intervenors stand to be
nullified or terminated by the operation of the NAIA IPT III under the PIATCO Contracts. The financial
prejudice brought about by the PIATCO Contracts on petitioners and petitioners-intervenors in these
cases are legitimate interests sufficient to confer on them the requisite standing to file the instant
petitions.
b. G.R. No. 155547
In G.R. No. 155547, petitioners filed the petition for prohibition as members of the House of
Representatives, citizens and taxpayers. They allege that as members of the House of Representatives,
they are especially interested in the PIATCO Contracts, because the contracts compel the Government
and/or the House of Representatives to appropriate funds necessary to comply with the provisions
therein.[11] They cite provisions of the PIATCO Contracts which require disbursement of unappropriated
amounts in compliance with the contractual obligations of the Government. They allege that the
Government obligations in the PIATCO Contracts which compel government expenditure without
appropriation is a curtailment of their prerogatives as legislators, contrary to the mandate of the
Constitution that [n]o money shall be paid out of the treasury except in pursuance of an appropriation
made by law.[12]
Standing is a peculiar concept in constitutional law because in some cases, suits are not brought by
parties who have been personally injured by the operation of a law or any other government act but by
concerned citizens, taxpayers or voters who actually sue in the public interest. Although we are not
unmindful of the cases of Imus Electric Co. v. Municipality of Imus[13] and Gonzales v.
Raquiza[14] whereinthis Court held that appropriation must be made only on amounts immediately
demandable, public interest demands that we take a more liberal view in determining whether the
petitioners suing as legislators, taxpayers and citizens have locus standi to file the instant
petition. In Kilosbayan, Inc. v. Guingona,[15] this Court held [i]n line with the liberal policy of this Court
on locus standi, ordinary taxpayers, members of Congress, and even association of planters, and non-
profit civic organizations were allowed to initiate and prosecute actions before this Court to question the
constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies or
instrumentalities.[16] Further, insofar as taxpayers' suits are concerned . . . (this Court) is not devoid of
discretion as to whether or not it should be entertained. [17] As such . . . even if, strictly speaking, they
[the petitioners] are not covered by the definition, it is still within the wide discretion of the Court to
waive the requirement and so remove the impediment to its addressing and resolving the serious
constitutional questions raised.[18] In view of the serious legal questions involved and their impact on
public interest, we resolve to grant standing to the petitioners.
Other Procedural Matters
Respondent PIATCO further alleges that this Court is without jurisdiction to review the instant cases
as factual issues are involved which this Court is ill-equipped to resolve. Moreover, PIATCO alleges that
submission of this controversy to this Court at the first instance is a violation of the rule on hierarchy of
courts. They contend that trial courts have concurrent jurisdiction with this Court with respect to a
special civil action for prohibition and hence, following the rule on hierarchy of courts, resort must first
be had before the trial courts.
After a thorough study and careful evaluation of the issues involved, this Court is of the view that
the crux of the instant controversy involves significant legal questions. The facts necessary to resolve
these legal questions are well established and, hence, need not be determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction over the
cases at bar. The said rule may be relaxed when the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of this Courts primary jurisdiction.[19]
It is easy to discern that exceptional circumstances exist in the cases at bar that call for the
relaxation of the rule. Both petitioners and respondents agree that these cases are of transcendental
importance as they involve the construction and operation of the countrys premier international airport.
Moreover, the crucial issues submitted for resolution are of first impression and they entail the proper
legal interpretation of key provisions of the Constitution, the BOT Law and its Implementing Rules and
Regulations. Thus, considering the nature of the controversy before the Court, procedural bars may be
lowered to give way for the speedy disposition of the instant cases.
Legal Effect of the Commencement
of Arbitration Proceedings by
PIATCO
There is one more procedural obstacle which must be overcome. The Court is aware that arbitration
proceedings pursuant to Section 10.02 of the ARCA have been filed at the instance of respondent
PIATCO. Again, we hold that the arbitration step taken by PIATCO will not oust this Court of its
jurisdiction over the cases at bar.
In Del Monte Corporation-USA v. Court of Appeals,[20] even after finding that the arbitration clause
in the Distributorship Agreement in question is valid and the dispute between the parties is arbitrable,
this Court affirmed the trial courts decision denying petitioners Motion to Suspend Proceedings pursuant
to the arbitration clause under the contract. In so ruling, this Court held that as contracts produce legal
effect between the parties, their assigns and heirs, only the parties to the Distributorship Agreement are
bound by its terms, including the arbitration clause stipulated therein. This Court ruled that arbitration
proceedings could be called for but only with respect to the parties to the contract in question.
Considering that there are parties to the case who are neither parties to the Distributorship Agreement
nor heirs or assigns of the parties thereto, this Court, citing its previous ruling in Salas, Jr. v. Laperal
Realty Corporation,[21] held that to tolerate the splitting of proceedings by allowing arbitration as to
some of the parties on the one hand and trial for the others on the other hand would, in effect, result
in multiplicity of suits, duplicitous procedure and unnecessary delay.[22] Thus, we ruled that the interest
of justice would best be served if the trial court hears and adjudicates the case in a single and complete
proceeding.
It is established that petitioners in the present cases who have presented legitimate interests in the
resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be
bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to
arbitration proceedings. A speedy and decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The
object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would
not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain
issues involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped to
resolve.
Now, to the merits of the instant controversy.
I. Is PIATCO a qualified bidder?
Public respondents argue that the Paircargo Consortium, PIATCOs predecessor, was not a duly pre-
qualified bidder on the unsolicited proposal submitted by AEDC as the Paircargo Consortium failed to
meet the financial capability required under the BOT Law and the Bid Documents. They allege that in
computing the ability of the Paircargo Consortium to meet the minimum equity requirements for the
project, the entire net worth of Security Bank, a member of the consortium, should not be considered.
PIATCO relies, on the other hand, on the strength of the Memorandum dated October 14, 1996
issued by the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo Consortium is found to
have a combined net worth of P3,900,000,000.00, sufficient to meet the equity requirements of the
project. The said Memorandum was in response to a letter from Mr. Antonio Henson of AEDC to
President Fidel V. Ramos questioning the financial capability of the Paircargo Consortium on the ground
that it does not have the financial resources to put up the required minimum equity
of P2,700,000,000.00. This contention is based on the restriction under R.A. No. 337, as amended or the
General Banking Act that a commercial bank cannot invest in any single enterprise in an amount more
than 15% of its net worth. In the said Memorandum, Undersecretary Cal opined:

The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial capability will be
evaluated based on total financial capability of all the member companies of the [Paircargo] Consortium.
In this connection, the Challenger was found to have a combined net worth of P3,926,421,242.00 that
could support a project costing approximately P13 Billion.

It is not a requirement that the net worth must be unrestricted. To impose that as a requirement now
will be nothing less than unfair.

The financial statement or the net worth is not the sole basis in establishing financial capability. As stated
in Bid Bulletin No. 3, financial capability may also be established by testimonial letters issued by
reputable banks. The Challenger has complied with this requirement.

To recap, net worth reflected in the Financial Statement should not be taken as the amount of the
money to be used to answer the required thirty percent (30%) equity of the challenger but rather to be
used in establishing if there is enough basis to believe that the challenger can comply with the required
30% equity. In fact, proof of sufficient equity is required as one of the conditions for award of contract
(Section 12.1 IRR of the BOT Law) but not for pre-qualification (Section 5.4 of the same document). [23]

Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be
awarded to the bidder who, having satisfied the minimum financial, technical, organizational and legal
standards required by the law, has submitted the lowest bid and most favorable terms of the project.
[24]
Further, the 1994 Implementing Rules and Regulations of the BOT Law provide:

Section 5.4 Pre-qualification Requirements.

c. Financial Capability: The project proponent must have adequate capability to sustain the financing
requirements for the detailed engineering design, construction and/or operation and maintenance
phases of the project, as the case may be. For purposes of pre-qualification, this capability shall be
measured in terms of (i) proof of the ability of the project proponent and/or the consortium to provide
a minimum amount of equity to the project, and (ii) a letter testimonial from reputable banks attesting
that the project proponent and/or members of the consortium are banking with them, that they are in
good financial standing, and that they have adequate resources. The government agency/LGU
concerned shall determine on a project-to-project basis and before pre-qualification, the minimum
amount of equity needed. (emphasis supplied)

Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August 16, 1996 amending
the financial capability requirements for pre-qualification of the project proponent as follows:
6. Basis of Pre-qualification

The basis for the pre-qualification shall be on the compliance of the proponent to the minimum technical
and financial requirements provided in the Bid Documents and in the IRR of the BOT Law, R.A. No. 6957,
as amended by R.A. 7718.

The minimum amount of equity to which the proponents financial capability will be based shall be thirty
percent (30%) of the project cost instead of the twenty percent (20%) specified in Section 3.6.4 of the
Bid Documents.This is to correlate with the required debt-to-equity ratio of 70:30 in Section 2.01a of the
draft concession agreement. The debt portion of the project financing should not exceed 70% of the
actual project cost.

Accordingly, based on the above provisions of law, the Paircargo Consortium or any challenger to
the unsolicited proposal of AEDC has to show that it possesses the requisite financial capability to
undertake the project in the minimum amount of 30% of the project cost through (i) proof of the ability
to provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable banks
attesting that the project proponent or members of the consortium are banking with them, that they are
in good financial standing, and that they have adequate resources.
As the minimum project cost was estimated to be US$350,000,000.00 or
roughly P9,183,650,000.00,[25] the Paircargo Consortium had to show to the satisfaction of the PBAC that
it had the ability to provide the minimum equity for the project in the amount of at
least P2,755,095,000.00.
Paircargos Audited Financial Statements as of 1993 and 1994 indicated that it had a net worth
of P2,783,592.00 and P3,123,515.00 respectively.[26] PAGS Audited Financial Statements as of 1995
indicate that it has approximately P26,735,700.00 to invest as its equity for the project. [27] Security Banks
Audited Financial Statements as of 1995 show that it has a net worth equivalent to its capital funds in
the amount of P3,523,504,377.00.[28]
We agree with public respondents that with respect to Security Bank, the entire amount of its net
worth could not be invested in a single undertaking or enterprise, whether allied or non-allied in
accordance with the provisions of R.A. No. 337, as amended or the General Banking Act:

Sec. 21-B. The provisions in this or in any other Act to the contrary notwithstanding, the Monetary
Board, whenever it shall deem appropriate and necessary to further national development objectives or
support national priority projects, may authorize a commercial bank, a bank authorized to provide
commercial banking services, as well as a government-owned and controlled bank, to operate under
an expanded commercial banking authority and by virtue thereof exercise, in addition to powers
authorized for commercial banks, the powers of an Investment House as provided in Presidential
Decree No. 129, invest in the equity of a non-allied undertaking, or own a majority or all of the equity
in a financial intermediary other than a commercial bank or a bank authorized to provide commercial
banking services: Provided, That (a) the total investment in equities shall not exceed fifty percent (50%)
of the net worth of the bank; (b) the equity investment in any one enterprise whether allied or non-
allied shall not exceed fifteen percent (15%) of the net worth of the bank; (c) the equity investment of
the bank, or of its wholly or majority-owned subsidiary, in a single non-allied undertaking shall not
exceed thirty-five percent (35%) of the total equity in the enterprise nor shall it exceed thirty-five
percent (35%) of the voting stock in that enterprise; and (d) the equity investment in other banks shall
be deducted from the investing bank's net worth for purposes of computing the prescribed ratio of net
worth to risk assets.

Further, the 1993 Manual of Regulations for Banks provides:

SECTION X383. Other Limitations and Restrictions. The following limitations and restrictions shall also
apply regarding equity investments of banks.

a. In any single enterprise. The equity investments of banks in any single enterprise shall not exceed at
any time fifteen percent (15%) of the net worth of the investing bank as defined in Sec. X106 and Subsec.
X121.5.

Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is
only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the
Paircargo Consortium, after considering the maximum amounts that may be validly invested by each of
its members is P558,384,871.55 or only 6.08% of the project cost,[29] an amount substantially less than
the prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00
or 30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity,
the ability of the bidder to undertake the project. Thus, with respect to the bidders financial capacity at
the pre-qualification stage, the law requires the government agency to examine and determine the
ability of the bidder to fund the entire cost of the project by considering the maximum amounts that
each bidder may invest in the project at the time of pre-qualification.
The PBAC has determined that any prospective bidder for the construction, operation and
maintenance of the NAIA IPT III project should prove that it has the ability to provide equity in the
minimum amount of 30% of the project cost, in accordance with the 70:30 debt-to-equity ratio
prescribed in the Bid Documents. Thus, in the case of Paircargo Consortium, the PBAC should determine
the maximum amounts that each member of the consortium may commit for the construction,
operation and maintenance of the NAIA IPT III project at the time of pre-qualification. With respect to
Security Bank, the maximum amount which may be invested by it would only be 15% of its net worth in
view of the restrictions imposed by the General Banking Act. Disregarding the investment ceilings
provided by applicable law would not result in a proper evaluation of whether or not a bidder is pre-
qualified to undertake the project as for all intents and purposes, such ceiling or legal restriction
determines the true maximum amount which a bidder may invest in the project.
Further, the determination of whether or not a bidder is pre-qualified to undertake the project
requires an evaluation of the financial capacity of the said bidder at the time the bid is submitted based
on the required documents presented by the bidder. The PBAC should not be allowed to speculate on
the future financial ability of the bidder to undertake the project on the basis of documents
submitted. This would open doors to abuse and defeat the very purpose of a public bidding. This is
especially true in the case at bar which involves the investment of billions of pesos by the project
proponent. The relevant government authority is duty-bound to ensure that the awardee of the contract
possesses the minimum required financial capability to complete the project. To allow the PBAC to
estimate the bidders future financial capability would not secure the viability and integrity of the
project. A restrictive and conservative application of the rules and procedures of public bidding is
necessary not only to protect the impartiality and regularity of the proceedings but also to ensure the
financial and technical reliability of the project. It has been held that:

The basic rule in public bidding is that bids should be evaluated based on the required documents
submitted before and not after the opening of bids. Otherwise, the foundation of a fair and competitive
public bidding would be defeated. Strict observance of the rules, regulations, and guidelines of the
bidding process is the only safeguard to a fair, honest and competitive public bidding. [30]

Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids
are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder
should be properly disqualified. Considering that at the pre-qualification stage, the maximum amounts
which the Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed
by the PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the
contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.
While it would be proper at this juncture to end the resolution of the instant controversy, as the
legal effects of the disqualification of respondent PIATCOs predecessor would come into play and
necessarily result in the nullity of all the subsequent contracts entered by it in pursuance of the project,
the Court feels that it is necessary to discuss in full the pressing issues of the present controversy for a
complete resolution thereof.
II. Is the 1997 Concession Agreement valid?
Petitioners and public respondents contend that the 1997 Concession Agreement is invalid as it
contains provisions that substantially depart from the draft Concession Agreement included in the Bid
Documents. They maintain that a substantial departure from the draft Concession Agreement is a
violation of public policy and renders the 1997 Concession Agreement null and void.
PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is
intended to be a draft, i.e., subject to change, alteration or modification, and that this intention was
clear to all participants, including AEDC, and DOTC/MIAA. It argued further that said intention is
expressed in Part C (6) of Bid Bulletin No. 3 issued by the PBAC which states:

6. Amendments to the Draft Concessions Agreement

Amendments to the Draft Concessions Agreement shall be issued from time to time. Said amendments
shall only cover items that would not materially affect the preparation of the proponents proposal.

By its very nature, public bidding aims to protect the public interest by giving the public the best
possible advantages through open competition. Thus:

Competition must be legitimate, fair and honest. In the field of government contract law, competition
requires, not only `bidding upon a common standard, a common basis, upon the same thing, the same
subject matter, the same undertaking,' but also that it be legitimate, fair and honest; and not designed to
injure or defraud the government. [31]

An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not
simply in terms of application of the procedural rules and regulations imposed by the relevant
government agency, but more importantly, on the contract bidded upon. Each bidder must be able to
bid on the same thing. The rationale is obvious. If the winning bidder is allowed to later include or
modify certain provisions in the contract awarded such that the contract is altered in any material
respect, then the essence of fair competition in the public bidding is destroyed. A public bidding would
indeed be a farce if after the contract is awarded, the winning bidder may modify the contract and
include provisions which are favorable to it that were not previously made available to the other
bidders. Thus:

It is inherent in public biddings that there shall be a fair competition among the bidders. The
specifications in such biddings provide the common ground or basis for the bidders. The specifications
should, accordingly, operate equally or indiscriminately upon all bidders. [32]

The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota:

The law is well settled that where, as in this case, municipal authorities can only let a contract for public
work to the lowest responsible bidder, the proposals and specifications therefore must be so framed as
to permit free and full competition. Nor can they enter into a contract with the best bidder containing
substantial provisions beneficial to him, not included or contemplated in the terms and specifications
upon which the bids were invited.[33]

In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument that the draft
concession agreement is subject to amendment, the pertinent portion of which was quoted above, the
PBAC also clarified that [s]aid amendments shall only cover items that would not materially affect the
preparation of the proponents proposal.
While we concede that a winning bidder is not precluded from modifying or amending certain
provisions of the contract bidded upon, such changes must not constitute substantial or material
amendments that would alter the basic parameters of the contract and would constitute a denial to
the other bidders of the opportunity to bid on the same terms. Hence, the determination of whether or
not a modification or amendment of a contract bidded out constitutes a substantial amendment rests on
whether the contract, when taken as a whole, would contain substantially different terms and conditions
that would have the effect of altering the technical and/or financial proposals previously submitted by
other bidders. The alterations and modifications in the contract executed between the government and
the winning bidder must be such as to render such executed contract to be an entirely different contract
from the one that was bidded upon.
In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc., [34] this Court quoted with approval
the ruling of the trial court that an amendment to a contract awarded through public bidding, when such
subsequent amendment was made without a new public bidding, is null and void:

The Court agrees with the contention of counsel for the plaintiffs that the due execution of a contract
after public bidding is a limitation upon the right of the contracting parties to alter or amend it without
another public bidding, for otherwise what would a public bidding be good for if after the execution of
a contract after public bidding, the contracting parties may alter or amend the contract, or even cancel
it, at their will? Public biddings are held for the protection of the public, and to give the public the best
possible advantages by means of open competition between the bidders. He who bids or offers the best
terms is awarded the contract subject of the bid, and it is obvious that such protection and best
possible advantages to the public will disappear if the parties to a contract executed after public
bidding may alter or amend it without another previous public bidding.[35]
Hence, the question that comes to fore is this: is the 1997 Concession Agreement the same
agreement that was offered for public bidding, i.e., the draft Concession Agreement attached to the Bid
Documents? A close comparison of the draft Concession Agreement attached to the Bid Documents and
the 1997 Concession Agreement reveals that the documents differ in at least two material respects:
a. Modification on the Public
Utility Revenues and Non-Public
Utility Revenues that may be
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft Concession Agreement and
the 1997 Concession Agreement may be classified into three distinct categories: (1) fees which are
subject to periodic adjustment of once every two years in accordance with a prescribed parametric
formula and adjustments are made effective only upon written approval by MIAA; (2) fees other than
those included in the first category which maybe adjusted by PIATCO whenever it deems necessary
without need for consent of DOTC/MIAA; and (3) new fees and charges that may be imposed by PIATCO
which have not been previously imposed or collected at the Ninoy Aquino International Airport
Passenger Terminal I, pursuant to Administrative Order No. 1, Series of 1993, as amended. The glaring
distinctions between the draft Concession Agreement and the 1997 Concession Agreement lie in the
types of fees included in each category and the extent of the supervision and regulation which MIAA is
allowed to exercise in relation thereto.
For fees under the first category, i.e., those which are subject to periodic adjustment in accordance
with a prescribed parametric formula and effective only upon written approval by MIAA, the draft
Concession Agreement includes the following:[36]
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) groundhandling fees;
(4) rentals and airline offices;
(5) check-in counter rentals; and
(6) porterage fees.
Under the 1997 Concession Agreement, fees which are subject to adjustment and effective upon
MIAA approval are classified as Public Utility Revenues and include: [37]
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) check-in counter fees; and
(4) Terminal Fees.
The implication of the reduced number of fees that are subject to MIAA approval is best
appreciated in relation to fees included in the second category identified above. Under the 1997
Concession Agreement, fees which PIATCO may adjust whenever it deems necessary without need for
consent of DOTC/MIAA are Non-Public Utility Revenues and is defined as all other income not classified
as Public Utility Revenues derived from operations of the Terminal and the Terminal Complex. [38] Thus,
under the 1997 Concession Agreement, groundhandling fees, rentals from airline offices and porterage
fees are no longer subject to MIAA regulation.
Further, under Section 6.03 of the draft Concession Agreement, MIAA reserves the right to regulate
(1) lobby and vehicular parking fees and (2) other new fees and charges that may be imposed by PIATCO.
Such regulation may be made by periodic adjustment and is effective only upon written approval of
MIAA. The full text of said provision is quoted below:

Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking fees, aircraft
tacking fees, groundhandling fees, rentals and airline offices, check-in-counter rentals and porterage fees
shall be allowed only once every two years and in accordance with the Parametric Formula attached
hereto as Annex F. Provided that adjustments shall be made effective only after the written express
approval of the MIAA. Provided, further, that such approval of the MIAA, shall be contingent only on the
conformity of the adjustments with the above said parametric formula. The first adjustment shall be
made prior to the In-Service Date of the Terminal.

The MIAA reserves the right to regulate under the foregoing terms and conditions the lobby and
vehicular parking fees and other new fees and charges as contemplated in paragraph 2 of Section 6.01
if in its judgment the users of the airport shall be deprived of a free option for the services they cover.
[39]

On the other hand, the equivalent provision under the 1997 Concession Agreement reads:
Section 6.03 Periodic Adjustment in Fees and Charges.

(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-Public Utility
Revenues in order to ensure that End Users are not unreasonably deprived of services. While the
vehicular parking fee, porterage fee and greeter/well wisher fee constitute Non-Public Utility
Revenues of Concessionaire, GRP may intervene and require Concessionaire to explain and justify the
fee it may set from time to time, if in the reasonable opinion of GRP the said fees have become
exorbitant resulting in the unreasonable deprivation of End Users of such services. [40]

Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee, (2)
porterage fee and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO to explain and
justify the fees set by PIATCO. In the draft Concession Agreement, vehicular parking fee is subject to
MIAA regulation and approval under the second paragraph of Section 6.03 thereof while porterage fee is
covered by the first paragraph of the same provision. There is an obvious relaxation of the extent of
control and regulation by MIAA with respect to the particular fees that may be charged by PIATCO.
Moreover, with respect to the third category of fees that may be imposed and collected by PIATCO,
i.e., new fees and charges that may be imposed by PIATCO which have not been previously imposed or
collected at the Ninoy Aquino International Airport Passenger Terminal I, under Section 6.03 of the draft
Concession Agreement MIAA has reserved the right to regulate the same under the same conditions
that MIAA may regulate fees under the first category, i.e., periodic adjustment of once every two years in
accordance with a prescribed parametric formula and effective only upon written approval by MIAA.
However, under the 1997 Concession Agreement, adjustment of fees under the third category is not
subject to MIAA regulation.
With respect to terminal fees that may be charged by PIATCO,[41] as shown earlier, this was included
within the category of Public Utility Revenues under the 1997 Concession Agreement. This classification
is significant because under the 1997 Concession Agreement, Public Utility Revenues are subject to an
Interim Adjustment of fees upon the occurrence of certain extraordinary events specified in the
agreement.[42] However, under the draft Concession Agreement, terminal fees are not included in the
types of fees that may be subject to Interim Adjustment. [43]
Finally, under the 1997 Concession Agreement, Public Utility Revenues, except terminal fees, are
denominated in US Dollars[44] while payments to the Government are in Philippine Pesos. In the draft
Concession Agreement, no such stipulation was included. By stipulating that Public Utility Revenues will
be paid to PIATCO in US Dollars while payments by PIATCO to the Government are in Philippine currency
under the 1997 Concession Agreement, PIATCO is able to enjoy the benefits of depreciations of the
Philippine Peso, while being effectively insulated from the detrimental effects of exchange rate
fluctuations.
When taken as a whole, the changes under the 1997 Concession Agreement with respect to
reduction in the types of fees that are subject to MIAA regulation and the relaxation of such regulation
with respect to other fees are significant amendments that substantially distinguish the draft Concession
Agreement from the 1997 Concession Agreement. The 1997 Concession Agreement, in this respect,
clearly gives PIATCO more favorable terms than what was available to other bidders at the time the
contract was bidded out. It is not very difficult to see that the changes in the 1997 Concession
Agreement translate to direct and concrete financial advantages for PIATCO which were not available at
the time the contract was offered for bidding. It cannot be denied that under the 1997 Concession
Agreement only Public Utility Revenues are subject to MIAA regulation. Adjustments of all other fees
imposed and collected by PIATCO are entirely within its control. Moreover, with respect to terminal
fees, under the 1997 Concession Agreement, the same is further subject to Interim Adjustments not
previously stipulated in the draft Concession Agreement. Finally, the change in the currency stipulated
for Public Utility Revenues under the 1997 Concession Agreement, except terminal fees, gives PIATCO an
added benefit which was not available at the time of bidding.
b. Assumption by the
Government of the liabilities of
PIATCO in the event of the latters
default thereof
Under the draft Concession Agreement, default by PIATCO of any of its obligations to creditors who
have provided, loaned or advanced funds for the NAIA IPT III project does not result in the assumption
by the Government of these liabilities. In fact, nowhere in the said contract does default of PIATCOs
loans figure in the agreement. Such default does not directly result in any concomitant right or obligation
in favor of the Government.
However, the 1997 Concession Agreement provides:
Section 4.04 Assignment.

(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default
has resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date
of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such
default. GRP shall, within one hundred eighty (180) Days from receipt of the joint written notice of the
Unpaid Creditors and Concessionaire, either (i) take over the Development Facility and assume the
Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be substituted as concessionaire
and operator of the Development Facility in accordance with the terms and conditions hereof, or
designate a qualified operator acceptable to GRP to operate the Development Facility, likewise under the
terms and conditions of this Agreement; Provided that if at the end of the 180-day period GRP shall not
have served the Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed
to have elected to take over the Development Facility with the concomitant assumption of Attendant
Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the
latter shall form and organize a concession company qualified to take over the operation of the
Development Facility. If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify and designate a qualified
operator acceptable to GRP within one hundred eighty (180) days from receipt of GRPs written notice. If
the concession company, acting in good faith and with due diligence, is unable to designate a qualified
operator within the aforesaid period, then GRP shall at the end of the 180-day period take over the
Development Facility and assume Attendant Liabilities.

The term Attendant Liabilities under the 1997 Concession Agreement is defined as:

Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of the
Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually
used for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses, and further including amounts owed by Concessionaire to
its suppliers, contractors and sub-contractors.

Under the above quoted portions of Section 4.04 in relation to the definition of Attendant
Liabilities, default by PIATCO of its loans used to finance the NAIA IPT III project triggers the occurrence
of certain events that leads to the assumption by the Government of the liability for the loans. Only in
one instance may the Government escape the assumption of PIATCOs liabilities, i.e., when the
Government so elects and allows a qualified operator to take over as Concessionaire. However, this
circumstance is dependent on the existence and availability of a qualified operator who is willing to
take over the rights and obligations of PIATCO under the contract, a circumstance that is not entirely
within the control of the Government.
Without going into the validity of this provision at this juncture, suffice it to state that Section 4.04
of the 1997 Concession Agreement may be considered a form of security for the loans PIATCO has
obtained to finance the project, an option that was not made available in the draft Concession
Agreement. Section 4.04 is an important amendment to the 1997 Concession Agreement because it
grants PIATCO a financial advantage or benefit which was not previously made available during the
bidding process. This financial advantage is a significant modification that translates to better terms and
conditions for PIATCO.
PIATCO, however, argues that the parties to the bidding procedure acknowledge that the draft
Concession Agreement is subject to amendment because the Bid Documents permit financing or
borrowing. They claim that it was the lenders who proposed the amendments to the draft Concession
Agreement which resulted in the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT Law to allow the
project proponent or the winning bidder to obtain financing for the project, especially in this case which
involves the construction, operation and maintenance of the NAIA IPT III. Expectedly, compliance by the
project proponent of its undertakings therein would involve a substantial amount of investment. It is
therefore inevitable for the awardee of the contract to seek alternate sources of funds to support the
project. Be that as it may, this Court maintains that amendments to the contract bidded upon should
always conform to the general policy on public bidding if such procedure is to be faithful to its real
nature and purpose. By its very nature and characteristic, competitive public bidding aims to protect the
public interest by giving the public the best possible advantages through open competition. [45] It has
been held that the three principles in public bidding are (1) the offer to the public; (2) opportunity for
competition; and (3) a basis for the exact comparison of bids. A regulation of the matter which excludes
any of these factors destroys the distinctive character of the system and thwarts the purpose of its
adoption.[46] These are the basic parameters which every awardee of a contract bidded out must conform
to, requirements of financing and borrowing notwithstanding. Thus, upon a concrete showing that, as in
this case, the contract signed by the government and the contract-awardee is an entirely different
contract from the contract bidded, courts should not hesitate to strike down said contract in its entirety
for violation of public policy on public bidding. A strict adherence on the principles, rules and regulations
on public bidding must be sustained if only to preserve the integrity and the faith of the general public
on the procedure.
Public bidding is a standard practice for procuring government contracts for public service and for
furnishing supplies and other materials. It aims to secure for the government the lowest possible price
under the most favorable terms and conditions, to curtail favoritism in the award of government
contracts and avoid suspicion of anomalies and it places all bidders in equal footing. [47] Any government
action which permits any substantial variance between the conditions under which the bids are
invited and the contract executed after the award thereof is a grave abuse of discretion amounting to
lack or excess of jurisdiction which warrants proper judicial action.
In view of the above discussion, the fact that the foregoing substantial amendments were made on
the 1997 Concession Agreement renders the same null and void for being contrary to public policy.
These amendments convert the 1997 Concession Agreement to an entirely different agreement from
the contract bidded out or the draft Concession Agreement. It is not difficult to see that the
amendments on (1) the types of fees or charges that are subject to MIAA regulation or control and the
extent thereof and (2) the assumption by the Government, under certain conditions, of the liabilities of
PIATCO directly translates concrete financial advantages to PIATCO that were previously not available
during the bidding process. These amendments cannot be taken as merely supplements to or
implementing provisions of those already existing in the draft Concession Agreement. The amendments
discussed above present new terms and conditions which provide financial benefit to PIATCO which may
have altered the technical and financial parameters of other bidders had they known that such terms
were available.
III. Direct Government Guarantee
Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997 Concession Agreement
provides:
Section 4.04 Assignment

(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default
resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date of
maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such
default. GRP shall within one hundred eighty (180) days from receipt of the joint written notice of the
Unpaid Creditors and Concessionaire, either (i) take over the Development Facility and assume the
Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified to be substituted as concessionaire
and operator of the Development facility in accordance with the terms and conditions hereof, or
designate a qualified operator acceptable to GRP to operate the Development Facility, likewise under the
terms and conditions of this Agreement; Provided, that if at the end of the 180-day period GRP shall not
have served the Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed
to have elected to take over the Development Facility with the concomitant assumption of Attendant
Liabilities.
(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the latter
shall form and organize a concession company qualified to takeover the operation of the Development
Facility. If the concession company should elect to designate an operator for the Development Facility,
the concession company shall in good faith identify and designate a qualified operator acceptable to GRP
within one hundred eighty (180) days from receipt of GRPs written notice. If the concession company,
acting in good faith and with due diligence, is unable to designate a qualified operator within the
aforesaid period, then GRP shall at the end of the 180-day period take over the Development Facility
and assume Attendant Liabilities.

Section 1.06. Attendant Liabilities

Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of
the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually
used for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses, and further including amounts owed by Concessionaire to
its suppliers, contractors and sub-contractors. [48]

It is clear from the above-quoted provisions that Government, in the event that PIATCO defaults in
its loan obligations, is obligated to pay all amounts recorded and from time to time outstanding from
the books of PIATCO which the latter owes to its creditors. [49] These amounts include all interests,
penalties, associated fees, charges, surcharges, indemnities, reimbursements and other related
expenses.[50]This obligation of the Government to pay PIATCOs creditors upon PIATCOs default would
arise if the Government opts to take over NAIA IPT III. It should be noted, however, that even if the
Government chooses the second option, which is to allow PIATCOs unpaid creditors operate NAIA IPT III,
the Government is still at a risk of being liable to PIATCOs creditors should the latter be unable to
designate a qualified operator within the prescribed period. [51] In effect, whatever option the
Government chooses to take in the event of PIATCOs failure to fulfill its loan obligations, the
Government is still at a risk of assuming PIATCOs outstanding loans. This is due to the fact that the
Government would only be free from assuming PIATCOs debts if the unpaid creditors would be able to
designate a qualified operator within the period provided for in the contract. Thus, the Governments
assumption of liability is virtually out of its control. The Government under the circumstances provided
for in the 1997 Concession Agreement is at the mercy of the existence, availability and willingness of a
qualified operator. The above contractual provisions constitute a direct government guarantee which is
prohibited by law.
One of the main impetus for the enactment of the BOT Law is the lack of government funds to
construct the infrastructure and development projects necessary for economic growth and
development. This is why private sector resources are being tapped in order to finance these
projects. The BOT law allows the private sector to participate, and is in fact encouraged to do so by way
of incentives, such as minimizing the unstable flow of returns, [52] provided that the government would
not have to unnecessarily expend scarcely available funds for the project itself. As such, direct guarantee,
subsidy and equity by the government in these projects are strictly prohibited. [53] This is but logical for if
the government would in the end still be at a risk of paying the debts incurred by the private entity in
the BOT projects, then the purpose of the law is subverted.

Section 2(n) of the BOT Law defines direct guarantee as follows:


(n) Direct government guarantee An agreement whereby the government or any of its agencies or local
government units assume responsibility for the repayment of debt directly incurred by the project
proponent in implementing the project in case of a loan default.

Clearly by providing that the Government assumes the attendant liabilities, which consists of
PIATCOs unpaid debts, the 1997 Concession Agreement provided for a direct government guarantee for
the debts incurred by PIATCO in the implementation of the NAIA IPT III project. It is of no moment that
the relevant sections are subsumed under the title of assignment. The provisions providing for direct
government guarantee which is prohibited by law is clear from the terms thereof.
The fact that the ARCA superseded the 1997 Concession Agreement did not cure this fatal
defect. Article IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA provides:
Section 4.04 Security

(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter into direct
agreement with the Senior Lenders, or with an agent of such Senior Lenders (which agreement shall be
subject to the approval of the Bangko Sentral ng Pilipinas), in such form as may be reasonably acceptable
to both GRP and Senior Lenders, with regard, inter alia, to the following parameters:

(iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to the Senior Lenders,
and as a result thereof the Senior Lenders have become entitled to accelerate the Senior Loans, the
Senior Lenders shall have the right to notify GRP of the same, and without prejudice to any other rights
of the Senior Lenders or any Senior Lenders agent may have (including without limitation under security
interests granted in favor of the Senior Lenders), to either in good faith identify and designate a nominee
which is qualified under sub-clause (viii)(y) below to operate the Development Facility [NAIA Terminal 3]
or transfer the Concessionaires [PIATCO] rights and obligations under this Agreement to a transferee
which is qualified under sub-clause (viii) below;

(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to designate a
nominee or effect a transfer in terms and conditions satisfactory to the Senior Lenders within one
hundred eighty (180) days after giving GRP notice as referred to respectively in (iv) or (v) above, then
GRP and the Senior Lenders shall endeavor in good faith to enter into any other arrangement relating to
the Development Facility [NAIA Terminal 3] (other than a turnover of the Development Facility [NAIA
Terminal 3] to GRP) within the following one hundred eighty (180) days. If no agreement relating to the
Development Facility [NAIA Terminal 3] is arrived at by GRP and the Senior Lenders within the said 180-
day period, then at the end thereof the Development Facility [NAIA Terminal 3] shall be transferred by
the Concessionaire [PIATCO] to GRP or its designee and GRP shall make a termination payment to
Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter defined) of the Development
Facility [NAIA Terminal 3] or the sum of the Attendant Liabilities, if greater.Notwithstanding Section
8.01(c) hereof, this Agreement shall be deemed terminated upon the transfer of the Development
Facility [NAIA Terminal 3] to GRP pursuant hereto;

Section 1.06. Attendant Liabilities

Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from time to
time owed or which may become owing by Concessionaire [PIATCO] to Senior Lenders or any other
persons or entities who have provided, loaned, or advanced funds or provided financial facilities to
Concessionaire [PIATCO] for the Project [NAIA Terminal 3], including, without limitation, all principal,
interest, associated fees, charges, reimbursements, and other related expenses (including the fees,
charges and expenses of any agents or trustees of such persons or entities), whether payable at maturity,
by acceleration or otherwise, and further including amounts owed by Concessionaire [PIATCO] to its
professional consultants and advisers, suppliers, contractors and sub-contractors. [54]

It is clear from the foregoing contractual provisions that in the event that PIATCO fails to fulfill its
loan obligations to its Senior Lenders, the Government is obligated to directly negotiate and enter into
an agreement relating to NAIA IPT III with the Senior Lenders, should the latter fail to appoint a qualified
nominee or transferee who will take the place of PIATCO. If the Senior Lenders and the Government are
unable to enter into an agreement after the prescribed period, the Government must then pay PIATCO,
upon transfer of NAIA IPT III to the Government, termination payment equal to the appraised value of
the project or the value of the attendant liabilities whichever is greater. Attendant liabilities as defined
in the ARCA includes all amounts owed or thereafter may be owed by PIATCO not only to the Senior
Lenders with whom PIATCO has defaulted in its loan obligations but to all other persons who may have
loaned, advanced funds or provided any other type of financial facilities to PIATCO for NAIA IPT III. The
amount of PIATCOs debt that the Government would have to pay as a result of PIATCOs default in its loan
obligations -- in case no qualified nominee or transferee is appointed by the Senior Lenders and no other
agreement relating to NAIA IPT III has been reached between the Government and the Senior Lenders --
includes, but is not limited to, all principal, interest, associated fees, charges, reimbursements, and other
related expenses . . . whether payable at maturity, by acceleration or otherwise. [55]
It is clear from the foregoing that the ARCA provides for a direct guarantee by the government to
pay PIATCOs loans not only to its Senior Lenders but all other entities who provided PIATCO funds or
services upon PIATCOs default in its loan obligation with its Senior Lenders. The fact that the
Governments obligation to pay PIATCOs lenders for the latters obligation would only arise after the
Senior Lenders fail to appoint a qualified nominee or transferee does not detract from the fact that,
should the conditions as stated in the contract occur, the ARCA still obligates the Government to pay any
and all amounts owed by PIATCO to its lenders in connection with NAIA IPT III. Worse, the conditions
that would make the Government liable for PIATCOs debts is triggered by PIATCOs own default of its loan
obligations to its Senior Lenders to which loan contracts the Government was never a party to. The
Government was not even given an option as to what course of action it should take in case PIATCO
defaulted in the payment of its senior loans. The Government, upon PIATCOs default, would be merely
notified by the Senior Lenders of the same and it is the Senior Lenders who are authorized to appoint a
qualified nominee or transferee. Should the Senior Lenders fail to make such an appointment, the
Government is then automatically obligated to directly deal and negotiate with the Senior Lenders
regarding NAIA IPT III. The only way the Government would not be liable for PIATCOs debt is for a
qualified nominee or transferee to be appointed in place of PIATCO to continue the construction,
operation and maintenance of NAIA IPT III. This pre-condition, however, will not take the contract out of
the ambit of a direct guarantee by the government as the existence, availability and willingness of a
qualified nominee or transferee is totally out of the governments control. As such the Government is
virtually at the mercy of PIATCO (that it would not default on its loan obligations to its Senior Lenders),
the Senior Lenders (that they would appoint a qualified nominee or transferee or agree to some other
arrangement with the Government) and the existence of a qualified nominee or transferee who is able
and willing to take the place of PIATCO in NAIA IPT III.
The proscription against government guarantee in any form is one of the policy considerations
behind the BOT Law. Clearly, in the present case, the ARCA obligates the Government to pay for all
loans, advances and obligations arising out of financial facilities extended to PIATCO for the
implementation of the NAIA IPT III project should PIATCO default in its loan obligations to its Senior
Lenders and the latter fails to appoint a qualified nominee or transferee. This in effect would make the
Government liable for PIATCOs loans should the conditions as set forth in the ARCA arise. This is a form
of direct government guarantee.
The BOT Law and its implementing rules provide that in order for an unsolicited proposal for a BOT
project may be accepted, the following conditions must first be met: (1) the project involves a new
concept in technology and/or is not part of the list of priority projects, (2) no direct government
guarantee, subsidy or equity is required, and (3) the government agency or local government unit has
invited by publication other interested parties to a public bidding and conducted the same. [56] The failure
to meet any of the above conditions will result in the denial of the proposal. It is further provided that
the presence of direct government guarantee, subsidy or equity will necessarily disqualify a proposal
from being treated and accepted as an unsolicited proposal. [57] The BOT Law clearly and strictly prohibits
direct government guarantee, subsidy and equity in unsolicited proposals that the mere inclusion of a
provision to that effect is fatal and is sufficient to deny the proposal. It stands to reason therefore that if
a proposal can be denied by reason of the existence of direct government guarantee, then its inclusion in
the contract executed after the said proposal has been accepted is likewise sufficient to invalidate the
contract itself. A prohibited provision, the inclusion of which would result in the denial of a proposal
cannot, and should not, be allowed to later on be inserted in the contract resulting from the said
proposal. The basic rules of justice and fair play alone militate against such an occurrence and must not,
therefore, be countenanced particularly in this instance where the government is exposed to the risk of
shouldering hundreds of million of dollars in debt.
This Court has long and consistently adhered to the legal maxim that those that cannot be done
directly cannot be done indirectly. [58] To declare the PIATCO contracts valid despite the clear statutory
prohibition against a direct government guarantee would not only make a mockery of what the BOT
Law seeks to prevent -- which is to expose the government to the risk of incurring a monetary
obligation resulting from a contract of loan between the project proponent and its lenders and to
which the Government is not a party to -- but would also render the BOT Law useless for what it seeks
to achieve - to make use of the resources of the private sector in the financing, operation and
maintenance of infrastructure and development projects [59] which are necessary for national growth
and development but which the government, unfortunately, could ill-afford to finance at this point in
time.

IV. Temporary takeover of business affected with public interest

Article XII, Section 17 of the 1987 Constitution provides:

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

The above provision pertains to the right of the State in times of national emergency, and in the
exercise of its police power, to temporarily take over the operation of any business affected with public
interest. In the 1986 Constitutional Commission, the term national emergency was defined to include
threat from external aggression, calamities or national disasters, but not strikes unless it is of such
proportion that would paralyze government service. [60] The duration of the emergency itself is the
determining factor as to how long the temporary takeover by the government would last. [61] The
temporary takeover by the government extends only to the operation of the business and not to the
ownership thereof. As such the government is not required to compensate the private entity-owner of
the said business as there is no transfer of ownership, whether permanent or temporary. The private
entity-owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of
the said business and its properties as the temporary takeover by the government is in exercise of
its police power and not of its power of eminent domain.
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:
Section 5.10 Temporary Take-over of operations by GRP.

(c) In the event the development Facility or any part thereof and/or the operations of Concessionaire or
any part thereof, become the subject matter of or be included in any notice, notification, or declaration
concerning or relating to acquisition, seizure or appropriation by GRP in times of war or national
emergency, GRP shall, by written notice to Concessionaire, immediately take over the operations of the
Terminal and/or the Terminal Complex. During such take over by GRP, the Concession Period shall be
suspended; provided, that upon termination of war, hostilities or national emergency, the operations
shall be returned to Concessionaire, at which time, the Concession period shall commence to run
again. Concessionaire shall be entitled to reasonable compensation for the duration of the temporary
take over by GRP, which compensation shall take into account the reasonable cost for the use of the
Terminal and/or Terminal Complex, (which is in the amount at least equal to the debt service
requirements of Concessionaire, if the temporary take over should occur at the time when
Concessionaire is still servicing debts owed to project lenders), any loss or damage to the Development
Facility, and other consequential damages. If the parties cannot agree on the reasonable compensation
of Concessionaire, or on the liability of GRP as aforesaid, the matter shall be resolved in accordance with
Section 10.01 [Arbitration]. Any amount determined to be payable by GRP to Concessionaire shall be
offset from the amount next payable by Concessionaire to GRP. [62]

PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on


temporary government takeover and obligate the government to pay reasonable cost for the use of
the Terminal and/or Terminal Complex. [63] Article XII, section 17 of the 1987 Constitution envisions a
situation wherein the exigencies of the times necessitate the government to temporarily take over or
direct the operation of any privately owned public utility or business affected with public interest. It is
the welfare and interest of the public which is the paramount consideration in determining whether or
not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover
is exercising its police power. Police power is the most essential, insistent, and illimitable of powers. [64] Its
exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the
government in the absence of damage due to arbitrariness of its exercise. [65] Thus, requiring the
government to pay reasonable compensation for the reasonable use of the property pursuant to the
operation of the business contravenes the Constitution.
V. Regulation of Monopolies
A monopoly is a privilege or peculiar advantage vested in one or more persons or companies,
consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a
particular article, or control the sale of a particular commodity. [66] The 1987 Constitution strictly
regulates monopolies, whether private or public, and even provides for their prohibition if public
interest so requires.Article XII, Section 19 of the 1987 Constitution states:
Sec. 19. The state shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.

Clearly, monopolies are not per se prohibited by the Constitution but may be permitted to exist to
aid the government in carrying on an enterprise or to aid in the performance of various services and
functions in the interest of the public.[67] Nonetheless, a determination must first be made as to whether
public interest requires a monopoly. As monopolies are subject to abuses that can inflict severe prejudice
to the public, they are subject to a higher level of State regulation than an ordinary business
undertaking.
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is granted
the exclusive right to operate a commercial international passenger terminal within the Island of Luzon
at the NAIA IPT III.[68] This is with the exception of already existing international airports in Luzon such as
those located in the Subic Bay Freeport Special Economic Zone (SBFSEZ), Clark Special Economic Zone
(CSEZ) and in Laoag City.[69] As such, upon commencement of PIATCOs operation of NAIA IPT III, Terminals
1 and 2 of NAIA would cease to function as international passenger terminals. This, however, does not
prevent MIAA to use Terminals 1 and 2 as domestic passenger terminals or in any other manner as it
may deem appropriate except those activities that would compete with NAIA IPT III in the latters
operation as an international passenger terminal. [70] The right granted to PIATCO to exclusively operate
NAIA IPT III would be for a period of twenty-five (25) years from the In-Service Date [71] and renewable for
another twenty-five (25) years at the option of the government. [72] Both the 1997 Concession
Agreement and the ARCA further provide that, in view of the exclusive right granted to PIATCO, the
concession contracts of the service providers currently servicing Terminals 1 and 2 would no longer be
renewed and those concession contracts whose expiration are subsequent to the In-Service Date
would cease to be effective on the said date.[73]
The operation of an international passenger airport terminal is no doubt an undertaking imbued
with public interest. In entering into a BuildOperate-and-Transfer contract for the construction, operation
and maintenance of NAIA IPT III, the government has determined that public interest would be served
better if private sector resources were used in its construction and an exclusive right to operate be
granted to the private entity undertaking the said project, in this case PIATCO. Nonetheless, the privilege
given to PIATCO is subject to reasonable regulation and supervision by the Government through the
MIAA, which is the government agency authorized to operate the NAIA complex, as well as DOTC, the
department to which MIAA is attached.[74]
This is in accord with the Constitutional mandate that a monopoly which is not prohibited must be
regulated.[75] While it is the declared policy of the BOT Law to encourage private sector participation by
providing a climate of minimum government regulations, [76] the same does not mean that Government
must completely surrender its sovereign power to protect public interest in the operation of a public
utility as a monopoly. The operation of said public utility can not be done in an arbitrary manner to the
detriment of the public which it seeks to serve. The right granted to the public utility may be exclusive
but the exercise of the right cannot run riot. Thus, while PIATCO may be authorized to exclusively
operate NAIA IPT III as an international passenger terminal, the Government, through the MIAA, has the
right and the duty to ensure that it is done in accord with public interest. PIATCOs right to operate NAIA
IPT III cannot also violate the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:

3.01 Concession Period


(e) GRP confirms that certain concession agreements relative to certain services and operations
currently being undertaken at the Ninoy Aquino International Airport passenger Terminal I have a
validity period extending beyond the In-Service Date. GRP through DOTC/MIAA, confirms that these
services and operations shall not be carried over to the Terminal and the Concessionaire is under no
legal obligation to permit such carry-overexcept through a separate agreement duly entered into with
Concessionaire. In the event Concessionaire becomes involved in any litigation initiated by any such
concessionaire or operator, GRP undertakes and hereby holds Concessionaire free and harmless on full
indemnity basis from and against any loss and/or any liability resulting from any such litigation, including
the cost of litigation and the reasonable fees paid or payable to Concessionaires counsel of choice, all
such amounts shall be fully deductible by way of an offset from any amount which the Concessionaire is
bound to pay GRP under this Agreement.

During the oral arguments on December 10, 2002, the counsel for the petitioners-in-intervention
for G.R. No. 155001 stated that there are two service providers whose contracts are still existing and
whose validity extends beyond the In-Service Date. One contract remains valid until 2008 and the other
until 2010.[77]
We hold that while the service providers presently operating at NAIA Terminal 1 do not have an
absolute right for the renewal or the extension of their respective contracts, those contracts whose
duration extends beyond NAIA IPT IIIs In-Service-Date should not be unduly prejudiced. These contracts
must be respected not just by the parties thereto but also by third parties. PIATCO cannot, by law and
certainly not by contract, render a valid and binding contract nugatory. PIATCO, by the mere expedient of
claiming an exclusive right to operate, cannot require the Government to break its contractual
obligations to the service providers. In contrast to the arrastre and stevedoring service providers in the
case of Anglo-Fil Trading Corporation v. Lazaro[78] whose contracts consist of temporary hold-over
permits, the affected service providers in the cases at bar, have a valid and binding contract with the
Government, through MIAA, whose period of effectivity, as well as the other terms and conditions
thereof, cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The provisions of the
1997 Concession Agreement and the ARCA did not strip government, thru the MIAA, of its right to
supervise the operation of the whole NAIA complex, including NAIA IPT III. As the primary government
agency tasked with the job, [79] it is MIAAs responsibility to ensure that whoever by contract is given the
right to operate NAIA IPT III will do so within the bounds of the law and with due regard to the rights
of third parties and above all, the interest of the public.
VI. CONCLUSION
In sum, this Court rules that in view of the absence of the requisite financial capacity of the
Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the
construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the
1997 Concession Agreement contains material and substantial amendments, which amendments had
the effect of converting the 1997 Concession Agreement into an entirely different agreement from the
contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to
public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997
Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a
direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing
Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA,
are likewise null and void.
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement
and the Supplements thereto are set aside for being null and void.
SO ORDERED.

[1]
An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the
Private Sector.
[2]
G.R. No. 155001.
[3]
G.R. No. 155547.
[4]
G.R. No. 155661.
[5]
An international airport is any nations gateway to the world, the first contact of foreigners with the Philippine
Republic, especially those foreigners who have not been in contact with the wonderful exports of the
Philippine economy, those foreigners who have not had the benefit of enjoying Philippine export
products. Because for them, when they see your products, that is the face of the Philippines they see. But
if they are not exposed to your products, then its the airport thats the first face of the Philippines they
see. Therefore, its not only a matter of opening yet, but making sure that it is a world class airport that
operates without any hitches at all and without the slightest risk to travelers. But its also emerging as a
test case of my administrations commitment to fight corruption to rid our state from the hold of any
vested interest, the Solicitor General, and the Justice Department have determined that all five
agreements covering the NAIA Terminal 3, most of which were contracted in the previous administration,
are null and void. I cannot honor contracts which the Executive Branchs legal offices have concluded (as)
null and void.
I am, therefore, ordering the Department of Justice and the Presidential Anti-Graft Commission to investigate any
anomalies and prosecute all those found culpable in connection with the NAIA contract. But despite all of
the problems involving the PIATCO contracts, I am assuring our people, our travelers, our exporters, my
administration will open the terminal even if it requires invoking the whole powers of the Presidency
under the Constitution and we will open a safe, secure and smoothly functioning airport, a world class
airport, as world class as the exporters we are honoring today. (Speech of President Arroyo, emphasis
supplied)
[6]
Art. VIII, Sec. 1, Philippine Constitution.
[7]
MIASCOR, MACROASIA-EUREST, MACROASIA OGDEN and Philippine Airlines.
[8]
Sections 3.01 (a) and 3.02, 1997 Concession Agreement; Sections 3.01 (d) and (e) and 3.02, ARCA.
[9]
Kilosbayan, Inc. v. Morato, G.R. No. 118910, July 17, 1995, 246 SCRA 540, 562-563, citing Baker v. Carr, 369 U.S.
186, 7 L. Ed. 633 (1962).
[10]
Id.; Bayan v. Zamora, G.R. No. 138570, October 10, 2000; 342 SCRA 449, 478.
[11]
Rollo, G.R. No. 155547, p.12.
[12]
Article VI, Section 29 (1).
[13]
G.R. No. 39842, March 28, 1934, 59 Phil 823.
[14]
G.R. No. 29627, December 19, 1989; 180 SCRA 254, 260-261.
[15]
G. R. No. 113375, May 5, 1994.
[16]
Id.
[17]
Id. citing Tan vs. Macapagal, 43 SCRA 677, 680 [1972].
[18]
Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, G. R. No. 78742, July
14, 1989; 175 SCRA 343, 364-365 [1989].
[19]
Santiago v. Vasquez, G.R. Nos. 99289-90, January 27, 1993; 217 SCRA 633, 652.
[20]
G.R. No. 136154, February 7, 2001; 351 SCRA 373, 381.
[21]
G.R. No. 135362, December 13, 1999; 320 SCRA 610.
[22]
Del Monte Corporation-USA v. Court of Appeals, G.R. No. 136154, February 7, 2001; 351 SCRA 373, 382.
[23]
Rollo, G.R. No.155001, pp. 2487-2488.
[24]
Section 5, R.A. No. 7718.
[25]
At the United States Dollar-Philippine Peso exchange rate of US$1:P26.239 quoted by the Bangko Sentral ng
Pilipinas at that time.
[26]
Rollo, G.R. No.155001, pp. 2471-2474.
[27]
Id. at 2475-2477. Derived from the figures on the authorized capital stock and the shares of stock that are
subscribed and paid-up.
[28]
Id. at 2478-2484.
[29]
Member Maximum Amount of Equity
Security Bank P528,525,656.55
PAGS 26,735,700.00
Paircargo 3,123,515.00
TOTAL P558,384,871.55
[30]
Republic of the Philippines vs. Hon. Ignacio C. Capulong, G.R. No. 93359, July 12, 1991; 199 SCRA 134, 146-147.
Emphasis supplied.
[31]
Danville Maritime, Inc. v. Commission on Audit, G.R. No. 85285, July 28, 1989, 175 SCRA 701, 713. Citations
omitted.
[32]
A. Cobacha & D. Lucenario, LAW ON PUBLIC BIDDING AND GOVERNMENT CONTRACTS 13 (1960).
[33]
Diamond v. City of Mankato, et al., 93 N.W. 912.
[34]
G.R. No. L-5439, December 29, 1954; 96 Phil 368.
[35]
Id. at 375.
[36]
Section 6.03, draft Concession Agreement.
[37]
Sections 1.33 and 6.03(b), 1997 Concession Agreement.
[38]
Sections 1.27 and 6.06, 1997 Concession Agreement.
[39]
Emphasis supplied.
[40]
Emphasis supplied.
[41]
Referred to as Passenger Service Fee under the draft Concession Agreement.
[42]
Section 6.05 Interim Adjustment
(a) Concessionaire may apply for and, if warranted, may be granted an interim adjustment of the fees and charges
constituting Public Utility Revenues upon the occurrence of extraordinary events resulting from any of the
following:
a depreciation since the last adjustment by at least fifteen percent (15%) of the value of the Philippine Peso relative
to the US Dollar using the exchange rates published by the Philippine Dealing System as reference;
an increase since the last adjustment by at least fifteen percent (15%) in the Metro Manila Consumer Price Index
based on National Census and Statistics Office publications;
an increase since the last adjustment in MERALCO power rates billing by at least fifteen percent (15%);
an increase since the last adjustment in the 180-day Treasury Bill interest rates by at least thirty (30%).
.
[43]
Section 6.05, draft Concession Agreement.
[44]
Section 1.33, 1997 Concession Agreement.
[45]
Supra note 31.
[46]
Malaga v. Penachos, Jr., G.R No. 86695, September 3, 1992; 213 SCRA 516, 526.
[47]
A. Cobacha & D. Lucenario, LAW ON PUBLIC BIDDING AND GOVERNMENT CONTRACTS 6-7 (1960).
[48]
Emphasis supplied.
[49]
Concession Agreement, Art. 4, Sec. 4.04 (b) and (c), Art. 1, Sec. 1.06, July 12, 1997.
[50]
Ibid.
[51]
Id. at Art. 4, Sec. 4.04 (c).
[52]
Record of the Senate Second Regular Session 1993-1994, vol. III, no. 42, p. 362.
[53]
Republic Act No. 7718, Secs. 2 and 4-A, Implementing Rules and Regulations, Rule 11, Secs. 11.1 and 11.3.
[54]
Emphasis and caption supplied.
[55]
Sec. 1.06, ARCA.
[56]
Republic Act No. 7718, as amended, Sec. 4-A, May 5, 1994; Implementing Rules and Regulations, Rule 10, Sec.
10.1.
[57]
Implementing Rules and Regulations, Rule 10, Sec. 10.4.
[58]
North Negros Sugar Co., Inc. v. Hidalgo, G.R. No. 42334, October 31, 1936; Intestate estate of the deceased
Florentino San Gil. Josefa R. Oppus v. Bonifacio San Gil, G.R. No. 48115, October 12, 1942; San Diego v.
Municipality of Naujan, G.R. No. L-9920, February 29, 1960; Favis vs. Municipality of Sabagan, G.R. No. L-
26522, 27 February 1969; City of Manila vs. Tarlac Development Corporation, L-24557, L-24469 & L-24481,
31 July 1968; In the matter of the Petition for Declaratory Judgment on Title to Real Property (Quieting of
Title) Pechueco Sons Company v. Provincial Board of Antique, G.R. No. L-27038, January 30, 1970; Fornilda
v. The Branch 164, Regional Trial Court IV th Judicial Region, Pasig, G.R. No. L-72306, October 5, 1988; Laurel
v. Civil Service Commission, G.R. No. 71562, October 28, 1991; Davac v. Court of Appeals, G.R. No. 106105,
April 21, 1994.
[59]
Republic Act No. 7718, Sec. 1.
[60]
III Record of the Constitutional Commission, pp. 266-267 (1986).
[61]
Id.
[62]
Except for providing for the suspension of all payments due to the Government for the duration of the takeover,
Article V, Section 5.10(b) of the ARCA contains the same provision. Emphasis and caption supplied.
[63]
Id.
[64]
Bataan Shipyard and Engineering Co., Inc. v. Presidential Commission on Good Government, G.R. No. 75885,
May 27, 1987 citing Freund, The Police Power (Chicago, 1904).
[65]
Genuino v. Court of Agrarian Relations, G.R. No. L-25035, February 26, 1968.
[66]
Blacks Law Dictionary, 4th Ed., p. 1158.
[67]
36 Am Jur 480 citing Slaughter-House Cases, 16 Wall. (US) 36, 21 L ed 394.
[68]
Concession Agreement (CA) dated July 12, 1997, Art. III, Sec. 3.02(a); Amended and Restated Concession
Agreement (ARCA) dated November 26, 1998, Art. III, Sec. 3.02(a).
[69]
Ibid.
[70]
Id. at CA, Art. III, Sec. 3.02(b); ARCA, Art. III, Sec. 3.02(b).
[71]
The day immediately following the day on which the Certificate of Completion is issued or deemed to be issued.
[72]
Id. at CA, Art. III, Sec. 3.01(a) and (b); ARCA, Art. III, Sec. 3.01 (a) and (b).
[73]
Id. at CA, Art. III, Sec. 3.01(d) and (e); ARCA, Art. III, Sec. 3.01(d) and (e).
[74]
Executive Order No. 903, as amended, Sec. 4 (b) and (c).
[75]
Art. XII, Sec. 19, Philippine Constitution.
[76]
Republic Act No. 7718, Sec. 1.
[77]
Transcript of Oral Arguments, p. 157, December 10, 2002.
[78]
G.R. No. L-54958, September 2, 1983; 09 Phil. 400.
[79]
Executive Order No. 903, July 21, 1983, provides:
Section 5. Functions, Powers, and Duties. The Authority shall have the following functions, powers and duties:
(b) To control, supervise, construct, maintain, operate and provide such facilities or services as shall be necessary
for the efficient functioning of the Airport;
(c) To promulgate rules and regulations governing the planning, development, maintenance, operation and
improvement of the Airport and to control and/or supervise as may be necessary the construction of any
structure or the rendition of any service within the Airport;

...

G.R. No. 127685 July 23, 1998

BLAS F. OPLE, petitioner,


vs.
RUBEN D. TORRES, ALEXANDER AGUIRRE, HECTOR VILLANUEVA, CIELITO HABITO,
ROBERT BARBERS, CARMENCITA REODICA, CESAR SARINO, RENATO VALENCIA,
TOMAS P. AFRICA, HEAD OF THE NATIONAL COMPUTER CENTER and CHAIRMAN OF
THE COMMISSION ON AUDIT, respondents.

PUNO, J.:

The petition at bar is a commendable effort on the part of Senator Blas F. Ople to
prevent the shrinking of the right to privacy, which the revered Mr. Justice Brandeis
considered as "the most comprehensive of rights and the right most valued by
civilized men." 1 Petitioner Ople prays that we invalidate Administrative Order No.
308 entitled "Adoption of a National Computerized Identification Reference System"
on two important constitutional grounds, viz: one, it is a usurpation of the power of
Congress to legislate, and two, it impermissibly intrudes on our citizenry's protected
zone of privacy. We grant the petition for the rights sought to be vindicated by the
petitioner need stronger barriers against further erosion.

A.O. No. 308 was issued by President Fidel V. Ramos On December 12, 1996 and
reads as follows:

ADOPTION OF A NATIONAL COMPUTERIZED

IDENTIFICATION REFERENCE SYSTEM

WHEREAS, there is a need to provide Filipino citizens and foreign


residents with the facility to conveniently transact business with basic
service and social security providers and other government
instrumentalities;
WHEREAS, this will require a computerized system to properly and
efficiently identify persons seeking basic services on social security
and reduce, if not totally eradicate fraudulent transactions and
misrepresentations;

WHEREAS, a concerted and collaborative effort among the various


basic services and social security providing agencies and other
government intrumentalities is required to achieve such a system;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the


Philippines, by virtue of the powers vested in me by law, do hereby
direct the following:

Sec. 1. Establishment of a National Compoterized Identification


Reference System. A decentralized Identification Reference System
among the key basic services and social security providers is hereby
established.

Sec. 2. Inter-Agency Coordinating Committee. An Inter-Agency


Coordinating Committee (IACC) to draw-up the implementing
guidelines and oversee the implementation of the System is hereby
created, chaired by the Executive Secretary, with the following as
members:

Head, Presidential Management Staff


Secretary, National Economic Development Authority
Secretary, Department of the Interior and Local Government
Secretary, Department of Health
Administrator, Government Service Insurance System,
Administrator, Social Security System,
Administrator, National Statistics Office
Managing Director, National Computer Center.

Sec. 3. Secretariat. The National Computer Center (NCC) is hereby


designated as secretariat to the IACC and as such shall provide
administrative and technical support to the IACC.

Sec. 4. Linkage Among Agencies. The Population Reference Number


(PRN) generated by the NSO shall serve as the common reference
number to establish a linkage among concerned agencies. The IACC
Secretariat shall coordinate with the different Social Security and
Services Agencies to establish the standards in the use of Biometrics
Technology and in computer application designs of their respective
systems.

Sec. 5. Conduct of Information Dissemination Campaign. The Office of


the Press Secretary, in coordination with the National Statistics Office,
the GSIS and SSS as lead agencies and other concerned agencies shall
undertake a massive tri-media information dissemination campaign to
educate and raise public awareness on the importance and use of the
PRN and the Social Security Identification Reference.

Sec. 6. Funding. The funds necessary for the implementation of the


system shall be sourced from the respective budgets of the concerned
agencies.

Sec. 7. Submission of Regular Reports. The NSO, GSIS and SSS shall
submit regular reports to the Office of the President through the IACC,
on the status of implementation of this undertaking.

Sec. 8. Effectivity. This Administrative Order shall take effect


immediately.

DONE in the City of Manila, this 12th day of December in the year of
Our Lord, Nineteen Hundred and Ninety-Six.

(SGD.) FIDEL V. RAMOS

A.O. No. 308 was published in four newspapers of general circulation on January 22,
1997 and January 23, 1997. On January 24, 1997, petitioner filed the instant petition
against respondents, then Executive Secretary Ruben Torres and the heads of the
government agencies, who as members of the Inter-Agency Coordinating
Committee, are charged with the implementation of A.O. No. 308. On April 8, 1997,
we issued a temporary restraining order enjoining its implementation.

Petitioner contends:

A. THE ESTABLISNMENT OF A NATIONAL COMPUTERIZED


IDENTIFICATION REFERENCE SYSTEM REQUIRES A LEGISLATIVE ACT.
THE ISSUANCE OF A.O. NO. 308 BY THE PRESIDENT OF THE REPUBLIC
OF THE PHILIPPINES IS, THEREFORE, AN UNCONSTITUTIONAL
USURPATION OF THE LEGISLATIVE POWERS OF THE CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES.

B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR THE


IMPLEMENTATION OF A.O. NO. 308 IS AN UNCONSTITUTIONAL
USURPATION OF THE EXCLUSIVE RIGHT OF CONGRESS TO
APPROPRIATE PUBLIC FUNDS FOR EXPENDITURE.

C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE


GROUNDWORK FOR A SYSTEM WHICH WILL VIOLATE THE BILL OF
RIGHTS ENSHRINED IN THE CONSTITUTION. 2

Respondents counter-argue:
A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS WOULD
WARRANT A JUDICIAL REVIEW;

B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE EXECUTIVE AND
ADMINISTRATIVE POWERS OF THE PRESIDENT WITHOUT ENCROACHING
ON THE LEGISLATIVE POWERS OF CONGRESS;

C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION OF THE


IDENTIFICATION REFERENCE SYSTEM MAY BE SOURCED FROM THE
BUDGETS OF THE CONCERNED AGENCIES;

D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUAL'S INTEREST IN


PRIVACY. 3

We now resolve.

As is usual in constitutional litigation, respondents raise the threshold issues


relating to the standing to sue of the petitioner and the justiciability of the case at
bar. More specifically, respondents aver that petitioner has no legal interest to
uphold and that the implementing rules of A.O. No. 308 have yet to be promulgated.

These submissions do not deserve our sympathetic ear. Petitioner Ople is a


distinguished member of our Senate. As a Senator, petitioner is possessed of the
requisite standing to bring suit raising the issue that the issuance of A.O. No. 308 is
a usurpation of legislative power. 4 As taxpayer and member of the Government
Service Insurance System (GSIS), petitioner can also impugn the legality of the
misalignment of public funds and the misuse of GSIS funds to implement A.O. No.
308. 5

The ripeness for adjudication of the Petition at bar is not affected by the fact that
the implementing rules of A.O. No. 308 have yet to be promulgated. Petitioner Ople
assails A.O. No. 308 as invalid per se and as infirmed on its face. His action is not
premature for the rules yet to be promulgated cannot cure its fatal defects.
Moreover, the respondents themselves have started the implementation of A.O. No.
308 without waiting for the rules. As early as January 19, 1997, respondent Social
Security System (SSS) caused the publication of a notice to bid for the manufacture
of the National Identification (ID) card. 6 Respondent Executive Secretary Torres has
publicly announced that representatives from the GSIS and the SSS have completed
the guidelines for the national identification system. 7 All signals from the
respondents show their unswerving will to implement A.O. No. 308 and we need not
wait for the formality of the rules to pass judgment on its constitutionality. In this
light, the dissenters insistence that we tighten the rule on standing is not a
commendable stance as its result would be to throttle an important constitutional
principle and a fundamental right.

II
We now come to the core issues. Petitioner claims that A.O. No. 308 is not a mere
administrative order but a law and hence, beyond the power of the President to
issue. He alleges that A.O. No. 308 establishes a system of identification that is all-
encompassing in scope, affects the life and liberty of every Filipino citizen and
foreign resident, and more particularly, violates their right to privacy.

Petitioner's sedulous concern for the Executive not to trespass on the lawmaking
domain of Congress is understandable. The blurring of the demarcation line
between the power of the Legislature to make laws and the power of the Executive
to execute laws will disturb their delicate balance of power and cannot be allowed.
Hence, the exercise by one branch of government of power belonging to another
will be given a stricter scrutiny by this Court.

The line that delineates Legislative and Executive power is not indistinct. Legislative
power is "the authority, under the Constitution, to make laws, and to alter and
repeal them." 8 The Constitution, as the will of the people in their original, sovereign
and unlimited capacity, has vested this power in the Congress of the
Philippines. 9 The grant of legislative power to Congress is broad, general and
comprehensive. 10 The legislative body possesses plenary power for all purposes of
civil government. 11 Any power, deemed to be legislative by usage and tradition, is
necessarily possessed by Congress, unless the Constitution has lodged it
elsewhere. 12 In fine, except as limited by the Constitution, either expressly or
impliedly, legislative power embraces all subjects and extends to matters of general
concern or common interest. 13

While Congress is vested with the power to enact laws, the President executes the
laws. 14 The executive power is vested in the Presidents. 15 It is generally defined as
the power to enforce and administer the laws. 16 It is the power of carrying the laws
into practical operation and enforcing their due observance. 17

As head of the Executive Department, the President is the Chief Executive. He


represents the government as a whole and sees to it that all laws are enforced by
the officials and employees of his department. 18 He has control over the executive
department, bureaus and offices. This means that he has the authority to assume
directly the functions of the executive department, bureau and office or interfere
with the discretion of its officials.19 Corollary to the power of control, the President
also has the duty of supervising the enforcement of laws for the maintenance of
general peace and public order. Thus, he is granted administrative power over
bureaus and offices under his control to enable him to discharge his duties
effectively. 20

Administrative power is concerned with the work of applying policies and enforcing
orders as determined by proper governmental organs. 21 It enables the President to
fix a uniform standard of administrative efficiency and check the official conduct of
his agents. 22 To this end, he can issue administrative orders, rules and regulations.

Prescinding from these precepts, we hold that A.O. No. 308 involves a subject that is
not appropriate to be covered by an administrative order. An administrative order is:
Sec. 3. Administrative Orders. — Acts of the President which relate to
particular aspects of governmental operation in pursuance of his duties
as administrative head shall be promulgated in administrative
orders. 23

An administrative order is an ordinance issued by the President which relates


to specific aspects in the administrative operation of government. It must be
in harmony with the law and should be for the sole purpose of implementing
the law and carrying out the legislative policy. 24 We reject the argument that
A.O. No. 308 implements the legislative policy of the Administrative Code of
1987. The Code is a general law and "incorporates in a unified document the
major structural, functional and procedural principles of governance." 25 and
"embodies changes in administrative structure and procedures designed to
serve the
people." 26 The Code is divided into seven (7) Books: Book I deals with
Sovereignty and General Administration, Book II with the Distribution of
Powers of the three branches of Government, Book III on the Office of the
President, Book IV on the Executive Branch, Book V on Constitutional
Commissions, Book VI on National Government Budgeting, and Book VII on
Administrative Procedure. These Books contain provisions on the
organization, powers and general administration of the executive, legislative
and judicial branches of government, the organization and administration of
departments, bureaus and offices under the executive branch, the
organization and functions of the Constitutional Commissions and other
constitutional bodies, the rules on the national government budget, as well as
guideline for the exercise by administrative agencies of quasi-legislative and
quasi-judicial powers. The Code covers both the internal administration of
government, i.e, internal organization, personnel and recruitment,
supervision and discipline, and the effects of the functions performed by
administrative officials on private individuals or parties outside
government. 27

It cannot be simplistically argued that A.O. No. 308 merely implements the
Administrative Code of 1987. It establishes for the first time a National
Computerized Identification Reference System. Such a System requires a delicate
adjustment of various contending state policies — the primacy of national security,
the extent of privacy interest against dossier-gathering by government, the choice
of policies, etc. Indeed, the dissent of Mr. Justice Mendoza states that the A.O. No.
308 involves the all-important freedom of thought. As said administrative order
redefines the parameters of some basic rights of our citizenry vis-a-vis the State as
well as the line that separates the administrative power of the President to make
rules and the legislative power of Congress, it ought to be evident that it deals with
a subject that should be covered by law.

Nor is it correct to argue as the dissenters do that A.D. No. 308 is not a law because
it confers no right, imposes no duty, affords no proctection, and creates no office.
Under A.O. No. 308, a citizen cannot transact business with government agencies
delivering basic services to the people without the contemplated identification card.
No citizen will refuse to get this identification card for no one can avoid dealing with
government. It is thus clear as daylight that without the ID, a citizen will have
difficulty exercising his rights and enjoying his privileges. Given this reality, the
contention that A.O. No. 308 gives no right and imposes no duty cannot stand.

Again, with due respect, the dissenting opinions unduly expand the limits of
administrative legislation and consequently erodes the plenary power of Congress
to make laws. This is contrary to the established approach defining the traditional
limits of administrative legislation. As well stated by Fisher: ". . . Many regulations
however, bear directly on the public. It is here that administrative legislation must
he restricted in its scope and application. Regulations are not supposed to be a
substitute for the general policy-making that Congress enacts in the form of a public
law. Although administrative regulations are entitled to respect, the authority to
prescribe rules and regulations is not an independent source of power to make
laws." 28

III

Assuming, arguendo, that A.O. No. 308 need not be the subject of a law, still it
cannot pass constitutional muster as an administrative legislation because facially it
violates the right to privacy. The essence of privacy is the "right to be let
alone." 29 In the 1965 case of Griswold v. Connecticut, 30 the United States Supreme
Court gave more substance to the right of privacy when it ruled that the right has a
constitutional foundation. It held that there is a right of privacy which can be found
within the penumbras of the First, Third, Fourth, Fifth and Ninth Amendments, 31 viz:

Specific guarantees in the Bill of Rights have penumbras formed by


emanations from these guarantees that help give them life and
substance . . . various guarantees create zones of privacy. The right of
association contained in the penumbra of the First Amendment is one,
as we have seen. The Third Amendment in its prohibition against the
quartering of soldiers "in any house" in time of peace without the
consent of the owner is another facet of that privacy. The Fourth
Amendment explicitly affirms the ''right of the people to be secure in
their persons, houses and effects, against unreasonable searches and
seizures." The Fifth Amendment in its Self-Incrimination Clause enables
the citizen to create a zone of privacy which government may not force
him to surrender to his detriment. The Ninth Amendment provides:
"The enumeration in the Constitution, of certain rights, shall not be
construed to deny or disparage others retained by the people."

In the 1968 case of Morfe v. Mutuc, 32 we adopted the Griswold ruling that
there is a constitutional right to privacy. Speaking thru Mr. Justice, later Chief
Justice, Enrique Fernando, we held:

xxx xxx xxx

The Griswold case invalidated a Connecticut statute which made the


use of contraceptives a criminal offence on the ground of its amounting
to an unconstitutional invasion of the right of privacy of married
persons; rightfully it stressed "a relationship lying within the zone of
privacy created by several fundamental constitutional guarantees." It
has wider implications though. The constitutional right to privacy has
come into its own.

So it is likewise in our jurisdiction. The right to privacy as such is


accorded recognition independently of its identification with liberty; in
itself, it is fully deserving of constitutional protection. The language of
Prof. Emerson is particularly apt: "The concept of limited government
has always included the idea that governmental powers stop short of
certain intrusions into the personal life of the citizen. This is indeed one
of the basic distinctions between absolute and limited government.
Ultimate and pervasive control of the individual, in all aspects of his
life, is the hallmark of the absolute state. In contrast, a system of
limited government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the
state can control. Protection of this private sector — protection, in
other words, of the dignity and integrity of the individual — has
become increasingly important as modern society has developed. All
the forces of a technological age — industrialization, urbanization, and
organization — operate to narrow the area of privacy and facilitate
intrusion into it. In modern terms, the capacity to maintain and support
this enclave of private life marks the difference between a democratic
and a totalitarian society."

Indeed, if we extend our judicial gaze we will find that the right of privacy is
recognized and enshrined in several provisions of our Constitution. 33 It is expressly
recognized in section 3 (1) of the Bill of Rights:

Sec. 3. (1) The privacy of communication and correspondence shall be


inviolable except upon lawful order of the court, or when public safety
or order requires otherwise as prescribed by law.

Other facets of the right to privacy are protectad in various provisions of the
Bill of Rights, viz: 34

Sec. 1. No person shall be deprived of life, liberty, or property without


due process of law, nor shall any person be denied the equal protection
of the laws.

Sec. 2. The right of the people to be secure in their persons, houses


papers, and effects against unreasonable searches and seizures of
whatever nature and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or
things to be seized.

xxx xxx xxx


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

xxx xxx xxx

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

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

Zones of privacy are likewise recognized and protected in our laws. The Civil Code
provides that "[e]very person shall respect the dignity, personality, privacy and
peace of mind of his neighbors and other persons" and punishes as actionable torts
several acts by a person of meddling and prying into the privacy of another. 35 It
also holds a public officer or employee or any private individual liable for damages
for any violation of the rights and liberties of another person, 36 and recognizes the
privacy of letters and other private communications. 37 The Revised Penal Code
makes a crime the violation of secrets by an officer, 38the revelation of trade and
industrial secrets, 39 and trespass to dwelling. 40 Invasion of privacy is an offense in
special laws like the Anti-Wiretapping Law, 41 the Secrecy of Bank Deposits
Act 42 and the Intellectual Property Code. 43 The Rules of Court on privileged
communication likewise recognize the privacy of certain information. 44

Unlike the dissenters, we prescind from the premise that the right to privacy is a
fundamental right guaranteed by the Constitution, hence, it is the burden of
government to show that A.O. No. 308 is justified by some compelling state interest
and that it is narrowly drawn. A.O. No. 308 is predicated on two considerations: (1)
the need to provides our citizens and foreigners with the facility to conveniently
transact business with basic service and social security providers and other
government instrumentalities and (2) the need to reduce, if not totally eradicate,
fraudulent transactions and misrepresentations by persons seeking basic services. It
is debatable whether these interests are compelling enough to warrant the issuance
of A.O. No. 308. But what is not arguable is the broadness, the vagueness, the
overbreadth of A.O. No. 308 which if implemented will put our people's right to
privacy in clear and present danger.

The heart of A.O. No. 308 lies in its Section 4 which provides for a Population
Reference Number (PRN) as a "common reference number to establish a linkage
among concerned agencies" through the use of "Biometrics Technology" and
"computer application designs."

Biometry or biometrics is "the science of the applicatin of statistical methods to


biological facts; a mathematical analysis of biological data." 45 The term
"biometrics" has evolved into a broad category of technologies which provide
precise confirmation of an individual's identity through the use of the individual's
own physiological and behavioral characteristics. 46 A physiological characteristic is
a relatively stable physical characteristic such as a fingerprint, retinal scan, hand
geometry or facial features. A behavioral characteristic is influenced by the
individual's personality and includes voice print, signature and keystroke. 47 Most
biometric idenfication systems use a card or personal identificatin number (PIN) for
initial identification. The biometric measurement is used to verify that the individual
holding the card or entering the PIN is the legitimate owner of the card or PIN. 48

A most common form of biological encoding is finger-scanning where technology


scans a fingertip and turns the unique pattern therein into an individual number
which is called a biocrypt. The biocrypt is stored in computer data banks 49 and
becomes a means of identifying an individual using a service. This technology
requires one's fingertip to be scanned every time service or access is
provided. 50 Another method is the retinal scan. Retinal scan technology employs
optical technology to map the capillary pattern of the retina of the eye. This
technology produces a unique print similar to a finger print. 51 Another biometric
method is known as the "artificial nose." This device chemically analyzes the unique
combination of substances excreted from the skin of people. 52 The latest on the list
of biometric achievements is the thermogram. Scientists have found that by taking
pictures of a face using infra-red cameras, a unique heat distribution pattern is
seen. The different densities of bone, skin, fat and blood vessels all contribute to the
individual's personal "heat signature." 53

In the last few decades, technology has progressed at a galloping rate. Some
science fictions are now science facts. Today, biometrics is no longer limited to the
use of fingerprint to identify an individual. It is a new science that uses various
technologies in encoding any and all biological characteristics of an individual for
identification. It is noteworthy that A.O. No. 308 does not state what specific
biological characteristics and what particular biometrics technology shall be used to
identify people who will seek its coverage. Considering the banquest of options
available to the implementors of A.O. No. 308, the fear that it threatens the right to
privacy of our people is not groundless.

A.O. No. 308 should also raise our antennas for a further look will show that it does
not state whether encoding of data is limited to biological information alone for
identification purposes. In fact, the Solicitor General claims that the adoption of the
Identification Reference System will contribute to the "generation of population data
for development planning." 54 This is an admission that the PRN will not be used
solely for identification but the generation of other data with remote relation to the
avowed purposes of A.O. No. 308. Clearly, the indefiniteness of A.O. No. 308 can
give the government the roving authority to store and retrieve information for a
purpose other than the identification of the individual through his PRN.

The potential for misuse of the data to be gathered under A.O. No. 308 cannot be
undarplayed as the dissenters do. Pursuant to said administrative order, an
individual must present his PRN everytime he deals with a government agency to
avail of basic services and security. His transactions with the government agency
will necessarily be recorded — whether it be in the computer or in the documentary
file of the agency. The individual's file may include his transactions for loan
availments, income tax returns, statement of assets and liabilities, reimbursements
for medication, hospitalization, etc. The more frequent the use of the PRN, the
better the chance of building a huge formidable informatin base through the
electronic linkage of the files. 55 The data may be gathered for gainful and useful
government purposes; but the existence of this vast reservoir of personal
information constitutes a covert invitation to misuse, a temptation that may be too
great for some of our authorities to resist. 56

We can even grant, arguendo, that the computer data file will be limited to the
name, address and other basic personal infomation about the individual. 57 Even
that hospitable assumption will not save A.O. No. 308 from constitutional infirmity
for again said order does not tell us in clear and categorical terms how these
information gathered shall he handled. It does not provide who shall control and
access the data, under what circumstances and for what purpose. These factors are
essential to safeguard the privacy and guaranty the integrity of the
information. 58 Well to note, the computer linkage gives other government agencies
access to the information. Yet, there are no controls to guard against leakage of
information. When the access code of the control programs of the particular
computer system is broken, an intruder, without fear of sanction or penalty, can
make use of the data for whatever purpose, or worse, manipulate the data stored
within the system. 59

It is plain and we hold that A.O. No. 308 falls short of assuring that personal
information which will be gathered about our people will only be processed for
unequivocally specified purposes. 60 The lack of proper safeguards in this regard of
A.O. No. 308 may interfere with the individual's liberty of abode and travel by
enabling authorities to track down his movement; it may also enable unscrupulous
persons to access confidential information and circumvent the right against self-
incrimination; it may pave the way for "fishing expeditions" by government
authorities and evade the right against unreasonable searches and seizures. 61 The
possibilities of abuse and misuse of the PRN, biometrics and computer technology
are accentuated when we consider that the individual lacks control over what can
be read or placed on his ID, much less verify the correctness of the data
encoded. 62 They threaten the very abuses that the Bill of Rights seeks to prevent. 63

The ability of sophisticated data center to generate a comprehensive cradle-to-


grave dossier on an individual and transmit it over a national network is one of the
most graphic threats of the computer revolution. 64 The computer is capable of
producing a comprehensive dossier on individuals out of information given at
different times and for varied purposes. 65 It can continue adding to the stored data
and keeping the information up to date. Retrieval of stored date is simple. When
information of a privileged character finds its way into the computer, it can be
extracted together with other data on the subject. 66Once extracted, the information
is putty in the hands of any person. The end of privacy begins.

Though A.O. No. 308 is undoubtedly not narrowly drawn, the dissenting opinions
would dismiss its danger to the right to privacy as speculative and hypothetical.
Again, we cannot countenance such a laidback posture. The Court will not be true to
its role as the ultimate guardian of the people's liberty if it would not immediately
smother the sparks that endanger their rights but would rather wait for the fire that
could consume them.
We reject the argument of the Solicitor General that an individual has a reasonable
expectation of privacy with regard to the Natioal ID and the use of biometrics
technology as it stands on quicksand. The reasonableness of a person's expectation
of privacy depends on a two-part test: (1) whether by his conduct, the individual has
exhibited an expectation of privacy; and (2) whether this expectation is one that
society recognizes as reasonable. 67 The factual circumstances of the case
determines the reasonableness of the expectation. 68 However, other factors, such
as customs, physical surroundings and practices of a particular activity, may serve
to create or diminish this expectation. 69 The use of biometrics and computer
technology in A.O. No. 308 does not assure the individual of a reasonable
expectation of privacy. 70 As technology advances, the level of reasonably expected
privacy decreases. 71 The measure of protection granted by the reasonable
expectation diminishes as relevant technology becomes more widely
accepted. 72 The security of the computer data file depends not only on the physical
inaccessibility of the file but also on the advances in hardware and software
computer technology. A.O. No. 308 is so widely drawn that a minimum standard for
a reasonable expectation of privacy, regardless of technology used, cannot be
inferred from its provisions.

The rules and regulations to be by the IACC cannot remedy this fatal defect. Rules
and regulations merely implement the policy of the law or order. On its face, A.O.
No. gives the IACC virtually infettered discretion to determine the metes and bounds
of the ID System.

Nor do your present laws prvide adequate safeguards for a reasonable expectation
of privacy. Commonwealth Act. No. 591 penalizes the disclosure by any person of
data furnished by the individual to the NSO with imprisonment and fine. 73 Republic
Act. No. 1161 prohibits public disclosure of SSS employment records and
reports. 74 These laws, however, apply to records and data with the NSO and the
SSS. It is not clear whether they may be applied to data with the other government
agencies forming part of the National ID System. The need to clarify the penal
aspect of A.O. No. 308 is another reason why its enactment should be given to
Congress.

Next, the Solicitor General urges us to validate A.O. No. 308's abridgment of the
right of privacy by using the rational relationship test. 75 He stressed that the
purposes of A.O. No. 308 are: (1) to streamline and speed up the implementation of
basic government services, (2) eradicate fraud by avoiding duplication of services,
and (3) generate population data for development planning. He cocludes that these
purposes justify the incursions into the right to privacy for the means are rationally
related to the end. 76

We are not impressed by the argument. In Morfe v. Mutuc, 77 we upheld the


constitutionality of R.A. 3019, the Anti-Graft and Corrupt Practices Act, as a valid
police power measure. We declared that the law, in compelling a public officer to
make an annual report disclosing his assets and liabilities, his sources of income
and expenses, did not infringe on the individual's right to privacy. The law was
enacted to promote morality in public administration by curtailing and minimizing
the opportunities for official corruption and maintaining a standard of honesty in the
public service. 78
The same circumstances do not obtain in the case at bar. For one, R.A. 3019 is a
statute, not an administrative order. Secondly, R.A. 3019 itself is sufficiently
detailed. The law is clear on what practices were prohibited and penalized, and it
was narrowly drawn to avoid abuses. IN the case at bar, A.O. No. 308 may have
been impelled by a worthy purpose, but, it cannot pass constitutional scrutiny for it
is not narrowly drawn. And we now hod that when the integrity of a fundamental
right is at stake, this court will give the challenged law, administrative order, rule or
regulation a stricter scrutiny. It will not do for the authorities to invoke the
presumption of regularity in the performance of official duties. Nor is it enough for
the authorities to prove that their act is not irrational for a basic right can be
diminished, if not defeated, even when the government does not act irrationally.
They must satisfactorily show the presence of compelling state interests and that
the law, rule or regulation is narrowly drawn to preclude abuses. This approach is
demanded by the 1987 Constitution whose entire matrix is designed to protect
human rights and to prevent authoritarianism. In case of doubt, the least we can do
is to lean towards the stance that will not put in danger the rights protected by the
Constitutions.

The case of Whalen v. Roe 79 cited by the Solicitor General is also off-line. In Whalen,
the United States Supreme Court was presented with the question of whether the
State of New York could keep a centralized computer record of the names and
addresses of all persons who obtained certain drugs pursuant to a doctor's
prescription. The New York State Controlled Substance Act of 1972 required
physicians to identify parties obtaining prescription drugs enumerated in the
statute, i.e., drugs with a recognized medical use but with a potential for abuse, so
that the names and addresses of the patients can be recorded in a centralized
computer file of the State Department of Health. The plaintiffs, who were patients
and doctors, claimed that some people might decline necessary medication
because of their fear that the computerized data may be readily available and open
to public disclosure; and that once disclosed, it may stigmatize them as drug
addicts. 80 The plaintiffs alleged that the statute invaded a constitutionally protected
zone of privacy, i.e., the individual interest in avoiding disclosure of personal
matters, and the interest in independence in making certain kinds of important
decisions. The U.S. Supreme Court held that while an individual's interest in
avoiding disclosuer of personal matter is an aspect of the right to privacy, the
statute did not pose a grievous threat to establish a constitutional violation. The
Court found that the statute was necessary to aid in the enforcement of laws
designed to minimize the misuse of dangerous drugs. The patient-identification
requirement was a product of an orderly and rational legislative decision made upon
recommmendation by a specially appointed commission which held extensive
hearings on the matter. Moreover, the statute was narrowly drawn and contained
numerous safeguards against indiscriminate disclosure. The statute laid down the
procedure and requirements for the gathering, storage and retrieval of the
informatin. It ebumerated who were authorized to access the data. It also prohibited
public disclosure of the data by imposing penalties for its violation. In view of these
safeguards, the infringement of the patients' right to privacy was justified by a valid
exercise of police power. As we discussed above, A.O. No. 308 lacks these vital
safeguards.
Even while we strike down A.O. No. 308, we spell out in neon that the Court is
not per se agains the use of computers to accumulate, store, process, retvieve and
transmit data to improve our bureaucracy. Computers work wonders to achieve the
efficiency which both government and private industry seek. Many information
system in different countries make use of the computer to facilitate important social
objective, such as better law enforcement, faster delivery of public services, more
efficient management of credit and insurance programs, improvement of
telecommunications and streamlining of financial activities. 81 Used wisely, data
stored in the computer could help good administration by making accurate and
comprehensive information for those who have to frame policy and make key
decisions. 82 The benefits of the computer has revolutionized information
technology. It developed the internet, 83 introduced the concept of cyberspace 84 and
the information superhighway where the individual, armed only with his personal
computer, may surf and search all kinds and classes of information from libraries
and databases connected to the net.

In no uncertain terms, we also underscore that the right to privacy does not bar all
incursions into individual privacy. The right is not intended to stifle scientific and
technological advancements that enhance public service and the common good. It
merely requires that the law be narrowly focused 85 and a compelling interest justify
such intrusions. 86 Intrusions into the right must be accompanied by proper
safeguards and well-defined standards to prevent unconstitutional invasions. We
reiterate that any law or order that invades individual privacy will be subjected by
this Court to strict scrutiny. The reason for this stance was laid down in Morfe v.
Mutuc, to wit:

The concept of limited government has always included the idea that
governmental powers stop short of certain intrusions into the personal
life of the citizen. This is indeed one of the basic disctinctions between
absolute and limited government. Ultimate and pervasive control of
the individual, in all aspects of his life, is the hallmark of the absolute
state. In contrast, a system of limited government safeguards a private
sector, which belongs to the individual, firmly distinguishing it from the
public sector, which the state can control. Protection of this private
sector — protection, in other words, of the dignity and integrity of the
individual — has become increasingly important as modern society has
developed. All the forces of a technological age — industrialization,
urbanization, and organization — operate to narrow the area of privacy
and facilitate intrusion into it. In modern terms, the capacity to
maintain and support this enclave of private life marks the difference
between a democratic and a totalitarian society. 87

IV
The right to privacy is one of the most threatened rights of man living in a mass
society. The threats emanate from various sources — governments, journalists,
employers, social scientists, etc. 88 In th case at bar, the threat comes from the
executive branch of government which by issuing A.O. No. 308 pressures the people
to surrender their privacy by giving information about themselves on the pretext
that it will facilitate delivery of basic services. Given the record-keeping power of
the computer, only the indifferent fail to perceive the danger that A.O. No. 308 gives
the government the power to compile a devastating dossier against unsuspecting
citizens. It is timely to take note of the well-worded warning of Kalvin, Jr., "the
disturbing result could be that everyone will live burdened by an unerasable record
of his past and his limitations. In a way, the threat is that because of its record-
keeping, the society will have lost its benign capacity to forget." 89 Oblivious to this
counsel, the dissents still say we should not be too quick in labelling the right to
privacy as a fundamental right. We close with the statement that the right to
privacy was not engraved in our Constitution for flattery.

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

1 Dissenting Opinion of Justice Brandeis in Olmstead v. United States, 277 U.S. 438, 478
[1928].
2 Petition, p. 9, Rollo, p. 11.
3 Comment, pp. 6, 9, 14, 15, Rollo, pp. 65, 68, 73-74.
4 Philconsa vs. Enriquez, 235 SCRA 506 [1994]; Guingona v. PCGG, 207 SCRA 659 [1992];
Tolentino v. Commission on Elections, 41 SCRA 702 [1971].
5 Sanidad v. Commission on Elections, 73 SCRA 333 [1976]; Pascual v. Secretary of Public
Works, 110 Phil. 331 [1960].
6 "Invitation to Bid," Annex "E" to the Petition, Rollo p. 50.
7 Annex "B" to Petitioner's Reply, Rollo, p. 144.
8 Government of the Philippine Islands v. Springer, 50 Phil. 259, 276 [1927].
9 Sec. 1, Article VI, 1987 Constitution.
10 Fernando, The Philippine Constitution, pp. 175-176 [1974].
11 Id., at 177; citing the concurring opinion of Justice Laurel in Schneckenburger v. Moran,
63 Phil. 249, 266 [1936].
12 Vera v. Avelino, 77 Phil. 192, 212 [1936].
13 See concurring opinion of Justice Laurel in Schneckenburger v. Moran, supra, at 266-267.
14 Government of the Philippine Islands v. Springer, 50 Phil. 259, 305 [1927].
15 Sec. 1, Article VII, 1987 Constitution.
16 Cruz, Philippine Political Law, p. 173 [1996].
17 Tanada and Carreon, Political Law of the Philippines, vol. 1, p. 275 [1961].
18 Sec. 17, Article VII of the 1987 Constitution provides:
Sec. 17. The President shall have control of all the executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed.
19 Pelaez v. Auditor General, 15 SCRA 569, 583 [1965].
20 Sinco, Philippine Political Law, pp. 234-235 [1962].
21 Id., at 234.
22 Id., at 235.
23 Sec. 3, Chapter 2, Title I, Book III, Administrative Code of 1987.
24 Cruz, Philippine Administrative Law, p. 18 [1991].
25 Third Whereas Clause, Administrative Code of 1987.
26 Fourth Whereas Clause, Administrative Code of 1987.
27 See Cortes, Philippine Administrative Law, pp. 2-5 [1984].
28 Fisher, Constitutional Conflicts Between Congress and the President, 4th ed., pp. 106-107.
29 Cooley on Torts, Sec. 135, vol. 1, 4th ed., [1932]; see also Warren and Brandeis "The
Right to Privacy," 4 Harvard Law Review 193-220 [1890] — this article greatly influenced the
enactment of privacy statutes in the United States (Cortes, I., The Constitutional Foundations
of Privacy, p. 15 [1970]).
30 381 U.S. 479, 14 L. ed. 2d 510 [1965].
31 AMENDMENT I [1791]
Congress shall make no law respecting an establishment of religion, or prohibiting the free
exercise thereof; or abridging the freedom of speech or of the press; or the right of the
people peaceably to assemble, and to petition the Government for a redress of grievances.
AMENDMENT III [1791]
No Soldier shall, in time of peace be quartered in any house, without the consent of the
Owner, nor in time of war, but in a manner to be prescribed by law.
AMENDMENT IV [1791]
The right of the people to be secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but
upon probable cause, supported by Oath or affirmation, and particularly describing the place
to be searched, and the persons or things to be seized.
AMENDMENT V [1791]
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a
presentment or indictment of a Grand Jury, except in cases arising in the land or naval
forces, or in the Militia, when in naval forces, or in the Militia, when in actual service in time
of War or public danger; nor shall any person be subject for the same offense to be twice put
in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness
against himself, nor be deprived of life, liberty, or property, without due process of law; nor
shall private property be taken for public use, without just compensation.
xxx xxx xxx
AMENDMENT IX [1791]
The enumeration in the Constitutiom, of certain rights, shall not be construed to deny or
disparage others retained by the people.
32 22 SCRA 424, 444-445.
33 Morfe v. Mutuc, 22 SCRA 424, 444 [1968]; Cortes, The Constitutional Foundations of
Privacy, p. 18 [1970].
34 Cortes, The Constitutional Foundations of Privacy, p. 18 [1970].
35 Art. 26 of the Civil Code provides:
Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute
a criminal offense, shall produce a cause of action damages, prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life,
place of birth, physical defect, or other personal condition.
36 Art. 32, Civil Code.
37 Art. 723, Civil Code.
38 Art. 229, Revised Penal Code.
39 Art. 290-292, Revised Penal Code.
40 Art. 280, Revised Penal Code.
41 R.A. 4200.
42 R.A. 1405.
43 R.A. 8293.
44 Sec. 24, Rule 130 [C], Revised Rules on Evidence.
45 "Biometry," Dorland's Illustated Medical Dictionary, 24th ed. [1965]. "Biometry" or
"biometrics" is literally, the measurement of living things; but it is generally used to mean
the application of mathematics to biology. The term is now largely obsolete as a biological
science since mathematical or statistical work is an integral part of most biological
disciplines (The Dictionary of Science [1993]).
46 "Biometric Identification," http://www.afmc.wpafb.af.mil/=organizations/HQ-
AFMC/LG/LSO/LOA/bio.html; see also "Biometrics Explianed — Section-1,"
http://www.ncsa.com/services/consortia/cbdc/sec1.html.
47 Id.
48 Id.
49 Or in microchips of smart cards and magnetic strips of bank cards.
50 "Privacy at Risk, Finger-scanning for Ideology and Profit" [1998],
file:///DI/commentary.html
51 "Biometric Identification," http://www.afmc.wpafb.af.mil/organizations/HQ-
AFMC/LG/LSO/LOA/bio.html
52 "The Libertarian Library: Facing Up to Biometrics," The Mouse Monitor, The International
Journal of Bureau-Rat Control [1998], http://www.cyberhaven.com/libertarian/biomet.html.
53 Id. The thermogram is so accurate that it can tell identical twins apart and cannot be
fooled by cosmetic surgery or disguises, including facial hair.
54 "An updated national population register will provide a suitable base for all types of
planning and programming of government facilities and services" (Memorandum of the
Solicitor General, p. 20, Rollo, p. 210).
55 Simitis, "Reviewing Privacy in an Information Society," University of Pennsylvania Law
Review, vol. 135: 707, 717 [March 1985].
56 Sloan, I. Law of Privacy Rights in a Technological Society, p. 6 [1986].
57 Respondent GSIS, through counsel claims that the basic information shall be limited to
the individual's full name place of birth, date of birth photograph, signature and thumbmark
(Comment of Respondent GSIS, p. 6, Rollo, p. 101).
58 Otani, K. "Information Security in the Network Age," 70 Philippine Law Journal, 1, 9
[1995].
59 Cortes, I., The Constitutional Foundations of Privacy, p. 12 [1970].
60 Simitis, "Reviewing Privacy in an Information Society," University of Pennsylvania Law
Review, vol. 135: 707, 740 [March 1987].
61 Ibid., p. 718.
62 The right to control the collection, maintenance use, and dissemination of data about
oneself is called "informational privacy" (Hancock, G. "California's Privacy Act: Controlling
Government's Use of Information? 32 Stanford Law Review no. 5, p. 1001 [May 1980]. The
right to make personal decisions or conduct personal activities without intrusion, observation
or interference is called "autonomy privacy" (Hill v. NCAA, 865 p. 2d 633, 652-654 [Cal.
1994].
63 Hosch, "The Interest in Limiting the Disclosure of Personal Information: A Constitutional
Analysis," Vanderbilt Law Review vol. 36: 139, 142 [Jan. 1983].
64 Miller, "Personal Privacy in the Computer Age, The Challenge of a New Technology in an
Information-Oriented Society," 67 Michigan Law Review 1091, 1119 [1969]; see
also Cortes, supra, at 13.
65 Cortes, I. The Constitutional Foundations of Privacy, p. 12 [1970].
66 Id.
67 Rakas v. Illinois, 439 U.S. 128, 143-144 [1978]; see the decision and Justice Harlan's
concurring opinion in Katz v. United States, 389 U.S. 347, 353, 361, 19 L. ed. 2d 576, 583,
587-589 [1967]; see alsoSouthard, "Individual Privacy and Government Efficiency:
Techonology's Effect on the Government's Ability to Gather, Store, and Distribute
Information" (Computer/Law Journal, vol. IX, pp. 359, 367, note 63 [1989]).
68 Kennedy, "Note: Emasculating a State's Constitutional Right to Privacy: The California
Supreme Court's Decision in Hill v. NCAA, "Temple Law Review, vol. 68: 1497, 1517 [1995].
69 Id.
70 Southard, supra, at 369.
71 Id; see also Laurence H. Tribe, " The Constitution in Cyberspace: Law and Liberty Beyond
the Electronic Frontier," Keynote Address at the First Conference on Computer, Freedom and
Privacy, at Jim Warren & Computer Professionals for Social Responsibility [1991].
72 As one author has observed, previously, one could take steps to esure an expectation of
privacy in a private palce, e.g., locking of doors and closing of curtains. Because advances in
surveillance technology have made these precautions meaningless, the expectation of the
privacy they offer is no longer justifiable and reasonable — Southard, supra, at 369.
73 Sec. 4, Commenwealth Act No. 591 [1940].
74 Sec. 24 [c] and 28 [e], R.A. 1161, as amended.
75 Citing Morfe v. Mutuc, 22 SCRA 424, 445 [1968].
76 Comment of the Solicitor General, p. 16, Rollo, p. 75.
77 Op. cit., note 76.
78 Id., at 435.
79 429 U.S. 589, 51 L ed. 2d 64 [1977].
80 Some of the patients were children whose parents feared would be stigmatized by the
State's central filing system.
81 Sloan, Law of Privacy Rights in a Technological Society, p. 4 [1986].
82 Southard, "Individual Privacy and Governmental Efficiency: Technology's Effect on the
Government's Ability to Gather, Store, and Distribute Information," IX Computer/ Law Journal
359, 360 [1989].
83 The Internet is a decentralized network interconnected by the TCP/IP protocol. The Net
was started as a military network ARPANET in 1969 by the US Department of Defense for the
purpose of networking main frame computers to prepare against missile weapons. It opened
to public research organizations and universities in 1983 and has been interconnected with
commercial networks since 1990 (Kazuko Otani, "Information Security in the Network Age,"
Philippine Law Journal, vol. 70: 1, 2 [1995]).
84 Cyberspace is a place located in no particular geographical location but available to
anyone, anywhere in the world, with access to the internet (Darrel Menthe, "Jurisdiction in
Cyberspace: A Theory of International Spaces 4 Mich. Tel. Tech. L. Rev. 3 (April 23, 1998),
<http://www. law.umich.edu/ mttlr/ volfour/menthe.html>.
85 Southard, supra, at 361-362.
86 Id; White v. Davis, 533 P. 2d 222 [Cal. 1975]; City of Sta. Barbara v. Adamson, 610 P. 2d
436 [Cal. 1980]. In his concurring opinion in Whalen v. Roe, Justice Brennan stated that a
statute that deprives an individual of his privacy is not unconstitutional only if it was
necessary to promote a compelling state interest (429 U.S. 589, 606-607, 51 L. ed. 2d 64,
77-78).
87 Morfe v. Mutuc, supra, at 444-445 citing Emerson,"Nine Justices in Search of a Doctrine,"
64 Michigan Law Review 219, 229 [1965].
88 See Shils, "Privacy: Its Constitution and Vicissitudes," Law and Contemporary Problems,
vol. 31, pp. 301-303 [1966].
89 Harry Kalvin, Jr., "The Problems of Privacy in the Year 2000," Daedalus, vol. 96, pp. 876-
879 [1967].

G.R. No. 124360 November 5, 1997

FRANCISCO S. TATAD, petitioner,


vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF THE DEPARTMENT OF
FINANCE, respondents.

G.R. No. 127867 November 5, 1997

EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO TANADA, FLAG HUMAN RIGHTS
FOUNDATION, INC., FREEDOM FROM DEBT COALITION (FDC), SANLAKAS, petitioners,
vs.
HON. RUBEN TORRES in his capacity as the Executive Secretary, HON. FRANCISCO VIRAY, in his capacity
as the Secretary of Energy, CALTEX Philippines, Inc., PETRON Corporation and PILIPINAS SHELL
Corporation, respondents.

PUNO, J.:

The petitions at bar challenge the constitutionality of Republic Act No. 8180 entitled "An Act
Deregulating the Downstream Oil Industry and For Other Purposes". 1 R.A. No. 8180 ends twenty six (26)
years of government regulation of the downstream oil industry. Few cases carry a surpassing importance
on the life of every Filipino as these petitions for the upswing and downswing of our economy materially
depend on the oscillation of oil.

First, the facts without the fat. Prior to 1971, there was no government agency regulating the oil industry
other than those dealing with ordinary commodities. Oil companies were free to enter and exit the
market without any government interference. There were four (4) refining companies (Shell, Caltex,
Bataan Refining Company and Filoil Refining) and six (6) petroleum marketing companies (Esso, Filoil,
Caltex, Getty, Mobil and Shell), then operating in the country. 2

In 1971, the country was driven to its knees by a crippling oil crisis. The government, realizing that
petroleum and its products are vital to national security and that their continued supply at reasonable
prices is essential to the general welfare, enacted the Oil Industry Commission Act. 3 It created the Oil
Industry Commission (OIC) to regulate the business of importing, exporting, re-exporting, shipping,
transporting, processing, refining, storing, distributing, marketing and selling crude oil, gasoline,
kerosene, gas and other refined petroleum products. The OIC was vested with the power to fix the
market prices of petroleum products, to regulate the capacities of refineries, to license new refineries
and to regulate the operations and trade practices of the industry. 4

In addition to the creation of the OIC, the government saw the imperious need for a more active role of
Filipinos in the oil industry. Until the early seventies, the downstream oil industry was controlled by
multinational companies. All the oil refineries and marketing companies were owned
by foreigners whose economic interests did not always coincide with the interest of the Filipino. Crude
oil was transported to the country by foreign-controlled tankers. Crude processing was done locally by
foreign-owned refineries and petroleum products were marketed through foreign-owned retail outlets.
On November 9, 1973, President Ferdinand E. Marcos boldly created the Philippine National Oil
Corporation (PNOC) to break the control by foreigners of our oil industry. 5 PNOC engaged in the business
of refining, marketing, shipping, transporting, and storing petroleum. It acquired ownership of ESSO
Philippines and Filoil to serve as its marketing arm. It bought the controlling shares of Bataan Refining
Corporation, the largest refinery in the country. 6 PNOC later put up its own marketing subsidiary —
Petrophil. PNOC operated under the business name PETRON Corporation. For the first time, there was a
Filipino presence in the Philippine oil market.

In 1984, President Marcos through Section 8 of Presidential Decree No. 1956, created the Oil Price
Stabilization Fund (OPSF) to cushion the effects of frequent changes in the price of oil caused by
exchange rate adjustments or increase in the world market prices of crude oil and imported petroleum
products. The fund is used (1) to reimburse the oil companies for cost increases in crude oil and
imported petroleum products resulting from exchange rate adjustment and/or increase in world market
prices of crude oil, and (2) to reimburse oil companies for cost underrecovery incurred as a result of the
reduction of domestic prices of petroleum products. Under the law, the OPSF may be sourced from:
1. any increase in the tax collection from ad valorem tax or customs duty imposed on
petroleum products subject to tax under P.D. No. 1956 arising from exchange rate
adjustment,

2. any increase in the tax collection as a result of the lifting of tax exemptions of
government corporations, as may be determined by the Minister of Finance in
consultation with the Board of Energy,

3. any additional amount to be imposed on petroleum products to augment the


resources of the fund through an appropriate order that may be issued by the Board of
Energy requiring payment of persons or companies engaged in the business of
importing, manufacturing and/or marketing petroleum products, or

4. any resulting peso costs differentials in case the actual peso costs paid by oil
companies in the importation of crude oil and petroleum products is less than the peso
costs computed using the reference foreign exchange rate as fixed by the Board of
Energy.7

By 1985, only three (3) oil companies were operating in the country — Caltex, Shell and the government-
owned PNOC.

In May, 1987, President Corazon C. Aquino signed Executive Order No. 172 creating the Energy
Regulatory Boardto regulate the business of importing, exporting, re-exporting, shipping, transporting,
processing, refining, marketing and distributing energy resources "when warranted and only when public
necessity requires." The Board had the following powers and functions:

1. Fix and regulate the prices of petroleum products;

2. Fix and regulate the rate schedule or prices of piped gas to be


charged by duly franchised gas companies which distribute gas
by means of underground pipe system;

3. Fix and regulate the rates of pipeline concessionaries under


the provisions of R.A. No. 387, as amended . . . ;

4. Regulate the capacities of new refineries or additional


capacities of existing refineries and license refineries that may
be organized after the issuance of (E.O. No. 172) under such
terms and conditions as are consistent with the national
interest; and

5. Whenever the Board has determined that there is a shortage


of any petroleum product, or when public interest so requires, it
may take such steps as it may consider necessary, including the
temporary adjustment of the levels of prices of petroleum
products and the payment to the Oil Price Stabilization Fund . . .
by persons or entities engaged in the petroleum industry of such
amounts as may be determined by the Board, which may enable
the importer to recover its cost of importation. 8

On December 9, 1992, Congress enacted R.A. No. 7638 which created the Department of Energy to
prepare, integrate, coordinate, supervise and control all plans, programs, projects, and activities of the
government in relation to energy exploration, development, utilization, distribution and
conservation.9 The thrust of the Philippine energy program under the law was toward privatization of
government agencies related to energy, deregulation of the power and energy industry and reduction of
dependency on oil-fired plants. 10 The law also aimed to encourage free and active participation and
investment by the private sector in all energy activities. Section 5(e) of the law states that "at the end of
four (4) years from the effectivity of this Act, the Department shall, upon approval of the President,
institute the programs and timetable of deregulation of appropriate energy projects and activities of the
energy industry."

Pursuant to the policies enunciated in R.A. No. 7638, the government approved the privatization of
Petron Corporation in 1993. On December 16, 1993, PNOC sold 40% of its equity in Petron Corporation
to the Aramco Overseas Company.

In March 1996, Congress took the audacious step of deregulating the downstream oil industry. It
enacted R.A. No.8180, entitled the "Downstream Oil Industry Deregulation Act of 1996." Under the
deregulated environment, "any person or entity may import or purchase any quantity of crude oil and
petroleum products from a foreign or domestic source, lease or own and operate refineries and other
downstream oil facilities and market such crude oil or use the same for his own requirement," subject
only to monitoring by the Department of
Energy.11

The deregulation process has two phases: the transition phase and the full deregulation phase. During
the transition phase, controls of the non-pricing aspects of the oil industry were to be lifted. The
following were to be accomplished: (1) liberalization of oil importation, exportation, manufacturing,
marketing and distribution, (2) implementation of an automatic pricing mechanism, (3) implementation
of an automatic formula to set margins of dealers and rates of haulers, water transport operators and
pipeline concessionaires, and (4) restructuring of oil taxes. Upon full deregulation, controls on the price
of oil and the foreign exchange cover were to be lifted and the OPSF was to be abolished.

The first phase of deregulation commenced on August 12, 1996.

On February 8, 1997, the President implemented the full deregulation of the Downstream Oil Industry
through E.O.No. 372.

The petitions at bar assail the constitutionality of various provisions of R.A No. 8180 and E.O. No. 372.

In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment of section 5(b) of R.A. No. 8180.
Section 5(b) provides:

b) Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff duty
shall be imposed and collected on imported crude oil at the rate of three percent (3%) and
imported refined petroleum products at the rate of seven percent (7%), except fuel oil and LPG,
the rate for which shall be the same as that for imported crude oil: Provided, That beginning on
January 1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be the
same: Provided, further, That this provision may be amended only by an Act of Congress.

The petition is anchored on three arguments:

First, that the imposition of different tariff rates on imported crude oil and imported refined petroleum
products violates the equal protection clause. Petitioner contends that the 3%-7% tariff differential
unduly favors the three existing oil refineries and discriminates against prospective investors in the
downstream oil industry who do not have their own refineries and will have to source refined petroleum
products from abroad.

Second, that the imposition of different tariff rates does not deregulate the downstream oil industry but
instead controls the oil industry, contrary to the avowed policy of the law. Petitioner avers that the tariff
differential between imported crude oil and imported refined petroleum products bars the entry of
other players in the oil industry because it effectively protects the interest of oil companies with existing
refineries. Thus, it runs counter to the objective of the law "to foster a truly competitive market."

Third, that the inclusion of the tariff provision in section 5(b) of R.A. No. 8180 violates Section 26(1)
Article VI of the Constitution requiring every law to have only one subject which shall be expressed in its
title. Petitioner contends that the imposition of tariff rates in section 5(b) of R.A. No. 8180 is foreign to
the subject of the law which is the deregulation of the downstream oil industry.

In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo, Enrique Garcia, Wigberto Tanada, Flag
Human Rights Foundation, Inc., Freedom from Debt Coalition (FDC) and Sanlakas contest the
constitutionality of section 15 of R.A. No. 8180 and E.O. No. 392. Section 15 provides:

Sec. 15. Implementation of Full Deregulation. — Pursuant to Section 5(e) of Republic Act No.
7638, the DOE shall, upon approval of the President, implement the full deregulation of the
downstream oil industry not later than March 1997. As far as practicable, the DOE shall time the
full deregulation when the prices of crude oil and petroleum products in the world market are
declining and when the exchange rate of the peso in relation to the US dollar is stable. Upon the
implementation of the full deregulation as provided herein, the transition phase is deemed
terminated and the following laws are deemed repealed:

xxx xxx xxx

E.O. No. 372 states in full, viz.:

WHEREAS, Republic Act No. 7638, otherwise known as the "Department of Energy Act of 1992,"
provides that, at the end of four years from its effectivity last December 1992, "the Department
(of Energy) shall, upon approval of the President, institute the programs and time table of
deregulation of appropriate energy projects and activities of the energy sector;"

WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as the "Downstream Oil
Industry Deregulation Act of 1996," provides that "the DOE shall, upon approval of the
President, implement full deregulation of the downstream oil industry not later than March,
1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude oil
and petroleum products in the world market are declining and when the exchange rate of the
peso in relation to the US dollar is stable;"

WHEREAS, pursuant to the recommendation of the Department of Energy, there is an imperative


need to implement the full deregulation of the downstream oil industry because of the following
recent developments: (i) depletion of the buffer fund on or about 7 February 1997 pursuant to
the Energy Regulatory Board's Order dated 16 January 1997; (ii) the prices of crude oil had been
stable at $21-$23 per barrel since October 1996 while prices of petroleum products in the world
market had been stable since mid-December of last year. Moreover, crude oil prices are
beginning to soften for the last few days while prices of some petroleum products had already
declined; and (iii) the exchange rate of the peso in relation to the US dollar has been stable for
the past twelve (12) months, averaging at around P26.20 to one US dollar;

WHEREAS, Executive Order No. 377 dated 31 October 1996 provides for an institutional
framework for the administration of the deregulated industry by defining the functions and
responsibilities of various government agencies;

WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the industry will foster a truly
competitive market which can better achieve the social policy objectives of fair prices and
adequate, continuous supply of environmentally-clean and high quality petroleum products;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by the powers
vested in me by law, do hereby declare the full deregulation of the downstream oil industry.

In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners offer the following submissions:

First, section 15 of R.A. No. 8180 constitutes an undue delegation of legislative power to the President
and the Secretary of Energy because it does not provide a determinate or determinable standard to
guide the Executive Branch in determining when to implement the full deregulation of the downstream
oil industry. Petitioners contend that the law does not define when it is practicable for the Secretary of
Energy to recommend to the President the full deregulation of the downstream oil industry or when the
President may consider it practicable to declare full deregulation. Also, the law does not provide any
specific standard to determine when the prices of crude oil in the world market are considered to be
declining nor when the exchange rate of the peso to the US dollar is considered stable.

Second, petitioners aver that E.O. No. 392 implementing the full deregulation of the downstream oil
industry is arbitrary and unreasonable because it was enacted due to the alleged depletion of the OPSF
fund — a condition not found in R.A. No. 8180.

Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the formation of a de facto cartel among the
three existing oil companies — Petron, Caltex and Shell — in violation of the constitutional prohibition
against monopolies, combinations in restraint of trade and unfair competition.

Respondents, on the other hand, fervently defend the constitutionality of R.A. No. 8180 and E.O. No.
392. In addition, respondents contend that the issues raised by the petitions are not justiciable as they
pertain to the wisdom of the law. Respondents further aver that petitioners have no locus standi as they
did not sustain nor will they sustain direct injury as a result of the implementation of R.A. No. 8180.

The petitions were heard by the Court on September 30, 1997. On October 7, 1997, the Court ordered
the private respondents oil companies "to maintain the status quo and to cease and desist from
increasing the prices of gasoline and other petroleum fuel products for a period of thirty (30) days . . .
subject to further orders as conditions may warrant."

We shall now resolve the petitions on the merit. The petitions raise procedural and substantive issues
bearing on the constitutionality of R.A. No. 8180 and E.O. No. 392. The procedural issues are: (1)
whether or not the petitions raise a justiciable controversy, and (2) whether or not the petitioners have
the standing to assail the validity of the subject law and executive order. The substantive issues are: (1)
whether or not section 5 (b) violates the one title — one subject requirement of the Constitution; (2)
whether or not the same section violates the equal protection clause of the Constitution; (3) whether or
not section 15 violates the constitutional prohibition on undue delegation of power; (4) whether or not
E.O. No. 392 is arbitrary and unreasonable; and (5) whether or not R.A. No. 8180 violates the
constitutional prohibition against monopolies, combinations in restraint of trade and unfair competition.

We shall first tackle the procedural issues. Respondents claim that the avalanche of arguments of the
petitioners assail the wisdom of R.A. No. 8180. They aver that deregulation of the downstream oil
industry is a policy decision made by Congress and it cannot be reviewed, much less be reversed by this
Court. In constitutional parlance, respondents contend that the petitions failed to raise a justiciable
controversy.

Respondents' joint stance is unnoteworthy. Judicial power includes not only the duty of the courts to
settle actual controversies involving rights which are legally demandable and enforceable, but also the
duty to determine whether or not there has been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the government. 12 The courts, as guardians
of the Constitution, have the inherent authority to determine whether a statute enacted by the
legislature transcends the limit imposed by the fundamental law. Where a statute violates the
Constitution, it is not only the right but the duty of the judiciary to declare such act as unconstitutional
and void.13 We held in the recent case of Tanada v. Angara:14

xxx xxx xxx

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the
right but in fact the duty of the judiciary to settle the dispute. The question thus posed is judicial
rather than political. The duty to adjudicate remains to assure that the supremacy of the
Constitution is upheld. Once a controversy as to the application or interpretation of a
constitutional provision is raised before this Court, it becomes a legal issue which the Court is
bound by constitutional mandate to decide.

Even a sideglance at the petitions will reveal that petitioners have raised constitutional issues which
deserve the resolution of this Court in view of their seriousness and their value as precedents. Our
statement of facts and definition of issues clearly show that petitioners are assailing R.A. No. 8180
because its provisions infringe the Constitution and not because the law lacks wisdom. The principle of
separation of power mandates that challenges on the constitutionality of a law should be resolved in our
courts of justice while doubts on the wisdom of a law should be debated in the halls of Congress. Every
now and then, a law may be denounced in court both as bereft of wisdom and constitutionally infirmed.
Such denunciation will not deny this Court of its jurisdiction to resolve the constitutionality of the said
law while prudentially refusing to pass on its wisdom.

The effort of respondents to question the locus standi of petitioners must also fall on barren ground. In
language too lucid to be misunderstood, this Court has brightlined its liberal stance on a
petitioner's locus standi where the petitioner is able to craft an issue of transcendental significance to
the people.15 In Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,16 we stressed:

xxx xxx xxx

Objections to taxpayers' suit for lack of sufficient personality, standing or interest are, however,
in the main procedural matters. Considering the importance to the public of the cases at bar, and
in keeping with the Court's duty, under the 1987 Constitution, to determine whether or not the
other branches of government have kept themselves within the limits of the Constitution and
the laws and that they have not abused the discretion given to them, the Court has brushed
aside technicalities of procedure and has taken cognizance of these petitions.

There is not a dot of disagreement between the petitioners and the respondents on the far reaching
importance of the validity of RA No. 8180 deregulating our downstream oil industry. Thus, there is no
good sense in being hypertechnical on the standing of petitioners for they pose issues which are
significant to our people and which deserve our forthright resolution.

We shall now track down the substantive issues. In G.R. No. 124360 where petitioner is Senator Tatad, it
is contended that section 5(b) of R.A. No. 8180 on tariff differential violates the provision 17 of the
Constitution requiring every law to have only one subject which should be expressed in its title. We do
not concur with this contention. As a policy, this Court has adopted a liberal construction of the one title
— one subject rule. We have consistently ruled 18 that the title need not mirror, fully index or catalogue
all contents and minute details of a law. A law having a single general subject indicated in the title may
contain any number of provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject
by providing for the method and means of carrying out the general subject. 19 We hold that section 5(b)
providing for tariff differential is germane to the subject of R.A. No. 8180 which is the deregulation of the
downstream oil industry. The section is supposed to sway prospective investors to put up refineries in
our country and make them rely less on imported petroleum. 20 We shall, however, return to the validity
of this provision when we examine its blocking effect on new entrants to the oil market.

We shall now slide to the substantive issues in G.R. No. 127867. Petitioners assail section 15 of R.A. No.
8180 which fixes the time frame for the full deregulation of the downstream oil industry. We restate its
pertinent portion for emphasis, viz.:

Sec. 15. Implementation of Full Deregulation — Pursuant to section 5(e) of Republic Act No.
7638, the DOE shall, upon approval of the President, implement the full deregulation of the
downstream oil industry not later than March 1997. As far as practicable, the DOE shall time the
full deregulation when the prices of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to the US dollar is stable . . .

Petitioners urge that the phrases "as far as practicable," "decline of crude oil prices in the world market"
and "stability of the peso exchange rate to the US dollar" are ambivalent, unclear and inconcrete in
meaning. They submit that they do not provide the "determinate or determinable standards" which can
guide the President in his decision to fully deregulate the downstream oil industry. In addition, they
contend that E.O. No. 392 which advanced the date of full deregulation is void for it illegally considered
the depletion of the OPSF fund as a factor.

The power of Congress to delegate the execution of laws has long been settled by this Court. As early as
1916 in Compania General de Tabacos de Filipinas vs. The Board of Public Utility Commissioners,21 this
Court thru, Mr. Justice Moreland, held that "the true distinction is between the delegation of power to
make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or
discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be
done; to the latter no valid objection can be made." Over the years, as the legal engineering of men's
relationship became more difficult, Congress has to rely more on the practice of delegating the execution
of laws to the executive and other administrative agencies. Two tests have been developed to determine
whether the delegation of the power to execute laws does not involve the abdication of the power to
make law itself. We delineated the metes and bounds of these tests in Eastern Shipping Lines,
Inc. VS. POEA,22 thus:

There are two accepted tests to determine whether or not there is a valid delegation of
legislative power, viz: the completeness test and the sufficient standard test. Under the first test,
the law must be complete in all its terms and conditions when it leaves the legislative such that
when it reaches the delegate the only thing he will have to do is to enforce it. Under the
sufficient standard test, there must be adequate guidelines or limitations in the law to map out
the boundaries of the delegate's authority and prevent the delegation from running riot. Both
tests are intended to prevent a total transference of legislative authority to the delegate, who is
not allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The validity of delegating legislative power is now a quiet area in our constitutional landscape. As sagely
observed, delegation of legislative power has become an inevitability in light of the increasing
complexity of the task of government. Thus, courts bend as far back as possible to sustain the
constitutionality of laws which are assailed as unduly delegating legislative powers. Citing Hirabayashi
v. United States23 as authority, Mr. Justice Isagani A. Cruz states "that even if the law does not expressly
pinpoint the standard, the courts will bend over backward to locate the same elsewhere in order to
spare the statute, if it can, from constitutional infirmity." 24

Given the groove of the Court's rulings, the attempt of petitioners to strike down section 15 on the
ground of undue delegation of legislative power cannot prosper. Section 15 can hurdle both the
completeness test and the sufficient standard test. It will be noted that Congress expressly provided in
R.A. No. 8180 that full deregulation will start at the end of March 1997, regardless of the occurrence of
any event. Full deregulation at the end of March 1997 is mandatory and the Executive has no discretion
to postpone it for any purported reason. Thus, the law is complete on the question of the final date of
full deregulation. The discretion given to the President is to advance the date of full deregulation before
the end of March 1997. Section 15 lays down the standard to guide the judgment of the President — he
is to time it as far as practicable when the prices of crude oil and petroleum products in the world
market are declining and when the exchange rate of the peso in relation to the US dollar is stable.

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been
defined in R.A. No. 8180 as they do not set determinate or determinable standards. The stubborn
submission deserves scant consideration. The dictionary meanings of these words are well settled and
cannot confuse men of reasonable intelligence. Webster defines "practicable" as meaning possible to
practice or perform, "decline" as meaning to take a downward direction, and "stable" as meaning firmly
established.25 The fear of petitioners that these words will result in the exercise of executive discretion
that will run riot is thus groundless. To be sure, the Court has sustained the validity of similar, if not more
general standards in other cases.26

It ought to follow that the argument that E.O. No. 392 is null and void as it was based on indeterminate
standards set by R.A. 8180 must likewise fail. If that were all to the attack against the validity of E.O. No.
392, the issue need not further detain our discourse. But petitioners further posit the thesis that the
Executive misapplied R.A. No. 8180 when it considered the depletion of the OPSF fund as a factor in fully
deregulating the downstream oil industry in February 1997. A perusal of section 15 of R.A. No. 8180 will
readily reveal that it only enumerated two factors to be considered by the Department of Energy and the
Office of the President, viz.: (1) the time when the prices of crude oil and petroleum products in the
world market are declining, and (2) the time when the exchange rate of the peso in relation to the US
dollar is stable. Section 15 did not mention the depletion of the OPSF fund as a factor to be given weight
by the Executive before ordering full deregulation. On the contrary, the debates in Congress will show
that some of our legislators wanted to impose as a pre-condition to deregulation a showing that the
OPSF fund must not be in deficit. 27 We therefore hold that the Executive department failed to follow
faithfully the standards set by R.A. No. 8180 when it considered the extraneous factor of depletion of the
OPSF fund. The misappreciation of this extra factor cannot be justified on the ground that the Executive
department considered anyway the stability of the prices of crude oil in the world market and the
stability of the exchange rate of the peso to the dollar. By considering another factor to hasten full
deregulation, the Executive department rewrote the standards set forth in R.A. 8180. The Executive is
bereft of any right to alter either by subtraction or addition the standards set in R.A. No. 8180 for it has
no power to make laws. To cede to the Executive the power to make law is to invite tyranny, indeed, to
transgress the principle of separation of powers. The exercise of delegated power is given a strict
scrutiny by courts for the delegate is a mere agent whose action cannot infringe the terms of agency. In
the cases at bar, the Executive co-mingled the factor of depletion of the OPSF fund with the factors of
decline of the price of crude oil in the world market and the stability of the peso to the US dollar. On the
basis of the text of E.O. No. 392, it is impossible to determine the weight given by the Executive
department to the depletion of the OPSF fund. It could well be the principal consideration for the early
deregulation. It could have been accorded an equal significance. Or its importance could be nil. In light of
this uncertainty, we rule that the early deregulation under E.O. No. 392 constitutes a misapplication of
R.A. No. 8180.

We now come to grips with the contention that some provisions of R.A. No. 8180 violate section 19 of
Article XII of the 1987 Constitution. These provisions are:

(1) Section 5 (b) which states — "Any law to the contrary notwithstanding and starting with the
effectivity of this Act, tariff duty shall be imposed and collected on imported crude oil at the rate
of three percent (3%) and imported refined petroleum products at the rate of seven percent
(7%) except fuel oil and LPG, the rate for which shall be the same as that for imported crude oil.
Provided, that beginning on January 1, 2004 the tariff rate on imported crude oil and refined
petroleum products shall be the same. Provided, further, that this provision may be amended
only by an Act of Congress."

(2) Section 6 which states — "To ensure the security and continuity of petroleum crude and
products supply, the DOE shall require the refiners and importers to maintain a minimum
inventory equivalent to ten percent (10%) of their respective annual sales volume or forty (40)
days of supply, whichever is lower," and

(3) Section 9 (b) which states — "To ensure fair competition and prevent cartels and monopolies
in the downstream oil industry, the following acts shall be prohibited:

xxx xxx xxx

(b) Predatory pricing which means selling or offering to sell any product at a
price unreasonably below the industry average cost so as to attract customers to
the detriment of competitors.

On the other hand, section 19 of Article XII of the Constitution allegedly violated by the aforestated
provisions of R.A. No. 8180 mandates: "The State shall regulate or prohibit monopolies when the public
interest so requires. No combinations in restraint of trade or unfair competition shall be allowed."

A monopoly is a privilege or peculiar advantage vested in one or more persons or companies, consisting
in the exclusive right or power to carry on a particular business or trade, manufacture a particular article,
or control the sale or the whole supply of a particular commodity. It is a form of market structure in
which one or only a few firms dominate the total sales of a product or service. 28 On the other hand, a
combination in restraint of trade is an agreement or understanding between two or more persons, in the
form of a contract, trust, pool, holding company, or other form of association, for the purpose of unduly
restricting competition, monopolizing trade and commerce in a certain commodity, controlling its,
production, distribution and price, or otherwise interfering with freedom of trade without statutory
authority.29 Combination in restraint of trade refers to the means while monopoly refers to the end. 30

Article 186 of the Revised Penal Code and Article 28 of the New Civil Code breathe life to this
constitutional policy. Article 186 of the Revised Penal Code penalizes monopolization and creation of
combinations in restraint of
31
trade, while Article 28 of the New Civil Code makes any person who shall engage in unfair competition
liable for damages.32

Respondents aver that sections 5(b), 6 and 9(b) implement the policies and objectives of R.A. No. 8180.
They explain that the 4% tariff differential is designed to encourage new entrants to invest in refineries.
They stress that the inventory requirement is meant to guaranty continuous domestic supply of
petroleum and to discourage fly-by-night operators. They also submit that the prohibition against
predatory pricing is intended to protect prospective entrants. Respondents manifested to the Court that
new players have entered the Philippines after deregulation and have now captured 3% — 5% of the oil
market.
The validity of the assailed provisions of R.A. No. 8180 has to be decided in light of the letter and spirit of
our Constitution, especially section 19, Article XII. Beyond doubt, the Constitution committed us to the
free enterprise system but it is a system impressed with its own distinctness. Thus, while the
Constitution embraced free enterprise as an economic creed, it did not prohibit per se the operation of
monopolies which can, however, be regulated in the public interest. 33 Thus too, our free enterprise
system is not based on a market of pure and unadulterated competition where the State pursues a strict
hands-off policy and follows the let-the-devil devour the hindmost rule. Combinations in restraint of
trade and unfair competitions are absolutely proscribed and the proscription is directed both against the
State as well as the private sector.34 This distinct free enterprise system is dictated by the need to achieve
the goals of our national economy as defined by section 1, Article XII of the Constitution which are: more
equitable distribution of opportunities, income and wealth; a sustained increase in the amount of goods
and services produced by the nation for the benefit of the people; and an expanding productivity as the
key to raising the quality of life for all, especially the underprivileged. It also calls for the State to protect
Filipino enterprises against unfair competition and trade practices.

Section 19, Article XII of our Constitution is anti-trust in history and in spirit. It espouses competition. The
desirability of competition is the reason for the prohibition against restraint of trade, the reason for the
interdiction of unfair competition, and the reason for regulation of unmitigated monopolies. Competition
is thus the underlying principle of section 19, Article XII of our Constitution which cannot be violated by
R.A. No. 8180. We subscribe to the observation of Prof. Gellhorn that the objective of anti-trust law is "to
assure a competitive economy, based upon the belief that through competition producers will strive to
satisfy consumer wants at the lowest price with the sacrifice of the fewest resources. Competition
among producers allows consumers to bid for goods and services, and thus matches their desires with
society's opportunity costs."35 He adds with appropriateness that there is a reliance upon "the operation
of the 'market' system (free enterprise) to decide what shall be produced, how resources shall be
allocated in the production process, and to whom the various products will be distributed. The market
system relies on the consumer to decide what and how much shall be produced, and on competition,
among producers to determine who will manufacture it."

Again, we underline in scarlet that the fundamental principle espoused by section 19, Article XII of the
Constitution is competition for it alone can release the creative forces of the market. But the competition
that can unleash these creative forces is competition that is fighting yet is fair. Ideally, this kind of
competition requires the presence of not one, not just a few but several players. A market controlled by
one player (monopoly) or dominated by a handful of players (oligopoly) is hardly the market where
honest-to-goodness competition will prevail. Monopolistic or oligopolistic markets deserve our careful
scrutiny and laws which barricade the entry points of new players in the market should be viewed with
suspicion.

Prescinding from these baseline propositions, we shall proceed to examine whether the provisions of
R.A. No. 8180 on tariff differential, inventory reserves, and predatory prices imposed substantial barriers
to the entry and exit of new players in our downstream oil industry. If they do, they have to be struck
down for they will necessarily inhibit the formation of a truly competitive market. Contrariwise, if they
are insignificant impediments, they need not be stricken down.

In the cases at bar, it cannot be denied that our downstream oil industry is operated and controlled by
an oligopoly, a foreign oligopoly at that. Petron, Shell and Caltex stand as the only major league players
in the oil market. All other players belong to the lilliputian league. As the dominant players, Petron, Shell
and Caltex boast of existing refineries of various capacities. The tariff differential of 4% therefore works
to their immense benefit. Yet, this is only one edge of the tariff differential. The other edge cuts and cuts
deep in the heart of their competitors. It erects a high barrier to the entry of new players. New players
that intend to equalize the market power of Petron, Shell and Caltex by building refineries of their own
will have to spend billions of pesos. Those who will not build refineries but compete with them will suffer
the huge disadvantage of increasing their product cost by 4%. They will be competing on an uneven field.
The argument that the 4% tariff differential is desirable because it will induce prospective players to
invest in refineries puts the cart before the horse. The first need is to attract new players and they
cannot be attracted by burdening them with heavy disincentives. Without new players belonging to the
league of Petron, Shell and Caltex, competition in our downstream oil industry is an idle dream.

The provision on inventory widens the balance of advantage of Petron, Shell and Caltex against
prospective new players. Petron, Shell and Caltex can easily comply with the inventory requirement of
R.A. No. 8180 in view of their existing storage facilities. Prospective competitors again will find
compliance with this requirement difficult as it will entail a prohibitive cost. The construction cost of
storage facilities and the cost of inventory can thus scare prospective players. Their net effect is to
further occlude the entry points of new players, dampen competition and enhance the control of the
market by the three (3) existing oil companies.

Finally, we come to the provision on predatory pricing which is defined as ". . . selling or offering to sell
any product at a price unreasonably below the industry average cost so as to attract customers to the
detriment of competitors." Respondents contend that this provision works against Petron, Shell and
Caltex and protects new entrants. The ban on predatory pricing cannot be analyzed in isolation. Its
validity is interlocked with the barriers imposed by R.A. No. 8180 on the entry of new players. The
inquiry should be to determine whether predatory pricing on the part of the dominant oil companies is
encouraged by the provisions in the law blocking the entry of new players. Text-writer
Hovenkamp,36 gives the authoritative answer and we quote:

xxx xxx xxx

The rationale for predatory pricing is the sustaining of losses today that will give a firm monopoly
profits in the future. The monopoly profits will never materialize, however, if the market is
flooded with new entrants as soon as the successful predator attempts to raise its
price. Predatory pricing will be profitable only if the market contains significant barriers to new
entry.

As aforediscsussed, the 4% tariff differential and the inventory requirement are significant barriers which
discourage new players to enter the market. Considering these significant barriers established by R.A.
No. 8180 and the lack of players with the comparable clout of PETRON, SHELL and CALTEX, the
temptation for a dominant player to engage in predatory pricing and succeed is a chilling reality.
Petitioners' charge that this provision on predatory pricing is anti-competitive is not without reason.

Respondents belittle these barriers with the allegation that new players have entered the market since
deregulation. A scrutiny of the list of the alleged new players will, however, reveal that not one belongs
to the class and category of PETRON, SHELL and CALTEX. Indeed, there is no showing that any of these
new players intends to install any refinery and effectively compete with these dominant oil companies. In
any event, it cannot be gainsaid that the new players could have been more in number and more
impressive in might if the illegal entry barriers in R.A. No. 8180 were not erected.
We come to the final point. We now resolve the total effect of the untimely deregulation, the imposition
of 4% tariff differential on imported crude oil and refined petroleum products, the requirement of
inventory and the prohibition on predatory pricing on the constitutionality of R.A. No. 8180. The
question is whether these offending provisions can be individually struck down without invalidating the
entire R.A. No. 8180. The ruling case law is well stated by author Agpalo,37 viz.:

xxx xxx xxx

The general rule is that where part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if separable from the invalid, may stand and be enforced.
The presence of a separability clause in a statute creates the presumption that the legislature
intended separability, rather than complete nullity of the statute. To justify this result, the valid
portion must be so far independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it could not constitutionally
enact the other. Enough must remain to make a complete, intelligible and valid statute, which
carries out the legislative intent. . . .

The exception to the general rule is that when the parts of a statute are so mutually dependent
and connected, as conditions, considerations, inducements, or compensations for each other, as
to warrant a belief that the legislature intended them as a whole, the nullity of one part will
vitiate the rest. In making the parts of the statute dependent, conditional, or connected with one
another, the legislature intended the statute to be carried out as a whole and would not have
enacted it if one part is void, in which case if some parts are unconstitutional, all the other
provisions thus dependent, conditional, or connected must fall with them.

R.A. No. 8180 contains a separability clause. Section 23 provides that "if for any reason, any section or
provision of this Act is declared unconstitutional or invalid, such parts not affected thereby shall remain
in full force and effect." This separability clause notwithstanding, we hold that the offending provisions
of R.A. No. 8180 so permeate its essence that the entire law has to be struck down. The provisions on
tariff differential, inventory and predatory pricing are among the principal props of R.A. No. 8180.
Congress could not have deregulated the downstream oil industry without these provisions.
Unfortunately, contrary to their intent, these provisions on tariff differential, inventory and predatory
pricing inhibit fair competition, encourage monopolistic power and interfere with the free interaction of
market forces. R.A. No. 8180 needs provisions to vouchsafe free and fair competition. The need for these
vouchsafing provisions cannot be overstated. Before deregulation, PETRON, SHELL and CALTEX had no
real competitors but did not have a free run of the market because government controls both the pricing
and non-pricing aspects of the oil industry. After deregulation, PETRON, SHELL and CALTEX remain
unthreatened by real competition yet are no longer subject to control by government with respect to
their pricing and non-pricing decisions. The aftermath of R.A. No. 8180 is a deregulated market where
competition can be corrupted and where market forces can be manipulated by oligopolies.

The fall out effects of the defects of R.A. No. 8180 on our people have not escaped Congress. A lot of our
leading legislators have come out openly with bills seeking the repeal of these odious and offensive
provisions in R.A. No. 8180. In the Senate, Senator Freddie Webb has filed S.B. No. 2133 which is the
result of the hearings conducted by the Senate Committee on Energy. The hearings revealed that
(1) there was a need to level the playing field for the new entrants in the downstream oil industry , and (2)
there was no law punishing a person for selling petroleum products at unreasonable prices. Senator
Alberto G. Romulo also filed S.B. No. 2209 abolishing the tariff differential beginning January 1, 1998. He
declared that the amendment ". . . would mean that instead of just three (3) big oil companies there will
be other major oil companies to provide more competitive prices for the market and the consuming
public." Senator Heherson T . Alvarez, one of the principal proponents of R.A. No. 8180, also filed S.B. No.
2290 increasing the penalty for violation of its section 9. It is his opinion as expressed in the explanatory
note of the bill that the present oil companies are engaged in cartelization despite R.A. No. 8180, viz,:

xxx xxx xxx

Since the downstream oil industry was fully deregulated in February 1997, there have been eight
(8) fuel price adjustments made by the three oil majors, namely: Caltex Philippines, Inc.; Petron
Corporation; and Pilipinas Shell Petroleum Corporation. Very noticeable in the price adjustments
made, however, is the uniformity in the pump prices of practically all petroleum products of the
three oil companies. This, despite the fact, that their selling rates should be determined by a
combination of any of the following factors: the prevailing peso-dollar exchange rate at the time
payment is made for crude purchases, sources of crude, and inventory levels of both crude and
refined petroleum products. The abovestated factors should have resulted in different, rather
than identical prices.

The fact that the three (3) oil companies' petroleum products are uniformly priced suggests
collusion, amounting to cartelization, among Caltex Philippines, Inc., Petron Corporation and
Pilipinas Shell Petroleum Corporation to fix the prices of petroleum products in violation of
paragraph (a), Section 9 of R.A. No. 8180.

To deter this pernicious practice and to assure that present and prospective players in the
downstream oil industry conduct their business with conscience and propriety, cartel-like
activities ought to be severely penalized.

Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a uniform tariff rate on imported crude
oil and refined petroleum products. In the explanatory note of the bill, he declared in no uncertain terms
that ". . . the present set-up has raised serious public concern over the way the three oil companies have
uniformly adjusted the prices of oil in the country, an indication of a possible existence of a cartel or a
cartel-like situation within the downstream oil industry. This situation is mostly attributed to the
foregoing provision on tariff differential, which has effectively discouraged the entry of new players in the
downstream oil industry."

In the House of Representatives, the moves to rehabilitate R.A. No. 8180 are equally
feverish. Representative Leopoldo E. San Buenaventura has filed H.B. No. 9826 removing the tariff
differential for imported crude oil and imported refined petroleum products. In the explanatory note of
the bill, Rep. Buenaventura explained:

xxx xxx xxx

As we now experience, this difference in tariff rates between imported crude oil and imported
refined petroleum products, unwittingly provided a built-in-advantage for the three existing oil
refineries in the country and eliminating competition which is a must in a free enterprise
economy. Moreover, it created a disincentive for other players to engage even initially in the
importation and distribution of refined petroleum products and ultimately in the putting up of
refineries. This tariff differential virtually created a monopoly of the downstream oil industry by
the existing three oil companies as shown by their uniform and capricious pricing of their
products since this law took effect, to the great disadvantage of the consuming public.

Thus, instead of achieving the desired effects of deregulation, that of free enterprise and a level
playing field in the downstream oil industry, R.A. 8180 has created an environment conducive to
cartelization, unfavorable, increased, unrealistic prices of petroleum products in the country by
the three existing refineries.

Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent collusion among the present oil
companies by strengthening the oversight function of the government, particularly its ability to subject
to a review any adjustment in the prices of gasoline and other petroleum products. In the explanatory
note of the bill, Rep. Punzalan, Jr., said:

xxx xxx xxx

To avoid this, the proposed bill seeks to strengthen the oversight function of government,
particularly its ability to review the prices set for gasoline and other petroleum products. It
grants the Energy Regulatory Board (ERB) the authority to review prices of oil and other
petroleum products, as may be petitioned by a person, group or any entity, and to subsequently
compel any entity in the industry to submit any and all documents relevant to the imposition of
new prices. In cases where the Board determines that there exist collusion, economic conspiracy,
unfair trade practice, profiteering and/or overpricing, it may take any step necessary to protect
the public, including the readjustment of the prices of petroleum products. Further, the Board
may also impose the fine and penalty of imprisonment, as prescribed in Section 9 of R.A. 8180,
on any person or entity from the oil industry who is found guilty of such prohibited acts.

By doing all of the above, the measure will effectively provide Filipino consumers with a venue
where their grievances can be heard and immediately acted upon by government.

Thus, this bill stands to benefit the Filipino consumer by making the price-setting process more
transparent and making it easier to prosecute those who perpetrate such prohibited acts as
collusion, overpricing, economic conspiracy and unfair trade.

Representative Sergio A.F . Apostol filed H.B. No. 10039 to remedy an omission in R.A. No. 8180 where
there is no agency in government that determines what is "reasonable" increase in the prices of oil
products. Representative Dente O. Tinga, one of the principal sponsors of R.A. No. 8180, filed H.B. No.
10057 to strengthen its anti-trust provisions. He elucidated in its explanatory note:

xxx xxx xxx

The definition of predatory pricing, however, needs to be tightened up particularly with respect
to the definitive benchmark price and the specific anti-competitive intent. The definition in the
bill at hand which was taken from the Areeda-Turner test in the United States on predatory
pricing resolves the questions. The definition reads, "Predatory pricing means selling or offering
to sell any oil product at a price below the average variable cost for the purpose of destroying
competition, eliminating a competitor or discouraging a competitor from entering the market."

The appropriate actions which may be resorted to under the Rules of Court in conjunction with
the oil deregulation law are adequate. But to stress their availability and dynamism, it is a good
move to incorporate all the remedies in the law itself. Thus, the present bill formalizes the
concept of government intervention and private suits to address the problem of antitrust
violations. Specifically, the government may file an action to prevent or restrain any act of
cartelization or predatory pricing, and if it has suffered any loss or damage by reason of the
antitrust violation it may recover damages. Likewise, a private person or entity may sue to
prevent or restrain any such violation which will result in damage to his business or property,
and if he has already suffered damage he shall recover treble damages. A class suit may also be
allowed.

To make the DOE Secretary more effective in the enforcement of the law, he shall be given
additional powers to gather information and to require reports.

Representative Erasmo B. Damasing filed H.B. No. 7885 and has a more unforgiving view of R.A. No.
8180. He wants it completely repealed. He explained:

xxx xxx xxx

Contrary to the projections at the time the bill on the Downstream Oil Industry Deregulation was
discussed and debated upon in the plenary session prior to its approval into law, there aren't any
new players or investors in the oil industry. Thus, resulting in practically a cartel or monopoly in
the oil industry by the three (3) big oil companies, Caltex, Shell and Petron. So much so, that with
the deregulation now being partially implemented, the said oil companies have succeeded in
increasing the prices of most of their petroleum products with little or no interference at all from
the government. In the month of August, there was an increase of Fifty centavos (50¢) per liter
by subsidizing the same with the OPSF, this is only temporary as in March 1997, or a few months
from now, there will be full deregulation (Phase II) whereby the increase in the prices of
petroleum products will be fully absorbed by the consumers since OPSF will already be abolished
by then. Certainly, this would make the lives of our people, especially the unemployed ones,
doubly difficult and unbearable.

The much ballyhooed coming in of new players in the oil industry is quite remote considering
that these prospective investors cannot fight the existing and well established oil companies in
the country today, namely, Caltex, Shell and Petron. Even if these new players will come in, they
will still have no chance to compete with the said three (3) existing big oil companies considering
that there is an imposition of oil tariff differential of 4% between importation of crude oil by the
said oil refineries paying only 3% tariff rate for the said importation and 7% tariff rate to be paid
by businessmen who have no oil refineries in the Philippines but will import finished
petroleum/oil products which is being taxed with 7% tariff rates.

So, if only to help the many who are poor from further suffering as a result of unmitigated
increase in oil products due to deregulation, it is a must that the Downstream Oil Industry
Deregulation Act of 1996, or R.A.8180 be repealed completely.
Various resolutions have also been filed in the Senate calling for an immediate and comprehensive
review of R.A. No. 8180 to prevent the downpour of its ill effects on the people. Thus, S. Res. No. 574
was filed by Senator Gloria M. Macapagal entitled Resolution "Directing the Committee on Energy to
Inquire Into The Proper Implementation of the Deregulation of the Downstream Oil Industry and Oil Tax
Restructuring As Mandated Under R.A. Nos. 8180 and 8184, In Order to Make The Necessary Corrections
In the Apparent Misinterpretation Of The Intent And Provision Of The Laws And Curb The Rising Tide Of
Disenchantment Among The Filipino Consumers And Bring About The Real Intentions And Benefits Of
The Said Law." Senator Blas P. Ople filed S. Res. No. 664 entitled resolution "Directing the Committee on
Energy To Conduct An Inquiry In Aid Of Legislation To Review The Government's Oil Deregulation Policy
In Light Of The Successive Increases In Transportation, Electricity And Power Rates, As well As Of Food
And Other Prime Commodities And Recommend Appropriate Amendments To Protect The Consuming
Public." Senator Ople observed:

xxx xxx xxx

WHEREAS, since the passage of R.A. No. 8180, the Energy Regulatory Board (ERB) has imposed
successive increases in oil prices which has triggered increases in electricity and power rates,
transportation fares, as well as in prices of food and other prime commodities to the detriment
of our people, particularly the poor;

WHEREAS, the new players that were expected to compete with the oil cartel-Shell, Caltex and
Petron-have not come in;

WHEREAS, it is imperative that a review of the oil deregulation policy be made to consider
appropriate amendments to the existing law such as an extension of the transition phase before
full deregulation in order to give the competitive market enough time to develop;

WHEREAS, the review can include the advisability of providing some incentives in order to
attract the entry of new oil companies to effect a dynamic competitive market;

WHEREAS, it may also be necessary to defer the setting up of the institutional framework for full
deregulation of the oil industry as mandated under Executive Order No. 377 issued by President
Ramos last October 31, 1996 . . .

Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution "Directing the Committees on Energy
and Public Services In Aid Of Legislation To Assess The Immediate Medium And Long Term Impact of Oil
Deregulation On Oil Prices And The Economy." Among the reasons for the resolution is the finding that
"the requirement of a 40-day stock inventory effectively limits the entry of other oil firms in the market
with the consequence that instead of going down oil prices will rise."

Parallel resolutions have been filed in the House of Representatives. Representative Dante O. Tinga filed
H. Res. No. 1311 "Directing The Committee on Energy To Conduct An Inquiry, In Aid of Legislation, Into
The Pricing Policies And Decisions Of The Oil Companies Since The Implementation of Full Deregulation
Under the Oil Deregulation Act (R.A. No. 8180) For the Purpose of Determining In the Context Of The
Oversight Functions Of Congress Whether The Conduct Of The Oil Companies, Whether Singly Or
Collectively, Constitutes Cartelization Which Is A Prohibited Act Under R.A. No. 8180, And What
Measures Should Be Taken To Help Ensure The Successful Implementation Of The Law In Accordance
With Its Letter And Spirit, Including Recommending Criminal Prosecution Of the Officers Concerned Of
the Oil Companies If Warranted By The Evidence, And For Other Purposes." Representatives Marcial
C. Punzalan, Jr. Dante O. Tinga and Antonio E. Bengzon III filed H.R. No. 894 directing the House
Committee on Energy to inquire into the proper implementation of the deregulation of the downstream
oil industry. House Resolution No. 1013 was also filed by Representatives Edcel C. Lagman, Enrique
T . Garcia, Jr. and Joker P.Arroyo urging the President to immediately suspend the implementation of
E.O. No. 392.

In recent memory there is no law enacted by the legislature afflicted with so much constitutional
deformities as R.A. No. 8180. Yet, R.A. No. 8180 deals with oil, a commodity whose supply and price
affect the ebb and flow of the lifeblood of the nation. Its shortage of supply or a slight, upward spiral in
its price shakes our economic foundation. Studies show that the areas most impacted by the movement
of oil are food manufacture, land transport, trade, electricity and water. 38 At a time when our economy is
in a dangerous downspin, the perpetuation of R.A. No. 8180 threatens to multiply the number of our
people with bent backs and begging bowls. R.A. No. 8180 with its anti-competition provisions cannot be
allowed by this Court to stand even while Congress is working to remedy its defects.

The Court, however, takes note of the plea of PETRON, SHELL and CALTEX to lift our restraining order to
enable them to adjust upward the price of petroleum and petroleum products in view of the
plummeting value of the peso. Their plea, however, will now have to be addressed to the Energy
Regulatory Board as the effect of the declaration of unconstitutionality of R.A. No. 8180 is to revive the
former laws it repealed.39 The length of our return to the regime of regulation depends on Congress
which can fasttrack the writing of a new law on oil deregulation in accord with the Constitution.

With this Decision, some circles will chide the Court for interfering with an economic decision of
Congress. Such criticism is charmless for the Court is annulling R.A. No. 8180 not because it disagrees
with deregulation as an economic policy but because as cobbled by Congress in its present form, the law
violates the Constitution. The right call therefor should be for Congress to write a new oil deregulation
law that conforms with the Constitution and not for this Court to shirk its duty of striking down a law
that offends the Constitution. Striking down R.A. No. 8180 may cost losses in quantifiable terms to the oil
oligopolists. But the loss in tolerating the tampering of our Constitution is not quantifiable in pesos and
centavos. More worthy of protection than the supra-normal profits of private corporations is the sanctity
of the fundamental principles of the Constitution. Indeed when confronted by a law violating the
Constitution, the Court has no option but to strike it down dead. Lest it is missed, the Constitution is a
covenant that grants and guarantees both the political and economic rights of the people. The
Constitution mandates this Court to be the guardian not only of the people's political rights but their
economic rights as well. The protection of the economic rights of the poor and the powerless is of
greater importance to them for they are concerned more with the exoterics of living and less with the
esoterics of liberty. Hence, for as long as the Constitution reigns supreme so long will this Court be
vigilant in upholding the economic rights of our people especially from the onslaught of the powerful.
Our defense of the people's economic rights may appear heartless because it cannot be half-hearted.

IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is declared unconstitutional and E.O. No.
372 void.

SO ORDERED.
Footnotes

1 Downstream oil industry refers to the business of importing, exporting, re-exporting,


shipping, transporting, processing, refining, storing, distributing, marketing and/or
selling crude oil, gasoline, diesel, liquefied petroleum gas, kerosene and other
petroleum and crude oil products.
2 Paderanga & Paderanga, Jr., The Oil Industry in the Philippines, Philippine Economic
Journal, No. 65, Vol. 27, pp. 27-98 [1988].
3 Section 3, R.A. No. 6173.
4 Section 7, R.A. No. 6173.
5 P.D. No. 334.
6 Makasiar, G., Structural Response to the Energy Crisis: The Philippine Case. Energy
and Structural Change in the Asia Pacific Region: Papers and Proceedings of the 13th
Pacific Trade and Development Conference. Published by the Philippine Institute for
Development Studies/Asian Development Bank and edited by Romeo M. Bautista and
Seiji Nava, pp. 311-312 (1984).
7 P.D. 1956 as amended by E.O. 137.
8 Section 3, E.O. No. 172.
9 R.A. No. 7638.
10 Section 5(b), R.A. No. 7638.
11 Section 5, R.A. No. 8180.
12 Section 1, Article VIII, 1987 Constitution.
13 Bondoc v. Pineda, 201 SCRA 792 (1991); Osmena v. COMELEC, 199 SCRA 750
(1991).
14 G.R. No. 118295, May 2, 1997.
15 E.g. Garcia v. Executive Secretary, 211 SCRA 219 (1922); Osmena v. COMELEC, 199
SCRA (1991); Basco v. Pagcor, 197 SCRA 52 (1991); Daza v. Singson, 180 SCRA 496
(1989), Araneta v. Dinglasan, 84 Phil. 368 (1949).
16 163 SCRA 371 (1988).
17 Section 26(1) Article VI of the 1987 Constitution provides that "every bill passed by
the Congress shall embrace only one subject which shall be expressed in the title
thereof."
18 Tobias v. Abalos, 239 SCRA 106 (1994); Philippine Judges Association v. Prado, 227
SCRA 703 (1993); Lidasan v. COMELEC, 21 SCRA 496 (1967).
19 Tio v. Videogram Regulatory Board, 151 SCRA 208 (1987).
20 Journal of the House of Representatives, December 13, 1995, p. 32.
21 34 Phil. 136 citing Cincinnati, W. & Z. R.R. Co. vs. Clinton Country Commrs. (1 Ohio
St. 77).
22 166 SCRA 533, 543-544.
23 320 US 99.
24 Philippine Political Law, 1995 ed., p. 99.
25 Webster, New third International Dictionary, 1993 ed., pp. 1780, 586 and 2218.
26 See e.g., Balbuena v. Secretary of Education, 110 Phil. 150 used the standard
"simplicity and dignity." People v. Rosenthal, 68 Phil. 328 ("public interest"); Calalang v.
Williams, 70 Phil. 726 ("public welfare"); Rubi v. Provincial Board of Mindoro, 39 Phil.
669 ("interest of law and order").
27 See for example TSN of the Session of the Senate on November 14, 1995, p. 19,
view of Senator Gloria M. Arroyo.
28 Black's Law Dictionary, 6th edition, p. 1007.
29 Id., p. 266.
30 54 Am Jur 2d 669.
31 Art. 186. Monopolies and combinations in restraint of trade. — The penalty
of prision correccional in its minimum period or a fine ranging from 200 to 6,000 pesos,
or both, shall be imposed upon:
1. Any person who shall enter into any contract or agreement or shall take part in any
conspiracy or combination in the form of a trust or otherwise, in restraint of trade or
commerce to prevent by artificial means free competition in the market.
2. Any person who shall monopolize any merchandise or object of trade or commerce,
or shall combine with any other person or persons to monopolize said merchandise or
object in order to alter the price thereof by spreading false rumors or making use of
any other article to restrain free competition in the market;
3. Any person who, being a manufacturer, producer, or processor of any merchandise
or object of commerce or an importer of any merchandise or object of commerce from
any foreign country, either as principal or agent, wholesaler or retailer, shall combine,
conspire or agree in any manner with any person likewise engaged in the manufacture,
production, processing, assembling or importation of such merchandise or object of
commerce or with any other persons not so similarly engaged for the purpose of
making transactions prejudicial to lawful commerce, or of increasing the market price
in any part of the Philippines, or any such merchandise or object of commerce
manufactured, produced, or processed, assembled in or imported into the Philippines,
or of any article in the manufacture of which such manufactured, produced, processed,
or imported merchandise or object of commerce is used.
If the offense mentioned in this article affects any food substance, motor fuel or
lubricants, or other articles of prime necessity the penalty shall be that of prision
mayor in its maximum and medium periods, it being sufficient for the imposition
thereof that the initial steps have been taken toward carrying out the purposes of the
combination.
xxx xxx xxx
Whenever any of the offenses described above is committed by a corporation or
association, the president and each one of the directors or managers of said
corporation or association, who shall have knowingly permitted or failed to prevent the
commission of such offenses, shall be held liable as principals thereof.
32 Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in
labor through the use of force, intimidation, deceit, machination or any other unjust,
oppressive or highhanded method shall give rise to a right of action by the person who
thereby suffers damage.
33 Bernas, The Intent of the 1986 Constitution Writers (1995), p. 877; Philippine Long
Distance Telephone Co. v. National Telecommunications Commission, 190 SCRA 717
(1990); Northern Cement Corporation v. Intermediate Appellate Court, 158 SCRA 408
(1988); Philippine Ports Authority v. Mendoza, 138 SCRA 496 (1985); Anglo-Fil Trading
Corporation v. Lazaro, 124 SCRA 494 (1983).
34 Record of the Constitutional Commission, Volume III, p. 258.
35 Gellhorn, Anti Trust Law and Economics in a Nutshell, 1986 ed. p. 45.
36 Economics and Federal Anti-Trust Law, Hornbook Series, Student ed., 1985 ed., p.
181.
37 Statutory Construction, 1986 ed., pp. 28-29.
38 IBON Facts and Figures, Vol. 18, No. 7, p. 5, April 15, 1995.
39 Cruz v. Youngberg, 56 Phil. 234 (1931).

LOUIS BAROK C. BIRAOGO, G.R. No. 192935


Petitioner,

- versus -

THE PHILIPPINE TRUTH COMMISSION OF 2010,


Respondent.
x-----------------------x
REP. EDCEL C. LAGMAN,
REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. G.R. No. 193036
DATUMANONG, and REP. ORLANDO B. FUA, SR.,
Petitioners, Present:

CORONA, C.J.,
CARPIO,
- versus - CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. VILLARAMA, JR.,
and DEPARTMENT OF BUDGET AND PEREZ,
MANAGEMENT SECRETARY FLORENCIO B. MENDOZA, and
ABAD, SERENO, JJ.
Respondents.
Promulgated:

December 7, 2010
x -------------------------------------------------------------------------------------- x

DECISION

MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not


assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy the rights which
that instrument secures and guarantees to them.
--- Justice Jose P. Laurel[1]
The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental
powers of government are established, limited and defined, and by which these powers are distributed
among the several departments.[2] The Constitution is the basic and paramount law to which all other
laws must conform and to which all persons, including the highest officials of the land, must defer.
[3]
Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be
simply made to sway and accommodate the call of situations and much more tailor itself to the whims
and caprices of government and the people who run it. [4]

For consideration before the Court are two consolidated cases [5] both of which essentially assail the
validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled Creating the
Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis
Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being
violative of the legislative power of Congress under Section 1, Article VI of the Constitution [6] as it usurps
the constitutional authority of the legislature to create a public office and to appropriate funds therefor.
[7]

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by
petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua,
Sr. (petitioners-legislators) as incumbent members of the House of Representatives.

The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections,
when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and
corruption with his slogan, Kung walang corrupt, walang mahirap. The Filipino people, convinced of his
sincerity and of his ability to carry out this noble objective, catapulted the good senator to the
presidency.

To transform his campaign slogan into reality, President Aquino found a need for a special body to
investigate reported cases of graft and corruption allegedly committed during the previous
administration.
Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1
establishing the Philippine Truth Commission of 2010 (Truth Commission). Pertinent provisions of said
executive order read:
EXECUTIVE ORDER NO. 1

CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

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

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

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

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

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

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

WHEREAS, there is a need for a separate body dedicated solely to investigating and
finding out the truth concerning the reported cases of graft and corruption during the
previous administration, and which will recommend the prosecution of the offenders
and secure justice for all;
WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known
as the Revised Administrative Code of the Philippines, gives the President the continuing
authority to reorganize the Office of the President.

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

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH


COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek
and find the truth on, and toward this end, investigate reports of graft and corruption of
such scale and magnitude that shock and offend the moral and ethical sensibilities of the
people, committed by public officers and employees, their co-principals, accomplices
and accessories from the private sector, if any, during the previous administration; and
thereafter recommend the appropriate action or measure to be taken thereon to ensure
that the full measure of justice shall be served without fear or favor.
The Commission shall be composed of a Chairman and four (4) members who will act as
an independent collegial body.

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

a) Identify and determine the reported cases of such graft and corruption which it will
investigate;

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

c) Upon proper request or representation, obtain information and documents from


the Senate and the House of Representatives records of investigations conducted by
committees thereof relating to matters or subjects being investigated by the
Commission;

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

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

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

g) Turn over from time to time, for expeditious prosecution, to the appropriate
prosecutorial authorities, by means of a special or interim report and recommendation,
all evidence on corruption of public officers and employees and their private sector co-
principals, accomplices or accessories, if any, when in the course of its investigation the
Commission finds that there is reasonable ground to believe that they are liable for graft
and corruption under pertinent applicable laws;
h) Call upon any government investigative or prosecutorial agency such as the
Department of Justice or any of the agencies under it, and the Presidential Anti-Graft
Commission, for such assistance and cooperation as it may require in the discharge of its
functions and duties;

i) Engage or contract the services of resource persons, professionals and other


personnel determined by it as necessary to carry out its mandate;

j) Promulgate its rules and regulations or rules of procedure it deems necessary to


effectively and efficiently carry out the objectives of this Executive Order and to ensure
the orderly conduct of its investigations, proceedings and hearings, including the
presentation of evidence;

k) Exercise such other acts incident to or are appropriate and necessary in connection
with the objectives and purposes of this Order.
SECTION 3. Staffing Requirements. x x x.

SECTION 4. Detail of Employees. x x x.


SECTION 5. Engagement of Experts. x x x

SECTION 6. Conduct of Proceedings. x x x.


SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.
SECTION 8. Protection of Witnesses/Resource Persons. x x x.
SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government
official or personnel who, without lawful excuse, fails to appear upon subpoena issued
by the Commission or who, appearing before the Commission refuses to take oath or
affirmation, give testimony or produce documents for inspection, when required, shall
be subject to administrative disciplinary action. Any private person who does the same
may be dealt with in accordance with law.
SECTION 10. Duty to Extend Assistance to the Commission. x x x.
SECTION 11. Budget for the Commission. The Office of the President shall provide the
necessary funds for the Commission to ensure that it can exercise its powers, execute its
functions, and perform its duties and responsibilities as effectively, efficiently, and
expeditiously as possible.
SECTION 12. Office. x x x.

SECTION 13. Furniture/Equipment. x x x.

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

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

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

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

SECTION 18. Separability Clause. If any provision of this Order is declared


unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.

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

DONE in the City of Manila, Philippines, this 30 th day of July 2010.

(SGD.) BENIGNO S. AQUINO III

By the President:

(SGD.) PAQUITO N. OCHOA, JR.


Executive Secretary

Nature of the Truth Commission

As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a
mere ad hoc body formed under the Office of the President with the primary task to investigate reports
of graft and corruption committed by third-level public officers and employees, their co-principals,
accomplices and accessories during the previous administration, and thereafter to submit its finding and
recommendations to the President, Congress and the Ombudsman. Though it has been described as an
independent collegial body, it is essentially an entity within the Office of the President Proper and
subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one. [8]

To accomplish its task, the PTC shall have all the powers of an investigative body under Section
37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it
cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending
parties. All it can do is gather, collect and assess evidence of graft and corruption and make
recommendations. It may have subpoena powers but it has no power to cite people in contempt, much
less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable
cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot
impose criminal, civil or administrative penalties or sanctions.
The PTC is different from the truth commissions in other countries which have been created as
official, transitory and non-judicial fact-finding bodies to establish the facts and context of serious
violations of human rights or of international humanitarian law in a countrys past. [9] They are usually
established by states emerging from periods of internal unrest, civil strife or authoritarianism to serve as
mechanisms for transitional justice.

Truth commissions have been described as bodies that share the following characteristics: (1)
they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as
opposed to a particular event; (3) they are temporary bodies that finish their work with the submission
of a report containing conclusions and recommendations; and (4) they are officially sanctioned,
authorized or empowered by the State.[10] Commissions members are usually empowered to conduct
research, support victims, and propose policy recommendations to prevent recurrence of crimes.
Through their investigations, the commissions may aim to discover and learn more about past abuses, or
formally acknowledge them. They may aim to prepare the way for prosecutions and recommend
institutional reforms.[11]

Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo war
crime tribunals are examples of a retributory or vindicatory body set up to try and punish those
responsible for crimes against humanity. A form of a reconciliatory tribunal is the Truth and
Reconciliation Commission of South Africa, the principal function of which was to heal the wounds of
past violence and to prevent future conflict by providing a cathartic experience for victims.

The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation
than on judicial retribution, while the marching order of the PTC is the identification and punishment of
perpetrators. As one writer[12] puts it:

The order ruled out reconciliation. It translated the Draconian code spelled out
by Aquino in his inaugural speech: To those who talk about reconciliation, if they mean
that they would like us to simply forget about the wrongs that they have committed in
the past, we have this to say: There can be no reconciliation without justice. When we
allow crimes to go unpunished, we give consent to their occurring over and over again.

The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to
declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the
arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-
legislators summarized them in the following manner:

(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the
Congress to create a public office and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code
of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to
structurally reorganize the Office of the President to achieve economy, simplicity and
efficiency does not include the power to create an entirely new public office which was
hitherto inexistent like the Truth Commission.

(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it
vested the Truth Commission with quasi-judicial powers duplicating, if not superseding,
those of the Office of the Ombudsman created under the 1987 Constitution and the
Department of Justice created under the Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for
investigation and prosecution officials and personnel of the previous administration as if
corruption is their peculiar species even as it excludes those of the other
administrations, past and present, who may be indictable.
(e) The creation of the Philippine Truth Commission of 2010 violates the
consistent and general international practice of four decades wherein States constitute
truth commissions to exclusively investigate human rights violations, which customary
practice forms part of the generally accepted principles of international law which the
Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined
in the Constitution.

(f) The creation of the Truth Commission is an exercise in futility, an adventure in


partisan hostility, a launching pad for trial/conviction by publicity and a mere populist
propaganda to mistakenly impress the people that widespread poverty will altogether
vanish if corruption is eliminated without even addressing the other major causes of
poverty.

(g) The mere fact that previous commissions were not constitutionally
challenged is of no moment because neither laches nor estoppel can bar an eventual
question on the constitutionality and validity of an executive issuance or even a statute.
[13]

In their Consolidated Comment,[14] the respondents, through the Office of the Solicitor
General (OSG), essentially questioned the legal standing of petitioners and defended the assailed
executive order with the following arguments:

1] E.O. No. 1 does not arrogate the powers of Congress to create a public office
because the Presidents executive power and power of control necessarily include the
inherent power to conduct investigations to ensure that laws are faithfully executed and
that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No.
292), [15]Presidential Decree (P.D.) No. 1416 [16] (as amended by P.D. No. 1772), R.A. No.
9970,[17] and settled jurisprudence that authorize the President to create or form such
bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because
there is no appropriation but a mere allocation of funds already appropriated by
Congress.

3] The Truth Commission does not duplicate or supersede the functions of the
Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because
it is a fact-finding body and not a quasi-judicial body and its functions do not duplicate,
supplant or erode the latters jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it
was validly created for laudable purposes.

The OSG then points to the continued existence and validity of other executive orders and
presidential issuances creating similar bodies to justify the creation of the PTC such as Presidential
Complaint and Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on
Administrative Performance Efficiency (PCAPE) by President Carlos P. Garcia and Presidential Agency on
Reform and Government Operations (PARGO) by President Ferdinand E. Marcos.[18]
From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues
to be resolved:

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


their respective petitions and question Executive Order No. 1;

2. Whether or not Executive Order No. 1 violates the principle of


separation of powers by usurping the powers of Congress to create and to appropriate
funds for public offices, agencies and commissions;
3. Whether or not Executive Order No. 1 supplants the powers of the
Ombudsman and the DOJ;

4. Whether or not Executive Order No. 1 violates the equal protection clause;
and

5. Whether or not petitioners are entitled to injunctive relief.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs
to ascertain whether the requisites for a valid exercise of its power of judicial review are present.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to
limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial
power; (2) the person challenging the act must have the standing to question the validity of the subject
act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that
he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be
the very lis mota of the case.[19]

Among all these limitations, only the legal standing of the petitioners has been put at issue.

Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure
to demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not
shown that they have sustained or are in danger of sustaining any personal injury attributable to the
creation of the PTC. Not claiming to be the subject of the commissions investigations, petitioners will
not sustain injury in its creation or as a result of its proceedings. [20]

The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators
to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the
Congress as a body to which they belong as members. This certainly justifies their resolve to take the
cudgels for Congress as an institution and present the complaints on the usurpation of their power and
rights as members of the legislature before the Court. As held in Philippine Constitution Association v.
Enriquez,[21]
To the extent the powers of Congress are impaired, so is the power of each
member thereof, since his office confers a right to participate in the exercise of the
powers of that institution.
An act of the Executive which injures the institution of Congress causes a
derivative but nonetheless substantial injury, which can be questioned by a member of
Congress. In such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges
vested by the Constitution in their office remain inviolate. Thus, they are allowed to question the validity
of any official action which, to their mind, infringes on their prerogatives as legislators. [22]

With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the
creation of the PTC and the budget for its operations. [23] It emphasizes that the funds to be used for the
creation and operation of the commission are to be taken from those funds already appropriated by
Congress. Thus, the allocation and disbursement of funds for the commission will not entail
congressional action but will simply be an exercise of the Presidents power over contingent funds.

As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of
sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1.
Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to
exercise judicial power and to wield the axe over presidential issuances in defense of the
Constitution. The case of David v. Arroyo[24] explained the deep-seated rules on locus standi. Thus:

Locus standi is defined as a right of appearance in a court of justice on a given


question. In private suits, standing is governed by the real-parties-in interest rule as
contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It
provides that every action must be prosecuted or defended in the name of the real
party in interest. Accordingly, the real-party-in interest is the party who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the
suit. Succinctly put, the plaintiffs standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff
who asserts a public right in assailing an allegedly illegal official action, does so as a
representative of the general public. He may be a person who is affected no differently
from any other person. He could be suing as a stranger, or in the category of a citizen, or
taxpayer. In either case, he has to adequately show that he is entitled to seek judicial
protection. In other words, he has to make out a sufficient interest in the vindication of
the public order and the securing of relief as a citizen or taxpayer.

Case law in most jurisdictions now allows both citizen and taxpayer standing in
public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held
that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a
citizens suit. In the former, the plaintiff is affected by the expenditure of public funds,
while in the latter, he is but the mere instrument of the public concern. As held by the
New York Supreme Court in People ex rel Case v. Collins: In matter of mere public right,
howeverthe people are the real partiesIt is at least the right, if not the duty, of every
citizen to interfere and see that a public offence be properly pursued and punished, and
that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held
that the right of a citizen and a taxpayer to maintain an action in courts to restrain the
unlawful use of public funds to his injury cannot be denied.

However, to prevent just about any person from seeking judicial interference in
any official policy or act with which he disagreed with, and thus hinders the activities of
governmental agencies engaged in public service, the United State Supreme Court laid
down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston
v. Ullman. The same Court ruled that for a private individual to invoke the judicial power
to determine the validity of an executive or legislative action, he must show that he has
sustained a direct injury as a result of that action, and it is not sufficient that he has a
general interest common to all members of the public.

This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it
held that the person who impugns the validity of a statute must have a personal and
substantial interest in the case such that he has sustained, or will sustain direct injury
as a result. The Vera doctrine was upheld in a litany of cases, such as, Custodio v.
President of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual
v. Secretary of Public Works and Anti-Chinese League of the Philippines v.
Felix. [Emphases included. Citations omitted]

Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of
procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and
legislators when the public interest so requires, such as when the matter is of transcendental
importance, of overreaching significance to society, or of paramount public interest. [25]

Thus, in Coconut Oil Refiners Association, Inc. v. Torres,[26] the Court held that in cases of
paramount importance where serious constitutional questions are involved, the standing requirements
may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party
claiming the right of judicial review. In the first Emergency Powers Cases,[27]ordinary citizens and
taxpayers were allowed to question the constitutionality of several executive orders although they had
only an indirect and general interest shared in common with the public.

The OSG claims that the determinants of transcendental importance [28] laid down in CREBA v.
ERC and Meralco[29] are non-existent in this case. The Court, however, finds reason in Biraogos assertion
that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by the
Court. There are constitutional issues in the petition which deserve the attention of this Court in view of
their seriousness, novelty and weight as precedents. Where the issues are of transcendental and
paramount importance not only to the public but also to the Bench and the Bar, they should be resolved
for the guidance of all.[30] Undoubtedly, the Filipino people are more than interested to know the status
of the Presidents first effort to bring about a promised change to the country. The Court takes
cognizance of the petition not due to overwhelming political undertones that clothe the issue in the eyes
of the public, but because the Court stands firm in its oath to perform its constitutional duty to settle
legal controversies with overreaching significance to society.
Power of the President to Create the Truth Commission

In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public
office and not merely an adjunct body of the Office of the President. [31] Thus, in order that the President
may create a public office he must be empowered by the Constitution, a statute or an authorization
vested in him by law. According to petitioner, such power cannot be presumed [32] since there is no
provision in the Constitution or any specific law that authorizes the President to create a truth
commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the
continuing authority to reorganize his office, cannot serve as basis for the creation of a truth commission
considering the aforesaid provision merely uses verbs such as reorganize, transfer, consolidate, merge,
and abolish.[34] Insofar as it vests in the President the plenary power to reorganize the Office of the
President to the extent of creating a public office, Section 31 is inconsistent with the principle of
separation of powers enshrined in the Constitution and must be deemed repealed upon the effectivity
thereof.[35]

Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies
within the province of Congress and not with the executive branch of government. They maintain that
the delegated authority of the President to reorganize under Section 31 of the Revised Administrative
Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is
limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to
the restructuring of the internal organs of the Office of the President Proper, transfer of functions and
transfer of agencies; and 4) only to achieve simplicity, economy and efficiency. [36] Such continuing
authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the
President overstepped the limits of this delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the President
of a fact-finding body such as a truth commission. Pointing to numerous offices created by past
presidents, it argues that the authority of the President to create public offices within the Office of the
President Proper has long been recognized. [37] According to the OSG, the Executive, just like the other
two branches of government, possesses the inherent authority to create fact-finding committees to
assist it in the performance of its constitutionally mandated functions and in the exercise of its
administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the plenary powers
wielded by the President under Section 1 and his power of control under Section 17, both of Article VII of
the Constitution.[39]

It contends that the President is necessarily vested with the power to conduct fact-finding
investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees
of his department and in the exercise of his authority to assume directly the functions of the executive
department, bureau and office, or interfere with the discretion of his officials. [40]The power of the
President to investigate is not limited to the exercise of his power of control over his subordinates in the
executive branch, but extends further in the exercise of his other powers, such as his power to discipline
subordinates,[41] his power for rule making, adjudication and licensing purposes [42] and in order to be
informed on matters which he is entitled to know. [43]

The OSG also cites the recent case of Banda v. Ermita,[44] where it was held that the President has
the power to reorganize the offices and agencies in the executive department in line with his
constitutionally granted power of control and by virtue of a valid delegation of the legislative power to
reorganize executive offices under existing statutes.
Thus, the OSG concludes that the power of control necessarily includes the power to create
offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the
reported large scale graft and corruption in the government. [45]

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

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31
is a misplaced supposition, even in the plainest meaning attributable to the term restructure an
alteration of an existing structure. Evidently, the PTC was not part of the structure of the Office of the
President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon.
Executive Secretary,[46]

But of course, the list of legal basis authorizing the President to reorganize any
department or agency in the executive branch does not have to end here. We must not
lose sight of the very source of the power that which constitutes an express grant of
power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the
Administrative Code of 1987), "the President, subject to the policy in the Executive
Office and in order to achieve simplicity, economy and efficiency, shall have the
continuing authority to reorganize the administrative structure of the Office of the
President." For this purpose, he may transfer the functions of other Departments or
Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)],
we ruled that reorganization "involves the reduction of personnel, consolidation of
offices, or abolition thereof by reason of economy or redundancy of functions." It takes
place when there is an alteration of the existing structure of government offices or
units therein, including the lines of control, authority and responsibility between
them. The EIIB is a bureau attached to the Department of Finance. It falls under the
Office of the President. Hence, it is subject to the Presidents continuing authority to
reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power of control.
Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had
done in the performance of his duties and to substitute the judgment of the former with that of the
latter.[47] Clearly, the power of control is entirely different from the power to create public offices. The
former is inherent in the Executive, while the latter finds basis from either a valid delegation from
Congress, or his inherent duty to faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the
President to create a public office?

According to the OSG, the power to create a truth commission pursuant to the above provision
finds statutory basis under P.D. 1416, as amended by P.D. No. 1772. [48] The said law granted the President
the continuing authority to reorganize the national government, including the power to group,
consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify
functions, services and activities, transfer appropriations, and to standardize salaries and materials. This
decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such
as Larin v. Executive Secretary.[49]

The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to
create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a
delegation to then President Marcos of the authority to reorganize the administrative structure of the
national government including the power to create offices and transfer appropriations pursuant to one
of the purposes of the decree, embodied in its last Whereas clause:

WHEREAS, the transition towards the parliamentary form of government will


necessitate flexibility in the organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during the
interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the
First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the
Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause
of P.D. 1416 says it was enacted to prepare the
transition from presidential to parliamentary.
Now, in a parliamentary form of government,
the legislative and executive powers are fused,
correct?

SOLICITOR GENERAL CADIZ: Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you
agree with me that P.D. 1416 should not be
considered effective anymore upon the
promulgation, adoption, ratification of the
1987 Constitution.

SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.
ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire
National Government is deemed repealed, at
least, upon the adoption of the 1987
Constitution, correct.

SOLICITOR GENERAL CADIZ: Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as
amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the
Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed.
Section 17 reads:

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

As correctly pointed out by the respondents, the allocation of power in the three principal
branches of government is a grant of all powers inherent in them. The Presidents power to conduct
investigations to aid him in ensuring the faithful execution of laws in this case, fundamental laws on
public accountability and transparency is inherent in the Presidents powers as the Chief Executive. That
the authority of the President to conduct investigations and to create bodies to execute this power is not
explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.
[51]
As explained in the landmark case of Marcos v. Manglapus:[52]

x x x. The 1987 Constitution, however, brought back the presidential system of


government and restored the separation of legislative, executive and judicial powers by
their actual distribution among three distinct branches of government with provision for
checks and balances.

It would not be accurate, however, to state that "executive power" is the power
to enforce the laws, for the President is head of state as well as head of government and
whatever powers inhere in such positions pertain to the office unless the Constitution
itself withholds it. Furthermore, the Constitution itself provides that the execution of the
laws is only one of the powers of the President. It also grants the President other powers
that do not involve the execution of any provision of law, e.g., his power over the
country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution
imposes limitations on the exercise of specific powers of the President, it maintains
intact what is traditionally considered as within the scope of "executive
power." Corollarily, the powers of the President cannot be said to be limited only to the
specific powers enumerated in the Constitution. In other words, executive power is
more than the sum of specific powers so enumerated.

It has been advanced that whatever power inherent in the government that is
neither legislative nor judicial has to be executive. x x x.
Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated
above, the powers of the President are not limited to those specific powers under the Constitution.
[53]
One of the recognized powers of the President granted pursuant to this constitutionally-mandated
duty is the power to create ad hoc committees. This flows from the obvious need to ascertain facts and
determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the
authority of the President to issue Administrative Order No. 298, creating an investigative committee to
look into the administrative charges filed against the employees of the Department of Health for the
anomalous purchase of medicines was upheld. In said case, it was ruled:

The Chief Executives power to create the Ad hoc Investigating Committee cannot be
doubted. Having been constitutionally granted full control of the Executive Department,
to which respondents belong, the President has the obligation to ensure that all
executive officials and employees faithfully comply with the law. With AO 298 as
mandate, the legality of the investigation is sustained.Such validity is not affected by the
fact that the investigating team and the PCAGC had the same composition, or that the
former used the offices and facilities of the latter in conducting the inquiry. [Emphasis
supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow
an inquiry into matters which the President is entitled to know so that he can be properly advised and
guided in the performance of his duties relative to the execution and enforcement of the laws of the
land. And if history is to be revisited, this was also the objective of the investigative bodies created in the
past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa
Commission. There being no changes in the government structure, the Court is not inclined to declare
such executive power as non-existent just because the direction of the political winds have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate
funds for the operation of a public office, suffice it to say that there will be no appropriation but only an
allotment or allocations of existing funds already appropriated. Accordingly, there is no usurpation on
the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to
specify the amount to be earmarked for the operation of the commission because, in the words of the
Solicitor General, whatever funds the Congress has provided for the Office of the President will be the
very source of the funds for the commission. [55] Moreover, since the amount that would be allocated to
the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding.

Power of the Truth Commission to Investigate

The Presidents power to conduct investigations to ensure that laws are faithfully executed is well
recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17
thereof.[56] As the Chief Executive, the president represents the government as a whole and sees to it
that all laws are enforced by the officials and employees of his department. He has the authority to
directly assume the functions of the executive department. [57]

Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and
corruption and to recommend the appropriate action. As previously stated, no quasi-judicial powers
have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has
been said that Quasi-judicial powers involve the power to hear and determine questions of fact to which
the legislative policy is to apply and to decide in accordance with the standards laid down by law itself in
enforcing and administering the same law. [58] In simpler terms, judicial discretion is involved in the
exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be
clearly authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was delineated by
the Court in Cario v. Commission on Human Rights.[59] Thus:

"Investigate," commonly understood, means to examine, explore, inquire or


delve or probe into, research on, study. The dictionary definition of "investigate" is "to
observe or study closely: inquire into systematically: "to search or inquire into: x x to
subject to an official probe x x: to conduct an official inquiry." The purpose of
investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere
included or intimated is the notion of settling, deciding or resolving a controversy
involved in the facts inquired into by application of the law to the facts established by
the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by
step by patient inquiry or observation. To trace or track; to search into; to examine and
inquire into with care and accuracy; to find out by careful inquisition; examination; the
taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation"
being in turn described as "(a)n administrative function, the exercise of which ordinarily
does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or
otherwise, for the discovery and collection of facts concerning a certain matter or
matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate,


judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to
settle finally (the rights and duties of the parties to a court case) on the merits of issues
raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means
"to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award
or grant judicially in a case of controversy x x."
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial
authority. To determine finally. Synonymous with adjudge in its strictest sense;" and
"adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or
condemn. x x. Implies a judicial determination of a fact, and the entry of a
judgment." [Italics included. Citations Omitted]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of
justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining
therefrom the facts of a controversy is not a judicial function. To be considered as such, the act of
receiving evidence and arriving at factual conclusions in a controversy must be accompanied by the
authority of applying the law to the factual conclusions to the end that the controversy may be decided
or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be
provided by law.[60] Even respondents themselves admit that the commission is bereft of any quasi-
judicial power.[61]
Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode
their respective powers. If at all, the investigative function of the commission will complement those of
the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a
consequence of the overall task of the commission to conduct a fact-finding investigation. [62] The actual
prosecution of suspected offenders, much less adjudication on the merits of the charges against them,
[63]
is certainly not a function given to the commission. The phrase, when in the course of its
investigation, under Section 2(g), highlights this fact and gives credence to a contrary interpretation from
that of the petitioners. The function of determining probable cause for the filing of the appropriate
complaints before the courts remains to be with the DOJ and the Ombudsman. [64]

At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared
with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,[65] it
was written:

This power of investigation granted to the Ombudsman by the 1987 Constitution and
The Ombudsman Act is not exclusive but is shared with other similarly authorized
government agencies such as the PCGG and judges of municipal trial courts and
municipal circuit trial courts. The power to conduct preliminary investigation on charges
against public employees and officials is likewise concurrently shared with the
Department of Justice. Despite the passage of the Local Government Code in 1991, the
Ombudsman retains concurrent jurisdiction with the Office of the President and the
local Sanggunians to investigate complaints against local elective officials. [Emphasis
supplied].

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

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

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

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book
IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body
likewise tasked to investigate the commission of crimes.
Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be
accorded conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission
and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so,
the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the
recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be
aided by the reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

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

Section 1. No person shall be deprived of life, liberty, or property without due


process of law, nor shall any person be denied the equal protection of the laws.

The petitioners assail Executive Order No. 1 because it is violative of this constitutional
safeguard. They contend that it does not apply equally to all members of the same class such that the
intent of singling out the previous administration as its sole object makes the PTC an adventure in
partisan hostility.[66] Thus, in order to be accorded with validity, the commission must also cover reports
of graft and corruption in virtually all administrations previous to that of former President Arroyo. [67]

The petitioners argue that the search for truth behind the reported cases of graft and corruption
must encompass acts committed not only during the administration of former President Arroyo but also
during prior administrations where the same magnitude of controversies and anomalies [68] were
reported to have been committed against the Filipino people. They assail the classification formulated by
the respondents as it does not fall under the recognized exceptions because first, there is no substantial
distinction between the group of officials targeted for investigation by Executive Order No. 1 and other
groups or persons who abused their public office for personal gain; and second, the selective
classification is not germane to the purpose of Executive Order No. 1 to end corruption. [69] In order to
attain constitutional permission, the petitioners advocate that the commission should deal with graft and
grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal
force.[70]

Position of respondents

According to respondents, while Executive Order No. 1 identifies the previous administration as
the initial subject of the investigation, following Section 17 thereof, the PTC will not confine itself to
cases of large scale graft and corruption solely during the said administration. [71] Assuming arguendo that
the commission would confine its proceedings to officials of the previous administration, the petitioners
argue that no offense is committed against the equal protection clause for the segregation of the
transactions of public officers during the previous administration as possible subjects of investigation is a
valid classification based on substantial distinctions and is germane to the evils which the Executive
Order seeks to correct.[72] To distinguish the Arroyo administration from past administrations, it recited
the following:
First. E.O. No. 1 was issued in view of widespread reports of large scale graft and
corruption in the previous administration which have eroded public confidence in public
institutions. There is, therefore, an urgent call for the determination of the truth
regarding certain reports of large scale graft and corruption in the government and to
put a closure to them by the filing of the appropriate cases against those involved, if
warranted, and to deter others from committing the evil, restore the peoples faith and
confidence in the Government and in their public servants.

Second. The segregation of the preceding administration as the object of fact-


finding is warranted by the reality that unlike with administrations long gone, the
current administration will most likely bear the immediate consequence of the policies
of the previous administration.

Third. The classification of the previous administration as a separate class for


investigation lies in the reality that the evidence of possible criminal activity, the
evidence that could lead to recovery of public monies illegally dissipated, the policy
lessons to be learned to ensure that anti-corruption laws are faithfully executed,
are more easily established in the regime that immediately precede the current
administration.

Fourth. Many administrations subject the transactions of their predecessors to


investigations to provide closure to issues that are pivotal to national life or even as a
routine measure of due diligence and good housekeeping by a nascent administration
like the Presidential Commission on Good Government (PCGG), created by the late
President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-
gotten wealth of her predecessor former President Ferdinand Marcos and his cronies,
and the Saguisag Commission created by former President Joseph Estrada under
Administrative Order No, 53, to form an ad-hoc and independent citizens committee to
investigate all the facts and circumstances surrounding Philippine Centennial projects of
his predecessor, former President Fidel V. Ramos. [73] [Emphases supplied]

Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality of right which
is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is
embraced in the concept of due process, as every unfair discrimination offends the requirements of
justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific
guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general
may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an
unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.[74]

According to a long line of decisions, equal protection simply requires that all persons or things
similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. [75] It
requires public bodies and institutions to treat similarly situated individuals in a similar manner. [76] The
purpose of the equal protection clause is to secure every person within a states jurisdiction against
intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its
improper execution through the states duly constituted authorities. [77]In other words, the concept of
equal justice under the law requires the state to govern impartially, and it may not draw distinctions
between individuals solely on differences that are irrelevant to a legitimate governmental objective. [78]

The equal protection clause is aimed at all official state actions, not just those of the legislature.
[79]
Its inhibitions cover all the departments of the government including the political and executive
departments, and extend to all actions of a state denying equal protection of the laws, through whatever
agency or whatever guise is taken. [80]

It, however, does not require the universal application of the laws to all persons or things
without distinction. What it simply requires is equality among equals as determined according to a valid
classification. Indeed, the equal protection clause permits classification. Such classification, however, to
be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on
substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing
conditions only; and
(4) It applies equally to all members of the same class. [81] Superficial differences do not make for a valid
classification.[82]

For a classification to meet the requirements of constitutionality, it must include or embrace all
persons who naturally belong to the class. [83] The classification will be regarded as invalid if all the
members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is
not necessary that the classification be made with absolute symmetry, in the sense that the members of
the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and
as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact
that an individual belonging to a class differs from the other members, as long as that class is
substantially distinguishable from all others, does not justify the non-application of the law to him. [84]

The classification must not be based on existing circumstances only, or so constituted as to


preclude addition to the number included in the class. It must be of such a nature as to embrace all
those who may thereafter be in similar circumstances and conditions. It must not leave out or
underinclude those that should otherwise fall into a certain classification. As elucidated in Victoriano v.
Elizalde Rope Workers' Union[85] and reiterated in a long line of cases,[86]
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against inequality, that every man, woman
and child should be affected alike by a statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as such, but on persons according to
the circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination
as to things that are different. It does not prohibit legislation which is limited either in
the object to which it is directed or by the territory within which it is to operate.

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

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of
the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and
find out the truth concerning the reported cases of graft and corruption during the previous
administration[87] only. The intent to single out the previous administration is plain, patent and
manifest. Mention of it has been made in at least three portions of the questioned executive order.
Specifically, these are:

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

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH


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

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

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

Though the OSG enumerates several differences between the Arroyo administration and other
past administrations, these distinctions are not substantial enough to merit the restriction of the
investigation to the previous administration only. The reports of widespread corruption in the Arroyo
administration cannot be taken as basis for distinguishing said administration from earlier
administrations which were also blemished by similar widespread reports of impropriety. They are not
inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it,
Superficial differences do not make for a valid classification. [88]

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the
intended investigation to the previous administration only. The OSG ventures to opine that to include
other past administrations, at this point, may unnecessarily overburden the commission and lead it to
lose its effectiveness.[89] The reason given is specious. It is without doubt irrelevant to the legitimate and
noble objective of the PTC to stamp out or end corruption and the evil it breeds. [90]

The probability that there would be difficulty in unearthing evidence or that the earlier reports
involving the earlier administrations were already inquired into is beside the point. Obviously, deceased
presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC.
Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given
the bodys limited time and resources. The law does not require the impossible (Lex non cogit ad
impossibilia).[91]

Given the foregoing physical and legal impossibility, the Court logically recognizes the
unfeasibility of investigating almost a centurys worth of graft cases. However, the fact remains that
Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of
searching for the truth, must not exclude the other past administrations. The PTC must, at least, have the
authority to investigate all past administrations. While reasonable prioritization is permitted, it should
not be arbitrary lest it be struck down for being unconstitutional. In the often quoted language of Yick
Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if
applied and administered by public authority with an evil eye and an unequal hand, so
as practically to make unjust and illegal discriminations between persons in similar
circumstances, material to their rights, the denial of equal justice is still within the
prohibition of the constitution.[Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court,
however, is of the considered view that although its focus is restricted, the constitutional guarantee of
equal protection under the laws should not in any way be circumvented. The Constitution is the
fundamental and paramount law of the nation to which all other laws must conform and in accordance
with which all private rights determined and all public authority administered. [93] Laws that do not
conform to the Constitution should be stricken down for being unconstitutional. [94]While the thrust of
the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to
survive, must be read together with the provisions of the Constitution. To exclude the earlier
administrations in the guise of substantial distinctions would only confirm the petitioners lament that
the subject executive order is only an adventure in partisan hostility. In the case of US v. Cyprian,[95] it was
written: A rather limited number of such classifications have routinely been held or assumed to be
arbitrary; those include: race, national origin, gender, political activity or membership in a political
party, union activity or membership in a labor union, or more generally the exercise of first amendment
rights.
To reiterate, in order for a classification to meet the requirements of constitutionality, it must
include or embrace all persons who naturally belong to the class. [96] Such a classification must not be
based on existing circumstances only, or so constituted as to preclude additions to the number included
within a class, but must be of such a nature as to embrace all those who may thereafter be in similar
circumstances and conditions. Furthermore, all who are in situations and circumstances which are
relative to the discriminatory legislation and which are indistinguishable from those of the members of
the class must be brought under the influence of the law and treated by it in the same way as are the
members of the class.[97]

The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law under
the equal protection clause.[98] Legislation is not unconstitutional merely because it is not all-embracing
and does not include all the evils within its reach. [99] It has been written that a regulation challenged
under the equal protection clause is not devoid of a rational predicate simply because it happens to be
incomplete.[100] In several instances, the underinclusiveness was not considered a valid reason to strike
down a law or regulation where the purpose can be attained in future legislations or regulations. These
cases refer to the step by step process. [101] With regard to equal protection claims, a legislature does not
run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or
otherwise, to cover every evil that might conceivably have been attacked. [102]

In Executive Order No. 1, however, there is no inadvertence. That the previous administration
was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at
least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not
even mention any particular act, event or report to be focused on unlike the investigative commissions
created in the past. The equal protection clause is violated by purposeful and intentional discrimination.
[103]

To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that
the commission does not only confine itself to cases of large scale graft and corruption committed during
the previous administration.[104] The OSG points to Section 17 of Executive Order No. 1, which provides:

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

The Court is not convinced. Although Section 17 allows the President the discretion to expand
the scope of investigations of the PTC so as to include the acts of graft and corruption committed in
other past administrations, it does not guarantee that they would be covered in the future. Such
expanded mandate of the commission will still depend on the whim and caprice of the President. If he
would decide not to include them, the section would then be meaningless. This will only fortify the fears
of the petitioners that the Executive Order No. 1 was crafted to tailor-fit the prosecution of officials and
personalities of the Arroyo administration. [105]
The Court tried to seek guidance from the pronouncement in the case of Virata v.
Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not
violate the equal protection clause. The decision, however, was devoid of any discussion on how such
conclusory statement was arrived at, the principal issue in said case being only the sufficiency of a cause
of action.

A final word

The issue that seems to take center stage at present is - whether or not the Supreme Court, in
the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of
the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal,
which is expected to be the protector of the Constitution, itself guilty of violating fundamental tenets like
the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it
seems that the present political situation calls for it to once again explain the legal basis of its action lest
it continually be accused of being a hindrance to the nations thrust to progress.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is
vested with Judicial Power that includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the government.

Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the
power to declare a treaty, international or executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on
the constitutionality of the application, or operation of presidential decrees, proclamations, orders,
instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of
conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the
other. Many times the Court has been accused of asserting superiority over the other departments.

To answer this accusation, the words of Justice Laurel would be a good source of enlightenment,
to wit: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of the
legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to them. [107]

Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-
equal body but rather simply making sure that any act of government is done in consonance with the
authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no
constitutional violations of any sort, then, it has no more authority of proscribing the actions under
review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional.

It cannot be denied that most government actions are inspired with noble intentions, all geared
towards the betterment of the nation and its people. But then again, it is important to remember this
ethical principle: The end does not justify the means. No matter how noble and worthy of admiration the
purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with
constitutional parameters, then it cannot still be allowed. [108] The Court cannot just turn a blind eye and
simply let it pass. It will continue to uphold the Constitution and its enshrined principles.

The Constitution must ever remain supreme. All must bow to the mandate of this
law. Expediency must not be allowed to sap its strength nor greed for power debase its
rectitude.[109]

Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned
by the present administration. Perhaps a revision of the executive issuance so as to include the earlier
past administrations would allow it to pass the test of reasonableness and not be an affront to the
Constitution. Of all the branches of the government, it is the judiciary which is the most interested in
knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment. It must,
however, be emphasized that the search for the truth must be within constitutional bounds for ours is
still a government of laws and not of men.[110]

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby


declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution.

As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the
provisions of Executive Order No. 1.

SO ORDERED.
[1]
Angara v. The Electoral Commission, 63 Phil. 139, 158 (1936).
[2]
Bernas, The 1987 Constitution of the Republic of the Philippines; A Commentary, 1996 ed., p.
xxxiv, citing Miller, Lectures on the Constitution of the United States 64 (1893); 1 Schwartz, The Powers
of Government 1 (1963).
[3]
Cruz, Philippine Political law, 2002 ed. p. 12.
[4]
Id.
[5]
Resolution dated August 24, 2010 consolidating G.R. No. 192935 with G.R. No. 193036, rollo, pp. 87-
88.
[6]
Section 1. The legislative power shall be vested in the Congress of the Philippines which shall consist of
a Senate and a House of Representatives, except to the extent reserved to the people by the provision
on initiative and referendum.
[7]
Biraogo Petition, p. 5, rollo, p. 7.
[8]
Salvador Laurel v. Hon. Desierto, G.R. No. 145368, April 12, 2002, citing F.R. Mechem, A Treatise On
The Law of Public Offices and Officers.
[9]
International Center for Transitional Justice, <http://www.ictj.org/en/tj/138.html> visited November
20, 2010.
[10]
Freeman, The Truth Commission and Procedural Fairness, 2006 Ed., p. 12, citing Hayner,
UnspeakableTruths: Facing the Challenge of Truth Commissions.
[11]
International Center for Transitional Justice, supra note 9.
[12]
Armando Doronila, Philippine Daily Inquirer, August 2, 2010.
<http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20100802-284444/Truth-body-told-Take-
no
prisoners> visited November 9, 2010.
[13]
Lagman Petition, pp. 50-52, rollo, pp. 58-60.
[14]
Rollo, pp. 111-216.
[15]
Otherwise known as the Administrative Code of 1987.
[16]
Granting Continuing Authority To The President Of The Philippines To Reorganize The National
Government.
[17]
Otherwise known as the General Appropriations Act of 2010.
[18]
OSG Consolidated Comment, p. 33, rollo, p. 153, citing Uy v. Sandiganbayan, G.R. Nos. 105965-
70, March 20, 2001, 354 SCRA 651, 660-661.
[19]
Senate of the Philippines v. Ermita, G.R. No. 169777, April 20, 2006, 488 SCRA 1, 35; and Francisco v.
House of Representatives, 460 Phil. 830, 842 (2003).
[20]
OSG Memorandum, p. 29, rollo, p. 348.
[21]
G.R. No. 113105, August 19, 1994, 235 SCRA 506, 520.
[22]
Supra note 19, citing Pimentel Jr., v. Executive Secretary, G.R. No. 158088, July 6, 2005, 462 SCRA 623,
631-632.
[23]
OSG Memorandum, p. 30, rollo, p. 349.
[24]
G.R. No. 171396, May 3, 2006, 489 SCRA 160, 216-218.
[25]
Social Justice Society (SJS) v. Dangerous Drugs Board and Philippine Drug Enforcement Agency, G.R.
No. 157870, November 3, 2008, 570 SCRA 410, 421; Tatad v. Secretary of the Department of Energy,
346 Phil 321 (1997); De Guia v. COMELEC, G.R. No. 104712, May 6, 1992, 208 SCRA 420, 422.
[26]
G.R. 132527, July 29, 2005, 465 SCRA 47, 62.
[27]
84 Phil. 368, 373 (1949).
[28]
(1) the character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of the government; and, (3) the lack of any other party with a more direct and specific
interest in the questions being raised.
[29]
G.R. No. 174697, July 8, 2010.
[30]
Kilosbayan,Inc. v. Guingona, Jr., G.R. No. 113375, May 5, 1994, 232 SCRA 110, 139.
[31]
Biraogo Memorandum, p. 7, rollo, p. 69.
[32]
Id. at 6, rollo, p. 68.
[33]
Id. at 9, rollo, p. 71.
[34]
Id. at 10, rollo, p. 72.
[35]
Id. at 10-11, rollo pp. 72-73.
[36]
Lagman Memorandum, G.R. No 193036, pp. 10-11, rollo, pp. 270-271.
[37]
OSG Memorandum, p. 32, rollo, p. 351.
[38]
Id. at 33, rollo, p. 352.
[39]
OSG Consolidated Comment, p. 24, rollo, p. 144.
[40]
OSG Memorandum, pp. 38-39, rollo, pp. 357-358.
[41]
Citing Department of Health v. Camposano, G.R. No. 157684, April 27, 2005, 457 SCRA 438, 450.
[42]
Citing Evangelista v. Jarencio, No. L-27274, November 27, 1975, 68 SCRA 99, 104.
[43]
Citing Rodriguez v. Santos Diaz, No. L-19553, February 29, 1964, 10 SCRA 441, 445.
[44]
G.R. No. 166620, April 20, 2010.
[45]
Consolidated Comment, p. 45, rollo, p. 165.
[46]
G.R. Nos. 142801-802, July 10, 2001, 360 SCRA 718, also cited in Banda, supra.
[47]
The Veterans Federation of the Philippines v. Reyes, G. R. No. 155027, February 28, 2006, 483 SCRA
526, 564; DOTC v. Mabalot, 428 Phil. 154, 164-165 (2002); Mondano v. Silvosa, 97 Phil. 143 (1955).
[48]
OSG Memorandum, p. 56, rollo, p. 375.
[49]
G.R. No. 112745, October 16, 1997, 280 SCRA 713, 730.
[50]
TSN, September 28, 2010, pp. 205-207.
[51]
OSG Memorandum, p. 37, rollo, p.356.
[52]
G.R. 88211, September 15, 1989, 177 SCRA 688.
[53]
Id. at 691.
[54]
496 Phil. 886, 896-897 (2005).
[55]
Consolidated Comment, p. 48; rollo, p. 168.
[56]
Section 17. The President shall have control of all the executive departments, bureaus, and offices. He
shall ensure that the laws be faithfully executed.
[57]
Ople v. Torres, 354 Phil. 948, 967 (1998).
[58]
Smart Communications, Inc. et al. v. National Telecommunications Commission, 456 Phil. 145, 156
(2003).
[59]
G.R. No. 96681, December 2, 1991, 204 SCRA 483.
[60]
Id. at 492.
[61]
TSN, September 28, 2010, pp. 39-44; and OSG Memorandum, p. 67, rollo, p. 339.
[62]
OSG Consolidated Comment, p. 55, rollo, p. 175.
[63]
Id. at 56, rollo, p. 176.
[64]
Id.
[65]
G.R. No. 167711, October 10, 2008, 568 SCRA 327, 339.
[66]
Lagman Petition, pp. 43, 50-52, rollo, pp. 51, 50-60.
[67]
Lagman Memorandum, G.R. 193036, pp. 28-29, rollo, pp. 347-348.
[68]
Lagman Petition, p. 31, rollo, p. 39.
[69]
Id. at 28-29, rollo, pp. 36-37.
[70]
Id. at 29, rollo, p. 37.
[71]
OSG Memorandum, p. 88; rollo, p. 407.
[72]
OSG Consolidated Comment. p. 68, rollo, p. 188.
[73]
OSG Memorandum, pp. 90-93, rollo, pp. 409-412.
[74]
The Philippine Judges Association v. Hon. Pardo, G.R. No. 105371, November 11, 1993, 227 SCRA 703,
711.
[75]
Id. at 712, citing Ichong v. Hernandez, 101 Phil. 1155 (1957); Sison, Jr. v. Ancheta, No. L-59431, July 25,
1984, 130 SCRA 654; Association of Small Landowners in the Philippines v. Secretary of Agrarian
Reform, G.R. No. 7842, July 14, 1989, 175 SCRA 343, 375.
[76]
Guino v. Senkowski, 54 F 3d 1050 (2d. Cir. 1995) cited in Am. Jur, 2d, Vol. 16 (b), p. 302.
[77]
Edward Valves, Inc. v. Wake Country, 343 N.C. 426 cited in Am. Jur. 2d, Vol. 16 (b), p. 303.
[78]
Lehr v. Robertson, 463 US 248, 103 cited in Am. Jur. 2d, Vol. 16 (b), p. 303.
[79]
See Columbus Bd. of Ed. v. Penick, 443 US 449 cited Am. Jur. 2d, Vol. 16 (b), pp. 316-317.
[80]
See Lombard v. State of La., 373 US 267 cited in Am. Jur. 2d, Vol. 16 (b), p. 316.
[81]
Beltran v. Secretary of Health, 512 Phil 560, 583 (2005).
[82]
Cruz, Constitutional Law, 2003 ed., p. 128.
[83]
McErlain v. Taylor, 207 Ind. 240 cited in Am. Jur. 2d, Vol. 16 (b), p. 367.
[84]
Cruz, Constitutional Law, 2003 ed., pp. 135-136.
[85]
No. L-25246, 59 SCRA 54, 77-78 (September 12, 1974).
[86]
Basa v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas (FOITAF), No. L-
27113, November 19, 1974, 61 SCRA 93, 110-111; Anuncension v. National Labor Union, No. L-26097,
November 29, 1977, 80 SCRA 350, 372-373; Villegas v. Hiu Chiong Tsai Pao Ho, No. L-29646, November
10, 1978, 86 SCRA 270, 275; Dumlao v. Comelec, No. L-52245, January 22, 1980, 95 SCRA 392,
404; Ceniza v. Comelec, No. L-52304, January 28, 1980, 95 SCRA 763, 772-773; Himagan v. People, G.R.
No. 113811, October 7, 1994, 237 SCRA 538; The Conference of Maritime Manning Agencies, Inc. v.
POEA, G.R. No. 114714, April 21, 1995, 243 SCRA 666, 677; JMM Promotion and Management, Inc. v.
Court of Appeals, G.R. No. 120095, August 5, 1996, 260 SCRA 319, 331332; and Tiu v. Court of Appeals,
G.R. No. 127410, January 20, 1999, 301 SCRA 278, 288-289. See also Ichong v. Hernandez, No. L-7995,
101 Phil. 1155 (1957); Vera v. Cuevas, Nos. L-33693-94, May 31, 1979, 90 SCRA 379, 388; and Tolentino
v. Secretary of Finance, G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873,
and 115931, August 25, 1994, 235 SCRA 630, 684.
[87] th
7 Whereas clause, Executive Order No. 1.
[88]
Cruz, Constitutional Law, 2003 ed., p. 128.
[89]
OSG, Memorandum, p. 89, rollo, p. 408.
[90] th
6 Whereas clause, Executive Order No. 1
[91]
Lee, Handbook of Legal Maxims, 2002 Ed., p.
[92]
118 US 357, http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=118&invol=35 <accessed
on December 4, 2010>.
[93]
Macalintal v. COMELEC, G.R. No. 157013, July 10, 2003, 405 SCRA 614, pp. 631-632; Manila Prince
Hotel vs. GSIS, 335 Phil. 82, 101 (1997).
[94]
Id. at 632.
[95]
756 F. Supp. 388, N.. D. Ind., 1991, Jan 30, 1991, Crim No. HCR 90-42;
also http://in.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19910130_0000002.NIN.htm/qx <a
ccessed December 5, 2010>
[96]
McErlain v. Taylor, 207 Ind. 240 cited in Am. Jur. 2d, Vol. 16 (b), p. 367.
[97]
Martin v. Tollefson, 24 Wash. 2d 211 cited in Am. Jur. 2d, Vol. 16 (b), pp. 367-368 .
[98]
Nixon v. Administrator of General Services, 433 US 425 cited in Am. Jur. 2d, Vol. 16 (b), p. 371.
[99]
Hunter v. Flowers, 43 So 2d 435 cited in Am. Jur. 2d, Vol. 16 (b), p. 370.
[100]
Clements v. Fashing, 457 US 957.
[101]
See Am. Jur. 2d, Vol. 16 (b), pp. 370-371, as footnote (A state legislature may, consistently with the
Equal Protection Clause, address a problem one step at a time, or even select one phase of one field
and apply a remedy there, neglecting the others. [Jeffeson v. Hackney, 406 US 535].
[102]
McDonald v. Board of Election Comrs of Chicago, 394 US 802 cited in Am Jur 2d, Footnote No. 9.
[103]
Ricketts v. City of Hardford, 74 F. 3d 1397 cited in Am. Jur. 2d, Vol. 16 (b), p. 303.
[104]
OSG Consolidated Comment, p. 66, rollo, p.186.
[105]
Lagman Memorandum, p. 30; rollo, p. 118.
[106]
G.R. No. 86926, October 15, 1991; 202 SCRA 680.
[107]
Angara v. Electoral Commission, 63 Phil. 139, 158 (1936).
[108]
Cruz, Philippine Political Law, 2002 ed., pp. 12-13.
[109]
Id.
[110]
Republic v. Southside Homeowners Association, G.R. No. 156951, September 22, 2006.

CHAMBER OF REAL ESTATE AND BUILDERS G.R. No. 174697


ASSOCIATIONS, INC. (CREBA),
Petitioner, Present:

CORONA, C.J.,
CARPIO,
*
CARPIO MORALES,
**
VELASCO, JR.,
*
- versus - NACHURA,
**
LEONARDO-DE CASTRO,
BRION,
**
PERALTA,
**
BERSAMIN,
DEL CASTILLO,
ENERGY REGULATORY COMMISSION (ERC) and ABAD,
MANILA ELECTRIC COMPANY (MERALCO), VILLARAMA, JR.,
Respondents. PEREZ, and
MENDOZA, JJ.

Promulgated:

July 8, 2010

x-----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

This is a Petition for Certiorari with Prayer for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction [1] to nullify Section 2.6 of the Distribution Services and Open Access
Rules (DSOAR), promulgated by respondent Energy Regulatory Commission (ERC) on January 18,
2006. Petitioner Chamber of Real Estate and Builders Associations, Inc. asserts that Section 2.6 of the
DSOAR, which obligates certain customers to advance the amount needed to cover the expenses of
extending lines and installing additional facilities, is unconstitutional and contrary to Republic Act No.
9136, otherwise known as The Electric Power Industry Reform Act of 2001 (EPIRA).

THE BACKGROUND FACTS


The petitioner is a non-stock, non-profit corporation, organized under the laws of the Republic of
the Philippines, with principal office at 3/F CREBA Center, Don Alejandro Roces Avenue cor. South A
Street, Quezon City. It has almost 4,500 members, comprising of developers, brokers, appraisers,
contractors, manufacturers, suppliers, engineers, architects, and other persons or entities engaged in the
housing and real estate business.[2]

The ERC is a quasi-judicial and quasi-legislative regulatory body created under Section 38 of the
EPIRA, with office address at the Pacific Center Building, San Miguel Avenue, OrtigasCenter, Pasig City. It
is an administrative agency vested with broad regulatory and monitoring functions over the Philippine
electric industry to ensure its successful restructuring and modernization, while, at the same time,
promoting consumer interest.[3]

Respondent Manila Electric Company (MERALCO) is a corporation organized under the laws of
the Republic of the Philippines, with principal office at Lopez Building, Ortigas Avenue, Pasig City. It is
engaged primarily in the business of power production, transmission, and distribution. It is the largest
distributor of electricity in the Philippines.[4]

Pursuant to its rule-making powers under the EPIRA, the ERC promulgated the Magna Carta for
Residential Electricity Consumers (Magna Carta), which establishes residential consumers rights to have
access to electricity and electric service, subject to the requirements set by local government units and
distribution utilities (DUs).[5] Article 14 of the Magna Carta pertains to the rights of consumers to avail of
extension lines or additional facilities. It also distinguishes between consumers located within 30 meters
from existing lines and those who are located beyond 30 meters; the latter have the obligation to
advance the costs of the requested lines and facilities, to wit:

Article 14. Right to Extension of Lines and Facilities.A consumer located within
thirty (30) meters from the distribution utilities existing secondary low voltage lines, has
the right to an extension of lines or installation of additional facilities, other than a
service drop, at the expense of the utility inasmuch as said assets will eventually form
part of the rate base of the private distribution utilities, or will be sourced from the
reinvestment funds of the electric cooperatives. However, if a prospective customer is
beyond the said distance, or his demand load requires that the utility extend lines and
facilities, the customer may initially fund the necessary expenditures.
Article 14 of the Magna Carta continues with a provision on how the costs advanced by the residential
end-user can be recovered:

To recover his aforementioned expenditures, the customer may either demand


the issuance of a notes payable from the distribution utility or refund at the rate of
twenty-five (25) percent of the gross distribution revenue derived for the calendar year,
or, if available, the purchase of preferred shares.

Revenue derived from additional customers tapped directly to the poles and
facilities so extended shall be considered in determining the revenues derived from the
extension of facilities.

The same article specifies that if a developer initially pays the cost of the extension lines but passes it to
the registered customer, the customer would still be entitled to recover the cost in the manner provided
under this article:

When a developer initially paid the cost of the extension of lines to provide
electric service to a specific property and incorporated these expenses in the cost
thereof, and that property was purchased and transferred in the name of the registered
customer, the latter shall be entitled to the refund of the cost of the extension of lines,
and exercise the options for refund provided in this article.

On January 18, 2006, the ERC modified this provision when it issued the DSOAR. Section 2.6.1
reiterates the old rule requiring consumers located beyond 30 meters from existing lines to advance the
costs of the requested lines and facilities. Section 2.6.2 likewise provides that the costs advanced by
consumers may be refunded at the rate of 25% of the annual gross distribution revenue derived from all
customers connected to the line extension. However, Section 2.6.2 amends Article 14 of the Magna
Carta by limiting the period for the refund to five years, whether or not the amount advanced by the
consumer is fully paid. Section 2.6 of the DSOAR decrees that:

2.6. MODIFICATIONS AND NEW PHYSICAL CONNECTIONS: RESIDENTIAL

2.6.1 RIGHT TO EXTENSION OF LINES AND FACILITIES In accordance with the Magna
Carta, a residential End-user located within thirty (30) meters from the distribution
utilities existing secondary low voltage lines has the right to an extension of lines or
installation of additional facilities, other than a service drop, at the expense of the
utility. However, if a prospective customer is beyond the said distance, the customer
shall advance the amounts necessary to cover the expenditures on the facilities beyond
thirty (30) meters.

2.6.2 REFUNDTo recover the aforementioned advanced payment, the customer may
either demand the issuance of a notes payable from the distribution utility or a refund at
the rate of twenty-five (25) percent of the gross distribution revenue derived from all
customers connected to the line extension for the calendar year until such amounts are
fully refunded or for five (5) years whichever period is shorter, or, if available, the
purchase of preferred shares. Revenue derived from additional customers tapped
directly to the poles and facilities so extended shall be considered in determining the
revenues derived from the extension of facilities.

Distribution Connection Assets paid for through advances from residential End-users
shall be deemed plant in service in the accounts of the DU. Unpaid advances shall be a
reduction to plant in service. If replacement becomes necessary at any time for any
Distribution Connection Assets paid for by residential End-users, the DU shall be solely
responsible for the cost of such replacement which shall become plant in service in the
accounts of the DU, and shall not require another advanced payment from the
connected residential End-users unless the replacement is due to End-user fault.

The petitioner alleged that the entities it represented applied for electrical power service, and
MERALCO required them to sign pro forma contracts that (1) obligated them to advance the cost of the
construction of new lines and other facilities and (2) allowed annual refunds at 25% of the gross
distribution revenue derived from the customers electric service, until the amount advanced is fully paid,
pursuant to Section 2.6 of the DSOAR.[6]
The petitioner seeks to nullify Section 2.6 of the DSOAR, on the following grounds: (1) it is
unconstitutional since it is oppressive and it violates the due process and equal protection clauses; (2) it
contravenes the provisions of the EPIRA; and (3) it violates the principle of unjust enrichment. [7]
Petitioner claims that Section 2.6 of the DSOAR is unconstitutional as it is oppressive to the
affected end-users who must advance the amount for the installation of additional facilities. Burdening
residential end-users with the installation costs of additional facilities defeats the objective of the law
the electrification of residential areas and contradicts the provisions of the legislative franchise, requiring
DUs to be financially capable of providing the distribution service. Moreover, the questioned provision
violates the equal protection clause since the difference in treatment between end-users residing within
30 meters of the existing lines and those beyond 30 meters does not rest on substantial distinctions. [8]

In addition, the petitioner alleges that the assailed provision contravenes Sections 2, 23, 41 and
43 of the EPIRA[9] which are geared towards ensuring the affordability of electric power and the
protection of consumers.[10] Lastly, requiring consumers to provide the huge capital for the installation of
the facilities, which will be owned by distribution utilities such as MERALCO, results in unjust
enrichment.[11]

THE RESPONDENTS CASE

a. The ERC Position

Contradicting the petitioners arguments, the ERC avers that it issued Section 2.6 of the DSOAR as
an exercise of police power directed at promoting the general welfare. The rule seeks to address the
inequitable situation where the cost of an extension facility benefiting one or a few consumers is equally
shared by them.[12]

The ERC likewise asserts that the equal protection clause is observed since the distinction
between end-users residing within 30 meters of the existing lines and those beyond 30 meters is based
on real and substantial differences, namely: (1) proximity of end-user service drop to the main
distribution lines; (2) manner of checking status service; (3) system loss risk; (4) cost in installing the
facilities; and (5) additional risk posed by the possibility of the customer defaulting in his electric service
with the DU.[13]

The ERC also maintains that Section 2 of the DSOAR is consistent with Sections 2, 23, 41 and 43
of the EPIRA. By not subjecting most consumers to the payment of installation costs benefitting
customers located beyond a reasonably-set boundary, the provision in question gives effect to the EPIRA
policy to ensure that the prices of electricity remain affordable, transparent, and reasonable to the
majority. The policy of accelerating the total electrification of the country is also served when the
residents of far-flung areas are given the option to apply for extension lines. This option is subject only to
the condition that the cost of the extension of existing lines is advanced by the end-user, who will
eventually be reimbursed; without such condition, businesses will be reluctant to provide service
connection in remote areas.[14]

Additionally, the ERC points out that the DSOAR provisions do not result in unjust enrichment
since the DUs do not stand to be materially benefited by the customers advances. The DUs have the
obligation to reimburse the customers the advances within five years, and whatever advances are unpaid
during the five-year period are recorded as reductions in plant in service. [15]

Finally, it argues that petitioner lacks the standing to file the present suit since the petitioner is
not an end-user who will sustain a direct injury as a result of the issuance and implementation of the
DSOAR. The ERC likewise maintains the petition for certiorari must fail since petitioner fails to impute
grave abuse of discretion to the ERC.[16]

b. The MERALCO Position

MERALCO reiterates the defenses raised by the ERC. It also contends that the present petition
does not involve the ERCs judicial and quasi-judicial functions so that a petition for certiorari is an
improper remedy. MERALCO likewise argues that the petition for certiorari, assuming it to be a correct
remedy, should be dismissed since the petitioner failed to observe the doctrine of hierarchy of courts by
filing an original petition with this Court.

On the merits, MERALCO points out that even if Section 2.6 of the DSOAR is struck down, the
provision in the Magna Carta, on the same point, would nevertheless require end-users located beyond
30 meters from existing lines to advance the cost. The petitioners members are not also end-users, but
subdivision developers, brokers, and various entities who are not affected by the questioned provision; if
a developer would apply for electric service, the terms and conditions of the service will not be governed
by Section 2.6 of the DSOAR.[17]

MERALCO also elaborates on why the provision does not result in unjust enrichment and justifies
the distinction between end-users within the 30-meter limit and those located outside of this limit. The
DSOAR provides that the unpaid amounts that the end-users advanced for the electrical facilities are not
included in plant in service. The total plant in service is the basis in fixing the rates collected by the DU
from all its customers. By having the end-users, located 30 meters away from existing lines, advance the
amount, this amount is no longer included in the rates passed on to regular consumers. The DSOAR
further limits the subsidies by regular consumers, by limiting the amount to be recovered to 25% and to
five years. Thus, if the costs of the lines are too great and the revenues are too small, it is the end-user
who would bear the cost and not the regular customers. [18]
THE ISSUES

The petitioner summarizes the issues as follows:

Procedural Issues:

A. Whether petitioner can challenge the constitutionality of a quasi-legislative act (i.e.,


the Rules) in a petition for certiorari under Rule 65 of the Rules of Court.
B. Whether the Honorable Supreme [Court] has original jurisdiction over this case.

C. Whether petitioner has legal standing to sue.

D. Whether petitioner is authorized to file this suit.

Substantive issues:

A. Whether Section 2.6 of the Rules violates the due process and equal protection clause
of the Constitution.

B. Whether Section 2.6 of the Rules violates R.A. No. 9136.

C. Whether Section 2.6 of the Rules violates the rule against unjust enrichment.

D. Whether Section 2.6 of the Rules is a valid exercise of police power. [19]

THE COURTS RULING

We resolve to dismiss the petition for its serious procedural and technical defects.

a. The Petitioner Has No Legal Standing

We do not see the petitioner as an entity with the required standing to assail the validity of
Section 2.6 of the DSOAR.

Legal standing or locus standi refers to a partys personal and substantial interest in a case, arising
from the direct injury it has sustained or will sustain as a result of the challenged governmental action.
Legal standing calls for more than just a generalized grievance. The term interest means a material
interest, an interest in issue affected by the governmental action, as distinguished from mere interest in
the question involved, or a mere incidental interest. Unless a persons constitutional rights are adversely
affected by a statute or governmental action, he has no legal standing to challenge the statute or
governmental action.[20]

The petitioner expressly enumerates its members to be the following: developers, brokers,
appraisers, contractors, manufacturers, suppliers, engineers, architects, and other persons or entities
engaged in the housing and real estate business. [21] It does not question the challenged DSOAR provision
as a residential end-user and it cannot because the challenged provision only refers to the rights and
obligations of DUs and residential end-users; neither the petitioner nor its members are residential end-
users. In fact, the DSOAR has separate provisions for the extension of lines or installation of additional
facilities for non-residential end-users, under its Section 2.7 entitled Modifications and New
Connections: Non-Residential. Thus, neither the petitioner nor its members can claim any injury, as
residential end-users, arising from the challenged Section 2.6 of the DSOAR, nor cite any benefit accruing
to them as residential end-users that would result from the invalidation of the assailed provision.

The petitioner meets the objection to its capacity to bring suit through the claim that subdivision
developers are directly affected by the assailed provision because MERALCO has asked them to advance
the cost of installing additional lines and facilities, in accordance with Section 2.6 of the DSOAR. [22] This
claim is specious.

Section 1, Rule I of the Revised Rules and Regulations Implementing the Subdivision and
Condominium Buyers Protective Decree (PD 957) and Other Related Laws provides the minimum design
standards for subdivisions. These minimum standards include an electrical power supply, described
under subsection C(7) thus:

7. Electrical Power Supply System

Mandatory individual household connection to primary and/or alternate sources of


power.

xxxx

Provision of street lighting per pole is mandatory at 50-meter distance and every other
pole if distance is less than 50 meters.

Thus, subdivision developers are obligated under these rules to include in their design an electrical
power supply system that would link individual households within their subdivision to primary and/or
alternate sources of power. This requirement is intended to protect the rights of prospective subdivision
homeowners,[23] and exists regardless of the validity of Section 2.6 of the DSOAR.

In other words, the invalidation of Section 2.6 of the DSOAR would not permit subdivision
developers to renege from their duty to ensure power supply and to pass the costs of installing a proper
electrical power supply system to MERALCO. In this light, it is immaterial that MERALCO did require
certain developers to sign the Agreement for Extension of Lines And/Or Additional Facilities [24] as this
was required under the provisions of the Magna Carta, not under the assailed DSOAR provision that, in
the first place, does not govern the relationship of subdivision developers (who are not residential end-
users) and MERALCO.
a. 1. No Transcendental Issue Involved

The petitioner cites instances when the Court, in the exercise of its discretion, waived the
procedural rule on standing in cases that raised issues of transcendental importance. We do not,
however, view the present case as one involving a matter of transcendental importance so that a waiver
of the locus standi rule should be recognized.

The Court, through Associate Justice Florentino P. Feliciano (now retired), provided the following
instructive guides as determinants in determining whether a matter is of transcendental importance: (1)
the character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality
of the government; and (3) the lack of any other party with a more direct and specific interest in the
questions being raised.[25]

In this case, the three determinants are glaringly absent. Public funds are not involved. The allegations of
constitutional and statutory violations of the public respondent agency are unsubstantiated by facts and
are mere challenges on the wisdom of the rules, a matter that will be further discussed in this
Decision. In addition, parties with a more direct and specific interest in the questions being raised the
residential end-users undoubtedly exist and are not included as parties to the petition. As the Court did
in Anak Mindanao Party-List Group v. Executive Secretary,[26] we cannot waive the rule on standing where
the three determinants were not established.

b. Rule 65 is both a Wrong


and Misapplied Remedy

The petitioners choice of remedy a petition for certiorari under Rule 65 of the Rules of Court is
an incorrect remedy.

Rule 65, Section 1 of the Rules of Court mandates that the remedy of certiorari is directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions:

Section 1. Petition for certiorari.When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
Judicial functions are exercised by a body or officer clothed with authority to determine what the law is
and what the legal rights of the parties are with respect to the matter in controversy. [27]Quasi-judicial
function is a term that applies to the action or discretion of public administrative officers or bodies given
the authority to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions
from them as a basis for their official action using discretion of a judicial nature. [28] Thus, in Philnabank
Employees Association v. Estanislao, we did not grant a petition for certiorari against the Department
Secretary who did not act in any judicial or quasi-judicial capacity but merely promulgated the
questioned implementing rules under the mandate of Republic Act No. 6971, the applicable law in this
cited case.[29]

Contrary to Section 2, Rule III of the Rules of Court, the petitioner and its members are not even
parties who are aggrieved by the assailed DSOAR provision, as already discussed above. Even if they had
been properly aggrieved parties, the petition must still be dismissed for violation of yet another basic
principle applicable to Rule 65. This rule requires, for a petition for certiorari to be an appropriate
remedy, that there be no appeal or plain, speedy, and adequate remedy in the ordinary course of law.
[30]
Since the petitioner assails the validity of a rule or statute and seeks our declaration that the rule is
unconstitutional, a petition for declaratory relief under Section 1, Rule 63 of the Rules of
Court[31] provides a remedy more appropriate than certiorari.

Furthermore, the Court of Appeals and the Supreme Court have original concurrent jurisdiction
over petitions for certiorari; the rule on hierarchy of courts determines the venue of recourses to these
courts. In original petitions for certiorari, the Supreme Court will not directly entertain this special civil
action as in the present case unless the redress desired cannot be obtained elsewhere based on
exceptional and compelling circumstances justifying immediate resort to this Court. [32]

In the present case, the petitioner alleges that the constitutionality and legality of the assailed
provision are of immense importance to the public [33] and are a recipe for financial ruin of the affected
parties.[34] Moreover, it maintains that its petition raises transcendental and weighty issues that would
merit the Honorable Courts exercise of original jurisdiction. [35] To support its position, it cites the cases of
the Senate of the Philippines v. Ermita[36] and Ople v. Torres.[37]

Senate of the Philippines v. Ermita [38] was a case for certiorari and prohibition, while our Decision
in Ople v. Torres[39] did not clearly state whether the case was filed as a petition forcertiorari. But granting
that both cases were filed as petitions for certiorari, they prompted the Court to suspend its rules of
procedure as they involved clear violations of the Constitution which urgently needed to be
addressed. Moreover, they were unquestionably filed by the proper parties.

The petitioners in the Ermita case included the Philippine Senate, which assailed Executive Order
No. 464 for infringing on their prerogatives as legislators, to conduct inquiries in aid of legislation. [40] We
had to immediately resolve this case since the implementation of the challenged order had already
resulted in the absence of officials invited to Senate hearings.

In the Ople case, Senator Blas F. Ople sought to invalidate Administrative Order No. 308, which
establishes a system of identification that is all-encompassing in its scope, [and that] affects the life and
liberty of every Filipino citizen and foreign resident. [41] The petition was based on two important
constitutional grounds: (1) usurpation of the power of Congress to legislate and (2) impermissible
intrusion into the citizenrys protected zone of privacy.

In the present case, the petitioner cannot come before this Court using an incorrect remedy and
claim that it was oppressed, or that its rights to due process and equal protection have been violated by
an administrative issuance that does not even affect its rights and obligations. The writ of certiorari is an
extraordinary remedy that the Court issues only under closely defined grounds and procedures that
litigants and their lawyers must scrupulously observe. They cannot seek refuge under the umbrella of
this remedy on the basis of an undemonstrated claim that they raise issues of transcendental
importance, while at the same time flouting the basic ground rules for the remedys grant. [42]

These conclusions render any further discussion of the improperly raised substantive issues
unnecessary.

WHEREFORE, premises considered, we hereby DISMISS the petition for its serious procedural and
technical defects. Costs against the petitioner.

SO ORDERED.

[1]
Rollo, pp. 3-22.
[2]
Id. at 4.
[3]
Id. at 153.
[4]
Id. at 5.
[5]
Under Section 4(q) of the EPIRA, a distribution utility refers to any electric cooperative, private
corporation, government-owned utility, or existing local government unit which has an exclusive
franchise to operate a distribution system in accordance with this Act.
[6]
Rollo, pp. 7-9.
[7]
Id. at 7.
[8]
Id. at 11-15.
[9]
Section 2. Declaration of Policy. - It is hereby declared the policy of the State:
xxxx
b) To ensure the quality, reliability, security and affordability of the supply of electric power;
c) To ensure transparent and reasonable prices of electricity in a regime of free and fair
competition and full public accountability to achieve greater operational and economic
efficiency and enhance the competitiveness of Philippine products in the global market;
xxxx
f) To protect the public interest as it is affected by the rates and services of electric utilities
and other providers of electric power[.]

Section 23. Functions of Distribution Utilities. - A distribution utility shall have the obligation to provide
distribution services and connections to its system for any end-user within its franchise area consistent
with the distribution code. Any entity engaged therein shall provide open and non-discriminatory
access to its distribution system to all users.
xxxx

Section 41. x x x The ERC shall handle consumer complaints and ensure the adequate promotion of
consumer interests.
xxxx
Section 43. Functions of the ERC. The ERC shall promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the restructured
electricity industry.
[10]
Rollo, pp. 15-17.
[11]
Id. at 17-19.
[12]
Id. at 288-289.
[13]
Id. at 294.
[14]
Id. at 297.
[15]
Id. at 298-300.
[16]
Id. at 300-304.
[17]
Id. at 315, 318.
[18]
Id. at 323-324.
[19]
Id. at 236.
[20]
Abaya v. Ebdane, G.R. No. 167919, February 14, 2007, 515 SCRA 720, 756-757; Olama v. Philippine
National Bank, G.R. No. 169213, June 22, 2006, 492 SCRA 343, 353; and Jumamil v. Caf, G.R. No.
144570, September 21, 2005, 470 SCRA 475, 487.
[21]
Rollo, p. 4.
[22]
Id. at 249.
[23]
The WHEREAS clauses of Presidential Decree No. 957 state that:

WHEREAS, it is the policy of the State to afford its inhabitants the requirements
of decent human settlement and to provide them with ample opportunities for
improving their quality of life;
WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads drainage, sewerage,
water systems, lighting systems, and other similar basic requirements, thus endangering
the health and safety of home and lot buyers[.]
[24]
Rollo, pp. 208-222; Annexes A to E of the Reply to Respondents Comments.
[25]
Senate of the Philippines v. Ermita, G.R. No. 169777, April 20, 2006, 488 SCRA 1, 39-40; and Francisco
v. Nagmamalasakit na mga Manggagawang Pilipino, Inc., G.R. No. 160261, November 10, 2003, 415
SCRA 44, 139, citing Kilosbayan v. Guingona, G.R. No. 113375, May 5, 1994, 232 SCRA 110, 155-157.
[26]
G.R. No. 166052, August 29, 2007, 531 SCRA 583, 592.
[27]
Angara v. Fedman Development Corporation, G.R. No. 156822, October 18, 2004, 440 SCRA 467, 477;
and Toyota Motors Philippines Corporation Workers Association v. Court of Appeals, 458 Phil. 661, 681
(2003).
[28]
Metropolitan Bank and Trust Company, Inc. v. National Wages and Productivity Commission, G.R. No.
144322, February 6, 2007, 514 SCRA 346, 357; and Villarosa v. Commission on Elections, 377 Phil. 497,
506 (1999).
[29]
G.R. No. 104209, November 16, 1993, 227 SCRA 804, 810-811.
[30]
Esguera v. Gonzales-Asdala, G.R. No. 168906, December 4, 2008, 573 SCRA 50, 64-65; Franco-Cruz v.
Court of Appeals, G.R. No. 172238, September 17, 2008, 565 SCRA 531, 538; and Mallari v. Banco
Filipino Savings and Mortgage Bank, G.R. No. 157660, August 29, 2008, 563 SCRA 664, 668.
[31]
Section 1. Who may file petition.Any person interested under a deed, will, contract or other written
instrument, whose rights are affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
[32]
Audi AG v. Mejia, G.R. No. 167533, July 27, 2007, 528 SCRA 378, 384-385; De los Reyes v. People, G.R.
No. 138297, January 27, 2006, 480 SCRA 294, 297; and Santos v. Cruz, G.R. Nos. 170096 and 170097,
March 3, 2006, 484 SCRA 66, 75.
[33]
Rollo, p. 238.
[34]
Id. at 239.
[35]
Ibid.
[36]
G.R. No. 169777, April 20, 2006, 488 SCRA 1.
[37]
354 Phil. 948 (1998).
[38]
Supra note 36.
[39]
Supra note 37.
[40]
Supra note 36. The challenged order, Executive Order No. 464, required all heads of departments of
the Executive Branch of the government to secure the consent of the President prior to appearing
before either House of Congress. In its petition, the Senate considered this as a flagrant violation of
their prerogatives under Article VI, Section 21 of the Constitution, among other provisions.
[41]
Supra note 37, at 966.
[42]
Athena Computers, Inc. v. Reyes, G.R. No. 156905, September 5, 2007, 532 SCRA 343, 348.

[G.R. No. 157013. July 10, 2003]

ATTY. ROMULO B. MACALINTAL, petitioner, vs. COMMISSION ON ELECTIONS, HON. ALBERTO ROMULO,
in his official capacity as Executive Secretary, and HON. EMILIA T. BONCODIN, Secretary of the
Department of Budget and Management, respondents.

DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for certiorari and prohibition filed by Romulo B. Macalintal, a member
of the Philippine Bar, seeking a declaration that certain provisions of Republic Act No. 9189 (The
Overseas Absentee Voting Act of 2003)[1] suffer from constitutional infirmity. Claiming that he has actual
and material legal interest in the subject matter of this case in seeing to it that public funds are properly
and lawfully used and appropriated, petitioner filed the instant petition as a taxpayer and as a lawyer.
The Court upholds the right of petitioner to file the present petition.
R.A. No. 9189, entitled, An Act Providing for A System of Overseas Absentee Voting by Qualified
Citizens of the Philippines Abroad, Appropriating Funds Therefor, and for Other Purposes, appropriates
funds under Section 29 thereof which provides that a supplemental budget on the General
Appropriations Act of the year of its enactment into law shall provide for the necessary amount to carry
out its provisions. Taxpayers, such as herein petitioner, have the right to restrain officials from wasting
public funds through the enforcement of an unconstitutional statute. [2] The Court has held that they may
assail the validity of a law appropriating public funds [3] because expenditure of public funds by an officer
of the State for the purpose of executing an unconstitutional act constitutes a misapplication of such
funds.[4]
The challenged provision of law involves a public right that affects a great number of citizens. The
Court has adopted the policy of taking jurisdiction over cases whenever the petitioner has seriously and
convincingly presented an issue of transcendental significance to the Filipino people. This has been
explicitly pronounced in Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan, [5] where
the Court held:

Objections to taxpayers suit for lack of sufficient personality standing, or interest are, however, in the
main procedural matters. Considering the importance to the public of the cases at bar, and in keeping
with the Courts duty, under the 1987 Constitution, to determine whether or not the other branches of
government have kept themselves within the limits of the Constitution and the laws and that they have
not abused the discretion given to them, the Court has brushed aside technicalities of procedure and has
taken cognizance of these petitions.[6]

Indeed, in this case, the Court may set aside procedural rules as the constitutional right of suffrage
of a considerable number of Filipinos is involved.
The question of propriety of the instant petition which may appear to be visited by the vice of
prematurity as there are no ongoing proceedings in any tribunal, board or before a government official
exercising judicial, quasi-judicial or ministerial functions as required by Rule 65 of the Rules of
Court, dims in light of the importance of the constitutional issues raised by the petitioner. In Taada vs.
Angara,[7] the Court held:

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution,
the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is
seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of
the judiciary to settle the dispute. The question thus posed is judicial rather than political. The duty (to
adjudicate) remains to assure that the supremacy of the Constitution is upheld. Once a controversy as to
the application or interpretation of constitutional provision is raised before this Court (as in the instant
case), it becomes a legal issue which the Court is bound by constitutional mandate to decide.
In another case of paramount impact to the Filipino people, it has been expressed that it is illogical to
await the adverse consequences of the law in order to consider the controversy actual and ripe for
judicial resolution.[8] In yet another case, the Court said that:

. . . despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will not
hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this
conclusion, its only criterion will be the Constitution and God as its conscience gives it in the light to
probe its meaning and discover its purpose. Personal motives and political considerations are
irrelevancies that cannot influence its decisions. Blandishment is as ineffectual as intimidation, for all the
awesome power of the Congress and Executive, the Court will not hesitate to make the hammer fall
heavily, where the acts of these departments, or of any official, betray the peoples will as expressed in
the Constitution . . .[9]

The need to consider the constitutional issues raised before the Court is further buttressed by the
fact that it is now more than fifteen years since the ratification of the 1987 Constitution requiring
Congress to provide a system for absentee voting by qualified Filipinos abroad. Thus, strong reasons of
public policy demand that the Court resolves the instant petition [10] and determine whether Congress has
acted within the limits of the Constitution or if it had gravely abused the discretion entrusted to it. [11]
The petitioner raises three principal questions:

A. Does Section 5(d) of Rep. Act No. 9189 allowing the registration of voters who are
immigrants or permanent residents in other countries by their mere act of executing an
affidavit expressing their intention to return to the Philippines, violate the residency
requirement in Section 1 of Article V of the Constitution?

B. Does Section 18.5 of the same law empowering the COMELEC to proclaim the winning
candidates for national offices and party list representatives including the President and the
Vice-President violate the constitutional mandate under Section 4, Article VII of the
Constitution that the winning candidates for President and the Vice-President shall be
proclaimed as winners by Congress?

C. May Congress, through the Joint Congressional Oversight Committee created in Section 25
of Rep. Act No. 9189, exercise the power to review, revise, amend, and approve the
Implementing Rules and Regulations that the Commission on Elections shall promulgate
without violating the independence of the COMELEC under Section 1, Article IX-A of the
Constitution?

The Court will resolve the questions in seriatim.

A. Does Section 5(d) of Rep. Act No. 9189 violate Section 1, Article V of the 1987 Constitution of the
Republic of the Philippines?
Section 5(d) provides:

Sec. 5. Disqualifications. The following shall be disqualified from voting under this Act:
.........

d) An immigrant or a permanent resident who is recognized as such in the host country, unless he/she
executes, upon registration, an affidavit prepared for the purpose by the Commission declaring that
he/she shall resume actual physical permanent residence in the Philippines not later than three (3) years
from approval of his/her registration under this Act. Such affidavit shall also state that he/she has not
applied for citizenship in another country. Failure to return shall be cause for the removal of the name of
the immigrant or permanent resident from the National Registry of Absentee Voters and his/her
permanent disqualification to vote in absentia.

Petitioner posits that Section 5(d) is unconstitutional because it violates Section 1, Article V of the 1987
Constitution which requires that the voter must be a resident in the Philippines for at least one year and
in the place where he proposes to vote for at least six months immediately preceding an election.
Petitioner cites the ruling of the Court in Caasi vs. Court of Appeals[12] to support his claim. In that case,
the Court held that a green card holder immigrant to the United States is deemed to have abandoned his
domicile and residence in the Philippines.
Petitioner further argues that Section 1, Article V of the Constitution does not allow provisional
registration or a promise by a voter to perform a condition to be qualified to vote in a political exercise;
[13]
that the legislature should not be allowed to circumvent the requirement of the Constitution on the
right of suffrage by providing a condition thereon which in effect amends or alters the aforesaid
residence requirement to qualify a Filipino abroad to vote. [14] He claims that the right of suffrage should
not be granted to anyone who, on the date of the election, does not possess the qualifications provided
for by Section 1, Article V of the Constitution.
Respondent COMELEC refrained from commenting on this issue. [15]

In compliance with the Resolution of the Court, the Solicitor General filed his comment for all public
respondents. He contraposes that the constitutional challenge to Section 5(d) must fail because of the
absence of clear and unmistakable showing that said provision of law is repugnant to the
Constitution. He stresses: All laws are presumed to be constitutional; by the doctrine of separation of
powers, a department of government owes a becoming respect for the acts of the other two
departments; all laws are presumed to have adhered to constitutional limitations; the legislature
intended to enact a valid, sensible, and just law.
In addition, the Solicitor General points out that Section 1, Article V of the Constitution is
a verbatim reproduction of those provided for in the 1935 and the 1973 Constitutions. Thus, he cites Co
vs. Electoral Tribunal of the House of Representatives [16] wherein the Court held that the term residence
has been understood to be synonymous with domicile under both Constitutions. He further argues that
a person can have only one domicile but he can have two residences, one permanent (the domicile) and
the other temporary;[17] and that the definition and meaning given to the term residence likewise applies
to absentee voters. Invoking Romualdez-Marcos vs. COMELEC[18] which reiterates the Courts ruling
in Faypon vs. Quirino,[19] the Solicitor General maintains that Filipinos who are immigrants or permanent
residents abroad may have in fact never abandoned their Philippine domicile. [20]
Taking issue with the petitioners contention that green card holders are considered to have
abandoned their Philippine domicile, the Solicitor General suggests that the Court may have to discard
its ruling in Caasi vs. Court of Appeals [21] in so far as it relates to immigrants and permanent residents in
foreign countries who have executed and submitted their affidavits conformably with Section 5(d) of R.A.
No. 9189.He maintains that through the execution of the requisite affidavits, the Congress of the
Philippines with the concurrence of the President of the Republic had in fact given these immigrants and
permanent residents the opportunity, pursuant to Section 2, Article V of the Constitution, to manifest
that they had in fact never abandoned their Philippine domicile; that indubitably, they would have
formally and categorically expressed the requisite intentions, i.e., animus manendi and animus
revertendi; that Filipino immigrants and permanent residents abroad possess the unquestionable right to
exercise the right of suffrage under Section 1, Article V of the Constitution upon approval of their
registration, conformably with R.A. No. 9189.[22]
The seed of the present controversy is the interpretation that is given to the phrase, qualified
citizens of the Philippines abroad as it appears in R.A. No. 9189, to wit:

SEC. 2. Declaration of Policy. It is the prime duty of the State to provide a system of honest and orderly
overseas absentee voting that upholds the secrecy and sanctity of the ballot. Towards this end, the State
ensures equal opportunity to all qualified citizens of the Philippines abroad in the exercise of this
fundamental right.

SEC. 3. Definition of Terms. For purposes of this Act:

a) Absentee Voting refers to the process by which qualified citizens of the Philippines abroad, exercise
their right to vote;

. . . (Emphasis supplied)

f) Overseas Absentee Voter refers to a citizen of the Philippines who is qualified to register and
vote under this Act, not otherwise disqualified by law, who is abroad on the day of elections. (Emphasis
supplied)

SEC. 4. Coverage. All citizens of the Philippines abroad, who are not otherwise disqualified by law, at
least eighteen (18) years of age on the day of elections, may vote for president, vice-president, senators
and party-list representatives. (Emphasis supplied)

in relation to Sections 1 and 2, Article V of the Constitution which read:

SEC. 1. Suffrage may be exercised by all citizens of the Philippines not otherwise disqualified by law, who
are at least eighteen years of age, and who shall have resided in the Philippines for at least one year and
in the place wherein they propose to vote for at least six months immediately preceding the election. No
literacy, property, or other substantive requirement shall be imposed on the exercise of suffrage.

SEC. 2. The Congress shall provide a system for securing the secrecy and sanctity of the ballot as well
as a system for absentee voting by qualified Filipinos abroad.

. . . . . . . . . (Emphasis supplied)

Section 1, Article V of the Constitution specifically provides that suffrage may be exercised by (1) all
citizens of the Philippines, (2) not otherwise disqualified by law, (3) at least eighteen years of age, (4)
who are residents in the Philippines for at least one year and in the place where they propose to vote for
at least six months immediately preceding the election. Under Section 5(d) of R.A. No. 9189, one of
those disqualified from voting is an immigrant or permanent resident who is recognized as such in the
host country unless he/she executes an affidavit declaring that he/she shall resume actual physical
permanent residence in the Philippines not later than three years from approval of his/her registration
under said Act.
Petitioner questions the rightness of the mere act of execution of an affidavit to qualify the Filipinos
abroad who are immigrants or permanent residents, to vote. He focuses solely on Section 1, Article V of
the Constitution in ascribing constitutional infirmity to Section 5(d) of R.A. No. 9189, totally ignoring the
provisions of Section 2 empowering Congress to provide a system for absentee voting by qualified
Filipinos abroad.
A simple, cursory reading of Section 5(d) of R.A. No. 9189 may indeed give the impression that it
contravenes Section 1, Article V of the Constitution. Filipino immigrants and permanent residents
overseas are perceived as having left and abandoned the Philippines to live permanently in their host
countries and therefore, a provision in the law enfranchising those who do not possess the residency
requirement of the Constitution by the mere act of executing an affidavit expressing their intent to
return to the Philippines within a given period, risks a declaration of unconstitutionality. However, the
risk is more apparent than real.
The Constitution is the fundamental and paramount law of the nation to which all other laws must
conform and in accordance with which all private rights must be determined and all public authority
administered.[23] Laws that do not conform to the Constitution shall be stricken down for being
unconstitutional.
Generally, however, all laws are presumed to be constitutional. In Peralta vs. COMELEC, the Court
said:

. . . An act of the legislature, approved by the executive, is presumed to be within constitutional


limitations. The responsibility of upholding the Constitution rests not on the courts alone but on the
legislature as well. The question of the validity of every statute is first determined by the legislative
department of the government itself.[24]

Thus, presumption of constitutionality of a law must be overcome convincingly:

. . . To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and
unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of
constitutional rights is allowed. To strike down a law there must be a clear showing that what the
fundamental law condemns or prohibits, the statute allows it to be done. [25]

As the essence of R.A. No. 9189 is to enfranchise overseas qualified Filipinos, it behooves the Court
to take a holistic view of the pertinent provisions of both the Constitution and R.A. No. 9189. It is a basic
rule in constitutional construction that the Constitution should be construed as a whole. In Chiongbian
vs. De Leon,[26] the Court held that a constitutional provision should function to the full extent of its
substance and its terms, not by itself alone, but in conjunction with all other provisions of that great
document. Constitutional provisions are mandatory in character unless, either by express statement or
by necessary implication, a different intention is manifest. [27] The intent of the Constitution may be drawn
primarily from the language of the document itself. Should it be ambiguous, the Court may consider the
intent of its framers through their debates in the constitutional convention. [28]
R.A. No. 9189 was enacted in obeisance to the mandate of the first paragraph of Section 2, Article V
of the Constitution that Congress shall provide a system for voting by qualified Filipinos abroad. It must
be stressed that Section 2 does not provide for the parameters of the exercise of legislative authority in
enacting said law. Hence, in the absence of restrictions, Congress is presumed to have duly exercised its
function as defined in Article VI (The Legislative Department) of the Constitution.
To put matters in their right perspective, it is necessary to dwell first on the significance of absentee
voting. The concept of absentee voting is relatively new. It is viewed thus:

The method of absentee voting has been said to be completely separable and distinct from the regular
system of voting, and to be a new and different manner of voting from that previously known, and an
exception to the customary and usual manner of voting. The right of absentee and disabled voters to
cast their ballots at an election is purely statutory; absentee voting was unknown to, and not recognized
at, the common law.

Absentee voting is an outgrowth of modern social and economic conditions devised to accommodate
those engaged in military or civil life whose duties make it impracticable for them to attend their polling
places on the day of election, and the privilege of absentee voting may flow from constitutional
provisions or be conferred by statutes, existing in some jurisdictions, which provide in varying terms for
the casting and reception of ballots by soldiers and sailors or other qualified voters absent on election
day from the district or precinct of their residence.

Such statutes are regarded as conferring a privilege and not a right, or an absolute right. When the
legislature chooses to grant the right by statute, it must operate with equality among all the class to
which it is granted; but statutes of this nature may be limited in their application to particular types of
elections. The statutes should be construed in the light of any constitutional provisions affecting
registration and elections, and with due regard to their texts prior to amendment and to predecessor
statutes and the decisions thereunder; they should also be construed in the light of the circumstances
under which they were enacted; and so as to carry out the objects thereof, if this can be done without
doing violence to their provisions and mandates. Further, in passing on statutes regulating absentee
voting, the court should look to the whole and every part of the election laws, the intent of the entire
plan, and reasons and spirit of their adoption, and try to give effect to every portion thereof.
[29]
(Emphasis supplied)

Ordinarily, an absentee is not a resident and vice versa; a person cannot be at the same time, both a
resident and an absentee.[30] However, under our election laws and the countless pronouncements of the
Court pertaining to elections, an absentee remains attached to his residence in the Philippines as
residence is considered synonymous with domicile.
In Romualdez-Marcos,[31] the Court enunciated:

Article 50 of the Civil Code decrees that [f]or the exercise of civil rights and the fulfillment of civil
obligations, the domicile of natural persons is their place of habitual residence. In Ong vs. Republic, this
court took the concept of domicile to mean an individuals permanent home, a place to which, whenever
absent for business or for pleasure, one intends to return, and depends on facts and circumstances in
the sense that they disclose intent. Based on the foregoing, domicile includes the twin elements of the
fact of residing or physical presence in a fixed place and animus manendi, or the intention of returning
there permanently.
Residence, in its ordinary conception, implies the factual relationship of an individual to a certain
place. It is the physical presence of a person in a given area, community or country. The essential
distinction between residence and domicile in law is that residence involves the intent to leave when the
purpose for which the resident has taken up his abode ends. One may seek a place for purposes such as
pleasure, business, or health. If a persons intent be to remain, it becomes his domicile; if his intent is to
leave as soon as his purpose is established it is residence. It is thus, quite perfectly normal for an
individual to have different residences in various places. However, a person can only have a single
domicile, unless, for various reasons, he successfully abandons his domicile in favor of another domicile
of choice. In Uytengsu vs. Republic, we laid this distinction quite clearly:

There is a difference between domicile and residence. Residence is used to indicate a place of abode,
whether permanent or temporary; domicile denotes a fixed permanent residence to which, when
absent, one has the intention of returning. A man may have a residence in one place and a domicile in
another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an
unlimited time. A man can have but one domicile for the same purpose at any time, but he may have
numerous places of residence. His place of residence is generally his place of domicile, but it is not by
any means necessarily so since no length of residence without intention of remaining will constitute
domicile.

For political purposes the concepts of residence and domicile are dictated by the peculiar criteria of
political laws. As these concepts have evolved in our election law, what has clearly and unequivocally
emerged is the fact that residence for election purposes is used synonymously with domicile.
[32]
(Emphasis supplied)

Aware of the domiciliary legal tie that links an overseas Filipino to his residence in this country, the
framers of the Constitution considered the circumstances that impelled them to require Congress to
establish a system for overseas absentee voting, thus:

MR. OPLE. With respect to Section 1, it is not clear whether the right of suffrage, which here has a
residential restriction, is not denied to citizens temporarily residing or working abroad. Based on the
statistics of several government agencies, there ought to be about two million such Filipinos at this time.
Commissioner Bernas had earlier pointed out that these provisions are really lifted from the two
previous Constitutions of 1935 and 1973, with the exception of the last paragraph. They could not
therefore have foreseen at that time the phenomenon now described as the Filipino labor force
explosion overseas.

According to government data, there are now about 600,000 contract workers and employees, and
although the major portions of these expatriate communities of workers are to be found in the Middle
East, they are scattered in 177 countries in the world.

In a previous hearing of the Committee on Constitutional Commissions and Agencies, the Chairman of
the Commission on Elections, Ramon Felipe, said that there was no insuperable obstacle to making
effective the right of suffrage for Filipinos overseas. Those who have adhered to their Filipino citizenship
notwithstanding strong temptations are exposed to embrace a more convenient foreign citizenship. And
those who on their own or under pressure of economic necessity here, find that they have to detach
themselves from their families to work in other countries with definite tenures of employment. Many of
them are on contract employment for one, two, or three years. They have no intention of changing their
residence on a permanent basis, but are technically disqualified from exercising the right of suffrage in
their countries of destination by the residential requirement in Section 1 which says:

Suffrage shall be exercised by all citizens of the Philippines not otherwise disqualified by law, who are
eighteen years of age or over, and who shall have resided in the Philippines for at least one year and in
the place wherein they propose to vote for at least six months preceding the election.

I, therefore, ask the Committee whether at the proper time they might entertain an amendment that will
make this exercise of the right to vote abroad for Filipino citizens an effective, rather than merely a
nominal right under this proposed Constitution.

FR. BERNAS. Certainly, the Committee will consider that. But more than just saying that, I would like to
make a comment on the meaning of residence in the Constitution because I think it is a concept that has
been discussed in various decisions of the Supreme Court, particularly in the case of Faypon vs.
Quirino, a 1954 case which dealt precisely with the meaning of residence in the Election Law. Allow me
to quote:

A citizen may leave the place of his birth to look for greener pastures, as the saying goes, to improve his
lot and that, of course, includes study in other places, practice of his avocation, reengaging in
business. When an election is to be held, the citizen who left his birthplace to improve his lot may decide
to return to his native town, to cast his ballot, but for professional or business reasons, or for any other
reason, he may not absent himself from the place of his professional or business activities.

So, they are here registered as voters as he has the qualifications to be one, and is not willing to give up
or lose the opportunity to choose the officials who are to run the government especially in national
elections. Despite such registration, the animus revertendi to his home, to his domicile or residence of
origin has not forsaken him.

This may be the explanation why the registration of a voter in a place other than his residence of origin
has not been deemed sufficient to consider abandonment or loss of such residence of origin.

In other words, residence in this provision refers to two residence qualifications: residence in the
Philippines and residence in the place where he will vote. As far as residence in the Philippines is
concerned, the word residence means domicile, but as far as residence in the place where he will
actually cast his ballot is concerned, the meaning seems to be different. He could have a domicile
somewhere else and yet he is a resident of a place for six months and he is allowed to vote there. So that
there may be serious constitutional obstacles to absentee voting, unless the vote of the person who is
absent is a vote which will be considered as cast in the place of his domicile.

MR. OPLE. Thank you for citing the jurisprudence.

It gives me scant comfort thinking of about two million Filipinos who should enjoy the right of suffrage,
at least a substantial segment of these overseas Filipino communities. The Committee, of course, is
aware that when this Article of the Constitution explicitly and unequivocally extends the right of effective
suffrage to Filipinos abroad, this will call for a logistical exercise of global proportions. In effect, this will
require budgetary and administrative commitments on the part of the Philippine government, mainly
through the COMELEC and the Ministry of Foreign Affairs, and perhaps, a more extensive elaboration of
this mechanism that will be put in place to make effective the right to vote. Therefore, seeking shelter in
some wise jurisprudence of the past may not be sufficient to meet the demands of the right of suffrage
for Filipinos abroad that I have mentioned. But I want to thank the Committee for saying that an
amendment to this effect may be entertained at the proper time. . . . . . . . . .

[33]
(Emphasis supplied)
Thus, the Constitutional Commission recognized the fact that while millions of Filipinos reside
abroad principally for economic reasons and hence they contribute in no small measure to the economic
uplift of this country, their voices are marginal insofar as the choice of this countrys leaders is concerned.
The Constitutional Commission realized that under the laws then existing and considering the
novelty of the system of absentee voting in this jurisdiction, vesting overseas Filipinos with the right to
vote would spawn constitutional problems especially because the Constitution itself provides for the
residency requirement of voters:

MR. REGALADO. Before I act on that, may I inquire from Commissioner Monsod if the term absentee
voting also includes transient voting; meaning, those who are, let us say, studying in Manila need not go
back to their places of registration, for instance, in Mindanao, to cast their votes.

MR. MONSOD. I think our provision is for absentee voting by Filipinos abroad.

MR. REGALADO. How about those people who cannot go back to the places where they are registered?

MR. MONSOD. Under the present Election Code, there are provisions for allowing students and military
people who are temporarily in another place to register and vote. I believe that those situations can be
covered by the Omnibus Election Code. The reason we want absentee voting to be in the Constitution
as a mandate to the legislature is that there could be inconsistency on the residence rule if it is just a
question of legislation by Congress.So, by allowing it and saying that this is possible, then legislation
can take care of the rest.[34] (Emphasis supplied)

Thus, Section 2, Article V of the Constitution came into being to remove any doubt as to the
inapplicability of the residency requirement in Section 1. It is precisely to avoid any problems that could
impede the implementation of its pursuit to enfranchise the largest number of qualified Filipinos who
are not in the Philippines that the Constitutional Commission explicitly mandated Congress to provide a
system for overseas absentee voting.
The discussion of the Constitutional Commission on the effect of the residency requirement
prescribed by Section 1, Article V of the Constitution on the proposed system of absentee voting for
qualified Filipinos abroad is enlightening:

MR. SUAREZ. May I just be recognized for a clarification. There are certain qualifications for the exercise
of the right of suffrage like having resided in the Philippines for at least one year and in the place where
they propose to vote for at least six months preceding the elections. What is the effect of these
mandatory requirements on the matter of the exercise of the right of suffrage by the absentee voters like
Filipinos abroad?

THE PRESIDENT. Would Commissioner Monsod care to answer?


MR. MONSOD. I believe the answer was already given by Commissioner Bernas, that the domicile
requirements as well as the qualifications and disqualifications would be the same.

THE PRESIDENT. Are we leaving it to the legislature to devise the system?

FR. BERNAS. I think there is a very legitimate problem raised there.

THE PRESIDENT. Yes.

MR. BENGZON. I believe Commissioner Suarez is clarified.

FR. BERNAS. But I think it should be further clarified with regard to the residence requirement or the
place where they vote in practice; the understanding is that it is flexible. For instance, one might be a
resident of Naga or domiciled therein, but he satisfies the requirement of residence in Manila, so he is
able to vote in Manila.

MR. TINGSON. Madam President, may I then suggest to the Committee to change the word Filipinos to
QUALIFIED FILIPINO VOTERS. Instead of VOTING BY FILIPINOS ABROAD, it should be QUALIFIED FILIPINO
VOTERS. If the Committee wants QUALIFIED VOTERS LIVING ABROAD, would that not satisfy the
requirement?

THE PRESIDENT. What does Commissioner Monsod say?

MR. MONSOD. Madam President, I think I would accept the phrase QUALIFIED FILIPINOS ABROAD
because QUALIFIED would assume that he has the qualifications and none of the disqualifications to
vote.

MR. TINGSON. That is right. So does the Committee accept?

FR. BERNAS. QUALIFIED FILIPINOS ABROAD?

THE PRESIDENT. Does the Committee accept the amendment?

MR. REGALADO. Madam President.

THE PRESIDENT. Commissioner Regalado is recognized.

MR. REGALADO. When Commissioner Bengzon asked me to read my proposed amendment, I specifically
stated that the National Assembly shall prescribe a system which will enable qualified citizens,
temporarily absent from the Philippines, to vote. According to Commissioner Monsod, the use of the
phrase absentee voting already took that into account as its meaning. That is referring to qualified
Filipino citizens temporarily abroad.

MR. MONSOD. Yes, we accepted that. I would like to say that with respect to registration we will leave it
up to the legislative assembly, for example, to require where the registration is. If it is, say, members of
the diplomatic corps who may be continuously abroad for a long time, perhaps, there can be a system of
registration in the embassies. However, we do not like to preempt the legislative assembly.
THE PRESIDENT. Just to clarify, Commissioner Monsods amendment is only to provide a system.

MR. MONSOD. Yes.

THE PRESIDENT. The Commissioner is not stating here that he wants new qualifications for these
absentee voters.

MR. MONSOD. That is right. They must have the qualifications and none of the disqualifications.

THE PRESIDENT. It is just to devise a system by which they can vote.

MR. MONSOD. That is right, Madam President.[35] (Emphasis supplied)

Clearly therefrom, the intent of the Constitutional Commission is to entrust to Congress the
responsibility of devising a system of absentee voting. The qualifications of voters as stated in Section 1
shall remain except for the residency requirement. This is in fact the reason why the Constitutional
Commission opted for the term qualified Filipinos abroad with respect to the system of absentee voting
that Congress should draw up. As stressed by Commissioner Monsod, by the use of the
adjective qualified with respect to Filipinos abroad, the assumption is that they have the qualifications
and none of the disqualifications to vote. In fine-tuning the provision on absentee voting, the
Constitutional Commission discussed how the system should work:

MR. SUAREZ. For clarification purposes, we just want to state for the record that in the case of qualified
Filipino citizens residing abroad and exercising their right of suffrage, they can cast their votes for the
candidates in the place where they were registered to vote in the Philippines. So as to avoid any
complications, for example, if they are registered in Angeles City, they could not vote for a mayor in Naga
City.

In other words, if that qualified voter is registered in Angeles City, then he can vote only for the local and
national candidates in Angeles City. I just want to make that clear for the record.

MR. REGALADO. Madam President.


THE PRESIDENT. What does Commissioner Regalado say?
MR. REGALADO. I just want to make a note on the statement of Commissioner Suarez that this
envisions Filipinos residing abroad. The understanding in the amendment is that the
Filipino is temporarily abroad. He may not be actually residing abroad; he may just be
there on a business trip. It just so happens that the day before the elections he has to fly
to the United States, so he could not cast his vote. He is temporarily abroad, but not
residing there. He stays in a hotel for two days and comes back. This is not limited only to
Filipinos temporarily residing abroad. But as long as he is temporarily abroad on the
date of the elections, then he can fall within the prescription of Congress in that
situation.
MR. SUAREZ. I thank the Commissioner for his further clarification. Precisely, we need this
clarification on record.
MR. MONSOD. Madam President, to clarify what we mean by temporarily abroad, it need not
be on very short trips. One can be abroad on a treaty traders visa. Therefore, when we
talk about registration, it is possible that his residence is in Angeles and he would be able
to vote for the candidates in Angeles, but Congress or the Assembly may provide the
procedure for registration, like listing ones name, in a registry list in the embassy
abroad. That is still possible under the system.
FR. BERNAS. Madam President, just one clarification if Commissioner Monsod agrees with this.
Suppose we have a situation of a child of a diplomatic officer who reaches the voting age while
living abroad and he has never registered here. Where will he register? Will he be a
registered voter of a certain locality in the Philippines?
MR. MONSOD. Yes, it is possible that the system will enable that child to comply with the
registration requirements in an embassy in the United States and his name is then entered
in the official registration book in Angeles City, for instance.
FR. BERNAS. In other words, he is not a registered voter of Los Angeles, but a registered voter
of a locality here.
MR. MONSOD. That is right. He does not have to come home to the Philippines to comply with
the registration procedure here.
FR. BERNAS. So, he does not have to come home.
MR. BENGZON. Madam President, the Floor Leader wishes to inquire if there are more
clarifications needed from the body.
Also, the Floor Leader is happy to announce that there are no more registered Commissioners to
propose amendments. So I move that we close the period of amendments.
[36]
(Emphasis supplied)
It is clear from these discussions of the members of the Constitutional Commission that they
intended to enfranchise as much as possible all Filipino citizens abroad who have not abandoned their
domicile of origin. The Commission even intended to extend to young Filipinos who reach voting age
abroad whose parents domicile of origin is in the Philippines, and consider them qualified as voters for
the first time.
It is in pursuance of that intention that the Commission provided for Section 2 immediately after the
residency requirement of Section 1. By the doctrine of necessary implication in statutory construction,
which may be applied in construing constitutional provisions, [37] the strategic location of Section 2
indicates that the Constitutional Commission provided for an exception to the actual residency
requirement of Section 1 with respect to qualified Filipinos abroad. The same Commission has in effect
declared that qualified Filipinos who are not in the Philippines may be allowed to vote even though they
do not satisfy the residency requirement in Section 1, Article V of the Constitution.
That Section 2 of Article V of the Constitution is an exception to the residency requirement found in
Section 1 of the same Article was in fact the subject of debate when Senate Bill No. 2104, which became
R.A. No. 9189, was deliberated upon on the Senate floor, thus:
Senator Arroyo. Mr. President, this bill should be looked into in relation to the constitutional
provisions. I think the sponsor and I would agree that the Constitution is supreme in any
statute that we may enact.
Let me read Section 1, Article V, of the Constitution entitled, Suffrage. It says:

Section 1. Suffrage may be exercised by all citizens of the Philippines not otherwise disqualified by law,
who are at least eighteen years of age, and who shall have resided in the Philippines for at least one year
and in the place wherein they propose to vote for at least six months immediately preceding the
election.

Now, Mr. President, the Constitution says, who shall have resided in the Philippines. They are
permanent immigrants. They have changed residence so they are barred under the
Constitution. This is why I asked whether this committee amendment which in fact does
not alter the original text of the bill will have any effect on this?
Senator Angara. Good question, Mr. President. And this has been asked in various fora. This is
in compliance with the Constitution. One, the interpretation here of residence is
synonymous with domicile.
As the gentleman and I know, Mr. President, domicile is the intent to return to ones home . And
the fact that a Filipino may have been physically absent from the Philippines and may
be physically a resident of the United States, for example, but has a clear intent to
return to the Philippines, will make him qualified as a resident of the Philippines under
this law.
This is consistent, Mr. President, with the constitutional mandate that we that Congress must
provide a franchise to overseas Filipinos.
If we read the Constitution and the suffrage principle literally as demanding physical
presence, then there is no way we can provide for offshore voting to our
offshore kababayan, Mr. President.
Senator Arroyo. Mr. President, when the Constitution says, in Section 2 of Article V, it reads:
The Congress shall provide a system for securing the secrecy and sanctity of the ballot as
well as a system for absentee voting by qualified Filipinos abroad.
The key to this whole exercise, Mr. President, is qualified. In other words, anything that we
may do or say in granting our compatriots abroad must be anchored on the proposition
that they are qualified. Absent the qualification, they cannot vote. And residents (sic) is
a qualification.
I will lose votes here from permanent residents so-called green-card holders, but the
Constitution is the Constitution. We cannot compromise on this. The Senate cannot be a
party to something that would affect or impair the Constitution.
Look at what the Constitution says In the place wherein they propose to vote for at least six
months immediately preceding the election.
Mr. President, all of us here have run (sic) for office.
I live in Makati. My neighbor is Pateros where Senator Cayetano lives. We are separated only
by a creek. But one who votes in Makati cannot vote in Pateros unless he resides in
Pateros for six months. That is how restrictive our Constitution is. I am not talking even
about the Election Code. I am talking about the Constitution.
As I have said, if a voter in Makati would want to vote in Pateros, yes, he may do so. But he
must do so, make the transfer six months before the election, otherwise, he is not
qualified to vote.
That is why I am raising this point because I think we have a fundamental difference here.
Senator Angara. It is a good point to raise, Mr. President. But it is a point already well-debated
even in the constitutional commission of 1986. And the reason Section 2 of Article V was
placed immediately after the six-month/one-year residency requirement is to
demonstrate unmistakably that Section 2 which authorizes absentee voting is an
exception to the six-month/one-year residency requirement. That is the first principle,
Mr. President, that one must remember.
The second reason, Mr. President, is that under our jurisprudence and I think this is so well-
entrenched that one need not argue about it residency has been interpreted as
synonymous with domicile.
But the third more practical reason, Mr. President, is, if we follow the interpretation of the
gentleman, then it is legally and constitutionally impossible to give a franchise to vote to
overseas Filipinos who do not physically live in the country, which is quite ridiculous
because that is exactly the whole point of this exercise to enfranchise them and
empower them to vote.
[38]
(Emphasis supplied)
Accordingly, Section 4 of R.A. No. 9189 provides for the coverage of the absentee voting process, to
wit:

SEC. 4. Coverage. All citizens of the Philippines abroad, who are not otherwise disqualified by law, at
least eighteen (18) years of age on the day of elections, may vote for president, vice-president, senators
and party-list representatives.

which does not require physical residency in the Philippines; and Section 5 of the assailed law which
enumerates those who are disqualified, to wit:

SEC. 5. Disqualifications. The following shall be disqualified from voting under this Act:

a) Those who have lost their Filipino citizenship in accordance with Philippine laws;

b) Those who have expressly renounced their Philippine citizenship and who have pledged allegiance to
a foreign country;

c) Those who have committed and are convicted in a final judgment by a court or tribunal of an offense
punishable by imprisonment of not less than one (1) year, including those who have committed and
been found guilty of Disloyalty as defined under Article 137 of the Revised Penal Code, such disability not
having been removed by plenary pardon or amnesty: Provided, however, That any person disqualified to
vote under this subsection shall automatically acquire the right to vote upon expiration of five (5) years
after service of sentence; Provided, further, That the Commission may take cognizance of final judgments
issued by foreign courts or tribunals only on the basis of reciprocity and subject to the formalities and
processes prescribed by the Rules of Court on execution of judgments;
d) An immigrant or a permanent resident who is recognized as such in the host country, unless he/she
executes, upon registration, an affidavit prepared for the purpose by the Commission declaring that
he/she shall resume actual physical permanent residence in the Philippines not later than three (3) years
from approval of his/her registration under this Act. Such affidavit shall also state that he/she has not
applied for citizenship in another country. Failure to return shall be cause for the removal of the name of
the immigrant or permanent resident from the National Registry of Absentee Voters and his/her
permanent disqualification to vote in absentia.

e) Any citizen of the Philippines abroad previously declared insane or incompetent by competent
authority in the Philippines or abroad, as verified by the Philippine embassies, consulates or foreign
service establishments concerned, unless such competent authority subsequently certifies that such
person is no longer insane or incompetent.

As finally approved into law, Section 5(d) of R.A. No. 9189 specifically disqualifies
an immigrant or permanent resident who is recognized as such in the host country because immigration
or permanent residence in another country implies renunciation of ones residence in his country of
origin. However, same Section allows an immigrant and permanent resident abroad to register as voter
for as long as he/she executes an affidavit to show that he/she has not abandoned his domicile in
pursuance of the constitutional intent expressed in Sections 1 and 2 of Article V that all citizens of the
Philippines not otherwise disqualified by law must be entitled to exercise the right of suffrage and, that
Congress must establish a system for absentee voting; for otherwise, if actual, physical residence in the
Philippines is required, there is no sense for the framers of the Constitution to mandate Congress to
establish a system for absentee voting.
Contrary to the claim of petitioner, the execution of the affidavit itself is not the enabling or
enfranchising act. The affidavit required in Section 5(d) is not only proof of the intention of the
immigrant or permanent resident to go back and resume residency in the Philippines, but more
significantly, it serves as an explicit expression that he had not in fact abandoned his domicile of origin.
Thus, it is not correct to say that the execution of the affidavit under Section 5(d) violates the
Constitution that proscribes provisional registration or a promise by a voter to perform a condition to be
qualified to vote in a political exercise.
To repeat, the affidavit is required of immigrants and permanent residents abroad because by their
status in their host countries, they are presumed to have relinquished their intent to return to this
country; thus, without the affidavit, the presumption of abandonment of Philippine domicile shall
remain.
Further perusal of the transcripts of the Senate proceedings discloses another reason why the
Senate required the execution of said affidavit. It wanted the affiant to exercise the option to return or to
express his intention to return to his domicile of origin and not to preempt that choice by
legislation. Thus:
Senator Villar. Yes, we are going back.
It states that: For Filipino immigrants and those who have acquired permanent resident status
abroad, a requirement for the registration is the submission of a Sworn Declaration of
Intent to Return duly sworn before any Philippine embassy or consulate official authorized
to administer oath
Mr. President, may we know the rationale of this provision? Is the purpose of this Sworn
Declaration to include only those who have the intention of returning to be qualified to
exercise the right of suffrage? What if the Filipino immigrant has no purpose of returning?
Is he automatically disbarred from exercising this right to suffrage?
Senator Angara. The rationale for this, Mr. President, is that we want to be expansive and all-
inclusive in this law. That as long as he is a Filipino, no matter whether he is a green-
card holder in the U.S. or not, he will be authorized to vote. But if he is already a green-
card holder, that means he has acquired permanent residency in the United States, then
he must indicate an intention to return. This is what makes for the definition of
domicile. And to acquire the vote, we thought that we would require the immigrants and
the green-card holders . . . Mr. President, the three administration senators are leaving,
maybe we may ask for a vote [Laughter].
Senator Villar. For a merienda, Mr. President.
Senator Angara. Mr. President, going back to the business at hand. The rationale for the
requirement that an immigrant or a green-card holder should file an affidavit that he will
go back to the Philippines is that, if he is already an immigrant or a green-card holder, that
means he may not return to the country any more and that contradicts the definition of
domicile under the law.
But what we are trying to do here, Mr. President, is really provide the choice to the voter. The
voter, after consulting his lawyer or after deliberation within the family, may decide No, I
think we are risking our permanent status in the United States if we file an affidavit that
we want to go back. But we want to give him the opportunity to make that decision. We
do not want to make that decision for him. [39](Emphasis supplied)
The jurisprudential declaration in Caasi vs. Court of Appeals that green card holders are disqualified
to run for any elective office finds no application to the present case because the Caasi case did not, for
obvious reasons, consider the absentee voting rights of Filipinos who are immigrants and permanent
residents in their host countries.
In the advent of The Overseas Absentee Voting Act of 2003 or R.A. 9189, they may still be
considered as a qualified citizen of the Philippines abroad upon fulfillment of the requirements of
registration under the new law for the purpose of exercising their right of suffrage.
It must be emphasized that Section 5(d) does not only require an affidavit or a promise to resume
actual physical permanent residence in the Philippines not later than three years from approval of
his/her registration, the Filipinos abroad must also declare that they have not applied for citizenship in
another country. Thus, they must return to the Philippines; otherwise, their failure to return shall be
cause for the removal of their names from the National Registry of Absentee Voters and his/her
permanent disqualification to vote in absentia.
Thus, Congress crafted a process of registration by which a Filipino voter permanently residing
abroad who is at least eighteen years old, not otherwise disqualified by law, who has not relinquished
Philippine citizenship and who has not actually abandoned his/her intentions to return to his/her
domicile of origin, the Philippines, is allowed to register and vote in the Philippine embassy, consulate or
other foreign service establishments of the place which has jurisdiction over the country where he/she
has indicated his/her address for purposes of the elections, while providing for safeguards to a clean
election.
Thus, Section 11 of R.A. No. 9189 provides:

SEC. 11. Procedure for Application to Vote in Absentia.

11.1. Every qualified citizen of the Philippines abroad whose application for registration has been
approved, including those previously registered under Republic Act No. 8189, shall, in every national
election, file with the officer of the embassy, consulate or other foreign service establishment authorized
by the Commission, a sworn written application to vote in a form prescribed by the Commission. The
authorized officer of such embassy, consulate or other foreign service establishment shall transmit to the
Commission the said application to vote within five (5) days from receipt thereof. The application form
shall be accomplished in triplicate and submitted together with the photocopy of his/her overseas
absentee voter certificate of registration.

11.2. Every application to vote in absentia may be done personally at, or by mail to, the embassy,
consulate or foreign service establishment, which has jurisdiction over the country where he/she has
indicated his/her address for purposes of the elections.

11.3. Consular and diplomatic services rendered in connection with the overseas absentee voting
processes shall be made available at no cost to the overseas absentee voter.

Contrary to petitioners claim that Section 5(d) circumvents the Constitution, Congress enacted the
law prescribing a system of overseas absentee voting in compliance with the constitutional
mandate. Such mandate expressly requires that Congress provide a system of absentee voting that
necessarily presupposes that the qualified citizen of the Philippines abroad is not physically present in
the country. The provisions of Sections 5(d) and 11 are components of the system of overseas absentee
voting established by R.A. No. 9189. The qualified Filipino abroad who executed the affidavit is deemed
to have retained his domicile in the Philippines. He is presumed not to have lost his domicile by his
physical absence from this country. His having become an immigrant or permanent resident of his host
country does not necessarily imply an abandonment of his intention to return to his domicile of origin,
the Philippines. Therefore, under the law, he must be given the opportunity to express that he has not
actually abandoned his domicile in the Philippines by executing the affidavit required by Sections 5(d)
and 8(c) of the law.
Petitioners speculative apprehension that the implementation of Section 5(d) would affect the
credibility of the elections is insignificant as what is important is to ensure that all those who possess the
qualifications to vote on the date of the election are given the opportunity and permitted to freely do
so. The COMELEC and the Department of Foreign Affairs have enough resources and talents to ensure
the integrity and credibility of any election conducted pursuant to R.A. No. 9189.
As to the eventuality that the Filipino abroad would renege on his undertaking to return to the
Philippines, the penalty of perpetual disenfranchisement provided for by Section 5(d) would suffice to
serve as deterrence to non-compliance with his/her undertaking under the affidavit.
Petitioner argues that should a sizable number of immigrants renege on their promise to return, the
result of the elections would be affected and could even be a ground to contest the proclamation of the
winning candidates and cause further confusion and doubt on the integrity of the results of the
election. Indeed, the probability that after an immigrant has exercised the right to vote, he shall opt to
remain in his host country beyond the third year from the execution of the affidavit, is not
farfetched. However, it is not for this Court to determine the wisdom of a legislative exercise. As
expressed in Taada vs. Tuvera,[40] the Court is not called upon to rule on the wisdom of the law or to
repeal it or modify it if we find it impractical.
Congress itself was conscious of said probability and in fact, it has addressed the expected
problem. Section 5(d) itself provides for a deterrence which is that the Filipino who fails to return as
promised stands to lose his right of suffrage. Under Section 9, should a registered overseas absentee
voter fail to vote for two consecutive national elections, his name may be ordered removed from the
National Registry of Overseas Absentee Voters.
Other serious legal questions that may be raised would be: what happens to the votes cast by the
qualified voters abroad who were not able to return within three years as promised? What is the effect
on the votes cast by the non-returnees in favor of the winning candidates? The votes cast by qualified
Filipinos abroad who failed to return within three years shall not be invalidated because they were
qualified to vote on the date of the elections, but their failure to return shall be cause for the removal of
the names of the immigrants or permanent residents from the National Registry of Absentee Voters and
their permanent disqualification to vote in absentia.
In fine, considering the underlying intent of the Constitution, the Court does not find Section 5(d) of
R.A. No. 9189 as constitutionally defective.
B. Is Section 18.5 of R.A. No. 9189 in relation to Section 4 of the same Act in contravention of Section
4, Article VII of the Constitution?
Section 4 of R.A. No. 9189 provides that the overseas absentee voter may vote for president, vice-
president, senators and party-list representatives.
Section 18.5 of the same Act provides:

SEC. 18. On-Site Counting and Canvassing.

.........

18. 5 The canvass of votes shall not cause the delay of the proclamation of a winning candidate if the
outcome of the election will not be affected by the results thereof. Notwithstanding the foregoing, the
Commission is empowered to order the proclamation of winning candidates despite the fact that the
scheduled election has not taken place in a particular country or countries, if the holding of elections
therein has been rendered impossible by events, factors and circumstances peculiar to such country or
countries, in which events, factors and circumstances are beyond the control or influence of the
Commission. (Emphasis supplied)

Petitioner claims that the provision of Section 18.5 of R.A. No. 9189 empowering the COMELEC to
order the proclamation of winning candidates insofar as it affects the canvass of votes and proclamation
of winning candidates for president and vice-president, is unconstitutional because it violates the
following provisions of paragraph 4, Section 4 of Article VII of the Constitution:

SEC. 4 . . .

The returns of every election for President and Vice-President, duly certified by the board of canvassers
of each province or city, shall be transmitted to the Congress, directed to the President of the
Senate. Upon receipt of the certificates of canvass, the President of the Senate shall, not later than thirty
days after the day of the election, open all the certificates in the presence of the Senate and the House
of Representatives in joint public session, and the Congress, upon determination of the authenticity and
due execution thereof in the manner provided by law, canvass the votes.

The person having the highest number of votes shall be proclaimed elected, but in case two or more
shall have an equal and highest number of votes, one of them shall forthwith be chosen by the vote of a
majority of all the Members of both Houses of the Congress, voting separately.

The Congress shall promulgate its rules for the canvassing of the certificates.

...

which gives to Congress the duty to canvass the votes and proclaim the winning candidates for president
and vice-president.
The Solicitor General asserts that this provision must be harmonized with paragraph 4, Section 4,
Article VII of the Constitution and should be taken to mean that COMELEC can only proclaim the winning
Senators and party-list representatives but not the President and Vice-President. [41]
Respondent COMELEC has no comment on the matter.
Indeed, the phrase, proclamation of winning candidates, in Section 18.5 of R.A. No. 9189 is far too
sweeping that it necessarily includes the proclamation of the winning candidates for the presidency and
the vice-presidency.
Section 18.5 of R.A. No. 9189 appears to be repugnant to Section 4, Article VII of the Constitution
only insofar as said Section totally disregarded the authority given to Congress by the Constitution to
proclaim the winning candidates for the positions of president and vice-president.
In addition, the Court notes that Section 18.4 of the law, to wit:

18.4. . . . Immediately upon the completion of the canvass, the chairman of the Special Board of
Canvassers shall transmit via facsimile, electronic mail, or any other means of transmission equally safe
and reliable the Certificates of Canvass and the Statements of Votes to the Commission, . . . [Emphasis
supplied]

clashes with paragraph 4, Section 4, Article VII of the Constitution which provides that the returns of
every election for President and Vice-President shall be certified by the board of canvassers to Congress.
Congress could not have allowed the COMELEC to usurp a power that constitutionally belongs to it
or, as aptly stated by petitioner, to encroach on the power of Congress to canvass the votes for president
and vice-president and the power to proclaim the winners for the said positions. The provisions of the
Constitution as the fundamental law of the land should be read as part of The Overseas Absentee Voting
Act of 2003 and hence, the canvassing of the votes and the proclamation of the winning candidates for
president and vice-president for the entire nation must remain in the hands of Congress.
C. Are Sections 19 and 25 of R.A. No. 9189 in violation of Section 1, Article IX-A of the Constitution?
Petitioner avers that Sections 19 and 25 of R.A. No. 9189 violate Article IX-A (Common Provisions) of
the Constitution, to wit:
Section 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit. (Emphasis supplied)

He submits that the creation of the Joint Congressional Oversight Committee with the power to review,
revise, amend and approve the Implementing Rules and Regulations promulgated by the COMELEC, R.A.
No. 9189 intrudes into the independence of the COMELEC which, as a constitutional body, is not under
the control of either the executive or legislative departments of government; that only the COMELEC
itself can promulgate rules and regulations which may be changed or revised only by the majority of its
members; and that should the rules promulgated by the COMELEC violate any law, it is the Court that
has the power to review the same via the petition of any interested party, including the legislators.
It is only on this question that respondent COMELEC submitted its Comment. It agrees with the
petitioner that Sections 19 and 25 of R.A. No. 9189 are unconstitutional. Like the petitioner, respondent
COMELEC anchors its claim of unconstitutionality of said Sections upon Section 1, Article IX-A of the
Constitution providing for the independence of the constitutional commissions such as the COMELEC. It
asserts that its power to formulate rules and regulations has been upheld in Gallardo vs. Tabamo, Jr.
[42]
where this Court held that the power of the COMELEC to formulate rules and regulations is implicit in
its power to implement regulations under Section 2(1) of Article IX-C [43] of the Constitution. COMELEC
joins the petitioner in asserting that as an independent constitutional body, it may not be subject to
interference by any government instrumentality and that only this Court may review COMELEC rules and
only in cases of grave abuse of discretion.
The COMELEC adds, however, that another provision, vis--vis its rule-making power, to wit:

SEC. 17. Voting by Mail.

17.1. For the May, 2004 elections, the Commission shall authorize voting by mail in not more than three
(3) countries, subject to the approval of the Congressional Oversight Committee. Voting by mail may be
allowed in countries that satisfy the following conditions:

a) Where the mailing system is fairly well-developed and secure to prevent occasion for fraud;

b) Where there exists a technically established identification system that would preclude multiple or
proxy voting; and

c) Where the system of reception and custody of mailed ballots in the embassies, consulates and other
foreign service establishments concerned are adequate and well-secured.

Thereafter, voting by mail in any country shall be allowed only upon review and approval of the Joint
Congressional Oversight Committee.

. . . . . . . . . (Emphasis supplied)

is likewise unconstitutional as it violates Section 1, Article IX-A mandating the independence of


constitutional commissions.
The Solicitor General takes exception to his prefatory statement that the constitutional challenge
must fail and agrees with the petitioner that Sections 19 and 25 are invalid and unconstitutional on the
ground that there is nothing in Article VI of the Constitution on Legislative Department that would as
much as imply that Congress has concurrent power to enforce and administer election laws with the
COMELEC; and by the principles of exclusio unius est exclusio alterius and expressum facit cessare
tacitum, the constitutionally enumerated powers of Congress circumscribe its authority to the exclusion
of all others.
The parties are unanimous in claiming that Sections 19, 25 and portions of Section 17.1 are
unconstitutional. Thus, there is no actual issue forged on this question raised by petitioner.
However, the Court finds it expedient to expound on the role of Congress through the Joint
Congressional Oversight Committee (JCOC) vis--vis the independence of the COMELEC, as a
constitutional body.
R.A. No. 9189 created the JCOC, as follows:

SEC. 25. Joint Congressional Oversight Committee. A Joint Congressional Oversight Committee is hereby
created, composed of the Chairman of the Senate Committee on Constitutional Amendments, Revision
of Codes and Laws, and seven (7) other Senators designated by the Senate President, and the Chairman
of the House Committee on Suffrage and Electoral Reforms, and seven (7) other Members of the House
of Representatives designated by the Speaker of the House of Representatives: Provided, That, of the
seven (7) members to be designated by each House of Congress, four (4) should come from the majority
and the remaining three (3) from the minority.

The Joint Congressional Oversight Committee shall have the power to monitor and evaluate the
implementation of this Act. It shall review, revise, amend and approve the Implementing Rules and
Regulations promulgated by the Commission. (Emphasis supplied)

SEC. 19. Authority of the Commission to Promulgate Rules. The Commission shall issue the necessary
rules and regulations to effectively implement the provisions of this Act within sixty (60) days from the
effectivity of this Act.The Implementing Rules and Regulations shall be submitted to the Joint
Congressional Oversight Committee created by virtue of this Act for prior approval.

. . . . . . . . . (Emphasis supplied)

Composed of Senators and Members of the House of Representatives, the Joint Congressional Oversight
Committee (JCOC) is a purely legislative body. There is no question that the authority of Congress to
monitor and evaluate the implementation of R.A. No. 9189 is geared towards possible amendments or
revision of the law itself and thus, may be performed in aid of its legislation.
However, aside from its monitoring and evaluation functions, R.A. No. 9189 gives to the JCOC the
following functions: (a) to review, revise, amend and approve the Implementing Rules and Regulations
(IRR) promulgated by the COMELEC [Sections 25 and 19]; and (b) subject to the approval of the JCOC
[Section 17.1], the voting by mail in not more than three countries for the May 2004 elections and in any
country determined by COMELEC.
The ambit of legislative power under Article VI of the Constitution is circumscribed by other
constitutional provisions. One such provision is Section 1 of Article IX-A of the 1987 Constitution
ordaining that constitutional commissions such as the COMELEC shall be independent.
Interpreting Section 1, Article X of the 1935 Constitution providing that there shall be
an independent COMELEC, the Court has held that [w]hatever may be the nature of the functions of the
Commission on Elections, the fact is that the framers of the Constitution wanted it to be independent
from the other departments of the Government. [44] In an earlier case, the Court elucidated:

The Commission on Elections is a constitutional body. It is intended to play a distinct and important part
in our scheme of government. In the discharge of its functions, it should not be hampered with
restrictions that would be fully warranted in the case of a less responsible organization. The Commission
may err, so may this court also. It should be allowed considerable latitude in devising means and
methods that will insure the accomplishment of the great objective for which it was created free, orderly
and honest elections. We may not agree fully with its choice of means, but unless these are clearly illegal
or constitute gross abuse of discretion, this court should not interfere. Politics is a practical matter, and
political questions must be dealt with realistically not from the standpoint of pure theory. The
Commission on Elections, because of its fact-finding facilities, its contacts with political strategists, and
its knowledge derived from actual experience in dealing with political controversies, is in a peculiarly
advantageous position to decide complex political questions.

[45]
(Emphasis supplied)
The Court has no general powers of supervision over COMELEC which is an independent body
except those specifically granted by the Constitution, that is, to review its decisions, orders and rulings.
[46]
In the same vein, it is not correct to hold that because of its recognized extensive legislative power to
enact election laws, Congress may intrude into the independence of the COMELEC by exercising
supervisory powers over its rule-making authority.
By virtue of Section 19 of R.A. No. 9189, Congress has empowered the COMELEC to issue the
necessary rules and regulations to effectively implement the provisions of this Act within sixty days from
the effectivity of this Act. This provision of law follows the usual procedure in drafting rules and
regulations to implement a law the legislature grants an administrative agency the authority to craft the
rules and regulations implementing the law it has enacted, in recognition of the administrative expertise
of that agency in its particular field of operation. [47] Once a law is enacted and approved, the legislative
function is deemed accomplished and complete. The legislative function may spring back to Congress
relative to the same law only if that body deems it proper to review, amend and revise the law, but
certainly not to approve, review, revise and amend the IRR of the COMELEC.
By vesting itself with the powers to approve, review, amend, and revise the IRR for The Overseas
Absentee Voting Act of 2003, Congress went beyond the scope of its constitutional authority. Congress
trampled upon the constitutional mandate of independence of the COMELEC. Under such a situation,
the Court is left with no option but to withdraw from its usual reticence in declaring a provision of law
unconstitutional.
The second sentence of the first paragraph of Section 19 stating that [t]he Implementing Rules and
Regulations shall be submitted to the Joint Congressional Oversight Committee created by virtue of this
Act for prior approval, and the second sentence of the second paragraph of Section 25 stating that [i]t
shall review, revise, amend and approve the Implementing Rules and Regulations promulgated by the
Commission, whereby Congress, in both provisions, arrogates unto itself a function not specifically
vested by the Constitution, should be stricken out of the subject statute for constitutional infirmity. Both
provisions brazenly violate the mandate on the independence of the COMELEC.
Similarly, the phrase, subject to the approval of the Congressional Oversight Committee in the first
sentence of Section 17.1 which empowers the Commission to authorize voting by mail in not more than
three countries for the May, 2004 elections; and the phrase, only upon review and approval of the Joint
Congressional Oversight Committee found in the second paragraph of the same section are
unconstitutional as they require review and approval of voting by mail in any country after the 2004
elections. Congress may not confer upon itself the authority to approve or disapprove the countries
wherein voting by mail shall be allowed, as determined by the COMELEC pursuant to the conditions
provided for in Section 17.1 of R.A. No. 9189. [48] Otherwise, Congress would overstep the bounds of its
constitutional mandate and intrude into the independence of the COMELEC.
During the deliberations, all the members of the Court agreed to adopt the separate opinion of
Justice Reynato S. Puno as part of the ponencia on the unconstitutionality of Sections 17.1, 19 and 25 of
R.A. No. 9189 insofar as they relate to the creation of and the powers given to the Joint Congressional
Oversight Committee.
WHEREFORE, the petition is partly GRANTED. The following portions of R.A. No. 9189 are declared
VOID for being UNCONSTITUTIONAL:

a) The phrase in the first sentence of the first paragraph of Section 17.1, to wit: subject to the
approval of the Joint Congressional Oversight Committee;

b) The portion of the last paragraph of Section 17.1, to wit: only upon review and approval of
the Joint Congressional Oversight Committee;

c) The second sentence of the first paragraph of Section 19, to wit: The Implementing Rules
and Regulations shall be submitted to the Joint Congressional Oversight Committee created
by virtue of this Act for prior approval; and

d) The second sentence in the second paragraph of Section 25, to wit: It shall review, revise, amend and
approve the Implementing Rules and Regulations promulgated by the Commission of the same law;

for being repugnant to Section 1, Article IX-A of the Constitution mandating the independence of
constitutional commission, such as COMELEC.
The constitutionality of Section 18.5 of R.A. No. 9189 is UPHELD with respect only to the authority
given to the COMELEC to proclaim the winning candidates for the Senators and party-list representatives
but not as to the power to canvass the votes and proclaim the winning candidates for President and
Vice-President which is lodged with Congress under Section 4, Article VII of the Constitution.
The constitutionality of Section 5(d) is UPHELD.
Pursuant to Section 30 of R.A. No. 9189, the rest of the provisions of said law continues to be in full
force and effect.
SO ORDERED.
Davide, Jr., C.J., and Corona, JJ., concur.
Quisumbing, J., on leave.
Tinga, J., no part.
Bellosillo, and Carpio, JJ., see concurring opinion.
Puno, Ynares-Santiago, and Callejo, Sr., JJ., see concurring and dissenting opinion.
Sandoval-Gutierrez, J., see concurring and dissenting opinion. On official leave.
Vitug, and Panganiban, JJ., see separate opinion.
Carpio-Morales, and Azcuna, JJ., see separate (concurring) opinion.
[1]
President Gloria Macapagal-Arroyo approved the law on 13 February 2003. It was published in the 16 February
2003 of Today and Daily Tribune.
[2]
PHILCONSA vs. Mathay, 124 Phil. 890 (1966); 18 SCRA 300, 306.
[3]
Id., citing PHILCONSA vs. Gimenez, 122 Phil. 894 (1965).
[4]
Sanidad vs. COMELEC, L-44640, 12 October 1976, 73 SCRA 333, 358-359 citing Pascual vs. Secretary of Public
Works, 110 Phil. 331 (1960).
[5]
G.R. No. 81311, 30 June 1988, 163 SCRA 371, 378.
[6]
Id., p. 378 cited in Tatad vs. The Secretary of the Department of Energy, 346 Phil. 321, 359 (1997).
[7]
338 Phil. 546, 574 (1997).
[8]
Separate Opinion of Kapunan, J. in Cruz vs. Secretary of Environment and Natural Resources, G.R. No. 135385, 6
December 2000, 347 SCRA 128, 256.
[9]
Luz Farms vs. Secretary of the Department of Agrarian Reform, G.R. No. 86889, 4 December 1990, 192 SCRA 51,
58-59.
[10]
See: Gonzales vs. COMELEC, G.R. No. 27833, 18 April 1969, 27 SCRA 835.
[11]
Kilosbayan, Inc. vs. Guingona, Jr. 232 SCRA 110 (1994) and Basco vs. Phil. Amusements and Gaming Corporation,
197 SCRA 52 (1991).
[12]
G.R. No. 88831, 8 November 1990, 191 SCRA 229.
[13]
Petition, p. 7.
[14]
Id., p. 9.
[15]
Per Comment and Memorandum filed by Atty. Jose P. Balbuena, Director IV, Law Department, COMELEC.
[16]
199 SCRA 692, 713 (1991).
[17]
Comment, p. 9 citing Joaquin G. Bernas, Today, 5 February 2003.
[18]
318 Phil. 329 (1995); 248 SCRA 300.
[19]
96 Phil. 294 (1954).
[20]
Comment, pp. 11-12.
[21]
Caasi Case, supra.
[22]
Comment, p. 13.
[23]
Manila Prince Hotel vs. GSIS, 335 Phil. 82, 101 (1997).
[24]
L-47771, 11 March 1978, 82 SCRA 30, 55 citing People vs. Vera, 65 Phil. 56, 95 (1937).
[25]
Salas vs. Hon. Jarencio, 150-B Phil. 670, 690 (1972) citing Morfe vs. Mutuc, G.R. No. L-20387, 31 January 1968,
22 SCRA 424.
[26]
82 Phil. 771, 775 (1949).
[27]
Separate opinion of Vitug, J. in Romualdez-Marcos vs. COMELEC, supra, p. 387, citing Marcelino vs. Cruz, Jr., L-
42428, 18 March 1983, 121 SCRA 51.
[28]
Luz Farms vs. Secretary of the Department of Agrarian Reform, supra, p. 56.
[29]
29 C.J.S. 575-577.
[30]
1 WORDS AND PHRASES 264 citing Savant vs. Mercadal, 66 So. 961, 962, 136 La. 248.
[31]
318 Phil. 329 (1995); 248 SCRA 300.
[32]
Id., pp. 323-324.
[33]
II RECORD OF THE CONSTITUTIONAL COMMISSION, pp. 11-12 (19 July 1986).
[34]
Id., p. 33.
[35]
Id., pp. 34-35.
[36]
Id., pp. 35-36.
[37]
Marcelino vs. Cruz, 121 SCRA 51, 56.
[38]
TRANSCRIPTS OF SENATE PROCEEDINGS (1 October 2002), pp. 10-12.
[39]
Transcripts of Senate Proceedings (6 August 2002), pp. 30-31.
[40]
146 SCRA 446, 454 (1986) cited in Garcia vs. Corona, 321 SCRA 218 (1999) and Pagpalain Haulers, Inc. vs.
Trajano, 310 SCRA 354 (1999).
[41]
Comment, p. 15.
[42]
G.R. No. 104848, 29 January 1993, 218 SCRA 253.
[43]
SEC. 2. The Commission on Elections shall exercise the following powers and functions:
(1) Enforce and administer all laws and regulations relative to the conduct of an election, plebiscite, initiative,
referendum, and recall.
...
[44]
Nacionalista Party vs. Bautista, 85 Phil. 101, 107 (1949).
[45]
Sumulong vs. Commission on Elections, 73 Phil. 288, 294-295 (1941), cited in Espino vs. Zaldivar, 129 Phil. 451,
474 (1967).
[46]
Nacionalista Party vs. De Vera, 85 Phil. 126, 129 (1949).
[47]
In Grego vs. COMELEC (340 Phil. 591, 606 [1997]), the Court said: The COMELEC as an administrative agency and
a specialized constitutional body charged with the enforcement and administration of all laws and
regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall, has more
than enough expertise in its field that its findings or conclusions are generally respected and even given
finality.
[48]
SEC. 17. Voting by Mail.
17.1 . . . Voting by mail may be allowed in countries that satisfy the following conditions:
a) Where the mailing system is fairly well-developed and secure to prevent occasion for fraud;
b) Where there exists a technically established identification system that would preclude multiple or proxy voting;
and,
c) Where the system of reception and custody of mailed ballots in the embassies, consulates and other foreign
service establishments concerned are adequate and well-secured.

G.R. No. 80508 January 30, 1990

EDDIE GUAZON, JOSEFINA CABRERA, YOLANDA DACUNES, VIOLETA SEVILLA, QUERUBIN BILLONES,
ESTELITA BILLONES, GORGONIA MACARAEG, LAUREANA JOAQUIN, CRESTITA LICUP, SOLIDAD ABURDO,
ROSALINA VILLARDA, CONRADA HOBALANE, ERLINDA RESTORAN, VERIDIAN FLORA, ROSELA CONDE,
SOSIMA COSTO, JOSEFINA ALDIANO, ROSALINA DOMINGO, ARESTIO YANGA, MILAGROS GONZALES,
ESTRELITA ESTARES, BONIFACIA ANTIVO, PATRIA VALLES, ERLINDA LEE, MELANIO GAROFIL, ERIBERTO
MATEO, FRANCISCO HORTILLANO, ANATALIA PESIMO, LOSENDO GARBO, VIRGINIA LORESTO, LYDIA
ELA, RAFAEL VILLABRILLE, MA. RECHILDA SABALZA, EDITHA MAAMO, ELENIETA BANOSA, ALEXANDER
LABADO, ANDREW GO, WYNEFREDO REYES, ROSARIO SESPENE, ROSA MARTIN and JAIME
BONGAT, petitioners,
vs.
MAJ. GEN. RENATO DE VILLA, BRIG. GEN. ALEXANDER AGUIRRE, BRIG. GEN. RAMON MONTANO, BRIG.
GEN. ALFREDO LIM, and COL. JESUS GARCIA, respondents.

GUTIERREZ, JR., J.:

This is a petition for prohibition with preliminary injunction to prohibit the military and police officers
represented by public respondents from conducting "Areal Target Zonings" or "Saturation Drives" in
Metro Manila.

The forty one (41) petitioners state that they are all of legal age, bona fide residents of Metro Manila and
taxpayers and leaders in their respective communities. They maintain that they have a common or
general interest in the preservation of the rule of law, protection of their human rights and the reign of
peace and order in their communities. They claim to represent "the citizens of Metro Manila who have
similar interests and are so numerous that it is impracticable to bring them all before this Court."

The public respondents, represented by the Solicitor General, oppose the petition contending inter
alia that petitioners lack standing to file the instant petition for they are not the proper parties to
institute the action.

According to the petitioners, the following "saturation drives" were conducted in Metro Manila:

1. March 5, 1987 at about 9:30 PM in Tindalo, Kagitingan, and Magdalena Streets, Tondo,
Manila.
2. June l9, 1987 at about l0:00 PM in Mata Street, Panday Pira Extension and San Sebastian
Street, Tondo, Manila.
3. July 20, 1987 at about 8:00 AM in Bangkusay Street, Tondo, Manila.
4. August 11 to l3, 1987 between 11:00 PM and 2:00 AM in six blocks along Aroma Beach up to
Happy Land, Magsaysay Village, Tondo, Manila.
5. August 19, 1987 at 9:00 PM in Herbosa Extension, Quirino Street, and Pacheco Street, Tondo,
Manila.
6. August 28, 1987 at l0:30 PM, in Block 34, Dagat-dagatan Navotas, Metro Manila.
7. August 30, 1987 at 9:30 PM at Paraiso Extension, Magsaysay Village, Tondo, Manila.
8. October 12, 1987 at 12:00 midnight in Apelo Cruz Compound, Quezon City.
9. October 17, 1987 at 11:00 PM in Quirino Street, Tondo, Manila.
10. October 23, 1987 at 2:30 A.M. in Sun Valley Drive, Manila International Airport, Pasay City.
11. November 1, 1987 at 4:00 A.M. in Cordillera Street, Sta. Mesa, Manila.
12. November 3, 1987 at 5:00 A.M. in Lower Maricaban, Pasay City, Metro Manila.

According to the petitioners, the "areal target zonings" or saturation drives" are in critical areas
pinpointed by the military and police as places where the subversives are hiding. The arrests range from
seven (7) persons during the July 20 saturation drive in Bangkusay, Tondo to one thousand five hundred
(1,500) allegedly apprehended on November 3 during the drive at Lower Maricaban, Pasay City. The
petitioners claim that the saturation drives follow a common pattern of human rights abuses. In all these
drives, it is alleged that the following were committed:

1. Having no specific target house in mind, in the dead of the night or early morning hours,
police and military units without any search warrant or warrant of arrest cordon an area of more
than one residence and sometimes whole barangay or areas of barangay in Metro Manila. Most
of them are in civilian clothes and without nameplates or identification cards.

2. These raiders rudely rouse residents from their sleep by banging on the walls and windows of
their homes, shouting, kicking their doors open (destroying some in the process), and then
ordering the residents within to come out of their respective residences.

3. The residents at the point of high-powered guns are herded like cows, the men are ordered to
strip down to their briefs and examined for tattoo marks and other imagined marks.

4. While the examination of the bodies of the men are being conducted by the raiders, some of
the members of the raiding team force their way into each and every house within the cordoned
off area and then proceed to conduct search of the said houses without civilian witnesses from
the neighborhood.

5. In many instances, many residents have complained that the raiders ransack their homes,
tossing about the residents' belongings without total regard for their value. In several instances,
walls are destroyed, ceilings are damaged in the raiders' illegal effort to 'fish' for incriminating
evidence.

6. Some victims of these illegal operations have complained with increasing frequency that their
money and valuables have disappeared after the said operations.

7. All men and some women who respond to these illegal and unwelcome intrusions are
arrested on the spot and hauled off to waiting vehicles that take them to detention centers
where they are interrogated and 'verified.' These arrests are all conducted without any warrants
of arrest duly issued by a judge, nor under the conditions that will authorize warrantless arrest.
Some hooded men are used to fingerpoint suspected subversives.
8. In some instances, arrested persons are released after the expiration of the period wherein
they can be legally detained without any charge at all. In other instances, some arrested persons
are released without charge after a few days of arbitrary detention.

9. The raiders almost always brandish their weapons and point them at the residents during
these illegal operations.

10. Many have also reported incidents of on-the-spotbeatings, maulings and maltreatment.

11. Those who are detained for further 'verification' by the raiders are subjected to mental and
physical torture to extract confessions and tactical information. (Rollo, pp. 2-4)

The public respondents stress two points in their Comment which was also adopted as their
Memorandum after the petition was given due course.

First, the respondents have legal authority to conduct saturation drives. And second, they allege that the
accusations of the petitioners about a deliberate disregard for human rights are total lies.

Insofar as the legal basis for saturation drives is concerned, the respondents cite Article VII, Section 17 of
the Constitution which provides:

The President shall have control of all the executive departments, bureaus and offices. He shall
ensure that the laws be faithfully executed. (Emphasis supplied )

They also cite Section 18 of the same Article which provides:

The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or suppress
lawless violence, invasion or rebellion. ...

There can be no question that under ordinary circumstances, the police action of the nature described
by the petitioners would be illegal and blantantly violative of the express guarantees of the Bill of Rights.
If the military and the police must conduct concerted campaigns to flush out and catch criminal
elements, such drives must be consistent with the constitutional and statutory rights of all the people
affected by such actions.

There is, of course, nothing in the Constitution which denies the authority of the Chief Executive,
invoked by the Solicitor General, to order police actions to stop unabated criminality, rising lawlessness,
and alarming communist activities. The Constitution grants to Government the power to seek and
cripple subversive movements which would bring down constituted authority and substitute a regime
where individual liberties are suppressed as a matter of policy in the name of security of the State.
However, all police actions are governed by the limitations of the Bill of Rights. The Government cannot
adopt the same reprehensible methods of authoritarian systems both of the right and of the left, the
enlargement of whose spheres of influence it is trying hard to suppress. Our democratic institutions may
still be fragile but they are not in the least bit strengthened through violations of the constitutional
protections which are their distinguishing features.
In Roan v. Gonzales (145 SCRA 687; 690-691 [1986]), the Court stated:

One of the most precious rights of the citizen in a free society is the right to be left alone in the
privacy of his own house. That right has ancient roots, dating back through the mists of history
to the mighty English kings in their fortresses of power. Even then, the lowly subject had his own
castle where he was monarch of all he surveyed. This was his humble cottage from which he
could bar his sovereign lord and all the forces of the Crown.

That right has endured through the ages albeit only in a few libertarian regimes. Their number,
regrettably, continues to dwindle against the onslaughts of authoritarianism. We are among the
fortunate few, able again to enjoy this right after the ordeal of the past despotism. We must
cherish and protect it all the more now because it is like a prodigal son returning.

That right is guaranteed in the following provisions of Article IV of the 1973 Constitution:

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

xxx xxx xxx

Only last year, the Court again issued this reminder in 20th Century Fox Film Corporation v. Court of
Appeals (164 SCRA 655; 660- 661 [1988]):

This constitutional right protects a citizen against wanton and unreasonable invasion of his
privacy and liberty as to his person, papers and effects. We have explained in the case of People
vs. Burgos (144 SCRA 1) citing Villanueva v. Querubin (48 SCRA 345) why the right is so
important:

It is deference to one's personality that lies at the core of this right, but it could be also looked
upon as a recognition of a constitutionally protected area, primarily one's home, but not
necessarily thereto confined. (Cf. Hoffa v. United States, 385 US 293 [1966]) What is sought to be
guarded is a man's prerogative to choose who is allowed entry to his residence. In that haven of
refuge, his individuality can assert itself not only in the choice of who shall be welcome but
likewise in the kind of objects he wants around him. There the state, however powerful, does
not as such have access except under the circumstances above noted, for in the traditional
formulation, his house, however humble, is his castle. Thus is outlawed any unwarranted
intrusion by government, which is called upon to refrain from any invasion of his dwelling and to
respect the privacies of his life. (Cf. Schmerber v. California, 384 US 757 [1966], Brennan J. and
Boyd v. United States, 11 6 630 [1886]). In the same vein, Landynski in his authoritative work
(Search and Seizure and the Supreme Court [1966]), could fitly characterize constitutional right
as the embodiment of a spiritual concept: the belief that to value the privacy of home and
person and to afford its constitutional protection against the long reach of government is no less
than to value human dignity, and that his privacy must not be disturbed except in case of
overriding social need, and then only under stringent procedural safeguards. (ibid, p. 74.)

The decision of the United States Supreme Court in Rochin v. California, (342 US 165; 96 L. Ed. 183
[1952]) emphasizes clearly that police actions should not be characterized by methods that offend a
sense of justice. The court ruled:

Applying these general considerations to the circumstances of the present case, we are
compelled to conclude that the proceedings by which this conviction was obtained do more than
offend some fastidious squeamishness or private sentimentalism about combatting crime too
energetically. This is conduct that shocks the conscience. Illegally breaking into the privacy of the
petitioner, the struggle to open his mouth and remove what was there, the forcible extraction of
his stomach's contents this course of proceeding by agents of government to obtain evidence is
bound to offend even hardened sensibilities. They are methods too close to the rack and the
screw to permit of constitutional differentiation.

It is significant that it is not the police action perse which is impermissible and which should be
prohibited. Rather, it is the procedure used or in the words of the court, methods which "offend even
hardened sensibilities." In Breithaupt v. Abram (352 US 432, 1 L. Ed. 2nd 448 [1957]), the same court
validated the use of evidence, in this case blood samples involuntarily taken from the petitioner, where
there was nothing brutal or offensive in the taking. The Court stated:

Basically the distinction rests on the fact that there is nothing 'brutal' or 'offensive' in the taking
of a sample of blood when done, as in this case, under the protective eye of a physician. To be
sure, the driver here was unconscious when the blood was taken, but the absence of conscious
consent, without more, does not necessarily render the taking a violation of a constitutional
light; and certainly the rest was administered here would not be considered offensive by even
the most delicate. Furthermore, due process is not measured by the yardstick of personal
reaction or the sphygmogram of the most sensitive person, but by that whole community sense
of 'decency and fairness that has been woven by common experience into the fabric of
acceptable conduct....

The individual's right to immunity from such invasion of his body was considered as "far outweighed by
the value of its deterrent effect" on the evil sought to be avoided by the police action.

It is clear, therefore, that the nature of the affirmative relief hinges closely on the determination of the
exact facts surrounding a particular case.

The violations of human rights alleged by the petitioners are serious. If an orderly procedure ascertains
their truth, not only a writ of prohibition but criminal prosecutions would immediately issue as a matter
of course. A persistent pattern of wholesale and gross abuse of civil liberties, as alleged in the petition,
has no place in civilized society.

On the other hand, according to the respondents, the statements made by the petitioners are a
complete lie.

The Solicitor General argues:


This a complete lie.

Just the contrary, they had been conducted with due regard to human rights. Not only that, they
were intelligently and carefully planned months ahead of the actual operation. They were
executed in coordination with barangay officials who pleaded with their constituents to submit
themselves voluntarily for character and personal verification. Local and foreign correspondents,
who had joined these operations, witnessed and recorded the events that transpired relative
thereto. (After Operation Reports: November 5, 1987, Annex 12; November 20, 1987, Annex 13;
November 24, 1987, Annex 14). That is why in all the drives so far conducted, the alleged victims
who numbered thousands had not themselves complained.

In her speech during turn-over rites on January 26, 1987 at Camp Aguinaldo, President Aquino
branded all accusations of deliberate disregard for human rights as 'total lies'. Here are excerpts
from her strongest speech yet in support of the military:

All accusations of a deliberate disregard for human rights have been shown- up to be total lies.

...To our soldiers, let me say go out and fight, fight with every assurance that I will stand by you
through thick and thin to share the blame, defend your actions, mourn the losses and enjoy with
you the final victory that I am certain will be ours.

You and I will see this through together.

I've sworn to defend and uphold the Constitution.

We have wasted enough time answering their barkings for it is still a long way to lasting peace. . .
. The dangers and hardships to our men in the field are great enough as it is without having them
distracted by tills worthless carping at their backs.

Our counter-insurgency policy remains the same: economic development to pull out the roots-
and military operations to slash the growth — of the insurgency.

The answer to terror is force — now.

Only feats of arms can buy us the time needed to make our economic and social initiatives bear
fruit. . . Now that the extreme Right has been defeated, I expect greater vigor in the prosecution
of the war against the communist insurgency, even as we continue to watch our backs against
attacks from the Right. (Philippine Star, January 27, 1988, p. 1, Annex 15; emphasis supplied)

Viewed in the light of President Aquino's observation on the matter, it can be said that
petitioners misrepresent as human rights violations the military and police's zealous vigilance
over the people's right to live in peace and safety. (Rollo, pp. 36-38)

Herein lies the problem of the Court. We can only guess the truth. Everything before us consists of
allegations. According to the petitioners, more than 3,407 persons were arrested in the saturation drives
covered by the petition. No estimates are given for the drives in Block 34, Dagat-dagatan, Navotas; Apelo
Cruz Compound, Pasig; and Sun Valley Drive near the Manila International Airport area. Not one of the
several thousand persons treated in the illegal and inhuman manner described by the petitioners
appears as a petitioner or has come before a trial court to present the kind of evidence admissible in
courts of justice. Moreover, there must have been tens of thousands of nearby residents who were
inconvenienced in addition to the several thousand allegedly arrested. None of those arrested has
apparently been charged and none of those affected has apparently complained.

A particularly intriguing aspect of the Solicitor General's comments is the statement that local and
foreign co-respondents actually joined the saturation drives and witnessed and recorded the events. In
other words, the activities sought to be completely proscribed were in full view of media. The sight of
hooded men allegedly being used to fingerpoint suspected subversives would have been good television
copy. If true, this was probably effected away from the ubiquitous eye of the TV cameras or, as the
Solicitor General contends, the allegation is a "complete lie."

The latest attempt to stage a coup d'etat where several thousand members of the Armed Forces of the
Philippines sought to overthrow the present Government introduces another aspect of the problem and
illustrates quite clearly why those directly affected by human rights violations should be the ones to
institute court actions and why evidence of what actually transpired should first be developed before
petitions are filed with this Court.

Where there is large scale mutiny or actual rebellion, the police or military may go in force to the combat
areas, enter affected residences or buildings, round up suspected rebels and otherwise quell the mutiny
or rebellion without having to secure search warrants and without violating the Bill of Rights. This is
exactly what happened in the White Plains Subdivision and the commercial center of Makati during the
first week of December, 1989.

The areal target zonings in this petition were intended to flush out subversives and criminal elements
particularly because of the blatant assassinations of public officers and police officials by elements
supposedly coddled by the communities where the "drives" were conducted.

It is clear from the pleadings of both petitioners and respondents, however, that there was no rebellion
or criminal activity similar to that of the attempted coup d' etats. There appears to have been no
impediment to securing search warrants or warrants of arrest before any houses were searched or
individuals roused from sleep were arrested. There is no strong showing that the objectives sought to be
attained by the "areal zoning" could not be achieved even as the rights of squatter and low income
families are fully protected.

Where a violation of human rights specifically guaranteed by the Constitution is involved, it is the duty of
the court to stop the transgression and state where even the awesome power of the state may not
encroach upon the rights of the individual. It is the duty of the court to take remedial action even in
cases such as the present petition where the petitioners do not complain that they were victims of the
police actions, where no names of any of the thousands of alleged victims are given, and where the
prayer is a general one to stop all police "saturation drives," as long as the Court is convinced that the
event actually happened.

The Court believes it highly probable that some violations were actually committed. This is so inspite of
the alleged pleas of barangay officials for the thousands of residents "to submit themselves voluntarily
for character and personal verification." We cannot imagine police actions of the magnitude described in
the petitions and admitted by the respondents, being undertaken without some undisciplined soldiers
and policemen committing certain abuses. However, the remedy is not to stop all police
actions, including the essential and legitimate ones. We see nothing wrong in police making their
presence visibly felt in troubled areas. Police cannot respond to riots or violent demonstrations if they do
not move in sufficient numbers. A show of force is sometimes necessary as long as the rights of people
are protected and not violated. A blanket prohibition such as that sought by the petitioners would limit
all police actions to one on one confrontations where search warrants and warrants of arrests against
specific individuals are easily procured. Anarchy may reign if the military and the police decide to sit
down in their offices because all concerted drives where a show of force is present are totally prohibited.

The remedy is not an original action for prohibition brought through a taxpayers' suit. Where not one
victim complains and not one violator is properly charged, the problem is not initially for the Supreme
Court. It is basically one for the executive departments and for trial courts. Well meaning citizens with
only second hand knowledge of the events cannot keep on indiscriminately tossing problems of the
executive, the military, and the police to the Supreme Court as if we are the repository of all remedies
for all evils. The rules of constitutional litigation have been evolved for an orderly procedure in the
vindication of rights. They should be followed. If our policy makers sustain the contention of the military
and the police that occasional saturation drives are essential to maintain the stability of government and
to insure peace and order, clear policy guidelines on the behavior of soldiers and policemen must not
only be evolved, they should also be enforced. A method of pinpointing human rights abuses and
identifying violators is necessary.

The problem is appropriate for the Commission on Human Rights. A high level conference should bring
together the heads of the Department of Justice, Department of National Defense and the operating
heads of affected agencies and institutions to devise procedures for the prevention of abuses.

Under the circumstances of this taxpayers' suit, there is no erring soldier or policeman whom we can
order prosecuted. In the absence of clear facts ascertained through an orderly procedure, no permanent
relief can be given at this time. Further investigation of the petitioners' charges and a hard look by
administration officials at the policy implications of the prayed for blanket prohibition are also
warranted.

In the meantime and in the face of a prima facie showing that some abuses were probably committed
and could be committed during future police actions, we have to temporarily restrain the alleged
banging on walls, the kicking in of doors, the herding of half-naked men to assembly areas for
examination of tattoo marks, the violation of residences even if these are humble shanties of squatters,
and the other alleged acts which are shocking to the conscience.

WHEREFORE, the petition is hereby REMANDED to the Regional Trial Courts of Manila, Malabon, and
Pasay City where the petitioners may present evidence supporting their allegations and where specific
erring parties may be pinpointed and prosecuted.

Copies of this decision are likewise forwarded to the Commission on Human Rights, the Secretary of
Justice, the Secretary of National Defense, and the Commanding General PC-INP for the drawing up and
enforcement of clear guidelines to govern police actions intended to abate riots and civil disturbances,
flush out criminal elements, and subdue terrorist activities.
In the meantime, the acts violative of human rights alleged by the petitioners as committed during the
police actions are ENJOINED until such time as permanent rules to govern such actions are promulgated.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Cortes, Medialdea and
Regalado, JJ., concur.
Griño-Aquino, J., I join JJ. Cruz, Padilla and Sarmiento's dissents.

Separate Opinions

CRUZ, J., dissenting:

Mr. Justice Gutierrez and I are kindred spirits and usually find ourselves together on the side of liberty. It
saddens me that in the case at bar he is on the side of authority.

This is not to say that liberty and authority are irreconcilable enemies. The two must in fact co-exist, for
only in a well-ordered society can rights be properly enjoyed. Implicit in that theory, however, is the
other imperative: that the highest function of authority is to insure liberty.

While acknowledging that the military is conducting the saturation drives, the majority practically blinks
them away on mere technicalities. First, there are no proper parties. Second, there is no proof.
Therefore, the petition is dismissed.

The approach is to me too much simplification. We do not choose to see the woods for the trees. The
brutal fact is staring us in the face but we look the other way in search of excuses.

The majority says it cannot act against the drives because no one directly affected has complained. Such
silence, if I understand the ponencia correctly, has in effect purged the drives of all oppressiveness and
washed them clean.

(The reason for the silence is fear. These raids are conducted not in the enclaves of the rich but in the
deprived communities, where the residents have no power or influence. The parties directly aggrieved
are afraid. They are the little people. They cannot protest lest they provoke retaliation for their temerity.
Their only hope is in this Court, and we should not deny them that hope.)

The ruling that the petitioners are not proper parties is a specious pretext for inaction. We have held that
technical objections may be brushed aside where there are constitutional questions that must be met.
There are many decisions applying this doctrine. (Rodriguez v. Gella, 92 Phil. 603; Tolentino v.
Commission on Elections, 41 SCRA 702; Philconsa v. Jimenez, 65 SCRA 479; Edu v. Ericta, 35 SCRA 481;
Gonzales v. Commission on Elections, 27 SCRA 835; Lagunsad v. Court of Appeals; 154 SCRA 199;
Demetria v. Alba, 148 SCRA 208). Lozada was in fact an aberration.

I believe that where liberty is involved, every person is a proper party even if he may not be directly
injured. Each of us has a duty to protect liberty and that alone makes him a proper party. It is not only
the owner of the burning house who has the right to call the firemen. Every one has the right
and responsibility to prevent the fire from spreading even if he lives in the other block.

The majority seems to be willing to just accept the Solicitor General's assertion that the claimed abuses
are "complete lies" and leave it at that. But a blanket denial is not enough. The evidence is there on
media, in the papers and on radio and television, That kind of evidence cannot be cavalierly dismissed as
"complete lies."

The saturation drive is not unfamiliar to us. It is like the "zona" of the Japanese Occupation. An area was
surrounded by soldiers and all residents were flushed out of their houses and lined up, to be looked over
by a person with a bag over his head. This man pointed to suspected guerrillas, who were immediately
arrested and eventually if not instantly executed.

To be sure, there are some variations now. The most important difference is that it is no longer 1943 and
the belligerent occupation is over. There is no more war. It is now 1990, when we are supposed to be
under a free Republic and safeguarded by the Bill of Rights.

Article III, Section 2, clearly provides:

Sec. 2 The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be
searched and the persons or things to be seized. (Emphasis supplied.)

The provision is intended to protect the individual from official (and officious) intrusions, no matter how
humble his abode and however lowly his station in life. Against the mighty forces of the government, the
person's house is his castle, his inviolate refuge and exclusive domain where he is the monarch of all he
surveys.

Yet in the dead of night, armed soldiers may knock on one's door and command him at gunpoint to come
out so he and his neighbors, who have also been rounded up, can all be placed on public examination, as
in a slave market. This is followed by the arrest and detention of those suspected of villainy, usually on
the basis only of the tattoos on their bodies or the informer's accusing finger.

Where is the search warrant or the warrant of arrest required by the Bill of Rights? Where is the
probable cause that must be determined personally by the judge, and by no other, to justify the
warrant? Where is the examination under oath or affirmation of the complainant and the witnesses he
may produce to establish the probable cause? Where is the particular description that must be stated in
the warrant, of the places to be searched and the persons or things to be seized? And where, assuming
all these may be dispensed with, is the admissible exception to the rule?

Saturation drives are not among the accepted instances when a search or an arrest may be made
without warrant. They come under the concept of the fishing expeditions stigmatized by law and
doctrine. At any rate, if the majority is really introducing the "zona" as another exception to the rule, it
must not equivocate. It must state that intention in forthright language and not in vague generalizations
that concede the wrong but deny the right.

To justify the "zona" on the basis of the recent coup attempt is, in my view, to becloud the issue. The
"zonas" complained of happened before the failed coup and had nothing whatsoever to do with that
disturbance. There was no "large scale mutiny or actual rebellion' when the saturation drives were
conducted and there were no "combat areas" either in the places where the violations were committed.
The failed coup cannot validate the invalid "zonas' retroactively.

The ponencia says that "we cannot take judicial notice of the facts and figures given by the petitioners
regarding these saturation drives conducted by the military and police authorities." Maybe so. But
we can and should take judicial notice of the saturation drives themselves which are not and cannot be
denied by the government.

I urge my brethren to accept the fact that those drives are per se unconstitutional. I urge them to accept
that even without proof of the hooded figure and the personal indignities and the loss and destruction
of properties and the other excesses allegedly committed, the mere waging of the saturation
drives alone is enough to make this Court react with outraged concern.

Confronted with this clear case of oppression, we should not simply throw up our hands and proclaim
our helplessness. I submit that this Court should instead declare categorically and emphatically that
these saturation drives are violative of human rights and individual liberty and so should be
stopped immediately. While they may be allowed in the actual theater of military operations against the
insurgents, the Court should also make it clear that Metro Manila is not such a battleground.

The danger to our free institutions lies not only in those who openly defy the authority of the
government and violate its laws. The greater menace is in those who, in the name of democracy, destroy
the very things it stands for as in this case and so undermine democracy itself.

Where liberty is debased into a cruel illusion, all of us are degraded and diminished. Liberty is indivisible;
it belongs to every one. We should realize that when the bell tolls the death of liberty for one of us, "it
tolls for thee" and for all of us.

SARMIENTO, J., dissenting:

There is only one question here: Whether or not the police actions (saturation drives) complained of
constitute a valid exercise of police power.

The fact that on twelve occasions between March and November, 1987 the military conducted the
saturation drives in question is a fact open to no question. The Solicitor General admits that they, the
saturation drives, had been done, except that they had been done "with due regard to human rights."
"Not only that," so he states:

... they were intelligently and carefully planned months ahead of the actual operation. They were
executed in coordination with barangay officials who pleaded with their constituents to submit
themselves voluntarily for character and personal verification. Local and foreign correspondents,
who had joined these operations, witnessed, and reported the events that transpired relative
thereto. (After Operation Reports: November 5, 1987, Annex 12; November 20, 1987, Annex 13;
November 24, 1987, Annex 14). That is why in all the drives so far conducted, the alleged victims
who numbered thousands had not themselves complained.

The question, then, is purely one of law: Are the saturation drives in question lawful and legitimate? It is
also a question that is nothing novel: No, because the arrests were not accompanied by a judicial
warrant. 1

Therefore, the fact that they had been carefully planned, executed in coordination with Tondo's
barangay officials, and undertaken with due courtesy and politeness (which I doubt), will not validate
them. The lack of a warrant makes them, per se illegal.

According to the majority, "the remedy is not to stop all police actions, including the essential and
legitimate ones . . . [w]e see nothing wrong in police making their presence visibly felt in troubled
areas . . . " 2 But the petitioners have not come to court to "stop all police actions" but rather, the
saturation drives, which are, undoubtedly, beyond police power.

That "[a] show of force is sometimes necessary as long as the rights of people are protected and not
violated3 is a contradiction in terms. A "show of force" (by way of saturation drives) is a violation of
human rights because it is not covered by a judicial warrant.

In all candor, I can not swallow what I find is a complete exaggeration of the issues:

...A show of force is sometimes necessary as long as the rights of people are protected and not
violated.1âwphi1 A blanket prohibition such as that sought by the petitioners would limit all
police actions to one on one confrontations where search warrants and warrants of arrests
against specific individuals are easily procured. Anarchy may reign if the military and the police
decide to sit down in their offices because all concerted drives where a show of force is present
are totally prohibited. 4

As a general rule, a peace officer can not act unless he is possessed of the proper arrest or search
warrant. The exception is when a criminal offense is unfolding before him, in which case, action is
justified and necessary. The majority would have the exception to be simply, the general rule.

The fact of the matter is that we are not here confronted by police officers on the beat or prowl cars on
patrol. What we have and I suppose that everybody is agreed on it- are lightning raids of homes,
arbitrary confiscation of effects, and summary arrests of persons, the very acts proscribed by the
Constitution. If this is a "show of force", it certainly has no place in a constitutional democracy.

I find allusions to the last aborted coup d'etat inapt. In that case, our men in uniform had all the right to
act amidst crimes being committed in flagrante. The instant case is quite different. There are no offenses
being committed, but rather, police officers fishing for evidence of offenses that may have
been committed, As I said, in that event, a court warrant is indispensable.

That "the problem is not initially for the Supreme Court 5 is to me, an abdication of judicial duty. As I
indicated, the controversy is purely one of law the facts being undisputed. Law, needless to say, is the
problem of the Supreme Court, not the Executive.
Worse, it is passing the buck. The petitioners, precisely, have a grievance to raise, arising from abuses
they pinpoint to the lower offices of the Executive (which presumably has its imprimatur). To make it an
executive problem, so I hold, is to make the Executive judge and jury of its own acts, and hardly, a
neutral arbiter.

I am also taken aback by references to "[w]ell meaning citizens with only second hand knowledge of the
events ... keep[ing] on indiscriminately tossing problems -of the Executive, the military, and the police to
the Supreme Court as if we are the repository of all remedies for all evils." 6 First, the facts are not
"second-hand", they are undisputed: Ther had been saturation drives. Second, the petitioners have
trooped to the highest court with a legitimate grievance against the Executive (and military).

The fact that the majority would "remand" the case to the lower courts and the various echelons of the
Executive for investigation is to admit that walls have indeed been banged, doors kicked in, and half-
naked men herded. I do not see therefore why we can not issue a writ of prohibition as prayed for, in the
midst of these facts.

G.R. No. 132922 April 21, 1998

TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES, INC. and GMA NETWORK,
INC., petitioners,
vs.
THE COMMISSION ON ELECTIONS, respondent.

MENDOZA, J.:

In Osmeña v. COMELEC, G.R. No. 132231, decided March 31, 1998, 1 we upheld the validity of § 11(b) of
R.A. No. 6646 which prohibits the sale or donation of print space or air time for political ads, except to
the Commission on Elections under §90, of B.P. No. 881, the Omnibus Election Code, with respect to
print media, and §92, with respect to broadcast media. In the present case, we consider the validity of
§92 of B.P. Blg. No. 881 against claims that the requirement that radio and television time be given free
takes property without due process of law; that it violates the eminent domain clause of the Constitution
which provides for the payment of just compensation; that it denies broadcast media the equal
protection of the laws; and that, in any event, it violates the terms of the franchise of petitioner GMA
Network, Inc.

Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. is an organization of


lawyers of radio and television broadcasting companies. They are suing as citizens, taxpayers, and
registered voters. The other petitioner, GMA Network, Inc., operates radio and television broadcasting
stations throughout the Philippines under a franchise granted by Congress.

Petitioners challenge the validity of §92 on the ground (1) that it takes property without due process of
law and without just compensation; (2) that it denies radio and television broadcast companies the
equal protection of the laws; and (3) that it is in excess of the power given to the COMELEC to supervise
or regulate the operation of media of communication or information during the period of election.

The Question of Standing

At the threshold of this suit is the question of standing of petitioner Telecommunications and Broadcast
Attorneys of the Philippines, Inc. (TELEBAP). As already noted, its members assert an interest as lawyers
of radio and television broadcasting companies and as citizens, taxpayers, and registered voters.

In those cases2 in which citizens were authorized to sue, this Court upheld their standing in view of the
"transcendental importance" of the constitutional question raised which justified the granting of relief. In
contrast, in the case at bar, as will presently be shown, petitioner's substantive claim is without merit. To
the extent, therefore, that a party's standing is determined by the substantive merit of his case or
preliminary estimate thereof, petitioner TELEBAP must be held to be without standing. Indeed, a citizen
will be allowed to raise a constitutional question only when he can show that he has personally suffered
some actual or threatened injury as a result of the allegedly illegal conduct of the government; the injury
fairly is fairly traceable to the challenged action; and the injury is likely to be redressed by a favorable
action.3 Members of petitioner have not shown that they have suffered harm as a result of the operation
of §92 of B.P. Blg. 881.

Nor do members of petitioner TELEBAP have an interest as registered voters since this case does not
concern their right of suffrage. Their interest in §92 of B.P. Blg. 881 should be precisely in upholding its
validity.

Much less do they have an interest as taxpayers since this case does not involve the exercise by Congress
of its taxing or spending power. 4 A party suing as a taxpayer must specifically show that he has a
sufficient interest in preventing the illegal expenditure of money raised by taxation and that he will
sustain a direct injury as a result of the enforcement of the questioned statute.

Nor indeed as a corporate entity does TELEBAP have standing to assert the rights of radio and television
broadcasting companies. Standing jus tertii will be recognized only if it can be shown that the party suing
has some substantial relation to the third party, or that the third party cannot assert his constitutional
right, or that the eight of the third party will be diluted unless the party in court is allowed to espouse
the third party's constitutional claim. None of these circumstances is here present. The mere fact that
TELEBAP is composed of lawyers in the broadcast industry does not entitle them to bring this suit in their
name as representatives of the affected companies.

Nevertheless, we have decided to take this case since the other petitioner, GMA Network, Inc., appears
to have the requisite standing to bring this constitutional challenge. Petitioner operates radio and
television broadcast stations in the Philippines affected by the enforcement of §92 of B.P. Blg. 881
requiring radio and television broadcast companies to provide free air time to the COMELEC for the use
of candidates for campaign and other political purposes.

Petitioner claims that it suffered losses running to several million pesos in providing COMELEC Time in
connection with the 1992 presidential election and the 1995 senatorial election and that it stands to
suffer even more should it be required to do so again this year. Petitioner's allegation that it will suffer
losses again because it is required to provide free air time is sufficient to give it standing to question the
validity of §92.5

Airing of COMELEC Time, a

Reasonable Condition for

Grant of Petitioner's

Franchise

As pointed out in our decision in Osmeña v. COMELEC, §11(b) of R.A. No. 6646 and §90 and §92 of the
B.P. Blg. 881 are part and parcel of a regulatory scheme designed to equalize the opportunity of
candidates in an election in regard to the use of mass media for political campaigns. These statutory
provisions state in relevant parts:

R.A. No. 6646

Sec. 11. Prohibited Forms of Election Propaganda. — In addition to the forms of election
propaganda prohibited under Section 85 of Batas Pambansa Blg. 881, it shall be unlawful:

xxx xxx xxx

(b) for any newspapers, radio broadcasting or television station, or other mass media, or any
person making use of the mass media to sell or to give free of charge print space or air time for
campaign or other political purposes except to the Commission as provided under Section 90
and 92 of Batas Pambansa Blg. 881. Any mass media columnist, commentator, announcer or
personality who is a candidate for any elective public office shall take a leave of absence from his
work as such during the campaign period.

B.P. Blg. 881, (Omnibus Election Code)

Sec. 90. Comelec space. — The Commission shall procure space in at least one newspaper of
general circulation in every province or city; Provided, however, That in the absence of said
newspaper, publication shall be done in any other magazine or periodical in said province or city,
which shall be known as "Comelec Space" wherein candidates can announce their candidacy.
Said space shall be allocated, free of charge, equally and impartially by the Commission among
all candidates within the area in which the newspaper is circulated. (Sec. 45, 1978 EC).

Sec. 92. Comelec time. — The commission shall procure radio and television time to be known as
"Comelec Time" which shall be allocated equally and impartially among the candidates within
the area of coverage of all radio and television stations. For this purpose, the franchise of all
radio broadcasting and television stations are hereby amended so as to provide radio or
television time, free of charge, during the period of the campaign. (Sec. 46, 1978 EC)

Thus, the law prohibits mass media from selling or donating print space and air time to the candidates
and requires the COMELEC instead to procure print space and air time for allocation to the candidates. It
will be noted that while §90 of B.P. Blg. 881 requires the COMELEC to procure print space which, as we
have held, should be paid for, §92 states that air time shall be procured by the COMELEC free of charge.

Petitioners contend that §92 of BP Blg. 881 violates the due process clause 6 and the eminent domain
provision7 of the Constitution by taking air time from radio and television broadcasting stations without
payment of just compensation. Petitioners claim that the primary source of revenue of the radio and
television stations is the sale of air time to advertisers and that to require these stations to provide free
air time is to authorize a taking which is not "a de minimis temporary limitation or restraint upon the use
of private property." According to petitioners, in 1992, the GMA Network, Inc. lost P22,498,560.00 in
providing free air time of one (1) hour every morning from Mondays to Fridays and one (1) hour on
Tuesdays and Thursday from 7:00 to 8:00 p.m. (prime time) and, in this year's elections, it stands to lose
P58,980,850.00 in view of COMELEC'S requirement that radio and television stations provide at least 30
minutes of prime time daily for the COMELEC Time. 8

Petitioners' argument is without merit, All broadcasting, whether by radio or by television stations, is
licensed by the government. Airwave frequencies have to be allocated as there are more individuals who
want to broadcast than there are frequencies to assign. 9 A franchise is thus a privilege subject, among
other things, to amended by Congress in accordance with the constitutional provision that "any such
franchise or right granted . . . shall be subject to amendment, alteration or repeal by the Congress when
the common good so requires."10

The idea that broadcast stations may be required to provide COMELEC Time free of charge is not new. It
goes back to the Election Code of 1971 (R.A. No. 6388), which provided:

Sec. 49. Regulation of election propaganda through mass media. — (a) The franchise of all radio
broadcasting and television stations are hereby amended so as to require each such station to
furnish free of charge, upon request of the Commission [on Elections], during the period of sixty
days before the election not more than fifteen minutes of prime time once a week which shall
be known as "Comelec Time" and which shall be used exclusively by the Commission to
disseminate vital election information. Said "Comelec Time" shall be considered as part of the
public service time said stations are required to furnish the Government for the dissemination of
public information and education under their respective franchises or permits.

The provision was carried over with slight modification by the 1978 Election Code (P.D. No. 1296), which
provided:

Sec. 46. COMELEC Time. — The Commission [on Elections] shall procure radio and television
time to be known as "COMELEC Time" which shall be allocated equally and impartially among
the candidates within the area of coverage of said radio and television stations. For this purpose,
the franchises of all radio broadcasting and television stations are hereby amended so as to
require such stations to furnish the Commission radio or television time, free of charge, during
the period of the campaign, at least once but not oftener than every other day.

Substantially the same provision is now embodied in §92 of B.P. Blg. 881.

Indeed, provisions for COMELEC Tima have been made by amendment of the franchises of radio and
television broadcast stations and, until the present case was brought, such provisions had not been
thought of as taking property without just compensation. Art. XII, §11 of the Constitution authorizes the
amendment of franchises for "the common good." What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but even more of the
public, particularly the voters, so that they will be fully informed of the issues in an election? "[I]t is the
right of the viewers and listeners, not the right of the broadcasters, which is paramount." 11

Nor indeed can there be any constitutional objection to the requirement that broadcast stations give
free air time. Even in the United States, there are responsible scholars who believe that government
controls on broadcast media can constitutionally be instituted to ensure diversity of views and attention
to public affairs to further the system of free expression. For this purpose, broadcast stations may be
required to give free air time to candidates in an election. 12 Thus, Professor Cass R. Sunstein of the
University of Chicago Law School, in urging reforms in regulations affecting the broadcast industry,
writes:

Elections. We could do a lot to improve coverage of electoral campaigns. Most important,


government should ensure free media time for candidates. Almost all European nations make
such provisions; the United States does not. Perhaps government should pay for such time on its
own. Perhaps broadcasters should have to offer it as a condition for receiving a license. Perhaps
a commitment to provide free time would count in favor of the grant of a license in the first
instance. Steps of this sort would simultaneously promote attention to public affairs and greater
diversity of view. They would also help overcome the distorting effects of "soundbites" and the
corrosive financial pressures faced by candidates in seeking time on the media. 13

In truth, radio and television broadcasting companies, which are given franchises, do not own the
airwaves and frequencies through which they transmit broadcast signals and images. They are merely
given the temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the
privilege may reasonably be burdened with the performance by the grantee of some form of public
service. Thus, in De Villata v. Stanley,14 a regulation requiring interisland vessels licensed to engage in the
interisland trade to carry mail and, for this purpose, to give advance notice to postal authorities of date
and hour of sailings of vessels and of changes of sailing hours to enable them to tender mail for
transportation at the last practicable hour prior to the vessel's departure, was held to be a reasonable
condition for the state grant of license. Although the question of compensation for the carriage of mail
was not in issue, the Court strongly implied that such service could be without compensation, as in fact
under Spanish sovereignty the mail was carried free. 15

In Philippine Long Distance Telephone Company v. NTC,16 the Court ordered the PLDT to allow the
interconnection of its domestic telephone system with the international gateway facility of Eastern
Telecom. The Court cited (1) the provisions of the legislative franchise allowing such interconnection; (2)
the absence of any physical, technical, or economic basis for restricting the linking up of two separate
telephone systems; and (3) the possibility of increase in the volume of international traffic and more
efficient service, at more moderate cost, as a result of interconnection.

Similarly, in the earlier case of PLDT v. NTC,17 it was held:

Such regulation of the use and ownership of telecommunications systems is in the exercise of
the plenary police power of the State for the promotion of the general welfare. The 1987
Constitution recognizes the existence of that power when it provides:
Sec. 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including
corporations, cooperatives, and similar collective organizations, shall have the
right to own, establish, and operate economic enterprises, subject to the duty of
the State to promote distributive justice and to intervene when the common
good so demands (Article XII).

The interconnection which has been required of PLDT is a form of "intervention" with property
rights dictated by "the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines, . . . to maximize the use of
telecommunications facilities available, . . . in recognition of the vital role of communications in
nation building . . . and to ensure that all users of the public telecommunications service have
access to all other users of the service wherever they may be within the Philippines at an
acceptable standard of service and at reasonable cost" (DOTC Circular No. 90-248). Undoubtedly,
the encompassing objective is the common good. The NTC, as the regulatory agency of the State,
merely exercised its delegated authority to regulate the use of telecommunications networks
when it decreed interconnection.

In the granting of the privilege to operate broadcast stations and thereafter supervising radio and
television stations, the state spends considerable public funds in licensing and supervising such
stations. 18 It would be strange if it cannot even require the licensees to render public service by giving
free air time.

Considerable effort is made in the dissent of Mr. Justice Panganiban to show that the production of
television programs involves large expenditure and requires the use of equipment for which huge
investments have to be made. The dissent cites the claim of GMA Network that the grant of free air time
to the COMELEC for the duration of the 1998 campaign period would cost the company P52,380,000,
representing revenue it would otherwise earn if the air time were sold to advertisers, and the amount of
P6,600,850, representing the cost of producing a program for the COMELEC Time, or the total amount of
P58,980,850.

The claim that petitioner would be losing P52,380,000 in unrealized revenue from advertising is based on
the assumption that air time is "finished product" which, it is said, become the property of the company,
like oil produced from refining or similar natural resources after undergoing a process for their
production. But air time is not owned by broadcast companies. As held in Red Lion Broadcasting
Co. v. F.C.C.,19 which upheld the right of a party personally attacked to reply, "licenses to broadcast do
not confer ownership of designated frequencies, but only the temporary privilege of using them."
Consequently, "a license permits broadcasting, but the license has no constitutional right to be the one
who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens. There is
nothing in the First Amendment which prevents the Government from requiring a licensee to share his
frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those
views and voices which are representative of his community and which would otherwise, by necessity,
be barred from the airwaves." 20 As radio and television broadcast stations do not own the airwaves, no
private property is taken by the requirement that they provide air time to the COMELEC.

Justice Panganiban's dissent quotes from Tolentino on the Civil Code which says that "the air lanes
themselves 'are not property because they cannot be appropriated for the benefit of any individual.'" (p.
5) That means neither the State nor the stations own the air lanes. Yet the dissent also says that "The
franchise holders can recover their huge investments only by selling air time to advertisers." (p. 13) If air
lanes cannot be appropriated, how can they be used to produce air time which the franchise holders can
sell to recover their investment? There is a contradiction here.

As to the additional amount of P6,600,850, it is claimed that this is the cost of producing a program and
it is for such items as "sets and props," "video tapes," "miscellaneous (other rental, supplies,
transportation, etc.)," and "technical facilities (technical crew such as director and cameraman as well as
'on air plugs')." There is no basis for this claim. Expenses for these items will be for the account of the
candidates. COMELEC Resolution No. 2983, §6(d) specifically provides in this connection:

(d) Additional services such as tape-recording or video-taping of programs, the preparation of


visual aids, terms and condition thereof, and consideration to be paid therefor may be arranged
by the candidates with the radio/television station concerned. However, no radio/television
station shall make any discrimination among candidates relative to charges, terms, practices or
facilities for in connection with the services rendered.

It is unfortunate that in the effort to show that there is taking of private property worth millions of
pesos, the unsubstantiated charge is made that by its decision the Court permits the "grand larceny of
precious time," and allows itself to become "the people's unwitting oppressor." The charge is really
unfortunate. In Jackson v. Rosenbaun,21 Justice Holmes was so incensed by the resistance of property
owners to the erection of party walls that he was led to say in his original draft, "a statute, which
embodies the community's understanding of the reciprocal rights and duties of neighboring landowners,
does not need to invoke the penalty larceny of the police power in its justification." Holmes's brethren
corrected his taste, and Holmes had to amend the passage so that in the end it spoke only of invoking
"the police power."22 Justice Holmes spoke of the "petty larceny" of the police power. Now we are being
told of the "grand larceny [by means of the police power] of precious air time."

Giving Free Air Time a Duty

Assumed by Petitioner

Petitioners claim that §92 is an invalid amendment of R.A. No. 7252 which granted GMA Network, Inc. a
franchise for the operation of radio and television broadcasting stations. They argue that although §5 of
R.A. No. 7252 gives the government the power to temporarily use and operate the stations of petitioner
GMA Network or to authorize such use and operation, the exercise of this right must be compensated.

The cited provision of. R.A. No. 7252 states:

Sec. 5. Right of Government. — A special right is hereby reserved to the President of the
Philippines, in times of rebellion, public peril, calamity, emergency, disaster or disturbance of
peace and order, to temporarily take over and operate the stations of the grantee, to temporarily
suspend the operation of any station in the interest of public safety, security and public welfare,
or to authorize the temporary use and operation thereof by any agency of the Government,
upon due compensation to the grantee, for the use of said stations during the period when they
shall be so operated.
The basic flaw in petitioner's argument is that it assumes that the provision for COMELEC Time
constitutes the use and operation of the stations of the GMA Network, Inc., This is not so. Under §92 of
B.P. Blg. 881, the COMELEC does not take over the operation of radio and television stations but only the
allocation of air time to the candidates for the purpose of ensuring, among other things, equal
opportunity, time, and the right to reply as mandated by the Constitution. 23

Indeed, it is wrong to claim an amendment of petitioner's franchise for the reason that B.P. Blg. 881,
which is said to have amended R.A. No. 7252, actually antedated it. 24 The provision of §92 of B.P. Blg. 881
must be deemed instead to be incorporated in R.A. No. 7252. And, indeed, §4 of the latter statute does.

For the fact is that the duty imposed on the GMA Network, Inc. by its franchise to render "adequate
public service time" implements §92 of B.P. Blg. 881. Undoubtedly, its purpose is to enable the
government to communicate with the people on matters of public interest. Thus, R.A. No. 7252 provides:

Sec. 4. Responsibility to the Public. — The grantee shall provide adequate public service time to
enable the Government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public information
and education; conform to the ethics of honest enterprise; and not use its station for the
broadcasting of obscene and indecent language, speech, act or scene, or for the dissemination
of deliberately false information or willful misrepresentation, or to the detriment of the public
interest, or to incite, encourage, or assist in subversive or treasonable acts. (Emphasis added).

It is noteworthy that §40 of R.A. No. 6388, from which §92 of B.P. Blg. 881 was taken, expressly provided
that the COMELEC Time should "be considered as part of the public service time said stations are
required to furnish the Government for the dissemination of public information and education under
their respective franchises or permits." There is no reason to suppose that §92 of B.P. Blg. 881 considers
the COMELEC Time therein provided to be otherwise than as a public service which petitioner is required
to render under §4 of its charter (R.A. No. 7252). In sum, B.P. Blg. 881, §92 is not an invalid amendment
of petitioner's franchise but the enforcement of a duty voluntarily assumed by petitioner in accepting a
public grant of privilege.

Thus far, we have confined the discussion to the provision of §92 of B.P. Blg. 881 for free air time without
taking into account COMELEC Resolution No. 2983-A, §2 of which states:

Sec. 2. Grant of "Comelec Time." — Every radio broadcasting and television station operating
under franchise shall grant the Commission, upon payment of just compensation, at least thirty
(30) minutes of prime time daily, to be known as "Comelec Time", effective February 10, 1998
for candidates for President, Vice-President and Senators, and effective March 27, 1998, for
candidates for local elective offices, until May 9, 1998. (Emphasis added).

This is because the amendment providing for the payment of "just compensation" is invalid, being in
contravention of §92 of B.P. Blg. 881 that radio and television time given during the period of the
campaign shall be "free of charge." Indeed, Resolution No. 2983 originally provided that the time
allocated shall be "free of charge," just as §92 requires such time to be given "free of charge." The
amendment appears to be a reaction to petitioner's claim in this case that the original provision was
unconstitutional because it allegedly authorized the taking of property without just compensation.
The Solicitor General, relying on the amendment, claims that there should be no more dispute because
the payment of compensation is now provided for. It is basic, however, that an administrative agency
cannot, in the exercise of lawmaking, amend a statute of Congress. Since §2 of Resolution No. 2983-A is
invalid, it cannot be invoked by the parties.

Law Allows Flextime for Programming

by Stations, Not Confiscation of

Air Time by COMELEC

It is claimed that there is no standard in the law to guide the COMELEC in procuring free air time and
that "theoretically the COMELEC can demand all of the air time of such stations." 25 Petitioners do not
claim that COMELEC Resolution No. 2983-A arbitrarily sequesters radio and television time. What they
claim is that because of the breadth of the statutory language, the provision in question is susceptible of
"unbridled, arbitrary and oppressive exercise." 26

The contention has no basis. For one, the COMELEC is required to procure free air time for candidates
"within the area of coverage" of a particular radio or television broadcaster so that it cannot, for
example, procure such time for candidates outside that area. At what time of the day and how much
time the COMELEC may procure will have to be determined by it in relation to the overall objective of
informing the public about the candidates, their qualifications and their programs of government. As
stated in Osmeña v. COMELEC, the COMELEC Time provided for in §92, as well as the COMELEC Space
provided for in §90, is in lieu of paid ads which candidates are prohibited to have under §11(b) of R.A.
No. 6646. Accordingly, this objective must be kept in mind in determining the details of the COMELEC
Time as well as those of the COMELEC Space.

There would indeed be objection to the grant of power to the COMELEC if §92 were so detailed as to
leave no room for accommodation of the demands of radio and television programming. For were that
the case, there could be an intrusion into the editorial prerogatives of radio and television stations.

Differential Treatment of

Broadcast Media Justified

Petitioners complain that B.P. Blg. 881, §92 singles out radio and television stations to provide free air
time. They contend that newspapers and magazines are not similarly required as, in fact, in Philippine
Press Institute v.COMELEC,27 we upheld their right to the payment of just compensation for the print
space they may provide under §90.

The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the same
treatment under the free speech guarantee of the Constitution as the print media. There are important
differences in the characteristics of the two media, however, which justify their differential treatment for
free speech purposes. Because of the physical limitations of the broadcast spectrum, the government
must, of necessity, allocate broadcast frequencies to those wishing to use them. There is no similar
justification for government allocation and regulation of the print media. 28
In the allocation of limited resources, relevant conditions may validly be imposed on the grantees or
licensees. The reason for this is that, as already noted, the government spends public funds for the
allocation and regulation of the broadcast industry, which it does not do in the case of the print media.
To require the radio and television broadcast industry to provide free air time for the COMELEC Time is a
fair exchange for what the industry gets.

From another point of view, this Court has also held that because of the unique and pervasive influence
of the broadcast media, "[n]ecessarily . . . the freedom of television and radio broadcasting is somewhat
lesser in scope than the freedom accorded to newspaper and print media." 29

The broadcast media have also established a uniquely pervasive presence in the lives of all Filipinos.
Newspapers and current books are found only in metropolitan areas and in the poblaciones of
municipalities accessible to fast and regular transportation. Even here, there are low income masses who
find the cost of books, newspapers, and magazines beyond their humble means. Basic needs like food
and shelter perforce enjoy high priorities.

On the other hand, the transistor radio is found everywhere. The television set is also becoming
universal. Their message may be simultaneously received by a national or regional audience of
listeners including the indifferent or unwilling who happen to be within reach of a blaring radio
or television set. The materials broadcast over the airwaves reach every person of every age,
persons of varying susceptibilities to persuasion, persons of different I.Q.s and mental
capabilities, persons whose reactions to inflammatory or offensive speech would he difficult to
monitor or predict. The impact of the vibrant speech is forceful and immediate. Unlike readers of
the printed work, the radio audience has lesser opportunity to cogitate, analyze, and reject the
utterance. 30

Petitioners' assertion therefore that §92 of B.P. Blg. 881 denies them the equal protection of the law has
no basis. In addition, their plea that §92 (free air time) and §11(b) of R.A. No. 6646 (ban on paid political
ads) should be invalidated would pave the way for a return to the old regime where moneyed candidates
could monopolize media advertising to the disadvantage of candidates with less resources. That is what
Congress tried to reform in 1987 with the enactment of R.A. No. 6646. We are not free to set aside the
judgment of Congress, especially in light of the recent failure of interested parties to have the law
repealed or at least modified.

Requirement of COMELEC Time, a

Reasonable Exercise of the

State's Power to Regulate

Use of Franchises

Finally, it is argued that the power to supervise or regulate given to the COMELEC under Art. IX-C, §4 of
the Constitution does not include the power to prohibit. In the first place, what the COMELEC is
authorized to supervise or regulate by Art. IX-C, §4 of the Constitution, 31 among other things, is the use
by media of information of their franchises or permits, while what Congress (not the COMELEC) prohibits
is the sale or donation of print space or air time for political ads. In other words, the object of
supervision or regulation is different from the object of the prohibition. It is another fallacy for
petitioners to contend that the power to regulate does not include the power to prohibit. This may have
force if the object of the power were the same.

In the second place, the prohibition in §11(b) of R.A. No. 6646 is only half of the regulatory provision in
the statute. The other half is the mandate to the COMELEC to procure print space and air time for
allocation to candidates. As we said in Osmeña v. COMELEC:

The term political "ad ban" when used to describe §11(b) of R.A. No. 6646, is misleading, for
even as §11(b) prohibits the sale or donation of print space and air time to political candidates, it
mandates the COMELEC to procure and itself allocate to the candidates space and time in the
media. There is no suppression of political ads but only a regulation of the time and manner of
advertising.

xxx xxx xxx

. . . What is involved here is simply regulation of this nature. Instead of leaving candidates to
advertise freely in the mass media, the law provides for allocation, by the COMELEC of print
space and air time to give all candidates equal time and space for the purpose of ensuring "free,
orderly, honest, peaceful, and credible elections."

With the prohibition on media advertising by candidates themselves, the COMELEC Time and COMELEC
Space are about the only means through which candidates can advertise their qualifications and
programs of government. More than merely depriving their qualifications and programs of government.
More than merely depriving candidates of time for their ads, the failure of broadcast stations to provide
air time unless paid by the government would clearly deprive the people of their right to know. Art III, §7
of the Constitution provides that "the right of the people to information on matters of public concern
shall be recognized," while Art. XII, §6 states that "the use of property bears a social function [and] the
right to own, establish, and operate economic enterprises [is] subject to the duty of the State to promote
distributive justice and to intervene when the common good so demands."

To affirm the validity of §92 of B.P. Blg. 881 is to hold public broadcasters to their obligation to see to it
that the variety and vigor of public debate on issues in an election is maintained. For while broadcast
media are not mere common carriers but entities with free speech rights, they are also public trustees
charged with the duty of ensuring that the people have access to the diversity of views on political
issues. This right of the people is paramount to the autonomy of broadcast media. To affirm the validity
of §92, therefore, is likewise to uphold the people's right to information on matters of public concern.
The use of property bears a social function and is subject to the state's duty to intervene for the
common good. Broadcast media can find their just and highest reward in the fact that whatever altruistic
service they may render in connection with the holding of elections is for that common good.

For the foregoing reasons, the petition is dismissed.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Bellosillo, Melo, Puno, Kapunan, Martinez and Quisumbing, JJ.,
concur.