G.R. No.

L-14078 March 7, 1919

RUBI, ET AL. (manguianes), plaintiffs,

vs.
THE PROVINCIAL BOARD OF MINDORO, defendant.

D. R. Williams & Filemon Sotto for plaintiff.

Office of the Solicitor-General Paredes for defendant.

MALCOLM, J.:

In one of the cases which denote a landmark in American Constitutional History (Worcester vs. Georgia [1832], 6
Pet., 515), Chief Justice Marshall, the first luminary of American jurisprudence, began his opinion (relating to the
status of an Indian) with words which, with a slight change in phraseology, can be made to introduce the present
opinion — This cause, in every point of view in which it can be placed, is of the deepest interest. The legislative
power of state, the controlling power of the constitution and laws, the rights if they have any, the political existence
of a people, the personal liberty of a citizen, are all involved in the subject now to be considered.

To imitate still further the opinion of the Chief Justice, we adopt his outline and proceed first, to introduce the facts
and the issues, next to give a history of the so called "non-Christians," next to compare the status of the "non-
Christians" with that of the American Indians, and, lastly, to resolve the constitutional questions presented.

I. INTRODUCTION.

This is an application for habeas corpus in favor of Rubi and other Manguianes of the Province of Mindoro. It is
alleged that the Maguianes are being illegally deprived of their liberty by the provincial officials of that province. Rubi
and his companions are said to be held on the reservation established at Tigbao, Mindoro, against their will, and
one Dabalos is said to be held under the custody of the provincial sheriff in the prison at Calapan for having run
away form the reservation.

The return of the Solicitor-General alleges:

1. That on February 1, 1917, the provincial board of Mindoro adopted resolution No. 25 which is as follows:

The provincial governor, Hon. Juan Morente, Jr., presented the following resolution:

"Whereas several attempts and schemes have been made for the advancement of the non-Christian
people of Mindoro, which were all a failure,

"Whereas it has been found out and proved that unless some other measure is taken for the
Mangyan work of this province, no successful result will be obtained toward educating these people.

"Whereas it is deemed necessary to obliged them to live in one place in order to make a permanent
settlement,

"Whereas the provincial governor of any province in which non-Christian inhabitants are found is
authorized, when such a course is deemed necessary in the interest of law and order, to direct such
inhabitants to take up their habitation on sites on unoccupied public lands to be selected by him and
approved by the provincial board.

"Whereas the provincial governor is of the opinion that the sitio of Tigbao on Lake Naujan is a place
most convenient for the Mangyanes to live on, Now, therefore be it

"Resolved, that under section 2077 of the Administrative Code, 800 hectares of public land in the sitio of
Tigbao on Naujan Lake be selected as a site for the permanent settlement of Mangyanes in Mindoro subject
to the approval of the Honorable Secretary of the Interior, and

"Resolved further, That Mangyans may only solicit homesteads on this reservation providing that said
homestead applications are previously recommended by the provincial governor."

2. That said resolution No. 25 (series 1917) of the provincial board of Mindoro was approved by the
Secretary of the Interior of February 21, 1917.

3. That on December 4, 1917, the provincial governor of Mindoro issued executive order No. 2 which says:

"Whereas the provincial board, by Resolution No. 25, current series, has selected a site in the sitio of
Tigbao on Naujan Lake for the permanent settlement of Mangyanes in Mindoro.

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 "Whereas said resolution has been duly approve by the Honorable, the Secretary of the Interior, on
February 21, 1917.

"Now, therefore, I, Juan Morente, jr., provincial governor of Mindoro, pursuant to the provisions of
section 2145 of the revised Administrative Code, do hereby direct that all the Mangyans in the
townships of Naujan and Pola and the Mangyans east of the Baco River including those in the
districts of Dulangan and Rubi's place in Calapan, to take up their habitation on the site of Tigbao,
Naujan Lake, not later than December 31, 1917.

"Any Mangyan who shall refuse to comply with this order shall upon conviction be imprisoned not
exceed in sixty days, in accordance with section 2759 of the revised Administrative Code."

4. That the resolution of the provincial board of Mindoro copied in paragraph 1 and the executive order of the
governor of the same province copied in paragraph 3, were necessary measures for the protection of the
Mangyanes of Mindoro as well as the protection of public forests in which they roam, and to introduce
civilized customs among them.

5. That Rubi and those living in his rancheria have not fixed their dwelling within the reservation of Tigbao
and are liable to be punished in accordance with section 2759 of Act No. 2711.

6. That the undersigned has not information that Doroteo Dabalos is being detained by the sheriff of Mindoro
but if he is so detained it must be by virtue of the provisions of articles Nos. 2145 and 2759 of Act No. 2711.

It thus appears that the provincial governor of Mindoro and the provincial board thereof directed the Manguianes in
question to take up their habitation in Tigbao, a site on the shore of Lake Naujan, selected by the provincial
governor and approved by the provincial board. The action was taken in accordance with section 2145 of the
Administrative Code of 1917, and was duly approved by the Secretary of the Interior as required by said action.
Petitioners, however, challenge the validity of this section of the Administrative Code. This, therefore, becomes the
paramount question which the court is called upon the decide.

Section 2145 of the Administrative Code of 1917 reads as follows:

SEC. 2145. Establishment of non-Christina upon sites selected by provincial governor. — With the prior
approval of the Department Head, the provincial governor of any province in which non-Christian inhabitants
are found is authorized, when such a course is deemed necessary in the interest of law and order, to direct
such inhabitants to take up their habitation on sites on unoccupied public lands to be selected by him an
approved by the provincial board.

In connection with the above-quoted provisions, there should be noted section 2759 of the same Code, which read
as follows:

SEC. 2759. Refusal of a non-Christian to take up appointed habitation. — Any non-Christian who shall
refuse to comply with the directions lawfully given by a provincial governor, pursuant to section two thousand
one hundred and forty-five of this Code, to take up habitation upon a site designated by said governor shall
upon conviction be imprisonment for a period not exceeding sixty days.

The substance of what is now found in said section 2145 is not new to Philippine law. The genealogical tree of this
section, if we may be permitted to use such terminology, would read: Section 2077, Administrative Code of 1916;
section 62, Act No. 1397; section 2 of various special provincial laws, notably of Act No. 547, specifically relating to
the Manguianes; section 69, Act No. 387.

Section 2145 and its antecedent laws make use of the term "non-Christians." This word, as will later be disclosed, is
also found in varying forms in other laws of the Philippine Islands. In order to put the phrase in its proper category,
and in order to understand the policy of the Government of the Philippine Islands with reference to the uncivilized
elements of the Islands, it is well first of all to set down a skeleton history of the attitude assumed by the authorities
towards these "non-Christians," with particular regard for the legislation on the subject.

II. HISTORY.

A. BEFORE ACQUISITION OF THE PHILIPPINE BY THE UNITED STATES.

The most important of the laws of the Indies having reference to the subject at hand are compiled in Book VI, Title
III, in the following language.

LAW I.

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 The Emperor Charles and the Prince, the governor, at Cigales, on March 21, 1551. Philip II at Toledo, on
February 19, 1560. In the forest of Segovia on September 13, 1565. In the Escorial on November 10, 1568.
Ordinance 149 of the poblaciones of 1573. In San Lorenzo, on May 20, 1578,

THAT THE "INDIOS" BE REDUCED INTO "POBLACIONES" COMMUNITIES).

In order that the indios may be instructed in the Sacred Catholic Faith and the evangelical law, and in order
that they may forget the blunders of their ancient rites and ceremonies to the end that they may live in
harmony and in a civilized manner, it has always been endeavored, with great care and special attention, to
use all the means most convenient to the attainment of these purposes. To carry out this work with success,
our Council of the Indies and other religious persons met at various times; the prelates of new Spain
assembled by order of Emperor Charles V of glorious memory in the year one thousand five hundred and
forty-six — all of which meetings were actuated with a desire to serve God an our Kingdom. At these
meetings it was resolved that indios be made to live in communities, and not to live in places divided and
separated from one another by sierras and mountains, wherein they are deprived of all spiritual and
temporal benefits and wherein they cannot profit from the aid of our ministers and from that which gives rise
to those human necessities which men are obliged to give one another. Having realized that convenience of
this resolution, our kings, our predecessors, by different orders, have entrusted and ordered the viceroys,
presidents, and governors to execute with great care and moderation the concentration of
the indios into reducciones; and to deal with their doctrine with such forbearance and gentleness, without
causing inconveniences, so that those who would not presently settle and who would see the good
treatment and the protection of those already in settlements would, of their own accord, present themselves,
and it is ordained that they be not required to pay taxes more than what is ordered. Because the above has
been executed in the greater part of our Indies, we hereby order and decree that the same be complied with
in all the remaining parts of the Indies, and the encomederos shall entreat compliance thereof in the manner
and form prescribed by the laws of this title.

xxx xxx xxx

LAW VIII.

Philip II at the Pardo, on December 1, 1573. Philip III at Madrid, October 10, 1618.

THE "REDUCCTIONES" BE MADE IN ACCORDANCE WITH THE CONDITIONS OF THIS LAW.

The places wherein the pueblos and reducciones shall be formed should have the facilities of waters. lands,
and mountains, ingress and egress, husbandry and passageway of one league long, wherein the indios can
have their live stock that they may not be mixed with those of the Spaniards.

LAW IX.

Philip II at Toledo, on February 19, 1956.

THAT THE "INDIOS" IN "REDUCCIONES" BE NOT DEPRIVED OF THE LANDS PREVIOUSLY HELD BY THEM.

With more good-will and promptness, the indios shall be concentrated in reducciones. Provided they shall
not be deprived of the lands and granaries which they may have in the places left by them. We hereby order
that no change shall be made in this respect, and that they be allowed to retain the lands held by them
previously so that they may cultivate them and profit therefrom.

xxx xxx xxx

LAW XIII.

THE SAME AS ABOVE.

THAT THE "REDUCCIONES" BE NOT REMOVED WITHOUT ORDER OF THE KING, VICEROY, OR COURT.

No governor, or magistrate, or alcalde mayor, or any other court, has the right to alter or to remove
thepueblos or the reducciones once constituted and founded, without our express order or that of the
viceroy, president, or the royal district court, provided, however, that the encomenderos, priests,
or indios request such a change or consent to it by offering or giving information to that en. And, because
these claims are often made for private interests and not for those of the indios, we hereby order that this
law be always complied with, otherwise the change will be considered fraudulently obtained. The penalty of
one thousand pesos shall be imposed upon the judge or encomendero who should violate this law.

LAW XV.

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Philip III at Madrid, on October 10, 1618.

THAT THERE BE MAYORS AND ALDERMEN IN THE "REDUCTIONES," WHO SHALL BE "INDIOS."

We order that in each town and reduccion there be a mayor, who should be an indio of the same reduccion;
if there be more than eighty houses, there should be two mayors and two aldermen, also indios; and, even if
the town be a big one, there should, nevertheless, be more than two mayors and four aldermen, If there be
less than eighty indios but not less than forty, there should be not more than one mayor and one alderman,
who should annually elect nine others, in the presence of the priests , as is the practice in town inhabited by
Spaniards and indios.

LAW XXI.

Philip II, in Madrid, On May 2, 1563, and on November 25, 1578. At Tomar, on May 8, 1581. At Madrid, on
January 10, 1589. Philip III, at Todesillas, on July 12, 1600. Philip IV, at Madrid, on October 1 and
December 17, 1646. For this law and the one following, see Law I, Tit. 4, Book 7.

THAT IN THE TOWNS OF THE "INDIOS," THERE SHALL LIVE NO SPANIARDS, NEGROES, "MESTIZOS," AND
MULATTOES.

We hereby prohibit and forbid Spaniards, negroes, mulattores, or mestizos to live to live in
the reduccionesand towns and towns of the indios, because it has been found that some Spaniards who
deal, trade, live, and associate with the indios are men of troublesome nature, of dirty ways of living;
robbers, gamblers, and vicious and useless men; and, to avoid the wrongs done them, the indios would
leave their towns and provinces; and the negroes, mestizos, and mulattoes, besides maltreating them and
utilizing their services, contaminate them with their bad customs, idleness, and also some of their blunders
and vices which may corrupt and pervert the goal which we desire to reach with regard to their salvation,
increase, and tranquillity. We hereby order the imposition of grave penalties upon the commission of the
acts above-mentioned which should not be tolerated in the towns, and that the viceroys, presidents,
governors, and courts take great care in executing the law within their powers and avail themselves of the
cooperation of the ministers who are truly honest. As regards the mestizos and Indian and Chinese half-
breeds (zambaigos), who are children of indiasand born among them, and who are to inherit their houses
and haciendas, they all not be affected by this law, it appearing to be a harsh thing to separate them from
their parents. (Law of the Indies, vol. 2, pp. 228, 229, 230, 231.)

A clear exposition of the purposes of the Spanish government, in its efforts to improve the condition of the less
advanced inhabitants of the Islands by concentrating them in "reducciones," is found in the Decree of the Governor-
General of the Philippine Islands of January 14, 1881, reading as follows:

It is a legal principle as well as a national right that every inhabitant of a territory recognized as an integral
part of a nation should respect and obey the laws in force therein; while, on other hand, it is the duty to
conscience and to humanity for all governments to civilize those backward races that might exist in the
nation, and which living in the obscurity of ignorance, lack of all the nations which enable them to grasp the
moral and material advantages that may be acquired in those towns under the protection and vigilance
afforded them by the same laws.

It is equally highly depressive to our national honor to tolerate any longer the separation and isolation of the
non-Christian races from the social life of the civilized and Christian towns; to allow any longer the
commission of depredations, precisely in the Island of Luzon wherein is located the seat of the
representative of the Government of the, metropolis.

It is but just to admit the fact that all the governments have occupied themselves with this most important
question, and that much has been heretofore accomplished with the help and self-denial of the missionary
fathers who have even sacrificed their lives to the end that those degenerate races might be brought to the
principles of Christianity, but the means and the preaching employed to allure them have been insufficient to
complete the work undertaken. Neither have the punishments imposed been sufficient in certain cases and
in those which have not been guarded against, thus giving and customs of isolation.

As it is impossible to consent to the continuation of such a lamentable state of things, taking into account the
prestige which the country demands and the inevitable duty which every government has in enforcing
respect and obedience to the national laws on the part of all who reside within the territory under its control, I
have proceeded in the premises by giving the most careful study of this serious question which involves
important interests for civilization, from the moral and material as well as the political standpoints. After
hearing the illustrious opinions of all the local authorities, ecclesiastics, and missionaries of the provinces of
Northern Luzon, and also after finding the unanimous conformity of the meeting held with the Archbishop of
Manila, the Bishops of Jaro and Cebu, and the provincial prelates of the orders of the Dominicans,
Agustinians, Recoletos, Franciscans, and Jesuits as also of the meeting of the Council of Authorities, held
for the object so indicated, I have arrived at an intimate conviction of the inevitable necessity of proceeding

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in a practical manner for the submission of the said pagan and isolated races, as well as of the manner and
the only form of accomplishing such a task.

For the reasons above stated and for the purpose of carrying out these objects, I hereby promulgate the
following:

DECREE.

1. All the indian inhabitants (indios) of the Islands of Luzon are, from this date, to be governed by the
common law, save those exceptions prescribed in this decree which are bases upon the differences of
instructions, of the customs, and of the necessities of the different pagan races which occupy a part of its
territory.

2. The diverse rules which should be promulgated for each of these races — which may be divided into
three classes; one, which comprises those which live isolated and roaming about without forming a town nor
a home; another, made up of those subdued pagans who have not as yet entered completely the social life;
and the third, of those mountain and rebellious pagans — shall be published in their respective dialects, and
the officials, priests, and missionaries of the provinces wherein they are found are hereby entrusted in the
work of having these races learn these rules. These rules shall have executive character, beginning with the
first day of next April, and, as to their compliance, they must be observed in the manner prescribed below.

3. The provincial authorities in conjunction with the priests shall proceed, from now on, with all the means
which their zeal may suggest to them, to the taking of the census of the inhabitants of the towns or
settlement already subdued, and shall adopt the necessary regulations for the appointment of local
authorities, if there be none as yet; for the construction of courts and schools, and for the opening or fixing
up of means of communication, endeavoring, as regards the administrative organization of the said towns or
settlements, that this be finished before the first day of next July, so that at the beginning of the fiscal year
they shall have the same rights and obligations which affect the remaining towns of the archipelago, with the
only exception that in the first two years they shall not be obliged to render personal services other than
those previously indicated.

4. So long as these subdued towns or settlements are located infertile lands appropriate for cultivation, the
inhabitants thereof shall not be obliged to move their dwelling-houses; and only in case of absolute
necessity shall a new residence be fixed for them, choosing for this purpose the place most convenient for
them and which prejudices the least their interest; and, in either of these cases, an effort must be made to
establish their homes with the reach of the sound of the bell.

5. For the protection and defense of these new towns, there shall be established an armed force composed
precisely of native Christian, the organization and service of which shall be determined in a regulations
based upon that of the abolished Tercios de Policia (division of the Guardia Civil).

6. The authorities shall see to it that the inhabitants of the new towns understand all the rights and duties
affecting them and the liberty which they have as to where and now they shall till their lands and sell the
products thereof, with the only exception of the tobacco which shall be bought by the Hacienda at the same
price and conditions allowed other producers, and with the prohibition against these new towns as well as
the others from engaging in commerce of any other transaction with the rebellious indios, the violation of
which shall be punished with deportation.

7. In order to properly carry out this express prohibition, the limits of the territory of the rebellious indios shall
be fixed; and whoever should go beyond the said limits shall be detained and assigned governmentally
wherever convenient.

8. For the purpose of assisting in the conversion of the pagans into the fraternity of the Catholic Church, all
by this fact along be exempt for eight years from rendering personal labor.

9. The authorities shall offer in the name of the State to the races not subdued (aetas and mountains
igorrots the following advantages in returns for their voluntary submission: to live in towns; unity among their
families; concession of good lands and the right to cultivate them in the manner they wish and in the way
them deem most productive; support during a year, and clothes upon effecting submission; respect for their
habits and customs in so far as the same are not opposed to natural law; freedom to decide of their own
accord as to whether they want to be Christians or not; the establishment of missions and families of
recognized honesty who shall teach, direct, protect, and give them security and trust them; the purchase or
facility of the sale of their harvests; the exemption from contributions and tributes for ten years and from
the quintas (a kind of tax) for twenty years; and lastly, that those who are governed by the local authorities
as the ones who elect such officials under the direct charge of the authorities of the province or district.

10. The races indicated in the preceding article, who voluntarily admit the advantages offered, shall, in
return, have the obligation of constituting their new towns, of constructing their town hall, schools, and
country roads which place them in communication with one another and with the Christians; provided, the
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 location of these towns be distant from their actual residences, when the latter do not have the good
conditions of location and cultivations, and provided further the putting of families in a place so selected by
them be authorized in the towns already constituted.

11. The armed force shall proceed to the prosecution and punishment of the tribes, that, disregarding the
peace, protection, and advantages offered them, continue in their rebellious attitude on the first of next April,
committing from now on the crimes and vexations against the Christian towns; and for the this purposes, the
Captain General's Office shall proceed with the organization of the divisions of the Army which, in
conjunction with the rural guards (cuadrilleros), shall have to enter the territory of such tribes. On the
expiration of the term, they shall destroy their dwelling-houses, labors, and implements, and confiscate their
products and cattle. Such a punishment shall necessarily be repeated twice a year, and for this purpose the
military headquarters shall immediately order a detachment of the military staff to study the zones where
such operations shall take place and everything conducive to the successful accomplishment of the same.

12. The chiefs of provinces, priests, and missioners, local authorities, and other subordinates to my
authorities, local authorities, and other subordinates to may authority, civil as well as military authorities,
shall give the most effective aid and cooperation to the said forces in all that is within the attributes and the
scope of the authority of each.

13. With respect to the reduccion of the pagan races found in some of the provinces in the southern part of
the Archipelago, which I intend to visit, the preceding provisions shall conveniently be applied to them.

14. There shall be created, under my presidency as Governor-General, Vice-Royal Patron, a council or
permanent commission which shall attend to and decide all the questions relative to the application of the
foregoing regulations that may be brought to it for consultations by the chiefs of provinces and priests and
missionaries.

15. The secondary provisions which may be necessary, as a complement to the foregoing, in brining about
due compliance with this decree, shall be promulgated by the respective official centers within their
respective jurisdictions. (Gaceta de Manila, No. 15) (Diccionario de la Administracion, vol. 7, pp. 128-134.)

B. AFTER ACQUISITON OF THE PHILIPPINES BY THE UNITED STATES.

Ever since the acquisition of the Philippine Islands by the United States, the question as to the best method for
dealing with the primitive inhabitants has been a perplexing one.

1. Organic law.

The first order of an organic character after the inauguration of the American Government in the Philippines was
President McKinley's Instructions to the Commission of April 7, 1900, later expressly approved and ratified by
section 1 of the Philippine Bill, the Act of Congress of July 1, 1902. Portions of these instructions have remained
undisturbed by subsequent congressional legislation. One paragraph of particular interest should here be quoted,
namely:

In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same course followed
by Congress in permitting the tribes of our North American Indians to maintain their tribal organization and
government and under which many of these tribes are now living in peace and contentment, surrounded by
civilization to which they are unable or unwilling to conform. Such tribal governments should, however, be
subjected to wise and firm regulation; and, without undue or petty interference, constant and active effort
should be exercised to prevent barbarous practices and introduce civilized customs.

Next comes the Philippine Bill, the Act of Congress of July 1, 1902, in the nature of an Organic Act for the
Philippines. The purpose of section 7 of the Philippine Bill was to provide for a legislative body and, with this end in
view, to name the prerequisites for the organization of the Philippine Assembly. The Philippine Legislature,
composed of the Philippine Commission and the Philippine Assembly, was to have jurisdiction over the Christian
portion of the Islands. The Philippine Commission was to retain exclusive jurisdiction of that part of said Islands
inhabited by Moros or other non-Christian tribes.

The latest Act of Congress, nearest to a Constitution for the Philippines, is the Act of Congress of August 29, 1916,
commonly known as the Jones Law. This transferred the exclusive legislative jurisdiction and authority theretofore
exercised by the Philippine Commission, to the Philippine Legislature (sec. 12). It divided the Philippine Islands into
twelve senatorial districts, the twelfth district to be composed of the Mountain Province, Baguio, Nueva Vizcaya, and
the Department of Mindanao and Sulu. The Governor-General of the Philippine Islands was authorized to appoint
senators and representatives for the territory which, at the time of the passage of the Jones Law, was not
represented in the Philippine Assembly, that is, for the twelfth district (sec. 16). The law establish a bureau to be
known as the "Bureau of non-Christian Tribes" which shall have general supervision over the public affairs of the
inhabitants which are represented in the Legislature by appointed senators and representatives( sec. 22).

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Philippine organic law may, therefore, be said to recognized a dividing line between the territory not inhabited by
Moros or other non-Christian tribes, and the territory which Moros or other non-Christian tribes, and the territory
which is inhabited by Moros or other non-Christian tribes.

2. Statute law.

Local governments in the Philippines have been provided for by various acts of the Philippine Commission and
Legislature. The most notable are Acts Nos. 48 and 49 concerning the Province of Benguet and the Igorots; Act NO.
82, the Municipal Code; ;Act no. 83, the Provincial Government Act; Act No. 183, the Character of the city of Manila;
Act No. 7887, providing for the organization and government of the Moro Province; Act No. 1396, the Special
Provincial Government Act; Act No. 1397, the Township Government Act; Act No. 1667, relating to the organization
of settlements; Act No. 1963, the Baguio charger; and Act No. 2408, the Organic Act of the Department of Mindanao
and Sulu. The major portion of these laws have been carried forward into the Administrative Codes of 1916 an
d1917.

Of more particular interest are certain special laws concerning the government of the primitive peoples. Beginning
with Act No. 387, sections 68-71, enacted on April 9, 1902, by the United States Philippine Commission, having
reference to the Province of Nueva Vizcaya, Acts Nos. 4111, 422, 445, 500, 547, 548, 549, 550, 579, 753, 855,
1113, 1145, 4568, 1306 were enacted for the provinces of Abra, Antique, Bataan, Ilocos Norte, Ilocos Sur, Isabela.
Lepanto-Bontoc, Mindoro, Misamis, Nueva Vizcaya, Pangasinan, Paragua (Palawan), Tarlac, Tayabas, and
Zambales. As an example of these laws, because referring to the Manguianes, we insert Act No. 547:

No. 547. — AN ACT PROVIDING FOR THE ESTABLISHMENT OF LOCAL CIVIL GOVERNMENTS
FOR THE MANGUIANES IN THE PROVINCE OF MINDORO.

By authority of the United States, be it enacted by the Philippine Commission, that:

SECTION 1. Whereas the Manguianes of the Provinces of Mindoro have not progressed sufficiently in
civilization to make it practicable to bring them under any form of municipal government, the provincial
governor is authorized, subject to the approval of the Secretary of the Interior, in dealing with these
Manguianes to appoint officers from among them, to fix their designations and badges of office, and to
prescribe their powers and duties: Provided, That the powers and duties thus prescribed shall not be in
excess of those conferred upon township officers by Act Numbered Three hundred and eighty-seven entitled
"An Act providing for the establishment of local civil Governments in the townships and settlements of Nueva
Vizcaya."

SEC. 2. Subject to the approval of the Secretary of the Interior, the provincial governor is further authorized,
when he deems such a course necessary in the interest of law and order, to direct such Manguianes to take
up their habitation on sites on unoccupied public lands to be selected by him and approved by the provincial
board. Manguianes who refuse to comply with such directions shall upon conviction be imprisonment for a
period not exceeding sixty days.

SEC. 3. The constant aim of the governor shall be to aid the Manguianes of his province to acquire the
knowledge and experience necessary for successful local popular government, and his supervision and
control over them shall be exercised to this end, an to the end that law and order and individual freedom
shall be maintained.

SEC. 4. When in the opinion of the provincial board of Mindoro any settlement of Manguianes has advanced
sufficiently to make such a course practicable, it may be organized under the provisions of sections one to
sixty-seven, inclusive, of Act Numbered three hundred and eighty-seven, as a township, and the
geographical limits of such township shall be fixed by the provincial board.

SEC. 5. The public good requiring the speedy enactment of this bill, the passage of the same is hereby
expedited in accordance with section two of 'An Act prescribing the order of procedure by the Commission in
the enactment of laws,' passed September twenty-sixth, nineteen hundred.

SEC. 6. This Act shall take effect on its passage.

Enacted, December 4, 1902.

All of these special laws, with the exception of Act No. 1306, were repealed by Act No. 1396 and 1397. The last
named Act incorporated and embodied the provisions in general language. In turn, Act No. 1397 was repealed by
the Administrative Code of 1916. The two Administrative Codes retained the provisions in questions.

These different laws, if they of the non-Christian inhabitants of the Philippines and a settled and consistent practice
with reference to the methods to be followed for their advancement.

C. TERMINOLOGY.

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The terms made use of by these laws, organic and statutory, are found in varying forms.

"Uncivilized tribes" is the denomination in President McKinley's instruction to the Commission.

The most commonly accepted usage has sanctioned the term "non-Christian tribes." These words are to be found in
section 7 of the Philippine Bill and in section 22 of the Jones Law. They are also to be found in Act No. 253 of the
Philippines Commission, establishing a Bureau of non-Christian Tribes and in Act No. 2674 of the Philippine
Legislature, carried forward into sections 701-705 of the Administrative Code of 1917, reestablishing this Bureau.
Among other laws which contain the phrase, there can be mentioned Acts Nos. 127, 128, 387, 547, 548, 549, 550,
1397, 1639, and 2551.

"Non-Christian people," "non-Christian inhabitants," and "non-Christian Filipinos" have been the favorite
nomenclature, in lieu of the unpopular word "tribes," since the coming into being of a Filipinized legislature. These
terms can be found in sections 2076, 2077, 2390, 2394, Administrative Code of 1916; sections 701-705, 2145,
2422, 2426, Administrative Code of 1917; and in Acts Nos. 2404, 2435, 2444, 2674 of the Philippine Legislatures,
as well as in Act No. 1667 of the Philippine Commission.

The Administrative Code specifically provides that the term "non-Christian" shall include Mohammedans and
pagans. (Sec. 2576, Administrative Code of 1917; sec. 2561, Administrative Code of 1916, taken from Act No. 2408,
sec. 3.)

D. MEANING OF TERM "NON-CHRISTIAN."

If we were to follow the literal meaning of the word "non-Christian," it would of course result in giving to it a religious
signification. Obviously, Christian would be those who profess the Christian religion, and non-Christians, would be
those who do not profess the Christian religion. In partial corroboration of this view, there could also be cited section
2576 of the last Administrative Code and certain well-known authorities, as Zuñiga, "Estadismo de las Islas
Filipinas," Professor Ferdinand Blumentritt, "Philippine Tribes and Languages," and Dr. N. M. Saleeby, "The Origin
of Malayan Filipinos." (See Blair & Robertson, "The Philippine Islands," 1493-1898, vol. III, p. 300, note; Craig-
Benitez, "Philippine Progress prior to 1898," vol. I. p. 107.)

Not content with the apparent definition of the word, we shall investigate further to ascertain what is its true
meaning.

In one sense, the word can have a geographical signification. This is plainly to be seen by the provisions of many
laws. Thus, according to the Philippine Bill, the authority of the Philippine Assembly was recognized in the "territory"
of the Islands not inhabited by Moros or other non-Christian tribes. Again, the Jones Law confers similar recognition
in the authorization of the twelfth senatorial district for the "territory not now represented in the Philippine Assembly."
The Philippines Legislature has, time and again, adopted acts making certain other acts applicable to that "part" of
the Philippine Islands inhabited by Moros or other non-Christian tribes.

Section 2145, is found in article XII of the Provincial Law of the Administrative Code. The first section of this article,
preceding section 2145, makes the provisions of the article applicable only in specially organized provinces. The
specially organized provinces are the Mountain Province, Nueva Vizcaya, Mindoro, Batanes, and Palawan. These
are the provinces to which the Philippine Legislature has never seen fit to give all the powers of local self-
government. They do not, however, exactly coincide with the portion of the Philippines which is not granted popular
representation. Nevertheless, it is still a geographical description.

It is well-known that within the specially organized provinces, there live persons some of who are Christians and
some of whom are not Christians. In fact, the law specifically recognizes this. ( Sec. 2422, Administrative Code of
1917, etc.)

If the religious conception is not satisfactory, so against the geographical conception is likewise inadquate. The
reason it that the motive of the law relates not to a particular people, because of their religion, or to a particular
province because of its location, but the whole intent of the law is predicated n the civilization or lack of civilization of
the inhabitants.

At most, "non-Christian" is an awkward and unsatisfactory word. Apologetic words usually introduce the term. "The
so-called non-Christian" is a favorite expression. The Secretary of the Interior who for so many years had these
people under his jurisdiction, recognizing the difficulty of selecting an exact designation, speaks of the "backward
Philippine peoples, commonly known as the 'non-Christian tribes."' (See Hearings before the Committee on the
Philippines, United States Senate, Sixty-third Congress, third session on H.R. 18459, An Act to declare the purpose
of the People of the United States as to the future political status of the Philippine Islands and to provide a more
autonomous government for the Islands, pp. 346, 351; letter of the Secretary of the Interior of June 30, 1906,
circulated by the Executive Secretary.)

The idea that the term "non-Christian" is intended to relate to degree of civilization, is substantiated by reference to
legislative, judicial, and executive authority.

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The legislative intent is borne out by Acts Nos. 48, 253, 387, 1667, and 2674, and sections 701 et seq, and sections
2422 et seq, of the Administrative Code of 1917. For instance, Act No. 253 charged the Bureau of non-Christian
tribes to conduct "systematic investigations with reference to non-Christian tribes . . . with special view to
determining the most practicable means for bringing about their advancement in civilization and material property
prosperity."

As authority of a judicial nature is the decision of the Supreme Court in the case of United States vs. Tubban
[Kalinga] ([1915], 29, Phil., 434). The question here arose as to the effect of a tribal marriage in connection with
article 423 of the Penal code concerning the husband who surprises his wife in the act of adultery. In discussing the
point, the court makes use of the following language:

. . . we are not advised of any provision of law which recognizes as legal a tribal marriage of so-called non-
Christians or members of uncivilized tribes, celebrated within that province without compliance with the
requisites prescribed by General Orders no. 68. . . . We hold also that the fact that the accused is shown to
be a member of an uncivilized tribe, of a low order of intelligence, uncultured and uneducated, should be
taken into consideration as a second marked extenuating circumstance.

Of much more moment is the uniform construction of execution officials who have been called upon to interpret and
enforce the law. The official who, as a member of the Philippine Commission, drafted much of the legislation relating
to the so-called Christians and who had these people under his authority, was the former Secretary of the Interior.
Under date of June 30, 1906, this official addressed a letter to all governor of provinces, organized under the
Special Provincial Government Act, a letter which later received recognition by the Governor-General and was
circulated by the Executive Secretary, reading as follows:

Sir: Within the past few months, the question has arisen as to whether people who were originally non-
Christian but have recently been baptized or who are children of persons who have been recently baptized
are, for the purposes of Act 1396 and 1397, to be considered Christian or non-Christians.

It has been extremely difficult, in framing legislation for the tribes in these islands which are not advanced far
in civilization, to hit upon any suitable designation which will fit all cases. The number of individual tribes is
so great that it is almost out of the question to enumerate all of them in an Act. It was finally decided to adopt
the designation 'non-Christians' as the one most satisfactory, but the real purpose of the Commission was
not so much to legislate for people having any particular religious belief as for those lacking sufficient
advancement so that they could, to their own advantage, be brought under the Provincial Government Act
and the Municipal Code.

The mere act of baptism does not, of course, in itself change the degree of civilization to which the person
baptized has attained at the time the act of baptism is performed. For practical purposes, therefore, you will
give the member of so-called "wild tribes" of your province the benefit of the doubt even though they may
recently have embraced Christianity.

The determining factor in deciding whether they are to be allowed to remain under the jurisdiction of
regularly organized municipalities or what form of government shall be afforded to them should be the
degree of civilization to which they have attained and you are requested to govern yourself accordingly.

I have discussed this matter with the Honorable, the Governor-General, who concurs in the opinion above
expressed and who will have the necessary instructions given to the governors of the provinces organized
under the Provincial Government Act. (Internal Revenue Manual, p. 214.)

The present Secretary of the Interior, in a memorandum furnished a member of this court, has the following to say
on the subject:

As far as names are concerned the classification is indeed unfortunate, but while no other better
classification has as yet been made the present classification should be allowed to stand . . . I believe the
term carries the same meaning as the expressed in the letter of the Secretary of the Interior (of June 30,
1906, herein quoted). It is indicative of the degree of civilization rather than of religious denomination, for the
hold that it is indicative of religious denomination will make the law invalid as against that Constitutional
guaranty of religious freedom.

Another official who was concerned with the status of the non-Christians, was the Collector of Internal Revenue. The
question arose for ruling relatives to the cedula taxation of the Manobos and the Aetas. Thereupon, the view of the
Secretary of the Interior was requested on the point, who, by return indorsement, agreed with the interpretation of
the Collector of Internal Revenue. This Construction of the Collector of Internal Revenue can be found in circular
letter No. 188 of the Bureau of Internal Revenue, dated June 11, 1907, reading as follows (Internal Revenue
Manual, p. 214):

The internal revenue law exempts "members of non-Christian tribes" from the payment of cedula taxes. The
Collector of Internal Revenue has interpreted this provision of law to mean not that persons who profess
some form of Christian worship are alone subject to the cedula tax, and that all other person are exempt; he
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 has interpreted it to mean that all persons preserving tribal relations with the so-called non-Christian tribes
are exempt from the cedula tax, and that all others, including Jews, Mohammedans, Confucians, Buddists,
etc., are subject to said tax so long as they live in cities or towns, or in the country in a civilized condition. In
other words, it is not so much a matter of a man's form of religious worship or profession that decides
whether or not he is subject to the cedula tax; it is more dependent on whether he is living in a civilized
manner or is associated with the mountain tribes, either as a member thereof or as a recruit. So far, this
question has not come up as to whether a Christian, maintaining his religious belief, but throwing his lot and
living with a non-Christian tribe, would or would not be subject to the cedula tax. On one occasion a
prominent Hebrew of Manila claimed to this office that he was exempt from the cedula tax, inasmuch as he
was not a Christian. This Office, however, continued to collect cedula taxes from all the Jews, East Indians,
Arabs, Chinamen, etc., residing in Manila. Quite a large proportion of the cedula taxes paid in this city are
paid by men belonging to the nationalities mentioned. Chinamen, Arabs and other s are quite widely
scattered throughout the Islands, and a condition similar to that which exist in Manila also exists in most of
the large provincial towns. Cedula taxes are therefore being collected by this Office in all parts of these
Islands on the broad ground that civilized people are subject to such taxes, and non-civilized people
preserving their tribal relations are not subject thereto.

(Sgd.) JNO. S. HORD,

Collector of Internal Revenue.

On September 17, 1910, the Collector of Internal Revenue addressed circular letter No. 327, approved by the
Secretary of Finance and Justice, to all provincial treasurers. This letter in part reads:

In view of the many questions that have been raised by provincial treasurers regarding cedula taxes due
from members of non-Christian tribes when they come in from the hills for the purposes of settling down and
becoming members of the body politic of the Philippine Islands, the following clarification of the laws
governing such questions and digest of rulings thereunder is hereby published for the information of all
concerned:

Non-Christian inhabitants of the Philippine Islands are so classed, not by reason of the fact that they do not
profess Christianity, but because of their uncivilized mode of life and low state of development. All
inhabitants of the Philippine Islands classed as members of non-Christian tribes may be divided into three
classes in so far as the cedula tax law is concerned . . .

Whenever any member of an non-Christian tribe leaves his wild and uncivilized mode of life, severs
whatever tribal relations he may have had and attaches himself civilized community, belonging a member of
the body politic, he thereby makes himself subject to precisely the same law that governs the other
members of that community and from and after the date when he so attaches himself to the community the
same cedula and other taxes are due from him as from other members thereof. If he comes in after the
expiration of the delinquency period the same rule should apply to him as to persons arriving from foreign
countries or reaching the age of eighteen subsequent to the expiration of such period, and a regular class A,
D, F, or H cedula, as the case may be, should be furnished him without penalty and without requiring him to
pay the tax for former years.

In conclusion, it should be borne in mind that the prime factors in determining whether or not a man is
subject to the regular cedula tax is not the circumstance that he does or does not profess Christianity, nor
even his maintenance of or failure to maintain tribal relations with some of the well known wild tribes, but his
mode of life, degree of advancement in civilization and connection or lack of connection with some civilized
community. For this reason so called "Remontados" and "Montescos" will be classed by this office as
members of non-Christian tribes in so far as the application of the Internal Revenue Law is concerned,
since, even though they belong to no well recognized tribe, their mode of life, degree of advancement and
so forth are practically the same as those of the Igorrots and members of other recognized non-Christina
tribes.

Very respectfully,

(Sgd.) ELLIS CROMWELL,

Collector of Internal Revenue,

Approved:
(Sgd.) GREGORIO ARANETA,
Secretary of Finance and Justice.

The two circular above quoted have since been repealed by Bureau of Internal Revenue Regulations No. 1,
promulgated by Venancio Concepcion, Acting Collector of Internal Revenue, and approved on April 16, 1915, by
Honorable Victorino Mapa, Secretary of Finance and Justice. Section 30 of the regulations is practically a transcript
of Circular Letter No. 327.

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The subject has come before the Attorney-General for consideration. The Chief of Constabulary request the opinion
of the Attorney-General as to the status of a non-Christian who has been baptized by a minister of the Gospel. The
precise questions were these: "Does he remain non-Christian or is he entitled to the privileges of a Christian? By
purchasing intoxicating liquors, does he commit an infraction of the law and does the person selling same lay
himself liable under the provision of Act No. 1639?" The opinion of Attorney-General Avanceña, after quoting the
same authorities hereinbefore set out, concludes:

In conformity with the above quoted constructions, it is probable that is probable that the person in question
remains a non-Christian, so that, in purchasing intoxicating liquors both he and the person selling the same
make themselves liable to prosecution under the provisions of Act No. 1639. At least, I advise you that these
should be the constructions place upon the law until a court shall hold otherwise.

Solicitor-General Paredes in his brief in this case says:

With respect to the meaning which the phrase non-Christian inhabitants has in the provisions of the
Administrative code which we are studying, we submit that said phrase does not have its natural meaning
which would include all non-Christian inhabitants of the Islands, whether Filipino or strangers, civilized or
uncivilized, but simply refers to those uncivilized members of the non-Christian tribes of the Philippines who,
living without home or fixed residence, roam in the mountains, beyond the reach of law and order . . .

The Philippine Commission in denominating in its laws that portion of the inhabitants of the Philippines which
live in tribes as non-Christian tribes, as distinguished from the common Filipinos which carry on a social and
civilized life, did not intended to establish a distinction based on the religious beliefs of the individual, but,
without dwelling on the difficulties which later would be occasioned by the phrase, adopted the expression
which the Spanish legislation employed to designate the uncivilized portion of the inhabitants of the
Philippines.

The phrase 'non-Christian inhabitants' used in the provisions of articles 2077 and 2741 of Act No. 2657
(articles 2145 and 2759) should be understood as equivalent to members of uncivilized tribes of the
Philippines, not only because this is the evident intention of the law, but because to give it its lateral meaning
would make the law null and unconstitutional as making distinctions base the religion of the individual.

The Official Census of 1903, in the portion written by no less an authority than De. David P. Barrows, then "Chief of
the Bureau of non-Christian Tribes," divides the population in the Christian or Civilized Tribes, and non-Christian or
Wild Tribes. (Census of the Philippine Islands [1903], vol. 1, pp. 411 et seq). The present Director of the Census,
Hon. Ignacio Villamor, writes that the classification likely to be used in the Census now being taken is: "Filipinos and
Primitive Filipinos." In a Pronouncing Gazetteer and Geographical Dictionary of the Philippine Islands, prepared in
the Bureau of Insular Affairs, War Department, a sub-division under the title non-Christian tribes is, "Physical and
Political Characteristics of the non-Christian Tribes," which sufficiently shows that the terms refers to culture and not
to religion.

In resume, therefore, the Legislature and the Judiciary, inferentially, and different executive officials, specifically, join
in the proposition that the term "non-Christian" refers, not to religious belief, but, in a way , to geographical area,
and, more directly, to natives of the Philippine Islands of a law grade of civilization, usually living in tribal relationship
apart from settled communities.

E. THE MANGUIANES.

The so-called non-Christians are in various state approaching civilization. The Philippine Census of 1903 divided
them into four classes. Of the third class, are the Manguianes (or Mangyans) of Mindoro.

Of the derivation of the name "Manguian" Dr. T. H. Pardo de Tavera in his Etimilogia de los nombres de Rozas de
Filipinas, says:

In Tagalog, Bicol, and Visaya, Manguian signifies "savage," "mountainer," "pagan," "negro." It may be that
the use of this word is applicable to a great number of Filipinos, but nevertheless it has been applied only to
certain inhabitants of Mindoro. Even in primitive times without doubt this name was given to those of that
island who bear it to-day, but its employed in three Filipino languages shows that the radical ngian had in all
these languages a sense to-day forgotten. In Pampango this ending still exists and signifies "ancient," from
which we can deduce that the name was applied to men considered to be the ancient inhabitants, and that
these men were pushed back into the interior by the modern invaders, in whose language they were called
the "ancients."

The Manguianes are very low in culture. They have considerable Negrito blood and have not advanced beyond the
Negritos in civilization. They are a peaceful, timid, primitive, semi-nomadic people. They number approximately
15,000. The manguianes have shown no desire for community life, and, as indicated in the preamble to Act No. 547,
have not progressed sufficiently in civilization to make it practicable to bring them under any form of municipal
government. (See Census of the Philippine (Islands [1903], vol. I, pp. 22, 23, 460.)

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 III. COMPARATIVE — THE AMERICAN INDIANS.

Reference was made in the Presidents' instructions to the Commission to the policy adopted by the United States
for the Indian Tribes. The methods followed by the Government of the Philippines Islands in its dealings with the so-
called non-Christian people is said, on argument, to be practically identical with that followed by the United States
Government in its dealings with the Indian tribes. Valuable lessons, it is insisted, can be derived by an investigation
of the American-Indian policy.

From the beginning of the United States, and even before, the Indians have been treated as "in a state of pupilage."
The recognized relation between the Government of the United States and the Indians may be described as that of
guardian and ward. It is for the Congress to determine when and how the guardianship shall be terminated. The
Indians are always subject to the plenary authority of the United States.

Chief Justice Marshall in his opinion in Worcester vs. Georgia, hereinbefore mentioned, tells how the Congress
passed an Act in 1819 "for promoting those humane designs of civilizing the neighboring Indians." After quoting the
Act, the opinion goes on — "This act avowedly contemplates the preservation of the Indian nations as an object
sought by the United States, and proposes to effect this object by civilizing and converting them from hunters into
agriculturists."

A leading case which discusses the status of the Indians is that of the United States vs. Kagama ([1886], 118 U.S.,
375). Reference is herein made to the clause of the United States Constitution which gives Congress "power to
regulate commerce with foreign nations, and among the several States, and with the Indian tribes." The court then
proceeds to indicate a brief history of the position of the Indians in the United States (a more extended account of
which can be found in Marshall's opinion in Worcester vs. Georgia, supra), as follows:

The relation of the Indian tribes living within the borders of the United States, both before and since the
Revolution, to the people of the United States, has always been an anomalous one and of a complex
character.

Following the policy of the European Governments in the discovery of American towards the Indians who
were found here, the colonies before the Revolution and the States and the United States since, have
recognized in the Indians a possessory right to the soil over which they roamed and hunted and established
occasional villages. But they asserted an ultimate title in the land itself, by which the Indian tribes were
forbidden to sell or transfer it to other nations or peoples without the consent of this paramount authority.
When a tribe wished to dispose of its lands, or any part of it, or the State or the United States wished to
purchase it, a treaty with the tribe was the only mode in which this could be done. The United States
recognized no right in private persons, or in other nations, to make such a purchase by treaty or otherwise.
With the Indians themselves these relation are equally difficult to define. They were, and always have been,
regarded as having a semi-independent position when they preserved their tribal relations; not as States, not
as nation not a possessed of the fall attributes of sovereignty, but as a separate people, with the power of
regulating their internal and social relations, and thus far not brought under the laws of the Union or of the
State within whose limits they resided.

The opinion then continues:

It seems to us that this (effect of the law) is within the competency of Congress. These Indian tribes are the
wards of the nation. The are communities dependent on the United States. dependent largely for their daily
food. Dependent for their political rights. They owe no allegiance to the States, and receive from the no
protection. Because of the local ill feeling, the people of the States where they are found are often their
deadliest enemies. From their very weakness and helplessness, so largely due to the course of dealing of
the Federal Government with them and the treaties in which it has been promised, there arise the duty of
protection, and with it the power. This has always been recognized by the Executive and by Congress, and
by this court, whenever the question has arisen . . . The power of the General Government over these
remnants of race once powerful, now weak and diminished in numbers, is necessary to their protection, as
well as to the safety of those among whom they dwell. it must exist in that government, because it never has
existed anywhere else, because the theater of its exercise is within the geographical limits of the United
States, because it has never been denied, and because it alone can enforce its laws on all the tribes.

In the later case of United States vs. Sandoval ([1913], 231 U.S., 28) the question to be considered was whether the
status of the Pueblo Indians and their lands was such that Congress could prohibit the introduction of intoxicating
liquor into those lands notwithstanding the admission of New Mexico to statehood. The court looked to the reports of
the different superintendent charged with guarding their interests and founds that these Indians are dependent upon
the fostering care and protection of the government "like reservation Indians in general." Continuing, the court said
"that during the Spanish dominion, the Indians of the pueblos were treated as wards requiring special protection,
where subjected to restraints and official supervisions in the alienation of their property." And finally, we not the
following: "Not only does the Constitution expressly authorize Congress to regulate commerce with the Indians
tribes, but long-continued legislative and executive usage and an unbroken current of judicial decisions have
attributed to the United States as a superior and civilized nation the power and the duty of exercising a fostering

Page 12 of 152
care and protection over all dependent Indian communities within its borders, whether within its original territory or
territory subsequently acquired, and whether within or without the limits of a state."

With reference to laws affecting the Indians, it has been held that it is not within the power of the courts to overrule
the judgment of Congress. For very good reason, the subject has always been deemed political in nature, not
subject to the jurisdiction of the judicial department of the government. (Matter of Heff [1905], 197 U.S., 488;
U.S. vs. Celestine [1909], 215 U.S., 278; U.S. vs. Sandoval, supra; Worcester vs. Georgia, supra; U.S. vs. Rogers
[1846], 4 How., 567; the Cherokee Tobacco [1871], 11 Wall, 616; Roff vs. Burney [1897], 168 U.S., 218;
Thomas vs.Gay [1898], 169 U.S.., 264; Lone Wolf vs. Hitchcock[1903], 187 U.S., 553; Wallace vs. Adams [1907],
204 U.S., 415; Conley vs. Bollinger [1910], 216 U.S., 84; Tiger vs. Western Invest. Co. [1911], 221 U.S., 286;
U.S. vs. Lane [1913], 232 U.S.., 598; Cyr vs. Walker (1911], 29 Okla, 281; 35 L.R.A. [N. S.], 795.) Whenever,
therefore, the United States sets apart any public land as an Indian reservation, it has full authority to pass such
laws and authorize such measures as may be necessary to give to the Indians thereon full protection in their
persons and property. (U.S. vs.Thomas [1894], 151 U.S., 577.)

All this borne out by long-continued legislative and executive usage, and an unbroken line of judicial decisions.

The only case which is even remotely in point and which, if followed literally, might result in the issuance of habeas
corpus, is that of United States vs. Crook ([1879], Fed. Cas. No. 14891). This was a hearing upon return to a writ
of habeas corpus issued against Brigadier General George Crook at the relation of Standing Bear and other Indians,
formerly belonging to the Ponca Tribe of Indians. The petition alleged in substance that the relators are Indians who
have formerly belonged to the Ponca tribe of Indians, now located in the Indian Territory; that they had some time
previously withdrawn from the tribe, and completely severed their tribal relations therewith, and had adopted the
general habits of the whites, and were then endeavoring to maintain themselves by their own exertions, and without
aid or assistance from the general government; that whilst they were thus engaged, and without being guilty of
violating any of the laws of the United States, they were arrested and restrained of their liberty by order of the
respondent, George Crook. The substance of the return to the writ was that the relators are individual members of,
and connected with, the Ponca tribe of Indians; that they had fled or escaped form a reservation situated some
place within the limits of the Indian Territory — had departed therefrom without permission from the Government;
and, at the request of the Secretary of the Interior, the General of the Army had issued an order which required the
respondent to arrest and return the relators to their tribe in the Indian Territory, and that, pursuant to the said order,
he had caused the relators to be arrested on the Omaha Indian Territory.

The first question was whether an Indian can test the validity of an illegal imprisonment by habeas corpus. The
second question, of much greater importance, related to the right of the Government to arrest and hold the relators
for a time, for the purpose of being returned to the Indian Territory from which it was alleged the Indian escaped. In
discussing this question, the court reviewed the policy the Government had adopted in its dealing with the friendly
tribe of Poncase. Then, continuing, the court said: "Laws passed for the government of the Indian country, and for
the purpose of regulating trade and intercourse with the Indian tribes, confer upon certain officers of the Government
almost unlimited power over the persons who go upon the reservations without lawful authority . . . Whether such an
extensive discretionary power is wisely vested in the commissioner of Indian affairs or not , need not be questioned.
It is enough to know that the power rightfully exists, and, where existing, the exercise of the power must be upheld."
The decision concluded as follows:

The reasoning advanced in support of my views, leads me to conclude:

1. that an Indian is a 'person' within the meaning of the laws of the United States, and has, therefore, the
right to sue out a writ of habeas corpus in a federal court, or before a federal judge, in all cases where he
may be confined or in custody under color of authority of the United States or where he is restrained of
liberty in violation of the constitution or laws of the United States.

2. That General George Crook, the respondent, being commander of the military department of the Platte,
has the custody of the relators, under color of authority of the United States, and in violation of the laws
therefore.

3. That n rightful authority exists for removing by force any of the relators to the Indian Territory, as the
respondent has been directed to do.

4. that the Indians possess the inherent right of expatriation, as well as the more fortunate white race, and
have the inalienable right to "life, liberty, and the pursuit of happiness," so long as they obey the laws and do
not trespass on forbidden ground. And,

5. Being restrained of liberty under color of authority of the United States, and in violation of the laws thereof,
the relators must be discharged from custody, and it is so ordered.

As far as the first point is concerned, the decision just quoted could be used as authority to determine that Rubi, the
Manguian petitioner, a Filipino, and a citizen of the Philippine Islands, is a "person" within the meaning of
the Habeas Corpus Act, and as such, entitled to sue out a writ in the Philippine courts. (See also In re Race Horse
[1895], 70 Fed., 598.) We so decide.
Page 13 of 152
As to the second point the facts in the Standing Bear case an the Rubi case are not exactly identical. But even
admitting similarity of facts, yet it is known to all that Indian reservations do exist in the United States, that Indians
have been taken from different parts of the country and placed on these reservation, without any previous
consultation as to their own wishes, and that, when once so located, they have been made to remain on the
reservation for their own good and for the general good of the country. If any lesson can be drawn form the Indian
policy of the United States, it is that the determination of this policy is for the legislative and executive branches of
the government and that when once so decided upon, the courts should not interfere to upset a carefully planned
governmental system. Perhaps, just as may forceful reasons exists for the segregation as existed for the
segregation of the different Indian tribes in the United States.

IV. CONSTITUTIONAL QUESTIONS.

A. DELEGATION OF LEGISLATIVE POWER.

The first constitutional objection which confronts us is that the Legislature could not delegate this power to provincial
authorities. In so attempting, it is contended, the Philippine Legislature has abdicated its authority and avoided its
full responsibility.

That the maxim of Constitutional Law forbidding the delegation of legislative power should be zealously protected,
we agree. An understanding of the rule will, however, disclose that it has not bee violated in his instance.

The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed
in a multitude of case, namely: "The true distinction therefore is between the delegation of power to make the law,
which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the later no valid
objection can be made." (Cincinnati, W. & Z. R. Co. vs. Comm'rs. Clinton County [1852], 1 Ohio S.t, 88.) Discretion,
as held by Chief Justice Marshall in Wayman vs. Southard ([1825], 10 Wheat., 1) may be committed by the
Legislature to an executive department or official. The Legislature may make decisions of executive departments of
subordinate official thereof, to whom t has committed the execution of certain acts, final on questions of fact.
(U.S. vs. Kinkead [1918], 248 Fed., 141.) The growing tendency in the decision is to give prominence to the
"necessity" of the case.

Is not all this exactly what the Legislature has attempted to accomplish by the enactment of section 21454 of the
Administrative Code? Has not the Legislature merely conferred upon the provincial governor, with the approval of
the provincial board and the Department Head, discretionary authority as to the execution of the law? Is not this
"necessary"?

The case of West vs. Hitchock, ([1906], 205 U.S., 80) was a petition for mandamus to require the Secretary of the
Interior to approve the selection and taking of one hundred and sixty acres by the relator out of the lands ceded to
the United States by the Wichita and affiliated bands of Indians. Section 463 of the United States Revised Statutes
provided: "The Commissioner of Indian Affairs shall, under the direction of the Secretary of the Interior, and
agreeably to such regulations as the President may prescribe, have the management of all Indian affairs, and of all
matters arising out to the Indian relations." Justice Holmes said: "We should hesitate a good deal, especially in view
of the long established practice of the Department, before saying that this language was not broad enough to
warrant a regulation obviously made for the welfare of the rather helpless people concerned. The power of
Congress is not doubted. The Indians have been treated as wards of the nation. Some such supervision was
necessary, and has been exercised. In the absence of special provisions naturally it would be exercised by the
Indian Department." (See also as corroborative authority, it any is needed, Union Bridge Co. vs. U.S. [1907], 204
U.S.., 364, reviewing the previous decisions of the United States Supreme Court: U.S. vs. Lane [1914], 232 U.S.,
598.)

There is another aspect of the question, which once accepted, is decisive. An exception to the general rule.
sanctioned by immemorial practice, permits the central legislative body to delegate legislative powers to local
authorities. The Philippine Legislature has here conferred authority upon the Province of Mindoro, to be exercised
by the provincial governor and the provincial board.

Who but the provincial governor and the provincial board, as the official representatives of the province, are better
qualified to judge "when such as course is deemed necessary in the interest of law and order?" As officials charged
with the administration of the province and the protection of its inhabitants, who but they are better fitted to select
sites which have the conditions most favorable for improving the people who have the misfortune of being in a
backward state?

Section 2145 of the Administrative Code of 1917 is not an unlawful delegation of legislative power by the Philippine
Legislature to provincial official and a department head.

B. RELIGIOUS DISCRIMINATION

The attorney de officio, for petitioners, in a truly remarkable brief, submitted on behalf of his unknown clients, says
that — "The statute is perfectly clear and unambiguous. In limpid English, and in words as plain and unequivocal as
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language can express, it provides for the segregation of 'non-Christians' and none other." The inevitable result,
them, is that the law "constitutes an attempt by the Legislature to discriminate between individuals because of their
religious beliefs, and is, consequently, unconstitutional."

Counsel's premise once being conceded, his arguments is answerable — the Legislature must be understood to
mean what it has plainly expressed; judicial construction is then excluded; religious equality is demanded by the
Organic Law; the statute has violated this constitutional guaranty, and Q. E. D. is invalid. But, as hereinbefore
stated, we do not feel free to discard the long continued meaning given to a common expression, especially as
classification of inhabitants according to religious belief leads the court to what it should avoid, the nullification of
legislative action. We hold that the term "non-Christian" refers to natives of the Philippines Islands of a low grade of
civilization, and that section 2145 of the Administrative Code of 1917, does not discriminate between individuals an
account of religious differences.

C. LIBERTY; DUE PROCESS OF LAW; EQUAL PROTECTION OF THE LAWS.

The third constitutional argument is grounded on those portions of the President's instructions of to the Commission,
the Philippine Bill, and the Jones Law, providing "That no law shall be enacted in said Islands which shall deprive
any person of life, liberty, or property without due process of law, or deny to any person therein the equal protection
of the laws." This constitutional limitation is derived from the Fourteenth Amendment to the United States
Constitution — and these provisions, it has been said "are universal in their application, to all persons within the
territorial jurisdiction, without regard to any differences of race, of color, or of nationality." (Yick Wo vs. Hopkins
[1886], 118 U.S., 356.) The protection afforded the individual is then as much for the non-Christian as for the
Christian.

The conception of civil liberty has been variously expressed thus:

Every man may claim the fullest liberty to exercise his faculties, compatible with the possession of like liberty
by every other. (Spencer, Social Statistics, p. 94.)

Liberty is the creature of law, essentially different from that authorized licentiousness that trespasses on
right. That authorized licentiousness that trespasses on right. It is a legal and a refined idea, the offspring of
high civilization, which the savage never understood, and never can understand. Liberty exists in proportion
to wholesome restraint; the more restraint on others to keep off from us, the more liberty we have . . . that
man is free who is protected from injury. (II Webster's Works, p. 393.)

Liberty consists in the ability to do what one caught to desire and in not being forced to do what one ought
not do desire. (Montesque, spirit of the Laws.)

Even liberty itself, the greatest of all rights, is no unrestricted license to ac according to one's own will. It is
only freedom from restraint under conditions essential to the equal enjoyment of the same right by others.
(Field, J., in Crowley vs. Christensen [1890], 137 U.S., 86.)

Liberty does not import "an absolute right in each person to be, at all times and in all circumstances, wholly
freed from restraint. There are manifold restraints to which every person is necessarily subject for the
common good. On any other basis, organized society could not exist with safety to its members. Society
based on the rule that each one is a law unto himself would soon be confronted with disorder and anarchy.
Real liberty for all could not exist under the operation of a principle which recognizes the right of each
individual person to use his own, whether in respect of his person or his property, regardless of the injury
that may be done to others . . . There is, of course, a sphere with which the individual may asserts the
supremacy of his own will, and rightfully dispute the authority of any human government — especially of any
free government existing under a written Constitution — to interfere with the exercise of that will. But it is
equally true that in very well-ordered society charged with the duty of conserving the safety of its members,
the rights of the individual in respect of his liberty may at times, under the pressure of great dangers, be
subjected to such restraint to be enforced by reasonable regulations, as the safety of the general public may
demand." (Harlan, J., In Jacobson vs. Massachusetts [1905] 197 U.S., 11.)

Liberty is freedom to do right and never wrong; it is ever guided by reason and the upright and honorable
conscience of the individual. (Apolinario Mabini.)

Civil Liberty may be said to mean that measure of freedom which may be enjoyed in a civilized community,
consistently with the peaceful enjoyment of like freedom in others. The right to Liberty guaranteed by the
Constitution includes the right to exist and the right to be free from arbitrary personal restraint or servitude. The term
cannot be dwarfed into mere freedom from physical restraint of the person of the citizen, but is deemed to embrace
the right of man to enjoy the faculties with which he has been endowed by this Creator, subject only to such
restraints as are necessary for the common welfare. As enunciated in a long array of authorities including epoch-
making decisions of the United States Supreme Court, Liberty includes the right of the citizens to be free to use his
faculties in all lawful ways; to live an work where he will; to earn his livelihood by an lawful calling; to pursue any
avocations, an for that purpose. to enter into all contracts which may be proper, necessary, and essential to his

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carrying out these purposes to a successful conclusion. The chief elements of the guaranty are the right to contract,
the right to choose one's employment, the right to labor, and the right of locomotion.

In general, it may be said that Liberty means the opportunity to do those things which are ordinarily done by free
men. (There can be noted Cummings vs. Missouri [1866], 4 Wall, 277; Wilkinson vs. Leland [1829], 2 Pet., 627;
Williams vs. Fears [1900], 179 U.S., 274; Allgeyer vs. Louisiana [1896], 165, U.S., 578; State vs. Kreutzberg [1902],
114 Wis., 530. See 6 R.C.L., 258, 261.)

One thought which runs through all these different conceptions of Liberty is plainly apparent. It is this: "Liberty" as
understood in democracies, is not license; it is "Liberty regulated by law." Implied in the term is restraint by law for
the good of the individual and for the greater good of the peace and order of society and the general well-being. No
man can do exactly as he pleases. Every man must renounce unbridled license. The right of the individual is
necessarily subject to reasonable restraint by general law for the common good. Whenever and wherever the
natural rights of citizen would, if exercises without restraint, deprive other citizens of rights which are also and
equally natural, such assumed rights must yield to the regulation of law. The Liberty of the citizens may be
restrained in the interest of the public health, or of the public order and safety, or otherwise within the proper scope
of the police power. (See Hall vs. Geiger-Jones [1916], 242 U.S., 539; Hardie-Tynes Manufacturing Co. vs. Cruz
[1914], 189 Al., 66.)

None of the rights of the citizen can be taken away except by due process of law. Daniel Webster, in the course of
the argument in the Dartmouth College Case before the United States Supreme Court, since a classic in forensic
literature, said that the meaning of "due process of law" is, that "every citizen shall hold his life, liberty, property, an
immunities under the protection of the general rules which govern society." To constitute "due process of law," as
has been often held, a judicial proceeding is not always necessary. In some instances, even a hearing and notice
are not requisite a rule which is especially true where much must be left to the discretion of the administrative
officers in applying a law to particular cases. (See McGehee, Due Process of Law, p. 371.) Neither is due process a
stationary and blind sentinel of liberty. "Any legal proceeding enforced by public authority, whether sanctioned by
age and customs, or newly devised in the discretion of the legislative power, in furtherance of the public good, which
regards and preserves these principles of liberty and justice, must be held to be due process of law."
(Hurtado vs.California [1883], 110, U.S., 516.) "Due process of law" means simply . . . "first, that there shall be a law
prescribed in harmony with the general powers of the legislative department of the Government; second, that this
law shall be reasonable in its operation; third, that it shall be enforced according to the regular methods of procedure
prescribed; and fourth, that it shall be applicable alike to all the citizens of the state or to all of a class."
(U.S. vs. Ling Su Fan [1908], 10 Phil., 104, affirmed on appeal to the United States Supreme Court. 1) "What is due
process of law depends on circumstances. It varies with the subject-matter and necessities of the situation."
(Moyer vs. Peablody [1909], 212 U. S., 82.)

The pledge that no person shall be denied the equal protection of the laws is not infringed by a statute which is
applicable to all of a class. The classification must have a reasonable basis and cannot be purely arbitrary in nature.

We break off with the foregoing statement, leaving the logical deductions to be made later on.

D. SLAVERY AND INVOLUNTARY SERVITUDE.

The fourth constitutional contention of petitioner relates to the Thirteen Amendment to the United States Constitution
particularly as found in those portions of Philippine Organic Law providing "That slavery shall not exist in said
Islands; nor shall involuntary servitude exist except as a punishment for crime whereof the party shall have been
duly convicted." It is quite possible that the Thirteenth Amendment, since reaching to "any place subject to" the
"jurisdiction" of the United States, has force in the Philippine. However this may be, the Philippine Legislature has,
by adoption, with necessary modifications, of sections 268 to 271 inclusive of the United States Criminal Code,
prescribed the punishment for these crimes. Slavery and involuntary servitude, together wit their corollary, peonage,
all denote "a condition of enforced, compulsory service of one to another." (Hodges vs. U.S. [1906], 203 U.S., 1.)
The term of broadest scope is possibly involuntary servitude. It has been applied to any servitude in fact involuntary,
no matter under what form such servitude may have been disguised. (Bailey vs. Alabama [1910], 219 U.S., 219.)

So much for an analysis of those constitutional provisions on which petitioners rely for their freedom. Next must
come a description of the police power under which the State must act if section 2145 is to be held valid.

E. THE POLICE POWER.

Not attempting to phrase a definition of police power, all that it is necessary to note at this moment is the farreaching
scope of the power, that it has become almost possible to limit its weep, and that among its purposes is the power to
prescribe regulations to promote the health, peace, morals, education, and good order of the people, and to legislate
so as to increase the industries of the State, develop its resources and add to is wealth and prosperity. (See
Barbier vs. Connolly [1884], 113 U.S., 27.) What we are not interested in is the right of the government to restrain
liberty by the exercise of the police power.

"The police power of the State," one court has said, . . . "is a power coextensive with self-protection, and is not
inaptly termed the 'law of overruling necessity.' It may be said to be that inherent and plenary power in the State
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which enables it to prohibit all things hurtful to the comfort, safety and welfare of society." (Lake View vs. Rose Hill
Cemetery Co. [1873], 70 Ill., 191.) Carried onward by the current of legislation, the judiciary rarely attempt to dam
the on rushing power of legislative discretion, provided the purposes of the law do not go beyond the great principles
that mean security for the public welfare or do not arbitrarily interfere with the right of the individual.

The Government of the Philippine Islands has both on reason and authority the right to exercise the sovereign police
power in the promotion of the general welfare and the public interest. "There can be not doubt that the exercise of
the police power of the Philippine Government belongs to the Legislature and that this power is limited only by the
Acts of Congress and those fundamental principles which lie at the foundation of all republican forms of
government." (Churchill and Tait vs. Rafferty [1915], 32 Phil., 580; U.S. vs. Pompeya [1915], 31 Phil., 245.)

With the foregoing approximation of the applicable basic principles before us, before finally deciding whether any
constitutional provision has indeed been violated by section 2145 of the Administrative Code, we should endeavor to
ascertain the intention of the Legislature in enacting this section. If legally possible, such legislative intention should
be effectuated.

F. LEGISLATIVE INTENT.

The preamble of the resolution of the provincial board of Mindoro which set apart the Tigbao reservation, it will be
remembered, assigned as reasons fort the action, the following: (1) The failure of former attempts for the
advancement of the non-Christian people of the province; and (2) the only successfully method for educating the
Manguianes was to oblige them to live in a permanent settlement. The Solicitor-General adds the following; (3) The
protection of the Manguianes; (4) the protection of the public forests in which they roam; (5) the necessity of
introducing civilized customs among the Manguianes.

The present Secretary of the Interior says of the Tigbao reservation and of the motives for its selection, the
following:

To inform himself of the conditions of those Manguianes who were taken together to Tigbao, the Secretary
of the Interior on June 10 to 13, 1918, made a trip to the place. There he found that the site selected is a
good one; that creditable progress has been made in the clearing of forests, construction of buildings, etc.,
that there appears to be encouraging reaction by the boys to the work of the school the requirements of
which they appear to meet with enthusiastic interest after the first weeks which are necessarily a somewhat
trying period for children wholly unaccustomed to orderly behaviour and habit of life. He also gathered the
impression that the results obtained during the period of less than one year since the beginning of the
institution definitely justify its continuance and development.

Of course, there were many who were protesting against that segregation. Such was naturally to be
expected. But the Secretary of the Interior, upon his return to Manila, made the following statement to the
press:

"It is not deemed wise to abandon the present policy over those who prefer to live a nomadic life and
evade the influence of civilization. The Government will follow its policy to organize them into political
communities and to educate their children with the object of making them useful citizens of this
country. To permit them to live a wayfaring life will ultimately result in a burden to the state and on
account of their ignorance, they will commit crimes and make depredation, or if not they will be
subject to involuntary servitude by those who may want to abuse them."

The Secretary of the Interior, who is the official charged with the supervision of all the non-Christian people, has
adopted as the polaris of his administration — "the advancement of the non-Christian elements of our population to
equality and unification with the highly civilized Christian inhabitants." This is carried on by the adoption of the
following measures:

(a) Pursuance of the closer settlement policy whereby people of seminomadic race are induced to leave
their wild habitat and settle in organized communities.

(b) The extension of the public school system and the system of public health throughout the regions
inhabited by the non-Christian people.

(c) The extention of public works throughout the Mohammedan regions to facilitate their development and
the extention of government control.

(d) Construction of roads and trials between one place and another among non-Christians, to promote social
and commercial intercourse and maintain amicable relations among them and with the Christian people.

(e) Pursuance of the development of natural economic resources, especially agriculture.

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 ( f ) The encouragement of immigration into, and of the investment of private capital in, the fertile regions of
Mindanao and Sulu.

The Secretary adds:

To attain the end desired, work of a civilizing influence have been continued among the non-Christian
people. These people are being taught and guided to improve their living conditions in order that they may
fully appreciate the benefits of civilization. Those of them who are still given to nomadic habits are being
persuaded to abandon their wild habitat and settle in organized settlements. They are being made to
understand that it is the purpose of the Government to organize them politically into fixed and per manent
communities, thus bringing them under the control of the Government, to aid them to live and work, protect
them from involuntary servitude and abuse, educate their children, and show them the advantages of
leading a civilized life with their civilized brothers. In short, they are being impressed with the purposes and
objectives of the Government of leading them to economic, social, and political equality, and unification with
the more highly civilized inhabitants of the country. (See Report of the Department for 1917.)

The fundamental objective of governmental policy is to establish friendly relations with the so-called non-Christians,
and to promote their educational, agricultural, industrial, and economic development and advancement in
civilization. (Note Acts Nos. 2208, 2404, 2444.) Act No. 2674 in reestablishing the Bureau of non-Christian Tribes,
defines the aim of the Government towards the non-Christian people in the following unequivocal terms:

It shall be the duty of the Bureau of non-Christian Tribes to continue the work for advancement and liberty in
favor of the region inhabited by non-Christian Filipinos and foster by all adequate means and in a
systematical, rapid, and complete manner the moral, material, economic, social, and political development of
those regions, always having in view the aim of rendering permanent the mutual intelligence between, and
complete fusion of, all the Christian and non-Christian elements populating the provinces of the Archipelago.
(Sec. 3.)

May the Manguianes not be considered, as are the Indians in the United States, proper wards of the Filipino
people? By the fostering care of a wise Government, may not these unfortunates advance in the "habits and arts of
civilization?" Would it be advisable for the courts to intrude upon a plan, carefully formulated, and apparently
working out for the ultimate good of these people?

In so far as the Manguianes themselves are concerned, the purpose of the Government is evident. Here, we have
on the Island of Mindoro, the Manguianes, leading a nomadic life, making depredations on their more fortunate
neighbors, uneducated in the ways of civilization, and doing nothing for the advancement of the Philippine Islands.
What the Government wished to do by bringing than into a reservation was to gather together the children for
educational purposes, and to improve the health and morals — was in fine, to begin the process of civilization. this
method was termed in Spanish times, "bringing under the bells." The same idea adapted to the existing situation,
has been followed with reference to the Manguianes and other peoples of the same class, because it required, if
they are to be improved, that they be gathered together. On these few reservations there live under restraint in
some cases, and in other instances voluntarily, a few thousands of the uncivilized people. Segregation really
constitutes protection for the manguianes.

Theoretically, one may assert that all men are created free and equal. Practically, we know that the axiom is not
precisely accurate. The Manguianes, for instance, are not free, as civilized men are free, and they are not the
equals of their more fortunate brothers. True, indeed, they are citizens, with many but not all the rights which
citizenship implies. And true, indeed, they are Filipinos. But just as surely, the Manguianes are citizens of a low
degree of intelligence, and Filipinos who are a drag upon the progress of the State.

In so far as the relation of the Manguianes to the State is concerned, the purposes of the Legislature in enacting the
law, and of the executive branch in enforcing it, are again plain. Settlers in Mindoro must have their crops and
persons protected from predatory men, or they will leave the country. It is no argument to say that such crimes are
punished by the Penal Code, because these penalties are imposed after commission of the offense and not before.
If immigrants are to be encouraged to develop the resources of the great Islands of Mindoro, and its, as yet,
unproductive regions, the Government must be in a position to guarantee peace and order.

Waste lands do not produce wealth. Waste people do not advance the interest of the State. Illiteracy and
thriftlessness are not conducive to homogeneity. The State to protect itself from destruction must prod on the
laggard and the sluggard. The great law of overwhelming necessity is all convincing.

To quote again from the instructive memorandum of the Secretary of the Interior:

Living a nomadic and a wayfaring life and evading the influence of civilization, they (the manguianes) are
engaged in the works of destruction — burning and destroying the forests and making illegal caiñgins
thereon. Not bringing any benefit to the State but instead injuring and damaging its interests, what will
ultimately become of these people with the sort of liberty they wish to preserve and for which they are now
fighting in court? They will ultimately become a heavy burden to the State and on account of their ignorance

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 they will commit crimes and make depredations, or if not they will be subjected to involuntary servitude by
those who may want to abuse them.

There is no doubt in my mind that this people a right conception of liberty and does not practice liberty in a
rightful way. They understand liberty as the right to do anything they will — going from one place to another
in the mountains, burning and destroying forests and making illegal caiñgins thereon.

Not knowing what true liberty is and not practising the same rightfully, how can they allege that they are
being deprived thereof without due process of law?

xxx xxx xxx

But does the Constitutional guaranty that 'no person shall be deprived of his liberty without due process of
law' apply to a class of persons who do not have a correct idea of what liberty is and do not practise liberty in
a rightful way?

To say that it does will mean to sanction and defend an erroneous idea of such class of persons as to what
liberty is. It will mean, in the case at bar, that the Government should not adopt any measures looking to the
welfare and advancement of the class of persons in question. It will mean that this people should be let
along in the mountains and in a permanent state of savagery without even the remotest hope of coming to
understand liberty in its true and noble sense.

In dealing with the backward population, like the Manguianes, the Government has been placed in the
alternative of either letting them alone or guiding them in the path of civilization. The latter measure was
adopted as the one more in accord with humanity and with national conscience.

xxx xxx xxx

The national legislation on the subject of non-Christian people has tended more and more towards the
education and civilization of such people and fitting them to be citizens. The progress of those people under
the tutelage of the Government is indeed encouraging and the signs of the times point to a day which is not
far distant when they will become useful citizens. In the light of what has already been accomplished which
has been winning the gratitude of most of the backward people, shall we give up the noble work simply
because a certain element, believing that their personal interests would be injured by such a measure has
come forward and challenged the authority of the Government to lead this people in the pat of civilization?
Shall we, after expending sweat, treasure, and even blood only to redeem this people from the claws of
ignorance and superstition, now willingly retire because there has been erroneously invoked in their favor
that Constitutional guaranty that no person shall be deprived of his liberty without due process of law? To
allow them to successfully invoke that Constitutional guaranty at this time will leave the Government without
recourse to pursue the works of civilizing them and making them useful citizens. They will thus left in a
permanent state of savagery and become a vulnerable point to attack by those who doubt, nay challenge,
the ability of the nation to deal with our backward brothers.

The manguianes in question have been directed to live together at Tigbao. There they are being taught and
guided to improve their living conditions. They are being made to understand that they object of the
government is to organize them politically into fixed and permanent communities. They are being aided to
live and work. Their children are being educated in a school especially established for them. In short,
everything is being done from them in order that their advancement in civilization and material prosperity
may be assured. Certainly their living together in Tigbao does not make them slaves or put them in a
condition compelled to do services for another. They do not work for anybody but for themselves. There is,
therefore, no involuntary servitude.

But they are compelled to live there and prohibited from emigrating to some other places under penalty of
imprisonment. Attention in this connection is invited to the fact that this people, living a nomadic and
wayfaring life, do not have permanent individual property. They move from one place to another as the
conditions of living warrants, and the entire space where they are roving about is the property of the nation,
the greater part being lands of public domain. Wandering from one place to another on the public lands, why
can not the government adopt a measure to concentrate them in a certain fixed place on the public lands,
instead of permitting them to roam all over the entire territory? This measure is necessary both in the
interest of the public as owner of the lands about which they are roving and for the proper accomplishment
of the purposes and objectives of the government. For as people accustomed to nomadic habit, they will
always long to return to the mountains and follow a wayfaring life, and unless a penalty is provinced for, you
can not make them live together and the noble intention of the Government of organizing them politically will
come to naught.

G. APPLICATION AND CONCLUSION.

Our exhaustive study should have left us in a position to answer specific objections and to reach a general
conclusion.
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In the first place, it is argued that the citizen has the right, generally speaking, to go where he pleases. Could be not,
however, be kept away from certain localities ? To furnish an example from the Indian legislation. The early Act of
Congress of 1802 (2 U.S. Stat. at L., p. 141) Indian reservation. Those citizens certainly did not possess absolute
freedom of locomotion. Again the same law provided for the apprehension of marauding Indians. Without any doubt,
this law and other similar were accepted and followed time and again without question.

It is said that, if we hold this section to be constitutional, we leave this weak and defenseless people confined as in a
prison at the mercy of unscrupulous official. What, it is asked, would be the remedy of any oppressed Manguian?
The answer would naturally be that the official into whose hands are given the enforcement of the law would have
little or not motive to oppress these people; on the contrary, the presumption would all be that they would endeavor
to carry out the purposes of the law intelligently and patriotically. If, indeed, they did ill-treat any person thus
confined, there always exists the power of removal in the hands of superior officers, and the courts are always open
for a redress of grievances. When, however, only the validity of the law is generally challenged and no particular
case of oppression is called to the attention of the courts, it would seems that the Judiciary should not unnecessarily
hamper the Government in the accomplishment of its laudable purpose.

The question is above all one of sociology. How far, consistently with freedom, may the right and liberties of the
individual members of society be subordinated to the will of the Government? It is a question which has assailed the
very existence of government from the beginning of time. Now purely an ethical or philosophical subject, nor now to
be decided by force, it has been transferred to the peaceful forum of the Judiciary. In resolving such an issue, the
Judiciary must realize that the very existence of government renders imperatives a power to restrain the individual to
some extent, dependent, of course, on the necessities of the class attempted to be benefited. As to the particular
degree to which the Legislature and the Executive can go in interfering with the rights of the citizen, this is, and for a
along time to come will be, impossible for the courts to determine.

The doctrines of laissez faire and of unrestricted freedom of the individual, as axioms of economics and political
theory, are of the past. The modern period has shown as widespread belief in the amplest possible demonstration of
governmental activity. The courts unfortunately have sometimes seemed to trial after the other two branches of the
government in this progressive march.

Considered, therefore, purely as an exercise of the police power, the courts cannot fairly say that the Legislature
has exceeded its rightful authority. it is, indeed, an unusual exercise of that power. But a great malady requires an
equally drastic remedy.

Further, one cannot hold that the liberty of the citizen is unduly interfered without when the degree of civilization of
the Manguianes is considered. They are restrained for their own good and the general good of the Philippines. Nor
can one say that due process of law has not been followed. To go back to our definition of due process of law and
equal protection of the law, there exists a law ; the law seems to be reasonable; it is enforced according to the
regular methods of procedure prescribed; and it applies alike to all of a class.

As a point which has been left for the end of this decision and which, in case of doubt, would lead to the
determination that section 2145 is valid. it the attitude which the courts should assume towards the settled policy of
the Government. In a late decision with which we are in full accord, Gambles vs. Vanderbilt University (200
Southwestern Reporter, 510) the Chief Justice of the Supreme Court of Tennessee writes:

We can seen objection to the application of public policy as a ratio decidendi. Every really new question that comes
before the courts is, in the last analysis, determined on that theory, when not determined by differentiation of the
principle of a prior case or line of cases, or by the aid of analogies furnished by such prior case. In balancing
conflicting solutions, that one is perceived to tip the scales which the court believes will best promote the public
welfare in its probable operation as a general rule or principle. But public policy is not a thing inflexible. No court is
wise enough to forecast its influence in all possible contingencies. Distinctions must be made from time to time as
sound reason and a true sense of justice may dictate."

Our attempt at giving a brief history of the Philippines with reference to the so-called non-Christians has been in
vain, if we fail to realize that a consistent governmental policy has been effective in the Philippines from early days
to the present. The idea to unify the people of the Philippines so that they may approach the highest conception of
nationality. If all are to be equal before the law, all must be approximately equal in intelligence. If the Philippines is to
be a rich and powerful country, Mindoro must be populated, and its fertile regions must be developed. The public
policy of the Government of the Philippine Islands is shaped with a view to benefit the Filipino people as a whole.
The Manguianes, in order to fulfill this governmental policy, must be confined for a time, as we have said, for their
own good and the good of the country.

Most cautiously should the power of this court to overrule the judgment of the Philippine Legislature, a coordinate
branch, be exercised. The whole tendency of the best considered case is toward non-interference on the part of the
courts whenever political ideas are the moving consideration. Justice Holmes, in one of the aphorisms for which he
is justly famous, said that "constitutional law, like other mortal contrivances, has to take some chances."
(Blinn vs.Nelson [1911], 222 U.S., 1.) If in the final decision of the many grave questions which this case presents,
the courts must take "a chance," it should be with a view to upholding the law, with a view to the effectuation of the
general governmental policy, and with a view to the court's performing its duty in no narrow and bigoted sense, but

Page 20 of 152
with that broad conception which will make the courts as progressive and effective a force as are the other
departments of the Government.

We are of the opinion that action pursuant to section 2145 of the Administrative Code does not deprive a person of
his liberty without due process of law and does not deny to him the equal protection of the laws, and that
confinement in reservations in accordance with said section does not constitute slavery and involuntary servitude.
We are further of the opinion that section 2145 of the Administrative Code is a legitimate exertion of the police
power, somewhat analogous to the Indian policy of the United States. Section 2145 of the Administrative Code of
1917 is constitutional.

Petitioners are not unlawfully imprisoned or restrained of their liberty. Habeas corpus can, therefore, not issue. This
is the true ruling of the court. Costs shall be taxes against petitioners. So ordered.

G.R. No. 135808 October 6, 2008

SECURITIES AND EXCHANGE COMMISSION, petitioner,

vs.
INTERPORT RESOURCES CORPORATION, MANUEL S. RECTO, RENE S. VILLARICA, PELAGIO RICALDE,
ANTONIO REINA, FRANCISCO ANONUEVO, JOSEPH SY and SANTIAGO TANCHAN, JR., respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,1 dated 20
August 1998, rendered by the Court of Appeals in C.A.-G.R. SP No. 37036, enjoining petitioner Securities and
Exchange Commission (SEC) from taking cognizance of or initiating any action against the respondent corporation
Interport Resources Corporation (IRC) and members of its board of directors, respondents Manuel S. Recto, Rene
S. Villarica, Pelagio Ricalde, Antonio Reina, Francisco Anonuevo, Joseph Sy and Santiago Tanchan, Jr., with
respect to Sections 8, 30 and 36 of the Revised Securities Act. In the same Decision of the appellate court, all the
proceedings taken against the respondents, including the assailed SEC Omnibus Orders of 25 January 1995 and 30
March 1995, were declared void.

The antecedent facts of the present case are as follows.

On 6 August 1994, the Board of Directors of IRC approved a Memorandum of Agreement with Ganda Holdings
Berhad (GHB). Under the Memorandum of Agreement, IRC acquired 100% or the entire capital stock of Ganda
Energy Holdings, Inc. (GEHI),2 which would own and operate a 102 megawatt (MW) gas turbine power-generating
barge. The agreement also stipulates that GEHI would assume a five-year power purchase contract with National
Power Corporation. At that time, GEHI's power-generating barge was 97% complete and would go on-line by mid-
September of 1994. In exchange, IRC will issue to GHB 55% of the expanded capital stock of IRC amounting to
40.88 billion shares which had a total par value of P488.44 million.3

On the side, IRC would acquire 67% of the entire capital stock of Philippine Racing Club, Inc. (PRCI). PRCI owns
25.724 hectares of real estate property in Makati. Under the Agreement, GHB, a member of the Westmont Group of
Companies in Malaysia, shall extend or arrange a loan required to pay for the proposed acquisition by IRC of PRCI.4

IRC alleged that on 8 August 1994, a press release announcing the approval of the agreement was sent through
facsimile transmission to the Philippine Stock Exchange and the SEC, but that the facsimile machine of the SEC
could not receive it. Upon the advice of the SEC, the IRC sent the press release on the morning of 9 August 1994.5

The SEC averred that it received reports that IRC failed to make timely public disclosures of its negotiations with
GHB and that some of its directors, respondents herein, heavily traded IRC shares utilizing this material insider
information. On 16 August 1994, the SEC Chairman issued a directive requiring IRC to submit to the SEC a copy of
its aforesaid Memorandum of Agreement with GHB. The SEC Chairman further directed all principal officers of IRC
to appear at a hearing before the Brokers and Exchanges Department (BED) of the SEC to explain IRC's failure to
immediately disclose the information as required by the Rules on Disclosure of Material Facts.6

Page 21 of 152
In compliance with the SEC Chairman's directive, the IRC sent a letter dated 16 August 1994 to the SEC, attaching
thereto copies of the Memorandum of Agreement. Its directors, Manuel Recto, Rene Villarica and Pelagio Ricalde,
also appeared before the SEC on 22 August 1994 to explain IRC's alleged failure to immediately disclose material
information as required under the Rules on Disclosure of Material Facts.7

On 19 September 1994, the SEC Chairman issued an Order finding that IRC violated the Rules on Disclosure of
Material Facts, in connection with the Old Securities Act of 1936, when it failed to make timely disclosure of its
negotiations with GHB. In addition, the SEC pronounced that some of the officers and directors of IRC entered into
transactions involving IRC shares in violation of Section 30, in relation to Section 36, of the Revised Securities Act.8

Respondents filed an Omnibus Motion, dated 21 September 1994, which was superseded by an Amended Omnibus
Motion, filed on 18 October 1994, alleging that the SEC had no authority to investigate the subject matter, since
under Section 8 of Presidential Decree No. 902-A,9 as amended by Presidential Decree No. 1758, jurisdiction was
conferred upon the Prosecution and Enforcement Department (PED) of the SEC. Respondents also claimed that the
SEC violated their right to due process when it ordered that the respondents appear before the SEC and "show
cause why no administrative, civil or criminal sanctions should be imposed on them," and, thus, shifted the burden
of proof to the respondents. Lastly, they sought to have their cases tried jointly given the identical factual situations
surrounding the alleged violation committed by the respondents.10

Respondents also filed a Motion for Continuance of Proceedings on 24 October 1994, wherein they moved for
discontinuance of the investigations and the proceedings before the SEC until the undue publicity had abated and
the investigating officials had become reasonably free from prejudice and public pressure.11

No formal hearings were conducted in connection with the aforementioned motions, but on 25 January 1995, the
SEC issued an Omnibus Order which thus disposed of the same in this wise:12

WHEREFORE, premised on the foregoing considerations, the Commission resolves and hereby rules:

1. To create a special investigating panel to hear and decide the instant case in accordance with the Rules
of Practice and Procedure Before the Prosecution and Enforcement Department (PED), Securities and
Exchange Commission, to be composed of Attys. James K. Abugan, Medardo Devera (Prosecution and
Enforcement Department), and Jose Aquino (Brokers and Exchanges Department), which is hereby directed
to expeditiously resolve the case by conducting continuous hearings, if possible.

2. To recall the show cause orders dated September 19, 1994 requiring the respondents to appear and
show cause why no administrative, civil or criminal sanctions should be imposed on them.

3. To deny the Motion for Continuance for lack of merit.

Respondents filed an Omnibus Motion for Partial Reconsideration,13 questioning the creation of the special
investigating panel to hear the case and the denial of the Motion for Continuance. The SEC denied reconsideration
in its Omnibus Order dated 30 March 1995.14

The respondents filed a petition before the Court of Appeals docketed as C.A.-G.R. SP No. 37036, questioning the
Omnibus Orders dated 25 January 1995 and 30 March 1995.15 During the proceedings before the Court of Appeals,
respondents filed a Supplemental Motion16 dated 16 May 1995, wherein they prayed for the issuance of a writ of
preliminary injunction enjoining the SEC and its agents from investigating and proceeding with the hearing of the
case against respondents herein. On 5 May 1995, the Court of Appeals granted their motion and issued a writ of
preliminary injunction, which effectively enjoined the SEC from filing any criminal, civil or administrative case against
the respondents herein.17

On 23 October 1995, the SEC filed a Motion for Leave to Quash SEC Omnibus Orders so that the case may be
investigated by the PED in accordance with the SEC Rules and Presidential Decree No. 902-A, and not by the
special body whose creation the SEC had earlier ordered.18

The Court of Appeals promulgated a Decision19 on 20 August 1998. It determined that there were no implementing
rules and regulations regarding disclosure, insider trading, or any of the provisions of the Revised Securities Acts
which the respondents allegedly violated. The Court of Appeals likewise noted that it found no statutory authority for
the SEC to initiate and file any suit for civil liability under Sections 8, 30 and 36 of the Revised Securities Act. Thus,
it ruled that no civil, criminal or administrative proceedings may possibly be held against the respondents without
violating their rights to due process and equal protection. It further resolved that absent any implementing rules, the
SEC cannot be allowed to quash the assailed Omnibus Orders for the sole purpose of re-filing the same case
against the respondents.20

The Court of Appeals further decided that the Rules of Practice and Procedure Before the PED, which took effect on
14 April 1990, did not comply with the statutory requirements contained in the Administrative Code of 1997. Section
8, Rule V of the Rules of Practice and Procedure Before the PED affords a party the right to be present but without
the right to cross-examine witnesses presented against him, in violation of Section 12(3), Chapter 3, Book VII of the
Administrative Code. 21
Page 22 of 152
In the dispositive portion of its Decision, dated 20 August 1998, the Court of Appeals ruled that22:

WHEREFORE, [herein petitioner SEC's] Motion for Leave to Quash SEC Omnibus Orders is
hereby DENIED. The petition for certiorari, prohibition and mandamus is GRANTED. Consequently, all
proceedings taken against [herein respondents] in this case, including the Omnibus Orders of January 25,
1995 and March 30, 1995 are declared null and void. The writ of preliminary injunction is hereby made
permanent and, accordingly, [SEC] is hereby prohibited from taking cognizance or initiating any
action, be they civil, criminal, or administrative against [respondents] with respect to Sections 8 (Procedure
for Registration), 30 (Insider's duty to disclose when trading) and 36 (Directors, Officers and Principal
Stockholders) in relation to Sections 46 (Administrative sanctions) 56 (Penalties) 44 (Liabilities of Controlling
persons) and 45 (Investigations, injunctions and prosecution of offenses) of the Revised Securities Act and
Section 144 (Violations of the Code) of the Corporation Code. (Emphasis provided.)

The SEC filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution23 issued on 30
September 1998.

Hence, the present petition, which relies on the following grounds24:

THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONER'S MOTION FOR LEAVE TO QUASH
THE ASSAILED SEC OMNIBUS ORDERS DATED JANUARY 25 AND MARCH 30, 1995.

II

THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE IS NO STATUTORY AUTHORITY
WHATSOEVER FOR PETITIONER SEC TO INITIATE AND FILE ANY SUIT BE THEY CIVIL, CRIMINAL
OR ADMINISTRATIVE AGAINST RESPONDENT CORPORATION AND ITS DIRECTORS WITH
RESPECT TO SECTION 30 (INSIDER'S DUTY TO DISCOLSED [sic] WHEN TRADING) AND 36
(DIRECTORS OFFICERS AND PRINCIPAL STOCKHOLDERS) OF THE REVISED SECURITIES ACT;
AND

III

THE COURT OF APPEALS ERRED WHEN IT RULED THAT RULES OF PRACTICE AND PROSECUTION
BEFORE THE PED AND THE SICD RULES OF PROCEDURE ON ADMINISTRATIVE
ACTIONS/PROCEEDINGS25 ARE INVALID AS THEY FAIL TO COMPLY WITH THE STATUTORY
REQUIREMENTS CONTAINED IN THE ADMINISTRATIVE CODE OF 1987.

The petition is impressed with merit.

Before discussing the merits of this case, it should be noted that while this case was pending in this Court, Republic
Act No. 8799, otherwise known as the Securities Regulation Code, took effect on 8 August 2000. Section 8 of
Presidential Decree No. 902-A, as amended, which created the PED, was already repealed as provided for in
Section 76 of the Securities Regulation Code:

SEC. 76. Repealing Clause. - The Revised Securities Act (Batas Pambansa Blg. 178), as amended, in its
entirety, and Sections 2, 4 and 8 of Presidential Decree 902-A, as amended, are hereby repealed. All other
laws, orders, rules and regulations, or parts thereof, inconsistent with any provision of this Code are hereby
repealed or modified accordingly.

Thus, under the new law, the PED has been abolished, and the Securities Regulation Code has taken the place of
the Revised Securities Act.

The Court now proceeds with a discussion of the present case.

I. Sctions 8, 30 and 36 of the Revised Securities Act do not require the enactment of implementing rules to
make them binding and effective.

The Court of Appeals ruled that absent any implementing rules for Sections 8, 30 and 36 of the Revised Securities
Act, no civil, criminal or administrative actions can possibly be had against the respondents without violating their
right to due process and equal protection, citing as its basis the case Yick Wo v. Hopkins.26 This is untenable.

In the absence of any constitutional or statutory infirmity, which may concern Sections 30 and 36 of the Revised
Securities Act, this Court upholds these provisions as legal and binding. It is well settled that every law has in its
favor the presumption of validity. Unless and until a specific provision of the law is declared invalid and
unconstitutional, the same is valid and binding for all intents and purposes.27 The mere absence of implementing

Page 23 of 152
rules cannot effectively invalidate provisions of law, where a reasonable construction that will support the law may
be given. In People v. Rosenthal,28 this Court ruled that:

In this connection we cannot pretermit reference to the rule that "legislation should not be held invalid on the
ground of uncertainty if susceptible of any reasonable construction that will support and give it effect. An Act
will not be declared inoperative and ineffectual on the ground that it furnishes no adequate means to secure
the purpose for which it is passed, if men of common sense and reason can devise and provide the means,
and all the instrumentalities necessary for its execution are within the reach of those intrusted therewith." (25
R.C.L., pp. 810, 811)

In Garcia v. Executive Secretary,29 the Court underlined the importance of the presumption of validity of laws and
the careful consideration with which the judiciary strikes down as invalid acts of the legislature:

The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the
political departments are valid in the absence of a clear and unmistakable showing to the contrary. To doubt
is to sustain. This presumption is based on the doctrine of separation of powers which enjoins upon each
department a becoming respect for the acts of the other departments. The theory is that as the joint act of
Congress and the President of the Philippines, a law has been carefully studied and determined to be in
accordance with the fundamental law before it was finally enacted.

The necessity for vesting administrative authorities with power to make rules and regulations is based on the
impracticability of lawmakers' providing general regulations for various and varying details of management.30 To rule
that the absence of implementing rules can render ineffective an act of Congress, such as the Revised Securities
Act, would empower the administrative bodies to defeat the legislative will by delaying the implementing rules. To
assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of
the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet
developed, or to things future and impossible to fully know.31 It is well established that administrative authorities
have the power to promulgate rules and regulations to implement a given statute and to effectuate its policies,
provided such rules and regulations conform to the terms and standards prescribed by the statute as well as purport
to carry into effect its general policies. Nevertheless, it is undisputable that the rules and regulations cannot assert
for themselves a more extensive prerogative or deviate from the mandate of the statute.32 Moreover, where the
statute contains sufficient standards and an unmistakable intent, as in the case of Sections 30 and 36 of the
Revised Securities Act, there should be no impediment to its implementation.

The reliance placed by the Court of Appeals in Yick Wo v. Hopkins33 shows a glaring error. In the cited case, this
Court found unconstitutional an ordinance which gave the board of supervisors authority to refuse permission to
carry on laundries located in buildings that were not made of brick and stone, because it violated the equal
protection clause and was highly discriminatory and hostile to Chinese residents and not because the standards
provided therein were vague or ambiguous.

This Court does not discern any vagueness or ambiguity in Sections 30 and 36 of the Revised Securities Act,
such that the acts proscribed and/or required would not be understood by a person of ordinary intelligence.

Section 30 of the Revised Securities Act

Section 30 of the Revised Securities Act reads:

Sec. 30. Insider's duty to disclose when trading. - (a) It shall be unlawful for an insider to sell or buy a
security of the issuer, if he knows a fact of special significance with respect to the issuer or the security that
is not generally available, unless (1) the insider proves that the fact is generally available or (2) if the other
party to the transaction (or his agent) is identified, (a) the insider proves that the other party knows it, or (b)
that other party in fact knows it from the insider or otherwise.

(b) "Insider" means (1) the issuer, (2) a director or officer of, or a person controlling, controlled by, or under
common control with, the issuer, (3) a person whose relationship or former relationship to the issuer gives or
gave him access to a fact of special significance about the issuer or the security that is not generally
available, or (4) a person who learns such a fact from any of the foregoing insiders as defined in this
subsection, with knowledge that the person from whom he learns the fact is such an insider.

(c) A fact is "of special significance" if (a) in addition to being material it would be likely, on being made
generally available, to affect the market price of a security to a significant extent, or (b) a reasonable person
would consider it especially important under the circumstances in determining his course of action in the
light of such factors as the degree of its specificity, the extent of its difference from information generally
available previously, and its nature and reliability.

(d) This section shall apply to an insider as defined in subsection (b) (3) hereof only to the extent that he
knows of a fact of special significance by virtue of his being an insider.

Page 24 of 152
The provision explains in simple terms that the insider's misuse of nonpublic and undisclosed information is the
gravamen of illegal conduct. The intent of the law is the protection of investors against fraud, committed when an
insider, using secret information, takes advantage of an uninformed investor. Insiders are obligated to disclose
material information to the other party or abstain from trading the shares of his corporation. This duty to disclose or
abstain is based on two factors: first, the existence of a relationship giving access, directly or indirectly, to
information intended to be available only for a corporate purpose and not for the personal benefit of anyone; and
second, the inherent unfairness involved when a party takes advantage of such information knowing it is unavailable
to those with whom he is dealing.34

In the United States (U.S.), the obligation to disclose or abstain has been traditionally imposed on corporate
"insiders," particularly officers, directors, or controlling stockholders, but that definition has since been
expanded.35The term "insiders" now includes persons whose relationship or former relationship to the issuer gives or
gave them access to a fact of special significance about the issuer or the security that is not generally available, and
one who learns such a fact from an insider knowing that the person from whom he learns the fact is such an insider.
Insiders have the duty to disclose material facts which are known to them by virtue of their position but which are not
known to persons with whom they deal and which, if known, would affect their investment judgment. In some cases,
however, there may be valid corporate reasons for the nondisclosure of material information. Where such reasons
exist, an issuer's decision not to make any public disclosures is not ordinarily considered as a violation of insider
trading. At the same time, the undisclosed information should not be improperly used for non-corporate purposes,
particularly to disadvantage other persons with whom an insider might transact, and therefore the insider must
abstain from entering into transactions involving such securities.36

Respondents further aver that under Section 30 of the Revised Securities Act, the SEC still needed to define the
following terms: "material fact," "reasonable person," "nature and reliability" and "generally available." 37 In
determining whether or not these terms are vague, these terms must be evaluated in the context of Section 30 of
the Revised Securties Act. To fully understand how the terms were used in the aforementioned provision, a
discussion of what the law recognizes as a fact of special significance is required, since the duty to disclose such
fact or to abstain from any transaction is imposed on the insider only in connection with a fact of special significance.

Under the law, what is required to be disclosed is a fact of "special significance" which may be (a) a material fact
which would be likely, on being made generally available, to affect the market price of a security to a significant
extent, or (b) one which a reasonable person would consider especially important in determining his course of action
with regard to the shares of stock.

(a) Material Fact - The concept of a "material fact" is not a new one. As early as 1973, the Rules Requiring
Disclosure of Material Facts by Corporations Whose Securities Are Listed In Any Stock Exchange or
Registered/Licensed Under the Securities Act, issued by the SEC on 29 January 1973, explained that "[a] fact is
material if it induces or tends to induce or otherwise affect the sale or purchase of its securities." Thus, Section 30 of
the Revised Securities Act provides that if a fact affects the sale or purchase of securities, as well as its price, then
the insider would be required to disclose such information to the other party to the transaction involving the
securities. This is the first definition given to a "fact of special significance."

(b.1) Reasonable Person - The second definition given to a fact of special significance involves the judgment of a
"reasonable person." Contrary to the allegations of the respondents, a "reasonable person" is not a problematic
legal concept that needs to be clarified for the purpose of giving effect to a statute; rather, it is the standard on which
most of our legal doctrines stand. The doctrine on negligence uses the discretion of the "reasonable man" as the
standard.38 A purchaser in good faith must also take into account facts which put a "reasonable man" on his
guard.39 In addition, it is the belief of the reasonable and prudent man that an offense was committed that sets the
criteria for probable cause for a warrant of arrest.40 This Court, in such cases, differentiated the reasonable and
prudent man from "a person with training in the law such as a prosecutor or a judge," and identified him as "the
average man on the street," who weighs facts and circumstances without resorting to the calibrations of our
technical rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense of
which all reasonable men have in abundance.41 In the same vein, the U.S. Supreme Court similarly determined its
standards by the actual significance in the deliberations of a "reasonable investor," when it ruled in TSC Industries,
Inc. v. Northway, Inc.,42 that the determination of materiality "requires delicate assessments of the inferences a
‘reasonable shareholder' would draw from a given set of facts and the significance of those inferences to him."

(b.2) Nature and Reliability - The factors affecting the second definition of a "fact of special significance," which is
of such importance that it is expected to affect the judgment of a reasonable man, were substantially lifted from a
test of materiality pronounced in the case In the Matter of Investors Management Co., Inc.43:

Among the factors to be considered in determining whether information is material under this test are the
degree of its specificity, the extent to which it differs from information previously publicly disseminated, and
its reliability in light of its nature and source and the circumstances under which it was received.

It can be deduced from the foregoing that the "nature and reliability" of a significant fact in determining the course of
action a reasonable person takes regarding securities must be clearly viewed in connection with the particular
circumstances of a case. To enumerate all circumstances that would render the "nature and reliability" of a fact to be
of special significance is close to impossible. Nevertheless, the proper adjudicative body would undoubtedly be able

Page 25 of 152
to determine if facts of a certain "nature and reliability" can influence a reasonable person's decision to retain, sell or
buy securities, and thereafter explain and justify its factual findings in its decision.

(c) Materiality Concept - A discussion of the "materiality concept" would be relevant to both a material fact which
would affect the market price of a security to a significant extent and/or a fact which a reasonable person would
consider in determining his or her cause of action with regard to the shares of stock. Significantly, what is referred to
in our laws as a fact of special significance is referred to in the U.S. as the "materiality concept" and the latter is
similarly not provided with a precise definition. In Basic v. Levinson,44 the U.S. Supreme Court cautioned against
confining materiality to a rigid formula, stating thus:

A bright-line rule indeed is easier to follow than a standard that requires the exercise of judgment in the light
of all the circumstances. But ease of application alone is not an excuse for ignoring the purposes of the
Securities Act and Congress' policy decisions. Any approach that designates a single fact or occurrence as
always determinative of an inherently fact-specific finding such as materiality, must necessarily be
overinclusive or underinclusive.

Moreover, materiality "will depend at any given time upon a balancing of both the indicated probability that the event
will occur and the anticipated magnitude of the event in light of the totality of the company activity."45 In drafting the
Securities Act of 1934, the U.S. Congress put emphasis on the limitations to the definition of materiality:

Although the Committee believes that ideally it would be desirable to have absolute certainty in the
application of the materiality concept, it is its view that such a goal is illusory and unrealistic. The materiality
concept is judgmental in nature and it is not possible to translate this into a numerical formula. The
Committee's advice to the [SEC] is to avoid this quest for certainty and to continue consideration of
materiality on a case-by-case basis as disclosure problems are identified." House Committee on
Interstate and Foreign Commerce, Report of the Advisory Committee on Corporate Disclosure to the
Securities and Exchange Commission, 95th Cong., 1st Sess., 327 (Comm.Print 1977). (Emphasis
provided.)46

(d) Generally Available - Section 30 of the Revised Securities Act allows the insider the defense that in a
transaction of securities, where the insider is in possession of facts of special significance, such information is
"generally available" to the public. Whether information found in a newspaper, a specialized magazine, or any
cyberspace media be sufficient for the term "generally available" is a matter which may be adjudged given the
particular circumstances of the case. The standards cannot remain at a standstill. A medium, which is widely used
today was, at some previous point in time, inaccessible to most. Furthermore, it would be difficult to approximate
how the rules may be applied to the instant case, where investigation has not even been started. Respondents
failed to allege that the negotiations of their agreement with GHB were made known to the public through any form
of media for there to be a proper appreciation of the issue presented.

Section 36(a) of the Revised Securities Act

As regards Section 36(a) of the Revised Securities Act, respondents claim that the term "beneficial ownership" is
vague and that it requires implementing rules to give effect to the law. Section 36(a) of the Revised Securities Act is
a straightforward provision that imposes upon (1) a beneficial owner of more than ten percent of any class of any
equity security or (2) a director or any officer of the issuer of such security, the obligation to submit a statement
indicating his or her ownership of the issuer's securities and such changes in his or her ownership thereof. The said
provision reads:

Sec. 36. Directors, officers and principal stockholders. - (a) Every person who is directly or indirectly the
beneficial owner of more than ten per centum of any [class] of any equity security which is registered
pursuant to this Act, or who is [a] director or an officer of the issuer of such security, shall file, at the time of
the registration of such security on a securities exchange or by the effective date of a registration statement
or within ten days after he becomes such a beneficial owner, director or officer, a statement with the
Commission and, if such security is registered on a securities exchange, also with the exchange, of the
amount of all equity securities of such issuer of which he is the beneficial owner, and within ten days after
the close of each calendar month thereafter, if there has been a change in such ownership during such
month, shall file with the Commission, and if such security is registered on a securities exchange, shall also
file with the exchange, a statement indicating his ownership at the close of the calendar month and such
changes in his ownership as have occurred during such calendar month. (Emphasis provided.)

Section 36(a) refers to the "beneficial owner." Beneficial owner has been defined in the following manner:

[F]irst, to indicate the interest of a beneficiary in trust property (also called "equitable ownership"); and
second, to refer to the power of a corporate shareholder to buy or sell the shares, though the shareholder is
not registered in the corporation's books as the owner. Usually, beneficial ownership is distinguished from
naked ownership, which is the enjoyment of all the benefits and privileges of ownership, as against
possession of the bare title to property.47

Page 26 of 152
Even assuming that the term "beneficial ownership" was vague, it would not affect respondents' case, where the
respondents are directors and/or officers of the corporation, who are specifically required to comply with the
reportorial requirements under Section 36(a) of the Revised Securities Act. The validity of a statute may be
contested only by one who will sustain a direct injury as a result of its enforcement.48

Sections 30 and 36 of the Revised Securities Act were enacted to promote full disclosure in the securities market
and prevent unscrupulous individuals, who by their positions obtain non-public information, from taking advantage of
an uninformed public. No individual would invest in a market which can be manipulated by a limited number of
corporate insiders. Such reaction would stifle, if not stunt, the growth of the securities market. To avert the
occurrence of such an event, Section 30 of the Revised Securities Act prevented the unfair use of non-public
information in securities transactions, while Section 36 allowed the SEC to monitor the transactions entered into by
corporate officers and directors as regards the securities of their companies.

In the case In the Matter of Investor's Management Co.,49 it was cautioned that "the broad language of the anti-fraud
provisions," which include the provisions on insider trading, should not be "circumscribed by fine distinctions and
rigid classifications." The ambit of anti-fraud provisions is necessarily broad so as to embrace the infinite variety of
deceptive conduct.50

In Tatad v. Secretary of Department of Energy,51 this Court brushed aside a contention, similar to that made by the
respondents in this case, that certain words or phrases used in a statute do not set determinate standards, declaring
that:

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 and determinable standards. This stubborn submission
deserves scant consideration. The dictionary meanings of these words are well settled and cannot confuse
men of reasonable intelligence. x x x. 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.

Among the words or phrases that this Court upheld as valid standards were "simplicity and dignity,"52 "public
interest,"53 and "interests of law and order."54

The Revised Securities Act was approved on 23 February 1982. The fact that the Full Disclosure Rules were
promulgated by the SEC only on 24 July 1996 does not render ineffective in the meantime Section 36 of the
Revised Securities Act. It is already unequivocal that the Revised Securities Act requires full disclosure and the Full
Disclosure Rules were issued to make the enforcement of the law more consistent, efficient and effective. It is
equally reasonable to state that the disclosure forms later provided by the SEC, do not, in any way imply that no
compliance was required before the forms were provided. The effectivity of a statute which imposes reportorial
requirements cannot be suspended by the issuance of specified forms, especially where compliance therewith may
be made even without such forms. The forms merely made more efficient the processing of requirements already
identified by the statute.

For the same reason, the Court of Appeals made an evident mistake when it ruled that no civil, criminal or
administrative actions can possibly be had against the respondents in connection with Sections 8, 30 and 36 of the
Revised Securities Act due to the absence of implementing rules. These provisions are sufficiently clear and
complete by themselves. Their requirements are specifically set out, and the acts which are enjoined are
determinable. In particular, Section 855 of the Revised Securities Act is a straightforward enumeration of the
procedure for the registration of securities and the particular matters which need to be reported in the registration
statement thereof. The Decision, dated 20 August 1998, provides no valid reason to exempt the respondent IRC
from such requirements. The lack of implementing rules cannot suspend the effectivity of these provisions. Thus,
this Court cannot find any cogent reason to prevent the SEC from exercising its authority to investigate respondents
for violation of Section 8 of the Revised Securities Act.

II. The right to cross-examination is not absolute and cannot be demanded during investigative proceedings
before the PED.

In its assailed Decision dated 20 August 1998, the Court of Appeals pronounced that the PED Rules of Practice and
Procedure was invalid since Section 8, Rule V56 thereof failed to provide for the parties' right to cross-examination, in
violation of the Administrative Code of 1987 particularly Section 12(3), Chapter 3, Book VII thereof. This ruling is
incorrect.

Firstly, Section 4, Rule I of the PED Rules of Practice and Procedure, categorically stated that the proceedings
before the PED are summary in nature:

Section 4. Nature of Proceedings - Subject to the requirements of due process, proceedings before the
"PED" shall be summary in nature not necessarily adhering to or following the technical rules of evidence
obtaining in the courts of law. The Rules of Court may apply in said proceedings in suppletory character
whenever practicable.

Page 27 of 152
Rule V of the PED Rules of Practice and Procedure further specified that:

Section 5. Submission of Documents - During the preliminary conference/hearing, or immediately thereafter,

the Hearing Officer may require the parties to simultaneously submit their respective verified position papers
accompanied by all supporting documents and the affidavits of their witnesses, if any which shall take the
place of their direct testimony. The parties shall furnish each other with copies of the position papers
together with the supporting affidavits and documents submitted by them.

Section 6. Determination of necessity of hearing. - Immediately after the submission by the parties of their
position papers and supporting documents, the Hearing Officer shall determine whether there is a need for a
formal hearing. At this stage, he may, in his discretion, and for the purpose of making such determination,
elicit pertinent facts or information, including documentary evidence, if any, from any party or witness to
complete, as far as possible, the facts of the case. Facts or information so elicited may serve as basis for his
clarification or simplifications of the issues in the case. Admissions and stipulation of facts to abbreviate the
proceedings shall be encouraged.

Section 7. Disposition of Case. If the Hearing Officer finds no necessity of further hearing after the parties
have submitted their position papers and supporting documents, he shall so inform the parties stating the
reasons therefor and shall ask them to acknowledge the fact that they were so informed by signing the
minutes of the hearing and the case shall be deemed submitted for resolution.

As such, the PED Rules provided that the Hearing Officer may require the parties to submit their respective verified
position papers, together with all supporting documents and affidavits of witnesses. A formal hearing was not
mandatory; it was within the discretion of the Hearing Officer to determine whether there was a need for a formal
hearing. Since, according to the foregoing rules, the holding of a hearing before the PED is discretionary, then the
right to cross-examination could not have been demanded by either party.

Secondly, it must be pointed out that Chapter 3, Book VII of the Administrative Code, entitled "Adjudication," does
not affect the investigatory functions of the agencies. The law creating the PED, Section 8 of Presidential Decree
No. 902-A, as amended, defines the authority granted to the PED, thus:

SEC. 8. The Prosecution and Enforcement Department shall have, subject to the Commission's control and
supervision, the exclusive authority to investigate, on complaint or motu proprio, any act or omission of
the Board of Directors/Trustees of corporations, or of partnerships, or of other associations, or of their
stockholders, officers or partners, including any fraudulent devices, schemes or representations, in violation
of any law or rules and regulations administered and enforced by the Commission; to file and prosecute in
accordance with law and rules and regulations issued by the Commission and in appropriate cases, the
corresponding criminal or civil case before the Commission or the proper court or body upon prima facie
finding of violation of any laws or rules and regulations administered and enforced by the Commission; and
to perform such other powers and functions as may be provided by law or duly delegated to it by the
Commission. (Emphasis provided.)

The law creating PED empowers it to investigate violations of the rules and regulations promulgated by the SEC and
to file and prosecute such cases. It fails to mention any adjudicatory functions insofar as the PED is concerned.
Thus, the PED Rules of Practice and Procedure need not comply with the provisions of the Administrative Code on
adjudication, particularly Section 12(3), Chapter 3, Book VII.

In Cariño v. Commission on Human Rights,57 this Court sets out the distinction between investigative and
adjudicative functions, 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" xx to subject to an official probe xx: to conduct an official inquiry." The purpose of an
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; xx 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 parties to
a court case) on the merits of issues raised: xx to pass judgment on: settle judicially: xx act as judge." And
"adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: xx to award or
grant judicially in a case of controversy x x x."
Page 28 of 152
In a 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 x Implies a judicial determination of a fact, and the entry of a judgment."

There is no merit to the respondent's averment that the sections under Chapter 3, Book VII of the Administrative
Code, do not distinguish between investigative and adjudicatory functions. Chapter 3, Book VII of the Administrative
Code, is unequivocally entitled "Adjudication."

Respondents insist that the PED performs adjudicative functions, as enumerated under Section 1(h) and (j), Rule II;
and Section 2(4), Rule VII of the PED Rules of Practice and Procedure:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree No.
902-A, as amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department is
primarily charged with the following:

xxxx

(h) Suspends or revokes, after proper notice and hearing in accordance with these Rules, the franchise or
certificate of registration of corporations, partnerships or associations, upon any of the following grounds:

1. Fraud in procuring its certificate of registration;

2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or
damage to the general public;

3. Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which
would amount to a grave violation of its franchise;

xxxx

(j) Imposes charges, fines and fees, which by law, it is authorized to collect;

xxxx

Section 2. Powers of the Hearing Officer. The Hearing Officer shall have the following powers:

xxxx

4. To cite and/or declare any person in direct or indirect contempt in accordance with pertinent provisions of
the Rules of Court.

Even assuming that these are adjudicative functions, the PED, in the instant case, exercised its investigative
powers; thus, respondents do not have the requisite standing to assail the validity of the rules on adjudication. A
valid source of a statute or a rule can only be contested by one who will sustain a direct injury as a result of its
enforcement.58 In the instant case, respondents are only being investigated by the PED for their alleged failure to
disclose their negotiations with GHB and the transactions entered into by its directors involving IRC shares. The
respondents have not shown themselves to be under any imminent danger of sustaining any personal injury
attributable to the exercise of adjudicative functions by the SEC. They are not being or about to be subjected by the
PED to charges, fees or fines; to citations for contempt; or to the cancellation of their certificate of registration under
Section 1(h), Rule II of the PED Rules of Practice and Procedure.

To repeat, the only powers which the PED was likely to exercise over the respondents were investigative in nature,
to wit:

Section 1. Authority of the Prosecution and Enforcement Department - Pursuant to Presidential Decree No.
902-A, as amended by Presidential Decree No. 1758, the Prosecution and Enforcement Department is
primarily charged with the following:

xxxx

b. Initiates proper investigation of corporations and partnerships or persons, their books, records and other
properties and assets, involving their business transactions, in coordination with the operating department
involved;

xxxx

Page 29 of 152
 e. Files and prosecutes civil or criminal cases before the Commission and other courts of justice involving
violations of laws and decrees enforced by the Commission and the rules and regulations promulgated
thereunder;

f. Prosecutes erring directors, officers and stockholders of corporations and partnerships, commercial paper
issuers or persons in accordance with the pertinent rules on procedures;

The authority granted to the PED under Section 1(b), (e), and (f), Rule II of the PED Rules of Practice and
Procedure, need not comply with Section 12, Chapter 3, Rule VII of the Administrative Code, which affects only the
adjudicatory functions of administrative bodies. Thus, the PED would still be able to investigate the respondents
under its rules for their alleged failure to disclose their negotiations with GHB and the transactions entered into by its
directors involving IRC shares.

This is not to say that administrative bodies performing adjudicative functions are required to strictly comply with the
requirements of Chapter 3, Rule VII of the Administrative Code, particularly, the right to cross-examination. It should
be noted that under Section 2.2 of Executive Order No. 26, issued on 7 October 1992, abbreviated proceedings are
prescribed in the disposition of administrative cases:

2. Abbreviation of Proceedings. All administrative agencies are hereby directed to adopt and include in their
respective Rules of Procedure the following provisions:

xxxx

2.2 Rules adopting, unless otherwise provided by special laws and without prejudice to Section 12, Chapter
3, Book VII of the Administrative Code of 1987, the mandatory use of affidavits in lieu of direct testimonies
and the preferred use of depositions whenever practicable and convenient.

As a consequence, in proceedings before administrative or quasi-judicial bodies, such as the National Labor
Relations Commission and the Philippine Overseas Employment Agency, created under laws which authorize
summary proceedings, decisions may be reached on the basis of position papers or other documentary evidence
only. They are not bound by technical rules of procedure and evidence. 59 In fact, the hearings before such agencies
do not connote full adversarial proceedings.60 Thus, it is not necessary for the rules to require affiants to appear and
testify and to be cross-examined by the counsel of the adverse party. To require otherwise would negate the
summary nature of the administrative or quasi-judicial proceedings.61 In Atlas Consolidated Mining and Development
Corporation v. Factoran, Jr.,62 this Court stated that:

[I]t is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is
sufficient that findings of fact are not shown to be unsupported by evidence. Substantial evidence is all that
is needed to support an administrative finding of fact, and substantial evidence is "such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion."

In order to comply with the requirements of due process, what is required, among other things, is that every litigant
be given reasonable opportunity to appear and defend his right and to introduce relevant evidence in his favor.63

III. The Securities Regulations Code did not repeal Sections 8, 30 and 36 of the Revised Securities Act since
said provisions were reenacted in the new law.

The Securities Regulations Code absolutely repealed the Revised Securities Act. While the absolute repeal of a law
generally deprives a court of its authority to penalize the person charged with the violation of the old law prior to its
appeal, an exception to this rule comes about when the repealing law punishes the act previously penalized under
the old law. The Court, in Benedicto v. Court of Appeals, sets down the rules in such instances:64

As a rule, an absolute repeal of a penal law has the effect of depriving the court of its authority to punish a
person charged with violation of the old law prior to its repeal. This is because an unqualified repeal of a
penal law constitutes a legislative act of rendering legal what had been previously declared as illegal, such
that the offense no longer exists and it is as if the person who committed it never did so. There are,
however, exceptions to the rule. One is the inclusion of a saving clause in the repealing statute that provides
that the repeal shall have no effect on pending actions. Another exception is where the repealing
act reenacts the former statute and punishes the act previously penalized under the old law. In such
instance, the act committed before the reenactment continues to be an offense in the statute books and
pending cases are not affected, regardless of whether the new penalty to be imposed is more favorable to
the accused. (Emphasis provided.)

In the present case, a criminal case may still be filed against the respondents despite the repeal, since Sections
8, 65 12,66 26,67 2768 and 2369 of the Securities Regulations Code impose duties that are substantially similar to
Sections 8, 30 and 36 of the repealed Revised Securities Act.

Page 30 of 152
Section 8 of the Revised Securities Act, which previously provided for the registration of securities and the
information that needs to be included in the registration statements, was expanded under Section 12, in connection
with Section 8 of the Securities Regulations Code. Further details of the information required to be disclosed by the
registrant are explained in the Amended Implementing Rules and Regulations of the Securities Regulations Code,
issued on 30 December 2003, particularly Sections 8 and 12 thereof.

Section 30 of the Revised Securities Act has been reenacted as Section 27 of the Securities Regulations Code, still
penalizing an insider's misuse of material and non-public information about the issuer, for the purpose of protecting
public investors. Section 26 of the Securities Regulations Code even widens the coverage of punishable acts, which
intend to defraud public investors through various devices, misinformation and omissions.

Section 23 of the Securities Regulations Code was practically lifted from Section 36(a) of the Revised Securities Act.
Both provisions impose upon (1) a beneficial owner of more than ten percent of any class of any equity security or
(2) a director or any officer of the issuer of such security, the obligation to submit a statement indicating his or her
ownership of the issuer's securities and such changes in his or her ownership thereof.

Clearly, the legislature had not intended to deprive the courts of their authority to punish a person charged with
violation of the old law that was repealed; in this case, the Revised Securities Act.

IV. The SEC retained the jurisdiction to investigate violations of the Revised Securities Act, reenacted in the
Securities Regulations Code, despite the abolition of the PED.

Section 53 of the Securities Regulations Code clearly provides that criminal complaints for violations of rules and
regulations enforced or administered by the SEC shall be referred to the Department of Justice (DOJ) for preliminary
investigation, while the SEC nevertheless retains limited investigatory powers.70 Additionally, the SEC may still
impose the appropriate administrative sanctions under Section 54 of the aforementioned law.71

In Morato v. Court of Appeals,72 the cases therein were still pending before the PED for investigation and the SEC
for resolution when the Securities Regulations Code was enacted. The case before the SEC involved an intra-
corporate dispute, while the subject matter of the other case investigated by the PED involved the schemes,
devices, and violations of pertinent rules and laws of the company's board of directors. The enactment of the
Securities Regulations Code did not result in the dismissal of the cases; rather, this Court ordered the transfer of
one case to the proper regional trial court and the SEC to continue with the investigation of the other case.

The case at bar is comparable to the aforecited case. In this case, the SEC already commenced the investigative
proceedings against respondents as early as 1994. Respondents were called to appear before the SEC and explain
their failure to disclose pertinent information on 14 August 1994. Thereafter, the SEC Chairman, having already
made initial findings that respondents failed to make timely disclosures of their negotiations with GHB, ordered a
special investigating panel to hear the case. The investigative proceedings were interrupted only by the writ of
preliminary injunction issued by the Court of Appeals, which became permanent by virtue of the Decision, dated 20
August 1998, in C.A.-G.R. SP No. 37036. During the pendency of this case, the Securities Regulations Code
repealed the Revised Securities Act. As in Morato v. Court of Appeals, the repeal cannot deprive SEC of its
jurisdiction to continue investigating the case; or the regional trial court, to hear any case which may later be filed
against the respondents.

V. The instant case has not yet prescribed.

Respondents have taken the position that this case is moot and academic, since any criminal complaint that may be
filed against them resulting from the SEC's investigation of this case has already prescribed.73 They point out that
the prescription period applicable to offenses punished under special laws, such as violations of the Revised
Securities Act, is twelve years under Section 1 of Act No. 3326, as amended by Act No. 3585 and Act No. 3763,
entitled "An Act to Establish Periods of Prescription for Violations Penalized by Special Acts and Municipal
Ordinances and to Provide When Prescription Shall Begin to Act."74 Since the offense was committed in 1994, they
reasoned that prescription set in as early as 2006 and rendered this case moot. Such position, however, is
incongruent with the factual circumstances of this case, as well as the applicable laws and jurisprudence.

It is an established doctrine that a preliminary investigation interrupts the prescription period.75 A preliminary
investigation is essentially a determination whether an offense has been committed, and whether there is probable
cause for the accused to have committed an offense:

A preliminary investigation is merely inquisitorial, and it is often the only means of discovering the persons
who may be reasonably charged with a crime, to enable the fiscal to prepare the complaint or information. It
is not a trial of the case on the merits and has no purpose except that of determining whether a crime has
been committed or whether there is probable cause to believe that the accused is guilty thereof.76

Under Section 45 of the Revised Securities Act, which is entitled Investigations, Injunctions and Prosecution of
Offenses, the Securities Exchange Commission (SEC) has the authority to "make such investigations as it deems
necessary to determine whether any person has violated or is about to violate any provision of this Act XXX." After a

Page 31 of 152
finding that a person has violated the Revised Securities Act, the SEC may refer the case to the DOJ for preliminary
investigation and prosecution.

While the SEC investigation serves the same purpose and entails substantially similar duties as the preliminary
investigation conducted by the DOJ, this process cannot simply be disregarded. In Baviera v. Paglinawan,77 this
Court enunciated that a criminal complaint is first filed with the SEC, which determines the existence of probable
cause, before a preliminary investigation can be commenced by the DOJ. In the aforecited case, the complaint filed
directly with the DOJ was dismissed on the ground that it should have been filed first with the SEC. Similarly, the
offense was a violation of the Securities Regulations Code, wherein the procedure for criminal prosecution was
reproduced from Section 45 of the Revised Securities Act. 78 This Court affirmed the dismissal, which it explained
thus:

The Court of Appeals held that under the above provision, a criminal complaint for violation of any law or
rule administered by the SEC must first be filed with the latter. If the Commission finds that there is probable
cause, then it should refer the case to the DOJ. Since petitioner failed to comply with the foregoing
procedural requirement, the DOJ did not gravely abuse its discretion in dismissing his complaint in I.S. No.
2004-229.

A criminal charge for violation of the Securities Regulation Code is a specialized dispute. Hence, it must first
be referred to an administrative agency of special competence, i.e., the SEC. Under the doctrine of primary
jurisdiction, courts will not determine a controversy involving a question within the jurisdiction of the
administrative tribunal, where the question demands the exercise of sound administrative discretion
requiring the specialized knowledge and expertise of said administrative tribunal to determine technical and
intricate matters of fact. The Securities Regulation Code is a special law. Its enforcement is particularly
vested in the SEC. Hence, all complaints for any violation of the Code and its implementing rules and
regulations should be filed with the SEC. Where the complaint is criminal in nature, the SEC shall indorse
the complaint to the DOJ for preliminary investigation and prosecution as provided in Section 53.1 earlier
quoted.

We thus agree with the Court of Appeals that petitioner committed a fatal procedural lapse when he filed his
criminal complaint directly with the DOJ. Verily, no grave abuse of discretion can be ascribed to the DOJ in
dismissing petitioner's complaint.

The said case puts in perspective the nature of the investigation undertaken by the SEC, which is a requisite before
a criminal case may be referred to the DOJ. The Court declared that it is imperative that the criminal prosecution be
initiated before the SEC, the administrative agency with the special competence.

It should be noted that the SEC started investigative proceedings against the respondents as early as 1994. This
investigation effectively interrupted the prescription period. However, said proceedings were disrupted by a
preliminary injunction issued by the Court of Appeals on 5 May 1995, which effectively enjoined the SEC from filing
any criminal, civil, or administrative case against the respondents herein.79 Thereafter, on 20 August 1998, the
appellate court issued the assailed Decision in C.A. G.R. SP. No. 37036 ordering that the writ of injunction be made
permanent and prohibiting the SEC from taking cognizance of and initiating any action against herein respondents.
The SEC was bound to comply with the aforementioned writ of preliminary injunction and writ of injunction issued by
the Court of Appeals enjoining it from continuing with the investigation of respondents for 12 years. Any deviation by
the SEC from the injunctive writs would be sufficient ground for contempt. Moreover, any step the SEC takes in
defiance of such orders will be considered void for having been taken against an order issued by a court of
competent jurisdiction.

An investigation of the case by any other administrative or judicial body would likewise be impossible pending the
injunctive writs issued by the Court of Appeals. Given the ruling of this Court in Baviera v. Paglinawan,80 the DOJ
itself could not have taken cognizance of the case and conducted its preliminary investigation without a prior
determination of probable cause by the SEC. Thus, even presuming that the DOJ was not enjoined by the Court of
Appeals from conducting a preliminary investigation, any preliminary investigation conducted by the DOJ would
have been a futile effort since the SEC had only started with its investigation when respondents themselves applied
for and were granted an injunction by the Court of Appeals.

Moreover, the DOJ could not have conducted a preliminary investigation or filed a criminal case against the
respondents during the time that issues on the effectivity of Sections 8, 30 and 36 of the Revised Securities Act and
the PED Rules of Practice and Procedure were still pending before the Court of Appeals. After the Court of Appeals
declared the aforementioned statutory and regulatory provisions invalid and, thus, no civil, criminal or administrative
case may be filed against the respondents for violations thereof, the DOJ would have been at a loss, as there was
no statutory provision which respondents could be accused of violating.

Accordingly, it is only after this Court corrects the erroneous ruling of the Court of Appeals in its Decision dated 20
August 1998 that either the SEC or DOJ may properly conduct any kind of investigation against the respondents for
violations of Sections 8, 30 and 36 of the Revised Securities Act. Until then, the prescription period is deemed
interrupted.

Page 32 of 152
To reiterate, the SEC must first conduct its investigations and make a finding of probable cause in accordance with
the doctrine pronounced in Baviera v. Paglinawan.81 In this case, the DOJ was precluded from initiating a
preliminary investigation since the SEC was halted by the Court of Appeals from continuing with its investigation.
Such a situation leaves the prosecution of the case at a standstill, and neither the SEC nor the DOJ can conduct
any investigation against the respondents, who, in the first place, sought the injunction to prevent their prosecution.
All that the SEC could do in order to break the impasse was to have the Decision of the Court of Appeals
overturned, as it had done at the earliest opportunity in this case. Therefore, the period during which the SEC was
prevented from continuing with its investigation should not be counted against it. The law on the prescription period
was never intended to put the prosecuting bodies in an impossible bind in which the prosecution of a case would be
placed way beyond their control; for even if they avail themselves of the proper remedy, they would still be barred
from investigating and prosecuting the case.

Indubitably, the prescription period is interrupted by commencing the proceedings for the prosecution of the
accused. In criminal cases, this is accomplished by initiating the preliminary investigation. The prosecution of
offenses punishable under the Revised Securities Act and the Securities Regulations Code is initiated by the filing of
a complaint with the SEC or by an investigation conducted by the SEC motu proprio. Only after a finding of probable
cause is made by the SEC can the DOJ instigate a preliminary investigation. Thus, the investigation that was
commenced by the SEC in 1995, soon after it discovered the questionable acts of the respondents, effectively
interrupted the prescription period. Given the nature and purpose of the investigation conducted by the SEC, which
is equivalent to the preliminary investigation conducted by the DOJ in criminal cases, such investigation would
surely interrupt the prescription period.

VI. The Court of Appeals was justified in denying SEC's Motion for Leave to Quash SEC Omnibus Orders
dated 23 October 1995.

The SEC avers that the Court of Appeals erred when it denied its Motion for Leave to Quash SEC Omnibus Orders,
dated 23 October 1995, in the light of its admission that the PED had the sole authority to investigate the present
case. On this matter, this Court cannot agree with the SEC.

In the assailed decision, the Court of Appeals denied the SEC's Motion for Leave to Quash SEC Omnibus Orders,
since it found other issues that were more important than whether or not the PED was the proper body to investigate
the matter. Its refusal was premised on its earlier finding that no criminal, civil, or administrative case may be filed
against the respondents under Sections 8, 30 and 36 of the Revised Securities Act, due to the absence of any
implementing rules and regulations. Moreover, the validity of the PED Rules on Practice and Procedure was also
raised as an issue. The Court of Appeals, thus, reasoned that if the quashal of the orders was granted, then it would
be deprived of the opportunity to determine the validity of the aforementioned rules and statutory provisions. In
addition, the SEC would merely pursue the same case without the Court of Appeals having determined whether or
not it may do so in accordance with due process requirements. Absent a determination of whether the SEC may file
a case against the respondents based on the assailed provisions of the Revised Securities Act, it would have been
improper for the Court of Appeals to grant the SEC's Motion for Leave to Quash SEC Omnibus Orders.

In all, this Court rules that no implementing rules were needed to render effective Sections 8, 30 and 36 of the
Revised Securities Act; nor was the PED Rules of Practice and Procedure invalid, prior to the enactment of the
Securities Regulations Code, for failure to provide parties with the right to cross-examine the witnesses presented
against them. Thus, the respondents may be investigated by the appropriate authority under the proper rules of
procedure of the Securities Regulations Code for violations of Sections 8, 30, and 36 of the Revised Securities Act.82

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court hereby REVERSES the assailed
Decision of the Court of Appeals promulgated on 20 August 1998 in CA-G.R. SP No. 37036 and LIFTS the
permanent injunction issued pursuant thereto. This Court further DECLARES that the investigation of the
respondents for violations of Sections 8, 30 and 36 of the Revised Securities Act may be undertaken by the proper
authorities in accordance with the Securities Regulations Code. No costs.

SO ORDERED.

G.R. No. L-49112 February 2, 1979

LEOVILLO C. AGUSTIN, petitioner,

vs.
HON. ROMEO F. EDU, in his capacity as Land Transportation Commissioner; HON. JUAN PONCE ENRILE,
in his capacity as Minister of National Defense; HON. ALFREDO L. JUINIO, in his capacity as Minister Of
Public Works, Transportation and Communications; and HON: BALTAZAR AQUINO, in his capacity as
Minister of Public Highways, respondents.
Page 33 of 152
Leovillo C. Agustin Law Office for petitioner.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Ruben E. Agpalo and Solicitor Amado D. Aquino
for respondents.

FERNANDO, J.:

The validity of a letter of Instruction 1 providing for an early seaming device for motor vehicles is assailed in this
prohibition proceeding as being violative of the constitutional guarantee of due process and, insofar as the rules and
regulations for its implementation are concerned, for transgressing the fundamental principle of non- delegation of
legislative power. The Letter of Instruction is stigmatized by petitioner who is possessed of the requisite standing, as
being arbitrary and oppressive. A temporary restraining order as issued and respondents Romeo F. Edu, Land
Transportation Commissioner Juan Ponce Enrile, Minister of National Defense; Alfredo L. Juinio, Minister of Public
Works, Transportation and Communications; and Baltazar Aquino, Minister of Public Highways; were to answer.
That they did in a pleading submitted by Solicitor General Estelito P. Mendoza. 2 Impressed with a highly persuasive
quality, it makes devoid clear that the imputation of a constitutional infirmity is devoid of justification The Letter of
Instruction on is a valid police power measure. Nor could the implementing rules and regulations issued by
respondent Edu be considered as amounting to an exercise of legislative power. Accordingly, the petition must be
dismissed.

The facts are undisputed. The assailed Letter of Instruction No. 229 of President Marcos, issued on December 2,
1974, reads in full: "[Whereas], statistics show that one of the major causes of fatal or serious accidents in land
transportation is the presence of disabled, stalled or parked motor vehicles along streets or highways without any
appropriate early warning device to signal approaching motorists of their presence; [Whereas], the hazards posed
by such obstructions to traffic have been recognized by international bodies concerned with traffic safety, the 1968
Vienna Convention on Road Signs and Signals and the United Nations Organization (U.N.); [Whereas], the said
Vienna Convention which was ratified by the Philippine Government under P.D. No. 207, recommended the
enactment of local legislation for the installation of road safety signs and devices; [Now, therefore, I, Ferdinand E.
Marcos], President of the Philippines, in the interest of safety on all streets and highways, including expressways or
limited access roads, do hereby direct: 1. That all owners, users or drivers of motor vehicles shall have at all times in
their motor vehicles at least one (1) pair of early warning device consisting of triangular, collapsible reflectorized
plates in red and yellow colors at least 15 cms. at the base and 40 cms. at the sides. 2. Whenever any motor vehicle
is stalled or disabled or is parked for thirty (30) minutes or more on any street or highway, including expressways or
limited access roads, the owner, user or driver thereof shall cause the warning device mentioned herein to be
installed at least four meters away to the front and rear of the motor vehicle staged, disabled or parked. 3. The Land
Transportation Commissioner shall cause Reflectorized Triangular Early Warning Devices, as herein described, to
be prepared and issued to registered owners of motor vehicles, except motorcycles and trailers, charging for each
piece not more than 15 % of the acquisition cost. He shall also promulgate such rules and regulations as are
appropriate to effectively implement this order. 4. All hereby concerned shall closely coordinate and take such
measures as are necessary or appropriate to carry into effect then instruction. 3 Thereafter, on November 15, 1976,
it was amended by Letter of Instruction No. 479 in this wise. "Paragraph 3 of Letter of Instruction No. 229 is hereby
amended to read as follows: 3. The Land transportation Commissioner shall require every motor vehicle owner to
procure from any and present at the registration of his vehicle, one pair of a reflectorized early warning device, as d
bed of any brand or make chosen by mid motor vehicle . The Land Transportation Commissioner shall also
promulgate such rule and regulations as are appropriate to effectively implement this order.'" 4 There was issued
accordingly, by respondent Edu, the implementing rules and regulations on December 10, 1976. 5 They were not
enforced as President Marcos on January 25, 1977, ordered a six-month period of suspension insofar as the
installation of early warning device as a pre-registration requirement for motor vehicle was concerned. 6 Then on
June 30, 1978, another Letter of Instruction 7 the lifting of such suspension and directed the immediate
implementation of Letter of Instruction No. 229 as amended. 8 It was not until August 29, 1978 that respondent Edu
issued Memorandum Circular No. 32, worded thus: "In pursuance of Letter of Instruction No. 716, dated June 30,
1978, the implementation of Letter of Instruction No. 229, as amended by Letter of Instructions No. 479, requiring
the use of Early Warning Devices (EWD) on motor vehicle, the following rules and regulations are hereby issued: 1.
LTC Administrative Order No. 1, dated December 10, 1976; shall now be implemented provided that the device may
come from whatever source and that it shall have substantially complied with the EWD specifications contained in
Section 2 of said administrative order; 2. In order to insure that every motor vehicle , except motorcycles, is
equipped with the device, a pair of serially numbered stickers, to be issued free of charge by this Commission, shall
be attached to each EWD. The EWD. serial number shall be indicated on the registration certificate and official
receipt of payment of current registration fees of the motor vehicle concerned. All Orders, Circulars, and Memoranda
in conflict herewith are hereby superseded, This Order shall take effect immediately. 9 It was for immediate
implementation by respondent Alfredo L. Juinio, as Minister of Public Works, transportation, and Communications. 10

Petitioner, after setting forth that he "is the owner of a Volkswagen Beetle Car, Model 13035, already properly
equipped when it came out from the assembly lines with blinking lights fore and aft, which could very well serve as
an early warning device in case of the emergencies mentioned in Letter of Instructions No. 229, as amended, as
well as the implementing rules and regulations in Administrative Order No. 1 issued by the land transportation
Commission," 11 alleged that said Letter of Instruction No. 229, as amended, "clearly violates the provisions and
delegation of police power, [sic] * * *: " For him they are "oppressive, unreasonable, arbitrary, confiscatory, nay
Page 34 of 152
unconstitutional and contrary to the precepts of our compassionate New Society." 12 He contended that they are
"infected with arbitrariness because it is harsh, cruel and unconscionable to the motoring public;" 13 are "one-sided,
onerous and patently illegal and immoral because [they] will make manufacturers and dealers instant millionaires at
the expense of car owners who are compelled to buy a set of the so-called early warning device at the rate of P
56.00 to P72.00 per set." 14 are unlawful and unconstitutional and contrary to the precepts of a compassionate New
Society [as being] compulsory and confiscatory on the part of the motorists who could very well provide a practical
alternative road safety device, or a better substitute to the specified set of EWD's." 15 He therefore prayed for a
judgment both the assailed Letters of Instructions and Memorandum Circular void and unconstitutional and for a
restraining order in the meanwhile.

A resolution to this effect was handed down by this Court on October 19, 1978: "L-49112 (Leovillo C. Agustin v.
Hon. Romeo F. Edu, etc., et al.) — Considering the allegations contained, the issues raised and the arguments
adduced in the petition for prohibition with writ of p prohibitory and/or mandatory injunction, the Court Resolved to
(require) the respondents to file an answer thereto within ton (10) days from notice and not to move to dismiss the
petition. The Court further Resolved to [issue] a [temporary restraining order] effective as of this date and continuing
until otherwise ordered by this Court.16

Two motions for extension were filed by the Office of the Solicitor General and granted. Then on November 15,
1978, he Answer for respondents was submitted. After admitting the factual allegations and stating that they lacked
knowledge or information sufficient to form a belief as to petitioner owning a Volkswagen Beetle car," they
"specifically deny the allegations and stating they lacked knowledge or information sufficient to form a belief as to
petitioner owning a Volkswagen Beetle Car, 17 they specifically deny the allegations in paragraphs X and XI
(including its subparagraphs 1, 2, 3, 4) of Petition to the effect that Letter of Instruction No. 229 as amended by
Letters of Instructions Nos. 479 and 716 as well as Land transportation Commission Administrative Order No. 1 and
its Memorandum Circular No. 32 violates the constitutional provisions on due process of law, equal protection of law
and undue delegation of police power, and that the same are likewise oppressive, arbitrary, confiscatory, one-sided,
onerous, immoral unreasonable and illegal the truth being that said allegations are without legal and factual basis
and for the reasons alleged in the Special and Affirmative Defenses of this Answer."18 Unlike petitioner who
contented himself with a rhetorical recital of his litany of grievances and merely invoked the sacramental phrases of
constitutional litigation, the Answer, in demonstrating that the assailed Letter of Instruction was a valid exercise of
the police power and implementing rules and regulations of respondent Edu not susceptible to the charge that there
was unlawful delegation of legislative power, there was in the portion captioned Special and Affirmative Defenses, a
citation of what respondents believed to be the authoritative decisions of this Tribunal calling for application. They
are Calalang v. Williams, 19 Morfe v. Mutuc, 20 and Edu v. Ericta. 21 Reference was likewise made to the 1968 Vienna
Conventions of the United Nations on road traffic, road signs, and signals, of which the Philippines was a signatory
and which was duly ratified. 22 Solicitor General Mendoza took pains to refute in detail, in language calm and
dispassionate, the vigorous, at times intemperate, accusation of petitioner that the assailed Letter of Instruction and
the implementing rules and regulations cannot survive the test of rigorous scrutiny. To repeat, its highly-persuasive
quality cannot be denied.

This Court thus considered the petition submitted for decision, the issues being clearly joined. As noted at the
outset, it is far from meritorious and must be dismissed.

1. The Letter of Instruction in question was issued in the exercise of the police power. That is conceded by petitioner
and is the main reliance of respondents. It is the submission of the former, however, that while embraced in such a
category, it has offended against the due process and equal protection safeguards of the Constitution, although the
latter point was mentioned only in passing. The broad and expansive scope of the police power which was originally
Identified by Chief Justice Taney of the American Supreme Court in an 1847 decision as "nothing more or less than
the powers of government inherent in every sovereignty" 23 was stressed in the aforementioned case of Edu v.
Ericta thus: "Justice Laurel, in the first leading decision after the Constitution came into force, Calalang v. Williams,
Identified police power with state authority to enact legislation that may interfere with personal liberty or property in
order to promote the general welfare. Persons and property could thus 'be subjected to all kinds of restraints and
burdens in order to we the general comfort, health and prosperity of the state.' Shortly after independence in
1948, Primicias v. Fugoso reiterated the doctrine, such a competence being referred to as 'the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety, and general welfare of the
people. The concept was set forth in negative terms by Justice Malcolm in a pre-Commonwealth decision as 'that
inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety and
welfare of society. In that sense it could be hardly distinguishable as noted by this Court in Morfe v. Mutuc with the
totality of legislative power. It is in the above sense the greatest and most powerful at. tribute of government. It is, to
quote Justice Malcolm anew, 'the most essential, insistent, and at least table powers, I extending as Justice Holmes
aptly pointed out 'to all the great public needs.' Its scope, ever-expanding to meet the exigencies of the times, even
to anticipate the future where it could be done, provides enough room for an efficient and flexible response to
conditions and circumstances thus assuring the greatest benefits. In the language of Justice Cardozo: 'Needs that
were narrow or parochial in the past may be interwoven in the present with the well-being of the nation. What is
critical or urgent changes with the time.' The police power is thus a dynamic agency, suitably vague and far from
precisely defined, rooted in the conception that men in organizing the state and imposing upon its government
limitations to safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures calculated to communal peace, safety,
good order, and welfare." 24

Page 35 of 152
2. It was thus a heavy burden to be shouldered by petitioner, compounded by the fact that the particular police
power measure challenged was clearly intended to promote public safety. It would be a rare occurrence indeed for
this Court to invalidate a legislative or executive act of that character. None has been called to our attention, an
indication of its being non-existent. The latest decision in point, Edu v. Ericta, sustained the validity of the Reflector
Law, 25 an enactment conceived with the same end in view. Calalang v. Williams found nothing objectionable in a
statute, the purpose of which was: "To promote safe transit upon, and. avoid obstruction on roads and streets
designated as national roads * * *. 26 As a matter of fact, the first law sought to be nullified after the effectivity of the
1935 Constitution, the National Defense Act, 27 with petitioner failing in his quest, was likewise prompted by the
imperative demands of public safety.

3. The futility of petitioner's effort to nullify both the Letter of Instruction and the implementing rules and regulations
becomes even more apparent considering his failure to lay the necessary factual foundation to rebut the
presumption of validity. So it was held in Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of
Manila. 28 The rationale was clearly set forth in an excerpt from a decision of Justice Branders of the American
Supreme Court, quoted in the opinion: "The statute here questioned deals with a subject clearly within the scope of
the police power. We are asked to declare it void on the ground that the specific method of regulation prescribed is
unreasonable and hence deprives the plaintiff of due process of law. As underlying questions of fact may condition
the constitutionality of legislation of this character, the presumption of constitutionality must prevail in the absence of
some factual foundation of record in overthrowing the statute. 29

4. Nor did the Solicitor General as he very well could, rely solely on such rebutted presumption of validity. As was
pointed out in his Answer "The President certainly had in his possession the necessary statistical information and
data at the time he issued said letter of instructions, and such factual foundation cannot be defeated by petitioner's
naked assertion that early warning devices 'are not too vital to the prevention of nighttime vehicular accidents'
because allegedly only 390 or 1.5 per cent of the supposed 26,000 motor vehicle accidents that in 1976 involved
rear-end collisions (p. 12 of petition). Petitioner's statistics is not backed up by demonstrable data on record. As
aptly stated by this Honorable Court: Further: "It admits of no doubt therefore that there being a presumption of
validity, the necessity for evidence to rebut it is unavoidable, unless the statute or ordinance is void on its face,
which is not the case here"' * * *. But even as g the verity of petitioner's statistics, is that not reason enough to
require the installation of early warning devices to prevent another 390 rear-end collisions that could mean the death
of 390 or more Filipinos and the deaths that could likewise result from head-on or frontal collisions with stalled
vehicles?" 30 It is quite manifest then that the issuance of such Letter of Instruction is encased in the armor of prior,
careful study by the Executive Department. To set it aside for alleged repugnancy to the due process clause is to
give sanction to conjectural claims that exceeded even the broadest permissible limits of a pleader's well known
penchant for exaggeration.

5. The rather wild and fantastic nature of the charge of oppressiveness of this Letter of Instruction was exposed in
the Answer of the Solicitor General thus: "Such early warning device requirement is not an expensive redundancy,
nor oppressive, for car owners whose cars are already equipped with 1) blinking lights in the fore and aft of said
motor vehicles,' 2) "battery-powered blinking lights inside motor vehicles," 3) "built-in reflectorized tapes on front and
rear bumpers of motor vehicles," or 4) "well-lighted two (2) petroleum lamps (the Kinke) * * * because: Being
universal among the signatory countries to the said 1968 Vienna Conventions, and visible even under adverse
conditions at a distance of at least 400 meters, any motorist from this country or from any part of the world, who
sees a reflectorized rectangular early seaming device installed on the roads, highways or expressways, will
conclude, without thinking, that somewhere along the travelled portion of that road, highway, or expressway, there is
a motor vehicle which is stationary, stalled or disabled which obstructs or endangers passing traffic. On the other
hand, a motorist who sees any of the aforementioned other built in warning devices or the petroleum lamps will not
immediately get adequate advance warning because he will still think what that blinking light is all about. Is it an
emergency vehicle? Is it a law enforcement car? Is it an ambulance? Such confusion or uncertainty in the mind of
the motorist will thus increase, rather than decrease, the danger of collision. 31

6. Nor did the other extravagant assertions of constitutional deficiency go unrefuted in the Answer of the Solicitor
General "There is nothing in the questioned Letter of Instruction No. 229, as amended, or in Administrative Order
No. 1, which requires or compels motor vehicle owners to purchase the early warning device prescribed thereby. All
that is required is for motor vehicle owners concerned like petitioner, to equip their motor vehicles with a pair of this
early warning device in question, procuring or obtaining the same from whatever source. In fact, with a little of
industry and practical ingenuity, motor vehicle owners can even personally make or produce this early warning
device so long as the same substantially conforms with the specifications laid down in said letter of instruction and
administrative order. Accordingly the early warning device requirement can neither be oppressive, onerous,
immoral, nor confiscatory, much less does it make manufacturers and dealers of said devices 'instant millionaires at
the expense of car owners' as petitioner so sweepingly concludes * * *. Petitioner's fear that with the early warning
device requirement 'a more subtle racket may be committed by those called upon to enforce it * * * is an unfounded
speculation. Besides, that unscrupulous officials may try to enforce said requirement in an unreasonable manner or
to an unreasonable degree, does not render the same illegal or immoral where, as in the instant case, the
challenged Letter of Instruction No. 229 and implementing order disclose none of the constitutional defects alleged
against it.32

7 It does appear clearly that petitioner's objection to this Letter of Instruction is not premised on lack of power, the
justification for a finding of unconstitutionality, but on the pessimistic, not to say negative, view he entertains as to its
wisdom. That approach, it put it at its mildest, is distinguished, if that is the appropriate word, by its unorthodoxy. It
Page 36 of 152
bears repeating "that this Court, in the language of Justice Laurel, 'does not pass upon questions of wisdom justice
or expediency of legislation.' As expressed by Justice Tuason: 'It is not the province of the courts to supervise
legislation and keep it within the bounds of propriety and common sense. That is primarily and exclusively a
legislative concern.' There can be no possible objection then to the observation of Justice Montemayor. 'As long as
laws do not violate any Constitutional provision, the Courts merely interpret and apply them regardless of whether or
not they are wise or salutary. For they, according to Justice Labrador, 'are not supposed to override legitimate policy
and * * * never inquire into the wisdom of the law.' It is thus settled, to paraphrase Chief Justice Concepcion in
Gonzales v. Commission on Elections, that only congressional power or competence, not the wisdom of the action
taken, may be the basis for declaring a statute invalid. This is as it ought to be. The principle of separation of powers
has in the main wisely allocated the respective authority of each department and confined its jurisdiction to such a
sphere. There would then be intrusion not allowable under the Constitution if on a matter left to the discretion of a
coordinate branch, the judiciary would substitute its own. If there be adherence to the rule of law, as there ought to
be, the last offender should be courts of justice, to which rightly litigants submit their controversy precisely to
maintain unimpaired the supremacy of legal norms and prescriptions. The attack on the validity of the challenged
provision likewise insofar as there may be objections, even if valid and cogent on is wisdom cannot be sustained. 33

8. The alleged infringement of the fundamental principle of non-delegation of legislative power is equally without any
support well-settled legal doctrines. Had petitioner taken the trouble to acquaint himself with authoritative
pronouncements from this Tribunal, he would not have the temerity to make such an assertion. An exempt from the
aforecited decision of Edu v. Ericta sheds light on the matter: "To avoid the taint of unlawful delegation, there must
be a standard, which implies at the very least that the legislature itself determines matters of principle and lays down
fundamental policy. Otherwise, the charge of complete abdication may be hard to repel A standard thus defines
legislative policy, marks its maps out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected. It is the criterion by which legislative purpose
may be carried out. Thereafter, the executive or administrative office designated may in pursuance of the above
guidelines promulgate supplemental rules and regulations. The standard may be either express or implied. If the
former, the non-delegation objection is easily met. The standard though does not have to be spelled out specifically.
It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law clearly, the
legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe transit upon the
roads.' This is to adhere to the recognition given expression by Justice Laurel in a decision announced not too long
after the Constitution came into force and effect that the principle of non-delegation "has been made to adapt itself
to the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation" not only in the United States and England but in practically all modern governments.' He
continued: 'Accordingly, with the growing complexity of modern life, the multiplication of the subjects of
governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing
tendency toward the delegation of greater powers by the legislature and toward the approval of the practice by the
courts.' Consistency with the conceptual approach requires the reminder that what is delegated is authority non-
legislative in character, the completeness of the statute when it leaves the hands of Congress being assumed." 34

9. The conclusion reached by this Court that this petition must be dismissed is reinforced by this consideration. The
petition itself quoted these two whereas clauses of the assailed Letter of Instruction: "[Whereas], the hazards posed
by such obstructions to traffic have been recognized by international bodies concerned with traffic safety, the 1968
Vienna Convention on Road Signs and Signals and the United Nations Organization (U.N.); [Whereas], the said
Vionna Convention, which was ratified by the Philippine Government under P.D. No. 207, recommended the
enactment of local legislation for the installation of road safety signs and devices; * * * " 35 It cannot be disputed then
that this Declaration of Principle found in the Constitution possesses relevance: "The Philippines * * * adopts the
generally accepted principles of international law as part of the law of the land * * *." 36 The 1968 Vienna Convention
on Road Signs and Signals is impressed with such a character. It is not for this country to repudiate a commitment
to which it had pledged its word. The concept of Pacta sunt servanda stands in the way of such an attitude, which is,
moreover, at war with the principle of international morality.

10. That is about all that needs be said. The rather court reference to equal protection did not even elicit any attempt
on the Part of Petitioner to substantiate in a manner clear, positive, and categorical why such a casual observation
should be taken seriously. In no case is there a more appropriate occasion for insistence on what was referred to as
"the general rule" in Santiago v. Far Eastern Broadcasting Co., 37 namely, "that the constitutionality of a law wig not
be considered unless the point is specially pleaded, insisted upon, and adequately argued." 38 "Equal protection" is
not a talismanic formula at the mere invocation of which a party to a lawsuit can rightfully expect that success will
crown his efforts. The law is anything but that.

WHEREFORE, this petition is dismissed. The restraining order is lifted. This decision is immediately executory. No
costs.

G.R. Nos. L-8895 and L-9191 April 30, 1957

Page 37 of 152
SALVADOR A. ARANETA, ETC., ET AL., petitioners,
vs.
THE HON. MAGNO S. GATMAITAN, ETC., ET AL., respondents.

EXEQUIEL SORIANO, ET AL., petitioners-appellees,

vs.
SALVADOR ARANETA, ETC., ET AL., respondents-appellants.

Office of the Solicitor General Ambrosio Padilla, Assistant Solicitor General Jose G. Bautista and Solicitor Troadio T.
Quiazon for petitioners.
San Juan, Africa and Benedicto for respondents.

FELIX, J.:

San Miguel Bay, located between the provinces of Camarines Norte and Camarines Sur, a part of the National
waters of the Philippines with an extension of about 250 square miles and an average depth of approximately 6
fathoms (Otter trawl explorations in Philippine waters p. 21, Exh. B), is considered as the most important fishing
area in the Pacific side of the Bicol region. Sometime in 1950, trawl1 operators from Malabon, Navotas and other
places migrated to this region most of them settling at Sabang, Calabanga, Camarines Sur, for the purpose of using
this particular method of fishing in said bay. On account of the belief of sustenance fishermen that the operation of
this kind of gear caused the depletion of the marine resources of that area, there arose a general clamor among the
majority of the inhabitants of coastal towns to prohibit the operation of trawls in San Miguel Bay. This move was
manifested in the resolution of December 18, 1953 (Exh. F), passed by the Municipal Mayors' League condemning
the operation of trawls as the cause of the wanton destruction of the shrimp specie and resolving to petition the
President of the Philippines to regulate fishing in San Miguel Bay by declaring it closed for trawl fishing at a certain
period of the year. In another resolution dated March 27, 1954, the same League of Municipal Mayor, prayed the
President to protect them and the fish resources of San Miguel Bay by banning the operation of trawls therein (Exh.
4). The Provincial Governor also made proper presentations to this effect and petitions in behalf of the non-trawl
fishermen were likewise presented to the President by social and civic organizations as the NAMFREL (National
Movement for Free Elections) and the COMPADRE (Committee for Philippine Action in Development,
Reconstruction and Education), recommending the cancellation of the licenses of trawl operators after investigation,
if such inquiry would substantiate the charges that the operation of said fishing method was detrimental to the
welfare of the majority of the inhabitants (Exh. 2).

In response to these pleas, the President issued on April 5, 1954, Executive Order No. 22 (50 Off. Gaz., 1421)
prohibiting the use of trawls in San Miguel Bay, but said executive order was amended by Executive Order No. 66,
issued on September 23, 1954 (50 Off. Gaz., 4037), apparently in answer to a resolution of the Provincial Board of
Camarines Sur recommending the allowance of trawl fishing during the typhoon season only. On November 2,
1954, however, Executive Order No. 80 (50 Off. Gaz., 5198) was issued reviving Executive Order No. 22, to take
effect after December 31, 1954.

A group of Otter trawl operators took the matter to the court by filing a complaint for injunction and/or declaratory
relief with preliminary injunction with the Court of First Instance of Manila, docketed as Civil Case No. 24867,
praying that a writ of preliminary injunction be issued to restrain the Secretary of Agriculture and Natural Resources
and the Director of Fisheries from enforcing said executive order; to declare the same null and void, and for such
other relief as may be just and equitable in the premises.

The Secretary of Agriculture and Natural Resources and the Director of Fisheries, represented by the Legal Adviser
of said Department and a Special Attorney of the Office of the Solicitor General, answered the complaint alleging,
among other things, that of the 18 plaintiff (Exequiel Soriano, Teodora Donato, Felipe Concepcion, Venancio
Correa, Santo Gaviana, Alfredo General, Constancio Gutierrez, Arsenio de Guzman, Pedro Lazaro, Porfirio Lazaro,
Deljie de Leon, Jose Nepomuceno, Bayani Pingol, Claudio Salgado, Porfirio, San Juan, Luis Sioco, Casimiro Villar
and Enrique Voluntad), only 11 were issued license to operate fishing boats for the year 1954 (Annex B, petition —
L-8895); that the executive orders in question were issued accordance with law; that the encouragement by the
Bureau of Fisheries of the use of Otter trawls should not be construed to mean that the general welfare of the public
could be disregarded, and set up the defenses that since plaintiffs question the validity of the executive orders
issued by the President, then the Secretary of Agriculture and Natural Resources and the Director of Fisheries were
not the real parties in interest; that said executive orders do not constitute a deprivation of property without due
process of law, and therefore prayed that the complaint be dismissed (Exh. B, petition, L-8895).

During the trial of the case, the Governor of Camarines Sur appearing for the municipalities of Siruma, Tinambac,
Calabanga, Cabusao and Sipocot, in said province, called the attention of the Court that the Solicitor General had
not been notified of the proceeding. To this manifestation, the Court ruled that in view of the circumstances of the
case, and as the Solicitor General would only be interested in maintaining the legality of the executive orders sought
to be impugned, section 4 of Rule 66 could be interpreted to mean that the trial could go on and the Solicitor
General could be notified before judgement is entered.

After the evidence for both parties was submitted and the Solicitor General was allowed to file his memorandum, the
Court rendered decision on February 2, 1955, the last part of which reads as follows:

Page 38 of 152
 The power to close any definite area of the Philippine waters, from the fact that Congress has seen fit to
define under what conditions it may be done by the enactment of the sections cited, in the mind of Congress
must be of transcendental significance. It is primarily within the fields of legislation not of execution: for it
goes far and says who can and who can not fish in definite territorial waters. The court can not accept that
Congress had intended to abdicate its inherent right to legislate on this matter of national importance. To
accept respondents' view would be to sanction the exercise of legislative power by executive decrees. If it is
San Miguel Bay now, it may be Davao Gulf tomorrow, and so on. That may be done only by Congress. This
being the conclusion, there is hardly need to go any further. Until the trawler is outlawed by legislative
enactment, it cannot be banned from San Miguel Bay by executive proclamation. The remedy for
respondents and population of the coastal towns of Camarines Sur is to go to the Legislature. The result will
be to issue the writ prayed for, even though this be to strike at public clamor and to annul the orders of the
President issued in response therefor. This is a task unwelcome and unpleasant; unfortunately, courts of
justice use only one measure for both the rich and poor, and are not bound by the more popular cause when
they give judgments.

IN VIEW WHEREOF, granted; Executive Order Nos. 22, 66 and 80 are declared invalid; the injunction
prayed for is ordered to issue; no pronouncement as to costs.

Petitioners immediately filed an ex-parte motion for the issuance of a writ of injunction which was opposed by the
Solicitor General and after the parties had filed their respective memoranda, the Court issued an order dated
February 19, 1955, denying respondents' motion to set aside judgement and ordering them to file a bond in the sum
of P30,000 on or before March 1, 1955, as a condition for the non-issuance of the injunction prayed for by
petitioners pending appeal. The Solicitor General filed a motion for reconsideration which was denied for lack of
merit, and the Court, acting upon the motion for new trial filed by respondents, issued another order on March 3,
1965, denying said motion and granting the injunction prayed for by petitioners upon the latter's filing a bond for
P30,000 unless respondents could secure a writ of preliminary injunction from the Supreme Court on or before
March 15, 1955. Respondents, therefore, brought the matter to this Court in a petition for prohibition
and certiorariwith preliminary injunction, docketed as G.R. No. L-8895, and on the same day filed a notice to appeal
from the order of the lower court dated February 2, 1955, which appeal was docketed in this Court as G.R. No. L-
9191.

In the petition for prohibition and certiorari, petitioners (respondents therein) contended among other things, that the
order of, the respondent Judge requiring petitioners Secretary of Agriculture and Natural Resources and the Director
of Fisheries to post a bond in the sum of P30,000 on or before March 1, 1955, had been issued without jurisdiction
or in excess thereof, or at the very least with grave abuse of discretion, because by requiring the bond, the Republic
of the Philippines was in effect made a party defendant and therefore transformed the suit into one against the
Government which is beyond the jurisdiction of the respondent Judge to entertain; that the failure to give the
Solicitor General the opportunity to defend the validity of the challenged executive orders resulted in the receipt of
objectionable matters at the hearing; that Rule 66 of the Rules of Court does not empower a court of law to pass
upon the validity of an executive order in a declaratory relief proceeding; that the respondent Judge did not have the
power to grant the injunction as Section 4 of Rule 39 does not apply to declaratory relief proceedings but only to
injunction, receivership and patent accounting proceedings; and prayed that a writ of preliminary injunction be
issued to enjoin the respondent Judge from enforcing its order of March 3, 1955, and for such other relief as may be
deem just and equitable in the premises. This petition was given due course and the hearing on the merits was set
by this Court for April 12, 1955, but no writ of preliminary injunction was issued.

Meanwhile, the appeal (G.R. No. L-9191) was heard on October 3, 1956, wherein respondents-appellants ascribed
to the lower court the commission of the following errors:

1. In ruling that the President has no authority to issue Executive Orders Nos. 22, 66 and 80 banning the
operation of trawls in San Miguel Bay;

2. In holding that the power to declare a closed area for fishing purposes has not been delegated to the
President of the Philippines under the Fisheries Act;

3. In not considering Executive Orders Nos. 22, 66 and 80 as declaring a closed season pursuant to Section
7, Act 4003, as amended, otherwise known as the Fisheries Act;

4. In holding that to uphold the validity of Executive Orders Nos. 22 and 80 would be to sanction the exercise
of legislative power by executive decrees;

5. In its suggestion that the only remedy for respondents and the people of the coastal towns of Camarines
Sur and Camarines Norte is to go to the Legislature; and

6. In declaring Executive Orders Nos. 22, 66 and 80 invalid and in ordering the injunction prayed for to issue.

As Our decision in the prohibition and certiorari case (G.R. No. L-8895) would depend, in the last analysis, on Our
ruling in the appeal of the respondents in case G.R. No. L-9191, We shall first proceed to dispose of the latter case.

Page 39 of 152
It is indisputable that the President issued Executive Orders Nos. 22, 66 and 80 in response to the clamor of the
inhabitants of the municipalities along the coastline of San Miguel Bay. They read as follows:

EXECUTIVE ORDER No. 22

PROHIBITING THE USE OF TRAWLS IN SAN MIGUEL BAY

In order to effectively protect the municipal fisheries of San Miguel Bay, Camarines Norte and Camarines
Sur, and to conserve fish and other aquatic resources of the area, I, RAMON MAGSAYSAY, President of
the Philippines, by virtue of the powers vested in me by law, do hereby order that:

1. Fishing by means of trawls (utase, otter and/or perenzella) of any kind, in the waters comprised within
San Miguel Bay, is hereby prohibited.

2. Trawl shall mean, for the purpose of this Order, a fishing net made in the form of a bag with the mouth
kept open by a device, the whole affair being towed, dragged, trailed or trawled on the bottom of the sea to
capture demersal, ground or bottom species.

3. Violation of the provisions of this Order shall subject the offender to the penalty provided under Section 83
of Act 4993, or more than six months, or both, in the discretion of the Court.

Done in the City of Manila, this 5th day of April, nineteen hundred and fifty-four and of the Independence of
the Philippines, the eighth. (50 Off. Gaz. 1421)

EXECUTIVE ORDER No. 66

AMENDING EXECUTIVE ORDER No. 22, DATED APRIL 5, 1954, ENTITLED "PROHIBITING THE USE OF
TRAWLS IN SAN MIGUEL BAY"

By virtue of the powers voted in me by law, I, RAMON MAGSAYSAY, President of the Philippines, do
hereby amend Executive Order No. 22, dated April 5, 1954, so as to allow fishing by means of trawls, as
defined in said Executive Order, within that portion of San Miguel Bay north of a straight line drawn from
Tacubtacuban Hill in the Municipality of Tinambac, Province of Camarines Sur. Fishing by means of trawls
south of said line shall still be absolutely prohibited.

Done in the City of Manila, this 23rd day of September, in the year of our Lord, nineteen hundred and fifty-
four, and of the Independence of the Philippines, the ninth." (50 Off. Gaz. 4037).

EXECUTIVE ORDER No. 80.

FURTHER AMENDING EXECUTIVE ORDER No. 22, DATED APRIL 5, 1954, AS AMENDED BY
EXECUTIVE ORDER No. 66, DATED SEPTEMBER 23, 1954.

By virtue of the powers vested in me by law, I, RAMON MAGSAYSAY, President of the Philippines, do
hereby amend Executive Order No. 66 dated September 23, 1954, so as to allow fishing by means of trawls,
as defined in Executive Order No. 22, dated April 5, 1954, within the portion of San Miguel Bay North of a
straight line drawn from Tacubtacuban Hill in the Municipality of Mercedes, Province of Camarines Norte to
Balocbaloc Point in the Municipality of Tinambac, Province of Camarines Sur, until December 31, 1954,
only.

Thereafter, the provisions of said Executive Order No. 22 absolutely prohibiting fishing by means of trawls in
all the waters comprised within the San Miguel Bay shall be revived and given full force and effect as
originally provided therein.

Done in the City of Manila, this 2nd day of November, in the year of Our Lord, nineteen hundred and fifty-
four and of the Independence of the Philippines, the ninth. (50 Off. Gaz. 5198)

It is likewise admitted that petitioners assailed the validity of said executive orders in their petition for a writ of
injunction and/or declaratory relief filed with the Court of First Instance of Manila, and that the lower court, upon
declaring Executive Orders Nos. 22, 66 and 80 invalid, issued an order requiring the Secretary of Agriculture and
Natural Resources and the Director of Fisheries to post a bond for P30,000 if the writ of injunction restraining them
from enforcing the executive orders in question must be stayed.

The Solicitor General avers that the constitutionality of an executive order cannot be ventilated in a declaratory relief
proceeding. We find this untenable, for this Court taking cognizance of an appeal from the decision of the lower
court in the case of Hilado vs. De la Costa, et al., 83 Phil., 471, which involves the constitutionality of another
executive order presented in an action for declaratory relief, in effect accepted the propriety of such action.

Page 40 of 152
This question being eliminated, the main issues left for Our determination with respect to defendants' appeal (G.R.
No. L-9191), are:

(1) Whether the Secretary of an Executive Department and the Director of a Bureau, acting in their capacities as
such Government officials, could lawfully be required to post a bond in an action against them;

(2) Whether the President of the Philippines has authority to issue Executive Orders Nos. 22, 66 and 80, banning
the operation of trawls in San Miguel Bay, or, said in other words, whether said Executive Orders Nos. 22, 66 and
80 were issued in accordance with law; and.

(3) Whether Executive Orders Nos. 22, 66 and 80 were valid, for the issuance thereof was not in the exercise of
legislative powers unduly delegated to the President.

Counsel for both parties presented commendable exhaustive defenses in support of their respective stands.
Certainly, these cases deserve such efforts, not only because the constitutionality of an act of a coordinate branch in
our tripartite system of Government is in issue, but also because of the number of inhabitants, admittedly classified
as "subsistence fishermen", that may be affected by any ruling that We may promulgate herein.

I. As to the first proposition, it is an elementary rule of procedure that an appeal stays the execution of a judgment.
An exception is offered by section 4 of Rule 39 of the Rules of Court which provides that:

SEC. 4. INJUNCTION, RECEIVERSHIP AND PATENT ACCOUNTING, NOT STAYED. — Unless otherwise
ordered by the court, a judgment in an action for injunction or in a receivership action, or a judgment or order
directing an accounting in an action for infringement of letter patent, shall not be stayed after its rendition
and before an appeal is taken or during the pendency of an appeal. The trial court, however, in its discretion,
when an appeal is taken from a judgement granting, dissolving or denying an injunction, may make an order
suspending, modifying, restoring, or granting such injunction during the pendency of an appeal, upon such
terms as to bond or otherwise as it may consider proper for the security of the rights of the adverse party.

This provision was the basis of the order of the lower court dated February 19, 1955, requiring the filing by the
respondents of a bond for P30,000 as a condition for the non-issuance of the injunction prayed for by plaintiffs
therein, and which the Solicitor General charged to have been issued in excess of jurisdiction. The State's counsel,
however, alleges that while judgment could be stayed in injunction, receivership and patent accounting cases and
although the complaint was styled "Injunction, and/or Declaratory Relief with Preliminary Injunction", the case is
necessarily one for declaratory relief, there being no allegation sufficient to convince the Court that the plaintiffs
intended it to be one for injunction. But aside from the title of the complaint, We find that plaintiffs pray for the
declaration of the nullity of Executive Order Nos. 22, 66 and 80; the issuance of a writ of preliminary injunction, and
for such other relief as may be deemed just and equitable. This Court has already held that there are only two
requisites to be satisfied if an injunction is to issue, namely, the existence of the right sought to be protected, and
that the acts against which the injunction is to be directed are violative of said right (North Negros Sugar Co.,
Inc. vs.Serafin Hidalgo, 63 Phil., 664). There is no question that at least 11 of the complaining trawl operators were
duly licensed to operate in any of the national waters of the Philippines, and it is undeniable that the executive
enactment's sought to be annulled are detrimental to their interests. And considering further that the granting or
refusal of an injunction, whether temporary or permanent, rests in the sound discretion of the Court, taking into
account the circumstances and the facts of the particular case (Rodulfa vs. Alfonso, 76 Phil,, 225, 42 Off. Gaz.,
2439), We find no abuse of discretion when the trial Court treated the complaint as one for injunction and
declaratory relief and executed the judgment pursuant to the provisions of section 4 of Rule 39 of the Rules of Court.

On the other hand, it shall be remembered that the party defendants in Civil Case No. 24867 of the Court of First
Instance of Manila are Salvador Araneta, as Secretary of Agriculture and Natural Resources, and, Deogracias
Villadolid, as Director of Fisheries, and were sued in such capacities because they were the officers charged with
duty of carrying out the statutes, orders and regulations on fishing and fisheries. In its order of February 19, 1955,
the trial court denied defendants' motion to set aside judgment and they were required to file a bond for P30,000 to
answer for damages that plaintiffs were allegedly suffering at that time, as otherwise the injunction prayed for by the
latter would be issued.

Because of these facts, We agree with the Solicitor General when he says that the action, being one against herein
petitioners as such Government officials, is essentially one against the Government, and to require these officials to
file a bond would be indirectly a requirement against the Government for as regards bonds or damages that may be
proved, if any, the real party in interest would be the Republic of the Philippines (L. S. Moon and Co. vs. Harrison,
43 Phi., 39; Salgado vs. Ramos, 64 Phil., 724-727, and others). The reason for this pronouncement is
understandable; the State undoubtedly is always solvent (Tolentino vs. Carlos 66 Phil., 140; Government of the P.
I. vs. Judge of the Court of First Instance of Iloilo, 34 Phil., 167, cited in Joaquin Gutierrez et al. vs. Camus et al. *
G.R. No. L-6725, promulgated October 30, 1954). However, as the records show that herein petitioners failed to put
up the bond required by the lower court, allegedly due to difficulties encountered with the Auditor General's Office
(giving the impression that they were willing to put up said bond but failed to do so for reasons beyond their control),
and that the orders subjects of the prohibition and certiorari proceedings in G.R. No. L-8895, were enforced, if at
all,2 in accordance with section 4 of Rule 39, which We hold to be applicable to the case at bar, the issue as to the
regularity or adequacy of requiring herein petitioners to post a bond, becomes moot and academic.

Page 41 of 152
II. Passing upon the question involved in the second proposition, the trial judge extending the controversy to the
determination of which between the Legislative, and Executive Departments of the Government had "the power to
close any definite area of the Philippine waters" instead of limiting the same to the real issue raised by the
enactment of Executive Orders No. 22, 26 and 80, especially the first and the last "absolutely prohibiting fishing by
means trawls in all the waters comprised within the San Miguel Bay", ruled in favor of Congress had not intended to
abdicate its power to legislate on the matter, he maintained as stated before, that "until the trawler is outlawed by
legislative enactment, it cannot be banned from San Miguel Bay by executive proclamation", and that "the remedy
for respondents and population of the coastal towns of Camarines Sur is to go to Legislature," and thus declared
said Executive Orders Nos. 22, 66 and 80 invalid".

The Solicitor General, on the contrary, asserts that the President is empowered by law to issue the executive
enactment's in question.

Sections 6, 13 and 75 of Act No. 4003, known as the Fisheries Law, the latter two sections as amended by section 1
of Commonwealth Act No. 471, read as follows:

SEC. 6. WORDS AND PHRASES DEFINED. —Words and terms used in this Act shall be construed as
follows:

xxx xxx xxx

TAKE or TAKING includes pursuing, shooting, killing, capturing, trapping, snaring, and netting fish and other
aquatic animals, and all lesser acts, such as disturbing, wounding, stupefying; or placing, setting, drawing, or
using any net or other device commonly used to take or collect fish and other aquatic animals, whether they
result in taking or not, and includes every attempt to take and every act of assistance to every other person
in taking or attempting to take or collect fish and other aquatic animals: PROVIDED, That whenever taking is
allowed by law, reference is had to taking by lawful means and in lawful manner.

xxx xxx xxx

SEC. 13. PROTECTION OF FRY OR FISH EGGS. — Except for scientific or educational purpose or for
propagation, it shall be unlawful to take or catch fry or fish eggs and the small fish, not more than three (3)
centimeters long, known as siliniasi, in the territorial waters of the Philippines. Towards this end, the
Secretary of Agriculture and Commerce shall be authorized to provide by regulations such restrictions as
may be deemed necessary to be imposed on THE USE OF ANY FISHING NET OR FISHING DEVICE FOR
THE PROTECTION OF FRY OR FISH EGGS; Provided, however, That the Secretary of Agriculture and
Commerce shall permit the taking of young of certain species of fish known as hipon under such restrictions
as may be deemed necessary.

SEC. 75. FISH REFUGEES AND SANCTUARIES. — Upon the recommendation of the officer or chief of the
bureau, office or service concerned, the Secretary of Agriculture and Commerce may set aside and
establish fishery reservation or fish refuges and sanctuaries to be administered in the manner to be
prescribed by him. All streams, ponds and waters within the game refuge, birds, sanctuaries, national parks,
botanical gardens, communal forest and communal pastures are hereby declared fishing refuges and
sanctuaries. It shall be unlawful for any person, to take, destroy or kill in any of the places aforementioned,
or in any manner disturb or drive away or take therefrom, any fish fry or fish eggs.

Act No. 4003 further provides as follows:

SEC. 83. OTHER VIOLATIONS. — Any other violation of the provisions of this Act or any rules and
regulations promulgated thereunder shall subject the offender to a fine of not more than two hundred pesos,
or imprisonment for not more than six months, or both, in the discretion of the Court.

As may be seen from the just quoted provisions, the law declares unlawful and fixes the penalty for the taking
(except for scientific or educational purposes or for propagation), destroying or killing of any fish fry or fish eggs, and
the Secretary of Agriculture and Commerce (now the Secretary of Agriculture and Natural Resources) is authorized
to promulgate regulations restricting the use of any fish net or fishing device (which includes the net used by trawl
fishermen) for the protection of fry or fish eggs, as well as to set aside and establish fishery reservations or fish
refuges and sanctuaries to be administered in the manner prescribed by him, from which no person could lawfully
take, destroy or kill in any of the places aforementioned, or in any manner disturb or drive away or take therefrom
any small or immature fish, fry or fish eggs. It is true that said section 75 mentions certain streams, ponds and
waters within the game refuges, . . . communal forest, etc., which the law itself declares fish refuges and
sanctuaries, but this enumeration of places does not curtail the general and unlimited power of the Secretary of
Agriculture and Natural Resources in the first part of section 75, to set aside and establish fishery reservations or
fish refuges and sanctuaries, which naturally include seas or bays, like the San Miguel Bay in Camarines.

From the resolution passed at the Conference of Municipal Mayors held at Tinambac, Camarines Sur, on December
18, 1953 (Exh. F), the following manifestation is made:

Page 42 of 152
 WHEREAS, the continuous operation of said trawls even during the close season as specified in said
Executive Order No. 20 caused the wanton destruction of the mother shrimps laying their eggs and the
millions of eggs laid and the inevitable extermination of the shrimps specie; in order to save the shrimps
specie from eventual extermination and in order to conserve the shrimps specie for posterity;

In the brief submitted by the NAMFREL and addressed to the President of the Philippines (Exh. 2), in support of the
petition of San Miguel Bay fishermen (allegedly 6, 175 in number), praying that trawlers be banned from operating in
San Miguel Bay, it is stated that:

The trawls ram and destroy the fish corrals. The heavy trawl nets dig deep into the ocean bed. They destroy
the fish foods which lies below the ocean floor. Their daytime catches net millions of shrimps scooped up
from the mud. In their nets they bring up the life of the sea: algea, shell fish and star fish . . .

The absence of some species or the apparent decline in the catch of some fishermen operating in the bay
may be due to several factors, namely: the indiscriminate catching of fry and immature sizes of fishes, the
wide-spread use of explosives inside as well as at the mouth and approaches of the bay, and the extensive
operation of the trawls. (p.9, Report of Santos B. Rasalan, Exh. A)

Extensive Operation of Trawls: — The strenuous effect of the operations of the 17 TRAWLS of the demersal
fisheries of San Miguel Bay is better appreciated when we consider the fact that out of its about 850 square
kilometers area, only about 350 square kilometers of 5 fathoms up could be trawled. With their continuous
operation, is greatly strained. This is shown by the fact that in view of the non-observance of the close
season from May to October, each year, majority of their catch are immature. If their operation would
continue unrestricted, the supply would be greatly depleted. (p. 11), Report of Santos B. Rasalan, Exh. A)

San Miguel Bay — can sustain 3 to 4 small trawlers (Otter Trawl Explorations in Philippine Waters,
Research Report 25 of the Fish and Wildlife Service, United States Department of the Interior, p. 9 Exhibit
B).

According to Annex A of the complaint filed in the lower court in Civil Case No. 24867 — G.R. No. L-9191 (Exh. D,
p. 53 of the folder of Exhibits), the 18 plaintiffs-appellees operate 29 trawling boats, and their operation must be in a
big scale considering the investments plaintiffs have made therefore, amounting to P387,000 (Record on Appeal, p.
16-17).

In virtue of the aforementioned provisions of law and the manifestation just copied, We are of the opinion that with or
without said Executive Orders, the restriction and banning of trawl fishing from all Philippine waters come, under the
law, within the powers of the Secretary of Agriculture and Natural Resources, who in compliance with his duties may
even cause the criminal prosecution of those who in violation of his instructions, regulations or orders are caught
fishing with trawls in the Philippine waters.

Now, if under the law the Secretary of Agriculture and Natural Resources has authority to regulate or ban the fishing
by trawl which, it is claimed, obnoxious for it carries away fish eggs and fry's which should be preserved, can the
President of the Philippines exercise that same power and authority? Section 10(1), Article VII of the Constitution of
the Philippines prescribes:

SEC. 10 (1). The President shall have control of all the executive departments, bureaus or offices, exercises
general supervision over all local governments as may be provided by law, and take care that the laws be
faithfully executed.

Section 63 of the Revised Administrative Code reads as follows:

SEC. 63. EXECUTIVE ORDERS AND EXECUTIVE PROCLAMATION. — Administrative acts and
commands of the President of the Philippines touching the organization or mode of operation of the
Government or rearranging or readjusting any of the district, divisions, parts or ports of the Philippines, and
all acts and commands governing the general performance of duties by public employees or disposing of
issues of general concern shall be made in executive orders.

xxx xxx xxx

Regarding department organization Section 74 of the Revised Administrative Code also provides that:

All executive functions of the government of the Republic of the Philippines shall be directly under the
Executive Departments subject to the supervision and control of the President of the Philippines in matters
of general policy. The Departments are established for the proper distribution of the work of the Executive,
for the performance of the functions expressly assigned to them by law, and in order that each branch of the
administration may have a chief responsible for its direction and policy. Each Department Secretary shall
assume the burden of, and responsibility for, all activities of the Government under his control and
supervision.

Page 43 of 152
 For administrative purposes the President of the Philippines shall be considered the Department Head of the
Executive Office.

One of the executive departments is that of Agriculture and Natural Resources which by law is placed under the
direction and control of the Secretary, who exercises its functions subject to the general supervision and control of
the President of the Philippines (Sec. 75, R. A. C.). Moreover, "executive orders, regulations, decrees and
proclamations relative to matters under the supervision or jurisdiction of a Department, the promulgation whereof is
expressly assigned by law to the President of the Philippines, shall as a general rule, be issued upon proposition
and recommendation of the respective Department" (Sec. 79-A, R.A.C.), and there can be no doubt that the
promulgation of the questioned Executive Orders was upon the proposition and recommendation of the Secretary of
Agriculture and Natural Resources and that is why said Secretary, who was and is called upon to enforce said
executive Orders, was made a party defendant in one of the cases at bar (G.R. No. L-9191).

For the foregoing reasons We do hesitate to declare that Executive Orders Nos. 22, 66 and 80, series of 1954, of
the President, are valid and issued by authority of law.

III. But does the exercise of such authority by the President constitute and undue delegation of the powers of
Congress?

As already held by this Court, the true distinction between delegation of the power to legislate and the conferring of
authority or discretion as to the execution of law consists in that the former necessary involves a discretion as to
what the law shall be, wile in the latter the authority or discretion as to its execution has to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no valid objection can be made (Cruz vs. Youngberg, 56
Phil., 234, 239. See also Rubi, et al. vs. The Provincial Board of Mindoro, 39 Phil., 660).

In the case of U. S. vs. Ang Tang Ho, 43 Phil. 1, We also held:

THE POWER TO DELEGATE. — The Legislature cannot delegate legislative power to enact any law. If Act
No. 2868 is a law unto itself, and it does nothing more than to authorize the Governor-General to make rules
and regulations to carry it into effect, then the Legislature created the law. There is no delegation of power
and it is valid. On the other hand, if the act within itself does not define a crime and is not complete, and
some legislative act remains to be done to make it a law or a crime, the doing of which is vested in the
Governor-General, the act is delegation of legislative power, is unconstitutional and void.

From the provisions of Act No. 4003 of the Legislature, as amended by Commonwealth Act No. 471, which have
been aforequoted, We find that Congress (a) declared it unlawful "to take or catch fry or fish eggs in the territorial
waters of the Philippines; (b) towards this end, it authorized the Secretary of Agriculture and Natural Resources to
provide by the regulations such restrictions as may be deemed necessary to be imposed on the use of any fishing
net or fishing device for the protection of fish fry or fish eggs (Sec. 13); (c) it authorized the Secretary of Agriculture
and Natural Resources to set aside and establish fishery reservations or fish refuges and sanctuaries to be
administered in the manner to be prescribed by him and declared it unlawful for any person to take, destroy or kill in
any of said places, or, in any manner disturb or drive away or take therefrom, any fish fry or fish eggs (See. 75); and
(d) it penalizes the execution of such acts declared unlawful and in violation of this Act (No. 4003) or of any rules
and regulations promulgated thereunder, making the offender subject to a fine of not more than P200, or
imprisonment for not more than 6 months, or both, in the discretion of the court (Sec. 83).

From the foregoing it may be seen that in so far as the protection of fish fry or fish egg is concerned, the Fisheries
Act is complete in itself, leaving to the Secretary of Agriculture and Natural Resources the promulgation of rules and
regulations to carry into effect the legislative intent. It also appears from the exhibits on record in these cases that
fishing with trawls causes "a wanton destruction of the mother shrimps laying their eggs and the millions of eggs laid
and the inevitable extermination of the shrimps specie" (Exh. F), and that, "the trawls ram and destroy the fish
corrals. The heavy trawl nets dig deep into the ocean bed. They destroy the fish food which lies below the ocean
floor. Their daytime catches net millions of shrimps scooped up from the mud. In their nets they bring up the life of
the sea" (Exh- 2).

In the light of these facts it is clear to Our mind that for the protection of fry or fish eggs and small and immature
fishes, Congress intended with the promulgation of Act No. 4003, to prohibit the use of any fish net or fishing device
like trawl nets that could endanger and deplete our supply of sea food, and to that end authorized the Secretary of
Agriculture and Natural Resources to provide by regulations such restrictions as he deemed necessary in order to
preserve the aquatic resources of the land. Consequently, when the President, in response to the clamor of the
people and authorities of Camarines Sur issued Executive Order No. 80 absolutely prohibiting fishing by means of
trawls in all waters comprised within the San Miguel Bay, he did nothing but show an anxious regard for the welfare
of the inhabitants of said coastal province and dispose of issues of general concern (Sec. 63, R.A.C.) which were in
consonance and strict conformity with the law.

Wherefore, and on the strength of the foregoing considerations We render judgement, as follows:

Page 44 of 152
(a) Declaring that the issues involved in case G.R. No. L-8895 have become moot, as no writ of preliminary
injunction has been issued by this Court the respondent Judge of the Court of First Instance of Manila Branch XIV,
from enforcing his order of March 3, 1955; and

(b) Reversing the decision appealed from in case G. R. No. L-9191; dissolving the writ of injunction prayed for in the
lower court by plaintiffs, if any has been actually issued by the court a quo; and declaring Executive Orders Nos. 22,
66 and 80, series of 1954, valid for having been issued by authority of the Constitution, the Revised Administrative
Code and the Fisheries Act.

Without pronouncement as to costs. It is so ordered.

G.R. No. 157870 November 3, 2008

SOCIAL JUSTICE SOCIETY (SJS), petitioner

vs.
DANGEROUS DRUGS BOARD and PHILIPPINE DRUG ENFORCEMENT AGENCY (PDEA), respondents.

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

G.R. No. 158633 November 3, 2008

ATTY. MANUEL J. LASERNA, JR., petitioner

vs.
DANGEROUS DRUGS BOARD and PHILIPPINE DRUG ENFORCEMENT AGENCY, respondents.

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

G.R. No. 161658 November 3, 2008

AQUILINO Q. PIMENTEL, JR., petitioner

vs.
COMMISSION ON ELECTIONS, respondents.

DECISION

VELASCO, JR., J.:

In these kindred petitions, the constitutionality of Section 36 of Republic Act No. (RA) 9165, otherwise known as
the Comprehensive Dangerous Drugs Act of 2002, insofar as it requires mandatory drug testing of candidates for public
office, students of secondary and tertiary schools, officers and employees of public and private offices, and persons
charged before the prosecutor's office with certain offenses, among other personalities, is put in issue.

As far as pertinent, the challenged section reads as follows:

SEC. 36. Authorized Drug Testing. - Authorized drug testing shall be done by any government forensic
laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the
quality of the test results. x x x The drug testing shall employ, among others, two (2) testing methods, the
screening test which will determine the positive result as well as the type of drug used and the confirmatory test
which will confirm a positive screening test. x x x The following shall be subjected to undergo drug testing:

xxxx

(c) Students of secondary and tertiary schools. - Students of secondary and tertiary schools shall, pursuant to the
related rules and regulations as contained in the school's student handbook and with notice to the parents,
undergo a random drug testing x x x;

(d) Officers and employees of public and private offices. - Officers and employees of public and private offices,
whether domestic or overseas, shall be subjected to undergo a random drug test as contained in the company's
work rules and regulations, x x x for purposes of reducing the risk in the workplace. Any officer or employee found
positive for use of dangerous drugs shall be dealt with administratively which shall be a ground for suspension or
termination, subject to the provisions of Article 282 of the Labor Code and pertinent provisions of the Civil Service
Law;

xxxx

Page 45 of 152
 (f) All persons charged before the prosecutor's office with a criminal offense having an imposable penalty of
imprisonment of not less than six (6) years and one (1) day shall undergo a mandatory drug test;

(g) All candidates for public office whether appointed or elected both in the national or local government shall
undergo a mandatory drug test.

In addition to the above stated penalties in this Section, those found to be positive for dangerous drugs use shall be
subject to the provisions of Section 15 of this Act.

G.R. No. 161658 (Aquilino Q. Pimentel, Jr. v. Commission on Elections)

On December 23, 2003, the Commission on Elections (COMELEC) issued Resolution No. 6486, prescribing the rules and
regulations on the mandatory drug testing of candidates for public office in connection with the May 10, 2004
synchronized national and local elections. The pertinent portions of the said resolution read as follows:

WHEREAS, Section 36 (g) of Republic Act No. 9165 provides:

SEC. 36. Authorized Drug Testing. - x x x

xxxx

(g) All candidates for public office x x x both in the national or local government shall undergo a mandatory
drug test.

WHEREAS, Section 1, Article XI of the 1987 Constitution provides that public officers and employees must at all
times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency;

WHEREAS, by requiring candidates to undergo mandatory drug test, the public will know the quality of candidates
they are electing and they will be assured that only those who can serve with utmost responsibility, integrity,
loyalty, and efficiency would be elected x x x.

NOW THEREFORE, The [COMELEC], pursuant to the authority vested in it under the Constitution, Batas
Pambansa Blg. 881 (Omnibus Election Code), [RA] 9165 and other election laws, RESOLVED to promulgate, as
it hereby promulgates, the following rules and regulations on the conduct of mandatory drug testing to candidates
for public office[:]

SECTION 1. Coverage. - All candidates for public office, both national and local, in the May 10, 2004
Synchronized National and Local Elections shall undergo mandatory drug test in government forensic
laboratories or any drug testing laboratories monitored and accredited by the Department of Health.

SEC. 3. x x x

On March 25, 2004, in addition to the drug certificates filed with their respective offices, the Comelec Offices and
employees concerned shall submit to the Law Department two (2) separate lists of candidates. The first list shall
consist of those candidates who complied with the mandatory drug test while the second list shall consist of those
candidates who failed to comply x x x.

SEC. 4. Preparation and publication of names of candidates. - Before the start of the campaign period, the
[COMELEC] shall prepare two separate lists of candidates. The first list shall consist of those candidates who
complied with the mandatory drug test while the second list shall consist of those candidates who failed to comply
with said drug test. x x x

SEC. 5. Effect of failure to undergo mandatory drug test and file drug test certificate. - No person elected to any
public office shall enter upon the duties of his office until he has undergone mandatory drug test and filed with the
offices enumerated under Section 2 hereof the drug test certificate herein required. (Emphasis supplied.)

Petitioner Aquilino Q. Pimentel, Jr., a senator of the Republic and a candidate for re - election in the May 10, 2004
elections,1filed a Petition for Certiorari and Prohibition under Rule 65. In it, he seeks (1) to nullify Sec. 36(g) of RA 9165
and COMELEC Resolution No. 6486 dated December 23, 2003 for being unconstitutional in that they impose a
qualification for candidates for senators in addition to those already provided for in the 1987 Constitution; and (2) to enjoin
the COMELEC from implementing Resolution No. 6486.

Pimentel invokes as legal basis for his petition Sec. 3, Article VI of the Constitution, which states:

SECTION 3. No person shall be a Senator unless he is a natural - born citizen of the Philippines, and, on the day
of the election, is at least thirty - five years of age, able to read and write, a registered voter, and a resident of the
Philippines for not less than two years immediately preceding the day of the election.

According to Pimentel, the Constitution only prescribes a maximum of five (5) qualifications for one to be a candidate for,
elected to, and be a member of the Senate. He says that both the Congress and COMELEC, by requiring, via RA 9165
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and Resolution No. 6486, a senatorial aspirant, among other candidates, to undergo a mandatory drug test, create an
additional qualification that all candidates for senator must first be certified as drug free. He adds that there is no provision
in the Constitution authorizing the Congress or COMELEC to expand the qualification requirements of candidates for
senator.

G.R. No. 157870 (Social Justice Society v. Dangerous

Drugs Board and Philippine Drug Enforcement Agency)

In its Petition for Prohibition under Rule 65, petitioner Social Justice Society (SJS), a registered political party, seeks to
prohibit the Dangerous Drugs Board (DDB) and the Philippine Drug Enforcement Agency (PDEA) from enforcing
paragraphs (c), (d), (f), and (g) of Sec. 36 of RA 9165 on the ground that they are constitutionally infirm. For one, the
provisions constitute undue delegation of legislative power when they give unbridled discretion to schools and employers
to determine the manner of drug testing. For another, the provisions trench in the equal protection clause inasmuch as
they can be used to harass a student or an employee deemed undesirable. And for a third, a person's constitutional right
against unreasonable searches is also breached by said provisions.

G.R. No. 158633 (Atty. Manuel J. Laserna, Jr. v. Dangerous

Drugs Board and Philippine Drug Enforcement Agency)

Petitioner Atty. Manuel J. Laserna, Jr., as citizen and taxpayer, also seeks in his Petition for Certiorari and Prohibition
under Rule 65 that Sec. 36(c), (d), (f), and (g) of RA 9165 be struck down as unconstitutional for infringing on the
constitutional right to privacy, the right against unreasonable search and seizure, and the right against self - incrimination,
and for being contrary to the due process and equal protection guarantees.

The Issue on Locus Standi

First off, we shall address the justiciability of the cases at bench and the matter of the standing of petitioners SJS and
Laserna to sue. As respondents DDB and PDEA assert, SJS and Laserna failed to allege any incident amounting to a
violation of the constitutional rights mentioned in their separate petitions. 2

It is basic that the power of judicial review can only be exercised in connection with a bona fide controversy which involves
the statute sought to be reviewed.3 But even with the presence of an actual case or controversy, the Court may refuse to
exercise judicial review unless the constitutional question is brought before it by a party having the requisite standing to
challenge it.4 To have standing, one must establish that he or she has suffered some actual or threatened injury as a
result of the allegedly illegal conduct of the government; the injury is fairly traceable to the challenged action; and the
injury is likely to be redressed by a favorable action.5

The rule on standing, however, is a matter of procedure; hence, it can be relaxed for non - traditional plaintiffs, like
ordinary citizens, taxpayers, and legislators when the public interest so requires, such as when the matter is of
transcendental importance, of overarching significance to society, or of paramount public interest. 6 There is no doubt that
Pimentel, as senator of the Philippines and candidate for the May 10, 2004 elections, possesses the requisite standing
since he has substantial interests in the subject matter of the petition, among other preliminary considerations. Regarding
SJS and Laserna, this Court is wont to relax the rule on locus standi owing primarily to the transcendental importance and
the paramount public interest involved in the enforcement of Sec. 36 of RA 9165.

The Consolidated Issues

The principal issues before us are as follows:

(1) Do Sec. 36(g) of RA 9165 and COMELEC Resolution No. 6486 impose an additional qualification for candidates for
senator? Corollarily, can Congress enact a law prescribing qualifications for candidates for senator in addition to those
laid down by the Constitution? and

(2) Are paragraphs (c), (d), (f), and (g) of Sec. 36, RA 9165 unconstitutional? Specifically, do these paragraphs violate the
right to privacy, the right against unreasonable searches and seizure, and the equal protection clause? Or do they
constitute undue delegation of legislative power?

Pimentel Petition
(Constitutionality of Sec. 36[g] of RA 9165 and
COMELEC Resolution No. 6486)

In essence, Pimentel claims that Sec. 36(g) of RA 9165 and COMELEC Resolution No. 6486 illegally impose an
additional qualification on candidates for senator. He points out that, subject to the provisions on nuisance candidates, a
candidate for senator needs only to meet the qualifications laid down in Sec. 3, Art. VI of the Constitution, to wit: (1)
citizenship, (2) voter registration, (3) literacy, (4) age, and (5) residency. Beyond these stated qualification requirements,
candidates for senator need not possess any other qualification to run for senator and be voted upon and elected as
member of the Senate. The Congress cannot validly amend or otherwise modify these qualification standards, as it cannot
disregard, evade, or weaken the force of a constitutional mandate, 7 or alter or enlarge the Constitution.

Pimentel's contention is well - taken. Accordingly, Sec. 36(g) of RA 9165 should be, as it is hereby declared as,
unconstitutional. It is basic that if a law or an administrative rule violates any norm of the Constitution, that issuance is null
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and void and has no effect. The Constitution is the basic law to which all laws must conform; no act shall be valid if it
conflicts with the Constitution.8 In the discharge of their defined functions, the three departments of government have no
choice but to yield obedience to the commands of the Constitution. Whatever limits it imposes must be observed.9

Congress' inherent legislative powers, broad as they may be, are subject to certain limitations. As early as 1927,
in Government v. Springer, the Court has defined, in the abstract, the limits on legislative power in the following wise:

Someone has said that the powers of the legislative department of the Government, like the boundaries of the
ocean, are unlimited. In constitutional governments, however, as well as governments acting under delegated
authority, the powers of each of the departments x x x are limited and confined within the four walls of the
constitution or the charter, and each department can only exercise such powers as are necessarily implied from
the given powers. The Constitution is the shore of legislative authority against which the waves of legislative
enactment may dash, but over which it cannot leap.10

Thus, legislative power remains limited in the sense that it is subject to substantive and constitutional limitations which
circumscribe both the exercise of the power itself and the allowable subjects of legislation.11 The substantive constitutional
limitations are chiefly found in the Bill of Rights12 and other provisions, such as Sec. 3, Art. VI of the Constitution
prescribing the qualifications of candidates for senators.

In the same vein, the COMELEC cannot, in the guise of enforcing and administering election laws or promulgating rules
and regulations to implement Sec. 36(g), validly impose qualifications on candidates for senator in addition to what the
Constitution prescribes. If Congress cannot require a candidate for senator to meet such additional qualification, the
COMELEC, to be sure, is also without such power. The right of a citizen in the democratic process of election should not
be defeated by unwarranted impositions of requirement not otherwise specified in the Constitution. 13

Sec. 36(g) of RA 9165, as sought to be implemented by the assailed COMELEC resolution, effectively enlarges the
qualification requirements enumerated in the Sec. 3, Art. VI of the Constitution. As couched, said Sec. 36(g) unmistakably
requires a candidate for senator to be certified illegal - drug clean, obviously as a pre - condition to the validity of a
certificate of candidacy for senator or, with like effect, a condition sine qua non to be voted upon and, if proper, be
proclaimed as senator - elect. The COMELEC resolution completes the chain with the proviso that "[n]o person elected to
any public office shall enter upon the duties of his office until he has undergone mandatory drug test." Viewed, therefore,
in its proper context, Sec. 36(g) of RA 9165 and the implementing COMELEC Resolution add another qualification layer to
what the 1987 Constitution, at the minimum, requires for membership in the Senate. Whether or not the drug - free bar set
up under the challenged provision is to be hurdled before or after election is really of no moment, as getting elected would
be of little value if one cannot assume office for non - compliance with the drug - testing requirement.

It may of course be argued, in defense of the validity of Sec. 36(g) of RA 9165, that the provision does not expressly state
that non - compliance with the drug test imposition is a disqualifying factor or would work to nullify a certificate of
candidacy. This argument may be accorded plausibility if the drug test requirement is optional. But the particular section of
the law, without exception, made drug - testing on those covered mandatory, necessarily suggesting that the obstinate
ones shall have to suffer the adverse consequences for not adhering to the statutory command. And since the provision
deals with candidates for public office, it stands to reason that the adverse consequence adverted to can only refer to and
revolve around the election and the assumption of public office of the candidates. Any other construal would reduce the
mandatory nature of Sec. 36(g) of RA 9165 into a pure jargon without meaning and effect whatsoever.

While it is anti - climactic to state it at this juncture, COMELEC Resolution No. 6486 is no longer enforceable, for by its
terms, it was intended to cover only the May 10, 2004 synchronized elections and the candidates running in that electoral
event. Nonetheless, to obviate repetition, the Court deems it appropriate to review and rule, as it hereby rules, on its
validity as an implementing issuance.

It ought to be made abundantly clear, however, that the unconstitutionality of Sec. 36(g) of RA 9165 is rooted on its having
infringed the constitutional provision defining the qualification or eligibility requirements for one aspiring to run for and
serve as senator.

SJS Petition
(Constitutionality of Sec. 36[c], [d], [f], and [g] of RA 9165)

The drug test prescribed under Sec. 36(c), (d), and (f) of RA 9165 for secondary and tertiary level students and public and
private employees, while mandatory, is a random and suspicionless arrangement. The objective is to stamp out illegal
drug and safeguard in the process "the well being of [the] citizenry, particularly the youth, from the harmful effects of
dangerous drugs." This statutory purpose, per the policy - declaration portion of the law, can be achieved via the pursuit
by the state of "an intensive and unrelenting campaign against the trafficking and use of dangerous drugs x x x through an
integrated system of planning, implementation and enforcement of anti - drug abuse policies, programs and
projects."14 The primary legislative intent is not criminal prosecution, as those found positive for illegal drug use as a result
of this random testing are not necessarily treated as criminals. They may even be exempt from criminal liability should the
illegal drug user consent to undergo rehabilitation. Secs. 54 and 55 of RA 9165 are clear on this point:

Sec. 54. Voluntary Submission of a Drug Dependent to Confinement, Treatment and Rehabilitation. - A drug
dependent or any person who violates Section 15 of this Act may, by himself/herself or through his/her parent,
[close relatives] x x x apply to the Board x x x for treatment and rehabilitation of the drug dependency. Upon such
application, the Board shall bring forth the matter to the Court which shall order that the applicant be examined for

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 drug dependency. If the examination x x x results in the certification that the applicant is a drug dependent, he/she
shall be ordered by the Court to undergo treatment and rehabilitation in a Center designated by the Board x x x.

xxxx

Sec. 55. Exemption from the Criminal Liability Under the Voluntary Submission Program. - A drug dependent
under the voluntary submission program, who is finally discharged from confinement, shall be exempt from the
criminal liability under Section 15 of this Act subject to the following conditions:

xxxx

School children, the US Supreme Court noted, are most vulnerable to the physical, psychological, and addictive effects of
drugs. Maturing nervous systems of the young are more critically impaired by intoxicants and are more inclined to drug
dependency. Their recovery is also at a depressingly low rate. 15

The right to privacy has been accorded recognition in this jurisdiction as a facet of the right protected by the guarantee
against unreasonable search and seizure16 under Sec. 2, Art. III17 of the Constitution. But while the right to privacy has
long come into its own, this case appears to be the first time that the validity of a state - decreed search or intrusion
through the medium of mandatory random drug testing among students and employees is, in this jurisdiction, made the
focal point. Thus, the issue tendered in these proceedings is veritably one of first impression.

US jurisprudence is, however, a rich source of persuasive jurisprudence. With respect to random drug testing among
school children, we turn to the teachings of Vernonia School District 47J v. Acton (Vernonia) and Board of Education of
Independent School District No. 92 of Pottawatomie County, et al. v. Earls, et al. (Board of Education),18 both fairly
pertinent US Supreme Court - decided cases involving the constitutionality of governmental search.

In Vernonia, school administrators in Vernonia, Oregon wanted to address the drug menace in their respective institutions
following the discovery of frequent drug use by school athletes. After consultation with the parents, they required random
urinalysis drug testing for the school's athletes. James Acton, a high school student, was denied participation in the
football program after he refused to undertake the urinalysis drug testing. Acton forthwith sued, claiming that the school's
drug testing policy violated, inter alia, the Fourth Amendment19 of the US Constitution.

The US Supreme Court, in fashioning a solution to the issues raised in Vernonia, considered the following: (1) schools
stand in loco parentis over their students; (2) school children, while not shedding their constitutional rights at the school
gate, have less privacy rights; (3) athletes have less privacy rights than non - athletes since the former observe communal
undress before and after sports events; (4) by joining the sports activity, the athletes voluntarily subjected themselves to a
higher degree of school supervision and regulation; (5) requiring urine samples does not invade a student's privacy since
a student need not undress for this kind of drug testing; and (6) there is need for the drug testing because of the
dangerous effects of illegal drugs on the young. The US Supreme Court held that the policy constituted reasonable search
under the Fourth20 and 14th Amendments and declared the random drug - testing policy constitutional.

In Board of Education, the Board of Education of a school in Tecumseh, Oklahoma required a drug test for high school
students desiring to join extra - curricular activities. Lindsay Earls, a member of the show choir, marching band, and
academic team declined to undergo a drug test and averred that the drug - testing policy made to apply to non - athletes
violated the Fourth and 14th Amendments. As Earls argued, unlike athletes who routinely undergo physical examinations
and undress before their peers in locker rooms, non - athletes are entitled to more privacy.

The US Supreme Court, citing Vernonia, upheld the constitutionality of drug testing even among non - athletes on the
basis of the school's custodial responsibility and authority. In so ruling, said court made no distinction between a non -
athlete and an athlete. It ratiocinated that schools and teachers act in place of the parents with a similar interest and duty
of safeguarding the health of the students. And in holding that the school could implement its random drug - testing policy,
the Court hinted that such a test was a kind of search in which even a reasonable parent might need to engage.

In sum, what can reasonably be deduced from the above two cases and applied to this jurisdiction are: (1) schools and
their administrators stand in loco parentis with respect to their students; (2) minor students have contextually fewer rights
than an adult, and are subject to the custody and supervision of their parents, guardians, and schools; (3) schools, acting
in loco parentis, have a duty to safeguard the health and well - being of their students and may adopt such measures as
may reasonably be necessary to discharge such duty; and (4) schools have the right to impose conditions on applicants
for admission that are fair, just, and non-discriminatory.

Guided by Vernonia and Board of Education, the Court is of the view and so holds that the provisions of RA 9165
requiring mandatory, random, and suspicionless drug testing of students are constitutional. Indeed, it is within the
prerogative of educational institutions to require, as a condition for admission, compliance with reasonable school rules
and regulations and policies. To be sure, the right to enroll is not absolute; it is subject to fair, reasonable, and equitable
requirements.

The Court can take judicial notice of the proliferation of prohibited drugs in the country that threatens the well - being of
the people,21 particularly the youth and school children who usually end up as victims. Accordingly, and until a more
effective method is conceptualized and put in motion, a random drug testing of students in secondary and tertiary schools
is not only acceptable but may even be necessary if the safety and interest of the student population, doubtless a
legitimate concern of the government, are to be promoted and protected. To borrow from Vernonia, "[d]eterring drug use

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by our Nation's schoolchildren is as important as enhancing efficient enforcement of the Nation's laws against the
importation of drugs"; the necessity for the State to act is magnified by the fact that the effects of a drug - infested school
are visited not just upon the users, but upon the entire student body and faculty. 22 Needless to stress, the random testing
scheme provided under the law argues against the idea that the testing aims to incriminate unsuspecting individual
students.

Just as in the case of secondary and tertiary level students, the mandatory but random drug test prescribed by Sec. 36 of
RA 9165 for officers and employees of public and private offices is justifiable, albeit not exactly for the same reason. The
Court notes in this regard that petitioner SJS, other than saying that "subjecting almost everybody to drug testing, without
probable cause, is unreasonable, an unwarranted intrusion of the individual right to privacy," 23 has failed to show how the
mandatory, random, and suspicionless drug testing under Sec. 36(c) and (d) of RA 9165 violates the right to privacy and
constitutes unlawful and/or unconsented search under Art. III, Secs. 1 and 2 of the Constitution. 24 Petitioner Laserna's
lament is just as simplistic, sweeping, and gratuitous and does not merit serious consideration. Consider what he wrote
without elaboration:

The US Supreme Court and US Circuit Courts of Appeals have made various rulings on the constitutionality of
mandatory drug tests in the school and the workplaces. The US courts have been consistent in their rulings that
the mandatory drug tests violate a citizen's constitutional right to privacy and right against unreasonable search
and seizure. They are quoted extensively hereinbelow.25

The essence of privacy is the right to be left alone.26 In context, the right to privacy means the right to be free from
unwarranted exploitation of one's person or from intrusion into one's private activities in such a way as to cause
humiliation to a person's ordinary sensibilities. 27 And while there has been general agreement as to the basic function of
the guarantee against unwarranted search, "translation of the abstract prohibition against ‘unreasonable searches and
seizures' into workable broad guidelines for the decision of particular cases is a difficult task," to borrow from C. Camara
v. Municipal Court.28 Authorities are agreed though that the right to privacy yields to certain paramount rights of the public
and defers to the state's exercise of police power.29

As the warrantless clause of Sec. 2, Art III of the Constitution is couched and as has been held, "reasonableness" is the
touchstone of the validity of a government search or intrusion.30 And whether a search at issue hews to the
reasonableness standard is judged by the balancing of the government - mandated intrusion on the individual's privacy
interest against the promotion of some compelling state interest.31 In the criminal context, reasonableness requires
showing of probable cause to be personally determined by a judge. Given that the drug - testing policy for employees--
and students for that matter--under RA 9165 is in the nature of administrative search needing what was referred to
in Vernonia as "swift and informal disciplinary procedures," the probable - cause standard is not required or even
practicable. Be that as it may, the review should focus on the reasonableness of the challenged administrative search in
question.

The first factor to consider in the matter of reasonableness is the nature of the privacy interest upon which the drug
testing, which effects a search within the meaning of Sec. 2, Art. III of the Constitution, intrudes. In this case, the office or
workplace serves as the backdrop for the analysis of the privacy expectation of the employees and the reasonableness of
drug testing requirement. The employees' privacy interest in an office is to a large extent circumscribed by the company's
work policies, the collective bargaining agreement, if any, entered into by management and the bargaining unit, and the
inherent right of the employer to maintain discipline and efficiency in the workplace. Their privacy expectation in a
regulated office environment is, in fine, reduced; and a degree of impingement upon such privacy has been upheld.

Just as defining as the first factor is the character of the intrusion authorized by the challenged law. Reduced to a question
form, is the scope of the search or intrusion clearly set forth, or, as formulated in Ople v. Torres, is the enabling law
authorizing a search "narrowly drawn" or "narrowly focused"?32

The poser should be answered in the affirmative. For one, Sec. 36 of RA 9165 and its implementing rules and regulations
(IRR), as couched, contain provisions specifically directed towards preventing a situation that would unduly embarrass the
employees or place them under a humiliating experience. While every officer and employee in a private establishment is
under the law deemed forewarned that he or she may be a possible subject of a drug test, nobody is really singled out in
advance for drug testing. The goal is to discourage drug use by not telling in advance anyone when and who is to be
tested. And as may be observed, Sec. 36(d) of RA 9165 itself prescribes what, in Ople, is a narrowing ingredient by
providing that the employees concerned shall be subjected to "random drug test as contained in the company's work rules
and regulations x x x for purposes of reducing the risk in the work place."

For another, the random drug testing shall be undertaken under conditions calculated to protect as much as possible the
employee's privacy and dignity. As to the mechanics of the test, the law specifies that the procedure shall employ two
testing methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as possible the
trustworthiness of the results. But the more important consideration lies in the fact that the test shall be conducted by
trained professionals in access - controlled laboratories monitored by the Department of Health (DOH) to safeguard
against results tampering and to ensure an accurate chain of custody. 33 In addition, the IRR issued by the DOH provides
that access to the drug results shall be on the "need to know" basis; 34 that the "drug test result and the records shall be
[kept] confidential subject to the usual accepted practices to protect the confidentiality of the test results." 35 Notably, RA
9165 does not oblige the employer concerned to report to the prosecuting agencies any information or evidence relating
to the violation of the Comprehensive Dangerous Drugs Act received as a result of the operation of the drug testing. All
told, therefore, the intrusion into the employees' privacy, under RA 9165, is accompanied by proper safeguards,
particularly against embarrassing leakages of test results, and is relatively minimal.

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To reiterate, RA 9165 was enacted as a measure to stamp out illegal drug in the country and thus protect the well - being
of the citizens, especially the youth, from the deleterious effects of dangerous drugs. The law intends to achieve this
through the medium, among others, of promoting and resolutely pursuing a national drug abuse policy in the workplace
via a mandatory random drug test.36 To the Court, the need for drug testing to at least minimize illegal drug use is
substantial enough to override the individual's privacy interest under the premises. The Court can consider that the illegal
drug menace cuts across gender, age group, and social - economic lines. And it may not be amiss to state that the sale,
manufacture, or trafficking of illegal drugs, with their ready market, would be an investor's dream were it not for the illegal
and immoral components of any of such activities. The drug problem has hardly abated since the martial law public
execution of a notorious drug trafficker. The state can no longer assume a laid back stance with respect to this modern -
day scourge. Drug enforcement agencies perceive a mandatory random drug test to be an effective way of preventing and
deterring drug use among employees in private offices, the threat of detection by random testing being higher than other
modes. The Court holds that the chosen method is a reasonable and enough means to lick the problem.

Taking into account the foregoing factors, i.e., the reduced expectation of privacy on the part of the employees, the
compelling state concern likely to be met by the search, and the well - defined limits set forth in the law to properly guide
authorities in the conduct of the random testing, we hold that the challenged drug test requirement is, under the limited
context of the case, reasonable and, ergo, constitutional.

Like their counterparts in the private sector, government officials and employees also labor under reasonable supervision
and restrictions imposed by the Civil Service law and other laws on public officers, all enacted to promote a high standard
of ethics in the public service.37 And if RA 9165 passes the norm of reasonableness for private employees, the more
reason that it should pass the test for civil servants, who, by constitutional command, are required to be accountable at all
times to the people and to serve them with utmost responsibility and efficiency.38

Petitioner SJS' next posture that Sec. 36 of RA 9165 is objectionable on the ground of undue delegation of power hardly
commends itself for concurrence. Contrary to its position, the provision in question is not so extensively drawn as to give
unbridled options to schools and employers to determine the manner of drug testing. Sec. 36 expressly provides how drug
testing for students of secondary and tertiary schools and officers/employees of public/private offices should be
conducted. It enumerates the persons who shall undergo drug testing. In the case of students, the testing shall be in
accordance with the school rules as contained in the student handbook and with notice to parents. On the part of
officers/employees, the testing shall take into account the company's work rules. In either case, the random procedure
shall be observed, meaning that the persons to be subjected to drug test shall be picked by chance or in an unplanned
way. And in all cases, safeguards against misusing and compromising the confidentiality of the test results are
established.

Lest it be overlooked, Sec. 94 of RA 9165 charges the DDB to issue, in consultation with the DOH, Department of the
Interior and Local Government, Department of Education, and Department of Labor and Employment, among other
agencies, the IRR necessary to enforce the law. In net effect then, the participation of schools and offices in the drug
testing scheme shall always be subject to the IRR of RA 9165. It is, therefore, incorrect to say that schools and employers
have unchecked discretion to determine how often, under what conditions, and where the drug tests shall be conducted.

The validity of delegating legislative power is now a quiet area in the constitutional landscape. 39 In the face of the
increasing complexity of the task of the government and the increasing inability of the legislature to cope directly with the
many problems demanding its attention, resort to delegation of power, or entrusting to administrative agencies the power
of subordinate legislation, has become imperative, as here.

Laserna Petition (Constitutionality of Sec. 36[c], [d],

[f], and [g] of RA 9165)

Unlike the situation covered by Sec. 36(c) and (d) of RA 9165, the Court finds no valid justification for mandatory drug
testing for persons accused of crimes. In the case of students, the constitutional viability of the mandatory, random, and
suspicionless drug testing for students emanates primarily from the waiver by the students of their right to privacy when
they seek entry to the school, and from their voluntarily submitting their persons to the parental authority of school
authorities. In the case of private and public employees, the constitutional soundness of the mandatory, random, and
suspicionless drug testing proceeds from the reasonableness of the drug test policy and requirement.

We find the situation entirely different in the case of persons charged before the public prosecutor's office with criminal
offenses punishable with six (6) years and one (1) day imprisonment. The operative concepts in the mandatory drug
testing are "randomness" and "suspicionless." In the case of persons charged with a crime before the prosecutor's office,
a mandatory drug testing can never be random or suspicionless. The ideas of randomness and being suspicionless are
antithetical to their being made defendants in a criminal complaint. They are not randomly picked; neither are they beyond
suspicion. When persons suspected of committing a crime are charged, they are singled out and are impleaded against
their will. The persons thus charged, by the bare fact of being haled before the prosecutor's office and peaceably
submitting themselves to drug testing, if that be the case, do not necessarily consent to the procedure, let alone waive
their right to privacy.40 To impose mandatory drug testing on the accused is a blatant attempt to harness a medical test as
a tool for criminal prosecution, contrary to the stated objectives of RA 9165. Drug testing in this case would violate a
persons' right to privacy guaranteed under Sec. 2, Art. III of the Constitution. Worse still, the accused persons are
veritably forced to incriminate themselves.

WHEREFORE, the Court resolves to GRANT the petition in G.R. No. 161658 and declares Sec. 36(g) of RA
9165 and COMELEC Resolution No. 6486 as UNCONSTITUTIONAL; and to PARTIALLY GRANT the petition in G.R.
Nos. 157870 and 158633 by declaring Sec. 36(c) and (d) of RA 9165 CONSTITUTIONAL, but declaring its Sec. 36(f)

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UNCONSTITUTIONAL. All concerned agencies are, accordingly, permanently enjoined from implementing Sec.
36(f) and (g)of RA 9165. No costs.

SO ORDERED.

G.R. Nos. L-46076 and L-46077 June 12, 1939

THE PEOPLE OF THE PHILIPPINES, plaintifff-appellee,

vs.
JACOB ROSENTHAL and NICASIO OSMEÑA, defendants-appellants.

Claro M. Recto and Hilado, Lorenzo and Hilado for appellant Rosenthal.
Jose M. Casal for appellant Osmeña.
Office of the Solicitor-General Tuason for appellee.

LAUREL, J.:

Appellants, Jacob Rosenthal and Nicasio Osmeña, were charged in the Court of First Instance of Manila with having
violated Act No. 2581, commonly known as the Blue Sky Law, under the following informations:

CASE NO. 52365

That in or about and during the period comprised between October 1, 1935 and January 22, 1936, both
dates inclusive, in the City of Manila, Philippine Islands, and within the jurisdiction of this court, the said
Nicasio Osmeña and Jacob Rosenthal, two of ten promoters, organizers, founders and incorporators of, the
former being, in addition, one of the members of the board of directors of, the O.R.O. Oil Co., Inc., a
domestic corporation organized under the laws of the Philippines and registered in the mercantile registry of
the Bureau of Commerce, with central office in the said city, the main objects and purposes of which were
"to mine, dig for, or otherwise obtain from earth, petroleum, rock and carbon oils, natural gas, other volatile
mineral substances and salt, and to manufacture, refine, prepare for market, buy, sell and transport the
same in crude or refined condition", and the capital thereof in their articles of incorporation, the accused
herein included, consisting of 3,000 shares without par value, 400 shares of which having been subscribed
by the said accused at 200 shares each and paid partly by them at the price of only P5 per share, according
to the said agreement which shares were speculative securities, because the value thereof materially
depended upon proposed promise for future promotion and development of the oil business above
mentioned rather than on actual tangible assets and conditions thereof, did then and there, with deliberate
intent of evading the provisions of sections 2 and 5 of the said Act No. 2581, and conspiring and
confederating together and helping each other, willfully, unlawfully and feloniously trade in, negotiate and
speculate with, their shares aforesaid, by making personally or through brokers or agents repeated and
successive sales of the said shares at a price ranging from P100 to P300 per share, as follows:

The accused Nicasio Osmeña sold 163 shares to nine different parties, and the accused Jacob Rosenthal
sold 21 shares to seven others, without first obtaining the corresponding written permit or license from the
Insular Treasurer of the Commonwealth of the Philippines, as by law required.

CASE NO. 52366

That in or about and during the period comprised between October 1, 1935, and January 22, 1936, both
dates inclusive, in the City of Manila, Philippine Islands, and within the jurisdiction of this court, the said
Nicasio Osmeña and Jacob Rosenthal, two of the ten promoters, organizers, founders and incorporators of,
the former being, in addition, one of the members of the board of directors of, the South Cebu Oil Co., Inc., a
domestic corporation organized under the laws of the Philippines and registered in the mercantile registry of
the Bureau of Commerce, with central office in the said city, the main objects and purposes of which were
"to mine, dig for, or otherwise obtain from earth, petroleum, rock or carbon oils, natural gas, other volatile
mineral substances and salt, and to manufacture, refine, prepare for market, buy, sell and transport the
same in crude and refined condition", and the capital stock of which, as per agreement of all the
incorporators thereof in their articles of incorporation, the accused herein included, consisting of 2,800
shares without par value, 200 shares of which having been subscribed by the accused Nicasio Osmeña, and
100 shares of which having been subscribed by the accused Jacob Rosenthal and paid by both at the price
of only P5 per share, according to the said agreement, which shares were speculative securities, because
the value thereof materially depended upon proposed promise of future promotion and development of the
oil business above mentioned rather than on actual tangible assets and conditions thereof, did then and
there, with deliberate intent of evading the provisions of sections 2 and 5 of Act No. 2581, and conspiring
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 and confederating together and helping one another, willfully, unlawfully and feloniously trade in, negotiate
and speculate with, their shares aforesaid, by making personally or through brokers or agents repeated and
successive sales of the said shares at a price ranging from P100 to P300 per share, as follows:

The accused Nicasio Osmeña sold 185 shares to nine different parties, and the accused Jacob Rosenthal
sold 12 shares to seven others, without first obtaining the corresponding written permit or license form the
Insular Treasurer of the Commonwealth of the Philippines, as by law provided.

Upon motion of Jacob Rosenthal, the Court of First Instance of Manila granted him separate trial although, when the
cases were called for hearing, the court acceded to the motion of the prosecution that the two cases be tried jointly
inasmuch as the evidence to be adduced by the government therein was the same, without prejudice to allowing the
defendants to present their proof separately. After trial, the lower court, on March 22, 1937, in separate decisions,
found the defendants guilty as charged in the informations. In case No. 52365 Jacob Rosenthal was sentenced to
pay a fine of P500, with subsidiary imprisonment in case of insolvency, and to pay one-half of the costs; Nicasio
Osmeña was sentenced to pay a fine of P1,000, with subsidiary imprisonment in case of insolvency, and to pay one-
half of the costs. In case No. 52366 Jacob Rosenthal was sentenced to pay a fine of P500, with subsidiary
imprisonment in case of insolvency, and to pay one-half of the costs; Nicasio Osmeña was sentenced to pay a fine
of P2,000, with subsidiary imprisonment in case of insolvency, and to pay one-half of the costs. The defendants duly
perfected their appeal from these judgments and the cases were originally elevated to the Court of Appeals but,
upon motion of the Solicitor-General, the same were forwarded to this court in view of the fact that the
constitutionality of Act No. 2581 has been put in issue by appellants. Two separate briefs have been filed by
Rosenthal and Osmeña. In the brief for appellant Rosenthal the following "joint assignment of errors" is made:

1. In declaring that according to the report of the geologist contracted by the O.R. Oil Co. and the South
Cebu Oil Co. to explore the properties leased to said companies, "no habia ninguna indicacion de que
hubiese petroleo en aquellos terrenos", when in truth what the report stated was that in so far as the O.R.O.
Oil Co. land was concerned, the territory covered by the lease if full of possibilities; and with respect to the
South Cebu Oil Co. lease, that no further investigations and expenses be made "unless favorable test
results are obtained on the northern lease."

2. In declaring that the exploration leases were, subsequent to the findings of the geologist, cancelled by the
government, implying thereby that as no oil was found in said lands, the leases were cancelled; when in
truth the cancellation was based on supposed violation of those provisions of the corporation law prohibiting
the setting up of interlocking directorates.

3. In declaring that the defendant, of his 200 shares of stock in the O.R.O. Oil Co., sold twenty-one shares to
different persons and on different dates, one share having been sold directly to one E.F. Pimley; five, thru a
firm of brokers known as Mackay & McCormick, to Arthur Hoyer, Wm. Scheunig, and Modesto Bautista, in
the proportion of two, two and one, respectively; and fifteen shares directly to Henry J. Belden, R.T.
Fitzimmons and D.P. O'Brien, in the proportion of five shares to each of them — when in truth only that to
E.F. Pimley was sold to the latter by the defendant, while those eventually transferred to Hoyer, Scheunig
and Bautista were sold directly to the said firm Mackay & McCormick, which bought them on its own risk and
account, and the remaining fifteen transferred to Belden, O'Brien, and Fitzimmons were loaned by Rosenthal
to Nicasio Osmeña, who was not until now either returned those shares or paid their value.

4. In also declaring that of his 100 shares of stock in the South Cebu Oil Co., the defendant sold twelve to
various persons and on different dates, when in truth only one of these shares was sold by the defendant to
E.F. Pimley, and the remaining eleven, two of which were transferred to Arthur Hoyer, two to William
Scheunig, one to Jose de la Fuente, one to Crispin Llamado, one to A.M. Opisso, and four to Ines Galano,
were sold and transferred, in one single transaction, to the said firm of brokers directly, which firm bought
said shares on its own risk and account.

5. In declaring that the shares sold to Mackay & McCormick were brought by the latter on credit at P250
each, to be resold by it at P300 each, and that out of the proceeds of the sale of these shares the defendant
received the price agreed upon between him and the said brokerage firm, or P250 per share, when in truth
and in fact there was no agreement between the parties as to whether the said firm was to sell said shares
to others or whether those shares were to be kept and retained by it on its own risk and account.

6. In declaring that the corporations had not begun exploration work on the territory covered by their leases,
and that they had no tangible properties.

7. In declaring that while the defendant needed no permit to sell his own stock, the corporations as issuer
being the ones bound to obtain the permit required by the Blue Sky Law, nevertheless he (the defendant)
was guilty of a violation of said law because the possession of the shares held and sold by him was not in
good faith, in that his acquisition thereof was not made in the ordinary and normal course of the business of
the corporations, but that said shares were purchased to indirectly promote the enterprise for which the
corporations were formed; the said defendant having paid in full to the corporations the value of said shares
of stock.

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 8. In holding as proven that the possession of the defendant of his own stock, which he paid for in full, was
not a possession in good faith, because he, as an incorporator (fundador), should have known that no permit
in writing had been issued the corporations by the Insular Treasurer for the sale of said stock.

9. In overruling the objection to the admission of Exhibit 1-b, and in holding that a permit had not been
issued by the Insular Treasurer for the sale of the stocks of the corporations.

10. In holding that there were repeated and successive sales made by the defendant Rosenthal of his own
shares of stock.

11. In holding that although the defendant was the absolute owner of the stock he sold, his repeated and
successive sales of such stock prove that this claim of ownership (esta pretension de propriedad) was but a
means employed by him to sell said stock at prices very much higher than those he paid for them.

12. In holding that said stock was sold by the defendant without the required permit having been first issued
by the Insular Treasurer, and that the sale was effected as if such permit had been actually issued (como si
en realidad pudieran venderse por haberse expedido tal permiso).

13. In holding that as a result of an investigation conducted by the City Fiscal, the defendant refunded to
Belden, O'Brien and Fitzimmons and others the amount they paid for the stock they purchased.

14. In holding that the opinion given by the Chief of the Insurance Division of the Office of the Insular
Treasurer to the effect that the defendant could sell the said stock without a permit as long as no false
representations were made by the said defendant, can not and does not exempt the latter from criminal
responsibility even though no false representations whatsoever were made by the aforesaid defendant.

15. In holding that the prima facie presumption in section 8 of the law to the effect that the claim of
ownership is not bona fide when repeated and successive sales of such stock are effected, has been totally
destroyed by the fact that said stock absolutely belongs to the defendant, and in not further holding that
because of such absolute ownership the defendant could have legally disposed of such stock in as many
sales as he saw fit without any permit from the Insular Treasurer.

16. In not holding that the Blue Sky Law contravenes the constitutional provisions of the Jones Act in so far
as such law constitutes an undue delegation of legislative powers to the Insular Treasurer, and in so far as it
does not afford equal protection before the law.

17. In not absolving the defendant.

In the brief for appellant Osmeña the following "relacion conjunta de errores" is in turn submitted:

1. Al no sobreseer esta causa despues de promulgada la Ley No. 83 del Commonwealth, no obstante
haberse llamado su atencion al hecho de que esta Ley derogaba la Ley No. 2581 de la Legislatura Filipina,
bajo cuyas disposiciones ha sido procesado el acusado.

2. Al condenar al acusado por infraccion de la "Blue Sky Law", no obstante reconocerse en la decision que
consta en las pruebas que el acusado Osmeña no ha of recido en venta ninguna de aquellas acciones, ni
ha hecho manifestaciones falsas a nadie para poder venderlas, y que la mayor parte, si no todos los que las
compraron, estaban satisfechos de la inversion de su dinero en la adquisicion de tales acciones.

3. Al condenar al acusado por haber vendido acciones especulativas sin licencia, cuando no se probo: (a)
que las acciones de la O.R.O. Oil Co., Inc., y de la South Cebu Oil Co., Inc., eran especulativas por su
naturaleza, y (b) que el acusado Osmeña carecia de licencia para venderlas.

4. Al declarar que la posesion por el acusado Osmeña de sus acciones de la O.R.O. Oil Co., Inc., y de la
South Cebu Oil Co., Inc., no era de buena fe y que no las habia adquirido por su propia cuenta sino para la
promocion indirecta de un provecto de negocio o empresa especulativa.

5. Al no declarar que la "Blue Sky Law" es contraria a las normas constitucionales que gozaba al tiempo de
su promulgacion : (1) porque contiene en sus disposiciones una delegacion indebida de facultades
legislativas; (2) porque es vaga e incierte en sus disposiciones y, por tanto, nula; y (3) porque infringe el
derecho de igual proteccion ante la ley, viola la libertad de contratacion y contraviene el derecho de adquirir,
gozar y disponer libremente de la propriedad privada, siendo su promulgacion, por tanto, un acto de
opresion y de verdadera tirania.

6. Al no absolveral acusado Nicasio Osmeña..

To meet the foregoing errors assigned by the appellants, plaintiff-appellee contends:

Page 54 of 152
 (a) That the enactment of Commonwealth Act No. 83 did not have the effect of relieving appellants from
criminal liability.

(b) That the appellants acted as promoters of the O.R.O. Oil Co. and the South Cebu Oil Co.

(c) That the shares of the two corporations are speculative in nature.

(d) That the appellants sold their shares in said corporations without permit or knowing that the latter did not
have the permit required by law.

(e) That the appellants are not entitled to the exemption provided in section 8 of the Blue Sky Law (Act No.
2581).

(f) That the Blue Sky Law is valid and constitutional.

Most of the errors assigned by the appellants deal with questions of fact. This is particularly true with reference to
errors one, two, three, four, five, six, seven, eight, nine, ten, eleven, twelve and thirteen of appellant Jacob
Rosenthal, and error four of appellant Nicasio Osmeña. There is no material discrepancy regarding the facts, and
we shall proceed to consider the legal questions propounded, which are in the main set forth by the Solicitor-
General in his brief.

It is contended by the appellants that Act No. 2581 is unconstitutional on three grounds. (1) That it constitutes an
undue delegation of legislative authority to the Insular Treasurer: (2) that it does not afford equal protection before
the law; and (3) that it is vague and ambiguous.

Under section 2 of Act No. 2581, every person, partnership, association, or corporation attempting to offer to sell in
the Philippines speculative securities of any kind or character whatsoever, is under obligation to file previously with
the Insular Treasurer the various documents and papers enumerated therein and to pay the required tax of twenty
pesos. Certain securities listed in section 3 are exempted from the operation of the Act. Section 5 imposes upon the
Insular Treasurer the mandatory duty to examine the statements and documents thus filed and the additional duty to
make or cause to be made, if deemed advisable by him, a detailed examination of the affairs of the applicant.
Section 5 also provides that "whatever the said Treasurer of the Philippine Islands is satisfied, either with or without
the examination herein provided, that any person, partnership, association or corporation is entitled to the right to
offer its securities as above defined and provided for sale in the Philippine Islands, he shall issue to such person,
partnership, association or corporation a certificate or permit reciting that such person, partnership, association or
corporation has complied with the provisions of this Act, and that such person, partnership, association or
corporation, its brokers or agents are entitled to offer the securities named in said certificate or permit for sale"; that
"said Treasurer shall furthermore have authority, whenever in his judgment it is in the public interest, to cancel said
certificate or permit", and that "an appeal from the decision of the Insular Treasurer may be had within the period of
thirty days to the Secretary of Finance."

Appellants argue that, while Act No. 2581 empowers the Insular Treasurer to issue and cancel certificates or permits
for the sale of speculative securities, no standard or rule is fixed in the Act which can guide said official in
determining the cases in which a certificate or permit ought to be issued, thereby making his opinion the sole
criterion in the matter of its issuance, with the result that, legislative powers being unduly delegated to the Insular
Treasurer, Act No. 2581 is unconstitutional. We are of the opinion that the Act furnishes a sufficient standard for the
Insular Treasurer to follow in reaching a decision regarding the issuance or cancellation of a certificate or permit.
The certificate or permit to be issued under the Act must recite that the person, partnership, association or
corporation applying therefor "has complied with the provisions of this Act", and this requirement, construed in
relation to the other provisions of the law, means that a certificate or permit shall be issued by the Insular Treasurer
when the provisions of Act No. 2581 have been complied with. Upon the other hand, the authority of the Insular
Treasurer to cancel a certificate or permit is expressly conditioned upon a finding that such cancellation "is in the
public interest." In view of the intention and purpose of Act No. 2581 — to protect the public against "speculative
schemes which have no more basis than so many feet of blue sky" and against the "sale of stock in fly-by-night
concerns, visionary oil wells, distant gold mines, and other like fraudulent exploitations", — we incline to hold that
"public interest" in this case is a sufficient standard to guide the Insular Treasurer in reaching a decision on a matter
pertaining to the issuance or cancellation of certificates or permits. As we observed in the case of People vs.
Fernandez and Trinidad (G.R. No. 45655, June 15, 1938), "siendo el objecto de la ley el evitar especulaciones
ruinosas, es claro que el interes publico, es, y debe ser la razon en que el Tesorero Insular deba basar sus
resoluciones." And the term "public interest" is not without a settled meaning.

Appellant insists that the delegation of authority to the Commission is invalid because the stated criterion is
uncertain. That criterion is the public interest. It is a mistaken assumption that this is a mere general
reference to public welfare without any standard to guide determinations. The purpose of the Act, the
requirement it imposes, and the context of the provision in question show the contrary. . . . (New York
Central Securities Corporation vs. U.S.A., 287 U.S., 12, 24, 25; 77 Law. ed., 138, 145, 146.) (See
also Schenchter Poultry Corporation vs. U.S., 295 U.S., 495; 540; 79 Law. ed., 1570, 1585;
Ferrazzini vs. Gsell, 34 Phil., 697, 711, 712.)

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In this connection, we cannot overlook the fact that the Act No. 2581 allows an appeal from the decision of the
Insular Treasurer to the Secretary of Finance. Hence, it cannot be contended that the Insular Treasurer can act and
decide without any restraining influence.

The theory of the separation of powers is designed by its originators to secure action and at the same time to
forestall over action which necessarily results from undue concentration of powers, and thereby obtain efficiency
and prevent despotism. Thereby, the "rule of law" was established which narrows the range of governmental action
and makes it subject to control by certain legal devices. As a corollary, we find the rule prohibiting delegation of
legislative authority, and from the earliest time American legal authorities have proceeded on the theory that
legislative power must be exercised by the legislative alone. It is frankness, however, to confess that as one delves
into the mass of judicial pronouncements, he finds a great deal of confusion. One thing, however, is apparent in the
development of the principle of separation of powers and that is that the maximum of delegatus non potest delegare
or delegata potestas non potest delegare, attributed to Bracton (De Legibus et Consuetudinious Angliae, edited by
G.E. Woodbine, Yale University Press [1922], vol. 2, p.167) but which is also recognized in principle in the Roman
Law (D.17.18.3), has been made to adapt itself to the complexities of modern governments, giving rise to the
adoption, within certain limits, of the principle of "subordinate legislation", not only in the United States and England
but in practically all modern governments. The difficulty lies in the fixing of the limit and extent of the authority. While
courts have undertaken to lay down general principles, the safest is to decide each case according to its peculiar
environment, having in mind the wholesome legislative purpose intended to be achieved.

Counsel for appellant Jacob Rosenthal also argues that the Insular Treasurer possesses "the discretionary power to
determine when a security is a speculative security and when it is not" because "he is given the power to compel
any corporation, association or partnership already functioning, to surrender to him for examination its books and
accounts enumerated in section 2, 'whenever he has reasonable ground to believe that the securities being sold or
offered for sale are of a speculative character.'" It should be observed, however, that section 1 of Act No. 2581
defines and enumerates what are "speculative securities" and all the other provisions of the Act must be read and
construed in conjunction and harmony with said section.

Laws of the different states of the American Union similar in nature to Act No. 2581 were assailed on constitutional
grounds somewhat analogous to those involved in the case at bar, but the decisions of both the state courts and the
Supreme Court of the United States have upheld their constitutionality. In the case of Hall vs. Geiger-Jones Co. (242
U.S., 539), the contention was made that the Blue Sky Law of Ohio, which requires the commissioner before
granting a license to "be satisfied of the good repute in business of such applicant and named agents", and which
empowers said commissioner to revoke the license or refuse to renew it upon ascertaining that the licensee "is of
bad business repute; has violated any provisions of this act or has engaged, or is about to engage, under favor of
such license, in illegitimate business or in fraudulent transactions", is unconstitutional because the law has failed to
give a standard to guide or determine the decision of the commissioner leaves "room for the play and action of
purely personal and arbitrary power", but the Supreme Court of the United States overruled the contention and held:

Besides it is certainly apparent that if the conditions are within the power of the State to impose, they can
only be ascertained by an executive officer. Reputation and character are quite tangible attributes, but there
can be no legislative definition of them that can automatically attach to or identify individuals possessing
them, and necessarily the aid of some executive agency must be invoked. The contention of appellees
would take from government one of its most essential instrumentalities, of which the various national and
state commissions are instances. But the contention may be answered by authority. In Gundling vs. Chicago
(177 U.S., 183), an ordinance of the City of Chicago was passed on which required a license of dealers in
cigarettes and as a condition of the license that the applicant, if a single individual, all of the members of the
firm, if a co-partnership, and any person or persons in charge of the business, if a corporation, should be of
good character and reputation, and the duty was delegated to the mayor of the city to determine the
existence of the conditions. The ordinance was sustained. To this case may be added Red "C" Oil
Manufacturing Co. vs. North Carolina (222 U.S., 380, 394, and cases cited); Mutual Film
Corporation vs. Industrial Commission of Ohio (236 U.S., 230); Brazee vs. Michigan (241 U.S., 340,
341). See also Reetz vs. Michigan, (188 U.S., 505); Lieberman vs. Van de Carr (199 U. S., 552). (Pp. 553,
554.)

In the case of Leach vs. Daugherty (238 P., 160), where the contention was advanced that section 6 of the
Corporate Securities Act of California which authorized the corporation commissioner to refuse to grant a broker's
certificate, if he is not satisfied of the "good business reputation of the applicant", is unconstitutional because "no
rules, regulations, or specifications are set forth in the said Corporate Securities Act defining what shall constitute
'good business reputation,'" it was ruled that "Considering such objection, it would appear that the leading case of
Hall vs. Geiger-Jones Co. (242 U.S., 539; 37 Sup. Ct., 217; 61 Law. ed., 480; L.R.A., 1917F, 514; Ann. Cas. 1917C,
643), is so conclusively against the petitioner's contention that little room is left for argument", and that "it is well-
settled principle of law in this state that by legislative act a commission or board may be empowered to ascertain the
existence of facts, upon the finding of which may depend the right to continue in the practice of a profession or a
regulated business."

In the case of G.F. Redmond & Co. vs. Michigan Securities Commission (222 Mich., 1; 192 N.W., 688), in which it
was argued that the provision in section 11955 of the Compiled Laws of 1915 (Michigan Blue Sky Law), authorizing
the commission to revoke a license for "good cause" upon notice to the dealer and a hearing duly had, is

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unconstitutional because the term "good cause" is so vague and indefinite that the law practically vested upon the
commission arbitrary powers, the court said:

The term "good cause" for revocation, as employed in the statute, relates so clearly to the conduct of the
licensed business, within the limits fixed by law, as to negative any arbitrary official action, and is so
comprehensive of unlawful, irregular, fraudulent, unauthorized, and forbidden business management and
transactions conducted as to demand no more particular specification of its meaning and its application.

Must the law map out , for the guidance of the licensee, a code of ethics and post danger signals against
inhibited and dishonest practices? The defendant had no right to have the conduct of its business charted by
specifications of forbidden practices involving revocation of the license. The general scope and expressed
purpose of the law, together with open and fair dealing, entered the license, and transgression thereof
constituted good cause for revocation thereof. (P. 689.)

In the case of State ex rel. Central Steam Heat & Power Co. vs. Gettle (Wis. [1928], 220 N.W., 201), where it was
argued that the requirement of the Wisconsin Blue Sky Law (St. 1925, sec. 184.09 [3]; Law 1927, c. 444) that the
Railroad Commission shall find that the "financial condition, plan of operation, and the proposed undertakings of the
corporation are such as to afford reasonable protection to the purchasers of the securities to be issued", is
unconstitutional for the reason that (1) the Legislature has no power to regulate the issuance of securities in order to
protect the investing public; (2) the Legislature does not provide a standard to control the commission; (3) the
statute is so indefinite and uncertain in its meaning as to be incapable of administration; and (4) the statute
delegates to the railroad commission legislative power, the court said:

This is but a usual provision found in the many so-called Blue Sy Laws, the constitutionality of which has
been upheld by the courts generally. The constitutionality of similar provisions has been so thoroughly
considered by this court that further discussion thereof is unnecessary. The following cases abundantly
establish the constitutionality of this provision. (State ex rel. Minneapolis, St. Paul & Sault Ste. Marie Railway
Company vs. Railroad Commission of Wisconsin, 137 Wis., 80; 117 N.W., 846; Appleton Water Works
Co. vs.Railroad Commission of Wisconsin, 154 Wis., 121; 142 N.E., 476; 47 L.R.A. [N.S.], 770; Ann. Cas.
1915B, 1160; State ex rel. City of Milwaukee vs. Milwaukee Electric Railway & Light Co., 169 Wis., 183; 172
N.W., 230; City of Milwaukee vs. Railroad Commission of Wisconsin, 183 Wis., 498; 196 N.W., 853;
Wisconsin Southern Ry. Co. vs. Railroad Commission of Wisconsin, 185 Wis., 313; 201 N.W., 244;
Kretuzer vs.Westfahl, 187 Wis., 463; 204 N.W., 595.)

Another ground relied upon by appellants in contending that Act No. 2581 is unconstitutional is that it denies equal
protection of the laws because the law discriminates between an owner who sells his securities in a single
transaction and one who disposes of them in repeated and successive transactions. In disposing of this contention
we need only refer to the case of Hall vs. Geiger-Jones Co., supra, wherein the Supreme Court of the United States
held:

"Discriminations are asserted against the statute which extend, it is contended, to denying appellees the
equal protection of the laws. Counsel enumerates them as follows:

"Prominent among such discriminations are . . . between an owner who sells his securities in a single
transaction and one who disposes of them in successive transactions; . . . "

We cannot give separate attention to the asserted discriminations. It is enough to say that they are within the
power of classification which a state has. A state "ay direct its law against what it deems the evil as it
actually exists without covering the whole field of possible abuses, and it may do so none the less that the
forbidden act does not differ in kind from those that are allowed . . .. If a class is deemed to present a
conspicuous example of what the legislature seeks to prevent, the 14th Amendment allows it to be dealt with
although otherwise and merely logically not distinguishable from others not embraced in the law.

Counsel for appellant Nicasio Osmeña further alleges that Act No. 2581 is unconstitutional on the ground that it is
vague and uncertain. A similar contention has already been overruled by this court in the case of People vs.
Fernandez and Trinidad, supra. An Act will be declared void and inoperative on the ground of vagueness and
uncertainty only upon a showing that the defect is such that the courts are unable to determine, with any reasonable
degree of certainty, what the legislature intended. The circumstance that this court has no more than one occasion
given effect and application to Act. No. 2581 (Valhalla Hotel Construction Co. vs. Carmona, 44 Phil., 233;
People vs.Nimrod McKinney, 47 Phil., 792; People vs. Fernandez and Trinidad, supra) decisively argues against the
position taken by appellant Osmeña. In this connection we cannot pretermit reference to the rule that "legislation
should not be held invalid on the ground of uncertainty if susceptible of any reasonable construction that will support
and give it effect. An Act will not be declared inoperative and ineffectual on the ground that it furnishes no adequate
means to secure the purpose for which it is passed, if men of common sense and reason can devise and provide
the means, and all the instrumentalities necessary for its execution are within the reach of those intrusted therewith."
(25 R.C.L., pp. 810, 811.)

Reaffirming our view in People vs. Fernandez and Trinidad, supra, we hold that Act No. 2581 is valid and
constitutional.
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Taking up now the question raised with reference to the speculative nature of the shares of the ). O.R.O. Oil Co. and
the South Cebu Oil Co., we find that section 1, paragraph (b) of Act No. 2581, in defining speculative securities,
provides:

. . . The term "speculative securities" as used in this Act shall be deemed to mean and include:

xxx xxx xxx

(b) All securities the value of which materially depend upon proposed or promised future promotion or
development rather than on present tangible assets and conditions.

At the beginning, and at the time of the issuance of the shares of the O.R.O. Oil Co. and the South Cebu Oil Co., all
that these companies had were their exploration leases. Beyond this, there was nothing tangible. The value of those
shares depended upon future development and the uncertainty of "striking" oil. The shares issued under these
circumstances are clearly speculative because they depended upon proposed or promised future promotion or
development rather than on present tangible assets and conditions.

Appellants next contend that in view of the repeal of Act No. 2581 by Commonwealth Act. No. 83, they have been
relieved of criminal responsibility. Assuming that the former Act has been entirely and completely abrogated by the
latter Act — a point we do not have to decide — this fact does not relieve appellants from criminal responsibility. "It
has been the holding, and it must again be the holding, that where an Act of the Legislature which penalizes an
offense repeals a former Act which penalized the same offense, such repeal does not have the effect of thereafter
depriving the courts of jurisdiction to try, convict and sentence offenders charged with violations of the old law."
(People vs. Concepcion, 44 Phil., 126, 132; Ong Chang Wing and Kwong Fok vs. U.S., 218 U.S., 272; 40 Phil.,
1046; U.S. vs. Cuna, 12 Phil., 241; U.S. vs. Aron, 12 Phil., 778; U.S. vs. Tonga, 15 Phil., 43; U.S. vs. Molina, 17
Phil., 582.)

Appellants further contend that they come under the exception provided in section 8 of Act No. 2581. This section
provides:

This Act shall not apply to the holder of any speculative security who is not the issuer thereof, nor to the
person who has acquired the same for his own account in the usual and ordinary course of business and not
for the direct or indirect promotion of any enterprise or scheme within the purview of this Act, unless such
possession is in good faith. Repeated and successive sales of any speculative securities shall be prima
facieevidence that the claim of ownership is not bona fide, but is a mere shift, device or plot to evade the
provisions of this Act. Such speculators shall incur the penalty provided for in section seven of this Act.

Under this section, there are clearly two classes of persons to whom the law is not applicable: (1) Persons who hold
speculative securities but who are not the issuers thereof; and (2) persons who have acquired the same for their
own account in the usual and ordinary course of business and not for the direct or indirect promotion of any
enterprise or scheme within the purview of this Act, provided (the law uses the term "unless") such possession is in
good faith.

Passing upon the questions of fact necessarily involved in the application of section 8 of Act No. 2581, the trial court
in case No. 52365 makes the following findings with reference to Nicasio Osmeña:

. . . El acusado Osmeña no ha adquirido por su propia cuenta en el curso ordinario y corriente de los
negocios en la O.R.O. Oil Co. Las acciones por el vendidas, pues las adquirio mediante suscripcion como
uno de los fundadores de dicha corporacion, pero si para la promocion indirecta de un proyecto de negocio
o empresa para el cual se habia organizado le corporacion, habiendo pagado totalmente el importe de
dichas acciones a la misma corporacion; ni tampoco las poseia de buena fe, puesto que como fundador y
miembro de la junta directiva de dicha corporacion debia saber que no se habia expedido por el Tesorero
Insular ningun permiso por escrito a al corporacion para la venta de dichas acciones. Y las ventas sucesivas
y repetidas de esas acciones que tenia en la misma corporacion, aunque tales acciones eran suyas por
haberlas el obtenido de la corporacion mediante suscripcion y pago del importe correspondiente prueban
que esta pretension de propiedad ha sido solamente un medio de que se ha valido para vender tales
acciones a precios mucho mayores que el importe por por haberse expedido tal permiso.

The same findings, mutatis mutandis, are made in case No. 52366 against the same appellant, and against Jacob
Rosenthal in the two cases. Even if we could, we do not feel justified in disturbing the findings of the trial court. The
good faith set up by appellant Rosenthal for having acted on the advice of one Garcia, an officer in the Insular
Treasury, and the subsequent devolution by him of amounts collected from some of the purchasers of the shares
may be considered as a circumstance in his favor in the imposition of the penalty prescribed by law but does not
exempt him from criminal responsibility. (People vs. McCalla, 63 Cal. App., 783; 220 Pac., 436; 367 U.S., 585; 69
Law. ed., 799; 45 Sup. Ct., 461; People vs. Fernandez and Trinidad, supra.)

The judgments of the lower court are affirmed, with the modification that the fines are reduced as to accused Jacob
Rosenthal from P500 to P200 in each case, and as to accused Nicasio Osmeña, from P1,000 to P500 in case No.

Page 58 of 152
52365 and from P2,000 to P1,000 in case No. 52366, with subsidiary imprisonment for both in case of insolvency,
and costs. So ordered.

G.R. No. 76633 October 18, 1988

EASTERN SHIPPING LINES, INC., petitioner,

vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR AND
EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents.

Jimenea, Dala & Zaragoza Law Office for petitioner.

The Solicitor General for public respondent.

Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J.:

The private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas Employment Administration (POEA) for the death of her
husband. The decision is challenged by the petitioner on the principal ground that the POEA had no jurisdiction over the case as the husband was not an overseas
worker.

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan,
March 15, 1985. His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2 of
the POEA. The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by
the Social Security System and should have been filed against the State Insurance Fund. The POEA nevertheless
assumed jurisdiction and after considering the position papers of the parties ruled in favor of the complainant. The
award consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses.

The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissal on the ground
of non-exhaustion of administrative remedies.

Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations Commission, on the
theory inter alia that the agency should be given an opportunity to correct the errors, if any, of its subordinates. This
case comes under one of the exceptions, however, as the questions the petitioner is raising are essentially
questions of law. 1 Moreover, the private respondent himself has not objected to the petitioner's direct resort to this
Court, observing that the usual procedure would delay the disposition of the case to her prejudice.

The Philippine Overseas Employment Administration was created under Executive Order No. 797, promulgated on
May 1, 1982, to promote and monitor the overseas employment of Filipinos and to protect their rights. It replaced the
National Seamen Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said
executive order, the POEA is vested with "original and exclusive jurisdiction over all cases, including money claims,
involving employee-employer relations arising out of or by virtue of any law or contract involving Filipino contract
workers, including seamen." These cases, according to the 1985 Rules and Regulations on Overseas Employment
issued by the POEA, include "claims for death, disability and other benefits" arising out of such employment. 2

The petitioner does not contend that Saco was not its employee or that the claim of his widow is not compensable.
What it does urge is that he was not an overseas worker but a 'domestic employee and consequently his widow's
claim should have been filed with Social Security System, subject to appeal to the Employees Compensation
Commission.

We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas employee of the
petitioner at the time he met with the fatal accident in Japan in 1985.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment
of a worker outside the Philippines, including employment on board vessels plying international waters, covered by a
valid contract. 3 A contract worker is described as "any person working or who has worked overseas under a valid
employment contract and shall include seamen" 4 or "any person working overseas or who has been employed by
another which may be a local employer, foreign employer, principal or partner under a valid employment contract
and shall include seamen." 5 These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while

Page 59 of 152
under a contract of employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris,
while berthed in a foreign country. 6

It is worth observing that the petitioner performed at least two acts which constitute implied or tacit recognition of the
nature of Saco's employment at the time of his death in 1985. The first is its submission of its shipping articles to the
POEA for processing, formalization and approval in the exercise of its regulatory power over overseas employment
under Executive Order NO. 797. 7 The second is its payment 8 of the contributions mandated by law and regulations
to the Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social
and welfare services to Filipino overseas workers."

Significantly, the office administering this fund, in the receipt it prepared for the private respondent's signature,
described the subject of the burial benefits as "overseas contract worker Vitaliano Saco." 9 While this receipt is
certainly not controlling, it does indicate, in the light of the petitioner's own previous acts, that the petitioner and the
Fund to which it had made contributions considered Saco to be an overseas employee.

The petitioner argues that the deceased employee should be likened to the employees of the Philippine Air Lines
who, although working abroad in its international flights, are not considered overseas workers. If this be so, the
petitioner should not have found it necessary to submit its shipping articles to the POEA for processing,
formalization and approval or to contribute to the Welfare Fund which is available only to overseas workers.
Moreover, the analogy is hardly appropriate as the employees of the PAL cannot under the definitions given be
considered seamen nor are their appointments coursed through the POEA.

The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA pursuant
to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular prescribed a standard
contract to be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen for
overseas employment. A similar contract had earlier been required by the National Seamen Board and had been
sustained in a number of cases by this Court. 10 The petitioner claims that it had never entered into such a contract
with the deceased Saco, but that is hardly a serious argument. In the first place, it should have done so as required
by the circular, which specifically declared that "all parties to the employment of any Filipino seamen on board any
ocean-going vessel are advised to adopt and use this employment contract effective 01 February 1984 and to desist
from using any other format of employment contract effective that date." In the second place, even if it had not done
so, the provisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate of
the police power of the State. 11

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle of non-
delegation of legislative power. It contends that no authority had been given the POEA to promulgate the said
regulation; and even with such authorization, the regulation represents an exercise of legislative discretion which,
under the principle, is not subject to delegation.

The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797, reading as
follows:

... The governing Board of the Administration (POEA), as hereunder provided shall promulgate the
necessary rules and regulations to govern the exercise of the adjudicatory functions of the
Administration (POEA).

Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself prescribed
a standard shipping contract substantially the same as the format adopted by the POEA.

The second challenge is more serious as it is true that legislative discretion as to the substantive contents of the law
cannot be delegated. What can be delegated is the discretion to determine how the law may be enforced,
not whatthe law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative
cannot be abdicated or surrendered by the legislature to the delegate. Thus, in Ynot v. Intermediate Apellate
Court 12 which annulled Executive Order No. 626, this Court held:

We also mark, on top of all this, the questionable manner of the disposition of the confiscated
property as prescribed in the questioned executive order. It is there authorized that the seized
property shall be distributed to charitable institutions and other similar institutions as the Chairman of
the National Meat Inspection Commission may see fit, in the case of carabaos.' (Italics supplied.)
The phrase "may see fit" is an extremely generous and dangerous condition, if condition it is. It is
laden with perilous opportunities for partiality and abuse, and even corruption. One searches in vain
for the usual standard and the reasonable guidelines, or better still, the limitations that the officers
must observe when they make their distribution. There is none. Their options are apparently
boundless. Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they
be chosen? Only the officers named can supply the answer, they and they alone may choose the
grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a 'roving
commission a wide and sweeping authority that is not canalized within banks that keep it from
overflowing,' in short a clearly profligate and therefore invalid delegation of legislative powers.

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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 legislature such that when it reaches the delegate the only thing he will have to do is
enforce it. 13 Under the sufficient standard test, there must be adequate guidelines or stations in the law to map out
the boundaries of the delegate's authority and prevent the delegation from running riot. 14

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 principle of non-delegation of powers is applicable to all the three major powers of the Government but is
especially important in the case of the legislative power because of the many instances when its delegation is
permitted. The occasions are rare when executive or judicial powers have to be delegated by the authorities to
which they legally certain. In the case of the legislative power, however, such occasions have become more and
more frequent, if not necessary. This had led to the observation that the delegation of legislative power has become
the rule and its non-delegation the exception.

The reason is the increasing complexity of the task of government and the growing inability of the legislature to cope
directly with the myriad problems demanding its attention. The growth of society has ramified its activities and
created peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend.
Specialization even in legislation has become necessary. To many of the problems attendant upon present-day
undertakings, the legislature may not have the competence to provide the required direct and efficacious, not to say,
specific solutions. These solutions may, however, be expected from its delegates, who are supposed to be experts
in the particular fields assigned to them.

The reasons given above for the delegation of legislative powers in general are particularly applicable to
administrative bodies. With the proliferation of specialized activities and their attendant peculiar problems, the
national legislature has found it more and more necessary to entrust to administrative agencies the authority to
issue rules to carry out the general provisions of the statute. This is called the "power of subordinate legislation."

With this power, administrative bodies may implement the broad policies laid down in a statute by "filling in' the
details which the Congress may not have the opportunity or competence to provide. This is effected by their
promulgation of what are known as supplementary regulations, such as the implementing rules issued by the
Department of Labor on the new Labor Code. These regulations have the force and effect of law.

Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed thereby has been
applied in a significant number of the cases without challenge by the employer. The power of the POEA (and before
it the National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient standard
guiding the delegate in the exercise of the said authority. That standard is discoverable in the executive order itself
which, in creating the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas
Filipino workers to "fair and equitable employment practices."

Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" in People v.
Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16 "public convenience and welfare" in Calalang v.
Williams 17 and "simplicity, economy and efficiency" in Cervantes v. Auditor General, 18 to mention only a few cases.
In the United States, the "sense and experience of men" was accepted in Mutual Film Corp. v. Industrial
Commission, 19 and "national security" in Hirabayashi v. United States. 20

It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42 since
March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In addition, as
already observed, she also received a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers.
These payments will not preclude allowance of the private respondent's claim against the petitioner because it is
specifically reserved in the standard contract of employment for Filipino seamen under Memorandum Circular No. 2,
Series of 1984, that—

Section C. Compensation and Benefits.—

1. In case of death of the seamen during the term of his Contract, the employer shall pay his
beneficiaries the amount of:

a. P220,000.00 for master and chief engineers

b. P180,000.00 for other officers, including radio operators and master electrician

c. P 130,000.00 for ratings.

2. It is understood and agreed that the benefits mentioned above shall be separate and distinct from,
and will be in addition to whatever benefits which the seaman is entitled to under Philippine laws. ...

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 3. ...

c. If the remains of the seaman is buried in the Philippines, the owners shall pay the
beneficiaries of the seaman an amount not exceeding P18,000.00 for burial
expenses.

The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the National Seamen
Board on July 12,1976, providing an follows:

Income Benefits under this Rule Shall be Considered Additional Benefits.—

All compensation benefits under Title II, Book Four of the Labor Code of the Philippines (Employees
Compensation and State Insurance Fund) shall be granted, in addition to whatever benefits,
gratuities or allowances that the seaman or his beneficiaries may be entitled to under the
employment contract approved by the NSB. If applicable, all benefits under the Social Security Law
and the Philippine Medicare Law shall be enjoyed by the seaman or his beneficiaries in accordance
with such laws.

The above provisions are manifestations of the concern of the State for the working class, consistently with the
social justice policy and the specific provisions in the Constitution for the protection of the working class and the
promotion of its interest.

One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied due
process because the same POEA that issued Memorandum Circular No. 2 has also sustained and applied it is an
uninformed criticism of administrative law itself. Administrative agencies are vested with two basic powers, the
quasi-legislative and the quasi-judicial. The first enables them to promulgate implementing rules and regulations,
and the second enables them to interpret and apply such regulations. Examples abound: the Bureau of Internal
Revenue adjudicates on its own revenue regulations, the Central Bank on its own circulars, the Securities and
Exchange Commission on its own rules, as so too do the Philippine Patent Office and the Videogram Regulatory
Board and the Civil Aeronautics Administration and the Department of Natural Resources and so on ad infinitum on
their respective administrative regulations. Such an arrangement has been accepted as a fact of life of modern
governments and cannot be considered violative of due process as long as the cardinal rights laid down by Justice
Laurel in the landmark case of Ang Tibay v. Court of Industrial Relations 21 are observed.

Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of the private
respondent, in line with the express mandate of the Labor Code and the principle that those with less in life should
have more in law.

When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence
of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged
worker. This is only fair if he is to be given the opportunity and the right to assert and defend his cause not as a
subordinate but as a peer of management, with which he can negotiate on even plane. Labor is not a mere
employee of capital but its active and equal partner.

WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated
December 10, 1986 is hereby LIFTED. It is so ordered.

G.R. No. 78164 July 31, 1987

TERESITA TABLARIN, MA, LUZ CIRIACO, MA NIMFA B. ROVIRA, EVANGELINA S. LABAO, in their behalf
and in behalf of applicants for admission into the Medical Colleges during the school year 1987-88 and
future years who have not taken or successfully hurdled tile National Medical Admission Test
(NMAT).petitioners,
vs.
THE HONORABLE JUDGE ANGELINA S. GUTIERREZ, Presiding Judge of Branch XXXVII of the Regional
Trial Court of the National Capital Judicial Region with seat at Manila, THE HONORABLE SECRETARY
LOURDES QUISUMBING, in her capacity as Chairman of the BOARD OF MEDICAL EDUCATION, and THE
CENTER FOR EDUCATIONAL MEASUREMENT (CEM), respondents.

FELICIANO, J.:

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The petitioners sought admission into colleges or schools of medicine for the school year 1987-1988. However, the
petitioners either did not take or did not successfully take the National Medical Admission Test (NMAT) required by
the Board of Medical Education, one of the public respondents, and administered by the private respondent, the
Center for Educational Measurement (CEM).

On 5 March 1987, the petitioners filed with the Regional Trial Court, National Capital Judicial Region, a Petition for
Declaratory Judgment and Prohibition with a prayer for Temporary Restraining Order and Preliminary Injunction.
The petitioners sought to enjoin the Secretary of Education, Culture and Sports, the Board of Medical Education and
the Center for Educational Measurement from enforcing Section 5 (a) and (f) of Republic Act No. 2382, as
amended, and MECS Order No. 52, series of 1985, dated 23 August 1985 and from requiring the taking and
passing of the NMAT as a condition for securing certificates of eligibility for admission, from proceeding with
accepting applications for taking the NMAT and from administering the NMAT as scheduled on 26 April 1987 and in
the future. After hearing on the petition for issuance of preliminary injunction, the trial court denied said petition on
20 April 1987. The NMAT was conducted and administered as previously scheduled.

Petitioners accordingly filed this Special Civil Action for certiorari with this Court to set aside the Order of the
respondent judge denying the petition for issuance of a writ of preliminary injunction.

Republic Act 2382, as amended by Republic Acts Nos. 4224 and 5946, known as the "Medical Act of 1959" defines
its basic objectives in the following manner:

Section 1. Objectives. — This Act provides for and shall govern (a) the standardization and regulation of
medical education (b) the examination for registration of physicians; and (c) the supervision, control and
regulation of the practice of medicine in the Philippines. (Underscoring supplied)

The statute, among other things, created a Board of Medical Education which is composed of (a) the Secretary of
Education, Culture and Sports or his duly authorized representative, as Chairman; (b) the Secretary of Health or his
duly authorized representative; (c) the Director of Higher Education or his duly authorized representative; (d) the
Chairman of the Medical Board or his duly authorized representative; (e) a representative of the Philippine Medical
Association; (f) the Dean of the College of Medicine, University of the Philippines; (g) a representative of the Council
of Deans of Philippine Medical Schools; and (h) a representative of the Association of Philippine Medical Colleges,
as members. The functions of the Board of Medical Education specified in Section 5 of the statute include the
following:

(a) To determine and prescribe equirements for admission into a recognized college of medicine;

(b) To determine and prescribe requirements for minimum physical facilities of colleges of medicine, to wit:
buildings, including hospitals, equipment and supplies, apparatus, instruments, appliances, laboratories, bed
capacity for instruction purposes, operating and delivery rooms, facilities for outpatient services, and others,
used for didactic and practical instruction in accordance with modern trends;

(c) To determine and prescribe the minimum number and minimum qualifications of teaching personnel,
including student-teachers ratio;

(d) To determine and prescribe the minimum required curriculum leading to the degree of Doctor of
Medicine;

(e) To authorize the implementation of experimental medical curriculum in a medical school that has
exceptional faculty and instrumental facilities. Such an experimental curriculum may prescribe admission
and graduation requirements other than those prescribed in this Act; Provided, That only exceptional
students shall be enrolled in the experimental curriculum;

(f) To accept applications for certification for admission to a medical school and keep a register of those
issued said certificate; and to collect from said applicants the amount of twenty-five pesos each which shall
accrue to the operating fund of the Board of Medical Education;

(g) To select, determine and approve hospitals or some departments of the hospitals for training which
comply with the minimum specific physical facilities as provided in subparagraph (b) hereof; and

(h) To promulgate and prescribe and enforce the necessary rules and regulations for the proper
implementation of the foregoing functions. (Emphasis supplied)

Section 7 prescribes certain minimum requirements for applicants to medical schools:

Admission requirements. — The medical college may admit any student who has not been convicted by any
court of competent jurisdiction of any offense involving moral turpitude and who presents (a) a record of
completion of a bachelor's degree in science or arts; (b) a certificate of eligibility for entrance to a medical
school from the Board of Medical Education; (c) a certificate of good moral character issued by two former

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 professors in the college of liberal arts; and (d) birth certificate. Nothing in this act shall be construed to
inhibit any college of medicine from establishing, in addition to the preceding, other entrance requirements
that may be deemed admissible.

xxx xxx x x x (Emphasis supplied)

MECS Order No. 52, s. 1985, issued by the then Minister of Education, Culture and Sports and dated 23 August
1985, established a uniform admission test called the National Medical Admission Test (NMAT) as an additional
requirement for issuance of a certificate of eligibility for admission into medical schools of the Philippines, beginning
with the school year 1986-1987. This Order goes on to state that:

2. The NMAT, an aptitude test, is considered as an instrument toward upgrading the selection of applicants
for admission into the medical schools and its calculated to improve the quality of medical education in the
country. The cutoff score for the successful applicants, based on the scores on the NMAT, shall be
determined every year by the Board of Medical Education after consultation with the Association of
Philippine Medical Colleges. The NMAT rating of each applicant, together with the other admission
requirements as presently called for under existing rules, shall serve as a basis for the issuance of the
prescribed certificate of elegibility for admission into the medical colleges.

3. Subject to the prior approval of the Board of Medical Education, each medical college may give other
tests for applicants who have been issued a corresponding certificate of eligibility for admission that will yield
information on other aspects of the applicant's personality to complement the information derived from the
NMAT.

xxx xxx xxx

8. No applicant shall be issued the requisite Certificate of Eligibility for Admission (CEA), or admitted for
enrollment as first year student in any medical college, beginning the school year, 1986-87, without the
required NMAT qualification as called for under this Order. (Underscoring supplied)

Pursuant to MECS Order No. 52, s. 1985, the private respondent Center conducted NMATs for entrance to medical
colleges during the school year 1986-1987. In December 1986 and in April 1987, respondent Center conducted the
NMATs for admission to medical colleges during the school year 1987.1988. 1avv phi1

Petitioners raise the question of whether or not a writ of preliminary injunction may be issued to enjoin the
enforcement of Section 5 (a) and (f) of Republic Act No. 2382, as amended, and MECS Order No. 52, s. 1985,
pending resolution of the issue of constitutionality of the assailed statute and administrative order. We regard this
issue as entirely peripheral in nature. It scarcely needs documentation that a court would issue a writ of preliminary
injunction only when the petitioner assailing a statute or administrative order has made out a case of
unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of constitutionality, aside
from showing a clear legal right to the remedy sought. The fundamental issue is of course the constitutionality of the
statute or order assailed.

1. The petitioners invoke a number of provisions of the 1987 Constitution which are, in their assertion, violated by
the continued implementation of Section 5 (a) and (f) of Republic Act 2381, as amended, and MECS Order No. 52,
s. 1985. The provisions invoked read as follows:

(a) Article 11, Section 11: "The state values the dignity of every human person and guarantees full respect of
human rights. "

(b) ArticleII, Section l3: "The State recognizes the vital role of the youth in nation building and shall promote
and protect their physical, moral, spiritual, intellectual and social well being. It shall inculcate in the youth
patriotism and nationalism, and encourage their involvement in public and civic affairs."

(c) Article II, Section 17: "The State shall give priority to education, science and technology, arts, culture and
sports to foster patriotism and nationalism, accelerate social progress and to promote total human liberation
and development. "

(d) Article XIV, Section l: "The State shall protect and promote the right of all citizens to quality education at
all levels and take appropriate steps to make such education accessible to all. "

(e) Article XIV, Section 5 (3): "Every citizen has a right to select a profession or course of study, subject to
fair, reasonable and equitable admission and academic requirements."

Article II of the 1987 Constitution sets forth in its second half certain "State policies" which the government is
enjoined to pursue and promote. The petitioners here have not seriously undertaken to demonstrate to what extent
or in what manner the statute and the administrative order they assail collide with the State policies embodied in
Sections 11, 13 and 17. They have not, in other words, discharged the burden of proof which lies upon them. This

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burden is heavy enough where the constitutional provision invoked is relatively specific, rather than abstract, in
character and cast in behavioral or operational terms. That burden of proof becomes of necessity heavier where the
constitutional provision invoked is cast, as the second portion of Article II is cast, in language descriptive of basic
policies, or more precisely, of basic objectives of State policy and therefore highly generalized in tenor. The
petitioners have not made their case, even a prima facie case, and we are not compelled to speculate and to
imagine how the legislation and regulation impugned as unconstitutional could possibly offend the constitutional
provisions pointed to by the petitioners.

Turning to Article XIV, Section 1, of the 1987 Constitution, we note that once more petitioners have failed to
demonstrate that the statute and regulation they assail in fact clash with that provision. On the contrary we may
note-in anticipation of discussion infra — that the statute and the regulation which petitioners attack are in fact
designed to promote "quality education" at the level of professional schools. When one reads Section 1 in relation to
Section 5 (3) of Article XIV as one must one cannot but note that the latter phrase of Section 1 is not to be read with
absolute literalness. The State is not really enjoined to take appropriate steps to make quality education " accessible
to all who might for any number of reasons wish to enroll in a professional school but rather merely to make such
education accessible to all who qualify under "fair, reasonable and equitable admission and academic requirements.
"

2. In the trial court, petitioners had made the argument that Section 5 (a) and (f) of Republic Act No. 2382, as
amended, offend against the constitutional principle which forbids the undue delegation of legislative power, by
failing to establish the necessary standard to be followed by the delegate, the Board of Medical Education. The
general principle of non-delegation of legislative power, which both flows from the reinforces the more fundamental
rule of the separation and allocation of powers among the three great departments of government,1 must be applied
with circumspection in respect of statutes which like the Medical Act of 1959, deal with subjects as obviously
complex and technical as medical education and the practice of medicine in our present day world. Mr. Justice
Laurel stressed this point 47 years ago in Pangasinan Transportation Co., Inc. vs. The Public Service Commission:2

One thing, however, is apparent in the development of the principle of separation of powers and that is that
the maxim of delegatus non potest delegare or delegate potestas non potest delegare, adopted this practice
(Delegibus et Consuetudiniis Anglia edited by G.E. Woodbine, Yale University Press, 1922, Vol. 2, p. 167)
but which is also recognized in principle in the Roman Law (d. 17.18.3) has been made to adapt itself to the
complexities of modern government, giving rise to the adoption, within certain limits of the principle of
"subordinate legislation," not only in the United States and England but in practically all modern
governments. (People vs. Rosenthal and Osmena [68 Phil. 318, 1939]. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulation and the increased
difficulty of administering the laws, there is a constantly growing tendency toward the delegation of greater
power by the legislature, and toward the approval of the practice by the courts." 3

The standards set for subordinate legislation in the exercise of rule making authority by an administrative agency
like the Board of Medical Education are necessarily broad and highly abstract. As explained by then Mr. Justice
Fernando in Edu v. Ericta4 —

The standard may be either expressed or implied. If the former, the non-delegation objection is easily
met. The standard though does not have to be spelled out specifically. It could be implied from the policy
and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public
safety. What is sought to be attained as in Calalang v. Williams is "safe transit upon the roads. 5

We believe and so hold that the necessary standards are set forth in Section 1 of the 1959 Medical Act: "the
standardization and regulation of medical education" and in Section 5 (a) and 7 of the same Act, the body of the
statute itself, and that these considered together are sufficient compliance with the requirements of the non-
delegation principle.

3. The petitioners also urge that the NMAT prescribed in MECS Order No. 52, s. 1985, is an "unfair, unreasonable
and inequitable requirement," which results in a denial of due process. Again, petitioners have failed to specify just
what factors or features of the NMAT render it "unfair" and "unreasonable" or "inequitable." They appear to suggest
that passing the NMAT is an unnecessary requirement when added on top of the admission requirements set out in
Section 7 of the Medical Act of 1959, and other admission requirements established by internal regulations of the
various medical schools, public or private. Petitioners arguments thus appear to relate to utility and wisdom or
desirability of the NMAT requirement. But constitutionality is essentially a question of power or authority: this Court
has neither commission or competence to pass upon questions of the desirability or wisdom or utility of legislation or
administrative regulation. Those questions must be address to the political departments of the government not to the
courts.

There is another reason why the petitioners' arguments must fail: the legislative and administrative provisions
impugned by them constitute, to the mind of the Court, a valid exercise of the police power of the state. The police
power, it is commonplace learning, is the pervasive and non-waivable power and authority of the sovereign to
secure and promote an the important interests and needs — in a word, the public order — of the general
community.6 An important component of that public order is the health and physical safety and well being of the
population, the securing of which no one can deny is a legitimate objective of governmental effort and regulation.7

Page 65 of 152
Perhaps the only issue that needs some consideration is whether there is some reasonable relation between the
prescribing of passing the NMAT as a condition for admission to medical school on the one hand, and the securing
of the health and safety of the general community, on the other hand. This question is perhaps most usefully
approached by recalling that the regulation of the practice of medicine in all its branches has long been recognized
as a reasonable method of protecting the health and safety of the public.8 That the power to regulate and control the
practice of medicine includes the power to regulate admission to the ranks of those authorized to practice medicine,
is also well recognized. thus, legislation and administrative regulations requiring those who wish to practice
medicine first to take and pass medical board examinations have long ago been recognized as valid exercises of
governmental power.9 Similarly, the establishment of minimum medical educational requirements — i.e., the
completion of prescribed courses in a recognized medical school — for admission to the medical profession, has
also been sustained as a legitimate exercise of the regulatory authority of the state.10 What we have before us in the
instant case is closely related: the regulation of access to medical schools. MECS Order No. 52, s. 1985, as noted
earlier, articulates the rationale of regulation of this type: the improvement of the professional and technical quality
of the graduates of medical schools, by upgrading the quality of those admitted to the student body of the medical
schools. That upgrading is sought by selectivity in the process of admission, selectivity consisting, among other
things, of limiting admission to those who exhibit in the required degree the aptitude for medical studies and
eventually for medical practice. The need to maintain, and the difficulties of maintaining, high standards in our
professional schools in general, and medical schools in particular, in the current stage of our social and economic
development, are widely known.

We believe that the government is entitled to prescribe an admission test like the NMAT as a means for achieving its
stated objective of "upgrading the selection of applicants into [our] medical schools" and of "improv[ing] the quality of
medical education in the country." Given the widespread use today of such admission tests in, for instance, medical
schools in the United States of America (the Medical College Admission Test [MCAT]11 and quite probably in other
countries with far more developed educational resources than our own, and taking into account the failure or inability
of the petitioners to even attempt to prove otherwise, we are entitled to hold that the NMAT is reasonably related to
the securing of the ultimate end of legislation and regulation in this area. That end, it is useful to recall, is the
protection of the public from the potentially deadly effects of incompetence and ignorance in those who would
undertake to treat our bodies and minds for disease or trauma.

4. Petitioners have contended, finally, that MECS Order No. 52, s. 1985, is in conflict with the equal protection
clause of the Constitution. More specifically, petitioners assert that that portion of the MECS Order which provides
that

the cutoff score for the successful applicants, based on the scores on the NMAT, shall be determined every-
year by the Board of Medical 11 Education after consultation with the Association of Philippine Medical
Colleges. (Emphasis supplied)

infringes the requirements of equal protection. They assert, in other words, that students seeking admission during a
given school year, e.g., 1987-1988, when subjected to a different cutoff score than that established for an, e.g.,
earlier school year, are discriminated against and that this renders the MECS Order "arbitrary and capricious." The
force of this argument is more apparent than real. Different cutoff scores for different school years may be dictated
by differing conditions obtaining during those years. Thus, the appropriate cutoff score for a given year may be a
function of such factors as the number of students who have reached the cutoff score established the preceding
year; the number of places available in medical schools during the current year; the average score attained during
the current year; the level of difficulty of the test given during the current year, and so forth. To establish a
permanent and immutable cutoff score regardless of changes in circumstances from year to year, may wen result in
an unreasonable rigidity. The above language in MECS Order No. 52, far from being arbitrary or capricious, leaves
the Board of Medical Education with the measure of flexibility needed to meet circumstances as they change.

We conclude that prescribing the NMAT and requiring certain minimum scores therein as a condition for admission
to medical schools in the Philippines, do not constitute an unconstitutional imposition.

WHEREFORE, the Petition for certiorari is DISMISSED and the Order of the respondent trial court denying the
petition for a writ of preliminary injunction is AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 115844 August 15, 1997

Page 66 of 152
CESAR G. VIOLA, Chairman, Brgy. 167, Zone 15, District II, Manila, petitioner,
vs.
HON. RAFAEL M. ALUNAN III, Secretary DILG, ALEX L. DAVID, President/Secretary General, National Liga
ng mga Barangay, LEONARDO L. ANGAT, President, City of Manila, Liga ng mga Barangay, respondents.

MENDOZA, J.:

This is a petition for prohibition challenging the validity of Art. III, §§ 1-2 of the Revised Implementing Rules and
Guidelines for the General Elections of the Liga ng mga Barangay Officers so far as they provide for the election of
first, second and third vice presidents and for auditors for the National Liga ng mga Barangay and its chapters. The
provisions in question read:

§1. Local Liga Chapters. The Municipal, City, Metropolitan and Provincial Chapters shall directly
elect the following officers and directors to constitute their respective Board of Directors, namely:

1.1 President

1.2 Executive Vice-President

1.3 First Vice-President

1.4 Second Vice-President

1.5 Third Vice-President

1.6 Auditor

1.7 Five (5) Directors

§2. National Liga. The National Liga shall directly elect the following officers and directors to
constitute the National Liga Board of Directors namely:

2.1 President

2.2 Executive Vice-President

2.3 First Vice-President

2.4 Second Vice-President

2.5 Third Vice-President

2.6 Secretary General

2.7 Auditor

2.8 Five (5) Directors

Petitioner Cesar G. Viola brought this action as barangay chairman of Brgy. 167, Zone 15, District II, Manila against
then Secretary of Interior and Local Government Rafael M. Alunan III, Alex L. David, president/secretary general of
the National Liga ng mga Barangay, and Leonardo L. Angat, president of the City of Manila Liga ng mga Barangay,
to restrain them from carrying out the elections for the questioned positions on July 3, 1994.

Petitioner's contention is that the positions in question are in excess of those provided in the Local Government
Code (R.A. No. 7160), §493 of which mentions as elective positions only those of president, vice president, and five
members of the board of directors in each chapter at the municipal, city, provincial, metropolitan political subdivision,
and national levels. Petitioner argues that, in providing for the positions of first, second and third vice presidents and
auditor for each chapter, §§1-2 of the Implementing Rules expand the number of positions authorized in §493 of the
Local Government Code in violation of the principle that implementing rules and regulations cannot add or detract
from the provisions of the law they are designed to implement.

Although the elections are now over, the issues raised in this case are likely to arise again in future elections of
officers of the Liga ng mga Barangay. For one thing, doubt may be cast on the validity of the acts of those elected.
For another, this comes within the rule that courts will decide a question which is otherwise moot and academic if it
is "capable of repetition, yet evading review."1
Page 67 of 152
We will therefore proceed to the merits of this case.

Petitioner's contention that the additional positions in question have been created without authority of law is
untenable. To begin with, the creation of these positions was actually made in the Constitution and By-laws of the
Liga ng Mga Barangay, which was adopted by the First Barangay National Assembly on January 11, 1994. This
Constitution and By-laws provide in pertinent parts:

ARTICLE VI

OFFICERS AND DIRECTORS

Sec. 1. Organization of Board of Directors of Local Chapters. — The chapters shall directly elect
their respective officers, namely, a president; executive vice president; first, second, and third vice
presidents; auditor; and five (5) members to constitute the Board of Directors of their respective
chapter. Thereafter, the Board shall appoint a secretary, treasurer, and public relations officer from
among the five (5) members, with the rest serving as Directors of Board. The Board may create such
other positions as it may deem necessary for the management of the chapter. Pending elections of
the president of the municipal, city, provincial and metropolitan chapters of the Liga, the incumbent
presidents of the ABCs of the municipality, city province and Metropolitan Manila shall continue to
act as presidents of the corresponding Liga chapters, subject to the provisions of the Local
Government Code of 1991.

Sec. 2. Organization of Board of Directors of the National Liga. — The National Liga shall be
composed of the presidents of the provincial Liga chapters, highly urbanized and independent
component city chapters, and the metropolitan chapter who shall directly elect their respective
officers, namely, a president, executive vice president; first, second, and third vice president, auditor,
secretary general; and five (5) members to constitute the Board of Directors of the National Liga.
Thereafter, the Board shall appoint a treasurer, secretary and public relations officers from among
the five (5) members with the rest serving as directors of the Board. The Board may create such
other positions as it may deem necessary for the management of the National Liga. Pending election
of Secretary-General, the incumbent president of the Pambansang Katipunan ng mga Barangay
(PKB) shall act as the Secretary-General. The incumbent members of the Board of the PKB, headed
by the Secretary-General who continue to be presidents of the respective chapters of the Liga to
which they belong, shall constitute a committee to exercise the powers and duties of the National
Liga and with the primordial responsibility of drafting a Constitution and By-Laws needed for the
organization of the Liga as a whole pursuant to the provisions of the Local Government Code of
1991.

The post of executive vice president is in reality that of the vice president in §493 of the LGC, so that the only
additional positions created for each chapter in the Constitution and By-laws are those of first, second and third vice
presidents and auditor. Contrary to petitioner's contention, the creation of the additional positions is authorized by
the LGC which provides as follows:

§493. Organization. The liga at the municipal, city, provincial, Metropolitan political subdivision, and
national levels directly elect a president, a vice-president, and five (5) members of the board of
directors. The board shall appoint its secretary and treasurer and create such other positions as it
may deem necessary for the management of the chapter. A secretary-general shall be elected form
among the members of the national liga and shall be charged with the overall operation of the liga on
the national level. The board shall coordinate the activities of the chapters of the liga. (emphasis
added)

This provision in fact requires — and not merely authorizes the board of directors to "create such other positions as
it may deem necessary for the management of the chapter" and belies petitioner's claim that said provision (§493)
limits the officers of a chapter to the president, vice president, five members of the board of directors, secretary, and
treasurer. That Congress can delegate the power to create positions such as these has been settled by our
decisions upholding the validity of reorganization statutes authorizing the President of the Philippines to create,
abolish or merge officers in the executive department.2 The question is whether, in making a delegation of this
power to the board of directors of each chapter of the Liga ng Mga Barangay, Congress provided a sufficient
standard so that, in the phrase of Justice Cardozo, administrative discretion may be "canalized within proper banks
that keep it from overflowing."3

Statutory provisions authorizing the President of the Philippines to make reforms and changes in government owned
or controlled corporations for the purpose of promoting "simplicity, economy and efficiency"4 in their operations and
empowering the Secretary of Education to prescribe minimum standards of "adequate and efficient instruction" 5 in
private schools and colleges have been found to be sufficient for the purpose of valid delegation. Judged by these
cases, we hold that §493 of the Local Government Code, in directing the board of directors of the liga to "create
such other positions as may be deemed necessary for the management of the chapter[s]," embodies a fairly
intelligible standard. There is no undue delegation of power by Congress.

Page 68 of 152
Justice Davide contends in dissent, however, that "only the Board of Directors — and not any other body — is
vested with the power to create other positions as may be necessary for the management of the chapter" and that,
in any case, there is no showing that the Barangay National Assembly was authorized to draft the Constitution and
By-laws because he is unable to find any creating it. The Barangay National Assembly is actually the Pambansang
Katipunan ng mga Barangay (PKB) referred to in Art. 210(f)(2)(3) of the Rules and Regulations Implementing the
Local Government Code of 1991, which Justice Davide's dissent cites. It will be helpful to quote these provisions:

(2) A secretary-general shall be elected from among the members of the national liga who shall be
responsible for the overall operation of the liga. Pending election of a secretary-general under this
rule, the incumbent president of the pambansang katipunan ng mga barangay shall act as the
secretary-general. The incumbent members of the board of the pambansang katipunan ng mga
barangay, headed by the secretary-general, who continue to be presidents of the respective
chapters of the liga to which they belong, shall constitute a committee to exercise the powers and
duties of the national liga and draft or amend the constitution and by-laws of the national liga to
conform to the provisions of this Rule.

(3) The board of directors shall coordinate the activities of the various chapters of the liga.

(Emphasis added)

Pursuant to these provisions, pending the organization of the Liga ng mga Barangay, the board of directors of the
PKB was constituted into a committee, headed by the PKB president, who acted as secretary general, with a two-
fold mandate: "[I] exercise the powers and duties of the national liga and [2] draft or amend the constitution and by-
laws of the national liga to conform to the provisions of this Rule." The board of directors of the PKB, functioning in
place of the board of directors of the National Liga ng mga Barangay, exercised one of these powers of the National
Liga board, namely, to create additional positions which it deemed necessary for the management of a chapter.
There is therefore no basis for the claim that because the power to create additional positions in the Liga on its
chapters is vested only in the board of directors the exercise of this power by the Barangay National Assembly is
unauthorized and illegal and positions created are void. The Barangay National Assembly was actually the
Pambansang Katipunan ng mga Barangay or PKB. Pending the organization of the Liga ng mga Barangay, it served
as the Liga.

But it is contended in the dissent that "Section 493 of the LGC . . . vests the power to create additional positions in
the Board of Directors of the chapter." The implication seems to be that the board of the directors at the national
level did not have that power. It is necessary to consider the organizational structure of the Liga ng mga Barangay
as provided in the LGC, as follows:

§492. Representation, Chapters, National Liga. — Every barangay shall be represented in said liga
by the punong barangay, or in his absence or incapacity, by a sangguniang member duly elected for
the purpose among its members, who shall attend all meetings or deliberations called by the
different chapters of the liga.

The liga shall have chapters at the municipal, city, provincial and metropolitan political subdivision
levels.

The municipal and city chapters of the liga shall be composed of the barangay representatives of
municipal and city barangays, respectively. The duly elected presidents of component municipal and
city chapters shall constitute the provincial chapter or the metropolitan political subdivision chapter.
The duly elected presidents of highly-urbanized cities, provincial chapters, the Metropolitan Manila
chapter and metropolitan political subdivision chapters shall constitute the National Liga ng mga
Barangay.

§493. Organization. — The liga at the municipal, city, provincial, metropolitan political subdivision,
and national levels directly elect a president, a vice-president, and five (5) members of the board of
directors. The board shall appoint its secretary and treasurer and create such other positions as it
may deem necessary for the management of the chapter. A secretary-general shall be elected from
among the members of the national liga and shall be charged with the overall operation of the liga on
the national level. The board shall coordinate the activities of the chapters of the liga.

(Emphasis added)

While the board of directors of a local chapter can create additional positions to provide for the needs of the chapter,
the board of directors of the National Liga must be deemed to have the power to create additional positions not only
for its management but also for that of all the chapters at the municipal, city, provincial and metropolitan political
subdivision levels. Otherwise the National Liga would be no different from the local chapters. There would then be
only so many local chapters without a national one, when what is contemplated in the above-quoted provisions of
the LGC is that there should be one Liga ng mga Barangay with local chapters at all levels of local government
units. The dissent, by denying to the board of directors at the National Liga the power to create additional positions
in the local chapters, would reduce such board to a board of a local chapter. The fact is that §493 grants the power
Page 69 of 152
to create positions not only to the boards of the local chapters but to the board of the Liga at the national level as
well.

Indeed what was done in the Constitution and By-laws of their liga was to create additional positions in each
chapters, whether national or local, without however precluding the boards of directors of the chapters as well as
that of the national liga from creating other positions for their peculiar needs. The creation by the board of the
National Liga of the positions of first, second and third vice presidents, auditors and public relations officers was
intended to provide uniform officers for the various chapters in line with the mandate in Art. 210(g)(2) of the Rules
and Regulations Implementing the Local Government Code of 1991 to the Barangay National Assembly to
"formulate uniform constitution and by-laws applicable to the national liga and all local chapters." The various
chapters could have different minor officers depending on their local needs, but they must have the same major
elective officers, meaning to say, the additional vice-presidents and auditors.

The dissent further argues that, following the rule of ejusdem generis, what may be created as additional positions
can only be appointive ones because the positions of secretary and treasurer are appointive positions. The rule
might apply if what is involved is the appointment of other officers. But what we are dealing with in this case is
the creation of additional positions. Section 493 actually gives the board the power to "[1] appoint its secretary and
treasurer and [2] create such other positions as it may deem necessary for the management of the chapter." The
additional positions to be created need not therefore be appointive positions.

Nor is it correct to say that §493, in providing that additional positions to be created must be those which are
"deemed necessary for the management of the chapter," contemplates only appointive positions. Management
positions are not necessarily limited to appointive positions. Elective officers, such as the president and vice-
president, can be expected to be involved in the general administration or management of the chapter. Hence, the
creation of other elective positions which may be deemed necessary for the management of the chapter is within the
purview of §493.

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

SO ORDERED.

G.R. No. 168056 September 1, 2005

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA and ED VINCENT S.
ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE SECRETARY OF THE
DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE COMMISSIONER OF INTERNAL
REVENUE GUILLERMO PARAYNO, JR., Respondent.

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

G.R. No. 168207

AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO M. LACSON,

ALFREDO S. LIM, JAMBY A.S. MADRIGAL, AND SERGIO R. OSMEÑA III, Petitioners,
vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA, SECRETARY OF FINANCE,
GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE, Respondent.

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

G.R. No. 168461

ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President, ROSARIO ANTONIO;
PETRON DEALERS’ ASSOCIATION represented by its President, RUTH E. BARBIBI; ASSOCIATION OF CALTEX
DEALERS’ OF THE PHILIPPINES represented by its President, MERCEDITAS A. GARCIA; ROSARIO ANTONIO
doing business under the name and style of "ANB NORTH SHELL SERVICE STATION"; LOURDES MARTINEZ
doing business under the name and style of "SHELL GATE – N. DOMINGO"; BETHZAIDA TAN doing business
under the name and style of "ADVANCE SHELL STATION"; REYNALDO P. MONTOYA doing business under the
name and style of "NEW LAMUAN SHELL SERVICE STATION"; EFREN SOTTO doing business under the name
Page 70 of 152
and style of "RED FIELD SHELL SERVICE STATION"; DONICA CORPORATION represented by its President,
DESI TOMACRUZ; RUTH E. MARBIBI doing business under the name and style of "R&R PETRON STATION";
PETER M. UNGSON doing business under the name and style of "CLASSIC STAR GASOLINE SERVICE
STATION"; MARIAN SHEILA A. LEE doing business under the name and style of "NTE GASOLINE & SERVICE
STATION"; JULIAN CESAR P. POSADAS doing business under the name and style of "STARCARGA
ENTERPRISES"; ADORACION MAÑEBO doing business under the name and style of "CMA MOTORISTS
CENTER"; SUSAN M. ENTRATA doing business under the name and style of "LEONA’S GASOLINE STATION and
SERVICE CENTER"; CARMELITA BALDONADO doing business under the name and style of "FIRST CHOICE
SERVICE CENTER"; MERCEDITAS A. GARCIA doing business under the name and style of "LORPED SERVICE
CENTER"; RHEAMAR A. RAMOS doing business under the name and style of "RJRAM PTT GAS STATION"; MA.
ISABEL VIOLAGO doing business under the name and style of "VIOLAGO-PTT SERVICE CENTER"; MOTORISTS’
HEART CORPORATION represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA;
MOTORISTS’ HARVARD CORPORATION represented by its Vice-President for Operations, JOSELITO F.
FLORDELIZA; MOTORISTS’ HERITAGE CORPORATION represented by its Vice-President for Operations,
JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL CORPORATION represented by its Vice-President for
Operations, JOSELITO F. FLORDELIZA; ROMEO MANUEL doing business under the name and style of
"ROMMAN GASOLINE STATION"; ANTHONY ALBERT CRUZ III doing business under the name and style of
"TRUE SERVICE STATION", Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of the Department of Finance and GUILLERMO L.
PARAYNO, JR., in his capacity as Commissioner of Internal Revenue, Respondent.

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

G.R. No. 168463

FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA, RODOLFO G.

PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C. AGARAO, JR. JUAN
EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO G. NOEL, MUJIV S. HATAMAN, RENATO
B. MAGTUBO, JOSEPH A. SANTIAGO, TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q.
AGBAYANI and TEODORO A. CASIÑO, Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of Finance, GUILLERMO L. PARAYNO, JR., in his capacity
as Commissioner of Internal Revenue, and EDUARDO R. ERMITA, in his capacity as Executive
Secretary,Respondent.

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

G.R. No. 168730

BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. Petitioner,

vs.
HON. EDUARDO R. ERMITA, in his capacity as the Executive Secretary; HON. MARGARITO TEVES, in his
capacity as Secretary of Finance; HON. JOSE MARIO BUNAG, in his capacity as the OIC Commissioner of the
Bureau of Internal Revenue; and HON. ALEXANDER AREVALO, in his capacity as the OIC Commissioner of the
Bureau of Customs, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

The expenses of government, having for their object the interest of all, should be borne by everyone, and the more
man enjoys the advantages of society, the more he ought to hold himself honored in contributing to those expenses.

-Anne Robert Jacques Turgot (1727-1781)

French statesman and economist

Mounting budget deficit, revenue generation, inadequate fiscal allocation for education, increased emoluments for
health workers, and wider coverage for full value-added tax benefits … these are the reasons why Republic Act No.
9337 (R.A. No. 9337)1 was enacted. Reasons, the wisdom of which, the Court even with its extensive constitutional
power of review, cannot probe. The petitioners in these cases, however, question not only the wisdom of the law,
but also perceived constitutional infirmities in its passage.

Every law enjoys in its favor the presumption of constitutionality. Their arguments notwithstanding, petitioners failed
to justify their call for the invalidity of the law. Hence, R.A. No. 9337 is not unconstitutional.

LEGISLATIVE HISTORY

Page 71 of 152
R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill Nos. 3555 and 3705, and Senate Bill
No. 1950.

House Bill No. 35552 was introduced on first reading on January 7, 2005. The House Committee on Ways and
Means approved the bill, in substitution of House Bill No. 1468, which Representative (Rep.) Eric D. Singson
introduced on August 8, 2004. The President certified the bill on January 7, 2005 for immediate enactment. On
January 27, 2005, the House of Representatives approved the bill on second and third reading.

House Bill No. 37053 on the other hand, substituted House Bill No. 3105 introduced by Rep. Salacnib F. Baterina,
and House Bill No. 3381 introduced by Rep. Jacinto V. Paras. Its "mother bill" is House Bill No. 3555. The House
Committee on Ways and Means approved the bill on February 2, 2005. The President also certified it as urgent on
February 8, 2005. The House of Representatives approved the bill on second and third reading on February 28,
2005.

Meanwhile, the Senate Committee on Ways and Means approved Senate Bill No. 19504 on March 7, 2005, "in
substitution of Senate Bill Nos. 1337, 1838 and 1873, taking into consideration House Bill Nos. 3555 and 3705."
Senator Ralph G. Recto sponsored Senate Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were both
sponsored by Sens. Franklin M. Drilon, Juan M. Flavier and Francis N. Pangilinan. The President certified the bill on
March 11, 2005, and was approved by the Senate on second and third reading on April 13, 2005.

On the same date, April 13, 2005, the Senate agreed to the request of the House of Representatives for a
committee conference on the disagreeing provisions of the proposed bills.

Before long, the Conference Committee on the Disagreeing Provisions of House Bill No. 3555, House Bill No. 3705,
and Senate Bill No. 1950, "after having met and discussed in full free and conference," recommended the approval
of its report, which the Senate did on May 10, 2005, and with the House of Representatives agreeing thereto the
next day, May 11, 2005.

On May 23, 2005, the enrolled copy of the consolidated House and Senate version was transmitted to the President,
who signed the same into law on May 24, 2005. Thus, came R.A. No. 9337.

July 1, 2005 is the effectivity date of R.A. No. 9337.5 When said date came, the Court issued a temporary restraining
order, effective immediately and continuing until further orders, enjoining respondents from enforcing and
implementing the law.

Oral arguments were held on July 14, 2005. Significantly, during the hearing, the Court speaking through Mr. Justice
Artemio V. Panganiban, voiced the rationale for its issuance of the temporary restraining order on July 1, 2005, to
wit:

J. PANGANIBAN : . . . But before I go into the details of your presentation, let me just tell you a little background.
You know when the law took effect on July 1, 2005, the Court issued a TRO at about 5 o’clock in the afternoon. But
before that, there was a lot of complaints aired on television and on radio. Some people in a gas station were
complaining that the gas prices went up by 10%. Some people were complaining that their electric bill will go up by
10%. Other times people riding in domestic air carrier were complaining that the prices that they’ll have to pay would
have to go up by 10%. While all that was being aired, per your presentation and per our own understanding of the
law, that’s not true. It’s not true that the e-vat law necessarily increased prices by 10% uniformly isn’t it?

ATTY. BANIQUED : No, Your Honor.

J. PANGANIBAN : It is not?

ATTY. BANIQUED : It’s not, because, Your Honor, there is an Executive Order that granted the Petroleum
companies some subsidy . . . interrupted

J. PANGANIBAN : That’s correct . . .

ATTY. BANIQUED : . . . and therefore that was meant to temper the impact . . . interrupted

J. PANGANIBAN : . . . mitigating measures . . .

ATTY. BANIQUED : Yes, Your Honor.

J. PANGANIBAN : As a matter of fact a part of the mitigating measures would be the elimination of the Excise Tax
and the import duties. That is why, it is not correct to say that the VAT as to petroleum dealers increased prices by
10%.

ATTY. BANIQUED : Yes, Your Honor.

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J. PANGANIBAN : And therefore, there is no justification for increasing the retail price by 10% to cover the E-Vat
tax. If you consider the excise tax and the import duties, the Net Tax would probably be in the neighborhood of 7%?
We are not going into exact figures I am just trying to deliver a point that different industries, different products,
different services are hit differently. So it’s not correct to say that all prices must go up by 10%.

ATTY. BANIQUED : You’re right, Your Honor.

J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr. Counsel, are at present imposed a Sales
Tax of 3%. When this E-Vat law took effect the Sales Tax was also removed as a mitigating measure. So, therefore,
there is no justification to increase the fares by 10% at best 7%, correct?

ATTY. BANIQUED : I guess so, Your Honor, yes.

J. PANGANIBAN : There are other products that the people were complaining on that first day, were being
increased arbitrarily by 10%. And that’s one reason among many others this Court had to issue TRO because of the
confusion in the implementation. That’s why we added as an issue in this case, even if it’s tangentially taken up by
the pleadings of the parties, the confusion in the implementation of the E-vat. Our people were subjected to the
mercy of that confusion of an across the board increase of 10%, which you yourself now admit and I think even the
Government will admit is incorrect. In some cases, it should be 3% only, in some cases it should be 6% depending
on these mitigating measures and the location and situation of each product, of each service, of each company, isn’t
it?

ATTY. BANIQUED : Yes, Your Honor.

J. PANGANIBAN : Alright. So that’s one reason why we had to issue a TRO pending the clarification of all these and
we wish the government will take time to clarify all these by means of a more detailed implementing rules, in case
the law is upheld by this Court. . . .6

The Court also directed the parties to file their respective Memoranda.

G.R. No. 168056

Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a petition for prohibition on
May 27, 2005. They question the constitutionality of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106,
107 and 108, respectively, of the National Internal Revenue Code (NIRC). Section 4 imposes a 10% VAT on sale of
goods and properties, Section 5 imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT
on sale of services and use or lease of properties. These questioned provisions contain a
uniform proviso authorizing the President, upon recommendation of the Secretary of Finance, to raise the VAT rate
to 12%, effective January 1, 2006, after any of the following conditions have been satisfied, to wit:

. . . That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise
the rate of value-added tax to twelve percent (12%), after any of the following conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two
and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1
½%).

Petitioners argue that the law is unconstitutional, as it constitutes abandonment by Congress of its exclusive
authority to fix the rate of taxes under Article VI, Section 28(2) of the 1987 Philippine Constitution.

G.R. No. 168207

On June 9, 2005, Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition for certiorari likewise assailing the
constitutionality of Sections 4, 5 and 6 of R.A. No. 9337.

Aside from questioning the so-called stand-by authority of the President to increase the VAT rate to 12%, on the
ground that it amounts to an undue delegation of legislative power, petitioners also contend that the increase in the
VAT rate to 12% contingent on any of the two conditions being satisfied violates the due process clause embodied
in Article III, Section 1 of the Constitution, as it imposes an unfair and additional tax burden on the people, in that:
(1) the 12% increase is ambiguous because it does not state if the rate would be returned to the original 10% if the
conditions are no longer satisfied; (2) the rate is unfair and unreasonable, as the people are unsure of the applicable
VAT rate from year to year; and (3) the increase in the VAT rate, which is supposed to be an incentive to the
President to raise the VAT collection to at least 2 4/5 of the GDP of the previous year, should only be based on fiscal
adequacy.

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Petitioners further claim that the inclusion of a stand-by authority granted to the President by the Bicameral
Conference Committee is a violation of the "no-amendment rule" upon last reading of a bill laid down in Article VI,
Section 26(2) of the Constitution.

G.R. No. 168461

Thereafter, a petition for prohibition was filed on June 29, 2005, by the Association of Pilipinas Shell Dealers, Inc., et
al., assailing the following provisions of R.A. No. 9337:

1) Section 8, amending Section 110 (A)(2) of the NIRC, requiring that the input tax on depreciable goods shall be
amortized over a 60-month period, if the acquisition, excluding the VAT components, exceeds One Million Pesos
(₱1, 000,000.00);

2) Section 8, amending Section 110 (B) of the NIRC, imposing a 70% limit on the amount of input tax to be credited
against the output tax; and

3) Section 12, amending Section 114 (c) of the NIRC, authorizing the Government or any of its political subdivisions,
instrumentalities or agencies, including GOCCs, to deduct a 5% final withholding tax on gross payments of goods
and services, which are subject to 10% VAT under Sections 106 (sale of goods and properties) and 108 (sale of
services and use or lease of properties) of the NIRC.

Petitioners contend that these provisions are unconstitutional for being arbitrary, oppressive, excessive, and
confiscatory.

Petitioners’ argument is premised on the constitutional right of non-deprivation of life, liberty or property without due
process of law under Article III, Section 1 of the Constitution. According to petitioners, the contested sections
impose limitations on the amount of input tax that may be claimed. Petitioners also argue that the input tax partakes
the nature of a property that may not be confiscated, appropriated, or limited without due process of law. Petitioners
further contend that like any other property or property right, the input tax credit may be transferred or disposed of,
and that by limiting the same, the government gets to tax a profit or value-added even if there is no profit or value-
added.

Petitioners also believe that these provisions violate the constitutional guarantee of equal protection of the law under
Article III, Section 1 of the Constitution, as the limitation on the creditable input tax if: (1) the entity has a high ratio of
input tax; or (2) invests in capital equipment; or (3) has several transactions with the government, is not based on
real and substantial differences to meet a valid classification.

Lastly, petitioners contend that the 70% limit is anything but progressive, violative of Article VI, Section 28(1) of the
Constitution, and that it is the smaller businesses with higher input tax to output tax ratio that will suffer the
consequences thereof for it wipes out whatever meager margins the petitioners make.

G.R. No. 168463

Several members of the House of Representatives led by Rep. Francis Joseph G. Escudero filed this petition
for certiorari on June 30, 2005. They question the constitutionality of R.A. No. 9337 on the following grounds:

1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation of legislative power, in violation of Article VI,
Section 28(2) of the Constitution;

2) The Bicameral Conference Committee acted without jurisdiction in deleting the no pass on provisions present in
Senate Bill No. 1950 and House Bill No. 3705; and

3) Insertion by the Bicameral Conference Committee of Sections 27, 28, 34, 116, 117, 119, 121, 125,7 148, 151,
236, 237 and 288, which were present in Senate Bill No. 1950, violates Article VI, Section 24(1) of the Constitution,
which provides that all appropriation, revenue or tariff bills shall originate exclusively in the House of
Representatives

G.R. No. 168730

On the eleventh hour, Governor Enrique T. Garcia filed a petition for certiorari and prohibition on July 20, 2005,
alleging unconstitutionality of the law on the ground that the limitation on the creditable input tax in effect allows
VAT-registered establishments to retain a portion of the taxes they collect, thus violating the principle that tax
collection and revenue should be solely allocated for public purposes and expenditures. Petitioner Garcia further
claims that allowing these establishments to pass on the tax to the consumers is inequitable, in violation of Article
VI, Section 28(1) of the Constitution.

RESPONDENTS’ COMMENT

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 The Office of the Solicitor General (OSG) filed a Comment in behalf of respondents. Preliminarily, respondents
contend that R.A. No. 9337 enjoys the presumption of constitutionality and petitioners failed to cast doubt on its
validity.

Relying on the case of Tolentino vs. Secretary of Finance, 235 SCRA

630 (1994), respondents argue that the procedural issues raised by petitioners, i.e., legality of the bicameral
proceedings, exclusive origination of revenue measures and the power of the Senate concomitant thereto, have
already been settled. With regard to the issue of undue delegation of legislative power to the President, respondents
contend that the law is complete and leaves no discretion to the President but to increase the rate to 12% once any
of the two conditions provided therein arise.

Respondents also refute petitioners’ argument that the increase to 12%, as well as the 70% limitation on the
creditable input tax, the 60-month amortization on the purchase or importation of capital goods exceeding
₱1,000,000.00, and the 5% final withholding tax by government agencies, is arbitrary, oppressive, and confiscatory,
and that it violates the constitutional principle on progressive taxation, among others.

Finally, respondents manifest that R.A. No. 9337 is the anchor of the government’s fiscal reform agenda. A reform in
the value-added system of taxation is the core revenue measure that will tilt the balance towards a sustainable
macroeconomic environment necessary for economic growth.

ISSUES

The Court defined the issues, as follows:

PROCEDURAL ISSUE

Whether R.A. No. 9337 violates the following provisions of the Constitution:

a. Article VI, Section 24, and

b. Article VI, Section 26(2)

SUBSTANTIVE ISSUES

1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate the
following provisions of the Constitution:

a. Article VI, Section 28(1), and

b. Article VI, Section 28(2)

2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12 of
R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:

a. Article VI, Section 28(1), and

b. Article III, Section 1

RULING OF THE COURT

As a prelude, the Court deems it apt to restate the general principles and concepts of value-added tax (VAT), as the
confusion and inevitably, litigation, breeds from a fallacious notion of its nature.

The VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange or lease of goods or
properties and services.8 Being an indirect tax on expenditure, the seller of goods or services may pass on the
amount of tax paid to the buyer,9 with the seller acting merely as a tax collector.10 The burden of VAT is intended to
fall on the immediate buyers and ultimately, the end-consumers.

In contrast, a direct tax is a tax for which a taxpayer is directly liable on the transaction or business it engages in,
without transferring the burden to someone else.11 Examples are individual and corporate income taxes, transfer
taxes, and residence taxes.12

In the Philippines, the value-added system of sales taxation has long been in existence, albeit in a different mode.
Prior to 1978, the system was a single-stage tax computed under the "cost deduction method" and was payable only
by the original sellers. The single-stage system was subsequently modified, and a mixture of the "cost deduction
method" and "tax credit method" was used to determine the value-added tax payable.13 Under the "tax credit
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method," an entity can credit against or subtract from the VAT charged on its sales or outputs the VAT paid on its
purchases, inputs and imports.14

It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273, that the VAT system was
rationalized by imposing a multi-stage tax rate of 0% or 10% on all sales using the "tax credit method."15

E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT Law,16 R.A. No. 8241 or the Improved VAT
Law,17 R.A. No. 8424 or the Tax Reform Act of 1997,18 and finally, the presently beleaguered R.A. No. 9337, also
referred to by respondents as the VAT Reform Act.

The Court will now discuss the issues in logical sequence.

PROCEDURAL ISSUE

I.

Whether R.A. No. 9337 violates the following provisions of the Constitution:

a. Article VI, Section 24, and

b. Article VI, Section 26(2)

A. The Bicameral Conference Committee

Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference Committee exceeded its
authority by:

1) Inserting the stand-by authority in favor of the President in Sections 4, 5, and 6 of R.A. No. 9337;

2) Deleting entirely the no pass-on provisions found in both the House and Senate bills;

3) Inserting the provision imposing a 70% limit on the amount of input tax to be credited against the output tax; and

4) Including the amendments introduced only by Senate Bill No. 1950 regarding other kinds of taxes in addition to
the value-added tax.

Petitioners now beseech the Court to define the powers of the Bicameral Conference Committee.

It should be borne in mind that the power of internal regulation and discipline are intrinsic in any legislative body for,
as unerringly elucidated by Justice Story, "[i]f the power did not exist, it would be utterly impracticable to
transact the business of the nation, either at all, or at least with decency, deliberation, and order."19 Thus,
Article VI, Section 16 (3) of the Constitution provides that "each House may determine the rules of its proceedings."
Pursuant to this inherent constitutional power to promulgate and implement its own rules of procedure, the
respective rules of each house of Congress provided for the creation of a Bicameral Conference Committee.

Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives provides as follows:

Sec. 88. Conference Committee. – In the event that the House does not agree with the Senate on the amendment
to any bill or joint resolution, the differences may be settled by the conference committees of both chambers.

In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and support the
House Bill. If the differences with the Senate are so substantial that they materially impair the House Bill, the panel
shall report such fact to the House for the latter’s appropriate action.

Sec. 89. Conference Committee Reports. – . . . Each report shall contain a detailed, sufficiently explicit statement of
the changes in or amendments to the subject measure.

...

The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the voting
thereon. The House shall vote on the Conference Committee Report in the same manner and procedure as it votes
on a bill on third and final reading.

Rule XII, Section 35 of the Rules of the Senate states:

Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any bill
or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet
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within ten (10) days after their composition. The President shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.

Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in, or
amendments to the subject measure, and shall be signed by a majority of the members of each House panel, voting
separately.

A comparative presentation of the conflicting House and Senate provisions and a reconciled version thereof with the
explanatory statement of the conference committee shall be attached to the report.

...

The creation of such conference committee was apparently in response to a problem, not addressed by any
constitutional provision, where the two houses of Congress find themselves in disagreement over changes or
amendments introduced by the other house in a legislative bill. Given that one of the most basic powers of the
legislative branch is to formulate and implement its own rules of proceedings and to discipline its members, may the
Court then delve into the details of how Congress complies with its internal rules or how it conducts its business of
passing legislation? Note that in the present petitions, the issue is not whether provisions of the rules of both houses
creating the bicameral conference committee are unconstitutional, but whether the bicameral conference
committee has strictly complied with the rules of both houses, thereby remaining within the jurisdiction
conferred upon it by Congress.

In the recent case of Fariñas vs. The Executive Secretary,20 the Court En Banc, unanimously reiterated and
emphasized its adherence to the "enrolled bill doctrine," thus, declining therein petitioners’ plea for the Court to go
behind the enrolled copy of the bill. Assailed in said case was Congress’s creation of two sets of bicameral
conference committees, the lack of records of said committees’ proceedings, the alleged violation of said
committees of the rules of both houses, and the disappearance or deletion of one of the provisions in the
compromise bill submitted by the bicameral conference committee. It was argued that such irregularities in the
passage of the law nullified R.A. No. 9006, or the Fair Election Act.

Striking down such argument, the Court held thus:

Under the "enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate President and the
certification of the Secretaries of both Houses of Congress that it was passed are conclusive of its due enactment. A
review of cases reveals the Court’s consistent adherence to the rule. The Court finds no reason to deviate from
the salutary rule in this case where the irregularities alleged by the petitioners mostly involved the internal
rules of Congress, e.g., creation of the 2nd or 3rd Bicameral Conference Committee by the House. This Court
is not the proper forum for the enforcement of these internal rules of Congress, whether House or Senate.
Parliamentary rules are merely procedural and with their observance the courts have no concern. Whatever
doubts there may be as to the formal validity of Rep. Act No. 9006 must be resolved in its favor.The Court
reiterates its ruling in Arroyo vs. De Venecia, viz.:

But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to
inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in
the absence of showing that there was a violation of a constitutional provision or the rights of private
individuals. In Osmeña v. Pendatun, it was held: "At any rate, courts have declared that ‘the rules adopted by
deliberative bodies are subject to revocation, modification or waiver at the pleasure of the body adopting them.’ And
it has been said that "Parliamentary rules are merely procedural, and with their observance, the courts have
no concern. They may be waived or disregarded by the legislative body." Consequently, "mere failure to
conform to parliamentary usage will not invalidate the action (taken by a deliberative body) when the
requisite number of members have agreed to a particular measure."21 (Emphasis supplied)

The foregoing declaration is exactly in point with the present cases, where petitioners allege irregularities committed
by the conference committee in introducing changes or deleting provisions in the House and Senate bills. Akin to
the Fariñas case,22 the present petitions also raise an issue regarding the actions taken by the conference
committee on matters regarding Congress’ compliance with its own internal rules. As stated earlier, one of the most
basic and inherent power of the legislature is the power to formulate rules for its proceedings and the discipline of its
members. Congress is the best judge of how it should conduct its own business expeditiously and in the most
orderly manner. It is also the sole

concern of Congress to instill discipline among the members of its conference committee if it believes that said
members violated any of its rules of proceedings. Even the expanded jurisdiction of this Court cannot apply to
questions regarding only the internal operation of Congress, thus, the Court is wont to deny a review of the internal
proceedings of a co-equal branch of government.

Moreover, as far back as 1994 or more than ten years ago, in the case of Tolentino vs. Secretary of Finance,23 the
Court already made the pronouncement that "[i]f a change is desired in the practice [of the Bicameral
Conference Committee] it must be sought in Congress since this question is not covered by any
constitutional provision but is only an internal rule of each house." 24 To date, Congress has not seen it fit to
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make such changes adverted to by the Court. It seems, therefore, that Congress finds the practices of the bicameral
conference committee to be very useful for purposes of prompt and efficient legislative action.

Nevertheless, just to put minds at ease that no blatant irregularities tainted the proceedings of the bicameral
conference committees, the Court deems it necessary to dwell on the issue. The Court observes that there was a
necessity for a conference committee because a comparison of the provisions of House Bill Nos. 3555 and 3705 on
one hand, and Senate Bill No. 1950 on the other, reveals that there were indeed disagreements. As pointed out in
the petitions, said disagreements were as follows:

House Bill No. 3555
With regard to "Stand-By Authority" in favor of President
Provides for 12% VAT on every
sale of goods or properties
(amending Sec. 106 of NIRC);
12% VAT on importation of
goods (amending Sec. 107 of
NIRC); and 12% VAT on sale of
services and use or lease of
properties (amending Sec. 108 of
NIRC)
With regard to the "no pass-on" provision
No similar provision
House Bill No.3705
Provides for 12% VAT in general on
sales of goods or properties and
reduced rates for sale of certain
locally manufactured goods and
petroleum products and raw materials
to be used in the manufacture thereof
(amending Sec. 106 of NIRC); 12%
VAT on importation of goods and
reduced rates for certain imported
products including petroleum
products (amending Sec. 107 of
NIRC); and 12% VAT on sale of
services and use or lease of
properties and a reduced rate for
certain services including power
generation (amending Sec. 108 of
NIRC)
Provides that the VAT imposed on
power generation and on the sale of
petroleum products shall be absorbed
by generation companies or sellers,
respectively, and shall not be passed
on to consumers
Senate Bill No. 1950
Provides for a single rate of 10%
VAT on sale of goods or
properties (amending Sec. 106 of
NIRC), 10% VAT on sale of
services including sale of
electricity by generation
companies, transmission and
distribution companies, and use or
lease of properties (amending
Sec. 108 of NIRC)
Provides that the VAT imposed on
sales of electricity by generation
companies and services of
transmission companies and
distribution companies, as well as
those of franchise grantees of
electric utilities shall not apply to
residential

end-users. VAT shall be absorbed

Provides that the input tax credit
for capital goods on which a VAT
has been paid shall be equally
distributed over 5 years or the
depreciable life of such capital
goods; the input tax credit for
goods and services other than
capital goods shall not exceed
5% of the total amount of such
goods and services; and for
persons engaged in retail trading
of goods, the allowable input tax
credit shall not exceed 11% of
the total amount of goods
purchased.
With regard to amendments to be made to NIRC provisions regarding income and excise
No similar provision
by generation, transmission, and
distribution companies.
With regard to 70% limit on input tax credit
No similar provision Provides that the input tax credit
for capital goods on which a VAT
has been paid shall be equally
distributed over 5 years or the
depreciable life of such capital
goods; the input tax credit for
goods and services other than
capital goods shall not exceed
90% of the output VAT.
taxes
No similar provision Provided for amendments to
several NIRC provisions
regarding corporate income,
percentage, franchise and
excise taxes

The disagreements between the provisions in the House bills and the Senate bill were with regard to (1) what rate of
VAT is to be imposed; (2) whether only the VAT imposed on electricity generation, transmission and distribution
companies should not be passed on to consumers, as proposed in the Senate bill, or both the VAT imposed on
electricity generation, transmission and distribution companies and the VAT imposed on sale of petroleum products
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should not be passed on to consumers, as proposed in the House bill; (3) in what manner input tax credits should be
limited; (4) and whether the NIRC provisions on corporate income taxes, percentage, franchise and excise taxes
should be amended.

There being differences and/or disagreements on the foregoing provisions of the House and Senate bills, the
Bicameral Conference Committee was mandated by the rules of both houses of Congress to act on the same by
settling said differences and/or disagreements. The Bicameral Conference Committee acted on the disagreeing
provisions by making the following changes:

1. With regard to the disagreement on the rate of VAT to be imposed, it would appear from the Conference
Committee Report that the Bicameral Conference Committee tried to bridge the gap in the difference between the
10% VAT rate proposed by the Senate, and the various rates with 12% as the highest VAT rate proposed by the
House, by striking a compromise whereby the present 10% VAT rate would be retained until certain conditions
arise, i.e., the value-added tax collection as a percentage of gross domestic product (GDP) of the previous year
exceeds 2 4/5%, or National Government deficit as a percentage of GDP of the previous year exceeds 1½%, when
the President, upon recommendation of the Secretary of Finance shall raise the rate of VAT to 12% effective
January 1, 2006.

2. With regard to the disagreement on whether only the VAT imposed on electricity generation, transmission and
distribution companies should not be passed on to consumers or whether both the VAT imposed on electricity
generation, transmission and distribution companies and the VAT imposed on sale of petroleum products may be
passed on to consumers, the Bicameral Conference Committee chose to settle such disagreement by altogether
deleting from its Report any no pass-on provision.

3. With regard to the disagreement on whether input tax credits should be limited or not, the Bicameral Conference
Committee decided to adopt the position of the House by putting a limitation on the amount of input tax that may be
credited against the output tax, although it crafted its own language as to the amount of the limitation on input tax
credits and the manner of computing the same by providing thus:

(A) Creditable Input Tax. – . . .

...

Provided, The input tax on goods purchased or imported in a calendar month for use in trade or business for which
deduction for depreciation is allowed under this Code, shall be spread evenly over the month of acquisition and the
fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component
thereof, exceeds one million Pesos (₱1,000,000.00): PROVIDED, however, that if the estimated useful life of the
capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over
such shorter period: . . .

(B) Excess Output or Input Tax. – If at the end of any taxable quarter the output tax exceeds the input tax, the
excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be
carried over to the succeeding quarter or quarters: PROVIDED that the input tax inclusive of input VAT carried over
from the previous quarter that may be credited in every quarter shall not exceed seventy percent (70%) of the output
VAT: PROVIDED, HOWEVER, THAT any input tax attributable to zero-rated sales by a VAT-registered person may
at his option be refunded or credited against other internal revenue taxes, . . .

4. With regard to the amendments to other provisions of the NIRC on corporate income tax, franchise, percentage
and excise taxes, the conference committee decided to include such amendments and basically adopted the
provisions found in Senate Bill No. 1950, with some changes as to the rate of the tax to be imposed.

Under the provisions of both the Rules of the House of Representatives and Senate Rules, the Bicameral
Conference Committee is mandated to settle the differences between the disagreeing provisions in the House bill
and the Senate bill. The term "settle" is synonymous to "reconcile" and "harmonize."25 To reconcile or harmonize
disagreeing provisions, the Bicameral Conference Committee may then (a) adopt the specific provisions of either
the House bill or Senate bill, (b) decide that neither provisions in the House bill or the provisions in the Senate bill
would

be carried into the final form of the bill, and/or (c) try to arrive at a compromise between the disagreeing provisions.

In the present case, the changes introduced by the Bicameral Conference Committee on disagreeing provisions
were meant only to reconcile and harmonize the disagreeing provisions for it did not inject any idea or intent that is
wholly foreign to the subject embraced by the original provisions.

The so-called stand-by authority in favor of the President, whereby the rate of 10% VAT wanted by the Senate is
retained until such time that certain conditions arise when the 12% VAT wanted by the House shall be imposed,
appears to be a compromise to try to bridge the difference in the rate of VAT proposed by the two houses of
Congress. Nevertheless, such compromise is still totally within the subject of what rate of VAT should be imposed
on taxpayers.
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The no pass-on provision was deleted altogether. In the transcripts of the proceedings of the Bicameral Conference
Committee held on May 10, 2005, Sen. Ralph Recto, Chairman of the Senate Panel, explained the reason for
deleting the no pass-on provision in this wise:

. . . the thinking was just to keep the VAT law or the VAT bill simple. And we were thinking that no sector should be
a beneficiary of legislative grace, neither should any sector be discriminated on. The VAT is an indirect tax. It is a
pass on-tax. And let’s keep it plain and simple. Let’s not confuse the bill and put a no pass-on provision. Two-thirds
of the world have a VAT system and in this two-thirds of the globe, I have yet to see a VAT with a no pass-though
provision. So, the thinking of the Senate is basically simple, let’s keep the VAT simple.26 (Emphasis supplied)

Rep. Teodoro Locsin further made the manifestation that the no pass-on provision "never really enjoyed the support
of either House."27

With regard to the amount of input tax to be credited against output tax, the Bicameral Conference Committee came
to a compromise on the percentage rate of the limitation or cap on such input tax credit, but again, the change
introduced by the Bicameral Conference Committee was totally within the intent of both houses to put a cap on input
tax that may be

credited against the output tax. From the inception of the subject revenue bill in the House of Representatives, one
of the major objectives was to "plug a glaring loophole in the tax policy and administration by creating vital
restrictions on the claiming of input VAT tax credits . . ." and "[b]y introducing limitations on the claiming of tax credit,
we are capping a major leakage that has placed our collection efforts at an apparent disadvantage."28

As to the amendments to NIRC provisions on taxes other than the value-added tax proposed in Senate Bill No.
1950, since said provisions were among those referred to it, the conference committee had to act on the same and it
basically adopted the version of the Senate.

Thus, all the changes or modifications made by the Bicameral Conference Committee were germane to subjects of
the provisions referred

to it for reconciliation. Such being the case, the Court does not see any grave abuse of discretion amounting to lack
or excess of jurisdiction committed by the Bicameral Conference Committee. In the earlier cases of Philippine
Judges Association vs. Prado29 and Tolentino vs. Secretary of Finance,30 the Court recognized the long-standing
legislative practice of giving said conference committee ample latitude for compromising differences between the
Senate and the House. Thus, in the Tolentino case, it was held that:

. . . it is within the power of a conference committee to include in its report an entirely new provision that is not found
either in the House bill or in the Senate bill. If the committee can propose an amendment consisting of one or two
provisions, there is no reason why it cannot propose several provisions, collectively considered as an "amendment
in the nature of a substitute," so long as such amendment is germane to the subject of the bills before the
committee. After all, its report was not final but needed the approval of both houses of Congress to become valid as
an act of the legislative department. The charge that in this case the Conference Committee acted as a third
legislative chamber is thus without any basis.31 (Emphasis supplied)

B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the Constitution on the "No-Amendment Rule"

Article VI, Sec. 26 (2) of the Constitution, states:

No bill passed by either House shall become a law unless it has passed three readings on separate days, and
printed copies thereof in its final form have been distributed to its Members three days before its passage, except
when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency.
Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal.

Petitioners’ argument that the practice where a bicameral conference committee is allowed to add or delete
provisions in the House bill and the Senate bill after these had passed three readings is in effect a circumvention of
the "no amendment rule" (Sec. 26 (2), Art. VI of the 1987 Constitution), fails to convince the Court to deviate from its
ruling in the Tolentino case that:

Nor is there any reason for requiring that the Committee’s Report in these cases must have undergone three
readings in each of the two houses. If that be the case, there would be no end to negotiation since each house may
seek modification of the compromise bill. . . .

Art. VI. § 26 (2) must, therefore, be construed as referring only to bills introduced for the first time in either
house of Congress, not to the conference committee report.32 (Emphasis supplied)

The Court reiterates here that the "no-amendment rule" refers only to the procedure to be followed by each
house of Congress with regard to bills initiated in each of said respective houses, before said bill is

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transmitted to the other house for its concurrence or amendment. Verily, to construe said provision in a way as
to proscribe any further changes to a bill after one house has voted on it would lead to absurdity as this would mean
that the other house of Congress would be deprived of its constitutional power to amend or introduce changes to
said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot be taken to mean that the introduction by the Bicameral
Conference Committee of amendments and modifications to disagreeing provisions in bills that have been acted
upon by both houses of Congress is prohibited.

C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the Constitution on Exclusive Origination of Revenue
Bills

Coming to the issue of the validity of the amendments made regarding the NIRC provisions on corporate income
taxes and percentage, excise taxes. Petitioners refer to the following provisions, to wit:

Section 27 Rates of Income Tax on Domestic Corporation

28(A)(1) Tax on Resident Foreign Corporation
28(B)(1) Inter-corporate Dividends
34(B)(1) Inter-corporate Dividends
116 Tax on Persons Exempt from VAT
117 Percentage Tax on domestic carriers and keepers of Garage
119 Tax on franchises
121 Tax on banks and Non-Bank Financial Intermediaries
148 Excise Tax on manufactured oils and other fuels
151 Excise Tax on mineral products
236 Registration requirements
237 Issuance of receipts or sales or commercial invoices
288 Disposition of Incremental Revenue

Petitioners claim that the amendments to these provisions of the NIRC did not at all originate from the House. They
aver that House Bill No. 3555 proposed amendments only regarding Sections 106, 107, 108, 110 and 114 of the
NIRC, while House Bill No. 3705 proposed amendments only to Sections 106, 107,108, 109, 110 and 111 of the
NIRC; thus, the other sections of the NIRC which the Senate amended but which amendments were not found in the
House bills are not intended to be amended by the House of Representatives. Hence, they argue that since the
proposed amendments did not originate from the House, such amendments are a violation of Article VI, Section 24
of the Constitution.

The argument does not hold water.

Article VI, Section 24 of the Constitution reads:

Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application,
and private bills shall originate exclusively in the House of Representatives but the Senate may propose or concur
with amendments.

In the present cases, petitioners admit that it was indeed House Bill Nos. 3555 and 3705 that initiated the move for
amending provisions of the NIRC dealing mainly with the value-added tax. Upon transmittal of said House bills to
the Senate, the Senate came out with Senate Bill No. 1950 proposing amendments not only to NIRC provisions on
the value-added tax but also amendments to NIRC provisions on other kinds of taxes. Is the introduction by the
Senate of provisions not dealing directly with the value- added tax, which is the only kind of tax being amended in
the House bills, still within the purview of the constitutional provision authorizing the Senate to propose or concur
with amendments to a revenue bill that originated from the House?

The foregoing question had been squarely answered in the Tolentino case, wherein the Court held, thus:

. . . To begin with, it is not the law – but the revenue bill – which is required by the Constitution to "originate
exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. . . . At
this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced. To insist
that a revenue statute – and not only the bill which initiated the legislative process culminating in the
enactment of the law – must substantially be the same as the House bill would be to deny the Senate’s
power not only to "concur with amendments" but also to "propose amendments." It would be to violate the
coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate.

…Given, then, the power of the Senate to propose amendments, the Senate can propose its own version
even with respect to bills which are required by the Constitution to originate in the House.

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...

Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff or tax bills, bills authorizing
an increase of the public debt, private bills and bills of local application must come from the House of
Representatives on the theory that, elected as they are from the districts, the members of the House can be
expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the national perspective. Both views are
thereby made to bear on the enactment of such laws.33 (Emphasis supplied)

Since there is no question that the revenue bill exclusively originated in the House of Representatives, the Senate
was acting within its

constitutional power to introduce amendments to the House bill when it included provisions in Senate Bill No. 1950
amending corporate income taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24 of the
Constitution does not contain any prohibition or limitation on the extent of the amendments that may be introduced
by the Senate to the House revenue bill.

Furthermore, the amendments introduced by the Senate to the NIRC provisions that had not been touched in the
House bills are still in furtherance of the intent of the House in initiating the subject revenue bills. The Explanatory
Note of House Bill No. 1468, the very first House bill introduced on the floor, which was later substituted by House
Bill No. 3555, stated:

One of the challenges faced by the present administration is the urgent and daunting task of solving the country’s
serious financial problems. To do this, government expenditures must be strictly monitored and controlled and
revenues must be significantly increased. This may be easier said than done, but our fiscal authorities are still
optimistic the government will be operating on a balanced budget by the year 2009. In fact, several measures that
will result to significant expenditure savings have been identified by the administration. It is supported with a
credible package of revenue measures that include measures to improve tax administration and control the
leakages in revenues from income taxes and the value-added tax (VAT). (Emphasis supplied)

Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555, declared that:

In the budget message of our President in the year 2005, she reiterated that we all acknowledged that on top of our
agenda must be the restoration of the health of our fiscal system.

In order to considerably lower the consolidated public sector deficit and eventually achieve a balanced budget by the
year 2009, we need to seize windows of opportunities which might seem poignant in the beginning, but in
the long run prove effective and beneficial to the overall status of our economy. One such opportunity is a
review of existing tax rates, evaluating the relevance given our present conditions.34 (Emphasis supplied)

Notably therefore, the main purpose of the bills emanating from the House of Representatives is to bring in sizeable
revenues for the government

to supplement our country’s serious financial problems, and improve tax administration and control of the leakages
in revenues from income taxes and value-added taxes. As these house bills were transmitted to the Senate, the
latter, approaching the measures from the point of national perspective, can introduce amendments within the
purposes of those bills. It can provide for ways that would soften the impact of the VAT measure on the
consumer, i.e., by distributing the burden across all sectors instead of putting it entirely on the shoulders of the
consumers. The sponsorship speech of Sen. Ralph Recto on why the provisions on income tax on corporation were
included is worth quoting:

All in all, the proposal of the Senate Committee on Ways and Means will raise ₱64.3 billion in additional revenues
annually even while by mitigating prices of power, services and petroleum products.

However, not all of this will be wrung out of VAT. In fact, only ₱48.7 billion amount is from the VAT on twelve goods
and services. The rest of the tab – ₱10.5 billion- will be picked by corporations.

What we therefore prescribe is a burden sharing between corporate Philippines and the consumer. Why should the
latter bear all the pain? Why should the fiscal salvation be only on the burden of the consumer?

The corporate world’s equity is in form of the increase in the corporate income tax from 32 to 35 percent, but up to
2008 only. This will raise ₱10.5 billion a year. After that, the rate will slide back, not to its old rate of 32 percent, but
two notches lower, to 30 percent.

Clearly, we are telling those with the capacity to pay, corporations, to bear with this emergency provision that will be
in effect for 1,200 days, while we put our fiscal house in order. This fiscal medicine will have an expiry date.

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For their assistance, a reward of tax reduction awaits them. We intend to keep the length of their sacrifice brief. We
would like to assure them that not because there is a light at the end of the tunnel, this government will keep on
making the tunnel long.

The responsibility will not rest solely on the weary shoulders of the small man. Big business will be there to share
the burden.35

As the Court has said, the Senate can propose amendments and in fact, the amendments made on provisions in the
tax on income of corporations are germane to the purpose of the house bills which is to raise revenues for the
government.

Likewise, the Court finds the sections referring to other percentage and excise taxes germane to the reforms to the
VAT system, as these sections would cushion the effects of VAT on consumers. Considering that certain goods and
services which were subject to percentage tax and excise tax would no longer be VAT-exempt, the consumer would
be burdened more as they would be paying the VAT in addition to these taxes. Thus, there is a need to amend
these sections to soften the impact of VAT. Again, in his sponsorship speech, Sen. Recto said:

However, for power plants that run on oil, we will reduce to zero the present excise tax on bunker fuel, to lessen the
effect of a VAT on this product.

For electric utilities like Meralco, we will wipe out the franchise tax in exchange for a VAT.

And in the case of petroleum, while we will levy the VAT on oil products, so as not to destroy the VAT chain, we will
however bring down the excise tax on socially sensitive products such as diesel, bunker, fuel and kerosene.

...

What do all these exercises point to? These are not contortions of giving to the left hand what was taken from the
right. Rather, these sprang from our concern of softening the impact of VAT, so that the people can cushion the
blow of higher prices they will have to pay as a result of VAT.36

The other sections amended by the Senate pertained to matters of tax administration which are necessary for the
implementation of the changes in the VAT system.

To reiterate, the sections introduced by the Senate are germane to the subject matter and purposes of the house
bills, which is to supplement our country’s fiscal deficit, among others. Thus, the Senate acted within its power to
propose those amendments.

SUBSTANTIVE ISSUES

I.

Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate the
following provisions of the Constitution:

a. Article VI, Section 28(1), and

b. Article VI, Section 28(2)

A. No Undue Delegation of Legislative Power

Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escudero, et al. contend in common that
Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the NIRC giving the
President the stand-by authority to raise the VAT rate from 10% to 12% when a certain condition is met, constitutes
undue delegation of the legislative power to tax.

The assailed provisions read as follows:

SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as follows:

SEC. 106. Value-Added Tax on Sale of Goods or Properties. –

(A) Rate and Base of Tax. – There shall be levied, assessed and collected on every sale, barter or exchange of
goods or properties, a value-added tax equivalent to ten percent (10%) of the gross selling price or gross value in
money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or
transferor: provided, that the President, upon the recommendation of the Secretary of Finance, shall,

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effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following
conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or

(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 ½%).

SEC. 5. Section 107 of the same Code, as amended, is hereby further amended to read as follows:

SEC. 107. Value-Added Tax on Importation of Goods. –

(A) In General. – There shall be levied, assessed and collected on every importation of goods a value-added tax
equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and
customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer
prior to the release of such goods from customs custody: Provided, That where the customs duties are determined
on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus
excise taxes, if any: provided, further, that the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%) after any
of the following conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or

(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 ½%).

SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as follows:

SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties –

(A) Rate and Base of Tax. – There shall be levied, assessed and collected, a value-added tax equivalent to ten
percent (10%) of gross receipts derived from the sale or exchange of services: provided, that the President, upon
the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-
added tax to twelve percent (12%), after any of the following conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%) or

(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 ½%). (Emphasis supplied)

Petitioners allege that the grant of the stand-by authority to the President to increase the VAT rate is a virtual
abdication by Congress of its exclusive power to tax because such delegation is not within the purview of Section 28
(2), Article VI of the Constitution, which provides:

The Congress may, by law, authorize the President to fix within specified limits, and may impose, tariff rates, import
and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the government.

They argue that the VAT is a tax levied on the sale, barter or exchange of goods and properties as well as on the
sale or exchange of services, which cannot be included within the purview of tariffs under the exempted delegation
as the latter refers to customs duties, tolls or tribute payable upon merchandise to the government and usually
imposed on goods or merchandise imported or exported.

Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the President the legislative power
to tax is contrary to republicanism. They insist that accountability, responsibility and transparency should dictate the
actions of Congress and they should not pass to the President the decision to impose taxes. They also argue that
the law also effectively nullified the President’s power of control, which includes the authority to set aside and nullify
the acts of her subordinates like the Secretary of Finance, by mandating the fixing of the tax rate by the President
upon the recommendation of the Secretary of Finance.

Petitioners Pimentel, et al. aver that the President has ample powers to cause, influence or create the conditions
provided by the law to bring about either or both the conditions precedent.

On the other hand, petitioners Escudero, et al. find bizarre and revolting the situation that the imposition of the 12%
rate would be subject to the whim of the Secretary of Finance, an unelected bureaucrat, contrary to the principle of
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no taxation without representation. They submit that the Secretary of Finance is not mandated to give a favorable
recommendation and he may not even give his recommendation. Moreover, they allege that no guiding standards
are provided in the law on what basis and as to how he will make his recommendation. They claim, nonetheless,
that any recommendation of the Secretary of Finance can easily be brushed aside by the President since the former
is a mere alter ego of the latter, such that, ultimately, it is the President who decides whether to impose the
increased tax rate or not.

A brief discourse on the principle of non-delegation of powers is instructive.

The principle of separation of powers ordains that each of the three great branches of government has exclusive
cognizance of and is supreme in matters falling within its own constitutionally allocated sphere.37 A logical

corollary to the doctrine of separation of powers is the principle of non-delegation of powers, as expressed in the
Latin maxim: potestas delegata non delegari potest which means "what has been delegated, cannot be
delegated."38 This doctrine is based on the ethical principle that such as delegated power constitutes not only a right
but a duty to be performed by the delegate through the instrumentality of his own judgment and not through the
intervening mind of another.39

With respect to the Legislature, Section 1 of Article VI of the Constitution provides that "the Legislative power shall
be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives." The
powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively,
legislative. Purely legislative power, which can never be delegated, has been described as the authority to make a
complete law – complete as to the time when it shall take effect and as to whom it shall be applicable – and
to determine the expediency of its enactment.40 Thus, the rule is that in order that a court may be justified in
holding a statute unconstitutional as a delegation of legislative power, it must appear that the power involved is
purely legislative in nature – that is, one appertaining exclusively to the legislative department. It is the nature of the
power, and not the liability of its use or the manner of its exercise, which determines the validity of its delegation.

Nonetheless, the general rule barring delegation of legislative powers is subject to the following recognized
limitations or exceptions:

(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;

(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;

(3) Delegation to the people at large;

(4) Delegation to local governments; and

(5) Delegation to administrative bodies.

In every case of permissible delegation, there must be a showing that the delegation itself is valid. It is valid only if
the law (a) is complete in itself, setting forth therein the policy to be executed, carried out, or implemented by the
delegate;41 and (b) fixes a standard — the limits of which are sufficiently determinate and determinable — to which
the delegate must conform in the performance of his functions.42 A sufficient standard is one which defines
legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected.43 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.44

In People vs. Vera,45 the Court, through eminent Justice Jose P. Laurel, expounded on the concept and extent of
delegation of power in this wise:

In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire whether
the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was
left to the judgment of any other appointee or delegate of the legislature.

...

‘The true distinction’, says Judge Ranney, ‘is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made.’

...

It is contended, however, that a legislative act may be made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the executive
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or the adoption by the people of a particular community. In Wayman vs. Southard, the Supreme Court of the United
States ruled that the legislature may delegate a power not legislative which it may itself rightfully exercise. The
power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in
ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a
mental process common to all branches of the government. Notwithstanding the apparent tendency, however,
to relax the rule prohibiting delegation of legislative authority on account of the complexity arising from social and
economic forces at work in this modern industrial age, the orthodox pronouncement of Judge Cooley in his work on
Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the Constitution of the United States in
the following language — speaking of declaration of legislative power to administrative agencies: The principle
which permits the legislature to provide that the administrative agent may determine when the
circumstances are such as require the application of a law is defended upon the ground that at the time this
authority is granted, the rule of public policy, which is the essence of the legislative act, is determined by
the legislature. In other words, the legislature, as it is its duty to do, determines that, under given
circumstances, certain executive or administrative action is to be taken, and that, under other
circumstances, different or no action at all is to be taken. What is thus left to the administrative official is
not the legislative determination of what public policy demands, but simply the ascertainment of what the
facts of the case require to be done according to the terms of the law by which he is governed. The
efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but the
ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it
may designate. The legislature, then, may provide that a law shall take effect upon the happening of future
specified contingencies leaving to some other person or body the power to determine when the specified
contingency has arisen. (Emphasis supplied).46

In Edu vs. Ericta,47 the Court reiterated:

What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the test
is the completeness of the statute in all its terms and provisions when it leaves the hands of the legislature. To
determine whether or not there is an undue delegation of legislative power, the inquiry must be directed to the scope
and definiteness of the measure enacted. The legislative does not abdicate its functions when it describes
what job must be done, who is to do it, and what is the scope of his authority. For a complex economy, that
may be the only way in which the legislative process can go forward. A distinction has rightfully been made
between delegation of power to make the laws which necessarily involves a discretion as to what it shall be,
which constitutionally may not be done, and delegation of authority or discretion as to its execution to be
exercised under and in pursuance of the law, to which no valid objection can be made. The Constitution is
thus not to be regarded as denying the legislature the necessary resources of flexibility and practicability. (Emphasis
supplied).48

Clearly, the legislature may delegate to executive officers or bodies the power to determine certain facts or
conditions, or the happening of contingencies, on which the operation of a statute is, by its terms, made to depend,
but the legislature must prescribe sufficient standards, policies or limitations on their authority.49 While the power to
tax cannot be delegated to executive agencies, details as to the enforcement and administration of an exercise of
such power may be left to them, including the power to determine the existence of facts on which its operation
depends.50

The rationale for this is that the preliminary ascertainment of facts as basis for the enactment of legislation is not of
itself a legislative function, but is simply ancillary to legislation. Thus, the duty of correlating information and making
recommendations is the kind of subsidiary activity which the legislature may perform through its members, or which
it may delegate to others to perform. Intelligent legislation on the complicated problems of modern society is
impossible in the absence of accurate information on the part of the legislators, and any reasonable method of
securing such information is proper.51 The Constitution as a continuously operative charter of government does not
require that Congress find for itself

every fact upon which it desires to base legislative action or that it make for itself detailed determinations which it
has declared to be prerequisite to application of legislative policy to particular facts and circumstances impossible
for Congress itself properly to investigate.52

In the present case, the challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6 which
reads as follows:

That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the
rate of value-added tax to twelve percent (12%), after any of the following conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two
and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1
½%).

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The case before the Court is not a delegation of legislative power. It is simply a delegation of ascertainment of facts
upon which enforcement and administration of the increase rate under the law is contingent. The legislature has
made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact or condition. It
leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the
executive.

No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the
word shall is used in the common proviso. The use of the word shall connotes a mandatory order. Its use in a
statute denotes an imperative obligation and is inconsistent with the idea of discretion.53 Where the law is clear and
unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the
mandate is obeyed.54

Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the
conditions specified by Congress. This is a duty which cannot be evaded by the President. Inasmuch as the law
specifically uses the word shall, the exercise of discretion by the President does not come into play. It is a clear
directive to impose the 12% VAT rate when the specified conditions are present. The time of taking into effect of the
12% VAT rate is based on the happening of a certain specified contingency, or upon the ascertainment of certain
facts or conditions by a person or body other than the legislature itself.

The Court finds no merit to the contention of petitioners ABAKADA GURO Party List, et al. that the law effectively
nullified the President’s power of control over the Secretary of Finance by mandating the fixing of the tax rate by the
President upon the recommendation of the Secretary of Finance. The Court cannot also subscribe to the position of
petitioners

Pimentel, et al. that the word shall should be interpreted to mean may in view of the phrase "upon the
recommendation of the Secretary of Finance." Neither does the Court find persuasive the submission of petitioners
Escudero, et al. that any recommendation by the Secretary of Finance can easily be brushed aside by the President
since the former is a mere alter ego of the latter.

When one speaks of the Secretary of Finance as the alter ego of the President, it simply means that as head of the
Department of Finance he is the assistant and agent of the Chief Executive. The multifarious executive and
administrative functions of the Chief Executive are performed by and through the executive departments, and the
acts of the secretaries of such departments, such as the Department of Finance, performed and promulgated in the
regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of
the Chief Executive. The Secretary of Finance, as such, occupies a political position and holds office in an advisory
capacity, and, in the language of Thomas Jefferson, "should be of the President's bosom confidence" and, in the
language of Attorney-General Cushing, is "subject to the direction of the President."55

In the present case, in making his recommendation to the President on the existence of either of the two conditions,
the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. In such instance, he
is not subject to the power of control and direction of the President. He is acting as the agent of the legislative
department, to determine and declare the event upon which its expressed will is to take effect.56 The Secretary of
Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he
possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate
them. His function is to gather and collate statistical data and other pertinent information and verify if any of the two
conditions laid out by Congress is present. His personality in such instance is in reality but a projection of that of
Congress. Thus, being the agent of Congress and not of the President, the President cannot alter or modify or
nullify, or set aside the findings of the Secretary of Finance and to substitute the judgment of the former for that of
the latter.

Congress simply granted the Secretary of Finance the authority to ascertain the existence of a fact, namely, whether
by December 31, 2005, the value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (24/5%) or the national government deficit as a percentage of GDP
of the previous year exceeds one and one-half percent (1½%). If either of these two instances has occurred, the
Secretary of Finance, by legislative mandate, must submit such information to the President. Then the 12% VAT
rate must be imposed by the President effective January 1, 2006. There is no undue delegation of legislative
power but only of the discretion as to the execution of a law. This is constitutionally permissible.57 Congress
does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it,
and what is the scope of his authority; in our complex economy that is frequently the only way in which the
legislative process can go forward.58

As to the argument of petitioners ABAKADA GURO Party List, et al. that delegating to the President the legislative
power to tax is contrary to the principle of republicanism, the same deserves scant consideration. Congress did not
delegate the power to tax but the mere implementation of the law. The intent and will to increase the VAT rate to
12% came from Congress and the task of the President is to simply execute the legislative policy. That Congress
chose to do so in such a manner is not within the province of the Court to inquire into, its task being to interpret the
law.59

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The insinuation by petitioners Pimentel, et al. that the President has ample powers to cause, influence or create the
conditions to bring about either or both the conditions precedent does not deserve any merit as this argument is
highly speculative. The Court does not rule on allegations which are manifestly conjectural, as these may not exist
at all. The Court deals with facts, not fancies; on realities, not appearances. When the Court acts on appearances
instead of realities, justice and law will be short-lived.

B. The 12% Increase VAT Rate Does Not Impose an Unfair and Unnecessary Additional Tax Burden

Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate imposes an unfair and additional tax burden
on the people. Petitioners also argue that the 12% increase, dependent on any of the 2 conditions set forth in the
contested provisions, is ambiguous because it does not state if the VAT rate would be returned to the original 10% if
the rates are no longer satisfied. Petitioners also argue that such rate is unfair and unreasonable, as the people are
unsure of the applicable VAT rate from year to year.

Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any of the two conditions set forth therein are
satisfied, the President shall increase the VAT rate to 12%. The provisions of the law are clear. It does not provide
for a return to the 10% rate nor does it empower the President to so revert if, after the rate is increased to 12%, the
VAT collection goes below the 24/5 of the GDP of the previous year or that the national government deficit as a
percentage of GDP of the previous year does not exceed 1½%.

Therefore, no statutory construction or interpretation is needed. Neither can conditions or limitations be introduced
where none is provided for. Rewriting the law is a forbidden ground that only Congress may tread upon.60

Thus, in the absence of any provision providing for a return to the 10% rate, which in this case the Court finds none,
petitioners’ argument is, at best, purely speculative. There is no basis for petitioners’ fear of a fluctuating VAT rate
because the law itself does not provide that the rate should go back to 10% if the conditions provided in Sections 4,
5 and 6 are no longer present. The rule is that where the provision of the law is clear and unambiguous, so that
there is no occasion for the court's seeking the legislative intent, the law must be taken as it is, devoid of judicial
addition or subtraction.61

Petitioners also contend that the increase in the VAT rate, which was allegedly an incentive to the President to raise
the VAT collection to at least 2 4/5 of the GDP of the previous year, should be based on fiscal adequacy.

Petitioners obviously overlooked that increase in VAT collection is not the only condition. There is another
condition, i.e., the national government deficit as a percentage of GDP of the previous year exceeds one and one-
half percent (1 ½%).

Respondents explained the philosophy behind these alternative conditions:

1. VAT/GDP Ratio > 2.8%

The condition set for increasing VAT rate to 12% have economic or fiscal meaning. If VAT/GDP is less than 2.8%, it
means that government has weak or no capability of implementing the VAT or that VAT is not effective in the
function of the tax collection. Therefore, there is no value to increase it to 12% because such action will also be
ineffectual.

2. Nat’l Gov’t Deficit/GDP >1.5%

The condition set for increasing VAT when deficit/GDP is 1.5% or less means the fiscal condition of government has
reached a relatively sound position or is towards the direction of a balanced budget position. Therefore, there is no
need to increase the VAT rate since the fiscal house is in a relatively healthy position. Otherwise stated, if the ratio
is more than 1.5%, there is indeed a need to increase the VAT rate.62

That the first condition amounts to an incentive to the President to increase the VAT collection does not render it
unconstitutional so long as there is a public purpose for which the law was passed, which in this case, is mainly to
raise revenue. In fact, fiscal adequacy dictated the need for a raise in revenue.

The principle of fiscal adequacy as a characteristic of a sound tax system was originally stated by Adam Smith in
his Canons of Taxation (1776), as:

IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as
possible over and above what it brings into the public treasury of the state.63

It simply means that sources of revenues must be adequate to meet government expenditures and their variations.64

The dire need for revenue cannot be ignored. Our country is in a quagmire of financial woe. During the Bicameral
Conference Committee hearing, then Finance Secretary Purisima bluntly depicted the country’s gloomy state of
economic affairs, thus:
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First, let me explain the position that the Philippines finds itself in right now. We are in a position where 90 percent of
our revenue is used for debt service. So, for every peso of revenue that we currently raise, 90 goes to debt service.
That’s interest plus amortization of our debt. So clearly, this is not a sustainable situation. That’s the first fact.

The second fact is that our debt to GDP level is way out of line compared to other peer countries that borrow money
from that international financial markets. Our debt to GDP is approximately equal to our GDP. Again, that shows you
that this is not a sustainable situation.

The third thing that I’d like to point out is the environment that we are presently operating in is not as benign as what
it used to be the past five years.

What do I mean by that?

In the past five years, we’ve been lucky because we were operating in a period of basically global growth and low
interest rates. The past few months, we have seen an inching up, in fact, a rapid increase in the interest rates in the
leading economies of the world. And, therefore, our ability to borrow at reasonable prices is going to be challenged.
In fact, ultimately, the question is our ability to access the financial markets.

When the President made her speech in July last year, the environment was not as bad as it is now, at least based
on the forecast of most financial institutions. So, we were assuming that raising 80 billion would put us in a position
where we can then convince them to improve our ability to borrow at lower rates. But conditions have changed on
us because the interest rates have gone up. In fact, just within this room, we tried to access the market for a billion
dollars because for this year alone, the Philippines will have to borrow 4 billion dollars. Of that amount, we have
borrowed 1.5 billion. We issued last January a 25-year bond at 9.7 percent cost. We were trying to access last week
and the market was not as favorable and up to now we have not accessed and we might pull back because the
conditions are not very good.

So given this situation, we at the Department of Finance believe that we really need to front-end our deficit
reduction. Because it is deficit that is causing the increase of the debt and we are in what we call a debt spiral. The
more debt you have, the more deficit you have because interest and debt service eats and eats more of your
revenue. We need to get out of this debt spiral. And the only way, I think, we can get out of this debt spiral is really
have a front-end adjustment in our revenue base.65

The image portrayed is chilling. Congress passed the law hoping for rescue from an inevitable catastrophe. Whether
the law is indeed sufficient to answer the state’s economic dilemma is not for the Court to judge. In the Fariñas case,
the Court refused to consider the various arguments raised therein that dwelt on the wisdom of Section 14 of R.A.
No. 9006 (The Fair Election Act), pronouncing that:

. . . policy matters are not the concern of the Court. Government policy is within the exclusive dominion of the
political branches of the government. It is not for this Court to look into the wisdom or propriety of legislative
determination. Indeed, whether an enactment is wise or unwise, whether it is based on sound economic theory,
whether it is the best means to achieve the desired results, whether, in short, the legislative discretion within its
prescribed limits should be exercised in a particular manner are matters for the judgment of the legislature, and the
serious conflict of opinions does not suffice to bring them within the range of judicial cognizance.66

In the same vein, the Court in this case will not dawdle on the purpose of Congress or the executive policy, given
that it is not for the judiciary to "pass upon questions of wisdom, justice or expediency of legislation."67

II.

Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12 of R.A.
No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:

a. Article VI, Section 28(1), and

b. Article III, Section 1

A. Due Process and Equal Protection Clauses

Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that Section 8 of R.A. No. 9337, amending
Sections 110 (A)(2), 110 (B), and Section 12 of R.A. No. 9337, amending Section 114 (C) of the NIRC are arbitrary,
oppressive, excessive and confiscatory. Their argument is premised on the constitutional right against deprivation of
life, liberty of property without due process of law, as embodied in Article III, Section 1 of the Constitution.

Petitioners also contend that these provisions violate the constitutional guarantee of equal protection of the law.

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The doctrine is that where the due process and equal protection clauses are invoked, considering that they are not
fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such
a conclusion. Absent such a showing, the presumption of validity must prevail.68

Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes a limitation on the amount of input tax
that may be credited against the output tax. It states, in part: "[P]rovided, that the input tax inclusive of the input VAT
carried over from the previous quarter that may be credited in every quarter shall not exceed seventy percent (70%)
of the output VAT: …"

Input Tax is defined under Section 110(A) of the NIRC, as amended, as the value-added tax due from or paid by a
VAT-registered person on the importation of goods or local purchase of good and services, including lease or use of
property, in the course of trade or business, from a VAT-registered person, and Output Tax is the value-added
tax due on the sale or lease of taxable goods or properties or services by any person registered or required to
register under the law.

Petitioners claim that the contested sections impose limitations on the amount of input tax that may be claimed. In
effect, a portion of the input tax that has already been paid cannot now be credited against the output tax.

Petitioners’ argument is not absolute. It assumes that the input tax exceeds 70% of the output tax, and therefore, the
input tax in excess of 70% remains uncredited. However, to the extent that the input tax is less than 70% of the
output tax, then 100% of such input tax is still creditable.

More importantly, the excess input tax, if any, is retained in a business’s books of accounts and remains creditable
in the succeeding quarter/s. This is explicitly allowed by Section 110(B), which provides that "if the input tax exceeds
the output tax, the excess shall be carried over to the succeeding quarter or quarters." In addition, Section 112(B)
allows a VAT-registered person to apply for the issuance of a tax credit certificate or refund for any unused input
taxes, to the extent that such input taxes have not been applied against the output taxes. Such unused input tax
may be used in payment of his other internal revenue taxes.

The non-application of the unutilized input tax in a given quarter is not ad infinitum, as petitioners exaggeratedly
contend. Their analysis of the effect of the 70% limitation is incomplete and one-sided. It ends at the net effect that
there will be unapplied/unutilized inputs VAT for a given quarter. It does not proceed further to the fact that such
unapplied/unutilized input tax may be credited in the subsequent periods as allowed by the carry-over provision of
Section 110(B) or that it may later on be refunded through a tax credit certificate under Section 112(B).

Therefore, petitioners’ argument must be rejected.

On the other hand, it appears that petitioner Garcia failed to comprehend the operation of the 70% limitation on the
input tax. According to petitioner, the limitation on the creditable input tax in effect allows VAT-registered
establishments to retain a portion of the taxes they collect, which violates the principle that tax collection and
revenue should be for public purposes and expenditures

As earlier stated, the input tax is the tax paid by a person, passed on to him by the seller, when he buys goods.
Output tax meanwhile is the tax due to the person when he sells goods. In computing the VAT payable, three
possible scenarios may arise:

First, if at the end of a taxable quarter the output taxes charged by the seller are equal to the input taxes that he paid
and passed on by the suppliers, then no payment is required;

Second, when the output taxes exceed the input taxes, the person shall be liable for the excess, which has to be
paid to the Bureau of Internal Revenue (BIR);69 and

Third, if the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or
quarters. Should the input taxes result from zero-rated or effectively zero-rated transactions, any excess over the
output taxes shall instead be refunded to the taxpayer or credited against other internal revenue taxes, at the
taxpayer’s option.70

Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input tax. Thus, a person can credit his input
tax only up to the extent of 70% of the output tax. In layman’s term, the value-added taxes that a person/taxpayer
paid and passed on to him by a seller can only be credited up to 70% of the value-added taxes that is due to him on
a taxable transaction. There is no retention of any tax collection because the person/taxpayer has already previously
paid the input tax to a seller, and the seller will subsequently remit such input tax to the BIR. The party directly liable
for the payment of the tax is the seller.71 What only needs to be done is for the person/taxpayer to apply or credit
these input taxes, as evidenced by receipts, against his output taxes.

Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that the input tax partakes the nature of a
property that may not be confiscated, appropriated, or limited without due process of law.

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The input tax is not a property or a property right within the constitutional purview of the due process clause. A VAT-
registered person’s entitlement to the creditable input tax is a mere statutory privilege.

The distinction between statutory privileges and vested rights must be borne in mind for persons have no vested
rights in statutory privileges. The state may change or take away rights, which were created by the law of the state,
although it may not take away property, which was vested by virtue of such rights.72

Under the previous system of single-stage taxation, taxes paid at every level of distribution are not recoverable from
the taxes payable, although it becomes part of the cost, which is deductible from the gross revenue. When Pres.
Aquino issued E.O. No. 273 imposing a 10% multi-stage tax on all sales, it was then that the crediting of the input
tax paid on purchase or importation of goods and services by VAT-registered persons against the output tax was
introduced.73 This was adopted by the Expanded VAT Law (R.A. No. 7716),74 and The Tax Reform Act of 1997 (R.A.
No. 8424).75 The right to credit input tax as against the output tax is clearly a privilege created by law, a privilege that
also the law can remove, or in this case, limit.

Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of R.A. No. 9337, amending
Section 110(A) of the NIRC, which provides:

SEC. 110. Tax Credits. –

(A) Creditable Input Tax. – …

Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for
which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of acquisition
and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT
component thereof, exceeds One million pesos (₱1,000,000.00): Provided, however, That if the estimated useful life
of the capital goods is less than five (5) years, as used for depreciation purposes, then the input VAT shall be
spread over such a shorter period: Provided, finally, That in the case of purchase of services, lease or use of
properties, the input tax shall be creditable to the purchaser, lessee or license upon payment of the compensation,
rental, royalty or fee.

The foregoing section imposes a 60-month period within which to amortize the creditable input tax on purchase or
importation of capital goods with acquisition cost of ₱1 Million pesos, exclusive of the VAT component. Such spread
out only poses a delay in the crediting of the input tax. Petitioners’ argument is without basis because the taxpayer
is not permanently deprived of his privilege to credit the input tax.

It is worth mentioning that Congress admitted that the spread-out of the creditable input tax in this case amounts to
a 4-year interest-free loan to the government.76 In the same breath, Congress also justified its move by saying that
the provision was designed to raise an annual revenue of 22.6 billion.77 The legislature also dispelled the fear that
the provision will fend off foreign investments, saying that foreign investors have other tax incentives provided by
law, and citing the case of China, where despite a 17.5% non-creditable VAT, foreign investments were not
deterred.78 Again, for whatever is the purpose of the 60-month amortization, this involves executive economic policy
and legislative wisdom in which the Court cannot intervene.

With regard to the 5% creditable withholding tax imposed on payments made by the government for taxable
transactions, Section 12 of R.A. No. 9337, which amended Section 114 of the NIRC, reads:

SEC. 114. Return and Payment of Value-added Tax. –

(C) Withholding of Value-added Tax. – The Government or any of its political subdivisions, instrumentalities or
agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment on
account of each purchase of goods and services which are subject to the value-added tax imposed in Sections 106
and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of the gross
payment thereof: Provided, That the payment for lease or use of properties or property rights to nonresident owners
shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes of this Section, the payor
or person in control of the payment shall be considered as the withholding agent.

The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the
month the withholding was made.

Section 114(C) merely provides a method of collection, or as stated by respondents, a more simplified VAT
withholding system. The government in this case is constituted as a withholding agent with respect to their
payments for goods and services.

Prior to its amendment, Section 114(C) provided for different rates of value-added taxes to be withheld -- 3% on
gross payments for purchases of goods; 6% on gross payments for services supplied by contractors other than by
public works contractors; 8.5% on gross payments for services supplied by public work contractors; or 10% on
payment for the lease or use of properties or property rights to nonresident owners. Under the present Section

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114(C), these different rates, except for the 10% on lease or property rights payment to nonresidents, were deleted,
and a uniform rate of 5% is applied.

The Court observes, however, that the law the used the word final. In tax usage, final, as opposed to creditable,
means full. Thus, it is provided in Section 114(C): "final value-added tax at the rate of five percent (5%)."

In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The Tax Reform Act of 1997), the concept of final
withholding tax on income was explained, to wit:

SECTION 2.57. Withholding of Tax at Source

(A) Final Withholding Tax. – Under the final withholding tax system the amount of income tax withheld by the
withholding agent is constituted as full and final payment of the income tax due from the payee on the said
income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in case of his
failure to withhold the tax or in case of underwithholding, the deficiency tax shall be collected from the
payor/withholding agent. …

(B) Creditable Withholding Tax. – Under the creditable withholding tax system, taxes withheld on certain income
payments are intended to equal or at least approximate the tax due of the payee on said income. … Taxes withheld
on income payments covered by the expanded withholding tax (referred to in Sec. 2.57.2 of these regulations) and
compensation income (referred to in Sec. 2.78 also of these regulations) are creditable in nature.

As applied to value-added tax, this means that taxable transactions with the government are subject to a 5% rate,
which constitutes as full payment of the tax payable on the transaction. This represents the net VAT payable of the
seller. The other 5% effectively accounts for the standard input VAT (deemed input VAT), in lieu of the actual input
VAT directly or attributable to the taxable transaction.79

The Court need not explore the rationale behind the provision. It is clear that Congress intended to treat differently
taxable transactions with the government.80 This is supported by the fact that under the old provision, the 5% tax
withheld by the government remains creditable against the tax liability of the seller or contractor, to wit:

SEC. 114. Return and Payment of Value-added Tax. –

(C) Withholding of Creditable Value-added Tax. – The Government or any of its political subdivisions,
instrumentalities or agencies, including government-owned or controlled corporations (GOCCs) shall, before making
payment on account of each purchase of goods from sellers and services rendered by contractors which are subject
to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold the value-added tax due
at the rate of three percent (3%) of the gross payment for the purchase of goods and six percent (6%) on gross
receipts for services rendered by contractors on every sale or installment payment which shall be creditable
against the value-added tax liability of the seller or contractor: Provided, however, That in the case of
government public works contractors, the withholding rate shall be eight and one-half percent (8.5%): Provided,
further, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to
ten percent (10%) withholding tax at the time of payment. For this purpose, the payor or person in control of the
payment shall be considered as the withholding agent.

The valued-added tax withheld under this Section shall be remitted within ten (10) days following the end of the
month the withholding was made. (Emphasis supplied)

As amended, the use of the word final and the deletion of the word creditable exhibits Congress’s intention to treat
transactions with the government differently. Since it has not been shown that the class subject to the 5% final
withholding tax has been unreasonably narrowed, there is no reason to invalidate the provision. Petitioners, as
petroleum dealers, are not the only ones subjected to the 5% final withholding tax. It applies to all those who deal
with the government.

Moreover, the actual input tax is not totally lost or uncreditable, as petitioners believe. Revenue Regulations No. 14-
2005 or the Consolidated Value-Added Tax Regulations 2005 issued by the BIR, provides that should the actual
input tax exceed 5% of gross payments, the excess may form part of the cost. Equally, should the actual input tax
be less than 5%, the difference is treated as income.81

Petitioners also argue that by imposing a limitation on the creditable input tax, the government gets to tax a profit or
value-added even if there is no profit or value-added.

Petitioners’ stance is purely hypothetical, argumentative, and again, one-sided. The Court will not engage in a legal
joust where premises are what ifs, arguments, theoretical and facts, uncertain. Any disquisition by the Court on this
point will only be, as Shakespeare describes life in Macbeth,82 "full of sound and fury, signifying nothing."

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What’s more, petitioners’ contention assumes the proposition that there is no profit or value-added. It need not take
an astute businessman to know that it is a matter of exception that a business will sell goods or services without
profit or value-added. It cannot be overstressed that a business is created precisely for profit.

The equal protection clause under the Constitution means that "no person or class of persons shall be deprived of
the same protection of laws which is enjoyed by other persons or other classes in the same place and in like
circumstances."83

The power of the State to make reasonable and natural classifications for the purposes of taxation has long been
established. Whether it relates to the subject of taxation, the kind of property, the rates to be levied, or the amounts
to be raised, the methods of assessment, valuation and collection, the State’s power is entitled to presumption of
validity. As a rule, the judiciary will not interfere with such power absent a clear showing of unreasonableness,
discrimination, or arbitrariness.84

Petitioners point out that the limitation on the creditable input tax if the entity has a high ratio of input tax, or invests
in capital equipment, or has several transactions with the government, is not based on real and substantial
differences to meet a valid classification.

The argument is pedantic, if not outright baseless. The law does not make any classification in the subject of
taxation, the kind of property, the rates to be levied or the amounts to be raised, the methods of assessment,
valuation and collection. Petitioners’ alleged distinctions are based on variables that bear different consequences.
While the implementation of the law may yield varying end results depending on one’s profit margin and value-
added, the Court cannot go beyond what the legislature has laid down and interfere with the affairs of business.

The equal protection clause does not require the universal application of the laws on all persons or things without
distinction. This might in fact sometimes result in unequal protection. What the clause requires is equality among
equals as determined according to a valid classification. By classification is meant the grouping of persons or things
similar to each other in certain particulars and different from all others in these same particulars.85

Petitioners brought to the Court’s attention the introduction of Senate Bill No. 2038 by Sens. S.R. Osmeña III and
Ma. Ana Consuelo A.S. – Madrigal on June 6, 2005, and House Bill No. 4493 by Rep. Eric D. Singson. The
proposed legislation seeks to amend the 70% limitation by increasing the same to 90%. This, according to
petitioners, supports their stance that the 70% limitation is arbitrary and confiscatory. On this score, suffice it to say
that these are still proposed legislations. Until Congress amends the law, and absent any unequivocal basis for its
unconstitutionality, the 70% limitation stays.

B. Uniformity and Equitability of Taxation

Article VI, Section 28(1) of the Constitution reads:

The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.

Uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the
same rate. Different articles may be taxed at different amounts provided that the rate is uniform on the same class
everywhere with all people at all times.86

In this case, the tax law is uniform as it provides a standard rate of 0% or 10% (or 12%) on all goods and services.
Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the NIRC, provide for a
rate of 10% (or 12%) on sale of goods and properties, importation of goods, and sale of services and use or lease of
properties. These same sections also provide for a 0% rate on certain sales and transaction.

Neither does the law make any distinction as to the type of industry or trade that will bear the 70% limitation on the
creditable input tax, 5-year amortization of input tax paid on purchase of capital goods or the 5% final withholding
tax by the government. It must be stressed that the rule of uniform taxation does not deprive Congress of the power
to classify subjects of taxation, and only demands uniformity within the particular class.87

R.A. No. 9337 is also equitable. The law is equipped with a threshold margin. The VAT rate of 0% or 10% (or 12%)
does not apply to sales of goods or services with gross annual sales or receipts not exceeding
₱1,500,000.00.88Also, basic marine and agricultural food products in their original state are still not subject to the
tax,89 thus ensuring that prices at the grassroots level will remain accessible. As was stated in Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan:90

The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged in
business with an aggregate gross annual sales exceeding ₱200,000.00. Small corner sari-sari stores are
consequently exempt from its application. Likewise exempt from the tax are sales of farm and marine products, so
that the costs of basic food and other necessities, spared as they are from the incidence of the VAT, are expected to
be relatively lower and within the reach of the general public.

Page 93 of 152
It is admitted that R.A. No. 9337 puts a premium on businesses with low profit margins, and unduly favors those with
high profit margins. Congress was not oblivious to this. Thus, to equalize the weighty burden the law entails, the law,
under Section 116, imposed a 3% percentage tax on VAT-exempt persons under Section 109(v), i.e., transactions
with gross annual sales and/or receipts not exceeding ₱1.5 Million. This acts as a equalizer because in effect,
bigger businesses that qualify for VAT coverage and VAT-exempt taxpayers stand on equal-footing.

Moreover, Congress provided mitigating measures to cushion the impact of the imposition of the tax on those
previously exempt. Excise taxes on petroleum products91 and natural gas92 were reduced. Percentage tax on
domestic carriers was removed.93 Power producers are now exempt from paying franchise tax.94

Aside from these, Congress also increased the income tax rates of corporations, in order to distribute the burden of
taxation. Domestic, foreign, and non-resident corporations are now subject to a 35% income tax rate, from a
previous 32%.95 Intercorporate dividends of non-resident foreign corporations are still subject to 15% final
withholding tax but the tax credit allowed on the corporation’s domicile was increased to 20%.96 The Philippine
Amusement and Gaming Corporation (PAGCOR) is not exempt from income taxes anymore.97 Even the sale by an
artist of his works or services performed for the production of such works was not spared.

All these were designed to ease, as well as spread out, the burden of taxation, which would otherwise rest largely
on the consumers. It cannot therefore be gainsaid that R.A. No. 9337 is equitable.

C. Progressivity of Taxation

Lastly, petitioners contend that the limitation on the creditable input tax is anything but regressive. It is the smaller
business with higher input tax-output tax ratio that will suffer the consequences.

Progressive taxation is built on the principle of the taxpayer’s ability to pay. This principle was also lifted from Adam
Smith’s Canons of Taxation, and it states:

I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in
proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the
protection of the state.

Taxation is progressive when its rate goes up depending on the resources of the person affected.98

The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The principle of progressive
taxation has no relation with the VAT system inasmuch as the VAT paid by the consumer or business for every
goods bought or services enjoyed is the same regardless of income. In

other words, the VAT paid eats the same portion of an income, whether big or small. The disparity lies in the income
earned by a person or profit margin marked by a business, such that the higher the income or profit margin, the
smaller the portion of the income or profit that is eaten by VAT. A converso, the lower the income or profit margin,
the bigger the part that the VAT eats away. At the end of the day, it is really the lower income group or businesses
with low-profit margins that is always hardest hit.

Nevertheless, the Constitution does not really prohibit the imposition of indirect taxes, like the VAT. What it simply
provides is that Congress shall "evolve a progressive system of taxation." The Court stated in the Tolentino case,
thus:

The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. What it
simply provides is that Congress shall ‘evolve a progressive system of taxation.’ The constitutional provision has
been interpreted to mean simply that ‘direct taxes are . . . to be preferred [and] as much as possible, indirect taxes
should be minimized.’ (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed. 1977))
Indeed, the mandate to Congress is not to prescribe, but to evolve, a progressive tax system. Otherwise, sales
taxes, which perhaps are the oldest form of indirect taxes, would have been prohibited with the proclamation of Art.
VIII, §17 (1) of the 1973 Constitution from which the present Art. VI, §28 (1) was taken. Sales taxes are also
regressive.

Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to avoid
them by imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the law minimizes
the regressive effects of this imposition by providing for zero rating of certain transactions (R.A. No. 7716, §3,
amending §102 (b) of the NIRC), while granting exemptions to other transactions. (R.A. No. 7716, §4 amending
§103 of the NIRC)99

CONCLUSION

It has been said that taxes are the lifeblood of the government. In this case, it is just an enema, a first-aid measure
to resuscitate an economy in distress. The Court is neither blind nor is it turning a deaf ear on the plight of the

Page 94 of 152
masses. But it does not have the panacea for the malady that the law seeks to remedy. As in other cases, the Court
cannot strike down a law as unconstitutional simply because of its yokes.

Let us not be overly influenced by the plea that for every wrong there is a remedy, and that the judiciary should
stand ready to afford relief. There are undoubtedly many wrongs the judicature may not correct, for instance, those
involving political questions. . . .

Let us likewise disabuse our minds from the notion that the judiciary is the repository of remedies for all political or
social ills; We should not forget that the Constitution has judiciously allocated the powers of government to three
distinct and separate compartments; and that judicial interpretation has tended to the preservation of the
independence of the three, and a zealous regard of the prerogatives of each, knowing full well that one is not the
guardian of the others and that, for official wrong-doing, each may be brought to account, either by impeachment,
trial or by the ballot box.100

The words of the Court in Vera vs. Avelino101 holds true then, as it still holds true now. All things considered, there is
no raison d'être for the unconstitutionality of R.A. No. 9337.

WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions in G.R. Nos. 168056, 168207,
168461, 168463, and 168730, are hereby DISMISSED.

There being no constitutional impediment to the full enforcement and implementation of R.A. No. 9337, the
temporary restraining order issued by the Court on July 1, 2005 is LIFTED upon finality of herein decision.

SO ORDERED.

G.R. No. 133640 November 25, 2005

RODOLFO S. BELTRAN, doing business under the name and style, OUR LADY OF FATIMA BLOOD BANK,
FELY G. MOSALE, doing business under the name and style, MOTHER SEATON BLOOD BANK; PEOPLE’S
BLOOD BANK, INC.; MARIA VICTORIA T. VITO, M.D., doing business under the name and style, AVENUE
BLOOD BANK; JESUS M. GARCIA, M.D., doing business under the name and style, HOLY REDEEMER
BLOOD BANK, ALBERT L. LAPITAN, doing business under the name and style, BLUE CROSS BLOOD
TRANSFUSION SERVICES; EDGARDO R. RODAS, M.D., doing business under the name and style, RECORD
BLOOD BANK, in their individual capacities and for and in behalf of PHILIPPINE ASSOCIATION OF BLOOD
BANKS, Petitioners,
vs.
THE SECRETARY OF HEALTH, Respondent.

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

G.R. No. 133661

DOCTORS’ BLOOD CENTER, Petitioner,

vs.
DEPARTMENT OF HEALTH, Respondent.

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

G.R. No. 139147

RODOLFO S. BELTRAN, doing business under the name and style, OUR LADY OF FATIMA BLOOD BANK,
FELY G. MOSALE, doing business under the name and style, MOTHER SEATON BLOOD BANK; PEOPLE’S
BLOOD BANK, INC.; MARIA VICTORIA T. VITO, M.D., doing business under the name and style, AVENUE
BLOOD BANK; JESUS M. GARCIA, M.D., doing business under the name and style, HOLY REDEEMER
BLOOD BANK, ALBERT L. LAPITAN, doing business under the name and style, BLUE CROSS BLOOD
TRANSFUSION SERVICES; EDGARDO R. RODAS, M.D., doing business under the name and style, RECORD
BLOOD BANK, in their Individual capacities and for and in behalf of PHILIPPINE ASSOCIATION OF BLOOD
BANKS, Petitioners,
vs.
THE SECRETARY OF HEALTH, Respondent.

Page 95 of 152
 DECISION

AZCUNA, J.:

Before this Court are petitions assailing primarily the constitutionality of Section 7 of Republic Act No. 7719,
otherwise known as the "National Blood Services Act of 1994," and the validity of Administrative Order (A.O.) No. 9,
series of 1995 or the Rules and Regulations Implementing Republic Act No. 7719.

G.R. No. 133640,1 entitled "Rodolfo S. Beltran, doing business under the name and style, Our Lady of Fatima Blood
Bank, et al., vs. The Secretary of Health" and G.R. No. 133661,2 entitled "Doctors Blood Bank Center vs.
Department of Health" are petitions for certiorari and mandamus, respectively, seeking the annulment of the
following: (1) Section 7 of Republic Act No. 7719; and, (2) Administrative Order (A.O.) No. 9, series of 1995. Both
petitions likewise pray for the issuance of a writ of prohibitory injunction enjoining the Secretary of Health from
implementing and enforcing the aforementioned law and its Implementing Rules and Regulations; and, for a
mandatory injunction ordering and commanding the Secretary of Health to grant, issue or renew petitioners’ license
to operate free standing blood banks (FSBB).

The above cases were consolidated in a resolution of the Court En Banc dated June 2, 1998.3

G.R. No. 139147,4 entitled "Rodolfo S. Beltran, doing business under the name and style, Our Lady of Fatima Blood
Bank, et al., vs. The Secretary of Health," on the other hand, is a petition to show cause why respondent Secretary
of Health should not be held in contempt of court.

This case was originally assigned to the Third Division of this Court and later consolidated with G.R. Nos. 133640
and 133661 in a resolution dated August 4, 1999.5

Petitioners comprise the majority of the Board of Directors of the Philippine Association of Blood Banks, a duly
registered non-stock and non-profit association composed of free standing blood banks.

Public respondent Secretary of Health is being sued in his capacity as the public official directly involved and
charged with the enforcement and implementation of the law in question.

The facts of the case are as follows:

Republic Act No. 7719 or the National Blood Services Act of 1994 was enacted into law on April 2, 1994. The Act
seeks to provide

an adequate supply of safe blood by promoting voluntary blood donation and by regulating blood banks in the
country. It was approved by then President Fidel V. Ramos on May 15, 1994 and was subsequently published in the
Official Gazette on August 18, 1994. The law took effect on August 23, 1994.

On April 28, 1995, Administrative Order No. 9, Series of 1995, constituting the Implementing Rules and Regulations
of said law was promulgated by respondent Secretary of the Department of Health (DOH).6

Section 7 of R.A. 7719 7 provides:

"Section 7. Phase-out of Commercial Blood Banks - All commercial blood banks shall be phased-out over a
period of two (2) years after the effectivity of this Act, extendable to a maximum period of two (2) years by the
Secretary."

Section 23 of Administrative Order No. 9 provides:

"Section 23. Process of Phasing Out. -- The Department shall effect the phasing-out of all commercial blood
banks over a period of two (2) years, extendible for a maximum period of two (2) years after the effectivity of R.A.
7719. The decision to extend shall be based on the result of a careful study and review of the blood supply and
demand and public safety."8

Blood banking and blood transfusion services in the country have been arranged in four (4) categories: blood
centers run by the Philippine National Red Cross (PNRC), government-run blood services, private hospital blood
banks, and commercial blood services.

Years prior to the passage of the National Blood Services Act of 1994, petitioners have already been operating
commercial blood banks under Republic Act No. 1517, entitled "An Act Regulating the Collection, Processing and
Sale of Human Blood, and the Establishment and Operation of Blood Banks and Blood Processing Laboratories."
The law, which was enacted on June 16, 1956, allowed the establishment and operation by licensed physicians of
blood banks and blood processing laboratories. The Bureau of Research and Laboratories (BRL) was created in
1958 and was given the power to regulate clinical laboratories in 1966 under Republic Act No. 4688. In 1971, the
Licensure Section was created within the BRL. It was given the duty to enforce the licensure requirements for blood
Page 96 of 152
banks as well as clinical laboratories. Due to this development, Administrative Order No. 156, Series of 1971, was
issued. The new rules and regulations triggered a stricter enforcement of the Blood Banking Law, which was
characterized by frequent spot checks, immediate suspension and communication of such suspensions to hospitals,
a more systematic record-keeping and frequent communication with blood banks through monthly information
bulletins. Unfortunately, by the 1980’s, financial difficulties constrained the BRL to reduce the frequency of its
supervisory visits to the blood banks.9

Meanwhile, in the international scene, concern for the safety of blood and blood products intensified when the
dreaded disease Acute Immune Deficiency Syndrome (AIDS) was first described in 1979. In 1980, the International
Society of Blood Transfusion (ISBT) formulated the Code of Ethics for Blood Donation and Transfusion. In 1982, the
first case of transfusion-associated AIDS was described in an infant. Hence, the ISBT drafted in 1984, a model for a
national blood policy outlining certain principles that should be taken into consideration. By 1985, the ISBT had
disseminated guidelines requiring AIDS testing of blood and blood products for transfusion.10

In 1989, another revision of the Blood Banking Guidelines was made. The DOH issued Administrative Order No. 57,
Series of 1989, which classified banks into primary, secondary and tertiary depending on the services they provided.
The standards were adjusted according to this classification. For instance, floor area requirements varied according
to classification level. The new guidelines likewise required Hepatitis B and HIV testing, and that the blood bank be
headed by a pathologist or a hematologist.11

In 1992, the DOH issued Administrative Order No. 118-A institutionalizing the National Blood Services Program
(NBSP). The BRL was designated as the central office primarily responsible for the NBSP. The program paved the
way for the creation of a committee that will implement the policies of the program and the formation of the Regional
Blood Councils.

In August 1992, Senate Bill No. 1011, entitled "An Act Promoting Voluntary Blood Donation, Providing for an
Adequate Supply of Safe Blood, Regulating Blood Banks and Providing Penalties for Violations Thereof, and for
other Purposes" was introduced in the Senate.12

Meanwhile, in the House of Representatives, House Bills No. 384, 546, 780 and 1978 were being deliberated to
address the issue of safety of the Philippine blood bank system. Subsequently, the Senate and House Bills were
referred to the appropriate committees and subsequently consolidated.13

In January of 1994, the New Tropical Medicine Foundation, with the assistance of the U.S. Agency for International
Development (USAID) released its final report of a study on the Philippine blood banking system entitled "Project to
Evaluate the Safety of the Philippine Blood Banking System." It was revealed that of the blood units collected in
1992, 64.4 % were supplied by commercial blood banks, 14.5% by the PNRC, 13.7% by government hospital-based
blood banks, and 7.4% by private hospital-based blood banks. During the time the study was made, there were only
twenty-four (24) registered or licensed free-standing or commercial blood banks in the country. Hence, with these
numbers in mind, the study deduced that each commercial blood bank produces five times more blood than the Red
Cross and fifteen times more than the government-run blood banks. The study, therefore, showed that the
Philippines heavily relied on commercial sources of blood. The study likewise revealed that 99.6% of the donors of
commercial blood banks and 77.0% of the donors of private-hospital based blood banks are paid donors. Paid
donors are those who receive remuneration for donating their blood. Blood donors of the PNRC and government-run
hospitals, on the other hand, are mostly voluntary.14

It was further found, among other things, that blood sold by persons to blood commercial banks are three times
more likely to have any of the four (4) tested infections or blood transfusion transmissible diseases, namely, malaria,
syphilis, Hepatitis B and Acquired Immune Deficiency Syndrome (AIDS) than those donated to PNRC.15

Commercial blood banks give paid donors varying rates around ₱50 to ₱150, and because of this arrangement,
many of these donors are poor, and often they are students, who need cash immediately. Since they need the
money, these donors are not usually honest about their medical or social history. Thus, blood from healthy,
voluntary donors who give their true medical and social history are about three times much safer than blood from
paid donors.16

What the study also found alarming is that many Filipino doctors are not yet fully trained on the specific indications
for blood component transfusion. They are not aware of the lack of blood supply and do not feel the need to adjust
their practices and use of blood and blood products. It also does not matter to them where the blood comes from.17

On August 23, 1994, the National Blood Services Act providing for the phase out of commercial blood banks took
effect. On April 28, 1995, Administrative Order No. 9, Series of 1995, constituting the Implementing Rules and
Regulations of said law was promulgated by DOH.

The phase-out period was extended for two years by the DOH pursuant to Section 7 of Republic Act No. 7719 and
Section 23 of its Implementing Rules and Regulations. Pursuant to said Act, all commercial blood banks should
have been phased out by May 28, 1998. Hence, petitioners were granted by the Secretary of Health their licenses to
open and operate a blood bank only until May 27, 1998.

Page 97 of 152
On May 20, 1998, prior to the expiration of the licenses granted to petitioners, they filed a petition for certiorari with
application for the issuance of a writ of preliminary injunction or temporary restraining order under Rule 65 of the
Rules of Court assailing the constitutionality and validity of the aforementioned Act and its Implementing Rules and
Regulations. The case was entitled "Rodolfo S. Beltran, doing business under the name and style, Our Lady of
Fatima Blood Bank," docketed as G.R. No. 133640.

On June 1, 1998, petitioners filed an Amended Petition for Certiorari with Prayer for Issuance of a Temporary
Restraining Order, writ of preliminary mandatory injunction and/or status quo ante order.18

In the aforementioned petition, petitioners assail the constitutionality of the questioned legal provisions, namely,
Section 7 of Republic Act No. 7719 and Section 23 of Administrative Order No. 9, Series of 1995, on the following
grounds: 19

1. The questioned legal provisions of the National Blood Services Act and its Implementing Rules violate the equal
protection clause for irrationally discriminating against free standing blood banks in a manner which is not germane
to the purpose of the law;

2. The questioned provisions of the National Blood Services Act and its Implementing Rules represent undue
delegation if not outright abdication of the police power of the state; and,

3. The questioned provisions of the National Blood Services Act and its Implementing Rules are unwarranted
deprivation of personal liberty.

On May 22, 1998, the Doctors Blood Center filed a similar petition for mandamus with a prayer for the issuance of a
temporary restraining order, preliminary prohibitory and mandatory injunction before this Court entitled "Doctors
Blood Center vs. Department of Health," docketed as G.R. No. 133661. 20 This was consolidated with G.R. No.
133640.21

Similarly, the petition attacked the constitutionality of Republic Act No. 7719 and its implementing rules and
regulations, thus, praying for the issuance of a license to operate commercial blood banks beyond May 27, 1998.
Specifically, with regard to Republic Act No. 7719, the petition submitted the following questions22 for resolution:

1. Was it passed in the exercise of police power, and was it a valid exercise of such power?

2. Does it not amount to deprivation of property without due process?

3. Does it not unlawfully impair the obligation of contracts?

4. With the commercial blood banks being abolished and with no ready machinery to deliver the same supply and
services, does R.A. 7719 truly serve the public welfare?

On June 2, 1998, this Court issued a Resolution directing respondent DOH to file a consolidated comment. In the
same Resolution, the Court issued a temporary restraining order (TRO) for respondent to cease and desist from
implementing and enforcing Section 7 of Republic Act No. 7719 and its implementing rules and regulations until
further orders from the Court.23

On August 26, 1998, respondent Secretary of Health filed a Consolidated Comment on the petitions for certiorari
and mandamus in G.R. Nos. 133640 and 133661, with opposition to the issuance of a temporary restraining order.24

In the Consolidated Comment, respondent Secretary of Health submitted that blood from commercial blood banks is
unsafe and therefore the State, in the exercise of its police power, can close down commercial blood banks to
protect the public. He cited the record of deliberations on Senate Bill No. 1101 which later became Republic Act No.
7719, and the sponsorship speech of Senator Orlando Mercado.

The rationale for the closure of these commercial blood banks can be found in the deliberations of Senate Bill No.
1011, excerpts of which are quoted below:

Senator Mercado: I am providing over a period of two years to phase out all commercial blood banks. So that in the
end, the new section would have a provision that states:

"ALL COMMERCIAL BLOOD BANKS SHALL BE PHASED OUT OVER A PERIOD OF TWO YEARS AFTER THE
EFFECTIVITY OF THIS ACT. BLOOD SHALL BE COLLECTED FROM VOLUNTARY DONORS ONLY AND THE
SERVICE FEE TO BE CHARGED FOR EVERY BLOOD PRODUCT ISSUED SHALL BE LIMITED TO THE
NECESSARY EXPENSES ENTAILED IN COLLECTING AND PROCESSING OF BLOOD. THE SERVICE FEE
SHALL BE MADE UNIFORM THROUGH GUIDELINES TO BE SET BY THE DEPARTMENTOF HEALTH."

Page 98 of 152
I am supporting Mr. President, the finding of a study called "Project to Evaluate the Safety of the Philippine Blood
Banking System." This has been taken note of. This is a study done with the assistance of the USAID by doctors
under the New Tropical Medicine Foundation in Alabang.

Part of the long-term measures proposed by this particular study is to improve laws, outlaw buying and selling of
blood and legally define good manufacturing processes for blood. This goes to the very heart of my amendment
which seeks to put into law the principle that blood should not be subject of commerce of man.

The Presiding Officer [Senator Aquino]: What does the sponsor say?

Senator Webb: Mr. President, just for clarity, I would like to find out how the Gentleman defines a commercial blood
bank. I am at a loss at times what a commercial blood bank really is.

Senator Mercado: We have a definition, I believe, in the measure, Mr. President.

The Presiding Officer [Senator Aquino]: It is a business where profit is considered.

Senator Mercado: If the Chairman of the Committee would accept it, we can put a provision on Section 3, a
definition of a commercial blood bank, which, as defined in this law, exists for profit and engages in the buying and
selling of blood or its components.

Senator Webb: That is a good description, Mr. President.

Senator Mercado: I refer, Mr. President, to a letter written by Dr. Jaime Galvez-Tan, the Chief of Staff,
Undersecretary of Health, to the good Chairperson of the Committee on Health.

In recommendation No. 4, he says:

"The need to phase out all commercial blood banks within a two-year period will give the Department of Health
enough time to build up government’s capability to provide an adequate supply of blood for the needs of the
nation...the use of blood for transfusion is a medical service and not a sale of commodity."

Taking into consideration the experience of the National Kidney Institute, which has succeeded in making the
hospital 100 percent dependent on voluntary blood donation, here is a success story of a hospital that does not buy
blood. All those who are operated on and need blood have to convince their relatives or have to get volunteers who
would donate blood…

If we give the responsibility of the testing of blood to those commercial blood banks, they will cut corners because it
will protect their profit.

In the first place, the people who sell their blood are the people who are normally in the high-risk category. So we
should stop the system of selling and buying blood so that we can go into a national voluntary blood program.

It has been said here in this report, and I quote:

"Why is buying and selling of blood not safe? This is not safe because a donor who expects payment for his blood
will not tell the truth about his illnesses and will deny any risky social behavior such as sexual promiscuity which
increases the risk of having syphilis or AIDS or abuse of intravenous addictive drugs. Laboratory tests are of limited
value and will not detect early infections. Laboratory tests are required only for four diseases in the Philippines.
There are other blood transmissible diseases we do not yet screen for and there could be others where there are no
tests available yet.

A blood bank owner expecting to gain profit from selling blood will also try his best to limit his expenses. Usually he
tries to increase his profit by buying cheaper reagents or test kits, hiring cheaper manpower or skipping some tests
altogether. He may also try to sell blood even though these have infections in them. Because there is no existing
system of counterchecking these, the blood bank owner can usually get away with many unethical practices.

The experience of Germany, Mr. President is illustrative of this issue. The reason why contaminated blood was sold
was that there were corners cut by commercial blood banks in the testing process. They were protecting their
profits.25

The sponsorship speech of Senator Mercado further elucidated his stand on the issue:

Page 99 of 152
 …

Senator Mercado: Today, across the country, hundreds of poverty-stricken, sickly and weak Filipinos, who,
unemployed, without hope and without money to buy the next meal, will walk into a commercial blood bank, extend
their arms and plead that their blood be bought. They will lie about their age, their medical history. They will lie about
when they last sold their blood. For doing this, they will receive close to a hundred pesos. This may tide them over
for the next few days. Of course, until the next bloodletting.

This same blood will travel to the posh city hospitals and urbane medical centers. This same blood will now be
bought by the rich at a price over 500% of the value for which it was sold. Between this buying and selling,
obviously, someone has made a very fast buck.

Every doctor has handled at least one transfusion-related disease in an otherwise normal patient. Patients come in
for minor surgery of the hand or whatever and they leave with hepatitis B. A patient comes in for an appendectomy
and he leaves with malaria. The worst nightmare: A patient comes in for a Caesarian section and leaves with AIDS.

We do not expect good blood from donors who sell their blood because of poverty. The humane dimension of blood
transfusion is not in the act of receiving blood, but in the act of giving it…

For years, our people have been at the mercy of commercial blood banks that lobby their interests among medical
technologists, hospital administrators and sometimes even physicians so that a proactive system for collection of
blood from healthy donors becomes difficult, tedious and unrewarding.

The Department of Health has never institutionalized a comprehensive national program for safe blood and for
voluntary blood donation even if this is a serious public health concern and has fallen for the linen of commercial
blood bankers, hook, line and sinker because it is more convenient to tell the patient to buy blood.

Commercial blood banks hold us hostage to their threat that if we are to close them down, there will be no blood
supply. This is true if the Government does not step in to ensure that safe supply of blood. We cannot allow
commercial interest groups to dictate policy on what is and what should be a humanitarian effort. This cannot and
will never work because their interest in blood donation is merely monetary. We cannot expect commercial blood
banks to take the lead in voluntary blood donation. Only the Government can do it, and the Government must do
it."26

On May 5, 1999, petitioners filed a Motion for Issuance of Expanded Temporary Restraining Order for the Court to
order respondent Secretary of Health to cease and desist from announcing the closure of commercial blood banks,
compelling the public to source the needed blood from voluntary donors only, and committing similar acts "that will
ultimately cause the shutdown of petitioners’ blood banks."27

On July 8, 1999, respondent Secretary filed his Comment and/or Opposition to the above motion stating that he has
not ordered the closure of commercial blood banks on account of the Temporary Restraining Order (TRO) issued on
June 2, 1998 by the Court. In compliance with the TRO, DOH had likewise ceased to distribute the health advisory
leaflets, posters and flyers to the public which state that "blood banks are closed or will be closed." According to
respondent Secretary, the same were printed and circulated in anticipation of the closure of the commercial blood
banks in accordance with R.A. No. 7719, and were printed and circulated prior to the issuance of the TRO.28

On July 15, 1999, petitioners in G.R. No. 133640 filed a Petition to Show Cause Why Public Respondent Should Not
be Held in Contempt of Court, docketed as G.R. No. 139147, citing public respondent’s willful disobedience of or
resistance to the restraining order issued by the Court in the said case. Petitioners alleged that respondent’s act
constitutes circumvention of the temporary restraining order and a mockery of the authority of the Court and the
orderly administration of justice.29 Petitioners added that despite the issuance of the temporary restraining order in
G.R. No. 133640, respondent, in his effort to strike down the existence of commercial blood banks, disseminated
misleading information under the guise of health advisories, press releases, leaflets, brochures and flyers stating,
among others, that "this year [1998] all commercial blood banks will be closed by 27 May. Those who need blood
will have to rely on government blood banks."30 Petitioners further claimed that respondent Secretary of Health
announced in a press conference during the Blood Donor’s Week that commercial blood banks are "illegal and
dangerous" and that they "are at the moment protected by a restraining order on the basis that their commercial
interest is more important than the lives of the people." These were all posted in bulletin boards and other
conspicuous places in all government hospitals as well as other medical and health centers.31

In respondent Secretary’s Comment to the Petition to Show Cause Why Public Respondent Should Not Be Held in
Contempt of Court, dated January 3, 2000, it was explained that nothing was issued by the department ordering the
closure of commercial blood banks. The subject health advisory leaflets pertaining to said closure pursuant to
Republic Act No. 7719 were printed and circulated prior to the Court’s issuance of a temporary restraining order on
June 21, 1998.32

Public respondent further claimed that the primary purpose of the information campaign was "to promote the
importance and safety of voluntary blood donation and to educate the public about the hazards of patronizing blood
supplies from commercial blood banks."33 In doing so, he was merely performing his regular functions and duties as
Page 100 of 152
the Secretary of Health to protect the health and welfare of the public. Moreover, the DOH is the main proponent of
the voluntary blood donation program espoused by Republic Act No. 7719, particularly Section 4 thereof which
provides that, in order to ensure the adequate supply of human blood, voluntary blood donation shall be promoted
through public education, promotion in schools, professional education, establishment of blood services network,
and walking blood donors.

Hence, by authority of the law, respondent Secretary contends that he has the duty to promote the program of
voluntary blood donation. Certainly, his act of encouraging the public to donate blood voluntarily and educating the
people on the risks associated with blood coming from a paid donor promotes general health and welfare and which
should be given more importance than the commercial businesses of petitioners.34

On July 29, 1999, interposing personal and substantial interest in the case as taxpayers and citizens, a Petition-in-
Intervention was filed interjecting the same arguments and issues as laid down by petitioners in G.R. No. 133640
and 133661, namely, the unconstitutionality of the Acts, and, the issuance of a writ of prohibitory injunction. The
intervenors are the immediate relatives of individuals who had died allegedly because of shortage of blood supply at
a critical time.35

The intervenors contended that Republic Act No. 7719 constitutes undue delegation of legislative powers and
unwarranted deprivation of personal liberty.36

In a resolution, dated September 7, 1999, and without giving due course to the aforementioned petition, the Court
granted the Motion for Intervention that was filed by the above intervenors on August 9, 1999.

In his Comment to the petition-in-intervention, respondent Secretary of Health stated that the sale of blood is
contrary to the spirit and letter of the Act that "blood donation is a humanitarian act" and "blood transfusion is a
professional medical service and not a sale of commodity (Section 2[a] and [b] of Republic Act No. 7719). The act of
selling blood or charging fees other than those allowed by law is even penalized under Section 12."37

Thus, in view of these, the Court is now tasked to pass upon the constitutionality of Section 7 of Republic Act No.
7719 or the National Blood Services Act of 1994 and its Implementing Rules and Regulations.

In resolving the controversy, this Court deems it necessary to address the issues and/or questions raised by
petitioners concerning the constitutionality of the aforesaid Act in G.R. No. 133640 and 133661 as summarized
hereunder:

WHETHER OR NOT SECTION 7 OF R.A. 7719 CONSTITUTES UNDUE DELEGATION OF LEGISLATIVE

POWER;

II

WHETHER OR NOT SECTION 7 OF R.A. 7719 AND ITS IMPLEMENTING RULES AND REGULATIONS VIOLATE
THE EQUAL PROTECTION CLAUSE;

III

WHETHER OR NOT SECTION 7 OF R.A. 7719 AND ITS IMPLEMENTING RULES AND REGULATIONS VIOLATE
THE NON-IMPAIRMENT CLAUSE;

IV

WHETHER OR NOT SECTION 7 OF R.A. 7719 AND ITS IMPLEMENTING RULES AND REGULATIONS
CONSTITUTE DEPRIVATION OF PERSONAL LIBERTY AND PROPERTY;

WHETHER OR NOT R.A. 7719 IS A VALID EXERCISE OF POLICE POWER; and,

VI

WHETHER OR NOT SECTION 7 OF R.A. 7719 AND ITS IMPLEMENTING RULES AND REGULATIONS TRULY
SERVE PUBLIC WELFARE.

As to the first ground upon which the constitutionality of the Act is being challenged, it is the contention of petitioners
that the phase out of commercial or free standing blood banks is unconstitutional because it is an improper and
unwarranted delegation of legislative power. According to petitioners, the Act was incomplete when it was passed by

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the Legislature, and the latter failed to fix a standard to which the Secretary of Health must conform in the
performance of his functions. Petitioners also contend that the two-year extension period that may be granted by the
Secretary of Health for the phasing out of commercial blood banks pursuant to Section 7 of the Act constrained the
Secretary to legislate, thus constituting undue delegation of legislative power.

In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire whether
the statute was complete in all its terms and provisions when it left the hands of the Legislature so that nothing was
left to the judgment of the administrative body or any other appointee or delegate of the Legislature.38 Except as to
matters of detail that may be left to be filled in by rules and regulations to be adopted or promulgated by executive
officers and administrative boards, an act of the Legislature, as a general rule, is incomplete and hence invalid if it
does not lay down any rule or definite standard by which the administrative board may be guided in the exercise of
the discretionary powers delegated to it.39

Republic Act No. 7719 or the National Blood Services Act of 1994 is complete in itself. It is clear from the provisions
of the Act that the Legislature intended primarily to safeguard the health of the people and has mandated several
measures to attain this objective. One of these is the phase out of commercial blood banks in the country. The law
has sufficiently provided a definite standard for the guidance of the Secretary of Health in carrying out its provisions,
that is, the promotion of public health by providing a safe and adequate supply of blood through voluntary blood
donation. By its provisions, it has conferred the power and authority to the Secretary of Health as to its execution, to
be exercised under and in pursuance of the law.

Congress may validly delegate to administrative agencies the authority to promulgate rules and regulations to
implement a given legislation and effectuate its policies.40 The Secretary of Health has been given, under Republic
Act No. 7719, broad powers to execute the provisions of said Act. Section 11 of the Act states:

"SEC. 11. Rules and Regulations. – The implementation of the provisions of the Act shall be in accordance with the
rules and regulations to be promulgated by the Secretary, within sixty (60) days from the approval hereof…"

This is what respondent Secretary exactly did when DOH, by virtue of the administrative body’s authority and
expertise in the matter, came out with Administrative Order No.9, series of 1995 or the Rules and Regulations
Implementing Republic Act No. 7719. Administrative Order. No. 9 effectively filled in the details of the law for its
proper implementation.

Specifically, Section 23 of Administrative Order No. 9 provides that the phase-out period for commercial blood banks
shall be extended for another two years until May 28, 1998 "based on the result of a careful study and review of the
blood supply and demand and public safety." This power to ascertain the existence of facts and conditions upon
which the Secretary may effect a period of extension for said phase-out can be delegated by Congress. The true
distinction between the power to make laws and discretion as to its execution is illustrated by the fact that the
delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be
done; to the latter no valid objection can be made.41

In this regard, the Secretary did not go beyond the powers granted to him by the Act when said phase-out period
was extended in accordance with the Act as laid out in Section 2 thereof:

"SECTION 2. Declaration of Policy – In order to promote public health, it is hereby declared the policy of the state:

a) to promote and encourage voluntary blood donation by the citizenry and to instill public consciousness of the
principle that blood donation is a humanitarian act;

b) to lay down the legal principle that the provision of blood for transfusion is a medical service and not a sale of
commodity;

c) to provide for adequate, safe, affordable and equitable distribution of blood supply and blood products;

d) to inform the public of the need for voluntary blood donation to curb the hazards caused by the commercial sale
of blood;

e) to teach the benefits and rationale of voluntary blood donation in the existing health subjects of the formal
education system in all public and private schools as well as the non-formal system;

f) to mobilize all sectors of the community to participate in mechanisms for voluntary and non-profit collection of
blood;

g) to mandate the Department of Health to establish and organize a National Blood Transfusion Service Network in
order to rationalize and improve the provision of adequate and safe supply of blood;

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h) to provide for adequate assistance to institutions promoting voluntary blood donation and providing non-profit
blood services, either through a system of reimbursement for costs from patients who can afford to pay, or
donations from governmental and non-governmental entities;

i) to require all blood collection units and blood banks/centers to operate on a non-profit basis;

j) to establish scientific and professional standards for the operation of blood collection units and blood
banks/centers in the Philippines;

k) to regulate and ensure the safety of all activities related to the collection, storage and banking of blood; and,

l) to require upgrading of blood banks/centers to include preventive services and education to control spread of
blood transfusion transmissible diseases."

Petitioners also assert that the law and its implementing rules and regulations violate the equal protection clause
enshrined in the Constitution because it unduly discriminates against commercial or free standing blood banks in a
manner that is not germane to the purpose of the law.42

What may be regarded as a denial of the equal protection of the laws is a question not always easily determined. No
rule that will cover every case can be formulated. Class legislation, discriminating against some and favoring others
is prohibited but classification on a reasonable basis and not made arbitrarily or capriciously is permitted. The
classification, however, to be reasonable: (a) must be based on substantial distinctions which make real differences;
(b) must be germane to the purpose of the law; (c) must not be limited to existing conditions only; and, (d) must
apply equally to each member of the class.43

Republic Act No. 7719 or The National Blood Services Act of 1994, was enacted for the promotion of public health
and welfare. In the aforementioned study conducted by the New Tropical Medicine Foundation, it was revealed that
the Philippine blood banking system is disturbingly primitive and unsafe, and with its current condition, the spread of
infectious diseases such as malaria, AIDS, Hepatitis B and syphilis chiefly from blood transfusion is unavoidable.
The situation becomes more distressing as the study showed that almost 70% of the blood supply in the country is
sourced from paid blood donors who are three times riskier than voluntary blood donors because they are unlikely to
disclose their medical or social history during the blood screening.44

The above study led to the passage of Republic Act No. 7719, to instill public consciousness of the importance and
benefits of voluntary blood donation, safe blood supply and proper blood collection from healthy donors. To do this,
the Legislature decided to order the phase out of commercial blood banks to improve the Philippine blood banking
system, to regulate the supply and proper collection of safe blood, and so as not to derail the implementation of the
voluntary blood donation program of the government. In lieu of commercial blood banks, non-profit blood banks or
blood centers, in strict adherence to professional and scientific standards to be established by the DOH, shall be set
in place.45

Based on the foregoing, the Legislature never intended for the law to create a situation in which unjustifiable
discrimination and inequality shall be allowed. To effectuate its policy, a classification was made between nonprofit
blood banks/centers and commercial blood banks.

We deem the classification to be valid and reasonable for the following reasons:

One, it was based on substantial distinctions. The former operates for purely humanitarian reasons and as a
medical service while the latter is motivated by profit. Also, while the former wholly encourages voluntary blood
donation, the latter treats blood as a sale of commodity.

Two, the classification, and the consequent phase out of commercial blood banks is germane to the purpose of the
law, that is, to provide the nation with an adequate supply of safe blood by promoting voluntary blood donation and
treating blood transfusion as a humanitarian or medical service rather than a commodity. This necessarily involves
the phase out of commercial blood banks based on the fact that they operate as a business enterprise, and they
source their blood supply from paid blood donors who are considered unsafe compared to voluntary blood donors
as shown by the USAID-sponsored study on the Philippine blood banking system.

Three, the Legislature intended for the general application of the law. Its enactment was not solely to address the
peculiar circumstances of the situation nor was it intended to apply only to the existing conditions.

Lastly, the law applies equally to all commercial blood banks without exception.

Having said that, this Court comes to the inquiry as to whether or not Republic Act No. 7719 constitutes a valid
exercise of police power.

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The promotion of public health is a fundamental obligation of the State. The health of the people is a primordial
governmental concern. Basically, the National Blood Services Act was enacted in the exercise of the State’s police
power in order to promote and preserve public health and safety.

Police power of the state is validly exercised if (a) the interest of the public generally, as distinguished from those of
a particular class, requires the interference of the State; and, (b) the means employed are reasonably necessary to
the attainment of the objective sought to be accomplished and not unduly oppressive upon individuals.46

In the earlier discussion, the Court has mentioned of the avowed policy of the law for the protection of public health
by ensuring an adequate supply of safe blood in the country through voluntary blood donation. Attaining this
objective requires the interference of the State given the disturbing condition of the Philippine blood banking system.

In serving the interest of the public, and to give meaning to the purpose of the law, the Legislature deemed it
necessary to phase out commercial blood banks. This action may seriously affect the owners and operators, as well
as the employees, of commercial blood banks but their interests must give way to serve a higher end for the interest
of the public.

The Court finds that the National Blood Services Act is a valid exercise of the State’s police power. Therefore, the
Legislature, under the circumstances, adopted a course of action that is both necessary and reasonable for the
common good. Police power is the State authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare.47

It is in this regard that the Court finds the related grounds and/or issues raised by petitioners, namely, deprivation of
personal liberty and property, and violation of the non-impairment clause, to be unmeritorious.

Petitioners are of the opinion that the Act is unconstitutional and void because it infringes on the freedom of choice
of an individual in connection to what he wants to do with his blood which should be outside the domain of State
intervention. Additionally, and in relation to the issue of classification, petitioners asseverate that, indeed, under the
Civil Code, the human body and its organs like the heart, the kidney and the liver are outside the commerce of man
but this cannot be made to apply to human blood because the latter can be replenished by the body. To treat human
blood equally as the human organs would constitute invalid classification. 48

Petitioners likewise claim that the phase out of the commercial blood banks will be disadvantageous to them as it
will affect their businesses and existing contracts with hospitals and other health institutions, hence Section 7 of the
Act should be struck down because it violates the non-impairment clause provided by the Constitution.

As stated above, the State, in order to promote the general welfare, may interfere with personal liberty, with
property, and with business and occupations. Thus, persons may be subjected to certain kinds of restraints and
burdens in order to secure the general welfare of the State and to this fundamental aim of government, the rights of
the individual may be subordinated.49

Moreover, in the case of Philippine Association of Service Exporters, Inc. v. Drilon,50 settled is the rule that the non-
impairment clause of the Constitution must yield to the loftier purposes targeted by the government. The right
granted by this provision must submit to the demands and necessities of the State’s power of regulation. While the
Court understands the grave implications of Section 7 of the law in question, the concern of the Government in this
case, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is
profits that suffer as a result of government regulation.

Furthermore, the freedom to contract is not absolute; all contracts and all rights are subject to the police power of
the State and not only may regulations which affect them be established by the State, but all such regulations must
be subject to change from time to time, as the general well-being of the community may require, or as the
circumstances may change, or as experience may demonstrate the necessity.51 This doctrine was reiterated in the
case of Vda. de Genuino v. Court of Agrarian Relations52 where the Court held that individual rights to contract and
to property have to give way to police power exercised for public welfare.

As for determining whether or not the shutdown of commercial blood banks will truly serve the general public
considering the shortage of blood supply in the country as proffered by petitioners, we maintain that the wisdom of
the Legislature in the lawful exercise of its power to enact laws cannot be inquired into by the Court. Doing so would
be in derogation of the principle of separation of powers.53

That, under the circumstances, proper regulation of all blood banks without distinction in order to achieve the
objective of the law as contended by petitioners is, of course, possible; but, this would be arguing on what the
law may be or should be and not what the law is. Between is and ought there is a far cry. The wisdom and propriety
of legislation is not for this Court to pass upon.54

Finally, with regard to the petition for contempt in G.R. No. 139147, on the other hand, the Court finds respondent
Secretary of Health’s explanation satisfactory. The statements in the flyers and posters were not aimed at
influencing or threatening the Court in deciding in favor of the constitutionality of the law.

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Contempt of court presupposes a contumacious attitude, a flouting or arrogant belligerence in defiance of the
court.55 There is nothing contemptuous about the statements and information contained in the health advisory that
were distributed by DOH before the TRO was issued by this Court ordering the former to cease and desist from
distributing the same.

In sum, the Court has been unable to find any constitutional infirmity in the questioned provisions of the National
Blood Services Act of 1994 and its Implementing Rules and Regulations.

The fundamental criterion is that all reasonable doubts should be resolved in favor of the constitutionality of a
statute. Every law has in its favor the presumption of constitutionality. For a law to be nullified, it must be shown that
there is a clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond
reasonable doubt.56 Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly
establish the basis therefor. Otherwise, the petition must fail.

Based on the grounds raised by petitioners to challenge the constitutionality of the National Blood Services Act of
1994 and its Implementing Rules and Regulations, the Court finds that petitioners have failed to overcome the
presumption of constitutionality of the law. As to whether the Act constitutes a wise legislation, considering the
issues being raised by petitioners, is for Congress to determine.57

WHEREFORE, premises considered, the Court renders judgment as follows:

1. In G.R. Nos. 133640 and 133661, the Court UPHOLDS THE VALIDITY of Section 7 of Republic Act No. 7719,
otherwise known as the National Blood Services Act of 1994, and Administrative Order No. 9, Series of 1995 or the
Rules and Regulations Implementing Republic Act No. 7719. The petitions are DISMISSED. Consequently, the
Temporary Restraining Order issued by this Court on June 2, 1998, is LIFTED.

2. In G.R. No. 139147, the petition seeking to cite the Secretary of Health in contempt of court is DENIED for lack of
merit.

No costs.

SO ORDERED.

G.R. No. 96754 June 22, 1995

CONGRESSMAN JAMES L. CHIONGBIAN (Third District, South Cotobato) ADELBERT W. ANTONINO (First
District, South Cotobato), WILFREDO G. CAINGLET (Third District, Zamboanga del Norte), HILARION
RAMIRO, JR. (Second Division, Misamis Occidental), ERNESTO S. AMATONG (Second District, Zamboanga
del Norte), ALVIN G. DANS (Lone District, Basilan), ABDULLAH M. DIMAPORO (Second District, Lanao del
Norte), and CONGRESSWOMAN MARIA CLARA A. LOBREGAT (Lone District, Zamboanga City) petitioners,
vs.
HON. OSCAR M. ORBOS, Executive Secretary; COMMITTEE CHAIRMAN SEC. FIDEL V. RAMOS, CABINET
OFFICERS FOR REGIONAL DEVELOPMENT FOR REGIONS X AND XII, CHAIRMAN OF THE REGIONAL
DEVELOPMENT COUNCIL FOR REGION X, CHAIRMAN JESUS V. AYALA, CABINET OFFICERS FOR
REGIONAL DEVELOPMENT FOR REGIONS XI and XII, DEPARTMENT OF LOCAL GOVERNMENT, NATIONAL
ECONOMIC AND DEVELOPMENT AUTHORITY SECRETARIAT, PRESIDENTIAL MANAGEMENT STAFF, HON.
GUILLERMO CARAGUE, Secretary of the DEPARTMENT OF BUDGET and MANAGEMENT; and HON.
ROSALINA S. CAJUCUM, OIC National Treasurer, respondents.

IMMANUEL JALDON, petitioner,

vs.
HON. EXECUTIVE SECRETARY OSCAR M. ORBOS, HON. FIDEL RAMOS, HON. SECRETARY LUIS SANTOS,
AND HON. NATIONAL TREASURER ROSALINA CAJUCOM, respondents.

MENDOZA, J.:

These suits challenge the validity of a provision of the Organic Act for the Autonomous Region in Muslim Mindanao
(R.A. No. 6734), authorizing the President of the Philippines to "merge" by administrative determination the regions
remaining after the establishment of the Autonomous Region, and the Executive Order issued by the President
Page 105 of 152
pursuant to such authority, "Providing for the Reorganization of Administrative Regions in Mindanao." A temporary
restraining order prayed for by the petitioners was issued by this Court on January 29, 1991, enjoining the
respondents from enforcing the Executive Order and statute in question.

The facts are as follows:

Pursuant to Art. X, §18 of the 1987 Constitution, Congress passed R.A. No. 6734, the Organic Act for the
Autonomous Region in Muslim Mindanao, calling for a plebiscite to be held in the provinces of Basilan, Cotobato,
Davao del Sur, Lanao del Norte, Lanao del Sur, Maguindanao, Palawan, South Cotabato, Sultan Kudarat, Sulu,
Tawi-Tawi, Zamboanga del Norte, and Zamboanga del Sur, and the cities of Cotabato, Dapitan, Dipolog, General
Santos, Iligan, Marawi, Pagadian, Puerto Princesa and Zamboanga. In the ensuing plebiscite held on November 16,
1989, four provinces voted in favor of creating an autonomous region. These are the provinces of Lanao del Sur,
Maguindanao, Sulu and Tawi-Tawi. In accordance with the constitutional provision, these provinces became the
Autonomous Region in Muslim Mindanao.

On the other hand, with respect to provinces and cities not voting in favor of the Autonomous Region, Art. XIX, § 13
of R.A. No. 6734 provides,

That only the provinces and cities voting favorably in such plebiscites shall be included in the
Autonomous Region in Muslim Mindanao. The provinces and cities which in the plebiscite do not
vote for inclusion in the Autonomous Region shall remain in the existing administrative
regions. Provided, however, that the President may, by administrative determination, merge the
existing regions.

Pursuant to the authority granted by this provision, then President Corazon C. Aquino issued on October 12, 1990
Executive Order No. 429, "providing for the Reorganization of the Administrative Regions in Mindanao." Under this
Order, as amended by E.O. No. 439 —

(1) Misamis Occidental, at present part of Region X, will become part of Region IX.

(2) Oroquieta City, Tangub City and Ozamiz City, at present parts of Region X will become parts of
Region IX.

(3) South Cotobato, at present a part of Region XI, will become part of Region XII.

(4) General Santos City, at present part of Region XI, will become part of Region XII.

(5) Lanao del Norte, at present part of Region XII, will become part of Region IX.

(6) Iligan City and Marawi City, at present part of Region XII, will become part of Region IX.

Petitioners in G.R. No. 96754 are, or at least at the time of the filing of their petition, members of Congress
representing various legislative districts in South Cotobato, Zamboanga del Norte, Basilan, Lanao del Norte and
Zamboanga City. On November 12, 1990, they wrote then President Aquino protesting E.O. No. 429. They
contended that

There is no law which authorizes the President to pick certain provinces and cities within the existing
regions — some of which did not even take part in the plebiscite as in the case of the province of
Misamis Occidental and the cities of Oroquieta, Tangub and Ozamiz — and restructure them to new
administrative regions. On the other hand, the law (Sec. 13, Art. XIX, R.A. 6734) is specific to the
point, that is, that "the provinces and cities which in the plebiscite do not vote for inclusion in the
Autonomous Region shall remain in the existing administrative regions."

The transfer of the provinces of Misamis Occidental from Region X to Region IX; Lanao del Norte
from Region XII to Region IX, and South Cotobato from Region XI to Region XII are alterations of
the existing structures of governmental units, in other words, reorganization. This can be gleaned
from Executive Order No. 429, thus

Whereas, there is an urgent need to reorganize the administrative regions in

Mindanao to guarantee the effective delivery of field services of government
agencies taking into consideration the formation of the Autonomous Region in
Muslim Mindanao.

With due respect to Her Excellency, we submit that while the authority necessarily includes the
authority to merge, the authority to merge does not include the authority to reorganize. Therefore,
the President's authority under RA 6734 to "merge existing regions" cannot be construed to include
the authority to reorganize them. To do so will violate the rules of statutory construction.

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 The transfer of regional centers under Executive Order 429 is actually a restructuring
(reorganization) of administrative regions. While this reorganization, as in Executive Order 429, does
not affect the apportionment of congressional representatives, the same is not valid under the
penultimate paragraph of Sec. 13, Art. XIX of R.A. 6734 and Ordinance appended to the 1986
Constitution apportioning the seats of the House of Representatives of Congress of the Philippines
to the different legislative districts in provinces and cities.1

As their protest went unheeded, while Inauguration Ceremonies of the New Administrative Region IX were
scheduled on January 26, 1991, petitioners brought this suit for certiorari and prohibition.

On the other hand, the petitioner in G.R. No. 96673, Immanuel Jaldon, is a resident of Zamboanga City, who is
suing in the capacity of taxpayer and citizen of the Republic of the Philippines.

Petitioners in both cases contend that Art. XIX, §13 of R.A. No. 6734 is unconstitutional because (1) it unduly
delegates legislative power to the President by authorizing him to "merge [by administrative determination] the
existing regions" or at any rate provides no standard for the exercise of the power delegated and (2) the power
granted is not expressed in the title of the law.

In addition, petitioner in G.R. No. 96673 challenges the validity of E.O. No. 429 on the ground that the power
granted by Art. XIX, §13 to the President is only to "merge regions IX and XII" but not to reorganize the entire
administrative regions in Mindanao and certainly not to transfer the regional center of Region IX from Zamboanga
City to Pagadian City.

The Solicitor General defends the reorganization of regions in Mindanao by E.O. No. 429 as merely the exercise of
a power "traditionally lodged in the President," as held in Abbas v. Comelec,2 and as a mere incident of his power of
general supervision over local governments and control of executive departments, bureaus and offices under Art. X,
§16 and Art. VII, §17, respectively, of the Constitution.

He contends that there is no undue delegation of legislative power but only a grant of the power to "fill up" or provide
the details of legislation because Congress did not have the facility to provide for them. He cites by analogy the case
of Municipality of Cardona v. Municipality of Binangonan,3 in which the power of the Governor-General to fix
municipal boundaries was sustained on the ground that —

[such power] is simply a transference of certain details with respect to provinces, municipalities, and
townships, many of them newly created, and all of them subject to a more or less rapid change both
in development and centers of population, the proper regulation of which might require not only
prompt action but action of such a detailed character as not to permit the legislative body, as such,
to take it efficiently.

The Solicitor General justifies the grant to the President of the power "to merge the existing regions" as something
fairly embraced in the title of R.A. No. 6734, to wit, "An Act Providing for an Organic Act for the Autonomous Region
in Muslim Mindanao," because it is germane to it.

He argues that the power is not limited to the merger of those regions in which the provinces and cities which took
part in the plebiscite are located but that it extends to all regions in Mindanao as necessitated by the establishment
of the autonomous region.

Finally, he invokes P.D. No. 1416, as amended by P.D. No. 1772 which provides:

1. The President of the Philippines shall have the continuing authority to reorganize the National
Government. In exercising this authority, the President shall be guided by generally acceptable
principles of good government and responsive national government, including but not limited to the
following guidelines for a more efficient, effective, economical and development-oriented
governmental framework:

(a) More effective planning implementation, and review functions;

(b) Greater decentralization and responsiveness in decision-making process;

(c) Further minimization, if not, elimination, of duplication or overlapping of purposes,

functions, activities, and programs;

(d) Further development of as standardized as possible ministerial, sub-ministerial

and corporate organizational structures;

(e) Further development of the regionalization process; and

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 (f) Further rationalization of the functions of and administrative relationships among
government entities.

For purposes of this Decree, the coverage of the continuing authority of the President
to reorganize shall be interpreted to encompass all agencies, entities,
instrumentalities, and units of the National Government, including all government
owned or controlled corporations as well as the entire range of the powers, functions,
authorities, administrative relationships, acid related aspects pertaining to these
agencies, entities, instrumentalities, and units.

2. [T]he President may, at his discretion, take the following actions:

xxx xxx xxx

f. Create, abolish, group, consolidate, merge, or integrate entities, agencies,

instrumentalities, and units of the National Government, as well as expand, amend,
change, or otherwise modify their powers, functions and authorities, including, with
respect to government-owned or controlled corporations, their corporate life,
capitalization, and other relevant aspects of their charters.

g. Take such other related actions as may be necessary to carry out the purposes
and objectives of this Decree.

Considering the arguments of the parties, the issues are:

(1) whether the power to "merge" administrative regions is legislative in character, as petitioners contend, or
whether it is executive in character, as respondents claim it is, and, in any event, whether Art. XIX, §13 is invalid
because it contains no standard to guide the President's discretion;

(2) whether the power given is fairly expressed in the title of the statute; and

(3) whether the power granted authorizes the reorganization even of regions the provinces and cities in which either
did not take part in the plebiscite on the creation of the Autonomous Region or did not vote in favor of it; and

(4) whether the power granted to the President includes the power to transfer the regional center of Region IX from
Zamboanga City to Pagadian City.

It will be useful to recall first the nature of administrative regions and the basis and purpose for their creation. On
September 9, 1968, R.A. No. 5435 was passed "authorizing the President of the Philippines, with the help of a
Commission on Reorganization, to reorganize the different executive departments, bureaus, offices, agencies and
instrumentalities of the government, including banking or financial institutions and corporations owned or controlled
by it." The purpose was to promote "simplicity, economy and efficiency in the government."4 The Commission on
Reorganization created under the law was required to submit an integrated reorganization plan not later than
December 31, 1969 to the President who was in turn required to submit the plan to Congress within forty days after
the opening of its next regular session. The law provided that any reorganization plan submitted would become
effective only upon the approval of Congress.5

Accordingly, the Reorganization Commission prepared an Integrated Reorganization Plan which divided the country
into eleven administrative regions. 6 By P.D. No. 1, the Plan was approved and made part of the law of the land on
September 24, 1972. P.D. No. 1 was twice amended in 1975, first by P.D. No. 742 which "restructur[ed] the regional
organization of Mindanao, Basilan, Sulu and Tawi-Tawi" and later by P.D. No. 773 which further "restructur[ed] the
regional organization of Mindanao and divid[ed] Region IX into two sub-regions." In 1978, P.D. No. 1555 transferred
the regional center of Region IX from Jolo to Zamboanga City.

Thus the creation and subsequent reorganization of administrative regions have been by the President pursuant to
authority granted to him by law. In conferring on the President the power "to merge [by administrative determination]
the existing regions" following the establishment of the Autonomous Region in Muslim Mindanao, Congress merely
followed the pattern set in previous legislation dating back to the initial organization of administrative regions in
1972. The choice of the President as delegate is logical because the division of the country into regions is intended
to facilitate not only the administration of local governments but also the direction of executive departments which
the law requires should have regional offices. As this Court observed in Abbas, "while the power to merge
administrative regions is not expressly provided for in the Constitution, it is a power which has traditionally been
lodged with the President to facilitate the exercise of the power of general supervision over local governments
[seeArt. X, §4 of the Constitution]." The regions themselves are not territorial and political divisions like provinces,
cities, municipalities and barangays but are "mere groupings of contiguous provinces for administrative
purposes."7 The power conferred on the President is similar to the power to adjust municipal boundaries8 which has
been described in Pelaez v. Auditor General9 or as "administrative in nature."

Page 108 of 152

There is, therefore, no abdication by Congress of its legislative power in conferring on the President the power to
merge administrative regions. The question is whether Congress has provided a sufficient standard by which the
President is to be guided in the exercise of the power granted and whether in any event the grant of power to him is
included in the subject expressed in the title of the law.

First, the question of standard. A legislative standard need not be expressed. It may simply be gathered or
implied. 10 Nor need it be found in the law challenged because it may be embodied in other statutes on the same
subject as that of the challenged legislation. 11

With respect to the power to merge existing administrative regions, the standard is to be found in the same policy
underlying the grant to the President in R.A. No. 5435 of the power to reorganize the Executive Department, to wit:
"to promote simplicity, economy and efficiency in the government to enable it to pursue programs consistent with
national goals for accelerated social and economic development and to improve the service in the transaction of the
public business."12 Indeed, as the original eleven administrative regions were established in accordance with this
policy, it is logical to suppose that in authorizing the President to "merge [by administrative determination] the
existing regions" in view of the withdrawal from some of those regions of the provinces now constituting the
Autonomous Region, the purpose of Congress was to reconstitute the original basis for the organization of
administrative regions.

Nor is Art. XIX, §13 susceptible to charge that its subject is not embraced in the title of R.A. No. 6734. The
constitutional requirement that "every bill passed by the Congress shall embrace only one subject which shall be
expressed in the title thereof" 13 has always been given a practical rather than a technical construction. The title is
not required to be an index of the content of the bill. It is a sufficient compliance with the constitutional requirement if
the title expresses the general subject and all provisions of the statute are germane to that subject. 14 Certainly the
reorganization of the remaining administrative regions is germane to the general subject of R.A. No. 6734, which is
the establishment of the Autonomous Region in Muslim Mindanao.

Finally, it is contended that the power granted to the President is limited to the reorganization of administrative
regions in which some of the provinces and cities which voted in favor of regional autonomy are found, because Art.
XIX, §13 provides that those which did not vote for autonomy "shall remain in the existing administrative regions."
More specifically, petitioner in G.R. No. 96673 claims:

The questioned Executive Order No. 429 distorted and, in fact, contravened the clear intent of this
provision by moving out or transferring certain political subdivisions (provinces/cities) out of their
legally designated regions. Aggravating this unacceptable or untenable situation is EO No. 429's
effecting certain movements on areas which did not even participate in the November 19, 1989
plebiscite. The unauthorized action of the President, as effected by and under the questioned EO
No. 429, is shown by the following dispositions: (1) Misamis Occidental, formerly of Region X and
which did not even participate in the plebiscite, was moved from said Region X to Region IX; (2) the
cities of Ozamis, Oroquieta, and Tangub, all formerly belonging to Region X, which likewise did not
participate in the said plebiscite, were transferred to Region IX; (3) South Cotobato, from Region XI
to Region XII; (4) General Santos City: from Region XI to Region XII; (5) Lanao del Norte, from
Region XII to Region IX; and (6) the cities of Marawi and Iligan from Region XII to Region IX. All of
the said provinces and cities voted "NO", and thereby rejected their entry into the Autonomous
Region in Muslim Mindanao, as provided under RA No. 6734. 15

The contention has no merit. While Art. XIX, §13 provides that "The provinces and cities which do not vote for
inclusion in the Autonomous Region shall remain in the existing administrative regions," this provision is subject to
the qualification that "the President may by administrative determination merge the existing regions." This means
that while non-assenting provinces and cities are to remain in the regions as designated upon the creation of the
Autonomous Region, they may nevertheless be regrouped with contiguous provinces forming other regions as the
exigency of administration may require.

The regrouping is done only on paper. It involves no more than are definition or redrawing of the lines separating
administrative regions for the purpose of facilitating the administrative supervision of local government units by the
President and insuring the efficient delivery of essential services. There will be no "transfer" of local governments
from one region to another except as they may thus be regrouped so that a province like Lanao del Norte, which is
at present part of Region XII, will become part of Region IX.

The regrouping of contiguous provinces is not even analogous to a redistricting or to the division or merger of local
governments, which all have political consequences on the right of people residing in those political units to vote and
to be voted for. It cannot be overemphasized that administrative regions are mere groupings of contiguous
provinces for administrative purposes, not for political representation.

Petitioners nonetheless insist that only those regions, in which the provinces and cities which voted for inclusion in
the Autonomous Region are located, can be "merged" by the President.

To be fundamental reason Art. XIX, §13 is not so limited. But the more fundamental reason is that the President's
power cannot be so limited without neglecting the necessities of administration. It is noteworthy that the petitioners
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do not claim that the reorganization of the regions in E.O. No. 429 is irrational. The fact is that, as they themselves
admit, the reorganization of administrative regions in E.O. No. 429 is based on relevant criteria, to wit: (1) contiguity
and geographical features; (2) transportation and communication facilities; (3) cultural and language groupings; (4)
land area and population; (5) existing regional centers adopted by several agencies; (6) socio-economic
development programs in the regions and (7) number of provinces and cities.

What has been said above applies to the change of the regional center from Zamboanga City to Pagadian City.
Petitioners contend that the determination of provincial capitals has always been by act of Congress. But as, this
Court said in Abbas, 16 administrative regions are mere "groupings of contiguous provinces for administrative
purposes, . . . [They] are not territorial and political subdivisions like provinces, cities, municipalities and barangays."
There is, therefore, no basis for contending that only Congress can change or determine regional centers. To the
contrary, the examples of P.D. Nos. 1, 742, 773 and 1555 suggest that the power to reorganize administrative
regions carries with it the power to determine the regional center.

It may be that the transfer of the regional center in Region IX from Zamboanga City to Pagadian City may entail the
expenditure of large sums of money for the construction of buildings and other infrastructure to house regional
offices. That contention is addressed to the wisdom of the transfer rather than to its legality and it is settled that
courts are not the arbiters of the wisdom or expediency of legislation. In any event this is a question that we will
consider only if fully briefed and upon a more adequate record than that presented by petitioners.

WHEREFORE, the petitions for certiorari and prohibition are DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 196425 July 24, 2012

PROSPERO A. PICHAY, JR., Petitioner,

vs.
OFFICE OF THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS INVESTIGATIVE AND
ADJUDICATORY DIVISION, HON. PAQUITO N. OCHOA, JR., in his capacity as Executive Secretary, and
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, and as an ex-officio member of the
Monetary Board, Respondents.

DECISION

PERLAS-BERNABE, J.:

The Case

This is a Petition for Certiorari and Prohibition with a prayer for the issuance of a temporary restraining order,
seeking to declare as unconstitutional Executive Order No. 13, entitled, "Abolishing the Presidential Anti-Graft
Commission and Transferring Its Investigative, Adjudicatory and Recommendatory Functions to the Office Of The
Deputy Executive Secretary For Legal Affairs, Office of the President",1 and to permanently prohibit respondents
from administratively proceeding against petitioner on the strength of the assailed executive order.

The Facts

On April 16, 2001, then President Gloria Macapagal-Arroyo issued Executive Order No. 12 (E.O. 12) creating the
Presidential Anti-Graft Commission (PAGC) and vesting it with the power to investigate or hear administrative cases
or complaints for possible graft and corruption, among others, against presidential appointees and to submit its
report and recommendations to the President. Pertinent portions of E.O. 12 provide:

Section 4. Jurisdiction, Powers and Functions. –

(a) x x x xxx xxx

(b) The Commission, acting as a collegial body, shall have the authority to investigate or hear administrative cases
or complaints against all presidential appointees in the government and any of its agencies or instrumentalities xxx

xxx xxx xxx

xxx xxx xxx

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Section 8. Submission of Report and Recommendations. – After completing its investigation or hearing, the
Commission en banc shall submit its report and recommendations to the President. The report and
recommendations shall state, among others, the factual findings and legal conclusions, as well as the penalty
recommend (sic) to be imposed or such other action that may be taken."

On November 15, 2010, President Benigno Simeon Aquino III issued Executive Order No. 13 (E.O. 13), abolishing
the PAGC and transferring its functions to the Office of the Deputy Executive Secretary for Legal Affairs (ODESLA),
more particularly to its newly-established Investigative and Adjudicatory Division (IAD). The full text of the assailed
executive order reads:

EXECUTIVE ORDER NO. 13

ABOLISHING THE PRESIDENTIAL ANTI-GRAFT COMMISSION AND TRANSFERRING ITS INVESTIGATIVE,

ADJUDICATORY AND RECOMMENDATORY FUNCTIONS TO THE OFFICE OF THE DEPUTY EXECUTIVE
SECRETARY FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT

WHEREAS, this administration has a continuing mandate and advocacy to fight and eradicate corruption in the
different departments, bureaus, offices and other government agencies and instrumentalities;

WHEREAS, the government adopted a policy of streamlining the government bureaucracy to promote economy and
efficiency in government;

WHEREAS, Section VII of the 1987 Philippine Constitution provides that the President shall have control of all the
executive departments, bureaus and offices;

WHEREAS, Section 31 Chapter 10, Title III, Book III of Executive Order 292 (Administrative Code of 1987) provides
for the continuing authority of the President to reorganize the administrative structure of the Office of the President;

WHEREAS, Presidential Decree (PD) No. 1416 (Granting Continuing Authority to the President of the Philippines to
Reorganize the National Government), as amended by PD 1722, provides that the President of the Philippines shall
have continuing authority to reorganize the administrative structure of the National Government and may, at his
discretion, create, abolish, group, consolidate, merge or integrate entities, agencies, instrumentalities and units of
the National Government, as well as, expand, amend, change or otherwise modify their powers, functions and
authorities;

WHEREAS, Section 78 of the General Provisions of Republic Act No. 9970 (General Appropriations Act of 2010)
authorizes the President of the Philippines to direct changes in the organizational units or key positions in any
department or agency;

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

SECTION 1. Declaration of Policy. It is the policy of the government to fight and eradicate graft and corruption in the
different departments, bureaus, offices and other government agencies and instrumentalities.

The government adopted a policy of streamlining the government bureaucracy to promote economy and efficiency
in the government.

SECTION 2. Abolition of Presidential Anti-Graft Commission (PAGC). To enable the Office of the President (OP) to
directly investigate graft and corrupt cases of Presidential appointees in the Executive Department including heads
of government-owned and controlled corporations, the

Presidential Anti-Graft Commission (PAGC) is hereby abolished and their vital functions and other powers and
functions inherent or incidental thereto, transferred to the Office of the Deputy Executive Secretary for Legal Affairs
(ODESLA), OP in accordance with the provisions of this Executive Order.

SECTION 3. Restructuring of the Office of the Deputy Executive Secretary for Legal Affairs, OP. In addition to the
Legal and Legislative Divisions of the ODESLA, the Investigative and Adjudicatory Division shall be created.

The newly created Investigative and Adjudicatory Division shall perform powers, functions and duties mentioned in
Section 2 hereof, of PAGC.

The Deputy Executive Secretary for Legal Affairs (DESLA) will be the recommending authority to the President, thru
the Executive Secretary, for approval, adoption or modification of the report and recommendations of the
Investigative and Adjudicatory Division of ODESLA.

SECTION 4. Personnel Who May Be Affected By the Abolition of PAGC. The personnel who may be affected by the
abolition of the PAGC shall be allowed to avail of the benefits provided under existing laws if applicable. The
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Department of Budget and Management (DBM) is hereby ordered to release the necessary funds for the benefits of
the employees.

SECTION 5. Winding Up of the Operation and Disposition of the Functions, Positions, Personnel, Assets and
Liabilities of PAGC. The winding up of the operations of PAGC including the final disposition or transfer of their
functions, positions, personnel, assets and liabilities as may be necessary, shall be in accordance with the
applicable provision(s) of the Rules and Regulations Implementing EO 72 (Rationalizing the Agencies Under or
Attached to the Office of the President) dated March 15, 2002. The winding up shall be implemented not later than
31 December 2010.

The Office of the Executive Secretary, with the assistance of the Department of Budget and Management, shall
ensure the smooth and efficient implementation of the dispositive actions and winding-up of the activities of PAGC.

SECTION 6. Repealing Clause. All executive orders, rules, regulations and other issuances or parts thereof, which
are inconsistent with the provisions of this Executive Order, are hereby revoked or modified accordingly.

SECTION 7. Effectivity. This Executive Order shall take effect immediately after its publication in a newspaper of
general circulation.

On April 6, 2011, respondent Finance Secretary Cesar V. Purisima filed before the IAD-ODESLA a complaint
affidavit2 for grave misconduct against petitioner Prospero A. Pichay, Jr., Chairman of the Board of Trustees of the
Local Water Utilities Administration (LWUA), as well as the incumbent members of the LWUA Board of Trustees,
namely, Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario M. Pena, Sr. and Daniel Landingin, which arose
from the purchase by the LWUA of Four Hundred Forty-Five Thousand Three Hundred Seventy Seven (445,377)
shares of stock of Express Savings Bank, Inc.

On April 14, 2011, petitioner received an Order3 signed by Executive Secretary Paquito N. Ochoa, Jr. requiring him
and his co-respondents to submit their respective written explanations under oath. In compliance therewith,
petitioner filed a Motion to Dismiss Ex Abundante Ad Cautelam manifesting that a case involving the same
transaction and charge of grave misconduct entitled, "Rustico B. Tutol, et al. v. Prospero Pichay, et al.", and
docketed as OMB-C-A-10-0426-I, is already pending before the Office of the Ombudsman.

Now alleging that no other plain, speedy and adequate remedy is available to him in the ordinary course of law,
petitioner has resorted to the instant petition for certiorari and prohibition upon the following grounds:

I. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO CREATE

A PUBLIC OFFICE.

II. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO

APPROPRIATE FUNDS.

III. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF CONGRESS TO DELEGATE

QUASI-JUDICIAL POWERS TO ADMINISTRATIVE AGENCIES.

IV. E.O. 13 IS UNCONSTITUTIONAL FOR ENCROACHING UPON THE POWERS OF THE

OMBUDSMAN.

V. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE GUARANTEE OF DUE PROCESS.

VI. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE EQUAL PROTECTION CLAUSE.

Our Ruling

In assailing the constitutionality of E.O. 13, petitioner asseverates that the President is not authorized under any
existing law to create the Investigative and Adjudicatory Division, Office of the Deputy Executive Secretary for Legal
Affairs (IAD-ODESLA) and that by creating a new, additional and distinct office tasked with quasi-judicial functions,
the President has not only usurped the powers of congress to create a public office, appropriate funds and delegate
quasi-judicial functions to administrative agencies but has also encroached upon the powers of the Ombudsman.
Petitioner avers that the unconstitutionality of E.O. 13 is also evident when weighed against the due process
requirement and equal protection clause under the 1987 Constitution.

The contentions are unavailing.

The President has Continuing Authority to Reorganize the Executive Department under E.O. 292.

Section 31 of Executive Order No. 292 (E.O. 292), otherwise known as the Administrative Code of 1987, vests in the
President the continuing authority to reorganize the offices under him in order to achieve simplicity, economy and
efficiency. E.O. 292 sanctions the following actions undertaken for such purpose:
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 (1)Restructure the internal organization of the Office of the President Proper, including the immediate
Offices, the Presidential Special Assistants/Advisers System and the Common Staff Support System, by
abolishing, consolidating, or merging units thereof or transferring functions from one unit to another;

(2)Transfer any function under the Office of the President to any other Department or Agency as well as
transfer functions to the Office of the President from other Departments and Agencies; and

(3)Transfer any agency under the Office of the President to any other Department or Agency as well as
transfer agencies to the Office of the President from other departments or agencies.4

In the case of Buklod ng Kawaning EIIB v. Zamora5 the Court affirmed that the President's authority to carry out a
reorganization in any branch or agency of the executive department is an express grant by the legislature by virtue
of E.O. 292, thus:

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 of 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. (Emphasis supplied)

And in Domingo v. Zamora,6 the Court gave the rationale behind the President's continuing authority in this wise:

The law grants the President this power in recognition of the recurring need of every President to reorganize his
office "to achieve simplicity, economy and efficiency." The Office of the President is the nerve center of the
Executive Branch. To remain effective and efficient, the Office of the President must be capable of being shaped
and reshaped by the President in the manner he deems fit to carry out his directives and policies. After all, the Office
of the President is the command post of the President. (Emphasis supplied)

Clearly, the abolition of the PAGC and the transfer of its functions to a division specially created within the ODESLA
is properly within the prerogative of the President under his continuing "delegated legislative authority to reorganize"
his own office pursuant to E.O. 292.

Generally, this authority to implement organizational changes is limited to transferring either an office or a function
from the Office of the President to another Department or Agency, and the other way around.7

Only Section 31(1) gives the President a virtual freehand in dealing with the internal structure of the Office of the
President Proper by allowing him to take actions as extreme as abolition, consolidation or merger of units, apart
from the less drastic move of transferring functions and offices from one unit to another. Again, in Domingo v.
Zamora8 the Court noted:

However, the President's power to reorganize the Office of the President under Section 31 (2) and (3) of EO 292
should be distinguished from his power to reorganize the Office of the President Proper. Under Section 31 (1) of EO
292, the President can reorganize the Office of the President Proper by abolishing, consolidating or merging units,
or by transferring functions from one unit to another. In contrast, under Section 31 (2) and (3) of EO 292, the
President's power to reorganize offices outside the Office of the President Proper but still within the Office of the

President is limited to merely transferring functions or agencies from the Office of the President to Departments or
Agencies, and vice versa.

The distinction between the allowable organizational actions under Section 31(1) on the one hand and Section 31
(2) and (3) on the other is crucial not only as it affects employees' tenurial security but also insofar as it touches
upon the validity of the reorganization, that is, whether the executive actions undertaken fall within the limitations
prescribed under E.O. 292. When the PAGC was created under E.O. 12, it was composed of a Chairman and two
(2) Commissioners who held the ranks of Presidential Assistant II and I, respectively,9 and was placed directly "under
the Office of the President."10 On the other hand, the ODESLA, to which the functions of the PAGC have now been
transferred, is an office within the Office of the President Proper.11 Since both of these offices belong to the Office of
the President Proper, the reorganization by way of abolishing the PAGC and transferring its functions to the
ODESLA is allowable under Section 31 (1) of E.O. 292.

Petitioner, however, goes on to assert that the President went beyond the authority granted by E.O. 292 for him to
reorganize the executive department since his issuance of E.O. 13 did not merely involve the abolition of an office
but the creation of one as well. He argues that nowhere in the legal definition laid down by the Court in several
cases does a reorganization include the act of creating an office.

The contention is misplaced.

Page 113 of 152

The Reorganization Did not Entail the Creation of a New, Separate and Distinct Office.

The abolition of the PAGC did not require the creation of a new, additional and distinct office as the duties and
functions that pertained to the defunct anti-graft body were simply transferred to the ODESLA, which is an existing
office within the Office of the President Proper. The reorganization required no more than a mere alteration of the
administrative structure of the ODESLA through the establishment of a third division – the Investigative and
Adjudicatory Division – through which ODESLA could take on the additional functions it has been tasked to
discharge under E.O. 13. In Canonizado v. Aguirre,12 We ruled that –

Reorganization 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. It involves a reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy of functions.

The Reorganization was Pursued in Good Faith.

A valid reorganization must not only be exercised through legitimate authority but must also be pursued in good
faith. A reorganization is said to be carried out in good faith if it is done for purposes of economy and efficiency.13 It
appears in this case that the streamlining of functions within the Office of the President Proper was pursued with
such purposes in mind.

In its Whereas clauses, E.O. 13 cites as bases for the reorganization the policy dictates of eradicating corruption in
the government and promoting economy and efficiency in the bureaucracy. Indeed, the economical effects of the
reorganization is shown by the fact that while Congress had initially appropriated P22 Million for the PAGC's
operation in the 2010 annual budget,14 no separate or added funding of such a considerable amount was ever
required after the transfer of the PAGC functions to the IAD-ODESLA.

Apparently, the budgetary requirements that the IAD-ODESLA needed to discharge its functions and maintain its
personnel would be sourced from the following year's appropriation for the President's Offices under the General
Appropriations Act of 2011.15 Petitioner asseverates, however, that since Congress did not indicate the manner by
which the appropriation for the Office of the President was to be distributed, taking therefrom the operational funds
of the IAD-ODESLA would amount to an illegal appropriation by the President. The contention is without legal basis.

There is no usurpation of the legislative power to appropriate public funds.

In the chief executive dwell the powers to run government. Placed upon him is the power to recommend the budget
necessary for the operation of the Government,16 which implies that he has the necessary authority to evaluate and
determine the structure that each government agency in the executive department would need to operate in the
most economical and efficient manner.17 Hence, the express recognition under Section 78 of R.A. 9970 or the
General Appropriations Act of 2010 of the President’s authority to "direct changes in the organizational units or key
positions in any department or agency." The aforecited provision, often and consistently included in the general
appropriations laws, recognizes the extent of the President’s power to reorganize the executive offices and agencies
under him, which is, "even to the extent of modifying and realigning appropriations for that purpose."18

And to further enable the President to run the affairs of the executive department, he is likewise given constitutional
authority to augment any item in the General Appropriations Law using the savings in other items of the
appropriation for his office.19 In fact, he is explicitly allowed by law to transfer any fund appropriated for the different
departments, bureaus, offices and agencies of the Executive Department which is included in the General
Appropriations Act, to any program, project or activity of any department, bureau or office included in the General
Appropriations Act or approved after its enactment.20

Thus, while there may be no specific amount earmarked for the IAD-ODESLA from the total amount appropriated by
Congress in the annual budget for the Office of the President, the necessary funds for the IAD-ODESLA may be
properly sourced from the President's own office budget without committing any illegal appropriation. After all, there
is no usurpation of the legislature's power to appropriate funds when the President simply allocates the existing
funds previously appropriated by Congress for his office.

The IAD-ODESLA is a fact-finding and recommendatory body not vested with quasi-judicial powers.

Petitioner next avers that the IAD-ODESLA was illegally vested with judicial power which is reserved to the Judicial
Department and, by way of exception through an express grant by the legislature, to administrative agencies. He
points out that the name Investigative and Adjudicatory Division is proof itself that the IAD-ODESLA wields quasi-
judicial power.

The argument is tenuous. As the OSG aptly explained in its Comment,21 while the term "adjudicatory" appears part of
its appellation, the IAD-ODESLA cannot try and resolve cases, its authority being limited to the conduct of
investigations, preparation of reports and submission of recommendations. E.O. 13 explicitly states that the IAD-
ODESLA shall "perform powers, functions and duties xxx, of PAGC."22

Page 114 of 152

Under E.O. 12, the PAGC was given the authority to "investigate or hear administrative cases or complaints against
all presidential appointees in the government"23 and to "submit its report and recommendations to the
President."24The IAD-ODESLA is a fact-finding and recommendatory body to the President, not having the power to
settle controversies and adjudicate cases. As the Court ruled in Cariño v. Commission on Human Rights,25 and later
reiterated in Biraogo v. The Philippine Truth Commission:26

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 determined authoritatively, finally and definitively, subject to such appeals or
modes of review as may be provided by law.

The President's authority to issue E.O. 13 and constitute the IAD-ODESLA as his fact-finding investigator cannot be
doubted. After all, as Chief Executive, he is granted full control over the Executive Department to ensure the
enforcement of the laws. Section 17, Article VII of the Constitution provides:

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

The obligation to see to it that laws are faithfully executed necessitates the corresponding power in the President to
conduct investigations into the conduct of officials and employees in the executive department.27

The IAD-ODESLA does not encroach upon the powers and duties of the Ombudsman.

Contrary to petitioner's contention, the IAD-ODESLA did not encroach upon the Ombudsman's primary jurisdiction
when it took cognizance of the complaint affidavit filed against him notwithstanding the earlier filing of criminal and
administrative cases involving the same charges and allegations before the Office of the Ombudsman. The primary
jurisdiction of the Ombudsman to investigate and prosecute cases refers to criminal cases cognizable by the
Sandiganbayan and not to administrative cases. It is only in the exercise of its primary jurisdiction that the
Ombudsman may, at any time, take over the investigation being conducted by another investigatory agency. Section
15 (1) of R.A. No. 6770 or the Ombudsman Act of 1989, empowers the Ombudsman to –

(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.
(Emphasis supplied)

Since the case filed before the IAD-ODESLA is an administrative disciplinary case for grave misconduct, petitioner
may not invoke the primary jurisdiction of the Ombudsman to prevent the IAD-ODESLA from proceeding with its
investigation. In any event, the Ombudsman's authority to investigate both elective and appointive officials in the
government, extensive as it may be, is by no means exclusive. It is shared with other similarly authorized
government agencies.28

While the Ombudsman's function goes into the determination of the existence of probable cause and the
adjudication of the merits of a criminal accusation, the investigative authority of the IAD- ODESLA is limited to that of
a fact-finding investigator whose determinations and recommendations remain so until acted upon by the President.
As such, it commits no usurpation of the Ombudsman's constitutional duties.

Executive Order No. 13 Does Not Violate Petitioner's Right to Due Process and the Equal Protection of the Laws.

Petitioner goes on to assail E.O. 13 as violative of the equal protection clause pointing to the arbitrariness of limiting
the IAD-ODESLA's investigation only to presidential appointees occupying upper-level positions in the government.
The equal protection of the laws is a guaranty against any form of undue favoritism or hostility from the
government.29 It is embraced under the due process concept and simply requires that, in the application of the law,
"all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities
imposed."30 The equal protection clause, however, is not absolute but subject to reasonable classification so that
aggrupations bearing substantial distinctions may be treated differently from each other. This we ruled in Farinas v.
Executive Secretary,31 wherein we further stated that –

The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not intended to prohibit legislation which is limited either in the
object to which it is directed or by territory within which it is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like circumstances and conditions both as
to privileges conferred and liabilities enforced. The equal protection clause is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all persons within such class, and
reasonable grounds exist for making a distinction between those who fall within such class and those who do not.
(Emphasis supplied)
Page 115 of 152
Presidential appointees come under the direct disciplining authority of the President. This proceeds from the well
settled principle that, in the absence of a contrary law, the power to remove or to discipline is lodged in the same
authority on which the power to appoint is vested.32 Having the power to remove and/or discipline presidential
appointees, the President has the corollary authority to investigate such public officials and look into their conduct in
office.33 Petitioner is a presidential appointee occupying the high-level position of Chairman of the LWUA.
Necessarily, he comes under the disciplinary jurisdiction of the President, who is well within his right to order an
investigation into matters that require his informed decision.

There are substantial distinctions that set apart presidential appointees occupying upper-level positions in
government from non-presidential appointees and those that occupy the lower positions in government. In
Salumbides v. Office of the Ombudsman,34 we had ruled extensively on the substantial distinctions that exist
between elective and appointive public officials, thus:

Substantial distinctions clearly exist between elective officials and appointive officials. The former occupy their office
by virtue of the mandate of the electorate. They are elected to an office for a definite term and may be removed
therefrom only upon stringent conditions. On the other hand, appointive officials hold their office by virtue of their
designation thereto by an appointing authority. Some appointive officials hold their office in a permanent capacity
and are entitled to security of tenure while others serve at the pleasure of the appointing authority.

xxxx

An election is the embodiment of the popular will, perhaps the purest expression of the sovereign power of the
people. It involves the choice or selection of candidates to public office by popular vote. Considering that elected
1âwphi1

officials are put in office by their constituents for a definite term, x x x complete deference is accorded to the will of
the electorate that they be served by such officials until the end of the term for which they were elected. In contrast,
there is no such expectation insofar as appointed officials are concerned. (Emphasis supplied)

Also, contrary to petitioner's assertions, his right to due process was not violated when the IAD-ODESLA took
cognizance of the administrative complaint against him since he was given sufficient opportunity to oppose the
formal complaint filed by Secretary Purisima. In administrative proceedings, the filing of charges and giving
reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum
requirements of due process,35 which simply means having the opportunity to explain one’s side.36 Hence, as long as
petitioner was given the opportunity to explain his side and present evidence, the requirements of due process are
satisfactorily complied with because what the law abhors is an absolute lack of opportunity to be heard.37 The
records show that petitioner was issued an Order requiring him to submit his written explanation under oath with
respect to the charge of grave misconduct filed against him. His own failure to submit his explanation despite notice
defeats his subsequent claim of denial of due process.

Finally, petitioner doubts that the IAD-ODESLA can lawfully perform its duties as an impartial tribunal, contending
that both the IAD-ODESLA and respondent Secretary Purisima are connected to the President. The mere suspicion
of partiality will not suffice to invalidate the actions of the IAD-ODESLA. Mere allegation is not equivalent to proof.
Bias and partiality

cannot be presumed.38 Petitioner must present substantial proof to show that the lAD-ODES LA had unjustifiably
sided against him in the conduct of the investigation. No such evidence has been presented as to defeat the
presumption of regularity m the performance of the fact-finding investigator's duties. The assertion, therefore,
deserves scant consideration.

Every law has in its favor the presumption of constitutionality, and to justify its nullification, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and argumentative one.39 Petitioner has failed to discharge the
burden of proving the illegality of E.O. 13, which IS indubitably a valid exercise of the President's continuing
authority to reorganize the Office of the President.

WHEREFORE, premises considered, the petition IS hereby DISMISSED.

SO ORDERED.

G.R. No. 199082 July 23, 2013

JOSE MIGUEL T. ARROYO, Petitioner,

vs.
DEPARTMENT OF JUSTICE; COMMISSION ON ELECTIONS; HON. LEILA DE LIMA, in her capacity as
Secretary of the Department of Justice; HON. SIXTO BRILLANTES, JR., in his capacity as Chairperson of
Page 116 of 152
the Commission on Elections; and the JOINT DOJ-COMELEC PRELIMINARY INVESTIGATION COMMITTEE
and FACT-FINDING TEAM, Respondents.

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

G.R. No. 199085

BENJAMIN S. ABALOS, SR., Petitioner,

vs.
HON. LEILA DE LIMA, in capacity as Secretary of Justice; HON. SIXTO S. BRILLANTES, JR., in his capacity
as COMELEC Chairperson; RENE V. SARMIENTO, LUCENITO N. TAGLE, ARMANDO V. VELASCO, ELIAS R.
YUSOPH, CHRISTIAN ROBERT S. LIM AND AUGUSTO C. LAGMAN, in their capacity as COMELEC
COMMISSIONERS; CLARO A. ARELLANO, GEORGE C. DEE, JACINTO G. ANG, ROMEO B. FORTES AND
MICHAEL D. VILLARET, in their capacity as CHAIRPERSON AND MEMBERS, RESPECTIVELY, OF THE
JOINT DOJ-COMELEC PRELIMINARY INVESTIGATION COMMITTEE ON THE 2004 AND 2007 ELECTION
FRAUD,Respondents.

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

G.R. No. 199118

GLORIA MACAPAGAL-ARROYO, Petitioner,

vs.
COMMISSION ON ELECTIONS, represented by Chairperson Sixto S. Brillantes, Jr., DEPARTMENT OF
JUSTICE, represented by Secretary Leila M. De Lima, JOINT DOJ-COMELEC PRELIMINARY INVESTIGATION
COMMITTEE, SENATOR AQUILINO M. PIMENTEL III, and DOJ-COMELEC FACT FINDING TEAM,Respondents.

RESOLUTION

PERALTA, J.:

For resolution are the separate motions for reconsideration filed by movants Gloria Macapagal Arroyo (GMA)1 in
G.R. No. 199118 and Jose Miguel T. Arroyo (Mike Arroyo )2 in G.R. No. 199082 praying that the Court take a
second look at our September 18, 2012 Decision3 dismissing their petitions and supplemental petitions against
respondents Commission on Elections (Comelec), the Department of Justice (DOJ), Senator Aquilino M. Pimentel III
(Senator Pimentel), Joint DOJ-Comelec Preliminary Investigation Committee (Joint Committee) and DOJ-Comelec
Fact-Finding Team (Fact-Finding Team), et al.

For a better perspective, we briefly state the relevant factual and procedural antecedents as found by the Court in
the assailed decision, to wit:

On August 15, 2011, the Comelec and the DOJ issued Joint Order No. 001-2011 creating and constituting a Joint
Committee and Fact-Finding Team (referred to as Joint Panel) on the 2004 and 2007 National Elections electoral
fraud and manipulation cases. The Joint Committee was mandated to conduct the necessary preliminary
investigation on the basis of the evidence gathered and the charges recommended by the Fact-Finding Team. The
Fact-Finding Team, on the other hand, was created for the purpose of gathering real, documentary, and testimonial
evidence which can be utilized in the preliminary investigation to be conducted by the Joint Committee. Pursuant to
Section 74 of the Joint Order, on August 23, 2011, the Joint Committee promulgated its Rules of Procedure.

In its Initial Report5 dated October 20, 2011, the Fact-Finding Team concluded that manipulation of the results in the
May 14, 2007 senatorial elections in the provinces of North and South Cotabato, and Maguindanao was indeed
perpetrated.6 The Fact-Finding Team recommended, among others, that petitioner Benjamin S. Abalos, Sr. (Abalos)
be subjected to preliminary investigation for electoral sabotage for conspiring to manipulate the election results in
North and South Cotabato; that GMA and Abalos be subjected to another preliminary investigation for manipulating
the election results in Maguindanao;7 and, that Mike Arroyo be subjected to further investigation.8 The case was
docketed as DOJ-Comelec Case No. 001-2011.

Meanwhile, on October 17, 2011, Senator Pimentel filed a ComplaintAffidavit9 for Electoral Sabotage against
petitioners and twelve others, and several John Does and Jane Does. The case was docketed as DOJ-Comelec
Case No. 002-2011.

On October 24, 2011, the Joint Committee issued two subpoenas against petitioners in DOJ-Comelec Case Nos.
001-2011 and 002-2011.10 On November 3, 2011, petitioners, through counsel, appeared before the Joint
Committee11 and respondents therein were ordered to submit their Counter-Affidavits by November 14, 2011.12

Thereafter, petitioners filed before the Court separate Petitions for Certiorari and Prohibition with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction assailing the creation of the
Joint Panel.13 The petitions were eventually consolidated.

Page 117 of 152

On November 14, 2011, Mike Arroyo filed a Motion to Defer Proceedings14 before the Joint Committee, in view of
the pendency of his petition before the Court. On the same day, GMA filed before the Joint Committee an Omnibus
Motion Ad Cautelam15 to require Senator Pimentel to furnish her with documents referred to in his complaint-affidavit
and for the production of election documents as basis for the charge of electoral sabotage. GMA prayed that she be
allowed to file her counter-affidavit within ten (10) days from receipt of the requested documents.16Petitioner Abalos,
for his part, filed a Motion to Suspend Proceedings (Ex Abundante Ad Cautelam),17 in view of the pendency of his
petition brought before the Court.

In an Order18 dated November 15, 2011, the Joint Committee denied the aforesaid motions of petitioners. GMA,
subsequently, filed a motion for reconsideration.19

On November 16, 2011, the Joint Committee promulgated a Joint Resolution which was later indorsed to the
Comelec.20 On November 18, 2011, the Comelec en banc issued a Resolution21 approving and adopting the Joint
Resolution subject to modifications. The Comelec resolved, among others, that an information for electoral sabotage
be filed against GMA and Abalos, while the charges against Mike Arroyo be dismissed for insufficiency of evidence.

On even date, pursuant to the above Resolution, the Comelec’s Law Department filed with the Regional Trial Court
(RTC), Pasay City, an Information against petitioner GMA, Governor Andal Ampatuan, Sr., and Atty. Lintang H.
Bedol, for violation of Section 42(b)(3) of Republic Act (RA) No. 9369, amending Section 27 (b) of RA 6646,
docketed as Criminal Case No. RPSY-11-04432-CR.22 The case was raffled to Branch 112 and the corresponding
Warrant of Arrest was issued which was served on GMA on the same day.23

On November 18, 2011, GMA filed with the RTC an Urgent Omnibus Motion Ad Cautelam24 with leave to allow the
Joint Committee to resolve the motion for reconsideration filed by GMA, to defer issuance of a warrant of arrest and
a hold departure order, and to proceed to judicial determination of probable cause. She, likewise, filed with the
Comelec a Motion to Vacate Ad Cautelam25 praying that its Resolution be vacated for being null and void. The RTC,
nonetheless, issued a Warrant for her arrest which was duly served. GMA was later arraigned and she entered a
plea of "not guilty." She was, for some time, on hospital arrest but was able to obtain temporary liberty when her
motion for bail was granted. At present, she is again on hospital arrest by virtue of a warrant issued in another
criminal case.

On September 18, 2012, the Court rendered the assailed Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the petitions and supplemental petitions are DISMISSED. Comelec Resolution
No. 9266 dated August 2, 2011, Joint Order No. 001-2011 dated August 15, 2011, and the Fact- Finding Team’s
Initial Report dated October 20, 2011, are declared VALID. However, the Rules of Procedure on the Conduct of
Preliminary Investigation on the Alleged Election Fraud in the 2004 and 2007 National Elections is declared
INEFFECTIVE for lack of publication.

In view of the constitutionality of the Joint Panel and the proceedings having been conducted in accordance with
Rule 112 of the Rules on Criminal Procedure and Rule 34 of the Comelec Rules of Procedure, the conduct of the
preliminary investigation is hereby declared VALID.

Let the proceedings in the Regional Trial Court of Pasay City, Branch 112, where the criminal cases for electoral
sabotage against petitioners GMA and Abalos are pending, proceed with dispatch.

SO ORDERED.26

Hence, these motions for reconsideration.

Issues

Mike Arroyo reiterates his arguments on the independence of the Comelec as basis in nullifying the subject joint
DOJ-Comelec resolutions. Echoing Justice Arturo Brion in his Dissenting and Concurring Opinion,27 Mike Arroyo
insists that the creation of the Joint Panel undermines the decisional independence of the Comelec.28

Mike Arroyo also maintains that the DOJ should conduct preliminary investigation only when deputized by the
Comelec but not exercise concurrent jurisdiction.29 Finally, as has been repeatedly pointed out in his earlier
pleadings before the Court, Mike Arroyo claims that the proceedings involving the electoral sabotage case were
rushed because of pressures from the executive branch of the government.30

For her part, GMA claims that in availing of the procedural remedies available, she merely exercised her earnest
efforts to defend herself and should not have been deemed by the Court as acts which purportedly tend to
demonstrate that she either waived or forfeited her right to submit her counter-affidavit and countervailing
evidence.31 Citing several cases decided by the Court, she likewise faults the Court in not upholding her right to ask
for additional time within which to submit her counter-affidavit and countervailing evidence.32 GMA highlights that the
subject Comelec Resolution creating the Joint Panel is different from the previous Comelec resolutions requesting
the DOJ Secretary to assign prosecutors to assist the Comelec, as the latter emphasize the role of the DOJ as

Page 118 of 152

deputized agency in the conduct of preliminary investigation. She maintains that it is the Comelec and not the Joint
Committee that has the primary, if not exclusive, authority to conduct preliminary investigation of election cases.33

In their Consolidated Comment,34 respondents defend the creation of the Joint Committee and argue that it does not
undermine the independence of the Comelec as a constitutional body because it is still the Comelec that ultimately
determines probable cause.35 As to the conduct of the preliminary investigation, respondents maintain that no rights
were violated as GMA was afforded the opportunity to defend herself, submit her counter-affidavit and other
countervailing evidence.36 They, thus, consider GMA’s claim of availing of the remedial measures as "delaying
tactics" employed to thwart the investigation of charges against her by the Joint Committee.37

The Court’s Ruling

Clearly from the above discussion, movants raise issues that have been thoroughly explained by the Court in the
assailed decision. The issues were all addressed and the explanation was exhaustive, thus, we find no reason to
disturb the Court’s conclusions.

At any rate, if only to address the motions of the movants herein and to put an end to the questions attached to the
creation of the Joint Panel and, consequently, to the performance of their assigned tasks, we hereby reiterate our
findings and conclusions made in the assailed decision.

This is not the first time that the Court is confronted with the issue of whether the Comelec has the exclusive power
to investigate and prosecute cases of violations of election laws. In Barangay Association for National Advancement
and Transparency (BANAT) Party-List v. Commission on Elections,38 the constitutionality of Section 4339 of RA
936940 had already been raised by petitioners therein and addressed by the Court. While recognizing the Comelec’s
exclusive power to investigate and prosecute cases under Batas Pambansa Bilang 881 or the Omnibus Election
Code, the Court pointed out that the framers of the 1987 Constitution did not have such intention. This exclusivity is
thus a legislative enactment that can very well be amended by Section 43 of RA 9369. Therefore, under the present
law, the Comelec and other prosecuting arms of the government, such as the DOJ, now exercise concurrent
jurisdiction in the investigation and prosecution of election offenses.

Indeed, as aptly pointed out by GMA, there is a discrepancy between Comelec Resolution No. 346741 dated January
12, 2001 and Joint Order No. 001-2011, dated August 15, 2011, creating and constituting a Joint Committee and
Fact-Finding Team on the 2004 and 2007 National Elections electoral fraud and manipulation cases. However, GMA
seemed to miss the date when these two resolutions were promulgated by the Comelec. It is noteworthy that
Comelec Resolution No. 3467 was issued when Section 265 of the Omnibus Election Code was still effective, while
Joint Order No. 001-2011 as well as Comelec Resolution Nos. 873342 and 905743 mentioned in the assailed decision
but missed out by GMA in her motion, were issued during the effectivity of Section 43 of RA 9369, giving the
Comelec and other prosecuting arms of the government the concurrent jurisdiction to investigate and prosecute
election offenses. This amendment paved the way for the discrepancy. In Comelec Resolution No. 3467, the
Comelec maintained the continuing deputation of prosecutors and the Comelec Law Department was tasked to
supervise the investigatory and prosecutory functions of the task force pursuant to the mandate of the Omnibus
Election Code. However, with the amendment, the Comelec likewise changed the tenor of the later resolutions to
reflect the new mandate of the Comelec and other prosecuting arms of the government now exercising concurrent
jurisdiction. Thus, the Comelec Law Department and the Office of the Chief State Prosecutor of the DOJ were
tasked to jointly supervise the investigatory and prosecutory functions of the Comelec-DOJ Task Force.
Considering, therefore, that the later resolutions, including Joint Order No. 001-2011, were issued pursuant to
Section 43 of RA 9369 amending Section 265 of BP 881 which was declared "constitutional" in Banat, there is no
reason for us to declare otherwise. To maintain the previous role of other prosecuting arms of the government as
mere deputies despite the amendment would mean challenging Section 43 of RA 9369 anew which has already
been settled in Banat.

To be sure, the creation of a Joint Committee is not repugnant to the concept of "concurrent jurisdiction" authorized
by the amendatory law. As we explained in our September 18, 2012 Decision:

x x x The doctrine of concurrent jurisdiction means equal jurisdiction to deal with the same subject matter. Contrary
to the contention of the petitioners, there is no prohibition on simultaneous exercise of power between two
coordinate bodies. What is prohibited is the situation where one files a complaint against a respondent initially with
one office (such as the Comelec) for preliminary investigation which was immediately acted upon by said office and
the re-filing of substantially the same complaint with another office (such as the DOJ). The subsequent assumption
of jurisdiction by the second office over the cases filed will not be allowed. Indeed, it is a settled rule that the body or
agency that first takes cognizance of the complaint shall exercise jurisdiction to the exclusion of the others.

xxxx

None of these problems would likely arise in the present case. The Comelec and the DOJ themselves agreed that
they would exercise their concurrent jurisdiction jointly. Although the preliminary investigation was conducted on the
basis of two complaints – the initial report of the Fact-Finding Team and the complaint of Senator Pimentel – both
complaints were filed with the Joint Committee. Consequently, the complaints were filed with and the preliminary
investigation was conducted by only one investigative body. Thus, we find no reason to disallow the exercise of
Page 119 of 152
concurrent jurisdiction jointly by those given such authority. This is especially true in this case given the magnitude
of the crimes allegedly committed by petitioners. The joint preliminary investigation also serves to maximize the
resources and manpower of both the Comelec and the DOJ for the prompt disposition of the cases.44

Notwithstanding the grant of concurrent jurisdiction, the Comelec and the DOJ nevertheless included a provision in
the assailed Joint Order whereby the resolutions of the Joint Committee finding probable cause for election offenses
shall still be approved by the Comelec in accordance with the Comelec Rules of Procedure.45 With more reason,
therefore, that we cannot consider the creation of the Joint Committee as an abdication of the Comelec’s
independence enshrined in the 1987 Constitution.

Finally, we focus on the validity of the preliminary investigation conducted by the Joint Committee.

The procedure in conducting the preliminary investigation is governed by Rule 112 of the Revised Rules on Criminal
Procedure and Rule 34 of the Comelec Rules of Procedure. Under both Rules,46 the respondent shall submit his
counter-affidavit and that of his witnesses and other supporting documents relied upon for his defense, within ten
(10) days from receipt of the subpoena, with the complaint and supporting affidavits and documents.47 Also in both
Rules, respondent is given the right to examine evidence, but such right of examination is limited only to the
documents or evidence submitted by complainants which she may not have been furnished and to copy them at her
expense.48

As to the alleged denial of GMA’s right to examine documents, we maintain that no right was violated in view of the
limitation of such right as set forth above. We reiterate our explanation in the assailed decision, to wit:

While it is true that Senator Pimentel referred to certain election documents which served as bases in the allegations
of significant findings specific to the protested municipalities involved, there were no annexes or attachments to the
complaint filed. As stated in the Joint Committee’s Order dated November 15, 2011 denying GMA’s Omnibus Motion
Ad Cautelam, Senator Pimentel was ordered to furnish petitioners with all the supporting evidence. However,
Senator Pimentel manifested that he was adopting all the affidavits attached to the Fact-Finding Team’s Initial
Report. Therefore, when GMA was furnished with the documents attached to the Initial Report, she was already
granted the right to examine as guaranteed by the Comelec Rules of Procedure and the Rules on Criminal
Procedure. Those were the only documents submitted by the complainants to the Committee. If there are other
documents that were referred to in Senator Pimentel’s complaint but were not submitted to the Joint Committee, the
latter considered those documents unnecessary at that point (without foreclosing the relevance of other evidence
that may later be presented during the trial) as the evidence submitted before it were considered adequate to find
probable cause against her. x x x49 1âw phi 1

Neither was GMA’s right violated when her motion for extension of time within which to submit her counter-affidavit
and countervailing evidence was consequently denied. The Rules use the term "shall" in requiring the respondent to
submit counter-affidavit and other countervailing evidence within ten (10) days from receipt of the subpoena. It is
settled that the use of the word "shall" which is a word of command, underscores the mandatory character of the
rule.50 As in any other rule, though, liberality in the application may be allowed provided that the party is able to
present a compelling justification for the non-observance of the mandatory rules. In the 2008 Revised Manual for
Prosecutors, investigating prosecutors allow or grant motions or requests for extension of time to submit counter-
affidavits when the interest of justice demands that respondent be given reasonable time or sufficient opportunity to
engage the services of counsel; examine voluminous records submitted in support of the complaint or undertake
research on novel, complicated or technical questions or issues of law and facts of the case.51

In this case, GMA claimed that she could not submit her counteraffidavit within the prescribed period because she
needed to examine documents mentioned in Senator Pimentel’s complaint-affidavit. It appeared, however, that said
documents were not submitted to the Joint Committee and the only supporting documents available were those
attached to the Initial Report of the Fact-Finding Team. Admittedly, GMA was furnished those documents. Thus, at
the time she asked for the extension of time within which to file her counter-affidavit, she very well knew that the
documents she was asking were not in the record of the case. Obviously, she was not furnished those documents
because they were not submitted to the Joint Committee. Logically, she has no right to examine said documents.
We cannot, therefore, fault the Joint Committee in consequently denying her motion for extension to file counter-
affidavit as there was no compelling justification for the non-observance of the period she was earlier required to
follow.

And as we held in the assailed decision:

There might have been overzealousness on the part of the Joint Committee in terminating the investigation,
endorsing the Joint Resolution to the Comelec for approval, and in filing the information in court.

However, speed in the conduct of proceedings by a judicial or quasijudicial officer cannot per se be instantly
attributed to an injudicious performance of functions. The orderly administration of justice remains the paramount
consideration with particular regard to the peculiar circumstances of each case. To be sure, petitioners were given
the opportunity to present countervailing evidence. Instead of complying with the Joint Committee’s directive,
several motions were filed but were denied by the Joint Committee. Consequently, petitioners’ right to submit
counter-affidavit and countervailing evidence was forfeited. Taking into account the constitutional right to speedy
Page 120 of 152
disposition of cases and following the procedures set forth in the Rules on Criminal Procedure and the Comelec
Rules of Procedure, the Joint Committee finally reached its conclusion and referred the case to the Comelec. The
latter, in turn, performed its task and filed the information in court. Indeed, petitioners were given the opportunity to
be heard. They even actively participated in the proceedings and in fact filed several motions before the Joint
Committee. Consistent with the constitutional mandate of speedy disposition of cases, unnecessary delays should
be avoided.52

Finally, in our assailed decision, we already took judicial notice that not only did GMA enter a plea of "not guilty," she
also filed a Motion for Bail and after due hearing, it was granted. Apparently, she benefited from the RTC Order
giving her temporary liberty. In filing the motion before the RTC and actively participating therein, she has chosen to
seek judicial remedy before the RTC where the electoral sabotage case is pending instead of the executive remedy
of going back to the Joint Committee for the submission of her counter-affidavit and countervailing evidence.
Besides, as thoroughly discussed in the assailed decision, the irregularity or even the absence of preliminary
investigation does not impair the validity of the information filed against her.

WHEREFORE, premises considered, the Motions for Reconsideration are DENIED for lack of merit.

SO ORDERED.

G.R. No. L-45685 November 16, 1937

THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING
CORPORATION,petitioners,
vs.
JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU UNJIENG, respondents.

Office of the Solicitor General Tuason and City Fiscal Diaz for the Government.
De Witt, Perkins and Ponce Enrile for the Hongkong and Shanghai Banking Corporation.
Vicente J. Francisco, Feria and La O, Orense and Belmonte, and Gibbs and McDonough for respondent Cu
Unjieng.
No appearance for respondent Judge.

LAUREL, J.:

This is an original action instituted in this court on August 19, 1937, for the issuance of the writ of certiorari and of
prohibition to the Court of First Instance of Manila so that this court may review the actuations of the aforesaid Court
of First Instance in criminal case No. 42649 entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et
al.", more particularly the application of the defendant Mariano Cu Unjieng therein for probation under the provisions
of Act No. 4221, and thereafter prohibit the said Court of First Instance from taking any further action or entertaining
further the aforementioned application for probation, to the end that the defendant Mariano Cu Unjieng may be
forthwith committed to prison in accordance with the final judgment of conviction rendered by this court in said case
(G. R. No. 41200). 1

Petitioners herein, the People of the Philippine and the Hongkong and Shanghai Banking Corporation, are
respectively the plaintiff and the offended party, and the respondent herein Mariano Cu Unjieng is one of the
defendants, in the criminal case entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.",
criminal case No. 42649 of the Court of First Instance of Manila and G.R. No. 41200 of this court. Respondent
herein, Hon. Jose O. Vera, is the Judge ad interim of the seventh branch of the Court of First Instance of Manila,
who heard the application of the defendant Mariano Cu Unjieng for probation in the aforesaid criminal case.

The information in the aforesaid criminal case was filed with the Court of First Instance of Manila on October 15,
1931, petitioner herein Hongkong and Shanghai Banking Corporation intervening in the case as private prosecutor.
After a protracted trial unparalleled in the annals of Philippine jurisprudence both in the length of time spent by the
court as well as in the volume in the testimony and the bulk of the exhibits presented, the Court of First Instance of
Manila, on January 8, 1934, rendered a judgment of conviction sentencing the defendant Mariano Cu Unjieng to
indeterminate penalty ranging from four years and two months of prision correccional to eight years of prision
mayor, to pay the costs and with reservation of civil action to the offended party, the Hongkong and Shanghai
Banking Corporation. Upon appeal, the court, on March 26, 1935, modified the sentence to an indeterminate penalty
Page 121 of 152
of from five years and six months of prision correccional to seven years, six months and twenty-seven days
of prision mayor, but affirmed the judgment in all other respects. Mariano Cu Unjieng filed a motion for
reconsideration and four successive motions for new trial which were denied on December 17, 1935, and final
judgment was accordingly entered on December 18, 1935. The defendant thereupon sought to have the case
elevated on certiorari to the Supreme Court of the United States but the latter denied the petition
for certiorari in November, 1936. This court, on November 24, 1936, denied the petition subsequently
filed by the defendant for leave to file a second alternative motion for reconsideration or new trial and thereafter
remanded the case to the court of origin for execution of the judgment.

The instant proceedings have to do with the application for probation filed by the herein respondent Mariano Cu
Unjieng on November 27, 1936, before the trial court, under the provisions of Act No. 4221 of the defunct
Philippine Legislature. Herein respondent Mariano Cu Unjieng states in his petition, inter alia, that he is innocent of
the crime of which he was convicted, that he has no criminal record and that he would observe good conduct in the
future. The Court of First Instance of Manila, Judge Pedro Tuason presiding, referred the application for probation of
the Insular Probation Office which recommended denial of the same June 18, 1937. Thereafter, the Court of First
Instance of Manila, seventh branch, Judge Jose O. Vera presiding, set the petition for hearing on April 5, 1937.

On April 2, 1937, the Fiscal of the City of Manila filed an opposition to the granting of probation to the herein
respondent Mariano Cu Unjieng. The private prosecution also filed an opposition on April 5, 1937, alleging, among
other things, that Act No. 4221, assuming that it has not been repealed by section 2 of Article XV of the Constitution,
is nevertheless violative of section 1, subsection (1), Article III of the Constitution guaranteeing equal protection of
the laws for the reason that its applicability is not uniform throughout the Islands and because section 11 of the said
Act endows the provincial boards with the power to make said law effective or otherwise in their respective or
otherwise in their respective provinces. The private prosecution also filed a supplementary opposition on April 19,
1937, elaborating on the alleged unconstitutionality on Act No. 4221, as an undue delegation of legislative power to
the provincial boards of several provinces (sec. 1, Art. VI, Constitution). The City Fiscal concurred in the opposition
of the private prosecution except with respect to the questions raised concerning the constitutionality of Act No.
4221.

On June 28, 1937, herein respondent Judge Jose O. Vera promulgated a resolution with a finding that "las pruebas
no han establecido de unamanera concluyente la culpabilidad del peticionario y que todos los hechos probados no
son inconsistentes o incongrentes con su inocencia" and concludes that the herein respondent Mariano Cu Unjieng
"es inocente por duda racional" of the crime of which he stands convicted by this court in G.R. No. 41200, but
denying the latter's petition for probation for the reason that:

. . . Si este Juzgado concediera la poblacion solicitada por las circunstancias y la historia social que se han
expuesto en el cuerpo de esta resolucion, que hacen al peticionario acreedor de la misma, una parte de la
opinion publica, atizada por los recelos y las suspicacias, podria levantarse indignada contra un sistema de
probacion que permite atisbar en los procedimientos ordinarios de una causa criminal perturbando la
quietud y la eficacia de las decisiones ya recaidas al traer a la superficie conclusiones enteramente
differentes, en menoscabo del interes publico que demanda el respeto de las leyes y del veredicto judicial.

On July 3, 1937, counsel for the herein respondent Mariano Cu Unjieng filed an exception to the resolution denying
probation and a notice of intention to file a motion for reconsideration. An alternative motion for reconsideration or
new trial was filed by counsel on July 13, 1937. This was supplemented by an additional motion for reconsideration
submitted on July 14, 1937. The aforesaid motions were set for hearing on July 31, 1937, but said hearing was
postponed at the petition of counsel for the respondent Mariano Cu Unjieng because a motion for leave to intervene
in the case as amici curiae signed by thirty-three (thirty-four) attorneys had just been filed with the trial court.
Attorney Eulalio Chaves whose signature appears in the aforesaid motion subsequently filed a petition for leave to
withdraw his appearance as amicus curiae on the ground that the motion for leave to intervene as amici curiae was
circulated at a banquet given by counsel for Mariano Cu Unjieng on the evening of July 30, 1937, and that he signed
the same "without mature deliberation and purely as a matter of courtesy to the person who invited me (him)."

On August 6, 1937, the Fiscal of the City of Manila filed a motion with the trial court for the issuance of an order of
execution of the judgment of this court in said case and forthwith to commit the herein respondent Mariano Cu
Unjieng to jail in obedience to said judgment.

On August 7, 1937, the private prosecution filed its opposition to the motion for leave to intervene as amici
curiae aforementioned, asking that a date be set for a hearing of the same and that, at all events, said motion
should be denied with respect to certain attorneys signing the same who were members of the legal staff of the
several counsel for Mariano Cu Unjieng. On August 10, 1937, herein respondent Judge Jose O. Vera issued an
order requiring all parties including the movants for intervention as amici curiae to appear before the court on August
14, 1937. On the last-mentioned date, the Fiscal of the City of Manila moved for the hearing of his motion for
execution of judgment in preference to the motion for leave to intervene as amici curiae but, upon objection of
counsel for Mariano Cu Unjieng, he moved for the postponement of the hearing of both motions. The respondent
judge thereupon set the hearing of the motion for execution on August 21, 1937, but proceeded to consider the
motion for leave to intervene as amici curiae as in order. Evidence as to the circumstances under which said motion
for leave to intervene as amici curiae was signed and submitted to court was to have been heard on August 19,
1937. But at this juncture, herein petitioners came to this court on extraordinary legal process to put an end to what
they alleged was an interminable proceeding in the Court of First Instance of Manila which fostered "the campaign
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of the defendant Mariano Cu Unjieng for delay in the execution of the sentence imposed by this Honorable Court on
him, exposing the courts to criticism and ridicule because of the apparent inability of the judicial machinery to make
effective a final judgment of this court imposed on the defendant Mariano Cu Unjieng."

The scheduled hearing before the trial court was accordingly suspended upon the issuance of a temporary
restraining order by this court on August 21, 1937.

To support their petition for the issuance of the extraordinary writs of certiorari and prohibition, herein petitioners
allege that the respondent judge has acted without jurisdiction or in excess of his jurisdiction:

I. Because said respondent judge lacks the power to place respondent Mariano Cu Unjieng under probation for the
following reason:

(1) Under section 11 of Act No. 4221, the said of the Philippine Legislature is made to apply only to
the provinces of the Philippines; it nowhere states that it is to be made applicable to chartered cities
like the City of Manila.

(2) While section 37 of the Administrative Code contains a proviso to the effect that in the absence of
a special provision, the term "province" may be construed to include the City of Manila for the
purpose of giving effect to laws of general application, it is also true that Act No. 4221 is not a law of
general application because it is made to apply only to those provinces in which the respective
provincial boards shall have provided for the salary of a probation officer.

(3) Even if the City of Manila were considered to be a province, still, Act No. 4221 would not be
applicable to it because it has provided for the salary of a probation officer as required by section 11
thereof; it being immaterial that there is an Insular Probation Officer willing to act for the City of
Manila, said Probation Officer provided for in section 10 of Act No. 4221 being different and distinct
from the Probation Officer provided for in section 11 of the same Act.

II. Because even if the respondent judge originally had jurisdiction to entertain the application for probation of the
respondent Mariano Cu Unjieng, he nevertheless acted without jurisdiction or in excess thereof in continuing to
entertain the motion for reconsideration and by failing to commit Mariano Cu Unjieng to prison after he had
promulgated his resolution of June 28, 1937, denying Mariano Cu Unjieng's application for probation, for the reason
that:

(1) His jurisdiction and power in probation proceedings is limited by Act No. 4221 to the granting or
denying of applications for probation.

(2) After he had issued the order denying Mariano Cu Unjieng's petition for probation on June 28,
1937, it became final and executory at the moment of its rendition.

(3) No right on appeal exists in such cases.

(4) The respondent judge lacks the power to grant a rehearing of said order or to modify or change
the same.

III. Because the respondent judge made a finding that Mariano Cu Unjieng is innocent of the crime for which he was
convicted by final judgment of this court, which finding is not only presumptuous but without foundation in fact and in
law, and is furthermore in contempt of this court and a violation of the respondent's oath of office as ad interim judge
of first instance.

IV. Because the respondent judge has violated and continues to violate his duty, which became imperative when he
issued his order of June 28, 1937, denying the application for probation, to commit his co-respondent to jail.

Petitioners also avers that they have no other plain, speedy and adequate remedy in the ordinary course of law.

In a supplementary petition filed on September 9, 1937, the petitioner Hongkong and Shanghai Banking Corporation
further contends that Act No. 4221 of the Philippine Legislature providing for a system of probation for persons
eighteen years of age or over who are convicted of crime, is unconstitutional because it is violative of section 1,
subsection (1), Article III, of the Constitution of the Philippines guaranteeing equal protection of the laws because it
confers upon the provincial board of its province the absolute discretion to make said law operative or otherwise in
their respective provinces, because it constitutes an unlawful and improper delegation to the provincial boards of the
several provinces of the legislative power lodged by the Jones Law (section 8) in the Philippine Legislature and by
the Constitution (section 1, Art. VI) in the National Assembly; and for the further reason that it gives the provincial
boards, in contravention of the Constitution (section 2, Art. VIII) and the Jones Law (section 28), the authority to
enlarge the powers of the Court of First Instance of different provinces without uniformity. In another supplementary
petition dated September 14, 1937, the Fiscal of the City of Manila, in behalf of one of the petitioners, the People of
the Philippine Islands, concurs for the first time with the issues raised by other petitioner regarding the

Page 123 of 152

constitutionality of Act No. 4221, and on the oral argument held on October 6, 1937, further elaborated on the theory
that probation is a form of reprieve and therefore Act. No. 4221 is an encroachment on the exclusive power of the
Chief Executive to grant pardons and reprieves. On October 7, 1937, the City Fiscal filed two memorandums in
which he contended that Act No. 4221 not only encroaches upon the pardoning power to the executive, but also
constitute an unwarranted delegation of legislative power and a denial of the equal protection of the laws. On
October 9, 1937, two memorandums, signed jointly by the City Fiscal and the Solicitor-General, acting in behalf of
the People of the Philippine Islands, and by counsel for the petitioner, the Hongkong and Shanghai Banking
Corporation, one sustaining the power of the state to impugn the validity of its own laws and the other contending
that Act No. 4221 constitutes an unwarranted delegation of legislative power, were presented. Another joint
memorandum was filed by the same persons on the same day, October 9, 1937, alleging that Act No. 4221 is
unconstitutional because it denies the equal protection of the laws and constitutes an unlawful delegation of
legislative power and, further, that the whole Act is void: that the Commonwealth is not estopped from questioning
the validity of its laws; that the private prosecution may intervene in probation proceedings and may attack the
probation law as unconstitutional; and that this court may pass upon the constitutional question in prohibition
proceedings.

Respondents in their answer dated August 31, 1937, as well as in their oral argument and memorandums, challenge
each and every one of the foregoing proposition raised by the petitioners.

As special defenses, respondents allege:

(1) That the present petition does not state facts sufficient in law to warrant the issuance of the writ
of certiorari or of prohibition.

(2) That the aforesaid petition is premature because the remedy sought by the petitioners is the very
same remedy prayed for by them before the trial court and was still pending resolution before the
trial court when the present petition was filed with this court.

(3) That the petitioners having themselves raised the question as to the execution of judgment
before the trial court, said trial court has acquired exclusive jurisdiction to resolve the same under
the theory that its resolution denying probation is unappealable.

(4) That upon the hypothesis that this court has concurrent jurisdiction with the Court of First
Instance to decide the question as to whether or not the execution will lie, this court nevertheless
cannot exercise said jurisdiction while the Court of First Instance has assumed jurisdiction over the
same upon motion of herein petitioners themselves.

(5) That upon the procedure followed by the herein petitioners in seeking to deprive the trial court of
its jurisdiction over the case and elevate the proceedings to this court, should not be tolerated
because it impairs the authority and dignity of the trial court which court while sitting in the probation
cases is "a court of limited jurisdiction but of great dignity."

(6) That under the supposition that this court has jurisdiction to resolve the question submitted to and
pending resolution by the trial court, the present action would not lie because the resolution of the
trial court denying probation is appealable; for although the Probation Law does not specifically
provide that an applicant for probation may appeal from a resolution of the Court of First Instance
denying probation, still it is a general rule in this jurisdiction that a final order, resolution or decision
of an inferior court is appealable to the superior court.

(7) That the resolution of the trial court denying probation of herein respondent Mariano Cu Unjieng
being appealable, the same had not become final and executory for the reason that the said
respondent had filed an alternative motion for reconsideration and new trial within the requisite
period of fifteen days, which motion the trial court was able to resolve in view of the restraining order
improvidently and erroneously issued by this court. lawphi 1.net

(8) That the Fiscal of the City of Manila had by implication admitted that the resolution of the trial
court denying probation is not final and unappealable when he presented his answer to the motion
for reconsideration and agreed to the postponement of the hearing of the said motion.

(9) That under the supposition that the order of the trial court denying probation is not appealable, it
is incumbent upon the accused to file an action for the issuance of the writ
of certiorari with mandamus, it appearing that the trial court, although it believed that the accused
was entitled to probation, nevertheless denied probation for fear of criticism because the accused is
a rich man; and that, before a petition for certiorari grounded on an irregular exercise of jurisdiction
by the trial court could lie, it is incumbent upon the petitioner to file a motion for reconsideration
specifying the error committed so that the trial court could have an opportunity to correct or cure the
same.

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 (10) That on hypothesis that the resolution of this court is not appealable, the trial court retains its
jurisdiction within a reasonable time to correct or modify it in accordance with law and justice; that
this power to alter or modify an order or resolution is inherent in the courts and may be exercise
either motu proprio or upon petition of the proper party, the petition in the latter case taking the form
of a motion for reconsideration.

(11) That on the hypothesis that the resolution of the trial court is appealable as respondent allege,
said court cannot order execution of the same while it is on appeal, for then the appeal would not be
availing because the doors of probation will be closed from the moment the accused commences to
serve his sentence (Act No. 4221, sec. 1; U.S. vs. Cook, 19 Fed. [2d], 827).

In their memorandums filed on October 23, 1937, counsel for the respondents maintain that Act No. 4221 is
constitutional because, contrary to the allegations of the petitioners, it does not constitute an undue delegation of
legislative power, does not infringe the equal protection clause of the Constitution, and does not encroach upon the
pardoning power of the Executive. In an additional memorandum filed on the same date, counsel for the
respondents reiterate the view that section 11 of Act No. 4221 is free from constitutional objections and contend, in
addition, that the private prosecution may not intervene in probation proceedings, much less question the validity of
Act No. 4221; that both the City Fiscal and the Solicitor-General are estopped from questioning the validity of the
Act; that the validity of Act cannot be attacked for the first time before this court; that probation in unavailable; and
that, in any event, section 11 of the Act No. 4221 is separable from the rest of the Act. The last memorandum for the
respondent Mariano Cu Unjieng was denied for having been filed out of time but was admitted by resolution of this
court and filed anew on November 5, 1937. This memorandum elaborates on some of the points raised by
the respondents and refutes those brought up by the petitioners.

In the scrutiny of the pleadings and examination of the various aspects of the present case, we noted that the court
below, in passing upon the merits of the application of the respondent Mariano Cu Unjieng and in denying said
application assumed the task not only of considering the merits of the application, but of passing upon the culpability
of the applicant, notwithstanding the final pronouncement of guilt by this court. (G.R. No. 41200.) Probation implies
guilt be final judgment. While a probation case may look into the circumstances attending the commission of the
offense, this does not authorize it to reverse the findings and conclusive of this court, either directly or indirectly,
especially wherefrom its own admission reliance was merely had on the printed briefs, averments, and pleadings of
the parties. As already observed by this court in Shioji vs. Harvey ([1922], 43 Phil., 333, 337), and reiterated in
subsequent cases, "if each and every Court of First Instance could enjoy the privilege of overruling decisions of the
Supreme Court, there would be no end to litigation, and judicial chaos would result." A becoming modesty of inferior
courts demands conscious realization of the position that they occupy in the interrelation and operation of the
intergrated judicial system of the nation.

After threshing carefully the multifarious issues raised by both counsel for the petitioners and the respondents, this
court prefers to cut the Gordian knot and take up at once the two fundamental questions presented, namely, (1)
whether or not the constitutionality of Act No. 4221 has been properly raised in these proceedings; and (2) in the
affirmative, whether or not said Act is constitutional. Considerations of these issues will involve a discussion of
certain incidental questions raised by the parties.

To arrive at a correct conclusion on the first question, resort to certain guiding principles is necessary. It is a well-
settled rule that the constitutionality of an act of the legislature will not be determined by the courts unless that
question is properly raised and presented inappropriate cases and is necessary to a determination of the case; i.e.,
the issue of constitutionality must be the very lis mota presented. (McGirr vs. Hamilton and Abreu [1915], 30 Phil.,
563, 568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.)

The question of the constitutionality of an act of the legislature is frequently raised in ordinary actions. Nevertheless,
resort may be made to extraordinary legal remedies, particularly where the remedies in the ordinary course of law
even if available, are not plain, speedy and adequate. Thus, in Cu Unjieng vs. Patstone ([1922]), 42 Phil., 818), this
court held that the question of the constitutionality of a statute may be raised by the petitioner
in mandamus proceedings (see, also, 12 C. J., p. 783); and in Government of the Philippine Islands vs.
Springer ([1927], 50 Phil., 259 [affirmed in Springer vs. Government of the Philippine Islands (1928), 277 U. S., 189;
72 Law. ed., 845]), this court declared an act of the legislature unconstitutional in an action of quo warranto brought
in the name of the Government of the Philippines. It has also been held that the constitutionality of a statute may be
questioned in habeas corpus proceedings (12 C. J., p. 783; Bailey on Habeas Corpus, Vol. I, pp. 97, 117), although
there are authorities to the contrary; on an application for injunction to restrain action under the challenged statute
(mandatory, see Cruz vs. Youngberg [1931], 56 Phil., 234); and even on an application for preliminary injunction
where the determination of the constitutional question is necessary to a decision of the case. (12 C. J., p. 783.) The
same may be said as regards prohibition and certiorari.(Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271
U. S., 500; 70 Law. ed., 1059; Bell vs. First Judicial District Court [1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R.,
854; 6 Ann. Cas., 982; 1 L. R. A. [N. S], 843, and cases cited). The case of Yu Cong Eng vs. Trinidad, supra,
decided by this court twelve years ago was, like the present one, an original action for certiorari and prohibition. The
constitutionality of Act No. 2972, popularly known as the Chinese Bookkeeping Law, was there challenged by the
petitioners, and the constitutional issue was not met squarely by the respondent in a demurrer. A point was raised
"relating to the propriety of the constitutional question being decided in original proceedings in prohibition." This
court decided to take up the constitutional question and, with two justices dissenting, held that Act No. 2972 was
constitutional. The case was elevated on writ of certiorari to the Supreme Court of the United States which reversed
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the judgment of this court and held that the Act was invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the question of
jurisdiction, however, the Federal Supreme Court, though its Chief Justice, said:

By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine supreme court is
granted concurrent jurisdiction in prohibition with courts of first instance over inferior tribunals or persons,
and original jurisdiction over courts of first instance, when such courts are exercising functions without or in
excess of their jurisdiction. It has been held by that court that the question of the validity of the criminal
statute must usually be raised by a defendant in the trial court and be carried regularly in review to the
Supreme Court. (Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192). But in this case where a
new act seriously affected numerous persons and extensive property rights, and was likely to cause a
multiplicity of actions, the Supreme Court exercised its discretion to bring the issue to the act's validity
promptly before it and decide in the interest of the orderly administration of justice. The court relied by
analogy upon the cases of Ex parte Young (209 U. S., 123;52 Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup.
Ct. Rep., 441; 14 Ann. Ca., 764; Traux vs. Raich, 239 U. S., 33; 60 Law. ed., 131; L. R. A. 1916D, 545; 36
Sup. Ct. Rep., 7; Ann. Cas., 1917B, 283; and Wilson vs. New, 243 U. S., 332; 61 Law. ed., 755; L. R. A.
1917E, 938; 37 Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024). Although objection to the jurisdiction was raise
by demurrer to the petition, this is now disclaimed on behalf of the respondents, and both parties ask a
decision on the merits. In view of the broad powers in prohibition granted to that court under the Island
Code, we acquiesce in the desire of the parties.

The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed to an
inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is not legally
vested. (High, Extraordinary Legal Remedies, p. 705.) The general rule, although there is a conflict in the cases, is
that the merit of prohibition will not lie whether the inferior court has jurisdiction independent of the statute the
constitutionality of which is questioned, because in such cases the interior court having jurisdiction may itself
determine the constitutionality of the statute, and its decision may be subject to review, and consequently the
complainant in such cases ordinarily has adequate remedy by appeal without resort to the writ of prohibition. But
where the inferior court or tribunal derives its jurisdiction exclusively from an unconstitutional statute, it may be
prevented by the writ of prohibition from enforcing that statute. (50 C. J., 670; Ex parte Round tree [1874, 51 Ala.,
42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish [1912], 109 Me., 384; 84 A., 799; Pennington vs.
Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903], 54 W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837], 5
Dana, 19; 30 Am. Dec., 669.)

Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from Act No. 4221 which
prescribes in detailed manner the procedure for granting probation to accused persons after their conviction has
become final and before they have served their sentence. It is true that at common law the authority of the courts to
suspend temporarily the execution of the sentence is recognized and, according to a number of state courts,
including those of Massachusetts, Michigan, New York, and Ohio, the power is inherent in the courts
(Commonwealth vs. Dowdican's Bail [1874], 115 Mass., 133; People vs. Stickel [1909], 156 Mich., 557; 121 N. W.,
497; People ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616).
But, in the leading case of Ex parte United States ([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A., 1917E, 1178; 37
Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United States expressed the opinion that under
the common law the power of the court was limited to temporary suspension, and brushed aside the contention as
to inherent judicial power saying, through Chief Justice White:

Indisputably under our constitutional system the right to try offenses against the criminal laws and upon
conviction to impose the punishment provided by law is judicial, and it is equally to be conceded that, in
exerting the powers vested in them on such subject, courts inherently possess ample right to exercise
reasonable, that is, judicial, discretion to enable them to wisely exert their authority. But these concessions
afford no ground for the contention as to power here made, since it must rest upon the proposition that the
power to enforce begets inherently a discretion to permanently refuse to do so. And the effect of the
proposition urged upon the distribution of powers made by the Constitution will become apparent when it is
observed that indisputable also is it that the authority to define and fix the punishment for crime is legislative
and includes the right in advance to bring within judicial discretion, for the purpose of executing the statute,
elements of consideration which would be otherwise beyond the scope of judicial authority, and that the right
to relieve from the punishment, fixed by law and ascertained according to the methods by it provided
belongs to the executive department.

Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs. Judge of First Instance of
Cavite (29 Phil., 265), decided by this court in 1915, also reached the conclusion that the power to suspend the
execution of sentences pronounced in criminal cases is not inherent in the judicial function. "All are agreed", he said,
"that in the absence of statutory authority, it does not lie within the power of the courts to grant such suspensions."
(at p. 278.) Both petitioner and respondents are correct, therefore, when they argue that a Court of First Instance
sitting in probation proceedings is a court of limited jurisdiction. Its jurisdiction in such proceedings is conferred
exclusively by Act No. 4221 of the Philippine Legislature.

It is, of course, true that the constitutionality of a statute will not be considered on application for prohibition where
the question has not been properly brought to the attention of the court by objection of some kind (Hill vs. Tarver
[1901], 130 Ala., 592; 30 S., 499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120; 168 S. W., 746). In the case at
bar, it is unquestionable that the constitutional issue has been squarely presented not only before this court by the
Page 126 of 152
petitioners but also before the trial court by the private prosecution. The respondent, Hon. Jose O Vera, however,
acting as judge of the court below, declined to pass upon the question on the ground that the private prosecutor, not
being a party whose rights are affected by the statute, may not raise said question. The respondent judge cited
Cooley on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760 and 762), and McGlue vs. Essex
County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as authority for the proposition that a court will not consider
any attack made on the constitutionality of a statute by one who has no interest in defeating it because his rights are
not affected by its operation. The respondent judge further stated that it may not motu proprio take up the
constitutional question and, agreeing with Cooley that "the power to declare a legislative enactment void is one
which the judge, conscious of the fallibility of the human judgment, will shrink from exercising in any case where he
can conscientiously and with due regard to duty and official oath decline the responsibility" (Constitutional
Limitations, 8th ed., Vol. I, p. 332), proceeded on the assumption that Act No. 4221 is constitutional. While therefore,
the court a quo admits that the constitutional question was raised before it, it refused to consider the question solely
because it was not raised by a proper party. Respondents herein reiterates this view. The argument is advanced
that the private prosecution has no personality to appear in the hearing of the application for probation of defendant
Mariano Cu Unjieng in criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of
constitutionality was not properly raised in the lower court. Although, as a general rule, only those who are parties to
a suit may question the constitutionality of a statute involved in a judicial decision, it has been held that since the
decree pronounced by a court without jurisdiction is void, where the jurisdiction of the court depends on the validity
of the statute in question, the issue of the constitutionality will be considered on its being brought to the attention of
the court by persons interested in the effect to be given the statute.(12 C. J., sec. 184, p. 766.) And, even if we were
to concede that the issue was not properly raised in the court below by the proper party, it does not follow that the
issue may not be here raised in an original action of certiorari and prohibitions. It is true that, as a general rule, the
question of constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings,
ordinarily it may not be raised at the trial, and if not raised in the trial court, it will not considered on appeal. (12 C. J.,
p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that
the general rule admits of exceptions. Courts, in the exercise of sounds discretion, may determine the time when a
question affecting the constitutionality of a statute should be presented. (In re Woolsey [1884], 95 N. Y., 135, 144.)
Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be
raised for the first time at any stage of the proceedings, either in the trial court or on appeal. (12 C. J., p. 786.) Even
in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though raised for
the first time on appeal, if it appears that a determination of the question is necessary to a decision of the case.
(McCabe's Adm'x vs. Maysville & B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis
Cordage Co. [1908], 214 Mo., 685; 113 S. W. 1108; Carmody vs. St. Louis Transit Co., [1905], 188 Mo., 572; 87 S.
W., 913.) And it has been held that a constitutional question will be considered by an appellate court at any time,
where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the
power of this court to consider the constitutional question raised for the first time before this court in these
proceedings, we turn again and point with emphasis to the case of Yu Cong Eng vs. Trinidad, supra. And on the
hypotheses that the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the
proper party to raise the constitutional question here — a point we do not now have to decide — we are of the
opinion that the People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila,
is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity
of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustained,
direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the constitution,
the People of the Philippines, in whose name the present action is brought, has a substantial interest in having it set
aside. Of grater import than the damage caused by the illegal expenditure of public funds is the mortal wound
inflicted upon the fundamental law by the enforcement of an invalid statute. Hence, the well-settled rule that the
state can challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50
Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845),
this court declared an act of the legislature unconstitutional in an action instituted in behalf of the Government of the
Philippines. In Attorney General vs. Perkins ([1889], 73 Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of
Michigan, through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to
renew a mining corporation, alleging that the statute under which the respondents base their right was
unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer of the state to
question the constitutionality of the statute was though, as a general rule, only those who are parties to a suit may
question the constitutionality of a statute involved in a judicial decision, it has been held that since the decree
pronounced by a court without jurisdiction in void, where the jurisdiction of the court depends on the validity of the
statute in question, the issue of constitutionality will be considered on its being brought to the attention of the court
by persons interested in the effect to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede
that the issue was not properly raised in the court below by the proper party, it does not follow that the issue may not
be here raised in an original action of certiorari and prohibition. It is true that, as a general rule, the question of
constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not
be raised a the trial, and if not raised in the trial court, it will not be considered on appeal. (12 C.J., p. 786. See, also,
Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule
admits of exceptions. Courts, in the exercise of sound discretion, may determine the time when a question affecting
the constitutionality of a statute should be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.) Thus, in criminal
cases, although there is a very sharp conflict of authorities, it is said that the question may be raised for the first time
at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p. 786.) Even in civil cases, it has
been held that it is the duty of a court to pass on the constitutional question, though raised for first time on appeal, if
it appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs.
Maysville & B. S. R. Co. [1910], 136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis, Cordage Co. [1908], 214 Mo.
685; 113 S. W., 1108; Carmody vs. St. Louis Transit Co. [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held
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that a constitutional question will be considered by an appellate court at any time, where it involves the jurisdiction of
the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the
constitutional question raised for the first time before this court in these proceedings, we turn again and point with
emphasis to the case of Yu Cong Eng. vs. Trinidad, supra. And on the hypothesis that the Hongkong & Shanghai
Banking Corporation, represented by the private prosecution, is not the proper party to raise the constitutional
question here — a point we do not now have to decide — we are of the opinion that the People of the Philippines,
represented by the Solicitor-General and the Fiscal of the City of Manila, is such a proper party in the present
proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal
and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its
enforcement. It goes without saying that if Act No. 4221 really violates the Constitution, the People of the
Philippines, in whose name the present action is brought, has a substantial interest in having it set aside. Of greater
import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the
fundamental law by the enforcement of an invalid statute. Hence, the well-settled rule that the state can challenge
the validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in
Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an
act of the legislature unconstitutional in an action instituted in behalf of the Government of the Philippines. In
Attorney General vs. Perkings([1889], 73 Mich., 303, 311, 312; 41 N.W., 426, 428, 429), the State of Michigan,
through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to renew a
mining corporation, alleging that the statute under which the respondents base their right was unconstitutional
because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the
constitutionality of the statute was itself questioned. Said the Supreme Court of Michigan, through Champlin, J.:

. . . The idea seems to be that the people are estopped from questioning the validity of a law enacted by
their representatives; that to an accusation by the people of Michigan of usurpation their government, a
statute enacted by the people of Michigan is an adequate answer. The last proposition is true, but, if the
statute relied on in justification is unconstitutional, it is statute only in form, and lacks the force of law, and is
of no more saving effect to justify action under it than if it had never been enacted. The constitution is the
supreme law, and to its behests the courts, the legislature, and the people must bow . . . The legislature and
the respondents are not the only parties in interest upon such constitutional questions. As was remarked by
Mr. Justice Story, in speaking of an acquiescence by a party affected by an unconstitutional act of the
legislature: "The people have a deep and vested interest in maintaining all the constitutional limitations upon
the exercise of legislative powers." (Allen vs. Mckeen, 1 Sum., 314.)

In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was brought by the
Attorney-General of Kansas to test the constitutionality of a statute of the state. In disposing of the question whether
or not the state may bring the action, the Supreme Court of Kansas said:

. . . the state is a proper party — indeed, the proper party — to bring this action. The state is always
interested where the integrity of its Constitution or statutes is involved.

"It has an interest in seeing that the will of the Legislature is not disregarded, and need not,
as an individual plaintiff must, show grounds of fearing more specific injury. (State vs.
Kansas City 60 Kan., 518 [57 Pac., 118])." (State vs. Lawrence, 80 Kan., 707; 103 Pac.,
839.)

Where the constitutionality of a statute is in doubt the state's law officer, its Attorney-General, or county
attorney, may exercise his bet judgment as to what sort of action he will bring to have the matter determined,
either by quo warranto to challenge its validity (State vs. Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A.,
662), by mandamus to compel obedience to its terms (State vs. Dolley, 82 Kan., 533; 108 Pac., 846), or by
injunction to restrain proceedings under its questionable provisions (State ex rel. vs. City of Neodesha, 3
Kan. App., 319; 45 Pac., 122).

Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917], 197 S. W., 1006;
State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181 La., 597; 160 S., 91; State vs. Board
of County Comr's [1934], 39 Pac. [2d], 286; First Const. Co. of Brooklyn vs. State [1917], 211 N.Y., 295; 116 N.E.,
1020; Bush vs. State {1918], 187 Ind., 339; 119 N.E., 417; State vs. Watkins [1933], 176 La., 837; 147 S., 8, 10, 11).
In the case last cited, the Supreme Court of Luisiana said:

It is contended by counsel for Herbert Watkins that a district attorney, being charged with the duty of
enforcing the laws, has no right to plead that a law is unconstitutional. In support of the argument three
decisions are cited, viz.: State ex rel. Hall, District Attorney, vs. Judge of Tenth Judicial District (33 La. Ann.,
1222); State ex rel. Nicholls, Governor vs. Shakespeare, Mayor of New Orleans (41 Ann., 156; 6 So., 592);
and State ex rel., Banking Co., etc. vs. Heard, Auditor (47 La. Ann., 1679; 18 So., 746; 47 L. R. A., 512).
These decisions do not forbid a district attorney to plead that a statute is unconstitutional if he finds if in
conflict with one which it is his duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the
ruling was the judge should not, merely because he believed a certain statute to be unconstitutional forbid
the district attorney to file a bill of information charging a person with a violation of the statute. In other
words, a judge should not judicially declare a statute unconstitutional until the question of constitutionality is
tendered for decision, and unless it must be decided in order to determine the right of a party litigant.
State ex rel. Nicholls, Governor, etc., is authority for the proposition merely that an officer on whom a statute
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 imposes the duty of enforcing its provisions cannot avoid the duty upon the ground that he considers the
statute unconstitutional, and hence in enforcing the statute he is immune from responsibility if the statute be
unconstitutional. State ex rel. Banking Co., etc., is authority for the proposition merely that executive officers,
e.g., the state auditor and state treasurer, should not decline to perform ministerial duties imposed upon
them by a statute, on the ground that they believe the statute is unconstitutional.

It is the duty of a district attorney to enforce the criminal laws of the state, and, above all, to support the
Constitution of the state. If, in the performance of his duty he finds two statutes in conflict with each other, or
one which repeals another, and if, in his judgment, one of the two statutes is unconstitutional, it is his duty to
enforce the other; and, in order to do so, he is compelled to submit to the court, by way of a plea, that one of
the statutes is unconstitutional. If it were not so, the power of the Legislature would be free from
constitutional limitations in the enactment of criminal laws.

The respondents do not seem to doubt seriously the correctness of the general proposition that the state may
impugn the validity of its laws. They have not cited any authority running clearly in the opposite direction. In fact,
they appear to have proceeded on the assumption that the rule as stated is sound but that it has no application in
the present case, nor may it be invoked by the City Fiscal in behalf of the People of the Philippines, one of the
petitioners herein, the principal reasons being that the validity before this court, that the City Fiscal is estopped from
attacking the validity of the Act and, not authorized challenge the validity of the Act in its application outside said
city. (Additional memorandum of respondents, October 23, 1937, pp. 8,. 10, 17 and 23.)

The mere fact that the Probation Act has been repeatedly relied upon the past and all that time has not been
attacked as unconstitutional by the Fiscal of Manila but, on the contrary, has been impliedly regarded by him as
constitutional, is no reason for considering the People of the Philippines estopped from nor assailing its validity. For
courts will pass upon a constitutional questions only when presented before it in bona fide cases for determination,
and the fact that the question has not been raised before is not a valid reason for refusing to allow it to be raised
later. The fiscal and all others are justified in relying upon the statute and treating it as valid until it is held void by the
courts in proper cases.

It remains to consider whether the determination of the constitutionality of Act No. 4221 is necessary to the
resolution of the instant case. For, ". . . while the court will meet the question with firmness, where its decision is
indispensable, it is the part of wisdom, and just respect for the legislature, renders it proper, to waive it, if the case in
which it arises, can be decided on other points." (Ex parte Randolph [1833], 20 F. Cas. No. 11, 558; 2 Brock., 447.
Vide, also Hoover vs. wood [1857], 9 Ind., 286, 287.) It has been held that the determination of a constitutional
question is necessary whenever it is essential to the decision of the case (12 C. J., p. 782, citing Long Sault Dev.
Co. vs. Kennedy [1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff. 212 N.Y., 1: 105 N. E., 849; Ann. Cas.
1915D, 56; and app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan vs. Doddridge, 22
Gratt [63 Va.], 458; Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129 N. W., 605), as where the right of
a party is founded solely on a statute the validity of which is attacked. (12 C.J., p. 782, citing Central Glass Co. vs.
Niagrara F. Ins. Co., 131 La., 513; 59 S., 972; Cheney vs. Beverly, 188 Mass., 81; 74 N.E., 306). There is no doubt
that the respondent Cu Unjieng draws his privilege to probation solely from Act No. 4221 now being assailed.

Apart from the foregoing considerations, that court will also take cognizance of the fact that the Probation Act is a
new addition to our statute books and its validity has never before been passed upon by the courts; that may
persons accused and convicted of crime in the City of Manila have applied for probation; that some of them are
already on probation; that more people will likely take advantage of the Probation Act in the future; and that the
respondent Mariano Cu Unjieng has been at large for a period of about four years since his first conviction. All wait
the decision of this court on the constitutional question. Considering, therefore, the importance which the instant
case has assumed and to prevent multiplicity of suits, strong reasons of public policy demand that the
constitutionality of Act No. 4221 be now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U.S.,
500; 70 Law. ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207 N.Y., 533; 101 N.E., 442, 444;
Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327; 133 N.W., 209, 211; 37 L.R.A. [N.S.] 489;
Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil., 304.) In Yu Cong Eng vs. Trinidad, supra, an analogous
situation confronted us. We said: "Inasmuch as the property and personal rights of nearly twelve thousand
merchants are affected by these proceedings, and inasmuch as Act No. 2972 is a new law not yet interpreted by the
courts, in the interest of the public welfare and for the advancement of public policy, we have determined to overrule
the defense of want of jurisdiction in order that we may decide the main issue. We have here an extraordinary
situation which calls for a relaxation of the general rule." Our ruling on this point was sustained by the Supreme
Court of the United States. A more binding authority in support of the view we have taken can not be found.

We have reached the conclusion that the question of the constitutionality of Act No. 4221 has been properly raised.
Now for the main inquiry: Is the Act unconstitutional?

Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the Constitution. This court,
by clear implication from the provisions of section 2, subsection 1, and section 10, of Article VIII of the Constitution,
may declare an act of the national legislature invalid because in conflict with the fundamental lay. It will not shirk
from its sworn duty to enforce the Constitution. And, in clear cases, it will not hesitate to give effect to the supreme
law by setting aside a statute in conflict therewith. This is of the essence of judicial duty.

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This court is not unmindful of the fundamental criteria in cases of this nature that all reasonable doubts should be
resolved in favor of the constitutionality of a statute. An act of the legislature approved by the executive, is presumed
to be within constitutional limitations. The responsibility of upholding the Constitution rests not on the courts alone
but on the legislature as well. "The question of the validity of every statute is first determined by the legislative
department of the government itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10; Case vs. Board of Health and Heiser
[1913], 24 Phil., 250, 276; U.S. vs. Joson [1913], 26 Phil., 1.) And a statute finally comes before the courts sustained
by the sanction of the executive. The members of the Legislature and the Chief Executive have taken an oath to
support the Constitution and it must be presumed that they have been true to this oath and that in enacting and
sanctioning a particular law they did not intend to violate the Constitution. The courts cannot but cautiously exercise
its power to overturn the solemn declarations of two of the three grand departments of the governments. (6 R.C.L.,
p. 101.) Then, there is that peculiar political philosophy which bids the judiciary to reflect the wisdom of the people
as expressed through an elective Legislature and an elective Chief Executive. It follows, therefore, that the courts
will not set aside a law as violative of the Constitution except in a clear case. This is a proposition too plain to
require a citation of authorities.

One of the counsel for respondents, in the course of his impassioned argument, called attention to the fact that the
President of the Philippines had already expressed his opinion against the constitutionality of the Probation Act,
adverting that as to the Executive the resolution of this question was a foregone conclusion. Counsel, however,
reiterated his confidence in the integrity and independence of this court. We take notice of the fact that the President
in his message dated September 1, 1937, recommended to the National Assembly the immediate repeal of the
Probation Act (No. 4221); that this message resulted in the approval of Bill No. 2417 of the Nationality Assembly
repealing the probation Act, subject to certain conditions therein mentioned; but that said bill was vetoed by the
President on September 13, 1937, much against his wish, "to have stricken out from the statute books of the
Commonwealth a law . . . unfair and very likely unconstitutional." It is sufficient to observe in this connection that, in
vetoing the bill referred to, the President exercised his constitutional prerogative. He may express the reasons which
he may deem proper for taking such a step, but his reasons are not binding upon us in the determination of actual
controversies submitted for our determination. Whether or not the Executive should express or in any manner
insinuate his opinion on a matter encompassed within his broad constitutional power of veto but which happens to
be at the same time pending determination in this court is a question of propriety for him exclusively to decide or
determine. Whatever opinion is expressed by him under these circumstances, however, cannot sway our judgment
on way or another and prevent us from taking what in our opinion is the proper course of action to take in a given
case. It if is ever necessary for us to make any vehement affirmance during this formative period of our political
history, it is that we are independent of the Executive no less than of the Legislative department of our government
— independent in the performance of our functions, undeterred by any consideration, free from politics, indifferent to
popularity, and unafraid of criticism in the accomplishment of our sworn duty as we see it and as we understand it.

The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said Act encroaches upon
the pardoning power of the Executive; (2) that its constitutes an undue delegation of legislative power and (3) that it
denies the equal protection of the laws.

1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law, in force at the time of
the approval of Act No. 4221, otherwise known as the Probation Act, vests in the Governor-General of the
Philippines "the exclusive power to grant pardons and reprieves and remit fines and forfeitures". This power is now
vested in the President of the Philippines. (Art. VII, sec. 11, subsec. 6.) The provisions of the Jones Law and the
Constitution differ in some respects. The adjective "exclusive" found in the Jones Law has been omitted from the
Constitution. Under the Jones Law, as at common law, pardon could be granted any time after the commission of
the offense, either before or after conviction (Vide Constitution of the United States, Art. II, sec. 2; In re Lontok
[1922], 43 Phil., 293). The Governor-General of the Philippines was thus empowered, like the President of the
United States, to pardon a person before the facts of the case were fully brought to light. The framers of our
Constitution thought this undesirable and, following most of the state constitutions, provided that the pardoning
power can only be exercised "after conviction". So, too, under the new Constitution, the pardoning power does not
extend to "cases of impeachment". This is also the rule generally followed in the United States (Vide Constitution of
the United States, Art. II, sec. 2). The rule in England is different. There, a royal pardon can not be pleaded in bar of
an impeachment; "but," says Blackstone, "after the impeachment has been solemnly heard and determined, it is not
understood that the king's royal grace is further restrained or abridged." (Vide, Ex parte Wells [1856], 18 How., 307;
15 Law. ed., 421; Com. vs. Lockwood [1872], 109 Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio
St., 457; 23 am. Rep., 762.) The reason for the distinction is obvious. In England, Judgment on impeachment is not
confined to mere "removal from office and disqualification to hold and enjoy any office of honor, trust, or profit under
the Government" (Art. IX, sec. 4, Constitution of the Philippines) but extends to the whole punishment attached by
law to the offense committed. The House of Lords, on a conviction may, by its sentence, inflict capital punishment,
perpetual banishment, perpetual banishment, fine or imprisonment, depending upon the gravity of the offense
committed, together with removal from office and incapacity to hold office. (Com. vs. Lockwood, supra.) Our
Constitution also makes specific mention of "commutation" and of the power of the executive to impose, in the
pardons he may grant, such conditions, restrictions and limitations as he may deem proper. Amnesty may be
granted by the President under the Constitution but only with the concurrence of the National Assembly. We need
not dwell at length on the significance of these fundamental changes. It is sufficient for our purposes to state that the
pardoning power has remained essentially the same. The question is: Has the pardoning power of the Chief
Executive under the Jones Law been impaired by the Probation Act?

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As already stated, the Jones Law vests the pardoning power exclusively in the Chief Executive. The exercise of the
power may not, therefore, be vested in anyone else.
". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor fettered by any legislative
restrictions, nor can like power be given by the legislature to any other officer or authority. The coordinate
departments of government have nothing to do with the pardoning power, since no person properly belonging to one
of the departments can exercise any powers appertaining to either of the others except in cases expressly provided
for by the constitution." (20 R.C.L., pp., , and cases cited.) " . . . where the pardoning power is conferred on the
executive without express or implied limitations, the grant is exclusive, and the legislature can neither exercise such
power itself nor delegate it elsewhere, nor interfere with or control the proper exercise thereof, . . ." (12 C.J., pp.
838, 839, and cases cited.) If Act No. 4221, then, confers any pardoning power upon the courts it is for that reason
unconstitutional and void. But does it?

In the famous Killitts decision involving an embezzlement case, the Supreme Court of the United States ruled in
1916 that an order indefinitely suspending sentenced was void. (Ex parte United States [1916], 242 U.S., 27; 61
Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355.) Chief Justice White, after an
exhaustive review of the authorities, expressed the opinion of the court that under the common law the power of the
court was limited to temporary suspension and that the right to suspend sentenced absolutely and permanently was
vested in the executive branch of the government and not in the judiciary. But, the right of Congress to establish
probation by statute was conceded. Said the court through its Chief Justice: ". . . and so far as the future is
concerned, that is, the causing of the imposition of penalties as fixed to be subject, by probation legislation or such
other means as the legislative mind may devise, to such judicial discretion as may be adequate to enable courts to
meet by the exercise of an enlarged but wise discretion the infinite variations which may be presented to them for
judgment, recourse must be had Congress whose legislative power on the subject is in the very nature of things
adequately complete." (Quoted in Riggs vs. United States [1926], 14 F. [2d], 5, 6.) This decision led the National
Probation Association and others to agitate for the enactment by Congress of a federal probation law. Such action
was finally taken on March 4, 1925 (chap. 521, 43 Stat. L. 159, U.S.C. title 18, sec. 724). This was followed by an
appropriation to defray the salaries and expenses of a certain number of probation officers chosen by civil service.
(Johnson, Probation for Juveniles and Adults, p. 14.)

In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309), the Supreme Court of
the United States, through Chief Justice Taft, held that when a person sentenced to imprisonment by a district court
has begun to serve his sentence, that court has no power under the Probation Act of March 4, 1925 to grant him
probation even though the term at which sentence was imposed had not yet expired. In this case of Murray, the
constitutionality of the probation Act was not considered but was assumed. The court traced the history of the Act
and quoted from the report of the Committee on the Judiciary of the United States House of Representatives
(Report No. 1377, 68th Congress, 2 Session) the following statement:

Prior to the so-called Killitts case, rendered in December, 1916, the district courts exercised a form of
probation either, by suspending sentence or by placing the defendants under state probation officers or
volunteers. In this case, however (Ex parte United States, 242 U.S., 27; 61 L. Ed., 129; L.R.A., 1917E, 1178;
37 Sup. Ct. Rep., 72 Ann. Cas. 1917B, 355), the Supreme Court denied the right of the district courts to
suspend sentenced. In the same opinion the court pointed out the necessity for action by Congress if the
courts were to exercise probation powers in the future . . .

Since this decision was rendered, two attempts have been made to enact probation legislation. In 1917, a
bill was favorably reported by the Judiciary Committee and passed the House. In 1920, the judiciary
Committee again favorably reported a probation bill to the House, but it was never reached for definite
action.

If this bill is enacted into law, it will bring the policy of the Federal government with reference to its treatment
of those convicted of violations of its criminal laws in harmony with that of the states of the Union. At the
present time every state has a probation law, and in all but twelve states the law applies both to adult and
juvenile offenders. (see, also, Johnson, Probation for Juveniles and Adults [1928], Chap. I.)

The constitutionality of the federal probation law has been sustained by inferior federal courts. In Riggs vs. United
States supra, the Circuit Court of Appeals of the Fourth Circuit said:

Since the passage of the Probation Act of March 4, 1925, the questions under consideration have been
reviewed by the Circuit Court of Appeals of the Ninth Circuit (7 F. [2d], 590), and the constitutionality of the
act fully sustained, and the same held in no manner to encroach upon the pardoning power of the President.
This case will be found to contain an able and comprehensive review of the law applicable here. It arose
under the act we have to consider, and to it and the authorities cited therein special reference is made (Nix
vs. James, 7 F. [2d], 590, 594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit
(Kriebel vs. U.S., 10 F. [2d], 762), likewise construing the Probation Act.

We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal language, pointed to
Congress as possessing the requisite power to enact probation laws, that a federal probation law as actually
enacted in 1925, and that the constitutionality of the Act has been assumed by the Supreme Court of the United
States in 1928 and consistently sustained by the inferior federal courts in a number of earlier cases.

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We are fully convinced that the Philippine Legislature, like the Congress of the United States, may legally enact a
probation law under its broad power to fix the punishment of any and all penal offenses. This conclusion is
supported by other authorities. In Ex parte Bates ([1915], 20 N. M., 542; L.R.A. 1916A, 1285; 151 Pac., 698, the
court said: "It is clearly within the province of the Legislature to denominate and define all classes of crime, and to
prescribe for each a minimum and maximum punishment." And in State vs. Abbott ([1910], 87 S.C., 466; 33 L.R.A.
[N. S.], 112; 70 S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The legislative power to set punishment for crime
is very broad, and in the exercise of this power the general assembly may confer on trial judges, if it sees fit, the
largest discretion as to the sentence to be imposed, as to the beginning and end of the punishment and whether it
should be certain or indeterminate or conditional." (Quoted in State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69.)
Indeed, the Philippine Legislature has defined all crimes and fixed the penalties for their violation. Invariably, the
legislature has demonstrated the desire to vest in the courts — particularly the trial courts — large discretion in
imposing the penalties which the law prescribes in particular cases. It is believed that justice can best be served by
vesting this power in the courts, they being in a position to best determine the penalties which an individual convict,
peculiarly circumstanced, should suffer. Thus, while courts are not allowed to refrain from imposing a sentence
merely because, taking into consideration the degree of malice and the injury caused by the offense, the penalty
provided by law is clearly excessive, the courts being allowed in such case to submit to the Chief Executive, through
the Department of Justice, such statement as it may deem proper (see art. 5, Revised Penal Code), in cases where
both mitigating and aggravating circumstances are attendant in the commission of a crime and the law provides for
a penalty composed of two indivisible penalties, the courts may allow such circumstances to offset one another in
consideration of their number and importance, and to apply the penalty according to the result of such
compensation. (Art. 63, rule 4, Revised Penal Code; U.S. vs. Reguera and Asuategui [1921], 41 Phil., 506.) Again,
article 64, paragraph 7, of the Revised Penal Code empowers the courts to determine, within the limits of each
periods, in case the penalty prescribed by law contains three periods, the extent of the evil produced by the crime. In
the imposition of fines, the courts are allowed to fix any amount within the limits established by law, considering not
only the mitigating and aggravating circumstances, but more particularly the wealth or means of the culprit. (Art. 66,
Revised Penal Code.) Article 68, paragraph 1, of the same Code provides that "a discretionary penalty shall be
imposed" upon a person under fifteen but over nine years of age, who has not acted without discernment, but
always lower by two degrees at least than that prescribed by law for the crime which he has committed. Article 69 of
the same Code provides that in case of "incomplete self-defense", i.e., when the crime committed is not wholly
excusable by reason of the lack of some of the conditions required to justify the same or to exempt from criminal
liability in the several cases mentioned in article 11 and 12 of the Code, "the courts shall impose the penalty in the
period which may be deemed proper, in view of the number and nature of the conditions of exemption present or
lacking." And, in case the commission of what are known as "impossible" crimes, "the court, having in mind the
social danger and the degree of criminality shown by the offender," shall impose upon him either arresto mayor or a
fine ranging from 200 to 500 pesos. (Art. 59, Revised Penal Code.)

Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is deducted form the entire
term of imprisonment, except in certain cases expressly mentioned (art. 29); the death penalty is not imposed when
the guilty person is more than seventy years of age, or where upon appeal or revision of the case by the Supreme
Court, all the members thereof are not unanimous in their voting as to the propriety of the imposition of the death
penalty (art. 47, see also, sec. 133, Revised Administrative Code, as amended by Commonwealth Act No. 3); the
death sentence is not to be inflicted upon a woman within the three years next following the date of the sentence or
while she is pregnant, or upon any person over seventy years of age (art. 83); and when a convict shall become
insane or an imbecile after final sentence has been pronounced, or while he is serving his sentenced, the execution
of said sentence shall be suspended with regard to the personal penalty during the period of such insanity or
imbecility (art. 79).

But the desire of the legislature to relax what might result in the undue harshness of the penal laws is more clearly
demonstrated in various other enactments, including the probation Act. There is the Indeterminate Sentence Law
enacted in 1933 as Act No. 4103 and subsequently amended by Act No. 4225, establishing a system of parole
(secs. 5 to 100 and granting the courts large discretion in imposing the penalties of the law. Section 1 of the law as
amended provides; "hereafter, in imposing a prison sentence for an offenses punished by the Revised Penal Code,
or its amendments, the court shall sentence the accused to an indeterminate sentence the maximum term of which
shall be that which, in view of the attending circumstances, could be properly imposed under the rules of the said
Code, and to a minimum which shall be within the range of the penalty next lower to that prescribed by the Code for
the offense; and if the offense is punished by any other law, the court shall sentence the accused to an
indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by said law and the
minimum shall not be less than the minimum term prescribed by the same." Certain classes of convicts are, by
section 2 of the law, excluded from the operation thereof. The Legislature has also enacted the Juvenile
Delinquency Law (Act No. 3203) which was subsequently amended by Act No. 3559. Section 7 of the original Act
and section 1 of the amendatory Act have become article 80 of the Revised Penal Code, amended by Act No. 4117
of the Philippine Legislature and recently reamended by Commonwealth Act No. 99 of the National Assembly. In this
Act is again manifested the intention of the legislature to "humanize" the penal laws. It allows, in effect, the
modification in particular cases of the penalties prescribed by law by permitting the suspension of the execution of
the judgment in the discretion of the trial court, after due hearing and after investigation of the particular
circumstances of the offenses, the criminal record, if any, of the convict, and his social history. The Legislature has
in reality decreed that in certain cases no punishment at all shall be suffered by the convict as long as the conditions
of probation are faithfully observed. It this be so, then, it cannot be said that the Probation Act comes in conflict with
the power of the Chief Executive to grant pardons and reprieves, because, to use the language of the Supreme
Court of New Mexico, "the element of punishment or the penalty for the commission of a wrong, while to be declared

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by the courts as a judicial function under and within the limits of law as announced by legislative acts, concerns
solely the procedure and conduct of criminal causes, with which the executive can have nothing to do." (Ex
parteBates, supra.) In Williams vs. State ([1926], 162 Ga., 327; 133 S.E., 843), the court upheld the constitutionality
of the Georgia probation statute against the contention that it attempted to delegate to the courts the pardoning
power lodged by the constitution in the governor alone is vested with the power to pardon after final sentence has
been imposed by the courts, the power of the courts to imposed any penalty which may be from time to time
prescribed by law and in such manner as may be defined cannot be questioned."

We realize, of course, the conflict which the American cases disclose. Some cases hold it unlawful for the legislature
to vest in the courts the power to suspend the operation of a sentenced, by probation or otherwise, as to do so
would encroach upon the pardoning power of the executive. (In re Webb [1895], 89 Wis., 354; 27 L.R.A., 356; 46
Am. St. Rep., 846; 62 N.W., 177; 9 Am. Crim., Rep., 702; State ex rel. Summerfield vs. Moran [1919], 43 Nev., 150;
182 Pac., 927; Ex parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19 L.R.A. [N.S.], 1041; 132
Am. St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903], 202 Ill, 287; 67 N.E., 23; 63 L.R.A., 82; 95 Am. St. Rep.,
230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep., 615; 41 L. R. A. [N. S.], 1144; 150 S. W., 162; Ex parte Shelor
[1910], 33 Nev., 361;111 Pac., 291; Neal vs. State [1898], 104 Ga., 509; 42 L. R. A., 190; 69 Am. St. Rep., 175; 30
S. E. 858; State ex rel. Payne vs. Anderson [1921], 43 S. D., 630; 181 N. W., 839; People vs. Brown, 54 Mich., 15;
19 N. W., 571; States vs. Dalton [1903], 109 Tenn., 544; 72 S. W., 456.)

Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs. Snook [1926; D.
C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d], 5; Murphy vs. States [1926], 171 Ark.,
620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini [1912], 18 Cal. App., 166; 122 Pac., 831; Re Nachnaber [1928],
89 Cal. App., 530; 265 Pac., 392; Ex parte De Voe [1931], 114 Cal. App., 730; 300 Pac., 874; People vs. Patrick
[1897], 118 Cal., 332; 50 Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168 Pac., 1171; Belden vs. Hugo [1914],
88 Conn., 50; 91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133 S. E., 843; People vs. Heise [1913],
257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind., 534; 35 N. E., 179; 23 L. R. A., 859; St. Hillarie,
Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs. Stickle [1909], 156 Mich., 557; 121 N. W., 497; State vs.
Fjolander [1914], 125 Minn., 529; State ex rel. Bottomnly vs. District Court [1925], 73 Mont., 541; 237 Pac., 525;
State vs. Everitt [1913], 164 N. C., 399; 79 S. E., 274; 47 L. R. A. [N. S.], 848; State ex rel. Buckley vs. Drew [1909],
75 N. H., 402; 74 Atl., 875; State vs. Osborne [1911], 79 N. J. Eq., 430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M.,
542; L. R. A., 1916 A. 1285; 151 Pac., 698; People vs. ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288;
23 L. R. A., 856; 36 N. E., 386; 15 Am. Crim. Rep., 675; People ex rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106
N. Y. Supp., 928; People vs. Goodrich [1914], 149 N. Y. Supp., 406; Moore vs. Thorn [1935], 245 App. Div., 180;
281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38; L. R. A., 1915C, 1169; 149 N. W., 568; Ex parte Eaton [1925], 29
Okla., Crim. Rep., 275; 233 P., 781; State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S.
C., 466; 33 L.R.A., [N. S.], 112; 70 S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods
vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs.
State [1913],70 Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim. Rep., 548; 165 S. W.,
573; King vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep.,
394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt.,
197; 136 A., 24; Richardson vs. Com. [1921], 131 Va., 802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash.,
287; 118 Pac., 42; State ex rel. Tingstand vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393; 396.)
We elect to follow this long catena of authorities holding that the courts may be legally authorized by the legislature
to suspend sentence by the establishment of a system of probation however characterized. State ex rel. Tingstand
vs. Starwich ([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393), deserved particular mention. In that case, a
statute enacted in 1921 which provided for the suspension of the execution of a sentence until otherwise ordered by
the court, and required that the convicted person be placed under the charge of a parole or peace officer during the
term of such suspension, on such terms as the court may determine, was held constitutional and as not giving the
court a power in violation of the constitutional provision vesting the pardoning power in the chief executive of the
state. (Vide, also, Re Giannini [1912], 18 Cal App., 166; 122 Pac., 831.)

Probation and pardon are not coterminous; nor are they the same. They are actually district and different from each
other, both in origin and in nature. In People ex rel. Forsyth vs. Court of Sessions ([1894], 141 N. Y., 288, 294; 36 N.
E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep., 675), the Court of Appeals of New York said:

. . . The power to suspend sentence and the power to grant reprieves and pardons, as understood when the
constitution was adopted, are totally distinct and different in their nature. The former was always a part of the
judicial power; the latter was always a part of the executive power. The suspension of the sentence simply
postpones the judgment of the court temporarily or indefinitely, but the conviction and liability following it,
and the civil disabilities, remain and become operative when judgment is rendered. A pardon reaches both
the punishment prescribed for the offense and the guilt of the offender. It releases the punishment, and blots
out of existence the guilt, so that in the eye of the law, the offender is as innocent as if he had never
committed the offense. It removes the penalties and disabilities, and restores him to all his civil rights. It
makes him, as it were, a new man, and gives him a new credit and capacity. (Ex parte Garland, 71 U. S., 4
Wall., 333; 18 Law. ed., 366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U.
S., 149; 24 Law. ed., 442.)

The framers of the federal and the state constitutions were perfectly familiar with the principles governing the
power to grant pardons, and it was conferred by these instruments upon the executive with full knowledge of
the law upon the subject, and the words of the constitution were used to express the authority formerly
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 exercised by the English crown, or by its representatives in the colonies. (Ex parte Wells, 59 U. S., 18 How.,
307; 15 Law. ed., 421.) As this power was understood, it did not comprehend any part of the judicial
functions to suspend sentence, and it was never intended that the authority to grant reprieves and pardons
should abrogate, or in any degree restrict, the exercise of that power in regard to its own judgments, that
criminal courts has so long maintained. The two powers, so distinct and different in their nature and
character, were still left separate and distinct, the one to be exercised by the executive, and the other by the
judicial department. We therefore conclude that a statute which, in terms, authorizes courts of criminal
jurisdiction to suspend sentence in certain cases after conviction, — a power inherent in such courts at
common law, which was understood when the constitution was adopted to be an ordinary judicial function,
and which, ever since its adoption, has been exercised of legislative power under the constitution. It does
not encroach, in any just sense, upon the powers of the executive, as they have been understood and
practiced from the earliest times. (Quoted with approval in Directors of Prisons vs. Judge of First Instance of
Cavite [1915], 29 Phil., 265, Carson, J., concurring, at pp. 294, 295.)

In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally and completely
exonerated. He is not exempt from the entire punishment which the law inflicts. Under the Probation Act, the
probationer's case is not terminated by the mere fact that he is placed on probation. Section 4 of the Act provides
that the probation may be definitely terminated and the probationer finally discharged from supervision only after the
period of probation shall have been terminated and the probation officer shall have submitted a report, and the court
shall have found that the probationer has complied with the conditions of probation. The probationer, then, during
the period of probation, remains in legal custody — subject to the control of the probation officer and of the court;
and, he may be rearrested upon the non-fulfillment of the conditions of probation and, when rearrested, may be
committed to prison to serve the sentence originally imposed upon him. (Secs. 2, 3, 5 and 6, Act No. 4221.)

The probation described in the act is not pardon. It is not complete liberty, and may be far from it. It is really
a new mode of punishment, to be applied by the judge in a proper case, in substitution of the imprisonment
and find prescribed by the criminal laws. For this reason its application is as purely a judicial act as any other
sentence carrying out the law deemed applicable to the offense. The executive act of pardon, on the
contrary, is against the criminal law, which binds and directs the judges, or rather is outside of and above it.
There is thus no conflict with the pardoning power, and no possible unconstitutionality of the Probation Act
for this cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.)

Probation should also be distinguished from reprieve and from commutation of the sentence. Snodgrass vs. State
([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S. W., 162), is relied upon most strongly by the
petitioners as authority in support of their contention that the power to grant pardons and reprieves, having been
vested exclusively upon the Chief Executive by the Jones Law, may not be conferred by the legislature upon the
courts by means of probation law authorizing the indefinite judicial suspension of sentence. We have examined that
case and found that although the Court of Criminal Appeals of Texas held that the probation statute of the state in
terms conferred on the district courts the power to grant pardons to persons convicted of crime, it also distinguished
between suspensions sentence on the one hand, and reprieve and commutation of sentence on the other. Said the
court, through Harper, J.:

That the power to suspend the sentence does not conflict with the power of the Governor to grant reprieves
is settled by the decisions of the various courts; it being held that the distinction between a "reprieve" and a
suspension of sentence is that a reprieve postpones the execution of the sentence to a day certain, whereas
a suspension is for an indefinite time. (Carnal vs. People, 1 Parker, Cr. R., 262; In re Buchanan, 146 N. Y.,
264; 40 N. E., 883), and cases cited in 7 Words & Phrases, pp. 6115, 6116. This law cannot be hold in
conflict with the power confiding in the Governor to grant commutations of punishment, for a commutations
is not but to change the punishment assessed to a less punishment.

In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the Supreme Court of Montana
had under consideration the validity of the adult probation law of the state enacted in 1913, now found in sections
12078-12086, Revised Codes of 1921. The court held the law valid as not impinging upon the pardoning power of
the executive. In a unanimous decision penned by Justice Holloway, the court said:

. . . . the term "pardon", "commutation", and "respite" each had a well understood meaning at the time our
Constitution was adopted, and no one of them was intended to comprehend the suspension of the execution
of the judgment as that phrase is employed in sections 12078-12086. A "pardon" is an act of grace,
proceeding from the power intrusted with the execution of the laws which exempts the individual on whom it
is bestowed from the punishment the law inflicts for a crime he has committed (United States vs. Wilson, 7
Pet., 150; 8 Law. ed., 640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a
forgiveness of the offense (Cook vs. Middlesex County, 26 N. J. Law, 326; Ex parte Powell, 73 Ala., 517; 49
Am. Rep., 71). "Commutation" is a remission of a part of the punishment; a substitution of a less penalty for
the one originally imposed (Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs. Chamberlain,
107 Mich., 381; 65 N. W., 235). A "reprieve" or "respite" is the withholding of the sentence for an interval of
time (4 Blackstone's Commentaries, 394), a postponement of execution (Carnal vs. People, 1 Parker, Cr. R.
[N. Y.], 272), a temporary suspension of execution (Butler vs. State, 97 Ind., 373).

Few adjudicated cases are to be found in which the validity of a statute similar to our section 12078 has
been determined; but the same objections have been urged against parole statutes which vest the power to
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 parole in persons other than those to whom the power of pardon is granted, and these statutes have been
upheld quite uniformly, as a reference to the numerous cases cited in the notes to Woods vs. State (130
Tenn., 100; 169 S. W.,558, reported in L. R. A., 1915F, 531), will disclose. (See, also, 20 R. C. L., 524.)

We conclude that the Probation Act does not conflict with the pardoning power of the Executive. The pardoning
power, in respect to those serving their probationary sentences, remains as full and complete as if the Probation
Law had never been enacted. The President may yet pardon the probationer and thus place it beyond the power of
the court to order his rearrest and imprisonment. (Riggs vs. United States [1926],
14 F. [2d], 5, 7.)

2. But while the Probation Law does not encroach upon the pardoning power of the executive and is not for that
reason void, does section 11 thereof constitute, as contended, an undue delegation of legislative power?

Under the constitutional system, the powers of government are distributed among three coordinate and substantially
independent organs: the legislative, the executive and the judicial. Each of these departments of the government
derives its authority from the Constitution which, in turn, is the highest expression of popular will. Each has exclusive
cognizance of the matters within its jurisdiction, and is supreme within its own sphere.

The power to make laws — the legislative power — is vested in a bicameral Legislature by the Jones Law (sec. 12)
and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1, Constitution of the Philippines). The
Philippine Legislature or the National Assembly may not escape its duties and responsibilities by delegating that
power to any other body or authority. Any attempt to abdicate the power is unconstitutional and void, on the principle
that potestas delegata non delegare potest. This principle is said to have originated with the glossators, was
introduced into English law through a misreading of Bracton, there developed as a principle of agency, was
established by Lord Coke in the English public law in decisions forbidding the delegation of judicial power, and found
its way into America as an enlightened principle of free government. It has since become an accepted corollary of
the principle of separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The classic statement of the rule is
that of Locke, namely: "The legislative neither must nor can transfer the power of making laws to anybody else, or
place it anywhere but where the people have." (Locke on Civil Government, sec. 142.) Judge Cooley enunciates the
doctrine in the following oft-quoted language: "One of the settled maxims in constitutional law is, that the power
conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority.
Where the sovereign power of the state has located the authority, there it must remain; and by the constitutional
agency alone the laws must be made until the Constitution itself is charged. The power to whose judgment, wisdom,
and patriotism this high prerogative has been intrusted cannot relieve itself of the responsibilities by choosing other
agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any
other body for those to which alone the people have seen fit to confide this sovereign trust." (Cooley on
Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This
court posits the doctrine "on the ethical principle that such a delegated power constitutes not only a right but a duty
to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the matter of
legislation and not through the intervening mind of another. (U. S. vs. Barrias, supra, at p. 330.)

The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It admits of
exceptions. An exceptions sanctioned by immemorial practice permits the central legislative body to delegate
legislative powers to local authorities. (Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria
[1918], 39 Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State
vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that local affairs shall be
managed by local authorities, and general affairs by the central authorities; and hence while the rule is also
fundamental that the power to make laws cannot be delegated, the creation of the municipalities exercising local self
government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general
legislative power, but rather as the grant of the authority to prescribed local regulations, according to immemorial
practice, subject of course to the interposition of the superior in cases of necessity." (Stoutenburgh vs.
Hennick, supra.) On quite the same principle, Congress is powered to delegate legislative power to such agencies in
the territories of the United States as it may select. A territory stands in the same relation to Congress as a
municipality or city to the state government. (United States vs. Heinszen [1907], 206 U. S., 370; 27 Sup. Ct. Rep.,
742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49
Law. ed., 128; 1 Ann. Cas., 697.) Courts have also sustained the delegation of legislative power to the people at
large. Some authorities maintain that this may not be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People
vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442; Ann. Cas., 1914C, 616). However, the question of whether or
not a state has ceased to be republican in form because of its adoption of the initiative and referendum has been
held not to be a judicial but a political question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56
Law. ed., 377; 32 Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked upon with favor by
certain progressive courts, the sting of the decisions of the more conservative courts has been pretty well drawn.
(Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910], 57
Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.)
Doubtless, also, legislative power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI
of the Constitution of the Philippines provides that "The National Assembly may by law authorize the President,
subject to such limitations and restrictions as it may impose, to fix within specified limits, tariff rates, import or export
quotas, and tonnage and wharfage dues." And section 16 of the same article of the Constitution provides that "In
times of war or other national emergency, the National Assembly may by law authorize the President, for a limited
period and subject to such restrictions as it may prescribed, to promulgate rules and regulations to carry out a
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declared national policy." It is beyond the scope of this decision to determine whether or not, in the absence of the
foregoing constitutional provisions, the President could be authorized to exercise the powers thereby vested in him.
Upon the other hand, whatever doubt may have existed has been removed by the Constitution itself.

The case before us does not fall under any of the exceptions hereinabove mentioned.

The challenged section of Act No. 4221 in section 11 which reads as follows:

This Act shall apply only in those provinces in which the respective provincial boards have provided for the
salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation
officer shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation
Office. (Emphasis ours.)

In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to inquire whether
the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was
left to the judgment of any other appointee or delegate of the legislature. (6 R. C. L., p. 165.) In the United States vs.
Ang Tang Ho ([1922], 43 Phil., 1), this court adhered to the foregoing rule when it held an act of the legislature void
in so far as it undertook to authorize the Governor-General, in his discretion, to issue a proclamation fixing the price
of rice and to make the sale of it in violation of the proclamation a crime. (See and cf. Compañia General de
Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general rule, however, is limited by
another rule that to a certain extent matters of detail may be left to be filled in by rules and regulations to be adopted
or promulgated by executive officers and administrative boards. (6 R. C. L., pp. 177-179.)

For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies endowed with
power to determine when the Act should take effect in their respective provinces. They are the agents or delegates
of the legislature in this respect. The rules governing delegation of legislative power to administrative and executive
officers are applicable or are at least indicative of the rule which should be here adopted. An examination of a
variety of cases on delegation of power to administrative bodies will show that the ratio decidendi is at variance but,
it can be broadly asserted that the rationale revolves around the presence or absence of a standard or rule of action
— or the sufficiency thereof — in the statute, to aid the delegate in exercising the granted discretion. In some cases,
it is held that the standard is sufficient; in others that is insufficient; and in still others that it is entirely lacking. As a
rule, an act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by
which the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it.
(See Schecter vs. United States [1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947;
People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See
also R. C. L., title "Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards in
the exercise of their discretionary power to determine whether or not the Probation Act shall apply in their respective
provinces? What standards are fixed by the Act? We do not find any and none has been pointed to us by the
respondents. The probation Act does not, by the force of any of its provisions, fix and impose upon the provincial
boards any standard or guide in the exercise of their discretionary power. What is granted, if we may use the
language of Justice Cardozo in the recent case of Schecter, supra, is a "roving commission" which enables the
provincial boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not seemingly on its
own authority extend the benefits of the Probation Act to the provinces but in reality leaves the entire matter for the
various provincial boards to determine. In other words, the provincial boards of the various provinces are to
determine for themselves, whether the Probation Law shall apply to their provinces or not at all. The applicability
and application of the Probation Act are entirely placed in the hands of the provincial boards. If the provincial board
does not wish to have the Act applied in its province, all that it has to do is to decline to appropriate the needed
amount for the salary of a probation officer. The plain language of the Act is not susceptible of any other
interpretation. This, to our minds, is a virtual surrender of legislative power to the provincial boards.

"The true distinction", says Judge Ranney, "is between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made."
(Cincinnati, W. & Z. R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory
Construction, sec 68.) To the same effect are the decision of this court in Municipality of Cardona vs. Municipality of
Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of Mindoro ([1919],39 Phil., 660) and Cruz vs.
Youngberg ([1931], 56 Phil., 234). In the first of these cases, this court sustained the validity of the law conferring
upon the Governor-General authority to adjust provincial and municipal boundaries. In the second case, this court
held it lawful for the legislature to direct non-Christian inhabitants to take up their habitation on unoccupied lands to
be selected by the provincial governor and approved by the provincial board. In the third case, it was held proper for
the legislature to vest in the Governor-General authority to suspend or not, at his discretion, the prohibition of the
importation of the foreign cattle, such prohibition to be raised "if the conditions of the country make this advisable or
if deceased among foreign cattle has ceased to be a menace to the agriculture and livestock of the lands."

It should be observed that in the case at bar we are not concerned with the simple transference of details of
execution or the promulgation by executive or administrative officials of rules and regulations to carry into effect the
provisions of a law. If we were, recurrence to our own decisions would be sufficient. (U. S. vs. Barrias [1908], 11
Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil., 394; Cebu Autobus
Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs. Provincial Board of Mindoro
[1919], 39 Phil., 660.)
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It is connected, however, that a legislative act may be made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the executive
or the adoption by the people of a particular community (6 R. C. L., 116, 170-172; Cooley, Constitutional Limitations,
8th ed., Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme Court of the
United State ruled that the legislature may delegate a power not legislative which it may itself rightfully
exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The
power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in
ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a mental
process common to all branches of the government. (Dowling vs. Lancashire Ins. Co., supra; In re Village of North
Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs. Fries [1906], 129 Wis., 120; 108 N.W.,
210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct., 495; 36 Law. ed., 294.) Notwithstanding the apparent
tendency, however, to relax the rule prohibiting delegation of legislative authority on account of the complexity
arising from social and economic forces at work in this modern industrial age (Pfiffner, Public Administration [1936]
ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-
Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp. 147, 152), the orthodox pronouncement of
Judge Cooley in his work on Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the
Constitution of the United States in the following language — speaking of declaration of legislative power to
administrative agencies: "The principle which permits the legislature to provide that the administrative agent may
determine when the circumstances are such as require the application of a law is defended upon the ground that at
the time this authority is granted, the rule of public policy, which is the essence of the legislative act, is determined
by the legislature. In other words, the legislature, as it its duty to do, determines that, under given circumstances,
certain executive or administrative action is to be taken, and that, under other circumstances, different of no action
at all is to be taken. What is thus left to the administrative official is not the legislative determination of what public
policy demands, but simply the ascertainment of what the facts of the case require to be done according to the
terms of the law by which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p.
1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed., 971, 974), it was
said: "The efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but the
ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it may
designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal., 343,
258.) The legislature, then may provide that a contingencies leaving to some other person or body the power to
determine when the specified contingencies has arisen. But, in the case at bar, the legislature has not made the
operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by the provincial
board. It leaves, as we have already said, the entire operation or non-operation of the law upon the provincial board.
the discretion vested is arbitrary because it is absolute and unlimited. A provincial board need not investigate
conditions or find any fact, or await the happening of any specified contingency. It is bound by no rule, — limited by
no principle of expendiency announced by the legislature. It may take into consideration certain facts or conditions;
and, again, it may not. It may have any purpose or no purpose at all. It need not give any reason whatsoever for
refusing or failing to appropriate any funds for the salary of a probation officer. This is a matter which rest entirely at
its pleasure. The fact that at some future time — we cannot say when — the provincial boards may appropriate
funds for the salaries of probation officers and thus put the law into operation in the various provinces will not save
the statute. The time of its taking into effect, we reiterate, would yet be based solely upon the will of the provincial
boards and not upon the happening of a certain specified contingency, or upon the ascertainment of certain facts or
conditions by a person or body other than legislature itself.

The various provincial boards are, in practical effect, endowed with the power of suspending the operation of the
Probation Law in their respective provinces. In some jurisdiction, constitutions provided that laws may be suspended
only by the legislature or by its authority. Thus, section 28, article I of the Constitution of Texas provides that "No
power of suspending laws in this state shall be exercised except by the legislature"; and section 26, article I of the
Constitution of Indiana provides "That the operation of the laws shall never be suspended, except by authority of the
General Assembly." Yet, even provisions of this sort do not confer absolute power of suspension upon the
legislature. While it may be undoubted that the legislature may suspend a law, or the execution or operation of a
law, a law may not be suspended as to certain individuals only, leaving the law to be enjoyed by others. The
suspension must be general, and cannot be made for individual cases or for particular localities. In Holden vs.
James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was said:

By the twentieth article of the declaration of rights in the constitution of this commonwealth, it is declared that
the power of suspending the laws, or the execution of the laws, ought never to be exercised but by the
legislature, or by authority derived from it, to be exercised in such particular cases only as the legislature
shall expressly provide for. Many of the articles in that declaration of rights were adopted from the Magna
Charta of England, and from the bill of rights passed in the reign of William and Mary. The bill of rights
contains an enumeration of the oppressive acts of James II, tending to subvert and extirpate the protestant
religion, and the laws and liberties of the kingdom; and the first of them is the assuming and exercising a
power of dispensing with and suspending the laws, and the execution of the laws without consent of
parliament. The first article in the claim or declaration of rights contained in the statute is, that the exercise of
such power, by legal authority without consent of parliament, is illegal. In the tenth section of the same
statute it is further declared and enacted, that "No dispensation by non obstante of or to any statute, or part
thereof, should be allowed; but the same should be held void and of no effect, except a dispensation be
allowed of in such statute." There is an implied reservation of authority in the parliament to exercise the
power here mentioned; because, according to the theory of the English Constitution, "that absolute despotic
power, which must in all governments reside somewhere," is intrusted to the parliament: 1 Bl. Com., 160.

Page 137 of 152

 The principles of our government are widely different in this particular. Here the sovereign and absolute
power resides in the people; and the legislature can only exercise what is delegated to them according to
the constitution. It is obvious that the exercise of the power in question would be equally oppressive to the
subject, and subversive of his right to protection, "according to standing laws," whether exercised by one
man or by a number of men. It cannot be supposed that the people when adopting this general principle
from the English bill of rights and inserting it in our constitution, intended to bestow by implication on the
general court one of the most odious and oppressive prerogatives of the ancient kings of England. It is
manifestly contrary to the first principles of civil liberty and natural justice, and to the spirit of our constitution
and laws, that any one citizen should enjoy privileges and advantages which are denied to all others under
like circumstances; or that ant one should be subject to losses, damages, suits, or actions from which all
others under like circumstances are exempted.

To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to the owner of
domestic animals wounded by it for the damages without proving a knowledge of it vicious disposition. By a
provision of the act, power was given to the board of supervisors to determine whether or not during the current year
their county should be governed by the provisions of the act of which that section constituted a part. It was held that
the legislature could not confer that power. The court observed that it could no more confer such a power than to
authorize the board of supervisors of a county to abolish in such county the days of grace on commercial paper, or
to suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in Missouri was
held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.) In that case a general
statute formulating a road system contained a provision that "if the county court of any county should be of opinion
that the provisions of the act should not be enforced, they might, in their discretion, suspend the operation of the
same for any specified length of time, and thereupon the act should become inoperative in such county for the
period specified in such order; and thereupon order the roads to be opened and kept in good repair, under the laws
theretofore in force." Said the court: ". . . this act, by its own provisions, repeals the inconsistent provisions of a
former act, and yet it is left to the county court to say which act shall be enforce in their county. The act does not
submit the question to the county court as an original question, to be decided by that tribunal, whether the act shall
commence its operation within the county; but it became by its own terms a law in every county not excepted by
name in the act. It did not, then, require the county court to do any act in order to give it effect. But being the law in
the county, and having by its provisions superseded and abrogated the inconsistent provisions of previous laws, the
county court is . . . empowered, to suspend this act and revive the repealed provisions of the former act. When the
question is before the county court for that tribunal to determine which law shall be in force, it is urge before us that
the power then to be exercised by the court is strictly legislative power, which under our constitution, cannot be
delegated to that tribunal or to any other body of men in the state. In the present case, the question is not presented
in the abstract; for the county court of Saline county, after the act had been for several months in force in that
county, did by order suspend its operation; and during that suspension the offense was committed which is the
subject of the present indictment . . . ." (See Mitchell vs. State [1901], 134 Ala., 392; 32 S., 687.)

True, the legislature may enact laws for a particular locality different from those applicable to other localities and,
while recognizing the force of the principle hereinabove expressed, courts in may jurisdiction have sustained the
constitutionality of the submission of option laws to the vote of the people. (6 R.C.L., p. 171.) But option laws thus
sustained treat of subjects purely local in character which should receive different treatment in different localities
placed under different circumstances. "They relate to subjects which, like the retailing of intoxicating drinks, or the
running at large of cattle in the highways, may be differently regarded in different localities, and they are sustained
on what seems to us the impregnable ground, that the subject, though not embraced within the ordinary powers of
municipalities to make by-laws and ordinances, is nevertheless within the class of public regulations, in respect to
which it is proper that the local judgment should control." (Cooley on Constitutional Limitations, 5th ed., p. 148.) So
that, while we do not deny the right of local self-government and the propriety of leaving matters of purely local
concern in the hands of local authorities or for the people of small communities to pass upon, we believe that in
matters of general of general legislation like that which treats of criminals in general, and as regards the general
subject of probation, discretion may not be vested in a manner so unqualified and absolute as provided in Act No.
4221. True, the statute does not expressly state that the provincial boards may suspend the operation of the
Probation Act in particular provinces but, considering that, in being vested with the authority to appropriate or not the
necessary funds for the salaries of probation officers, they thereby are given absolute discretion to determine
whether or not the law should take effect or operate in their respective provinces, the provincial boards are in reality
empowered by the legislature to suspend the operation of the Probation Act in particular provinces, the Act to be
held in abeyance until the provincial boards should decide otherwise by appropriating the necessary funds. The
validity of a law is not tested by what has been done but by what may be done under its provisions. (Walter E. Olsen
& Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.)

It in conceded that a great deal of latitude should be granted to the legislature not only in the expression of what
may be termed legislative policy but in the elaboration and execution thereof. "Without this power, legislation would
become oppressive and yet imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has been said that popular government
lives because of the inexhaustible reservoir of power behind it. It is unquestionable that the mass of powers of
government is vested in the representatives of the people and that these representatives are no further restrained
under our system than by the express language of the instrument imposing the restraint, or by particular provisions
which by clear intendment, have that effect. (Angara vs. Electoral Commission [1936], 35 Off. Ga., 23;
Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it should be borne in mind that a constitution is both a
grant and a limitation of power and one of these time-honored limitations is that, subject to certain exceptions,
legislative power shall not be delegated.
Page 138 of 152
We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative authority
to the provincial boards and is, for this reason, unconstitutional and void.

3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which prohibits the denial to
any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1. Constitution of the Philippines.)

This basic individual right sheltered by the Constitution is a restraint on all the tree grand departments of our
government and on the subordinate instrumentalities and subdivision thereof, and on many constitutional power, like
the police power, taxation and eminent domain. The equal protection of laws, sententiously observes the Supreme
Court of the United States, "is a pledge of the protection of equal laws." (Yick Wo vs. Hopkins [1886], 118 U. S.,
356; 30 Law. ed., 220; 6 Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S., 510; 39 Sup. Ct. Rep., 357; 63
Law. ed., 735.) Of course, what may be regarded as a denial of the equal protection of the laws in a question not
always easily determined. No rule that will cover every case can be formulated. (Connolly vs. Union Sewer Pipe Co.
[1902], 184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed., 679.) Class legislation discriminating against some and
favoring others in prohibited. But classification on a reasonable basis, and nor made arbitrarily or capriciously, is
permitted. (Finely vs. California [1911], 222 U. S., 28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co.
vs. Ellis [1897], 165 U. S., 150; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40
Phil., 136.) The classification, however, to be reasonable must be based on substantial distinctions which make real
differences; it must be germane to the purposes of the law; it must not be limited to existing conditions only, and
must apply equally to each member of the class. (Borgnis vs. Falk. Co. [1911], 147 Wis., 327, 353; 133 N. W., 209;
3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489; State vs. Cooley, 56 Minn., 540; 530-552; 58 N. W., 150; Lindsley vs.
Natural Carbonic Gas Co.[1911], 220 U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C,
160; Lake Shore & M. S. R. Co. vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374;
Southern Ry. Co. vs. Greene [1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17 Ann. Cas., 1247;
Truax vs. Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.)

In the case at bar, however, the resultant inequality may be said to flow from the unwarranted delegation of
legislative power, although perhaps this is not necessarily the result in every case. Adopting the example given by
one of the counsel for the petitioners in the course of his oral argument, one province may appropriate the
necessary fund to defray the salary of a probation officer, while another province may refuse or fail to do so. In such
a case, the Probation Act would be in operation in the former province but not in the latter. This means that a person
otherwise coming within the purview of the law would be liable to enjoy the benefits of probation in one province
while another person similarly situated in another province would be denied those same benefits. This is obnoxious
discrimination. Contrariwise, it is also possible for all the provincial boards to appropriate the necessary funds for the
salaries of the probation officers in their respective provinces, in which case no inequality would result for the
obvious reason that probation would be in operation in each and every province by the affirmative action of
appropriation by all the provincial boards. On that hypothesis, every person coming within the purview of the
Probation Act would be entitled to avail of the benefits of the Act. Neither will there be any resulting inequality if no
province, through its provincial board, should appropriate any amount for the salary of the probation officer — which
is the situation now — and, also, if we accept the contention that, for the purpose of the Probation Act, the City of
Manila should be considered as a province and that the municipal board of said city has not made any appropriation
for the salary of the probation officer. These different situations suggested show, indeed, that while inequality may
result in the application of the law and in the conferment of the benefits therein provided, inequality is not in all cases
the necessary result. But whatever may be the case, it is clear that in section 11 of the Probation Act creates a
situation in which discrimination and inequality are permitted or allowed. There are, to be sure, abundant authorities
requiring actual denial of the equal protection of the law before court should assume the task of setting aside a law
vulnerable on that score, but premises and circumstances considered, we are of the opinion that section 11 of Act
No. 4221 permits of the denial of the equal protection of the law and is on that account bad. We see no difference
between a law which permits of such denial. A law may appear to be fair on its face and impartial in appearance,
yet, if it permits of unjust and illegal discrimination, it is within the constitutional prohibitions. (By analogy, Chy Lung
vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550; Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law. ed.,
543; Ex parte Virginia [1880], 100 U. S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881], 103 U. S., 370; 26 Law.
ed., 567; Soon Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs. Hopkins [1886],118 U. S.,
356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218; 18 Sup. Ct. Rep., 583; 42 Law. ed., 1012;
Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law. ed., Sunday Lake Iron Co. vs. Wakefield
[1918], 247 U. S., 450; 38 Sup. Ct. Rep., 495; 62 Law. ed., 1154.) In other words, statutes may be adjudged
unconstitutional because of their effect in operation (General Oil Co. vs. Clain [1907], 209 U. S., 211; 28 Sup. Ct.
Rep., 475; 52 Law. ed., 754; State vs. Clement Nat. Bank [1911], 84 Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If
the law has the effect of denying the equal protection of the law it is unconstitutional. (6 R. C. L. p. 372; Civil Rights
Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835; Yick Wo vs. Hopkins, supra; State vs. Montgomery, 94
Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs. Dering, 84 Wis., 585; 54 N. W., 1104; 36 A. S. R., 948; 19 L. R. A.,
858.) Under section 11 of the Probation Act, not only may said Act be in force in one or several provinces and not be
in force in other provinces, but one province may appropriate for the salary of the probation officer of a given year —
and have probation during that year — and thereafter decline to make further appropriation, and have no probation
is subsequent years. While this situation goes rather to the abuse of discretion which delegation implies, it is here
indicated to show that the Probation Act sanctions a situation which is intolerable in a government of laws, and to
prove how easy it is, under the Act, to make the guaranty of the equality clause but "a rope of sand". (Brewer, J.
Gulf C. & S. F. Ry. Co. vs. Ellis [1897], 165 U. S., 150 154; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255.) lawph!1.net

Page 139 of 152

Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United States ([1914], 234 U. S.,
91; 58 Law. ed., 1231). In that case, the Supreme Court of the United States affirmed the decision of this court (18
Phil., 1) by declining to uphold the contention that there was a denial of the equal protection of the laws because, as
held in Missouri vs. Lewis (Bowman vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed., 991), the guaranty of
the equality clause does not require territorial uniformity. It should be observed, however, that this case concerns
the right to preliminary investigations in criminal cases originally granted by General Orders No. 58. No question of
legislative authority was involved and the alleged denial of the equal protection of the laws was the result of the
subsequent enactment of Act No. 612, amending the charter of the City of Manila (Act No. 813) and providing in
section 2 thereof that "in cases triable only in the court of first instance of the City of Manila, the defendant . . . shall
not be entitled as of right to a preliminary examination in any case where the prosecuting attorney, after a due
investigation of the facts . . . shall have presented an information against him in proper form . . . ." Upon the other
hand, an analysis of the arguments and the decision indicates that the investigation by the prosecuting attorney —
although not in the form had in the provinces — was considered a reasonable substitute for the City of Manila,
considering the peculiar conditions of the city as found and taken into account by the legislature itself.

Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a situation where the
constitution of Missouri permits appeals to the Supreme Court of the state from final judgments of any circuit court,
except those in certain counties for which counties the constitution establishes a separate court of appeals called St.
Louis Court of Appeals. The provision complained of, then, is found in the constitution itself and it is the constitution
that makes the apportionment of territorial jurisdiction.

We are of the opinion that section 11 of the Probation Act is unconstitutional and void because it is also repugnant
to equal-protection clause of our Constitution.

Section 11 of the Probation Act being unconstitutional and void for the reasons already stated, the next inquiry is
whether or not the entire Act should be avoided.

In seeking the legislative intent, the presumption is against any mutilation of a statute, and the courts will
resort to elimination only where an unconstitutional provision is interjected into a statute otherwise valid, and
is so independent and separable that its removal will leave the constitutional features and purposes of the
act substantially unaffected by the process. (Riccio vs. Hoboken, 69 N. J. Law., 649, 662; 63 L. R. A., 485;
55 Atl., 1109, quoted in Williams vs. Standard Oil Co. [1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49
Sup. Ct. Rep., 115; 60 A. L. R., 596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court stated the
well-established rule concerning partial invalidity of statutes in the following language:

. . . where part of the a statute is void, as repugnant to the Organic Law, while another part is valid, the valid
portion, if separable from the valid, may stand and be enforced. But in order to do this, the valid portion must
be in so far independent of the invalid portion that it is fair to presume that the Legislative would have
enacted it by itself if they had supposed that they could not constitutionally enact the other. (Mutual Loan Co.
vs. Martell, 200 Mass., 482; 86 N. E., 916; 128 A. S. R., 446; Supervisors of Holmes Co. vs. Black Creek
Drainage District, 99 Miss., 739; 55 Sou., 963.) Enough must remain to make a complete, intelligible, and
valid statute, which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E., 798.) The
void provisions must be eliminated without causing results affecting the main purpose of the Act, in a
manner contrary to the intention of the Legislature. (State vs. A. C. L. R., Co., 56 Fla., 617, 642; 47 Sou.,
969; Harper vs. Galloway, 58 Fla., 255; 51 Sou., 226; 26 L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe
Co., 184 U. S., 540, 565; People vs. Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S., 1135;
State vs. Cognevich, 124 La., 414; 50 Sou., 439.) The language used in the invalid part of a statute can
have no legal force or efficacy for any purpose whatever, and what remains must express the legislative will,
independently of the void part, since the court has no power to legislate. (State vs. Junkin, 85 Neb., 1; 122
N. W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S., vs. Rodriguez [1918], 38 Phil., 759; Pollock vs.
Farmers' Loan and Trust Co. [1895], 158 U. S., 601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6
R.C.L., 121.)

It is contended that even if section 11, which makes the Probation Act applicable only in those provinces in which
the respective provincial boards provided for the salaries of probation officers were inoperative on constitutional
grounds, the remainder of the Act would still be valid and may be enforced. We should be inclined to accept the
suggestions but for the fact that said section is, in our opinion, is inseparably linked with the other portions of the Act
that with the elimination of the section what would be left is the bare idealism of the system, devoid of any practical
benefit to a large number of people who may be deserving of the intended beneficial result of that system. The clear
policy of the law, as may be gleaned from a careful examination of the whole context, is to make the application of
the system dependent entirely upon the affirmative action of the different provincial boards through appropriation of
the salaries for probation officers at rates not lower than those provided for provincial fiscals. Without such action on
the part of the various boards, no probation officers would be appointed by the Secretary of Justice to act in the
provinces. The Philippines is divided or subdivided into provinces and it needs no argument to show that if not one
of the provinces — and this is the actual situation now — appropriate the necessary fund for the salary of a
probation officer, probation under Act No. 4221 would be illusory. There can be no probation without a probation
officer. Neither can there be a probation officer without the probation system.

Section 2 of the Acts provides that the probation officer shall supervise and visit the probationer. Every probation
officer is given, as to the person placed in probation under his care, the powers of the police officer. It is the duty of
Page 140 of 152
the probation officer to see that the conditions which are imposed by the court upon the probationer under his care
are complied with. Among those conditions, the following are enumerated in section 3 of the Act:

That the probationer (a) shall indulge in no injurious or vicious habits;

(b) Shall avoid places or persons of disreputable or harmful character;

(c) Shall report to the probation officer as directed by the court or probation officers;

(d) Shall permit the probation officer to visit him at reasonable times at his place of abode or elsewhere;

(e) Shall truthfully answer any reasonable inquiries on the part of the probation officer concerning his
conduct or condition; "(f) Shall endeavor to be employed regularly; "(g) Shall remain or reside within a
specified place or locality;

(f) Shall make reparation or restitution to the aggrieved parties for actual damages or losses caused by his
offense;

(g) Shall comply with such orders as the court may from time to time make; and

(h) Shall refrain from violating any law, statute, ordinance, or any by-law or regulation, promulgated in
accordance with law.

The court is required to notify the probation officer in writing of the period and terms of probation. Under section 4, it
is only after the period of probation, the submission of a report of the probation officer and appropriate finding of the
court that the probationer has complied with the conditions of probation that probation may be definitely terminated
and the probationer finally discharged from supervision. Under section 5, if the court finds that there is non-
compliance with said conditions, as reported by the probation officer, it may issue a warrant for the arrest of the
probationer and said probationer may be committed with or without bail. Upon arraignment and after an opportunity
to be heard, the court may revoke, continue or modify the probation, and if revoked, the court shall order the
execution of the sentence originally imposed. Section 6 prescribes the duties of probation officers: "It shall be the
duty of every probation officer to furnish to all persons placed on probation under his supervision a statement of the
period and conditions of their probation, and to instruct them concerning the same; to keep informed concerning
their conduct and condition; to aid and encourage them by friendly advice and admonition, and by such other
measures, not inconsistent with the conditions imposed by court as may seem most suitable, to bring about
improvement in their conduct and condition; to report in writing to the court having jurisdiction over said probationers
at least once every two months concerning their conduct and condition; to keep records of their work; make such
report as are necessary for the information of the Secretary of Justice and as the latter may require; and to perform
such other duties as are consistent with the functions of the probation officer and as the court or judge may direct.
The probation officers provided for in this Act may act as parole officers for any penal or reformatory institution for
adults when so requested by the authorities thereof, and, when designated by the Secretary of Justice shall act as
parole officer of persons released on parole under Act Number Forty-one Hundred and Three, without additional
compensation."

It is argued, however, that even without section 11 probation officers maybe appointed in the provinces under
section 10 of Act which provides as follows:

There is hereby created in the Department of Justice and subject to its supervision and control, a Probation
Office under the direction of a Chief Probation Officer to be appointed by the Governor-General with the
advise and consent of the Senate who shall receive a salary of four eight hundred pesos per annum. To
carry out this Act there is hereby appropriated out of any funds in the Insular Treasury not otherwise
appropriated, the sum of fifty thousand pesos to be disbursed by the Secretary of Justice, who is hereby
authorized to appoint probation officers and the administrative personnel of the probation officer under civil
service regulations from among those who possess the qualifications, training and experience prescribed by
the Bureau of Civil Service, and shall fix the compensation of such probation officers and administrative
personnel until such positions shall have been included in the Appropriation Act.

But the probation officers and the administrative personnel referred to in the foregoing section are clearly not those
probation officers required to be appointed for the provinces under section 11. It may be said, reddendo singula
singulis, that the probation officers referred to in section 10 above-quoted are to act as such, not in the various
provinces, but in the central office known as the Probation Office established in the Department of Justice, under the
supervision of the Chief Probation Officer. When the law provides that "the probation officer" shall investigate and
make reports to the court (secs. 1 and 4); that "the probation officer" shall supervise and visit the probationer (sec.
2; sec. 6, par. d); that the probationer shall report to the "probationer officer" (sec. 3, par. c.), shall allow "the
probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any reasonable inquiries on the part of "the
probation officer" concerning his conduct or condition (sec. 3, par. 4); that the court shall notify "the probation officer"
in writing of the period and terms of probation (sec. 3, last par.), it means the probation officer who is in charge of a
particular probationer in a particular province. It never could have been intention of the legislature, for instance, to
require the probationer in Batanes, to report to a probationer officer in the City of Manila, or to require a probation
Page 141 of 152
officer in Manila to visit the probationer in the said province of Batanes, to place him under his care, to supervise his
conduct, to instruct him concerning the conditions of his probation or to perform such other functions as are
assigned to him by law.

That under section 10 the Secretary of Justice may appoint as many probation officers as there are provinces or
groups of provinces is, of course possible. But this would be arguing on what the law may be or should be and not
on what the law is. Between is and ought there is a far cry. The wisdom and propriety of legislation is not for us to
pass upon. We may think a law better otherwise than it is. But much as has been said regarding progressive
interpretation and judicial legislation we decline to amend the law. We are not permitted to read into the law matters
and provisions which are not there. Not for any purpose — not even to save a statute from the doom of invalidity.

Upon the other hand, the clear intention and policy of the law is not to make the Insular Government defray the
salaries of probation officers in the provinces but to make the provinces defray them should they desire to have the
Probation Act apply thereto. The sum of P50,000, appropriated "to carry out the purposes of this Act", is to be
applied, among other things, for the salaries of probation officers in the central office at Manila. These probation
officers are to receive such compensations as the Secretary of Justice may fix "until such positions shall have been
included in the Appropriation Act". It was the intention of the legislature to empower the Secretary of Justice to fix
the salaries of the probation officers in the provinces or later on to include said salaries in an appropriation act.
Considering, further, that the sum of P50,000 appropriated in section 10 is to cover, among other things, the salaries
of the administrative personnel of the Probation Office, what would be left of the amount can hardly be said to be
sufficient to pay even nominal salaries to probation officers in the provinces. We take judicial notice of the fact that
there are 48 provinces in the Philippines and we do not think it is seriously contended that, with the fifty thousand
pesos appropriated for the central office, there can be in each province, as intended, a probation officer with a salary
not lower than that of a provincial fiscal. If this a correct, the contention that without section 11 of Act No. 4221 said
act is complete is an impracticable thing under the remainder of the Act, unless it is conceded that in our case there
can be a system of probation in the provinces without probation officers.

Probation as a development of a modern penology is a commendable system. Probation laws have been enacted,
here and in other countries, to permit what modern criminologist call the "individualization of the punishment", the
adjustment of the penalty to the character of the criminal and the circumstances of his particular case. It provides a
period of grace in order to aid in the rehabilitation of a penitent offender. It is believed that, in any cases, convicts
may be reformed and their development into hardened criminals aborted. It, therefore, takes advantage of an
opportunity for reformation and avoids imprisonment so long as the convicts gives promise of reform. (United States
vs. Murray [1925], 275 U. S., 347 357, 358; 72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep., 146; Kaplan vs. Hecht, 24
F. [2d], 664, 665.) The Welfare of society is its chief end and aim. The benefit to the individual convict is merely
incidental. But while we believe that probation is commendable as a system and its implantation into the Philippines
should be welcomed, we are forced by our inescapable duty to set the law aside because of the repugnancy to our
fundamental law.

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

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

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

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

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

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

Page 142 of 152

G.R. No. 166715 August 14, 2008

ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS SAMSON S. ALCANTARA, ED VINCENT
S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R. SANDOVAL, petitioners,
vs.
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON. GUILLERMO L. PARAYNO, JR., in his
capacity as Commissioner of the Bureau of Internal Revenue, and HON. ALBERTO D. LINA, in his Capacity as
Commissioner of Bureau of Customs, respondents.

DECISION

CORONA, J.:

This petition for prohibition1 seeks to prevent respondents from implementing and enforcing Republic Act (RA)
93352(Attrition Act of 2005).

RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue
(BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and employees to exceed
their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and Incentives
Fund (Fund) and a Revenue Performance Evaluation Board (Board). 3 It covers all officials and employees of the BIR and
the BOC with at least six months of service, regardless of employment status. 4

The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue targets for the year, as
determined by the Development Budget and Coordinating Committee (DBCC). Any incentive or reward is taken from the
fund and allocated to the BIR and the BOC in proportion to their contribution in the excess collection of the targeted
amount of tax revenue.5

The Boards in the BIR and the BOC are composed of the Secretary of the Department of Finance (DOF) or his/her
Undersecretary, the Secretary of the Department of Budget and Management (DBM) or his/her Undersecretary, the
Director General of the National Economic Development Authority (NEDA) or his/her Deputy Director General, the
Commissioners of the BIR and the BOC or their Deputy Commissioners, two representatives from the rank-and-file
employees and a representative from the officials nominated by their recognized organization. 6

Each Board has the duty to (1) prescribe the rules and guidelines for the allocation, distribution and release of the Fund;
(2) set criteria and procedures for removing from the service officials and employees whose revenue collection falls short
of the target; (3) terminate personnel in accordance with the criteria adopted by the Board; (4) prescribe a system for
performance evaluation; (5) perform other functions, including the issuance of rules and regulations and (6) submit an
annual report to Congress.7

The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC) were tasked to promulgate and issue the
implementing rules and regulations of RA 9335,8 to be approved by a Joint Congressional Oversight Committee created
for such purpose.9

Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335, a tax reform
legislation. They contend that, by establishing a system of rewards and incentives, the law "transform[s] the officials and
employees of the BIR and the BOC into mercenaries and bounty hunters" as they will do their best only in consideration of
such rewards. Thus, the system of rewards and incentives invites corruption and undermines the constitutionally
mandated duty of these officials and employees to serve the people with utmost responsibility, integrity, loyalty and
efficiency.

Petitioners also claim that limiting the scope of the system of rewards and incentives only to officials and employees of the
BIR and the BOC violates the constitutional guarantee of equal protection. There is no valid basis for classification or
distinction as to why such a system should not apply to officials and employees of all other government agencies.

In addition, petitioners assert that the law unduly delegates the power to fix revenue targets to the President as it lacks a
sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides that BIR and BOC officials may be
dismissed from the service if their revenue collections fall short of the target by at least 7.5%, the law does not, however,
fix the revenue targets to be achieved. Instead, the fixing of revenue targets has been delegated to the President without
sufficient standards. It will therefore be easy for the President to fix an unrealistic and unattainable target in order to
dismiss BIR or BOC personnel.

Finally, petitioners assail the creation of a congressional oversight committee on the ground that it violates the doctrine of
separation of powers. While the legislative function is deemed accomplished and completed upon the enactment and

Page 143 of 152

approval of the law, the creation of the congressional oversight committee permits legislative participation in the
implementation and enforcement of the law.

In their comment, respondents, through the Office of the Solicitor General, question the petition for being premature as
there is no actual case or controversy yet. Petitioners have not asserted any right or claim that will necessitate the
exercise of this Court’s jurisdiction. Nevertheless, respondents acknowledge that public policy requires the resolution of
the constitutional issues involved in this case. They assert that the allegation that the reward system will breed
mercenaries is mere speculation and does not suffice to invalidate the law. Seen in conjunction with the declared
objective of RA 9335, the law validly classifies the BIR and the BOC because the functions they perform are distinct from
those of the other government agencies and instrumentalities. Moreover, the law provides a sufficient standard that will
guide the executive in the implementation of its provisions. Lastly, the creation of the congressional oversight committee
under the law enhances, rather than violates, separation of powers. It ensures the fulfillment of the legislative policy and
serves as a check to any over-accumulation of power on the part of the executive and the implementing agencies.

After a careful consideration of the conflicting contentions of the parties, the Court finds that petitioners have failed to
overcome the presumption of constitutionality in favor of RA 9335, except as shall hereafter be discussed.

Actual Case And Ripeness

An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial
adjudication.10 A closely related requirement is ripeness, that is, the question must be ripe for adjudication. And a
constitutional question is ripe for adjudication when the governmental act being challenged has a direct adverse effect on
the individual challenging it.11 Thus, to be ripe for judicial adjudication, the petitioner must show a personal stake in the
outcome of the case or an injury to himself that can be redressed by a favorable decision of the Court. 12

In this case, aside from the general claim that the dispute has ripened into a judicial controversy by the mere enactment of
the law even without any further overt act,13 petitioners fail either to assert any specific and concrete legal claim or to
demonstrate any direct adverse effect of the law on them. They are unable to show a personal stake in the outcome of
this case or an injury to themselves. On this account, their petition is procedurally infirm.

This notwithstanding, public interest requires the resolution of the constitutional issues raised by petitioners. The grave
nature of their allegations tends to cast a cloud on the presumption of constitutionality in favor of the law. And where an
action of the legislative branch is alleged to have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. 14

Accountability of
Public Officers

Section 1, Article 11 of the Constitution states:

Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism, and justice, and
lead modest lives.

Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the benefit of the
public for whom he holds it in trust. By demanding accountability and service with responsibility, integrity, loyalty,
efficiency, patriotism and justice, all government officials and employees have the duty to be responsive to the needs of
the people they are called upon to serve.

Public officers enjoy the presumption of regularity in the performance of their duties. This presumption necessarily obtains
in favor of BIR and BOC officials and employees. RA 9335 operates on the basis thereof and reinforces it by providing a
system of rewards and sanctions for the purpose of encouraging the officials and employees of the BIR and the BOC to
exceed their revenue targets and optimize their revenue-generation capability and collection.15

The presumption is disputable but proof to the contrary is required to rebut it. It cannot be overturned by mere conjecture
or denied in advance (as petitioners would have the Court do) specially in this case where it is an underlying principle to
advance a declared public policy.

Petitioners’ claim that the implementation of RA 9335 will turn BIR and BOC officials and employees into "bounty hunters
and mercenaries" is not only without any factual and legal basis; it is also purely speculative.

A law enacted by Congress enjoys the strong presumption of constitutionality. To justify its nullification, there must be a
clear and unequivocal breach of the Constitution, not a doubtful and equivocal one. 16 To invalidate RA 9335 based on
petitioners’ baseless supposition is an affront to the wisdom not only of the legislature that passed it but also of the
executive which approved it.

Public service is its own reward. Nevertheless, public officers may by law be rewarded for exemplary and exceptional
performance. A system of incentives for exceeding the set expectations of a public office is not anathema to the concept
of public accountability. In fact, it recognizes and reinforces dedication to duty, industry, efficiency and loyalty to public
service of deserving government personnel.

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In United States v. Matthews,17 the U.S. Supreme Court validated a law which awards to officers of the customs as well as
other parties an amount not exceeding one-half of the net proceeds of forfeitures in violation of the laws against
smuggling. Citing Dorsheimer v. United States,18 the U.S. Supreme Court said:

The offer of a portion of such penalties to the collectors is to stimulate and reward their zeal and industry in
detecting fraudulent attempts to evade payment of duties and taxes.

In the same vein, employees of the BIR and the BOC may by law be entitled to a reward when, as a consequence of their
zeal in the enforcement of tax and customs laws, they exceed their revenue targets. In addition, RA 9335 establishes
safeguards to ensure that the reward will not be claimed if it will be either the fruit of "bounty hunting or mercenary activity"
or the product of the irregular performance of official duties. One of these precautionary measures is embodied in Section
8 of the law:

SEC. 8. Liability of Officials, Examiners and Employees of the BIR and the BOC. – The officials, examiners, and
employees of the [BIR] and the [BOC] who violate this Act or who are guilty of negligence, abuses or acts of
malfeasance or misfeasance or fail to exercise extraordinary diligence in the performance of their duties shall be
held liable for any loss or injury suffered by any business establishment or taxpayer as a result of such violation,
negligence, abuse, malfeasance, misfeasance or failure to exercise extraordinary diligence.

Equal Protection

Equality guaranteed under the equal protection clause is equality under the same conditions and among persons similarly
situated; it is equality among equals, not similarity of treatment of persons who are classified based on substantial
differences in relation to the object to be accomplished.19 When things or persons are different in fact or circumstance,
they may be treated in law differently. In Victoriano v. Elizalde Rope Workers’ Union,20 this Court declared:

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 [S]tate. 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.

In the exercise of its power to make classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the
classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that
the classification be made with mathematical nicety. Hence, legislative classification may in many cases properly
rest on narrow distinctions, for the equal protection guaranty does not preclude the legislature from recognizing
degrees of evil or harm, and legislation is addressed to evils as they may appear. 21 (emphasis supplied)

The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable foundation or
rational basis and not arbitrary.22 With respect to RA 9335, its expressed public policy is the optimization of the revenue-
generation capability and collection of the BIR and the BOC. 23 Since the subject of the law is the revenue- generation
capability and collection of the BIR and the BOC, the incentives and/or sanctions provided in the law should logically
pertain to the said agencies. Moreover, the law concerns only the BIR and the BOC because they have the common
distinct primary function of generating revenues for the national government through the collection of taxes, customs
duties, fees and charges.

The BIR performs the following functions:

Sec. 18. The Bureau of Internal Revenue. – The Bureau of Internal Revenue, which shall be headed by and
subject to the supervision and control of the Commissioner of Internal Revenue, who shall be appointed by the
President upon the recommendation of the Secretary [of the DOF], shall have the following functions:

(1) Assess and collect all taxes, fees and charges and account for all revenues collected;

(2) Exercise duly delegated police powers for the proper performance of its functions and duties;

Page 145 of 152

 (3) Prevent and prosecute tax evasions and all other illegal economic activities;

(4) Exercise supervision and control over its constituent and subordinate units; and

(5) Perform such other functions as may be provided by law.24

xxx xxx xxx (emphasis supplied)

On the other hand, the BOC has the following functions:

Sec. 23. The Bureau of Customs. – The Bureau of Customs which shall be headed and subject to the
management and control of the Commissioner of Customs, who shall be appointed by the President upon the
recommendation of the Secretary[of the DOF] and hereinafter referred to as Commissioner, shall have the
following functions:

(1) Collect custom duties, taxes and the corresponding fees, charges and penalties;

(2) Account for all customs revenues collected;

(3) Exercise police authority for the enforcement of tariff and customs laws;

(4) Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of entry;

(5) Supervise and control exports, imports, foreign mails and the clearance of vessels and aircrafts in all ports of
entry;

(6) Administer all legal requirements that are appropriate;

(7) Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction;

(8) Exercise supervision and control over its constituent units;

(9) Perform such other functions as may be provided by law.25

xxx xxx xxx (emphasis supplied)

Both the BIR and the BOC are bureaus under the DOF. They principally perform the special function of being the
instrumentalities through which the State exercises one of its great inherent functions – taxation. Indubitably, such
substantial distinction is germane and intimately related to the purpose of the law. Hence, the classification and treatment
accorded to the BIR and the BOC under RA 9335 fully satisfy the demands of equal protection.

Undue Delegation

Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2) the sufficient
standard test. A law is complete when it sets forth therein the policy to be executed, carried out or implemented by the
delegate.26 It lays down a sufficient standard when it provides adequate guidelines or limitations in the law to map out the
boundaries of the delegate’s authority and prevent the delegation from running riot.27 To be sufficient, the standard must
specify the limits of the delegate’s authority, announce the legislative policy and identify the conditions under which it is to
be implemented.28

RA 9335 adequately states the policy and standards to guide the President in fixing revenue targets and the implementing
agencies in carrying out the provisions of the law. Section 2 spells out the policy of the law:

SEC. 2. Declaration of Policy. – It is the policy of the State to optimize the revenue-generation capability and
collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing for a system of
rewards and sanctions through the creation of a Rewards and Incentives Fund and a Revenue Performance
Evaluation Board in the above agencies for the purpose of encouraging their officials and employees to exceed
their revenue targets.

Section 4 "canalized within banks that keep it from overflowing"29 the delegated power to the President to fix revenue
targets:

SEC. 4. Rewards and Incentives Fund. – A Rewards and Incentives Fund, hereinafter referred to as the Fund, is
hereby created, to be sourced from the collection of the BIR and the BOC in excess of their respective revenue
targets of the year, as determined by the Development Budget and Coordinating Committee (DBCC), in the
following percentages:

Excess of Collection of the Percent (%) of the Excess Collection to

Excess the Revenue Targets Accrue to the Fund
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 30% or below – 15%
More than 30% – 15% of the first 30% plus 20% of the
remaining excess

The Fund shall be deemed automatically appropriated the year immediately following the year when the revenue
collection target was exceeded and shall be released on the same fiscal year.

Revenue targets shall refer to the original estimated revenue collection expected of the BIR and the BOC
for a given fiscal year as stated in the Budget of Expenditures and Sources of Financing (BESF)
submitted by the President to Congress. The BIR and the BOC shall submit to the DBCC the distribution of the
agencies’ revenue targets as allocated among its revenue districts in the case of the BIR, and the collection
districts in the case of the BOC.

xxx xxx xxx (emphasis supplied)

Revenue targets are based on the original estimated revenue collection expected respectively of the BIR and the BOC for
a given fiscal year as approved by the DBCC and stated in the BESF submitted by the President to Congress. 30 Thus, the
determination of revenue targets does not rest solely on the President as it also undergoes the scrutiny of the DBCC.

On the other hand, Section 7 specifies the limits of the Board’s authority and identifies the conditions under which officials
and employees whose revenue collection falls short of the target by at least 7.5% may be removed from the service:

SEC. 7. Powers and Functions of the Board. – The Board in the agency shall have the following powers and
functions:

xxx xxx xxx

(b) To set the criteria and procedures for removing from service officials and employees whose revenue
collection falls short of the target by at least seven and a half percent (7.5%), with due consideration of all
relevant factors affecting the level of collection as provided in the rules and regulations promulgated under
this Act, subject to civil service laws, rules and regulations and compliance with substantive and
procedural due process: Provided, That the following exemptions shall apply:

1. Where the district or area of responsibility is newly-created, not exceeding two years in operation, as
has no historical record of collection performance that can be used as basis for evaluation; and

2. Where the revenue or customs official or employee is a recent transferee in the middle of the period
under consideration unless the transfer was due to nonperformance of revenue targets or potential
nonperformance of revenue targets: Provided, however, That when the district or area of responsibility
covered by revenue or customs officials or employees has suffered from economic difficulties brought
about by natural calamities or force majeure or economic causes as may be determined by the Board,
termination shall be considered only after careful and proper review by the Board.

(c) To terminate personnel in accordance with the criteria adopted in the preceding paragraph: Provided, That
such decision shall be immediately executory: Provided, further, That the application of the criteria for the
separation of an official or employee from service under this Act shall be without prejudice to the
application of other relevant laws on accountability of public officers and employees, such as the Code of
Conduct and Ethical Standards of Public Officers and Employees and the Anti-Graft and Corrupt
Practices Act;

xxx xxx xxx (emphasis supplied)

Clearly, RA 9335 in no way violates the security of tenure of officials and employees of the BIR and the BOC. The
guarantee of security of tenure only means that an employee cannot be dismissed from the service for causes other than
those provided by law and only after due process is accorded the employee. 31 In the case of RA 9335, it lays down a
reasonable yardstick for removal (when the revenue collection falls short of the target by at least 7.5%) with due
consideration of all relevant factors affecting the level of collection. This standard is analogous to inefficiency and
incompetence in the performance of official duties, a ground for disciplinary action under civil service laws. 32 The action
for removal is also subject to civil service laws, rules and regulations and compliance with substantive and procedural due
process.

At any rate, this Court has recognized the following as sufficient standards: "public interest," "justice and equity," "public
convenience and welfare" and "simplicity, economy and welfare."33 In this case, the declared policy of optimization of the
revenue-generation capability and collection of the BIR and the BOC is infused with public interest.

Separation Of Powers

Section 12 of RA 9335 provides:

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 SEC. 12. Joint Congressional Oversight Committee. – There is hereby created a Joint Congressional Oversight
Committee composed of seven Members from the Senate and seven Members from the House of
Representatives. The Members from the Senate shall be appointed by the Senate President, with at least two
senators representing the minority. The Members from the House of Representatives shall be appointed by the
Speaker with at least two members representing the minority. After the Oversight Committee will have approved
the implementing rules and regulations (IRR) it shall thereafter become functus officio and therefore cease to
exist.

The Joint Congressional Oversight Committee in RA 9335 was created for the purpose of approving the implementing
rules and regulations (IRR) formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it approved the
said IRR. From then on, it became functus officio and ceased to exist. Hence, the issue of its alleged encroachment on
the executive function of implementing and enforcing the law may be considered moot and academic.

This notwithstanding, this might be as good a time as any for the Court to confront the issue of the constitutionality of the
Joint Congressional Oversight Committee created under RA 9335 (or other similar laws for that matter).

The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the concept of congressional oversight in Macalintal v.
Commission on Elections34 is illuminating:

Concept and bases of congressional oversight

Broadly defined, the power of oversight embraces all activities undertaken by Congress to enhance its
understanding of and influence over the implementation of legislation it has enacted. Clearly, oversight
concerns post-enactment measures undertaken by Congress: (a) to monitor bureaucratic compliance
with program objectives, (b) to determine whether agencies are properly administered, (c) to eliminate
executive waste and dishonesty, (d) to prevent executive usurpation of legislative authority, and (d) to
assess executive conformity with the congressional perception of public interest.

The power of oversight has been held to be intrinsic in the grant of legislative power itself and integral to the
checks and balances inherent in a democratic system of government. x x x x x x x x x

Over the years, Congress has invoked its oversight power with increased frequency to check the perceived
"exponential accumulation of power" by the executive branch. By the beginning of the 20 th century, Congress has
delegated an enormous amount of legislative authority to the executive branch and the administrative agencies.
Congress, thus, uses its oversight power to make sure that the administrative agencies perform their functions
within the authority delegated to them. x x x x x x x x x

Categories of congressional oversight functions

The acts done by Congress purportedly in the exercise of its oversight powers may be divided
into three categories, namely: scrutiny, investigation and supervision.

a. Scrutiny

Congressional scrutiny implies a lesser intensity and continuity of attention to administrative operations.
Its primary purpose is to determine economy and efficiency of the operation of government activities. In
the exercise of legislative scrutiny, Congress may request information and report from the other branches
of government. It can give recommendations or pass resolutions for consideration of the agency involved.

xxx xxx xxx

b. Congressional investigation

While congressional scrutiny is regarded as a passive process of looking at the facts that are readily
available, congressional investigation involves a more intense digging of facts. The power of Congress to
conduct investigation is recognized by the 1987 Constitution under section 21, Article VI,
xxx xxx xxx

c. Legislative supervision

The third and most encompassing form by which Congress exercises its oversight power is thru legislative
supervision. "Supervision" connotes a continuing and informed awareness on the part of a congressional
committee regarding executive operations in a given administrative area. While both congressional scrutiny and
investigation involve inquiry into past executive branch actions in order to influence future executive branch
performance, congressional supervision allows Congress to scrutinize the exercise of delegated law-making
authority, and permits Congress to retain part of that delegated authority.

Congress exercises supervision over the executive agencies through its veto power. It typically utilizes veto
provisions when granting the President or an executive agency the power to promulgate regulations with the force
of law. These provisions require the President or an agency to present the proposed regulations to Congress,
which retains a "right" to approve or disapprove any regulation before it takes effect. Such legislative veto
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 provisions usually provide that a proposed regulation will become a law after the expiration of a certain period of
time, only if Congress does not affirmatively disapprove of the regulation in the meantime. Less frequently, the
statute provides that a proposed regulation will become law if Congress affirmatively approves it.

Supporters of legislative veto stress that it is necessary to maintain the balance of power between the legislative
and the executive branches of government as it offers lawmakers a way to delegate vast power to the executive
branch or to independent agencies while retaining the option to cancel particular exercise of such power without
having to pass new legislation or to repeal existing law. They contend that this arrangement promotes democratic
accountability as it provides legislative check on the activities of unelected administrative agencies. One
proponent thus explains:

It is too late to debate the merits of this delegation policy: the policy is too deeply embedded in our law
and practice. It suffices to say that the complexities of modern government have often led Congress-
whether by actual or perceived necessity- to legislate by declaring broad policy goals and general
statutory standards, leaving the choice of policy options to the discretion of an executive officer. Congress
articulates legislative aims, but leaves their implementation to the judgment of parties who may or may
not have participated in or agreed with the development of those aims. Consequently, absent safeguards,
in many instances the reverse of our constitutional scheme could be effected: Congress proposes, the
Executive disposes. One safeguard, of course, is the legislative power to enact new legislation or to
change existing law. But without some means of overseeing post enactment activities of the executive
branch, Congress would be unable to determine whether its policies have been implemented in
accordance with legislative intent and thus whether legislative intervention is appropriate.

Its opponents, however, criticize the legislative veto as undue encroachment upon the executive prerogatives.
They urge that any post-enactment measures undertaken by the legislative branch should be limited to
scrutiny and investigation; any measure beyond that would undermine the separation of powers
guaranteed by the Constitution. They contend that legislative veto constitutes an impermissible evasion of the
President’s veto authority and intrusion into the powers vested in the executive or judicial branches of
government. Proponents counter that legislative veto enhances separation of powers as it prevents the executive
branch and independent agencies from accumulating too much power. They submit that reporting requirements
and congressional committee investigations allow Congress to scrutinize only the exercise of delegated law-
making authority. They do not allow Congress to review executive proposals before they take effect and they do
not afford the opportunity for ongoing and binding expressions of congressional intent. In contrast, legislative veto
permits Congress to participate prospectively in the approval or disapproval of "subordinate law" or those enacted
by the executive branch pursuant to a delegation of authority by Congress. They further argue that legislative veto
"is a necessary response by Congress to the accretion of policy control by forces outside its chambers." In an era
of delegated authority, they point out that legislative veto "is the most efficient means Congress has yet devised to
retain control over the evolution and implementation of its policy as declared by statute."

In Immigration and Naturalization Service v. Chadha, the U.S. Supreme Court resolved the validity of
legislative veto provisions. The case arose from the order of the immigration judge suspending the deportation
of Chadha pursuant to § 244(c)(1) of the Immigration and Nationality Act. The United States House of
Representatives passed a resolution vetoing the suspension pursuant to § 244(c)(2) authorizing either House of
Congress, by resolution, to invalidate the decision of the executive branch to allow a particular deportable alien to
remain in the United States. The immigration judge reopened the deportation proceedings to implement the
House order and the alien was ordered deported. The Board of Immigration Appeals dismissed the alien’s appeal,
holding that it had no power to declare unconstitutional an act of Congress. The United States Court of Appeals
for Ninth Circuit held that the House was without constitutional authority to order the alien’s deportation and that §
244(c)(2) violated the constitutional doctrine on separation of powers.

On appeal, the U.S. Supreme Court declared § 244(c)(2) unconstitutional. But the Court shied away from the
issue of separation of powers and instead held that the provision violates the presentment clause and
bicameralism. It held that the one-house veto was essentially legislative in purpose and effect. As such, it is
subject to the procedures set out in Article I of the Constitution requiring the passage by a majority of both Houses
and presentment to the President. x x x x x x x x x

Two weeks after the Chadha decision, the Court upheld, in memorandum decision, two lower court decisions
invalidating the legislative veto provisions in the Natural Gas Policy Act of 1978 and the Federal Trade
Commission Improvement Act of 1980. Following this precedence, lower courts invalidated statutes containing
legislative veto provisions although some of these provisions required the approval of both Houses of Congress
and thus met the bicameralism requirement of Article I. Indeed, some of these veto provisions were not even
exercised.35 (emphasis supplied)

In Macalintal, given the concept and configuration of the power of congressional oversight and considering the nature and
powers of a constitutional body like the Commission on Elections, the Court struck down the provision in RA 9189 (The
Overseas Absentee Voting Act of 2003) creating a Joint Congressional Committee. The committee was tasked not only to
monitor and evaluate the implementation of the said law but also to review, revise, amend and approve the IRR
promulgated by the Commission on Elections. The Court held that these functions infringed on the constitutional
independence of the Commission on Elections.36

With this backdrop, it is clear that congressional oversight is not unconstitutional per se, meaning, it neither necessarily
constitutes an encroachment on the executive power to implement laws nor undermines the constitutional separation of

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powers. Rather, it is integral to the checks and balances inherent in a democratic system of government. It may in fact
even enhance the separation of powers as it prevents the over-accumulation of power in the executive branch.

However, to forestall the danger of congressional encroachment "beyond the legislative sphere," the Constitution imposes
two basic and related constraints on Congress.37 It may not vest itself, any of its committees or its members with either
executive or judicial power.38 And, when it exercises its legislative power, it must follow the "single, finely wrought and
exhaustively considered, procedures" specified under the Constitution, 39 including the procedure for enactment of laws
and presentment.

Thus, any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In
particular, congressional oversight must be confined to the following:

(1) scrutiny based primarily on Congress’ power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses
on any matter pertaining to their departments and its power of confirmation40 and

(2) investigation and monitoring41 of the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.42

Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. Legislative vetoes
fall in this class.

Legislative veto is a statutory provision requiring the President or an administrative agency to present the proposed
implementing rules and regulations of a law to Congress which, by itself or through a committee formed by it, retains a
"right" or "power" to approve or disapprove such regulations before they take effect. As such, a legislative veto in the form
of a congressional oversight committee is in the form of an inward-turning delegation designed to attach a congressional
leash (other than through scrutiny and investigation) to an agency to which Congress has by law initially delegated broad
powers.43It radically changes the design or structure of the Constitution’s diagram of power as it entrusts to Congress a
direct role in enforcing, applying or implementing its own laws.44

Congress has two options when enacting legislation to define national policy within the broad horizons of its legislative
competence.45 It can itself formulate the details or it can assign to the executive branch the responsibility for making
necessary managerial decisions in conformity with those standards. 46 In the latter case, the law must be complete in all its
essential terms and conditions when it leaves the hands of the legislature. 47 Thus, what is left for the executive branch or
the concerned administrative agency when it formulates rules and regulations implementing the law is to fill up details
(supplementary rule-making) or ascertain facts necessary to bring the law into actual operation (contingent rule-making).48

Administrative regulations enacted by administrative agencies to implement and interpret the law which they are entrusted
to enforce have the force of law and are entitled to respect.49 Such rules and regulations partake of the nature of a
statute50and are just as binding as if they have been written in the statute itself. As such, they have the force and effect of
law and enjoy the presumption of constitutionality and legality until they are set aside with finality in an appropriate case
by a competent court.51 Congress, in the guise of assuming the role of an overseer, may not pass upon their legality by
subjecting them to its stamp of approval without disturbing the calculated balance of powers established by the
Constitution. In exercising discretion to approve or disapprove the IRR based on a determination of whether or not they
conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power exclusively vested in
this Court by the Constitution.

Considered Opinion of
Mr. Justice Dante O. Tinga

Moreover, the requirement that the implementing rules of a law be subjected to approval by Congress as a condition for
their effectivity violates the cardinal constitutional principles of bicameralism and the rule on presentment.52

Section 1, Article VI of the Constitution states:

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. (emphasis supplied)

Legislative power (or the power to propose, enact, amend and repeal laws)53 is vested in Congress which consists of two
chambers, the Senate and the House of Representatives. A valid exercise of legislative power requires the act of both
chambers. Corrollarily, it can be exercised neither solely by one of the two chambers nor by a committee of either or both
chambers. Thus, assuming the validity of a legislative veto, both a single-chamber legislative veto and a congressional
committee legislative veto are invalid.

Additionally, Section 27(1), Article VI of the Constitution provides:

Section 27. (1) Every bill passed by the Congress shall, before it becomes a law, be presented to the
President. If he approves the same, he shall sign it, otherwise, he shall veto it and return the same with his
objections to the House where it originated, which shall enter the objections at large in its Journal and proceed to
reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the
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 bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered,
and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes
of each House shall be determined by yeas or nays, and the names of the members voting for or against shall be
entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within
thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it. (emphasis
supplied)

Every bill passed by Congress must be presented to the President for approval or veto. In the absence of presentment to
the President, no bill passed by Congress can become a law. In this sense, law-making under the Constitution is a joint
act of the Legislature and of the Executive. Assuming that legislative veto is a valid legislative act with the force of law, it
cannot take effect without such presentment even if approved by both chambers of Congress.

In sum, two steps are required before a bill becomes a law. First, it must be approved by both Houses of
Congress.54Second, it must be presented to and approved by the President.55 As summarized by Justice Isagani
Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is the procedure for the approval of bills:

A bill is introduced by any member of the House of Representatives or the Senate except for some measures that
must originate only in the former chamber.

The first reading involves only a reading of the number and title of the measure and its referral by the Senate
President or the Speaker to the proper committee for study.

The bill may be "killed" in the committee or it may be recommended for approval, with or without amendments,
sometimes after public hearings are first held thereon. If there are other bills of the same nature or purpose, they
may all be consolidated into one bill under common authorship or as a committee bill.

Once reported out, the bill shall be calendared for second reading. It is at this stage that the bill is read in its
entirety, scrutinized, debated upon and amended when desired. The second reading is the most important stage
in the passage of a bill.

The bill as approved on second reading is printed in its final form and copies thereof are distributed at least three
days before the third reading. On the third reading, the members merely register their votes and explain them if
they are allowed by the rules. No further debate is allowed.

Once the bill passes third reading, it is sent to the other chamber, where it will also undergo the three readings. If
there are differences between the versions approved by the two chambers, a conference
committee58 representing both Houses will draft a compromise measure that if ratified by the Senate and the
House of Representatives will then be submitted to the President for his consideration.

The bill is enrolled when printed as finally approved by the Congress, thereafter authenticated with the signatures
of the Senate President, the Speaker, and the Secretaries of their respective chambers… 59

The President’s role in law-making.

The final step is submission to the President for approval. Once approved, it takes effect as law after the required
publication.60

Where Congress delegates the formulation of rules to implement the law it has enacted pursuant to sufficient standards
established in the said law, the law must be complete in all its essential terms and conditions when it leaves the hands of
the legislature. And it may be deemed to have left the hands of the legislature when it becomes effective because it is only
upon effectivity of the statute that legal rights and obligations become available to those entitled by the language of the
statute. Subject to the indispensable requisite of publication under the due process clause,61 the determination as to when
a law takes effect is wholly the prerogative of Congress.62 As such, it is only upon its effectivity that a law may be
executed and the executive branch acquires the duties and powers to execute the said law. Before that point, the role of
the executive branch, particularly of the President, is limited to approving or vetoing the law.63

From the moment the law becomes effective, any provision of law that empowers Congress or any of its members to play
any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus
unconstitutional. Under this principle, a provision that requires Congress or its members to approve the implementing
rules of a law after it has already taken effect shall be unconstitutional, as is a provision that allows Congress or its
members to overturn any directive or ruling made by the members of the executive branch charged with the
implementation of the law.

Following this rationale, Section 12 of RA 9335 should be struck down as unconstitutional. While there may be similar
provisions of other laws that may be invalidated for failure to pass this standard, the Court refrains from invalidating them
wholesale but will do so at the proper time when an appropriate case assailing those provisions is brought before us. 64

The next question to be resolved is: what is the effect of the unconstitutionality of Section 12 of RA 9335 on the other
provisions of the law? Will it render the entire law unconstitutional? No.

Section 13 of RA 9335 provides:

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 SEC. 13. Separability Clause. – If any provision of this Act is declared invalid by a competent court, the remainder
of this Act or any provision not affected by such declaration of invalidity shall remain in force and effect.

In Tatad v. Secretary of the Department of Energy,65 the Court laid down the following rules:

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. x x x

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.

The separability clause of RA 9335 reveals the intention of the legislature to isolate and detach any invalid provision from
the other provisions so that the latter may continue in force and effect. The valid portions can stand independently of the
invalid section. Without Section 12, the remaining provisions still constitute a complete, intelligible and valid law which
carries out the legislative intent to optimize the revenue-generation capability and collection of the BIR and the BOC by
providing for a system of rewards and sanctions through the Rewards and Incentives Fund and a Revenue Performance
Evaluation Board.

To be effective, administrative rules and regulations must be published in full if their purpose is to enforce or implement
existing law pursuant to a valid delegation. The IRR of RA 9335 were published on May 30, 2006 in two newspapers of
general circulation66 and became effective 15 days thereafter.67 Until and unless the contrary is shown, the IRR are
presumed valid and effective even without the approval of the Joint Congressional Oversight Committee.

WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335 creating a Joint Congressional
Oversight Committee to approve the implementing rules and regulations of the law is
declared UNCONSTITUTIONAL and therefore NULL and VOID. The constitutionality of the remaining provisions of RA
9335 is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain in force and effect.

SO ORDERED.

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