EN BANC V.

IT HELD THAT THERE IS NOT ENOUGH EVIDENCE TO WARRANT

THE COURT TO ENJOIN THE PRELIMINARY INVESTIGATION OF THE
G.R. Nos. 146710-15. April 3, 2001 INCUMBENT OMBUDSMAN, PETITIONER HAVING FAILED TO PROVE
THE IMPAIRED CAPACITY OF THE OMBUDSMAN TO RENDER A
JOSEPH E. ESTRADA, Petitioner, vs. ANIANO DESIERTO, in BIASED FREE DECISION.
his capacity as Ombudsman, RAMON GONZALES,
VOLUNTEERS AGAINST CRIME AND CORRUPTION, GRAFT In G.R. No. 146738, petitioner raises and argues the following
FREE PHILIPPINES FOUNDATION, INC., LEONARD DE VERA, issues:
DENNIS FUNA, ROMEO CAPULONG and ERNESTO B.
FRANCISCO, JR., Respondents. 1. WHETHER PETITIONER RESIGNED OR SHOULD BE CONSIDERED
RESIGNED AS OF JANUARY 20, 2001;
[G.R. No. 146738. April 3, 2001
2. WHETHER THE ANGARA DIARY IS INADMISSIBLE FOR BEING
JOSEPH E. ESTRADA, Petitioner, vs. GLORIA MACAPAGAL- VIOLATIVE OF THE FOLLOWING RULES ON EVIDENCE: HEARSAY,
ARROYO, Respondent. BEST EVIDENCE, AUTHENTICATION, ADMISSIONS AND RES INTER
ALIOS ACTA;
RESOLUTION
3. WHETHER RELIANCE ON NEWSPAPER ACOUNTS IS VIOLATIVE
PUNO, J.: OF THE HEARSAY RULE;

For resolution are petitioners Motion for Reconsideration in G.R. 4. WHETHER CONGRESS POST FACTO CAN DECIDE PETITIONERS
Nos. 146710-15 and Omnibus Motion in G.R. No. 146738 of the INABILITY TO GOVERN CONSIDERING SECTION 11, ARTICLE VII
Courts Decision of March 2, 2001. OF THE CONSTITUTION; and

In G.R. Nos. 146710-15, petitioner raises the following grounds: 5. WHETHER PREJUDICIAL PUBLICITY HAS AFFECTED
PETITIONERS RIGHT TO FAIR TRIAL.
I. IT DISREGARDED THE CLEAR AND EXPLICIT PROVISIONS OF
ART. XI, SECTION 3 (7) OF THE CONSTITUTION AND THE SETTLED We find the contentions of petitioner bereft of merit.
JURISPRUDENCE THEREON.
I
II. IT HELD THAT PETITIONER CAN BE PROSECUTED NOW, FOR
Prejudicial Publicity on the Court
THIS RULING WOULD VIOLATE THE DOUBLE JEOPARDY CLAUSE OF
THE CONSTITUTION, CONSIDERING THAT PETITIONER WAS
ACQUITTED IN THE IMPEACHMENT PROCEEDINGS. Petitioner insists he is the victim of prejudicial publicity. Among
others, he assails the Decision for adverting to newspaper accounts
III. IT HELD THAT PETITIONER IS NO LONGER ENTITLED TO of the events and occurrences to reach the conclusion that he has
ABSOLUTE IMMUNITY FROM SUIT. resigned. In our Decision, we used the totality test to arrive at the
conclusion that petitioner has resigned. We referred to and
IV. IT HELD THAT PETITIONERS DUE PROCESS RIGHTS TO A FAIR analyzed events that were prior, contemporaneous and posterior to
TRIAL HAVE NOT BEEN PREJUDICED BY PRE-TRIAL PUBLICITY. the oath-taking of respondent Arroyo as president. All these
events are facts which are well-established and cannot be
refuted. Thus, we adverted to prior events that built up the
irresistible pressure for the petitioner to resign. These are: (1) the news accounts. The reference by the Court to certain
expose of Governor Luis Chavit Singson on October 4, 2000; (2) newspapers reporting them as they happened does not
the I accuse speech of then Senator Teofisto Guingona in the make them inadmissible evidence for being hearsay. The
Senate; (3) the joint investigation of the speech of Senator news account only buttressed these facts as facts. For all his
Guingona by the Blue Ribbon Committee and the Committee on loud protestations, petitioner has not singled out any of
Justice; (4) the investigation of the Singson expose by the House these facts as false.
Committee on Public Order and Security; (5) the move to impeach
the petitioner in the House of Representatives; (6) the Pastoral We now come to some events of January 20, 2001
Letter of Archbishop Jaime Cardinal Sin demanding petitioners contemporaneous to the oath taking of respondent Arroyo. We
resignation; (7) a similar demand by the Catholic Bishops used the Angara Diary to decipher the intent to resign on the part
conference; (8) the similar demands for petitioners resignation by of the petitioner. Let it be emphasized that it is not unusual for
former Presidents Corazon C. Aquino and Fidel V. Ramos; (9) the courts to distill a persons subjective intent from the evidence
resignation of respondent Arroyo as Secretary of the DSWD and before them. Everyday, courts ascertain intent in criminal cases, in
her call for petitioner to resign; (10) the resignation of the civil law cases involving last wills and testaments, in commercial
members of petitioners Council of Senior Economic Advisers and of cases involving contracts and in other similar cases. As will be
Secretary Mar Roxas III from the Department of Trade and discussed below, the use of the Angara Diary is not prohibited by
Industry; (11) the defection of then Senate President Franklin the hearsay rule. Petitioner may disagree with some of the
Drilon and then Speaker of the House of Representatives Manuel inferences arrived at by the Court from the facts narrated in the
Villar and forty seven (47) representatives from petitioners Lapiang Diary but that does not make the Diary inadmissible as evidence.
Masang Pilipino; (12) the transmission of the Articles of
Impeachment by Speaker Villar to the Senate; (13) the unseating We did not stop with the contemporaneous events but proceeded
of Senator Drilon as Senate President and of Representative Villar to examine some events posterior to the oath-taking of respondent
as Speaker of the House; (14) the impeachment trial of the Arroyo. Specifically, we analyzed the all important press release of
petitioner; (15) the testimonies of Clarissa Ocampo and former the petitioner containing his final statement which was issued
Finance Secretary Edgardo Espiritu in the impeachment trial; (16) after the oath-taking of respondent Arroyo as president. After
the 11-10 vote of the senator-judges denying the prosecutors analyzing its content, we ruled that petitioners issuance of the
motion to open the 2nd envelope which allegedly contained press release and his abandonemnt of Malacaang Palace confirmed
evidence showing that petitioner held a P3.3 billion deposit in a his resignation. 1 These are overt acts which leave no doubt to the
secret bank account under the name of Jose Velarde; (17) the Court that the petitioner has resigned.
prosecutors walkout and resignation; (18) the indefinite
postponement of the impeachment proceedings to give a chance to
In light of this finding that petitioner has resigned before 12
the House of Representatives to resolve the issue of resignation of
oclock noon of Janaury 20, 2001, the claim that the office of
their prosecutors; (19) the rally in the EDSA Shrine and its
the President was not vacant when respondent Arroyo took
intensification in various parts of the country; (20) the withdrawal
her oath of office at half past noon of the same day has no
of support of then Secretary of National Defense Orlando Mercado
leg to stand on.
and the then Chief of Staff, General Angelo Reyes, together with
the chiefs of all the armed services; (21) the same withdrawal of
support made by the then Director General of the PNP, General We also reject the contention that petitioners resignation was due
Panfilo Lacson, and the major service commanders; (22) the to duress and an involuntary resignation is no resignation at
stream of resignations by Cabinet secretaries, undersecretaries, all.
assistant secretaries and bureau chiefs; (23) petitioners agreement
to hold a snap election and opening of the controversial second x x x [I]t has been said that, in determining whether a given
envelope. All these prior events are facts which are within resignation is voluntarily tendered, the element of voluntariness is
judicial notice by this Court. There was no need to cite their vitiated only when the resignation is submitted under duress
brought on by government action. The three-part test for such elections. He transmitted to the Congress a written declaration of
duress has been stated as involving the following elements: (1) temporary inability. He could not claim he was forced to resign
whether one side involuntarily accepted the others terms; (2) because immediately before he left Malacaang, he asked Secretary
whether circumstances permitted no other alternative; and (3) Angara: Ed, aalis na ba ako? which implies that he still had a
whether such circumstances were the result of coercive acts of the choice of whether or not to leave.
opposite side. The view has also been expressed that a resignation
may be found involuntary if on the totality of the To be sure, pressure was exerted for the petitioner to
circumstances it appears that the employers conduct resign. But it is difficult to believe that the pressure
in requesting resignation effectively deprived the employer of completely vitiated the voluntariness of the petitioners
free choice in the matter. Factors to be considered, under this resignation. The Malacaang ground was then fully protected by
test, are: (1) whether the employee was given some alternative to the Presidential Security Guard armed with tanks and high-
resignation; (2) whether the employee understood the nature of powered weapons. The then Chief of Staff, General Angelo Reyes,
the choice he or she was given; (3) whether the employewe was and other military officers were in Malacaang to assure that no
given a reasonable time in which to choose; and (4) whether he or harm would befall the petitioner as he left the Palace. Indeed, no
she was permitted to select the effective date of resignation. In harm, not even a scratch, was suffered by the petitioner, the
applying this totality of the circumstances test, the assessment members of his family and his Cabinet who stuck it out with him in
whether real alternatives were offered must be gauged by an his last hours. Petitioners entourage was even able to detour safely
objective standard rather than by the employees purely subjective to the Municipal Hall of San Juan and bade goodbye to his followers
evaluation; that the employee may perceive his or her only before finally going to his residence in Polk Street, Greenhills. The
option to be resignation for example, because of concerns only incident before the petitioner left the Palace was the stone
about his or her reputation is irrelevant. Similarly, the mere throwing between a small group of pro and anti Erap rallyists which
fact that the choice is between comparably unpleasant resulted in minor injuries to a few of them. Certainly, there were
alternatives for example, resignation or facing disciplinary no tanks that rumbled through the Palace, no attack planes that
charges does not of itself establish that a resignation was flew over the presidential residence, no shooting, no large scale
induced by duress or coercion, and was therefore violence, except verbal violence, to justify the conclusion that
involuntary. This is so even where the only alternative to petitioner was coerced to resign.
resignation is facing possible termination for cause, unless the
employer actually lacked good cause to believe that grounds for II
termination existed. In this regard it has also been said that a
resignation resulting from a choice between resigning or facing Evidentiary Issues
proceedings for dismissal is not tantamount to discharge by
coercion without procedural view if the employee is given sufficient
time and opportunity for deliberation of the choice posed. Petitioner devotes a large part of his arguments on the alleged
Futhermore, a resignation by an officer charged with misconduct is improper use by this Court of the Angara Diary. It is urged that
not given under duress, though the appropriate authority has the use of the Angara Diary to determine the state of mind of the
already determined that the officers alternative is termination, petitioner on the issue of his resignation violates the rule against
where such authority has the legal authority to terminate the the admission of hearsay evidence.
officers employment under the particular circumstances, since it is
not duress to threaten to do what one has the legal right to do, or We are unpersuaded. To begin with, the Angara diary is not an
to threaten to take any measure authorized by law and the out of court statement. The Angara Diary is part of the
circumstances of the case.2cräläwvirtualibräry pleadings in the cases at bar. Petitioner cannot complain he was
not furnished a copy of the Angara Diary. Nor can he feign surprise
In the cases at bar, petitioner had several options available to on its use. To be sure, the said Diary was frequently referred to by
him other than resignation. He proposed to the holding of snap the parties in their pleadings. 3 The three parts of the Diary
published in the PDI from February 4-6, 2001 were attached as the Federal Rules which authorize the admission of hearsay
Annexes A-C, respectively, of the Memorandum of private that does not satisfy a class exception, provided it is
respondents Romeo T. Capulong, et al., dated February 20, 2001. adequately trustworthy and probative (section 12, infra).
The second and third parts of the Diary were earlier also attached
as Annexes 12 and 13 of the Comment of private respondents Moreover, some commentators believe that the hearsay rule
Capulong, et al., dated February 12, 2001. In fact, petitioner even should be abolished altogether instead of being
cited in his Second Supplemental Reply Memorandum both the loosened. See, e.g., Note, The Theoretical Foundation of the
second part of the diary, published on February 5, 2001, 4 and the Hearsay Rules, 93 Harv.L.Rev. 1786, 1804-1805, 1815 (1980)
third part, published on February 6, 2001. 5 It was also extensively (footnotes omitted):
used by Secretary of Justice Hernando Perez in his oral arguments.
Thus, petitioner had all the opportunity to contest the use of the The Federal Rules of Evidence provide that [a]lthough relevant,
Diary but unfortunately failed to do so. evidence may be excluded if its probative value is substantially
outweighed by the danger of unfair prejudice. Under this structure,
Even assuming arguendo that the Angara Diary was an out of court exclusion is justified by fears of how the jury will be influenced by
statement, still its use is not covered bythe hearsay the evidence. However, it is not traditional to think of hearsay as
rule. 6 Evidence is called hearsay when its probative force depends, merely a subdivision of this structure, and the Federal Rules do not
in whole or in part, on the competency and credibility of some conceive of hearsay in that manner. Prejudice refers to the jurys
persons other than the witness by whom it is sought to produce use of evidence for inferences other than those for which the
it. 7 There are three reasons for excluding hearsay evidence: (1) evidence is legally relevant; by contrast, the rule against hearsay
absence of cross examination; (2) absence of demeanor evidence, questions the jurys ability to evaluate the strength of
and (3) absence of the oath. 8 Not at all hearsay evidence, a legitimate inference to be drawn from the evidence. For example,
however, is inadmissible as evidence. Over the years, a huge body were a judge to exclude testimony because a witness was
of hearsay evidence has been admitted by courts due to their particularly smooth or convincing, there would be no doubt as to
relevance, trustworthiness and necessity. 9 The emergence of these the usurpation of the jurys function. Thus, unlike prejudices
exceptions and their wide spread acceptance is well-explained by recognized by the evidence rules, such as those stemming from
Weinstein, Mansfield, Abrams and Berger as follows: racial or religious biases or from the introduction of photographs of
a victims final state, the exclusion of hearsay on the basis of
xxx misperception strikes at the root of the jurys function by usurping
its power to process quite ordinary evidence, the type of
On the other hand, we all make decisions in our everyday lives on information routinely encountered by jurors in their everyday lives.
the basis of other persons accounts of what happened, and verdicts
are usually sustained and affirmed even if they are based on Since virtually all criteria seeking to distinguish between good and
hearsay erroneously admitted, or admitted because no objection bad hearsay are either incoherent, inconsistent, or indeterminate,
was made. See Shepp v. Uehlinger, 775 F 2d 452, 454-455 (1st the only altenative to a general rule of admission would be an
Cir. 1985) (hearsay evidence alone can support a verdict). absolute rule of exclusion, which is surely inferior. More important,
Although volumes have been written suggesting ways to revise the the assumptions necessary to justify a rule against hearsay seem
hearsay rule, no one advocates a rule that would bar all hearsay insupportable and, in any event, are inconsistent with accepted
evidence. Indeed, the decided historical trend has been to notions of the function of the jury. Therefore, the hearsay rules
exclude categories of highly probative statements from the should be abolished.
definition of hearsay (sections 2 and 3, infra), and to
develop more class exceptions to the hearsay rule (sections Some support for this view can be found in the limited empirical
4-11, infra). Furthermore, many states have added to their research now available which is, however, derived from simulations
rules the residual, or catch-all, exceptions first pioneered by that suggests that admitting hearsay has little effect on trial
outcomes because jurors discount the value of hearsay these admissions are admissible even if they are
evidence. See Rakos & Landsman, Researching the Hearsay Rule: hearsay. Retired Justice Oscar Herrera of the Court of Appeals
Emerging Findings, General Issues, and Future Directions, 76 cites the various authorities who explain why admissions are not
Minn.L.Rev. 655 (1992); Miene, Park, & Borgidas, Jury Decision covered by the hearsay rule: 12cräläwvirtualibräry
Making and the Evaluation of Hearsay Evidence, 76 Minn.L.Rev.
683 (1992); Kovera, Park, & Penrod, Jurors Perceptions of Wigmore, after pointing out that the partys declaration has
Eyewitness and Hearsay Evidence, 76 Minn.L.Rev. 703 (1992); generally the probative value of any other persons asssertion,
Landsman & Rakos, Research Essay: A Preliminary Empirical argued that it had a special value when offered against the
Enquiry Concerning the prohibition of Hearsay Evidence in party. In that circumstance, the admission discredits the partys
American Courts, 15 Law & Psychol. Rev. 65 (1991). statement with the present claim asserted in pleadings and
testimony, much like a witness impeached by contradictory
Others, even if they concede that restrictions on hearsay statements. Moreover, he continued, admissions pass the
have some utility, question whether the benefits outweigh gauntlet of the hearsay rule, which requires that extrajudicial
the cost: assertions be excluded if there was no opportunity for the
opponent to cross-examine because it is the opponents own
The cost of maintaining the rule is not just a function of its declaration, and he does not need to cross examine himself.
contribution to justice. It also includes the time spent on litigating Wigmore then added that the Hearsay Rule is satisfied since the
the rule. And of course this is not just a cost voluntarily borne by party now as opponent has the full opportunity to put himself on
the parties, for in our system virtually all the cost of the court the stand and explain his former assertion. (Wigmore on
salaries, administrative costs, and capital costs are borne by the evidence, Sec. 1048 (Chadbourn Rev. 1972), cited in Sec.
public. As expensive as litigation is for the parties, it is supported 154, McCormick)
by an enormous public subsidy. Each time a hearsay question is
litigated, the public pays. The rule imposes other costs as well. According to Morgan: The admissibility of an admission made by
Enormous time is spent teaching and writing about the hearsay the party himself rests not upon any notion that the circumstances
rule, which are both costly enterprises. In some law schools, in which it was made furnish the trier means of evaluating it fairly,
students spend over half their time in evidence classes learning the but upon the adversary theory of litigation. A party can hardly
intricacies of the hearsay rule, and enormous academic resources object that he had no opportunity to cross-examine himself
are expended on the rule. or that he is unworthy of credence save when speaking
under sanction of an oath.
Allen, Commentary on Professor Friendmans Article: The Evolution
of the Hearsay Rule to a Rule of Admission, 76 Minn.L.Rev. 797, A mans acts, conduct, and declaration, wherever made, if
800 [1992] (but would abolish rule only in civil cases). See also voluntary, are admissible against him, for the reason that it is fair
Friedman, Toward a Partial Economic, Game-Theoretic Analysis of to presume that they correspond with the truth, and it is his fault if
Hearsay, 76 Minn. L. Rev. 723 (1992).10cräläwvirtualibräry they do not. (U.S. vs. Ching Po, 23 Phil. 578, 583).

A complete analysis of any hearsay problem requires that The Angara Diary contains direct statements of petitioner which
we further determine whether the hearsay evidence is one can be categorized as admissions of a party: his proposal for a
exempted from the rules of exclusion. A more circumspect snap presidential election where he would not be a candidate; his
examination of our rules of exclusion will show that they do statement that he only wanted the five-day period promised by
not cover admissions of a party and the Angara Diary Chief of Staff Angelo Reyes; his statements that he would leave by
belongs to this class. Section 26 of Rule 130 provides that the Monday if the second envelope would be opened by Monday and
act, declaration or omission of a party as to a relevant fact may be Pagod na pagod na ako. Ayoko na, masyado nang masakit. Pagod
given in evidence against him. 11 It has long been settled that na ako sa red tape, bureaucracy, intriga. (I am very tired. I dont
want any more of this its too painful. Im tired of the red tape, the hours and days before he abandoned Malacaang Palace.
bureaucracy, the intrigue). I just want to clear my name, then I Thus, according to the Angara Diary, the petitioner told Secretary
will go. We noted that days before, petitioner had repeatedly Angara: Mula umpisa pa lang ng kampanya, Ed, ikaw na lang
declared that he would not resign despite the growing clamor for pinakikinggan ko. At hanggang sa huli, ikaw pa rin. (Since the start
his resignation. The reason for the meltdown is obvious - - - his will of the campaign, Ed, you have been the only one Ive listened to.
not to resign has wilted. And now at the end, you still are.) 17 This statement of full trust
was made by the petitioner after Secretary Angara briefed
It is, however, argued that the Angara Diary is not the diary him about the progress of the first negotiation . True to this
of the petitioner, hence, non-binding on him. The trust, the petitioner had to ask Secretary Angara if he would
argument overlooks the doctrine of adoptive admission. An already leave Malacaang after taking their final lunch on January
adoptive admission is a partys reaction to a statement or action by 20, 2001 at about 1:00 p.m. The Angara Diary quotes the
another person when it is reasonable to treat the partys petitioner as saying to Secretary Angara: ed, kailangan ko na bang
reaction as an admission of something stated or implied by umalis? (Do I have to leave now?) 18 Secretary Angara told him to
the other person. 13 Jones explains that the basis for admissibility go and he did. Petitioner cannot deny that Secretary Angara
of admissions made vicariously is that arising from headed his team of negotiators that met with the team of the
the ratification or adoption by the party of the statements which respondent Arroyo to discuss the peaceful and orderly transfer of
the other person had made. 14 To use the blunt language of Mueller power after his relinquishment of the powers of the presidency.
and Kirkpatrick, this process of attribution is not mumbo The Diary shows that petitioner was always briefed by Secretary
jumbo but common sense. 15 In the Angara Diary , the options Angara on the progress of their negotiations. Secretary Angara
of the petitioner started to dwindle when the armed forces acted for and in behalf of the petitioner in the crucial days
withdrew its support from him as President and commander-in- before respondent Arroyo took her oath as President.
chief. Thus, Executive Secretary Angara had to ask Senate Consequently, petitioner is bound by the acts and
President Pimentel to advise petitioner to consider the option declarations of Secretary Angara.
of dignified exit or resignation . Petitioner did not object to the
suggested option but simply said he could never leave the country. Under our rules of evidence, admissions of an agent
Petitioners silence on this and other related suggestions can be (Secretary Angara) are binding on the principal
taken as an admission by him. 16cräläwvirtualibräry (petitioner). 19 Jones very well explains the reasons for the
rule , viz: What is done, by agent, is done by the principal through
Petitioner further contends that the use of the Angara him, as through a mere instrument. So, whatever is said by an
diary against him violated the rule on res inter alios acta. The agent, either in making a contract for his principal, or at the time
rule is expressed in section 28 of Rule 130 of the Rules of Court, and accompanying the performance of any act within the scope of
viz: The rights of a party cannot be prejudiced by an act, his authority, having relation to, and connected with, and in the
declaration, or omission of another, except as hereinafter course of the particular contract or transaction in which he is then
provided. engaged, or in the language of the old writers, dum fervet
opus is, in legal effect, said by his principal and admissible in
Again, petitioner errs in his contention. The res inter alios evidence against such principal. 20cräläwvirtualibräry
acta rule has several exceptions. One of them is provided in
section 29 of Rule 130 with respect to admissions by a co- Moreover, the ban on hearsay evidence does not cover
partner or agent. independently relevant statements. These are statements
which are relevant independently of whether they are true or
Executive Secretary Angara as such was an alter ego of the not. They belong to two (2) classes: (1) those statements which
petitioner. He was the Little President. Indeed, he was are the very facts in issue, and (2) those statements which
authorized by the petitioner to act for him in the critical are circumstantial evidence of the facts in issue. The second
class includes the following: 21cräläwvirtualibräry
a. Statement of a person showing his state of mind, that is, his evidence and petitioners attempt to foment a belated tempest
mental condition, knowledge, belief, intention, ill will and other cannot receive our imprimatur.
emotions;
Petitioner also contends that the rules on authentication of
b. Statements of a person which show his physical condition, as private writings and best evidence were violated in our
illness and the like; Decision, viz:

c. Statements of a person from which an inference may be made The use of the Angara diary palpably breached several hornbook
as to the state of mind of another, that is, the knowledge, belief, rules of evidence, such as the rule on authentication of private
motive, good or bad faith, etc. of the latter; writings

d. Statements which may identify the date, place and person in xxx
question; and
A. Rule on Proof of Private Writings Violated
e. Statements showing the lack of credibility of a witness.
The rule governing private documents as evidence was violated.
Again, Jones tells us why these independently relevant The law provides that before any private writing offered as
statements are not covered by the prohibition against authentic is received in evidence, its due execution and
hearsay evidence: 22cräläwvirtualibräry authenticity must be proved either: a) by anyone who saw the
document executed or written, or b) by evidence of the
1088. Mental State or Condition Proof of Knowledge.- There are a genuineness of the signature or handwriting of the maker.
number of comon issues, forming a general class, in proof of which
hearsay is so obviously necessary that it is not customary to refer xxx
to its admissibility as by virtue of any exception to the general
exclusionary rule. Admissibility, in such cases, is as of course. For B. Best Evidence Rule Infringed
example, where any mental state or condition is in issue,
such as motive, malice, knowledge, intent, assent or dissent, Clearly, the newspaper reproduction is not the best evidence of the
unless direct testimony of the particular person is to be taken as Angara diary. It is secondary evidence, of dubious authenticity. It
conclusive of his state of mind, the only method of proof was however used by this Honorable Court without proof of the
available is testimony of others to the acts or statements of unavailability of the original or duplicate original of the diary. The
such person. Where his acts or statements are against his Best Evidence Rule should have been applied since the contents of
interest, they are plainly admissible within the rules hereinabove the diary are the subject of inquiry.
announced as to admissions against interest. And even where not
against interest, if they are so closely connected with the event or
The rule is that, except in four (4) specific instances, [w]hen the
transaction in issue as to constitute one of the very facts in
subject of inquiry is the contents of a document, no evidence shall
controversy, they become admissible of necessity.
be admissible other than the original document
itself.23cräläwvirtualibräry
As aforediscussed, The Angara Diary contains statements of the
petitioner which reflect his state of mind and are circumstantial
Petitioners contention is without merit. In regard to the Best
evidence of his intent to resign. It also contains statements of
Evidence rule, the Rules of Court provides in sections 2 to 4 of
Secretary Angara from which we can reasonably deduce petitioners
Rule 130, as follows:
intent to resign. They are admissible and they are not covered by
the rule on hearsay. This has long been a quiet area of our law on
Sec. 2. Documentary evidence. Documents as evidence consist of Production of the original may be dispensed with, in the trial courts
writings or any material containing letters, words, numbers, figures discretion, whenever in the case in hand the opponent does not
or other modes of written expressions offered as proof of their bona fide dispute the contents of the document and no other
contents. useful purpose will be served by requiring production.24

Sec. 3. Original document must be produced; exceptions. When xxx

the subject of inquiry is the contents of a document, no evidence
shall be admissible other than the original document itself, except In several Canadian provinces, the principle of unavailability has
in the following cases: been abandoned, for certain documents in which ordinarily no real
dispute arised. This measure is a sensible and progressive one and
(a) When the original has been lost or destroyed, or cannot be deserves universal adoption (post, sec. 1233). Its essential feature
produced in court, without bad faith on the part of the offeror; is that a copy may be used unconditionally, if the opponent has
been given an opportunity to inspect it. (empahsis supplied)
(b) When the original is in the custody or under the control of the
party against whom the evidence is offered, and the latter fails to Franciscos opinion is of the same tenor, viz:
produce it after reasonable notice;
Generally speaking, an objection by the party against whom
(c) When the original consists of numerous accounts or other secondary evidence is sought to be introduced is essential to bring
documents which cannot be examined in court without great loss of the best evidence rule into application; and frequently, where
time and the fact sought to be established from them is only the secondary evidence has been admitted, the rule of exclusion might
general result of the whole; and have successfully been invoked if proper and timely objection had
been taken. No general rule as to the form or mode of objecting to
(d) When the original is a public record in the custody of a public the admission of secondary evidence is set forth. Suffice it to say
officer or is recorded in a public office. here that the objection should be made in proper season that
is, whenever it appears that there is better evidence than
Sec. 4. Original of document. (a) The original of a document is one that which is offered and before the secondary evidence has
the contents of which are the subject of inquiry. been admitted. The objection itself should be sufficiently definite
to present a tangible question for the courts
consideration.25cräläwvirtualibräry
(b) When a document is in two or more copies executed at or
about the same time, with identical contents, all such copies are
equally regarded as originals. He adds:

(c) When an entry is repeated in the regular course of business, Secondary evidence of the content of the writing will be received in
one being copied from another at or near the time of the evidence if no objection is made to its
transaction, all the entries are likewise equally regarded as reception.26cräläwvirtualibräry
originals.
In regard to the authentication of private writings, the Rules of
It is true that the Court relied not upon the original but only copy Court provides in section 20 of Rule 132, viz:
of the Angara Diary as published in the Philippine Daily Inquirer
on February 4-6, 2001. In doing so, the Court, did not, Sec. 20. Proof of private document. Before any private document
however, violate the best evidence rule. Wigmore, in his book offered as authentic is received in evidence, its due execution and
on evidence, states that: authenticity must be proved either:
(a) By anyone who saw the document executed or written; or Motion, after the Angara Diary has been used as evidence and a
decision rendered partly on the basis thereof.
(b) By evidence of the genuineness of the signature or handwriting
of the maker. III

Temporary Inability
Any other private document need only be identified as that which it
is claimed to be.
Petitioner argues that the Court misinterpreted the meaning of
On the rule of authentication of private writings, Francisco states section 11, Article VII, of the Constitution in that congress can only
that: decide the issue of inability when there is a variance of opinion
between a majority of the Cabinet and the President. The situation
A proper foundation must be laid for the admission of documentary presents itself when majority of the Cabinet determines that the
evidence; that is, the identity and authenticity of the document President is unable to govern; later, the President informs
must be reasonably established as a pre-requisite to its admission. Congress that his inability has ceased but is contradicted by a
(Rouw v. Arts, 174 Ark. 79, 294 S.W. 993, 52 A.L.R. 1263, and majority of the members of the Cabinet. It is also urged that the
others) However, a party who does not deny the genuineness presidents judgment that he is unable to govern temporarily which
of a proffered instrument may not object that it was not is thereafter communicated to the Speaker of the House and the
properly identified before it was admitted in evidence. President of the Senate is the political question which this Court
(Strand v. Halverson, 220 Iowa 1276, 264 N.W. 266, 103 A.L.R. cannot review.
835).27cräläwvirtualibräry
We cannot sustain the petitioner. Lest petitioner forgets, he
Petitioner cites the case of State prosecutors v. Muro, 28 which himself made the submission in G.R. No. 146738
frowned on reliance by courts on newspaper accounts. In that case, that Congress has the ultimate authority under the
Judge Muro was dismissed from the service for relying on a Constitution to determine whether the President is
newspaper account in dismissing eleven (11) cases against Mrs. incapable of performing his functions in the manner
Imelda Romualdez Marcos. There is a significant difference , provided for in section 11 of Article VII. 29 We sustained this
however, between the Muro case and the cases at bar. In submission and held that by its many acts, Congress has already
the Muro case, Judge Muro dismissed the cases against Mrs. determined and dismissed the claim of alleged temporary inability
Marcos on the basis of a newspaper account without affording to govern proffered by petitioner. If petitioner now feels aggrieved
the prosecution the basic opportunity to be heard on the matter by the manner Congress exercised its power, it is incumbent upon
by way of a written comment or on oral argument. . .(this is) not him to seek redress from Congress itself. The power is conceded
only a blatant denial of elementary due process to the Government by the petitioner to be with Congress and its alleged
but is palpably indicative of bad faith and partiality. In the instant erroneous exercise cannot be corrected by this Court. The
cases, however, the petitioner had an opportunity to object to recognition of respondent Arroyo as our de jure president made
the admissibility of the Angara Diary when he filed his by Congress is unquestionably a political judgment. It is
Memorandum dated February 20, 2001, Reply Memorandum dated significant that House Resolution No. 176 cited as the bases of its
February 22, 2001, Supplemental Memorandum dated February judgment such factors as the peoples loss of confidence on the
23, 2001, and Second Supplemental memorandum dated February ability of former President Joseph Ejercito Estrada to effectively
24, 2001. He was therefore not denied due process. In the words govern and the members of the international community had
of Wigmore, supra , petitioner had been given an opportunity to extended their recognition of Her Excellency, Gloria Macapagal-
inspect the Angara Diary but did not object to its admissibility. It Arroyo as President of the Republic of the Philippines and it has a
is already too late in the day to raise his o bjections in an Omnibus constitutional duty of fealty to the supreme will of the people x
x x. This political judgment may be right or wrong but
Congress is answerable only to the people for its judgment. culminated on a Saturday. Congress was then not in session
Its wisdom is fit to be debated before the tribunal of the people and had no reasonable opportunity to act a priori on
and not before a court of justice. Needles to state, the doctrine petitioners letter claiming inability to govern. To be sure, however,
of separation of power constitutes an inseparable bar against the petitioner cannot strictly maintain that the President of the
this courts interposition of its power of judicial review to review the Senate, the Honorable Aquilino Pimentel, Jr. and the then Speaker
judgment of Congress rejecting petitioners claim that he is still the of the House of Representatives, the Honorable Arnulfo P.
President, albeit on leave and that respondent Arroyo is merely an Fuentebella, recognized respondent Arroyo as the constitutional
acting President. successor to the presidency post facto. Petitioner himself states
that his letter alleging his inability to govern was received by the
Petitioner attempts to extricate himself from his submission that Office of the Speaker on January 20, 2001 at 8:30 A.M. and the
Congress has the ultimate authority to determine his inability to Office of the Senate at 9 P.M. of the same day. 30 Respondent took
govern, and whose determination is a political question by now her oath of office a few minutes past 12 oclock in the afternoon of
arguing that whether one is a de jure or de facto President is January 20. Before the oath-taking, Senate President Pimentel, Jr.
a judicial question. Petitioners change of theory, ill disguised as and Speaker Fuentebella had prepared a Joint Statement which
it is, does not at all impress. The cases at bar do not present states : 31
the general issue of whether the respondent Arroyo is the de
jure or a de facto President. Specific issues were raised to the Joint Statement of Support
Court for resolution and we ruled on an issue by issue basis. and Recognition from the
On the issue of resignation under section 8, Article VII of the Senate President and the Speaker
Constitution, we held that the issue is legal and ruled that Of the House of Representatives
petitioner has resigned from office before respondent Arroyo took
her oath as President. On the issue of inability to govern under We, the elected leaders of the Senate and the House of
section 11, Article VII of the Constitution, we held that the Representatives, are called upon to address the constitutional crisis
Congress has the ultimate authority to determine the question as affecting the authority of the President to effectively govern our
opined by the petitioner himself and that the determination of distressed nation. We understand that the Supreme Court at that
Congress is a political judgment which this Court cannot time is issuing an en banc resolution recognizing this political
review. Petitioner cannot blur these specific rulings by the reality. While we may differ on the means to effect a change of
generalization that whether one is a de jure or de facto leadership, we however, cannot be indifferent and must act
President is a judicial question. resolutely. Thus, in line with our sworn duty to represent our
people and in pursuit of our goals for peace and prosperity
Petitioner now appears to fault Congress for its various acts to all, we, the Senate President and the Speaker of the
expressed thru resolutions which brushed off his temporary House of Representatives, hereby declare our support and
inability to govern and President-on-leave argument . He recognition to the constitutional successor to the
asserts that these acts of Congress should not be accorded any Presidency. We similarly call on all sectors to close ranks despite
legal significance because: (1) they are post facto and (2) a our political differences : May God bless our nation in this period of
declaration of presidential incapacity cannot be implied. new beginnings.

We disagree. There is nothing in section 11 of Article VII of the Mabuhay and Pilipinas at ang mamamayang Pilipino.
Constitution which states that the declaration by Congress of the
Presidents inability must always be a priori or before the Vice- (Sgd.) AQUILINO PIMENTEL, JR.
President assumes the presidency. In the cases at bar, special Senate President
consideration should be given to the fact that the events which led
to the resignation of the petitioner happened at express speed and (Sgd.) ARNULFO P. FUENTEBELLA
Speaker of the House of Representatives
This a priori recognition by the President of the Senate and the and the Speaker of the House of Representatives his written
Speaker of the House of Representatives of respondent Arroyo as declaration that he is unable to discharge the powers and duties of
the constitutional successor to the presidency was followed post his office. In each case, the Constitution specifies the body
facto by various resolutions of the Senate and the House, in effect, that will resolve the issues that may arise from the
confirming this recognition. Thus, Resolution No. 176 expressed x x contingency. In case of election contest, section 4, Article VII
x the support of the House of Representatives to the assumption provides that the contests shall be resolved by this Court sitting en
into office by Vice-President Gloria Macapagal-Arroyo as President banc. In case of resignation of the President, it is not disputed that
of the Republic of the Philippines, extending its congratulations and this Court has jurisdiction to decide the issue. In case of inability to
expressing its support for her administration as a partner in the govern, section 11 of Article VII gives the Congress the power to
attainment of the nations goal under the Constitution. 32 Resolution adjudge the issue and petitioner himself submitted this thesis
No. 82 of the Senate and Resolution No. 178 of the House of which was shared by this Court. In light of these clear provisions of
Representatives both confirmed the nomination of then Senator the Constitution, it is inappropriate, to say the least, for petitioner
Teofisto Guingona, Jr., as Vice-President. 33 It also passed to make inferences that simply distort their meanings.
Resolution No. 83 declaring the impeachment court functus
officio. 34 Both Houses sent bills to respondent Arroyo to be signed IV

by her into law as President of the Philippines. 35 These acts of

Congress, a priori and post facto, cannot be dismissed as Impeachment and Absolute Immunity

merely implied recognitions of respondent Arroyo, as the

President of the Republic. Petitioners insistence that respondent
Petitioner contends that this Court disregarded section 3 (7) of
Arroyo is just a de facto President because said acts of Congress x
Article XI of the Constitution which provides:
x x are mere circumstances of acquiescence calculated to induce
people to submit to respondents exercise of the powers of the
presidency 36 is a guesswork far divorced from reality to deserve (7) Judgment in cases of impeachment shall not extend further
further discussion. than removal from office and disqualification to hold any office
under the Republic of the Philippines, but the party convicted
should nevertheless be liable and subject to prosecution, trial and
Similarly way off the mark is petitioners point that while the
punishment according to law.
Constitution has made Congress the national board of canvassers
for presidential and vice-presidential elections, this Honorable
Court nonetheless remains the sole judge in presidential and vice Petitioner reiterates the argument that he must be first
presidential contests. 37 He thus postulates that such constitutional convicted in the impeachment proceedings before he could be
provision 38 is indicative of the desire of the sovereign people to criminally prosecuted. A plain reading of the provision will not yield
keep out of the hands of Congress questions as to the legality of a this conclusion. The provision conveys two uncomplicated
persons claim to the presidential office. 39 Suffice to state that ideas: first, it tells us that judgment in impeachment cases has
the inference is illogical. Indeed, there is no room to resort to a limited reach. . .i.e., it cannot extend further than removal
inference. The Constitution clearly sets out the structure on how from office and disqualification to hold any office under the
vacancies and election contest in the office of the President shall be Republic of the Philippines, and second, it tells us
decided. Thus, section 7 of Article VII covers the instance when the consequence of the limited reach of a judgment in
(a) the President-elect fails to qualify, (b) if a President shall not impeachment proceedings considering its nature, i.e., that the
have been chosen and (c) if at the beginning of the term of the party convicted shall still be liable and subject to prosecution, trial
President, the President-elect shall have died or shall have become and punishment according to law. No amount of manipulation will
permanently disabled. Section 8 of Article VII covers the justify petitioners non sequitur submission that the provision
situation of the death, permanent disability, removal from office or requires that his conviction in the impeachment proceedings is a
resignation of the President. Section 11 of Article VII covers the condition sine qua non to his prosecution, trial and punishment
case where the President transmits to the President of the Senate
for the offenses he is now facing before the respondent accused. 43 Assuming arguendo that the first four requisites of
Ombudsman. double jeopardy were complied with, petitioner failed to satisfy the
fifth requisite for he was not acquitted nor was the
Petitioner contends that the private and public prosecutors walk impeachment proceeding dismissed without his express
out from the impeachment proceedings should be consent. Petitioners claim of double jeopardy cannot be predicated
considered failure to prosecute on the part of the public and on prior conviction for he was not convicted by the impeachment
private prosecutors, and the termination of the case by the Senate court. At best, his claim of previous acquittal may be scrutinized in
is equivalent to acquittal. 40 He explains failure to prosecute as light of a violation of his right to speedy trial, which amounts to a
the failure of the prosecution to prove the case, hence dismissal on failure to prosecute. As Bernas points out, a failure to prosecute,
such grounds is a dismissal on the merits. 41 He then concludes which is what happens when the accused is not given a speedy
that dismissal of a case for failure to prosecute amounts to an trial, means failure of the prosecution to prove the case. Hence,
acquittal for purposes of applying the rule against double dismissal on such grounds is a dismissal on the
jeopardy. 42cräläwvirtualibräry merits. 44cräläwvirtualibräry

Without ruling on the nature of impeachment proceedings, This Court held in Esmea v. Pogoy 45, viz:
we reject petitioners submission.
If the defendant wants to exercise his constitutional right to a
The records will show that the prosecutors walked out in speedy trial, he should ask, not for the dismissal, but for the trial of
the January 16, 2001 hearing of the impeachment cases when by the case. After the prosecutions motion for postponement of the
a vote of 11-10, the Senator-judges refused to open the second trial is denied and upon order of the court the fiscal does not or
envelope allegedly containing the P3.3 billion deposit of the cannot produce his evidence and, consequently fails to prove the
petitioner in a secret bank account under the name Jose Velarde. defendants guilt, the court upon defendants motion shall dismiss
The next day, January 17, the public prosecutors submitted a the case, such dismissall amounting to an acquittal of the
letter to the Speaker of the House tendering defendant.
their resignation. They also filed their Manifestation of
Withdrawal of Appearance with the impeachment tribunal. In a more recent case, this Court held:
Senator Raul Roco immediately moved for the indefinite
suspension of the impeachment proceedings until the House of It is true that in an unbroken line of cases, we have held that the
Representatives shall have resolved the resignation of the dismissal of cases on the ground of failure to prosecute is
public prosecutors. The Roco motion was then granted by Chief equivalent to an acquittal that would bar further prosecution of the
Justice Davide, Jr. Before the House could resolve the issue of accused for the same offense. It must be stressed, however, that
resignation of its prosecutors or on January 20, 2001,petitioner these dismissals were predicated on the clear right of the accused
relinquished the presidency and respondent Arroyo took her oath to speedy trial. These cases are not applicable to the petition at
as President of the Republic. Thus, on February 7, 2001,the bench considering that the right of the private respondents to
Senate passed Resolution No. 83 declaring that the impeachment speedy trial has not been violated by the State. For this reason,
court is functus officio. private respondents cannot invoke their right against double
jeopardy.46cräläwvirtualibräry
Prescinding from these facts, petitioner cannot invoke
double jeopardy. Double jeopardy attaches only: (1) upon a valid Petitioner did not move for the dismissal of the
complaint; (2) before a competent court; (3) after arraignment; impeachment case against him. Even assuming arguendo that
(4) when a valid plea has been entered; and (5) when the there was a move for its dismissal, not every invocation of an
defendant was acquitted or convicted or the case was dismissed or accuseds right to speedy trial is meritorious. While the Court
otherwise terminated without the express consent of the accords due importance to an accuseds right to a speedy trial and
adheres to a policy of speedy administration of justice, this right consent of the accused. We reiterate that the impeachment
cannot be invoked loosely. Unjustified postponements which proceeding was closed only after the petitioner had resigned from
prolong the trial for an unreasonable length of time are what offend the presidency, thereby rendering the impeachment court functus
the right of the accused to speedy trial. 47 The following provisions officio. By resigning from the presidency, petitioner more than
of the Revised Rules of Criminal Procedure are apropos: consented to the termination of the impeachmment case against
him, for he brought about the termination of the impeachment
Rule 115, Section 1(h). Rights of accused at the trial. -- In all proceedings. We have consistently ruled that when the dismissal or
criminal prosecutions, the accused shall be entitled to the following termination of the case is made at the instance of the accused,
rights: there is no double jeopardy. 48cräläwvirtualibräry

(h) To have speedy, impartial and public trial. Petitioner stubbornly clings to the contention that he is entitled
to absolute immunity from suit. His arguments are merely
Rule 119, Section 2. Continuous trial until terminated; recycled and we need not prolong the longevity of the debate on
postponements.-- Trial once commenced shall continue from day to the subject. In our Decision, we exhaustively traced the origin of
day as far as practicable until terminated. It may be postponed for executive immunity in our jurisdiction and its bends and turns up
a reasonable length of time for good cause. to the present time. We held that given the intent of the 1987
Constitution to breathe life to the policy that a public office is a
public trust, the petitioner, as a non-sitting President, cannot
The court shall, after consultation with the prosecutor and defense
claim executive immunity for his alleged criminal acts
counsel, set the case for continuous trial on a weekly or other
committed while a sitting President. Petitioners rehashed
short-term trial calendar at the earliest possible time so as to
arguments including their thinly disguised new spins are based on
ensure speedy trial. In no case shall the entire trial period exceed
the rejected contention that he is still President, albeit, a President
one hundred eighty (180) days from the first day of trial, except as
on leave. His stance that his immunity covers his entire term of
otherwise authorized by the Supreme Court.
office or until June 30, 2004 disregards the reality that he has
relinquished the presidency and there is now a new de
Petitioner therefore failed to show that the postponement of jure President.
the impeachment proceedings was unjustified, much less
that it was for an unreasonable length of time. Recalling the
Petitioner goes a step further and avers that even a non-sitting
facts, on January 17, 2001, the impeachment proceeding was
President enjoys immunity from suit during his term of office. He
suspended until the House of Representatives shall have resolved
buttresses his position with the deliberations of the Constitutional
the issue on the resignation of the public prosecutors. This was
Commission, viz:
justified and understandable for an impeachment proceeding
without a panel of prosecutors is a mockery of the impeachment
process. However, three (3) days from the suspension or January Mr. Suarez. Thank you.
20, 2001, petitioners resignation supervened. With the sudden turn
of events, the impeachment court became functus officio and the The last question is with reference to the Committees omitting in
proceedings were therefore terminated. By no stretch of the the draft proposal the immunity provision for the President. I agree
imagination can the four-day period from the time the with Commissioner Nolledo that the Committee did very well in
impeachment proceeding was suspended to the day petitioner striking out this second sentence, at the very least, of the original
resigned, constitute an unreasonable period of delay violative of provision on immunity from suit under the 1973 Constitution. But
the right of the accused to speedy trial. would the Committee members not agree to a restoration of at
least the first sentence that the President shall be immune from
Nor can the claim of double jeopardy be grounded on the suit during his tenure, considering that if we do not provide him
dismissal or termination of the case without the express that kind of an immunity, he might be spending all his time facing
litigations, as the President-in-exile in Hawaii is now facing petitioners claim of prejudicial publicity. Unconvinced, petitioner
litigations almost daily? alleges that the vivid narration of events in our Decision itself
proves the pervasiveness of the prejudicial publicity. He then posits
Fr. Bernas: The reason for the omission is that we consider it the thesis that doubtless, the national fixation with the probable
understood in present jurisprudence that during his tenure he is guilt of petitioner fueled by the hate campaign launched by some
immune from suit. high circulation newspaper and by the bully pulpit of priests and
bishops left indelible impression on all sectors of the citizenry
Mr. Suarez: So there is no need to express it here. and all regions, so harsh and so pervasive that the prosecution and
the judiciary can no longer assure petitioner a sporting
chance. 51 To be sure, petitioner engages in exageration when he
Fr. Bernas: There is no need. It was that way before. The only
alleges that all sectors of the citizenry and all regions have been
innovation made by the 1973 Constitution was to make that
irrevocably influenced by this barrage of prejudicial publicity. This
explicit and to add other things.
exaggeration collides with petitioners claim that he still
enjoys the support of the majority of our people, especially
Mr. Suarez; On the understanding, I will not press for any more the masses.
query, madam President.
Petitioner pleads that we apply the doctrine of res ipsa
I thank the Commissioner for the clarification.49cräläwvirtualibräry loquitur (the thing or the transaction speaks for itself) to support
his argument. Under the res ipsa loquitur rule in its broad sense,
Petitioner, however, fails to distinguish between term and the fact of the occurrence of an injury, taken with the surrounding
tenure. The term means the time during which the officer may circumstances, may permit an inference or raise a presumption of
claim to hold the office as of right, and fixes the interval after negligence, or make out a plaintiffs prima facie case, and present a
which the several incumbents shall succeed one another. The question of fact for defendant to meet with an explanation. 52 It is
tenure represents the term during which the incumbent actually not a rule of substantive law but more a procedural rule. Its mere
holds office. The tenure may be shorter than the term for reasons invocation does not exempt the plaintiff with the requirement of
within or beyond the power of the incumbent. 50 From the proof to prove negligence. It merely allows the plaintiff to present
deliberations, the intent of the framers is clear that the along with the proof of the accident, enough of the attending
immunity of the president from suit is concurrent only with circumstances to invoke the doctrine, creating an inference or
his tenure and not his term. presumption of negligence and to thereby place on the defendant
the burden of going forward with the proof. 53cräläwvirtualibräry
Indeed, petitioners stubborn stance cannot but bolster the belief
that the cases at bar were filed not really for petitioner to reclaim We hold that it is inappropriate to apply the rule on res ipsa
the presidency but just to take advantage of the immunity attached loquitur, a rule usually applied only in tort cases, to the cases at
to the presidency and thus, derail the investigation of the criminal bar. Indeed, there is no court in the whole world that has
cases pending against him in the Office of the Ombudsman. applied the res ipsa loquitur rule to resolve the issue of
prejudicial publicity. We again stress that the issue before us is
V
whether the alleged pervasive publicity of the cases against the
petitioner has prejudiced the minds of the members of the panel of
Prejudicial Publicity on the Ombudsman
investigators. We reiterate the test we laid down in People v.
Teehankee, 54 to resolve this issue, viz:
Petitioner hangs tough on his submission that his due process
rights to a fair trial have been prejudiced by pre-trial publicity. In We cannot sustain appellants claim that he was denied the right to
our Decision, we held that there is not enough evidence to sustain impartial trial due to prejudicial publicity. It is true that the print
and broadcast media gave the case at bar pervasive publicity, just publicity which is incapable of change even by evidence presented
like all high profile and high stake criminal trials. Then and now, during the trial. Appellant has the burden to prove this actual bias
we rule that the right of an accused to a fair trial is not and he has not discharged the burden.
incompatible to a free press. To be sure, responsible reporting
enhances an accuseds right to a fair trial for, as well pointed out , a Petitioner keeps on pounding on the adverse publicity
responsible press has always been regarded as the handmaiden of against him but fails to prove how the impartiality of the
effective judicial administration, especially in the criminal field x x panel of investigators from the Office of the Ombudsman
x. The press does not simply publish information about trials but has been infected by it. As we held before and we hold it
guards against the miscarriage of justice by subjecting the police, again, petitioner has completely failed to adduce any proof
prosecutors, and judicial processes to extensive public scrutiny and of actual prejudice developed by the members of the Panel of
criticism. Investigators. This fact must be established by clear and
convincing evidence and cannot be left to loose surmises and
Pervasive publicity is not per se prejudicial to the right of an conjectures. In fact, petitioner did not even identify the members
accused to fair trial. The mere fact that the trial of appellant was of the Panel of Investigators. We cannot replace this test of actual
given a day-to-day, gavel-to-gavel coverage does not by itself prejudice with the rule of res ipsa loquitur as suggested by the
prove that the publicity so permeated the mind of the trial judge petitioner. The latter rule assumes that an injury (i.e., prejudicial
and impaired his impartiality. For one, it is impossible to seal the publicity) has been suffered and then shifts the burden to the panel
minds of members of the bench from pre-trial and other off-court of investigators to prove that the impartiality of its members has
publicity of sensational criminal cases. The state of the art of our been affected by said publicity. Such a rule will overturn our case
communication system brings news as hey happen straight to our law that pervasive publicity is not per se prejudicial to the right of
breakfast tables and right to our bedrooms. These news form part an accused to fair trial. The cases are not wanting where an
of our everyday menu of the facts and fictions of life. For another, accused has been acquitted despite pervasive publicity. 55 For this
our idea of a fair and impartial judge is not that of a hermit who is reason, we continue to hold that it is not enough for petitioner
out of touch with the world. We have not installed the jury system to conjure possibility of prejudice but must prove actual
whose members are overly protected from publicity lest they lost prejudice on the part of his investigators for the Court to sustain
their impartiality. x x x . Our judges are learned in the law and his plea. It is plain that petitioner has failed to do so.
trained to disregard off-court evidence and on-camera
performances of parties to a litigation. Their mere exposure to Petitioner agains suggests that the Court should order a 2-month
publications and publicity stunts does not per se fatally infect their cooling off period to allow passions to subside and hopefully the
impartiality. alleged prejudicial publicity against him would die down. We regret
not to acquiesce to the proposal. There is no assurance that the so
At best, appellant can only conjure possibility of prejudice on the called 2-month cooling off period will achieve its purpose. The
part of the trial judge due to the barrage of publicity that investigation of the petitioner is a natural media event. It is the
characterized the investigation and trial of the case. In Martelino, first time in our history that a President will be investigated by the
et al. v. Alejandro, et al., we rejected this standard of possibility of Office of the Ombudsman for alleged commission of heinous crimes
prejudice and adopted the test of actual prejudice as we ruled that while a sitting President. His investigation will even be monitored
to warrant a finding of prejudicial publicity, there must be by the foreign press all over the world in view of its legal and
allegation and proof that the judges have been unduly influenced, historic significance. In other words, petitioner cannot avoid the
not simply that they might be, by the barrage of publicity. In the kleiglight of publicity. But what is important for the petitioner
case at bar, the records do not show that the trial judge is that his constitutional rights are not violated in the
developed actual bias against appellant as a consequence of the process of investigation. For this reason, we have warned the
extensive media coverage of the pre-trial and trial of his case. respondent Ombudsman in our Decision to conduct petitioners
The totality of circumstances of the case does not prove that the preliminary investigation in a circus-free atmosphere. Petitioner is
trial judge acquired a fixed opinion as a result of prejudicial
represented by brilliant legal minds who can protect his right as an the Court did not treat the letter of respondent Arroyo to be
accused. administered the oath by Chief Justice Davide, Jr., as a case but as
an administrativematter. If it were considered as a case, then
VI petitioner has reason to fear that the Court has
predetermined the legitimacy of the claim of respondent
Recusation Arroyo to the presidency. To dispel the erroneous notion,
the Court precisely treated the letter as an administrative
matter and emphasized that it was without prejudice to the
Finally, petitioner prays that the members of this Honorable Court
disposition of any justiciable case that may be filed by a
who went to EDSA put on record who they were and consider
proper party. In further clarification, the Court on February 20,
recusing or inhibiting themselves, particularly those who had ex-
2001 issued another resolution to inform the parties and the
parte contacts with those exerting pressure on this Honorable
public that it xxx did not issue a resolution on January 20, 2001
Court, as mentioned in our Motion of March 9, 2001, given the
declaring the office of the President vacant and that neither did the
need for the cold neutrality of impartial
Chief Justice issue a press statement justifying the alleged
judges. 56cräläwvirtualibräry
resolution. Thus, there is no reason for petitioner to request
for the said twelve (12) justices to recuse themselves. To be
We hold that the prayer lacks merit. There is no ground to sure, a motion to inhibit filed by a party after losing his case
inhibit the twelve (12) members of the Court who merely accepted is suspect and is regarded with general disfavor.
the invitation of the respondent Arroyo to attend her oath taking.
As mere spectators of a historic event, said members of the
Moreover, to disqualify any of the members of the Court,
Court did not prejudge the legal basis of the claim of respondent
particularly a majority of them, is nothing short of pro
Arroyo to the presidency at the time she took her oath. Indeed, the
tanto depriving the Court itself of its jurisdiction as established by
Court in its en banc resolution on January 22, 2001, the first
the fundamental law. Disqualification of a judge is a deprivation of
working day after respondent Arroyo took her oath as President,
his judicial power. And if that judge is the one designated by the
held in Administrative Matter No. 01-1-05 SC, to wit:
Constitution to exercise the jurisdiction of his court, as is the case
with the Justices of this Court, the deprivation of his or their
A.M. No. 01-1-05-SC In re: Request for Vice President Gloria judicial power is equivalent to the deprivation of the judicial power
Macapagal-Arroyo to Take Her Oath of Office as President of the of the court itself. It affects the very heart of judicial
Republic of the Philippines before the Chief Justice Acting on the independence. 57 The proposed mass disqualification, if sanctioned
urgent request of Vice President Gloria Macapagal-Arroyo to be and ordered, would leave the Court no alternative but to abandon a
sworn in as President of the Republic of the Philippines, addressed duty which it cannot lawfully discharge if shorn of the participation
to the Chief Justice and confirmed by a letter to the Court, dated of its entire membership of Justices. 58cräläwvirtualibräry
January 20, 2001, which request was treated as an administrative
matter, the court Resolved unanimously to confirm the authority
IN VIEW WHEREOF, petitioners Motion for Reconsideration in
given by the twelve (12) members of the Court then present to the
G.R. Nos. 146710-15 and his Omnibus Motion in G.R. No. 146738
Chief Justice on January 20, 2001 to administer the oath of office
are DENIED for lack of merit.
to Vice President Gloria Macapagal-Arroyo as President of the
Philippines, at noon of January 20, 2001.
SO ORDERED.
This resolution is without prejudice to the disposition of any
justiciable case that may be filed by a proper party. Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes,
and De Leon, Jr., JJ., concur.
The above resolution was unanimously passed by the 15
members of the Court. It should be clear from the resolution that
Davide, Jr., C.J., no part for reason given in open court and 1. POLITICAL LAW; CONSTITUTION; DEFINED. — A constitution is
in the extended explanation. a system of fundamental laws for the governance and
administration of a nation. It is supreme, imperious, absolute and
Vitug, J., see separate concurring opinion. unalterable except by the authority from which it emanates. It has
been defined as the fundamental and paramount law of the nation.
Mendoza, J., see concurring opinion. It prescribes the permanent framework of a system of government,
assigns to the different departments their respective powers and
duties, and establishes certain fixed principles on which
Kapunan, J., concurs on the result but strongly reiterate my
government is founded. The fundamental conception in other
separate opinion in the case.
words is that it is a supreme law to which all other laws must
conform and in accordance with which all private rights must be
Ynares-Santiago, J., concurs in the result but maintains determined and all public authority administered.
separate opinion in the main Decision.
2. ID.; ID.; DEEMED WRITTEN IN EVERY STATUTE AND
Sandoval-Gutierrez, J., concurs in the result subject to CONTRACT. — Under the doctrine of constitutional supremacy, if a
separate opinion in the main Decision. law or contract violates any norm of the constitution that law or
contract whether promulgated by the legislative or by the
Panganiban, J., no part see Extended Explanation of executive branch or entered into by private persons for private
Inhibition prom. on March 8, 2001. purposes is null and void and without any force and effect. Thus,
since the Constitution is the fundamental, paramount and supreme
law of the nation, it is deemed written in every statute and
contract. Adhering to the doctrine of constitutional supremacy, the
subject constitutional provision is, as it should be, impliedly written
in the bidding rules issued by respondent GSIS, lest the bidding
rules be nullified for being violative of the Constitution. It is a basic
principle in constitutional law that all laws and contracts must
conform with the fundamental law of the land. Those which violate
the Constitution lose their reason for being.

3. ID.; ID.; CONSIDERED SELF-EXECUTING RATHER THAN NON-

SELF-EXECUTING. — In case of doubt, the Constitution should be
EN BANC
considered self-executing rather than non-self-executing . . .
Unless the contrary is clearly intended, the provisions of the
[G.R. No. 122156. February 3, 1997.]
Constitution should be considered self-executing, as a contrary rule
would give the legislature discretion to determine when, or
MANILA PRINCE HOTEL, Petitioner, v. GOVERNMENT
whether, they shall be effective. These provisions would be
SERVICE INSURANCE SYSTEM, MANILA HOTEL
subordinated to the will of the lawmaking body, which could make
CORPORATION, COMMITTEE ON PRIVATIZATION and
them entirely meaningless by simply refusing to pass the needed
OFFICE OF THE GOVERNMENT CORPORATE
implementing statute. (Cruz, Isagani A., Constitutional Law, 1993
COUNSEL, Respondents.
ed., pp. 8-10)

4. ID.; ID.; SELF-EXECUTING PROVISIONS; LEGISLATURE NOT

SYLLABUS
PRECLUDED FROM ENACTING LAWS ENFORCING PROVISIONS. —
Quite apparently, Sec. 10, second par., of Art. XII is couched in
such a way as not to make it appear that it is non-self-executing shall give preference to qualified Filipinos, it means just that —
but simply for purposes of style. But, certainly, the legislature is qualified Filipinos shall be preferred. And when our Constitution
not precluded from enacting further laws to enforce the declares that a right exists in certain specified circumstances an
constitutional provision so long as the contemplated statute action may be maintained to enforce such right notwithstanding
squares with the Constitution. Minor details may be left to the the absence of any legislation on the subject; consequently, if
legislature without the self-executing nature of constitutional there is no statute especially enacted to enforce such constitutional
provisions. The omission from a constitution of any express right, such right enforces itself by its own inherent potency and
provision for a remedy for enforcing a right or liability is not puissance and from which all legislations must take their bearings.
necessarily an indication that it was not intended to be self- Where there is a right there is a remedy. Ubi jus ibi remedium.
executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the 7. ID.; ID.; ID.; INCLUDES THE NATIONAL, RESOURCES AND
subject, but any legislation must be in harmony with the CULTURAL, HERITAGE. — When the Constitution speaks of national
constitution, further the exercise of constitutional right and make it patrimony, it refers not only to the natural resources of the
more available. Subsequent legislation however does not Philippines, as the Constitution could have very well used the term
necessarily mean that the subject constitutional provision is not, by natural resources, but also to the cultural heritage of the Filipinos.
itself, fully enforceable.
8. ID.; ID.; ID.; MANILA HOTEL CORPORATION, EMBRACED
5. ID.; ID.; ID.; A PROVISION MAY BE SELF-EXECUTING IN ONE THEREIN; FILIPINO FIRST POLICY PROVISION, APPLICABLE IN
PART AND NON-SELF-EXECUTING IN ANOTHER. — Respondents SALES OF HOTEL STOCKS. — For more than eight (8) decades
also argue that the non-self-executing nature of Sec. 10, second Manila Hotel has bore mute witness to the triumphs and failures,
par., of Art. XII is implied from the tenor of the first and third loves and frustrations of the Filipinos; its existence is impressed
paragraphs of the same section which undoubtedly are not self- with public interest; its own historicity associated with our struggle
executing. The argument is flawed. If the first and third paragraphs for sovereignty, independence and nationhood. Verily, Manila Hotel
are not self-executing because Congress is still to enact measures has become part of our national economy and patrimony. For sure,
to encourage the formation and operation of enterprises fully 51% of the equity of the MHC comes within the purview of the
owned by Filipinos, as in the first paragraph, and the State still constitutional shelter for it comprises the majority and controlling
needs legislation to regulate and exercise authority over foreign stock, so that anyone who acquires or owns the 51% will have
investments within its national jurisdiction, as in the third actual control and management of the hotel. In this instance, 51%
paragraph, then a fortiori, by the same logic, the second paragraph of the MHC cannot be disassociated from the hotel and the land on
can only be self-executing as it does not by its language require which the hotel edifice stands. Consequently, we cannot sustain
any legislation in order to give preference to qualified Filipinos in respondents’ claim that the Filipino First Policy provision is not
the grant of rights, privileges and concessions covering the national applicable since what is being sold is only 51% of the outstanding
economy and patrimony. A constitutional provision may be self- shares of the corporation, not the Hotel building nor the land upon
executing in one part and non-self-executing in another. which the building stands.

6. ID.; ID.; NATIONAL PATRIMONY; PROVISION ON PREFERENCE 9. ID.; STATE; SALE BY THE GSIS OF 51% OF ITS SHARE IN
TO QUALIFIED FILIPINOS, SELF-EXECUTING. — Sec. 10, second MANILA HOTEL CORP., A STATE ACTION, SUBJECT TO
par., Art. XII of the 1987 Constitution is a mandatory, positive CONSTITUTIONAL COMMAND. — In constitutional jurisprudence,
command which is complete in itself and which needs no further the acts of persons distinct from the government are considered
guidelines or implementing laws or rules for its enforcement. From "state action" covered by the Constitution (1) when the activity it
its very words the provision does not require any legislation to put engages in is a" public function", (2) when the government is so-
it in operation. It is per se judicially enforceable. When our significantly involved with the private actor as to make the
Constitution mandates that [i]n the grant of rights, privileges, and government responsible for his action; and. (3) when the
concessions covering national economy and patrimony, the State government has approved or authorized the action. It is evident
that the act of respondent GSIS in selling 51% of its share in the bidding because of the constitutional mandate, petitioner had
respondent MHC comes under the second and third categories of not yet matched the bid offered by Renong Berhad. Thus it did not
"state action." Without doubt therefore the transaction, although have the right or personality then to compel respondent GSIS to
entered into by respondent GSIS, is in fact a transaction of the accept its earlier bid. Rightly, only after it had matched the bid of
State and therefore subject to the constitutional command. the foreign firm and the apparent disregard by respondent GSIS of
petitioner’s matching bid did the latter have a cause of action.
10. ID.; CONSTITUTION; WHEN THE CONSTITUTION ADDRESSES
THE STATE, IT REFERS TO BOTH PEOPLE AND GOVERNMENT. — 13. ID.; SPECIAL CIVIL ACTION, CERTIORARI; FAILURE OF THE
When the Constitution addresses the State it refers not only to the GSIS TO EXECUTE CORRESPONDING DOCUMENTS WHERE
people but also to the government as elements of the State. After PETITIONER HAD MATCHED THE BID PRICE BY FOREIGN BIDDER,
all, government is composed of three (3) divisions of power — A GRAVE ABUSE OF DISCRETION. — Since petitioner has already
legislative, executive and judicial. Accordingly, a constitutional matched the bid price tendered by Renong Berhad pursuant to the
mandate directed to the State is correspondingly directed to the bidding rules, respondent GSIS is left with no alternative but to
three (3) branches of government. It is undeniable that in this case award to petitioner the block of shares of MHC and to execute the
the subject constitutional injunction is addressed among others to necessary agreements and documents to effect the sale in
the Executive Department and respondent GSIS, a government accordance not only with the bidding guidelines and procedures but
instrumentality deriving its authority from the State. with the Constitution as well. The refusal of respondent GSIS to
execute the corresponding documents with petitioner as provided
11. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED in the bidding rules after the latter has matched the bid of the
FILIPINOS; SALE OF STOCKS OF MANILA HOTEL CORPORATION BY Malaysian firm clearly constitutes grave abuse of discretion.
THE GSIS; FILIPINOS ALLOWED TO MATCH THE BID OF FOREIGN
ENTITY. — In the instant case, where a foreign firm submits the 14. ID.; SUPREME COURT; DUTY BOUND TO MAKE SURE THAT
highest bid in a public bidding concerning the grant of rights, CONTRACTS DO NOT VIOLATE THE CONSTITUTION OR THE LAWS.
privileges and concessions covering the national economy and — While it is no business of the Court to intervene in contracts of
patrimony, thereby exceeding the bid of a Filipino, there is no the kind referred to or set itself up as the judge of whether they
question that the Filipino will have to be allowed to match the bid are viable or attainable, it is its bounden duty to make sure that
of the foreign entity. And if the Filipino matches the bid of a foreign they do not violate the Constitution or the laws, or are not adopted
firm the award should go to the Filipino. It must be so if we are to or implemented with grave abuse of discretion amounting to lack
give life and meaning to the Filipino First Policy provision of the or excess of jurisdiction. It will never shirk that duty, no matter
1987 Constitution. For, while this may neither be expressly stated how buffeted by winds of unfair and ill-informed criticism. Indeed,
nor contemplated in the bidding rules, the constitutional fiat is the Court will always defer to the Constitution in the proper
omnipresent to be simply disregarded. To ignore it would be to governance of a free society; after all, there is nothing so
sanction a perilous skirting of the basic law. sacrosanct in any economic policy as to draw itself beyond judicial
review when the Constitution is involved.
12. REMEDIAL LAW; ACTIONS; FOREIGN BIDDERS WITHOUT
CAUSE OF ACTION AGAINST GSIS BEFORE ACCEPTANCE OF BID. PADILLA, J., concurring opinion:chanrob1es virtual 1aw library
— The argument of respondents that petitioner is now estopped
from questioning the sale to Renong Berhad since petitioner was 1. POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION,
well aware from the beginning that a foreigner could participate in CONSTRUED. — A study of the 1935 Constitution, where the
the bidding is meritless. Undoubtedly, Filipinos and foreigners alike concept of "national patrimony" originated, would show that its
were invited to the bidding. But foreigners may be awarded the framers decided to adopt the even more comprehensive expression
sale only if no Filipino qualifies, or if the qualified Filipino fails to "Patrimony of the Nation" in the belief that the phrase encircles a
match the highest bid tendered by the foreign entity. In the case concept embracing not only the natural resources of the country
before us, while petitioner was already preferred at the inception of but practically everything that belongs to the Filipino people, the
tangible and the material as well as the intangible and the spiritual and even attractive for foreign investors to come to our shores, yet
assets and possessions of the people. It is to be noted that the we should not preclude ourselves from reserving to us Filipinos
framers did not stop with conservation. They knew that certain areas where our national identity, culture and heritage are
conservation alone does not spell progress; and that this may be involved. In the hotel industry, for instance, foreign investors have
achieved only through development as a correlative factor to established themselves creditably, such as in the Shangri-La, the
assure to the people not only the exclusive ownership, but also the Nikko, the Peninsula, and Mandarin Hotels. This should not stop us
exclusive benefits of their national patrimony. Moreover, the from retaining 51% of the capital stock of the Manila Hotel
concept of national patrimony has been viewed as referring not Corporation in the hands of Filipinos. This would be in keeping with
only to our rich natural resources but also to the cultural heritage the intent of the Filipino people to preserve our national patrimony,
of our race. There is no doubt in my mind that the Manila Hotel is including our historical and cultural heritage in the hands of
very much a part of our national patrimony and, as such deserves Filipinos.
constitutional protection as to who shall own it and benefit from its
operation. This institution has played an important role in our VITUG, J., separate opinion:chanrob1es virtual 1aw library
nation’s history, having been the venue of many a historical event,
and serving as it did, and as it does, as the Philippine Guest House 1. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY;
for visiting foreign heads of state, dignitaries, celebrities, and PROVISION GIVING PREFERENCE TO QUALIFIED FILIPINOS, SELF-
others. EXECUTORY. — The provision in our fundamental law which
provides that" (i)n the grant of rights, privileges, and concessions
2. ID.; ID.; MANILA HOTEL, PART OF OUR NATIONAL PATRIMONY. covering the national economy and patrimony, the State shall give
— There is no doubt in my mind that the Manila Hotel is very much preference to qualified Filipinos" is self-executory. The provision
a part of our national patrimony and, as such, deserves verily does not need, although it can obviously be amplified or
constitutional protection as to who shall own it and benefit from its regulated by, an enabling law or a set of rules.
operation. This institution has played an important role in our
nation’s history, having been the venue of many a historical event, 2. ID.; ID.; ID.; PATRIMONY INCLUDES CULTURAL HERITAGE OF
and serving as it did, and as it does, as the Philippine Guest House THE COUNTRY; MANILA HOTEL, EMBRACED THEREIN. — The term
for visiting foreign heads of state, dignitaries. celebrities, and "patrimony" does not merely refer to the country’s natural
others. resources but also to its cultural heritage. A "historical landmark,"
to use the words of Mr. Justice Justo P. Torres, Jr., Manila Hotel
3. ID.; ID.; PREFERENCE TO QUALIFIED FILIPINOS; APPLIED TO has now indeed become part of Philippine heritage.
SALES OF SHARE OF STOCKS OF MANILA HOTEL. — "Preference to
qualified Filipinos," to be meaningful, must refer not only to things 3. ADMINISTRATIVE LAW; GOVERNMENT SERVICE INSURANCE
that are peripheral, collateral, or tangential. It must touch and SYSTEM; SALE OF ITS SHARE IN MANILA HOTEL CORPORATION,
affect the very "heart of the existing order." In the field of public AN ACT OF THE STATE; CONSTITUTIONAL REQUIREMENT SHOULD
bidding in the acquisition of things that pertain to the national BE COMPLIED WITH. — The act of the Government Service
patrimony, preference to qualified Filipinos must allow a qualified Insurance System ("GSIS"), a government entity which derives its
Filipino to match or equal the higher bid of a non-Filipino, the authority from the State, in selling 51% of its share in MHC should
preference shall not operate only when the bids of the qualified be considered an act of the State subject to the Constitutional
Filipino and the non-Filipino are equal in which case, the award mandate.
should undisputedly be made to the qualified Filipino. The
Constitutional preference should give the qualified Filipino an 4. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY;
opportunity to match or equal the higher bid of the non-Filipino PREFERENCE TO QUALIFIED FILIPINOS; DOES NOT REFER TO
bidder if the preference of the qualified Filipino bidder is to be ALLOWING QUALIFIED FILIPINOS TO MATCH FOREIGN BID. — On
significant at all. While government agencies, including the courts the pivotal issue of the degree of "preference to qualified Filipinos"
should re-condition their thinking to such a trend, and make it easy I find it somewhat difficult to take the same path traversed by the
forceful reasoning of Justice Puno. In the particular case before us, SALE OF ITS STOCKS SHOULD BE LIMITED TO QUALIFIED
the only meaningful preference, it seems, would really be to allow FILIPINOS. — Section 10, Article XII of the 1987 Constitution
the qualified Filipino to match the foreign bid for, as a practical should be read in conjunction with Article II of the same
matter, I cannot see any bid that literally calls for millions of Constitution pertaining to "Declaration of Principles and State
dollars to be at par (to the last cent) with another. The magnitude Policies" which ordain — "The State shall develop a self-reliant and
of the bids is such that it becomes hardly possible for the independent national economy, effectively controlled by Filipinos."
competing bids to stand exactly "equal" which alone, under the (Sec. 19), Interestingly, the matter of giving preference to
dissenting view, could trigger the right of preference. "qualified Filipinos" was one of the highlights in the 1987
Constitution Commission proceedings. The nationalistic provisions
MENDOZA, J., separate opinion:chanrob1es virtual 1aw library of the 1987 Constitution reflect the history and spirit of the Malolos
Constitution of 1898, the 1935 Constitution and the 1973
POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; Constitution. I subscribe to the view that history, culture, heritage,
PREFERENCE TO QUALIFIED FILIPINOS; FILIPINO BIDDERS and tradition are not legislated and is the product of events,
SHOULD BE ALLOWED TO EQUAL BID OF FOREIGN FIRM IN SALE customs, usages and practices. It is actually a product of growth
OF STOCKS OF MANILA HOTEL CORPORATION. — I take the view and acceptance by the collective mores of a race. It is the spirit
that in the context of the present controversy the only way to and soul of a people. The Manila Hotel is part of our history, culture
enforce the constitutional mandate that" [i]n the grant of rights, and heritage. Every inch of the Manila Hotel is witness to historic
privileges and concessions covering the national patrimony the events (too numerous to mention) which shaped our history for
State shall give preference to qualified Filipinos" is to allow almost 84 years. The history of the Manila Hotel should not be
petitioner Philippine corporation to equal the bid of the Malaysian placed in the auction block of a purely business transaction, where
firm Renong Berhad for the purchase of the controlling shares of profit subverts the cherished historical values of our people. The
stocks in the Manila Hotel Corporation. Indeed, it is the only way a Filipino should be first under his Constitution and in his own land.
qualified Filipino or Philippine corporation can be given preference
in the enjoyment of a right, privilege or concession given by the PUNO, J., dissenting opinion:chanrob1es virtual 1aw library
State, by favoring it over a foreign national or corporation. Under
the rules on public bidding of the Government Service and 1. POLITICAL LAW; CONSTITUTION; AS A RULE PROVISIONS
Insurance System, if petitioner and the Malaysian firm had offered THEREOF ARE SELF-EXECUTING. — A Constitution provides the
the same price per share, "priority [would be given] to the bidder guiding policies and principles upon which is built the substantial
seeking the larger ownership interest in MHC," so that if petitioner foundation and general framework of the law and government. As
bid for more shares, it would be preferred to the Malaysian a rule, its provisions are deemed self-executing and can be
corporation for that reason and not because it is a Philippine enforced without further legislative action. Some of its provisions,
corporation. Consequently, it is only in cases like the present one, however, can be implemented only through appropriate laws
where an alien corporation is the highest bidder, that preferential enacted by the Legislature, hence not self-executing. Courts as a
treatment of the Philippine corporation is mandated not by rule consider the provisions of the Constitution as self-executing,
declaring it winner but by allowing it "to match the highest bid in rather than as requiring future legislation for their enforcement.
terms of price per share" before it is awarded the shares of stocks. The reason is not difficult to discern For if they are not treated as
That, to me, is what "preference to qualified Filipinos" means in the self-executing, the mandate of the fundamental law ratified by the
context of this case — by favoring Filipinos whenever they are at a sovereign people can be easily ignored and nullified by Congress.
disadvantage vis-a-vis foreigners. Suffused with wisdom of the ages is the unyielding rule that
legislative actions may give breath to constitutional rights but
TORRES, JR., J., separate opinion:chanrob1es virtual 1aw library congressional inaction should not suffocate them.

POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION; 2. ID.; ID.; PROVISIONS ARE NOT SELF-EXECUTING WHERE IT
MANILA HOTEL, EMBRACED WITHIN THE MEANING THEREOF; MERELY ANNOUNCES A POLICY AND EMPOWERS THE
LEGISLATURE TO ENACT LAWS TO CARRY THE POLICY INTO the disposition of part of our national patrimony. The records of the
EFFECT. — Contrariwise, case law lays down the rule that a Constitutional Commission show that the Commissioners
constitutional provision is not self-executing where it merely entertained the same view as to its meaning. According to
announces a policy and its language empowers the Legislature to Commissioner Nolledo, "patrimony" refers not only to our rich
prescribe the means by which the policy shall be carried into effect. natural resources but also to the cultural heritage of our race. By
this yardstick, the sale of Manila Hotel falls within the coverage of
3. ID.; ID.; FIRST PARAGRAPH OF SECTION 10, ARTICLE 12 NOT the constitutional provision giving preferential treatment to
SELF-EXECUTING. — The first paragraph directs Congress to qualified Filipinos in the grant of rights involving our national
reserve certain areas of investments in the country to Filipino patrimony.
citizens or to corporations sixty per cent of whose capital stock is
owned by Filipinos. It further commands Congress to enact laws 6. ID.; STATE; GSIS, EMBRACED WITHIN THE MEANING THEREOF.
that will encourage the formation and operation of one hundred — The third issue is whether the constitutional command to the
percent Filipino-owned enterprises. In checkered contrast, the State includes the respondent GSIS. A look at its charter will reveal
second paragraph orders the entire State to give preference to that GSIS is a government-owned and controlled corporation that
qualified Filipinos in the grant of rights and privileges covering the administers funds that come from the monthly contributions of
national economy and patrimony. The third paragraph also directs government employees and the government. The funds are held in
the State to regulate foreign investments in line with our national trust for a distinct purpose which cannot be disposed of
goals and well-set priorities. The first paragraph of Section 10 is indifferently. They are to be used to finance the retirement,
not self-executing. By its express text, there is a categorical disability and life insurance benefits of the employees and the
command for Congress to enact laws restricting foreign ownership administrative and operational expenses of the GSIS. Excess funds,
in certain areas of investments in the country and to encourage the however, are allowed to be invested in business and other ventures
formation and operation of wholly-owned Filipino enterprises. for the benefit of the employees. The GSIS is not a pure private
corporation. It is essentially a public corporation created by
4. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED Congress and granted an original charter to serve a public purpose.
FILIPINOS UNDER PARAGRAPHS 2 AND 3 OF SECTION 10, ARTICLE It is subject to the jurisdictions of the Civil Service Commission and
12, SELF-EXECUTING. — The second and third paragraphs of the Commission on Audit. As a state-owned and controlled
Section 10 are different. They are directed to the State and not to corporation, it is skin-bound to adhere to the policies spelled out in
Congress alone which is but one of the three great branches of our the Constitution especially those designed to promote the general
government. Their coverage is also broader for they cover "the welfare of the people. One of these policies is the Filipino First
national economy and patrimony" and "foreign investments within policy which the people elevated as a constitutional command.
[the] national jurisdiction" and not merely "certain areas of
investments." Beyond debate, they cannot be read as granting 7. ID.; CONSTITUTION; PROVISIONS THEREOF DEEMED
Congress the exclusive power to implement by law the policy of INCLUDED IN ALL LEGISLATIONS AND ALL STATE ACTIONS. — The
giving preference to qualified Filipinos in the conferral of rights and constitutional command to enforce the Filipino First policy is
privileges covering our national economy and patrimony. Their addressed to the State and not to Congress alone. Hence, the word
language does not suggest that any of the State agency or "laws" should not be understood as limited to legislations but all
instrumentality has the privilege to hedge or to refuse its state actions which include applicable rules and regulations
implementation for any reason whatsoever. Their duty to adopted by agencies and instrumentalities of the State in the
implement is unconditional and it is now. The second and the third exercise of their rule-making power.
paragraphs of Section 10, Article XII are thus self-executing.
8. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED
5. ID.; ID.; ID.; MANILA HOTEL CORPORATION, PART OF THE FILIPINOS; STATE NOT PROHIBITED FROM GRANTING RIGHTS TO
NATIONAL PATRIMONY. — The second issue is whether the sale of FOREIGN FIRM IN THE ABSENCE OF QUALIFIED FILIPINOS. — In
a majority of the stocks of the Manila Hotel Corporation involves the absence of qualified Filipinos, the State is not prohibited from
granting these rights, privileges and concessions to foreigners if
the act will promote the weal of the nation. POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION;
PREFERENCE TO QUALIFIED FILIPINOS; LOSING FILIPINO NOT
9. ID.; ID.; ID.; ID.; CASE AT BAR. — The right of preference of GIVEN RIGHT TO EQUAL THE HIGHEST FOREIGN BID. — The
petitioner arises only if it tied the bid of Renong Berhad. In that majority contends the Constitution should be interpreted to mean
instance, all things stand equal, and petitioner, as a qualified that, after a bidding process is concluded, the losing Filipino bidder
Filipino bidder, should be preferred. It is with deep regret that I should be given the right to equal the highest foreign bid, and thus
cannot subscribe to the view that petitioner has a right to match to win. However, the Constitution [Sec. 10 (2), Art. XII] simply
the bid of Renong Berhad. Petitioner’s submission must be states that "in the grant of rights . . . covering the national
supported by the rules but even if we examine the rules inside-out economy and patrimony, the State shall give preference to
a thousand times, they can not justify the claimed right. Under the qualified Filipinos." The majority concedes that there is no law
rules, the right to match the highest bid arises only "if for any defining the extent or degree of such preference. Specifically, no
reason, the highest bidder cannot be awarded the block of statute empowers a losing Filipino bidder to increase his bid and
shares . . ." No reason has arisen that will prevent the award to equal that of the winning foreigner. In the absence of such
Renong Berhad. It deserves the award as a matter of right for the empowering law, the majority’s strained interpretation, I
rules clearly did not give to the petitioner as a qualified Filipino the respectfully submit, constitutes unadulterated judicial legislation,
privilege to match the higher bid of a foreigner. What the rules did which makes bidding a ridiculous sham where no Filipino can lose
not grant, petitioner cannot demand. Our sympathies may be with and where no foreigner can win. Only in the Philippines! Aside from
petitioner but the court has no power to extend the latitude and being prohibited by the Constitution, such judicial legislation is
longtitude of the right of preference as defined by the rules. We are short-sighted and, viewed properly, gravely prejudicial to long-
duty-bound to respect that determination even if we differ with the term Filipino interests. In the absence of a law specifying the
wisdom of their judgment. The right they grant may be little but degree or extent of the "Filipino First" policy of the Constitution,
we must uphold the grant for as long as the right of preference is the constitutional preference for the "qualified Filipinos" may be
not denied. It is only when a State action amounts to a denial of allowed only where all the bids are equal. In this manner, we put
the right that the Court can come in and strike down the denial as the Filipino ahead without self-destructing him and without being
unconstitutional. unfair to the foreigner. In short, the Constitution mandates a
victory for the qualified Filipino only when the scores are tied. But
10. REMEDIAL LAW; ACTIONS; ESTOPPEL; PARTY ESTOPPED FROM not when the ballgame is over and the foreigner clearly posted the
ASSAILING THE WINNING BID OF FOREIGN FIRM FROM BEING highest score.
AWARE OF THE RULES AND REGULATIONS OF THE BIDDINGS IT
AGREED TO RESPECT. — I submit that petitioner is estopped from
assailing the winning bid of Renong Berhad. Petitioner was aware
of the rules and regulations of the bidding. It knew that the rules DECISION
and regulations do not provide that a qualified Filipino bidder can
match the winning bid after submitting an inferior bid. It knew that
the bid was open to foreigners and that foreigners qualified even BELLOSILLO, J.:
during the first bidding. Petitioner cannot be allowed to repudiate
the rules which it agreed to respect. It cannot be allowed to obey
the rules when it wins and disregard them when it loses. If The Filipino First Policy enshrined in the 1987 Constitution, i.e., in
sustained, petitioners’ stance will wreak havoc on the essence of the grant of rights, privileges, and concessions covering the
bidding. national economy and patrimony, the State shall give preference to
qualified Filipinos, 1 is invoked by petitioner in its bid to acquire
PANGANIBAN, J., separate dissenting opinion:chanrob1es virtual 51% of the shares of the Manila Hotel Corporation (MHC) which
1aw library owns the historic Manila Hotel. Opposing, respondents maintain
that the provision is not self-executing but requires an —
implementing legislation for its enforcement. Corollarily, they ask
whether the 51% shares form part of the national economy and The Highest Bidder will be declared the Winning Bidder/Strategic
patrimony covered by the protective mantle of the Constitution. Partner after the following conditions are met

The controversy arose when respondent Government Service a. Execution of the necessary contracts with GSIS/MHC not later
Insurance System (GSIS), pursuant to the privatization program of than October 23, 1995 (reset to November 3, 1995); and
the Philippine Government under Proclamation No. 50 dated 8
December 1986, decided to sell through public bidding 30% to b. Requisite approvals from the GSIS/MHC and COP (Committee on
51% of the issued and outstanding shares of respondent MHC. The Privatization)/ OGCC (Office of the Government Corporate Counsel)
winning bidder, or the eventual "strategic partner," is to provide are obtained." 3
management expertise and/or an international marketing/
reservation system, and financial support to strengthen the Pending the declaration of Renong Berhard as the winning
profitability and performance of the Manila Hotel. 2 In a close bidder/strategic partner and the execution of the necessary
bidding held on 18 September 1995 only two (2) bidders contracts, petitioner in a letter to respondent GSIS dated 28
participated: petitioner Manila Prince Hotel Corporation, a Filipino September 1995 matched the bid price of P44.00 per share
corporation, which offered to buy 51% of the MHC or 15,300,000 tendered by Renong Berhad. 4 In a subsequent letter dated 10
shares at P41.58 per share, and Renong Berhad, a Malaysian firm, October 1995 petitioner sent a manager’s check issued by Philtrust
with ITT-Sheraton as its hotel operator, which bid for the same Bank for Thirty-three Million Pesos (P33,000,000.00) as Bid
number of shares at P44.00 per share, or P2.42 more than the bid Security to match the bid of the Malaysian Group, Messrs. Renong
of petitioner. Berhad . . . . 5 which respondent GSIS refused to accept.

Pertinent provisions of the bidding rules prepared by respondent On 17 October 1995, perhaps apprehensive that respondent GSIS
GSIS state — has disregarded the tender of the matching bid and that the sale of
51% of the MHC may be hastened by respondent GSIS and
I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC consummated with Renong Berhad, petitioner came to this Court
— on prohibition and mandamus. On 18 October 1995 the Court
issued a temporary restraining order enjoining respondents from
1. The Highest Bidder must comply with the conditions set forth perfecting and consummating the sale to the Malaysian firm.
below by October 23, 1995 (reset to November 3, 1995) or the
Highest Bidder will lose the right to purchase the Block of Shares On 10 September 1996 the instant case was accepted by the Court
and GSIS will instead offer the Block of Shares to the other En Banc after it was referred to it by the First Division. The case
Qualified Bidders:chanrob1es virtual 1aw library was then set for oral arguments with former Chief Justice Enrique
M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.
a. The Highest Bidder must negotiate and execute with the
GSIS/MHC the Management Contract, International In the main, petitioner invokes Sec. 10, second par., Art. XII, of
Marketing/Reservation System Contract or other type of contract the 1987 Constitution and submits that the Manila Hotel has been
specified by the Highest Bidder in its strategic plan for the Manila identified with the Filipino nation and has practically become a
Hotel . . . . historical monument which reflects the vibrancy of Philippine
heritage and culture. It is a proud legacy of an earlier generation of
b. The Highest Bidder must execute the Stock Purchase and Sale Filipinos who believed in the nobility and sacredness of
Agreement with GSIS . . . . independence and its power and capacity to release the full
potential of the Filipino people. To all intents and purposes, it has
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER become a part of the national patrimony. 6 Petitioner also argues
that since 51% of the shares of the MHC carries with it the the corporation, not the hotel building nor the land upon which the
ownership of the business of the hotel which is owned by building stands. Certainly, 51% of the equity of the MHC cannot be
respondent GSIS, a government-owned and controlled corporation, considered part of the national patrimony. Moreover, if the
the hotel business of respondent GSIS being a part of the tourism disposition of the shares of the MHC is really contrary to the
industry is unquestionably a part of the national economy. Thus, Constitution, petitioner should have questioned it right from the
any transaction involving 51% of the shares of stock of the MHC is beginning and not after it had lost in the bidding.
clearly covered by the term national economy, to which Sec. 10,
second par., Art. XII, 1987 Constitution, applies. 7 Fourth, the reliance by petitioner on par. V., subpar. J. 1, of the
bidding rules which provides that if for any reason, the Highest
It is also the thesis of petitioner that since Manila Hotel is part of Bidder cannot be awarded the Block of Shares, GSIS may offer this
the national patrimony and its business also unquestionably part of to the other Qualified Bidders that have validly submitted bids
the national economy petitioner should be preferred after it has provided that these Qualified Bidders are willing to match the
matched the bid offer of the Malaysian firm. For the bidding rules highest bid in terms of price per share, is misplaced. Respondents
mandate that if for any reason, the Highest Bidder cannot be postulate that the privilege of submitting a matching bid has not
awarded the Block of Shares, GSIS may offer this to the other yet arisen since it only takes place if for any reason, the Highest
Qualified Bidders that have validly submitted bids provided that Bidder cannot be awarded the Block of Shares. Thus the
these Qualified Bidders are willing to match the highest bid in submission by petitioner of a matching bid is premature since
terms of price per share. 8 Renong Berhad could still very well be awarded the block of shares
and the condition giving rise to the exercise of the privilege to
Respondents except. They maintain that: First, Sec. 10, second submit a matching bid had not yet taken place.
par., Art. XII, of the 1987 Constitution is merely a statement of
principle and policy since it is not a self-executing provision and Finally, the prayer for prohibition grounded on grave abuse of
requires implementing legislation(s). . . . Thus, for the said discretion should fail since respondent GSIS did not exercise its
provision to operate, there must be existing laws "to lay down discretion in a capricious, whimsical manner, and if ever it did
conditions under which business may be done." 9 abuse its discretion it was not so patent and gross as to amount to
an evasion of a positive duty or a virtual refusal to perform a duty
Second, granting that this provision is self-executing, Manila Hotel enjoined by law. Similarly, the petition for mandamus should fail as
does not fall under the term national patrimony which only refers petitioner has no clear legal right to what it demands and
to lands of the public domain, waters, minerals, coal, petroleum respondents do not have an imperative duty to perform the act
and other mineral oils, all forces of potential energy, fisheries, required of them by petitioner.
forests or timber, wildlife, flora and fauna and all marine wealth in
its territorial sea, and exclusive marine zone as cited in the first We now resolve. A constitution is a system of fundamental laws for
and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. the governance and administration of a nation. It is supreme,
According to respondents, while petitioner speaks of the guests imperious, absolute and unalterable except by the authority from
who have slept in the hotel and the events that have transpired which it emanates. It has been defined as the fundamental and
therein which make the hotel historic, these alone do not make the paramount law of the nation. 10 It prescribes the permanent
hotel fall under the patrimony of the nation. What is more, the framework of a system of government, assigns to the different
mandate of the Constitution is addressed to the State, not to departments their respective powers and duties, and establishes
respondent GSIS which possesses a personality of its own separate certain fixed principles on which government is founded. The
and distinct from the Philippines as a State.chanrobles fundamental conception in other words is that it is a supreme law
to which all other laws must conform and in accordance with which
Third, granting that the Manila Hotel forms part of the national all private rights must be determined and all public authority
patrimony, the constitutional provision invoked is still inapplicable administered. 11 Under the doctrine of constitutional supremacy, if
since what is being sold is only 51% of the outstanding shares of a law or contract violates any norm of the constitution that law or
contract whether promulgated by the legislative or by the legislature discretion to determine when, or whether, they shall be
executive branch or entered into by private persons for private effective. These provisions would be subordinated to the will of the
purposes is null and void and without any force and effect. Thus, lawmaking body, which could make them entirely meaningless by
since the Constitution is the fundamental paramount and supreme simply refusing to pass the needed implementing statute. 15
law of the nation, it is deemed written in every statute and
contract. Respondents argue that Sec. 10, second par., Art. XII, of the 1987
Constitution is clearly not self-executing, as they quote from
Admittedly, some constitutions are merely declarations of policies discussions on the floor of the 1986 Constitutional Commission —
and principles. Their provisions command the legislature to enact
laws and carry out the purposes of the framers who merely MR. RODRIGO. Madam President, I am asking this question as the
establish an outline of government providing for the different Chairman of the Committee on Style. If the wording of
departments of the governmental machinery and securing certain "PREFERENCE" is given to "QUALIFIED FILIPINOS," can it be
fundamental and inalienable rights of citizens. 12 A provision which understood as a preference to qualified Filipinos vis-a-vis Filipinos
lays down a general principle, such as those found in Art. II of the who are not qualified. So, why do we not make it clear? To
1987 Constitution, is usually not self-executing. But a provision qualified Filipinos as against aliens?
which is complete in itself and becomes operative without the aid
of supplementary or enabling legislation, or that which supplies THE PRESIDENT. What is the question of Commissioner Rodrigo? Is
sufficient rule by means of which the right it grants may be it to remove the word "QUALIFIED?"
enjoyed or protected, is self-executing. Thus a constitutional
provision is self-executing if the nature and extent of the right MR. RODRIGO. No, no, but say definitely "TO QUALIFIED
conferred and the liability imposed are fixed by the constitution FILIPINOS" as against whom? As against aliens or over aliens?
itself, so that they can be determined by an examination and
construction of its terms, and there is no language indicating that MR. NOLLEDO. Madam President, I think that is understood. We
the subject is referred to the legislature for action. 13 use the word "QUALIFIED" because the existing laws or prospective
laws will always lay down conditions under which business may be
As against constitutions of the past, modern constitutions have done. For example, qualifications on capital, qualifications on the
been generally drafted upon a different principle and have often setting up of other financial structures, et cetera (Emphasis
become in effect extensive codes of laws intended to operate supplied by respondents).
directly upon the people in a manner similar to that of statutory
enactments, and the function of constitutional conventions has MR RODRIGO. It is just a matter of style.
evolved into one more like that of a legislative body. Hence, unless
it is expressly provided that a legislative act is necessary to enforce MR. NOLLEDO. Yes. 16
a constitutional mandate, the presumption now is that all
provisions of the constitution are self-executing. If the Quite apparently, Sec. 10, second par., of Art. XII is couched in
constitutional provisions are treated as requiring legislation instead such a way as not to make it appear that it is non-self-executing
of self-executing, the legislature would have the power to ignore but simply for purposes of style. But, certainly, the legislature is
and practically nullify the mandate of the fundamental law. 14 This not precluded from enacting further laws to enforce the
can be cataclysmic. That is why the prevailing view is, as it has constitutional provision so long as the contemplated statute
always been, that — squares with the Constitution. Minor details may be left to the
legislature without the self-executing nature of constitutional
. . . in case of doubt, the Constitution should be considered self- provisions.
executing rather than non-self-executing. . . . Unless the contrary
is clearly intended, the provisions of the Constitution should be In self-executing constitutional provisions, the legislature may still
considered self-executing, as a contrary rule would give the enact legislation to facilitate the exercise of powers directly granted
by the constitution, further the operation of such a provision, and human rights 27 and on education. 28 Lastly, Kilosbayan, Inc.
prescribe a practice to be used for its enforcement, provide a v. Morato 29 cites provisions on the promotion of general welfare,
convenient remedy for the protection of the rights secured or the 30 the sanctity of family life, 31 the vital role of the youth in
determination thereof, or place reasonable safeguards around the nation-building 32 and the promotion of total human liberation and
exercise of the right. The mere fact that legislation may development. 33 A reading of these provisions indeed clearly
supplement and add to or prescribe a penalty for the violation of a shows that they are not judicially enforceable constitutional rights
self-executing constitutional provision does not render such a but merely guidelines for legislation. The very terms of the
provision ineffective in the absence of such legislation. The provisions manifest that they are only principles upon which
omission from a constitution of any express provision for a remedy legislations must be based. Res ipsa loquitur.
for enforcing a right or liability is not necessarily an indication that
it was not intended to be self-executing. The rule is that a self- On the other hand, Sec. 10, second par., Art. XII of the 1987
executing provision of the constitution does not necessarily exhaust Constitution is a mandatory, positive command which is complete
legislative power on the subject, but any legislation must be in in itself and which needs no further guidelines or implementing
harmony with the constitution, further the exercise of constitutional laws or rules for its enforcement. From its very words the provision
right and make it more available. 17 Subsequent legislation does not require any legislation to put it in operation. It is per se
however does not necessarily mean that the subject constitutional judicially enforceable. When our Constitution mandates that [i]n
provision is not, by itself, fully enforceable. the grant of rights, privileges, and concessions covering national
economy and patrimony, the State shall give preference to
Respondents also argue that the non-self-executing nature of Sec. qualified Filipinos, it means just that — qualified Filipinos shall be
10, second par., of Art. XII is implied from the tenor of the first preferred. And when our Constitution declares that a right exists in
and third paragraphs of the same section which undoubtedly are certain specified circumstances an action may be maintained to
not self-executing. 18 The argument is flawed. If the first and third enforce such right notwithstanding the absence of any legislation
paragraphs are not self-executing because Congress is still to enact on the subject; consequently, if there is no statute especially
measures to encourage the formation and operation of enterprises enacted to enforce such constitutional right, such right enforces
fully owned by Filipinos, as in the first paragraph, and the State itself by its own inherent potency and puissance, and from which
still needs legislation to regulate and exercise authority over all legislations must take their bearings. Where there is a right
foreign investments within its national jurisdiction, as in the third there is a remedy. Ubi jus ibi remedium.
paragraph, then a fortiori, by the same logic, the second paragraph
can only be self-executing as it does not by its language require As regards our national patrimony, a member of the 1986
any legislation in order to give preference to qualified Filipinos in Constitutional Commission 34 explains —
the grant of rights, privileges and concessions covering the national
economy and patrimony. A constitutional provision may be self- The patrimony of the Nation that should be conserved and
executing in one part and non-self-executing in another. 19 developed refers not only to our rich natural resources but also to
the cultural heritage of our race. It also refers to our intelligence in
Even the cases cited by respondents holding that certain arts, sciences and letters. Therefore, we should develop not only
constitutional provisions are merely statements of principles and our lands, forests, mines and other natural resources but also the
policies, which are basically not self-executing and only placed in mental ability or faculty of our people.
the Constitution as moral incentives to legislation, not as judicially
enforceable rights — are simply not in point. Basco v. Philippine We agree. In its plain and ordinary meaning, the term patrimony
Amusements and Gaming Corporation 20 speaks of constitutional pertains to heritage. 35 When the Constitution speaks of national
provisions on personal dignity, 21 the sanctity of family life, 22 the patrimony, it refers not only to the natural resources of the
vital role of the youth in nation-building, 23 the promotion of social Philippines, as the Constitution could have very well used the term
justice, 24 and the values of education. 25 Tolentino v. Secretary natural resources, but also to the cultural heritage of the Filipinos.
of Finance 26 refers to constitutional provisions on social justice
Manila Hotel has become a landmark — a living testimonial of which is owned by Filipinos. This is very clear from the proceedings
Philippine heritage. While it was restrictively an American hotel of the 1986 Constitutional Commission —
when it first opened in 1912, it immediately evolved to be truly
Filipino. Formerly a concourse for the elite, it has since then THE PRESIDENT.
become the venue of various significant events which have shaped
Philippine history. It was called the Cultural Center of the 1930’s. It Commissioner Davide is recognized.
was the site of the festivities during the inauguration of the
Philippine Commonwealth. Dubbed as the Official Guest House of MR. DAVIDE.
the Philippine Government it plays host to dignitaries and official
visitors who are accorded the traditional Philippine hospitality. 36 I would like to introduce an amendment to the Nolledo
amendment. And the amendment would consist in substituting the
The history of the hotel has been chronicled in the book The Manila words "QUALIFIED FILIPINOS" with the following: "CITIZENS OF
Hotel: The Heart and Memory of a City. 37 During World War II the THE PHILIPPINES OR CORPORATIONS OR ASSOCIATIONS WHOSE
hotel was converted by the Japanese Military Administration into a CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH
military headquarters. When the American forces returned to CITIZENS."cralaw virtua1aw library
recapture Manila the hotel was selected by the Japanese together
with Intramuros as the two (2) places for their final stand. x       x       x
Thereafter, in the 1950’s and 1960’s, the hotel became the center
of political activities, playing host to almost every political
convention. In 1970 the hotel reopened after a renovation and MR. MONSOD.
reaped numerous international recognitions, an acknowledgment of
the Filipino talent and ingenuity. In 1986 the hotel was the site of a Madam President, apparently the proponent is agreeable, but we
failed coup d’etat where an aspirant for vice-president was have to raise a question. Suppose it is a corporation that is 80-
"proclaimed" President of the Philippine Republic. percent Filipino, do we not give it preference?

For more than eight (8) decades Manila Hotel has bore mute MR. DAVIDE.
witness to the triumphs and failures, loves and frustrations of the
Filipinos; its existence is impressed with public interest; its own The Nolledo amendment would refer to an individual Filipino. What
historicity associated with our struggle for sovereignty, about a corporation wholly owned by Filipino citizens?
independence and nationhood. Verily, Manila Hotel has become
part of our national economy and patrimony. For sure, 51% of the MR. MONSOD.
equity of the MHC comes within the purview of the constitutional
shelter for it comprises the majority and controlling stock, so that At least 60 percent, Madam President.
anyone who acquires or owns the 51% will have actual control and
management of the hotel. In this instance, 51% of the MHC cannot MR. DAVIDE.
be disassociated from the hotel and the land on which the hotel
edifice stands. Consequently, we cannot sustain respondents’ claim Is that the intention?
that the Filipino First Policy provision is not applicable since what is
being sold is only 51% of the outstanding shares of the MR MONSOD.
corporation, not the Hotel building nor the land upon which the
building stands. 38 Yes, because, in fact, we would be limiting it if we say that the
preference should only be 100-percent Filipino.
The argument is pure sophistry. The term qualified Filipinos as
used in our Constitution also includes corporations at least 60% of MR. DAVIDE.
 enterprise still be given a preference?
I want to get that meaning clear because "QUALIFIED FILIPINOS"
may refer only to individuals and not to juridical personalities or MR. NOLLEDO.
entities.
Obviously.
MR. MONSOD.
MR. FOZ.
We agree, Madam President. 39
If the foreigner is more qualified in some aspects than the Filipino
x       x       x enterprise, will the Filipino still be preferred?

MR. NOLLEDO.
MR. RODRIGO.
The answer is "yes."cralaw virtua1aw library
Before we vote, may I request that the amendment be read again.
MR. FOZ.
MR. NOLLEDO.
Thank you. 41
The amendment will read: "IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL Expounding further on the Filipino First Policy provision
ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE Commissioner Nolledo continues —
TO QUALIFIED FILIPINOS." And the word "Filipinos" here, as
intended by the proponents, will include not only individual Filipinos MR NOLLEDO.
but also Filipino-controlled entities or entities fully-controlled by
Filipinos. 40 Yes, Madam President. Instead of "MUST," it will be "SHALL — THE
STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." This
The phrase preference to qualified Filipinos was explained thus — embodies the so-called "Filipino First" policy. That means that
Filipinos should be given preference in the grant of concessions,
MR. FOZ. privileges and rights covering the national patrimony. 42

Madam President, I would like to request Commissioner Nolledo to The exchange of views in the sessions of the Constitutional
please restate his amendment so that I can ask a question. Commission regarding the subject provision was still further
clarified by Commissioner Nolledo 43 —
MR. NOLLEDO.
"Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino"
"IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS bias in all economic concerns. It is better known as the FILIPINO
COVERING THE NATIONAL ECONOMY AND PATRIMONY, THE STATE FIRST Policy. . . . This provision was never found in previous
SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS."cralaw Constitutions. . . .
virtua1aw library
The term "qualified Filipinos" simply means that preference shall be
MR. FOZ. given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency. It
In connection with that amendment, if a foreign enterprise is certainly does NOT mandate the pampering and preferential
qualified and a Filipino enterprise is also qualified, will the Filipino treatment to Filipino citizens or organizations that are incompetent
or inefficient, since such an indiscriminate preference would be Respondents further argue that the constitutional provision is
counterproductive and inimical to the common good. addressed to the State, not to respondent GSIS which by itself
possesses a separate and distinct personality. This argument again
In the granting of economic rights, privileges, and concessions, is at best specious. It is undisputed that the sale of 51% of the
when a choice has to be made between a "qualified foreigner" and MHC could only be carried out with the prior approval of the State
a "qualified Filipino," the latter shall be chosen over the acting through respondent Committee on Privatization. As correctly
former."cralaw virtua1aw library pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone makes
the sale of the assets of respondents GSIS and MHC a "state
Lastly, the word qualified is also determinable. Petitioner was so action." In constitutional jurisprudence, the acts of persons distinct
considered by respondent GSIS and selected as one of the qualified from the government are considered "state action" covered by the
bidders. It was pre-qualified by respondent GSIS in accordance Constitution (1) when the activity it engages in is a "public
with its own guidelines so that the sole inference here is that function;" (2) when the government is so-significantly involved
petitioner has been found to be possessed of proven management with the private actor as to make the government responsible for
expertise in the hotel industry, or it has significant equity his action; and, (3) when the government has approved or
ownership in another hotel company, or it has an overall authorized the action. It is evident that the act of respondent GSIS
management and marketing proficiency to successfully operate the in selling 51% of its share in respondent MHC comes under the
Manila Hotel. 44 second and third categories of "state action." Without doubt
therefore the transaction, although entered into by respondent
The penchant to try to whittle away the mandate of the GSIS, is in fact a transaction of the State and therefore subject to
Constitution by arguing that the subject provision is not self- the constitutional command. 46
executory and requires implementing legislation is quite disturbing.
The attempt to violate a clear constitutional provision — by the When the Constitution addresses the State it refers not only to the
government itself — is only too distressing. To adopt such a line of people but also to the government as elements of the State. After
reasoning is to renounce the duty to ensure faithfulness to the all, government is composed of three (3) divisions of power —
Constitution. For, even some of the provisions of the Constitution legislative, executive and judicial. Accordingly, a constitutional
which evidently need implementing legislation have juridical life of mandate directed to the State is correspondingly directed to the
their own and can be the source of a judicial remedy. We cannot three (3) branches of government. It is undeniable that in this case
simply afford the government a defense that arises out of the the subject constitutional injunction is addressed among others to
failure to enact further enabling, implementing or guiding the Executive Department and respondent GSIS, a government
legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on instrumentality deriving its authority from the State.
constitutional government is apt —
It should be stressed that while the Malaysian firm offered the
The executive department has a constitutional duty to implement higher bid it is not yet the winning bidder. The bidding rules
laws, including the Constitution, even before Congress acts — expressly provide that the highest bidder shall only be declared the
provided that there are discoverable legal standards for executive winning bidder after it has negotiated and executed the necessary
action. When the executive acts, it must be guided by its own contracts, and secured the requisite approvals. Since the Filipino
understanding of the constitutional command and of applicable First Policy provision of the Constitution bestows preference on
laws. The responsibility for reading and understanding the qualified Filipinos the mere tending of the highest bid is not an
Constitution and the laws is not the sole prerogative of Congress. If assurance that the highest bidder will be declared the winning
it were, the executive would have to ask Congress, or perhaps the bidder. Resultantly, respondents are not bound to make the award
Court, for an interpretation every time the executive is confronted yet, nor are they under obligation to enter into one with the
by a constitutional command. That is not how constitutional highest bidder. For in choosing the awardee respondents are
government operates. 45 mandated to abide by the dictates of the 1987 Constitution the
provisions of which are presumed to be known to all the bidders
and other interested parties. questioning the sale to Renong Berhad since petitioner was well
aware from the beginning that a foreigner could participate in the
Adhering to the doctrine of constitutional supremacy, the subject bidding is meritless. Undoubtedly, Filipinos and foreigners alike
constitutional provision is, as it should be, impliedly written in the were invited to the bidding. But foreigners may be awarded the
bidding rules issued by respondent GSIS, lest the bidding rules be sale only if no Filipino qualifies, or if the qualified Filipino fails to
nullified for being violative of the Constitution. It is a basic principle match the highest bid tendered by the foreign entity. In the case
in constitutional law that all laws and contracts must conform with before us, while petitioner was already preferred at the inception of
the fundamental law of the land. Those which violate the the bidding because of the constitutional mandate, petitioner had
Constitution lose their reason for being. not yet matched the bid offered by Renong Berhad. Thus it did not
have the right or personality then to compel respondent GSIS to
Paragraph V. J. 1 of the bidding rules provides that [i]f for any accept its earlier bid. Rightly, only after it had matched the bid of
reason the Highest Bidder cannot be awarded the Block of Shares, the foreign firm and the apparent disregard by respondent GSIS of
GSIS may offer this to other Qualified Bidders that have validly petitioner’s matching bid did the latter have a cause of action.
submitted bids provided that these Qualified Bidders are willing to
match the highest bid in terms of price per share. 47 Certainly, the Besides, there is no time frame for invoking the constitutional
constitutional mandate itself is reason enough not to award the safeguard unless perhaps the award has been finally made. To
block of shares immediately to the foreign bidder notwithstanding insist on selling the Manila Hotel to foreigners when there is a
its submission of a higher, or even the highest, bid. In fact, we Filipino group willing to match the bid of the foreign group is to
cannot conceive of a stronger reason than the constitutional insist that government be treated as any other ordinary market
injunction itself. player, and bound by its mistakes or gross errors of judgment,
regardless of the consequences to the Filipino people. The
In the instant case, where a foreign firm submits the highest bid in miscomprehension of the Constitution is regrettable. Thus we
a public bidding concerning the grant of rights, privileges and would rather remedy the indiscretion while there is still an
concessions covering the national economy and patrimony, thereby opportunity to do so than let the government develop the habit of
exceeding the bid of a Filipino, there is no question that the Filipino forgetting that the Constitution lays down the basic conditions and
will have to be allowed to match the bid of the foreign entity. And if parameters for its actions.
the Filipino matches the bid of a foreign firm the award should go
to the Filipino. It must be so if we are to give life and meaning to Since petitioner has already matched the bid price tendered by
the Filipino First Policy provision of the 1987 Constitution. For, Renong Berhad pursuant to the bidding rules, respondent GSIS is
while this may neither be expressly stated nor contemplated in the left with no alternative but to award to petitioner the block of
bidding rules, the constitutional fiat is omnipresent to be simply shares of MHC and to execute the necessary agreements and
disregarded. To ignore it would be to sanction a perilous skirting of documents to effect the sale in accordance not only with the
the basic law. bidding guidelines and procedures but with the Constitution as well.
The refusal of respondent GSIS to execute the corresponding
This Court does not discount the apprehension that this policy may documents with petitioner as provided in the bidding rules after the
discourage foreign investors. But the Constitution and laws of the latter has matched the bid of the Malaysian firm clearly constitutes
Philippines are understood to be always open to public scrutiny. grave abuse of discretion.
These are given factors which investors must consider when
venturing into business in a foreign jurisdiction. Any person The Filipino First Policy is a product of Philippine nationalism. It is
therefore desiring to do business in the Philippines or with any of embodied in the 1987 Constitution not merely to be used as a
its agencies or instrumentalities is presumed to know his rights and guideline for future legislation but primarily to be enforced; so
obligations under the Constitution and the laws of the forum must it be enforced. This Court as the ultimate guardian of the
Constitution will never shun, under any reasonable circumstance,
The argument of respondents that petitioner is now estopped from the duty of upholding the majesty of the Constitution which it is
tasked to defend. It is worth emphasizing that it is not the In nationalism, the happiness and welfare of the people must be
intention of this Court to impede and diminish, much less the goal. The nation-state can have no higher purpose. Any
undermine, the influx of foreign investments. Far from it, the Court interpretation of any constitutional provision must adhere to such
encourages and welcomes more business opportunities but basic concept. Protection of foreign investments, while laudable, is
avowedly sanctions the preference for Filipinos whenever such merely a policy. It cannot override the demands of nationalism. 50
preference is ordained by the Constitution. The position of the
Court on this matter could have not been more appropriately The Manila Hotel or, for that matter, 51% of the MHC, is not just
articulated by Chief Justice Narvasa — any commodity to be sold to the highest bidder solely for the sake
of privatization. We are not talking about an ordinary piece of
As scrupulously as it has tried to observe that it is not its function property in a commercial district. We are talking about a historic
to substitute its judgment for that of the legislature or the relic that has hosted many of the most important events in the
executive about the wisdom and feasibility of legislation economic short history of the Philippines as a nation. We are talking about a
in nature, the Supreme Court has not been spared criticism for hotel where heads of states would prefer to be housed as a strong
decisions perceived as obstacles to economic progress and manifestation of their desire to cloak the dignity of the highest
development . . . in connection with a temporary injunction issued state function to their official visits to the Philippines. Thus the
by the Court’s First Division against the sale of the Manila Hotel to Manila Hotel has played and continues to play a significant role as
a Malaysian Firm and its partner, certain statements were an authentic repository of twentieth century Philippine history and
published in a major daily to the effect that that injunction "again culture. In this sense, it has become truly a reflection of the Filipino
demonstrates that the Philippine legal system can be a major soul — a place with a history of grandeur; a most historical setting
obstacle to doing business here."cralaw virtua1aw library that has played a part in the shaping of a country.
51chanroblesvirtuallawlibrary:red
Let it be stated for the record once again that while it is no
business of the Court to intervene in contracts of the kind referred This Court cannot extract rhyme nor reason from the determined
to or set itself up as the judge of whether they are viable or efforts of respondents to sell the historical landmark — this Grand
attainable, it is its bounden duty to make sure that they do not Old Dame of hotels in Asia — to a total stranger. For, indeed, the
violate the Constitution or the laws, or are not adopted or conveyance of this epic exponent of the Filipino psyche to alien
implemented with grave abuse of discretion amounting to lack or hands cannot be less than mephistophelian for it is, in whatever
excess of jurisdiction. It will never shirk that duty, no matter how manner viewed, a veritable alienation of a nation’s soul for some
buffeted by winds of unfair and ill-informed criticism. 48 pieces of foreign silver. And so we ask: What advantage, which
cannot be equally drawn from a qualified Filipino, can be gained by
Privatization of a business asset for purposes of enhancing its the Filipinos if Manila Hotel — and all that it stands for — is sold to
business viability and preventing further losses, regardless of the a non-Filipino? How much of national pride will vanish if the
character of the asset, should not take precedence over non- nation’s cultural heritage is entrusted to a foreign entity? On the
material values. A commercial, nay even a budgetary, objective other hand, how much dignity will be preserved and realized if the
should not be pursued at the expense of national pride and dignity. national patrimony is safekept in the hands of a qualified, zealous
For the Constitution enshrines higher and nobler non-material and well-meaning Filipino? This is the plain and simple meaning of
values. Indeed, the Court will always defer to the Constitution in the Filipino First Policy provision of the Philippine Constitution. And
the proper governance of a free society; after all, there is nothing this Court, heeding the clarion call of the Constitution and
so sacrosanct in any economic policy as to draw itself beyond accepting the duty of being the elderly watchman of the nation, will
judicial review when the Constitution is involved. 49 continue to respect and protect the sanctity of the Constitution.

Nationalism is inherent in the very concept of the Philippines being WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE
a democratic and republican state, with sovereignty residing in the SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON
Filipino people and from whom all government authority emanates. PRIVATIZATION and OFFICE OF THE GOVERNMENT CORPORATE
COUNSEL are directed to CEASE and DESIST from selling 51% of people, the tangible and the material as well as the intangible and
the shares of the Manila Hotel Corporation to RENONG BERHAD, the spiritual assets and possessions of the people. It is to be noted
and to ACCEPT the matching bid of petitioner MANILA PRINCE that the framers did not stop with conservation. They knew that
HOTEL CORPORATION to purchase the subject 51% of the shares conservation alone does not spell progress; and that this may be
of the Manila Hotel Corporation at P44.00 per share and thereafter achieved only through development as a correlative factor to
to execute the necessary agreements and documents to effect the assure to the people not only the exclusive ownership, but also the
sale, to issue the necessary clearances and to do such other acts exclusive benefits of their national patrimony. 3
and deeds as may be necessary for the purpose.
Moreover, the concept of national patrimony has been viewed as
SO ORDERED referring not only to our rich natural resources but also to the
cultural heritage of our race. 4
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and
Hermosisima, Jr., JJ., concur. There is no doubt in my mind that the Manila Hotel is very much a
part of our national patrimony and, as such deserves constitutional
Separate Opinions protection as to who shall own it and benefit from its operation.
This institution has played an important role in our nation’s history,
having been the venue of many a historical event, and serving as it
PADILLA, J., concurring:chanrob1es virtual 1aw library did, and as it does, as the Philippine Guest House for visiting
foreign heads of state, dignitaries, celebrities, and others. 5
I concur with the ponencia of Mr. Justice Bellosillo. At the same
time, I would like to expound a bit more on the concept of national It is therefore our duty to protect and preserve it for future
patrimony as including within its scope and meaning institutions generations of Filipinos. As President Manuel L. Quezon once said,
such as the Manila Hotel. we must exploit the natural resources of our country, but we
should do so with an eye to the welfare of the future generations.
It is argued by petitioner that the Manila Hotel comes under In other words, the leaders of today are the trustees of the
"national patrimony" over which qualified Filipinos have the patrimony of our race. To preserve our national patrimony and
preference, in ownership and operation. The Constitutional reserve it for Filipinos was the intent of the distinguished
provision on point states:jgc:chanrobles.com.ph gentlemen who first framed our Constitution. Thus, in debating the
need for nationalization of our lands and natural resources, one
"x       x       x expounded that we should "put more teeth into our laws, and; not
make the nationalization of our lands and natural resources a
In the grant of rights, privileges, and concessions covering the subject of ordinary legislation but of constitutional enactment." 6
national economy and patrimony, the State shall give preference to To quote further: "Let not our children be mere tenants and
qualified Filipinos." 1 trespassers in their own country. Let us preserve and bequeath to
them what is rightfully theirs, free from all foreign liens and
Petitioner’s argument, I believe, is well taken. Under the 1987 encumbrances." 7
Constitution, "national patrimony" consists of the natural resources
provided by Almighty God (Preamble) in our territory (Article 1) Now, a word on preference. In my view "preference to qualified
consisting of land, sea, and air. 2 A study of the 1935 Constitution, Filipinos", to be meaningful, must refer not only to things that are
where the concept of "national patrimony" originated, would show peripheral, collateral, or tangential. It must touch and affect the
that its framers decided to adopt the even more comprehensive very "heart of the existing order." In the field of public bidding in
expression "Patrimony of the Nation" in the belief that the phrase the acquisition of things that pertain to the national patrimony,
encircles a concept embracing not only the natural resources of the preference to qualified Filipinos must allow a qualified Filipino to
country but practically everything that belongs to the Filipino match or equal the higher bid of a non-Filipino; the preference
shall not operate only when the bids of the qualified Filipino and ("GSIS"), a government entity which derives its authority from the
the non-Filipino are equal in which case, the award should State, in selling 51% of its share in MHC should be considered an
undisputedly be made to the qualified Filipino. The Constitutional act of the State subject to the Constitutional mandate.
preference should give the qualified Filipino an opportunity to
match or equal the higher bid of the non-Filipino bidder if the On the pivotal issue of the degree of "preference to qualified
preference of the qualified Filipino bidder is to be significant at all. Filipinos," I find it somewhat difficult to take the same path
traversed by the forceful reasoning of Justice Puno. In the
It is true that in this present age of globalization of attitude particular case before us, the only meaningful preference, it seems,
towards foreign investments in our country, stress is on the would really be to allow the qualified Filipino to match the foreign
elimination of barriers to foreign trade and investment in the bid for, as a practical matter, I cannot see any bid that literally
country. While government agencies, including the courts should calls for millions of dollars to be at par (to the last cent) with
re-condition their thinking to such a trend, and make it easy and another. The magnitude of the bids is such that it becomes hardly
even attractive for foreign investors to come to our shores, yet we possible for the competing bids to stand exactly "equal" which
should not preclude ourselves from reserving to us Filipinos certain alone, under the dissenting view, could trigger the right of
areas where our national identity, culture and heritage are preference.
involved. In the hotel industry, for instance, foreign investors have
established themselves creditably, such as in the Shangri-La, the It is most unfortunate that Renong Berhad has not been spared
Nikko, the Peninsula, and Mandarin Hotels This should not stop us this great disappointment, a letdown that it did not deserve, by a
from retaining 51% of the capital stock of the Manila Hotel simple and timely advise of the proper rules of bidding along with
Corporation in the hands of Filipinos. This would be in keeping with the peculiar constitutional implications of the proposed transaction.
the intent of the Filipino people to preserve our national patrimony, It is also regrettable that the Court at times is seen to, instead, be
including our historical and cultural heritage in the hands of the refuge for bureaucratic inadequacies which create the
Filipinos. perception that it even takes on non-justiciable
controversies.chanroblesvirtual|awlibrary
VITUG, J., concurring:chanrob1es virtual 1aw library
All told, I am constrained to vote for granting the Petition.
I agree with Mr. Justice Josue N. Bellosillo on his clear-cut
statements, shared by Mr. Justice Reynato S. Puno in a well written MENDOZA, J., concurring:chanrob1es virtual 1aw library
separate (dissenting) opinion, that:chanrob1es virtual 1aw library
I take the view that in the context of the present controversy the
First, the provision in our fundamental law which provides that" only way to enforce the constitutional mandate that" [i]n the grant
(i)n the grant of rights, privileges, and concessions covering the of rights, privileges and concessions covering the national
national economy and patrimony, the State shall give preference to patrimony the State shall give preference to qualified Filipinos" 1 is
qualified Filipinos" 1 is self-executory. The provision verily does not to allow petitioner Philippine corporation to equal the bid of the
need, although it can obviously be amplified or regulated by, an Malaysian firm Renong Berhad for the purchase of the controlling
enabling law or a set of rules. shares of stocks in the Manila Hotel Corporation. Indeed, it is the
only way a qualified Filipino or Philippine corporation can be given
Second, the term "patrimony" does not merely refer to the preference in the enjoyment of a right, privilege or concession
country’s natural resources but also to its cultural heritage. A given by the State, by favoring it over a foreign national or
"historical landmark," to use the words of Mr. Justice Justo P. corporation.
Torres, Jr., Manila Hotel has now indeed become part of Philippine
heritage. Under the rules on public bidding of the Government Service and
Insurance System, if petitioner and the Malaysian firm had offered
Third, the act of the Government Service Insurance System the same price per share, "priority [would be given] to the bidder
seeking the larger ownership interest in MHC," 2 so that if foreign capital or know-how. We are dealing here not with common
petitioner bid for more shares, it would be preferred to the trades or common means of livelihood which are open to aliens in
Malaysian corporation for that reason and not because it is a our midst, 11 but with the sale of government property, which is
Philippine corporation. Consequently, it is only in cases like the like the grant of government largess or benefits. In the words of
present one, where an alien corporation is the highest bidder, that Art. XII, sec. 10, we are dealing here with "rights, privileges and
preferential treatment of the Philippine corporation is mandated not concessions covering the national economy" and therefore no one
by declaring it winner but by allowing it "to match the highest bid should begrudge us if we give preferential treatment to our
in terms of price per share" before it is awarded the shares of citizens. That at any rate is the command of the Constitution. For
stocks. 3 That, to me, is what "preference to qualified Filipinos" the Manila Hotel is a business owned by the Government. It is
means in the context of this case — by favoring Filipinos whenever being privatized. Privatization should result in the relinquishment of
they are at a disadvantage vis-a-vis foreigners. the business in favor of private individuals and groups who are
Filipino citizens, not in favor of aliens.
This was the meaning given in Co Chiong v. Cuaderno 4 to a 1947
statute giving "preference to Filipino citizens in the lease of public Nor should there be any doubt that by awarding the shares of
market stalls." 5 This Court upheld the cancellation of existing stocks to petitioner we would be trading competence and capability
leases covering market stalls occupied by persons who were not for nationalism. Both petitioner and the Malaysian firm are
Filipinos and the award thereafter of the stalls to qualified Filipino qualified, having hurdled the pre-qualification process. 12 It is only
vendors as ordered by the Department of Finance. Similarly, in the result of the public bidding that is sought to be modified by
Vda. de Salgado v. De la Fuente, 6 this Court sustained the validity enabling petitioner to up its bid to equal the highest bid.
of a municipal ordinance passed pursuant to the statute (R.A. No.
37), terminating existing leases of public market stalls and granting Nor, finally, is there any basis for the suggestion that to allow a
preference to Filipino citizens in the issuance of new licenses for Filipino bidder to match the highest bid of an alien could encourage
the occupancy of the stalls. In Chua Lao v. Raymundo, 7 the speculation, since all the Filipino entity would then do would be not
preference granted under the statute was held to apply to cases in to make a bid or make only a token one and, after it is known that
which Filipino vendors sought the same stalls occupied by alien a foreign bidder has submitted the highest bid, make an offer
vendors in the public markets even if there were available other matching that of the foreign firm. This is not possible under the
stalls as good as those occupied by aliens. "The law, apparently, is rules on public bidding of the GSIS. Under these rules there is
applicable whenever there is a conflict of interest between Filipino minimum bid required (P36.67 per share for a range of 9 to 15
applicants and aliens for lease of stalls in public markets, in which million shares). 13 Bids below the minimum will not be considered.
situation the right to preference immediately arises." 8 On the other hand, if the Filipino entity, after passing the pre-
qualification process, does not submit a bid, he will not be allowed
Our legislation on the matter thus antedated by a quarter of a to match the highest bid of the foreign firm because this is a
century efforts began only in the 1970s in America to realize the privilege allowed only to those who have "validly submitted bids."
promise of equality, through affirmative action and reverse 14 The suggestion is, to say the least, fanciful and has no basis in
discrimination programs designed to remedy past discrimination fact.
against colored people in such areas as employment, contracting
and licensing. 9 Indeed, in vital areas of our national economy, For the foregoing reasons, I vote to grant the petition.
there are situations in which the only way to place Filipinos in
control of the national economy as contemplated in the TORRES, JR., J., concurring:chanrob1es virtual 1aw library
Constitution 10 is to give them preferential treatment where they
can at least stand on equal footing with aliens. Constancy in law is not an attribute of a judicious mind. I say this
as we are confronted in the case at bar with legal and
There need be no fear that thus preferring Filipinos would either constitutional issues — and yet I am driven so to speak on the side
invite foreign retaliation or deprive the country of the benefit of of history. The reason perhaps is due to the belief that in the words
of Justice Oliver Wendell Holmes, Jr., a "page of history is worth a
volume of logic."cralaw virtua1aw library We also wanted to add, as Commissioner Villegas said, this
committee and this body already approved what is known as the
I will, however, attempt to share my thoughts on whether the Filipino First policy which was suggested by Commissioner de
Manila Hotel has a historical and cultural aspect within the meaning Castro. So that it is now in our Constitution (Vol. IV, Records of the
of the constitution and thus, forming part of the "patrimony of the Constitutional Commission, p. 225).
nation."cralaw virtua1aw library
Commissioner Jose Nolledo explaining the provision adverted to
Section 10, Article XII of the 1987 Constitution above, said:jgc:chanrobles.com.ph
provides :chanrob1es virtual 1aw library
"MR. NOLLEDO.
x       x       x
In the grant of rights, privileges and concessions covering the
national economy and patrimony, the State shall give preference to
"In the grant of rights, privileges, and concessions covering the qualified Filipinos.
national economy and patrimony, the State shall give preference to
qualified Filipinos. MR. FOZ.

The State shall regulate and exercise authority over foreign In connection with that amendment, if a foreign enterprise is
investments within its national goals and priorities."cralaw qualified and the Filipinos enterprise is also qualified, will the
virtua1aw library Filipino enterprise shall be given a preference?

The foregoing provisions should be read in conjunction with Article MR. NOLLEDO.
II of the same Constitution pertaining to "Declaration of Principles
and State Policies" which ordain — Obviously.

"The State shall develop a self-reliant and independent national MR. FOZ.
economy, effectively controlled by Filipinos." (Sec. 19).
If the foreigner is more qualified in some aspects than the Filipino
Interestingly, the matter of giving preference to "qualified Filipinos" enterprise, will the Filipino still be preferred?
was one of the highlights in the 1987 Constitution Commission
proceedings, thus:jgc:chanrobles.com.ph MR. NOLLEDO.

"MR. NOLLEDO. The answer is "yes" (Vol. III p. 616, Records of the Constitutional
Commission).
The Amendment will read: "IN THE GRANT OF RIGHTS,
PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL The nationalistic provisions of the 1987 Constitution reflect the
ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE history and spirit of the Malolos Constitution of 1898, the 1935
TO QUALIFIED FILIPINOS." And the word "Filipinos" here, as Constitution and the 1973 Constitutions. That we have not reneged
intended by the proponents, will include not only individual Filipinos on this nationalist policy is articulated in one of the earliest cases,
but also Filipino-controlled entities fully controlled by Filipinos (Vol. this Court said —
III, Records of the Constitutional, p. 608)
"The ‘nationalistic tendency is manifested in various provisions of
MR. MONSOD. the Constitution. . . . It cannot therefore be said that a law imbued
with the same purpose and spirit underlying many of the provisions I vote to GRANT the petition.
of the Constitution is unreasonable, invalid or unconstitutional
(Ichong, Et. Al. v. Hernandez, Et Al., 101 Phil. 1155)."cralaw PUNO, J., dissenting:chanrob1es virtual 1aw library
virtua1aw library
This is a petition for prohibition and mandamus filed by the Manila
I subscribe to the view that history, culture, heritage, and tradition Prince Hotel Corporation, a domestic corporation, to stop the
are not legislated and is the product of events, customs, usages Government Service Insurance System (GSIS) from selling the
and practices. It is actually a product of growth and acceptance by controlling shares of the Manila Hotel Corporation to a foreign
the collective mores of a race. It is the spirit and soul of a people. corporation. Allegedly, the sale violates the second paragraph of
section 10, Article XII of the Constitution.
The Manila Hotel is part of our history, culture and heritage. Every
inch of the Manila Hotel is witness to historic events (too numerous Respondent GSIS is a government-owned and controlled
to mention) which shaped our history for almost 84 years. corporation. It is the sole owner of the Manila Hotel which it
operates through its subsidiary, the Manila Hotel Corporation.
As I intimated earlier, it is not my position in this opinion, to Manila Hotel was included in the privatization program of the
examine the single instances of the legal largesse which have given government. In 1995, GSIS proposed to sell to interested buyers
rise to the controversy, as I believe that has been exhaustively 30% to 51% of its shares, ranging from 9,000,000 to 15,300,000
discussed in the ponencia. Suffice it to say at this point that the shares, in the Manila Hotel Corporation. After the absence of bids
history of the Manila Hotel should not be placed in the auction at the first public bidding, the block of shares offered for sale was
block of a purely business transaction, where profit subverts the increased from a maximum of 30% to 51%. Also, the winning
cherished historical values of our people. bidder, or the eventual "strategic partner" of the GSIS was
required to "provide management expertise and/or an international
As a historical landmark in this "Pearl of the Orient Seas", it has its marketing/reservation system, and financial support to strengthen
enviable tradition which, in the words of philosopher Salvador de the profitability and performance of the Manila Hotel." 1 The
Madarriaga, (tradition) is "more of a river than a stone, it keeps proposal was approved by respondent Committee on Privatization.
flowing, and one must view the flow in both directions. If you look
towards the hill from which the river flows, you see tradition in the In July 1995, a conference was held where pre-qualification
form of forceful currents that push the river or people towards the documents and the bidding rules were furnished interested parties.
future; if you look the other way, you progress."cralaw virtua1aw Petitioner Manila Prince Hotel, a domestic corporation, and Renong
library Berhad, a Malaysian firm with ITT Sheraton as operator, pre-
qualified. 2
Indeed, tradition and progress are the same, for progress depends
on the kind of tradition. Let us not jettison the tradition of the The bidding rules and procedures entitled "Guidelines and
Manila Hotel and thereby repeat our colonial history. Procedures: Second Pre-qualification and Public Bidding of the MHC
Privatization" provide:jgc:chanrobles.com.ph
I grant, of course, that men of the law can see the same subject in
different lights. "I. INTRODUCTION AND HIGHLIGHTS

I remember, however, a Spanish proverb which says — "He is DETERMINING THE WINNING BIDDER/STRATEGIC PARTNER
always right who suspects that he makes mistakes." On this note, I
say that if I have to make a mistake, I would rather err upholding The party that accomplishes the steps set forth below will be
the belief that the Filipino is first under his Constitution and in his declared the Winning Bidder/Strategic Partner and will be awarded
own land. the Block of Shares:chanrob1es virtual 1aw library
First — Pass the prequalification process; E. APPLICATION PROCEDURE

Second — Submit the highest bid on a price per share basis for the 1. DOCUMENTS AVAILABLE AT THE REGISTRATION OFFICE
Block of Shares;
The prequalification documents can be secured at the Registration
Third — Negotiate and execute the necessary contracts with Office between 9:00 AM to 4:00 PM during working days within the
GSIS/MHC not later than October 23, 1995. period specified in Section III. Each set of documents consists of
the following:chanrob1es virtual 1aw library
x       x       x
a. Guidelines and Procedures: Second Prequalification and Public
Bidding of the MHC Privatization
IV. GUIDELINES FOR PREQUALIFICATION
b. Confidential Information Memorandum: The Manila Hotel
A. PARTIES WHO MAY APPLY FOR PREQUALIFICATION Corporation

The Winning Bidder/Strategic Partner will be expected to provide c. Letter of Invitation to the Prequalification and Bidding
management expertise and/or an international marketing Conference
reservation, and financial support to strengthen the profitability
and performance of The Manila Hotel. In this context, the GSIS is x       x       x
inviting to the prequalification process any local and/or foreign
corporation, consortium/joint venture or juridical entity with at
least one of the following qualifications:chanrob1es virtual 1aw 4. PREQUALIFICATION AND BIDDING CONFERENCE
library
A prequalification and bidding conference will be held at The Manila
a. Proven management expertise in the hotel industry; or Hotel on the date specified in Section III to allow the Applicant to
seek clarifications and further information regarding the guidelines
b. Significant equity ownership (i.e. board representation) in and procedures. Only those who purchased the prequalification
another hotel company; or documents will be allowed in this conference. Attendance to this
conference is strongly advised, although the Applicant will not be
c. Overall management and marketing expertise to successfully penalized if it does not attend.
operate the Manila Hotel.
5. SUBMISSION OF PREQUALIFICATION DOCUMENTS
Parties interested in bidding for MHC should be able to provide
access to the requisite management expertise and/or international The Applicant should submit 5 sets of the prequalification
marketing/reservation system for The Manila Hotel. documents (1 original set plus 4 copies) at the Registration Office
between 9:00 AM to 4:00 PM during working days within the period
x       x       x specified in Section III.

F. PREQUALIFICATION PROCESS
D. PREQUALIFICATION DOCUMENTS
1. The Applicant will be evaluated by the PBAC with the assistance
x       x       x of the TEC based on the Information Package and other information
available to the PBAC.
2. If the Applicant is a Consortium/Joint Venture, the evaluation B. BLOCK OF SHARES
will consider the overall qualifications of the group, taking into
account the contribution of each member to the venture A range of Nine Million (9,000,000) to Fifteen Million Three
Hundred Thousand (15,300,000) shares of stock, representing
3. The decision of the PBAC with respect to the results of the PBAC Thirty Percent to Fifty-One Percent (30%-51%) of the issued and
evaluation will be final. outstanding shares of MHC, will be offered in the Public Bidding by
the GSIS. The Qualified Bidders will have the option of determining
4. The Applicant shall be evaluated according to the criteria set the number of shares within the range to bid for. The range is
forth below:chanrob1es virtual 1aw library intended to attract bidders with different preferences and
objectives for the operation and management of The Manila Hotel.
a. Business management expertise, track record, and experience
C. MINIMUM BID REQUIRED ON A PRICE PER SHARE BASIS
b. Financial capability
1. Bids will be evaluated on a price per share basis. The minimum
c. Feasibility and acceptability of the proposed strategic plan for bid required on a price per share basis for the Block of Shares is
the Manila Hotel Thirty-Six Pesos and Sixty-Seven Centavos (P36.67).

5. The PBAC will shortlist such number of Applicants as it may 2. Bids should be in the Philippine currency payable to the GSIS.
deem appropriate.
3. Bids submitted with an equivalent price per share below the
6. The parties that prequalified in the first MHC public bidding — minimum required will not considered.
ITT Sheraton, Marriot International Inc., Renaissance Hotels
International Inc., consortium of RCBC Capital/Ritz Carlton — may D. TRANSFER COSTS
participate in the Public Bidding without having to undergo the
prequalification process again. x       x       x

G. SHORTLIST OF QUALIFIED BIDDERS

E. OFFICIAL BID FORM
1. A notice of prequalification results containing the shortlist of
Qualified Bidders will be posted at the Registration Office at the 1. Bids must be contained in the prescribed Official Bid Form, a
date specified in Section III. copy of which is attached as Annex IV. The Official Bid Form must
be properly accomplished in all details; improper accomplishment
2. In the case of a Consortium/Joint Venture, the withdrawal by a may be a sufficient basis for disqualification.
member whose qualification was a material consideration for being
included in the shortlist is a ground for disqualification of the 2. During the Public Bidding, the Qualified Bidder will submit the
Applicant. Official Bid Form, which will indicate the offered purchase price, in
a sealed envelope marked "OFFICIAL BID."cralaw virtua1aw library
V. GUIDELINES FOR THE PUBLIC BIDDING
F. SUPPORTING DOCUMENTS
A. PARTIES WHO MAY PARTICIPATE IN THE PUBLIC BIDDING
During the Public Bidding, the following documents should be
All parties in the shortlist of Qualified Bidders will be eligible to submitted along with the bid in a separate envelop marked
participate in the Public Bidding. "SUPPORTING DOCUMENTS" :chanrob1es virtual 1aw library
1. WRITTEN AUTHORITY TO BID (UNDER OATH) e. The Bid Security of the Qualified Bidder will be returned
immediately after the Public Bidding if the Qualified Bidder is not
If the Qualified Bidder is a corporation, the representative of the declared the Highest Bidder.
Qualified Bidder should submit a Board resolution which adequately
authorizes such representative to bid for and in behalf of the f. The Bid Security will be returned by October 23, 1995 if the
corporation with full authority to perform such acts necessary or Highest Bidder is unable to negotiate and execute with GSIS/MHC
requisite to bind the Qualified Bidder. the Management Contract, International Marketing/Reservation
System Contract or other types of contract specified by the Highest
If the Qualified Bidder is a Consortium/Joint Venture, each member Bidder in its strategic plan for The Manila Hotel.
of the Consortium/Joint Venture should submit a Board resolution
authorizing one of its members and such member’s representative g. The Bid Security of the Highest Bidder will be forfeited in favor
to make the bid on behalf of the group with full authority to of GSIS if the Highest Bidder, after negotiating and executing the
perform such acts necessary or requisite to bind the Qualified Management Contract, International Marketing/Reservation System
Bidder. Contract or other types of contract specified by the Highest Bidder
in its strategic plan for The Manila Hotel, fails or refuses
2. BID SECURITY to:chanrob1es virtual 1aw library

a. The Qualified Bidder should deposit Thirty-Three Million Pesos i. Execute the Stock Purchase and Sale Agreement with GSIS not
(P33,000.00), in Philippine currency as Bid Security in the form later than October 23, 1995; or
of:chanrob1es virtual 1aw library
ii. Pay the full amount of the offered purchase price not later than
i. Manager’s check or unconditional demand draft payable to the October 23, 1995; or
"Government Service Insurance System" and issued by a reputable
banking institution duly licensed to do business in the Philippines iii. Consummate the sale of the Block of Shares for any other
and acceptable to GSIS; or reason.

ii. Standby-by letter of credit issued by a reputable banking G. SUBMISSION OF BIDS

institution acceptable to the GSIS.
1. The Public Bidding will be held on September 7, 1995 at the
b. The GSIS will reject a bid if :chanrob1es virtual 1aw library following location:chanrob1es virtual 1aw library

i. The bid does not have a Bid Security; or New GSIS Headquarters Building

ii. The Bid Security accompanying the bid is for less than the Financial Center, Reclamation Area
required amount
Roxas Boulevard, Pasay City, Metro Manila
c. If the Bid Security is in the form of a manager’s check or
unconditional demand draft, the interest earned on the Bid Security 2. The Secretariat of the PBAC will be stationed at the Public
will be for the account of GSIS. Bidding to accept any and all bids and supporting requirements.
Representatives from the Commission on Audit and COP will be
d. If the Qualified Bidder becomes the Winning Bidder/Strategic invited to witness the proceedings.
Partner, the Bid Security will be applied as the downpayment on
the Qualified Bidder’s offered purchase price. 3. The Qualified Bidder should submit its bid using the Official Bid
Form. The accomplished Official Bid Form should be submitted in a
sealed envelope marked "OFFICIAL BID."cralaw virtua1aw library equivalent price per share, priority will be given to the bidder
seeking the larger ownership interest in MHC.
4. The Qualified Bidder should submit the following documents in
another sealed envelope marked "SUPPORTING BID DOCUMENTS" 5. The Public Bidding will be declared a failed bidding in
case:chanrob1es virtual 1aw library
a. Written Authority Bid
a. No single bid is submitted within the prescribed period; or
b. Bid Security
b. There is only one (1) bid that is submitted and acceptable to the
5. The two sealed envelopes marked "OFFICIAL BID" and PBAC.
"SUPPORTING BID DOCUMENTS" must be submitted
simultaneously to the Secretariat between 9:00 AM and 2:00 PM, I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC
Philippine Standard Time, on the date of the Public Bidding. No bid
shall be accepted after the closing time. Opened or tampered bids 1. The Highest Bidder must comply with the conditions set forth
shall not be accepted. below by October 23, 1995 or the Highest Bidder will lose the right
to purchase the Block of Shares and GSIS will instead offer the
6. The Secretariat will log and record the actual time of submission Block of Shares to the other Qualified Bidders:chanrob1es virtual
of the two sealed envelopes. The actual time of submission will also 1aw library
be indicated by the Secretariat on the face of the two envelopes.
a. The Highest Bidder must negotiate and execute with GSIS/MHC
7. After Step No. 6, the two sealed envelopes will be dropped in the Management Contract, International Marketing/ Reservation
the corresponding bid boxes provided for the purpose. These boxes System Contract or other type of contract specified by the Highest
will be in full view of the invited public. Bidder in its strategic plan for The Manila Hotel. If the Highest
Bidder is intending to provide only financial support to The Manila
H. OPENING AND READING OF BIDS Hotel, a separate institution may enter into the aforementioned
contract/s with GSIS/MHC.
1. After the closing time of 2:00 PM on the date of the Public
Bidding, the PBAC will open all sealed envelopes marked b. The Highest Bidder must execute the Stock Purchase and Sale
"SUPPORTING BID DOCUMENTS" for screening, evaluation and Agreement with GSIS, a copy of which will be distributed to each of
acceptance. Those who submitted incomplete/insufficient the Qualified Bidder after the prequalification process is completed.
documents or document/s which is/are not substantially in the
form required by PBAC will be disqualified. The envelope containing 2. In the event that the Highest Bidder chooses a Management
their Official Bid Form will be immediately returned to the Contract for The Manila Hotel, the maximum levels for the
disqualified bidders. management fee structure that GSIS/MHC are prepared to accept
in the Management Contract are as follows :chanrob1es virtual 1aw
2. The sealed envelopes marked "OFFICIAL BID" will be opened at library
3:00 PM. The name of the bidder and the amount of its bid price
will be read publicly as the envelopes are opened. a. Basic management fee: Maximum of 2.5% of gross revenues.(1)

3. Immediately following the reading of the bids, the PBAC will b. Incentive fee: Maximum of 8.0% of gross operating profit (1)
formally announce the highest bid and the Highest Bidder. after deducting undistributed overhead expenses and the basic
management fee.
4. The highest bid will be determined on a price per share basis. In
the event of a tie wherein two or more bids have the same c. Fixed component of the international marketing/reservation
system fee: Maximum of 2.0% of gross room revenues.(1) The 1. Upon execution of the necessary contracts with GSIS/MHC, the
Applicant should indicate in its Information Package if it is wishes Winning Bidder/Strategic Partner must fully pay, not later than
to charge this fee. October 23, 1995, the offered purchase price for the Block of
Shares after deducting the Bid Security applied as downpayment.
Note (1): As defined in the uniform system of account for hotels.
2. All payments should be made in the form of a Manager’s Check
The GSIS/MHC have indicated above the acceptable parameters for or unconditional Demand Draft, payable to the "Government
the hotel management fees to facilitate the negotiations with the Service Insurance System," issued by a reputable banking
Highest Bidder for the Management Contract after the Public institution licensed to do business in the Philippines and acceptable
Bidding. to GSIS.

A Qualified Bidder envisioning a Management Contract for The M. GENERAL CONDITIONS

Manila Hotel should determine whether or not the management fee
structure above is acceptable before submitting their 1. The GSIS unconditionally reserves the right to reject any or all
prequalification documents to GSIS. applications, waive any formality therein, or accept such
application as maybe considered most advantageous to the GSIS.
J. BLOCK SALE TO THE OTHER QUALIFIED BIDDERS The GSIS similarly reserves the right to require the submission of
any additional information from the Applicant as the PBAC may
1. If for any reason, the Highest Bidder cannot be awarded the deem necessary.
Block of Shares, GSIS may offer this to the other Qualified Bidders
that have validly submitted bids provided that these Qualified are 2. The GSIS further reserves the right to call off the Public Bidding
willing to match the highest bid in terms of price per share. prior to acceptance of the bids and call for a new public bidding
under amended rules, and without any liability whatsoever to any
2. The order of priority among the interested Qualified Bidders will or all the Qualified Bidders, except the obligation to return the Bid
be in accordance with the equivalent price per share of their Security.
respective bids in the Public Bidding, i.e. first and second priority
will be given to the Qualified Bidders that submitted the second 3. The GSIS reserves the right to reset the date of the
and third highest bids on the price per share basis, respectively, prequalification/bidding conference, the deadline for the submission
and so on. of the prequalification documents, the date of the Public Bidding or
other pertinent activities at least three (3) calendar days prior to
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER the respective deadlines/target dates.

The Highest Bidder will be declared the Winning Bidder/Strategic 4. The GSIS sells only whatever rights, interest and participation it
Partner after the following conditions are met:chanrob1es virtual has on the Block of Shares.
1aw library
5. All documents and materials submitted by the Qualified Bidders,
a. Execution of the necessary contract with GSIS/MHC not later except the Bid Security, may be returned upon request.
than October 23, 1995; and
6. The decision of the PBAC/GSIS on the results of the Public
b. Requisite approvals from the GSIS/MHC and COP/OGCC are Bidding is final. The Qualified Bidders, by participating in the Public
obtained. Bidding, are deemed to have agreed to accept and abide by these
results.
I. FULL PAYMENT FOR THE BLOCK OF SHARES
7. The GSIS will be held free and harmless from any liability, suit
or allegation arising out of the Public Bidding by the Qualified executing, whether the controlling shares of the Manila Hotel
Bidders who have participated in the Public Bidding." 3 Corporation form part of our patrimony as a nation;

The second public bidding was held on September 18, 1995. (3) Whether GSIS is included in the term "State," hence, mandated
Petitioner bidded P41.00 per share for 15,300,000 shares and to implement section 10, paragraph 2 of Article XII of the
Renong Berhad bidded P44.00 per share also for 15,300,000 Constitution;
shares. The GSIS declared Renong Berhad the highest bidder and
immediately returned petitioner’s bid security. (4) Assuming GSIS is part of the State, whether it failed to give
preference to petitioner, a qualified Filipino corporation, over and
On September 28, 1995, ten days after the bidding, petitioner above Renong Berhad, a foreign corporation, in the sale of the
wrote to GSIS offering to match the bid price of Renong Berhad. It controlling shares of the Manila Hotel Corporation;
requested that the award be made to itself citing the second
paragraph of Section 10, Article XII of the Constitution. It sent a (5) Whether petitioner is estopped from questioning the sale of the
manager’s check for thirty-three million pesos (P33,000,000.00) as shares to Renong Berhad, a foreign corporation.
bid security.
Anent the first issue, it is now familiar learning that a Constitution
Respondent GSIS, then in the process of negotiating with Renong provides the guiding policies and principles upon which is built the
Berhad the terms and conditions of the contract and technical substantial foundation and general framework of the law and
agreements in the operation of the hotel, refused to entertain government. 5 As a rule, its provisions are deemed self-executing
petitioner’s request. and can be enforced without further legislative action. 6 Some of
its provisions, however, can be implemented only through
Hence, petitioner filed the present petition. We issued a temporary appropriate laws enacted by the Legislature, hence not self-
restraining order on October 18, 1995. executing.

Petitioner anchors its plea on the second paragraph of Article XII, To determine whether a particular provision of a Constitution is
Section 10 of the Constitution 4 on the "National Economy and self-executing is a hard row to hoe. The key lies on the intent of
Patrimony" which provides:jgc:chanrobles.com.ph the framers of the fundamental law oftentimes submerged in its
language. A searching inquiry should be made to find out if the
"x       x       x provision is intended as a present enactment, complete in itself as
a definitive law, or if it needs future legislation for completion and
In the grant of rights, privileges, and concessions covering the enforcement. 7 The inquiry demands a micro-analysis of the text
national economy and patrimony, the State shall give preference to and the context of the provision in question. 8
qualified Filipinos.
Courts as a rule consider the provisions of the Constitution as self-
x       x       x" executing, 9 rather than as requiring future legislation for their
enforcement. 10 The reason is not difficult to discern. For if they
The vital issues can be summed up as follows:chanrob1es virtual are not treated as self-executing, the mandate of the fundamental
1aw library law ratified by the sovereign people can be easily ignored and
nullified by Congress. 11 Suffused with wisdom of the ages is the
(1) Whether section 10, paragraph 2 of Article XII of the unyielding rule that legislative actions may give breath to
Constitution is a self-executing provision and does not need constitutional rights but congressional inaction should not suffocate
implementing legislation to carry it into effect; them. 12

(2) Assuming section 10, paragraph 2 of Article XII is self- Thus, we have treated as self-executing the provisions in the Bill of
Rights on arrests, searches and seizures, 13 the rights of a person
under custodial investigation, 14 the rights of an accused, 15 and The first paragraph directs Congress to reserve certain areas of
the privilege against self-incrimination. 16 It is recognized that investments in the country 25 to Filipino citizens or to corporations
legislation is unnecessary to enable courts to effectuate sixty per cent 26 of whose capital stock is owned by Filipinos. It
constitutional provisions guaranteeing the fundamental rights of further commands Congress to enact laws that will encourage the
life, liberty and the protection of property. 17 The same treatment formation and operation of one hundred percent Filipino-owned
is accorded to constitutional provisions forbidding the taking or enterprises. In checkered contrast, the second paragraph orders
damaging of property for public use without just compensation. 18 the entire State to give preference to qualified Filipinos in the grant
of rights and privileges covering the national economy and
Contrariwise, case law lays down the rule that a constitutional patrimony. The third paragraph also directs the State to regulate
provision is not self-executing where it merely announces a policy foreign investments in line with our national goals and well-set
and its language empowers the Legislature to prescribe the means priorities.
by which the policy shall be carried into effect. 19 Accordingly, we
have held that the provisions in Article II of our Constitution The first paragraph of Section 10 is not self-executing. By its
entitled "Declaration of Principles and State Policies" should express text, there is a categorical command for Congress to enact
generally be construed as mere statements of principles of the laws restricting foreign ownership in certain areas of investments in
State. 20 We have also ruled that some provisions of Article XIII on the country and to encourage the formation and operation of
"Social Justice and Human Rights," 21 and Article XIV on wholly-owned Filipino enterprises. The right granted by the
"Education Science and Technology, Arts, Culture and Sports" 22 provision is clearly still in esse. Congress has to breathe life to the
cannot be the basis of judicially enforceable rights. Their right by means of legislation. Parenthetically, this paragraph was
enforcement is addressed to the discretion of Congress though they plucked from section 3, Article XIV of the 1973 Constitution. 27
provide the framework for legislation 23 to effectuate their policy The provision in the 1973 Constitution affirmed our ruling in the
content. 24 landmark case of Lao Ichong v. Hernandez, 28 where we upheld
the discretionary authority of Congress to Filipinize certain areas of
Guided by this map of settled jurisprudence, we now consider investments. 29 By reenacting the 1973 provision, the first
whether Section 10, Article XII of the 1987 Constitution is self- paragraph of section 10 affirmed the power of Congress to
executing or not. It reads:chanroblesvirtuallawlibrary nationalize certain areas of investments in favor of Filipinos.

"Sec. 10. The Congress shall, upon recommendation of the The second and third paragraphs of Section 10 are different. They
economic and planning agency, when the national interest dictates, are directed to the State and not to Congress alone which is but
reserve to citizens of the Philippines or to corporations or one of the three great branches of our government. Their coverage
associations at least sixty per centum of whose capital is owned by is also broader for they cover "the national economy and
such citizens, or such higher percentage as Congress may patrimony" and "foreign investments within [the] national
prescribe, certain areas of investments. The Congress shall enact jurisdiction" and not merely "certain areas of investments." Beyond
measures that will encourage the formation and operation of debate, they cannot be read as granting Congress the exclusive
enterprises whose capital is wholly owned by Filipinos. power to implement by law the policy of giving preference to
qualified Filipinos in the conferral of rights and privileges covering
In the grant of rights, privileges, and concessions covering the our national economy and patrimony. Their language does not
national economy and patrimony, the State shall give preference to suggest that any of the State agency or instrumentality has the
qualified Filipinos. privilege to hedge or to refuse its implementation for any reason
whatsoever. Their duty to implement is unconditional and it is now.
The State shall regulate and exercise authority over foreign The second and the third paragraphs of Section 10, Article XII are
investments within its national jurisdiction and in accordance with thus self-executing.
its national goals and priorities."cralaw virtua1aw library
This submission is strengthened by Article II of the Constitution
entitled "Declaration of Principles and State Policies." Its Section 19 The Hotel may not, as yet, have been declared a national cultural
provides that" [T]he State shall develop a self-reliant and treasure pursuant to Republic Act No. 4846 but that does not
independent national economy effectively controlled by Filipinos." It exclude it from our national patrimony. Republic Act No 486, "he
engrafts the all-important Filipino First policy in our fundamental Cultural Properties Preservation and Protection Act," merely
law and by the use of the mandatory word "shall," directs its provides a procedure whereby a particular cultural property may be
enforcement by the whole State without any pause or a half-pause classified a "national cultural treasure" or an "important cultural
in time. property." 32 Approved on June 18, 1966 and amended by P.D.
374 in 1974, the law is limited in its reach and cannot be read as
The second issue is whether the sale of a majority of the stocks of the exclusive law implementing section 10, Article XII of the 1987
the Manila Hotel Corporation involves the disposition of part of our Constitution. To be sure, the law does not equate cultural treasure
national patrimony. The records of the Constitutional Commission and cultural property as synonymous to the phrase "patrimony of
show that the Commissioners entertained the same view as to its the nation."cralaw virtua1aw library
meaning. According to Commissioner Nolledo, "patrimony" refers
not only to our rich natural resources but also to the cultural The third issue is whether the constitutional command to the State
heritage of our race. 30 By this yardstick, the sale of Manila Hotel includes the respondent GSIS. A look at its charter will reveal that
falls within the coverage of the constitutional provision giving GSIS is a government-owned and controlled corporation that
preferential treatment to qualified Filipinos in the grant of rights administers funds that come from the monthly contributions of
involving our national patrimony. The unique value of the Manila government employees and the government. 33 The funds are held
Hotel to our history and culture cannot be viewed with a myopic in trust for a distinct purpose which cannot be disposed of
eye. The value of the hotel goes beyond pesos and centavos. As indifferently. 34 They are to be used to finance the retirement,
chronicled by Beth Day Romulo, 31 the hotel first opened on July 4, disability and life insurance benefits of the employees and the
1912 as a first-class hotel built by the American Insular administrative and operational expenses of the GSIS. 35 Excess
Government for Americans living in, or passing through, Manila funds, however, are allowed to be invested in business and other
while travelling to the Orient. Indigenous materials and Filipino ventures for the benefit of the employees. 36 It is thus contended
craftsmanship were utilized in its construction. For sometime, it that the GSIS’ investment in the Manila Hotel Corporation is a
was exclusively used by American and Caucasian travelers and simple business venture, hence, an act beyond the contemplation
served as the "official guesthouse" of the American Insular of section 10, paragraph 2 of Article XII of the Constitution.
Government for visiting foreign dignitaries. Filipinos began coming
to the Hotel as guests during the Commonwealth period. When the The submission is unimpressive. The GSIS is not a pure private
Japanese occupied Manila, it served as military headquarters and corporation. It is essentially a public corporation created by
lodging for the highest-ranking officers from Tokyo. It was at the Congress and granted an original charter to serve a public purpose.
Hotel and the Intramuros that the Japanese made their last stand It is subject to the jurisdictions of the Civil Service Commission 37
during the Liberation of Manila. After the war, the Hotel again and the Commission on Audit. 38 As a state-owned and controlled
served foreign guests and Filipinos alike. Presidents and kings, corporation, it is skin-bound to adhere to the policies spelled out in
premiers and potentates, as well as glamorous international film the Constitution especially those designed to promote the general
and sports celebrities were housed in the Hotel. It was also the welfare of the people. One of these policies is the Filipino First
situs of international conventions and conferences. In the local policy which the people elevated as a constitutional command.
scene, it was the venue of historic meetings, parties and
conventions of political parties. The Hotel has reaped and continues The fourth issue demands that we look at the content of the phrase
reaping numerous recognitions and awards from international hotel "qualified Filipinos" and their "preferential right." The Constitution
and travel award-giving bodies, a fitting acknowledgment of Filipino desisted from defining their contents. This is as it ought to be for a
talent and ingenuity. These are judicially cognizable facts which Constitution only lays down flexible policies and principles which
cannot be bent by a biased mind. can be bent to meet today’s manifest needs and tomorrow’s
unmanifested demands. Only a constitution strung with elasticity
can grow as a living constitution. Madam President, that was the intention of the proponents. The
committee has accepted the amendment.
Thus, during the deliberations in the Constitutional Commission,
Commissioner Nolledo brushed aside a suggestion to define the x       x       x"
phrase "qualified Filipinos." He explained that present and
prospective "laws" will take care of the problem of its As previously discussed, the constitutional command to enforce the
interpretation, viz:jgc:chanrobles.com.ph Filipino First policy is addressed to the State and not to Congress
alone. Hence, the word "laws" should not be understood as limited
"x       x       x to legislations but all state actions which include applicable rules
and regulations adopted by agencies and instrumentalities of the
THE PRESIDENT. State in the exercise of their rule-making power. In the case at
bar, the bidding rules and regulations set forth the, standards to
What is the suggestion of Commissioner Rodrigo? Is it to remove measure the qualifications of bidders Filipinos and foreigners alike.
the word "QUALIFIED?" It is not seriously disputed that petitioner qualified to bid as did
Renong Berhad. 39
MR. RODRIGO.
Thus, we come to the critical issue of the degree of preference
No, no, but say definitely "TO QUALIFIED FILIPINOS" as against which GSIS should have accorded petitioner, a qualified Filipino,
whom? As against aliens over aliens? over Renong Berhad, a foreigner, in the purchase of the controlling
shares of the Manila Hotel. Petitioner claims that after losing the
MR. NOLLEDO. bid, this right of preference gives it a second chance to match the
highest bid of Renong Berhad.
Madam President, I think that is understood. We use the word
"QUALIFIED" because the existing laws or the prospective laws will With due respect, I cannot sustain petitioner’s submission. I
always lay down conditions under which business may be done, for prescind from the premise that the second paragraph of section 10,
example, qualifications on capital, qualifications or the setting up of Article XII of the Constitution is pro-Filipino but not anti-alien. It is
other financial structures, et cetera. pro-Filipino for it gives preference to Filipinos. It is not, however,
anti-alien per se for it does not absolutely bar aliens in the grant of
MR. RODRIGO. rights, privileges and concessions covering the national economy
and patrimony. Indeed, in the absence of qualified Filipinos, the
It is just a matter of style. State is not prohibited from granting these rights, privileges and
concessions to foreigners if the act will promote the weal of the
MR. NOLLEDO. nation.

Yes. In implementing the policy articulated in Section 10, Article XII of

the Constitution, the stellar task of our State policy-makers is to
MR. RODRIGO. maintain a creative tension between two desiderata — first, the
need to develop our economy and patrimony with the help of
If we say, "PREFERENCE TO QUALIFIED FILIPINOS," it can be foreigners if necessary, and, second, the need to keep our
understood as giving preference to qualified Filipinos as against economy controlled by Filipinos. Rightfully, the framers of the
Filipinos who are not qualified. Constitution did not define the degree of the right of preference to
be given to qualified Filipinos. They knew that for the right to serve
MR. NOLLEDO. the general welfare, it must have a malleable content that can be
adjusted by our policy-makers to meet the changing needs of our bid. It was declared as the highest bidder by the GSIS and the
people. In fine, the right of preference of qualified Filipinos is to be rules say this decision is final. It deserves the award as a matter of
determined by degree as time dictates and circumstances warrant. right for the rules clearly did not give to the petitioner as a
The lesser the need for alien assistance, the greater the degree of qualified Filipino the privilege to match the higher bid of a
the right of preference can be given to Filipinos and vice versa. foreigner. What the rules did not grant, petitioner cannot demand.
Our sympathies may be with petitioner but the court has no power
Again, it should be stressed that the right and the duty to to extend the latitude and longitude of the right of preference as
determine the degree of this privilege at any given time is defined by the rules. The parameters of the right of preference
addressed to the entire State. While under our constitutional depend on a galaxy of facts and factors whose determination
scheme, the right primarily belongs to Congress as the lawmaking belongs to the province of the policy-making branches and
department of our government, other branches of government, and agencies of the State. We are duty-bound to respect that
all their agencies and instrumentalities, share the power to enforce determination even if we differ with the wisdom of their judgment.
this state policy. Within the limits of their authority, they can act or The right they grant may be little but we must uphold the grant for
promulgate rules and regulations defining the degree of this right as long as the right of preference is not denied. It is only when a
of preference in cases where they have to make grants involving State action amounts to a denial of the right that the Court can
the national economy and judicial duty. On the other hand, our come in and strike down the denial as unconstitutional.
duty is to strike down acts of the State that violate the policy.
Finally, I submit that petitioner is estopped from assailing the
To date, Congress has not enacted a law defining the degree of the winning bid of Renong Berhad. Petitioner was aware of the rules
preferential right. Consequently, we must turn to the rules and and regulations of the bidding. It knew that the rules and
regulations of respondents Committee on Privatization and GSIS to regulations do not provide that qualified Filipino bidder can match
determine the degree of preference that petitioner is entitled to as the winning bid after submitting an inferior bid. It knew that the
a qualified Filipino in the subject sale. A tearless look at the rules bid was open to foreigners and that foreigners qualified even
and regulations will show that they are silent on the degree of during the first bidding. Petitioner cannot be allowed to repudiate
preferential right to be accorded a qualified Filipino bidder. Despite the rules which it agreed to respect. It cannot be allowed to obey
their silence, however, they cannot be read to mean that they do the rules when it wins and disregard them when it loses. If
not grant any degree of preference to petitioner for paragraph 2, sustained, petitioners’ stance will wreak havoc on the essence of
Section 10, Article XII of the Constitution is deemed part of said bidding. Our laws, rules and regulations require highest bidding to
rules and regulations. Pursuant to legal hermeneutics which raise as much funds as possible for the government to maximize its
demand that we interpret rules to save them from capacity to deliver essential services to our people. This is a duty
unconstitutionality, I submit that the right of preference of that must be discharged by Filipinos and foreigners participating in
petitioner arises only if it tied the bid of Renong Berhad. In that a bidding contest and the rules are carefully written to attain this
instance, all things stand equal, and petitioner, as a qualified objective. Among others, bidders are prequalified to insure their
Filipino bidder, should be preferred. financial capability. The bidding is secret and the bids are sealed to
prevent collusion among the parties. This objective will be
It is with deep regret that I cannot subscribe to the view that undermined if we grant petitioner the privilege to know the winning
petitioner has a right to match the bid of Renong Berhad. bid and a chance to match it. For plainly, a second chance to bid
Petitioner’s submission must be supported by the rules but even if will encourage a bidder not to strive to give the highest bid in the
we examine the rules inside-out a thousand times, they can not first bidding.
justify the claimed right. Under the rules, the right to match the
highest bid arises only "if for any reason, the highest bidder cannot We support the Filipino First policy without any reservation. The
be awarded the block of shares . . ." No reason has arisen that will visionary nationalist Don Claro M. Recto has warned us that the
prevent the award to Renong Berhad. It qualified as a bidder. It greatest tragedy that can befall a Filipino is to be an alien in his
complied with the procedure of bidding. It tendered the highest own land. The Constitution has embodied Recto’s counsel as a
state policy and our decision should be in sync with this policy. But kingdoms have long ago found out that unfairness, greed and
while the Filipino First policy requires that we incline to a Filipino, it isolation are self-defeating and in the long-term, self-
does not demand that we wrong an alien. Our policy makers can destructing.chanroblesvirtuallawlibrary:red
write laws and rules giving favored treatment to the Filipino but we
are not free to be unfair to a foreigner after writing the laws and The moral lesson here is simple: Do not do unto others what you
the rules. After the laws are written, they must be obeyed as do not want others to do unto you.
written, by Filipinos and foreigners alike. The equal protection
clause of the Constitution protects all against unfairness. We can 3. In the absence of a law specifying the degree or extent of the
be pro-Filipino without unfairness to foreigners. "Filipino First" policy of the Constitution, the constitutional
preference for the "qualified Filipinos" may be allowed only where
I vote to dismiss the petition. all the bids are equal. In this manner, we put the Filipino ahead
without self-destructing him and without being unfair to the
PANGANIBAN, J., dissenting:chanrob1es virtual 1aw library foreigner.

I regret I cannot join the majority. To the incisive Dissenting In short, the Constitution mandates a victory for the qualified
Opinion of Mr. Justice Reynato S. Puno, may I just add:chanrob1es Filipino only when the scores are tied. But not when the ballgame
virtual 1aw library is over and the foreigner clearly posted the highest score.

1. The majority contends the Constitution should be interpreted to

mean that, after a bidding process is concluded, the losing Filipino
bidder should be given the right to equal the highest foreign bid,
and thus to win. However, the Constitution [Sec. 10 (2), Art. XII]
simply states that "in the grant of rights . . . covering the national
economy and patrimony, the State shall give preference to
qualified Filipinos." The majority concedes that there is no law EN BANC
defining the extent or degree of such preference. Specifically, no
statute empowers a losing Filipino bidder to increase his bid and  
equal that of the winning foreigner. In the absence of such PROF. RANDOLF S. DAVID, LORENZO   G.R. No. 171396
empowering law, the majority’s strained interpretation, I TAADA III, RONALD LLAMAS, H. HARRY  
respectfully submit, constitutes unadulterated judicial legislation, L. ROQUE, JR., JOEL RUIZ BUTUYAN,   Present:
which makes bidding a ridiculous sham where no Filipino can lose ROGER R. RAYEL, GARY S.  
and where no foreigner can win. Only in the Philippines! MALLARI,              ROMEL REGALADO   PANGANIBAN, C.
BAGARES, CHRISTOPHER F.C. J.,
2. Aside from being prohibited by the Constitution, such judicial BOLASTIG,  *PUNO,
legislation is short-sighted and, viewed properly, gravely prejudicial                                                Petitione   QUISUMBING,
to long-term Filipino interests. It encourages other countries — in rs,   YNARES-
the guise of reverse comity or worse, unabashed retaliation — to   SANTIAGO,
discriminate against us in their own jurisdictions by authorizing - versus -   SANDOVAL-
their own nationals to similarly equal and defeat the higher bids of   GUTIERREZ,
Filipino enterprises solely, while on the other hand, allowing similar     CARPIO,
bids of other foreigners to remain unchallenged by their nationals. GLORIA MACAPAGAL-   AUSTRIA-
The majority’s thesis will thus marginalize Filipinos as pariahs in ARROYO,                  AS PRESIDENT MARTINEZ,
the global marketplace with absolutely no chance of winning any AND COMMANDER-IN-CHIEF, EXECUTIVE   CORONA,
bidding outside our country. Even authoritarian regimes and hermit SECRETARY EDUARDO ERMITA, HON.   CARPIO
AVELINO CRUZ II, SECRETARY OF MORALES, LIBERTIES REPRESENTED BY AMADO  
NATIONAL DEFENSE, GENERAL   CALLEJO, SR., GAT INCIONG,  
GENEROSO SENGA, CHIEF OF STAFF,   AZCUNA,                                                Petitione  
ARMED FORCES OF THE PHILIPPINES,   TINGA, rs,  
DIRECTOR GENERAL ARTURO LOMIBAO,   CHICO-    
CHIEF, PHILIPPINE NATIONAL POLICE, NAZARIO, - versus -  
                                               Respond   GARCIA, and    
ents.   VELASCO, JJ.    
x--------------------------------------------   EDUARDO R. ERMITA, EXECUTIVE  
-----x   Promulgated: SECRETARY, AVELINO J. CRUZ, JR.,  
NIEZ CACHO-OLIVARES AND TRIBUNE   SECRETARY, DND RONALDO V. PUNO,  
PUBLISHING CO., INC.,   May 3, 2006 SECRETARY, DILG, GENEROSO SENGA,  
                                           Petitioners,   AFP CHIEF OF STAFF, ARTURO LOMIBAO,  
    CHIEF PNP,  
    G.R. No. 171409                                            Responden  
- versus -   ts.  
    x--------------------------------------------  
    -----x  
HONORABLE SECRETARY EDUARDO   KILUSANG MAYO UNO, REPRESENTED BY  
ERMITA AND HONORABLE DIRECTOR   ITS CHAIRPERSON ELMER C. LABOG G.R. No. 171483
GENERAL ARTURO C. LOMIBAO,    AND SECRETARY GENERAL JOEL  
                                       Respondents.   MAGLUNSOD, NATIONAL FEDERATION  
  OF LABOR UNIONS ' KILUSANG MAYO  
  UNO (NAFLU-KMU), REPRESENTED BY  
x--------------------------------------------   ITS NATIONAL PRESIDENT, JOSELITO V.  
-----x   USTAREZ, ANTONIO C. PASCUAL,  
FRANCIS JOSEPH G. ESCUDERO, JOSEPH   SALVADOR T. CARRANZA, EMILIA P.  
A. SANTIAGO, TEODORO A. CASINO, G.R. No. 171485 DAPULANG, MARTIN CUSTODIO, JR.,  
AGAPITO A. AQUINO, MARIO J. AGUJA,   AND ROQUE M. TAN,  
SATUR C. OCAMPO, MUJIV S. HATAMAN,                                                   
JUAN EDGARDO ANGARA, TEOFISTO DL.   Petitioners,  
GUINGONA III, EMMANUEL JOSEL J.      
VILLANUEVA, LIZA L. MAZA, IMEE R.      
MARCOS, RENATO B. MAGTUBO, JUSTIN      
MARC SB. CHIPECO, ROILO GOLEZ,      
DARLENE ANTONINO-CUSTODIO,   - versus -  
LORETTA ANN P. ROSALES, JOSEL G.      
VIRADOR, RAFAEL V. MARIANO,      
GILBERT C. REMULLA, FLORENCIO G.      
NOEL, ANA THERESIA HONTIVEROS-      
BARAQUEL, IMELDA C. NICOLAS,   HER EXCELLENCY, PRESIDENT GLORIA  
MARVIC M.V.F. LEONEN, NERI JAVIER   MACAPAGAL-ARROYO, THE HONORABLE  
COLMENARES, MOVEMENT OF   EXECUTIVE SECRETARY, EDUARDO  
CONCERNED CITIZENS FOR CIVIL   ERMITA, THE CHIEF OF STAFF, ARMED  
FORCES OF THE PHILIPPINES,   -----x  
GENEROSO SENGA, AND THE PNP   LOREN B. LEGARDA, G.R. No. 171424
DIRECTOR GENERAL, ARTURO LOMIBAO,                                          Petitioner,  
                                           Responden                                 
ts.      
x--------------------------------------------   - versus -
-----x G.R. No. 171400  
ALTERNATIVE LAW GROUPS, INC. (ALG),    
                                                Petition   GLORIA MACAPAGAL-ARROYO, IN HER
er,   CAPACITY AS PRESIDENT AND
- versus -     COMMANDER-IN-CHIEF; ARTURO
    LOMIBAO, IN HIS CAPACITY AS
    DIRECTOR-GENERAL OF THE PHILIPPINE
EXECUTIVE SECRETARY EDUARDO R.   NATIONAL POLICE (PNP); GENEROSO
ERMITA, LT. GEN. GENEROSO SENGA,   SENGA, IN HIS CAPACITY AS CHIEF OF
AND DIRECTOR GENERAL ARTURO   STAFF OF THE ARMED FORCES OF THE
LOMIBAO,            PHILIPPINES (AFP); AND EDUARDO
                                           Responden   ERMITA, IN HIS CAPACITY AS
ts.   EXECUTIVE SECRETARY,
x--------------------------------------------                                              Responden
-----x   ts.
JOSE ANSELMO I. CADIZ, FELICIANO M.    
BAUTISTA, ROMULO R. RIVERA, JOSE G.R. No. 171489 x-----------------------------------------------------------------------------
AMOR M. AMORADO, ALICIA A. RISOS-   ----------------x
VIDAL, FELIMON C. ABELITA III,   DECISION
MANUEL P. LEGASPI, J.B. JOVY C.  
BERNABE, BERNARD L. DAGCUTA,    
ROGELIO V. GARCIA AND INTEGRATED    
BAR OF THE PHILIPPINES (IBP),   SANDOVAL-GUTIERREZ, J.:
                                               Petitione    
rs,    
    All powers need some restraint; practical adjustments rather than
- versus -  
rigid formula are necessary.[1]   Superior strength ' the use of
   
    force ' cannot make wrongs into rights.  In this regard, the courts
HON. EXECUTIVE SECRETARY EDUARDO   should be vigilant in safeguarding the constitutional rights of the
ERMITA, GENERAL GENEROSO SENGA,  
citizens, specifically their liberty.
IN HIS CAPACITY AS AFP CHIEF OF  
 
STAFF, AND DIRECTOR GENERAL  
ARTURO LOMIBAO, IN HIS CAPACITY AS   Chief Justice Artemio V. Panganiban's philosophy of liberty is thus
PNP CHIEF,   most relevant.   He said: 'In cases involving liberty, the scales
                                           Responden  
ts.   of justice should weigh heavily against government and in
x--------------------------------------------   favor of the poor, the oppressed, the marginalized, the
dispossessed and the weak.  Laws and actions that restrict prevent or suppress all forms of lawless violence as
well as any act of insurrection or rebellion and to
fundamental rights come to the courts 'with a heavy presumption enforce obedience to all the laws and to all decrees,
against their constitutional validity.[2]chanroblesvirtuallawlibrary orders and regulations promulgated by me personally
or upon my direction; and as provided in Section 17,
Article 12 of the Constitution do hereby declare a
         These seven (7) consolidated petitions for certiorari and State of National Emergency.
prohibition allege that in issuing Presidential Proclamation No. 1017  
(PP 1017)  and  General Order No. 5 (G.O. No. 5), President Gloria She cited the following facts as bases:
Macapagal-Arroyo committed grave abuse of discretion.  Petitioners  
HEREAS, over these past months, elements in the political
contend that respondent officials of the Government, in their opposition have conspired with authoritarians of the
professed efforts to defend and preserve democratic institutions, extreme Left represented by the NDF-CPP-NPA and
are actually trampling upon the very freedom guaranteed and the extreme Right, represented by military
adventurists the historical enemies of the democratic
protected by the Constitution.  Hence, such issuances are void for Philippine State ' who are now in a tactical alliance and
being unconstitutional. engaged in a concerted and systematic conspiracy, over a
broad front, to bring down the duly constituted Government
 
elected in May 2004;
   
         Once again, the Court is faced with an age-old but WHEREAS, these conspirators have repeatedly tried to
bring down the President;
persistently modern problem.  How does the Constitution of a free
 
people combine the degree of liberty, without which, law becomes WHEREAS, the claims of these elements have
tyranny, with the degree of law, without which, liberty becomes been recklessly magnified by certain segments
of the national media;
license?[3]chanroblesvirtuallawlibrary
 
WHEREAS, this series of actions is hurting the
         On February 24, 2006, as the nation celebrated the Philippine State ' by obstructing governance
including hindering the growth of the economy
20th Anniversary of the Edsa People Power I, President Arroyo and sabotaging the people's confidence in
issued PP 1017 declaring a state of national emergency, thus: government and their faith in the future of this
  country;
NOW, THEREFORE, I, Gloria Macapagal-Arroyo, President  
of the Republic of the Philippines and Commander-in-Chief WHEREAS, these actions are adversely affecting
of the Armed Forces of the Philippines, by virtue of the the economy;
powers vested upon me by Section 18, Article 7 of the  
Philippine Constitution which states that: 'The President. . . WHEREAS, these activities give totalitarian
whenever it becomes necessary, . . . may call out (the) forces of both the extreme Left and extreme
armed forces to prevent or suppress. . .rebellion. . ., and in Right the opening to intensify their avowed
my capacity as their Commander-in-Chief, do hereby aims to bring down the democratic Philippine
command the Armed Forces of the Philippines, to State;
maintain law and order throughout the Philippines,  
 WHEREAS, Article 2, Section 4 of the our their avowed aims to bring down the democratic Philippine
Constitution makes the defense and preservation of State;
the democratic institutions and the State the primary  
duty of Government; WHEREAS, Article 2, Section 4 of our Constitution makes
  the defense and preservation of the democratic institutions
WHEREAS, the activities above-described, their and the State the primary duty of Government;
consequences, ramifications and collateral effects  
constitute a clear and present danger to the WHEREAS, the activities above-described, their
safety and the integrity of the Philippine State and of consequences, ramifications and collateral effects constitute
the Filipino people; a clear and present danger to the safety and the integrity of
  the Philippine State and of the Filipino people;
   
On the same day, the President issued G. O. No. 5 implementing WHEREAS, Proclamation 1017 date February 24, 2006 has
been issued declaring a State of National Emergency;
PP 1017, thus:  
   WHEREAS, over these past months, elements in the political NOW, THEREFORE, I GLORIA MACAPAGAL-
ARROYO, by virtue of the powers vested in me under the
opposition have conspired with authoritarians of the extreme Left,
Constitution as President of the Republic of the Philippines,
represented by the NDF-CPP-NPA and the extreme Right, and Commander-in-Chief of the Republic of the Philippines,
represented by military adventurists - the historical enemies of the and pursuant to Proclamation No. 1017 dated February 24,
2006, do hereby call upon the Armed Forces of the
democratic Philippine State ' and who are now in a tactical alliance
Philippines (AFP) and the Philippine National Police (PNP), to
and engaged in a concerted and systematic conspiracy, over a prevent and suppress acts of terrorism and lawless violence
broad front, to bring down the duly-constituted Government in the country;
 
elected in May 2004;
I hereby direct the Chief of Staff of the AFP and the Chief of
WHEREAS, these conspirators have repeatedly tried to
the PNP, as well as the officers and men of the AFP and
bring down our republican government;
PNP, to immediately carry out the necessary and
 
appropriate actions and measures to suppress and
WHEREAS, the claims of these elements have been
prevent acts of terrorism and lawless violence.
recklessly magnified by certain segments of the national
 
media;
        
 
WHEREAS, these series of actions is hurting the Philippine On March 3, 2006, exactly one week after the declaration of a state
State by obstructing governance, including hindering the of national emergency and after all these petitions had been filed,
growth of the economy and sabotaging the people's
the President lifted PP 1017.   She issued Proclamation No. 1021
confidence in the government and their faith in the future of
this country; which reads:
 
WHEREAS, these actions are adversely affecting the WHEREAS, pursuant to Section 18, Article VII and
economy; Section 17, Article XII of the Constitution, Proclamation
  No. 1017 dated February 24, 2006, was issued declaring a
WHEREAS, these activities give totalitarian forces; of both state of national emergency;
the extreme Left and extreme Right the opening to intensify  
WHEREAS, by virtue of General Order No.5 and No.6 none of the petitioners has shown that PP 1017 was without factual
dated February 24, 2006, which were issued on the basis
of Proclamation No. 1017, the Armed Forces of the bases.  While he explained that it is not respondents' task to state
Philippines (AFP) and the Philippine National Police (PNP), the facts behind the questioned Proclamation, however, they are
were directed to maintain law and order throughout the
presenting the same, narrated hereunder, for the elucidation of the
Philippines, prevent and suppress all form of lawless
violence as well as any act of rebellion and to undertake issues.
such action as may be necessary;
  On January 17, 2006, Captain Nathaniel Rabonza
WHEREAS, the AFP and PNP have effectively prevented, and                    First Lieutenants Sonny Sarmiento, Lawrence San
suppressed and quelled the acts lawless violence and Juan and Patricio Bumidang, members of the Magdalo Group
rebellion;
  indicted in the Oakwood mutiny, escaped their detention cell in Fort
NOW, THEREFORE, I, GLORIA MACAPAGAL- Bonifacio, Taguig City.   In a public statement, they vowed to
ARROYO, President of the Republic of the Philippines, by
remain defiant and to elude arrest at all costs.  They called upon
virtue of the powers vested in me by law, hereby declare
that the state of national emergency has ceased to the people to 'show and proclaim our displeasure at the sham
exist. regime. Let us demonstrate our disgust, not only by going to the
 
streets in protest, but also by wearing red bands on our left
 
arms. [5]
In their presentation of the factual bases of PP 1017 and G.O. No.
5, respondents stated that the proximate cause behind the  

executive issuances was the conspiracy among some military On February 17, 2006, the authorities got hold of a document
officers, leftist insurgents of the New People's Army (NPA), and entitled 'Oplan Hackle I ' which detailed plans for bombings and
some members of the political opposition in a plot to unseat or attacks during the Philippine Military Academy Alumni Homecoming
assassinate President Arroyo.[4]  They considered the aim to oust in Baguio City.   The plot was to assassinate selected targets
or assassinate the President and take-over the reigns of including some cabinet members and President Arroyo herself.
government as a clear and present danger. [6]   Upon the advice of her security, President Arroyo decided not
to attend the Alumni Homecoming.  The next day, at the height of
During the oral arguments held on March 7, 2006, the Solicitor the celebration, a bomb was found and detonated at the PMA
General specified the facts leading to the issuance of PP 1017 parade ground.
and            G.O. No. 5.   Significantly, there was no refutation
from petitioners' counsels. On February 21, 2006, Lt. San Juan was recaptured in a
communist safehouse in Batangas province.   Found in his
The Solicitor General argued that the intent of the Constitution is to possession were two (2) flash disks containing minutes of the
give full discretionary powers to the President in determining the meetings between members of the Magdalo Group and the National
necessity of calling out the armed forces.   He emphasized that People's Army (NPA), a tape recorder, audio cassette cartridges,
diskettes, and copies of subversive documents.[7]   Prior to his the chain of command to join the forces foist to unseat the
arrest, Lt. San Juan announced through DZRH that the 'Magdalo's President.   However, Gen. Senga has remained faithful to his
th
D-Day would be on February 24, 2006, the 20  Anniversary of Commander-in-Chief and to the chain of command.  He
Edsa I. immediately took custody of B/Gen. Lim and directed Col. Querubin
to return to the Philippine Marines Headquarters in Fort Bonifacio.
On February 23, 2006, PNP Chief Arturo Lomibao intercepted
information that members of the PNP- Special Action Force were Earlier, the CPP-NPA called for intensification of political and
planning to defect.   Thus, he immediately ordered SAF revolutionary work within the military and the police
Commanding General Marcelino Franco, Jr. to 'disavow any establishments in order to forge alliances with its members and key
defection. The latter promptly obeyed and issued a public officials.   NPA spokesman Gregorio 'Ka Roger Rosal declared: 'The
statement:  'All SAF units are under the effective control of Communist Party and revolutionary movement and the entire
responsible and trustworthy officers with proven integrity and people look forward to the possibility in the coming year of
unquestionable loyalty. accomplishing its immediate task of bringing down the Arroyo
regime; of rendering it to weaken and unable to rule that it will not
On the same day, at the house of former Congressman Peping take much longer to end it.[9]chanroblesvirtuallawlibrary
Cojuangco, President Cory Aquino's brother, businessmen and mid-
level government officials plotted moves to bring down the Arroyo On the other hand, Cesar Renerio, spokesman for the National
administration.  Nelly Sindayen of TIME Magazine reported that Democratic Front (NDF) at North Central Mindanao, publicly
Pastor Saycon, longtime Arroyo critic, called a U.S. government announced: 'Anti-Arroyo groups within the military and police are
official about his group's plans if President Arroyo is growing rapidly, hastened by the economic difficulties suffered by
ousted.  Saycon also phoned a man code-named Delta. Saycon the families of AFP officers and enlisted personnel who undertake
identified him as B/Gen. Danilo Lim, Commander of the Army's counter-insurgency operations in the field.  He claimed that with
elite Scout Ranger.  Lim said 'it was all systems go for the planned the forces of the national democratic movement, the anti-Arroyo
movement against Arroyo.[8]chanroblesvirtuallawlibrary conservative political parties, coalitions, plus the groups that have
been reinforcing since June 2005, it is probable that the President's
B/Gen. Danilo Lim and Brigade Commander Col. Ariel Querubin ouster is nearing its concluding stage in the first half of 2006.
confided to Gen. Generoso Senga, Chief of Staff of the Armed
Forces of the Philippines (AFP), that a huge number of soldiers Respondents further claimed that the bombing of
would join the rallies to provide a critical mass and armed telecommunication towers and cell sites in Bulacan and Bataan was
component to the Anti-Arroyo protests to be held on February 24, also considered as additional factual basis for the issuance of PP
2005.   According to these two (2) officers, there was no way they 1017 and G.O. No. 5.   So is the raid of an army outpost in
could possibly stop the soldiers because they too, were breaking Benguet resulting in the death of three (3) soldiers.   And also the
directive of the Communist Party of the Philippines ordering its shrine.   Those who were already near the EDSA site were violently
front organizations to join 5,000 Metro Manila radicals and 25,000 dispersed by huge clusters of anti-riot police.   The well-trained
more from the provinces in mass protests. policemen used truncheons, big fiber glass shields, water cannons,
[10]chanroblesvirtuallawlibrary and tear gas to stop and break up the marching groups, and
scatter the massed participants. The same police action was used
By midnight of February 23, 2006, the President convened her against the protesters marching forward to Cubao, Quezon City and
security advisers and several cabinet members to assess the to the corner of Santolan Street and EDSA.   That same evening,
gravity of the fermenting peace and order situation.   She directed hundreds of riot policemen broke up an EDSA celebration rally held
both the AFP and the PNP to account for all their men and ensure along Ayala Avenue and Paseo de Roxas Street in Makati City.[12] 
that the chain of command remains solid and undivided.   To
protect the young students from any possible trouble that might According to petitioner Kilusang Mayo Uno, the police cited PP 1017
break loose on the streets, the President suspended classes in all as the ground for the dispersal of their assemblies.
levels in the entire National Capital Region.  
During the dispersal of the rallyists along EDSA, police arrested
For their part, petitioners cited the events that followed (without warrant) petitioner Randolf S. David, a professor at the
after the issuance of PP 1017 and G.O. No. 5. University of the Philippines and newspaper columnist. Also
arrested was his companion, Ronald Llamas, president of party-
Immediately, the Office of the President announced the list Akbayan.
cancellation of all programs and activities related to the
20th anniversary celebration of Edsa People Power I; and revoked At around 12:20 in the early morning of February 25, 2006,
the permits to hold rallies issued earlier by the local governments. operatives of the Criminal Investigation and Detection Group
Justice Secretary Raul Gonzales stated that political rallies, which (CIDG) of the PNP, on the basis of PP 1017 and G.O. No. 5, raided
to the President's mind were organized for purposes of the Daily Tribune offices in Manila.   The raiding team confiscated
destabilization, are cancelled. Presidential Chief of Staff Michael news stories by reporters, documents, pictures, and mock-ups of
Defensor announced that 'warrantless arrests and take-over of the Saturday issue.   Policemen from Camp Crame in Quezon City
facilities, including media, can already be implemented.[11]  were stationed inside the editorial and business offices of the
newspaper; while policemen from the Manila Police District were
Undeterred by the announcements that rallies and public stationed outside the building.[13]       
assemblies would not be allowed, groups of protesters (members
of Kilusang Mayo Uno [KMU] and National Federation of Labor A few minutes after the search and seizure at the Daily
Unions-Kilusang Mayo Uno [NAFLU-KMU]), marched from various Tribune offices, the police surrounded the premises of another pro-
parts of Metro Manila with the intention of converging at the EDSA
opposition paper, Malaya, and its sister publication, the tabloid When members of petitioner KMU went to Camp Crame to visit
Abante. Beltran, they were told they could not be admitted because of PP
1017 and G.O. No. 5.   Two members were arrested and detained,
The raid, according to Presidential Chief of Staff Michael while the rest were dispersed by the police.
Defensor,  is 'meant to show a 'strong presence, to tell media
outlets not to connive or do anything that would help the rebels in Bayan Muna Representative Satur Ocampo eluded arrest when the
bringing down this government.   The PNP warned that it would police went after him during a public forum at the Sulo Hotel in
take over any media organization that would not follow 'standards Quezon City.   But his two drivers, identified as Roel and Art, were
set by the government during the state of national taken into custody.
emergency.   Director General Lomibao stated that 'if they do not
follow the standards ' and the standards are - if they would Retired Major General Ramon Montao, former head of the
contribute to instability in the government, or if they do not Philippine Constabulary, was arrested while with his wife and
subscribe to what is in General Order No. 5 and Proc. No. 1017 ' golfmates at the Orchard Golf and Country Club in Dasmarias,
we will recommend a 'takeover.  National Telecommunications' Cavite.
Commissioner Ronald Solis urged television and radio networks to
'cooperate with the government for the duration of the state of Attempts were made to arrest Anakpawis Representative Satur
national emergency.    He asked for 'balanced reporting from Ocampo, Representative Rafael Mariano, Bayan
broadcasters when covering the events surrounding the coup Muna Representative Teodoro Casio and Gabriela Representative
attempt foiled by the government.   He warned that his agency will Liza Maza.   Bayan Muna Representative Josel Virador was arrested
not hesitate to recommend the closure of any broadcast outfit that at the PAL Ticket Office in Davao City.  Later, he was turned over
violates rules set out for media coverage when the national to the custody of the House of Representatives where the 'Batasan
security is threatened.[14]chanroblesvirtuallawlibrary 5 decided to stay indefinitely.     

Also, on February 25, 2006, the police arrested Congressman Let it be stressed at this point that the alleged violations of the
Crispin Beltran, representing the Anakpawis Party and Chairman rights of Representatives Beltran, Satur Ocampo, et al., are not
of Kilusang Mayo Uno (KMU), while leaving his farmhouse in being raised in these petitions.
Bulacan.    The police showed a warrant for his arrest dated 1985.
Beltran's lawyer explained that the warrant, which stemmed from a  On March 3, 2006, President Arroyo issued PP 1021 declaring that
case of inciting to rebellion filed during the Marcos regime, had the state of national emergency has ceased to exist.
long been quashed.   Beltran, however, is not a party in any of
these petitions.
In the interim, these seven (7) petitions challenging the
constitutionality of PP 1017 and G.O. No. 5 were filed with this
Court against the above-named respondents.  Three (3) of these unconstitutional because (1) they arrogate unto President Arroyo
petitions impleaded President Arroyo as respondent. the power to enact laws and decrees; (2) their issuance was
without factual basis; and (3) they violate freedom of expression
         In G.R. No. 171396, petitioners Randolf S. David, et al. and the right of the people to peaceably assemble to redress their
assailed PP 1017 on the grounds that (1) it encroaches on the grievances.
emergency powers of Congress; (2) it is a subterfuge to avoid the
constitutional requirements for the imposition of martial law; In G.R. No. 171400, petitioner Alternative Law Groups, Inc.
and (3) it violates the constitutional guarantees of freedom of the (ALGI) alleged that PP 1017 and G.O. No. 5 are unconstitutional
press, of speech and of assembly. because they violate  (a)  Section 4[15] of Article II, (b) Sections
1,[16] 2,[17] and 4[18]  of Article III, (c) Section 23[19] of Article
         In G.R. No. 171409, petitioners Ninez Cacho-Olivares VI,  and  (d)  Section 17[20] of Article XII of the Constitution. 
and Tribune Publishing Co., Inc. challenged the CIDG's act of
raiding the Daily Tribune offices as a clear case of 'censorship or In G.R. No. 171489, petitioners Jose Anselmo I. Cadiz et
'prior restraint.   They also claimed that the term 'emergency refers al., alleged that PP 1017 is an 'arbitrary and unlawful exercise by
only to tsunami, typhoon, hurricane and similar occurrences, the President of her Martial Law powers.   And assuming that PP
hence, there is 'absolutely no emergency that warrants the 1017 is not really a declaration of Martial Law, petitioners argued
issuance of PP 1017.  that 'it amounts to an exercise by the President of emergency
powers without congressional approval.  In addition, petitioners
   In G.R. No. 171485, petitioners herein are Representative asserted that PP 1017 'goes beyond the nature and function of a
Francis Joseph G. Escudero, and twenty one (21) other members proclamation as defined under the Revised Administrative Code.
of the House of Representatives, including Representatives Satur
Ocampo, Rafael Mariano, Teodoro Casio, Liza Maza, and Josel And lastly, in G.R. No. 171424, petitioner Loren B. Legarda
Virador.   They asserted that PP 1017 and G.O. No. 5 constitute maintained that PP 1017 and G.O. No. 5 are 'unconstitutional for
'usurpation of legislative powers; 'violation of freedom of being violative of the freedom of expression, including its cognate
expression and 'a declaration of martial law.   They alleged that rights such as freedom of the press and the right to access to
President Arroyo 'gravely abused her discretion in calling out the information on matters of public concern, all guaranteed under
armed forces without clear and verifiable factual basis of the Article III, Section 4 of the 1987 Constitution.  In this regard, she
possibility of lawless violence and a showing that there is necessity stated that these issuances prevented her from fully prosecuting
to do so. her election protest pending before the Presidential Electoral
Tribunal.
      In G.R. No. 171483, petitioners KMU, NAFLU-KMU, and
their members averred that PP 1017 and G.O. No. 5 are
         In respondents' Consolidated Comment, the Solicitor General I- Moot and Academic Principle
countered that: first, the petitions should be dismissed for
being             moot; second, petitioners in G.R. Nos. 171400          One of the greatest contributions of the American system to
(ALGI),  171424 (Legarda), 171483 (KMU et al.), 171485 this country is the concept of judicial review enunciated in Marbury
(Escudero et al.) and 171489 (Cadiz et al.) have no legal v. Madison.[21] This concept rests on the extraordinary simple
standing;  third, it is not necessary for petitioners to implead foundation --
President Arroyo as respondent;  fourth,  PP 1017 has
constitutional and legal basis; and fifth, PP 1017 does not violate          The Constitution is the supreme law. It was
ordained by the people, the ultimate source of all
the people's right to free expression and redress of grievances.
political authority. It confers limited powers on the
national government. x x x If the government
         On March 7, 2006, the Court conducted oral arguments and consciously or unconsciously oversteps these
limitations there must be some authority
heard the parties on the above interlocking issues which may be competent to hold it in control, to thwart its
summarized as follows: unconstitutional attempt, and thus to vindicate
and preserve inviolate the will of the people as
expressed in the Constitution. This power the
                    A.    PROCEDURAL: courts exercise. This is the beginning and the
1)    Whether the issuance of PP 1021 renders the end of the theory of judicial review.[22]
petitions moot and academic.  
2)    Whether petitioners in 171485 (Escudero et          But the power of judicial review does not repose upon the
al.), G.R. Nos. 171400 (ALGI), 171483 (KMU et courts a 'self-starting capacity.[23]  Courts may exercise such
al.), 171489 (Cadiz et al.), and 171424 (Legarda) power only when the following requisites are present: first, there
have legal standing. must be an actual case or controversy; second, petitioners have to
                  B.      SUBSTANTIVE: raise a question of constitutionality; third, the constitutional
1)    Whether the Supreme Court can review the question must be raised at the earliest opportunity; and fourth, the
factual bases of PP 1017. decision of the constitutional question must be necessary to the
2)    Whether PP 1017 and G.O. No. 5 are determination of the case itself.[24] 
unconstitutional.
a. Facial Challenge Respondents maintain that the first and second requisites are
b. Constitutional Basis
c. As Applied Challenge absent, hence, we shall limit our discussion thereon.
 
A.            PROCEDURAL
An actual case or controversy involves a conflict of legal right, an
 
opposite legal claims susceptible of judicial resolution.  It is
         First, we must resolve the procedural roadblocks.
'definite and concrete, touching the legal relations of parties having
adverse legal    interest; a real and substantial controversy and the public;[33] and fourth, the case is capable of repetition yet
admitting of specific relief.[25]  The Solicitor General refutes the evading review.[34]chanroblesvirtuallawlibrary
existence of such actual case or controversy, contending that the
present petitions were rendered 'moot and academic by President All the foregoing exceptions are present here and justify this
Arroyo's issuance of PP 1021. Court's assumption of jurisdiction over the instant
petitions.  Petitioners alleged that the issuance of PP 1017 and
Such contention lacks merit. G.O. No. 5 violates the Constitution.  There is no question that the
issues being raised affect the public's interest, involving as they do
A moot and academic case is one that ceases to present a the people's basic rights to freedom of expression, of assembly and
justiciable controversy by virtue of supervening events,[26] so that of the press.   Moreover, the Court has the duty to formulate
a declaration thereon would be of no practical use or value. guiding and controlling constitutional precepts, doctrines or
[27]  Generally, courts decline jurisdiction over such case[28] or rules.  It has the symbolic function of educating the bench and the
dismiss it on ground of mootness.[29]   bar, and in the present petitions, the military and the police, on
the extent of the protection given by constitutional guarantees.
The Court holds that President Arroyo's issuance of PP 1021 did not [35]  And lastly, respondents' contested actions are capable of
render the present petitions moot and academic.   During the eight repetition.  Certainly, the petitions are subject to judicial    review.
(8) days that PP 1017 was operative, the police officers, according
to petitioners, committed illegal acts in implementing it.  Are PP In their attempt to prove the alleged mootness of this case,
1017 and G.O. No. 5 constitutional or valid?  Do they justify respondents cited Chief Justice Artemio V. Panganiban's Separate
these alleged illegal acts?  These are the vital issues that must Opinion in Sanlakas v. Executive Secretary.[36]   However, they
be resolved in the present petitions.  It must be stressed that 'an failed to take into account the Chief Justice's very statement that
unconstitutional act is not a law, it confers no rights, it an otherwise 'moot case may still be decided 'provided the party
imposes no duties, it affords no protection; it is in legal raising it in a proper case has been and/or continues to be
contemplation, inoperative.[30]chanroblesvirtuallawlibrary prejudiced or damaged as a direct result of its issuance.   The
present case falls right within this exception to the mootness rule
The 'moot and academic principle is not a magical formula that can pointed out by the Chief Justice.
automatically dissuade the courts in resolving a case.  Courts will
decide cases, otherwise moot and academic, if:  first, there is a II- Legal Standing
grave violation of the Constitution;[31] second, the exceptional
character of the situation and the paramount public interest is In view of the number of petitioners suing in various personalities,
involved;[32] third, when constitutional issue raised requires the Court deems it imperative to have a more than passing
formulation of controlling principles to guide the bench, the bar, discussion on legal standing or locus standi.
  partiesIt is at least the right, if not the duty, of every citizen
         Locus standi is defined as 'a right of appearance in a court to interfere and see that a public offence be properly
of justice on a given question.[37]   In private suits, standing is pursued and punished, and that a public grievance be
governed by the 'real-parties-in interest rule as contained in remedied.   With respect to taxpayer's suits, Terr v.
Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. Jordan[41]  held that 'the right of a citizen and a taxpayer to
It provides that 'every action must be prosecuted or defended maintain an action in courts to restrain the unlawful use of
in the name of the real party in interest.  Accordingly, the public funds to his injury cannot be denied.
'real-party-in interest is 'the party who stands to be benefited
or injured by the judgment in the suit or the party entitled          However, to prevent just about any person from seeking
to the avails of the suit.[38] Succinctly put, the plaintiff's judicial interference in any official policy or act with which he
standing is based on his own right to the relief sought. disagreed with, and thus hinders the activities of governmental
 
agencies engaged in public service, the United State Supreme
 
Court laid down the more stringent 'direct injury test in Ex Parte
         The difficulty of determining locus standi arises in public
Levitt,[42] later reaffirmed in Tileston v. Ullman.[43]  The same
suits.         Here, the plaintiff who asserts a 'public right in
Court ruled that for a private individual to invoke the judicial power
assailing an allegedly illegal official action, does so as a
to determine the validity of an executive or legislative action, he
representative of the general public.   He may be a person who is
must show that he has sustained a direct injury as a result
affected no differently from any other person.  He could be suing
of that action, and it is not sufficient that he has a general
as a 'stranger, or in the category of a citizen, or 'taxpayer.  In
interest common to all members of the public.
either case, he has to adequately show that he is entitled to seek
judicial protection.   In other words, he has to make out a sufficient
interest in the vindication of the public order and the securing of This Court adopted the 'direct injury test in our

relief as a 'citizen or 'taxpayer. jurisdiction.   In People v. Vera,[44]  it held that the person who
impugns the validity of a statute must have 'a personal and
substantial interest in the case such that he has sustained,
         Case law in most jurisdictions now allows both 'citizen and
or will sustain direct injury as a result.  The Vera doctrine was
'taxpayer standing in public actions.   The distinction was first laid
upheld in a litany of cases, such as, Custodio v. President of the
down in Beauchamp v. Silk,[39]  where it was held that the plaintiff
Senate,[45] Manila Race Horse Trainers' Association v. De la
in a taxpayer's suit is in a different category from the plaintiff in a
Fuente,[46]  Pascual v. Secretary of Public Works[47] and Anti-
citizen's suit.  In the former, the plaintiff is affected by the
Chinese League of the Philippines v. Felix.[48]
expenditure of public funds, while in the latter, he is but the
mere instrument of the public concern.   As held by the New
York Supreme Court in People ex rel Case v. Collins:[40]   'In However, being a mere procedural technicality, the requirement

matter of mere public right, howeverthe people are the real of locus standi may be waived by the Court in the exercise of its
discretion. This was done in the 1949 Emergency Powers 'Balikatan 02-01 involves the exercise of Congress'
taxing or spending powers, it               reiterated its
Cases, Araneta v. Dinglasan,[49] where the 'transcendental ruling in Bagong Alyansang Makabayan v. Zamora,
importance of the cases prompted the Court to act [55]  that in cases of transcendental
importance, the cases must be settled promptly
liberally.   Such liberality was neither a rarity nor
and definitely and standing requirements may
accidental.   In Aquino v. Comelec,[50]  this  Court resolved to be relaxed.
pass upon the issues raised due to the 'far-reaching
implications of the petition notwithstanding its categorical  
statement that petitioner therein had no personality to file the By way of summary, the following rules may be culled from
suit.  Indeed, there is a chain of cases where this liberal policy has the  cases decided by this Court.   Taxpayers, voters, concerned
been observed, allowing ordinary citizens, members of Congress, citizens, and legislators may be accorded standing to sue, provided
and civic organizations to prosecute actions involving the that the following requirements are met:
constitutionality or validity of laws, regulations and rulings.[51] 
(1)                   the cases involve constitutional issues;
         Thus, the Court has adopted a rule that even where the
petitioners have failed to show direct injury, they have been (2)                   for taxpayers, there must be a claim of

allowed to sue under the principle of 'transcendental illegal disbursement of public funds or that the tax

importance. Pertinent are the following cases: measure is unconstitutional;

(1) Chavez v. Public Estates Authority,[52] where

(3)                   for voters, there must be a showing of
the Court ruled that the enforcement of the
constitutional right to information and the obvious interest in the validity of the election law in
equitable diffusion of natural resources are question;
matters of transcendental importance which
clothe the petitioner with locus standi;
(4)                   for concerned citizens, there must be a
  showing that the issues raised are of transcendental
(2) Bagong Alyansang Makabayan v. Zamora,
[53]  wherein the Court held that 'given the importance which must be settled early; and
transcendental importance of the issues
involved, the Court may relax the standing (5)                    for legislators, there must be a claim that
requirements and allow the suit to prosper
the official action complained of infringes upon their
despite the lack of direct injury to the parties
seeking judicial review of the Visiting Forces prerogatives as legislators.
Agreement;
  Significantly, recent decisions show a certain toughening in the
(3) Lim v. Executive Secretary,[54]  while the Court
Court's attitude toward legal standing.  
noted that the petitioners may not file suit in their
capacity as taxpayers absent a showing that
         In Kilosbayan, Inc. v. Morato,[56] the Court ruled that the The locus standi of petitioners in G.R. No. 171396, particularly
status of Kilosbayan as a people's organization does not give it the David and Llamas, is beyond doubt.   The same holds true with
requisite personality to question the validity of the on-line lottery petitioners in G.R. No. 171409, Cacho-Olivares
contract, more so where it does not raise any issue of and Tribune Publishing Co. Inc.  They alleged direct injury resulting
constitutionality.  Moreover, it cannot sue as a taxpayer absent any from 'illegal arrest and 'unlawful search committed by police
allegation that public funds are being misused. Nor can it sue as a operatives pursuant to PP 1017.  Rightly so, the Solicitor General
concerned citizen as it does not allege any specific injury it has does not question their legal standing.
suffered.
         In G.R. No. 171485, the opposition Congressmen alleged
         In Telecommunications and Broadcast Attorneys of the there was usurpation of legislative powers.   They also raised the
Philippines, Inc. v. Comelec,[57]  the Court reiterated the 'direct issue of whether or not the concurrence of Congress is necessary
injury test with respect to concerned citizens' cases involving whenever the alarming powers incident to Martial Law are
constitutional issues.   It held that 'there must be a showing that used.   Moreover, it is in the interest of justice that those affected
the citizen personally suffered some actual or threatened injury by PP 1017 can be represented by their Congressmen in bringing to
arising from the alleged illegal official act. the attention of the Court the alleged violations of their basic
rights.
In Lacson v. Perez,[58] the Court ruled that one of the
petitioners, Laban ng Demokratikong Pilipino (LDP), is not a real          In G.R. No. 171400, (ALGI), this Court applied the liberality
party-in-interest as it had not demonstrated any injury to itself or rule in Philconsa v. Enriquez,[60] Kapatiran Ng Mga Naglilingkod sa
to its leaders, members or supporters.   Pamahalaan ng Pilipinas, Inc. v. Tan,[61] Association of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian
In Sanlakas v. Executive Secretary,[59] the Court ruled that only Reform,[62] Basco v. Philippine Amusement and Gaming
the petitioners who are members of Congress have standing to Corporation,[63] and Taada v. Tuvera,[64]  that when the issue
sue, as they claim that the President's declaration of a state of concerns a public right, it is sufficient that the petitioner is a citizen
rebellion is a usurpation of the emergency powers of and has an interest in the execution of the laws.
Congress, thus impairing their legislative powers. As to
petitioners Sanlakas, Partido Manggagawa, and Social Justice In G.R. No. 171483,  KMU's assertion that PP 1017 and G.O. No.
Society, the Court declared them to be devoid of standing, 5 violated its right to peaceful assembly may be deemed sufficient
equating them with the LDP in Lacson.  to give it legal standing.  Organizations may be granted
standing to assert the rights of their members.[65]    We take
Now,  the application of the above principles to the present judicial notice of the announcement by the Office of the President
petitions.
banning all rallies and canceling all permits for public assemblies It must always be borne in mind that the question of locus standi is
following the issuance of PP 1017 and G.O. No. 5. but corollary to the bigger question of proper exercise of judicial
power. This is the underlying legal tenet of the 'liberality doctrine
In G.R. No. 171489, petitioners, Cadiz et al., who are national on legal standing.   It cannot be doubted that the validity of PP No.
officers of the Integrated Bar of the Philippines (IBP) have no legal 1017 and G.O.  No. 5 is a judicial question which is of paramount
standing, having failed to allege any direct or potential injury which importance to the Filipino people.   To paraphrase Justice Laurel,
the IBP as an institution or its members may suffer as a the whole of Philippine society now waits with bated breath the
consequence of the issuance of PP No. 1017 and G.O. No. ruling of this Court on this very critical matter. The petitions thus
5.  In Integrated Bar of the Philippines v. Zamora,[66]  the Court call for the application of the 'transcendental
held that the mere invocation by the IBP of its duty to preserve the importance doctrine, a relaxation of the standing requirements for
rule of law and nothing more, while undoubtedly true, is not the petitioners in the 'PP 1017 cases.  
sufficient to clothe it with standing in this case.   This is too general  
an interest which is shared by other groups and the whole This Court holds that all the petitioners herein have locus standi.
citizenry.  However, in view of the transcendental importance of  
the issue, this Court declares that petitioner have locus standi. Incidentally, it is not proper to implead President Arroyo as
respondent.  Settled is the doctrine that the President, during his
In G.R. No. 171424, Loren Legarda has no personality as a tenure of office or actual incumbency,[67] may not be sued
taxpayer to file the instant petition as there are no allegations of in any civil or criminal case, and there is no need to provide for it
illegal disbursement of public funds.   The fact that she is a former in the Constitution or law.  It will degrade the dignity of the high
Senator is of no consequence.   She can no longer sue as a office of the President, the Head of State, if he can be dragged into
legislator on the allegation that her prerogatives as a lawmaker court litigations while serving as such.   Furthermore, it is
have been impaired by PP 1017 and G.O. No. 5.    Her claim that important that he be freed from any form of harassment, hindrance
she is a media personality will not likewise aid her because there or distraction to enable him to fully attend to the performance of
was no showing that the enforcement of these issuances prevented his official duties and functions.  Unlike the legislative and judicial
her from pursuing her occupation.  Her submission that she has branch, only one constitutes the executive branch and anything
pending electoral protest before the Presidential Electoral Tribunal which impairs his usefulness in the discharge of the many great
is likewise of no relevance.  She has not sufficiently shown that PP and important duties imposed upon him by the Constitution
1017 will affect the proceedings or result of her case.  But necessarily impairs the operation of the Government.  However,
considering once more the transcendental importance of the issue this does not mean that the President is not accountable to
involved, this Court may relax the standing rules. anyone.  Like any other official, he remains accountable to the
people[68] but he may be removed from office only in the mode
provided by law and that is by impeachment. allotted to him by the Basic Law, and             the authority to
[69]chanroblesvirtuallawlibrary determine whether or not he has so acted is vested            in
  the Judicial Department, which in this respect, is,
in                                 turn, constitutionally supreme.[76]  In
B.  SUBSTANTIVE 1973, the unanimous Court of Lansang was divided in Aquino v.
Enrile.[77]  There, the Court was                      almost evenly
I. Review of Factual Bases     
divided on the issue of whether the validity of

  the                         imposition of Martial Law is a political or

Petitioners maintain that PP 1017 has no factual basis.   Hence, it justiciable question.[78]   Then came Garcia-Padilla v. Enrile which

was not 'necessary for President Arroyo to issue such greatly diluted Lansang.  It declared that there is a need to re-

Proclamation.   examine the latter case, ratiocinating that in times of war or

national emergency, the President must be given absolute
control for the very life of the nation and the government is
The issue of whether the Court may review the factual bases of the
in great peril.  The President, it intoned, is answerable only
President's exercise of his Commander-in-Chief power has reached
to his conscience, the People, and God.[79] 
its distilled point - from the indulgent days of Barcelon v.
Baker[70]                            and Montenegro v.
Castaneda[71] to the volatile era of Lansang v.              Garcia, The Integrated Bar of the Philippines v. Zamora[80] -- a recent

[72] Aquino, Jr. v. Enrile,[73] and Garcia-Padilla v. Enrile. case most pertinent to these cases at bar -- echoed a principle

[74]  The tug-of-war always cuts across the line defining political similar to Lansang.  While the Court considered the President's

questions, particularly those questions 'in regard to which full 'calling-out power as a discretionary power solely vested in his

discretionary authority has been delegated to the legislative or wisdom, it stressed that 'this does not prevent an examination

executive branch of the government.[75]  Barcelon and of whether such power was exercised within permissible

Montenegro were in unison in declaring that the authority to constitutional limits or whether it was exercised in a

decide whether an exigency has arisen belongs to the manner constituting grave abuse of discretion.    This ruling is

President and his decision is final and conclusive on the mainly a result of the Court's reliance on Section 1, Article VIII of

courts.  Lansang took the opposite view. There, the members of 1987 Constitution which fortifies the authority of the courts to

the Court were unanimous in the conviction that the Court has the determine in an appropriate action the validity of the acts of the

authority to inquire into the existence of factual bases in order to political departments.   Under the new definition of judicial power,

determine their constitutional sufficiency.  From the principle of the courts are authorized not only 'to settle actual controversies

separation of powers, it shifted the focus to the system of involving rights which are legally demandable and enforceable, but

checks and balances, 'under which the President is also 'to determine whether or not there has been a grave

supreme, x x x only if and when he acts within the sphere abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of events.  Thus, absent any contrary allegations, the Court is
the government.   The latter part of the authority represents a convinced that the President was justified in issuing PP 1017 calling
broadening of judicial power to enable the courts of justice to for military aid.
review what was before a forbidden territory,    to wit, the  
discretion of the political departments of the government.[81]   It  
 
speaks of judicial prerogative not only in terms of power but also
Indeed, judging the seriousness of the incidents, President Arroyo
of duty.[82] 
was not expected to simply fold her arms and do nothing to
        
prevent or suppress what she believed was lawless violence,
As to how the Court may inquire into the President's exercise of
invasion or rebellion.   However, the exercise of such power or duty
power, Lansang adopted the test that judicial inquiry can go no
must not stifle liberty.
further than to satisfy the Court not that the President's decision
 
is correct, but that 'the President did not act arbitrarily. Thus, the
II. Constitutionality of PP 1017 and G.O. No. 5
standard laid down is not correctness, but arbitrariness.  
[83]  In Integrated Bar of the Philippines, this Court further ruled Doctrines of Several Political Theorists
on the Power of the President
that it is incumbent upon the petitioner to show that the
in Times of Emergency
President's decision is totally bereft of factual basis and that  
if he fails, by way of proof, to support his assertion, then 'this  
Court cannot undertake an independent investigation This case brings to fore a contentious subject -- the power of the
beyond the pleadings. President in times of emergency.   A glimpse at the various political
  theories relating to this subject provides an adequate backdrop for
our ensuing discussion.
Petitioners failed to show that President Arroyo's exercise of the  
calling-out power, by issuing PP 1017, is totally bereft of factual  
basis.  A reading of the Solicitor General's Consolidated Comment John Locke, describing the architecture of civil government, called
and Memorandum shows a detailed narration of the events leading upon the English doctrine of prerogative to cope with the problem
to the issuance of PP 1017, with supporting reports forming part of of emergency.   In times of danger to the nation, positive law
the records.  Mentioned are the escape of the Magdalo Group, their enacted by the legislature might be inadequate or even a fatal
audacious threat of the Magdalo D-Day, the defections in the obstacle to the promptness of action necessary to avert
military, particularly in the Philippine Marines, and the reproving catastrophe.  In these situations, the Crown retained a prerogative
statements from the communist leaders. There was also the 'power to act according to discretion for the public good,
Minutes of the Intelligence Report and Security Group of the without the proscription of the law and sometimes even
Philippine Army showing the growing alliance between the NPA and against it.[84]  But Locke recognized that this moral restraint
the military.   Petitioners presented nothing to refute such might not suffice to avoid abuse of prerogative powers.   Who
shall judge the need for resorting to the prerogative and  
 
how may its abuse be avoided?  Here, Locke readily admitted
John Stuart Mill concluded his ardent defense of representative
defeat, suggesting that 'the people have no other remedy in
government: 'I am far from condemning, in cases of extreme
this, as in all other cases where they have no judge on
necessity, the assumption of absolute power in the form of a
earth, but to appeal to Heaven.[85]  
  temporary dictatorship.[88] 
   

Jean-Jacques Rousseau also assumed the need for temporary

suspension of democratic processes of government in time of Nicollo Machiavelli's view of emergency powers, as one element in
emergency.  According to him: the whole scheme of limited government, furnished an ironic
contrast to the Lockean theory of prerogative.   He recognized and
The inflexibility of the laws, which prevents them attempted to bridge this chasm in democratic political
from adopting themselves to circumstances, may, in theory,  thus:
certain cases, render them disastrous and make
them bring about, at a time of crisis, the ruin of the
State             Now, in a well-ordered society, it should
  never be necessary to resort to extra 'constitutional
It is wrong therefore to wish to make political measures; for although they may for a time be
institutions as strong as to render it impossible to beneficial, yet the precedent is pernicious, for if the
suspend their operation. Even Sparta allowed its law practice is once established for good objects, they
to lapse... will in a little while be disregarded under that pretext
  but for evil purposes. Thus, no republic will ever be
If the peril is of such a kind that the paraphernalia of perfect if she has not by law provided for everything,
the laws are an obstacle to their preservation, the having a remedy for every emergency and fixed
method is to nominate a supreme lawyer, who shall rules for applying it.[89] 
silence all the laws and suspend for a moment the  
sovereign authority. In such a case, there is no  
doubt about the general will, and it clear that the
         Machiavelli ' in contrast to Locke, Rosseau and Mill ' sought
people's first intention is that the State shall not
perish.[86] to incorporate into the constitution a regularized system of standby
  emergency powers to be invoked with suitable checks and controls
 
in time of national danger.  He attempted forthrightly to meet the
Rosseau did not fear the abuse of the emergency dictatorship or
problem of combining a capacious reserve of power and speed and
'supreme magistracy as he termed it.  For him, it would more
vigor in its application in time of emergency, with effective
likely be cheapened by 'indiscreet use.   He was unwilling to rely
constitutional restraints.[90]chanroblesvirtuallawlibrary
upon an 'appeal to heaven.  Instead, he relied upon a tenure of
office of prescribed duration to avoid perpetuation of the         
dictatorship.[87]chanroblesvirtuallawlibrary
Contemporary political theorists, addressing themselves to the not enjoy power to determine the existence of an
problem of response to emergency by constitutional democracies, emergency; emergency powers should be exercised under a
have employed the doctrine of constitutional dictatorship. strict time limitation; and last, the objective of emergency
[91] Frederick M. Watkins saw 'no reason why absolutism action must be the defense of the constitutional order.[97] 
should not be used as a means for the defense of liberal
institutions, provided it 'serves to protect established  
institutions from the danger of permanent injury in a period Clinton L. Rossiter, after surveying the history of the employment
of temporary emergency and is followed by a prompt return of emergency powers in Great Britain, France, Weimar, Germany
to the previous forms of political life.[92]   He recognized the and the United States, reverted to a description of a scheme of
two (2) key elements of the problem of emergency governance, as 'constitutional dictatorship as solution to the vexing problems
well as all constitutional governance: increasing administrative presented by emergency.[98]   Like Watkins and Friedrich, he
powers of the executive, while at the same time 'imposing stated a priori the conditions of success of  the  'constitutional
limitation upon that power.[93]   Watkins placed his real faith in dictatorship, thus:
a scheme of constitutional dictatorship.  These are the conditions of
1) No general regime or particular institution
success of such a dictatorship:  'The period of dictatorship must
of constitutional dictatorship should be
be relatively shortDictatorship should always be strictly initiated unless it is necessary or even
legitimate in characterFinal authority to determine the need indispensable to the preservation of the State
and its constitutional order
for dictatorship in any given case must never rest with the
 
dictator himself[94] and the objective of such an emergency 2)   'the decision to institute a constitutional
dictatorship should be 'strict political conservatism.  dictatorship should never be in the hands of
the man or men who will constitute the
dictator
   
Carl J. Friedrich cast his analysis in terms similar to those of 3)   No government should initiate a
constitutional dictatorship without making
Watkins.[95]   'It is a problem of concentrating power ' in a
specific provisions for its termination
government where power has consciously been divided ' to cope  
with situations of unprecedented magnitude and gravity.  There 4)   'all uses of emergency powers and all
readjustments in the organization of the
must be a broad grant of powers, subject to equally strong
government should be effected in pursuit  of
limitations as to who shall exercise such powers, when, for how constitutional or legal requirements'
long, and to what end.[96]  Friedrich, too, offered criteria for  
5)   ' no dictatorial institution should be
judging the adequacy of any of scheme of emergency powers, to adopted, no right invaded, no regular
wit: 'The emergency executive must be appointed by procedure altered any more than is absolutely
constitutional means ' i.e., he must be legitimate; he should necessary for the conquest of the particular
crisis . . .
   danger to the nation is not based upon sound constitutional
6)   The measures adopted in the prosecution
of the a constitutional dictatorship should theory. To appraise emergency power in terms of constitutional
never be permanent in character or effect dictatorship serves merely to distort the problem and hinder
 
realistic analysis.  It matters not whether the term 'dictator is used
7)   The dictatorship should be carried on by
persons representative of every part of the in its normal sense (as applied to authoritarian rulers) or is
citizenry interested in the defense of the employed to embrace all chief executives administering emergency
existing constitutional order. . .
powers. However used, 'constitutional dictatorship cannot be
 
8)   Ultimate responsibility should be divorced from the implication of suspension of the processes of
maintained for every action taken under a constitutionalism.   Thus, they favored instead the concept of
constitutional dictatorship. . .
constitutionalism articulated by Charles H. McIlwain:
 
 
9)   The decision to terminate a constitutional
A concept of constitutionalism which is less misleading in
dictatorship, like the decision to institute one
the analysis of problems of emergency powers, and which is
should never be in the hands of the man or
consistent with the findings of this study, is that formulated
men who constitute the dictator. . .
by Charles H. McIlwain. While it does not by any means
 
necessarily exclude some indeterminate limitations upon the
10)cralaw No constitutional dictatorship
substantive powers of government, full emphasis is placed
should extend beyond the termination of the
upon procedural limitations, and political
crisis for which it was instituted
responsibility. McIlwain clearly recognized the need to
 
repose adequate power in government. And in discussing
11)cralaw 'the termination of the crisis must
the meaning of constitutionalism, he insisted that
be followed by a complete return as possible
the historical and proper test of constitutionalism was
to the political and governmental conditions
the existence of adequate processes for keeping
existing prior to the initiation of the
government responsible.  He refused to equate
constitutional dictatorship[99] 
constitutionalism with the enfeebling of government by an
         exaggerated emphasis upon separation of powers and
  substantive limitations on governmental power. He found
Rossiter accorded to legislature a far greater role in the oversight that the really effective checks on despotism have consisted
not in the weakening of government but, but rather in
exercise of emergency powers than did Watkins.   He would secure
the limiting of it; between which there is a great and very
to Congress final responsibility for declaring the existence or significant difference. In associating constitutionalism
termination of an emergency, and he places great faith in the with limited as distinguished from 'weak government,
McIlwain  meant government limited to the orderly
effectiveness of congressional investigating committees.
procedure of law as opposed to the processes of
[100]chanroblesvirtuallawlibrary force. The two fundamental correlative elements of
         Scott and Cotter, in analyzing the above contemporary constitutionalism for which all lovers of liberty must
yet fight are the legal limits to arbitrary power and a
theories in light of recent experience, were one in saying that, 'the complete political responsibility of government to the
suggestion that democracies surrender the control of governed.[101]
government to an authoritarian ruler in time of grave  
In the final analysis, the various approaches to emergency of the unprotected and protected rights under Section 4, Article III of the
above political theorists '- from Lock's 'theory of prerogative, to Constitution and sent a 'chilling effect to the citizens. 
Watkins' doctrine of 'constitutional dictatorship and, eventually, to  

McIlwain's 'principle of constitutionalism ---  ultimately aim to solve A facial review of PP 1017, using the overbreadth doctrine, is

one real problem in emergency governance, i.e., that of allotting uncalled for.

 
increasing areas of discretionary power to the Chief  
Executive, while insuring that such powers will be exercised   First and foremost, the overbreadth doctrine is an analytical tool
with a sense of political responsibility and under effective developed for testing 'on their faces' statutes in free speech
limitations and checks.  cases, also known under the American Law as First Amendment
  cases.[103]chanroblesvirtuallawlibrary
Our Constitution has fairly coped with this problem.  Fresh from the  
 
fetters of a repressive regime, the 1986 Constitutional Commission,
A plain reading of PP 1017 shows that it is not primarily directed to
in drafting the 1987 Constitution, endeavored to create a
speech or even speech-related conduct.  It is actually a call upon
government in the concept of Justice Jackson's 'balanced power
the AFP to prevent or suppress all forms
structure.[102]  Executive, legislative, and judicial powers are
of lawless violence.  In United States v. Salerno,[104] the US
dispersed to the President, the Congress, and the Supreme Court,
Supreme Court held that 'we have not recognized an
respectively.  Each is supreme within its own sphere.  But none
'overbreadth doctrine outside the limited context of the First
has the monopoly of power in times of emergency.  Each
Amendment (freedom of speech). 
branch is given a role to serve as limitation or check upon
 
the other.  This  system  does  not  weaken  the  
President,  it  just  limits  his  power, using the language of Moreover, the overbreadth doctrine is not intended for testing the
McIlwain.  In other words, in times of emergency, our Constitution validity of a law that 'reflects legitimate state interest in
reasonably demands that we repose a certain amount of faith in maintaining comprehensive control over harmful, constitutionally
the basic integrity and wisdom of the Chief Executive but, at the unprotected conduct. Undoubtedly, lawless violence, insurrection
same time, it obliges him to operate within carefully and rebellion are considered 'harmful and 'constitutionally
prescribed procedural limitations.  unprotected conduct. In Broadrick v. Oklahoma,[105] it was held:
   
It remains a 'matter of no little difficulty to determine when
a. 'Facial Challenge
a law may properly be held void on its face and when 'such
 
summary action is inappropriate. But the plain  import of
 
our cases is, at the very least, that facial overbreadth
Petitioners contend that PP 1017 is void on its face because of its adjudication is an exception to our traditional rules of
'overbreadth. They claim that its enforcement encroached on both practice and that its function, a limited one at the
outset, attenuates as the otherwise unprotected
behavior that it forbids the State to sanction moves permitted to raise the rights of third parties and can
from 'pure speech toward conduct and that conduct only assert their own interests.  In overbreadth
'even if expressive ' falls within the scope of analysis, those rules give way; challenges are
otherwise valid criminal laws that reflect legitimate permitted to raise the rights of third parties; and the
state interests in maintaining comprehensive controls court invalidates the entire statute 'on its face, not merely
over harmful, constitutionally unprotected conduct. 'as applied for so that the overbroad law becomes
  unenforceable until a properly authorized court construes it
  more narrowly.  The factor that motivates courts to depart
         Thus, claims of facial overbreadth are entertained in cases from the normal adjudicatory rules is the concern with the
'chilling; deterrent effect of the overbroad statute on third
involving statutes which, by their terms, seek to regulate only parties not courageous enough to bring suit.  The Court
'spoken words and again, that 'overbreadth claims, if assumes that an overbroad law's 'very existence may cause
others not before the court to refrain from constitutionally
entertained at all, have been curtailed when invoked against
protected speech or expression.  An overbreadth ruling is
ordinary criminal laws that are sought to be applied to designed to remove that deterrent effect on the speech of
protected conduct.[106]   Here, the incontrovertible fact remains those third parties.
  
that PP 1017 pertains to a spectrum of conduct, not free speech,
 
which is manifestly subject to state regulation. 
In other words, a facial challenge using the overbreadth doctrine
 
  will require the Court to examine PP 1017 and pinpoint its flaws
         Second, facial invalidation of laws is considered as and defects, not on the basis of its actual operation to petitioners,
'manifestly strong medicine, to be used 'sparingly and only as but on the assumption or prediction that its very existence may
a last resort, and  is 'generally disfavored;[107]  The reason cause others not before the Court to refrain from
for this is obvious. Embedded in the traditional rules governing constitutionally protected speech or expression.  In Younger v.
constitutional adjudication is the principle that a person to whom a Harris,[109] it was held that:
 
law may be applied will not be heard to challenge a law on the
[T]he task of analyzing a proposed statute, pinpointing its
ground that it may conceivably be applied unconstitutionally to deficiencies, and requiring correction of these deficiencies
others, i.e., in other situations not before the Court.[108]  A before the statute is put into effect, is rarely if ever an
appropriate task for the judiciary. The combination of
writer and scholar in Constitutional Law explains further:
the relative remoteness of the controversy, the impact
  on the legislative process of the relief sought, and
The most distinctive feature of the overbreadth above all the speculative and amorphous nature of the
technique is that it marks an exception to some of the required line-by-line analysis of detailed
usual rules of constitutional litigation.  Ordinarily, a statutes,...ordinarily results in a kind of case that
particular litigant claims that a statute is is wholly unsatisfactory for deciding constitutional
unconstitutional as applied to him or her; if the questions, whichever way they might be decided.
litigant prevails, the courts carve away the
 
unconstitutional aspects of the law by invalidating its
improper applications on a case to case And third, a facial challenge on the ground of overbreadth is the
basis.  Moreover, challengers to a law are not most difficult challenge to mount successfully, since the challenger
must establish that there can be no instance when the throughout the Philippines, prevent or suppress all
forms of lawless violence as well any act of
assailed law may be valid.  Here, petitioners did not even insurrection or rebellion
attempt to show whether this situation exists.  
  Second provision:
 
Petitioners likewise seek a facial review of PP 1017 on the ground
  'and to enforce obedience to all the
of vagueness.    This, too, is unwarranted. laws  and  to  all decrees, orders and regulations
  promulgated by me personally or upon my direction;
  Related to the 'overbreadth doctrine is the 'void for vagueness  
Third provision:
doctrine which holds that 'a law is facially invalid if men of
 
common intelligence must necessarily guess at its meaning
as provided in Section 17, Article XII of the
and differ as to its application.[110] It is subject to the same
Constitution do hereby declare a State of National
principles governing overbreadth doctrine.  For one, it is also an
Emergency.
analytical tool for testing 'on their faces' statutes in free speech
 
cases.  And like overbreadth, it is said that a litigant may  
challenge a statute on its face only if it is vague in all its  
First Provision:  Calling-out Power
possible applications. Again, petitioners did not even
 
attempt to show that PP 1017 is vague in all its         
application. They also failed to establish that men of common The first provision pertains to the President's calling-out power.  In
intelligence cannot understand the meaning and application of PP Sanlakas v. Executive Secretary,[111]  this Court, through Mr.
1017.   Justice Dante O. Tinga, held that Section 18, Article VII of the
  Constitution reproduced as follows: 
b. Constitutional Basis of PP 1017  
              Sec. 18. The President shall be the
  Commander-in-Chief of all armed forces of the
Philippines and whenever it becomes necessary,
Now on the constitutional foundation of PP 1017. he may call out such armed forces to prevent or
  suppress lawless violence, invasion or
The operative portion of PP 1017 may be divided into three rebellion. In case of invasion or rebellion, when the
public safety requires it, he may, for a period not
important provisions, thus: exceeding sixty days, suspend the privilege of the
  writ of habeas corpus or place the Philippines or any
part thereof under martial law. Within forty-eight
First provision:
hours from the proclamation of martial law or the
 
suspension of the privilege of the writ of habeas
 by virtue of the power vested upon me by Section
corpus, the President shall submit a report in person
18, Artilce VII ' do hereby command the Armed
or in writing to the Congress. The Congress, voting
Forces of the Philippines, to maintain law and order
 jointly, by a vote of at least a majority of all its the calling-out power, the power to suspend the privilege of the
Members in regular or special session, may revoke
such proclamation or suspension, which revocation writ of habeas corpus, and the power to declare Martial
shall not be set aside by the President. Upon the Law.   Citing Integrated Bar of the Philippines v. Zamora,[112]  the
initiative of the President, the Congress may, in the
Court ruled that the only criterion for the exercise of the calling-out
same manner, extend such proclamation or
suspension for a period to be determined by the power is that 'whenever it becomes necessary, the President
Congress, if the invasion or rebellion shall persist may call the armed forces 'to prevent or suppress lawless
and public safety requires it.
violence, invasion or rebellion.  Are these conditions present in
 
                                    The Congress, if not in session, shall the instant cases?  As stated earlier, considering the circumstances
within twenty-four hours following such proclamation then prevailing, President Arroyo found it necessary to issue PP
or suspension, convene in accordance with its rules
1017.   Owing to her Office's vast intelligence network, she is in
without need of a call.
  the best position to determine the actual condition of the country.
            The Supreme Court may review, in an  
appropriate proceeding filed by any citizen, the
sufficiency of the factual bases of the proclamation of          Under the calling-out power, the President may summon the
martial law or the suspension of the privilege of the armed forces to aid him in suppressing lawless violence,
writ or the extension thereof, and must promulgate invasion and rebellion.  This involves ordinary police action.  But
its decision thereon within thirty days from its filing.
  every act that goes beyond the President's calling-out power is
            A state of martial law does not suspend the considered illegal or ultra vires.  For this reason, a President must
operation of the Constitution, nor supplant the
be careful in the exercise of his powers.   He cannot invoke a
functioning of the civil courts or legislative
assemblies, nor authorize the conferment of greater power when he wishes to act under a lesser power.  There
jurisdiction on military courts and agencies over lies the wisdom of our Constitution, the greater the power, the
civilians where civil courts are able to function, nor
greater are the limitations.
automatically suspend the privilege of the writ.
   
                                    The suspension of the privilege of the writ          It is pertinent to state, however, that there is a distinction
shall apply only to persons judicially charged for
between the President's authority to declare a 'state of rebellion
rebellion or offenses inherent in or directly connected
with invasion. (in Sanlakas) and the authority to proclaim a state of national
  emergency.  While President Arroyo's authority to declare a 'state
                                    During the suspension of the privilege of
the writ, any person thus arrested or detained shall of rebellion emanates from her powers as Chief Executive, the
be judicially charged within three days, otherwise he statutory authority cited in Sanlakas was Section 4, Chapter 2,
shall be released. Book II of the Revised Administrative Code of 1987, which
 
  provides:
grants the President, as Commander-in-Chief, a sequence of  
         SEC. 4. ' Proclamations. ' Acts of the
graduated powers.  From the most to the least benign, these are: President fixing a date or declaring a status or
 condition of public moment or interest, upon restoration of order and the enforcement of law.
the existence of which the operation of a
specific law or regulation is made to depend, [113]chanroblesvirtuallawlibrary
shall be promulgated in proclamations which         
shall have the force of an executive order.
In his  'Statement before the Senate Committee on Justice on
 
  March 13, 2006, Mr. Justice Vicente V. Mendoza,[114] an authority
         President Arroyo's declaration of a 'state of rebellion was in constitutional law, said that of the three powers of the President
merely an act declaring a status or condition of public moment or as Commander-in-Chief, the power to declare Martial Law poses
interest, a declaration allowed under Section 4 cited above.  Such the most severe threat to civil liberties.  It is a strong medicine
declaration, in the words of Sanlakas, is harmless, without legal which should not be resorted to lightly.  It cannot be used to stifle
significance, and deemed not written.  In these cases, PP 1017 is or persecute critics of the government.  It is placed in the keeping
more than that.  In declaring a state of national emergency, of the President for the purpose of enabling him to secure the
President Arroyo did not only rely on Section 18, Article VII of the people from harm and to restore order so that they can enjoy their
Constitution, a provision calling on the AFP to prevent or suppress individual freedoms.  In fact, Section 18, Art. VII, provides:
 
lawless violence, invasion or rebellion.  She also relied on Section
A state of martial law does not suspend the
17, Article XII, a provision on the State's extraordinary power to operation of the Constitution, nor supplant the
take over privately-owned public utility and business affected with functioning of the civil courts or legislative
assemblies, nor authorize the conferment of
public interest.   Indeed, PP 1017 calls for the exercise of jurisdiction on military courts and agencies over
an awesome power.  Obviously, such Proclamation cannot be civilians where civil courts are able to function, nor
deemed harmless, without legal significance, or not written, as in automatically suspend the privilege of the writ.
 
the case of Sanlakas.
 
 
         Justice Mendoza also stated that PP 1017 is not a declaration
         Some of the petitioners vehemently maintain that PP 1017 is
of Martial Law.   It is no more than a call by the President to the
actually a declaration of Martial Law.  It is no so.  What defines the
armed forces to prevent or suppress lawless violence.   As such, it
character of PP 1017 are its wordings.  It is plain therein that what
cannot be used to justify acts that only under a valid declaration of
the President invoked was her calling-out power.
Martial Law can be done.   Its use for any other purpose is a
 
perversion of its nature and scope, and any act done contrary to its
         The declaration of Martial Law is a 'warn[ing] to citizens that
command is ultra vires.  
the military power has been called upon by the executive to assist
 
in the maintenance of law and order, and that, while the
         Justice Mendoza further stated that specifically, (a) arrests
emergency lasts, they must, upon pain of arrest and punishment,
and seizures without judicial warrants; (b) ban on public
not commit any acts which will in any way render more difficult the
assemblies; (c) take-over of news media and agencies and press
censorship; and (d) issuance of Presidential Decrees, are powers
which can be exercised by the President as Commander-in- forces of the country,[117] including the Philippine National
Chief only where there is a valid declaration of Martial Law or Police[118] under the Department of Interior and Local
suspension of the writ of habeas corpus.  Government.[119] 
   
 
Based on the above disquisition, it is clear that PP 1017 is not a
Petitioners, especially Representatives Francis Joseph G. Escudero,
declaration of Martial Law.  It is merely an exercise of
Satur Ocampo, Rafael Mariano, Teodoro Casio, Liza Maza, and Josel
President Arroyo's calling-out power for the armed forces to
Virador argue that PP 1017 is unconstitutional as it arrogated upon
assist her in preventing or suppressing lawless violence.
  President Arroyo the power to enact laws and decrees in violation
  of Section 1, Article VI of the Constitution, which vests the power
  to enact laws in Congress.  They assail the clause 'to enforce
 
obedience to all the laws and to all decrees, orders and
Second Provision:  'Take Care Power
regulations promulgated by me personally or upon my
 
direction.
The second provision pertains to the power of the President to
\
ensure that the laws be faithfully executed.  This is based on
Petitioners' contention is understandable.  A reading of PP 1017
Section 17, Article VII which reads:
  operative clause shows that it was lifted[120] from Former
  President Marcos' Proclamation No. 1081, which partly reads:  
SEC. 17. The President shall have control of all the  
executive departments, bureaus, and offices. He  
shall ensure that the laws be faithfully NOW, THEREFORE, I, FERDINAND E. MARCOS,
executed. President of the Philippines by virtue of the powers
  vested upon me by Article VII, Section 10, Paragraph
  (2) of the Constitution, do hereby place the entire
  Philippines as defined in Article 1, Section 1 of the
  Constitution under martial law and, in my capacity as
 As the Executive in whom the executive power is vested,[115] the their Commander-in-Chief, do hereby command
the Armed Forces of the Philippines, to
primary function of the President is to enforce the laws as well as maintain law and order throughout the
to formulate policies to be embodied in existing laws.  He sees to it Philippines, prevent or suppress all forms of
that all laws are enforced by the officials and employees of his lawless violence as well as any act of
insurrection or rebellion and to enforce
department.  Before assuming office, he is required to take an oath obedience to all the laws and decrees, orders
or affirmation to the effect that as President of the Philippines, he and regulations promulgated by me personally
or upon my direction. 
will, among others, execute its laws.[116]  In the exercise of such
 
function, the President, if needed, may employ the powers  
attached to his office as the Commander-in-Chief of all the armed  
We all know that it was PP 1081 which granted President Marcos depend, shall be promulgated in proclamations which
shall have the force of an executive order.
legislative power.  Its enabling clause states:  to enforce
Sec. 5.  Memorandum Orders. ' Acts of the President
obedience to all the laws and decrees, orders and
on matters of administrative detail or of subordinate
regulations promulgated by me personally or upon my or temporary interest which only concern a particular
direction.  Upon the other hand, the enabling clause of PP 1017 officer or office of the Government shall be embodied
in memorandum orders.
issued by President Arroyo is: to enforce obedience to all the
Sec. 6.  Memorandum Circulars. ' Acts of the
laws and to all decrees, orders and regulations promulgated
President on matters relating to internal
by me personally or upon my direction. administration, which the President desires to bring
  to the attention of all or some of the departments,
agencies, bureaus or offices of the Government, for
Is it within the domain of President Arroyo to promulgate information or compliance, shall be embodied in
'decrees?  memorandum circulars.
  Sec. 7.  General or Special Orders. ' Acts and
PP  1017  states in commands of the President in his capacity as
Commander-in-Chief of the Armed Forces of the
part:   to  enforce  obedience  to  all  the  laws  and decrees x x
Philippines shall be issued as general or special
x promulgated by me personally or upon my direction.  orders. 
   
 
The President is granted an Ordinance Power under Chapter 2,
 President Arroyo's ordinance power is limited to the foregoing
Book III of Executive Order No. 292 (Administrative Code of
issuances. She cannot issue decrees similar to those issued by
1987).  She may issue any of the following:
Former President Marcos under PP 1081.   Presidential Decrees are
  laws which are of the same category and binding force as statutes
Sec. 2.  Executive Orders. ' Acts of the President because they were issued by the President in the exercise of his
providing for rules of a general or permanent
legislative power during the period of Martial Law under the 1973
character in implementation or execution of
constitutional or statutory powers shall be Constitution.[121] 
promulgated in executive orders.  
Sec. 3.  Administrative Orders. ' Acts of the President This Court rules that the assailed PP 1017 is
which relate to particular aspect of governmental
unconstitutional insofar as it grants President Arroyo the
operations in pursuance of his duties as
administrative head shall be promulgated in authority to promulgate 'decrees.  Legislative power is
administrative orders. peculiarly within the province of the Legislature.  Section 1, Article
Sec. 4.  Proclamations. ' Acts of the President fixing VI categorically states that '[t]he legislative power shall be
a date or declaring a status or condition of public
vested in the Congress of the Philippines which shall consist
moment or interest, upon the existence of which the
operation of a specific law or regulation is made to of a Senate and a House of Representatives.  To be sure,
neither Martial Law nor a state of rebellion nor a state of          Sec. 17. In times of national emergency, when
the public interest so requires, the State may, during
emergency can justify President Arroyo's exercise of legislative the emergency and under reasonable terms
power by issuing decrees.   prescribed by it, temporarily take over or direct the
operation of any privately-owned public utility or
 
business affected with public interest.
         Can President Arroyo enforce obedience to all decrees and  
laws through the military?  
   
  What could be the reason of President Arroyo in invoking the above
         As this Court stated earlier, President Arroyo has no provision when she issued PP 1017?
authority to enact decrees. It follows that these decrees are void  
and, therefore, cannot be enforced.  With respect to 'laws, she The answer is simple.  During the existence of the state of national
cannot call the military to enforce or implement certain laws, such emergency, PP 1017 purports to grant the President, without any
as customs laws, laws governing family and property relations, authority or delegation from Congress, to take over or direct the
laws on obligations and contracts and the like.  She can only order operation of any privately-owned public utility or business affected
the military, under PP 1017, to enforce laws pertinent to its duty to with public interest.
suppress lawless violence.  
This provision was first introduced in the 1973 Constitution, as a
Third Provision:  Power to Take Over product of the 'martial law thinking of the 1971 Constitutional
 
Convention.[122]  In effect at the time of its approval was
The pertinent provision of PP 1017 states:
President Marcos' Letter of Instruction No. 2 dated September 22,
 
1972 instructing the Secretary of National Defense to take over
x x x and to enforce obedience to all
the laws and to all decrees, orders, 'the  management, control and operation of the Manila Electric
and regulations promulgated by me Company, the Philippine   Long Distance Telephone Company, the
personally or upon my direction; and
as provided in Section 17, Article National Waterworks and  Sewerage Authority, the Philippine
XII of the Constitution  do hereby National Railways, the Philippine Air Lines, Air Manila (and)
declare a state of national Filipinas Orient Airways . . . for the successful prosecution by the
emergency.
  Government of its effort to contain, solve and end the present
The import of this provision is that President Arroyo, during the national emergency.
state of national emergency under PP 1017, can call the military  
not only to enforce obedience 'to all the laws and to all decrees x x          Petitioners, particularly the members of the House of
x but also to act pursuant to the provision of Section 17, Article XII Representatives, claim that President Arroyo's inclusion of Section
which reads: 17, Article XII in PP 1017 is an encroachment on the legislature's
  emergency powers.
  authorize the President before he can declare a 'state of national
         This is an area that needs delineation. emergency.  The logical conclusion then is that President Arroyo
  could validly declare the existence of a state of national emergency
         A distinction must be drawn between the President's even in the absence of a Congressional enactment. 
authority to declare 'a state of national emergency         
and          to exercise emergency powers.  To the first, as But the exercise of emergency powers, such as the taking over of
elucidated by the Court, Section 18, Article VII grants the President privately owned public utility or business affected with public
such power, hence, no legitimate constitutional objection can be interest, is a
raised.  But to the second, manifold constitutional issues arise. different matter.    This requires a delegation from Congress. 
   
Courts have often said that constitutional provisions in pari
          Section 23, Article VI of the Constitution reads:  
materia are to be construed together.  Otherwise stated, different
  clauses, sections, and provisions of a constitution which relate to
SEC. 23.  (1) The Congress, by a vote of two-thirds
of both Houses in joint session assembled, voting the same subject matter will be construed together and considered
separately, shall have the sole power to declare in the light of each other.[123]  Considering that Section 17 of
the existence of a state of war. Article XII and Section 23 of Article VI, previously quoted, relate to
(2) In times of war or other national emergency, national emergencies, they must be read together to determine the
the Congress may, by law, authorize the President, limitation of the exercise of emergency powers.
for a limited period and subject to such restrictions
 
as it may prescribe, to exercise powers necessary
and proper to carry out a declared national policy. Generally, Congress is the repository of emergency
Unless sooner withdrawn by resolution of the powers.  This is evident in the tenor of Section 23 (2), Article VI
Congress, such powers shall cease upon the next
authorizing it to delegate such powers to the President.  Certainly,
adjournment thereof.
a body cannot delegate a power not reposed upon
  it.  However, knowing that during grave emergencies, it may not
         It may be pointed out that the second paragraph of the be possible or practicable for Congress to meet and exercise its
above provision refers not only to war but also to 'other national powers, the Framers of our Constitution deemed it wise to allow
emergency.  If the intention of the Framers of our Constitution Congress to grant emergency powers to the President, subject to
was to withhold from the President the authority to declare a state certain conditions, thus:
of national emergency pursuant to Section 18, Article VII (calling-  
 
out power) and grant it to Congress (like the declaration of the
(1)   There must be a war or other emergency.
existence of a state of war), then the Framers could have provided  
so.  Clearly, they did not intend that Congress should first (2)   The delegation must be for a limited period
only.
   Commander-in-Chief of the Armed Forces.  The
(3)  The delegation must be subject to such Government attempts to do so by citing a number of
restrictions as the Congress may cases upholding broad powers in military
prescribe. commanders engaged in day-to-day fighting in a
(4)  The emergency powers must be theater of war.  Such cases need not concern us
exercised to carry out a national here.  Even though 'theater of war be an
policy declared by Congress.[124] expanding concept, we cannot with faithfulness
  to our constitutional system hold that the
  Commander-in-Chief of the Armed Forces has
  the ultimate power as such to take possession
         Section 17, Article XII must be understood as an aspect of of private property in order to keep labor
disputes from stopping production.  This is a
the emergency powers clause.  The taking over of private business job for the nation's lawmakers, not for its
affected with public interest is just another facet of the emergency military authorities.
 
powers generally reposed upon Congress.  Thus, when Section 17
Nor can the seizure order be sustained because
states that the 'the State may, during the emergency and of the several constitutional provisions that
under reasonable terms prescribed by it, temporarily take grant executive power to the President.  In the
framework of our Constitution, the President's
over or direct the operation of any privately owned public
power to see that the laws are faithfully
utility or business affected with public interest,  it refers to executed refutes the idea that he is to be a
Congress, not the President.  Now, whether or not the President lawmaker. The Constitution limits his functions
in the lawmaking process to the recommending
may exercise such power is dependent on whether Congress may
of laws he thinks wise and the vetoing of laws
delegate it to him pursuant to a law prescribing the reasonable he thinks bad.  And the Constitution is neither
terms thereof.   Youngstown Sheet & Tube Co. et al. v. Sawyer, silent nor equivocal about who shall make laws
which the President is to execute.  The first
[125] held: section of the first article says that 'All
  legislative Powers herein granted shall be
It is clear that if the President had authority to issue vested in a Congress of the United States. . .
the order he did, it must be found in some provision [126]
of the Constitution.  And it is not claimed that  
express constitutional language grants this power to  
the President.  The contention is that presidential  
power should be implied from the aggregate of his Petitioner Cacho-Olivares, et al. contends that the term 'emergency
powers under the Constitution.  Particular reliance is
placed on provisions in Article II which say that 'The under Section 17, Article XII refers to 'tsunami, 'typhoon,   
executive Power shall be vested in a President . . . .; 'hurricane and 'similar occurrences.  This is a limited view of
that 'he shall take Care that the Laws be faithfully
'emergency.
executed; and that he shall be Commander-in-Chief
of the Army and Navy of the United States.  
   
The order cannot properly be sustained as an
 
exercise of the President's military power as
Emergency, as a generic term, connotes the existence of conditions x    x    x                                                            
                 x    x    x
suddenly intensifying the degree of existing danger to life or well-
being beyond that which is accepted as normal.   Implicit in this MR. TINGSON.  May I ask the committee if
'national emergency refers to military national
definitions are the elements of intensity, variety, and perception.
emergency or could this be economic
[127]   Emergencies, as perceived by legislature or executive in the emergency?
United Sates since 1933, have been occasioned by a wide range of
MR. VILLEGAS.  Yes, it could refer to both
situations, classifiable under three (3) principal
military or economic dislocations.
heads: a) economic,[128] b) natural disaster,
[129] and c) national security.[130]chanroblesvirtuallawlibrary MR. TINGSON.  Thank you very much.[133]
 
Emergency, as contemplated in our Constitution, is of the same  
breadth.  It may include rebellion, economic crisis, pestilence or          It may be argued that when there is national emergency,
epidemic, typhoon, flood, or other similar catastrophe of Congress may not be able to convene and, therefore, unable to
nationwide proportions or effect.[131]  This is evident in the delegate to the President the power to take over privately-owned
Records of the Constitutional Commission, thus: public utility or business affected with public interest.
   
MR. GASCON. Yes.  What is the Committee's
         In Araneta v. Dinglasan,[134] this Court emphasized that
definition of 'national emergency which appears in
Section 13, page 5?  It reads: legislative power, through which extraordinary measures are
  exercised, remains in Congress even in times of crisis.
When the common good so requires, the State
 
may temporarily take over or direct the operation of
any privately owned public utility or business          'x x x
affected with public interest.  
            After all the criticisms that have been
MR. VILLEGAS.  What I mean is threat made against the efficiency of the system of
from external aggression, for the separation of powers, the fact remains
example, calamities or natural disasters. that the Constitution has set up this form of
government, with all its defects and
MR. GASCON.   There is a question by shortcomings, in preference to the
Commissioner de los Reyes.  What about strikes and commingling of powers in one man or group
riots? of men.  The Filipino people by adopting
parliamentary government have given notice
MR. VILLEGAS.  Strikes, no; those would not be that they share the faith of other democracy-
covered by the term 'national emergency. loving peoples in this system, with all its
faults, as the ideal.  The point is, under this
MR. BENGZON.  Unless they are of such framework of government, legislation is
proportions such that they would paralyze preserved for Congress all the time, not
government service.[132] excepting periods of crisis no matter how
 serious.  Never in the history of the United over.   In short, the President has no absolute authority to exercise
States, the basic features of whose
Constitution have been copied in ours, have all the powers of the State under Section 17, Article VII in the
specific functions of the legislative branch of absence of an emergency powers act passed by Congress. 
enacting laws been surrendered to another  
department ' unless we regard as legislating
 
the carrying out of a legislative policy
according to prescribed standards; no, not c. 'AS APPLIED CHALLENGE
even when that Republic was fighting a total  
war, or when it was engaged in a life-and-
One of the misfortunes of an emergency, particularly, that which
death struggle to preserve the Union.  The
truth is that under our concept of pertains to security, is that military necessity and the guaranteed
constitutional government, in times of rights of the individual are often not compatible.   Our history
extreme perils more than in normal
reveals that in the crucible of conflict, many rights are curtailed
circumstances 'the various branches,
executive, legislative, and judicial, given the and trampled upon.  Here, the right against unreasonable
ability to act, are called  upon 'to perform the search and seizure; the right against warrantless
duties and discharge the responsibilities
committed to them respectively. arrest; and the freedom of speech, of expression, of the
  press, and of assembly under the Bill of Rights suffered the
  greatest blow.
Following our interpretation of Section 17, Article XII, invoked by  
President Arroyo in issuing PP 1017, this Court rules that such Of the seven (7) petitions, three (3) indicate 'direct injury. 
Proclamation does not authorize her during the emergency to  
temporarily take over or direct the operation of any privately In G.R. No. 171396, petitioners David and Llamas alleged that, on
owned public utility or business affected with public interest February 24, 2006, they were arrested without warrants on their
without authority from Congress.  way to EDSA to celebrate the 20th Anniversary of People Power
  I.     The arresting officers cited PP 1017 as basis of the arrest.  
Let it be emphasized that while the President alone can declare  
a   state of national emergency, however, without legislation, he In G.R. No. 171409, petitioners Cacho-Olivares
has no     power to take over privately-owned public utility or and Tribune Publishing Co., Inc. claimed that on February 25,
business affected     with public interest. The President cannot 2006, the CIDG operatives 'raided and ransacked without warrant
decide whether exceptional      circumstances exist warranting the their office.  Three policemen were assigned to guard their office as
take over of privately-owned           public utility or business a possible 'source of destabilization.  Again, the basis was PP 1017.
affected with public interest.  Nor can he determine when such  
exceptional circumstances have ceased.  Likewise, without And in G.R. No. 171483, petitioners KMU and NAFLU-KMU et
legislation, the President has no power to point out the types of al. alleged that their members were 'turned away and dispersed
businesses affected with public interest that should be taken
when they went to EDSA and later, to Ayala Avenue, to celebrate of power, and not a mere incidental result arising from its
th
the 20  Anniversary of People Power I. exertion.[138] This is logical.  Just imagine the absurdity of
         situations when laws maybe declared unconstitutional just because
          A perusal of the 'direct injuries' allegedly suffered by the the officers implementing them have acted arbitrarily.  If this were
said petitioners shows that they resulted from so, judging from the blunders committed by policemen in the cases
the implementation, pursuant to G.O. No. 5, of  PP 1017.  passed upon by the Court, majority of the provisions of the Revised
  Penal Code would have been declared unconstitutional a long time
Can this Court adjudge as unconstitutional PP 1017 and G.O. No 5 ago. 
on the basis of these illegal acts? In general, does the illegal  
implementation of a law render it unconstitutional?  

  President Arroyo issued G.O. No. 5 to carry into effect the

Settled is the rule that courts are not at liberty to declare statutes provisions of PP 1017.  General orders are 'acts and commands of

invalid although they may be abused and the President in his capacity as Commander-in-Chief of the Armed

misabused[135] and may afford an opportunity for abuse in Forces of the Philippines. They are internal rules issued by the

the manner of application.[136]  The validity of a statute or executive officer to his subordinates precisely for

ordinance is to be determined from its general purpose and its the proper and efficient administration of law.  Such rules and

efficiency to accomplish the end desired, not from its effects in a regulations create no relation except between the official who

particular case.[137]  PP 1017 is merely an invocation of the issues them and the official who receives them.[139]  They are

President's calling-out power.  Its general purpose is to command based on and are the product of, a relationship in which power is

the AFP to suppress all forms of lawless violence, invasion or their source, and obedience, their object.[140]  For these reasons,

rebellion.   It had accomplished the end desired which prompted one requirement for these rules to be valid is that they must

President Arroyo to issue PP 1021.  But there is nothing in PP 1017 be reasonable, not arbitrary or capricious.

allowing the police, expressly or impliedly, to conduct illegal arrest,  

search or violate the citizens' constitutional rights. G.O. No. 5 mandates the AFP and the PNP to immediately carry out

  the 'necessary and appropriate actions and measures to

  suppress and prevent acts of terrorism and lawless violence.

   

  Unlike the term 'lawless violence which is unarguably extant in our

Now, may this Court adjudge a law or ordinance unconstitutional statutes and the Constitution, and which is invariably associated

on the ground that its implementor committed illegal acts?   The with 'invasion, insurrection or rebellion, the phrase 'acts of

answer is no. The criterion by which the validity of the statute or terrorism is still an amorphous and vague concept.  Congress has

ordinance is to be measured is the essential basis for the exercise yet to enact a law defining and punishing acts of terrorism.
  What, then, is the defining criterion for terrorist acts
' the  differentia specifica distinguishing those acts
  from eventually legitimate acts of national resistance
  or self-defense?
 
In fact, this 'definitional predicament or the absence of an agreed
Since the times of the Cold War the United Nations
definition of terrorism confronts not only our country, but the Organization has been trying in vain to reach a
international consensus on the basic issue of definition.  The
organization has intensified its efforts recently, but
community as well.  The following observations are quite apropos:
has been unable to bridge the gap between those
  who associate 'terrorism with any violent act by non-
In the actual unipolar context of international state groups against civilians, state functionaries or
relations, the 'fight against terrorism has become infrastructure or military installations, and those who
one of the basic slogans when it comes to the believe in the concept of the legitimate use of force
justification of the use of force against certain states when resistance against foreign occupation or
and against groups operating internationally.  Lists of against systematic oppression of ethnic and/or
states 'sponsoring terrorism and of terrorist religious groups within a state is concerned.
organizations are set up and constantly being  
updated according to criteria that are not always The dilemma facing the international community can
known to the public, but are clearly determined by best be illustrated by reference to the contradicting
strategic interests. categorization of organizations and movements such
  as Palestine Liberation Organization (PLO) ' which is
The basic problem underlying all these military a terrorist group for Israel and a liberation
actions ' or threats of the use of force as the most movement for Arabs and Muslims ' the Kashmiri
recent by the United States against Iraq ' consists in resistance groups ' who are terrorists in the
the absence of an agreed definition of terrorism. perception of India, liberation fighters in that of
  Pakistan ' the earlier Contras in Nicaragua ' freedom
Remarkable confusion persists in regard to the legal fighters for the United States, terrorists for the
categorization of acts of violence either by states, by Socialist camp ' or, most drastically, the Afghani
armed groups such as liberation movements, or by Mujahedeen (later to become the Taliban
individuals. movement): during the Cold War period they were a
  group of freedom fighters for the West, nurtured by
The dilemma can by summarized in the saying 'One the United States, and a terrorist gang for the Soviet
country's terrorist is another country's freedom Union.  One could go on and on in enumerating
fighter.  The apparent contradiction or lack of examples of conflicting categorizations that cannot
consistency in the use of the term 'terrorism may be reconciled in any way ' because of opposing
further be demonstrated by the historical fact that political interests that are at the roots of those
leaders of national liberation movements such as perceptions.
Nelson Mandela in South Africa, Habib Bourgouiba in  
Tunisia, or Ahmed Ben Bella in Algeria, to mention How, then, can those contradicting definitions and
only a few, were originally labeled as terrorists by conflicting perceptions and evaluations of one and
those who controlled the territory at the time, but the same group and its actions be explained?  In our
later became internationally respected statesmen. analysis, the basic reason for these striking
  inconsistencies lies in the divergent interest of
 states.  Depending on whether a state is in the is a law defining the same as such and imposing the corresponding
position of an occupying power or in that of a rival,
or adversary, of an occupying power in a given penalty thereon.
territory, the definition of terrorism will fluctuate  
accordingly.  A state may eventually see itself as  
protector of the rights of a certain ethnic group
So far, the word 'terrorism appears only once in our criminal laws,
outside its territory and will therefore speak of a
'liberation struggle, not of 'terrorism when acts of i.e., in P.D. No. 1835 dated January 16, 1981 enacted by President
violence by this group are concerned, and vice- Marcos during the Martial Law regime.  This decree is entitled
versa.
'Codifying The Various Laws on Anti-Subversion and Increasing The
 
The United Nations Organization has been unable to Penalties for Membership in Subversive Organizations.  The word
reach a decision on the definition of terrorism exactly 'terrorism is mentioned in the following provision:  That one who
because of these conflicting interests of sovereign
conspires with any other person for the purpose of overthrowing
states that determine in each and every instance
how a particular armed movement (i.e. a non-state the Government of the Philippines x x x by force,
actor) is labeled in regard to the terrorists-freedom violence, terrorism, x x x shall be punished by reclusion
fighter dichotomy.  A 'policy of double standards' on
this vital issue of international affairs has been the temporal x x x.
unavoidable consequence.  
   
This definitional predicament of an organization  
consisting of sovereign states ' and not of peoples, in
spite of the emphasis in the Preamble to the United P.D. No. 1835 was repealed by E.O. No. 167 (which outlaws the
Nations Charter! ' has become even more serious in Communist Party of the Philippines) enacted by President Corazon
the present global power constellation: one
Aquino on May 5, 1985.  These two (2) laws, however, do not
superpower exercises the decisive role in the
Security Council, former great powers of the Cold define 'acts of terrorism.   Since there is no law defining 'acts of
War era as well as medium powers are increasingly terrorism, it is President Arroyo alone, under G.O. No. 5, who has
being marginalized; and the problem has become
the discretion to determine what acts constitute terrorism.  Her
even more acute since the terrorist attacks of 11
September 2001 I the United States.[141] judgment on this aspect is absolute, without
  restrictions.  Consequently, there can be indiscriminate arrest
The absence of a law defining 'acts of terrorism may result in abuse without warrants, breaking into offices and residences, taking over
and oppression on the part of the police or military.   An illustration the media enterprises, prohibition and dispersal of all assemblies
is when a group of persons are merely engaged in a drinking and gatherings unfriendly to the administration.  All these can be
spree.   Yet the military or the police may consider the act as an effected in the name of G.O. No. 5.  These acts go far beyond the
act of terrorism and immediately arrest them pursuant to G.O. No. calling-out power of the President.  Certainly, they violate the due
5.   Obviously, this is abuse and oppression on their part.  It must process clause of the Constitution.  Thus, this Court declares that
be remembered that an act can only be considered a crime if there the acts of terrorism portion of G.O. No. 5 is unconstitutional.
 
  PP 1017; third, he was brought at Camp Karingal, Quezon City
  where he was  fingerprinted, photographed and booked like a
  criminal suspect; fourth, he was treated brusquely by policemen
Significantly, there is nothing in G.O. No. 5 authorizing the military who 'held his head and tried to push him inside an unmarked
or police to commit acts beyond what are necessary and car; fifth, he was charged with Violation of Batas Pambansa
appropriate to suppress and prevent lawless violence, the Bilang         No. 880[145] and Inciting to Sedition; sixth,  he
limitation of their authority in pursuing the Order.  Otherwise, such was  detained for seven (7) hours; and seventh, he
acts are considered illegal.   was  eventually released for insufficiency of evidence. 
   
         We first examine G.R. No. 171396 (David et al.)  
 
   
The Constitution provides that 'the right of the people to be  
secured in their persons, houses, papers and effects against Section 5, Rule 113 of the Revised Rules on Criminal Procedure
unreasonable search and seizure of whatever nature and for any provides:
 
purpose shall be inviolable, and no search warrant or warrant of
Sec. 5. Arrest without warrant; when
arrest shall issue except upon probable cause to be determined lawful. - A peace officer or a private person
personally by the judge after examination under oath or affirmation may, without a warrant, arrest a person:
 
of the complainant and the witnesses he may produce, and
(a) When, in his presence, the person to be
particularly describing the place to be searched and the persons or arrested has committed, is actually committing,
things to be seized.[142]   The plain import of the language of the or is attempting to commit an offense.
 
Constitution is that searches, seizures and arrests
(b) When an offense has just been committed
are normally unreasonable unless authorized by a validly issued and he has probable cause to believe based on
search warrant or warrant of arrest. Thus, the fundamental personal knowledge of facts or circumstances
that the person to be arrested has committed it;
protection given by this provision is that between person and police and
must stand the protective authority of a magistrate clothed with  
power to issue or refuse to issue search warrants or warrants of x     x     x. 
 
arrest.[143]chanroblesvirtuallawlibrary
Neither of the two (2) exceptions mentioned above justifies
 
petitioner David's   warrantless  arrest.  During the inquest for the
 
charges of inciting to sedition  and violation of BP
         In the Brief Account[144] submitted by petitioner David,
880,  all  that  the  arresting  officers  could  invoke was  their
certain facts are established: first, he was arrested without
observation  that  some  rallyists  were  wearing  t-shirts with the
warrant; second, the PNP operatives arrested him on the  basis of
invective 'Oust Gloria Now and  their  erroneous  assumption that
petitioner David was the leader of the rally.[146]   Consequently, may not be conditioned upon the prior issuance of a permit or
the Inquest Prosecutor ordered his immediate release on the authorization from the government authorities except, of course, if
ground of insufficiency of evidence.  He noted that petitioner David the assembly is intended to be held in a public place, a permit for
was not wearing the subject t-shirt and even if he was wearing it, the use of such place, and not for the assembly itself, may be
such fact is insufficient to charge him with inciting to validly required.
sedition.  Further, he also stated that there is insufficient evidence  
for the charge of violation of BP 880 as it was not even known The ringing truth here is that petitioner David, et al. were arrested
whether petitioner David was the leader of the rally. while they were exercising their right to peaceful assembly.   They
[147]chanroblesvirtuallawlibrary were not committing any crime, neither was there a showing of a
  clear and present danger that warranted the limitation of that
  right.   As can be gleaned from circumstances, the charges
  of inciting to sedition and violation of BP 880 were mere
  afterthought.  Even the Solicitor General, during the oral argument,
But what made it doubly worse for petitioners David et al. is that failed to justify the arresting officers' conduct.  In De Jonge v.
not only was their right against warrantless arrest violated, but Oregon,[148] it was held that peaceable assembly cannot be made
also their right to peaceably assemble. a crime, thus:
   
Peaceable assembly for lawful discussion cannot be
Section 4 of Article III guarantees: made a crime. The holding of meetings for peaceable
  political action cannot be proscribed. Those who
No law shall be passed abridging the freedom of assist in the conduct of such meetings cannot be
speech, of expression, or of the press, or the right of branded as criminals on that score. The question, if
the people peaceably to assemble and petition the the rights of free speech and peaceful assembly are
government for redress of grievances. not to be preserved, is not as to the auspices under
  which the meeting was held but as to its purpose;
  not as to the relations of the speakers, but whether
their utterances transcend the bounds of the
Assembly means a right on the part of the citizens to meet
freedom of speech which the Constitution
peaceably for consultation in respect to public affairs.  It is a protects.  If the persons assembling have committed
necessary consequence of our republican institution and crimes elsewhere, if they have formed or are
engaged in a conspiracy against the public peace and
complements the right of speech.  As in the case of freedom of
order, they may be prosecuted for their conspiracy
expression, this right is not to be limited, much less denied, except or other violations of valid laws. But it is a
on a showing of a clear and present danger of a substantive evil different matter when the State, instead of
prosecuting them for such offenses, seizes
that Congress has a right to prevent.  In other words, like other
upon mere participation in a peaceable
rights embraced in the freedom of expression, the right to assembly and a lawful public discussion as the
assemble is not subject to previous restraint or censorship.   It basis for a criminal charge.
   G.R. No. 171409, (Cacho-Olivares, et al.) presents another facet
On the basis of the above principles, the Court likewise considers of freedom of speech i.e., the freedom of the press.  Petitioners'
the dispersal and arrest of the members of KMU et al. (G.R. No. narration of facts, which the Solicitor General failed to refute,
171483) unwarranted. Apparently, their dispersal was done merely established the following: first, the Daily Tribune's offices were
on the basis of Malacaang's directive canceling all permits searched without warrant; second, the police operatives seized
previously issued by local government units.  This is arbitrary.  The several materials for publication; third, the search was conducted
wholesale cancellation of all permits to rally is a blatant disregard at about 1:00 o clock in the morning of February 25,
of the principle that 'freedom of assembly is not to be limited, 2006; fourth, the search was conducted in the absence of any
much less denied, except on a showing of a clear and official of the Daily Tribune except the security guard of the
present danger of a substantive evil that the State has a building; and fifth, policemen stationed themselves at the vicinity
right to prevent.[149]  Tolerance is the rule and limitation is the of the Daily Tribune offices.
exception.  Only upon a showing that an assembly presents a clear
and present danger that the State may deny the citizens' right to  
exercise it.  Indeed, respondents failed to show or convince the          Thereafter, a wave of warning came from government
Court that the rallyists committed acts amounting to lawless officials. Presidential Chief of Staff Michael Defensor was quoted as
violence, invasion or rebellion.   With the blanket revocation of saying that such raid was 'meant to show a strong presence, to
permits, the distinction between protected and unprotected tell media outlets not to connive or do anything that would
assemblies was eliminated. help the rebels in bringing down this government.   Director
  General Lomibao further stated that 'if they do not follow the
 Moreover, under BP 880, the authority to regulate assemblies and standards 'and the standards are if they would contribute to
rallies is lodged with the local government units.  They have the instability in the government, or if they do not subscribe to
power to issue permits and to revoke such permits after due what is in General Order No. 5 and Proc. No. 1017 ' we will
notice and hearing on the determination of the presence of clear recommend a 'takeover.  National Telecommunications
and present danger. Here, petitioners were not even notified and Commissioner Ronald Solis urged television and radio networks to
heard on the revocation of their permits.[150]  The first time they 'cooperate with the government for the duration of the state of
learned of it was at the time of the dispersal.  Such absence of national emergency.   He warned that his agency will not
notice is a fatal defect.  When a person's right is restricted by hesitate to recommend the closure of any broadcast outfit
government action, it behooves a democratic government to see to that violates rules set out for media coverage during times
it that the restriction is fair, reasonable, and according to when the national security is threatened.[151]
procedure.
  The search is illegal.  Rule 126 of The Revised Rules on Criminal
Procedure lays down the steps in the conduct of search and
seizure.  Section 4 requires that a search warrant be issued framework where a free, alert and even
militant press is essential for the political
upon probable cause in connection with one specific offence to be enlightenment and growth of the citizenry.
determined personally by the judge after examination under oath  
or affirmation of the complainant and the witnesses he may While admittedly, the Daily Tribune was not padlocked and sealed
produce.  Section 8  mandates that the search of a house, room, like the 'Metropolitan Mail and 'We Forum newspapers in the above
or any other premise be made in the presence of the lawful case, yet it cannot be denied that the CIDG operatives exceeded
occupant thereof or any member of his family or in the absence of their enforcement duties.  The search and seizure of materials for
the latter, in the presence of two (2) witnesses of sufficient age publication, the stationing of policemen in the vicinity of the The
and discretion  residing in the same locality.  And  Section 9 states Daily Tribune offices, and the arrogant warning of government
that  the warrant must direct that it be served in the daytime, officials to media, are plain censorship.  It is that officious
unless the property is on the person or in the place ordered to be functionary of the repressive government who tells the citizen that
searched, in which case a direction may be inserted that it be he may speak only if allowed to do so, and no more and no less
served at any time of the day or night.  All these rules were than what he is permitted to say on pain of punishment should he
violated by the CIDG operatives. be so rash as to disobey.[153]   Undoubtedly, the The Daily
Tribune was subjected to these arbitrary intrusions because of its
  anti-government sentiments.   This Court cannot tolerate the
 
blatant disregard of a constitutional right even if it involves the
Not only that, the search violated petitioners' freedom of the
most defiant of our citizens.   Freedom to comment on public
press.   The best gauge of a free and democratic society rests in
affairs is essential to the vitality of a representative democracy.  It
the degree of freedom enjoyed by its media.  In the Burgos v.
is the duty of the courts to be watchful for the constitutional rights
Chief of Staff[152]  this Court held that -- 
of the citizen, and against any stealthy encroachments
thereon.  The motto should always be obsta principiis.
 As heretofore stated, the premises searched were
the business and printing offices of the "Metropolitan [154]chanroblesvirtuallawlibrary
Mail" and the "We Forum newspapers. As a  
consequence of the search and seizure, these Incidentally, during the oral arguments, the Solicitor General
premises were padlocked and sealed, with the
admitted that the search of the Tribune's offices and the seizure of
further result that the printing and publication
of said newspapers were discontinued. its materials for publication and other papers are illegal; and that
  the same are inadmissible for any purpose, thus:
Such closure is in the nature of previous  
restraint or censorship abhorrent to the JUSTICE CALLEJO:
freedom of the press guaranteed under the  
fundamental law, and constitutes a virtual You made quite a mouthful of
denial of petitioners' freedom to express admission when you said that the
themselves in print. This state of being is policemen, when inspected the Tribune
patently anathematic to a democratic
 for the purpose of gathering evidence  
and you admitted that the policemen SR. ASSO. JUSTICE PUNO:
were able to get the clippings.  Is that   
not in admission of the admissibility of Is it based on any law?
these clippings that were taken from  
the Tribune? SOLGEN BENIPAYO:
   
SOLICITOR GENERAL BENIPAYO: As far as I know, no, Your Honor, from the
  facts, no.
Under the law they would seem to be, if they  
were illegally seized, I think and I know, Your SR. ASSO. JUSTICE PUNO:
Honor, and these are inadmissible for any So, it has no basis, no legal basis
purpose.[155] whatsoever?
   
x x x                 x x x                 x x x SOLGEN BENIPAYO:
   
SR. ASSO. JUSTICE PUNO: Maybe so, Your Honor.  Maybe so, that is why
  I said, I dont know if it is premature to say
These have been published in the past issues this, we do not condone this.  If the
of the Daily Tribune; all you have to do is to people who have been injured by this
get those past issues.  So why do you have to would want to sue them, they can sue
go there at 1 oclock in the morning and and there are remedies for this.
without any search warrant?  Did they [156]chanroblesvirtuallawlibrary
become suddenly part of the evidence of  
rebellion or inciting to sedition or what?  
 
SOLGEN BENIPAYO: Likewise, the warrantless arrests and seizures executed by the
  police were, according to the Solicitor General, illegal and cannot
Well, it was the police that did that, Your
be condoned, thus: 
Honor.  Not upon my instructions.
   
SR. ASSO. JUSTICE PUNO: CHIEF JUSTICE PANGANIBAN:
 
 Are you saying that the act of the policeman There seems to be some confusions if not
is illegal, it is not based on any law, and it is contradiction in your theory.
not based on Proclamation 1017.                        
  SOLICITOR GENERAL BENIPAYO:
SOLGEN BENIPAYO:  
  I dont know whether this will clarify.  The
It is not based on Proclamation 1017, Your acts, the supposed illegal or unlawful acts
Honor, because there is nothing in 1017 committed on the occasion of 1017, as I
which says that the police could go and said, it cannot be condoned.  You cannot
inspect and gather clippings from Daily blame the President for, as you said, a
Tribune or any other newspaper. misapplication of the law.  These are acts of
 the police officers, that is their responsibility. they must now be resolved to prevent future constitutional
[157]
  aberration.

The Dissenting Opinion states that PP 1017 and G.O. No. 5 are  

constitutional in every aspect and 'should result in no constitutional The Court finds and so holds that PP 1017 is constitutional insofar

or statutory breaches if applied according to their letter. as it constitutes a call by the President for the AFP to prevent or

  suppress lawless violence.  The proclamation is sustained by

The Court has passed upon the constitutionality of these Section 18, Article VII of the Constitution and the relevant

issuances.  Its ratiocination has been exhaustively presented.  At jurisprudence discussed earlier.  However, PP 1017's extraneous

this point, suffice it to reiterate that PP 1017 is limited to the provisions giving the President express or implied power (1) to

calling out by the President of the military to prevent or suppress issue decrees; (2) to direct the AFP to enforce obedience to all

lawless violence, invasion or rebellion.  When in implementing its laws even those not related to lawless violence as well as decrees

provisions, pursuant to G.O. No. 5, the military and the police promulgated by the President; and (3) to impose standards on

committed acts which violate the citizens' rights under the media or any form of prior restraint on the press, are ultra

Constitution, this Court has to declare such acts unconstitutional vires and unconstitutional.  The Court also rules that under

and illegal. Section 17, Article XII of the Constitution, the President, in the

  absence of a legislation, cannot take over privately-owned public

In this connection, Chief Justice Artemio V. Panganiban's utility and private business affected with public interest.

concurring opinion, attached hereto, is considered an integral part  

of this ponencia. In the same vein, the Court finds G.O. No. 5 valid.  It is an Order

  issued by the President ' acting as Commander-in-Chief ' addressed

SUMMATION to subalterns in the AFP to carry out the provisions of PP

  1017.  Significantly, it also provides a valid standard ' that the

In sum, the lifting of PP 1017 through the issuance of PP 1021 ' a military and the police should take only the 'necessary and

supervening event ' would have normally rendered this case moot appropriate actions and measures to suppress and prevent

and academic.  However, while PP 1017 was still operative, illegal acts of lawless violence.   But the words 'acts of

acts were committed allegedly in pursuance thereof.  Besides, terrorism found in G.O. No. 5 have not been legally defined and

there is no guarantee that PP 1017, or one similar to it, may not made punishable by Congress and should thus be deemed deleted

again be issued.    Already, there have been media reports on April from the said G.O.  While 'terrorism has been denounced generally

30, 2006 that allegedly PP 1017 would be reimposed 'if the May 1 in media, no law has been enacted to guide the military, and

rallies' become 'unruly and violent.  Consequently, the eventually the courts, to determine the limits of the AFP's authority

transcendental issues raised by the parties should not be 'evaded; in carrying out this portion of G.O. No. 5.
 
On the basis of the relevant and uncontested facts narrated earlier, without surrendering the two vital principles of
it is also pristine clear that (1) the warrantless arrest of petitioners constitutionalism: the maintenance of legal limits to arbitrary
Randolf S. David and Ronald Llamas; (2) the dispersal of the rallies power, and political responsibility of the government to the
and warrantless arrest of the KMU and NAFLU-KMU members; (3) governed.[158]chanroblesvirtuallawlibrary
the imposition of standards on media or any prior restraint on the  

press; and (4) the warrantless search of the Tribune  offices and

WHEREFORE, the Petitions are partly granted.  The Court rules
the whimsical seizures of some articles for publication and other
that PP 1017 is CONSTITUTIONAL insofar as it constitutes a call
materials, are not authorized by the Constitution, the law and
by President Gloria Macapagal-Arroyo on the AFP to prevent or
jurisprudence.   Not even by the valid provisions of PP 1017 and
suppress lawless violence.  However, the provisions of PP 1017
G.O. No. 5.
commanding the AFP to enforce laws not related to lawless
violence, as well as decrees promulgated by the President, are
Other than this declaration of invalidity, this Court cannot impose
declared UNCONSTITUTIONAL.   In addition, the provision in PP
any civil, criminal or administrative sanctions on the individual
1017 declaring national emergency under Section 17,  Article VII of
police officers concerned.  They have not been individually
the Constitution is CONSTITUTIONAL, but such declaration does
identified and given their day in court.  The civil complaints or
not authorize the President to take over privately-owned public
causes of action and/or relevant criminal Informations have not
utility or business affected with public interest without prior
been presented before this Court.  Elementary due process bars
legislation.
this Court from making any specific pronouncement of civil,
criminal or administrative liabilities. G.O. No. 5 is CONSTITUTIONAL since it provides a standard by
  which the AFP and the PNP should implement PP 1017, i.e.
It is well to remember that military power is a means to an whatever is 'necessary and appropriate actions and measures
end and substantive civil rights are ends in to suppress and prevent acts of lawless violence.  Considering
themselves.  How to give the military the power it needs to that 'acts of terrorism have not yet been defined and made
protect the Republic without unnecessarily trampling punishable by the Legislature, such portion of G.O. No. 5 is
individual rights is one of the eternal balancing tasks of a declared UNCONSTITUTIONAL.  
democratic state.   During emergency, governmental action may  
vary in breadth and intensity from normal times, yet they should The warrantless arrest of Randolf S. David and Ronald Llamas; the
not be arbitrary as to unduly restrain our people's liberty.  dispersal and warrantless arrest of the KMU and NAFLU-KMU
  members during their rallies, in the absence of proof that these
Perhaps, the vital lesson that we must learn from the theorists who petitioners were committing acts constituting lawless violence,
studied the various competing political philosophies is that, it is invasion or rebellion and violating BP 880; the imposition of
possible to grant government the authority to cope with crises standards on media or any form of prior restraint on the press, as
well as the warrantless search of the Tribune offices and whimsical    
  DANTE O. TINGA
seizure of its articles for publication and other materials, are   Associate Justice
declared UNCONSTITUTIONAL. ADOLFO S. AZCUNA  
  Associate Justice  
No costs.    
    CANCIO C. GARCIA
  Associate Justice
MINITA V. CHICO-NAZARIO
SO ORDERED. Associate Justice
   
ANGELINA SANDOVAL-GUTIERREZ  
Associate Justice  
  PRESBITERO J. VELASCO, JR.
  Associate Justice
 
WE CONCUR:  
 
  CERTIFICATION
ARTEMIO V. PANGANIBAN
Chief Justice  
 
  Pursuant to Section 13, Article VIII of the Constitution, it is hereby
    certified that the conclusions in the above Decision were reached in
(On leave)   consultation before the case was assigned to the writer of the
REYNATO S. PUNO LEONARDO A. QUISUMBING opinion of the Court.
Associate Justice Associate Justice
            
     
                                                     ARTEMIO V. PANGANIBAN
CONSUELO YNARES- ANTONIO T. CARPIO
                           Chief Justice
SANTIAGO Associate Justice
 
Associate Justice  
   
    EN BANC
  RENATO C. CORONA
MA. ALICIA AUSTRIA- Associate Justice G.R. No. 104768. July 21, 2003
MARTINEZ  
Associate Justice   Republic of the Philippines, Petitioner, v. Sandiganbayan,
    Major General Josephus Q. Ramas and Elizabeth
  ROMEO J. CALLEJO, SR. Dimaano, Respondents.
  Associate Justice
CONCHITA CARPIO MORALES   DECISION
Associate Justice  
 CARPIO, J.: Evidence in the record showed that respondent is the owner of a
house and lot located at 15-Yakan St., La Vista, Quezon City. He is
The Case also the owner of a house and lot located in Cebu City. The lot has
an area of 3,327 square meters.
Before this Court is a petition for review on certiorari seeking to set
aside the Resolutions of the Sandiganbayan (First Division)1 dated The value of the property located in Quezon City may be estimated
18 November 1991 and 25 March 1992 in Civil Case No. 0037. The modestly at P700,000.00.
first Resolution dismissed petitioners Amended Complaint and
ordered the return of the confiscated items to respondent Elizabeth The equipment/items and communication facilities which were
Dimaano, while the second Resolution denied petitioners Motion for found in the premises of Elizabeth Dimaano and were confiscated
Reconsideration. Petitioner prays for the grant of the reliefs sought by elements of the PC Command of Batangas were all covered by
in its Amended Complaint, or in the alternative, for the remand of invoice receipt in the name of CAPT. EFREN SALIDO, RSO
this case to the Sandiganbayan (First Division) for further Command Coy, MSC, PA. These items could not have been in the
proceedings allowing petitioner to complete the presentation of its possession of Elizabeth Dimaano if not given for her use by
evidence. respondent Commanding General of the Philippine Army.

Antecedent Facts Aside from the military equipment/items and communications

equipment, the raiding team was also able to confiscate money in
Immediately upon her assumption to office following the successful the amount of P2,870,000.00 and $50,000 US Dollars in the house
EDSA Revolution, then President Corazon C. Aquino issued of Elizabeth Dimaano on 3 March 1986.
Executive Order No. 1 (EO No. 1) creating the Presidential
Commission on Good Government (PCGG). EO No. 1 primarily Affidavits of members of the Military Security Unit, Military Security
tasked the PCGG to recover all ill-gotten wealth of former President Command, Philippine Army, stationed at Camp Eldridge, Los Baos,
Ferdinand E. Marcos, his immediate family, relatives, subordinates Laguna, disclosed that Elizabeth Dimaano is the mistress of
and close associates. EO No. 1 vested the PCGG with the power (a) respondent. That respondent usually goes and stays and sleeps in
to conduct investigation as may be necessary in order to the alleged house of Elizabeth Dimaano in Barangay Tengga, Itaas,
accomplish and carry out the purposes of this order and the power Batangas City and when he arrives, Elizabeth Dimaano embraces
(h) to promulgate such rules and regulations as may be necessary and kisses respondent. That on February 25, 1986, a person who
to carry out the purpose of this order. Accordingly, the PCGG, rode in a car went to the residence of Elizabeth Dimaano with four
through its then Chairman Jovito R. Salonga, created an AFP Anti- (4) attache cases filled with money and owned by MGen Ramas.
Graft Board (AFP Board) tasked to investigate reports of
unexplained wealth and corrupt practices by AFP personnel, Sworn statement in the record disclosed also that Elizabeth
whether in the active service or retired.2cräläwvirtualibräry Dimaano had no visible means of income and is supported by
respondent for she was formerly a mere secretary.
Based on its mandate, the AFP Board investigated various reports
of alleged unexplained wealth of respondent Major General Taking in toto the evidence, Elizabeth Dimaano could not have
Josephus Q. Ramas (Ramas). On 27 July 1987, the AFP Board used the military equipment/items seized in her house on March 3,
issued a Resolution on its findings and recommendation on the 1986 without the consent of respondent, he being the Commanding
reported unexplained wealth of Ramas. The relevant part of the General of the Philippine Army. It is also impossible for Elizabeth
Resolution reads: Dimaano to claim that she owns the P2,870,000.00 and $50,000
US Dollars for she had no visible source of income.
III. FINDINGS and EVALUATION:
This money was never declared in the Statement of Assets and manifestly out of proportion to his salary as an army officer and his
Liabilities of respondent. There was an intention to cover the other income from legitimately acquired property by taking undue
existence of these money because these are all ill-gotten and advantage of his public office and/or using his power, authority and
unexplained wealth. Were it not for the affidavits of the members influence as such officer of the Armed Forces of the Philippines and
of the Military Security Unit assigned at Camp Eldridge, Los Baos, as a subordinate and close associate of the deposed President
Laguna, the existence and ownership of these money would have Ferdinand Marcos.5cräläwvirtualibräry
never been known.
The Amended Complaint also alleged that the AFP Board, after a
The Statement of Assets and Liabilities of respondent were also previous inquiry, found reasonable ground to believe that
submitted for scrutiny and analysis by the Boards consultant. respondents have violated RA No. 1379.6 The Amended Complaint
Although the amount of P2,870,000.00 and $50,000 US Dollars prayed for, among others, the forfeiture of respondents properties,
were not included, still it was disclosed that respondent has an funds and equipment in favor of the State.
unexplained wealth of P104,134. 60.
Ramas filed an Answer with Special and/or Affirmative Defenses
IV. CONCLUSION: and Compulsory Counterclaim to the Amended Complaint. In his
Answer, Ramas contended that his property consisted only of a
In view of the foregoing, the Board finds that a prima facie case residential house at La Vista Subdivision, Quezon City, valued
exists against respondent for ill-gotten and unexplained wealth in at P700,000, which was not out of proportion to his salary and
the amount of P2,974,134.00 and $50,000 US Dollars. other legitimate income. He denied ownership of any mansion in
Cebu City and the cash, communications equipment and other
V. RECOMMENDATION: items confiscated from the house of Dimaano.

Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas Dimaano filed her own Answer to the Amended Complaint.
(ret.) be prosecuted and tried for violation of RA 3019, as Admitting her employment as a clerk-typist in the office of Ramas
amended, otherwise known as Anti-Graft and Corrupt Practices Act from January-November 1978 only, Dimaano claimed ownership of
and RA 1379, as amended, otherwise known as The Act for the the monies, communications equipment, jewelry and land titles
Forfeiture of Unlawfully Acquired Property.3cräläwvirtualibräry taken from her house by the Philippine Constabulary raiding team.

Thus, on 1 August 1987, the PCGG filed a petition for forfeiture After termination of the pre-trial,7 the court set the case for trial on
under Republic Act No. 1379 (RA No. 1379) 4 against Ramas. the merits on 9-11 November 1988.

Before Ramas could answer the petition, then Solicitor General On 9 November 1988, petitioner asked for a deferment of the
Francisco I. Chavez filed an Amended Complaint naming the hearing due to its lack of preparation for trial and the absence of
Republic of the Philippines (petitioner), represented by the PCGG, witnesses and vital documents to support its case. The court reset
as plaintiff and Ramas as defendant. The Amended Complaint also the hearing to 17 and 18 April 1989.
impleaded Elizabeth Dimaano (Dimaano) as co-defendant.
On 13 April 1989, petitioner filed a motion for leave to amend the
The Amended Complaint alleged that Ramas was the Commanding complaint in order to charge the delinquent properties with being
General of the Philippine Army until 1986. On the other hand, subject to forfeiture as having been unlawfully acquired by
Dimaano was a confidential agent of the Military Security Unit, defendant Dimaano alone x x x.8cräläwvirtualibräry
Philippine Army, assigned as a clerk-typist at the office of Ramas
from 1 January 1978 to February 1979. The Amended Complaint Nevertheless, in an order dated 17 April 1989, the Sandiganbayan
further alleged that Ramas acquired funds, assets and properties proceeded with petitioners presentation of evidence on the ground
that the motion for leave to amend complaint did not state when PCGG does not have jurisdiction to investigate and prosecute
petitioner would file the amended complaint. The Sandiganbayan military officers by reason of mere position held without a showing
further stated that the subject matter of the amended complaint that they are subordinates of former President Marcos.
was on its face vague and not related to the existing complaint.
The Sandiganbayan also held that due to the time that the case On 18 November 1991, the Sandiganbayan rendered a resolution,
had been pending in court, petitioner should proceed to present its the dispositive portion of which states:
evidence.
WHEREFORE, judgment is hereby rendered dismissing the
After presenting only three witnesses, petitioner asked for a Amended Complaint, without pronouncement as to costs. The
postponement of the trial. counterclaims are likewise dismissed for lack of merit, but the
confiscated sum of money, communications equipment, jewelry
On 28 September 1989, during the continuation of the trial, and land titles are ordered returned to Elizabeth Dimaano.
petitioner manifested its inability to proceed to trial because of the
absence of other witnesses or lack of further evidence to present. The records of this case are hereby remanded and referred to the
Instead, petitioner reiterated its motion to amend the complaint to Hon. Ombudsman, who has primary jurisdiction over the forfeiture
conform to the evidence already presented or to change the cases under R.A. No. 1379, for such appropriate action as the
averments to show that Dimaano alone unlawfully acquired the evidence warrants. This case is also referred to the Commissioner
monies or properties subject of the forfeiture. of the Bureau of Internal Revenue for a determination of any tax
liability of respondent Elizabeth Dimaano in connection herewith.
The Sandiganbayan noted that petitioner had already delayed the
case for over a year mainly because of its many postponements. SO ORDERED.
Moreover, petitioner would want the case to revert to its
preliminary stage when in fact the case had long been ready for On 4 December 1991, petitioner filed its Motion for
trial. The Sandiganbayan ordered petitioner to prepare for Reconsideration.
presentation of its additional evidence, if any.
In answer to the Motion for Reconsideration, private respondents
During the trial on 23 March 1990, petitioner again admitted its filed a Joint Comment/Opposition to which petitioner filed its Reply
inability to present further evidence. Giving petitioner one more on 10 January 1992.
chance to present further evidence or to amend the complaint to
conform to its evidence, the Sandiganbayan reset the trial to 18
On 25 March 1992, the Sandiganbayan rendered a Resolution
May 1990. The Sandiganbayan, however, hinted that the re-setting
denying the Motion for Reconsideration.
was without prejudice to any action that private respondents might
take under the circumstances.
Ruling of the Sandiganbayan
However, on 18 May 1990, petitioner again expressed its inability
to proceed to trial because it had no further evidence to present. The Sandiganbayan dismissed the Amended Complaint on the
Again, in the interest of justice, the Sandiganbayan granted following grounds:
petitioner 60 days within which to file an appropriate pleading. The
Sandiganbayan, however, warned petitioner that failure to act (1.) The actions taken by the PCGG are not in accordance with the
would constrain the court to take drastic action. rulings of the Supreme Court in Cruz, Jr. v.
Sandiganbayan10 and Republic v. Migrino11 which involve the same
Private respondents then filed their motions to dismiss based issues.
on Republic v. Migrino.[9 The Court held in Migrino that the
(2.) No previous inquiry similar to preliminary investigations in 2. Any procedural defect in the institution of
criminal cases was conducted against Ramas and Dimaano. the complaint in Civil Case No. 0037
was cured and/or waived by
(3.) The evidence adduced against Ramas does not constitute respondents with the filing of their
a prima facie case against him. respective answers with counterclaim;
and
(4.) There was an illegal search and seizure of the items
confiscated. 3. The separate motions to dismiss were
evidently improper considering that
The Issues they were filed after commencement
of the presentation of the evidence of
the petitioner and even before the
Petitioner raises the following issues:
latter was allowed to formally offer its
evidence and rest its case;
A. RESPONDENT COURT SERIOUSLY ERRED IN
CONCLUDING THAT PETITIONERS EVIDENCE
C. RESPONDENT COURT SERIOUSLY ERRED IN
CANNOT MAKE A CASE FOR FORFEITURE AND
HOLDING THAT THE ARTICLES AND THINGS
THAT THERE WAS NO SHOWING OF
SUCH AS SUMS OF MONEY,
CONSPIRACY, COLLUSION OR RELATIONSHIP
COMMUNICATIONS EQUIPMENT, JEWELRY
BY CONSANGUINITY OR AFFINITY BY AND
AND LAND TITLES CONFISCATED FROM THE
BETWEEN RESPONDENT RAMAS AND
HOUSE OF RESPONDENT DIMAANO WERE
RESPONDENT DIMAANO NOTWITHSTANDING
ILLEGALLY SEIZED AND THEREFORE
THE FACT THAT SUCH CONCLUSIONS WERE
EXCLUDED AS EVIDENCE.12
CLEARLY UNFOUNDED AND PREMATURE,
HAVING BEEN RENDERED PRIOR TO THE
COMPLETION OF THE PRESENTATION OF THE The Courts Ruling
EVIDENCE OF THE PETITIONER.
First Issue: PCGGs Jurisdiction to Investigate Private Respondents
B. RESPONDENT COURT SERIOUSLY ERRED IN
HOLDING THAT THE ACTIONS TAKEN BY THE This case involves a revisiting of an old issue already decided by
PETITIONER, INCLUDING THE FILING OF THE this Court in Cruz, Jr. v. Sandiganbayan13 and Republic v.
ORIGINAL COMPLAINT AND THE AMENDED Migrino.14cräläwvirtualibräry
COMPLAINT, SHOULD BE STRUCK OUT IN
LINE WITH THE RULINGS OF THE SUPREME The primary issue for resolution is whether the PCGG has the
COURT IN CRUZ, JR. v. SANDIGANBAYAN, jurisdiction to investigate and cause the filing of a forfeiture
194 SCRA 474 AND REPUBLIC v. MIGRINO, petition against Ramas and Dimaano for unexplained wealth under
189 SCRA 289, NOTWITHSTANDING THE RA No. 1379.
FACT THAT:
We hold that PCGG has no such jurisdiction.
1. The cases of Cruz, Jr. v.
Sandiganbayan, supra, and Republic v. The PCGG created the AFP Board to investigate the unexplained
Migrino, supra, are clearly not wealth and corrupt practices of AFP personnel, whether in the
applicable to this case; active service or retired.15 The PCGG tasked the AFP Board to make
the necessary recommendations to appropriate government
agencies on the action to be taken based on its findings.16 The undoubtedly a subordinate of former President Marcos because of
PCGG gave this task to the AFP Board pursuant to the PCGGs his position as the Commanding General of the Philippine Army.
power under Section 3 of EO No. 1 to conduct investigation as may Petitioner claims that Ramas position enabled him to receive orders
be necessary in order to accomplish and to carry out the purposes directly from his commander-in-chief, undeniably making him a
of this order. EO No. 1 gave the PCGG specific responsibilities, to subordinate of former President Marcos.
wit:
We hold that Ramas was not a subordinate of former President
SEC. 2. The Commission shall be charged with the task of assisting Marcos in the sense contemplated under EO No. 1 and its
the President in regard to the following matters: amendments.

(a) The recovery of all ill-gotten wealth accumulated by Mere position held by a military officer does not automatically
former President Ferdinand E. Marcos, his make him a subordinate as this term is used in EO Nos. 1, 2, 14
immediate family, relatives, subordinates and close and 14-A absent a showing that he enjoyed close association with
associates, whether located in the Philippines or former President Marcos. Migrino discussed this issue in this wise:
abroad, including the takeover and sequestration of
all business enterprises and entities owned or A close reading of EO No. 1 and related executive orders will
controlled by them, during his administration, readily show what is contemplated within the term subordinate.
directly or through nominees, by taking undue The Whereas Clauses of EO No. 1 express the urgent need to
advantage of their public office and/ or using their recover the ill-gotten wealth amassed by former President
powers, authority, influence, connections or Ferdinand E. Marcos, his immediate family, relatives, and close
relationship. associates both here and abroad.

(b) The investigation of such cases of graft and corruption EO No. 2 freezes all assets and properties in the Philippines in
as the President may assign to the Commission which former President Marcos and/or his wife, Mrs. Imelda
from time to time. Marcos, their close relatives, subordinates, business associates,
dummies, agents, or nominees have any interest or participation.
x x x.
Applying the rule in statutory construction known as ejusdem
The PCGG, through the AFP Board, can only investigate the generis that is-
unexplained wealth and corrupt practices of AFP personnel who fall
under either of the two categories mentioned in Section 2 of EO [W]here general words follow an enumeration of persons or things
No. 1. These are: (1) AFP personnel who have accumulated ill- by words of a particular and specific meaning, such general words
gotten wealth during the administration of former President Marcos are not to be construed in their widest extent, but are to be held as
by being the latters immediate family, relative, subordinate or applying only to persons or things of the same kind or class as
close associate, taking undue advantage of their public office or those specifically mentioned [Smith, Bell & Co, Ltd. vs. Register of
using their powers, influence x x x;17 or (2) AFP personnel involved Deeds of Davao, 96 Phil. 53, 58, citing Black on Interpretation of
in other cases of graft and corruption provided the President Laws, 2nd Ed., 203].
assigns their cases to the PCGG.18cräläwvirtualibräry
[T]he term subordinate as used in EO Nos. 1 & 2 refers to one who
Petitioner, however, does not claim that the President assigned enjoys a close association with former President Marcos and/or his
Ramas case to the PCGG. Therefore, Ramas case should fall under wife, similar to the immediate family member, relative, and
the first category of AFP personnel before the PCGG could exercise close associate in EO No. 1 and the close relative, business
its jurisdiction over him. Petitioner argues that Ramas was associate, dummy, agent, or nominee in EO No. 2.
 xxx Thus, although the PCGG sought to investigate and prosecute
private respondents under EO Nos. 1, 2, 14 and 14-A, the result
It does not suffice, as in this case, that the respondent is or was a yielded a finding of violation of Republic Acts Nos. 3019 and 1379
government official or employee during the administration of without any relation to EO Nos. 1, 2, 14 and 14-A. This absence of
former President Marcos. There must be a prima facie showing relation to EO No. 1 and its amendments proves fatal to petitioners
that the respondent unlawfully accumulated wealth by case. EO No. 1 created the PCGG for a specific and limited purpose,
virtue of his close association or relation with former Pres. and necessarily its powers must be construed to addresssuch
Marcos and/or his wife. (Emphasis supplied) specific and limited purpose.

Ramas position alone as Commanding General of the Philippine Moreover, the resolution of the AFP Board and even the Amended
Army with the rank of Major General19 does not suffice to make him Complaint do not show that the properties Ramas allegedly owned
a subordinate of former President Marcos for purposes of EO No. 1 were accumulated by him in his capacity as a subordinate of his
and its amendments. The PCGG has to provide a prima commander-in-chief. Petitioner merely enumerated the properties
facie showing that Ramas was a close associate of former President Ramas allegedly owned and suggested that these properties were
Marcos, in the same manner that business associates, dummies, disproportionate to his salary and other legitimate income without
agents or nominees of former President Marcos were close to showing that Ramas amassed them because of his close
him.Such close association is manifested either by Ramas association with former President Marcos. Petitioner, in
complicity with former President Marcos in the accumulation of ill- fact, admits that the AFP Board resolution does not contain a
gotten wealth by the deposed President or by former President finding that Ramas accumulated his wealth because of his close
Marcos acquiescence in Ramas own accumulation of ill-gotten association with former President Marcos, thus:
wealth if any.
10. While it is true that the resolution of the Anti-Graft Board
This, the PCGG failed to do. of the New Armed Forces of the Philippines did not
categorically find a prima facie evidence showing that
Petitioners attempt to differentiate the instant case respondent Ramas unlawfully accumulated wealth by virtue
from Migrino does not convince us. Petitioner argues that unlike of his close association or relation with former President
in Migrino, the AFP Board Resolution in the instant case states Marcos and/or his wife, it is submitted that such omission
that the AFP Board conducted the investigation pursuant to EO was not fatal. The resolution of the Anti-Graft Board should be
Nos. 1, 2, 14 and 14-A in relation to RA No. 1379. Petitioner read in the context of the law creating the same and the objective
asserts that there is a presumption that the PCGG was acting of the investigation which was, as stated in the above, pursuant to
within its jurisdiction of investigating crony-related cases of graft Republic Act Nos. 3019 and 1379 in relation to Executive Order
and corruption and that Ramas was truly a subordinate of the Nos. 1, 2, 14 and 14-a;21 (Emphasis supplied)
former President. However, the same AFP Board Resolution belies
this contention. Although the Resolution begins with such Such omission is fatal. Petitioner forgets that it is precisely a prima
statement, it ends with the following recommendation: facie showing that the ill-gotten wealth was accumulated by a
subordinate of former President Marcos that vests jurisdiction on
V. RECOMMENDATION: PCGG. EO No. 122 clearly premises the creation of the PCGG on the
urgent need to recover all ill-gotten wealth amassed by former
President Marcos, his immediate family, relatives, subordinates and
Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas
close associates. Therefore, to say that such omission was not fatal
(ret.) be prosecuted and tried for violation of RA 3019, as
is clearly contrary to the intent behind the creation of the PCGG.
amended, otherwise known as Anti-Graft and Corrupt Practices Act
and RA 1379, as amended, otherwise known as The Act for the
Forfeiture of Unlawfully Acquired Property.20cräläwvirtualibräry
In Cruz, Jr. v. Sandiganbayan,23 the Court outlined the cases 6770) vests in the Ombudsman the power to conduct preliminary
that fall under the jurisdiction of the PCGG pursuant to EO Nos. 1, investigation and to file forfeiture proceedings involving
2,24 14,25 14-A:26cräläwvirtualibräry unexplained wealth amassed after 25 February
1986.28cräläwvirtualibräry
A careful reading of Sections 2(a) and 3 of Executive Order No. 1 in
relation with Sections 1, 2 and 3 of Executive Order No. 14, shows After the pronouncements of the Court in Cruz, the PCGG still
what the authority of the respondent PCGG to investigate and pursued this case despite the absence of a prima facie finding that
prosecute covers: Ramas was a subordinate of former President Marcos. The petition
for forfeiture filed with the Sandiganbayan should be dismissed for
(a) the investigation and prosecution of the civil action for lack of authority by the PCGG to investigate respondents since
the recovery of ill-gotten wealth under Republic Act No. there is no prima facie showing that EO No. 1 and its amendments
1379, accumulated by former President Marcos, his apply to respondents. The AFP Board Resolution and even the
immediate family, relatives, subordinates and close Amended Complaint state that there are violations of RA Nos. 3019
associates, whether located in the Philippines or abroad, and 1379. Thus, the PCGG should have recommended Ramas case
including the take-over or sequestration of all business to the Ombudsman who has jurisdiction to conduct the preliminary
enterprises and entities owned or controlled by them, during investigation of ordinary unexplained wealth and graft cases. As
his administration, directly or through his nominees, by stated in Migrino:
taking undue advantage of their public office and/or
using their powers, authority and influence, [But] in view of the patent lack of authority of the PCGG to
connections or relationships; and investigate and cause the prosecution of private respondent for
violation of Rep. Acts Nos. 3019 and 1379, the PCGG must also be
(b) the investigation and prosecution of such offenses enjoined from proceeding with the case, without prejudice to any
committed in the acquisition of said ill-gotten wealth as action that may be taken by the proper prosecutory agency. The
contemplated under Section 2(a) of Executive Order No. 1. rule of law mandates that an agency of government be allowed to
exercise only the powers granted to it.
However, other violations of the Anti-Graft and Corrupt
Practices Act not otherwise falling under the foregoing Petitioners argument that private respondents have waived any
categories, require a previous authority of the President for defect in the filing of the forfeiture petition by submitting their
the respondent PCGG to investigate and prosecute in respective Answers with counterclaim deserves no merit as well.
accordance with Section 2 (b) of Executive Order No. 1.
Otherwise, jurisdiction over such cases is vested in the Petitioner has no jurisdiction over private respondents. Thus, there
Ombudsman and other duly authorized investigating is no jurisdiction to waive in the first place. The PCGG cannot
agencies such as the provincial and city prosecutors, their exercise investigative or prosecutorial powers never granted to it.
assistants, the Chief State Prosecutor and his assistants and PCGGs powers are specific and limited. Unless given additional
the state prosecutors. (Emphasis supplied) assignment by the President, PCGGs sole task is only to recover
the ill-gotten wealth of the Marcoses, their relatives and
The proper government agencies, and not the PCGG, should cronies.29 Without these elements, the PCGG cannot claim
investigate and prosecute forfeiture petitions not falling under EO jurisdiction over a case.
No. 1 and its amendments. The preliminary investigation of
unexplained wealth amassed on or before 25 February 1986 falls Private respondents questioned the authority and jurisdiction of the
under the jurisdiction of the Ombudsman, while the authority to file PCGG to investigate and prosecute their cases by filing their Motion
the corresponding forfeiture petition rests with the Solicitor to Dismiss as soon as they learned of the pronouncement of the
General.27 The Ombudsman Act or Republic Act No. 6770 (RA No. Court in Migrino. This case was decided on 30 August 1990, which
explains why private respondents only filed their Motion to Dismiss The Sandiganbayan, however, refused to defer the presentation of
on 8 October 1990. Nevertheless, we have held that the parties petitioners evidence since petitioner did not state when it would file
may raise lack of jurisdiction at any stage of the the amended complaint. On 18 April 1989, the Sandiganbayan set
proceeding.30 Thus, we hold that there was no waiver of jurisdiction the continuation of the presentation of evidence on 28-29
in this case. Jurisdiction is vested by law and not by the parties to September and 9-11 October 1989, giving petitioner ample time to
an action.31cräläwvirtualibräry prepare its evidence. Still, on 28 September 1989, petitioner
manifested its inability to proceed with the presentation of its
Consequently, the petition should be dismissed for lack of evidence. The Sandiganbayan issued an Order expressing its view
jurisdiction by the PCGG to conduct the preliminary investigation. on the matter, to wit:
The Ombudsman may still conduct the proper preliminary
investigation for violation of RA No. 1379, and if warranted, the The Court has gone through extended inquiry and a narration of
Solicitor General may file the forfeiture petition with the the above events because this case has been ready for trial for
Sandiganbayan.32 The right of the State to forfeit unexplained over a year and much of the delay hereon has been due to the
wealth under RA No. 1379 is not subject to prescription, laches or inability of the government to produce on scheduled dates for pre-
estoppel.33 trial and for trial documents and witnesses, allegedly upon the
failure of the military to supply them for the preparation of the
Second Issue: Propriety of Dismissal of Case presentation of evidence thereon. Of equal interest is the fact that
this Court has been held to task in public about its alleged failure
Before Completion of Presentation of Evidence to move cases such as this one beyond the preliminary stage,
when, in view of the developments such as those of today, this
Court is now faced with a situation where a case already in
Petitioner also contends that the Sandiganbayan erred in
progress will revert back to the preliminary stage, despite a five-
dismissing the case before completion of the presentation of
month pause where appropriate action could have been undertaken
petitioners evidence.
by the plaintiff Republic.35cräläwvirtualibräry
We disagree.
On 9 October 1989, the PCGG manifested in court that it was
conducting a preliminary investigation on the unexplained wealth of
Based on the findings of the Sandiganbayan and the records of this private respondents as mandated by RA No. 1379.36 The PCGG
case, we find that petitioner has only itself to blame for non- prayed for an additional four months to conduct the preliminary
completion of the presentation of its evidence. First, this case has investigation. The Sandiganbayan granted this request and
been pending for four years before the Sandiganbayan dismissed scheduled the presentation of evidence on 26-29 March 1990.
it. Petitioner filed its Amended Complaint on 11 August 1987, and However, on the scheduled date, petitioner failed to inform the
only began to present its evidence on 17 April 1989. Petitioner had court of the result of the preliminary investigation the PCGG
almost two years to prepare its evidence. However, despite this supposedly conducted. Again, the Sandiganbayan gave petitioner
sufficient time, petitioner still delayed the presentation of the rest until 18 May 1990 to continue with the presentation of its evidence
of its evidence by filing numerous motions for postponements and and to inform the court of what lies ahead insofar as the status of
extensions. Even before the date set for the presentation of its the case is concerned x x x.37 Still on the date set, petitioner failed
evidence, petitioner filed, on 13 April 1989, a Motion for Leave to to present its evidence. Finally, on 11 July 1990, petitioner filed its
Amend the Complaint.34 The motion sought to charge the Re-Amended Complaint.38 The Sandiganbayan correctly observed
delinquent properties (which comprise most of petitioners that a case already pending for years would revert to its
evidence) with being subject to forfeiture as having been unlawfully preliminary stage if the court were to accept the Re-Amended
acquired by defendant Dimaano alone x x x. Complaint.
Based on these circumstances, obviously petitioner has only itself Proclamation No. 1 announcing that President Aquino and Vice
to blame for failure to complete the presentation of its evidence. President Laurel were taking power in the name and by the will of
The Sandiganbayan gave petitioner more than sufficient time to the Filipino people.40 Petitioner asserts that the revolutionary
finish the presentation of its evidence. The Sandiganbayan government effectively withheld the operation of the 1973
overlooked petitioners delays and yet petitioner ended the long- Constitution which guaranteed private respondents exclusionary
string of delays with the filing of a Re-Amended Complaint, which right.
would only prolong even more the disposition of the case.
Moreover, petitioner argues that the exclusionary right arising from
Moreover, the pronouncements of the Court an illegal search applies only beginning 2 February 1987, the date
in Migrino and Cruz prompted the Sandiganbayan to dismiss the of ratification of the 1987 Constitution. Petitioner contends that all
case since the PCGG has no jurisdiction to investigate and rights under the Bill of Rights had already reverted to its embryonic
prosecute the case against private respondents. This alone would stage at the time of the search. Therefore, the government may
have been sufficient legal basis for the Sandiganbayan to dismiss confiscate the monies and items taken from Dimaano and use the
the forfeiture case against private respondents. same in evidence against her since at the time of their seizure,
private respondents did not enjoy any constitutional right.
Thus, we hold that the Sandiganbayan did not err in dismissing the
case before completion of the presentation of petitioners evidence. Petitioner is partly right in its arguments.

Third Issue: Legality of the Search and Seizure The EDSA Revolution took place on 23-25 February 1986. As
succinctly stated in President Aquinos Proclamation No. 3 dated 25
Petitioner claims that the Sandiganbayan erred in declaring the March 1986, the EDSA Revolution was done in defiance of the
properties confiscated from Dimaanos house as illegally seized and provisions of the 1973 Constitution.41 The resulting
therefore inadmissible in evidence. This issue bears a significant government was indisputably a revolutionary government bound by
effect on petitioners case since these properties comprise most of no constitution or legal limitations except treaty obligations that
petitioners evidence against private respondents. Petitioner will not the revolutionary government, as the de jure government in the
have much evidence to support its case against private Philippines, assumed under international law.
respondents if these properties are inadmissible in evidence.
The correct issues are: (1) whether the revolutionary government
On 3 March 1986, the Constabulary raiding team served at was bound by the Bill of Rights of the 1973 Constitution during
Dimaanos residence a search warrant captioned Illegal Possession the interregnum, that is, after the actual and effective take-over
of Firearms and Ammunition. Dimaano was not present during the of power by the revolutionary government following the cessation
raid but Dimaanos cousins witnessed the raid. The raiding team of resistance by loyalist forces up to 24 March 1986 (immediately
seized the items detailed in the seizure receipt together with other before the adoption of the Provisional Constitution); and (2)
items not included in the search warrant. The raiding team seized whether the protection accorded to individuals under the
these items: one baby armalite rifle with two magazines; 40 International Covenant on Civil and Political Rights (Covenant) and
rounds of 5.56 ammunition; one pistol, caliber .45; the Universal Declaration of Human Rights (Declaration) remained
communications equipment, cash consisting of P2,870,000 and in effect during the interregnum.
US$50,000, jewelry, and land titles.
We hold that the Bill of Rights under the 1973 Constitution was not
Petitioner wants the Court to take judicial notice that the raiding operative during the interregnum. However, we rule that the
team conducted the search and seizure on March 3, 1986 or five protection accorded to individuals under the Covenant and the
days after the successful EDSA revolution.39 Petitioner argues that Declaration remained in effect during the interregnum.
a revolutionary government was operative at that time by virtue of
During the interregnum, the directives and orders of the Constitution as a Batasang Pambansa resolution had earlier
revolutionary government were the supreme law because no declared Mr. Marcos as the winner in the 1986 presidential
constitution limited the extent and scope of such directives and election. Thus it can be said that the organization of Mrs. Aquinos
orders. With the abrogation of the 1973 Constitution by the Government which was met by little resistance and her control of
successful revolution, there was no municipal law higher than the the state evidenced by the appointment of the Cabinet and other
directives and orders of the revolutionary government. Thus, key officers of the administration, the departure of the Marcos
during the interregnum, a person could not invoke any Cabinet officials, revamp of the Judiciary and the Military signaled
exclusionary right under a Bill of Rights because there was neither the point where the legal system then in effect, had ceased
a constitution nor a Bill of Rights during the interregnum. As the to be obeyed by the Filipino. (Emphasis supplied)
Court explained in Letter of Associate Justice Reynato S.
Puno:[42cräläwvirtualibräry To hold that the Bill of Rights under the 1973 Constitution
remained operative during the interregnum would render void all
A revolution has been defined as the complete overthrow of the sequestration orders issued by the Philippine Commission on Good
established government in any country or state by those who were Government (PCGG) before the adoption of the Freedom
previously subject to it or as a sudden, radical and fundamental Constitution. The sequestration orders, which direct the freezing
change in the government or political system, usually effected with and even the take-over of private property by mere executive
violence or at least some acts of violence. In Kelsen's book, issuance without judicial action, would violate the due process and
General Theory of Law and State, it is defined as that which occurs search and seizure clauses of the Bill of Rights.
whenever the legal order of a community is nullified and replaced
by a new order . . . a way not prescribed by the first order itself. During the interregnum, the government in power was concededly
a revolutionary government bound by no constitution. No one could
It was through the February 1986 revolution, a relatively peaceful validly question the sequestration orders as violative of the Bill of
one, and more popularly known as the people power revolution Rights because there was no Bill of Rights during the interregnum.
that the Filipino people tore themselves away from an existing However, upon the adoption of the Freedom Constitution, the
regime. This revolution also saw the unprecedented rise to power sequestered companies assailed the sequestration orders as
of the Aquino government. contrary to the Bill of Rights of the Freedom Constitution.

From the natural law point of view, the right of revolution has been In Bataan Shipyard & Engineering Co. Inc. vs. Presidential
defined as an inherent right of a people to cast out their rulers, Commission on Good Government,43 petitioner Baseco, while
change their policy or effect radical reforms in their system of conceding there was no Bill of Rights during the interregnum,
government or institutions by force or a general uprising when the questioned the continued validity of the sequestration orders upon
legal and constitutional methods of making such change have adoption of the Freedom Constitution in view of the due process
proved inadequate or are so obstructed as to be unavailable. It has clause in its Bill of Rights. The Court ruled that the Freedom
been said that the locus of positive law-making power lies with the Constitution, and later the 1987 Constitution, expressly
people of the state and from there is derived the right of the recognized the validity of sequestration orders, thus:
people to abolish, to reform and to alter any existing form of
government without regard to the existing constitution. If any doubt should still persist in the face of the foregoing
considerations as to the validity and propriety of sequestration,
xxx freeze and takeover orders, it should be dispelled by the fact that
these particular remedies and the authority of the PCGG to issue
It is widely known that Mrs. Aquinos rise to the presidency them have received constitutional approbation and sanction. As
was not due to constitutional processes; in fact, it was already mentioned, the Provisional or Freedom Constitution
achieved in violation of the provisions of the 1973 recognizes the power and duty of the President to enact measures
to achieve the mandate of the people to . . . (r)ecover ill-gotten constitutional normalization and at the same time ask for a
properties amassed by the leaders and supporters of the previous temporary halt to the full functioning of what is at the heart of
regime and protect the interest of the people through orders of constitutionalism. That would be hypocritical; that would be a
sequestration or freezing of assets or accounts. And as also already repetition of Marcosian protestation of due process and rule of law.
adverted to, Section 26, Article XVIII of the 1987 Constitution The New Society word for that is backsliding. It is tragic when we
treats of, and ratifies the authority to issue sequestration or freeze begin to backslide even before we get there.
orders under Proclamation No. 3 dated March 25, 1986.
Second, this is really a corollary of the first. Habits tend to become
The framers of both the Freedom Constitution and the 1987 ingrained. The committee report asks for extraordinary exceptions
Constitution were fully aware that the sequestration orders would from the Bill of Rights for six months after the convening of
clash with the Bill of Rights. Thus, the framers of both constitutions Congress, and Congress may even extend this longer.
had to include specific language recognizing the validity of the
sequestration orders. The following discourse by Commissioner Good deeds repeated ripen into virtue; bad deeds repeated become
Joaquin G. Bernas during the deliberations of the Constitutional vice. What the committee report is asking for is that we should
Commission is instructive: allow the new government to acquire the vice of disregarding the
Bill of Rights.
FR. BERNAS: Madam President, there is something schizophrenic
about the arguments in defense of the present amendment. Vices, once they become ingrained, become difficult to shed. The
practitioners of the vice begin to think that they have a vested
For instance, I have carefully studied Minister Salongas lecture in right to its practice, and they will fight tooth and nail to keep the
the Gregorio Araneta University Foundation, of which all of us have franchise. That would be an unhealthy way of consolidating the
been given a copy. On the one hand, he argues that everything the gains of a democratic revolution.
Commission is doing is traditionally legal. This is repeated by
Commissioner Romulo also. Minister Salonga spends a major Third, the argument that what matters are the results and not the
portion of his lecture developing that argument. On the other hand, legal niceties is an argument that is very disturbing. When it comes
almost as an afterthought, he says that in the end what matters from a staunch Christian like Commissioner Salonga, a Minister,
are the results and not the legal niceties, thus suggesting that the and repeated verbatim by another staunch Christian like
PCGG should be allowed to make some legal shortcuts, another Commissioner Tingson, it becomes doubly disturbing and even
word for niceties or exceptions. discombobulating. The argument makes the PCGG an auctioneer,
placing the Bill of Rights on the auction block. If the price is right,
Now, if everything the PCGG is doing is legal, why is it asking the the search and seizure clause will be sold. Open your Swiss bank
CONCOM for special protection? The answer is clear. What they account to us and we will award you the search and seizure clause.
are doing will not stand the test of ordinary due process, You can keep it in your private safe.
hence they are asking for protection, for exceptions. Grandes
malos, grandes remedios, fine, as the saying stands, but let us not Alternatively, the argument looks on the present government as
say grandes malos, grande y malos remedios. That is not an hostage to the hoarders of hidden wealth. The hoarders will release
allowable extrapolation. Hence, we should not give the exceptions the hidden health if the ransom price is paid and the ransom price
asked for, and let me elaborate and give three reasons: is the Bill of Rights, specifically the due process in the search and
seizure clauses. So, there is something positively revolving about
First, the whole point of the February Revolution and of the work of either argument. The Bill of Rights is not for sale to the highest
the CONCOM is to hasten constitutional normalization. Very much bidder nor can it be used to ransom captive dollars. This nation will
at the heart of the constitutional normalization is the full effectivity survive and grow strong, only if it would become convinced of the
of the Bill of Rights. We cannot, in one breath, ask for
values enshrined in the Constitution of a price that is beyond signatory. Article 2(1) of the Covenant requires each signatory
monetary estimation. State to respect and to ensure to all individuals within its territory
and subject to its jurisdiction the rights45 recognized in the present
For these reasons, the honorable course for the Constitutional Covenant. Under Article 17(1) of the Covenant, the revolutionary
Commission is to delete all of Section 8 of the committee report government had the duty to insure that [n]o one shall be subjected
and allow the new Constitution to take effect in full vigor. If Section to arbitrary or unlawful interference with his privacy, family, home
8 is deleted, the PCGG has two options. First, it can pursue the or correspondence.
Salonga and the Romulo argument that what the PCGG has been
doing has been completely within the pale of the law. If sustained, The Declaration, to which the Philippines is also a signatory,
the PCGG can go on and should be able to go on, even without the provides in its Article 17(2) that [n]o one shall be arbitrarily
support of Section 8. If not sustained, however, the PCGG has only deprived of his property. Although the signatories to the
one honorable option, it must bow to the majesty of the Bill of Declaration did not intend it as a legally binding document, being
Rights. only a declaration, the Court has interpreted the Declaration as
part of the generally accepted principles of international law and
The PCGG extrapolation of the law is defended by staunch binding on the State.46 Thus, the revolutionary government was
Christians. Let me conclude with what another Christian replied also obligated under international law to observe the rights47 of
when asked to toy around with the law. From his prison cell, individuals under the Declaration.
Thomas More said, "I'll give the devil benefit of law for my nations
safety sake. I ask the Commission to give the devil benefit of law The revolutionary government did not repudiate the Covenant or
for our nations sake. And we should delete Section 8. the Declaration during the interregnum. Whether the revolutionary
government could have repudiated all its obligations under the
Thank you, Madam President. (Emphasis supplied) Covenant or the Declaration is another matter and is not the issue
here. Suffice it to say that the Court considers the Declaration as
Despite the impassioned plea by Commissioner Bernas against the part of customary international law, and that Filipinos as human
amendment excepting sequestration orders from the Bill of Rights, beings are proper subjects of the rules of international law laid
the Constitutional Commission still adopted the amendment as down in the Covenant. The fact is the revolutionary government did
Section 26,44 Article XVIII of the 1987 Constitution. The framers of not repudiate the Covenant or the Declaration in the same way it
the Constitution were fully aware that absent Section 26, repudiated the 1973 Constitution. As the de jure government, the
sequestration orders would not stand the test of due process under revolutionary government could not escape responsibility for the
the Bill of Rights. States good faith compliance with its treaty obligations under
international law.
Thus, to rule that the Bill of Rights of the 1973 Constitution
remained in force during the interregnum, absent a constitutional It was only upon the adoption of the Provisional Constitution on 25
provision excepting sequestration orders from such Bill of Rights, March 1986 that the directives and orders of the revolutionary
would clearly render all sequestration orders void during the government became subject to a higher municipal law that, if
interregnum. Nevertheless, even during the interregnum the contravened, rendered such directives and orders void. The
Filipino people continued to enjoy, under the Covenant and the Provisional Constitution adopted verbatim the Bill of Rights of the
Declaration, almost the same rights found in the Bill of Rights of 1973 Constitution.48 The Provisional Constitution served as a self-
the 1973 Constitution. limitation by the revolutionary government to avoid abuses of the
absolute powers entrusted to it by the people.
The revolutionary government, after installing itself as the de
jure government, assumed responsibility for the States good faith During the interregnum when no constitution or Bill of Rights
compliance with the Covenant to which the Philippines is a existed, directives and orders issued by government officers were
valid so long as these officers did not exceed the authority granted xxx
them by the revolutionary government. The directives and orders
should not have also violated the Covenant or the Declaration. In Q. You said you found money instead of weapons, do
this case, the revolutionary government presumptively sanctioned you know the reason why your team seized this
the warrant since the revolutionary government did not repudiate money instead of weapons?
it. The warrant, issued by a judge upon proper application, A. I think the overall team leader and the other two
specified the items to be searched and seized. The warrant is thus officers assisting him decided to bring along also
valid with respect to the items specifically described in the warrant. the money because at that time it was already
dark and they felt most secured if they will bring
However, the Constabulary raiding team seized items not included that because they might be suspected also of
in the warrant. As admitted by petitioners witnesses, the raiding taking money out of those items, your
team confiscated items not included in the warrant, thus: Honor.49cräläwvirtualibräry

Direct Examination of Capt. Rodolfo Sebastian Cross-examination

AJ AMORES Atty. Banaag

Q. According to the search warrant, you are supposed to Q. Were you present when the search warrant in
seize only for weapons. What else, aside from the connection with this case was applied before the
weapons, were seized from the house of Miss Municipal Trial Court of Batangas, Branch 1?
Elizabeth Dimaano? A. Yes, sir.

A. The communications equipment, money in Philippine Q. And the search warrant applied for by you was for
currency and US dollars, some jewelries, land titles, the search and seizure of five (5) baby armalite
sir. rifles M-16 and five (5) boxes of ammunition?
A. Yes, sir.
Q. Now, the search warrant speaks only of weapons
to be seized from the house of Elizabeth xxx
Dimaano. Do you know the reason why your
team also seized other properties not mentioned AJ AMORES
in said search warrant?
A. During the conversation right after the conduct of Q. Before you applied for a search warrant, did you
said raid, I was informed that the reason why conduct surveillance in the house of Miss
they also brought the other items not included in Elizabeth Dimaano?
the search warrant was because the money and A. The Intelligence Operatives conducted surveillance
other jewelries were contained in attach cases together with the MSU elements, your Honor.
and cartons with markings Sony Trinitron, and I
think three (3) vaults or steel safes. Believing Q. And this party believed there were weapons
that the attach cases and the steel safes were deposited in the house of Miss Elizabeth
containing firearms, they forced open these Dimaano?
containers only to find out that they contained A. Yes, your Honor.
money.
Q. And they so swore before the Municipal Trial Q. There were other articles seized which were not
Judge? included in the search warrant, like for instance,
A. Yes, your Honor. jewelries. Why did you seize the jewelries?
A. I think it was the decision of the overall team
Q. But they did not mention to you, the applicant for leader and his assistant to bring along also the
the search warrant, any other properties or jewelries and other items, sir. I do not really
contraband which could be found in the know where it was taken but they brought along
residence of Miss Elizabeth Dimaano? also these articles. I do not really know their
A. They just gave us still unconfirmed report about reason for bringing the same, but I just learned
some hidden items, for instance, the that these were taken because they might get
communications equipment and money. lost if they will just leave this behind.
However, I did not include that in the application
for search warrant considering that we have not xxx
established concrete evidence about that. So Q. How about the money seized by your raiding team,
when they were not also included in the search
Q. So that when you applied for search warrant, you warrant?
had reason to believe that only weapons were in A. Yes sir, but I believe they were also taken
the house of Miss Elizabeth Dimaano? considering that the money was discovered to be
A. Yes, your Honor.50cräläwvirtualibräry contained in attach cases. These attach cases
were suspected to be containing pistols or other
xxx high powered firearms, but in the course of the
search the contents turned out to be money. So
the team leader also decided to take this
Q. You stated that a .45 caliber pistol was seized
considering that they believed that if they will
along with one armalite rifle M-16 and how
just leave the money behind, it might get lost
many ammunition?
also.
A. Forty, sir.
Q. That holds true also with respect to the other
Q. And this became the subject of your complaint with
articles that were seized by your raiding team,
the issuing Court, with the fiscals office who
like Transfer Certificates of Title of lands?
charged Elizabeth Dimaano for Illegal Possession
A. Yes, sir. I think they were contained in one of the
of Firearms and Ammunition?
vaults that were opened.51cräläwvirtualibräry
A. Yes, sir.
Q. Do you know what happened to that case? It is obvious from the testimony of Captain Sebastian that the
A. I think it was dismissed, sir. warrant did not include the monies, communications equipment,
jewelry and land titles that the raiding team confiscated. The
Q. In the fiscals office?
search warrant did not particularly describe these items and the
A. Yes, sir.
raiding team confiscated them on its own authority. The raiding
Q. Because the armalite rifle you seized, as well as team had no legal basis to seize these items without showing that
the .45 caliber pistol had a Memorandum Receipt these items could be the subject of warrantless search and
in the name of Felino Melegrito, is that not seizure.52 Clearly, the raiding team exceeded its authority when it
correct? seized these items.
A. I think that was the reason, sir.
The seizure of these items was therefore void, and unless these ABAYON, MELVIN G. MACUSI AND ELEAZAR P. QUINTO,
items are contraband per se,53 and they are not, they must be PETITIONERS, VS. COMMISSION ON ELECTIONS, MANUEL A.
returned to the person from whom the raiding seized them. ROXAS II, FRANKLIN M. DRILON AND J.R. NEREUS O.
However, we do not declare that such person is the lawful owner of ACOSTA, RESPONDENTS.
these items, merely that the search and seizure warrant could not
be used as basis to seize and withhold these items from the DECISION
possessor. We thus hold that these items should be returned
immediately to Dimaano. ABAD, J.:

WHEREFORE, the petition for certiorari is DISMISSED. The This petition is an offshoot of two earlier cases already resolved by
questioned Resolutions of the Sandiganbayan dated 18 November the Court involving a leadership dispute within a political party. In
1991 and 25 March 1992 in Civil Case No. 0037, remanding the this case, the petitioners question their expulsion from that party
records of this case to the Ombudsman for such appropriate action and assail the validity of the election of new party leaders
as the evidence may warrant, and referring this case to the conducted by the respondents.
Commissioner of the Bureau of Internal Revenue for a
determination of any tax liability of respondent Elizabeth Dimaano, Statement of the Facts and the Case
are AFFIRMED.
For a better understanding of the controversy, a brief recall of the
SO ORDERED. preceding events is in order.

On July 5, 2005 respondent Franklin M. Drilon (Drilon), as erstwhile

Bellosillo, Austria-Martinez, Corona, Carpio-Morales, Callejo,
president of the Liberal Party (LP), announced his party's
Sr. and Azcuna, JJ., concur.
withdrawal of support for the administration of President Gloria
Macapagal-Arroyo. But petitioner Jose L. Atienza, Jr. (Atienza), LP
Davide, Jr., C.J., in the result. I concur with Mr. Justice Chairman, and a number of party members denounced Drilon's
Vitug in his concurring opinion. move, claiming that he made the announcement without consulting
his party.
Puno and Vitug, JJ., see separate opinion
On March 2, 2006 petitioner Atienza hosted a party conference to
Panganiban, J., in the result. supposedly discuss local autonomy and party matters but, when
convened, the assembly proceeded to declare all positions in the
Quisumbing and Sandoval-Gutierrez, JJ., on official leave. LP's ruling body vacant and elected new officers, with Atienza as LP
president. Respondent Drilon immediately filed a petition[1] with the
Ynares-Santiago, J., in the result. I concur in the separate Commission on Elections (COMELEC) to nullify the elections. He
opinion of J. Reynato Puno. claimed that it was illegal considering that the party's electing
bodies, the National Executive Council (NECO) and the National
Tinga, J., separate opinion reserved. Political Council (NAPOLCO), were not properly convened. Drilon
EN BANC also claimed that under the amended LP Constitution, [2] party
officers were elected to a fixed three-year term that was yet to end
[G.R. No. 188920 : February 16, 2010] on November 30, 2007.

JOSE L. ATIENZA, JR., MATIAS V. DEFENSOR, JR., RODOLFO On the other hand, petitioner Atienza claimed that the majority of
G. VALENCIA, DANILO E. SUAREZ, SOLOMON R. the LP's NECO and NAPOLCO attended the March 2, 2006
CHUNGALAO, SALVACION ZALDIVAR-PEREZ, HARLIN CAST- assembly. The election of new officers on that occasion could be
likened to "people power," wherein the LP majority removed elected him was invalidly convened. They questioned the existence
respondent Drilon as president by direct action. Atienza also said of a quorum and claimed that the NECO composition ought to have
that the amendments[3] to the original LP Constitution, or the been based on a list appearing in the party's 60th Anniversary
Salonga Constitution, giving LP officers a fixed three-year term, Souvenir Program. Both Atienza and Drilon adopted that list as
had not been properly ratified. Consequently, the term of Drilon common exhibit in the earlier cases and it showed that the NECO
and the other officers already ended on July 24, 2006. had 103 members.

On October 13, 2006, the COMELEC issued a resolution, [4] partially Petitioners Atienza, et al. also complained that Atienza, the
granting respondent Drilon's petition. It annulled the March 2, 2006 incumbent party chairman, was not invited to the NECO meeting
elections and ordered the holding of a new election under and that some members, like petitioner Defensor, were given the
COMELEC supervision. It held that the election of petitioner Atienza status of "guests" during the meeting. Atienza's allies allegedly
and the others with him was invalid since the electing assembly did raised these issues but respondent Drilon arbitrarily thumbed them
not convene in accordance with the Salonga Constitution. But, down and "railroaded" the proceedings. He suspended the meeting
since the amendments to the Salonga Constitution had not been and moved it to another room, where Roxas was elected without
properly ratified, Drilon's term may be deemed to have ended. notice to Atienza's allies.
Thus, he held the position of LP president in a holdover capacity
until new officers were elected. On the other hand, respondents Roxas, et al. claimed that Roxas'
election as LP president faithfully complied with the provisions of
Both sides of the dispute came to this Court to challenge the the amended LP Constitution. The party's 60th Anniversary Souvenir
COMELEC rulings. On April 17, 2007 a divided Court issued a Program could not be used for determining the NECO members
resolution,[5] granting respondent Drilon's petition and denying that because supervening events changed the body's number and
of petitioner Atienza. The Court held, through the majority, that composition. Some NECO members had died, voluntarily resigned,
the COMELEC had jurisdiction over the intra-party leadership or had gone on leave after accepting positions in the government.
dispute; that the Salonga Constitution had been validly amended; Others had lost their re-election bid or did not run in the May 2007
and that, as a consequence, respondent Drilon's term as LP elections, making them ineligible to serve as NECO members. LP
president was to end only on November 30, 2007. members who got elected to public office also became part of the
NECO. Certain persons of national stature also became NECO
Subsequently, the LP held a NECO meeting to elect new party members upon respondent Drilon's nomination, a privilege granted
leaders before respondent Drilon's term expired. Fifty-nine NECO the LP president under the amended LP Constitution. In other
members out of the 87 who were supposedly qualified to vote words, the NECO membership was not fixed or static; it changed
attended. Before the election, however, several persons associated due to supervening circumstances.
with petitioner Atienza sought to clarify their membership status
and raised issues regarding the composition of the NECO. Respondents Roxas, et al. also claimed that the party deemed
Eventually, that meeting installed respondent Manuel A. Roxas II petitioners Atienza, Zaldivar-Perez, and Cast-Abayon resigned for
(Roxas) as the new LP president. holding the illegal election of LP officers on March 2, 2006. This
was pursuant to a March 14, 2006 NAPOLCO resolution that NECO
On January 11, 2008 petitioners Atienza, Matias V. Defensor, Jr., subsequently ratified. Meanwhile, certain NECO members, like
Rodolfo G. Valencia, Danilo E. Suarez, Solomon R. Chungalao, petitioners Defensor, Valencia, and Suarez, forfeited their party
Salvacion Zaldivar-Perez, Harlin Cast-Abayon, Melvin G. Macusi, membership when they ran under other political parties during the
and Eleazar P. Quinto, filed a petition for mandatory and May 2007 elections. They were dropped from the roster of LP
prohibitory injunction[6] before the COMELEC against respondents members.
Roxas, Drilon and J.R. Nereus O. Acosta, the party secretary
general. Atienza, et al. sought to enjoin Roxas from assuming the On June 18, 2009 the COMELEC issued the assailed resolution
presidency of the LP, claiming that the NECO assembly which denying petitioners Atienza, et al.'s petition. It noted that the May
2007 elections necessarily changed the composition of the NECO The Court's Ruling
since the amended LP Constitution explicitly made incumbent
senators, members of the House of Representatives, governors and
mayors members of that body. That some lost or won these One. Respondents Roxas, et al. assert that the Court should
positions in the May 2007 elections affected the NECO dismiss the petition for failure of petitioners Atienza, et al. to
membership. Petitioners failed to prove that the NECO which implead the LP as an indispensable party. Roxas, et al. point out
elected Roxas as LP president was not properly convened. that, since the petition seeks the issuance of a writ of mandatory
injunction against the NECO, the controversy could not be
As for the validity of petitioners Atienza, et al.'s expulsion as LP adjudicated with finality without making the LP a party to the case.
[7]
members, the COMELEC observed that this was a membership
issue that related to disciplinary action within the political party.
The COMELEC treated it as an internal party matter that was But petitioners Atienza, et al.'s causes of action in this case consist
beyond its jurisdiction to resolve. in respondents Roxas, et al.'s disenfranchisement of Atienza, et al.
from the election of party leaders and in the illegal election of
Without filing a motion for reconsideration of the COMELEC Roxas as party president. Atienza, et al. were supposedly excluded
resolution, petitioners Atienza, et al. filed this petition from the elections by a series of "despotic acts" of Roxas, et al.,
for certiorari under Rule 65. who controlled the proceedings. Among these acts are Atienza, et
al.'s expulsion from the party, their exclusion from the NECO, and
The Issues Presented respondent Drilon's "railroading" of election proceedings.
Atienza, et al. attributed all these illegal and prejudicial acts to
Roxas, et al.
Respondents Roxas, et al. raise the following threshold issues:
Since no wrong had been imputed to the LP nor had some
1.Whether or not the LP, which was not impleaded in the case, is affirmative relief been sought from it, the LP is not an
an indispensable party; and indispensable party. Petitioners Atienza, et al.'s prayer for the
undoing of respondents Roxas, et al.'s acts and the reconvening of
2.Whether or not petitioners Atienza, et al., as ousted LP members, the NECO are directed against Roxas, et al.
have the requisite legal standing to question Roxas' election.
Two. Respondents Roxas, et al. also claim that petitioners
Petitioners Atienza, et al., on the other hand, raise the following Atienza, et al. have no legal standing to question the election of
issues: Roxas as LP president because they are no longer LP members,
having been validly expelled from the party or having joined other
3.Whether or not the COMELEC gravely abused its discretion when political parties.[8] As non-members, they have no stake in the
it upheld the NECO membership that elected respondent Roxas as outcome of the action.
LP president;
But, as the Court held in David v. Macapagal-Arroyo,[9] legal
4.Whether or not the COMELEC gravely abused its discretion when standing in suits is governed by the "real parties-in-interest" rule
it resolved the issue concerning the validity of the NECO meeting under Section 2, Rule 3 of the Rules of Court. This states that
without first resolving the issue concerning the expulsion of "every action must be prosecuted or defended in the name of the
Atienza, et al. from the party; and real party-in-interest." And "real party-in-interest" is one who
stands to be benefited or injured by the judgment in the suit or the
5.Whether or not respondents Roxas, et al. violated petitioners party entitled to the avails of the suit. In other words, the plaintiff's
Atienza, et al.'s constitutional right to due process by the latter's standing is based on his own right to the relief sought. In raising
expulsion from the party. petitioners Atienza, et al.'s lack of standing as a threshold issue,
respondents Roxas, et al. would have the Court hypothetically basis for such a position. The amended LP Constitution did not
assume the truth of the allegations in the petition. intend the NECO membership to be permanent. Its Section
27[11] provides that the NECO shall include all incumbent senators,
Here, it is precisely petitioners Atienza, et al.'s allegations that members of the House of Representatives, governors, and mayors
respondents Roxas, et al. deprived them of their rights as LP who were LP members in good standing for at least six months. It
members by summarily excluding them from the LP roster and not follows from this that with the national and local elections taking
allowing them to take part in the election of its officers and that not place in May 2007, the number and composition of the NECO would
all who sat in the NECO were in the correct list of NECO members. have to yield to changes brought about by the elections.
If Atienza, et al.'s allegations were correct, they would have been
irregularly expelled from the party and the election of officers, Former NECO members who lost the offices that entitled them to
void. Further, they would be entitled to recognition as members of membership had to be dropped. Newly elected ones who gained
good standing and to the holding of a new election of officers using the privilege because of their offices had to come in. Furthermore,
the correct list of NECO members. To this extent, therefore, former NECO members who passed away, resigned from the party,
Atienza, et al. who want to take part in another election would or went on leave could not be expected to remain part of the NECO
stand to be benefited or prejudiced by the Court's decision in this that convened and held elections on November 26, 2007. In
case. Consequently, they have legal standing to pursue this addition, Section 27 of the amended LP Constitution expressly
petition. authorized the party president to nominate "persons of national
stature" to the NECO. Thus, petitioners Atienza, et al. cannot
Three. In assailing respondent Roxas' election as LP president, validly object to the admission of 12 NECO members nominated by
petitioners Atienza, et al. claim that the NECO members allowed to respondent Drilon when he was LP president. Even if this move
take part in that election should have been limited to those in the could be regarded as respondents Roxas, et al.'s way of ensuring
list of NECO members appearing in the party's 60th Anniversary their election as party officers, there was certainly nothing irregular
Souvenir Program. Atienza, et al. allege that respondent Drilon, as about the act under the amended LP Constitution.
holdover LP president, adopted that list in the earlier cases before
the COMELEC and it should thus bind respondents Roxas, et al. The The NECO was validly convened in accordance with the amended
Court's decision in the earlier cases, said Atienza, et al., anointed LP Constitution. Respondents Roxas, et al. explained in details how
that list for the next party election. Thus, Roxas, et al. in effect they arrived at the NECO composition for the purpose of electing
defied the Court's ruling when they removed Atienza as party the party leaders.[12] The explanation is logical and consistent with
chairman and changed the NECO's composition. [10] party rules. Consequently, the COMELEC did not gravely abuse its
discretion when it upheld the composition of the NECO that elected
But the list of NECO members appearing in the party's Roxas as LP president.
60th Anniversary Souvenir Program was drawn before the May 2007
elections. After the 2007 elections, changes in the NECO Petitioner Atienza claims that the Court's resolution in the earlier
membership had to be redrawn to comply with what the amended cases recognized his right as party chairman with a term, like
LP Constitution required. Respondent Drilon adopted the souvenir respondent Drilon, that would last up to November 30, 2007 and
program as common exhibit in the earlier cases only to prove that that, therefore, his ouster from that position violated the Court's
the NECO, which supposedly elected Atienza as new LP president resolution. But the Court's resolution in the earlier cases did not
on March 2, 2006, had been improperly convened. It cannot be preclude the party from disciplining Atienza under Sections
regarded as an immutable list, given the nature and character of 29[13] and 46[14] of the amended LP Constitution. The party could
the NECO membership. very well remove him or any officer for cause as it saw fit.

Nothing in the Court's resolution in the earlier cases implies that Four. Petitioners Atienza, et al. lament that the COMELEC
the NECO membership should be pegged to the party's selectively exercised its jurisdiction when it ruled on the
60th Anniversary Souvenir Program. There would have been no composition of the NECO but refused to delve into the legality of
their expulsion from the party. The two issues, they said, weigh party only when necessary to the discharge of its constitutional
heavily on the leadership controversy involved in the case. The functions.
previous rulings of the Court, they claim, categorically upheld the
jurisdiction of the COMELEC over intra-party leadership disputes. [15] The COMELEC's jurisdiction over intra-party leadership disputes has
already been settled by the Court. The Court ruled in Kalaw v.
But, as respondents Roxas, et al. point out, the key issue in this Commission on Elections[16] that the COMELEC's powers and
case is not the validity of the expulsion of petitioners Atienza, et al. functions under Section 2, Article IX-C of the Constitution, "include
from the party, but the legitimacy of the NECO assembly that the ascertainment of the identity of the political party and its
elected respondent Roxas as LP president. Given the COMELEC's legitimate officers responsible for its acts." The Court also declared
finding as upheld by this Court that the membership of the NECO in in another case[17] that the COMELEC's power to register political
question complied with the LP Constitution, the resolution of the parties necessarily involved the determination of the persons who
issue of whether or not the party validly expelled petitioners cannot must act on its behalf. Thus, the COMELEC may resolve an intra-
affect the election of officers that the NECO held. party leadership dispute, in a proper case brought before it, as an
incident of its power to register political parties.
While petitioners Atienza, et al. claim that the majority of LP
members belong to their faction, they did not specify who these The validity of respondent Roxas' election as LP president is a
members were and how their numbers could possibly affect the leadership issue that the COMELEC had to settle. Under the
composition of the NECO and the outcome of its election of party amended LP Constitution, the LP president is the issuing authority
leaders. Atienza, et al. has not bothered to assail the individual for certificates of nomination of party candidates for all national
qualifications of the NECO members who voted for Roxas. Nor did elective positions. It is also the LP president who can authorize
Atienza, et al. present proof that the NECO had no quorum when it other LP officers to issue certificates of nomination for candidates
then assembled. In other words, the claims of Atienza, et al. were to local elective posts.[18] In simple terms, it is the LP president who
totally unsupported by evidence. certifies the official standard bearer of the party.

Consequently, petitioners Atienza, et al. cannot claim that their The law also grants a registered political party certain rights and
expulsion from the party impacts on the party leadership issue or privileges that will redound to the benefit of its official candidates.
on the election of respondent Roxas as president so that it was It imposes, too, legal obligations upon registered political parties
indispensable for the COMELEC to adjudicate such claim. Under the that have to be carried out through their leaders. The resolution of
circumstances, the validity or invalidity of Atienza, et al.'s the leadership issue is thus particularly significant in ensuring the
expulsion was purely a membership issue that had to be settled peaceful and orderly conduct of the elections.[19]
within the party. It is an internal party matter over which the
COMELEC has no jurisdiction. Five. Petitioners Atienza, et al. argue that their expulsion from the
party is not a simple issue of party membership or discipline; it
What is more, some of petitioner Atienza's allies raised objections involves a violation of their constitutionally-protected right to due
before the NECO assembly regarding the status of members from process of law. They claim that the NAPOLCO and the NECO should
their faction. Still, the NECO proceeded with the election, implying have first summoned them to a hearing before summarily expelling
that its membership, whose composition has been upheld, voted them from the party. According to Atienza, et al., proceedings on
out those objections. party discipline are the equivalent of administrative
proceedings[20] and are, therefore, covered by the due process
The COMELEC's jurisdiction over intra-party disputes is limited. It requirements laid down in Ang Tibay v. Court of Industrial
does not have blanket authority to resolve any and all Relations.[21]
controversies involving political parties. Political parties are
generally free to conduct their activities without interference from But the requirements of administrative due process do not apply to
the state. The COMELEC may intervene in disputes internal to a the internal affairs of political parties. The due process standards
set in Ang Tibay cover only administrative bodies created by the allowing the political processes to operate without undue
state and through which certain governmental acts or functions are interference. It is also consistent with the state policy of allowing a
performed. An administrative agency or instrumentality free and open party system to evolve, according to the free choice
"contemplates an authority to which the state delegates of the people.[25]
governmental power for the performance of a state
function."[22] The constitutional limitations that generally apply to To conclude, the COMELEC did not gravely abuse its discretion
the exercise of the state's powers thus, apply too, to administrative when it upheld Roxas' election as LP president but refused to rule
bodies. on the validity of Atienza, et al.'s expulsion from the party. While
the question of party leadership has implications on the COMELEC's
The constitutional limitations on the exercise of the state's powers performance of its functions under Section 2, Article IX-C of the
are found in Article III of the Constitution or the Bill of Rights. The Constitution, the same cannot be said of the issue pertaining to
Bill of Rights, which guarantees against the taking of life, property, Atienza, et al.'s expulsion from the LP. Such expulsion is for the
or liberty without due process under Section 1 is generally a moment an issue of party membership and discipline, in which the
limitation on the state's powers in relation to the rights of its COMELEC cannot intervene, given the limited scope of its power
citizens. The right to due process is meant to protect ordinary over political parties.
citizens against arbitrary government action, but not from acts
committed by private individuals or entities. In the latter case, the WHEREFORE, the Court DISMISSES the petition
specific statutes that provide reliefs from such private acts apply. and UPHOLDS the Resolution of the Commission on Elections
The right to due process guards against unwarranted dated June 18, 2009 in COMELEC Case SPP 08-001.
encroachment by the state into the fundamental rights of its
citizens and cannot be invoked in private controversies involving SO ORDERED.
private parties.[23]
Carpio Morales, Velasco, Jr., Nachura, Leonardo-De Castro,
Although political parties play an important role in our democratic Brion, Peralta, Bersamin, Del Castillo, Abad, Villarama, Jr.,
set-up as an intermediary between the state and its citizens, it is Perez, and Mendoza, JJ., concur.
still a private organization, not a state instrument. The discipline of Puno, C.J., in the result.
members by a political party does not involve the right to life, Carpio, J., concur but the comelec's jurisdiction over
liberty or property within the meaning of the due process clause. leadership dispute of political parties is merely for purposes
An individual has no vested right, as against the state, to be of determining whether they should be registered.
accepted or to prevent his removal by a political party. The only Corona, J., no part.
rights, if any, that party members may have, in relation to other
party members, correspond to those that may have been freely
agreed upon among themselves through their charter, which is a THIRD DIVISION
contract among the party members. Members whose rights under
their charter may have been violated have recourse to courts of [G.R. No. 81561. January 18, 1991.]
law for the enforcement of those rights, but not as a due process
issue against the government or any of its agencies. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ANDRE
MARTI, Accused-Appellant.
But even when recourse to courts of law may be made, courts will
ordinarily not interfere in membership and disciplinary matters The Solicitor General for Plaintiff-Appellee.
within a political party. A political party is free to conduct its
internal affairs, pursuant to its constitutionally-protected right to Reynaldo B . Tatoy and Abelardo E . Rogacion for Accused-
free association. In Sinaca v. Mula,[24] the Court said that judicial Appellant.
restraint in internal party matters serves the public interest by
 SYLLABUS
4. ID.; ID.; ID.; GUARANTEE AGAINST UNREASONABLE SEARCH
AND SEIZURE; CASE AT BAR. — The contraband in the case at bar
1. CONSTITUTIONAL LAW; BILL OF RIGHTS; GUARANTEE AGAINST having come into possession of the Government without the latter
UNREASONABLE SEARCHES AND SEIZURES; PRONOUNCEMENT OF transgressing appellant’s rights against unreasonable search and
UNITED STATES FEDERAL SUPREME COURT AND STATE APPELLATE seizure, the Court sees no cogent reason why the same should not
COURTS, DOCTRINAL IN THIS JURISDICTION. — Our present be admitted against him in the prosecution of the offense charged.
constitutional provision on the guarantee against unreasonable If the search is made upon the request of law enforcers, a warrant
search and seizure had its origin in the 1935 Charter which was in must generally be first secured if it is to pass the test of
turn derived almost verbatim from the Fourth Amendment to the constitutionality. However, if the search is made at the behest or
United States Constitution. As such, the Court may turn to the initiative of the proprietor of a private establishment for its own
pronouncements of the United States Federal Supreme Court and and private purposes, as in the case at bar, and without the
State Appellate Courts which are considered doctrinal in this intervention of police authorities, the right against unreasonable
jurisdiction. search and seizure cannot be invoked for only the act of private
individual, not the law enforcers, is involved. In sum, the
2. REMEDIAL LAW; EVIDENCE; ADMISSIBILITY; EXCLUSIONARY protection against unreasonable searches and seizures cannot be
RULE ON EVIDENCE OBTAINED IN VIOLATION OF THE GUARANTEE extended to acts committed by private individuals so as to bring it
AGAINST UNREASONABLE SEARCHES AND SEIZURES. — In a within the ambit of alleged unlawful intrusion by the government.
number of cases, the Court strictly adhered to the exclusionary rule
and has struck down the admissibility of evidence obtained in 5. ID.; ID.; ID.; ID.; MERE PRESENCE OF NBI AGENTS TO
violation of the constitutional safeguard against unreasonable OBSERVE AND LOOK AT WHICH IS IN PLAIN SIGHT IS NOT A
searches and seizures. (Bache & Co., (Phil.), Inc., v. Ruiz, 37 SCRA SEARCH. — The mere presence of the NBI agents did not convert
823 [1971]; Lim v. Ponce de Leon, 66 SCRA 299 [1975]; People v. the reasonable search effected by Reyes into a warrantless search
Burgos, 144 SCRA 1 [1986]; Roan v. Gonzales, 145 SCRA 687 and seizure proscribed by the Constitution. Merely to observe and
[1987]; See also Salazar v. Hon. Achacoso, Et Al., GR No. 81510, look at that which is in plain sight is not a search. Having observed
March 14, 1990). that which is open, where no trespass has been committed in aid
thereof, is not search (Chadwick v. State, 429 SW2d 135). Where
3. CONSTITUTIONAL LAW; BILL OF RIGHTS; LIBERTIES MAY BE the contraband articles are identified without a trespass on the part
INVOKED ONLY AGAINST THE STATE, NOT UPON PRIVATE of the arresting officer, there is not the search that is prohibited by
INDIVIDUALS. — In the absence of governmental interference, the the constitution (US v. Lee 274 US 559, 71 L.Ed. 1202 [1927]; Ker
liberties guaranteed by the Constitution cannot be invoked against v. State of California 374 US 23, 10 L. Ed. 2d. 726 [1963]; Moore
the State. As this Court held in Villanueva v. Querubin (48 SCRA v. State, 429 SW2d 122 [1968]).
345 [1972]: "1. This ‘constitutional right (against unreasonable
search and seizure) refers to the immunity of one’s person, 6. ID.; CONSTITUTION; DOES NOT GOVERN RELATIONSHIP
whether citizen or alien, from interference by government, included BETWEEN INDIVIDUALS. — The constitution, in laying down the
in which is his residence, his papers, and other possessions . . . principles of the government and fundamental liberties of the
That the Bill of Rights embodied in the Constitution is not meant to people, does not govern relationships between individuals.
be invoked against acts of private individuals finds support in the
deliberations of the Constitutional Commission. The constitutional 7. REMEDIAL LAW; EVIDENCE; ADMISSIBILITY; EVIDENCE
proscription against unlawful searches and seizures therefore PROCURED BY INDIVIDUALS EFFECTED THROUGH PRIVATE
applies as a restraint directed only against the government and its SEIZURE, ADMISSIBLE. — Similarly, the admissibility of the
agencies tasked with the enforcement of the law. Thus, it could evidence procured by an individual effected through private seizure
only be invoked against the State to whom the restraint against equally applies, in pari passu, to the alleged violation, non-
arbitrary and unreasonable exercise of power is imposed. governmental as it is, of appellant’s constitutional rights to privacy
and communication. The facts as summarized in the brief of the prosecution are as
follows:jgc:chanrobles.com.ph
8. ID.; ID.; CREDIBILITY; SELF-SERVING DENIALS, DESERVE NO
WEIGHT IN LAW. — Denials, if unsubstantiated by clear and "On August 14, 1987, between 10:00 and 11:00 a.m., the
convincing evidence, are negative self-serving evidence which appellant and his common-law wife, Shirley Reyes, went to the
deserve no weight in law and cannot be given greater evidentiary booth of the "Manila Packing and Export Forwarders" in the Pistang
weight than the testimony of credible witnesses who testify on Pilipino Complex, Ermita, Manila, carrying with them four (4) gift-
affirmative matters (People v. Esquillo, 171 SCRA 571 [1989]; wrapped packages. Anita Reyes (the proprietress and no relation to
People v. Sariol, 174 SCRA 237 [1989]). Shirley Reyes) attended to them. The appellant informed Anita
Reyes that he was sending the packages to a friend in Zurich,
9. ID.; ID.; ID.; REQUISITE FOR EVIDENCE TO BE BELIEVED. — Switzerland. Appellant filled up the contract necessary for the
Evidence, to be believed, must not only proceed from the mouth of transaction, writing therein his name, passport number, the date of
a credible witness, but it must be credible in itself such as the shipment and the name and address of the consignee, namely,
common experience and observation of mankind can approve as "WALTER FIERZ, Mattacketr II, 8052 Zurich, Switzerland"
probable under the circumstances. (Decision, p. 6)

10. ID.; ID.; BURDEN OF PROOF AND PRESUMPTIONS; THINGS "Anita Reyes then asked the appellant if she could examine and
WHICH A PERSON POSSESSES ARE PRESUMED OWNED BY HIM; inspect the packages. Appellant, however, refused, assuring her
CASE AT BAR. — As records further show, appellant did not even that the packages simply contained books, cigars, and gloves and
bother to ask Michael’s full name, his complete address or passport were gifts to his friend in Zurich. In view of appellant’s
number. Furthermore, if indeed, the German national was the representation, Anita Reyes no longer insisted on inspecting the
owner of the merchandise, appellant should have so indicated in packages. The four (4) packages were then placed inside a brown
the contract of shipment (Exh. "B", Original Records, p. 40). On the corrugated box one by two feet in size (1’ x 2’). Styro-foam was
contrary, appellant signed the contract as the owner and shipper placed at the bottom and on top of the packages before the box
thereof giving more weight to the presumption that things which a was sealed with masking tape, thus making the box ready for
person possesses, or exercises acts of ownership over, are owned shipment (Decision, p. 8).chanrobles law library : red
by him (Sec. 5 [j], Rule 131). At this point, appellant is therefore
estopped to claim otherwise. "Before delivery of appellant’s box to the Bureau of Customs
and/or Bureau of Posts, Mr. Job Reyes (proprietor) and husband of
Anita (Reyes), following standard operating procedure, opened the
boxes for final inspection. When he opened appellant’s box, a
DECISION peculiar odor emitted therefrom. His curiosity aroused, he
squeezed one of the bundles allegedly containing gloves and felt
dried leaves inside. Opening one of the bundles, he pulled out a
BIDIN, J.: cellophane wrapper protruding from the opening of one of the
gloves. He made an opening on one of the cellophane wrappers
and took several grams of the contents thereof (tsn, pp. 29-30,
This is an appeal from a decision ** rendered by the Special October 6, 1987; Emphasis supplied).
Criminal Court of Manila (Regional Trial Court, Branch XLIX)
convicting accused-appellant of violation of Section 21 (b), Article "Job Reyes forthwith prepared a letter reporting the shipment to
IV in relation to Section 4, Article 11 and Section 2 (e)(i), Article 1 the NBI and requesting a laboratory examination of the samples he
of Republic Act 6425, as amended, otherwise known as the extracted from the cellophane wrapper (tsn, pp. 5-6, October 6,
Dangerous Drugs Act. 1987).
"He brought the letter and a sample of appellant’s shipment to the
Narcotics Section of the National Bureau of Investigation (NBI), at In this appeal, Accused/appellant assigns the following errors, to
about 1:30 o’clock in the afternoon of that date, i.e., August 14, wit:jgc:chanrobles.com.ph
1987. He was interviewed by the Chief of Narcotics Section. Job
Reyes informed the NBI that the rest of the shipment was still in "THE LOWER COURT ERRED IN ADMITTING IN EVIDENCE THE
his office. Therefore, Job Reyes and three (3) NBI agents, and a ILLEGALLY SEARCHED AND SEIZED OBJECTS CONTAINED IN THE
photographer, went to the Reyes’ office et Ermita, Manila (tsn, p. FOUR PARCELS.
30, October 6, 1987).
"THE LOWER COURT ERRED IN CONVICTING APPELLANT DESPITE
"Job Reyes brought out the box in which appellant’s packages were THE UNDISPUTED FACT THAT HIS RIGHTS UNDER THE
placed and, in the presence of the NBI agents, opened the top CONSTITUTION WHILE UNDER CUSTODIAL PROCEEDINGS WERE
flaps, removed the styro-foam and took out the cellophane NOT OBSERVED.chanrobles virtual lawlibrary
wrappers from inside the gloves. Dried marijuana leaves were
found to have been contained inside the cellophane wrappers (tsn, "THE LOWER COURT ERRED IN NOT GIVING CREDENCE TO THE
p. 38, October 6, 1987; Emphasis supplied). EXPLANATION OF THE APPELLANT ON HOW THE FOUR PARCELS
CAME INTO HIS POSSESSION." (Appellant’s Brief, p. 1; Rollo, p.
"The package which allegedly contained books was likewise opened 55)
by Job Reyes. He discovered that the package contained bricks or
cake-like dried marijuana leaves. The package which allegedly 1. Appellant contends that the evidence subject of the imputed
contained tabacalera cigars was also opened. It turned out that offense had been obtained in violation of his constitutional rights
dried marijuana leaves were neatly stocked underneath the cigars against unreasonable search and seizure and privacy of
(tsn, p. 39, October 6, 1987). communication (Sec. 2 and 3, Art. III, Constitution) and therefore
argues that the same should be held inadmissible in evidence (Sec.
"The NBI agents made an inventory and took charge of the box 3 (2), Art. III).
and of the contents thereof, after signing a "Receipt"
acknowledging custody of the said effects (tsn, pp. 2-3, October 7, Sections 2 and 3, Article III of the Constitution
1987). provide:jgc:chanrobles.com.ph

Thereupon, the NBI agents tried to locate appellant but to no avail. "Section 2. The right of the people to be secure in their persons,
Appellant’s stated address in his passport being the Manila Central houses, papers and effects against unreasonable searches and
Post Office, the agents requested assistance from the latter’s Chief seizures of whatever nature and for any purpose shall be
Security. On August 27, 1987, appellant, while claiming his mail at inviolable, and no search warrant or warrant of arrest shall issue
the Central Post Office, was invited by the NBI to shed light on the except upon probable cause to be determined personally by the
attempted shipment of the seized dried leaves. On the same day judge after examination under oath or affirmation of the
the Narcotics Section of the NBI submitted the dried leaves to the complainant and the witnesses he may produce, and particularly
Forensic Chemistry Section for laboratory examination. It turned describing the place to be searched and the persons or things to be
out that the dried leaves were marijuana flowering tops as certified seized.
by the forensic chemist. (Appellee’s Brief, pp. 9-11, Rollo, pp. 132-
134). "Section 3. (1) The privacy of communication and correspondence
shall be inviolable except upon lawful order of the court, or when
Thereafter, an Information was filed against appellant for violation public safety or order requires otherwise as prescribed by law.
of RA 6425, otherwise known as the Dangerous Drugs Act.
"(2) Any evidence obtained in violation of this or the preceding
After trial, the court a quo rendered the assailed decision. section shall be inadmissible for any purpose in any
proceeding."cralaw virtua1aw library
On the other hand, the case at bar assumes a peculiar character
Our present constitutional provision on the guarantee against since the evidence sought to be excluded was primarily discovered
unreasonable search and seizure had its origin in the 1935 Charter and obtained by a private person, acting in a private capacity and
which, worded as follows:jgc:chanrobles.com.ph without the intervention and participation of State authorities.
Under the circumstances, can accused/appellant validly claim that
"The right of the people to be secure in their persons, houses, his constitutional right against unreasonable searches and seizure
papers and effects against unreasonable searches and seizures has been violated? Stated otherwise, may an act of a private
shall not be violated, and no warrants shall issue but upon individual, allegedly in violation of appellant’s constitutional rights,
probable cause, to be determined by the judge after examination be invoked against the State?
under oath or affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be searched, We hold in the negative. In the absence of governmental
and the persons or things to be seized." (Sec. 1 [3], Article III). interference, the liberties guaranteed by the Constitution cannot be
invoked against the State.
was in turn derived almost verbatim from the Fourth Amendment
*** to the United States Constitution. As such, the Court may turn As this Court held in Villanueva v. Querubin (48 SCRA 345
to the pronouncements of the United States Federal Supreme Court [1972]:jgc:chanrobles.com.ph
and State Appellate Courts which are considered doctrinal in this
jurisdiction. "1. This ‘constitutional right (against unreasonable search and
seizure) refers to the immunity of one’s person, whether citizen or
Thus, following the exclusionary rule laid down in Mapp v. Ohio by alien, from interference by government, included in which is his
the US Federal Supreme Court (367 US 643, 81 S.Ct. 1684, 6 L.Ed. residence, his papers, and other possessions . . .
1081 [1961]), this Court, in Stonehill v. Diokno (20 SCRA 383
[1967]), declared as inadmissible any evidence obtained by virtue ". . . There the state, however powerful, does not as such have the
of a defective search and seizure warrant, abandoning in the access except under the circumstances above noted, for in the
process the ruling earlier adopted in Moncado v. People’s Court (80 traditional formulation, his house, however humble, is his castle.
Phil. 1 [1948]) wherein the admissibility of evidence was not Thus is outlawed any unwarranted intrusion by government, which
affected by the illegality of its seizure. The 1973 Charter (Sec. 4 is called upon to refrain from any invasion of his dwelling and to
[2], Art. IV) constitutionalized the Stonehill ruling and is carried respect the privacies of his life . . ." (Cf. Schermerber v. California,
over up to the present with the advent of the 1987 Constitution. 384 US 757 [1966] and Boyd v. United States, 116 US 616
[1886]; Emphasis supplied).
In a number of cases, the Court strictly adhered to the
exclusionary rule and has struck down the admissibility of evidence In Burdeau v. McDowell (256 US 465 (1921), 41 S Ct. 547; 65
obtained in violation of the constitutional safeguard against L.Ed. 1048), the Court there in construing the right against
unreasonable searches and seizures. (Bache & Co., (Phil.), Inc., v. unreasonable searches and seizures declared
Ruiz, 37 SCRA 823 [1971]; Lim v. Ponce de Leon, 66 SCRA 299 that:jgc:chanrobles.com.ph
[1975]; People v. Burgos, 144 SCRA 1 [1986]; Roan v. Gonzales,
145 SCRA 687 [1987]; See also Salazar v. Hon. Achacoso, Et Al., "(t)he Fourth Amendment gives protection against unlawful
GR No. 81510, March 14, 1990). searches and seizures, and as shown in previous cases, its
protection applies to governmental action. Its origin and history
It must be noted, however, that in all those cases adverted to, the clearly show that it was intended as a restraint upon the activities
evidence so obtained were invariably procured by the State acting of sovereign authority, and was not intended to be a limitation
through the medium of its law enforcers or other authorized upon other than governmental agencies; as against such authority
government agencies.chanrobles law library : red it was the purpose of the Fourth Amendment to secure the citizen
in the right of unmolested occupation of his dwelling and the in two days. In both instances, the argument stands to fall on its
possession of his property, subject to the right of seizure by own weight, or the lack of it.
process duly served."cralaw virtua1aw library
First, the factual considerations of the case at bar readily foreclose
The above ruling was reiterated in State v. Bryan (457 P.2d 661 the proposition that NBI agents conducted an illegal search and
[1968]) where a parking attendant who searched the automobile to seizure of the prohibited merchandise. Records of the case clearly
ascertain the owner thereof found marijuana instead, without the indicate that it was Mr. Job Reyes, the proprietor of the forwarding
knowledge and participation of police authorities, was declared agency, who made search/inspection of the packages. Said
admissible in prosecution for illegal possession of narcotics. inspection was reasonable and a standard operating procedure on
the part of Mr. Reyes as a precautionary measure before delivery
And again in the 1969 case of Walker v. State (429 S.W.2d 121), it of packages to the Bureau of Customs or the Bureau of Posts (TSN,
was held that the search and seizure clauses are restraints upon October 6 & 7, 1987, pp. 15-18; pp. 7-8; Original Records, pp.
the government and its agents, not upon private individuals, (citing 119-122; 167-168).
People v. Potter, 240 Cal. App.2d 621, 49 Cap. Rptr, 892 (1966);
State v. Brown, Mo., 391 S.W.2d 903 (1965); State v. Olsen, Or., It will be recalled that after Reyes opened the box containing the
317 P.2d 938 (1957). illicit cargo, he took samples of the same to the NBI and later
summoned the agents to his place of business. Thereafter, he
Likewise appropos is the case of Bernas v. US (373 F.2d 517 opened the parcels containing the rest of the shipment and
(1967). The Court there said:jgc:chanrobles.com.ph entrusted the care and custody thereof to the NBI agents. Clearly,
the NBI agents made no search and seizure, much less an illegal
"The search of which appellant complains, however, was made by a one, contrary to the postulate of accused/appellant.
private citizen — the owner of a motel in which appellant stayed
overnight and in which he left behind a travel case containing the Second, the mere presence of the NBI agents did not convert the
evidence**** complained of. The search was made on the motel reasonable search effected by Reyes into a warrantless search and
owner’s own initiative. Because of it, he became suspicious, called seizure proscribed by the Constitution. Merely to observe and look
the local police, informed them of the bag’s contents, and made it at that which is in plain sight is not a search. Having observed that
available to the authorities. which is open, where no trespass has been committed in aid
thereof, is not search (Chadwick v. State, 429 SW2d 135). Where
"The fourth amendment and the case law applying it do not require the contraband articles are identified without a trespass on the part
exclusion of evidence obtained through a search by a private of the arresting officer, there is not the search that is prohibited by
citizen. Rather, the amendment only proscribes governmental the constitution (US v. Lee 274 US 559, 71 L.Ed. 1202 [1927]; Ker
action."cralaw virtua1aw library v. State of California 374 US 23, 10 L.Ed.2d. 726 [1963]; Moore v.
State, 429 SW2d 122 [1968]).
The contraband in the case at bar having come into possession of
the Government without the latter transgressing appellant’s rights In Gandy v. Watkins (237 F. Supp. 266 [1964]), it was likewise
against unreasonable search and seizure, the Court sees no cogent held that where the property was taken into custody of the police
reason why the same should not be admitted against him in the at the specific request of the manager and where the search was
prosecution of the offense charged.chanrobles law library initially made by the owner there is no unreasonable search and
seizure within the constitutional meaning of the term.
Appellant, however, would like this court to believe that NBI agents
made an illegal search and seizure of the evidence later on used in That the Bill of Rights embodied in the Constitution is not meant to
prosecuting the case which resulted in his conviction. be invoked against acts of private individuals finds support in the
deliberations of the Constitutional Commission. True, the liberties
The postulate advanced by accused/appellant needs to be clarified guaranteed by the fundamental law of the land must always be
subject to protection. But protection against whom? Commissioner liberties of the people, does not govern relationships between
Bernas in his sponsorship speech in the Bill of Rights answers the individuals. Moreover, it must be emphasized that the modifications
query which he himself posed, as follows:jgc:chanrobles.com.ph introduced in the 1987 Constitution (re: Sec. 2, Art. III) relate to
the issuance of either a search warrant or warrant of arrest vis-a-
"First, the general reflections. The protection of fundamental vis the responsibility of the judge in the issuance thereof (See
liberties in the essence of constitutional democracy. Protection Soliven v. Makasiar, 167 SCRA 393 [1988]; Circular No. 13
against whom? Protection against the state. The Bill of Rights [October 1, 1985] and Circular No. 12 [June 30, 1987]. The
governs the relationship between the individual and the state. Its modifications introduced deviate in no manner as to whom the
concern is not the relation between individuals, between a private restriction or inhibition against unreasonable search and seizure is
individual and other individuals. What the Bill of Rights does is to directed against. The restraint stayed with the State and did not
declare some forbidden zones in the private sphere inaccessible to shift to anyone else.
any power holder." (Sponsorship Speech of Commissioner Bernas;
Record of the Constitutional Commission, Vol. 1, p. 674; July 17, Corolarilly, alleged violations against unreasonable search and
1986; Emphasis supplied) seizure may only be invoked against the State by an individual
unjustly traduced by the exercise of sovereign authority. To agree
The constitutional proscription against unlawful searches and with appellant that an act of a private individual in violation of the
seizures therefore applies as a restraint directed only against the Bill of Rights should also be construed as an act of the State would
government and its agencies tasked with the enforcement of the result in serious legal complications and an absurd interpretation of
law. Thus, it could only be invoked against the State to whom the the constitution.
restraint against arbitrary and unreasonable exercise of power is
imposed.chanrobles virtual lawlibrary Similarly, the admissibility of the evidence procured by an
individual effected through private seizure equally applies, in pari
If the search is made upon the request of law enforcers, a warrant passu, to the alleged violation, non-governmental as it is, of
must generally be first secured if it is to pass the test of appellant’s constitutional rights to privacy and communication.
constitutionality. However, if the search is made at the behest or
initiative of the proprietor of a private establishment for its own 2. In his second assignment of error, appellant contends that the
and private purposes, as in the case at bar, and without the lower court erred in convicting him despite the undisputed fact that
intervention of police authorities, the right against unreasonable his rights under the constitution while under custodial investigation
search and seizure cannot be invoked for only the act of private were not observed.
individual, not the law enforcers, is involved. In sum, the
protection against unreasonable searches and seizures cannot be Again, the contention is without merit, We have carefully examined
extended to acts committed by private individuals so as to bring it the records of the case and found nothing to indicate, as an
within the ambit of alleged unlawful intrusion by the government. "undisputed fact", that appellant was not informed of his
constitutional rights or that he gave statements without the
Appellant argues, however, that since the provisions of the 1935 assistance of counsel. The law enforcers testified that
Constitution has been modified by the present phraseology found accused/appellant was informed of his constitutional rights. It is
in the 1987 Charter, expressly declaring as inadmissible any presumed that they have regularly performed their duties (Sec.
evidence obtained in violation of the constitutional prohibition 5(m), Rule 131) and their testimonies should be given full faith and
against illegal search and seizure, it matters not whether the credence, there being no evidence to the contrary. What is clear
evidence was procured by police authorities or private individuals from the records, on the other hand, is that appellant refused to
(Appellant’s Brief, p. 8, Rollo, p. 62). give any written statement while under investigation as testified by
Atty. Lastimoso of the NBI, Thus:jgc:chanrobles.com.ph
The argument is untenable. For one thing, the constitution, in
laying down the principles of the government and fundamental "Fiscal Formoso:jgc:chanrobles.com.ph
 say-so" (Decision, p. 19, Rollo, p. 91). As to why he readily agreed
"You said that you investigated Mr. and Mrs. Job Reyes. What to do the errand, appellant failed to explain. Denials, if
about the accused here, did you investigate the accused together unsubstantiated by clear and convincing evidence, are negative
with the girl? self-serving evidence which deserve no weight in law and cannot
be given greater evidentiary weight than the testimony of credible
"WITNESS:jgc:chanrobles.com.ph witnesses who testify on affirmative matters (People v. Esquillo,
171 SCRA 571 [1989]; People v. Sariol, 174 SCRA 237 [1989]).
"Yes, we have interviewed the accused together with the girl but
the accused availed of his constitutional right not to give any Appellant’s bare denial is even made more suspect considering
written statement, sir." (TSN, October 8, 1987, p. 62; Original that, as per records of the Interpol, he was previously convicted of
Records, p. 240) possession of hashish by the Kleve Court in the Federal Republic of
Germany on January 1, 1982 and that the consignee of the
The above testimony of the witness for the prosecution was not frustrated shipment, Walter Fierz, also a Swiss national, was
contradicted by the defense on cross-examination. As borne out by likewise convicted for drug abuse and is just about an hour’s drive
the records, neither was there any proof by the defense that from appellant’s residence in Zurich, Switzerland (TSN, October 8,
appellant gave uncounselled confession while being investigated. 1987, p. 66; Original Records, p. 244; Decision, p. 21; Rollo, p.
What is more, we have examined the assailed judgment of the trial 93).
court and nowhere is there any reference made to the testimony of
appellant while under custodial investigation which was utilized in Evidence to be believed, must not only proceed from the mouth of
the finding of conviction. Appellant’s second assignment of error is a credible witness, but it must be credible in itself such as the
therefore misplaced.chanrobles virtual lawlibrary common experience and observation of mankind can approve as
probable under the circumstances (People v. Alto, 26 SCRA 342
3. Coming now to appellant’s third assignment of error, appellant [1968], citing Daggers v. Van Dyke, 37 N.J. Eg. 130; see also
would like us to believe that he was not the owner of the packages People v. Sarda, 172 SCRA 651 [1989]; People v. Sunga, 123
which contained prohibited drugs but rather a certain Michael, a SCRA 327 [1983]); Castañares v. CA, 92 SCRA 567 [1979]). As
German national, whom appellant met in a pub along Ermita, records further show, appellant did not even bother to ask
Manila: that in the course of their 30-minute conversation, Michael Michael’s full name, his complete address or passport number.
requested him to ship the packages and gave him P2,000.00 for Furthermore, if indeed, the German national was the owner of the
the cost of the shipment since the German national was about to merchandise, appellant should have so indicated in the contract of
leave the country the next day (October 15, 1987, TSN, pp. 2-10). shipment (Exh. "B", Original Records, p. 40). On the contrary,
appellant signed the contract as the owner and shipper thereof
Rather than give the appearance of veracity, we find appellant’s giving more weight to the presumption that things which a person
disclaimer as incredulous, self-serving and contrary to human possesses, or exercises acts of ownership over, are owned by him
experience. It can easily be fabricated. An acquaintance with a (Sec. 5 [j], Rule 131). At this point, appellant is therefore estopped
complete stranger struck in half an hour could not have pushed a to claim otherwise.cralawnad
man to entrust the shipment of four (4) parcels and shell out
P2,000.00 for the purpose and for appellant to readily accede to Premises considered, we see no error committed by the trial court
comply with the undertaking without first ascertaining its contents. in rendering the assailed judgment.
As stated by the trial court," (a) person would not simply entrust
contraband and of considerable value at that as the marijuana WHEREFORE, the judgment of conviction finding appellant guilty
flowering tops, and the cash amount of P2,000.00 to a complete beyond reasonable doubt of the crime charged is hereby
stranger like the Accused. The Accused, on the other hand, would AFFIRMED. No costs.
not simply accept such undertaking to take custody of the
packages and ship the same from a complete stranger on his mere SO ORDERED.
 SECTION 4. Privileges for the Senior Citizens. – The senior citizens
Fernan, C.J., Gutierrez, Jr . and Feliciano, JJ., concur. shall be entitled to the following:

a) the grant of twenty percent (20%) discount from all

establishments relative to utilization of transportation services,
hotels and similar lodging establishment[s], restaurants and
recreation centers and purchase of medicine anywhere in the
country: Provided, That private establishments may claim the cost
as tax credit;
EN BANC
b) a minimum of twenty percent (20%) discount on admission fees
charged by theaters, cinema houses and concert halls, circuses,
G.R. No. 175356, December 03, 2013 carnivals and other similar places of culture, leisure, and
amusement;
MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-
SUCAT, INC., Petitioners, v. SECRETARY OF THE DEPARTMENT c) exemption from the payment of individual income taxes:
OF SOCIAL WELFARE AND DEVELOPMENT AND THE Provided, That their annual taxable income does not exceed the
SECRETARY OF THE DEPARTMENT OF FINANCE, Respondent. property level as determined by the National Economic and
Development Authority (NEDA) for that year;
DECISION
d) exemption from training fees for socioeconomic programs
DEL CASTILLO, J.: undertaken by the OSCA as part of its work;

When a party challenges the constitutionality of a law, the burden e) free medical and dental services in government establishment[s]
of proof rests upon him.1 anywhere in the country, subject to guidelines to be issued by the
Department of Health, the Government Service Insurance System
Before us is a Petition for Prohibition 2 under Rule 65 of the Rules of and the Social Security System;
Court filed by petitioners Manila Memorial Park, Inc. and La
Funeraria Paz-Sucat, Inc., domestic corporations engaged in the f) to the extent practicable and feasible, the continuance of the
business of providing funeral and burial services, against public same benefits and privileges given by the Government Service
respondents Secretaries of the Department of Social Welfare and Insurance System (GSIS), Social Security System (SSS) and PAG-
Development (DSWD) and the Department of Finance (DOF). IBIG, as the case may be, as are enjoyed by those in actual
service.
Petitioners assail the constitutionality of Section 4 of Republic Act On August 23, 1993, Revenue Regulations (RR) No. 02-94 was
(RA) No. 7432,3 as amended by RA 9257,4 and the implementing issued to implement RA 7432. Sections 2(i) and 4 of RR No. 02-94
rules and regulations issued by the DSWD and DOF insofar as provide:
these allow business establishments to claim the 20% discount Sec. 2. DEFINITIONS. – For purposes of these regulations:
given to senior citizens as a tax deduction.
i. Tax Credit – refers to the amount representing the 20% discount
Factual Antecedents granted to a qualified senior citizen by all establishments relative to
their utilization of transportation services, hotels and similar
On April 23, 1992, RA 7432 was passed into law, granting senior lodging establishments, restaurants, drugstores, recreation
citizens the following privileges: centers, theaters, cinema houses, concert halls, circuses, carnivals
and other similar places of culture, leisure and amusement, which
discount shall be deducted by the said establishments from their amount of money;” or “a reduction from the full amount or value of
gross income for income tax purposes and from their gross sales something, especially a price.” In business there are many kinds of
for value-added tax or other percentage tax purposes. discount, the most common of which is that affecting the income
statement or financial report upon which the income tax is based.
x x x
x x x
Sec. 4. RECORDING/BOOKKEEPING REQUIREMENTS FOR PRIVATE
ESTABLISHMENTS. – Private establishments, i.e., transport Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax
services, hotels and similar lodging establishments, restaurants, credit as the 20 percent discount deductible from gross income for
recreation centers, drugstores, theaters, cinema houses, concert income tax purposes, or from gross sales for VAT or other
halls, circuses, carnivals and other similar places of culture[,] percentage tax purposes. In effect, the tax credit benefit under RA
leisure and amusement, giving 20% discounts to qualified senior 7432 is related to a sales discount. This contrived definition is
citizens are required to keep separate and accurate record[s] of improper, considering that the latter has to be deducted from gross
sales made to senior citizens, which shall include the name, sales in order to compute the gross income in the income
identification number, gross sales/receipts, discounts, dates of statement and cannot be deducted again, even for purposes of
transactions and invoice number for every transaction. computing the income tax.

The amount of 20% discount shall be deducted from the gross When the law says that the cost of the discount may be claimed as
income for income tax purposes and from gross sales of the a tax credit, it means that the amount — when claimed — shall be
business enterprise concerned for purposes of the VAT and other treated as a reduction from any tax liability, plain and simple. The
percentage taxes. option to avail of the tax credit benefit depends upon the existence
of a tax liability, but to limit the benefit to a sales discount — which
In Commissioner of Internal Revenue v. Central Luzon Drug
is not even identical to the discount privilege that is granted by law
Corporation,5 the Court declared Sections 2(i) and 4 of RR No. 02-
— does not define it at all and serves no useful purpose. The
94 as erroneous because these contravene RA 7432,6 thus:
definition must, therefore, be stricken down.
RA 7432 specifically allows private establishments to claim as tax
credit the amount of discounts they grant. In turn, the
Laws Not Amended
Implementing Rules and Regulations, issued pursuant thereto,
by Regulations
provide the procedures for its availment. To deny such credit,
despite the plain mandate of the law and the regulations carrying
Second, the law cannot be amended by a mere regulation. In fact,
out that mandate, is indefensible.
a regulation that “operates to create a rule out of harmony with the
statute is a mere nullity;” it cannot prevail.
First, the definition given by petitioner is erroneous. It refers to tax
credit as the amount representing the 20 percent discount that
It is a cardinal rule that courts “will and should respect the
“shall be deducted by the said establishments from their gross
contemporaneous construction placed upon a statute by the
income for income tax purposes and from their gross sales for
executive officers whose duty it is to enforce it x x x.” In the
value-added tax or other percentage tax purposes.” In ordinary
scheme of judicial tax administration, the need for certainty and
business language, the tax credit represents the amount of such
predictability in the implementation of tax laws is crucial. Our tax
discount. However, the manner by which the discount shall be
credited against taxes has not been clarified by the revenue authorities fill in the details that “Congress may not have the
opportunity or competence to provide.” The regulations these
regulations.
authorities issue are relied upon by taxpayers, who are certain that
these will be followed by the courts. Courts, however, will not
By ordinary acceptation, a discount is an “abatement or reduction
uphold these authorities’ interpretations when clearly absurd,
made from the gross amount or value of anything.” To be more
erroneous or improper.
precise, it is in business parlance “a deduction or lowering of an
 discounts to senior citizens on the sale of goods and/or services
In the present case, the tax authorities have given the term tax specified thereunder are entitled to deduct the said discount from
credit in Sections 2.i and 4 of RR 2-94 a meaning utterly in gross income subject to the following conditions:
contrast to what RA 7432 provides. Their interpretation has (1) Only that portion of the gross sales EXCLUSIVELY USED,
muddled x x x the intent of Congress in granting a mere discount CONSUMED OR ENJOYED BY THE SENIOR CITIZEN shall be
privilege, not a sales discount. The administrative agency issuing eligible for the deductible sales discount.
these regulations may not enlarge, alter or restrict the provisions (2) The gross selling price and the sales discount MUST BE
of the law it administers; it cannot engraft additional requirements SEPARATELY INDICATED IN THE OFFICIAL RECEIPT OR SALES
not contemplated by the legislature. INVOICE issued by the establishment for the sale of goods or
services to the senior citizen.
In case of conflict, the law must prevail. A “regulation adopted (3) Only the actual amount of the discount granted or a sales
pursuant to law is law.” Conversely, a regulation or any portion discount not exceeding 20% of the gross selling price can be
thereof not adopted pursuant to law is no law and has neither the deducted from the gross income, net of value added tax, if
force nor the effect of law.7 applicable, for income tax purposes, and from gross sales or
On February 26, 2004, RA 92578 amended certain provisions of RA gross receipts of the business enterprise concerned, for VAT or
7432, to wit: other percentage tax purposes.
SECTION 4. Privileges for the Senior Citizens. – The senior citizens (4) The discount can only be allowed as deduction from gross
shall be entitled to the following: income for the same taxable year that the discount is granted.
(5) The business establishment giving sales discounts to qualified
(a) the grant of twenty percent (20%) discount from all senior citizens is required to keep separate and accurate
establishments relative to the utilization of services in hotels and record[s] of sales, which shall include the name of the senior
similar lodging establishments, restaurants and recreation centers, citizen, TIN, OSCA ID, gross sales/receipts, sales discount
and purchase of medicines in all establishments for the exclusive granted, [date] of [transaction] and invoice number for every
use or enjoyment of senior citizens, including funeral and burial sale transaction to senior citizen.
services for the death of senior citizens; (6) Only the following business establishments which granted sales
discount to senior citizens on their sale of goods and/or services
x x x may claim the said discount granted as deduction from gross
income, namely:
The establishment may claim the discounts granted under (a), (f), xxx
(g) and (h) as tax deduction based on the net cost of the goods (i) Funeral parlors and similar establishments – The beneficiary
sold or services rendered: Provided, That the cost of the discount or any person who shall shoulder the funeral and burial
shall be allowed as deduction from gross income for the same expenses of the deceased senior citizen shall claim the discount,
taxable year that the discount is granted. Provided, further, That such as casket, embalmment, cremation cost and other related
the total amount of the claimed tax deduction net of value added services for the senior citizen upon payment and presentation of
tax if applicable, shall be included in their gross sales receipts for [his] death certificate.
tax purposes and shall be subject to proper documentation and to The DSWD likewise issued its own Rules and Regulations
the provisions of the National Internal Revenue Code, as amended. Implementing RA 9257, to wit:
RULE VI
To implement the tax provisions of RA 9257, the Secretary of
DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS
Finance issued RR No. 4-2006, the pertinent provision of which
provides:
Article 8. Tax Deduction of Establishments. – The establishment
SEC. 8. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS
may claim the discounts granted under Rule V, Section 4 –
AS DEDUCTION FROM GROSS INCOME. – Establishments
Discounts for Establishments, Section 9, Medical and Dental
enumerated in subparagraph (6) hereunder granting sales
Services in Private Facilities and Sections 10 and 11 – Air, Sea and
Land Transportation as tax deduction based on the net cost of the property shall not be taken for public use without just
goods sold or services rendered. Provided, That the cost of the compensation.”11 In support of their position, petitioners
discount shall be allowed as deduction from gross income for the cite Central Luzon Drug Corporation,12 where it was ruled that the
same taxable year that the discount is granted; Provided, further, 20% discount privilege constitutes taking of private property for
That the total amount of the claimed tax deduction net of value public use which requires the payment of just
added tax if applicable, shall be included in their gross sales compensation,13 and Carlos Superdrug Corporation v. Department
receipts for tax purposes and shall be subject to proper of Social Welfare and Development,14 where it was acknowledged
documentation and to the provisions of the National Internal that the tax deduction scheme does not meet the definition of just
Revenue Code, as amended; Provided, finally, that the compensation.15
implementation of the tax deduction shall be subject to the
Revenue Regulations to be issued by the Bureau of Internal Petitioners likewise seek a reversal of the ruling in Carlos
Revenue (BIR) and approved by the Department of Finance (DOF). Superdrug Corporation16 that the tax deduction scheme adopted by
the government is justified by police power.17 They assert that
Feeling aggrieved by the tax deduction scheme, petitioners filed
“[a]lthough both police power and the power of eminent domain
the present recourse, praying that Section 4 of RA 7432, as
have the general welfare for their object, there are still traditional
amended by RA 9257, and the implementing rules and regulations
distinctions between the two”18 and that “eminent domain cannot
issued by the DSWD and the DOF be declared unconstitutional
be made less supreme than police power.”19 Petitioners further
insofar as these allow business establishments to claim the 20%
claim that the legislature, in amending RA 7432, relied on an
discount given to senior citizens as a tax deduction; that the DSWD
erroneous contemporaneous construction that prior payment of
and the DOF be prohibited from enforcing the same; and that the
taxes is required for tax credit.20
tax credit treatment of the 20% discount under the former Section
4 (a) of RA 7432 be reinstated.
Petitioners also contend that the tax deduction scheme violates
Issues Article XV, Section 421 and Article XIII, Section 1122 of the
Petitioners raise the following issues: Constitution because it shifts the State’s constitutional mandate or
A. duty of improving the welfare of the elderly to the private
WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR sector.23 Under the tax deduction scheme, the private sector
CONTROVERSY. shoulders 65% of the discount because only 35%24 of it is actually
B. returned by the government.25 Consequently, the implementation
WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS of the tax deduction scheme prescribed under Section 4 of RA 9257
IMPLEMENTING RULES AND REGULATIONS, INSOFAR AS THEY affects the businesses of petitioners. 26 Thus, there exists an actual
PROVIDE THAT THE TWENTY PERCENT (20%) DISCOUNT TO case or controversy of transcendental importance which deserves
SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE judicious disposition on the merits by the highest court of the
PRIVATE ESTABLISHMENTS, ARE INVALID AND land.27ChanRoblesVirtualawlibrary
UNCONSTITUTIONAL.9
Petitioners’ Arguments Respondents’ Arguments

Petitioners emphasize that they are not questioning the 20% Respondents, on the other hand, question the filing of the instant
discount granted to senior citizens but are only assailing the Petition directly with the Supreme Court as this disregards the
constitutionality of the tax deduction scheme prescribed under RA hierarchy of courts.28 They likewise assert that there is no
9257 and the implementing rules and regulations issued by the justiciable controversy as petitioners failed to prove that the tax
DSWD and the DOF.10 deduction treatment is not a “fair and full equivalent of the loss
sustained” by them.29 As to the constitutionality of RA 9257 and its
Petitioners posit that the tax deduction scheme contravenes Article implementing rules and regulations, respondents contend that
III, Section 9 of the Constitution, which provides that: “[p]rivate petitioners failed to overturn its presumption of
constitutionality.30 More important, respondents maintain that the police power, no just compensation is warranted. But if it is
tax deduction scheme is a legitimate exercise of the State’s police eminent domain, the tax deduction scheme is unconstitutional
power.31chanroblesvirtualawlibrary because it is not a peso for peso reimbursement of the 20%
discount given to senior citizens. Thus, it constitutes taking of
Our Ruling private property without payment of just compensation.

The Petition lacks merit. At the outset, we note that this question has been settled in Carlos
Superdrug Corporation.35 In that case, we ruled:
There exists an actual case or controversy. Petitioners assert that Section 4(a) of the law is unconstitutional
because it constitutes deprivation of private property. Compelling
We shall first resolve the procedural issue. drugstore owners and establishments to grant the discount will
result in a loss of profit and capital because 1) drugstores impose a
When the constitutionality of a law is put in issue, judicial review mark-up of only 5% to 10% on branded medicines; and 2) the law
may be availed of only if the following requisites concur: “(1) the failed to provide a scheme whereby drugstores will be justly
existence of an actual and appropriate case; (2) the existence of compensated for the discount.
personal and substantial interest on the part of the party raising
the [question of constitutionality]; (3) recourse to judicial review is Examining petitioners’ arguments, it is apparent that what
made at the earliest opportunity; and (4) the [question of petitioners are ultimately questioning is the validity of the tax
constitutionality] is the lis mota of the case.”32 deduction scheme as a reimbursement mechanism for the twenty
percent (20%) discount that they extend to senior citizens.
In this case, petitioners are challenging the constitutionality of the
tax deduction scheme provided in RA 9257 and the implementing Based on the afore-stated DOF Opinion, the tax deduction scheme
rules and regulations issued by the DSWD and the DOF. does not fully reimburse petitioners for the discount privilege
Respondents, however, oppose the Petition on the ground that accorded to senior citizens. This is because the discount is treated
there is no actual case or controversy. We do not agree with as a deduction, a tax-deductible expense that is subtracted from
respondents. the gross income and results in a lower taxable income. Stated
otherwise, it is an amount that is allowed by law to reduce the
An actual case or controversy exists when there is “a conflict of income prior to the application of the tax rate to compute the
legal rights” or “an assertion of opposite legal claims susceptible of amount of tax which is due. Being a tax deduction, the discount
judicial resolution.”33 The Petition must therefore show that “the does not reduce taxes owed on a peso for peso basis but merely
governmental act being challenged has a direct adverse effect on offers a fractional reduction in taxes owed.
the individual challenging it.”34 In this case, the tax deduction
scheme challenged by petitioners has a direct adverse effect on Theoretically, the treatment of the discount as a deduction reduces
them. Thus, it cannot be denied that there exists an actual case or the net income of the private establishments concerned. The
controversy. discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A.
The validity of the 20% senior citizen discount and tax No. 9257.
deduction scheme under RA 9257, as an exercise of police
power of the State, has already been settled in Carlos The permanent reduction in their total revenues is a forced subsidy
Superdrug Corporation. corresponding to the taking of private property for public use or
benefit. This constitutes compensable taking for which petitioners
Petitioners posit that the resolution of this case lies in the would ordinarily become entitled to a just compensation.
determination of whether the legally mandated 20% senior citizen
discount is an exercise of police power or eminent domain. If it is Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. The measure is
not the taker’s gain but the owner’s loss. The word just is used to (f) To recognize the important role of the private sector in
intensify the meaning of the word compensation, and to convey the improvement of the welfare of senior citizens and to
the idea that the equivalent to be rendered for the property to be actively seek their partnership.
taken shall be real, substantial, full and ample. To implement the above policy, the law grants a twenty percent
discount to senior citizens for medical and dental services, and
A tax deduction does not offer full reimbursement of the senior diagnostic and laboratory fees; admission fees charged by
citizen discount. As such, it would not meet the definition of just theaters, concert halls, circuses, carnivals, and other similar places
compensation. of culture, leisure and amusement; fares for domestic land, air and
sea travel; utilization of services in hotels and similar lodging
Having said that, this raises the question of whether the State, in establishments, restaurants and recreation centers; and purchases
promoting the health and welfare of a special group of citizens, can of medicines for the exclusive use or enjoyment of senior citizens.
impose upon private establishments the burden of partly As a form of reimbursement, the law provides that business
subsidizing a government program. establishments extending the twenty percent discount to senior
citizens may claim the discount as a tax deduction.
The Court believes so.
The law is a legitimate exercise of police power which, similar to
The Senior Citizens Act was enacted primarily to maximize the the power of eminent domain, has general welfare for its
contribution of senior citizens to nation-building, and to grant object. Police power is not capable of an exact definition, but has
benefits and privileges to them for their improvement and well- been purposely veiled in general terms to underscore its
being as the State considers them an integral part of our society. comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response to conditions and
The priority given to senior citizens finds its basis in the circumstances, thus assuring the greatest benefits. Accordingly, it
Constitution as set forth in the law itself. Thus, the Act provides: has been described as “the most essential, insistent and the least
SEC. 2. Republic Act No. 7432 is hereby amended to read as limitable of powers, extending as it does to all the great public
follows: needs.” It is “[t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of
SECTION 1. Declaration of Policies and Objectives. — Pursuant to wholesome and reasonable laws, statutes, and ordinances, either
Article XV, Section 4 of the Constitution, it is the duty of the family with penalties or without, not repugnant to the constitution, as
to take care of its elderly members while the State may design they shall judge to be for the good and welfare of the
programs of social security for them. In addition to this, Section 10 commonwealth, and of the subjects of the same.”
in the Declaration of Principles and State Policies provides: “The
State shall provide social justice in all phases of national For this reason, when the conditions so demand as determined by
development.” Further, Article XIII, Section 11, provides: “The the legislature, property rights must bow to the primacy of police
State shall adopt an integrated and comprehensive approach to power because property rights, though sheltered by due process,
health development which shall endeavor to make essential goods, must yield to general welfare.
health and other social services available to all the people at
affordable cost. There shall be priority for the needs of the Police power as an attribute to promote the common good would
underprivileged sick, elderly, disabled, women and children.” be diluted considerably if on the mere plea of petitioners that they
Consonant with these constitutional principles the following are the will suffer loss of earnings and capital, the questioned provision is
declared policies of this Act: invalidated. Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in question, there is
………
no basis for its nullification in view of the presumption of validity
which every law has in its favor.
 nature of the players in the industry. It is a business decision on
Given these, it is incorrect for petitioners to insist that the grant of the part of petitioners to peg the mark-up at 5%. Selling the
the senior citizen discount is unduly oppressive to their business, medicines below acquisition cost, as alleged by petitioners, is
because petitioners have not taken time to calculate correctly and merely a result of this decision. Inasmuch as pricing is a property
come up with a financial report, so that they have not been able to right, petitioners cannot reproach the law for being oppressive,
show properly whether or not the tax deduction scheme really simply because they cannot afford to raise their prices for fear of
works greatly to their disadvantage. losing their customers to competition.

In treating the discount as a tax deduction, petitioners insist that The Court is not oblivious of the retail side of the pharmaceutical
they will incur losses because, referring to the DOF Opinion, for industry and the competitive pricing component of the
every P1.00 senior citizen discount that petitioners would give, business. While the Constitution protects property rights,
P0.68 will be shouldered by them as only P0.32 will be refunded by petitioners must accept the realities of business and the State, in
the government by way of a tax deduction. the exercise of police power, can intervene in the operations of a
business which may result in an impairment of property rights in
To illustrate this point, petitioner Carlos Super Drug cited the anti- the process.
hypertensive maintenance drug Norvasc as an example. According
to the latter, it acquires Norvasc from the distributors at P37.57 Moreover, the right to property has a social dimension. While
per tablet, and retails it at P39.60 (or at a margin of 5%). If it Article XIII of the Constitution provides the precept for the
grants a 20% discount to senior citizens or an amount equivalent protection of property, various laws and jurisprudence, particularly
to P7.92, then it would have to sell Norvasc at P31.68 which on agrarian reform and the regulation of contracts and public
translates to a loss from capital of P5.89 per tablet. Even if the utilities, continuously serve as x x x reminder[s] that the right to
government will allow a tax deduction, only P2.53 per tablet will be property can be relinquished upon the command of the State for
refunded and not the full amount of the discount which is P7.92. In the promotion of public good.
short, only 32% of the 20% discount will be reimbursed to the
drugstores. Undeniably, the success of the senior citizens program rests largely
on the support imparted by petitioners and the other private
Petitioners’ computation is flawed. For purposes of reimbursement, establishments concerned. This being the case, the means
the law states that the cost of the discount shall be deducted from employed in invoking the active participation of the private sector,
gross income, the amount of income derived from all sources in order to achieve the purpose or objective of the law, is
before deducting allowable expenses, which will result in net reasonably and directly related. Without sufficient proof that
income. Here, petitioners tried to show a loss on a per transaction Section 4 (a) of R.A. No. 9257 is arbitrary, and that the continued
basis, which should not be the case. An income statement, showing implementation of the same would be unconscionably detrimental
an accounting of petitioners’ sales, expenses, and net profit (or to petitioners, the Court will refrain from quashing a legislative
loss) for a given period could have accurately reflected the effect of act.36 (Bold in the original; underline supplied)
the discount on their income. Absent any financial statement, We, thus, found that the 20% discount as well as the tax deduction
petitioners cannot substantiate their claim that they will be scheme is a valid exercise of the police power of the State.
operating at a loss should they give the discount. In addition, the
computation was erroneously based on the assumption that their No compelling reason has been proffered to overturn,
customers consisted wholly of senior citizens. Lastly, the 32% tax modify or abandon the ruling in Carlos Superdrug
rate is to be imposed on income, not on the amount of the Corporation. 
discount.
Petitioners argue that we have previously ruled in Central Luzon
Furthermore, it is unfair for petitioners to criticize the law because Drug Corporation37 that the 20% discount is an exercise of the
they cannot raise the prices of their medicines given the cutthroat power of eminent domain, thus, requiring the payment of just
compensation. They urge us to re-examine our ruling in Carlos “clearly imposed for a public purpose.” In recent years, the power
Superdrug Corporation38 which allegedly reversed the ruling to tax has indeed become a most effective tool to realize social
in Central Luzon Drug Corporation.39 They also point out justice, public welfare, and the equitable distribution of wealth.
that Carlos Superdrug Corporation40 recognized that the tax
deduction scheme under the assailed law does not provide for While it is a declared commitment under Section 1 of RA 7432,
sufficient just compensation. social justice “cannot be invoked to trample on the rights of
property owners who under our Constitution and laws are also
We agree with petitioners’ observation that there are statements entitled to protection. The social justice consecrated in our
in Central Luzon Drug Corporation41describing the 20% discount as [C]onstitution [is] not intended to take away rights from a person
an exercise of the power of eminent domain, viz.: and give them to another who is not entitled thereto.” For this
[T]he privilege enjoyed by senior citizens does not reason, a just compensation for income that is taken away from
come directly from the State, but rather from the private respondent becomes necessary. It is in the tax credit that our
establishments concerned. Accordingly, the tax credit benefit legislators find support to realize social justice, and no
granted to these establishments can be deemed as their just administrative body can alter that fact.
compensation for private property taken by the State for public
use. To put it differently, a private establishment that merely breaks
even — without the discounts yet — will surely start to incur losses
The concept of public use is no longer confined to the traditional because of such discounts. The same effect is expected if its mark-
notion of use by the public, but held synonymous with public up is less than 20 percent, and if all its sales come from retail
interest, public benefit, public welfare, and public convenience. The purchases by senior citizens. Aside from the observation we have
discount privilege to which our senior citizens are entitled is already raised earlier, it will also be grossly unfair to an
actually a benefit enjoyed by the general public to which these establishment if the discounts will be treated merely as deductions
citizens belong. The discounts given would have entered the coffers from either its gross income or its gross sales. Operating at a loss
and formed part of the gross sales of the private establishments through no fault of its own, it will realize that the tax
concerned, were it not for RA 7432. The permanent reduction in credit limitation under RR 2-94 is inutile, if not improper. Worse,
their total revenues is a forced subsidy corresponding to the taking profit-generating businesses will be put in a better position if they
of private property for public use or benefit. avail themselves of tax credits denied those that are losing,
because no taxes are due from the latter. 42 (Italics in the original;
As a result of the 20 percent discount imposed by RA 7432, emphasis supplied)
respondent becomes entitled to a just compensation. This term The above was partly incorporated in our ruling in Carlos
refers not only to the issuance of a tax credit certificate indicating Superdrug Corporation43 when we stated preliminarily that—
the correct amount of the discounts given, but also to the Petitioners assert that Section 4(a) of the law is unconstitutional
promptness in its release. Equivalent to the payment of property because it constitutes deprivation of private property. Compelling
taken by the State, such issuance — when not done within drugstore owners and establishments to grant the discount will
a reasonable time from the grant of the discounts — cannot be result in a loss of profit and capital because 1) drugstores impose a
considered as just compensation. In effect, respondent is made to mark-up of only 5% to 10% on branded medicines; and 2) the law
suffer the consequences of being immediately deprived of its failed to provide a scheme whereby drugstores will be justly
revenues while awaiting actual receipt, through the certificate, of compensated for the discount.
the equivalent amount it needs to cope with the reduction in its
revenues. Examining petitioners’ arguments, it is apparent that what
petitioners are ultimately questioning is the validity of the tax
Besides, the taxation power can also be used as an implement for deduction scheme as a reimbursement mechanism for the twenty
the exercise of the power of eminent domain. Tax measures are percent (20%) discount that they extend to senior citizens.
but “enforced contributions exacted on pain of penal sanctions” and
Based on the afore-stated DOF Opinion, the tax deduction scheme above-quoted statements in Central Luzon Drug
does not fully reimburse petitioners for the discount privilege Corporation46 and Carlos Superdrug Corporation.47
accorded to senior citizens. This is because the discount is treated
as a deduction, a tax-deductible expense that is subtracted from First, we note that the above-quoted disquisition on eminent
the gross income and results in a lower taxable income. Stated domain in Central Luzon Drug Corporation48 is obiter dicta and,
otherwise, it is an amount that is allowed by law to reduce the thus, not binding precedent. As stated earlier, in Central Luzon
income prior to the application of the tax rate to compute the Drug Corporation,49 we ruled that the BIR acted ultra vires when it
amount of tax which is due. Being a tax deduction, the discount effectively treated the 20% discount as a tax deduction, under
does not reduce taxes owed on a peso for peso basis but merely Sections 2.i and 4 of RR No. 2-94, despite the clear wording of the
offers a fractional reduction in taxes owed. previous law that the same should be treated as a tax credit. We
were, therefore, not confronted in that case with the issue as to
Theoretically, the treatment of the discount as a deduction reduces whether the 20% discount is an exercise of police power or
the net income of the private establishments concerned. The eminent domain.
discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. Second, although we adverted to Central Luzon Drug
No. 9257. Corporation50 in our ruling in Carlos Superdrug Corporation,51 this
referred only to preliminary matters. A fair reading of Carlos
The permanent reduction in their total revenues is a forced subsidy Superdrug Corporation52 would show that we categorically ruled
corresponding to the taking of private property for public use or therein that the 20% discount is a valid exercise of police power.
benefit. This constitutes compensable taking for which petitioners Thus, even if the current law, through its tax deduction scheme
would ordinarily become entitled to a just compensation. (which abandoned the tax credit scheme under the previous law),
does not provide for a peso for peso reimbursement of the 20%
Just compensation is defined as the full and fair equivalent of the discount given by private establishments, no constitutional infirmity
property taken from its owner by the expropriator. The measure is obtains because, being a valid exercise of police power, payment of
not the taker’s gain but the owner’s loss. The word just is used to just compensation is not warranted.
intensify the meaning of the word compensation, and to convey
the idea that the equivalent to be rendered for the property to be We have carefully reviewed the basis of our ruling in Carlos
taken shall be real, substantial, full and ample. Superdrug Corporation53 and we find no cogent reason to overturn,
modify or abandon it. We also note that petitioners’ arguments are
A tax deduction does not offer full reimbursement of the senior a mere reiteration of those raised and resolved in Carlos Superdrug
citizen discount. As such, it would not meet the definition of just Corporation.54 Thus, we sustain Carlos Superdrug Corporation.55
compensation.
Nonetheless, we deem it proper, in what follows, to amplify our
Having said that, this raises the question of whether the State, in explanation in Carlos Superdrug Corporation56 as to why the 20%
promoting the health and welfare of a special group of citizens, can discount is a valid exercise of police power and why it may
impose upon private establishments the burden of partly not, under the specific circumstances of this case, be considered as
subsidizing a government program. an exercise of the power of eminent domain contrary to
the obiter in Central Luzon Drug
The Court believes so.44 Corporation.57ChanRoblesVirtualawlibrary
This, notwithstanding, we went on to rule in Carlos Superdrug
Police power versus eminent domain.
Corporation45 that the 20% discount and tax deduction scheme is a
valid exercise of the police power of the State.
Police power is the inherent power of the State to regulate or to
restrain the use of liberty and property for public welfare.58 The
The present case, thus, affords an opportunity for us to clarify the
only limitation is that the restriction imposed should be reasonable, title or total destruction of the property is not essential for “taking”
not oppressive.59 In other words, to be a valid exercise of police under the power of eminent domain to be present. 70 Examples of
power, it must have a lawful subject or objective and a lawful these include establishment of easements such as where the land
method of accomplishing the goal.60 Under the police power of the owner is perpetually deprived of his proprietary rights because of
State, “property rights of individuals may be subjected to restraints the hazards posed by electric transmission lines constructed above
and burdens in order to fulfill the objectives of the his property71 or the compelled interconnection of the telephone
government.”61 The State “may interfere with personal liberty, system between the government and a private company.72 In these
property, lawful businesses and occupations to promote the cases, although the private property owner is not divested of
general welfare [as long as] the interference [is] reasonable and ownership or possession, payment of just compensation is
not arbitrary.”62 Eminent domain, on the other hand, is the warranted because of the burden placed on the property for the
inherent power of the State to take or appropriate private property use or benefit of the public.
for public use.63 The Constitution, however, requires that private
property shall not be taken without due process of law and the The 20% senior citizen discount is an exercise of police
payment of just compensation.64 power.     

Traditional distinctions exist between police power and eminent It may not always be easy to determine whether a challenged
domain. governmental act is an exercise of police power or eminent
domain. The very nature of police power as elastic and responsive
In the exercise of police power, a property right is impaired by to various social conditions73 as well as the evolving meaning and
regulation,65 or the use of property is merely prohibited, regulated scope of public use74 and just compensation75 in eminent domain
or restricted66 to promote public welfare. In such cases, there is no evinces that these are not static concepts. Because of the
compensable taking, hence, payment of just compensation is not exigencies of rapidly changing times, Congress may be compelled
required. Examples of these regulations are property condemned to adopt or experiment with different measures to promote the
for being noxious or intended for noxious purposes (e.g., a building general welfare which may not fall squarely within the traditionally
on the verge of collapse to be demolished for public safety, or recognized categories of police power and eminent domain. The
obscene materials to be destroyed in the interest of public judicious approach, therefore, is to look at the nature and effects of
morals)67 as well as zoning ordinances prohibiting the use of the challenged governmental act and decide, on the basis thereof,
property for purposes injurious to the health, morals or safety of whether the act is the exercise of police power or eminent domain.
the community (e.g., dividing a city’s territory into residential and Thus, we now look at the nature and effects of the 20% discount to
industrial areas).68 It has, thus, been observed that, in the exercise determine if it constitutes an exercise of police power or eminent
of police power (as distinguished from eminent domain), although domain.
the regulation affects the right of ownership, none of the bundle of
rights which constitute ownership is appropriated for use by or for The 20% discount is intended to improve the welfare of senior
the benefit of the public.69 citizens who, at their age, are less likely to be gainfully employed,
more prone to illnesses and other disabilities, and, thus, in need of
On the other hand, in the exercise of the power of eminent domain, subsidy in purchasing basic commodities. It may not be amiss to
property interests are appropriated and applied to some public mention also that the discount serves to honor senior citizens who
purpose which necessitates the payment of just compensation presumably spent the productive years of their lives on
therefor. Normally, the title to and possession of the property are contributing to the development and progress of the nation. This
transferred to the expropriating authority. Examples include the distinct cultural Filipino practice of honoring the elderly is an
acquisition of lands for the construction of public highways as well integral part of this law.
as agricultural lands acquired by the government under the
agrarian reform law for redistribution to qualified farmer As to its nature and effects, the 20% discount is a regulation
beneficiaries. However, it is a settled rule that the acquisition of affecting the ability of private establishments to price their
products and services relative to a special class of individuals,
senior citizens, for which the Constitution affords preferential The flaw in this reasoning is in its premise. It presupposes that the
concern.76 In turn, this affects the amount of profits or subject regulation, which impacts the pricing and, hence, the
income/gross sales that a private establishment can derive from profitability of a private establishment, automatically amounts to a
senior citizens. In other words, the subject regulation affects the deprivation of property without due process of law. If this were so,
pricing, and, hence, the profitability of a private establishment. then all price and rate of return on investment control laws would
However, it does not purport to appropriate or burden specific have to be invalidated because they impact, at some level, the
properties, used in the operation or conduct of the business of regulated establishment’s profits or income/gross sales, yet there
private establishments, for the use or benefit of the public, or is no provision for payment of just compensation. It would also
senior citizens for that matter, but merely regulates the pricing of mean that government cannot set price or rate of return on
goods and services relative to, and the amount of profits or investment limits, which reduce the profits or income/gross sales of
income/gross sales that such private establishments may derive private establishments, if no just compensation is paid even if the
from, senior citizens. measure is not confiscatory. The obiter is, thus, at odds with the
settled doctrine that the State can employ police power measures
The subject regulation may be said to be similar to, but with to regulate the pricing of goods and services, and, hence, the
substantial distinctions from, price control or rate of return on profitability of business establishments in order to pursue
investment control laws which are traditionally regarded as police legitimate State objectives for the common good, provided that the
power measures.77 These laws generally regulate public utilities or regulation does not go too far as to amount to “taking.” 79
industries/enterprises imbued with public interest in order to
protect consumers from exorbitant or unreasonable pricing as well In City of Manila v. Laguio, Jr.,80 we recognized that—
as temper corporate greed by controlling the rate of return on x x x a taking also could be found if government regulation of the
investment of these corporations considering that they have a use of property went “too far.” When regulation reaches a certain
monopoly over the goods or services that they provide to the magnitude, in most if not in all cases there must be an exercise of
general public. The subject regulation differs therefrom in that (1) eminent domain and compensation to support the act. While
the discount does not prevent the establishments from adjusting property may be regulated to a certain extent, if regulation goes
the level of prices of their goods and services, and (2) the discount too far it will be recognized as a taking.
does not apply to all customers of a given establishment but only
to the class of senior citizens. Nonetheless, to the degree material No formula or rule can be devised to answer the questions of what
to the resolution of this case, the 20% discount may be properly is too far and when regulation becomes a taking. In Mahon, Justice
viewed as belonging to the category of price regulatory measures Holmes recognized that it was “a question of degree and therefore
which affect the profitability of establishments subjected thereto. cannot be disposed of by general propositions.” On many other
occasions as well, the U.S. Supreme Court has said that the issue
On its face, therefore, the subject regulation is a police power of when regulation constitutes a taking is a matter of considering
measure. the facts in each case. The Court asks whether justice and fairness
require that the economic loss caused by public action must be
The obiter in Central Luzon Drug Corporation,78 however, describes compensated by the government and thus borne by the public as a
the 20% discount as an exercise of the power of eminent domain whole, or whether the loss should remain concentrated on those
and the tax credit, under the previous law, equivalent to the few persons subject to the public action.81
amount of discount given as the just compensation therefor. The The impact or effect of a regulation, such as the one under
reason is that (1) the discount would have formed part of the gross consideration, must, thus, be determined on a case-to-case basis.
sales of the establishment were it not for the law prescribing the Whether that line between permissible regulation under police
20% discount, and (2) the permanent reduction in total revenues is power and “taking” under eminent domain has been crossed must,
a forced subsidy corresponding to the taking of private property for under the specific circumstances of this case, be subject to proof
public use or benefit. and the one assailing the constitutionality of the regulation carries
the heavy burden of proving that the measure is unreasonable, margins on goods and services offered to the general public.
oppressive or confiscatory. The time-honored rule is that the Concurrently, Congress may have, likewise, legitimately concluded
burden of proving the unconstitutionality of a law rests upon the that the establishments, which will be required to extend the 20%
one assailing it and “the burden becomes heavier when police discount, have the capacity to revise their pricing strategy so that
power is at issue.”82ChanRoblesVirtualawlibrary whatever reduction in profits or income/gross sales that they may
sustain because of sales to senior citizens, can be recouped
The 20% senior citizen discount has not been shown to be through higher mark-ups or from other products not subject of
unreasonable, oppressive or confiscatory.  discounts. As a result, the discounts resulting from sales to senior
citizens will not be confiscatory or unduly oppressive.
In Alalayan v. National Power Corporation,83 petitioners, who were
franchise holders of electric plants, challenged the validity of a law In sum, we sustain our ruling in Carlos Superdrug
limiting their allowable net profits to no more than 12% per annum Corporation88 that the 20% senior citizen discount and tax
of their investments plus two-month operating expenses. In deduction scheme are valid exercises of police power of the State
rejecting their plea, we ruled that, in an earlier case, it was found absent a clear showing that it is arbitrary, oppressive or
that 12% is a reasonable rate of return and that petitioners failed confiscatory.
to prove that the aforesaid rate is confiscatory in view of the
presumption of constitutionality.84 Conclusion

We adopted a similar line of reasoning in Carlos Superdrug In closing, we note that petitioners hypothesize, consistent with
Corporation85 when we ruled that petitioners therein failed to prove our previous ratiocinations, that the discount will force
that the 20% discount is arbitrary, oppressive or confiscatory. We establishments to raise their prices in order to compensate for its
noted that no evidence, such as a financial report, to establish the impact on overall profits or income/gross sales. The general public,
impact of the 20% discount on the overall profitability of or those not belonging to the senior citizen class, are, thus, made
petitioners was presented in order to show that they would be to effectively shoulder the subsidy for senior citizens. This, in
operating at a loss due to the subject regulation or that the petitioners’ view, is unfair.
continued implementation of the law would be unconscionably
detrimental to the business operations of petitioners. In the case at As already mentioned, Congress may be reasonably assumed to
bar, petitioners proceeded with a hypothetical computation of the have foreseen this eventuality. But, more importantly, this goes
alleged loss that they will suffer similar to what the petitioners into the wisdom, efficacy and expediency of the subject law which
in Carlos Superdrug Corporation86 did. Petitioners went directly to is not proper for judicial review. In a way, this law pursues its
this Court without first establishing the factual bases of their social equity objective in a non-traditional manner unlike past and
claims. Hence, the present recourse must, likewise, fail. existing direct subsidy programs of the government for the poor
and marginalized sectors of our society. Verily, Congress must be
Because all laws enjoy the presumption of constitutionality, courts given sufficient leeway in formulating welfare legislations given the
will uphold a law’s validity if any set of facts may be conceived to enormous challenges that the government faces relative to, among
sustain it.87 On its face, we find that there are at least two others, resource adequacy and administrative capability in
conceivable bases to sustain the subject regulation’s validity absent implementing social reform measures which aim to protect and
clear and convincing proof that it is unreasonable, oppressive or uphold the interests of those most vulnerable in our society. In the
confiscatory. Congress may have legitimately concluded that process, the individual, who enjoys the rights, benefits and
business establishments have the capacity to absorb a decrease in privileges of living in a democratic polity, must bear his share in
profits or income/gross sales due to the 20% discount without supporting measures intended for the common good. This is only
substantially affecting the reasonable rate of return on their fair.
investments considering (1) not all customers of a business
establishment are senior citizens and (2) the level of its profit In fine, without the requisite showing of a clear and unequivocal
breach of the Constitution, the validity of the assailed law must be provisions of the revenue regulation that withdraw or modify such
sustained. grant are void. Basic is the rule that administrative regulations
cannot amend or revoke the law.93
Refutation of the Dissent As can be readily seen, the discussion on eminent domain was not
necessary in order to arrive at this conclusion. All that was needed
The main points of Justice Carpio’s Dissent may be summarized as was to point out that the revenue regulation contravened the law
follows: (1) the discussion on eminent domain in Central Luzon which it sought to implement. And, precisely, this was done
Drug Corporation89 is not obiter dicta; (2) allowable taking, in in Central Luzon Drug Corporation 94 by comparing the wording of
police power, is limited to property that is destroyed or placed the previous law vis-à-vis the revenue regulation; employing the
outside the commerce of man for public welfare; (3) the amount of rules of statutory construction; and applying the settled principle
mandatory discount is private property within the ambit of Article that a regulation cannot amend the law it seeks to implement.
III, Section 990 of the Constitution; and (4) the permanent
reduction in a private establishment’s total revenue, arising from A close reading of Central Luzon Drug Corporation 95 would show
the mandatory discount, is a taking of private property for public that the Court went on to state that the tax credit “can be deemed”
use or benefit, hence, an exercise of the power of eminent domain as just compensation only to explain why the previous law provides
requiring the payment of just compensation. for a tax credit instead of a tax deduction. The Court surmised that
the tax credit was a form of just compensation given to the
I
establishments covered by the 20% discount. However, the reason
why the previous law provided for a tax credit and not a tax
We maintain that the discussion on eminent domain in Central
deduction was not necessary to resolve the issue as to whether the
Luzon Drug Corporation91 is obiter dicta.
revenue regulation contravenes the law. Hence, the discussion on
eminent domain is obiter dicta.
As previously discussed, in Central Luzon Drug Corporation,92 the
BIR, pursuant to Sections 2.i and 4 of RR No. 2-94, treated the
A court, in resolving cases before it, may look into the possible
senior citizen discount in the previous law, RA 7432, as a tax
purposes or reasons that impelled the enactment of a particular
deduction instead of a tax credit despite the clear provision in that
statute or legal provision. However, statements made relative
law which stated –
thereto are not always necessary in resolving the actual
SECTION 4. Privileges for the Senior Citizens. – The senior citizens
controversies presented before it. This was the case in Central
shall be entitled to the following:
Luzon Drug Corporation96 resulting in that unfortunate statement
that the tax credit “can be deemed” as just compensation. This, in
a) The grant of twenty percent (20%) discount from all
turn, led to the erroneous conclusion, by deductive reasoning, that
establishments relative to utilization of transportation services,
the 20% discount is an exercise of the power of eminent domain.
hotels and similar lodging establishment, restaurants and
The Dissent essentially adopts this theory and reasoning which, as
recreation centers and purchase of medicines anywhere in the
will be shown below, is contrary to settled principles in police
country: Provided, That private establishments may claim the cost
power and eminent domain analysis.
as tax credit; (Emphasis supplied)
Thus, the Court ruled that the subject revenue regulation violated II
the law, viz:
The 20 percent discount required by the law to be given to senior The Dissent discusses at length the doctrine on “taking” in police
citizens is a tax credit, not merely a tax deduction from the gross power which occurs when private property is destroyed or placed
income or gross sale of the establishment concerned. A tax credit is outside the commerce of man. Indeed, there is a whole class of
used by a private establishment only after the tax has been police power measures which justify the destruction of private
computed; a tax deduction, before the tax is computed. RA 7432 property in order to preserve public health, morals, safety or
unconditionally grants a tax credit to all covered entities. Thus, the welfare. As earlier mentioned, these would include a building on
the verge of collapse or confiscated obscene materials as well as First, the assailed law, by imposing the senior citizen discount,
those mentioned by the Dissent with regard to property used in does not take any of the properties used by a business
violating a criminal statute or one which constitutes a nuisance. In establishment like, say, the land on which a manufacturing plant is
such cases, no compensation is required. constructed or the equipment being used to produce goods or
services.
However, it is equally true that there is another class of police
power measures which do not involve the destruction of private Second, rather than taking specific properties of a business
property but merely regulate its use. The minimum wage law, establishment, the senior citizen discount law merely regulates the
zoning ordinances, price control laws, laws regulating the operation prices of the goods or services being sold to senior citizens by
of motels and hotels, laws limiting the working hours to eight, and mandating a 20% discount. Thus, if a product is sold at P10.00 to
the like would fall under this category. The examples cited by the the general public, then it shall be sold at P8.00 (i.e., P10.00 less
Dissent, likewise, fall under this category: Article 157 of the Labor 20%) to senior citizens. Note that the law does not impose at
Code, Sections 19 and 18 of the Social Security Law, and Section 7 what specific price the product shall be sold, only that a 20%
of the Pag-IBIG Fund Law. These laws merely regulate or, to use discount shall be given to senior citizens based on the price set by
the term of the Dissent, burden the conduct of the affairs of the business establishment. A business establishment is, thus, free
business establishments. In such cases, payment of just to adjust the prices of the goods or services it provides to the
compensation is not required because they fall within the sphere of general public. Accordingly, it can increase the price of the above
permissible police power measures. The senior citizen discount law product to P20.00 but is required to sell it at P16.00 (i.e., P20.00
falls under this latter category. less 20%) to senior citizens.

III Third, because the law impacts the prices of the goods or services
of a particular establishment relative to its sales to senior citizens,
The Dissent proceeds from the theory that the permanent its profits or income/gross sales are affected. The extent of the
reduction of profits or income/gross sales, due to the 20% impact would, however, depend on the profit margin of the
discount, is a “taking” of private property for public purpose business establishment on a particular good or service. If a product
without payment of just compensation. costs P5.00 to produce and is sold at P10.00, then the profit 98 is
P5.0099 or a profit margin100 of 50%.101 Under the assailed law, the
At the outset, it must be emphasized that aforesaid product would have to be sold at P8.00 to senior citizens
petitioners never presented any evidence to establish that they yet the business would still earn P3.00102 or a 30%103 profit margin.
were forced to suffer enormous losses or operate at a loss due to On the other hand, if the product costs P9.00 to produce and is
the effects of the assailed law. They came directly to this Court and required to be sold at P8.00 to senior citizens, then the business
provided a hypothetical computation of the loss they would would experience a loss of P1.00.104 But note that since not all
allegedly suffer due to the operation of the assailed law. The customers of a business establishment are senior citizens, the
central premise of the Dissent’s argument that the 20% discount business establishment may continue to earn P1.00 from non-
results in a permanent reduction in profits or income/gross sales, senior citizens which, in turn, can offset any loss arising from sales
or forces a business establishment to operate at a loss is, to senior citizens.
thus, wholly unsupported by competent evidence. To be sure,
the Court can invalidate a law which, on its face, is arbitrary, Fourth, when the law imposes the 20% discount in favor of senior
oppressive or confiscatory.97 But this is not the case here. citizens, it does not prevent the business establishment from
revising its pricing strategy. By revising its pricing strategy, a
In the case at bar, evidence is indispensable before a business establishment can recoup any reduction of profits or
determination of a constitutional violation can be made because of income/gross sales which would otherwise arise from the giving of
the following reasons. the 20% discount. To illustrate, suppose A has two customers: X, a
senior citizen, and Y, a non-senior citizen. Prior to the law, A sells
his products at P10.00 a piece to X and Y resulting in income/gross establishments is ultimately passed on to the consumers but that,
sales of P20.00 (P10.00 + P10.00). With the passage of the law, A by itself, does not justify the wholesale nullification of these
must now sell his product to X at P8.00 (i.e., P10.00 less 20%) so measures. It is a basic postulate of our democratic system of
that his income/gross sales would be P18.00 (P8.00 + P10.00) or government that the Constitution is a social contract whereby the
lower by P2.00. To prevent this from happening, A decides to people have surrendered their sovereign powers to the State for
increase the price of his products to P11.11 per piece. Thus, he the common good.107 All persons may be burdened by regulatory
sells his product to X at P8.89 (i.e., P11.11 less 20%) and to Y at measures intended for the common good or to serve some
P11.11. As a result, his income/gross sales would still be important governmental interest, such as protecting or improving
P20.00105 (P8.89 + P11.11). The capacity, then, of business the welfare of a special class of people for which the Constitution
establishments to revise their pricing strategy makes it possible for affords preferential concern. Indubitably, the one assailing the law
them not to suffer any reduction in profits or income/gross sales, has the heavy burden of proving that the regulation is
or, in the alternative, mitigate the reduction of their profits or unreasonable, oppressive or confiscatory, or has gone “too far” as
income/gross sales even after the passage of the law. In other to amount to a “taking.” Yet, here, the Dissent would have this
words, business establishments have the capacity to adjust their Court nullify the law without any proof of such nature.
prices so that they may remain profitable even under the operation
of the assailed law. Further, this Court is not the proper forum to debate the economic
theories or realities that impelled Congress to shift from the tax
The Dissent, however, states that – credit to the tax deduction scheme. It is not within our power or
The explanation by the majority that private establishments can competence to judge which scheme is more or less burdensome to
always increase their prices to recover the mandatory discount will business establishments or the consuming public and, thereafter,
only encourage private establishments to adjust their prices to choose which scheme the State should use or pursue. The shift
upwards to the prejudice of customers who do not enjoy the 20% from the tax credit to tax deduction scheme is a policy
discount. It was likewise suggested that if a company increases its determination by Congress and the Court will respect it for as long
prices, despite the application of the 20% discount, the as there is no showing, as here, that the subject regulation has
establishment becomes more profitable than it was before the transgressed constitutional limitations.
implementation of R.A. 7432. Such an economic justification is self-
defeating, for more consumers will suffer from the price increase Unavoidably, the lack of evidence constrains the Dissent to rely
than will benefit from the 20% discount. Even then, such ability to on speculative and hypothetical argumentation when it states that
increase prices cannot legally validate a violation of the eminent the 20% discount is a significant amount and not a minimal loss
domain clause.106 (which erroneously assumes that the discount automatically results
in a loss when it is possible that the profit margin is greater than
But, if it is possible that the business establishment, by adjusting
20% and/or the pricing strategy can be revised to prevent or
its prices, will suffer no reduction in its profits or income/gross
mitigate any reduction in profits or income/gross sales as
sales (or suffer some reduction but continue to operate profitably)
illustrated above),108 and not all private establishments make a
despite giving the discount, what would be the basis to strike down
20% profit margin (which conversely implies that there are those
the law? If it is possible that the business establishment, by
who make more and, thus, would not be greatly affected by this
adjusting its prices, will not be unduly burdened, how can there be
regulation).109
a finding that the assailed law is an unconstitutional exercise of
police power or eminent domain?
In fine, because of the possible scenarios discussed above, we
cannot assume that the 20% discount results in a permanent
That there may be a burden placed on business establishments or
reduction in profits or income/gross sales, much less that business
the consuming public as a result of the operation of the assailed
establishments are forced to operate at a loss under the assailed
law is not, by itself, a ground to declare it unconstitutional for this
law. And, even if we gratuitously assume that the 20% discount
goes into the wisdom and expediency of the law. The cost of most,
results in some degree of reduction in profits or income/gross
if not all, regulatory measures of the government on business
sales, we cannot assume that such reduction is arbitrary, proceeds to argue that the 20% discount is not a minimal
oppressive or confiscatory. To repeat, there is no actual proof to loss111 and that the 20% discount forces business establishments to
back up this claim, and it could be that the loss suffered by a operate at a loss.112 Even the obiter in Central Luzon Drug
business establishment was occasioned through its fault or Corporation,113 which the Dissent essentially adopts and relies on,
negligence in not adapting to the effects of the assailed law. The is premised on the permanent reduction of total revenues and the
law uniformly applies to all business establishments covered loss that business establishments will be forced to suffer in arguing
thereunder. There is, therefore, no unjust discrimination as the that the 20% discount constitutes a “taking” under the power of
aforesaid business establishments are faced with the same eminent domain. Thus, when the Dissent now argues that the issue
constraints. of profit or loss is immaterial, it contradicts itself because it later
argues, in order to justify that there is a “taking” under the power
The necessity of proof is all the more pertinent in this case of eminent domain in this case, that the 20% discount forces
because, as similarly observed by Justice Velasco in his Concurring business establishments to suffer a significant loss or to operate at
Opinion, the law has been in operation for over nine years now. a loss.
However, the grim picture painted by petitioners on the
unconscionable losses to be indiscriminately suffered by business Second, this argument suffers from the same flaw as the Dissent’s
establishments, which should have led to the closure of numerous original arguments. It is an erroneous characterization of the 20%
business establishments, has not come to pass. discount.

Verily, we cannot invalidate the assailed law based on assumptions According to the Dissent, the 20% discount is part of the gross
and conjectures. Without adequate proof, the presumption of sales and, hence, private property belonging to business
constitutionality must prevail. establishments. However, as previously discussed, the 20%
discount is not private property actually owned and/or used by the
IV business establishment. It should be distinguished from properties
like lands or buildings actually used in the operation of a business
At this juncture, we note that the Dissent modified its original establishment which, if appropriated for public use, would amount
arguments by including a new paragraph, to wit: to a “taking” under the power of eminent domain.
Section 9, Article III of the 1987 Constitution speaks of private
property without any distinction. It does not state that there should Instead, the 20% discount is a regulatory measure which impacts
be profit before the taking of property is subject to just the pricing and, hence, the profitability of business establishments.
compensation. The private property referred to for purposes of At the time the discount is imposed, no particular property of the
taking could be inherited, donated, purchased, mortgaged, or as in business establishment can be said to be “taken.” That is, the State
this case, part of the gross sales of private establishments. They does not acquire or take anything from the business establishment
are all private property and any taking should be attended by in the way that it takes a piece of private land to build a public
corresponding payment of just compensation. The 20% discount road. While the 20% discount may form part of the potential profits
granted to senior citizens belong to private establishments, or income/gross sales114 of the business establishment, as similarly
whether these establishments make a profit or suffer a loss. In characterized by Justice Bersamin in his Concurring Opinion,
fact, the 20% discount applies to non-profit establishments like potential profits or income/gross sales are not private property,
country, social, or golf clubs which are open to the public and not specifically cash or money, already belonging to the business
only for exclusive membership. The issue of profit or loss to the establishment. They are a mere expectancy because they are
establishments is immaterial.110 potential fruits of the successful conduct of the business.
Two things may be said of this argument.
Prior to the sale of goods or services, a business establishment
First, it contradicts the rest of the arguments of the Dissent. After may be subject to State regulations, such as the 20% senior citizen
it states that the issue of profit or loss is immaterial, the Dissent discount, which may impact the level or amount of profits or
income/gross sales that can be generated by such establishment. Rather, when the regulation causes an establishment to incur
For this reason, the validity of the discount is to be determined losses in an unreasonable, oppressive or confiscatory manner, what
based on its overall effects on the operations of the business is actually taken is capital and the right of the business
establishment. establishment to a reasonable return on investment. If the
business losses are not halted because of the continued operation
Again, as previously discussed, the 20% discount does not of the regulation, this eventually leads to the destruction of the
automatically result in a 20% reduction in profits, or, to align it business and the total loss of the capital invested therein. But,
with the term used by the Dissent, the 20% discount does not again, petitioners in this case failed to prove that the subject
mean that a 20% reduction in gross sales necessarily results. regulation is unreasonable, oppressive or confiscatory.
Because (1) the profit margin of a product is not necessarily less
than 20%, (2) not all customers of a business establishment are V.
senior citizens, and (3) the establishment may revise its pricing
strategy, such reduction in profits or income/gross sales may be The Dissent further argues that we erroneously used price and rate
prevented or, in the alternative, mitigated so that the business of return on investment control laws to justify the senior citizen
establishment continues to operate profitably. Thus, even if we discount law. According to the Dissent, only profits from industries
gratuitously assume that some degree of reduction in profits or imbued with public interest may be regulated because this is a
income/gross sales occurs because of the 20% discount, it does condition of their franchises. Profits of establishments without
not follow that the regulation is unreasonable, oppressive or franchises cannot be regulated permanently because there is no
confiscatory because the business establishment may make the law regulating their profits. The Dissent concludes that the
necessary adjustments to continue to operate profitably. No permanent reduction of total revenues or gross sales of business
evidence was presented by petitioners to show otherwise. In fact, establishments without franchises is a taking of private property
no evidence was presented by petitioners at all. under the power of eminent domain.

Justice Leonen, in his Concurring and Dissenting Opinion, In making this argument, it is unfortunate that the Dissent quotes
characterizes “profits” (or income/gross sales) as an inchoate right. only a portion of the ponencia –
Another way to view it, as stated by Justice Velasco in his The subject regulation may be said to be similar to, but with
Concurring Opinion, is that the business establishment merely has substantial distinctions from, price control or rate of return on
a right to profits. The Constitution adverts to it as the right of an investment control laws which are traditionally regarded as police
enterprise to a reasonable return on investment.115 Undeniably, this power measures. These laws generally regulate public utilities or
right, like any other right, may be regulated under the police power industries/enterprises imbued with public interest in order to
of the State to achieve important governmental objectives like protect consumers from exorbitant or unreasonable pricing as well
protecting the interests and improving the welfare of senior as temper corporate greed by controlling the rate of return on
citizens. investment of these corporations considering that they have a
monopoly over the goods or services that they provide to the
It should be noted though that potential profits or income/gross general public. The subject regulation differs therefrom in that (1)
sales are relevant in police power and eminent domain analyses the discount does not prevent the establishments from adjusting
because they may, in appropriate cases, serve as an indicia when a the level of prices of their goods and services, and (2) the discount
regulation has gone “too far” as to amount to a “taking” under the does not apply to all customers of a given establishment but only
power of eminent domain. When the deprivation or reduction of to the class of senior citizens. x x x116
profits or income/gross sales is shown to be unreasonable, The above paragraph, in full, states –
oppressive or confiscatory, then the challenged governmental The subject regulation may be said to be similar to, but with
regulation may be nullified for being a “taking” under the power of substantial distinctions from, price control or rate of return on
eminent domain. In such a case, it is not profits or income/gross investment control laws which are traditionally regarded as police
sales which are actually taken and appropriated for public use. power measures. These laws generally regulate public utilities or
industries/enterprises imbued with public interest in order to increments.117 This may cover the regulation of profits or
protect consumers from exorbitant or unreasonable pricing as well income/gross sales of all businesses, without qualification, to attain
as temper corporate greed by controlling the rate of return on the objective of diffusing wealth in order to protect and enhance
investment of these corporations considering that they have a the right of all the people to human dignity. 118 Thus, under the
monopoly over the goods or services that they provide to the social justice policy of the Constitution, business establishments
general public. The subject regulation differs therefrom in that (1) may be compelled to contribute to uplifting the plight of vulnerable
the discount does not prevent the establishments from adjusting or marginalized groups in our society provided that the regulation
the level of prices of their goods and services, and (2) the discount is not arbitrary, oppressive or confiscatory, or is not in breach of
does not apply to all customers of a given establishment but only some specific constitutional limitation.
to the class of senior citizens. Nonetheless, to the degree
material to the resolution of this case, the 20% discount When the Dissent, therefore, states that the “profits of private
may be properly viewed as belonging to the category of establishments which are non-franchisees cannot be
price regulatory measures which affects the profitability of regulated permanently, and there is no such law regulating their
establishments subjected thereto. (Emphasis supplied) profits permanently,”119 it is assuming what it ought to prove. First,
there are laws which, in effect, permanently regulate profits or
The point of this paragraph is to simply show that the State has, in
income/gross sales of establishments without franchises, and RA
the past, regulated prices and profits of business establishments.
9257 is one such law. And, second, Congress can regulate such
In other words, this type of regulatory measures is traditionally
profits or income/gross sales because, as previously noted, there is
recognized as police power measures so that the senior citizen
nothing in the Constitution to prevent it from doing so. Here, again,
discount may be considered as a police power measure as well.
it must be emphasized that petitioners failed to present any proof
What is more, the substantial distinctions between price and rate of
to show that the effects of the assailed law on their operations has
return on investment control laws vis-à-vis the senior citizen
been unreasonable, oppressive or confiscatory.
discount law provide greater reason to uphold the validity of the
senior citizen discount law. As previously discussed, the ability to
The permanent regulation of profits or income/gross sales of
adjust prices allows the establishment subject to the senior citizen
business establishments, even those without franchises, is not as
discount to prevent or mitigate any reduction of profits or
uncommon as the Dissent depicts it to be.
income/gross sales arising from the giving of the discount. In
contrast, establishments subject to price and rate of return on
For instance, the minimum wage law allows the State to set the
investment control laws cannot adjust prices accordingly.
minimum wage of employees in a given region or geographical
area. Because of the added labor costs arising from the minimum
Certainly, there is no intention to say that price and rate of return
wage, a permanent reduction of profits or income/gross sales
on investment control laws are the justification for the senior
would result, assuming that the employer does not increase the
citizen discount law. Not at all. The justification for the senior
prices of his goods or services. To illustrate, suppose it costs a
citizen discount law is the plenary powers of Congress. The
company P5.00 to produce a product and it sells the same at
legislative power to regulate business establishments is broad and
P10.00 with a 50% profit margin. Later, the State increases the
covers a wide array of areas and subjects. It is well within
minimum wage. As a result, the company incurs greater labor costs
Congress’ legislative powers to regulate the profits or income/gross
so that it now costs P7.00 to produce the same product. The profit
sales of industries and enterprises, even those without franchises.
per product of the company would be reduced to P3.00 with a
For what are franchises but mere legislative enactments?
profit margin of 30%. The net effect would be the same as in the
earlier example of granting a 20% senior citizen discount. As can
There is nothing in the Constitution that prohibits Congress from
be seen, the minimum wage law could, likewise, lead to a
regulating the profits or income/gross sales of industries and
permanent reduction of profits. Does this mean that the minimum
enterprises without franchises. On the contrary, the social justice
wage law should, likewise, be declared unconstitutional on the
provisions of the Constitution enjoin the State to regulate the
mere plea that it results in a permanent reduction of profits?
“acquisition, ownership, use, and disposition” of property and its
Taking it a step further, suppose the company decides to increase x x x
the price of its product in order to offset the effects of the increase
in labor cost; does this mean that the minimum wage law, The Court is not oblivious of the retail side of the pharmaceutical
following the reasoning of the Dissent, is unconstitutional because industry and the competitive pricing component of the business.
the consuming public is effectively made to subsidize the wage of a While the Constitution protects property rights, petitioners must
group of laborers, i.e., minimum wage earners? accept the realities of business and the State, in the exercise of
police power, can intervene in the operations of a business which
The same reasoning can be adopted relative to the examples cited may result in an impairment of property rights in the process.
by the Dissent which, according to it, are valid police power
regulations. Article 157 of the Labor Code, Sections 19 and 18 of Moreover, the right to property has a social dimension. While
the Social Security Law, and Section 7 of the Pag-IBIG Fund Law Article XIII of the Constitution provides the precept for the
would effectively increase the labor cost of a business protection of property, various laws and jurisprudence, particularly
establishment. This would, in turn, be integrated as part of the cost on agrarian reform and the regulation of contracts and public
of its goods or services. Again, if the establishment does not utilities, continuously serve as a reminder that the right to property
increase its prices, the net effect would be a permanent reduction can be relinquished upon the command of the State for the
in its profits or income/gross sales. Following the reasoning of the promotion of public good.
Dissent that “any form of permanent taking of private property
(including profits or income/gross sales)120 is an exercise of Undeniably, the success of the senior citizens program rests largely
eminent domain that requires the State to pay just on the support imparted by petitioners and the other private
compensation,”121 then these statutory provisions would, likewise, establishments concerned. This being the case, the means
have to be declared unconstitutional. It does not matter that these employed in invoking the active participation of the private sector,
benefits are deemed part of the employees’ legislated wages in order to achieve the purpose or objective of the law, is
because the net effect is the same, that is, it leads to higher labor reasonably and directly related. Without sufficient proof that
costs and a permanent reduction in the profits or income/gross Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued
sales of the business establishments.122 implementation of the same would be unconscionably detrimental
to petitioners, the Court will refrain from quashing a legislative
The point then is this – most, if not all, regulatory measures act.125
imposed by the State on business establishments impact, at some In conclusion, we maintain that the correct rule in determining
level, the latter’s prices and/or profits or income/gross sales. 123 If whether the subject regulatory measure has amounted to a
the Court were to sustain the Dissent’s theory, then a wholesale “taking” under the power of eminent domain is the one laid down
nullification of such measures would inevitably result. The police in Alalayan v. National Power Corporation 126 and followed in Carlos
power of the State and the social justice provisions of the Superdrug Corporation127 consistent with long standing principles in
Constitution would, thus, be rendered nugatory. police power and eminent domain analysis. Thus, the deprivation
or reduction of profits or income/gross sales must be clearly shown
There is nothing sacrosanct about profits or income/gross sales. to be unreasonable, oppressive or confiscatory. Under the specific
This, we made clear in Carlos Superdrug Corporation:124 circumstances of this case, such determination can only be made
Police power as an attribute to promote the common good would upon the presentation of competent proof which petitioners failed
be diluted considerably if on the mere plea of petitioners that they to do. A law, which has been in operation for many years and
will suffer loss of earnings and capital, the questioned provision is promotes the welfare of a group accorded special concern by the
invalidated. Moreover, in the absence of evidence demonstrating Constitution, cannot and should not be summarily invalidated on a
the alleged confiscatory effect of the provision in question, there is mere allegation that it reduces the profits or income/gross sales of
no basis for its nullification in view of the presumption of validity business establishments.
which every law has in its favor.
WHEREFORE, the Petition is hereby DISMISSED for lack of
merit.chanRoblesvirtualLawlibrary
For many years now, petitioner sells electric power to the residents
SO ORDERED. of Cabanatuan City, posting a gross income of P107,814,187.96 in
1992. 7 Pursuant to section 37 of Ordinance No. 165-92, 8 the
Sereno, C.J., Abad, Villarama, Jr., Perez, Mendoza, Reyes, respondent assessed the petitioner a franchise tax amounting to
and Perlas-Bernabe, JJ., concur. P808,606.41, representing 75% of 1% of the latter’s gross receipts
Carpio, J., see dissenting opinion. for the preceding year. 9
Velasco, Jr., Bersamin, and Leonen, JJ., see concurring opinion.
Leonardo-De Castro, J., I certify that J. De Castro left her vote Petitioner, whose capital stock was subscribed and paid wholly by
concurring of ponencia of J. Del Castillo. the Philippine Government, 10 refused to pay the tax assessment.
Brion, J., no part. It argued that the respondent has no authority to impose tax on
Peralta, J., I certify that J. Peralta left his vote concurring of government entities. Petitioner also contended that as a non-profit
ponencia of J. Del Castillo. organization, it is exempted from the payment of all forms of
taxes, charges, duties or fees 11 in accordance with sec. 13 of Rep.
Act No. 6395, as amended, viz:chanrob1es virtual 1aw library
THIRD DIVISION
Sec. 13. Non-profit Character of the Corporation; Exemption from
[G.R. No. 149110. April 9, 2003.] all Taxes, Duties, Fees, Imposts and Other Charges by Government
and Governmental Instrumentalities. — The Corporation shall be
NATIONAL POWER CORPORATION, Petitioner, v. CITY OF non-profit and shall devote all its return from its capital
CABANATUAN, Respondent. investment, as well as excess revenues from its operation, for
expansion. To enable the Corporation to pay its indebtedness and
DECISION obligations and in furtherance and effective implementation of the
policy enunciated in Section one of this Act, the Corporation is
hereby exempt:chanrob1es virtual 1aw library
PUNO, J.:
(a) From the payment of all taxes, duties, fees, imposts, charges,
costs and service fees in any court or administrative proceedings in
This is a petition for review 1 of the Decision 2 and the Resolution which it may be a party, restrictions and duties to the Republic of
3 of the Court of Appeals dated March 12, 2001 and July 10, 2001, the Philippines, its provinces, cities, municipalities and other
respectively, finding petitioner National Power Corporation (NPC) government agencies and instrumentalities;
liable to pay franchise tax to respondent City of
Cabanatuan.chanrob1es virtua1 1aw 1ibrary (b) From all income taxes, franchise taxes and realty taxes to be
paid to the National Government, its provinces, cities,
Petitioner is a government-owned and controlled corporation municipalities and other government agencies and
created under Commonwealth Act No. 120, as amended. 4 It is instrumentalities;
tasked to undertake the "development of hydroelectric generations
of power and the production of electricity from nuclear, geothermal (c) From all import duties, compensating taxes and advanced sales
and other sources, as well as, the transmission of electric power on tax, and wharfage fees on import of foreign goods required for its
a nationwide basis." 5 Concomitant to its mandated duty, petitioner operations and projects; and
has, among others, the power to construct, operate and maintain
power plants, auxiliary plants, power stations and substations for (d) From all taxes, duties, fees, imposts, and all other charges
the purpose of developing hydraulic power and supplying such imposed by the Republic of the Philippines, its provinces, cities,
power to the inhabitants. 6 municipalities and other government agencies and
instrumentalities, on all petroleum products used by the know the existing laws on the subject and not to have enacted
Corporation in the generation, transmission, utilization, and sale of inconsistent or conflicting statutes. It is also a well-settled rule
electric power." 12 that, generally, general law does not repeal a special law unless it
clearly appears that the legislative has intended by the latter
The respondent filed a collection suit in the Regional Trial Court of general act to modify or repeal the earlier special law. Thus,
Cabanatuan City, demanding that petitioner pay the assessed tax despite the passage of R.A. No. 7160 from which the questioned
due, plus a surcharge equivalent to 25% of the amount of tax, and Ordinance No. 165-92 was based, the tax exemption privileges of
2% monthly interest. 13 Respondent alleged that petitioner’s defendant NPC remain.
exemption from local taxes has been repealed by section 193 of
Rep. Act No. 7160, 14 which reads as Another point going against plaintiff in this case is the ruling of the
follows:jgc:chanrobles.com.ph Supreme Court in the case of Basco v. Philippine Amusement and
Gaming Corporation, 197 SCRA 52, where it was held
"Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless that:chanrob1es virtual 1aw library
otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether natural or ‘Local governments have no power to tax instrumentalities of the
juridical, including government owned or controlled corporations, National Government. PAGCOR is a government owned or
except local water districts, cooperatives duly registered under R.A. controlled corporation with an original charter, PD 1869. All of its
No. 6938, non-stock and non-profit hospitals and educational shares of stocks are owned by the National Government. . . . Being
institutions, are hereby withdrawn upon the effectivity of this an instrumentality of the government, PAGCOR should be and
Code."cralaw virtua1aw library actually is exempt from local taxes. Otherwise, its operation might
be burdened, impeded or subjected to control by mere local
On January 25, 1996, the trial court issued an Order 15 dismissing government.’
the case. It ruled that the tax exemption privileges granted to
petitioner subsist despite the passage of Rep. Act No. 7160 for the Like PAGCOR, NPC, being a government owned and controlled
following reasons: (1) Rep. Act No. 6395 is a particular law and it corporation with an original charter and its shares of stocks owned
may not be repealed by Rep. Act No. 7160 which is a general law; by the National Government, is beyond the taxing power of the
(2) section 193 of Rep. Act No. 7160 is in the nature of an implied Local Government. Corollary to this, it should be noted here that in
repeal which is not favored; and (3) local governments have no the NPC Charter’s declaration of Policy, Congress declared that:
power to tax instrumentalities of the national government. ‘. . . (2) the total electrification of the Philippines through the
Pertinent portion of the Order reads:jgc:chanrobles.com.ph development of power from all services to meet the needs of
industrial development and dispersal and needs of rural
"The question of whether a particular law has been repealed or not electrification are primary objectives of the nations which shall be
by a subsequent law is a matter of legislative intent. The pursued coordinately and supported by all instrumentalities and
lawmakers may expressly repeal a law by incorporating therein agencies of the government, including its financial institutions.’
repealing provisions which expressly and specifically cite(s) the (Emphasis supplied). To allow plaintiff to subject defendant to its
particular law or laws, and portions thereof, that are intended to be tax-ordinance would be to impede the avowed goal of this
repealed. A declaration in a statute, usually in its repealing clause, government instrumentality.
that a particular and specific law, identified by its number or title is
repealed is an express repeal; all others are implied repeal. Sec. Unlike the State, a city or municipality has no inherent power of
193 of R.A. No. 7160 is an implied repealing clause because it fails taxation. Its taxing power is limited to that which is provided for in
to identify the act or acts that are intended to be repealed. It is a its charter or other statute. Any grant of taxing power is to be
well-settled rule of statutory construction that repeals of statutes construed strictly, with doubts resolved against its existence.
by implication are not favored. The presumption is against
inconsistency and repugnancy for the legislative is presumed to From the existing law and the rulings of the Supreme Court itself, it
is very clear that the plaintiff could not impose the subject tax on
the defendant." 16 B. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
NPC’S EXEMPTION FROM ALL FORMS OF TAXES HAS BEEN
On appeal, the Court of Appeals reversed the trial court’s Order 17 REPEALED BY THE PROVISION OF THE LOCAL GOVERNMENT CODE
on the ground that section 193, in relation to sections 137 and 151 AS THE ENACTMENT OF A LATER LEGISLATION, WHICH IS A
of the LGC, expressly withdrew the exemptions granted to the GENERAL LAW, CANNOT BE CONSTRUED TO HAVE REPEALED A
petitioner. 18 It ordered the petitioner to pay the respondent city SPECIAL LAW.
government the following: (a) the sum of P808,606.41
representing the franchise tax due based on gross receipts for the C. THE COURT OF APPEALS GRAVELY ERRED IN NOT
year 1992, (b) the tax due every year thereafter based in the gross CONSIDERING THAT AN EXERCISE OF POLICE POWER THROUGH
receipts earned by NPC, (c) in all cases, to pay a surcharge of 25% TAX EXEMPTION SHOULD PREVAIL OVER THE LOCAL GOVERNMENT
of the tax due and unpaid, and (d) the sum of P10,000.00 as CODE." 21
litigation expense. 19
It is beyond dispute that the respondent city government has the
On April 4, 2001, the petitioner filed a Motion for Reconsideration authority to issue Ordinance No. 165-92 and impose an annual tax
on the Court of Appeal’s Decision. This was denied by the appellate on "businesses enjoying a franchise," pursuant to section 151 in
court, viz:jgc:chanrobles.com.ph relation to section 137 of the LGC, viz:jgc:chanrobles.com.ph

"The Court finds no merit in NPC’s motion for reconsideration. Its "Sec. 137. Franchise Tax. — Notwithstanding any exemption
arguments reiterated therein that the taxing power of the province granted by any law or other special law, the province may impose
under Art. 137 (sic) of the Local Government Code refers merely to a tax on businesses enjoying a franchise, at a rate not exceeding
private persons or corporations in which category it (NPC) does not fifty percent (50%) of one percent (1%) of the gross annual
belong, and that the LGC (RA 7160) which is a general law may not receipts for the preceding calendar year based on the incoming
impliedly repeal the NPC Charter which is a special law — finds the receipt, or realized, within its territorial jurisdiction.
answer in Section 193 of the LGC to the effect that ‘tax exemptions
or incentives granted to, or presently enjoyed by all persons, In the case of a newly started business, the tax shall not exceed
whether natural or juridical, including government-owned or one-twentieth (1/20) of one percent (1%) of the capital
controlled corporations except local water districts . . . are hereby investment. In the succeeding calendar year, regardless of when
withdrawn.’ The repeal is direct and unequivocal, not implied. the business started to operate, the tax shall be based on the gross
receipts for the preceding calendar year, or any fraction thereof, as
IN VIEW WHEREOF, the motion for reconsideration is hereby provided herein." (Emphasis supplied)
DENIED.
x       x       x
SO ORDERED." 20

In this petition for review, petitioner raises the following Sec. 151. Scope of Taxing Powers. — Except as otherwise provided
issues:jgc:chanrobles.com.ph in this Code, the city, may levy the taxes, fees, and charges which
the province or municipality may impose: Provided, however, That
"A. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT the taxes, fees and charges levied and collected by highly
NPC, A PUBLIC NON-PROFIT CORPORATION, IS LIABLE TO PAY A urbanized and independent component cities shall accrue to them
FRANCHISE TAX AS IT FAILED TO CONSIDER THAT SECTION 137 and distributed in accordance with the provisions of this Code.
OF THE LOCAL GOVERNMENT CODE IN RELATION TO SECTION 131
APPLIES ONLY TO PRIVATE PERSONS OR CORPORATIONS The rates of taxes that the city may levy may exceed the
ENJOYING A FRANCHISE. maximum rates allowed for the province or municipality by not
more than fifty percent (50%) except the rates of professional and an agency or instrumentality of the Government. Being an
amusement taxes."cralaw virtua1aw library instrumentality of the Government, PAGCOR should be and actually
is exempt from local taxes. Otherwise, its operation might be
Petitioner, however, submits that it is not liable to pay an annual burdened, impeded or subjected to control by a mere local
franchise tax to the respondent city government. It contends that government.
sections 137 and 151 of the LGC in relation to section 131, limit
the taxing power of the respondent city government to private ‘The states have no power by taxation or otherwise, to retard,
entities that are engaged in trade or occupation for profit. 22 impede, burden or in any manner control the operation of
constitutional laws enacted by Congress to carry into execution the
Section 131 (m) of the LGC defines a "franchise" as "a right or powers vested in the federal government. (MC Culloch v. Maryland,
privilege, affected with public interest which is conferred upon 4 Wheat 316, 4 L Ed. 579)’
private persons or corporations, under such terms and conditions
as the government and its political subdivisions may impose in the This doctrine emanates from the ‘supremacy’ of the National
interest of the public welfare, security and safety." From the Government over local governments.
phraseology of this provision, the petitioner claims that the word
"private" modifies the terms "persons" and "corporations." Hence, ‘Justice Holmes, speaking for the Supreme Court, made reference
when the LGC uses the term "franchise," petitioner submits that it to the entire absence of power on the part of the States to touch,
should refer specifically to franchises granted to private natural in that way (taxation) at least, the instrumentalities of the United
persons and to private corporations. 23 Ergo, its charter should not States (Johnson v. Maryland, 254 US 51) and it can be agreed that
be considered a "franchise" for the purpose of imposing the no state or political subdivision can regulate a federal
franchise tax in question.chanrob1es virtua1 1aw 1ibrary instrumentality in such a way as to prevent it from consummating
its federal responsibilities, or even seriously burden it from
On the other hand, section 131 (d) of the LGC defines "business" accomplishment of them.’ (Antieau, Modern Constitutional Law,
as "trade or commercial activity regularly engaged in as means of Vol. 2, p. 140, Italics supplied)
livelihood or with a view to profit." Petitioner claims that it is not
engaged in an activity for profit, in as much as its charter Otherwise, mere creatures of the State can defeat National policies
specifically provides that it is a "non-profit organization." In any thru extermination of what local authorities may perceive to be
case, petitioner argues that the accumulation of profit is merely undesirable activities or enterprise using the power to tax as ‘a tool
incidental to its operation; all these profits are required by law to regulation’ (U.S. v. Sanchez, 340 US 42).
be channeled for expansion and improvement of its facilities and
services. 24 The power to tax which was called by Justice Marshall as the
‘power to destroy’ (Mc Culloch v. Maryland, supra) cannot be
Petitioner also alleges that it is an instrumentality of the National allowed to defeat an instrumentality or creation of the very entity
Government, 25 and as such, may not be taxed by the respondent which has the inherent power to wield it." 27
city government. It cites the doctrine in Basco v. Philippine
Amusement and Gaming Corporation 26 where this Court held that Petitioner contends that section 193 of Rep. Act No. 7160,
local governments have no power to tax instrumentalities of the withdrawing the tax privileges of government-owned or controlled
National Government, viz:jgc:chanrobles.com.ph corporations, is in the nature of an implied repeal. A special law, its
charter cannot be amended or modified impliedly by the local
"Local governments have no power to tax instrumentalities of the government code which is a general law. Consequently, petitioner
National Government. claims that its exemption from all taxes, fees or charges under its
charter subsists despite the passage of the LGC,
PAGCOR has a dual role, to operate and regulate gambling casinos. viz:jgc:chanrobles.com.ph
The latter role is governmental, which places it in the category of
"It is a well-settled rule of statutory construction that repeals of provide, consistent with the basic policy of local autonomy. Such
statutes by implication are not favored and as much as possible, taxes, fees and charges shall accrue exclusively to the Local
effect must be given to all enactments of the legislature. Moreover, Governments."cralaw virtua1aw library
it has to be conceded that the charter of the NPC constitutes a
special law. Republic Act No. 7160, is a general law. It is a basic This paradigm shift results from the realization that genuine
rule in statutory construction that the enactment of a later development can be achieved only by strengthening local
legislation which is a general law cannot be construed to have autonomy and promoting decentralization of governance. For a
repealed a special law. Where there is a conflict between a general long time, the country’s highly centralized government structure
law and a special statute, the special statute should prevail since it has bred a culture of dependence among local government leaders
evinces the legislative intent more clearly than the general statute. upon the national leadership. It has also "dampened the spirit of
28 initiative, innovation and imaginative resilience in matters of local
development on the part of local government leaders." 35 The only
Finally, petitioner submits that the charter of the NPC, being a valid way to shatter this culture of dependence is to give the LGUs a
exercise of police power, should prevail over the LGC. It alleges wider role in the delivery of basic services, and confer them
that the power of the local government to impose franchise tax is sufficient powers to generate their own sources for the purpose. To
subordinate to petitioner’s exemption from taxation; "police power achieve this goal, section 3 of Article X of the 1987 Constitution
being the most pervasive, the least limitable and most demanding mandates Congress to enact a local government code that will,
of all powers, including the power of taxation." 29 consistent with the basic policy of local autonomy, set the
guidelines and limitations to this grant of taxing powers,
The petition is without merit. viz:jgc:chanrobles.com.ph

Taxes are the lifeblood of the government, 30 for without taxes, "Section 3. The Congress shall enact a local government code
the government can neither exist nor endure. A principal attribute which shall provide for a more responsive and accountable local
of sovereignty, 31 the exercise of taxing power derives its source government structure instituted through a system of
from the very existence of the state whose social contract with its decentralization with effective mechanisms of recall, initiative, and
citizens obliges it to promote public interest and common good. referendum, allocate among the different local government units
The theory behind the exercise of the power to tax emanates from their powers, responsibilities, and resources, and provide for the
necessity; 32 without taxes, government cannot fulfill its mandate qualifications, election, appointment and removal, term, salaries,
of promoting the general welfare and well-being of the people. powers and functions and duties of local officials, and all other
matters relating to the organization and operation of the local
In recent years, the increasing social challenges of the times units."cralaw virtua1aw library
expanded the scope of state activity, and taxation has become a
tool to realize social justice and the equitable distribution of wealth, To recall, prior to the enactment of the Rep. Act No. 7160, 36 also
economic progress and the protection of local industries as well as known as the Local Government Code of 1991 (LGC), various
public welfare and similar objectives. 33 Taxation assumes even measures have been enacted to promote local autonomy. These
greater significance with the ratification of the 1987 Constitution. include the Barrio Charter of 1959, 37 the Local Autonomy Act of
Thenceforth, the power to tax is no longer vested exclusively on 1959, 38 the Decentralization Act of 1967 39 and the Local
Congress; local legislative bodies are now given direct authority to Government Code of 1983. 40 Despite these initiatives, however,
levy taxes, fees and other charges 34 pursuant to Article X, section the shackles of dependence on the national government remained.
5 of the 1987 Constitution, viz:jgc:chanrobles.com.ph Local government units were faced with the same problems that
hamper their capabilities to participate effectively in the national
"Section 5. Each Local Government unit shall have the power to development efforts, among which are: (a) inadequate tax base,
create its own sources of revenue, to levy taxes, fees and charges (b) lack of fiscal control over external sources of income, (c)
subject to such guidelines and limitations as the Congress may limited authority to prioritize and approve development projects,
(d) heavy dependence on external sources of income, and (e) However, as this Court ruled in the case of Mactan Cebu
limited supervisory control over personnel of national line agencies. International Airport Authority (MCIAA) v. Marcos, 45 nothing
41 prevents Congress from decreeing that even instrumentalities or
agencies of the government performing governmental functions
Considered as the most revolutionary piece of legislation on local may be subject to tax. 46 In enacting the LGC, Congress exercised
autonomy, 42 the LGC effectively deals with the fiscal constraints its prerogative to tax instrumentalities and agencies of government
faced by LGUs. It widens the tax base of LGUs to include taxes as it sees fit. Thus, after reviewing the specific provisions of the
which were prohibited by previous laws such as the imposition of LGC, this Court held that MCIAA, although an instrumentality of the
taxes on forest products, forest concessionaires, mineral products, national government, was subject to real property tax,
mining operations, and the like. The LGC likewise provides enough viz:jgc:chanrobles.com.ph
flexibility to impose tax rates in accordance with their needs and
capabilities. It does not prescribe graduated fixed rates but merely "Thus, reading together sections 133, 232, and 234 of the LGC, we
specifies the minimum and maximum tax rates and leaves the conclude that as a general rule, as laid down in section 133, the
determination of the actual rates to the respective sanggunian. 43 taxing power of local governments cannot extend to the levy of
inter alia, ‘taxes, fees and charges of any kind on the national
One of the most significant provisions of the LGC is the removal of government, its agencies and instrumentalities, and local
the blanket exclusion of instrumentalities and agencies of the government units’; however, pursuant to section 232, provinces,
national government from the coverage of local taxation. Although cities and municipalities in the Metropolitan Manila Area may
as a general rule, LGUs cannot impose taxes, fees or charges of impose the real property tax except on, inter alia, ‘real property
any kind on the National Government, its agencies and owned by the Republic of the Philippines or any of its political
instrumentalities, this rule now admits an exception, i.e., when subdivisions except when the beneficial use thereof has been
specific provisions of the LGC authorize the LGUs to impose taxes, granted for consideration or otherwise, to a taxable person as
fees or charges on the aforementioned entities, provided in the item (a) of the first paragraph of section 12.’" 47
viz:jgc:chanrobles.com.ph
In the case at bar, section 151 in relation to section 137 of the LGC
"Section 133. Common Limitations on the Taxing Powers of the clearly authorizes the respondent city government to impose on
Local Government Units. — Unless otherwise provided herein, the the petitioner the franchise tax in question.chanrob1es virtua1 1aw
exercise of the taxing powers of provinces, cities, municipalities, 1ibrary
and barangays shall not extend to the levy of the
following:chanrob1es virtual 1aw library In its general signification, a franchise is a privilege conferred by
government authority, which does not belong to citizens of the
x       x       x country generally as a matter of common right. 48 In its specific
sense, a franchise may refer to a general or primary franchise, or
to a special or secondary franchise. The former relates to the right
(o) Taxes, fees, or charges of any kind on the National to exist as a corporation, by virtue of duly approved articles of
Government, its agencies and instrumentalities, and local incorporation, or a charter pursuant to a special law creating the
government units." (Emphasis supplied) corporation. 49 The right under a primary or general franchise is
vested in the individuals who compose the corporation and not in
In view of the afore-quoted provision of the LGC, the doctrine in the corporation itself. 50 On the other hand, the latter refers to the
Basco v. Philippine Amusement and Gaming Corporation 44 relied right or privileges conferred upon an existing corporation such as
upon by the petitioner to support its claim no longer applies. To the right to use the streets of a municipality to lay pipes of tracks,
emphasize, the Basco case was decided prior to the effectivity of erect poles or string wires. 51 The rights under a secondary or
the LGC, when no law empowering the local government units to special franchise are vested in the corporation and may ordinarily
tax instrumentalities of the National Government was in effect. be conveyed or mortgaged under a general power granted to a
corporation to dispose of its property, except such special or connecting therewith or contiguous to its works or any part thereof.
secondary franchises as are charged with a public use. 52 Provided, That just compensation shall be paid to any person or
persons whose property is, directly or indirectly, adversely affected
In section 131 (m) of the LGC, Congress unmistakably defined a or damaged thereby;
franchise in the sense of a secondary or special franchise. This is to
avoid any confusion when the word franchise is used in the context (g) To construct, operate and maintain power plants, auxiliary
of taxation. As commonly used, a franchise tax is "a tax on the plants, dams, reservoirs, pipes, mains, transmission lines, power
privilege of transacting business in the state and exercising stations and substations, and other works for the purpose of
corporate franchises granted by the state." 53 It is not levied on developing hydraulic power from any river, creek, lake, spring and
the corporation simply for existing as a corporation, upon its waterfall in the Philippines and supplying such power to the
property 54 or its income, 55 but on its exercise of the rights or inhabitants thereof, to acquire, construct, install, maintain,
privileges granted to it by the government. Hence, a corporation operate, and improve gas, oil, or steam engines, and/or other
need not pay franchise tax from the time it ceased to do business prime movers, generators and machinery in plants and/or auxiliary
and exercise its franchise. 56 It is within this context that the plants for the production of electric power; to establish, develop,
phrase "tax on businesses enjoying a franchise" in section 137 of operate, maintain and administer power and lighting systems for
the LGC should be interpreted and understood. Verily, to determine the transmission and utilization of its power generation; to sell
whether the petitioner is covered by the franchise tax in question, electric power in bulk to (1) industrial enterprises, (2) city,
the following requisites should concur: (1) that petitioner has a municipal or provincial systems and other government institutions,
"franchise" in the sense of a secondary or special franchise; and (3) electric cooperatives, (4) franchise holders, and (5) real estate
(2) that it is exercising its rights or privileges under this franchise subdivisions . . .;
within the territory of the respondent city government.chanrob1es
virtua1 1aw 1ibrary (h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage,
encumber and otherwise dispose of property incident to, or
Petitioner fulfills the first requisite. Commonwealth Act No. 120, as necessary, convenient or proper to carry out the purposes for
amended by Rep. Act No. 7395, constitutes petitioner’s primary which the Corporation was created: Provided, That in case a right
and secondary franchises. It serves as the petitioner’s charter, of way is necessary for its transmission lines, easement of right of
defining its composition, capitalization, the appointment and the way shall only be sought: Provided, however, That in case the
specific duties of its corporate officers, and its corporate life span. property itself shall be acquired by purchase, the cost thereof shall
57 As its secondary franchise, Commonwealth Act No. 120, as be the fair market value at the time of the taking of such property;
amended, vests the petitioner the following powers which are not
available to ordinary corporations, viz:jgc:chanrobles.com.ph (i) To construct works across, or otherwise, any stream,
watercourse, canal, ditch, flume, street, avenue, highway or
"x       x       x railway of private and public ownership, as the location of said
works may require . . .;
(e) To conduct investigations and surveys for the development of
water power in any part of the Philippines; (j) To exercise the right of eminent domain for the purpose of this
Act in the manner provided by law for instituting condemnation
(f) To take water from any public stream, river, creek, lake, spring proceedings by the national, provincial and municipal
or waterfall in the Philippines, for the purposes specified in this Act; governments;
to intercept and divert the flow of waters from lands of riparian
owners and from persons owning or interested in waters which are x       x       x
or may be necessary for said purposes, upon payment of just
compensation therefor; to alter, straighten, obstruct or increase
the flow of water in streams or water channels intersecting or (m) To cooperate with, and to coordinate its operations with those
of the National Electrification Administration and public service The taxable entity is the corporation which exercises the franchise,
entities; and not the individual stockholders. By virtue of its charter,
petitioner was created as a separate and distinct entity from the
(n) To exercise complete jurisdiction and control over watersheds National Government. It can sue and be sued under its own name,
surrounding the reservoirs of plants and/or projects constructed or 61 and can exercise all the powers of a corporation under the
proposed to be constructed by the Corporation. Upon Corporation Code. 62
determination by the Corporation of the areas required for
watersheds for a specific project, the Bureau of Forestry, the To be sure, the ownership by the National Government of its entire
Reforestation Administration and the Bureau of Lands shall, upon capital stock does not necessarily imply that petitioner is not
written advice by the Corporation, forthwith surrender jurisdiction engaged in business. Section 2 of Pres. Decree No. 2029 63
to the Corporation of all areas embraced within the watersheds, classifies government-owned or controlled corporations (GOCCs)
subject to existing private rights, the needs of waterworks into those performing governmental functions and those
systems, and the requirements of domestic water supply; performing proprietary functions, viz:jgc:chanrobles.com.ph

(o) In the prosecution and maintenance of its projects, the "A government-owned or controlled corporation is a stock or a non-
Corporation shall adopt measures to prevent environmental stock corporation, whether performing governmental or proprietary
pollution and promote the conservation, development and functions, which is directly chartered by special law or if organized
maximum utilization of natural resources . . ." 58 under the general corporation law is owned or controlled by the
government directly, or indirectly through a parent corporation or
With these powers, petitioner eventually had the monopoly in the subsidiary corporation, to the extent of at least a majority of its
generation and distribution of electricity. This monopoly was outstanding voting capital stock . . . ." (emphases supplied)
strengthened with the issuance of Pres. Decree No. 40, 59
nationalizing the electric power industry. Although Exec. Order No. Governmental functions are those pertaining to the administration
215 60 thereafter allowed private sector participation in the of government, and as such, are treated as absolute obligation on
generation of electricity, the transmission of electricity remains the the part of the state to perform while proprietary functions are
monopoly of the petitioner. those that are undertaken only by way of advancing the general
interest of society, and are merely optional on the government. 64
Petitioner also fulfills the second requisite. It is operating within the Included in the class of GOCCs performing proprietary functions are
respondent city government’s territorial jurisdiction pursuant to the "business-like" entities such as the National Steel Corporation
powers granted to it by Commonwealth Act No. 120, as amended. (NSC), the National Development Corporation (NDC), the Social
From its operations in the City of Cabanatuan, petitioner realized a Security System (SSS), the Government Service Insurance System
gross income of P107,814,187.96 in 1992. Fulfilling both (GSIS), and the National Water Sewerage Authority (NAWASA), 65
requisites, petitioner is, and ought to be, subject of the franchise among others.chanrob1es virtua1 1aw 1ibrary
tax in question.
Petitioner was created to "undertake the development of
Petitioner, however, insists that it is excluded from the coverage of hydroelectric generation of power and the production of electricity
the franchise tax simply because its stocks are wholly owned by from nuclear, geothermal and other sources, as well as the
the National Government, and its charter characterized it as a transmission of electric power on a nationwide basis." 66 Pursuant
"non-profit" organization. to this mandate, petitioner generates power and sells electricity in
bulk. Certainly, these activities do not partake of the sovereign
These contentions must necessarily fail. functions of the government. They are purely private and
commercial undertakings, albeit imbued with public interest. The
To stress, a franchise tax is imposed based not on the ownership public interest involved in its activities, however, does not distract
but on the exercise by the corporation of a privilege to do business. from the true nature of the petitioner as a commercial enterprise,
in the same league with similar public utilities like telephone and case at bar, the petitioner’s sole refuge is section 13 of Rep. Act
telegraph companies, railroad companies, water supply and No. 6395 exempting from, among others, "all income taxes,
irrigation companies, gas, coal or light companies, power plants, franchise taxes and realty taxes to be paid to the National
ice plant among others; all of which are declared by this Court as Government, its provinces, cities, municipalities and other
ministrant or proprietary functions of government aimed at government agencies and instrumentalities." However, section 193
advancing the general interest of society. 67 of the LGC withdrew, subject to limited exceptions, the sweeping
tax privileges previously enjoyed by private and public
A closer reading of its charter reveals that even the legislature corporations. Contrary to the contention of petitioner, section 193
treats the character of the petitioner’s enterprise as a "business," of the LGC is an express, albeit general, repeal of all statutes
although it limits petitioner’s profits to twelve percent (12%), viz: granting tax exemptions from local taxes. 72 It
68 reads:jgc:chanrobles.com.ph

"(n) When essential to the proper administration of its corporate "Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless
affairs or necessary for the proper transaction of its business or to otherwise provided in this Code, tax exemptions or incentives
carry out the purposes for which it was organized, to contract granted to, or presently enjoyed by all persons, whether natural or
indebtedness and issue bonds subject to approval of the President juridical, including government-owned or controlled corporations,
upon recommendation of the Secretary of Finance; except local water districts, cooperatives duly registered under R.A.
No. 6938, non-stock and non-profit hospitals and educational
(o) To exercise such powers and do such things as may be institutions, are hereby withdrawn upon the effectivity of this
reasonably necessary to carry out the business and purposes for Code." (emphases supplied)
which it was organized, or which, from time to time, may be
declared by the Board to be necessary, useful, incidental or It is a basic precept of statutory construction that the express
auxiliary to accomplish the said purpose . . . ." (emphases mention of one person, thing, act, or consequence excludes all
supplied) others as expressed in the familiar maxim expressio unius est
exclusio alterius. 73 Not being a local water district, a cooperative
It is worthy to note that all other private franchise holders registered under R.A. No. 6938, or a non-stock and non-profit
receiving at least sixty percent (60%) of its electricity requirement hospital or educational institution, petitioner clearly does not
from the petitioner are likewise imposed the cap of twelve percent belong to the exception. It is therefore incumbent upon the
(12%) on profits. 69 The main difference is that the petitioner is petitioner to point to some provisions of the LGC that expressly
mandated to devote "all its returns from its capital investment, as grant it exemption from local taxes.
well as excess revenues from its operation, for expansion" 70 while
other franchise holders have the option to distribute their profits to But this would be an exercise in futility. Section 137 of the LGC
its stockholders by declaring dividends. We do not see why this fact clearly states that the LGUs can impose franchise tax
can be a source of difference in tax treatment. In both instances, "notwithstanding any exemption granted by any law or other
the taxable entity is the corporation, which exercises the franchise, special law." This particular provision of the LGC does not admit
and not the individual stockholders. any exception. In City Government of San Pablo, Laguna v. Reyes,
74 MERALCO’s exemption from the payment of franchise taxes was
We also do not find merit in the petitioner’s contention that its tax brought as an issue before this Court. The same issue was involved
exemptions under its charter subsist despite the passage of the in the subsequent case of Manila Electric Company v. Province of
LGC. Laguna. 75 Ruling in favor of the local government in both
instances, we ruled that the franchise tax in question is imposable
As a rule, tax exemptions are construed strongly against the despite any exemption enjoyed by MERALCO under special laws,
claimant. Exemptions must be shown to exist clearly and viz:jgc:chanrobles.com.ph
categorically, and supported by clear legal provisions. 71 In the
"It is our view that petitioners correctly rely on provisions of 165-92 which imposes an annual franchise tax "notwithstanding
Sections 137 and 193 of the LGC to support their position that any exemption granted by law or other special law," the
MERALCO’s tax exemption has been withdrawn. The explicit respondent city government clearly did not intend to exempt the
language of section 137 which authorizes the province to impose petitioner from the coverage thereof.
franchise tax ‘notwithstanding any exemption granted by any law
or other special law’ is all-encompassing and clear. The franchise Doubtless, the power to tax is the most effective instrument to
tax is imposable despite any exemption enjoyed under special raise needed revenues to finance and support myriad activities of
laws. the local government units for the delivery of basic services
essential to the promotion of the general welfare and the
Section 193 buttresses the withdrawal of extant tax exemption enhancement of peace, progress, and prosperity of the people. As
privileges. By stating that unless otherwise provided in this Code, this Court observed in the Mactan case, "the original reasons for
tax exemptions or incentives granted to or presently enjoyed by all the withdrawal of tax exemption privileges granted to government-
persons, whether natural or juridical, including government-owned owned or controlled corporations and all other units of government
or controlled corporations except (1) local water districts, (2) were that such privilege resulted in serious tax base erosion and
cooperatives duly registered under R.A. 6938, (3) non-stock and distortions in the tax treatment of similarly situated enterprises."
non-profit hospitals and educational institutions, are withdrawn 78 With the added burden of devolution, it is even more imperative
upon the effectivity of this code, the obvious import is to limit the for government entities to share in the requirements of
exemptions to the three enumerated entities. It is a basic precept development, fiscal or otherwise, by paying taxes or other charges
of statutory construction that the express mention of one person, due from them.
thing, act, or consequence excludes all others as expressed in the
familiar maxim expressio unius est exclusio alterius. In the absence IN VIEW WHEREOF, the instant petition is DENIED and the assailed
of any provision of the Code to the contrary, and we find no other Decision and Resolution of the Court of Appeals dated March 12,
provision in point, any existing tax exemption or incentive enjoyed 2001 and July 10, 2001, respectively, are hereby
by MERALCO under existing law was clearly intended to be AFFIRMED.chanrob1es virtua1 1aw 1ibrary
withdrawn.
SO ORDERED.
Reading together sections 137 and 193 of the LGC, we conclude
that under the LGC the local government unit may now impose a Panganiban, Sandoval-Gutierrez, Corona and Carpio-Morales, JJ.,
local tax at a rate not exceeding 50% of 1% of the gross annual concur.
receipts for the preceding calendar based on the incoming receipts
realized within its territorial jurisdiction. The legislative purpose to EN BANC
withdraw tax privileges enjoyed under existing law or charter is
clearly manifested by the language used on (sic) Sections 137 and G.R. No. 197676, February 04, 2014
193 categorically withdrawing such exemption subject only to the
exceptions enumerated. Since it would be not only tedious and
REMMAN ENTERPRISES, INC. AND CHAMBER OF REAL
impractical to attempt to enumerate all the existing statutes
ESTATE AND BUILDERS’
providing for special tax exemptions or privileges, the LGC
ASSOCIATION, Petitioners, v. PROFESSIONAL REGULATORY
provided for an express, albeit general, withdrawal of such
BOARD OF REAL ESTATE SERVICE AND PROFESSIONAL
exemptions or privileges. No more unequivocal language could
REGULATION COMMISSION, Respondents.
have been used." 76 (emphases supplied).

It is worth mentioning that section 192 of the LGC empowers the DECISION
LGUs, through ordinances duly approved, to grant tax exemptions,
initiatives or reliefs. 77 But in enacting section 37 of Ordinance No. VILLARAMA, JR., J.:
Assailed in this petition for review under Rule 45 is the estate service in the Philippines or offer himself/herself as real
Decision1 dated July 12, 2011 of the Regional Trial Court (RTC) of estate service practitioner, or use the title, word, letter, figure or
Manila, Branch 42 denying the petition to declare as any sign tending to convey the impression that one is a real estate
unconstitutional Sections 28(a), 29 and 32 of Republic Act (R.A.) service practitioner, or advertise or indicate in any manner
No. 9646. whatsoever that one is qualified to practice the profession, or be
appointed as real property appraiser or assessor in any national
R.A. No. 9646, otherwise known as the “Real Estate Service Act of government entity or local government unit, unless he/she
the Philippines” was signed into law on June 29, 2009 by President has satisfactorily passed the licensure examination given by
Gloria Macapagal–Arroyo. It aims to professionalize the real estate the Board, except as otherwise provided in this Act, a holder of a
service sector under a regulatory scheme of licensing, registration valid certificate of registration, and professional
and supervision of real estate service practitioners (real estate identification card or a valid special/temporary permit duly
brokers, appraisers, assessors, consultants and salespersons) in issued to him/her by the Board and the Commission, and in the
the country. Prior to its enactment, real estate service practitioners case of real estate brokers and private appraisers, they have paid
were under the supervision of the Department of Trade and the required bond as hereto provided.
Industry (DTI) through the Bureau of Trade Regulation and
Consumer Protection (BTRCP), in the exercise of its consumer x x x
regulation functions. Such authority is now transferred to the
Professional Regulation Commission (PRC) through the Professional SEC. 32. Corporate Practice of the Real Estate Service . – (a) No
Regulatory Board of Real Estate Service (PRBRES) created under partnership or corporation shall engage in the business of real
the new law. estate service unless it is duly registered with the Securities and
Exchange Commission (SEC), and the persons authorized to act
The implementing rules and regulations (IRR) of R.A. No. 9646 for the partnership or corporation are all duly registered and
were promulgated on July 21, 2010 by the PRC and PRBRES under licensed real estate brokers, appraisers or consultants, as
Resolution No. 02, Series of 2010. the case may be. The partnership or corporation shall regularly
submit a list of its real estate service practitioners to the
On December 7, 2010, herein petitioners Remman Enterprises, Inc. Commission and to the SEC as part of its annual reportorial
(REI) and the Chamber of Real Estate and Builders’ Association requirements. There shall at least be one (1) licensed real estate
(CREBA) instituted Civil Case No. 10–124776 in the Regional Trial broker for every twenty (20) accredited salespersons.
Court of Manila, Branch 42. Petitioners sought to declare as void
and unconstitutional the following provisions of R.A. No. (b) Divisions or departments of partnerships and corporations
9646:chanRoblesvirtualLawlibrary engaged in marketing or selling any real estate development
SEC. 28. Exemptions from the Acts Constituting the Practice of project in the regular course of business must be headed by full–
Real Estate Service. – The provisions of this Act and its rules and time registered and licensed real estate brokers.
regulations shall not apply to the following:
(c) Branch offices of real estate brokers, appraisers or consultants
(a) Any person, natural or juridical, who shall directly perform by must be manned by a duly licensed real estate broker, appraiser or
himself/herself the acts mentioned in Section 3 hereof with consultant as the case may be.
reference to his/her or its own property, except real estate
developers; In case of resignation or termination from employment of a real
estate service practitioner, the same shall be reported by the
x x x employer to the Board within a period not to exceed fifteen (15)
days from the date of effectivity of the resignation or termination.
SEC. 29. Prohibition Against the Unauthorized Practice of Real
Estate Service . – No person shall practice or offer to practice real Subject to the provisions of the Labor Code, a corporation or
partnership may hire the services of registered and licensed real under the latter’s supervision. It likewise found no real discord
estate brokers, appraisers or consultants on commission basis to between E.O. No. 648 and R.A. No. 9646 as the latter does not
perform real estate services and the latter shall be deemed render nugatory the license to sell granted by the HLURB to real
independent contractors and not employees of such corporations. estate developers, which license would still subsist. The only
(Emphasis and underscoring supplied.)chanroblesvirtualawlibrary difference is that by virtue of the new law, real estate developers
will now be compelled to hire the services of one licensed real
According to petitioners, the new law is constitutionally infirm
estate broker for every twenty salespersons to guide and supervise
because (1) it violates Article VI, Section 26 (1) of the 1987
the coterie of salespersons under the employ of the real estate
Philippine Constitution which mandates that “[e]very bill passed by
developers.
Congress shall embrace only one subject which shall be expressed
in the title thereof”; (2) it is in direct conflict with Executive Order
On the issue of due process, the trial court said that the questioned
(E.O.) No. 648 which transferred the exclusive jurisdiction of the
provisions do not preclude property owners from using, enjoying,
National Housing Authority (NHA) to regulate the real estate trade
or disposing of their own property because they can still develop
and business to the Human Settlements Commission, now the
and sell their properties except that they have to secure the
Housing and Land Use Regulatory Board (HLURB), which authority
services of a licensed real estate broker who shall oversee the
includes the issuance of license to sell of subdivision owners and
actions of the unlicensed real estate practitioners under their
developers pursuant to Presidential Decree (P.D.) No. 957; (3) it
employ. Since the subject provisions merely prescribe the
violates the due process clause as it impinges on the real estate
requirements for the regulation of the practice of real estate
developers’ most basic ownership rights, the right to use and
services, these are consistent with a valid exercise of the State’s
dispose property, which is enshrined in Article 428 of the Civil
police power. The trial court further ruled that Section 28(a) does
Code; and (4) Section 28(a) of R.A. No. 9646 violates the equal
not violate the equal protection clause because the exemption of
protection clause as no substantial distinctions exist between real
real estate developers was anchored on reasonable classification
estate developers and the exempted group mentioned since both
aimed at protecting the buying public from the rampant
are property owners dealing with their own property.
misrepresentations often committed by unlicensed real estate
practitioners, and to prevent unscrupulous and unethical real
Additionally, petitioners contended that the lofty goal of nurturing
estate practices from flourishing considering the large number of
and developing a “corps of technically competent, reasonable and
consumers in the regular course of business compared to isolated
respected professional real estate service practitioners” is not
sale transactions made by private individuals selling their own
served by curtailing the right of real estate developers to conduct
property.
their business of selling properties. On the contrary, these
restrictions would have disastrous effects on the real estate
Hence, this appeal on the following questions of
industry as the additional cost of commissions would affect the
law:chanRoblesvirtualLawlibrary
pricing and affordability of real estate packages. When that
happens, petitioners claimed that the millions of jobs and billions in
revenues that the real estate industry generates for the 1. Whether there is a justiciable controversy for this
government will be a thing of the past. Honorable Court to adjudicate;

After a summary hearing, the trial court denied the prayer for 2. Whether [R.A. No. 9646] is unconstitutional for
issuance of a writ of preliminary injunction. violating the “one title–one subject” rule under
Article VI, Section 26 (1) of the Philippine
On July 12, 2011, the trial court rendered its Decision2 denying the Constitution;
petition. The trial court held that the assailed provisions are
relevant to the title of the law as they are intended to regulate the 3. Whether [R.A. No. 9646] is in conflict with PD 957,
practice of real estate service in the country by ensuring that those as amended by EO 648, with respect to the exclusive
who engage in it shall either be a licensed real estate broker, or
 jurisdiction of the HLURB to regulate real estate sanctions for disobeying the mandate of the new law is likewise
developers; real. Asserting that the prohibition violates their rights as property
owners to dispose of their properties, petitioners challenged on
4. Whether Sections 28(a), 29, and 32 of [R.A. No. constitutional grounds the implementation of R.A. No. 9646 which
9646], insofar as they affect the rights of real estate the respondents defended as a valid legislation pursuant to the
developers, are unconstitutional for violating State’s police power. The Court thus finds a justiciable controversy
substantive due process; and that calls for immediate resolution.

5. Whether Section 28(a), which treats real estate No Violation of One–Title One–Subject Rule
developers differently from other natural or juridical
persons who directly perform acts of real estate Section 26(1), Article VI of the Constitution
service with reference to their own property, is states:chanRoblesvirtualLawlibrary
unconstitutional for violating the equal protection SEC. 26 (1). Every bill passed by the Congress shall embrace only
clause.3 one subject which shall be expressed in the title thereof.
In Fariñas v. The Executive Secretary,9 the Court explained the
The Court’s Ruling provision as follows:chanRoblesvirtualLawlibrary
The proscription is aimed against the evils of the so–called omnibus
The petition has no merit. bills and log–rolling legislation as well as surreptitious and/or
unconsidered encroaches. The provision merely calls for all parts of
Justiciable Controversy an act relating to its subject finding expression in its title.

The Constitution4 requires as a condition precedent for the exercise To determine whether there has been compliance with the
of judicial power the existence of an actual controversy between constitutional requirement that the subject of an act shall be
litigants. An actual case or controversy involves a conflict of legal expressed in its title, the Court laid down the rule that –
rights, an assertion of opposite legal claims susceptible to judicial Constitutional provisions relating to the subject matter and titles of
resolution.5 The controversy must be justiciable – definite and statutes should not be so narrowly construed as to cripple or
concrete – touching on the legal relations of parties having adverse impede the power of legislation. The requirement that the
legal interests, which may be resolved by a court of law through subject of an act shall be expressed in its title should
the application of a law.6 In other words, the pleadings must show receive a reasonable and not a technical construction. It is
an active antagonistic assertion of a legal right, on the one hand, sufficient if the title be comprehensive enough reasonably
and a denial thereof on the other; that is, it must concern a real to include the general object which a statute seeks to effect,
and not a merely theoretical question or issue. There ought to be without expressing each and every end and means
an actual and substantial controversy admitting of specific relief necessary or convenient for the accomplishing of that
through a decree conclusive in nature, as distinguished from an object. Mere details need not be set forth. The title need not be an
opinion advising what the law would be upon a hypothetical state abstract or index of the Act.10 (Emphasis
of facts.7 An actual case is ripe for adjudication when the act being supplied.)chanroblesvirtualawlibrary
challenged has a direct adverse effect on the individual challenging
it.8cralawlawlibrary The Court has previously ruled that the one–subject requirement
under the Constitution is satisfied if all the parts of the statute are
There is no question here that petitioners who are real estate related, and are germane to the subject matter expressed in the
developers are entities directly affected by the prohibition on title, or as long as they are not inconsistent with or foreign to the
performing acts constituting practice of real estate service without general subject and title.11 An act having a single general subject,
first complying with the registration and licensing requirements for indicated in the title, may contain any number of provisions, no
brokers and agents under R.A. No. 9646. The possibility of criminal matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be SEC. 2. Declaration of Policy. – The State recognizes the vital role
considered in furtherance of such subject by providing for the of real estate service practitioners in the social, political, economic
method and means of carrying out the general object.12 development and progress of the country by promoting the real
estate market, stimulating economic activity and enhancing
It is also well–settled that the “one title–one subject” rule does not government income from real property–based transactions. Hence,
require the Congress to employ in the title of the enactment it shall develop and nurture through proper and effective regulation
language of such precision as to mirror, fully index or catalogue all and supervision a corps of technically competent, responsible and
the contents and the minute details therein. The rule is sufficiently respected professional real estate service practitioners whose
complied with if the title is comprehensive enough as to include the standards of practice and service shall be globally competitive and
general object which the statute seeks to effect.13 Indeed, this will promote the growth of the real estate industry.
Court has invariably adopted a liberal rather than technical We find that the inclusion of real estate developers is germane to
construction of the rule “so as not to cripple or impede the law’s primary goal of developing “a corps of technically
legislation.”14 competent, responsible and respected professional real estate
service practitioners whose standards of practice and service shall
R.A. No. 9646 is entitled “An Act Regulating the Practice of Real be globally competitive and will promote the growth of the real
Estate Service in the Philippines, Creating for the Purpose a estate industry.” Since the marketing aspect of real estate
Professional Regulatory Board of Real Estate Service, Appropriating development projects entails the performance of those acts and
Funds Therefor and For Other Purposes.” Aside from provisions transactions defined as real estate service practices under Section
establishing a regulatory system for the professionalization of the 3(g) of R.A. No. 9646, it is logically covered by the regulatory
real estate service sector, the new law extended its coverage to scheme to professionalize the entire real estate service sector.
real estate developers with respect to their own properties.
Henceforth, real estate developers are prohibited from performing No Conflict Between R.A. No. 9646 and P.D. No. 957, as
acts or transactions constituting real estate service practice without amended by E.O. No. 648
first complying with registration and licensing requirements for
their business, brokers or agents, appraisers, consultants and Petitioners argue that the assailed provisions still cannot be
salespersons. sustained because they conflict with P.D. No. 957 which decreed
that the NHA shall have “exclusive jurisdiction to regulate the real
Petitioners point out that since partnerships or corporations estate trade and business.” Such jurisdiction includes the authority
engaged in marketing or selling any real estate development to issue a license to sell to real estate developers and to register
project in the regular course of business are now required to be real estate dealers, brokers or salesmen upon their fulfillment of
headed by full–time, registered and licensed real estate brokers, certain requirements under the law. By imposing limitations on real
this requirement constitutes limitations on the property rights and estate developers’ property rights, petitioners contend that R.A.
business prerogatives of real estate developers which are not all No. 9646 undermines the licenses to sell issued by the NHA (now
reflected in the title of R.A. No. 9646. Neither are real estate the HLURB) to real estate developers allowing them to sell
developers, who are already regulated under a different law, P.D. subdivision lots or condominium units directly to the public.
No. 957, included in the definition of real estate service Because the HLURB has been divested of its exclusive jurisdiction
practitioners. over real estate developers, the result is an implied repeal of P.D.
No. 957 as amended by E.O. No. 648, which is not favored in law.
We hold that R.A. No. 9646 does not violate the one–title, one–
subject rule. It is a well–settled rule of statutory construction that repeals by
implication are not favored. In order to effect a repeal by
The primary objective of R.A. No. 9646 is expressed as implication, the later statute must be so irreconcilably inconsistent
follows:chanRoblesvirtualLawlibrary and repugnant with the existing law that they cannot be made to
reconcile and stand together. The clearest case possible must be
made before the inference of implied repeal may be drawn, for SECTION 11. Registration of Dealers, Brokers and Salesmen. – No
inconsistency is never presumed. There must be a showing of real estate dealer, broker or salesman shall engage in the business
repugnance clear and convincing in character. The language used of selling subdivision lots or condominium units unless he has
in the later statute must be such as to render it irreconcilable with registered himself with the Authority in accordance with the
what had been formerly enacted. An inconsistency that falls short provisions of this section.
of that standard does not suffice.15 Moreover, t he failure to add a
specific repealing clause indicates that the intent was not to repeal If the Authority shall find that the applicant is of good repute and
any existing law, unless an irreconcilable inconsistency and has complied with the applicable rules of the Authority, including
repugnancy exist in the terms of the new and old laws.16 the payment of the prescribed fee, he shall register such applicant
as a dealer, broker or salesman upon filing a bond, or other
There is nothing in R.A. No. 9646 that repeals any provision of P.D. security in lieu thereof, in such sum as may be fixed by the
No. 957, as amended by E.O. No. 648. P.D. No. 957, otherwise Authority conditioned upon his faithful compliance with the
known as “ The Subdivision and Condominium Buyers’ Protective provisions of this Decree: Provided, that the registration of a
Decree,”17 vested the NHA with exclusive jurisdiction to regulate salesman shall cease upon the termination of his employment with
the real estate trade and business in accordance with its a dealer or broker.
provisions. It empowered the NHA to register, approve and monitor
real estate development projects and issue licenses to sell to real Every registration under this section shall expire on the thirty–first
estate owners and developers. It further granted the NHA the day of December of each year. Renewal of registration for the
authority to register and issue/revoke licenses of brokers, dealers succeeding year shall be granted upon written application therefore
and salesmen engaged in the selling of subdivision lots and made not less than thirty nor more than sixty days before the first
condominium units. day of the ensuing year and upon payment of the prescribed fee,
without the necessity of filing further statements or information,
E.O. No. 648, issued on February 7, 1981, reorganized the Human unless specifically required by the Authority. All applications filed
Settlements Regulatory Commission (HSRC) and transferred the beyond said period shall be treated as original applications.
regulatory functions of the NHA under P.D. 957 to the HSRC.
Among these regulatory functions were the (1) regulation of the The names and addresses of all persons registered as dealers,
real estate trade and business; (2) registration of subdivision lots brokers, or salesmen shall be recorded in a Register of Brokers,
and condominium projects; (3) issuance of license to sell Dealers and Salesmen kept in the Authority which shall be open to
subdivision lots and condominium units in the registered units; (4) public inspection.
approval of performance bond and the suspension of license to sell; On the other hand, Section 29 of R.A. No. 9646 requires as a
(5) registration of dealers, brokers and salesman engaged in the condition precedent for all persons who will engage in acts
business of selling subdivision lots or condominium units; and (6) constituting real estate service, including advertising in any
revocation of registration of dealers, brokers and salesmen.18 manner one’s qualifications as a real estate service practitioner,
compliance with licensure examination and other registration
E.O. No. 90, issued on December 17, 1986, renamed the HSRC as requirements including the filing of a bond for real estate brokers
the Housing and Land Use Regulatory Board (HLURB) and was and private appraisers. While Section 11 of P.D. No. 957 imposes
designated as the regulatory body for housing and land registration requirements for dealers, brokers and salespersons
development under the Housing and Urban Development engaged in the selling of subdivision lots and condominium units,
Coordinating Council (HUDCC). To date, HLURB continues to carry Section 29 of R.A. No. 9646 regulates all real estate service
out its mandate to register real estate brokers and salesmen practitioners whether private or government. While P.D. No. 957
dealing in condominium, memorial parks and subdivision projects seeks to supervise brokers and dealers who are engaged in the
pursuant to Section 11 of P.D. No. 957, which sale of subdivision lots and condominium units, R.A. No. 9646 aims
reads:chanRoblesvirtualLawlibrary to regulate the real estate service sector in general by
professionalizing their ranks and raising the level of ethical
standards for licensed real estate professionals. Indeed, no right is absolute, and the proper regulation of a
profession, calling, business or trade has always been upheld as a
There is no conflict of jurisdiction because the HLURB supervises legitimate subject of a valid exercise of the police power of the
only those real estate service practitioners engaged in the sale of State particularly when their conduct affects the execution of
subdivision lots and condominium projects, specifically for legitimate governmental functions, the preservation of the State,
violations of the provisions of P.D. No. 957, and not the entire real public health and welfare and public morals.20 In any case, wh ere
estate service sector which is now under the regulatory powers of the liberty curtailed affects at most the rights of property, the
the PRBRES. HLURB’s supervision of brokers and dealers to permissible scope of regulatory measures is certainly much wider.
effectively implement the provisions of P.D. No. 957 does not To pretend that licensing or accreditation requirements violate the
foreclose regulation of the real estate service as a profession. Real due process clause is to ignore the settled practice, under the
estate developers already regulated by the HLURB are now further mantle of police power, of regulating entry to the practice of
required to comply with the professional licensure requirements various trades or professions.21
under R.A. No. 9646, as provided in Sections 28, 29 and 32.
Plainly, there is no inconsistency or contradiction in the assailed Here, the legislature recognized the importance of professionalizing
provisions of R.A. No. 9646 and P.D. No. 957, as amended. the ranks of real estate practitioners by increasing their
competence and raising ethical standards as real property
The rule is that every statute must be interpreted and brought into transactions are “susceptible to manipulation and corruption,
accord with other laws in a way that will form a uniform system of especially if they are in the hands of unqualified persons working
jurisprudence. The legislature is presumed to have known existing under an ineffective regulatory system.” The new regulatory
laws on the subject and not to have enacted conflicting regime aimed to fully tap the vast potential of the real estate
laws.19 Congress, therefore, could not be presumed to have sector for greater contribution to our gross domestic income, and
intended Sections 28, 29 and 32 of R.A. No. 9646 to run counter to real estate practitioners “serve a vital role in spearheading the
P.D. No. 957. continuous flow of capital, in boosting investor confidence, and in
promoting overall national progress.”22
No Violation of Due Process
We thus find R.A. No. 9646 a valid exercise of the State’s police
Petitioners contend that the assailed provisions of R.A. No. 9646 power. As we said in another case challenging the constitutionality
are unduly oppressive and infringe the constitutional rule against of a law granting discounts to senior
deprivation of property without due process of law. They stress citizens:chanRoblesvirtualLawlibrary
that real estate developers are now burdened by law to employ The law is a legitimate exercise of police power which, similar to
licensed real estate brokers to sell, market and dispose of their the power of eminent domain, has general welfare for its object.
properties. Despite having invested a lot of money, time and Police power is not capable of an exact definition, but has been
resources in their projects, petitioners aver that real estate purposely veiled in general terms to underscore its
developers will still have less control in managing their business comprehensiveness to meet all exigencies and provide enough
and will be burdened with additional expenses. room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it
The contention has no basis. There is no deprivation of property as has been described as “the most essential, insistent and the least
no restriction on their use and enjoyment of property is caused by limitable of powers, extending as it does to all the great public
the implementation of R.A. No. 9646. If petitioners as property needs.” It is “[t]he power vested in the legislature by the
owners feel burdened by the new requirement of engaging the constitution to make, ordain, and establish all manner of
services of only licensed real estate professionals in the sale and wholesome and reasonable laws, statutes, and ordinances, either
marketing of their properties, such is an unavoidable consequence with penalties or without, not repugnant to the constitution, as
of a reasonable regulatory measure. they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same.”
 be treated alike, under like circumstances and conditions both as to
For this reason, when the conditions so demand as determined by privileges conferred and liabilities enforced. The equal protection
the legislature, property rights must bow to the primacy of police clause is not infringed by legislation which applies only to those
power because property rights, though sheltered by due persons falling within such class, and reasonable grounds exists for
process, must yield to general welfare. making a distinction between those who fall within such class and
those who do not. (2 Cooley, Constitutional Limitations, 824–
Police power as an attribute to promote the common good would 825).25ChanRoblesVirtualawlibrary
be diluted considerably if on the mere plea of petitioners that they Although the equal protection clause of the Constitution does not
will suffer loss of earnings and capital, the questioned provision is forbid classification, it is imperative that the classification should be
invalidated. Moreover, in the absence of evidence demonstrating based on real and substantial differences having a reasonable
the alleged confiscatory effect of the provision in question, there is relation to the subject of the particular legislation. 26 If classification
no basis for its nullification in view of the presumption of validity is germane to the purpose of the law, concerns all members of the
which every law has in its favor.23 (Emphasis class, and applies equally to present and future conditions, the
supplied.)chanroblesvirtualawlibrary classification does not violate the equal protection guarantee.27
No Violation of Equal Protection Clause
R.A. No. 9646 was intended to provide institutionalized
Section 28 of R.A. No. 9646 exempts from its coverage natural and government support for the development of “a corps of highly
juridical persons dealing with their own property, and other respected, technically competent, and disciplined real estate
persons such as receivers, trustees or assignees in insolvency or service practitioners, knowledgeable of internationally accepted
bankruptcy proceedings. However, real estate developers are standards and practice of the profession.”28 Real estate developers
specifically mentioned as an exception from those enumerated at present constitute a sector that hires or employs the largest
therein. Petitioners argue that this provision violates the equal number of brokers, salespersons, appraisers and consultants due
protection clause because it unjustifiably treats real estate to the sheer number of products (lots, houses and condominium
developers differently from those exempted persons who also own units) they advertise and sell nationwide. As early as in the ‘70s,
properties and desire to sell them. They insist that no substantial there has been a proliferation of errant developers, operators or
distinctions exist between ordinary property owners and real estate sellers who have reneged on their representation and obligations to
developers as the latter, in fact, are more capable of entering into comply with government regulations such as the provision and
real estate transactions and do not need the services of licensed maintenance of subdivision roads, drainage, sewerage, water
real estate brokers. They assail the RTC decision in citing the system and other basic requirements. To protect the interest of
reported fraudulent practices as basis for the exclusion of real home and lot buyers from fraudulent acts and manipulations
estate developers from the exempted group of persons under perpetrated by these unscrupulous subdivision and condominium
Section 28(a). sellers and operators, P.D. No. 957 was issued to strictly regulate
housing and real estate development projects. Hence, in approving
We sustain the trial court’s ruling that R.A. No. 9646 does not R.A. No. 9646, the legislature rightfully recognized the necessity of
violate the equal protection clause. imposing the new licensure requirements to all real estate service
practitioners, including and more importantly, those real estate
In Ichong v. Hernandez,24 the concept of equal protection was service practitioners working for real estate developers. Unlike
explained as follows:chanRoblesvirtualLawlibrary individuals or entities having isolated transactions over their own
The equal protection of the law clause is against undue favor and property, real estate developers sell lots, houses and condominium
individual or class privilege, as well as hostile discrimination or the units in the ordinary course of business, a business which is highly
oppression of inequality. It is not intended to prohibit legislation, regulated by the State to ensure the health and safety of home and
which is limited either in the object to which it is directed or by lot buyers.
territory within which it is to operate. It does not demand absolute
equality among residents; it merely requires that all persons shall The foregoing shows that substantial distinctions do exist between
ordinary property owners exempted under Section 28(a) and real
estate developers like petitioners, and the classification enshrined
in R.A. No. 9646 is reasonable and relevant to its legitimate
purpose. The Court thus rules that R.A. No. 9646 is valid and
constitutional.

Since every law is presumed valid, the presumption of

constitutionality can be overcome only by the clearest showing that
there was indeed an infraction of the Constitution, and only when
such a conclusion is reached by the required majority may the
Court pronounce, in the discharge of the duty it cannot escape,
that the challenged act must be struck down.29

Indeed, “all presumptions are indulged in favor of constitutionality;

one who attacks a statute, alleging unconstitutionality must prove
its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable
basis may be conceived which supports the statute, it will be
upheld, and the challenger must negate all possible bases; that the
courts are not concerned with the wisdom, justice, policy, or
expediency of a statute; and that a liberal interpretation of the
constitution in favor of the constitutionality of legislation should be
adopted.”30

WHEREFORE, the petition is DENIED. The Decision dated July 12,

2011 of the Regional Trial Court of Manila, Branch 42 in Civil Case
No. 10–124776 is hereby AFFIRMED and UPHELD.

No pronouncement as to costs.

SO ORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo–De Castro,

Brion, Peralta, Bersamin, Del Castillo, Abad, Perez,
Mendoza, Reyes, Perlas–Bernabe, and Leonen, JJ., concur.